Sony 2015 Annual Report Download - page 9

the amount of 80.6 billion yen, 98.0 billion yen and 38.3 billion yen were recorded in the fiscal years ended
March 31, 2014, 2015 and 2016, respectively. While Sony anticipates recording approximately 12.0 billion yen
of restructuring charges in the fiscal year ending March 31, 2017, significant additional or future restructuring
charges may be recorded due to reasons such as the impact of economic downturns or exiting from unprofitable
businesses, including the potential sale of certain businesses. Restructuring charges are recorded primarily in cost
of sales, selling, general and administrative (“SGA”) expenses and other operating (income) expense, net and
thus adversely affect Sony’s operating income (loss) and net income (loss) attributable to Sony’s stockholders
(Refer to Note 19 of the consolidated financial statements). Sony continues to take initiatives to optimize its
manufacturing operations, utilize outsourced manufacturing, reduce SGA expenses across the Sony group,
outsource support functions and information processing operations, and optimize business process across
functions, including sales and marketing, manufacturing, logistics, procurement, quality and R&D.
Due to internal or external factors, efficiencies and cost savings from the above-mentioned and other
restructuring and transformation initiatives may not be realized as scheduled and, even if those benefits are
realized, Sony may not be able to achieve the expected level of profitability due to market conditions worsening
beyond expectations. Possible internal factors may include, for example, changes in restructuring and
transformation plans, an inability to implement the initiatives effectively with available resources, an inability to
coordinate effectively across different business groups, delays in implementing the new business processes or
strategies, or an inability to effectively manage and monitor the post-transformation performance of the
operation. Possible external factors may include, for example, increased or unanticipated burdens from local
legal or regulatory restrictions, including labor regulations and labor union agreements, or from customary
Japanese labor practices that may prevent Sony from executing its restructuring initiatives as planned. The
inability to fully and successfully implement restructuring and transformation programs may adversely affect
Sony’s operating results and financial condition. Additionally, operating cash flows may be reduced as a result of
payments for restructuring charges.
Sony’s acquisitions, joint ventures and investments may not be successful.
Sony actively engages in acquisitions, joint ventures and other strategic investments in order to acquire new
technologies, efficiently develop new businesses, and enhance its business competitiveness. For example, in
February 2016, Sony completed the acquisition of Altair Semiconductor, which develops and sells products
focused on LTE (Long Term Evolution) technologies. Furthermore, Sony has previously engaged in joint
ventures with third parties in order to reduce its capital investment, reduce operating costs and share risk with its
joint venture partners, and may do so again in the future. Moreover, Sony may sell its equity interest in a joint
venture or buy out the joint venture partner’s equity due to the achievement of its original objectives or other
reasons. For example, Sony and the Estate of Michael Jackson (the “Estate”) entered into a binding
Memorandum of Understanding in March 2016 and a definitive agreement in April 2016, for Sony to obtain full
ownership of Sony/ATV Music Publishing LLC (“Sony/ATV”) by acquiring the 50 percent interest in Sony/ATV
held by the Estate. (The closing of the transaction is subject to certain closing conditions, including regulatory
approval.)
Sony may incur significant expenses to acquire and integrate businesses. Additionally, Sony may not
achieve strategic objectives, planned revenue improvements and cost savings, and may not retain key personnel
of the acquired businesses. Sony’s operating results may also be adversely affected by the assumption of
liabilities related to any acquired businesses.
Sony currently has investments in several joint ventures and strategic partnerships, and may engage in new
investments in the future. If Sony and its partners are unable to reach their common financial objectives
successfully due to changes in the competitive environment, strategic or cultural differences, failure to achieve
synergies or other reasons, Sony’s operating results may be adversely affected. Sony’s operating results may also
be adversely affected in the short- and medium-term during a partnership, even if Sony and its partners remain on
course to achieve their common financial objectives. In addition, by participating in joint ventures or other
strategic investments, Sony may encounter conflicts of interest, may not maintain sufficient control over these
relationships, including over cash flow, and may be faced with an increased risk of the loss of proprietary
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