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Title of each class | Name of each exchange on which registered | |
American Depositary Shares* | New York Stock Exchange | |
Pacific Stock Exchange | ||
Chicago Stock Exchange | ||
Common Stock** | New York Stock Exchange | |
Pacific Stock Exchange | ||
Chicago Stock Exchange |
* | American Depositary Shares evidenced by American Depositary Receipts. |
** | No par value per share. |
Outstanding as of | ||||||||
March 31, 2005 | March 30, 2005 | |||||||
Title of Class | (Tokyo Time) | (New York Time) | ||||||
Common Stock | 997,211,213 | |||||||
Subsidiary Tracking Stock | 3,072,000 | |||||||
American Depositary Shares | 135,460,544 |
Yes þ | No o |
Item 17 o | Item 18 þ |
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EX-1.1 ARTICLES OF INCORPORATION | ||||||||
EX-1.2 REGULATIONS OF THE BOARD OF DIRECTORS | ||||||||
EX-12.1 PRINCIPAL EXECUTIVE OFFICER CERTIFICATION REQUIRED BY 17 C.F.R. 240. 13a-14(a) | ||||||||
EX-12.2 PRINCIPAL FINANCIAL OFFICER CERTIFICATION REQUIRED BY 17 C.F.R. 240. 13a-14(a) | ||||||||
EX-13 CERTIFICATIONS REQUIRED BY 18 U.S.C. SECTION 1350 | ||||||||
EX-15.1 CONSENT OF CHUOAOYAMA PRICEWATERHOUSECOOPERS |
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Item 1. | Identity of Directors, Senior Management and Advisers |
Item 2. | Offer Statistics and Expected Timetable |
Item 3. | Key Information |
Fiscal Year Ended March 31 | ||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | ||||||||||||||||||
(Yen in millions, Yen per share amounts) | ||||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||
Sales and operating revenue | 7,314,824 | 7,578,258 | 7,473,633 | 7,496,391 | 7,159,616 | |||||||||||||||||
Operating income | 225,346 | 134,631 | 185,440 | 98,902 | 113,919 | |||||||||||||||||
Income before income taxes | 265,868 | 92,775 | 247,621 | 144,067 | 157,207 | |||||||||||||||||
Income taxes | 115,534 | 65,211 | 80,831 | 52,774 | 16,004 | |||||||||||||||||
Income before cumulative effect of accounting changes | 121,227 | 9,332 | 115,519 | 90,628 | 168,551 | |||||||||||||||||
Net income | 16,754 | 15,310 | 115,519 | 88,511 | 163,838 | |||||||||||||||||
Data per Share of Common Stock: | ||||||||||||||||||||||
Income before cumulative effect of accounting changes | ||||||||||||||||||||||
— Basic | 132.64 | 10.21 | 125.74 | 98.26 | 180.96 | |||||||||||||||||
— Diluted | 124.36 | 10.18 | 118.21 | 89.03 | 162.59 | |||||||||||||||||
Net income | ||||||||||||||||||||||
— Basic | 18.33 | 16.72 | 125.74 | 95.97 | 175.90 | |||||||||||||||||
— Diluted | 19.28 | 16.67 | 118.21 | 87.00 | 158.07 | |||||||||||||||||
Cash dividends declared | ||||||||||||||||||||||
Interim | 12.50 | 12.50 | 12.50 | 12.50 | 12.50 | |||||||||||||||||
(11.15 cents | ) | (10.07 cents | ) | (10.50 cents | ) | (11.37 cents | ) | (12.12 cents | ) | |||||||||||||
Fiscal year-end | 12.50 | 12.50 | 12.50 | 12.50 | 12.50 | |||||||||||||||||
(10.01 cents | ) | (9.78 cents | ) | (10.53 cents | ) | (11.26 cents | ) | (11.29 cents | ) | |||||||||||||
Depreciation and amortization* | 348,268 | 354,135 | 351,925 | 366,269 | 372,865 | |||||||||||||||||
Capital expenditures (additions to fixed assets) | 465,209 | 326,734 | 261,241 | 378,264 | 356,818 | |||||||||||||||||
Research and development costs | 416,708 | 433,214 | 443,128 | 514,483 | 502,008 | |||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||
Net working capital | 830,734 | 778,716 | 719,166 | 381,140 | 746,803 | |||||||||||||||||
Long-term debt | 843,687 | 838,617 | 807,439 | 777,649 | 678,992 | |||||||||||||||||
Stockholders’ equity | 2,315,453 | 2,370,410 | 2,280,895 | 2,378,002 | 2,870,338 | |||||||||||||||||
Total assets | 7,827,966 | 8,185,795 | 8,370,545 | 9,090,662 | 9,499,100 | |||||||||||||||||
Number of shares issued at fiscal year-end (thousands of shares of common stock) | 919,617 | 919,744 | 922,385 | 926,418 | 997,211 | |||||||||||||||||
Stockholders’ equity per share of common stock | 2,521.19 | 2,570.31 | 2,466.81 | 2,563.67 | 2,872.21 |
* | Depreciation and amortization includes amortization expenses for intangible assets and for deferred insurance acquisition costs. |
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Average* | High | Low | Period-End | |||||||||||||||
(Yen) | ||||||||||||||||||
Yen Exchange Rates per U.S. Dollar: | ||||||||||||||||||
Fiscal year ended March 31 | ||||||||||||||||||
2001 | 111.65 | 104.19 | 125.54 | 125.54 | ||||||||||||||
2002 | 125.64 | 115.89 | 134.77 | 132.70 | ||||||||||||||
2003 | 121.10 | 115.71 | 133.40 | 118.07 | ||||||||||||||
2004 | 113.07 | 120.55 | 104.18 | 104.18 | ||||||||||||||
2005 | 107.49 | 114.30 | 102.26 | 107.22 | ||||||||||||||
2004 | ||||||||||||||||||
December | 105.59 | 102.56 | 102.68 | |||||||||||||||
2005 | ||||||||||||||||||
January | 104.93 | 102.26 | 103.55 | |||||||||||||||
February | 105.84 | 103.70 | 104.25 | |||||||||||||||
March | 107.49 | 103.87 | 107.22 | |||||||||||||||
April | 108.67 | 104.64 | 104.64 | |||||||||||||||
May | 108.17 | 104.41 | 107.97 | |||||||||||||||
June (through June 20) | 109.58 | 106.64 | 109.42 |
* | The average yen exchange rates represent average noon buying rates on the last business day of each month during the respective period. |
1. | In July 2003, the Accounting Standards Executive Committee (“AcSEC”) of the American Institute of Certified Public Accountants issued the Statement of Position (“SOP”) 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts”. SOP 03-1 requires insurance enterprises to record additional reserves for long-duration life insurance contracts with minimum guarantee or annuity receivable options. Additionally, SOP 03-1 provides guidance for the presentation of separate accounts. This statement is effective for fiscal years beginning after December 15, 2003. Sony adopted SOP 03-1 on April 1, 2004. As a result of the adoption of SOP 03-1, Sony’s operating income decreased by 5,156 million yen for the fiscal year ended March 31, 2005. Additionally, on April 1, 2004, Sony recognized 4,713 million yen of loss (net of income taxes of 2,675 million yen) as a cumulative effect of an accounting change. In addition, the separate account assets, which are defined by insurance business law in Japan and were previously included in “Securities investments and other” on the consolidated balance sheet, were excluded from the category of separate accounts under SOP 03-1. Accordingly, assets previously treated as separate account assets are now treated within general account assets. |
2. | In July 2004, the Emerging Issues Task Force (“EITF”) issued EITF Issue No. 04-8, “The Effect of Contingently Convertible Instruments on Diluted Earnings per Share.” In accordance with Statement of Financial Accounting Standards (“FAS”) No. 128, “Earnings Per Share,” Sony had not previously included in the computation of diluted earnings per share (“EPS”) the number of potential shares of common stock issuable upon the conversion of contingently convertible debt instruments (“Co-Cos”) that have not met the conditions to exercise the associated stock acquisition rights. EITF Issue No. 04-8 requires that the maximum number of shares of common stock that could be issued upon the conversion of Co-Cos be included in diluted EPS computations from the date of issuance regardless of whether the conditions to exercise such rights have been met. EITF Issue No. 04-8 is effective for reporting periods ending after December 15, 2004. Sony adopted EITF Issue No. 04-8 during the quarter ended |
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December 31, 2004. As a result of the adoption of EITF Issue No. 04-8, Sony’s diluted EPS of its income before cumulative effect of an accounting change and its net income for the fiscal year ended March 31, 2004 were restated respectively. Sony’s diluted EPS of income before cumulative effect of an accounting change and net income for the fiscal year ended March 31, 2005 were decreased by 7.26 yen and 7.06 yen, respectively, compared to those before the adoption of EITF Issue No. 04-8. | |
3. | In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities — an Interpretation of Accounting Research Bulletins (“ARB”) No. 51”, and the revised FIN No. 46 was issued in December 2003. This interpretation addresses consolidation by a primary beneficiary of a variable interest entity (“VIE”). Sony adopted FIN No. 46 on July 1, 2003. As a result of the adoption of FIN No. 46, Sony recognized a 2,117 million yen charge as a cumulative effect of an accounting change. Additionally, Sony’s assets and liabilities increased by 96,776 million yen and 97,950 million yen, respectively, including cash and cash equivalents of 1,521 million yen. |
4. | On April 1, 2001, Sony adopted FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended by FAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities — an Amendment of FASB Statement No. 133”. As a result, Sony’s operating income, income before income taxes and net income for the fiscal year ended March 31, 2002 decreased by 3,007 million yen, 3,441 million yen and 2,167 million yen, respectively. Additionally, Sony recorded a one-time non-cash after-tax unrealized gain of 1,089 million yen in accumulated other comprehensive income in the consolidated balance sheet, as well as an after-tax gain of 5,978 million yen in the cumulative effect of accounting changes in the consolidated statement of income. In April 2003, the FASB issued FAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” Sony adopted FAS No. 149 on July 1, 2003. The adoption of FAS No. 149 did not have an impact on Sony’s results of operations and financial position. |
5. | In July 2001, the FASB issued FAS No. 142, “Goodwill and Other Intangible Assets.” Sony adopted FAS No. 142 retroactive to April 1, 2001. As a result, Sony’s operating income and income before income taxes for the fiscal year ended March 31, 2002 increased by 20,114 million yen and income before cumulative effect of accounting changes as well as net income for the fiscal year ended March 31, 2002 increased by 18,932 million yen. |
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Item 4. | Information on the Company |
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Main Product | Previous Product Category | New Product Category | ||
AIWA | “Other” | “Audio” or “Video” or “Televisions” | ||
Set-top box | “Video” | “Televisions” |
Fiscal Year Ended March 31 | |||||||||||||||||||||||||
2003 | 2004 | 2005 | |||||||||||||||||||||||
(Yen in millions) | |||||||||||||||||||||||||
Electronics | |||||||||||||||||||||||||
Audio | 784,114 | (10.5 | ) | 675,496 | (9.0 | ) | 571,864 | (8.0 | ) | ||||||||||||||||
Video | 828,308 | (11.1 | ) | 949,261 | (12.7 | ) | 1,034,736 | (14.5 | ) | ||||||||||||||||
Televisions | 981,655 | (13.1 | ) | 925,501 | (12.3 | ) | 957,122 | (13.4 | ) | ||||||||||||||||
Information and Communications | 836,724 | (11.2 | ) | 834,757 | (11.1 | ) | 778,374 | (10.9 | ) | ||||||||||||||||
Semiconductors | 204,710 | (2.7 | ) | 253,237 | (3.4 | ) | 246,314 | (3.4 | ) | ||||||||||||||||
Components | 527,782 | (7.1 | ) | 623,799 | (8.3 | ) | 619,477 | (8.6 | ) | ||||||||||||||||
Other | 460,888 | (6.2 | ) | 576,217 | (7.7 | ) | 578,349 | (8.1 | ) | ||||||||||||||||
Segment Total | 4,624,181 | (61.9 | ) | 4,838,268 | (64.5 | ) | 4,786,236 | (66.9 | ) | ||||||||||||||||
Game | 936,274 | (12.5 | ) | 753,732 | (10.1 | ) | 702,524 | (9.8 | ) | ||||||||||||||||
Music | 433,147 | (5.8 | ) | 409,487 | (5.5 | ) | 216,779 | (3.0 | ) | ||||||||||||||||
Pictures | 802,770 | (10.7 | ) | 756,370 | (10.1 | ) | 733,677 | (10.2 | ) | ||||||||||||||||
Financial Services | 509,398 | (6.8 | ) | 565,752 | (7.5 | ) | 537,715 | (7.5 | ) | ||||||||||||||||
Other | 167,863 | (2.3 | ) | 172,782 | (2.3 | ) | 182,685 | (2.6 | ) | ||||||||||||||||
Sales and operating revenue | 7,473,633 | (100.0 | ) | 7,496,391 | (100.0 | ) | 7,159,616 | (100.0 | ) | ||||||||||||||||
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“Audio” includes home audio, portable audio, car audio and car navigation systems. |
“Video” includes video cameras, digital still cameras, video decks, and DVD-Video players/recorders. |
“Televisions” includes televisions incorporating cathode ray tubes (“CRTs”), projection televisions, plasma televisions, liquid crystal displays (“LCDs”) televisions, computer displays, and CRTs. |
“Information and Communications” includes PCs, printer systems, personal digital assistants, and broadcast-and professional-use audio, video and monitors and other professional-use equipment. |
“Semiconductors” includes LCDs, charge coupled devices (“CCDs”) and other semiconductors. |
“Components” includes optical pickups, batteries, audio/video/data recording media, and data recording systems. |
“Other” includes sales to outside customers, such as sales of mobile phone handsets to Sony Ericsson, by Sony EMCS Corporation (“Sony EMCS”), CD and DVD disc manufacturing and physical distribution businesses, and products and services which are not included in the above categories. |
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Fiscal Year Ended March 31 | |||||||||||||||||||||||||
2003 | 2004 | 2005 | |||||||||||||||||||||||
(Yen in millions) | |||||||||||||||||||||||||
Japan | 2,093,880 | (28.0 | ) | 2,220,747 | (29.6 | ) | 2,100,793 | (29.3 | ) | ||||||||||||||||
United States | 2,403,946 | (32.2 | ) | 2,121,110 | (28.3 | ) | 1,977,310 | (27.6 | ) | ||||||||||||||||
Europe | 1,665,976 | (22.3 | ) | 1,765,053 | (23.6 | ) | 1,612,536 | (22.6 | ) | ||||||||||||||||
Other Areas | 1,309,831 | (17.5 | ) | 1,389,481 | (18.5 | ) | 1,468,977 | (20.5 | ) | ||||||||||||||||
Sales and operating revenue | 7,473,633 | (100.0 | ) | 7,496,391 | (100.0 | ) | 7,159,616 | (100.0 | ) | ||||||||||||||||
Sony Marketing (Japan) Inc. markets consumer electronics products through retailers and also markets professional electronics products and services. For electronic components, Sony sells products directly to wholesalers and manufacturers. |
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Sony markets its electronics products and services through Sony Electronics Inc. and other wholly-owned subsidiaries in the U.S. |
In Europe, Sony’s consumer electronics products and services are marketed through sales subsidiaries including Sony United Kingdom Limited, Sony Deutschland G.m.b.H., and Sony France S.A. Sales of electronics products for professional use, electronic components, and services are made through several divisions, differentiated by product, covering all of Europe. |
In overseas areas other than the U.S. and Europe, Sony’s electronics products and services are marketed through sales subsidiaries including Sony Corporation of Hong Kong Limited, Sony Gulf FZE in the United Arab Emirates, Sony Electrónicos de México, S.A. de C.V., Sony of Canada Ltd., and Sony Australia Limited. |
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Country of | (As of March 31, 2005) | |||||||
Name of company | incorporation | Percentage owned | ||||||
Sony EMCS Corporation | Japan | 100.0 | ||||||
Sony Semiconductor Kyushu Corporation | Japan | 100.0 | ||||||
Sony Marketing (Japan) Inc. | Japan | 100.0 | ||||||
Sony Computer Entertainment Inc. | Japan | 100.0 | ||||||
Sony Music Entertainment (Japan) Inc. | Japan | 100.0 | ||||||
Sony Financial Holdings, Inc. | Japan | 100.0 | ||||||
Sony Life Insurance Co., Ltd. | Japan | 100.0 | ||||||
Sony Americas Holding Inc. | U.S.A. | 100.0 | ||||||
Sony Corporation of America | U.S.A. | 100.0 | ||||||
Sony Electronics Inc. | U.S.A. | 100.0 | ||||||
Digital Audio Disc Corporation | U.S.A. | 100.0 | ||||||
Sony Computer Entertainment America Inc. | U.S.A. | 100.0 | ||||||
Sony Pictures Entertainment Inc. | U.S.A. | 100.0 | ||||||
Sony Europe Holding B.V. | Holland | 100.0 | ||||||
Sony Europe G.m.b.H. | Germany | 100.0 | ||||||
Sony Computer Entertainment Europe Ltd. | U.K. | 100.0 | ||||||
Sony Global Treasury Services Plc. | U.K. | 100.0 | ||||||
Sony Holding (Asia) B.V. | Holland | 100.0 | ||||||
Sony Electronics Asia Pacific Pte. Ltd. | Singapore | 100.0 |
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Approximate | |||||||
Location | floor space | Principal products manufactured | |||||
(square feet) | |||||||
In Japan: | |||||||
Nagasaki (Sony Semiconductor Kyushu Corporation | |||||||
— Nagasaki TEC and SCEI) | 2,232,000 | Semiconductors | |||||
Kokubu, Kagoshima (Sony Semiconductor Kyushu Corporation | |||||||
— Kokubu TEC) | 1,146,000 | Semiconductors | |||||
Kumamoto (Sony Semiconductor Kyushu Corporation | |||||||
— Kumamoto TEC) | 980,000 | Semiconductors | |||||
Kohda, Aichi (Sony EMCS Corporation — Kohda TEC) | 953,000 | Video cameras, digital still cameras, Memory Sticks, and printers | |||||
Inazawa, Aichi (Sony EMCS Corporation — Inazawa TEC) | 859,000 | CRT televisions | |||||
Ichinomiya, Aichi (Sony EMCS Corporation — Ichinomiya TEC) | 833,000 | CRT televisions, flat panel televisions, and digital still cameras | |||||
Kanuma, Tochigi (Sony Chemicals Corporation) | 819,000 | Magnetic and optical storage media and batteries | |||||
Tochigi, Tochigi (Sony Energy Devices Corporation) | 609,000 | Magnetic tapes, adhesives, and electronic components | |||||
Kisarazu, Chiba (Sony EMCS Corporation — Kisarazu TEC) | 601,000 | DVD Recorders and PCs | |||||
Koriyama, Fukushima (Sony Energy Devices Corporation) | 584,000 | Batteries | |||||
Kosai, Shizuoka (Sony EMCS Corporation — Kosai TEC) | 562,000 | Broadcast- and professional-use video equipment | |||||
Minokamo, Gifu (Sony EMCS Corporation — Minokamo TEC) | 528,000 | Video cameras, digital still cameras, mobile phones, and modules |
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Approximate | ||||||
Location | floor space | Principal products manufactured | ||||
(square feet) | ||||||
Overseas: | ||||||
Pittsburgh, Pennsylvania, U.S.A. (Sony Electronics Inc.) | 2,820,000 | CRT televisions, rear projection televisions, and CRTs | ||||
San Diego, California, U.S.A. (Sony Electronics Inc.) | 1,249,000 | CRTs | ||||
Wuxi, China (Sony Electronics (Wuxi) Co., Ltd. and Sony (China) Ltd.) | 1,160,000 | Batteries, televisions, PCs, and digital still cameras | ||||
