Sony 2004 Annual Report Download - page 75

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73
INCREASE IN ASSETS AND LIABILITIES
AS A RESULT OF CONSOLIDATION OF
VARIABLE INTEREST ENTITIES
Sony adopted FIN 46 on July 1, 2003. As a
result, Sony’s assets and liabilities increased as
non-cash transactions, which resulted in no
cash flows, by 95.3 billion yen and 98.0 billion
yen, respectively. Cash and cash equivalents
also increased by 1.5 billion yen. The Variable
Interest Entities (“VIEs”) consolidated by Sony
include the following:
Sony leases the headquarters of its U.S. sub-
sidiary from a VIE. Upon consolidation of the
VIE, assets and liabilities increased by 25.3 bil-
lion yen and 27.0 billion yen, respectively. Sony
has the option to purchase the building at any
time for 26.9 billion yen during the lease term
which expires in December 2008. The debt held
by the VIE is unsecured. At the end of the lease
term, Sony has agreed to either renew the
lease, purchase the building or remarket it to a
third party on behalf of the owner.
A subsidiary in the Pictures business entered
into a joint venture agreement with a VIE for
the purpose of funding the acquisition of cer-
tain international film rights. Upon consolida-
tion of the VIE, assets and liabilities increased
by 10.2 billion yen and 10.6 billion yen, re-
spectively. Under the agreement, the
subsidiary’s 1.2 billion yen equity investment is
the last equity to be repaid.
Sony has utilized a VIE to erect and operate
a multi-use real estate complex in Berlin,
Germany, which was accounted for under the
equity method by Sony until June 30, 2003.
On July 1, 2003, Sony consolidated this entity.
Upon consolidation of the VIE, assets and
liabilities increased by 61.3 billion yen and 60.3
billion yen, respectively. These liabilities include
a 57.3 billion yen syndicated bank loan which
matures in November 2004. The syndicated
bank loan is secured by the multi-use real
estate complex.
Regarding further information on transac-
tions with VIEs please refer to Notes 22 and 23
of Notes to Consolidated Financial Statements.
STOCKHOLDERS’ EQUITY
Stockholders’ equity on March 31, 2004 in-
creased by 97.1 billion yen, or 4.3 percent, to
2,378.0 billion yen compared with the previous
fiscal year-end. Retained earnings increased
65.3 billion yen compared with the previous
fiscal year-end, and the amount of deductions
recorded in accumulated other comprehensive
income decreased 22.0 billion yen. Accumu-
lated other comprehensive income improved
because, although foreign currency translation
adjustments (deduction from Accumulated
other comprehensive income) increased 127.9
billion yen year on year, due to the apprecia-
tion of the yen, minimum pension liability
adjustments (deduction from Accumulated
other comprehensive income) decreased 93.4
billion yen, due to an increase in pension
assets resulting from the rise in value of equity
investment in Japan, and unrealized gains on
securities increased 52.3 billion yen compared
with the previous fiscal year-end. The ratio of
stockholders’ equity to total assets decreased
1.0 percentage points from 27.2 percent to
26.2 percent.
CONDENSED BALANCE SHEETS
SEPARATING OUT THE FINANCIAL
SERVICES SEGMENT (UNAUDITED)
The following schedule shows an unaudited
condensed balance sheets for the Financial
Services segment and all other segments exclud-
ing Financial Services as well as the condensed
consolidated balance sheets. This presentation
is not required under U.S. GAAP, which is used
in Sony’s consolidated financial statements.
However, because the Financial Services seg-
ment is different 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 ex-
cluding Financial Services are eliminated in the
consolidated figures shown on the next page.
02 03 04
0
500
1,000
1,500
쐽Short-term (Including the current portion of long-
term debt)
쐽Long-term
* As of March 31
Interest-bearing liabilities
(Billion ¥)
쐽Stockholders’ equity
쑗Stockholders’ equity ratio
Stockholders’ equity ratio=Stockholders’ equity/Total assets
* As of March 31
29.0% 27.2% 26.2%
02 03 04
0
500
1,000
1,500
2,000
2,500
0
10
20
30
40
50
Stockholders’ equity and stockholders’ equity ratio
(Billion ¥) (%)
*As of March 31
02 03 04
0
500
1,000
1,500
2,000
2,500
3,000
Stockholders’ equity per share of common stock
(¥)