Sony 2007 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ... 4 6 2 " d e it n U y n 8 "So 28 ussion A Disc nics: ent Electro op Managem T among olders: h e r a h to S Letter ge from sa r, CEO A Mes e g n i r t dS Howar 21 25 iew n Interv nt A : s e r e Pictu anagem M p o T with in ration ess o b a l l Co sin sic Bu u M e th ss Ov Busine erview of...

  • Page 3
    ... New D e Executive O at Corpor sibility n o p s e ial R ate Soc r o p r o C 111 112 hts ion Rig it is u q c Stock A Information nd and Bo r Inf Investo n ormatio Cover page design concept: The representation of the energy created through "Sony United"-the collaboration of Sony's many businesses...

  • Page 4
    ... per share amounts and number of employees Percent change Dollars in millions* except per share amounts 2005 2006 2007 2007/2006 2007 FOR THE YEAR Sales and operating revenue ...Operating income...Income before income taxes ...Income taxes ...Equity in net income of affiliated companies ...Net...

  • Page 5
    ...Shares of sales* by business segment Shares of sales* by region 3.7% 7.5% 11.7% 2007 Electronics Game Pictures Financial Services All Other 22.9% 25.6% 2007 Japan U.S.A. Europe Other 11.7% 65.4% 24.6% 26.9% *Year ended March 31 *Percentage of sales and operating revenue to outside customers...

  • Page 6
    ... in profit and increased market share led by the great success of its Walkman ® and Cyber-shot mobile phones. Second, during calendar year 2006 our Pictures division set a number of box office records worldwide, including a record 13 No. 1 opening weekends and record total box office revenue in...

  • Page 7
    ...displaying the images on our BRAVIA televisions or digital 4K projectors for movie theaters, no company offers as many Full HD products as Sony. Complementing these products are our Blu-ray Disc players (both stand-alone and in PS3) and all of the HD content we possess in Sony Pictures Entertainment...

  • Page 8
    ... also a distinct competitive advantage and one we work hard every day to maintain. As we complete the transition from revitalization to driving long-term growth, we believe that dawn is breaking on a new day at Sony. We serve large and growing markets with an array of products and services most in...

  • Page 9
    ... of the Micro Systems Network Company. In 2004, he was promoted to Executive Deputy President and COO (in charge of the Device Business and Production Strategy). He became Electronics CEO in April 2005, and subsequently President of Sony Corporation in June, and currently serves in these two...

  • Page 10
    Where Sony's Revolution Begins

  • Page 11
    ... was introduced as an internal slogan in Sony's mid-term corporate strategy announced in September 2005. Since then, we have implemented a variety of measures aimed at "uniting" Sony, including promoting teamwork, cooperation and the marriage of key resources. In this year's special feature, we take...

  • Page 12
    ..., we make it possible to enjoy motion pictures, music, games and other entertainment content on products like LCD televisions, Blu-ray Disc players, audio players and PLAYSTATION®3 (PS3), thereby creating innovative products and services that offer new ways to excite and amuse. thereby positioning...

  • Page 13
    Sony United Electronics: A Discussion among Top Management 10

  • Page 14
    ...lineup centered on BRAVIA LCD televisions and made significant advances toward realizing the "HD World"-a world of high definition, high-resolution product networks, created by Sony. The electronics business also registered significant improvement in profitability, achieving-a year ahead of schedule...

  • Page 15
    ...series achieved firm sales in Europe, North America and Asia, while our new α™ ("Alpha") line of digital single-lens reflex (SLR) cameras made a spectacular debut. In the camcorder business, we strengthened our selection of high definition-compatible models. At the end of 2006, we realized a long...

  • Page 16
    ... digital cameras, Blu-ray Disc players and video cameras on their BRAVIA televisions. Enhancing linkage between products such as these is another way we are reinforcing the "Sony United" initiative within the group. Ryoji Chubachi President and Electronics CEO, Representative Corporate Executive...