Penang, Malaysia (Sony EMCS (Malaysia) Sdn. Bhd. — PG TEC) | 988,000 | Audio equipment and data storage systems | ||||
Tijuana, Mexico (Sony de Tijuana Este, S.A. de C.V.) | 935,000 | CRT televisions, rear projection televisions, TV tuners, computer displays, and audio equipment | ||||
Jurong, Singapore (Sony Display Device (Singapore)) | 838,000 | CRTs | ||||
Dothan, Alabama, U.S.A. (Sony Electronics Inc.) | 809,000 | Magnetic tape products and polarized film for LCD | ||||
Bangi, Malaysia (Sony EMCS (Malaysia) Sdn. Bhd.��— KL TEC) | 797,000 | CRT televisions, rear projection televisions, TV tuners, DVD players, and VTRs | ||||
Bridgend, Wales, U.K. (Sony Manufacturing Company U.K.) | 752,000 | CRTs and TV components | ||||
Pencoed, Wales, U.K. (Sony Manufacturing Company U.K.) | 707,000 | CRT televisions, broadcast cameras, and professional-use displays | ||||
Terre Haute, Indiana, U.S.A. (Digital Audio Disc Corporation) | 655,000 | CDs, CD-ROMs, DVDs, and DVD-ROMs | ||||
Nuevo Laredo, Mexico (Sony Electronics Inc.) | 608,000 | Magnetic storage media and batteries | ||||
Pitman, New Jersey, U.S.A. (Sony Music Entertainment Inc.) | 568,000 | CDs, CD-ROMs, DVDs, and DVD-ROMs | ||||
Viladecavallas, Spain (Sony Espana, S.A.) | 566,000 | CRT televisions, TV components, projectors, and flat panel televisions | ||||
Huizou, China (Sony Precision Devices (Huizou) Co., Ltd.) | 526,000 | Optical pickups and DVD players |
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Item 5. | Operating and Financial Review and Prospects |
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Fiscal Year Ended | ||||||||||||
March 31 | ||||||||||||
2004 | 2005 | Percent change | ||||||||||
(Yen in billions) | ||||||||||||
Sales and operating revenue | 7,496.4 | 7,159.6 | -4.5 | % | ||||||||
Operating income | 98.9 | 113.9 | +15.2 | |||||||||
Income before income taxes | 144.1 | 157.2 | +9.1 | |||||||||
Equity in net income of affiliated companies | 1.7 | 29.0 | +1,594.2 | |||||||||
Net income | 88.5 | 163.8 | +85.1 |
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Business Segment Information |
Fiscal Year Ended | |||||||||||||
March 31 | |||||||||||||
2004 | 2005 | Percent change | |||||||||||
(Yen in billions) | |||||||||||||
Sales and operating revenue | |||||||||||||
Electronics | 5,042.3 | 5,021.6 | -0.4 | % | |||||||||
Game | 780.2 | 729.8 | -6.5 | ||||||||||
Music | 440.3 | 249.1 | -43.4 | ||||||||||
Pictures | 756.4 | 733.7 | -3.0 | ||||||||||
Financial Services | 593.5 | 560.6 | -5.6 | ||||||||||
Other | 268.3 | 254.4 | -5.2 | ||||||||||
Elimination | (384.7 | ) | (389.6 | ) | — | ||||||||
Consolidated | 7,496.4 | 7,159.6 | -4.5 | ||||||||||
Fiscal Year Ended | |||||||||||||
March 31 | |||||||||||||
2004 | 2005 | Percent change | |||||||||||
(Yen in billions) | |||||||||||||
Operating income (loss) | |||||||||||||
Electronics | (6.8 | ) | (34.3 | ) | — | ||||||||
Game | 67.6 | 43.2 | -36.1 | % | |||||||||
Music | (6.0 | ) | 8.8 | — | |||||||||
Pictures | 35.2 | 63.9 | +81.4 | ||||||||||
Financial Services | 55.2 | 55.5 | +0.6 | ||||||||||
Other | (12.1 | ) | (4.1 | ) | — | ||||||||
Total | 133.1 | 133.0 | -0.1 | ||||||||||
Elimination and unallocated corporate expenses | (34.2 | ) | (19.0 | ) | — | ||||||||
Consolidated | 98.9 | 113.9 | +15.2 | ||||||||||
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Fiscal Year Ended | |||||||||||||
March 31 | |||||||||||||
Cumulative as of | |||||||||||||
2004 | 2005 | March 31, 2005 | |||||||||||
(Million units) | |||||||||||||
Total Production Shipments of Hardware* | |||||||||||||
PlayStation + PS one | 3.31 | 2.77 | 102.49 | ||||||||||
PlayStation 2 | 20.10 | 16.17 | 87.47 | ||||||||||
PlayStation Portable | 2.97 | 2.97 | |||||||||||
Total Production Shipments of Software*/** | |||||||||||||
PlayStation | 32.00 | 10.00 | 959.00 | ||||||||||
PlayStation 2 | 222.00 | 252.00 | 824.00 | ||||||||||
PlayStation Portable | 5.70 | 5.70 |
* | Production shipments of hardware and software are counted upon shipment of the products from manufacturing bases. Sales of such products are recognized when the products are delivered to customers. |
** | Including those both from Sony and third parties under Sony licenses. |
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Fiscal Year Ended | |||||||||
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Financial Services | |||||||||
Financial service revenue | 593,544 | 560,557 | |||||||
Financial service expenses | 538,383 | 505,067 | |||||||
Operating income | 55,161 | 55,490 | |||||||
Other income (expenses), net | 1,958 | 10,204 | |||||||
Income before income taxes | 57,119 | 65,694 | |||||||
Income taxes and other | 22,975 | 25,698 | |||||||
Income before cumulative effect of an accounting change | 34,144 | 39,996 | |||||||
Cumulative effect of an accounting change | — | (4,713 | ) | ||||||
Net income | 34,144 | 35,283 | |||||||
Fiscal Year Ended | |||||||||
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Sony without Financial Services | |||||||||
Net sales and operating revenue | 6,939,964 | 6,632,728 | |||||||
Costs and expenses | 6,896,377 | 6,575,354 | |||||||
Operating income | 43,587 | 57,374 | |||||||
Other income (expenses), net | 52,746 | 40,639 | |||||||
Income before income taxes | 96,333 | 98,013 | |||||||
Income taxes and other | 30,916 | (37,043 | ) | ||||||
Income before cumulative effect of an accounting change | 65,417 | 135,056 | |||||||
Cumulative effect of an accounting change | (2,117 | ) | — | ||||||
Net income | 63,300 | 135,056 | |||||||
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Fiscal Year Ended | |||||||||
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Consolidated | |||||||||
Financial service revenue | 565,752 | 537,715 | |||||||
Net sales and operating revenue | 6,930,639 | 6,621,901 | |||||||
7,496,391 | 7,159,616 | ||||||||
Costs and expenses | 7,397,489 | 7,045,697 | |||||||
Operating income | 98,902 | 113,919 | |||||||
Other income (expenses), net | 45,165 | 43,288 | |||||||
Income before income taxes | 144,067 | 157,207 | |||||||
Income taxes and other | 53,439 | (11,344 | ) | ||||||
Income before cumulative effect of an accounting change | 90,628 | 168,551 | |||||||
Cumulative effect of an accounting change | (2,117 | ) | (4,713 | ) | |||||
Net income | 88,511 | 163,838 | |||||||
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Fiscal Year Ended | ||||||||||||
March 31 | ||||||||||||
2003 | 2004 | Percent change | ||||||||||
(Yen in billions) | ||||||||||||
Sales and operating revenue | 7,473.6 | 7,496.4 | +0.3 | % | ||||||||
Operating income | 185.4 | 98.9 | -46.7 | |||||||||
Income before income taxes | 247.6 | 144.1 | -41.8 | |||||||||
Equity in net income of affiliated companies | (44.7 | ) | 1.7 | — | ||||||||
Net income | 115.5 | 88.5 | -23.4 |
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Fiscal Year Ended | |||||||||||||
March 31 | |||||||||||||
2003 | 2004 | Percent change | |||||||||||
(Yen in billions) | |||||||||||||
Sales and operating revenue | |||||||||||||
Electronics | 5,096.0 | 5,042.3 | -1.1 | % | |||||||||
Game | 955.0 | 780.2 | -18.3 | ||||||||||
Music | 466.3 | 440.3 | -5.6 | ||||||||||
Pictures | 802.8 | 756.4 | -5.8 | ||||||||||
Financial Services | 537.3 | 593.5 | +10.5 | ||||||||||
Other | 261.1 | 268.3 | +2.7 | ||||||||||
Elimination | (644.9 | ) | (384.7 | ) | — | ||||||||
Consolidated | 7,473.6 | 7,496.4 | +0.3 | ||||||||||
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Fiscal Year Ended | |||||||||||||
March 31 | |||||||||||||
2003 | 2004 | Percent change | |||||||||||
(Yen in billions) | |||||||||||||
Operating income (loss) | |||||||||||||
Electronics | 65.9 | (6.8 | ) | — | |||||||||
Game | 112.7 | 67.6 | -40.0 | % | |||||||||
Music | (28.3 | ) | (6.0 | ) | — | ||||||||
Pictures | 59.0 | 35.2 | -40.3 | ||||||||||
Financial Services | 22.8 | 55.2 | +142.4 | ||||||||||
Other | (28.3 | ) | (12.1 | ) | — | ||||||||
Elimination and unallocated corporate expenses | (18.3 | ) | (34.2 | ) | — | ||||||||
Consolidated | 185.4 | 98.9 | -46.7 | ||||||||||
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Fiscal Year Ended | |||||||||||||
March 31 | |||||||||||||
Cumulative as of | |||||||||||||
2003 | 2004 | March 31, 2004 | |||||||||||
(Million units) | |||||||||||||
Total Production Shipments of Hardware* | |||||||||||||
PlayStation + PS one | 6.78 | 3.31 | 99.72 | ||||||||||
PlayStation 2 | 22.52 | 20.10 | 71.30 | ||||||||||
Total Production Shipments of Software*/** | |||||||||||||
PlayStation | 61.00 | 32.00 | 949.00 | ||||||||||
PlayStation 2 | 189.90 | 222.00 | 572.00 |
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** | Including those both from Sony and third parties under Sony licenses. |
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All other segments | ||||||||||||||||||||||||
excluding | ||||||||||||||||||||||||
Financial Services | Financial Services | Consolidated | ||||||||||||||||||||||
Fiscal Year Ended March 31 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | ||||||||||||||||||
(Yen in millions) | ||||||||||||||||||||||||
Financial Services revenue | 537,276 | 593,544 | — | — | 509,398 | 565,752 | ||||||||||||||||||
Net sales and operating revenue | — | — | 6,974,980 | 6,939,964 | 6,964,235 | 6,930,639 | ||||||||||||||||||
537,276 | 593,544 | 6,974,980 | 6,939,964 | 7,473,633 | 7,496,391 | |||||||||||||||||||
Costs and expenses | 514,518 | 538,383 | 6,811,292 | 6,896,377 | 7,288,193 | 7,397,489 | ||||||||||||||||||
Operating income | 22,758 | 55,161 | 163,688 | 43,587 | 185,440 | 98,902 | ||||||||||||||||||
Other income (expenses) net | (1,282 | ) | 1,958 | 67,846 | 52,746 | 62,181 | 45,165 | |||||||||||||||||
Income before income taxes | 21,476 | 57,119 | 231,534 | 96,333 | 247,621 | 144,067 | ||||||||||||||||||
Income taxes and other | 13,071 | 22,975 | 120,089 | 30,916 | 132,102 | 53,439 | ||||||||||||||||||
Cumulative effect of accounting changes | — | — | — | (2,117 | ) | — | (2,117 | ) | ||||||||||||||||
Net income | 8,405 | 34,144 | 111,445 | 63,300 | 115,519 | 88,511 | ||||||||||||||||||
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Fiscal Year Ended | |||||||||
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 256,316 | 259,371 | |||||||
Marketable securities | 270,676 | 456,130 | |||||||
Notes and accounts receivable, trade | 72,273 | 77,023 | |||||||
Other | 100,433 | 197,667 | |||||||
699,698 | 990,191 | ||||||||
Investments and advances | 2,274,510 | 2,378,966 | |||||||
Property, plant and equipment | 40,833 | 38,551 | |||||||
Other assets: | |||||||||
Deferred insurance acquisition costs | 349,194 | 374,805 | |||||||
Other | 110,804 | 103,004 | |||||||
459,998 | 477,809 | ||||||||
3,475,039 | 3,885,517 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term borrowings | 86,748 | 45,358 | |||||||
Notes and accounts payable, trade | 7,847 | 7,099 | |||||||
Deposits from customers in the banking business | 378,851 | 546,718 | |||||||
Other | 175,357 | 109,438 | |||||||
648,803 | 708,613 | ||||||||
Long-term liabilities: | |||||||||
Long-term debt | 135,811 | 135,750 | |||||||
Accrued pension and severance costs | 10,183 | 14,362 | |||||||
Future insurance policy benefits and other | 2,178,626 | 2,464,295 | |||||||
Other | 126,349 | 142,272 | |||||||
2,450,969 | 2,756,679 | ||||||||
Minority interest in consolidated subsidiaries | — | 5,476 | |||||||
Stockholders’ equity | 375,267 | 414,749 | |||||||
3,475,039 | 3,885,517 | ||||||||
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Fiscal Year Ended | |||||||||
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions,) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 592,895 | 519,732 | |||||||
Marketable securities | 4,072 | 4,072 | |||||||
Notes and accounts receivable, trade | 943,590 | 952,692 | |||||||
Other | 1,151,879 | 1,116,353 | |||||||
2,692,436 | 2,592,849 | ||||||||
Film costs | 256,740 | 278,961 | |||||||
Investments and advances | 358,629 | 445,446 | |||||||
Investments in Financial Services, at cost | 176,905 | 187,400 | |||||||
Property, plant and equipment | 1,324,211 | 1,333,848 | |||||||
Other assets | 1,251,901 | 1,189,398 | |||||||
6,060,822 | 6,027,902 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term borrowings | 409,766 | 204,027 | |||||||
Notes and accounts payable, trade | 773,221 | 801,252 | |||||||
Other | 1,190,563 | 1,132,201 | |||||||
2,373,550 | 2,137,480 | ||||||||
Long-term liabilities: | |||||||||
Long-term debt | 775,233 | 627,367 | |||||||
Accrued pension and severance costs | 358,199 | 338,040 | |||||||
Other | 348,946 | 263,520 | |||||||
1,482,378 | 1,228,927 | ||||||||
Minority interest in consolidated subsidiaries | 17,554 | 18,471 | |||||||
Stockholders’ equity | 2,187,340 | 2,643,024 | |||||||
6,060,822 | 6,027,902 | ||||||||
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Fiscal Year Ended | |||||||||
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 849,211 | 779,103 | |||||||
Marketable securities | 274,748 | 460,202 | |||||||
Notes and accounts receivable, trade | 1,011,189 | 1,025,362 | |||||||
Other | 1,228,207 | 1,291,504 | |||||||
3,363,355 | 3,556,171 | ||||||||
Film costs | 256,740 | 278,961 | |||||||
Investments and advances | 2,512,950 | 2,745,689 | |||||||
Property, plant and equipment | 1,365,044 | 1,372,399 | |||||||
Other assets: | |||||||||
Deferred insurance acquisition costs | 349,194 | 374,805 | |||||||
Other | 1,243,379 | 1,171,075 | |||||||
1,592,573 | 1,545,880 | ||||||||
9,090,662 | 9,499,100 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term borrowings | 475,017 | 230,266 | |||||||
Notes and accounts payable, trade | 778,773 | 806,044 | |||||||
Deposits from customers in the banking business | 378,851 | 546,718 | |||||||
Other | 1,349,574 | 1,226,340 | |||||||
2,982,215 | 2,809,368 | ||||||||
Long-term liabilities: | |||||||||
Long-term debt | 777,649 | 678,992 | |||||||
Accrued pension and severance costs | 368,382 | 352,402 | |||||||
Future insurance policy benefits and other | 2,178,626 | 2,464,295 | |||||||
Other | 382,930 | 299,858 | |||||||
3,707,587 | 3,795,547 | ||||||||
Minority interest in consolidated subsidiaries | 22,858 | 23,847 | |||||||
Stockholders’ equity | 2,378,002 | 2,870,338 | |||||||
9,090,662 | 9,499,100 | ||||||||
Investments |
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Fiscal Year Ended March 31, 2005 | ||||||||||||||||||||
Cost | Unrealized gain | Unrealized Loss | Fair Market Value | |||||||||||||||||
(Yen in millions) | ||||||||||||||||||||
Financial Services | ||||||||||||||||||||
Available for sale | ||||||||||||||||||||
Debt securities | ||||||||||||||||||||
Sony Life | 1,769,693 | 56,988 | (2,130 | ) | 1,824,551 | |||||||||||||||
Other | 315,101 | 1,096 | (281 | ) | 315,916 | |||||||||||||||
Equity securities | ||||||||||||||||||||
Sony Life | 42,256 | 22,735 | (278 | ) | 64,713 | |||||||||||||||
Other | 9,469 | 5,172 | (12 | ) | 14,629 | |||||||||||||||
Held to maturity | ||||||||||||||||||||
Debt securities | ||||||||||||||||||||
Sony Life | — | — | — | — | ||||||||||||||||
Other | 27,414 | 530 | (13 | ) | 27,931 | |||||||||||||||
Total Financial Services | 2,163,933 | 86,521 | (2,714 | ) | 2,247,740 | |||||||||||||||
Non-Financial Services: | ||||||||||||||||||||
Available for sale securities | 61,212 | 21,520 | (577 | ) | 82,155 | |||||||||||||||
Held to maturity securities | 17 | — | — | 17 | ||||||||||||||||
Total Non-Financial Services | 61,229 | 21,520 | (577 | ) | 82,172 | |||||||||||||||
Consolidated | 2,225,162 | 108,041 | (3,291 | ) | 2,329,912 | |||||||||||||||
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• Within 1 year: | 18 percent | |
• 1 to 5 years: | 55 percent | |
• 5 to 10 years: | 21 percent |
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Payments Due by Period | |||||||||||||||||||||
Less than | 1 to | 3 to | After | ||||||||||||||||||
Total | 1 Year | 3 Year | 5 Year | 5 Year | |||||||||||||||||
(Yen in millions) | |||||||||||||||||||||
Contractual Obligations and Major Commitments:* | |||||||||||||||||||||
Long-term debt (Note 11) | |||||||||||||||||||||
Capital lease obligations (Notes 8 and 11) | 40,301 | 11,713 | 17,435 | 6,655 | 4,498 | ||||||||||||||||
Other long-term debt (Note 11) | 805,561 | 155,157 | 192,741 | 278,684 | 178,979 | ||||||||||||||||
Minimum rental payments required under operating leases (Note 8) | 169,951 | 38,182 | 53,561 | 24,556 | 53,652 | ||||||||||||||||
Purchase commitments for property, plant and equipment and other assets (Note 23) | 83,683 | 67,698 | 15,973 | 12 | — | ||||||||||||||||
Expected cost for the production or purchase of films and television programming or certain rights (Note 23) | 82,080 | 45,651 | 36,429 | — | — |
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Total Amounts of | |||||
Contingent Liabilities | |||||
(Yen in millions) | |||||
Contingent Liabilities: (Notes 23) | |||||
Loan guarantees to related parties | 7,642 | ||||
Other | 18,407 | ||||
Total contingent liabilities | 26,049 | ||||
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Fiscal Year Ended | |||||||||
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Financial Services | |||||||||
Net cash provided by operating activities | 241,627 | 168,078 | |||||||
Net cash used in investing activities | (401,550 | ) | (421,384 | ) | |||||
Net cash provided by financing activities | 141,696 | 256,361 | |||||||
Net increase (decrease) in cash and cash equivalents | (18,227 | ) | 3,055 | ||||||
Cash and cash equivalents at beginning of the fiscal year | 274,543 | 256,316 | |||||||
Cash and cash equivalents at end of the fiscal year | 256,316 | 259,371 | |||||||
Fiscal Year Ended | |||||||||
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Sony without Financial Services | |||||||||
Net cash provided by operating activities | 401,090 | 485,439 | |||||||
Net cash used in investing activities | (352,496 | ) | (472,119 | ) | |||||
Net cash provided by (used in) financing activities | 153,759 | (95,373 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (47,973 | ) | 8,890 | ||||||
Net increase (decrease) in cash and cash equivalents | 154,380 | (73,163 | ) | ||||||
Cash and cash equivalents at beginning of the fiscal year | 438,515 | 592,895 | |||||||
