Sony 2004 Annual Report Download - page 78

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between assets and liabilities. Government
bonds and corporate bonds constitute a majority
of Sony Life’s current portfolio. Sony Life invests
in various types of government and corporate
bonds in many countries, companies and indus-
tries, to diversify associated risks. Further, as
stocks accounted for approximately 2 percent
of such securities, the financial structure of Sony
Life is not greatly influenced by stock prices.
The total amount of commitments out-
standing at March 31, 2004 was 316.1 billion
yen (refer to Note 23 of Notes to Consolidated
Financial Statements). The commitments include
major purchase obligations as shown above.
In the ordinary course of business, Sony
makes commitments for the purchase of prop-
erty, plant and equipment. As of March 31,
2004, such commitments outstanding were
20.8 billion yen. Most of these assets will be
used for general operating purposes.
Certain subsidiaries in the Music segment
have entered into long-term contracts with re-
cording artists and companies for the produc-
tion and/or distribution of pre-recorded music
and videos. As of March 31, 2004, the total
amount of expected payments regarding these
long-term contracts was 39.1 billion yen.
A subsidiary in the Pictures segment has
committed to fund a portion of the production
cost of completed films and is responsible for
all distribution and marketing expenses
relating to these films under a distribution
agreement with a third party. Further, certain
subsidiaries in the Pictures segment have
entered into agreements with creative talent
for the development and production of films
and television programming as well as agree-
ments with third parties to acquire completed
films, or certain rights therein. As of March 31,
2004, the total amount of the expected cost
for the production or purchase of films and
television programming or certain rights under
the above commitments was 95.2 billion yen.
On March 8, 2004, Sony Corporation
signed an agreement with Samsung Electronics
Co., Ltd. (“Samsung”) to establish a joint
venture, named S-LCD Corporation. As of
March 31, 2004, under the joint venture
agreement, Sony is committed to fund a total
of 96.3 billion yen.
Sony Bank operates using a similar basic in-
vestment policy as Sony Life, taking expected
returns and investment risks into account in
order to disperse associated risks, and structur-
ing its asset portfolio to ensure steady returns
from investments. In addition, Sony Bank is
careful to match the duration of its asset
portfolio with the duration of liabilities result-
ing from customer deposits, in order to ensure
that significant discrepancies do not occur.
Government bonds and corporate bonds
constitute a majority of Sony Bank’s current
portfolio. Sony Bank invests in various types of
government and corporate bonds in many
countries, companies and industries, to diver-
sify associated risks. To safeguard its assets
Sony Bank does not lend its assets to corpora-
tions or invest in equity securities.
CONTRACTUAL OBLIGATIONS, COMMITMENTS, AND CONTINGENT LIABILITIES
The following table summarizes Sony’s contractual obligations and major commitments.
Payments Due by Period
Less than
(Yen in millions) Total 1 year 1 to 3 year 3 to 5 year After 5 year
Contractual Obligations and Major Commitments:
Long-term debt (Note 11)
Capital lease obligations (Notes 8 and 11). . . . . . . . . . . . . . . . . . . . . . . . . 42,689 12,667 13,109 10,923 5,990
Other long-term debt (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,118,717 371,090 316,103 299,984 131,540
Minimum rental payments required under operating leases (Note 8) . . . . . . . 187,379 42,649 58,725 29,498 56,507
Purchase commitments for property, plant and equipment and
other assets (Note 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,796 20,331 462 3 –
Expected payments regarding contracts with recording artists and
other (Note 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,073 19,470 14,759 3,708 1,136
Expected cost for the production or purchase of films and television
programming or certain rights (Note 23). . . . . . . . . . . . . . . . . . . . . . . . . . . 95,232 39,672 55,560 – –
Commitment under the joint venture agreement with Samsung
Electronics Co., Ltd. (Note 23). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,285 96,285 – – –
*The total amount of expected future pension payments is not included in the above table or the total amount of commitments outstanding at March 31, 2004 discussed below as such amount is not currently
determinable. Sony expects to contribute approximately 23.0 billion yen to the Japanese pension plans and approximately 17.0 billion yen to the foreign pension plans for the year ending March 31, 2005 (Note 14).
The following table summarizes Sony’s contingent liabilities.
Total Amounts of
Contingent
(Yen in millions) Liabilities
Contingent Liabilities (Notes 22 and 23):
Loan guarantees to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,903
Maximum potential future unrecorded obligation associated with
a joint venture in the Pictures segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,955
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,004
Total contingent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,862