  • Page 17
    ..., and plans are in place to launch a BRAVIA mobile phone in the future. As another example, in collaboration with the Pictures business we developed "Cinema Mode" for BRAVIA LCD televisions, suitable for movie viewing, and are actively conducting joint promotions for movies and electronics products...

  • Page 18
    ...Reinforcing Sony's software development structure by implementing strategies that cross business lines Chubachi As I mentioned at the beginning of our discussion, in 2006 we introduced a new development organization based on three development divisions and four research centers. Our objectives here...

  • Page 19
    ...personnel exchanges with research facilities and other schemes that enable employees to gain new experiences in a different workplace. Chubachi Mr. Ihara spent time at Sony Ericsson during his career at Sony, while Mr. Nakagawa spent the first half of fiscal year 2006 in the digital imaging business...

  • Page 20
    ... growth strategies going forward. Kazuo (Kaz) Hirai President and Group CEO, Sony Computer Entertainment Inc. Kaz Hirai joined CBS/Sony Inc. (currently Sony Music Entertainment Inc.) in 1984. Initially, he worked on contracts and external affairs and helped support the marketing of Japanese...

  • Page 21
    ... Sony's "HD World" products, PS3 is on display not only in the gaming section of retail stores, but also in BRAVIA LCD television sections, together with other consumer electronics products such as Cyber-shot digital cameras. • Market penetration of the Blu-ray Disc format SCE is also conducting...

  • Page 22
    ...provide even greater support to software creators and programmers. We have already organized specialized teams in Japan, North America and Europe, and plan to further expand our support to make the game development process run more smoothly. A wide variety of downloadable new game demos and trailers...

  • Page 23
    ... software As a company, what does Sony represent to you? How do you see the Sony Group developing over the next 10 years? I believe that the Game business will not only contribute to My grandfather was a great Sony fan and so there has always been an abundance of Sony products, like tape recorders...

  • Page 24
    ... CEO of Sony Pictures Entertainment Inc. (SPE) in January 2004 and currently manages SPE's overall global operations, which include motion picture, television and digital content production and distribution, worldwide television channel investments and the development of new entertainment products...

  • Page 25
    ...Death and RULES OF ENGAGEMENT . We continue to have the best game shows and soap operas in the U.S., and did a tremendous job in having a number of pilots picked up by U.S. broadcast and cable networks. The division also has a vibrant advertising sales business and is now overseeing domestic digital...

  • Page 26
    ... closely with other Sony divisions on the latest installment of the James Bond franchise. Casino Royale featured such Sony products as VAIO PCs, BRAVIA televisions and Sony Ericsson mobile phones. In addition, the Electronics division was extremely helpful in helping us market the picture around...

  • Page 27
    ...-box thinking. And we believe the people of Sony Pictures, and their passion, help us produce, Aiming to produce the best movies and television shows while delivering consistent financial results Please give us your vision of your mid- to long-term goals. market and distribute great entertainment...

  • Page 28
    .... to audition up-and-coming musical talent with the aim of developing a new song for use in a television advertisement for the W51S, a new mobile phone model developed by Sony Ericsson for KDDI CORPORATION's au-branded mobile phone service for the Japanese market. The public was invited to vote on...

  • Page 29
    ...) 966.3 Pictures 10.6% 733.7 63.9 2005 2005 745.9 27.4 2006 2006 42.7 2007 2007 2007 â- Sales â- Operating income (Yen in billions) Financial Services 7.2% 743.2 560.6 55.5 188.3 649.3 84.1 2007 2005 2005 2006 2006 2007 (Yen in billions) 2007 â- Financial Services revenue...

  • Page 30
    ...9.9 margin (%) • Revenue in the Financial Services business fell 12.6%. • Sony Life recorded a decline in revenue, mainly as a consequence of decreased valuation -12.6% -55.3% gains in its general and separate accounts from the previous fiscal year, during which the Japanese stock market rose...