Cash and cash equivalents at end of the fiscal year | 592,895 | 519,732 | |||||||
Fiscal Year Ended | |||||||||
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Consolidated | |||||||||
Net cash provided by operating activities | 632,635 | 646,997 | |||||||
Net cash used in investing activities | (761,792 | ) | (931,172 | ) | |||||
Net cash provided by financing activities | 313,283 | 205,177 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (47,973 | ) | 8,890 | ||||||
Net increase (decrease) in cash and cash equivalents | 136,153 | (70,108 | ) | ||||||
Cash and cash equivalents at beginning of the fiscal year | 713,058 | 849,211 | |||||||
Cash and cash equivalents at end of the fiscal year | 849,211 | 779,103 | |||||||
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All other segments | ||||||||||||||||||||||||
excluding | ||||||||||||||||||||||||
Financial Services | Financial Services | Consolidated | ||||||||||||||||||||||
Fiscal Year Ended March 31 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | ||||||||||||||||||
(Yen in millions) | ||||||||||||||||||||||||
Net cash provided by operating activities | 314,764 | 241,627 | 544,051 | 401,090 | 853,788 | 632,635 | ||||||||||||||||||
Net cash used in investing activities | (516,663 | ) | (401,550 | ) | (185,883 | ) | (352,496 | ) | (706,425 | ) | (761,792 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 149,207 | 141,696 | (251,247 | ) | 153,759 | (93,134 | ) | 313,283 | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (24,971 | ) | (47,973 | ) | (24,971 | ) | (47,973 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | (52,692 | ) | (18,227 | ) | 81,950 | 154,380 | 29,258 | 136,153 | ||||||||||||||||
Cash and cash equivalents at beginning of the fiscal year | 327,235 | 274,543 | 356,565 | 438,515 | 683,800 | 713,058 | ||||||||||||||||||
Cash and cash equivalents at end of the fiscal year | 274,543 | 256,316 | 438,515 | 592,895 | 713,058 | 849,211 | ||||||||||||||||||
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Moody’s | S&P | R&I | ||||
Long-term debt | A1 (Outlook: Negative) | A (Outlook: Negative) | AA | |||
Short-term debt | P-1 | A-1 | a-1+ |
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Pre-Tax | Pension | Equity | ||||||
Change in Assumption | PBO | Expense | (Net of Tax) | |||||
(Yen in billions) | ||||||||
25 basis point increase/decrease in discount rate | -/+45.0 | -/+3.0 | +/-1.8 | |||||
25 basis point increase/decrease in expected return on assets | — | -/+1.3 | +/-0.8 |
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Item 6. | Directors, Senior Management and Employees |
Nobuyuki Idei | |||
Date of Birth: November 22, 1937 | |||
Director (Member of the Board) Since: 1989 | |||
Corporate Executive Officer Since: 2003 | |||
Current Positions: Chairman and Group Chief Executive Officer, Representative Corporate Executive Officer | |||
Prior Positions: | |||
2000 | Chairman and Chief Executive Officer, Representative Director, Sony Corporation | ||
1999 | President and Representative Director, Chief Executive Officer, Sony Corporation | ||
1995 | President and Representative Director, Chief Operating Officer, Sony Corporation | ||
1990 | Senior General Manager, Advertising & Marketing Communication Strategy Group, Sony Corporation | ||
1989 | Director, Sony Corporation | ||
1988 | Senior General Manager, Home Video Group, Sony Corporation | ||
1960 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: Director of Nestlé S.A., Switzerland |
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Kunitake Ando | ||
Date of Birth: January 1, 1942 | ||
Director (Member of the Board) Since: 2000 (and from 1994 through 1997) | ||
Corporate Executive Officer Since: 2003 | ||
Current Positions: | President and Global Hub President, Representative Corporate Executive Officer, Officer in charge of Personal Solutions Business Group |
Prior Positions: | |||
2003 | President and Group Chief Operating Officer, Representative Corporate Executive Officer, Sony Corporation | ||
2000 | President and Chief Operating Officer, Representative Director, Sony Corporation | ||
1999 | President and Chief Operating Officer, Personal IT Network Company, Sony Corporation | ||
1998 | Corporate Senior Vice President, Sony Corporation | ||
1997 | Corporate Vice President (resigns as Director), Sony Corporation | ||
1994 | Director, Sony Corporation | ||
1990 | President and Chief Operating Officer, Sony Engineering and Manufacturing of America | ||
1985 | Deputy President, Sony Prudential Life Insurance Co., Ltd. | ||
1969 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None | |||
Teruo Masaki | |||
Date of Birth: August 7, 1943 | |||
Director (Member of the Board) Since: 1999 | |||
Corporate Executive Officer Since: 2003 | |||
Current Positions: Executive Deputy President and Group General Counsel | |||
Prior Positions: | |||
2000 | Corporate Senior Executive Vice President, Director, Sony Corporation | ||
1999 | Senior Managing Director, Sony Corporation | ||
1997 | Executive Vice President, Sony Corporation of America | ||
1991 | Deputy Senior General Manager, Legal and Intellectual Property Group, Sony Corporation | ||
1971 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None |
Sir Howard Stringer | ||
Date of Birth: February 19, 1942 | ||
Director (Member of the Board) Since: 1999 | ||
Corporate Executive Officer Since: 2003 | ||
Current Positions: | Vice Chairman and Sony Group Americas Representative, Chief Operating Officer in charge of Game Business Group and Entertainment Business Group, Officer in charge of Connect Company, Sony Corporation Chairman and Chief Executive Officer, Sony Corporation of America Chairman, Sony Electronics Inc. (a U.S. subsidiary of Sony Corporation) |
Prior Positions: | |||
1999 | Director, Sony Corporation | ||
1997 | President, Sony Corporation of America | ||
1995 | Chairman and Chief Executive Officer, TELE-TV, U.S.A. | ||
1988 | President, CBS Broadcast Group, CBS Inc., U.S.A. | ||
1986 | President, CBS News, U.S.A. | ||
Principal Business Activities Outside Sony: Director of InterContinental Hotels Group |
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Ken Kutaragi | ||
Date of Birth: August 2, 1950 | ||
Director (Member of the Board) Since: 2000 | ||
Current Positions: | Group Executive Officer, Sony Corporation President and Group Chief Executive Officer, Sony Computer Entertainment Inc. |
Prior Positions: | |||
2004 | Chief Operating Officer in charge of Game Business Group and Home Electronics Network Company | ||
2003 | Executive Deputy President, Corporate Executive Officer and Chief Operating Officer in charge of Home Network Company, Game Business Group, Broadband Network Company, NC President, Semiconductor Solutions Network Company, Sony Corporation | ||
2000 | Director, Sony Corporation | ||
1999 | Executive President, Sony Computer Entertainment Inc. | ||
1991 | Manager, PS Project, Video Disc Player Group, Sony Corporation | ||
1975 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None |
Teruhisa Tokunaka | ||
Date of Birth: August 9, 1945 | ||
Director (Member of the Board) Since: 1999 | ||
Current Positions: | Group Executive Officer, Sony Corporation President, Representative Director, Sony Financial Holdings Inc. |
Prior Positions: | |||
2003 | Group Chief Strategy Officer, Representative Corporate Executive Officer, Officer in charge of Network Application & Content Service Sector, Personal Solutions Business Group, Sony Corporation | ||
2000 | Executive Deputy President and Chief Financial Officer, Representative Director, Sony Corporation | ||
1999 | Senior Managing Director and Chief Financial Officer, Sony Corporation | ||
1995 | President, Sony Computer Entertainment Inc. | ||
1989 | Deputy Senior General Manager, Corporate Strategy Group, Sony Corporation | ||
1969 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None | |||
Göran Lindahl | |||
Date of Birth: April 28, 1945 | |||
Director (Member of the Board) Since: 2001 | |||
Prior Positions: | |||
2003 | Corporate Executive Officer, Sony Group Europe Representative, Chairman of Sony Group in Europe | ||
2001 | Director, Sony Corporation | ||
1999 | Director, Telefonaktiebolaget LM Ericsson, Sweden | ||
1997 | President and Chief Executive Officer, Asea Brown Boveri Ltd., Switzerland | ||
1985 | President, ASEA Transmission AB, Sweden | ||
1983 | President, ASEA Transformers AB, Sweden | ||
Principal Business Activities Outside Sony: Director, Anglo American Plc, U.K. |
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Akihisa Ohnishi | |||
Date of Birth: March 10, 1937 | |||
Director (Member of the Board) Since: 2003 (and from 1989 through 1993) | |||
Prior Positions: | |||
1993 | Standing Statutory Auditor, Sony Corporation | ||
1989 | Senior General Manager, Corporate Planning Group, Sony Corporation (concurrent with prior position) | ||
1989 | Director, Sony Corporation | ||
1988 | General Manager, Accounting Division, Sony Corporation | ||
1977 | Managing Director, Hispano Sony S.A. | ||
1961 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None | |||
Iwao Nakatani | |||
Date of Birth: January 22, 1942 | |||
Outside Director (Member of the Board) Since: 1999 | |||
Current Position: Chairman of the Board | |||
Prior Positions: | |||
1999 | Professor, School of Management and Information Sciences, Tama University | ||
1991 | Professor, Faculty of Commerce, Hitotsubashi University | ||
1984 | Professor, Faculty of Economics, Osaka University | ||
1973 | Lecturer and Researcher, Faculty of Economics, Harvard University | ||
Principal Business Activities Outside Sony: | |||
President, Tama University | |||
Director of Research, UFJ Institute Ltd. | |||
Director, JSAT Corporation | |||
Director, ASKUL Corporation | |||
Akishige Okada | |||
Date of Birth: April 9, 1938 | |||
Outside Director (Member of the Board) Since: 2002 | |||
Current Position: Chairman of the Compensation Committee | |||
Prior Positions: | |||
1997 | President, The Sakura Bank, Ltd. | ||
1996 | Senior Managing Director, The Sakura Bank, Ltd. | ||
1995 | Managing Director, The Sakura Bank, Ltd. | ||
1991 | Director, The Mitsui Taiyo Kobe Bank, Ltd. | ||
Principal Business Activities Outside Sony: | |||
Chairman of the Board (Representative Director), Sumitomo Mitsui Financial Group, Inc. Chairman of the Board (Representative Director), Sumitomo Mitsui Banking Corporation |
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Hirobumi Kawano | |||
Date of Birth: January 1, 1946 | |||
Outside Director (Member of the Board) Since: 2003 | |||
Current Position: Vice Chairman of the Board | |||
Prior Positions: | |||
1999 | Director-General, Agency for Natural Resources and Energy, Ministry of International Trade and Industry (“MITI”) (later renamed the Ministry of Economy, Trade and Industry (METI)) | ||
1998 | Director-General, Basic Industries Bureau, MITI | ||
1996 | Director-General, Machinery and Information Industries Policy, Machinery and Information Industries Bureau, MITI | ||
1995 | Director-General, Petroleum Department, Agency of Natural Resources and Energy, MITI | ||
1993 | Director, General Coordination Division, Minister’s Secretariat, MITI | ||
1992 | Director, General Industrial Machinery Division, Machinery and Information Industries Bureau, MITI | ||
1989 | Director, Americas-Oceania Division, International Trade Policy Bureau, MITI | ||
1969 | Entered MITI | ||
Principal Business Activities Outside Sony: Senior Vice President, JFE Steel Corporation | |||
Yotaro Kobayashi | |||
Date of Birth: April 25, 1933 | |||
Outside Director (Member of the Board) Since: 2003 | |||
Current Position: Chairman of the Nominating Committee | |||
Prior Positions: | |||
1996 | Director, ABB Ltd., Switzerland | ||
1978 | President and Chief Executive Officer, Fuji Xerox Co., Ltd. | ||
Principal Business Activities Outside Sony: | |||
Chairman of the Board, Fuji Xerox Co., Ltd. | |||
Director, Callaway Golf Company | |||
Director, Nippon Telegraph and Telephone Corporation | |||
Carlos Ghosn | |||
Date of Birth: March 9, 1954 | |||
Outside Director (Member of the Board) Since: 2003 | |||
Prior Positions: | |||
1990 | Chairman, President and Chief Executive Officer, Michelin North America Inc. | ||
1985 | Chief Operating Officer, Michelin — Brazil | ||
Principal Business Activities Outside Sony: | |||
President and Chief Executive Officer, Nissan Motor Co., Ltd. | |||
Director, Alcoa Inc., U.S.A. | |||
President and Chief Executive Officer, Renault S.A., France |
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Sakie T. Fukushima | |||
Date of Birth: September 10, 1949 | |||
Outside Director (Member of the Board) Since: 2003 | |||
Prior Position: | |||
2000 | Managing Director, Korn/Ferry International — Japan | ||
Principal Business Activities Outside Sony: | |||
Member, Board of Directors, Korn/ Ferry International, U.S.A. | |||
Director, Kao Corporation | |||
Advisory Board Member, All Nippon Airways Co., Ltd. | |||
Yoshihiko Miyauchi | |||
Date of Birth: September 13, 1935 | |||
Outside Director (Member of the Board) Since: 2003 | |||
Prior Positions: | |||
2000 | Representative Director, Chairman and Chief Executive Officer, ORIX Corporation | ||
1980 | Representative Director, President, ORIX Corporation | ||
Principal Business Activities Outside Sony: | |||
Director, Representative Executive Officer, Chairman and | |||
Group Chief Executive Officer, ORIX Corporation | |||
Director, Aozora Bank Ltd. | |||
Director, Fuji Xerox Co., Ltd. | |||
Director, Showa Shell Sekiyu K.K. | |||
Director, Daikyo Incorporated | |||
Yoshiaki Yamauchi | |||
Date of Birth: June 30, 1937 | |||
Outside Director (Member of the Board) Since: 2003 | |||
Current Position: Chairman of the Audit Committee | |||
Prior Positions: | |||
1999 | Director, Sumitomo Banking Corporation | ||
1993 | Executive Director, Asahi & Co. | ||
1991 | President, Inoue Saito Eiwa Audit Corporation | ||
1986 | President, Eiwa Audit Corporation | ||
Country Managing Partner — Japan, Arthur Andersen & Co. | |||
Principal Business Activities Outside Sony: | |||
Deputy President, ARI Research Institute | |||
Statutory Auditor, Stanley Electric Co., Ltd. | |||
Director, Amana Corporation | |||
Statutory Auditor, Seiko Watch Corporation | |||
Director, Sumitomo Mitsui Financial Group, Inc. |
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Ryoji Chubachi | |||
Date of Birth: September 4, 1947 | |||
Corporate Executive Officer Since: 2004 | |||
Current Positions: Executive Deputy President, Electronics Chief Executive Officer | |||
Prior Positions: | |||
2004 | Chief Operating Officer in charge of Micro Systems Network Company (MSNC) and Engineering, Manufacturing and Customer Services (“EMCS”), President, Production Strategy Group, Sony Corporation | ||
2003 | Executive Vice President, Executive Officer, NC President, MSNC, Sony Corporation | ||
2002 | NC President, Core Technology & Network Company (“CNC”), Sony Corporation | ||
2002 | Corporate Senior Vice President, Sony Corporation | ||
1999 | Corporate Vice President, President, Recording Media Company, CNC, Senior Vice President, CNC, Sony Corporation | ||
1977 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None |
Katsumi Ihara | ||
Date of Birth: September 24, 1950 | ||
Corporate Executive Officer Since: 2004 | ||
Current Positions: | Executive Deputy President, Group Chief Strategy Officer and Group Chief Financial Officer, NC President, Home Electronics Network Company |
Prior Positions: | |||
2001 | Group Executive Officer, Sony Corporation President, Sony Ericsson Mobile Communications AB | ||
2000 | Corporate Senior Vice President, NC President, Personal IT Network Company, Sony Corporation | ||
1997 | Corporate Vice President, Sony Corporation | ||
1996 | President, Home A&V Products Company, Sony Corporation | ||
1981 | Entered Sony Corporation | ||
1973 | Entered Mitsui Knowledge Industry Co., Ltd. | ||
Principal Business Activities Outside Sony: None |
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Sir Peter Bonfield | |||
Date of Birth: June 3, 1946 | |||
Current Position: Member of the Advisory Board | |||
Prior Positions: | |||
1996 | Chief Executive Officer, British Telecom plc | ||
1986 | Chairman, ICL plc | ||
1984 | Managing Director, ICL plc | ||
Principal Business Activities Outside Sony: | |||
Member of the Board, AstraZeneca plc | |||
Member of Audit Committee of the Board, Telefonaktiebolaget LM Ericsson | |||
Member of the Board, Mentor Graphics Inc. | |||
Member of the Board and Chairman of Audit Committee, Taiwan Semiconductor Manufacturing Company Ltd. | |||
Fueo Sumita | |||
Date of Birth: May 24, 1938 | |||
Prior Positions: | |||
2002 | Executive Vice President, Kawada Corp. | ||
2001 | Vice Chairman, Ernst & Young ShinNihon | ||
2000 | Deputy Director, Ohta-Showa Century Audit Corp. | ||
1999 | Chairman, Century Audit Corp. | ||
1985 | Deputy General Manager, Corporate Accounting Dept., Hitachi, Ltd. | ||
Principal Business Activities Outside Sony: | |||
Chief of Sumita Accounting Office |
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Shizuo Takashino | ||
Date of Birth: September 2, 1943 | ||
Corporate Executive Officer Since: 2003 | ||
Current Positions: | Executive Deputy President & Sony Group China Representative, President, China Design & Engineering Group, Sony China Limited, Chief Operating Officer in charge of Information Technology & Communications Network Company, Personal Audio Visual Network Company, Professional Solutions Network Company |
Prior Positions: | |||
2000 | NC President, Broadband Solutions Network Company, Sony Corporation | ||
1999 | Senior Executive Vice President, Corporate Executive Officer, Chief Operating Officer, NC President, Home Network Company, Sony Corporation | ||
1997 | Corporate Senior Vice President, (resigned as Director), Sony Corporation | ||
1996 | President, Personal A&V Products Company, Sony Corporation | ||
1995 | Executive Vice President, Consumer A&V Products Company, Sony Corporation | ||
1995 | Director, Sony Corporation | ||
1990 | Senior General Manager, General Audio Group, Sony Corporation | ||
1962 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None |
