Sony 2008 Annual Report Download - page 74

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72
Bank, on the other hand, uses its cash inflows, which come
mainly from customers’ deposits in local or foreign currencies,
in order to offer mortgage loans to individuals or to make bond
investments, and establish a necessary level of liquidity for the
smooth settlement of transactions.
Sony Life currently obtains ratings from five rating agencies:
A+ by S&P for insurer financial strength rating, Aa3 by Moody’s
for insurance financial strength rating, A+ by AM Best Company
Inc. for financial strength rating, AA by R&I for insurance claims
paying ability and AA by the Japan Credit Rating Agency Ltd.
for ability to pay insurance claims. Sony Bank obtained an A-
rating from S&P for its long-term local/foreign currency issuer
ratings and an A-2 rating from S&P for its short-term local/
foreign currency issuer rating.
RESEARCH AND DEVELOPMENT
It is necessary for Sony to continue technological innovation in
order to maintain group-wide growth. Sony believes that tech-
nology made possible by our research and development activi-
ties is key to the differentiation of products in existing businesses
and the source of creating value in new businesses.
Research and development is focused in four key domains:
a common development platform technology for home and
mobile electronics, and semiconductor, device, and software
technologies which are essential for product differentiation and
for creating value-added products.
Research and development costs for the fiscal year ended
March 31, 2008 decreased 23.4 billion yen, or 4.3 percent, to
520.6 billion yen, compared with the previous fiscal year. The
ratio of research and development costs to sales (which
excludes Financial Services segment revenue) decreased
from 7.1 percent to 6.3 percent. The bulk of research and
development costs were incurred in the Electronics and Game
segments. Expenses in the Electronics segment decreased
1.6 billion yen, or 0.4 percent, to 438.7 billion yen and
expenses in the Game segment decreased 20.8 billion yen, or
21.2 percent, to 77.1 billion yen. In the Electronics segment,
approximately 65 percent of expenses were for the develop-
ment of new product prototypes while the remaining 35 per-
cent were for the development of mid- to long-term new
technologies in such areas as semiconductors, communica-
tions and displays. In the Game segment, research and devel-
opment costs decreased mainly due to the decline in costs
related to PS3. Consolidated research and development costs
for the fiscal year ending March 31, 2009 are expected to
increase by 4 percent to 540 billion yen.
DIVIDEND POLICY
Sony believes that continuously increasing corporate value
and providing dividends are essential to rewarding shareholders.
It is Sony’s policy to utilize retained earnings, after ensuring
the perpetuation of stable dividends, to carry out various
investments that contribute to an increase in corporate value
such as those that ensure future growth and strengthen
competitiveness.
A fiscal year-end cash dividend of 12.5 yen per share of
Sony Corporation Common Stock was approved at the Board
of Directors meeting held on May 14, 2008 and was paid on
June 2, 2008. Sony Corporation has already paid an interim
dividend for Common Stock of 12.5 yen per share to each
shareholder; accordingly, the total annual cash dividend per
share of Common Stock is 25.0 yen.
In regards to the annual dividend for the fiscal year ending
March 31, 2009, upon careful consideration of Sony’s results in
that fiscal year and other factors, Sony Corporation plans to
increase its regular dividend per share by 15 yen to 40 yen per
annum. Sony Corporation also plans to distribute a special cash
dividend of 10 yen per share as part of the interim dividend,
which would be paid in December 2008. This special dividend
would reward our shareholders for the successful global initial
public offering of shares of SFH and be in appreciation of their
support during the implementation of our three-year restructuring
program and other corporate initiatives which resulted in record
consolidated net income during the fiscal year ended March 31,
2008. As a result, Sony Corporation plans to pay a total annual
dividend for the fiscal year ending March 31, 2009 of 50 yen per
share, comprising an interim dividend of 30 yen per share and a
year-end dividend of 20 yen per share.
EMPLOYEES
As of March 31, 2008, Sony had approximately 180,500
employees, an increase of approximately 17,500 employees
from March 31, 2007. The total number of employees increased
as a result of a significant increase of employees at manufactur-
ing sites in East Asia and East Europe with an expansion of
business in the Electronics segment.
RISK FACTORS
This section contains forward-looking statements that are
subject to the Cautionary Statement appearing on the inside
back cover page of this annual report. Risks to Sony are also