  • Page 31
    ...televisions, video, audio, information and communications equipment, components, semiconductors and other products. To achieve future growth and to reinforce competitiveness and profitability, Sony is concentrating investment of its Electronics business resources in development and commercialization...

  • Page 32
    Ad from Sony Thai 29

  • Page 33
    ... single-lens reflex camera DSLR-A100 Digital HD camcorder HDR-SR1 Blu-ray Disc recorder BDZ-V9 Despite harsh competition in the market for LCD rear-projection televisions, we maintained a high market share, particularly in the United States, the leading market for these products. We will focus...

  • Page 34
    Ad from Sony Europe 31

  • Page 35
    ... lifestyles of its customers by expanding its product portfolio, particularly by introducing attractive new mid-tier models, enabled Sony Ericsson to grow its business in Europe, as well as in emerging markets in Latin America and the Asia Pacific region. Total shipments of mobile phones amounted to...

  • Page 36
    Ad from Sony Marketing (Japan) 33

  • Page 37
    ...playstation.com/ Sony's Game business centers on consumer game consoles and software offered by Sony Computer Entertainment Inc. (SCE). Following the launch of the first-generation PlayStation® (PS) in 1994, SCE developed and launched the advanced computer entertainment systems known as PlayStation...

  • Page 38
    ...®3 software titles* *Some titles are yet to be released. Gran Turismo™ HD Concept Heavenly Sword ™ Hot Shots Golf ® 5 Lair LittleBigPlanet ™ Ratchet & Clank® Future: Tools of Destruction™ SingStar® THE EYE OF JUDGMENT™ Biolith Rebellion Uncharted: Drake's Fortune™ 35

  • Page 39
    ...platform allows games and all other digital content to be enjoyed in a high definition (HD) environment. Not limited to enjoying content in various forms, users can also enjoy PS3 as a forum for self-expression and communication. Moreover, PS3 can offer new ways of enjoying entertainment through the...

  • Page 40
    ...in terms of annual shipments. Sales have remained brisk into the current fiscal year, particularly in Europe and North America, leading SCE to anticipate that PS2's life span will exceed that of the original PS. In addition to enhancing its lineup of PS2 software titles, SCE will market PS2 with new...

  • Page 41
    ... pictures, television programming, home entertainment and digital entertainment businesses. Sony Music Entertainment (Japan) Inc. (SMEJ) and SONY BMG MUSIC ENTERTAINMENT, a joint venture with Bertelsmann AG, are engaged in the music recording and distribution businesses, producing many hit songs...

  • Page 42
    ...), a busy architect who is trying to get ahead in the world, purchases a remote control that seems to not only let him control his TV, but his entire life. Soon the technologically sophisticated device is controlling Michael in ways he never imagined possible. © 2007 Sony Pictures Television Inc...

  • Page 43
    ... Untold Legends: Dark Kingdom, a game for PLAYSTATION®3 (PS3). During the fiscal year ended March 31, 2007, SPE launched its new digital distribution business with outlets including CinemaNow, GUBA, AOL and Amazon. SPE also acquired the user-generated video website Grouper in August 2006. SPE has...

  • Page 44
    ...the GRAMMY® ceremony, winning a total of five awards, including Record Of The Year, Album Of The Year and Song Of The Year, in the process of becoming the first female group in history to take home all three GRAMMY® honors. Their most recent release, Taking The Long Way has sold over three million...

  • Page 45
    ...area. The company enjoyed significant success in selling digital products relating to the mobile phone, including ringtones, ringback tones and full track mobile downloads, as well as online products such as downloads and music subscriptions. SONY BMG also continued to aggressively monetize an asset...

  • Page 46
    ... brisk sales of nursing care insurance and other new products, supported an increase in Embedded Value (EV) 2, a key indicator used to evaluate a life insurance company's corporate value. As of March 31, 2007, Sony Life's solvency margin ratio2 was 1,852.0%, indicative of its highly sound financial...