Keiji Kimura | ||
Date of Birth: April 4, 1952 | ||
Corporate Executive Officer Since: 2004 | ||
Current Positions: | Senior Executive Vice President, NC President, Information Technology & Communications Network Company, Officer in charge of Connect Company |
Prior Positions: | |||
2003 | Senior Vice President, Executive Officer, Sony Corporation | ||
2002 | Corporate Senior Vice President, Sony Corporation | ||
2001 | NC President, Mobile Network Company, Sony Corporation | ||
2000 | Corporate Vice President, Sony Corporation NC President, Information Technology Company, Personal Network Company, Sony Corporation | ||
1977 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None |
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Fujio Nishida | ||
Date of Birth: November 26, 1948 | ||
Corporate Executive Officer Since: 2004 | ||
Current Positions: | Executive Vice President, President, Global Marketing Group, Deputy President, Information Technology & Communications Network Company, Deputy President, Personal Audio Visual Network Company, Officer in charge of Marketing and Corporate Communications |
Prior Positions: | |||
2003 | Senior Vice President and Electronics Chief Marketing Officer, Executive Officer, Sony Corporation | ||
2000 | Group Executive Officer, Sony Corporation President and Chief Operating Officer, Sony Electronics Inc. | ||
2000 | President, Consumer Electronics Group, Sony Electronics Inc. | ||
1998 | President, Consumer Products Marketing Group, Sony Electronics Inc. | ||
1996 | Senior Vice President, Home A/ V Division, Consumer AV Group, Sony Electronics Inc. (a U.S. subsidiary of Sony Corporation) | ||
1972 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None | |||
Takao Yuhara | |||
Date of Birth: June 7, 1946 | |||
Corporate Executive Officer Since: 2003 | |||
Current Positions: Senior Vice President, Officer in charge of Finance and Investor Relations | |||
Prior Positions: | |||
2003 | Group Chief Financial Officer, Sony Corporation | ||
2001 | Senior General Manager, Corporate Planning & Control, Global Hub, Sony Corporation | ||
1999 | Senior Vice President, Corporate Planning & Control, Group HQ, Sony Corporation | ||
1996 | Vice President, Display Company, General Manager, Planning & Control Department, Display Company, Sony Corporation | ||
1995 | General Manager, Planning & Control Department, Display Device Division, Component Company, Sony Corporation | ||
1971 | Entered Sony Corporation | ||
1969 | Entered Nippon Chemical Industrial Co., Ltd. | ||
Principal Business Activities Outside Sony: None |
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Nobuyuki Oneda | ||
Date of Birth: May 6, 1945 | ||
Corporate Executive Officer Since: 2004 | ||
Current Positions: | Senior Vice President, Officer in charge of Transformation 60, Corporate Planning & Control, Accounting and Information Systems |
Prior Positions: | |||
2003 | Senior Vice President, Executive Officer, Sony Corporation | ||
2002 | Officer and Chief Financial Officer, Network Application & Content Service Sector, Sony Corporation, Corporate Senior Vice President, Sony Corporation | ||
2000 | Deputy President, and Chief Financial Officer, Sony Electronics Inc. Group Executive Officer, Sony Corporation | ||
1999 | Executive Vice President and Chief Financial Officer, Sony Electronics Inc. (a U.S. subsidiary of Sony Corporation) | ||
1996 | General Manager, Corporate Planning & Control Department, Sony Corporation | ||
1969 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None | |||
Yasunori Kirihara | |||
Date of Birth: November 20, 1946 | |||
Corporate Executive Officer Since: 2004 | |||
Current Positions: Senior Vice President, Officer in charge of Corporate Human Resources | |||
Prior Positions: | |||
2003 | Vice President, Executive Officer, Sony Corporation | ||
1998 | Representative Director and President, Sony Service Corporation | ||
1997 | Senior Vice President, Recording Media & Energy Company, Sony Corporation | ||
1989 | General Manager, Human Resources, Human Resources Development, Sony Corporation | ||
1970 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None |
Nicole Seligman | ||
Date of Birth: October 25, 1956 | ||
Corporate Executive Officer Since: 2003 | ||
Current Positions: | Group Deputy General Counsel, Sony Corporation Executive Vice President and General Counsel, Sony Corporation of America |
Prior Positions: | |||
2000 | Entered Sony Corporation of America as Executive Vice President and General Counsel | ||
1992 | Partner, Williams & Connolly LLP | ||
1985 | Entered Williams & Connolly LLP | ||
1978 | Associate Editorial Page Editor for The Asian Wall Street Journal, Hong Kong | ||
Principal Business Activities Outside Sony: None |
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Yutaka Nakagawa | ||
Date of Birth: December 4, 1945 | ||
Current Positions: | Executive Vice President, Executive Officer, NC President, Personal Audio Visual Network Company, President, Personal Audio Business Group |
Prior Positions: | |||
2003 | Deputy President, Micro Systems Network Company, President, Energy Company, MSNC, Sony Corporation | ||
1999 | Corporate Senior Vice President, Sony Corporation | ||
1998 | President, Personal and Mobile Communication Company, Sony Corporation | ||
1997 | Corporate Vice President, Sony Corporation | ||
1992 | General Manager, Camcorder Products Division, Personal Video Group, Sony Corporation | ||
1968 | Entered Sony Corporation | ||
Principal Business Activities Outside Sony: None |
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March 31 | |||||||||||||
2003 | 2004 | 2005 | |||||||||||
Electronics | 128,000 | 127,100 | 123,600 | ||||||||||
Game | 4,400 | 4,800 | 4,300 | ||||||||||
Music | 8,400 | 6,600 | 2,100 | ||||||||||
Pictures | 5,700 | 6,200 | 5,900 | ||||||||||
Financial Services | 6,600 | 6,700 | 6,800 | ||||||||||
Other | 7,300 | 8,300 | 6,800 | ||||||||||
Unallocated — Corporate employees | 700 | 2,300 | 1,900 | ||||||||||
Total | 161,100 | 162,000 | 151,400 | ||||||||||
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Number of shares | Percentage | |||||
Title of class | Identity of person or group | beneficially owned | of class | |||
(In thousands) | ||||||
Common Stock | Directors and Executive Officers | 1,161 | 0.1 |
Total number of | ||||
Year granted | shares subject to stock | |||
(Fiscal Year Ended March 31) | acquisition rights | Exercise price per share | ||
(In thousands) | ||||
2005 | 230 | 40.34 U.S. dollars | ||
2005 | 482 | 3,782 yen | ||
2004 | 225 | 40.90 U.S. dollars | ||
2004 | 444 | 4,101 yen | ||
2003 | 200 | 36.57 U.S. dollars | ||
2003 | 345 | 5,396 yen |
Year granted | Total number of shares | |||
(Fiscal Year ended March 31) | subject to warrants | Exercise price per share | ||
(In thousands) | (Yen) | |||
2000 | 153 | 7,167 | ||
2001 | 245 | 12,457 | ||
2002 | 275 | 6,039 |
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Year issued | Total number of shares | |||
(Fiscal Year Ended March 31) | subject to CBs | Exercise price per share | ||
(In thousands) | (U.S. dollars) | |||
2001 | 60 | 122.98 | ||
2002 | 106 | 71.28 | ||
2003 | 115 | 52.29 |
Year granted | Total number of shares | |||
(Fiscal Year Ended March 31) | subject to SARs | Exercise price per share | ||
(In thousands) | (Yen for the Japanese plan, | |||
U.S. dollars for the U.S. plan) | ||||
The Japanese plan | ||||
2000 | 10 | 7,445 | ||
The U.S. plan | ||||
2002 | 10 | 44.00 |
Item 7. | Major Shareholders and Related Party Transactions |
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Item 8. | Financial Information |
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Item 9. | The Offer and Listing |
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Tokyo Stock | New York Stock | |||||||||||||||||
Exchange Price | Exchange Price | |||||||||||||||||
Per Share of | Per Share of | |||||||||||||||||
Common Stock | ADS | |||||||||||||||||
High | Low | High | Low | |||||||||||||||
(Yen) | (U.S. dollars) | |||||||||||||||||
Annual highs and lows* | ||||||||||||||||||
The fiscal year ended March 31, 2001 | 15,100 | 7,510 | 141.25 | 65.40 | ||||||||||||||
The fiscal year ended March 31, 2002 | 10,340 | 3,960 | 85.75 | 32.80 | ||||||||||||||
The fiscal year ended March 31, 2003 | 7,460 | 4,070 | 59.95 | 34.85 | ||||||||||||||
Quarterly highs and lows* | ||||||||||||||||||
The fiscal year ended March 31, 2004 | ||||||||||||||||||
1st quarter | 4,240 | 2,720 | 35.82 | 23.16 | ||||||||||||||
2nd quarter | 4,450 | 3,350 | 38.30 | 28.33 | ||||||||||||||
3rd quarter | 4,280 | 3,490 | 38.04 | 32.42 | ||||||||||||||
4th quarter | 4,670 | 3,760 | 42.81 | 34.81 | ||||||||||||||
The fiscal year ended March 31, 2005 | ||||||||||||||||||
1st quarter | 4,710 | 3,880 | 43.67 | 33.95 | ||||||||||||||
2nd quarter | 4,200 | 3,550 | 38.50 | 32.35 | ||||||||||||||
3rd quarter | 3,990 | 3,620 | 39.20 | 33.77 | ||||||||||||||
4th quarter | 4,420 | 3,750 | 41.81 | 36.26 | ||||||||||||||
Monthly highs and lows* | ||||||||||||||||||
2004 | ||||||||||||||||||
December | 3,990 | 3,670 | 38.76 | 35.75 | ||||||||||||||
2005 | ||||||||||||||||||
January | 4,090 | 3,750 | 39.53 | 36.26 | ||||||||||||||
February | 4,010 | 3,770 | 38.31 | 36.46 | ||||||||||||||
March | 4,420 | 3,960 | 41.81 | 37.85 | ||||||||||||||
April | 4,410 | 3,830 | 40.79 | 35.77 | ||||||||||||||
May | 4,140 | 3,850 | 38.45 | 36.30 | ||||||||||||||
June (through June 20) | 4,080 | 3,860 | 37.63 | 35.10 |
* | Stock price data are based on prices throughout the sessions for each corresponding period at each stock exchange. |
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Item 10. | Additional Information |
(i) | manufacture and sale of electronic and electrical machines and equipment, medical instruments, optical instruments and other equipment, machines and instruments; | |
(ii) | planning, production and sale of audio-visual software and computer software programs; | |
(iii) | manufacture and sale of metal industrial products, chemical industrial products and ceramic industrial products, textile products, paper products and wood-crafted articles, daily necessities, foodstuffs and toys, transportation machines, equipment, petroleum and coal products; | |
(iv) | real estate activities, construction business, transportation business and warehousing business; | |
(v) | publishing business and printing business; | |
(vi) | advertising agency business, insurance agency business, broadcasting enterprise, recreation business such as travel, management of sporting facilities, etc. and other service enterprises; | |
(vii) | financial business; | |
(viii) | Type I and Type II telecommunications business under the Telecommunications Business Law; | |
(ix) | investing in stocks and bonds, etc.; | |
(x) | manufacture, sale, export and import of products which are incidental to or related to those mentioned above; | |
(xi) | rendering of services related to those mentioned above; | |
(xii) | investment in businesses mentioned above operated by other companies or persons; and | |
(xiii) | all businesses which are incidental to or related to those mentioned above. |
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(i) | its stated capital; | |
(ii) | its additional paid-in capital; | |
(iii) | its accumulated legal reserve; | |
(iv) | the legal reserve to be set aside in respect of the fiscal period concerned; and | |
(v) | such other amounts as are provided for by an ordinance of the Ministry of Justice. |
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(1) | its liabilities; | |
(2) | its stated capital; | |
(3) | its additional paid-in capital and accumulated legal reserve; | |
(4) | other amounts as provided for by an ordinance of the Ministry of Justice; | |
(5) | (if Sony Corporation transferred its treasury stock after the end of the last fiscal year) the transfer price of its treasury stock after subtracting the book value thereof; | |
(6) | (if Sony Corporation decreased its stated capital after the end of the last fiscal year) the amount of decrease in its stated capital (excluding the amount transferred to the additional paid-in capital or legal reserve); | |
(7) | (if Sony Corporation decreased its additional paid-in capital or legal reserve after the end of the last fiscal year) the amount of decrease in its additional paid-in capital or legal reserve (excluding the amount transferred to the stated capital); | |
(8) | (if Sony Corporation cancelled its treasury stock after the end of the last fiscal year) the book value of its treasury stock so cancelled; | |
(9) | (if Sony Corporation distributed surplus to shareholders after the end of the last fiscal year) the assets distributed to shareholders by way of such distribution of surplus; and | |
(10) | other amounts as provided for by an ordinance of the Ministry of Justice. |
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(1) | the book value of its treasury stock; | |
(2) | (if Sony Corporation transferred its treasury stock after the end of the last fiscal year) the transfer price of its treasury stock; | |
(3) | the losses as recorded for the period after the end of Sony Corporation’s last fiscal year until the date of an extraordinary settlement of account (if any) as provided for in an ordinance of the Ministry of Justice; and | |
(4) | other amounts as provided for by an ordinance of the Ministry of Justice. |
(1) | the book value of Sony Corporation’s treasury stock; | |
(2) | (if Sony Corporation transferred its treasury stock after the end of the last fiscal year) the transfer price of its treasury stock after the end of Sony Corporation’s last fiscal year; | |
(3) | other amounts as provided for by an ordinance of the Ministry of Justice. |
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(1) | acquisition of its own shares from a specific party; | |
(2) | consolidation of shares; | |
(3) | any offering of new shares at a “specially favorable” price (or any offering of stock acquisition rights to subscribe for or acquire shares of capital stock, or bonds with stock acquisition rights at “specially favorable” conditions) to any persons other than shareholders; | |
(4) | the removal of a Director (when the New Company Law becomes effective, the removal of a Director who is elected by cumulative voting); | |
(5) | the exemption of liability of a Director or Corporate Executive Officer with certain exceptions; | |
(6) | a reduction of stated capital (when the New Company Law becomes effective, with certain exceptions in which a shareholders’ resolution is not required); | |
(7) | (when the New Company Law becomes effective) a distribution of in-kind dividends which meets certain requirements; | |
(8) | dissolution, merger, or consolidation with certain exceptions in which a shareholders’ resolution is not required; | |
(9) | the transfer of the whole or a material part of the business; | |
(10) | the taking over of the whole of the business of any other corporation with certain exceptions in which a shareholders’ resolution is not required; | |
(11) | share exchange or share transfer for the purpose of establishing 100 percent parent-subsidiary relationships with certain exceptions in which a shareholders’ resolution is not required; or | |
(12) | separating of the corporation into two or more corporations with certain exceptions in which a shareholders’ resolution is not required, |
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(i) | SCN transfers its assets representing 80 percent or more of the total assets appearing on its most recent consolidated balance sheet or transfers its business as a result of which its consolidated revenue is expected to decrease by 80 percent or more from its most recent consolidated profit and loss statement; | |
(ii) | SCN ceases to be a subsidiary of Sony Corporation; | |
(iii) | the number of shares of capital stock of SCN which Sony Corporation directly holds becomes less than the total number of outstanding shares of tracking stock multiplied by the Standard Ratio and such situation continues for a period of 3 months or more; | |
(iv) | a resolution was taken by SCN’s shareholders for its dissolution; | |
(v) | certain events of bankruptcy; or | |
(vi) | occurrence of any event which causes de-listing or de-registration of the subsidiary tracking stock from all Stock Exchanges where the tracking stock is listed or registered. |
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• | individuals who do not reside in Japan; and | |
• | corporations whose principal offices are located outside Japan. |
• | individuals who are exchange non-residents; | |
• | corporations that are organized under the laws of foreign countries or whose principal offices are located outside of Japan; and | |
• | corporations (1) of which 50 percent or more of their shares are held by individuals who are exchange non-residents and/or corporations (a) that are organized under the laws of foreign countries or (b) whose principal offices are located outside of Japan or (2) a majority of whose officers, or officers having the power of representation, are individuals who are exchange non-residents. |
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(i) | is a resident of the U.S. for purposes of the Treaty; | |
(ii) | does not maintain a permanent establishment in Japan (a) with which shares of Common Stock or ADSs of Sony Corporation are effectively connected or (b) of which shares of Common Stock or ADSs of Sony Corporation form part of the business property; and | |
(iii) | is eligible for benefits under the Treaty with respect to income and gain derived in connection with shares of Common Stock or ADSs of Sony Corporation. |
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Item 11. | Quantitative and Qualitative Disclosures about Market Risk |
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June 30, | September 30, | December 30, | March 31, | |||||||||||||
2004 | 2004 | 2004 | 2005 | |||||||||||||
(Yen in billions) | ||||||||||||||||
Net VaR | 3.5 | 1.7 | 2.3 | 1.9 | ||||||||||||
VaR of currency exchange rate risk | 1.1 | 0.8 | 0.7 | 0.6 | ||||||||||||
VaR of interest rate risk | 0.2 | 0.1 | 0.1 | 0.1 | ||||||||||||
