Sony 2015 Annual Report Download - page 120

In general, a U.S. holder will recognize capital gain or loss upon the sale or other disposition of ADSs or
Common Stock of Sony Corporation equal to the difference between the amount realized on the sale or
disposition and the U.S. holder’s tax basis in the ADSs or Common Stock. Such capital gain or loss will be long-
term capital gain or loss if the ADSs or Common Stock have been held for more than one year on the date of the
sale or disposition. The net amount of long-term capital gain recognized by an individual holder is subject to
lower rates of federal income taxation than ordinary income or short-term capital gain rates.
Under the Code, a U.S. holder of ADSs or Common Stock of Sony Corporation may be subject, under
certain circumstances, to information reporting and possibly backup withholding with respect to dividends and
proceeds from the sale or other disposition of ADSs or Common Stock, unless the U.S. holder provides proof of
an applicable exemption or correct taxpayer identification number and otherwise complies with applicable
requirements of the backup withholding rules. Any amount withheld under the backup withholding rules is not an
additional tax and may be refunded or credited against the U.S. holder’s federal income tax liability, so long as
the required information is furnished to the U.S. Internal Revenue Service.
F. Dividends and Paying Agent
Not Applicable
G. Statement by Experts
Not Applicable
H. Documents on Display
It is possible to read and copy documents referred to in this annual report on Form 20-F that have been filed
with the SEC at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges.
You can also access the documents at the SEC’s home page (http://www.sec.gov/index.html).
I. Subsidiary Information
Not Applicable
Item 11. Quantitative and Qualitative Disclosures about Market Risk
Sony’s business is continuously exposed to market fluctuation, such as fluctuations in currency exchange
rates, interest rates or stock prices. Sony utilizes several derivative instruments, such as foreign exchange forward
contracts, foreign currency option contracts, interest rate swap agreements and currency swap agreements in
order to hedge the potential downside risk on the cash flow from the normal course of business caused by market
fluctuation. Sony uses foreign exchange forward contracts and foreign currency option contracts primarily to
reduce the foreign exchange volatility risk that accounts receivable or accounts payable denominated in yen,
U.S. dollars, euros or other currencies have through the normal course of Sony’s worldwide business. Interest
rate swap agreements and currency swap agreements are utilized to diversify funding conditions or to reduce
funding costs, and in the Financial Services segment, these transactions are used for asset liability management.
Sony uses these derivative financial instruments mainly for risk-hedging purposes as described above, and some
derivative transactions, such as bond futures and bond options, are held or utilized for trading purposes in the
Financial Services segment. If hedge accounting cannot be applied because the accounts receivable or accounts
payable to be hedged are not yet booked, or because cash flows from derivative transactions do not coincide with
the underlying exposures recorded on Sony’s balance sheet, such derivatives agreements are subject to a mark-to-
market evaluation and their unrealized gains or losses are recognized in earnings. In addition, Sony holds
marketable securities, such as straight bonds and stocks in yen or other currencies, in the Financial Services
segment to obtain interest income or capital gain on the financial assets under management. These securities
include a concentration of investments in long-term Japanese national government bonds, for which Sony
monitors the related credit ratings and other market information on an ongoing basis. Investments in marketable
securities are also subject to market fluctuation.
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