Sony 2006 Annual Report Download - page 124

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122
A summary of SARs outstanding and exercisable at March 31, 2006 is as follows:
Outstanding and exercisable
Weighted- Weighted-
Number of average average
Exercise price range shares exercise price remaining life
Yen Yen Dollars Years
¥ 4,345– 7,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39,650 ¥ 5,819 $ 49.74.5.91.
7,001–10,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,525 9,143 78.15.1.73.
10,001–14,440 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,325 12,260 104.79.4.19.
¥ 4,345–14,440 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
186,500 ¥ 9,211 $ 78.73.3.23.
In accordance with APB No. 25 and its related interpretations,
the SARs compensation expense is measured as the excess of the
quoted market price of Sony Corporation’s common stock over the
SARs strike price, which is consistent with the accounting treatment
prescribed for SAR plans in FAS No. 123. For the fiscal year ended
March 31, 2004, Sony recognized ¥105 million of SARs compen-
sation expense. For the fiscal year ended March 31, 2005, Sony
recognized a reduction in SARs compensation expense of ¥74
million. For the fiscal year ended March 31, 2006, Sony recognized
¥70 million ($1 million) of SARs compensation expense.
18. Restructuring charges and asset impairments
As part of its effort to improve the performance of the various
businesses, Sony has undertaken a number of restructuring initia-
tives within its Electronics segment, Pictures segment and All
Other. For the fiscal years ended March 31, 2004, 2005 and 2006,
Sony recorded total restructuring charges of ¥168,091 million,
¥89,963 million and ¥138,692 million ($1,185 million), respectively.
Significant restructuring charges and asset impairments include
the following:
Electronics Segment
In an effort to improve the performance of the Electronics segment,
Sony has undergone a number of restructuring efforts to reduce its
operating costs. For the fiscal years ended March 31, 2004, 2005
and 2006, Sony recorded total restructuring charges of ¥143,589
million, ¥83,227 million and ¥125,802 million ($1,075 million),
respectively, within the Electronics segment. In addition to the
above charges, the Electronics segment also reflects restructuring
costs of ¥2,122 million for the fiscal year ended March 31, 2004,
that relate to the non-Japan based disc manufacturing and physi-
cal distribution businesses that were part of the restructuring
charges of the Music business which is discussed below. These
restructuring charges were formerly included within the Music
segment but were reclassified to the Electronics segment. See
Note 25 for more information on this reclassification. Significant
restructuring activities are as follows:
Downsizing of CRT TV display operations
Due to the worldwide market shrinkage and demand shift
from CRT displays to plasma and LCD panel displays, Sony
has begun to implement a worldwide plan to rationalize
production facilities of CRT TV display and has been
downsizing its business over several years.
As part of its worldwide plan, Sony made a decision in the
fiscal year ended March 31, 2004 to discontinue certain CRT
TV display manufacturing operations in Japan. Restructuring
charges totaling ¥8,478 million consisted of personnel related
costs of ¥3,139 million and non-cash equipment impairment,
disposal and other costs of ¥5,339 million. Of the total
restructuring charges, ¥158 million was recorded in cost of
sales, ¥3,139 million was included in selling, general and
administrative expenses, and ¥5,181 million was included
in loss on sale, disposal or impairment of assets, net in the
consolidated statements of income. This phase of the
restructuring program was completed in the fiscal year ended
March 31, 2004 and no liability existed as of March 31, 2006.
In the fiscal year ended March 31, 2005, as part of this
restructuring program, Sony recorded a non-cash impairment
charge of ¥7,479 million for CRT TV display manufacturing
facilities located in Europe. The impairment charge was
calculated as the difference between the carrying value of the
asset group and the present value of estimated future cash
flows. The charge was recorded in loss on sale, disposal or
impairment of assets, net in the consolidated statements of
income. This phase of the restructuring program was com-
pleted in the fiscal year ended March 31, 2005 and no liability
existed as of March 31, 2006.
In the fiscal year ended March 31, 2006, Sony made a
decision to discontinue certain CRT TV display manufacturing
operations in the U.S. Restructuring charges totaling ¥32,488
million ($278 million) consisted of personnel related costs of
¥1,962 million ($17 million) and non-cash equipment impair-
ment, disposal and other costs of ¥30,526 million ($261
million). Of the total restructuring charges, ¥6,982 million ($60
million) was recorded in cost of sales, and ¥25,506 million