  • Page 47
    ... to the customer within three hours3 upon receiving an accident report. The cost competitiveness of Sony Assurance's direct insurance business model and the high quality of its services continue to boost the number of new policies and strengthen support from policyholders. As of March 31, 2007, the...

  • Page 48
    ... to implement measures aimed at bolstering engineer training and software quality assurance systems, including reinforcing our systems architect qualification and personnel exchange programs. In April 2007, we established the B2B Solutions Business Group in a bid to generate new opportunities...

  • Page 49
    ... 31, 2007 New Agreements Sony joined an alliance of industry-leading consumer electronics and telecommunications companies from Japan, Korea, Europe and North America in March 2007 to establish the Open IPTV 2 Forum. The organization will set a single global standard for Internet protocol television...

  • Page 50
    ...that are essential to sustaining its growth strategies- and to utilize such intellectual property rights to strengthen the competitive advantage of its businesses. Sony's intellectual property strategy is forged in close alliance with its R&D and business strategies, and all three are implemented in...

  • Page 51
    ...Under this system, the Board of Directors defines the respective areas for which each Corporate Executive Officer is responsible and delegates to them decision-making authority to manage the business, thereby promoting the prompt and efficient management of the Sony Group. Governance Structure Sony...

  • Page 52
    ... coordinates closely with the internal audit departments of major subsidiaries around the world to promote Sony Group's internal audit activities on a global basis. The Sony Corporation internal audit division makes periodic presentations and submits monthly reports to the Audit Committee. To help...

  • Page 53
    ... management of the Sony Group who oversee investor relations, accounting, legal, corporate communications, finance, internal audit and human resources, assists the CEO, the President and the CFO in the establishment and implementation of the system and also in assuring the accuracy of financial...

  • Page 54
    ..., Sumitomo Mitsui Financial Group, Inc. Member of the Board, Telefonaktiebolaget LM Ericsson Chief of Sumita Accounting Office Chairman, Toyota Motor Corporation Operating Partner, Clayton, Dubilier & Rice, Inc. Professor, Graduate School of International Corporate Strategy, Hitotsubashi University...

  • Page 55
    ... the Sony Group that encourages employees to report concerns or raise questions about possible violations of laws or internal rules. In order to promote such activities, Sony Corporation's compliance division and regional compliance divisions established in the Americas, Europe, Japan, East Asia...

  • Page 56
    ... Sony's president as well as top management from each Electronics business group and manufacturing and marketing executives, to discuss and set policies, strategies and key measures relating to product quality. In addition to the above, through our Customer Information Center, where customers report...

  • Page 57
    ... match image and background brightness. These efforts have not gone unrecognized. In February 2007, we were the first consumer electronics and entertainment company awarded the Sustainable Energy Europe Award by the European Commission. 1 2 BRAVIAâ„¢ X series LCD television (KDL-46X2500 model) Not...

  • Page 58
    ... products and business activities and the talents and efforts of employees in the service of these communities. Sony Group companies and offices and Sony-supported charitable foundations in Japan, the United States, Europe, Canada and Australia sponsor a range of educational, science, music, digital...

  • Page 59
    ...Balance Sheets Consolidated Statements of Income Consolidated Statements of Cash Flows Consolidated Statements of Changes in Stockholders' Equity Segment Information For the notes to Sony's consolidated financial statements for the fiscal year ended March 31, 2007, visit Sony's website: http://www...

  • Page 60
    ... March 31, 2007, Sony's consolidated sales and operating revenue increased approximately 10%, to a record high. Despite a substantial increase in operating income in the Electronics segment due to brisk sales of digital cameras, LCD televisions and camcorders, consolidated operating income decreased...

