Sony 2005 Annual Report Download - page 126

Sony Corporation 123
Sony Corporation and certain of its subsidiaries are defen-
dants in several pending lawsuits. However, based upon the
information currently available to both Sony and its legal
counsel, management of Sony believes that damages from such
lawsuits, if any, would not have a material effect on Sony’s
consolidated financial statements.
The changes in product warranty liability for the years ended
March 31, 2004 and 2005 are as follows:
Dollars in
Yen in millions millions
Years ended March 31 2004 2005 2005
Balance at beginning of the fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 51,892 ¥ 50,670 $ 474
Provision for warranty reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,569 33,493 313
Settlements (in cash or in kind) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,971) (40,358) (377)
Changes in estimate for pre-existing warranty reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,970) (751) (7)
Translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,850) 1,865 17
Balance at end of the fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 50,670 ¥ 44,919 $ 420
25. Business segment information
Effective for the year ended March 31, 2005, Sony has partly
changed its business segment configuration as described below.
As of August 1, 2004, Sony and Bertelsmann AG combined
their recorded music businesses in a joint venture. In connection
with the establishment of this joint venture, the non-Japan
based disc manufacturing and physical distribution businesses,
formerly included within the Music segment, have been reclassi-
fied to the “Other” category in the Electronics segment. Results
for the year ended March 31, 2003 and 2004 in the Electronics
and Music segments have been restated to conform to the
presentation for the year ended March 31, 2005.
In July 2004, in order to establish a more efficient and coordi-
nated semiconductor supply structure, the Sony group has
integrated its semiconductor manufacturing business by trans-
ferring SCE’s semiconductor manufacturing operation from the
Game segment to the Electronics segment. As a result of this
transfer, sales revenue and expenditures associated with this
operation are now recorded within the “Semiconductor” cat-
egory in the Electronics segment. The results for the year ended
March 31, 2003 and 2004 have not been restated as such
comparable figures cannot be practically obtained given that it
was not operated as a separate line business within the Game
segment. This integration of the semiconductor manufacturing
businesses is a part of Sony’s semiconductor strategy of utilizing
semiconductor technologies and manufacturing equipment
originally developed or designed for the Game segment within
the Sony group as a whole.
The Electronics segment designs, develops, manufactures
and distributes audio-visual, informational and communicative
equipment, instruments and devices throughout the world. The
Game segment designs, develops and sells PlayStation,
PlayStation 2 and PlayStation Portable game consoles and
related software mainly in Japan, the United States of America
and Europe, and licenses to third party software developers. The
Music segment is mainly engaged in the development, produc-
tion, manufacture, and distribution of recorded music, in all
commercial formats and musical genres. As discussed above,
due to the establishment of the joint venture with Bertelsmann
AG, the results for the year ended March 31, 2005 only include
the results of Sony Music Entertainment Inc.’s (“SMEI”) recorded
music business for the months of April through July 2004 and
the results of SMEI’s music publishing business and SMEJ for
the full fiscal year. Results for the year ended March 31, 2003
and 2004 in the Music segment include the consolidated results
of SMEI’s recorded music business for the full fiscal year, as well
as the results of SMEI’s publishing business and SMEJ for the
full fiscal year. The Pictures segment develops, produces and
manufactures image-based software, including film, video, and
television mainly in the United States of America, and markets,
distributes and broadcasts in the worldwide market. The Finan-
cial Services segment represents primarily individual life insur-
ance and non-life insurance businesses in the Japanese market,
leasing and credit financing businesses and bank business in
Japan. The Other segment consists of various operating activi-
ties, primarily including a business focused on network service
business including Internet-related services, an animation pro-
duction and marketing business, an imported general merchan-
dise retail business, an IC card business, and an advertising
agency business in Japan. Sony’s products and services are
generally unique to a single operating segment.
The operating segments reported below are the segments of
Sony for which separate financial information is available and for
which operating profit or loss amounts are evaluated regularly by
executive management in deciding how to allocate resources
and in assessing performance.
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