Sony 2015 Annual Report Download - page 23

requires significant judgment, could result in impairment charges against these assets. Goodwill and indefinite
lived intangible assets are tested annually for impairment during the fourth quarter of the fiscal year and between
annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value
below the carrying amount. Such an event or change in circumstances would include unfavorable variances from
or adjustments to established business plans, significant changes in forecasted results or volatility inherent to
external markets and industries. The increased levels of global competition and the faster pace of technological
change to which Sony is exposed can result in greater volatility of these estimates, assumptions and judgments,
and increase the likelihood of impairment charges. In addition, the recoverability of the carrying value of long-
lived assets held and used and long-lived assets to be disposed of is reviewed whenever events or changes in
circumstances, including the types of events or changes described above with respect to goodwill and intangible
assets, indicate that the carrying value of the assets or asset groups may not be recoverable. If the carrying value
of the asset or asset group is considered impaired, an impairment charge is recorded for the amount by which the
carrying value of the asset or asset group exceeds its fair value. For example, in the fiscal year ended March 31,
2014, Sony recorded impairment charges including a 32.1 billion yen impairment charge related to long-lived
assets in the battery business in the Devices segment, a 25.6 billion yen impairment charge related to long-lived
assets in the disc manufacturing business outside of Japan and the U.S. and goodwill across the entire disc
manufacturing business in All Other, and a 12.8 billion yen impairment charge related to long-lived assets in the
PC business in All Other. In the fiscal year ended March 31, 2015, Sony recorded a 176.0 billion yen impairment
charge related to goodwill in the Mobile Communications segment. In the fiscal year ended March 31, 2016,
Sony recorded impairment charges in the Devices segment related to long-lived assets in the battery business and
in the camera module business of 30.6 billion yen and 59.6 billion yen, respectively. Any such charge may
adversely affect Sony’s operating results and financial condition.
Sony may be accused of infringing others’ intellectual property rights and be liable for significant damages.
Sony’s products incorporate a wide variety of technologies. Claims have been and may be asserted against
Sony that such technology infringes the intellectual property owned by others. Such claims may be asserted by
competitors to protect their products and services and/or as a business strategy to seek a competitive advantage,
or by other patent holders, particularly as markets become more competitive, and products evolve to include new
technologies and enhanced functionality that incorporate an increasing amount of intellectual property. Such
claims might require Sony to enter into settlement or license agreements, to pay significant damage awards, and/
or to face a temporary or permanent injunction prohibiting Sony from marketing or selling certain of its products,
which may have an adverse effect on Sony’s reputation, operating results and financial condition.
Sony may not be able to continue to obtain necessary licenses for certain intellectual property rights of others
or protect and enforce the intellectual property rights on which its business depends.
Many of Sony’s products are designed under the license of patents and other intellectual property rights
owned by third parties. Based upon past experience and industry practice, Sony believes that it will be able to
obtain or renew licenses relating to various intellectual properties useful in its business that it needs in the future;
however, such licenses may not be available at all or on acceptable terms, and Sony may need to redesign or
discontinue marketing or selling such products as a result. Additionally, Sony’s intellectual property rights may
be challenged or invalidated, or such intellectual property rights may not be sufficient to provide Sony with
competitive advantages. Such events may adversely impact Sony’s operating results and financial condition.
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