Sony 2015 Annual Report Download - page 214

SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
As described in Note 5, on June 29, 2012, an investor group which included a wholly-owned subsidiary of
Sony Corporation completed its acquisition of EMI Music Publishing. To effect the acquisition, the investor
group formed DH Publishing, L.P. (“DHP”) which acquired EMI Music Publishing. In addition, DHP entered
into an agreement with Sony’s U.S.-based music publishing subsidiary in which the subsidiary provides
administration services to DHP (the “Administration Agreement”). DHP was determined to be a VIE as many of
the decision making rights for the entity do not reside within the entity’s equity interests, but rather are embedded
in the Administration Agreement. Under the terms of the Administration Agreement, the largest non-Sony
shareholder has approval rights over decisions regarding the activities that most significantly impact DHP,
including the acquisition and retention of copyrights and the licensing of songs. These approval rights result in
Sony and the largest non-Sony shareholder sharing the power to direct the activities of DHP, and as such, Sony is
not the primary beneficiary of the VIE. At March 31, 2016, the only amounts recorded on Sony’s consolidated
balance sheet that relate to the VIE are Sony’s net investment of 187.9 million U.S. dollars and a net receivable
balance of 1.3 million U.S. dollars. Sony’s maximum exposure to losses as of March 31, 2016 is the aggregate
amount recorded on its balance sheet of 189 million U.S. dollars.
Sony’s subsidiary in the Pictures segment entered into a distribution agreement with and made an
investment in a production company that will develop, produce and finance feature-length motion pictures and
television programming. The investment is accounted for under the cost method. The production company is a
VIE as many of the decision making rights for the entity reside within the equity interests held by the
management of the production company which are not at risk of economic loss. Based on a qualitative
assessment, it was determined that Sony is not the primary beneficiary as Sony does not have the power to direct
the activities of the production company. Sony’s maximum exposure to losses as of March 31, 2016 is the
amount of investment and the future funding commitments, which total 50 million U.S. dollars.
As described in Note 6, certain accounts receivable sales programs also involve VIEs. These VIEs are all
special purpose entities associated with the sponsor banks. Based on a qualitative assessment, Sony is not the
primary beneficiary and therefore does not consolidate these entities as Sony does not have the power to direct
the activities, an obligation to absorb losses, or the right to receive the residual returns of these VIEs. Sony’s
maximum exposure to losses from these VIEs is considered insignificant.
24. Acquisitions
(1) Game Show Network acquisition
In December 2012, the other investor in Game Show Network (“GSN”) exercised its put right and Sony
acquired an 18% equity interest for 234 million U.S. dollars, bringing Sony’s total equity interest to 58%. For the
18% interest, Sony made a payment of 117 million U.S. dollars plus interest of 4 million U.S. dollars on April 2,
2013 and a second payment of 117 million U.S. dollars plus interest of 12 million U.S. dollars on December 13,
2013. Beginning on April 1, 2015, a buy/sell provision also applies to the equity interests in GSN owned by Sony
and the other investor and may be exercised from April 1 of each year for a 60 business day window.
(2) Sony Semiconductor acquisitions
On March 31, 2014, Sony Semiconductor Corporation (“SCK”), a wholly-owned subsidiary of Sony,
acquired from Renesas Electronics Corporation (“Renesas”) semiconductor fabrication equipment and certain
related assets (“Renesas Transferred Assets”) for 7,510 million yen. SCK is utilizing the Renesas Transferred
Assets to establish a new technology center and further strengthen its production capacity for CMOS image
sensors. The purchase price was allocated and recorded primarily to machinery and equipment. SCK also entered
into a supply arrangement with Renesas to manufacture and supply system LSIs for a certain period following the
acquisition. In connection with this, SCK also acquired related inventories from Renesas.
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