Sony 2015 Annual Report Download - page 81

* Future insurance policy benefits and other and policyholders’ account in the life insurance business are the
estimated future cash payments to be made to policyholders and others. These cash payments are based upon
assumptions including morbidity, mortality, withdrawals and other factors. Amounts presented in the above table
are undiscounted. The sum of the cash payments of 19,096.7 billion yen exceeds the corresponding liability
amounts of 6,863.0 billion yen included in the consolidated balance sheets principally due to the time value of
money. Refer to Note 10 of the consolidated financial statements.
** The total amount represents the liability for gross unrecognized tax benefits in accordance with the accounting
guidance for uncertain tax positions. Sony estimates that no portion of the liability is expected to be settled
within one year. The settlement period for the liability, which totaled 104.9 billion yen, cannot be reasonably
estimated due to the uncertainty associated with the timing of the settlements with the various taxing authorities.
Refer to Note 21 of the consolidated financial statements.
The following items are not included in either the above table or the total amount of commitments
outstanding at March 31, 2016:
• The total amount of expected future pension payments is not included as such amount is not currently
determinable. Sony expects to contribute approximately 11 billion yen to Japanese pension plans and
approximately 6 billion yen to foreign pension plans during the fiscal year ending March 31, 2017.
Refer to Note 15 of the consolidated financial statements.
• The total unused portion of the line of credit extended under loan agreements in the Financial Services
segment is not included in the above table as it is not foreseeable what loans will be incurred under such
line of credit. The total unused portion of the line of credit extended under these contracts was
approximately 30.6 billion yen as of March 31, 2016. Refer to Note 27 of the consolidated financial
statements.
• Purchases made during the ordinary course of business from certain component manufacturers and
contract manufacturers in order to establish the best pricing and continuity of supply for Sony’s
production are not included as there are typically no binding purchase obligations. Purchase obligations
are defined as contractual obligations to purchase goods or services that are enforceable and legally
binding on Sony. These obligations specify all significant terms, including fixed or minimum quantities
to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the
transaction. Purchase obligations do not include contracts that may be cancelled without penalty. These
purchases include arrangements with certain component manufacturers whereby Sony procures goods,
including product components, for these component manufacturers and is reimbursed for the related
purchases. This allows Sony’s supply chain management to have flexible and mutually beneficial
purchase arrangements with these manufacturers in order to minimize inventory risk. Consistent with
industry practice, Sony purchases processed goods that meet technical criteria from these component
manufacturers after issuing to these manufacturers information on Sony’s projected demand and
manufacturing needs.
Refer to Item 8 A. “Financial Information” Consolidated Statements and Other Financial Information for
legal proceedings and Note 27 of the consolidated financial statements for guarantees issued, including product
warranties.
Critical Accounting Policies and Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. On an ongoing basis, Sony evaluates its estimates, which are
based on historical experience, future projections and various other assumptions that are believed to be
reasonable under the circumstances. The results of these evaluations form the basis for making judgments about
the carrying values of assets and liabilities and the reported amounts of expenses that are not readily apparent
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