Sony 2015 Annual Report Download - page 77

Ratings
Sony considers one of management’s top priorities to be the maintenance of stable and appropriate credit
ratings in order to ensure financial flexibility for liquidity and capital management and continued adequate access
to sufficient funding resources in the financial and capital markets.
In order to facilitate access to global capital markets, Sony obtains credit ratings from two rating agencies,
Moody’s (Japan) K.K. (“Moody’s”) and Standard & Poor’s Ratings Japan K.K. (“S&P”). In order to facilitate
access to Japanese financial and capital markets, Sony obtains credit ratings from two agencies in Japan,
including Rating and Investment Information, Inc. and Japan Credit Rating Agency, Ltd.
Sony currently believes that it has access to sufficient funding resources in the financial and capital markets.
For information regarding a possible further rating downgrade, please refer to “Risk Factors” in “Item 3. Key
Information.”
Cash Management
Sony manages its global cash management activities mainly through SGTS. The excess or shortage of cash
at most of Sony’s subsidiaries is invested or funded by SGTS on a net basis, although Sony recognizes that fund
transfers are limited in certain countries and geographic areas due to restrictions on capital transactions. In order
to pursue more efficient cash management, cash surpluses among Sony’s subsidiaries are deposited with SGTS
and cash shortfalls among subsidiaries are covered by loans through SGTS, so that Sony can make use of excess
cash balances and reduce third-party borrowings. Where local restrictions prevent an efficient intercompany
transfer of funds, Sony’s intent is that cash balances remain outside of SGTS and that Sony meet its liquidity
needs through ongoing cash flows, external borrowings, or both. Sony does not expect restrictions of capital
transactions on amounts held outside of Japan to have a material effect on Sony’s overall liquidity, financial
condition or results of operations.
Financial Services segment
The management of SFH, Sony Life, Sony Assurance and Sony Bank recognizes the importance of securing
sufficient liquidity to cover the payment of obligations that these companies incur in the ordinary course of
business. Sony Life, Sony Assurance and Sony Bank maintain a sufficient cash balance and secure sufficient
means to meet their obligations while abiding by laws and regulations such as the Insurance Business Act or the
Banking Act of Japan, and restrictions imposed by the Financial Services Agency (“FSA”) and other regulatory
authorities as well as establishing and operating under company guidelines that comply with these regulations.
Sony Life and Sony Assurance establish a sufficient level of liquidity for the smooth payment of insurance
claims when they invest primarily in various securities cash inflows which are mainly from policyholders’
insurance premiums. Sony Bank maintains a necessary level of liquidity for the smooth settlement of transactions
when it uses its cash inflows, which come mainly from customers’ deposits in local currency, in order to offer
mortgage loans to individuals, and the remaining cash inflows are invested mainly in marketable securities. Cash
inflows from customers’ deposits in foreign currencies are invested in investment instruments of the same
currency.
In addition, Sony’s subsidiaries in the Financial Services segment are subject to the Japanese Insurance
Business Act and Banking Act, which require insurance and business companies to maintain their financial
credibility and to secure protection for policyholders and depositors in view of the public nature of insurance and
banking services. As such, lending and borrowing between subsidiaries in the Financial Service segment and the
other companies within Sony Group is strictly limited. Sony’s subsidiaries in the Financial Services segment are
managed separately from Sony’s cash management activities through SGTS as mentioned above.
C. Research and Development
It is necessary for Sony to continue technological innovation in order to maintain group-wide growth. Sony
believes that technology made possible by our research and development activities is a key to the differentiation
of products in existing businesses and the source of creating value in new businesses.
77