Sony 2004 Annual Report Download - page 71

69
creased due to improvements in valuation gains
and losses from investments in the general ac-
count. The above mentioned change in revenue
recognition method did not have a material ef-
fect on operating income. Valuation gains and
losses from investments in the separate account
accrue directly to the account of policyholders
and, therefore, do not affect operating income.
At Sony Assurance Inc. (“Sony Assurance”),
revenue increased due to higher insurance
revenue brought about by an expansion in
automobile insurance-in-force. Operating
income was recorded during the fiscal year
compared to an operating loss in the previous
fiscal year due to the increase in insurance
revenue and an improvement in the expense
ratio (the ratio of operating expenses to
premiums) and the loss ratio (the ratio of
insurance payouts to premiums).
At Sony Finance International, Inc. (“Sony
Finance”), a leasing and credit financing
business subsidiary in Japan, revenue was
unchanged compared to the previous year as
credit financing revenue increased slightly
and leasing revenue and rent revenue de-
creased slightly. In terms of profitability, oper-
ating loss increased due to the recording of a
loss from the lease of certain fixed assets to
Crosswave Communications Inc., which
commenced reorganization proceedings under
the Corporate Reorganization Law of Japan,
and an increase in expenses associated with
the start, in earnest, of a credit card business.
Sony Bank Inc. (“Sony Bank”), which
started business in June 2001, recorded a loss,
as was also the case in the previous fiscal year,
but the amount of loss decreased.
* The revenue and operating income at Sony Life, Sony Assurance
and Sony Bank discussed here differ from the results that Sony
Life, Sony Assurance and Sony Bank disclose on a Japanese
statutory basis.
CONDENSED STATEMENTS OF INCOME
SEPARATING OUT THE FINANCIAL SERVICES
SEGMENT (UNAUDITED)
The following schedule shows unaudited
condensed statements of income for the
Financial Services segment and all other
segments excluding Financial Services as well
as condensed consolidated statements of
income. This presentation is not required
under U.S. GAAP, which is used in Sony’s
consolidated financial statements. However,
because the Financial Services segment is dif-
ferent in nature from Sony’s other segments,
Sony believes that a comparative presentation
may be useful in understanding and analyzing
Sony’s consolidated financial statements.
Transactions between the Financial Services
segment and all other segments excluding
Financial Services are eliminated in the consoli-
dated figures shown below.
rate account and the general account, reflecting
strength in the equity markets. This increase oc-
curred despite a 30.8 billion yen reduction in
revenue resulting from a change in the method
of recognizing insurance premiums received on
certain products from being recorded as rev-
enues to being offset against the related provi-
sion for future insurance policy benefits since
the third quarter beginning October 1, 2003.
Insurance revenue decreased as a result of this
change in method of recording revenue but the
actual life insurance business remained strong
as new insurance sales increased compared
with the previous year, and the amount of
insurance-in-force at the end of the fiscal year
increased compared with the end of the previ-
ous year. Operating income at Sony Life in-
4.3% 4.2%
9.3%
–100
0
100
200
300
0
200
400
600
800
1,000
1,200
02 03 04
Revenue and operating income in the Financial
Services segment
(Billion ¥) (Billion ¥)
쐽Financial Services revenue (left)
쐽Operating income (right)
쑗Operating margin
* Year ended March 31
CONDENSED STATEMENTS OF INCOME SEPARATING OUT THE FINANCIAL SERVICES SEGMENT
Year ended March 31
All other segments
Financial Services excluding Financial Services Consolidated
(Yen in millions) 2003 2004 2003 2004 2003 2004
Financial Services revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537,276 593,544 ––509,398 565,752
Net sales and operating revenue . . . . . . . . . . . . . . . . . . . . . . . . – –6,974,980 6,939,964 6,964,235 6,930,639
537,276 593,544 6,974,980 6,939,964 7,473,633 7,496,391
Costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514,518 538,383 6,811,292 6,896,377 7,288,193 7,397,489
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,758 55,161 163,688 43,587 185,440 98,902
Other income (expenses), net . . . . . . . . . . . . . . . . . . . . . . . . . . (1,282) 1,958 67,846 52,746 62,181 45,165
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,476 57,119 231,534 96,333 247,621 144,067
Income taxes and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,071 22,975 120,089 30,916 132,102 53,439
Cumulative effect of accounting changes . . . . . . . . . . . . . . . . . – ––(2,117) –(2,117)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,405 34,144 111,445 63,300 115,519 88,511