Sony 2006 Annual Report Download - page 65

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63
The following table contains available for sale and held to maturity securities, breaking out the unrealized gains and losses by
investment category:
Yen in millions
Unrealized Unrealized Fair market
March 31, 2006 Cost gain loss value
Financial Services Business:
Available for sale
Debt securities
Sony Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,062,410 10,702 (15,122) 2,057,990
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
453,926 6,285 (7,561) 452,650
Equity securities
Sony Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
155,878 112,230 (1,137) 266,971
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,323 4,176 (33) 13,466
Held to maturity
Debt securities
Sony Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
————
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,189 132 (221) 33,100
Total Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,714,726 133,525 (24,074) 2,824,177
Non-Financial Services:
Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68,406 55,549 (546) 123,409
Held to maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4—— 4
Total Non-Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68,410 55,549 (546) 123,413
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,783,136 189,074 (24,620) 2,947,590
In evaluating the factors for available-for-sale securities with
readily determinable fair values, management presumes a
decline in value to be other-than-temporary if the fair value of the
security is 20% or more below its original cost for an extended
period of time (generally a period of up to six to twelve months).
The presumption of an other-than-temporary impairment in such
cases may be overcome if there is evidence to support that the
decline is temporary in nature due to the existence of other
factors which overcome the duration or magnitude of the
decline. On the other hand, there may be cases where
impairment losses are recognized when the decline in the fair
value of the security is not more than 20% or such decline has
not existed for an extended period of time, as a result of
considering specific factors which may indicate the decline in
the fair value is other-than-temporary.
The assessment of whether a decline in the value of an
investment is other-than-temporary is often judgmental in nature
and involves certain assumptions and estimates concerning the
expected operating results, business plans and future cash
flows of the issuer of the security. Accordingly, it is possible that
investments in Sony’s portfolio that have had a decline in value
that Sony currently believes to be temporary may be determined
to be other-than-temporary in the future based on Sony’s
evaluation of additional information such as continued poor
operating results, future broad declines in value of worldwide
equity markets and the effect of world wide interest rate
fluctuations. As a result, unrealized losses recorded for
investments may be recognized into income in future periods.
The most significant portion of these unrealized losses relate
to investments held by Sony Life. Sony Life principally invests in
debt securities in various industries. Most securities were rated
“BBB” or better by Standard & Poor’s, Moody’s or others. As of
March 31, 2006, Sony Life had debt and equity securities which
had gross unrealized losses of ¥15.1 billion and ¥1.1 billion,
respectively. Of the unrealized loss amounts recorded by Sony
Life, less than 1% relate to securities being in an unrealized loss
position of greater than 12 months. These unrealized losses
related to numerous investments, with no single investment
being in a material unrealized loss position. In addition, there
was no individual security with unrealized losses that met the
test discussed above for impairment as the declines in value
were observed to be small both in amounts and percentage,
and therefore, the decline in value for those investments was still
determined to be temporary in nature.