VaR of stock price risk | 3.1 | 1.5 | 2.1 | 1.7 |
June 30, | September 30, | December 30, | March 31, | |||||||||||||
2004 | 2004 | 2004 | 2005 | |||||||||||||
(Yen in billions) | ||||||||||||||||
Net VaR | 3.2 | 1.4 | 2.1 | 1.7 | ||||||||||||
VaR of currency exchange rate risk | 0.2 | 0.2 | 0.2 | 0.2 | ||||||||||||
VaR of interest rate risk | 0.2 | 0.1 | 0.1 | 0.1 | ||||||||||||
VaR of stock price risk | 3.1 | 1.5 | 2.1 | 1.7 |
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June 30, | September 30, | December 30, | March 31, | |||||||||||||
2004 | 2004 | 2004 | 2005 | |||||||||||||
(Yen in billions) | ||||||||||||||||
Net VaR | 1.0 | 0.8 | 0.6 | 0.5 | ||||||||||||
VaR of currency exchange rate risk | 1.0 | 0.8 | 0.6 | 0.5 | ||||||||||||
VaR of interest rate risk | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||
VaR of stock price risk | 0.0 | 0.0 | 0.0 | �� | 0.0 |
Item 12. | Description of Securities Other Than Equity Securities |
Item 13. | Defaults, Dividend Arrearages and Delinquencies |
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
Item 15. | Controls and Procedures |
Item 16. | [Reserved] |
Item 16A. | Audit Committee Financial Expert |
Item 16B. | Code of Ethics |
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March 31 | ||||||||
2004 | 2005 | |||||||
(Yen in millions) | ||||||||
Audit Fees | 2,118 | 1,939 | ||||||
Audit-Related Fees(1) | 284 | 570 | ||||||
Tax Fees(2) | 970 | 737 | ||||||
All Other Fees(3) | 150 | 68 | ||||||
3,522 | 3,314 | |||||||
(1) | Audit-Related Fees consist primarily of employee benefit plan audits and due diligence related to mergers. |
(2) | Tax Fees primarily include tax compliance, tax advice, tax planning and expatriate tax services. |
(3) | All Other Fees comprise fees for all other services not included in any of the other categories noted above. |
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(c) Total Number | (d) Maximum | |||||||||||||||
of Shares | Number of Shares | |||||||||||||||
(a) Total | Purchased as Part | that May Yet Be | ||||||||||||||
Number of | (b) Average | of Publicly | Purchased Under | |||||||||||||
Shares | Price Paid | Announced Plans | the Plans or | |||||||||||||
Period | Purchased | per Share | or Programs | Programs | ||||||||||||
April 1st — 30th, 2005 | 5,532 | 4,461.48 | N/A | N/A | ||||||||||||
May 1st — 31st, 2005 | 3,448 | 4,087.27 | N/A | N/A | ||||||||||||
June 1st — 30th, 2005 | 7,476 | 4,040.85 | N/A | N/A | ||||||||||||
July 1st — 31st, 2005 | 7,284 | 4,021.33 | N/A | N/A | ||||||||||||
August 1st — 31st, 2005 | 4,464 | 3,752.49 | N/A | N/A | ||||||||||||
September 1st — 30th, 2005 | 6,530 | 3,837.16 | N/A | N/A | ||||||||||||
October 1st — 31st, 2005 | 7,131 | 3,772.45 | N/A | N/A | ||||||||||||
November 1st — 30th, 2005 | 12,726 | 3,749.51 | N/A | N/A | ||||||||||||
December 1st — 31st, 2005 | 21,959 | 3,874.00 | N/A | N/A | ||||||||||||
January 1st — 31st, 2005 | 8,355 | 3,963.88 | N/A | N/A | ||||||||||||
February 1st — 28th, 2005 | 6,133 | 3,905.57 | N/A | N/A | ||||||||||||
March 1st — 31st, 2005 | 13,847 | 4,232.54 | N/A | N/A | ||||||||||||
Total | 104,885 | 3,960.99 | N/A | N/A |
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Item 17. | Financial Statements |
Item 18. | Financial Statements |
1.1 | Articles of Incorporation, including proposed amendments to be ratified at the Ordinary General Shareholders’ Meeting to be held on June 22, 2005 (English Translation) | |
1.2 | Regulations of the Board of Directors, as amended, including an amendment to be effective as of June 22, 2005 (English Translation) | |
8.1 | Significant subsidiaries (as defined in §210.1-02(w) of Regulation S-X) of Sony Corporation, including additional subsidiaries that management has deemed to be significant, as of March 31, 2005: Incorporated by reference to “Business Overview and Organizational Structure” in “Item 4. Information on the Company” | |
12.1 | Principal Executive Officer Certification Required by 17 C.F.R. 240.13a-14(a) | |
12.2 | Principal Financial Officer Certification Required by 17 C.F.R. 240.13a-14(a) | |
13 | Chief Executive Officer Certification required by 18 U.S.C. Section 1350 | |
Chief Financial Officer Certification required by 18 U.S.C. Section 1350 | ||
15.1 | Consent of ChuoAoyama PricewaterhouseCoopers |
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Sony Corporation | |
(Registrant) |
By: | /s/Katsumi Ihara |
(Signature) | |
Katsumi Ihara | |
Executive Deputy President | |
Group Chief Strategy Officer & | |
Group Chief Financial Officer |
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/s/ChuoAoyama PricewaterhouseCoopers |
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F-3
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Year Ended March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | 849,211 | 779,103 | |||||||
Time deposits | 4,662 | 1,492 | |||||||
Marketable securities | 274,748 | 460,202 | |||||||
Notes and accounts receivable, trade | 1,123,863 | 1,113,071 | |||||||
Allowance for doubtful accounts and sales returns | (112,674 | ) | (87,709 | ) | |||||
Inventories | 666,507 | 631,349 | |||||||
Deferred income taxes | 125,532 | 141,154 | |||||||
Prepaid expenses and other current assets | 431,506 | 517,509 | |||||||
Total current assets | 3,363,355 | 3,556,171 | |||||||
Film costs | 256,740 | 278,961 | |||||||
Investments and advances: | |||||||||
Affiliated companies | 86,253 | 252,905 | |||||||
Securities investments and other | 2,426,697 | 2,492,784 | |||||||
2,512,950 | 2,745,689 | ||||||||
Property, plant and equipment | |||||||||
Land | 189,785 | 182,900 | |||||||
Buildings | 930,983 | 925,796 | |||||||
Machinery and equipment | 2,053,085 | 2,192,038 | |||||||
Construction in progress | 98,480 | 92,611 | |||||||
3,272,333 | 3,393,345 | ||||||||
Less — Accumulated depreciation | 1,907,289 | 2,020,946 | |||||||
1,365,044 | 1,372,399 | ||||||||
Other assets: | |||||||||
Intangibles, net | 248,010 | 187,024 | |||||||
Goodwill | 277,870 | 283,923 | |||||||
Deferred insurance acquisition costs | 349,194 | 374,805 | |||||||
Deferred income taxes | 203,203 | 240,396 | |||||||
Other | 514,296 | 459,732 | |||||||
1,592,573 | 1,545,880 | ||||||||
9,090,662 | 9,499,100 | ||||||||
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Year Ended March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term borrowings | 91,260 | 63,396 | |||||||
Current portion of long-term debt | 383,757 | 166,870 | |||||||
Notes and accounts payable, trade | 778,773 | 806,044 | |||||||
Accounts payable, other and accrued expenses | 812,175 | 746,466 | |||||||
Accrued income and other taxes | 57,913 | 55,651 | |||||||
Deposits from customers in the banking business | 378,851 | 546,718 | |||||||
Other | 479,486 | 424,223 | |||||||
Total current liabilities | 2,982,215 | 2,809,368 | |||||||
Long-term liabilities: | |||||||||
Long-term debt | 777,649 | 678,992 | |||||||
Accrued pension and severance costs | 368,382 | 352,402 | |||||||
Deferred income taxes | 96,193 | 72,227 | |||||||
Future insurance policy benefits and other | 2,178,626 | 2,464,295 | |||||||
Other | 286,737 | 227,631 | |||||||
3,707,587 | 3,795,547 | ||||||||
Minority interest in consolidated subsidiaries | 22,858 | 23,847 | |||||||
Stockholders’ equity: | |||||||||
Subsidiary tracking stock, no par value — | |||||||||
Authorized 100,000,000 shares, outstanding 3,072,000 shares | 3,917 | 3,917 | |||||||
Common stock, no par value — | |||||||||
2004 — Authorized 3,500,000,000 shares, outstanding 926,418,280 shares | 476,350 | ||||||||
2005 — Authorized 3,500,000,000 shares, outstanding 997,211,213 shares | 617,792 | ||||||||
Additional paid-in capital | 992,817 | 1,134,222 | |||||||
Retained earnings | 1,367,060 | 1,506,082 | |||||||
Accumulated other comprehensive income — | |||||||||
Unrealized gains on securities | 69,950 | 62,669 | |||||||
Unrealized losses on derivative instruments | (600 | ) | (2,490 | ) | |||||
Minimum pension liability adjustment | (89,261 | ) | (90,030 | ) | |||||
Foreign currency translation adjustments | (430,048 | ) | (355,824 | ) | |||||
(449,959 | ) | (385,675 | ) | ||||||
Treasury stock, at cost | |||||||||
Subsidiary tracking stock | |||||||||
(2004 — 0 shares, 2005 — 32 shares) | — | (0 | ) | ||||||
Common stock | |||||||||
(2004 — 2,468,258 shares, 2005 — 1,118,984 shares) | (12,183 | ) | (6,000 | ) | |||||
2,378,002 | 2,870,338 | ||||||||
Commitments and contingent liabilities | |||||||||
9,090,662 | 9,499,100 | ||||||||
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Year Ended March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
(Yen in millions) | ||||||||||||
Sales and operating revenue: | ||||||||||||
Net sales | 6,916,042 | 6,883,478 | 6,565,010 | |||||||||
Financial service revenue | 509,398 | 565,752 | 537,715 | |||||||||
Other operating revenue | 48,193 | 47,161 | 56,891 | |||||||||
7,473,633 | 7,496,391 | 7,159,616 | ||||||||||
Costs and expenses: | ||||||||||||
Cost of sales | 4,979,421 | 5,058,205 | 5,000,112 | |||||||||
Selling, general and administrative | 1,782,367 | 1,798,239 | 1,535,015 | |||||||||
Financial service expenses | 486,464 | 505,550 | 482,576 | |||||||||
Loss on sale, disposal or impairment of assets, net | 39,941 | 35,495 | 27,994 | |||||||||
7,288,193 | 7,397,489 | 7,045,697 | ||||||||||
Operating income | 185,440 | 98,902 | 113,919 | |||||||||
Other income: | ||||||||||||
Interest and dividends | 14,441 | 18,756 | 14,708 | |||||||||
Royalty income | 32,375 | 34,244 | 31,709 | |||||||||
Foreign exchange gain, net | 1,928 | 18,059 | — | |||||||||
Gain on sale of securities investments, net | 72,552 | 11,774 | 5,437 | |||||||||
Gain on change in interest in subsidiaries and equity investees | — | 4,870 | 16,322 | |||||||||
Other | 36,232 | 34,587 | 29,447 | |||||||||
157,528 | 122,290 | 97,623 | ||||||||||
Other expenses: | ||||||||||||
Interest | 27,314 | 27,849 | 24,578 | |||||||||
Loss on devaluation of securities investments | 23,198 | 16,481 | 3,715 | |||||||||
Foreign exchange loss, net | — | — | 524 | |||||||||
Other | 44,835 | 32,795 | 25,518 | |||||||||
95,347 | 77,125 | 54,335 | ||||||||||
Income before income taxes | 247,621 | 144,067 | 157,207 | |||||||||
Income taxes: | ||||||||||||
Current | 178,847 | 87,219 | 85,510 | |||||||||
Deferred | (98,016 | ) | (34,445 | ) | (69,466 | ) | ||||||
80,831 | 52,774 | 16,044 | ||||||||||
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Year Ended March 31 | ||||||||||||||
2003 | 2004 | 2005 | ||||||||||||
(Yen in millions) | ||||||||||||||
Income before minority interest, equity in net income (loss) of affiliated companies and cumulative effect of an accounting change | 166,790 | 91,293 | 141,163 | |||||||||||
Minority interest in income of consolidated subsidiaries | 6,581 | 2,379 | 1,651 | |||||||||||
Equity in net income (loss) of affiliated companies | (44,690 | ) | 1,714 | 29,039 | ||||||||||
Income before cumulative effect of an accounting change | 115,519 | 90,628 | 168,551 | |||||||||||
Cumulative effect of an accounting change (2004: Net of income taxes of 0 million 2005: Net of income taxes of 2,675 million) | — | (2,117 | ) | (4,713 | ) | |||||||||
Net income | 115,519 | 88,511 | 163,838 | |||||||||||
Per share data: | ||||||||||||||
Common stock | ||||||||||||||
Income before cumulative effect of an accounting change | ||||||||||||||
— Basic | 125.74 | 98.26 | 180.96 | |||||||||||
— Diluted | 118.21 | 89.03 | 162.59 | |||||||||||
Cumulative effect of an accounting change | ||||||||||||||
— Basic | — | (2.29 | ) | (5.06 | ) | |||||||||
— Diluted | — | (2.03 | ) | (4.52 | ) | |||||||||
Net income | ||||||||||||||
— Basic | 125.74 | 95.97 | 175.90 | |||||||||||
— Diluted | 118.21 | 87.00 | 158.07 | |||||||||||
Cash dividends | 25.00 | 25.00 | 25.00 | |||||||||||
Subsidiary tracking stock | ||||||||||||||
Net income (loss) | ||||||||||||||
— Basic | (41.98 | ) | (41.80 | ) | 17.21 | |||||||||
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Year Ended March 31 | ||||||||||||||||
2003 | 2004 | 2005 | ||||||||||||||
(Yen in millions) | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | 115,519 | 88,511 | 163,838 | |||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities — | ||||||||||||||||
Depreciation and amortization, including amortization of deferred insurance acquisition costs | 351,925 | 366,269 | 372,865 | |||||||||||||
Amortization of film costs | 312,054 | 305,786 | 276,320 | |||||||||||||
Accrual for pension and severance costs, less payments | 37,858 | 35,562 | 22,837 | |||||||||||||
Loss on sale, disposal or impairment of assets, net | 39,941 | 35,495 | 27,994 | |||||||||||||
Gain on sale or loss on devaluation of securities investments, net | (49,354 | ) | 4,707 | (1,722 | ) | |||||||||||
Gain on change in interest in subsidiaries and equity investees | — | (4,870 | ) | (16,322 | ) | |||||||||||
Deferred income taxes | (98,016 | ) | (34,445 | ) | (69,466 | ) | ||||||||||
Equity in net (income) losses of affiliated companies, net of dividends | 46,692 | 1,732 | (15,648 | ) | ||||||||||||
Cumulative effect of an accounting change | — | 2,117 | 4,713 | |||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
(Increase) decrease in notes and accounts receivable, trade | 174,679 | (63,010 | ) | (22,056 | ) | |||||||||||
(Increase) decrease in inventories | 36,039 | (78,656 | ) | 34,128 | ||||||||||||
Increase in film costs | (317,953 | ) | (299,843 | ) | (294,272 | ) | ||||||||||
Increase (decrease) in notes and accounts payable, trade | (58,384 | ) | 93,950 | 31,473 | ||||||||||||
Increase (decrease) in accrued income and other taxes | 14,637 | (46,067 | ) | 3 | ||||||||||||
Increase in future insurance policy benefits and other | 233,992 | 264,216 | 144,143 | |||||||||||||
Increase in deferred insurance acquisition costs | (66,091 | ) | (71,219 | ) | (65,051 | ) | ||||||||||
(Increase) decrease in marketable securities held in the financial service business for trading purpose | — | 369 | (28,524 | ) | ||||||||||||
(Increase) decrease in other current assets | 29,095 | (34,991 | ) | (29,699 | ) | |||||||||||
Increase in other current liabilities | 26,205 | 44,772 | 46,545 | |||||||||||||
Other | 24,950 | 22,250 | 64,898 | |||||||||||||
Net cash provided by operating activities | 853,788 | 632,635 | 646,997 | |||||||||||||
F-8
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Year Ended March 31 | ||||||||||||||
2003 | 2004 | 2005 | ||||||||||||
(Yen in millions) | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||
Payments for purchases of fixed assets | (275,285 | ) | (427,344 | ) | (453,445 | ) | ||||||||
Proceeds from sales of fixed assets | 25,711 | 33,987 | 34,184 | |||||||||||
Payments for investments and advances by financial service business | (1,012,508 | ) | (1,167,945 | ) | (1,309,092 | ) | ||||||||
Payments for investments and advances (other than financial service business) | (123,839 | ) | (33,329 | ) | (158,151 | ) | ||||||||
Proceeds from maturities of marketable securities, sales of securities investments and collections of advances by financial service business | 529,395 | 791,188 | 923,593 | |||||||||||
Proceeds from maturities of marketable securities, sales of securities investments and collections of advances (other than financial service business) | 148,977 | 35,521 | 25,849 | |||||||||||
Other | 1,124 | 6,130 | 5,890 | |||||||||||
Net cash used in investing activities | (706,425 | ) | (761,792 | ) | (931,172 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from issuance of long-term debt | 12,323 | 267,864 | 57,232 | |||||||||||
Payments of long-term debt | (238,144 | ) | (32,042 | ) | (94,862 | ) | ||||||||
Increase (decrease) in short-term borrowings | (7,970 | ) | (57,708 | ) | 11,397 | |||||||||
Increase in deposits from customers in the financial service business | 142,023 | 129,874 | 294,352 | |||||||||||
Increase (decrease) in call money and bills sold in the banking business | 24,700 | 30,300 | (40,400 | ) | ||||||||||
Dividends paid | (22,871 | ) | (23,106 | ) | (22,978 | ) | ||||||||
Other | (3,195 | ) | (1,899 | ) | 436 | |||||||||
Net cash provided by (used in) financing activities | (93,134 | ) | 313,283 | 205,177 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (24,971 | ) | (47,973 | ) | 8,890 | |||||||||
Net increase (decrease) in cash and cash equivalents | 29,258 | 136,153 | (70,108 | ) | ||||||||||
Cash and cash equivalents at beginning of the fiscal year | 683,800 | 713,058 | 849,211 | |||||||||||
Cash and cash equivalents at end of the fiscal year | 713,058 | 849,211 | 779,103 | |||||||||||
Supplemental data: | ||||||||||||||
Cash paid during the year for — | ||||||||||||||
Income taxes | 171,531 | 114,781 | 65,477 | |||||||||||
Interest | 22,216 | 22,571 | 18,187 | |||||||||||
Non-cash investing and financing activities — | ||||||||||||||
Conversion of convertible bonds | 344 | 7,977 | 282,744 | |||||||||||
Obtaining assets by entering into capital lease | 9,034 | 18,298 | 19,049 | |||||||||||
Contribution of Net assets into the Joint Venture with Bertelsmann AG | — | — | 9,402 | |||||||||||
F-9
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Year Ended March 31 | |||||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||||
Subsidiary | Additional | other | Treasury | ||||||||||||||||||||||||||||
tracking | Common | paid-in | Retained | comprehensive | stock, at | ||||||||||||||||||||||||||
stock | stock | capital | earnings | income | cost | Total | |||||||||||||||||||||||||
(Yen in millions) | |||||||||||||||||||||||||||||||
Balance at March 31, 2002 | 3,917 | 472,189 | 968,223 | 1,209,262 | (275,593 | ) | (7,588 | ) | 2,370,410 | ||||||||||||||||||||||
Conversion of convertible bonds | 172 | 172 | 344 | ||||||||||||||||||||||||||||
Stock issued under exchange offering | 15,791 | 15,791 | |||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||
Net income | 115,519 | 115,519 | |||||||||||||||||||||||||||||
Other comprehensive income, net of tax | |||||||||||||||||||||||||||||||
Unrealized gains on securities: | |||||||||||||||||||||||||||||||
Unrealized holding gains or losses arising during the period | (9,627 | ) | (9,627 | ) | |||||||||||||||||||||||||||