  • Page 61
    ... coordination in the key areas of product planning, technology, procurement, manufacturing, and sales and marketing. For Sony's growth strategy in Electronics, resources will be focused on the development and commercialization of high-definition products, mobile products and advanced semiconductors...

  • Page 62
    ...CCD and CMOS image sensor, television- and video-related, and Game-related businesses. In the area of other key devices, S-LCD Corporation ("SLCD"), Sony's joint venture with Samsung Electronics Co., Ltd. ("Samsung"), which is based in South Korea, started production of 7th generation amorphous thin...

  • Page 63
    ... televisions to LCD and plasma televisions, Sony has been implementing a worldwide plan to rationalize CRT and CRT television production facilities and has been downsizing its business over several years. As a part of this restructuring program, in the fiscal year ended March 31, 2007 Sony recorded...

  • Page 64
    ... increased from 60.2 percent to 60.3 percent in the Pictures segment. In the Electronics segment, there was an improvement in the cost of sales ratio for several products, in particular digital cameras, LCD televisions and video cameras. In the Game segment, there was a deterioration in the cost of...

  • Page 65
    ... of CRT and CRT television production equipment in the Electronics segment, as well as an asset impairment write-down associated with the sale of the Metreon, a U.S. entertainment complex, in the previous fiscal year. Research and development expenses and as a percentage of sales (Yen in billions...

  • Page 66
    ... sales of hit models such as "Walkman®" and "Cyber-shot" phones. Sony recorded equity in net income of 5.0 billion yen for SONY BMG MUSIC ENTERTAINMENT ("SONY BMG"), a decrease of 0.8 billion yen compared to the previous fiscal year. Although there was a favorable impact due to an industry-related...

  • Page 67
    ...-use video cameras. In Other Areas, sales of LCD televisions and digital cameras increased, while sales of mobile phones, primarily to Sony Ericsson, and CRT televisions decreased. The decrease in sales of mobile phones was due to the impact of the deconsolidation resulting from the transfer to Sony...

  • Page 68
    ...such products as digital cameras, LCD televisions and home-use video cameras, although the cost of sales ratio deteriorated for products such as LCD rear-projection televisions due to sales price reductions associated with severe sales competition in North America. Restructuring charges recorded in...

  • Page 69
    ..., digital cameras and LCD televisions, which experienced favorable sales, and video cameras, which experienced an increase in sales of high-value-added models, contributed to the increase in the operating income of the segment. â- Manufacturing By region, although sales decreased slightly in Japan...

  • Page 70
    ... television product primarily due to the recording 500 3.7% 4.4% 50 250 25 0 2005 2006 2007 0 â- Sales (left) â- Operating income (right) â- Operating margin *Years ended March 31 FINANCIAL SERVICES Note that the revenue and operating income at Sony Life, Sony Assurance and Sony Bank...

  • Page 71
    ... investing activities. As a result, Sony Bank recorded operating income in the fiscal year ended March 31, 2007, as compared to an operating loss in the previous fiscal year. At Sony Finance International, Inc., a leasing and credit financing business subsidiary in Japan, overall revenue decreased...

  • Page 72
    ... business; Sony Music Entertainment Inc.'s ("SMEI") music publishing business; So-net, an Internet-related service business subsidiary operating mainly in Japan; a contactless integrated circuit ("IC") card business; and an advertising agency business in Japan. In June 2006, Sony Corporation sold...

  • Page 73
    ... and asset liability management ("ALM"). To minimize the adverse effects of foreign exchange fluctuations on its financial results, particularly in the Electronics segment, Sony seeks, when appropriate, to localize material and parts procurement, design, and manufacturing operations in areas outside...

  • Page 74
    ... recorded in connection with tax loss carryforwards of foreign subsidiaries in the Game segment. Other assets in the Financial Services segment on March 31, 2007 decreased by 46.2 billion yen, or 8.4 percent, to 501.8 billion yen compared with the previous fiscal year-end. â- PLANT AND EQUIPMENT...

