Sony 2007 Annual Report Download - page 65

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62
OTHER INCOME AND EXPENSES
For the fiscal year ended March 31, 2007, other income
decreased by 23.3 billion yen, or 19.6 percent, to 95.2 billion
yen, while other expenses increased by 6.4 billion yen, or
10.9 percent, to 64.9 billion yen, compared with the previous
fiscal year. The net amount of other income and other expenses
was net other income of 30.3 billion yen, a decrease of
29.6 billion yen, compared with the previous fiscal year.
The gain on change in interest in subsidiaries and equity
investees decreased by 29.3 billion yen, or 48.2 percent
compared to the previous fiscal year, to 31.5 billion yen.
During the fiscal year ended March 31, 2007, there was a
gain recorded on the sale of a portion of the stock held in
StylingLife Holdings Inc. (“StylingLife”). However, the total gain
on change in ownership interests declined as Sony recorded a
gain on change in interest of 60.8 billion yen in the previous
fiscal year resulting from the initial public offering of So-net
Entertainment Corporation (“So-net”), and the sale of a portion
of the stock held in both Monex Beans Holdings, Inc., and
So-net M3 Inc., a consolidated subsidiary of So-net.
Interest and dividends in other income of 28.2 billion yen was
recorded in the fiscal year ended March 31, 2007, an increase
of 3.3 billion yen, or 13.2 percent, compared with the previous
year. For the fiscal year ended March 31, 2007, interest expense
totaling 27.3 billion yen was recorded, a decrease of 1.7 billion
yen, or 5.9 percent, compared with the previous year.
In addition, a net foreign exchange loss of 18.8 billion yen
was recorded in the fiscal year ended March 31, 2007, an
increase of 15.8 billon yen from the previous fiscal year. The net
foreign exchange loss was recorded because the value of the
yen, especially during the second through fourth quarters of
the fiscal year ended March 31, 2007, was lower than the value
of the yen at the time that Sony entered into foreign exchange
forward contracts and foreign currency option contracts. These
contracts are entered into by Sony to mitigate the foreign
exchange rate risk to cash flows that arises from settlements
of foreign currency denominated accounts receivable and
accounts payable, as well as foreign currency denominated
transactions between consolidated subsidiaries.
INCOME BEFORE INCOME TAXES
Income before income taxes for the fiscal year ended March 31,
2007 decreased 184.3 billion yen, or 64.4 percent, to 102.0
billion yen compared with the previous fiscal year, as a result of
the decrease in operating income and the decrease in the net
amount of other income and other expenses mentioned above.
the previous fiscal year. In addition, advertising and publicity
expenses for the fiscal year increased by 86.0 billion yen
compared with the previous fiscal year primarily due to increased
advertising and publicity expenses within the Pictures segment.
Loss on sale, disposal or impairment of assets, net was
5.8 billion yen, compared with 73.9 billion yen in the previous
fiscal year. This decrease was mainly due to losses on the sale,
disposal and impairment 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.
OPERATING INCOME
Operating income for the fiscal year ended March 31, 2007
decreased by 154.7 billion yen, or 68.3 percent, to 71.8 billion
yen compared with the previous fiscal year. The operating
income margin decreased from 3.0 percent to 0.9 percent. In
descending order by amount of financial impact, the Electronics
segment, Financial Services segment, the Pictures segment and
All Other contributed to operating income. On the other hand,
an operating loss was recorded within the Game segment
primarily due to a loss arising from the sale of the PS3 at
strategic price points lower than its production cost during the
introductory period, as well as the recording of other charges in
association with preparation for the launch of the PS3 platform.
For a further breakdown of operating income (loss) for each
segment, please refer to “Operating Performance by Business
Segment” below.
8
6
4
2
0
600
450
300
150
02005 2006 2007
7.5% 7.8%
7.1%
Research and development
expenses and as a percentage
of sales
■Research and development
expenses
●Percentage of sales
*Years ended March 31
*Excluding the Financial
Services segment
(Yen in billions) (%)
Cost of sales and selling, general
and administrative (SGA) expenses
as a percentage of sales
● Cost of sales/sales
● SGA/sales
*Years ended March 31
*Excluding the Financial
Services segment
(%)
80
60
40
20
02005 2006 2007
75.1%
23.1%
75.9%
22.5%
76.8%
23.3%