Less: Reclassification adjustment for gains or losses included in net income | 4,288 | 4,288 | |||||||||||||||||||||||||||||
Unrealized losses on derivative instruments: | |||||||||||||||||||||||||||||||
Unrealized holding gains or losses arising during the period | (4,477 | ) | (4,477 | ) | |||||||||||||||||||||||||||
Less: Reclassification adjustment for gains or losses included in net income | 395 | 395 | |||||||||||||||||||||||||||||
Minimum pension liability adjustment | (110,636 | ) | (110,636 | ) | |||||||||||||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||||||||||||||||
Translation adjustments arising during the period | (83,993 | ) | (83,993 | ) | |||||||||||||||||||||||||||
Less: Reclassification adjustment for losses included in net income | 7,665 | 7,665 | |||||||||||||||||||||||||||||
Total comprehensive income | (80,866 | ) | |||||||||||||||||||||||||||||
Stock issue costs, net of tax | (19 | ) | (19 | ) | |||||||||||||||||||||||||||
Dividends declared | (23,022 | ) | (23,022 | ) | |||||||||||||||||||||||||||
Purchase of treasury stock | (1,817 | ) | (1,817 | ) | |||||||||||||||||||||||||||
Reissuance of treasury stock | 10 | 64 | 74 | ||||||||||||||||||||||||||||
Balance at March 31, 2003 | 3,917 | 472,361 | 984,196 | 1,301,740 | (471,978 | ) | (9,341 | ) | 2,280,895 | ||||||||||||||||||||||
F-10
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Year Ended March 31 | |||||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||||
Subsidiary | Additional | other | Treasury | ||||||||||||||||||||||||||||
tracking | Common | paid-in | Retained | comprehensive | stock, at | ||||||||||||||||||||||||||
stock | stock | capital | earnings | income | cost | Total | |||||||||||||||||||||||||
(Yen in millions) | |||||||||||||||||||||||||||||||
Balance at March 31, 2003 | 3,917 | 472,361 | 984,196 | 1,301,740 | (471,978 | ) | (9,341 | ) | 2,280,895 | ||||||||||||||||||||||
Conversion of convertible bonds | 3,989 | 3,988 | 7,977 | ||||||||||||||||||||||||||||
Stock issued under exchange offering | 5,409 | 5,409 | |||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||
Net income | 88,511 | 88,511 | |||||||||||||||||||||||||||||
Other comprehensive income, net of tax — | |||||||||||||||||||||||||||||||
Unrealized gains on securities: | |||||||||||||||||||||||||||||||
Unrealized holding gains or losses arising during the period | 57,971 | 57,971 | |||||||||||||||||||||||||||||
Less: Reclassification adjustment for gains or losses included in net income | (5,679 | ) | (5,679 | ) | |||||||||||||||||||||||||||
Unrealized losses on derivative instruments: | |||||||||||||||||||||||||||||||
Unrealized holding gains or losses arising during the period | 7,537 | 7,537 | |||||||||||||||||||||||||||||
Less: Reclassification adjustment for gains or losses included in net income | (3,344 | ) | (3,344 | ) | |||||||||||||||||||||||||||
Minimum pension liability adjustment | 93,415 | 93,415 | |||||||||||||||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||||||||||||||||
Translation adjustments arising during the period | (129,113 | ) | (129,113 | ) | |||||||||||||||||||||||||||
Less: Reclassification adjustment for losses included in net income | 1,232 | 1,232 | |||||||||||||||||||||||||||||
Total comprehensive income | 110,530 | ||||||||||||||||||||||||||||||
Stock issue costs, net of tax | (53 | ) | (53 | ) | |||||||||||||||||||||||||||
Dividends declared | (23,138 | ) | (23,138 | ) | |||||||||||||||||||||||||||
Purchase of treasury stock | (8,523 | ) | (8,523 | ) | |||||||||||||||||||||||||||
Reissuance of treasury stock | (776 | ) | 5,681 | 4,905 | |||||||||||||||||||||||||||
Balance at March 31, 2004 | 3,917 | 476,350 | 992,817 | 1,367,060 | (449,959 | ) | (12,183 | ) | 2,378,002 | ||||||||||||||||||||||
F-11
Table of Contents
Year Ended March 31 | |||||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||||
Subsidiary | Additional | other | Treasury | ||||||||||||||||||||||||||||
tracking | Common | paid-in | Retained | comprehensive | stock, at | ||||||||||||||||||||||||||
stock | stock | capital | earnings | income | cost | Total | |||||||||||||||||||||||||
(Yen in millions) | |||||||||||||||||||||||||||||||
Balance at March 31, 2004 | 3,917 | 476,350 | 992,817 | 1,367,060 | (449,959 | ) | (12,183 | ) | 2,378,002 | ||||||||||||||||||||||
Exercise of stock acquisition rights | 52 | 53 | 105 | ||||||||||||||||||||||||||||
Conversion of convertible bonds | 141,390 | 141,354 | 282,744 | ||||||||||||||||||||||||||||
Stock based compensation | 340 | 340 | |||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||
Net income | 163,838 | 163,838 | |||||||||||||||||||||||||||||
Other comprehensive income, net of tax — | |||||||||||||||||||||||||||||||
Unrealized gains on securities: | |||||||||||||||||||||||||||||||
Unrealized holding gains or losses arising during the period | 5,643 | 5,643 | |||||||||||||||||||||||||||||
Less: Reclassification adjustment for gains or losses included in net income | (12,924 | ) | (12,924 | ) | |||||||||||||||||||||||||||
Unrealized losses on derivative instruments: | |||||||||||||||||||||||||||||||
Unrealized holding gains or losses arising during the period | (209 | ) | (209 | ) | |||||||||||||||||||||||||||
Less: Reclassification adjustment for gains or losses included in net income | (1,681 | ) | (1,681 | ) | |||||||||||||||||||||||||||
Minimum pension liability adjustment | (769 | ) | (769 | ) | |||||||||||||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||||||||||||||||
Translation adjustments arising during the period | 74,224 | 74,224 | |||||||||||||||||||||||||||||
Total comprehensive income | 228,122 | ||||||||||||||||||||||||||||||
Stock issue costs, net of tax | (541 | ) | (541 | ) | |||||||||||||||||||||||||||
Dividends declared | (24,030 | ) | (24,030 | ) | |||||||||||||||||||||||||||
Purchase of treasury stock | (416 | ) | (416 | ) | |||||||||||||||||||||||||||
Reissuance of treasury stock | (342 | ) | (245 | ) | 6,599 | 6,012 | |||||||||||||||||||||||||
Balance at March 31, 2005 | 3,917 | 617,792 | 1,134,222 | 1,506,082 | (385,675 | ) | (6,000 | ) | 2,870,338 | ||||||||||||||||||||||
F-12
Table of Contents
Page | ||||||||
1. | Nature of operations | F-14 | ||||||
2. | Summary of significant accounting policies | F-14 | ||||||
3. | Inventories | F-25 | ||||||
4. | Film costs | F-25 | ||||||
5. | Related party transactions | F-25 | ||||||
6. | Accounts receivable securitization programs | F-28 | ||||||
7. | Marketable securities and securities investments and other | F-29 | ||||||
8. | Leased assets | F-30 | ||||||
9. | Goodwill and intangible assets | F-31 | ||||||
10. | Insurance-related accounts | F-33 | ||||||
11. | Short-term borrowings and long-term debt | F-35 | ||||||
12. | Deposits from customers in the banking business | F-37 | ||||||
13. | Financial instruments | F-37 | ||||||
14. | Pension and severance plans | F-41 | ||||||
15. | Stockholders’ equity | F-46 | ||||||
16. | Stock-based compensation plans | F-51 | ||||||
17. | Restructuring charges and asset impairments | F-54 | ||||||
18. | Research and development costs, advertising costs and shipping and handling costs | F-59 | ||||||
19. | Gain on change in interest in subsidiaries and equity investees | F-59 | ||||||
20. | Income taxes | F-61 | ||||||
21. | Reconciliation of the differences between basic and diluted net income per share (“EPS”) | F-64 | ||||||
22. | Variable interest entities | F-65 | ||||||
23. | Commitments and contingent liabilities | F-66 | ||||||
24. | Business segment information | F-68 |
F-13
Table of Contents
1. | Nature of operations |
2. | Summary of significant accounting policies |
(1) | Newly adopted accounting pronouncements: |
F-14
Table of Contents
F-15
Table of Contents
F-16
Table of Contents
F-17
Table of Contents
F-18
Table of Contents
F-19
Table of Contents
Year Ended March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
(Yen in millions) | ||||||||||||
Income before cumulative effect of an accounting change allocated to common stock: | ||||||||||||
As reported | 115,648 | 90,756 | 168,498 | |||||||||
Deduct: Total stock-based compensation expense determined under the fair value based method, net of related tax effects | (7,008 | ) | (6,334 | ) | (4,690 | ) | ||||||
Pro forma | 108,640 | 84,422 | 163,808 | |||||||||
Net income allocated to common stock: | ||||||||||||
As reported | 115,648 | 88,639 | 163,785 | |||||||||
Deduct: Total stock-based compensation expense determined under the fair value based method, net of related tax effects | (7,008 | ) | (6,334 | ) | (4,690 | ) | ||||||
Pro forma | 108,640 | 82,305 | 159,095 | |||||||||
F-20
Table of Contents
Year Ended March 31 | |||||||||||||
2003 | 2004 | 2005 | |||||||||||
(Yen) | |||||||||||||
Income before cumulative effect of an accounting change allocated to common stock: | |||||||||||||
— Basic EPS: | |||||||||||||
As reported | 125.74 | 98.26 | 180.96 | ||||||||||
Pro forma | 118.12 | 91.40 | 175.92 | ||||||||||
— Diluted EPS: | |||||||||||||
As reported | 118.21 | 89.03 | 162.59 | ||||||||||
Pro forma | 111.20 | 82.96 | 158.10 | ||||||||||
Net income allocated to common stock: | |||||||||||||
— Basic EPS: | |||||||||||||
As reported | 125.74 | 95.97 | 175.90 | ||||||||||
Pro forma | 118.12 | 89.11 | 170.86 | ||||||||||
— Diluted EPS: | |||||||||||||
As reported | 118.21 | 87.00 | 158.07 | ||||||||||
Pro forma | 111.20 | 80.94 | 153.58 |
F-21
Table of Contents
F-22
Table of Contents
F-23
Table of Contents
(3) | Recent Pronouncements: |
F-24
Table of Contents
(4) | Reclassifications: |
3. | Inventories |
March 31 | ||||||||
2004 | 2005 | |||||||
(Yen in millions) | ||||||||
Finished products | 427,877 | 405,616 | ||||||
Work in process | 98,607 | 93,181 | ||||||
Raw materials, purchased components and supplies | 140,023 | 132,552 | ||||||
666,507 | 631,349 | |||||||
4. | Film costs |
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Theatrical: | |||||||||
Released (including acquired film libraries) | 136,057 | 119,438 | |||||||
Completed not released | 7,946 | 11,358 | |||||||
In production and development | 79,198 | 118,271 | |||||||
Television licensing: | |||||||||
Released (including acquired film libraries) | 33,378 | 29,894 | |||||||
In production and development | 161 | 0 | |||||||
256,740 | 278,961 | ||||||||
5. | Related party transactions |
F-25
Table of Contents
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Current assets | 433,154 | 942,328 | |||||||
Property, plant and equipment | 94,130 | 361,406 | |||||||
Other assets | 57,756 | 250,245 | |||||||
Total assets | 585,040 | 1,553,979 | |||||||
Current liabilities | 397,242 | 876,430 | |||||||
Long-term liabilities | 27,639 | 115,999 | |||||||
Stockholders’ equity | 160,159 | 561,550 | |||||||
Total liabilities and stockholders’ equity | 585,040 | 1,553,979 | |||||||
Number of companies at end of the fiscal year | 66 | 56 |
Year Ended March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
(Yen in millions) | ||||||||||||
Sales and revenue | 785,697 | 1,009,005 | 1,473,273 | |||||||||
Gross profit | 140,078 | 231,083 | 477,796 | |||||||||
Net income (loss) | (81,422 | ) | 11,323 | 63,404 |
F-26
Table of Contents
F-27
Table of Contents
March 31 | ||||||||
2004 | 2005 | |||||||
(Yen in millions) | ||||||||
Accounts receivable, trade | 62,359 | 50,062 | ||||||
Advances | 561 | 16,756 | ||||||
Accounts payable, trade | 13,547 | 15,225 | ||||||
Year Ended March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
(Yen in millions) | ||||||||||||
Sales | 161,983 | 258,454 | 256,799 | |||||||||
Purchases | 102,735 | 106,100 | 101,976 | |||||||||
6. | Accounts receivable securitization programs |
F-28
Table of Contents
7. | Marketable securities and securities investments and other |
March 31, 2004 | March 31, 2005 | |||||||||||||||||||||||||||||||||
Gross | Gross | Gross | Gross | |||||||||||||||||||||||||||||||
unrealized | unrealized | unrealized | unrealized | |||||||||||||||||||||||||||||||
Cost | gains | losses | Fair value | Cost | gains | losses | Fair value | |||||||||||||||||||||||||||
(Yen in millions) | ||||||||||||||||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||||
Debt securities | 1,938,673 | 55,922 | (2,072 | ) | 1,992,523 | 2,090,605 | 58,161 | (2,464 | ) | 2,146,302 | ||||||||||||||||||||||||
Equity securities | 86,517 | 63,225 | (1,886 | ) | 147,856 | 107,126 | 49,350 | (814 | ) | 155,662 | ||||||||||||||||||||||||
Held-to-maturity securities | 26,439 | 381 | (28 | ) | 26,792 | 27,431 | 530 | (13 | ) | 27,948 | ||||||||||||||||||||||||
Total | 2,051,629 | 119,528 | (3,986 | ) | 2,167,171 | 2,225,162 | 108,041 | (3,291 | ) | 2,329,912 | ||||||||||||||||||||||||
F-29
Table of Contents
Less than 12 Months | 12 months or more | Total | ||||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||||
Fair value | losses | Fair value | losses | Fair value | losses | |||||||||||||||||||||
(Yen in millions) | ||||||||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||
Debt securities | 242,388 | (2,044 | ) | 41,523 | (420 | ) | 283,911 | (2,464 | ) | |||||||||||||||||
Equity securities | 11,010 | (457 | ) | 1,225 | (357 | ) | 12,235 | (814 | ) | |||||||||||||||||
Held-to-maturity securities | 239 | (0 | ) | 660 | (13 | ) | 899 | (13 | ) | |||||||||||||||||
Total | 253,637 | (2,501 | ) | 43,408 | (790 | ) | 297,045 | (3,291 | ) | |||||||||||||||||
8. | Leased assets |
March 31 | ||||||||
Class of property | 2004 | 2005 | ||||||
(Yen in millions) | ||||||||
Land | 174 | 181 | ||||||
Buildings | 12,421 | 11,089 | ||||||
Machinery, equipment and others | 36,907 | 33,747 | ||||||
Accumulated depreciation | (19,385 | ) | (18,509 | ) | ||||
30,117 | 26,508 | |||||||
F-30
Table of Contents
Yen in | |||||
millions | |||||
Year ending March 31: | |||||
2006 | 15,211 | ||||
2007 | 11,062 | ||||
2008 | 8,895 | ||||
2009 | 10,873 | ||||
2010 | 3,001 | ||||
Later years | 5,428 | ||||
Total minimum lease payments | 54,470 | ||||
Less — Amount representing interest | 14,169 | ||||
Present value of net minimum lease payments | 40,301 | ||||
Less — Current obligations | 11,713 | ||||
Long-term capital lease obligations | 28,588 | ||||
Yen in | |||||
millions | |||||
Year ending March 31: | |||||
2006 | 38,182 | ||||
2007 | 30,568 | ||||
2008 | 22,993 | ||||
2009 | 14,060 | ||||
2010 | 10,496 | ||||
Later years | 53,652 | ||||
Total minimum future rentals | 169,951 | ||||
9. | Goodwill and intangible assets |
F-31
Table of Contents
March 31 | ||||||||||||||||
2004 | 2005 | |||||||||||||||
Gross | Gross | |||||||||||||||
carrying | Accumulated | carrying | Accumulated | |||||||||||||
amount | amortization | amount | amortization | |||||||||||||
(Yen in millions) | ||||||||||||||||
Artist contracts | 80,675 | (68,300 | ) | 15,218 | (11,094 | ) | ||||||||||
Music catalog | 109,795 | (47,610 | ) | 65,674 | (19,641 | ) | ||||||||||
Acquired patent rights | 52,996 | (23,172 | ) | 55,173 | (26,139 | ) | ||||||||||
Software to be sold, leased or otherwise marketed | 31,983 | (13,577 | ) | 31,907 | (16,181 | ) | ||||||||||
Other | 55,048 | (27,422 | ) | 27,648 | (11,625 | ) | ||||||||||
Total | 330,497 | (180,081 | ) | 195,620 | (84,680 | ) | ||||||||||
Yen in | |||||
millions | |||||
Year ending March 31, | |||||
2006 | 22,650 | ||||
2007 | 18,287 | ||||
2008 | 12,202 | ||||
2009 | 10,623 | ||||
2010 | 8,874 |
March 31 | ||||||||
2004 | 2005 | |||||||
(Yen in millions) | ||||||||
Trademarks | 57,384 | 57,195 | ||||||
Distribution agreement | 18,834 | 18,848 | ||||||
76,218 | 76,043 | |||||||
F-32
Table of Contents
Financial | ||||||||||||||||||||||||||||
Electronics | Game | Music | Pictures | Services | Other | Total | ||||||||||||||||||||||
(Yen in millions) | ||||||||||||||||||||||||||||
Balance at March 31, 2003 | 53,179 | 110,606 | 46,021 | 78,697 | — | 1,624 | 290,127 | |||||||||||||||||||||
Goodwill acquired during year | 5,634 | — | 76 | 1,666 | — | 534 | 7,910 | |||||||||||||||||||||
Impairment losses | (6,049 | ) | — | — | — | — | — | (6,049 | ) | |||||||||||||||||||
Other * | (528 | ) | (244 | ) | (3,771 | ) | (9,574 | ) | — | (1 | ) | (14,118 | ) | |||||||||||||||
Balance at March 31, 2004 | 52,236 | 110,362 | 42,326 | 70,789 | — | 2,157 | 277,870 | |||||||||||||||||||||
Reallocated from Music segment to Electronics segment | 12,329 | — | (12,329 | ) | — | — | — | — | ||||||||||||||||||||
Goodwill acquired during year | 5,872 | 4,349 | 52 | 5,868 | 441 | 2,069 | 18,651 | |||||||||||||||||||||
Goodwill contributed to the Joint Venture with Bertelsmann AG | — | — | (15,626 | ) | — | — | — | (15,626 | ) | |||||||||||||||||||
Other * | 378 | 29 | 1,281 | 1,277 | — | 63 | 3,028 | |||||||||||||||||||||
Balance at March 31, 2005 | 70,815 | 114,740 | 15,704 | 77,934 | 441 | 4,289 | 283,923 | |||||||||||||||||||||
* | Other consists of translation adjustments and reclassification to/from other accounts. |
10. | Insurance-related accounts |
F-33
Table of Contents
(1) | Insurance policies: |
(2) | Deferred insurance acquisition costs: |
(3) | Future insurance policy benefits: |
(4) | Separate account assets: |
F-34
Table of Contents
11. | Short-term borrowings and long-term debt |
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Unsecured loans, principally from banks: | |||||||||
with weighted-average interest rate of 1.80% | 26,260 | ||||||||
with weighted-average interest rate of 2.79% | 38,796 | ||||||||
Secured call money: | |||||||||
with weighted-average interest rate of 0.01% | 65,000 | — | |||||||
Secured bills sold: | |||||||||
with weighted-average interest rate of 0.00% | — | 24,600 | |||||||
91,260 | 63,396 | ||||||||
F-35
Table of Contents
March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Secured loans, representing obligations to banks: | |||||||||
Due 2004 to 2008 with interest ranging from 2.20% to 3.73% per annum | 58,786 | ||||||||
Due 2005 to 2008 with interest of 2.20% per annum | 1,122 | ||||||||
Unsecured loans, representing obligations principally to banks: | |||||||||
Due 2004 to 2017 with interest ranging from 1.77% to 5.89% per annum | 77,646 | ||||||||
Due 2005 to 2017 with interest ranging from 0.23% to 5.89% per annum | 113,436 | ||||||||
Medium-term notes of consolidated subsidiaries: | |||||||||
Due 2004 to 2006 with interest ranging from 1.09% to 4.95% per annum | 60,537 | ||||||||