  • Page 75
    .... Long-term liabilities on March 31, 2007 in the Financial Services segment increased by 324.0 billion yen, or 10.6 percent, to 3,380.2 billion yen. This was due to an increase in insurance-in-force in the life insurance business which resulted in an increase in future insurance policy benefits and...

  • Page 76
    ... ...Liabilities and stockholders' equity Current liabilities ...Short-term borrowings ...Notes and accounts payable, trade ...Deposits from customers in the banking business ...Other ...Long-term liabilities ...Long-term debt ...Accrued pension and severance costs ...Future insurance policy benefits...

  • Page 77
    ...31, 2007 Cost Unrealized gain Unrealized loss Fair market value Financial Services Business: Available for sale Debt securities Sony Life ...Other ...Equity securities Sony Life ...Other ...Held to maturity Debt securities Sony Life ...Other ...Total Financial Services ...Non-Financial Services...

  • Page 78
    ... rates in Japan were increasing, Sony Life invested mainly in long-term Japanese government bonds. Sony Life concentrated its investments in convertible bonds whose prices had declined due to the issuer's falling stock price. Sony Bank operates using a similar basic investment policy as Sony Life...

  • Page 79
    ... for the production or purchase of films and television programming or certain rights (Note 23) ...Partnership program contract with Fédération Internationale de Football Association (Note 23) ...8th generation amorphous TFT LCD panel manufacturing line at joint venture, S-LCD Corporation (Note 23...

  • Page 80
    ... Sony Corporation. Through these programs, Sony can sell receivables to special purpose entities owned and operated by banks. These transactions are accounted for as a sale in accordance with Financial Accounting Standards ("FAS") No. 140, "Accounting for Transfers and Servicing of Financial Assets...

  • Page 81
    ... the Financial Services segment, as a result of an increase in policyholder accounts at Sony Life and an increase in deposits from customers at the banking business, financing activities generated 179.6 billion yen of net cash. Accounting for all these factors and the effect of exchange rate changes...

  • Page 82
    ...procure funds from the financial and capital markets. In order to meet long-term funding requirements, Sony Corporation utilizes its access to global equity and bond markets and borrowings from financial institutions. During the fiscal year ended March 31, 2007, Sony Corporation issued an 80 billion...

  • Page 83
    ... by the issuance of CP. However, Sony controls the outstanding CP amount through internal limits as part of its short-term debt risk management strategy. For general corporate purposes, including the support of CP programs and for emergency purposes, Sony has a total, translated into yen, of 689...

  • Page 84
    ... new product prototypes while the remaining approximately 38 percent were for the development of mid- to long-term new technologies in such areas as semiconductors, communications and displays. In the Game segment, research and development costs decreased NUMBER OF EMPLOYEES The number of employees...

  • Page 85
    ... greater financial, technical, and marketing resources available to them than the businesses of Sony against which they compete. The Financial Services segment faces increasing competition in Japan due to ongoing deregulation that is eliminating barriers among the insurance, banking and securities...

  • Page 86
    ...revenue to total revenue. Volatile mid- to long-term changes in exchange rate levels may interfere with Sony's global allocation of resources and hinder Sony's ability to execute procurement, production, logistics, and sales activities in a manner that is profitable after the effect of such exchange...

  • Page 87
    ... the scheduled date of November 2006 to March 2007 because of a delay in improvements in the mass production yield of the blue-violet laser diode, a key device for the Blu-ray Disc drive equipped in the PS3, which was designed, developed and manufactured internally at Sony. Also, a supply shortage...

  • Page 88
    ... effective ALM to balance possible risks and expected returns on investment assets with its financing liabilities and underwriting risks on insurance policy benefits, its ability to provide competitive products and services to customers may deteriorate and its profitability may decline. Sony Life...

