Sony 2015 Annual Report Download - page 13

Moreover, since Sony’s consolidated balance sheet is prepared by translating the local currency
denominated assets and liabilities of its subsidiaries around the world into yen, Sony’s equity capital may be
adversely impacted when the yen strengthens significantly against the U.S. dollar, the euro and/or other foreign
currencies.
Ratings downgrades or significant volatility and disruption in the global financial markets may adversely
affect the availability and cost of Sony’s funding.
Sony’s credit ratings may be adversely impacted by unfavorable operating results and a decline in its
financial condition. Any credit rating downgrades may, in turn, result in an increase in Sony’s cost of funding
and may have an adverse impact on Sony’s ability to access commercial paper or mid- to long-term debt markets
on acceptable terms.
Additionally, global financial markets may experience significant levels of volatility and disruption,
generally putting downward pressure on financial and other asset prices and impacting credit availability.
Historically, Sony’s primary sources of funds have been cash flows from operations, the issuance of commercial
paper and other debt securities such as term debt as well as borrowings from banks and other institutional
lenders. There can be no assurance that such sources will continue to be available at acceptable terms or be
sufficient to meet Sony’s needs.
As a result, Sony may seek other sources of financing to fund operations, such as the draw-down of funds from
contractually committed lines of credit from financial institutions or the sale of assets, in order to repay commercial
paper and mid- to long-term debt as they become due, and to meet other operational and liquidity needs. However,
such funding sources may also not be available at acceptable terms or be sufficient to meet Sony’s requirements.
This, in turn, could have an adverse impact on Sony’s operating results, financial condition and liquidity.
Sony is subject to the risks of operations in different countries.
Sony’s operations are conducted in many countries around the world, and these international operations can
create challenges. For example, in Sony’s electronics businesses, production and procurement of products, parts
and components in China and other Asian countries increase the time necessary to supply products to other
markets worldwide, which can make it more difficult to meet changing customer demand. Further, in certain
countries, Sony may encounter difficulty in planning and managing operations due to unfavorable political or
economic factors, such as armed conflicts, deterioration in foreign relations, domestic cultural and religious
conflicts, non-compliance with expected business conduct, local regulations, trade policies and taxation laws and
a lack of adequate infrastructure. Moreover, changes in local regulations, trade policies and taxation laws, such as
local content regulations, business or investment permit approval requirements, foreign exchange controls,
import or export controls, or the nationalization of assets or restrictions on the repatriation of income from
foreign operations and investments in major markets and regions may affect Sony’s operating results. For
example, a labor dispute or a change in labor regulations or policies may significantly change local labor
environments. Such a condition in China or another country in which Sony or a partner manufactures could cause
interruptions in production and shipping of Sony’s products and parts, a sharp rise in local labor costs, or a
shortage of well-trained employees, which may adversely affect Sony’s operating results. If international or
domestic political and military instability disrupts Sony’s business operations or those of its business partners, or
depresses consumer confidence, Sony’s operating results and financial condition may be adversely affected. In
addition, the time required to recover from disruptions, whether caused by these factors or other causes, such as
natural disasters or pandemics, may be greater in certain countries. Moreover, Sony’s susceptibility to the above-
mentioned risks may be greater in certain emerging markets that continue to be important to its operations, and
this may have an adverse impact on its operating results and financial condition.
Sony’s success depends on the ability to recruit and retain skilled technical employees and management
professionals.
In order to successfully continue to develop, design, manufacture, market, and sell products and services,
including networked products, game hardware and software, film, television and music content as well as
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