Due 2006 with interest ranging from 2.78% to 4.95% per annum | 58,755 | ||||||||
Unsecured 1.4% convertible bonds, due 2005, convertible at 3,995.5 yen for one common share, redeemable before due date | 287,753 | — | |||||||
Unsecured zero coupon convertible bonds, due 2008, convertible currently at 5,605 yen for one common share, redeemable before due date | 250,000 | 250,000 | |||||||
Unsecured 0.03% bonds, due 2004 with detachable warrants, net of unamortized discount | 3,981 | — | |||||||
Unsecured 0.1% bonds, due 2005 with detachable warrants, net of unamortized discount | 3,924 | 3,981 | |||||||
Unsecured 1.55% bonds, due 2006 with detachable warrants | 12,000 | 12,000 | |||||||
Unsecured 0.9% bonds, due 2007 with detachable warrants | 7,300 | 7,300 | |||||||
Unsecured 0.9% bonds, due 2007 with detachable warrants of subsidiary tracking stock | 150 | 150 | |||||||
Unsecured 1.42% bonds, due 2005, net of unamortized discount | 99,994 | 99,998 | |||||||
Unsecured 0.64% bonds, due 2006, net of unamortized discount | 99,994 | 99,996 | |||||||
Unsecured 2.04% bonds, due 2010, net of unamortized discount | 49,981 | 49,984 | |||||||
Unsecured 1.52% bonds, due 2011, net of unamortized discount | 49,996 | 49,997 | |||||||
Unsecured 2.0% bonds, due 2005 | 15,000 | 15,000 | |||||||
Unsecured 1.99% bonds, due 2007 | 15,000 | 15,000 | |||||||
Unsecured 2.35% bonds, due 2010 | 4,900 | 4,900 | |||||||
Capital lease obligations: | |||||||||
Due 2004 to 2014 with interest ranging from 2.15% to 30.00% per annum | 42,689 | ||||||||
Due 2005 to 2019 with interest ranging from 1.55% to 30.00% per annum | 40,301 | ||||||||
Guarantee deposits received | 21,775 | 23,942 | |||||||
1,161,406 | 845,862 | ||||||||
Less — Portion due within one year | 383,757 | 166,870 | |||||||
777,649 | 678,992 | ||||||||
F-36
Table of Contents
Exercise | Number of shares per | |||||||||
Issued on | Exercisable during | price | warrant | Status of exercise | ||||||
(Yen) | ||||||||||
August 23, 1999 | September 1, 2000 through August 22, 2005 | 7,167 | 279 shares of common stock of Sony Corporation | 2,000 warrants outstanding | ||||||
October 19, 2000 | November 1, 2001 through October 18, 2006 | 12,457 | 100 shares of common stock of Sony Corporation | 9,600 warrants outstanding | ||||||
December 21, 2001 | January 6, 2003 through December 20, 2007 | 6,039 | 100 shares of common stock of Sony Corporation | 11,534 warrants outstanding | ||||||
December 21, 2001 | June 20, 2002 through June 20, 2007 | 3,300 | 75 shares of subsidiary tracking stock | 600 warrants outstanding |
Year ending March 31 | Yen in millions | |||
2006 | 166,870 | |||
2007 | 178,117 | |||
2008 | 32,059 | |||
2009 | 282,430 | |||
2010 | 2,909 |
12. | Deposits from customers in the banking business |
13. | Financial instruments |
F-37
Table of Contents
F-38
Table of Contents
F-39
Table of Contents
(2) | Fair value of financial instruments: |
March 31 | ||||||||||||||||||||||||
2004 | 2005 | |||||||||||||||||||||||
Notional | Carrying | Estimated | Notional | Carrying | Estimated | |||||||||||||||||||
amount | amount | fair value | amount | amount | fair value | |||||||||||||||||||
(Yen in millions) | ||||||||||||||||||||||||
Long-term debt including the current portion | — | (1,161,406 | ) | (1,235,669 | ) | — | (845,862 | ) | (856,321 | ) | ||||||||||||||
Foreign exchange forward contracts | 1,348,157 | (994 | ) | (994 | ) | 1,545,814 | (55 | ) | (55 | ) | ||||||||||||||
Currency option contracts purchased | 375,582 | 10,781 | 10,781 | 428,261 | 1,646 | 1,646 | ||||||||||||||||||
Currency option contracts written | 124,925 | (1,000 | ) | (1,000 | ) | 146,506 | (3,390 | ) | (3,390 | ) | ||||||||||||||
Interest rate swap agreements | 218,101 | (4,229 | ) | (4,229 | ) | 171,133 | (4,417 | ) | (4,417 | ) | ||||||||||||||
Interest rate and currency swap agreements | 8,574 | 384 | 384 | 5,734 | 131 | 131 | ||||||||||||||||||
Interest rate future contracts | 17,007 | (9 | ) | (9 | ) | 136,470 | (92 | ) | (92 | ) | ||||||||||||||
Embedded derivatives | 421,416 | 12,885 | 12,885 | 405,756 | 11,894 | 11,894 |
F-40
Table of Contents
14. | Pension and severance plans |
F-41
Table of Contents
Year Ended March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
(Yen in millions) | ||||||||||||
Service cost | 47,884 | 54,501 | 31,971 | |||||||||
Interest cost | 20,857 | 19,489 | 21,364 | |||||||||
Expected return on plan assets | (25,726 | ) | (22,812 | ) | (16,120 | ) | ||||||
Amortization of net transition asset | (375 | ) | (375 | ) | (375 | ) | ||||||
Recognized actuarial loss | 20,655 | 31,019 | 20,236 | |||||||||
Amortization of prior service cost | (939 | ) | (939 | ) | (7,216 | ) | ||||||
Gains on curtailments and settlements | (1,380 | ) | — | (876 | ) | |||||||
Net periodic benefit cost | 60,976 | 80,883 | 48,984 | |||||||||
Year Ended March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
(Yen in millions) | ||||||||||||
Service cost | 13,954 | 11,252 | 6,419 | |||||||||
Interest cost | 8,478 | 8,566 | 8,091 | |||||||||
Expected return on plan assets | (7,319 | ) | (6,812 | ) | (6,712 | ) | ||||||
Amortization of net transition asset | (47 | ) | (27 | ) | (18 | ) | ||||||
Recognized actuarial loss | 1,452 | 1,569 | 1,637 | |||||||||
Amortization of prior service cost | (208 | ) | (117 | ) | (114 | ) | ||||||
(Gains) losses on curtailments and settlements | (460 | ) | 5,574 | 1,713 | ||||||||
Net periodic benefit cost | 15,850 | 20,005 | 11,016 | |||||||||
F-42
Table of Contents
Japanese plans | Foreign plans | ||||||||||||||||
March 31 | March 31 | ||||||||||||||||
2004 | 2005 | 2004 | 2005 | ||||||||||||||
(Yen in millions) | (Yen in millions) | ||||||||||||||||
Change in benefit obligation: | |||||||||||||||||
Benefit obligation at beginning of the fiscal year | 1,031,760 | 993,542 | 157,580 | 155,838 | |||||||||||||
Service cost | 54,501 | 31,971 | 11,252 | 6,419 | |||||||||||||
Interest cost | 19,489 | 21,364 | 8,566 | 8,091 | |||||||||||||
Plan participants’ contributions | 5,802 | 2,111 | 644 | 873 | |||||||||||||
Amendments | — | (120,873 | ) | 3,900 | 286 | ||||||||||||
Actuarial (gain) loss | (81,873 | ) | 1,641 | 431 | 12,210 | ||||||||||||
Foreign currency exchange rate changes | — | — | (17,082 | ) | 14,288 | ||||||||||||
Curtailments and settlements | — | (2,988 | ) | (66 | ) | (628 | ) | ||||||||||
Benefits paid | (36,137 | ) | (25,042 | ) | (9,387 | ) | (11,639 | ) | |||||||||
Divestiture | — | — | — | (32,140 | ) | ||||||||||||
Benefit obligation at end of the fiscal year | 993,542 | 901,726 | 155,838 | 153,598 | |||||||||||||
Change in plan assets: | |||||||||||||||||
Fair value of plan assets at beginning of the fiscal year | 405,248 | 513,095 | 67,937 | 85,662 | |||||||||||||
Actual return (loss) on plan assets | 93,154 | (354 | ) | 13,065 | 7,513 | ||||||||||||
Foreign currency exchange rate changes | — | — | (3,420 | ) | 3,517 | ||||||||||||
Employer contribution | 23,243 | 34,581 | 16,475 | 18,406 | |||||||||||||
Plan participants’ contributions | 5,802 | 2,111 | 644 | 873 | |||||||||||||
Curtailments and settlements | — | — | — | (112 | ) | ||||||||||||
Benefits paid | (14,352 | ) | (14,982 | ) | (9,039 | ) | (11,168 | ) | |||||||||
Divestiture | — | — | — | (12,666 | ) | ||||||||||||
Fair value of plan assets at end of the fiscal year | 513,095 | 534,451 | 85,662 | 92,025 | |||||||||||||
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Japanese plans | Foreign plans | ||||||||||||||||
March 31 | March 31 | ||||||||||||||||
2004 | 2005 | 2004 | 2005 | ||||||||||||||
(Yen in millions) | (Yen in millions) | ||||||||||||||||
Funded status | (480,447 | ) | (367,275 | ) | (70,176 | ) | (61,573 | ) | |||||||||
Unrecognized actuarial loss | 328,467 | 322,237 | 27,550 | 37,383 | |||||||||||||
Unrecognized net transition asset | (479 | ) | (104 | ) | 211 | 7 | |||||||||||
Unrecognized prior service cost | (20,784 | ) | (134,440 | ) | (748 | ) | (501 | ) | |||||||||
Net amount recognized | (173,243 | ) | (179,582 | ) | (43,163 | ) | (24,684 | ) | |||||||||
Amounts recognized in the consolidated balance sheet consist of: | |||||||||||||||||
Prepaid benefit cost | — | 1,795 | 2,609 | 1,351 | |||||||||||||
Accrued pension and severance costs, including current portion | (322,677 | ) | (309,957 | ) | (61,452 | ) | (42,934 | ) | |||||||||
Intangibles | 21,263 | — | 113 | 41 | |||||||||||||
Accumulated other comprehensive income | 128,171 | 128,580 | 15,567 | 16,858 | |||||||||||||
Net amount recognized | (173,243 | ) | (179,582 | ) | (43,163 | ) | (24,684 | ) | |||||||||
Japanese plans | Foreign plans | |||||||||||||||
March 31 | March 31 | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
(Yen in millions) | (Yen in millions) | |||||||||||||||
Accumulated benefit obligation | 830,898 | 835,420 | 129,879 | 121,176 |
Japanese plans | Foreign plans | |||||||||||||||
March 31 | March 31 | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
(Yen in millions) | (Yen in millions) | |||||||||||||||
Projected benefit obligations | 991,030 | 898,985 | 135,459 | 132,556 | ||||||||||||
Accumulated benefit obligations | 830,362 | �� | 835,420 | 113,020 | 115,147 | |||||||||||
Fair value of plan assets | 512,720 | 533,926 | 74,167 | 86,070 |
March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
Discount rate | 1.9 | % | 2.4 | % | 2.3 | % | ||||||
Rate of compensation increase | 3.0 | 3.0 | 3.3 |
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March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
Discount rate | 6.3 | % | 5.8 | % | 5.5 | % | ||||||
Rate of compensation increase | 4.1 | 4.0 | 3.3 |
Year Ended March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
Discount rate | 2.4 | % | 1.9 | % | 2.4 | % | ||||||
Expected return on plan assets | 4.0 | 4.0 | 3.2 | |||||||||
Rate of compensation increase | 3.0 | 3.0 | 3.3 |
Year Ended March 31 | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
Discount rate | 6.6 | % | 6.3 | % | 5.8 | % | ||||||
Expected return on plan assets | 8.1 | 8.3 | 7.8 | |||||||||
Rate of compensation increase | 4.5 | 4.1 | 4.0 |
March 31, | ||||||||
2004 | 2005 | |||||||
Equity securities | 39.0 | % | 28.0 | % | ||||
Debt securities | 14.7 | 34.7 | ||||||
Cash | 42.7 | 33.7 | ||||||
Other | 3.6 | 3.6 | ||||||
Total | 100 | % | 100 | % | ||||
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March 31, | ||||||||
2004 | 2005 | |||||||
Equity securities | 63.2 | % | 68.3 | % | ||||
Debt securities | 26.6 | 23.4 | ||||||
Real estate | 3.2 | 4.0 | ||||||
Other | 7.0 | 4.3 | ||||||
Total | 100 | % | 100 | % | ||||
Japanese plans | Foreign plans | ||||||||
(Yen in millions) | (Yen in millions) | ||||||||
Year ending March 31, | |||||||||
2006 | 18,281 | 5,625 | |||||||
2007 | 19,734 | 5,977 | |||||||
2008 | 22,075 | 6,308 | |||||||
2009 | 24,600 | 6,860 | |||||||
2010 | 29,475 | 7,912 | |||||||
2011 — 2015 | 181,527 | 51,919 |
15. | Stockholders’ equity |
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(2) | Common stock: |
Number of shares | ||||
Balance at March 31, 2002 | 919,744,355 | |||
Conversion of convertible bonds | 138,330 | |||
Stock issued under exchange offering | 2,502,491 | |||
Balance at March 31, 2003 | 922,385,176 | |||
Conversion of convertible bonds | 2,944,800 | |||
Stock issued under exchange offering | 1,088,304 | |||
Balance at March 31, 2004 | 926,418,280 | |||
Conversion of convertible bonds | 70,765,533 | |||
Exercise of stock acquisition rights | 27,400 | |||
Balance at March 31, 2005 | 997,211,213 | |||
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(3) | Retained earnings: |
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(4) | Other comprehensive income: |
Pre-tax | Tax | Net-of-tax | |||||||||||||
amount | expense | amount | |||||||||||||
(Yen in millions) | |||||||||||||||
For the year ended March 31, 2003: | |||||||||||||||
Unrealized gains on securities — | |||||||||||||||
Unrealized holding gains (losses) arising during the period | (18,575 | ) | 8,948 | (9,627 | ) | ||||||||||
Less: Reclassification adjustment for gains (losses) included in net income | 3,421 | 867 | 4,288 | ||||||||||||
Unrealized losses on derivative instruments — | |||||||||||||||
Unrealized holding gains (losses) arising during the period | (6,268 | ) | 1,791 | (4,477 | ) | ||||||||||
Less: Reclassification adjustment for gains (losses) included in net income | 682 | (287 | ) | 395 | |||||||||||
Minimum pension liability adjustment | (181,725 | ) | 71,089 | (110,636 | ) | ||||||||||
Foreign currency translation adjustments — | |||||||||||||||
Translation adjustments arising during the period | (87,103 | ) | 3,110 | (83,993 | ) | ||||||||||
Less: Reclassification adjustment for losses included in net income | 7,665 | — | 7,665 | ||||||||||||
Other comprehensive income | (281,903 | ) | 85,518 | (196,385 | ) | ||||||||||
For the year ended March 31, 2004: | |||||||||||||||
Unrealized gains on securities — | |||||||||||||||
Unrealized holding gains (losses) arising during the period | 89,861 | (31,890 | ) | 57,971 | |||||||||||
Less: Reclassification adjustment for gains (losses) included in net income | (7,371 | ) | 1,692 | (5,679 | ) | ||||||||||
Unrealized losses on derivative instruments — | |||||||||||||||
Unrealized holding gains (losses) arising during the period | 11,586 | (4,049 | ) | 7,537 | |||||||||||
Less: Reclassification adjustment for gains (losses) included in net income | (5,961 | ) | 2,617 | (3,344 | ) | ||||||||||
Minimum pension liability adjustment | 162,408 | (68,993 | ) | 93,415 | |||||||||||
Foreign currency translation adjustments — | |||||||||||||||
Translation adjustments arising during the period | (134,312 | ) | 5,199 | (129,113 | ) | ||||||||||
Less: Reclassification adjustment for losses included in net income | 1,232 | — | 1,232 | ||||||||||||
Other comprehensive income | 117,443 | (95,424 | ) | 22,019 | |||||||||||
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Pre-tax | Tax | Net-of-tax | |||||||||||||
amount | expense | amount | |||||||||||||
(Yen in millions) | |||||||||||||||
For the year ended March 31, 2005: | |||||||||||||||
Unrealized gains on securities — | |||||||||||||||
Unrealized holding gains (losses) arising during the period | 7,184 | (1,541 | ) | 5,643 | |||||||||||
Less: Reclassification adjustment for gains (losses) included in net income | (18,140 | ) | 5,216 | (12,924 | ) | ||||||||||
Unrealized losses on derivative instruments — | |||||||||||||||
Unrealized holding gains (losses) arising during the period | (2,015 | ) | 1,806 | (209 | ) | ||||||||||
Less: Reclassification adjustment for gains (losses) included in net income | (2,848 | ) | 1,167 | (1,681 | ) | ||||||||||
Minimum pension liability adjustment | (1,700 | ) | 931 | (769 | ) | ||||||||||
Foreign currency translation adjustments — | |||||||||||||||
Translation adjustments arising during the period | 76,585 | (2,361 | ) | 74,224 | |||||||||||
Other comprehensive income | 59,066 | 5,218 | 64,284 | ||||||||||||
16. | Stock-based compensation plans |
(1) | Warrant plan: |
(2) | Convertible Bond plan: |
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(3) | Stock Acquisition Rights: |
Year Ended March 31 | ||||||||||||||||||||||||
2003 | 2004 | 2005 | ||||||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||||||
average | average | average | ||||||||||||||||||||||
Number of | exercise | Number of | exercise | Number of | exercise | |||||||||||||||||||
Shares | price | Shares | price | Shares | price | |||||||||||||||||||
(Yen) | (Yen) | (Yen) | ||||||||||||||||||||||
Outstanding at beginning of the fiscal year | 5,853,892 | 8,648 | 9,640,892 | 7,832 | 11,705,592 | 6,082 | ||||||||||||||||||
Granted | 3,874,100 | 5,313 | 2,621,400 | 5,017 | 2,433,600 | 3,996 | ||||||||||||||||||
Exercised | — | — | — | — | (27,400 | ) | 3,896 | |||||||||||||||||
Forfeited | (87,100 | ) | 8,306 | (556,700 | ) | 6,760 | (998,592 | ) | 5,923 | |||||||||||||||
Outstanding at end of the fiscal year | 9,640,892 | 7,832 | 11,705,592 | 6,082 | 13,113,200 | 5,754 | ||||||||||||||||||
Exercisable at end of the fiscal year | 4,314,292 | 9,773 | 5,853,892 | 7,522 | 7,223,600 | 6,994 | ||||||||||||||||||
Outstanding | Exercisable | |||||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||||
Exercise price | Number of | average | average | Number of | average | |||||||||||||||||
range | Shares | exercise price | remaining life | Shares | exercise price | |||||||||||||||||
(Yen) | (Yen) | (Years) | (Yen) | |||||||||||||||||||
3,782~7,000 | 10,497,600 | 4,680 | 8.24 | 4,608,000 | 5,250 | |||||||||||||||||
7,001~13,202 | 2,615,600 | 10,065 | 3.14 | 2,615,600 | 10,065 | |||||||||||||||||
3,782~13,202 | 13,113,200 | 5,754 | 7.22 | 7,223,600 | 6,994 | |||||||||||||||||
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Outstanding | Exercisable | |||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||
Exercise price | Number of | average | average | Number of | average | |||||||||||||||
range | Shares | exercise price | remaining life | Shares | exercise price | |||||||||||||||
(Yen) | (Yen) | (Years) | (Yen) | |||||||||||||||||
815~3,300 | 181,500 | 1,591 | 7.22 | 90,300 | 2,118 |
Year Ended March 31 | ||||||||||||
Weighted-average assumptions | 2003 | 2004 | 2005 | |||||||||
Risk-free interest rate | 2.76% | 2.18% | 2.04% | |||||||||
Expected lives | 4.23 years | 3.67 years | 3.54 years | |||||||||
Expected volatility | 47.33% | 42.83% | 35.56% | |||||||||
Expected dividend | 0.47% | 0.57% | 0.62% |
(4) | SAR plan: |
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Year Ended March 31 | ||||||||||||||||||||||||
2003 | 2004 | 2005 | ||||||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||||||
Number of | average | Number of | average | Number of | average | |||||||||||||||||||
SARs | exercise price | SARs | exercise price | SARs | exercise price | |||||||||||||||||||
(Yen) | (Yen) | (Yen) | ||||||||||||||||||||||
Outstanding at beginning of the fiscal year | 2,410,394 | 6,644 | 2,343,028 | 6,341 | 1,526,568 | 6,424 | ||||||||||||||||||
Granted | 28,750 | 6,323 | — | — | — | — | ||||||||||||||||||
Exercised | (11,800 | ) | 5,727 | — | — | (241,134 | ) | 3,955 | ||||||||||||||||