  • Page 89
    ...as hard disk drive video and audio recorders, CD, DVD, and Blu-ray Disc recorders and peer-topeer digital distribution services. As a result, Sony has incurred and will continue to incur expenses to develop new services for the authorized digital distribution of music, movies and television programs...

  • Page 90
    ... is generally higher than in other parts of the world. In addition, Sony's offices and facilities, including those used for research and development, material procurement, manufacturing, motion picture and television production, logistics, sales and services are located throughout the world and...

  • Page 91
    ... recorded as cost of sales or as a selling, general and administrative expense. Refer to Note 14 of Notes to Consolidated Financial Statements for more information regarding Sony's pension and severance plans. Also refer to "Critical Accounting Policies," below. Most pension assets and liabilities...

  • Page 92
    ...different countries. Most of Sony's activities are conducted outside of Japan, including in emerging markets. International operations bring challenges. Production in China and other Asian countries of electronics products increases the time necessary to supply products to Europe and the U.S., which...

  • Page 93
    ...Sony's accounting books and records, or exercise appraisal rights through the depositary. Sony Corporation is incorporated in Japan with limited liability. A majority of our directors and corporate executive officers are non-U.S. residents, and a substantial portion of the assets of Sony Corporation...

  • Page 94
    ... price of the complex. In the fiscal year ended March 31, 2007, Sony recorded impairment charges for long-lived assets totaling 16.8 billion yen, which included 3.6 billion yen for the impairment of longlived assets of CRT TV display manufacturing facilities to be held and used in the U.S., East...

  • Page 95
    ... the benefit obligation of the Japanese pension plans, Sony used a discount rate of 2.3 percent for its Japanese pension plans as of March 31, 2007. The discount rate was determined by using currently available information about rates of return on high-quality fixed-income investments available...

  • Page 96
    ... to Note 14 of Notes to Consolidated Financial Statements for more information regarding Sony's pension and severance plans. The following table illustrates the effect of changes in the discount rate and the expected return on pension plan assets, while holding all other assumptions constant, for...

  • Page 97
    ... affect Sony's future insurance policy benefits. ACCOUNTING FOR STOCK-BASED COMPENSATION Effective April 1, 2006, Sony adopted FAS No. 123 (revised 2004), "Share-Based Payment" ("FAS No. 123(R)"). This statement requires the use of the fair value-based method of accounting for employee stock-based...

  • Page 98
    .... 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" with respect to the accounting for separately recognized servicing assets and servicing liabilities. This statement will be effective for Sony as of April 1, 2007. Sony is currently evaluating the...

  • Page 99
    ...does not require any new fair value measurements. FAS No. 157 will be effective for Sony beginning April 1, 2008. Sony is currently assessing the potential effect of FAS No. 157 on the financial statements. VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES In February 2007, the FASB issued...

  • Page 100
    ... to property, plant and equipment) ...Research and development expenses ...AT YEAR-END Net working capital ...Stockholders' equity ...Stockholders' equity per share attributable to common stock ...Total assets ...Number of shares issued at year-end (thousands of shares): Common stock ...Subsidiary...

  • Page 101
    ...-date fair value of share-based payments to employees be expensed over the period the service is received. Sony had accounted for its employee stock-based compensation in accordance with the provisions prescribed by APB No. 25 and its related interpretations and had disclosed the net effect on net...

  • Page 102
    ... expenses for intangible assets and for deferred insurance acquisition costs Notes: 1. Effective April 1, 2006, Sony adopted FAS No. 123 (revised 2004), "Share-Based Payment" ("FAS No. 123(R)"). This statement requires the use of the fair value based method of accounting for employee stock-based...

  • Page 103
    Segment Information Sony Corporation and Consolidated Subsidiaries-Years ended March 31 SALES AND OPERATING REVENUE BY BUSINESS SEGMENT* Yen in millions Years ended March 31 2005 2006 2007 Electronics ...Game ...Pictures ...Financial Services ...All Other ...Consolidated total ...**Sales and ...

  • Page 104
    SALES AND OPERATING REVENUE BY GEOGRAPHIC INFORMATION Yen in millions Years ended March 31 2005 2006 2007 Japan ...U.S.A...Europe ...Other ...Total ... ¥2,132,462 29.7.% 1,...Classification of geographic segment information shows sales and operating revenue recognized by location of customers. 101

  • Page 105
    ... 2006 2007 ASSETS Current assets: Cash and cash equivalents ...Marketable securities ...Notes and accounts receivable, trade ...Allowance for doubtful accounts and sales returns ...Inventories ...Deferred income taxes ...Prepaid expenses and other current assets ...Total current assets ...Film...

  • Page 106
    ...AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings ...Current portion of long-term debt ...Notes and accounts payable, trade ...Accounts payable, other and accrued expenses ...Accrued income and other taxes ...Deposits from customers in the banking business ...Other ...Total current...

  • Page 107
    ...Loss on devaluation of securities investments ...Foreign exchange loss, net ...Other ...Income before income taxes ...Income taxes: Current ...Deferred ...Income before minority interest, equity in net income of affiliated companies and cumulative effect of an accounting change ...Minority interest...

  • Page 108
    Yen 2005 2006 2007 Per share data: Common stock Income before cumulative effect of an accounting change -Basic ...-Diluted ...Cumulative effect of an accounting change -Basic ...-Diluted ...Net income -Basic ...-Diluted ...Cash dividends ...Subsidiary tracking stock Net income -Basic ... ¥180.96. ...

  • Page 109
    ... taxes ...Increase in future insurance policy benefits and other ...Increase in deferred insurance acquisition costs ...(Increase) decrease in marketable securities held in the financial service business for trading purpose ...Increase in other current assets ...Increase in other current liabilities...

  • Page 110
    ... of long-term debt ...Payments of long-term debt ...Increase (decrease) in short-term borrowings ...Increase in deposits from customers in the financial service business ...Increase (decrease) in call money and bills sold in the banking business ...Dividends paid ...Proceeds from issuance of shares...

  • Page 111
    ... Statements of Changes in Stockholders' Equity Sony Corporation and Consolidated Subsidiaries-Years ended March 31 Yen in millions Subsidiary tracking stock Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock, at cost Total...

  • Page 112
    ...Exercise of stock acquisition rights ...Conversion of convertible bonds ...Stock-based compensation ...Comprehensive income: Net income ...Cumulative effect of an accounting change, net of tax ...Other comprehensive income, net of tax- Unrealized gains on securities: Unrealized holding gains (losses...

  • Page 113
    ... of daily closing prices for each day of every month at the Tokyo Stock Exchange. Years ended March 31 2003 2004 2005 2006 2007 Stock price ( Yen) At year-end ...High ...Low ...Annual increase/decrease ...Number of shares outstanding at year-end (Thousands of shares) ...Market capitalization...

  • Page 114
    ...Bonds with Stock Acquisition Rights (total amount of issue being 250 billion yen) were issued in overseas markets mainly in Europe in order to raise funds for the development of and equipment expenditures for the next-generation semiconductors and key devices in Sony Group. 2. The issue price of the...

  • Page 115
    ... Trust Bank Limited and Banking Corporation Corporate Agency Department 10-11, Higashisuna 7-chome, Koto-ku, Tokyo 137-8081, Japan Phone: 81-(0)3-3212-1211 OVERSEAS STOCK EXCHANGE LISTINGS New York and London stock exchanges JAPANESE STOCK EXCHANGE LISTINGS Tokyo and Osaka stock exchanges NUMBER OF...

  • Page 116
    ...which are offered in highly competitive markets characterized by continual new product introductions, rapid development in technology and subjective and changing consumer preferences (particularly in the Electronics, Game and Pictures segments, and the music business); (iv) Sony's ability and timing...

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