Expired or forfeited | (84,316 | ) | 7,274 | (816,460 | ) | 5,494 | (420,350 | ) | 5,855 | |||||||||||||||
Outstanding at end of the fiscal year | 2,343,028 | 6,341 | 1,526,568 | 6,424 | 865,084 | 7,436 | ||||||||||||||||||
Exercisable at end of the fiscal year | 2,176,319 | 6,211 | 1,462,391 | 6,421 | 856,156 | 7,455 | ||||||||||||||||||
Outstanding | Exercisable | |||||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||||
Exercise price | Number of | average | average | Number of | average | |||||||||||||||||
range | SARs | exercise price | remaining life | SARs | exercise price | |||||||||||||||||
(Yen) | (Yen) | (Years) | (Yen) | |||||||||||||||||||
3,234~5,000 | 61,850 | 4,767 | 6.77 | 61,850 | 4,767 | |||||||||||||||||
5,001~10,000 | 749,109 | 7,365 | 1.08 | 740,181 | 7,386 | |||||||||||||||||
10,001~13,419 | 54,125 | 11,471 | 4.56 | 54,125 | 11,471 | |||||||||||||||||
3,234~13,419 | 865,084 | 7,436 | 1.70 | 856,156 | 7,455 | |||||||||||||||||
17. | Restructuring charges and asset impairments |
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Employee | Non-cash | ||||||||||||||||
termination | write-downs | Other associated | |||||||||||||||
benefits | and disposals | costs | Total | ||||||||||||||
(Yen in millions) | |||||||||||||||||
Balance at March 31, 2002 | 6,243 | — | 13,637 | 19,880 | |||||||||||||
Restructuring costs | 46,953 | 42,768 | 16,530 | 106,251 | |||||||||||||
Non-cash charges | — | (42,240 | ) | — | (42,240 | ) | |||||||||||
Cash payments | (38,548 | ) | — | (23,172 | ) | (61,720 | ) | ||||||||||
Adjustments | 136 | (528 | ) | (1,208 | ) | (1,600 | ) | ||||||||||
Balance at March 31, 2003 | 14,784 | — | 5,787 | 20,571 | |||||||||||||
Restructuring costs | 133,367 | 19,170 | 15,554 | 168,091 | |||||||||||||
Non-cash charges | — | (19,170 | ) | — | (19,170 | ) | |||||||||||
Cash payments | (124,674 | ) | — | (13,686 | ) | (138,360 | ) | ||||||||||
Adjustments | 1,173 | 0 | 333 | 1,506 | |||||||||||||
Balance at March 31, 2004 | 24,650 | — | 7,988 | 32,638 | |||||||||||||
Restructuring costs | 53,563 | 25,564 | 10,836 | 89,963 | |||||||||||||
Non-cash charges | — | (25,564 | ) | — | (25,564 | ) | |||||||||||
Cash payments | (61,523 | ) | — | (10,427 | ) | (71,950 | ) | ||||||||||
Adjustments* | (1,705 | ) | — | (3,096 | ) | (4,801 | ) | ||||||||||
Balance at March 31, 2005 | 14,985 | — | 5,301 | 20,286 | |||||||||||||
* | Adjustments primarily consist of the transfer of the accrued restructuring charges to SONY BMG, a joint venture with Bertelsmann AG (Note 5). |
18. | Research and development costs, advertising costs and shipping and handling costs |
(2) | Advertising costs: |
(3) | Shipping and handling costs: |
19. | Gain on change in interest in subsidiaries and equity investees |
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20. | Income taxes |
Year Ended March 31 | |||||||||||||
2003 | 2004 | 2005 | |||||||||||
(Yen in millions) | |||||||||||||
Income (loss) before income taxes: | |||||||||||||
Sony Corporation and subsidiaries in Japan | (7,998 | ) | (84,571 | ) | 5,005 | ||||||||
Foreign subsidiaries | 255,619 | 228,638 | 152,202 | ||||||||||
247,621 | 144,067 | 157,207 | |||||||||||
Income taxes — Current: | |||||||||||||
Sony Corporation and subsidiaries in Japan | 69,311 | 22,286 | 23,497 | ||||||||||
Foreign subsidiaries | 109,536 | 64,933 | 62,013 | ||||||||||
178,847 | 87,219 | 85,510 | |||||||||||
Income taxes — Deferred: | |||||||||||||
Sony Corporation and subsidiaries in Japan | (90,016 | ) | (32,845 | ) | 4,976 | ||||||||
Foreign subsidiaries | (8,000 | ) | (1,600 | ) | (74,442 | ) | |||||||
(98,016 | ) | (34,445 | ) | (69,466 | ) | ||||||||
Year Ended March 31 | |||||||||||||
2003 | 2004 | 2005 | |||||||||||
Statutory tax rate | 42.0 | % | 43.9 | % | 41.0 | % | |||||||
Increase (reduction) in taxes resulting from: | |||||||||||||
Income tax credits | (1.9 | ) | (2.4 | ) | (0.1 | ) | |||||||
Change in valuation allowances | 5.5 | 6.5 | (22.7 | ) | |||||||||
Decrease in deferred tax liabilities on undistributed earnings of foreign subsidiaries | (14.8 | ) | (9.2 | ) | (4.0 | ) | |||||||
Lower tax rate applied to life and non-life insurance business in Japan | (0.6 | ) | (2.6 | ) | (1.9 | ) | |||||||
Other | 2.4 | 0.4 | (2.1 | ) | |||||||||
Effective income tax rate | 32.6 | % | 36.6 | % | 10.2 | % | |||||||
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March 31 | |||||||||||
2004 | 2005 | ||||||||||
(Yen in millions) | |||||||||||
Deferred tax assets: | |||||||||||
Operating loss carryforwards for tax purposes | 196,308 | 193,212 | |||||||||
Accrued pension and severance costs | 150,073 | 159,610 | |||||||||
Film costs | 54,194 | 56,746 | |||||||||
Warranty reserve and accrued expenses | 45,664 | 56,551 | |||||||||
Future insurance policy benefits | 35,855 | 36,654 | |||||||||
Accrued bonus | 36,285 | 34,536 | |||||||||
Inventory — intercompany profits and write-down | 30,241 | 30,270 | |||||||||
Depreciations | 14,108 | 15,320 | |||||||||
Tax credit carryforwards | 13,740 | 8,552 | |||||||||
Reserve for doubtful accounts | 14,005 | 6,574 | |||||||||
Other | 141,731 | 153,525 | |||||||||
Gross deferred tax assets | 732,204 | 751,550 | |||||||||
Less: Valuation allowance | (127,577 | ) | (89,110 | ) | |||||||
Total deferred tax assets | 604,627 | 662,440 | |||||||||
Deferred tax liabilities: | |||||||||||
Insurance acquisition costs | (125,768 | ) | (135,083 | ) | |||||||
Unbilled accounts receivable in the Pictures business | (71,586 | ) | (57,314 | ) | |||||||
Unrealized gains on securities | (45,239 | ) | (41,564 | ) | |||||||
Intangible assets acquired through exchange offerings | (36,490 | ) | (35,418 | ) | |||||||
Undistributed earnings of foreign subsidiaries | (44,778 | ) | (30,865 | ) | |||||||
Gain on securities contribution to employee retirement benefit trust | (16,899 | ) | (6,184 | ) | |||||||
Other | (39,435 | ) | (58,714 | ) | |||||||
Gross deferred tax liabilities | (380,195 | ) | (365,142 | ) | |||||||
Net deferred tax assets | 224,432 | 297,298 | |||||||||
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March 31 | |||||||||
2004 | 2005 | ||||||||
(Yen in millions) | |||||||||
Current assets — Deferred income taxes | 125,532 | 141,154 | |||||||
Other assets — Deferred income taxes | 203,203 | 240,396 | |||||||
Current liabilities — Other | (8,110 | ) | (12,025 | ) | |||||
Long-term liabilities — Deferred income taxes | (96,193 | ) | (72,227 | ) | |||||
Net deferred tax assets | 224,432 | 297,298 | |||||||
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21. | Reconciliation of the differences between basic and diluted net income per share (“EPS”) |
(1) | Income before cumulative effect of accounting changes and net income allocated to each class of stock: |
Year Ended March 31 | |||||||||||||
2003 | 2004 | 2005 | |||||||||||
(Yen in millions) | |||||||||||||
Income before cumulative effect of an accounting change allocated to the common stock | 115,648 | 90,756 | 168,498 | ||||||||||
Income before cumulative effect of an accounting change allocated to the subsidiary tracking stock | (129 | ) | (128 | ) | 53 | ||||||||
Income before cumulative effect of an accounting change | 115,519 | 90,628 | 168,551 | ||||||||||
Net income allocated to the Common stock | 115,648 | 88,639 | 163,785 | ||||||||||
Net income allocated to the subsidiary tracking stock | (129 | ) | (128 | ) | 53 | ||||||||
Net income | 115,519 | 88,511 | 163,838 | ||||||||||
(2) | EPS attributable to common stock: |
Year Ended March 31 | |||||||||||||
2003 | 2004 | 2005 | |||||||||||
(Yen in millions) | |||||||||||||
Income before cumulative effect of an accounting change allocated to the common stock | 115,648 | 90,756 | 168,498 | ||||||||||
Effect of dilutive securities: | |||||||||||||
Convertible bonds | 2,398 | 2,260 | 1,209 | ||||||||||
Subsidiary tracking stock | — | — | (0 | ) | |||||||||
Income before cumulative effect of an accounting change allocated to the common stock for diluted EPS computation | 118,046 | 93,016 | 169,707 | ||||||||||
Thousands of shares | |||||||||||||
Weighted-average shares | 919,706 | 923,650 | 931,125 | ||||||||||
Effect of dilutive securities: | |||||||||||||
Warrants and stock acquisition rights | 12 | 48 | 61 | ||||||||||
Convertible bonds | 78,873 | 121,120 | 112,589 | ||||||||||
Weighted-average shares for diluted EPS computation | 998,591 | 1,044,818 | 1,043,775 | ||||||||||
Yen | ||||||||||||
Basic EPS | 125.74 | 98.26 | 180.96 | |||||||||
Diluted EPS | 118.21 | 89.03 | 162.59 | |||||||||
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(3) | EPS attributable to subsidiary tracking stock: |
22. | Variable interest entities |
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23. | Commitments and contingent liabilities |
A. | Purchase Commitments |
Commitments outstanding at March 31, 2005 amounted to 240,729 million yen. The major components of these commitments are as follows: | |
In the ordinary course of business, Sony makes commitments for the purchase of property, plant and equipment. As of March 31, 2005, such commitments outstanding were 83,683 million yen. |
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Certain subsidiaries in the Pictures segment have entered into agreements with creative talent for the development and production of films and television programming as well as agreements with third parties to acquire completed films, or certain rights therein. These agreements cover various periods through March 31, 2008. As of March 31, 2005, these subsidiaries were committed to make payments under such contracts of 51,625 million yen. | |
A subsidiary in the Pictures segment has also entered into a distribution agreement with a third party to distribute, in certain markets and territories, all feature length films produced or acquired by the third party during the term of the agreement. The distribution agreement expires on December 31, 2006 if a minimum of 36 films have been delivered as of that date. If 36 films have not been delivered by December 31, 2006, the distribution agreement expires on the earlier of the delivery of the 36th film or May 25, 2007. It is estimated that the third party will produce or acquire a total of 39 films under the distribution agreement. The subsidiary has the right to distribute the films for 15 years from the initial theatrical release of the film. Under the terms of the distribution agreement, the subsidiary must fund a portion of the production cost and is responsible for all distribution and marketing expenses. As of March 31, 2005, 29 films have been released or funded by the subsidiary. The subsidiary’s estimated commitment to fund the production of the remaining films under this agreement is 30,455 million yen. | |
The schedule of the aggregate amounts of year-by-year payment of purchase commitments during the next five years and thereafter is as follows: |
Year Ending March 31, | Yen in millions | ||||
2006 | 145,111 | ||||
2007 | 53,753 | ||||
2008 | 16,412 | ||||
2009 | 1,632 | ||||
2010 | 712 | ||||
Thereafter | 23,109 | ||||
Total | 240,729 | ||||
B. | Loan Commitments |
Subsidiaries in the Financial Services segment have entered into loan agreements with their customers in accordance with the condition of the contracts. As of March 31, 2005, the total unused portion of the line of credit extended under these contracts was 199,878 million yen. | |
At August 2004, Sony and Bertelsmann AG (“Bertelsmann”) combined their recorded music businesses in a joint venture. In connection with the establishment of the SONY BMG joint venture, Sony and Bertelsmann have entered into a 5 year Revolving Credit Agreement with the joint venture. Under the terms of the Credit Agreement, Sony and Bertelsmann have each agreed to provide one-half of the funding. The Credit Agreement, which matures on August 5, 2009, provides for a base commitment of $300 million and additional incremental borrowings of up to $150 million. As of March 31, 2005, the joint venture had no borrowings outstanding under the Credit Agreement. Accordingly, Sony’s outstanding commitment under the Credit Agreement as of March 31, 2005 was 24,075 million yen. | |
The aggregate amounts of future year-by-year payments for these loan commitments cannot be determined. |
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(2) | Contingent liabilities: |
Year Ended March 31, | ||||||||
2004 | 2005 | |||||||
(Yen in millions) | ||||||||
Balance at beginning of the fiscal year | 51,892 | 50,670 | ||||||
Provision for warranty reserve | 51,569 | 33,493 | ||||||
Settlements (in cash or in kind) | (46,971 | ) | (40,358 | ) | ||||
Changes in estimate for pre-existing warranty reserve | (2,970 | ) | (751 | ) | ||||
Translation adjustment | (2,850 | ) | 1,865 | |||||
Balance at end of the fiscal year | 50,670 | 44,919 | ||||||
24. | Business segment information |
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Year Ended March 31 | |||||||||||||||
2003 | 2004 | 2005 | |||||||||||||
(Yen in millions) | |||||||||||||||
Sales and operating revenue: | |||||||||||||||
Electronics — | |||||||||||||||
Customers | 4,624,181 | 4,838,268 | 4,786,236 | ||||||||||||
Intersegment | 471,798 | 204,051 | 235,411 | ||||||||||||
Total | 5,095,979 | 5,042,319 | 5,021,647 | ||||||||||||
Game — | |||||||||||||||
Customers | �� | 936,274 | 753,732 | 702,524 | |||||||||||
Intersegment | 18,757 | 26,488 | 27,230 | ||||||||||||
Total | 955,031 | 780,220 | 729,754 | ||||||||||||
Music — | |||||||||||||||
Customers | 433,147 | 409,487 | 216,779 | ||||||||||||
Intersegment | 33,191 | 30,819 | 32,326 | ||||||||||||
Total | 466,338 | 440,306 | 249,105 | ||||||||||||
Pictures — | |||||||||||||||
Customers | 802,770 | 756,370 | 733,677 | ||||||||||||
Intersegment | 0 | 0 | 0 | ||||||||||||
Total | 802,770 | 756,370 | 733,677 | ||||||||||||
Financial Services — | |||||||||||||||
Customers | 509,398 | 565,752 | 537,715 | ||||||||||||
Intersegment | 27,878 | 27,792 | 22,842 | ||||||||||||
Total | 537,276 | 593,544 | 560,557 | ||||||||||||
Other — | |||||||||||||||
Customers | 167,863 | 172,782 | 182,685 | ||||||||||||
Intersegment | 93,282 | 95,535 | 71,742 | ||||||||||||
Total | 261,145 | 268,317 | 254,427 | ||||||||||||
Elimination | (644,906 | ) | (384,685 | ) | (389,551 | ) | |||||||||
Consolidated total | 7,473,633 | 7,496,391 | 7,159,616 | ||||||||||||
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Segment profit or loss: |
Year Ended March 31 | |||||||||||||||
2003 | 2004 | 2005 | |||||||||||||
(Yen in millions) | |||||||||||||||
Operating income (loss): | |||||||||||||||
Electronics | 65,939 | (6,824 | ) | (34,305 | ) | ||||||||||
Game | 112,653 | 67,578 | 43,170 | ||||||||||||
Music | (28,261 | ) | (5,997 | ) | 8,783 | ||||||||||
Pictures | 58,971 | 35,230 | 63,899 | ||||||||||||
Financial Services | 22,758 | 55,161 | 55,490 | ||||||||||||
Other | (28,316 | ) | (12,054 | ) | (4,077 | ) | |||||||||
Total | 203,744 | 133,094 | 132,960 | ||||||||||||
Elimination | 15,065 | 13,226 | 13,530 | ||||||||||||
Unallocated amounts: | |||||||||||||||
Corporate expenses | (33,369 | ) | (47,418 | ) | (32,571 | ) | |||||||||
Consolidated operating income | 185,440 | 98,902 | 113,919 | ||||||||||||
Other income | 157,528 | 122,290 | 97,623 | ||||||||||||
Other expenses | (95,347 | ) | (77,125 | ) | (54,335 | ) | |||||||||
Consolidated income before income taxes | 247,621 | 144,067 | 157,207 | ||||||||||||
Assets: |
March 31 | ||||||||||||||
2003 | 2004 | 2005 | ||||||||||||
(Yen in millions) | ||||||||||||||
Total assets: | ||||||||||||||
Electronics | 2,973,972 | 2,995,306 | 3,434,138 | |||||||||||
Game | 673,208 | 684,226 | 482,037 | |||||||||||
Music | 500,627 | 483,990 | 325,928 | |||||||||||
Pictures | 868,395 | 856,517 | 863,056 | |||||||||||
Financial Services | 2,897,119 | 3,475,039 | 3,885,517 | |||||||||||
Other | 333,485 | 371,720 | 347,885 | |||||||||||
Total | 8,246,806 | 8,866,798 | 9,338,561 | |||||||||||
Elimination | (266,167 | ) | (319,204 | ) | (439,489 | ) | ||||||||
Corporate assets | 389,906 | 543,068 | 600,028 | |||||||||||
Consolidated total | 8,370,545 | 9,090,662 | 9,499,100 | |||||||||||
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Other significant items: |
Year Ended March 31 | ||||||||||||||
2003 | 2004 | 2005 | ||||||||||||
(Yen in millions) | ||||||||||||||
Depreciation and amortization: | ||||||||||||||
Electronics | 203,433 | 210,888 | 275,701 | |||||||||||
Game | 53,496 | 57,256 | 16,504 | |||||||||||
Music | 20,008 | 16,123 | 9,451 | |||||||||||
Pictures | 8,552 | 7,844 | 5,598 | |||||||||||
Financial Services, including deferred insurance acquisition costs | 52,041 | 56,586 | 52,788 | |||||||||||
Other | 10,157 | 13,455 | 8,564 | |||||||||||
Total | 347,687 | 362,152 | 368,606 | |||||||||||
Corporate | 4,238 | 4,117 | 4,259 | |||||||||||
Consolidated total | 351,925 | 366,269 | 372,865 | |||||||||||
Capital expenditures for segment assets: | ||||||||||||||
Electronics | 181,316 | 251,980 | 311,101 | |||||||||||
Game | 40,986 | 100,360 | 18,824 | |||||||||||
Music | 9,291 | 3,651 | 2,894 | |||||||||||
Pictures | 7,138 | 6,013 | 5,808 | |||||||||||
Financial Services | 3,655 | 4,618 | 3,845 | |||||||||||
Other | 16,993 | 10,124 | 6,149 | |||||||||||
Total | 259,379 | 376,746 | 348,621 | |||||||||||
Corporate | 1,862 | 1,518 | 8,197 | |||||||||||
Consolidated total | 261,241 | 378,264 | 356,818 | |||||||||||
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Year Ended March 31 | |||||||||||||
2003 | 2004 | 2005 | |||||||||||
(Yen in millions) | |||||||||||||
Audio | 784,114 | 675,496 | 571,864 | ||||||||||
Video | 828,308 | 949,261 | 1,034,736 | ||||||||||
Televisions | 981,655 | 925,501 | 957,122 | ||||||||||
Information and Communications | 836,724 | 834,757 | 778,374 | ||||||||||
Semiconductors | 204,710 | 253,237 | 246,314 | ||||||||||
Components | 527,782 | 623,799 | 619,477 | ||||||||||
Other | 460,888 | 576,217 | 578,349 | ||||||||||
Total | 4,624,181 | 4,838,268 | 4,786,236 | ||||||||||
Year Ended March 31 | ||||||||||||||
2003 | 2004 | 2005 | ||||||||||||
(Yen in millions) | ||||||||||||||
Sales and operating revenue: | ||||||||||||||
Japan | 2,093,880 | 2,220,747 | 2,100,793 | |||||||||||
U.S.A. | 2,403,946 | 2,121,110 | 1,977,310 | |||||||||||
Europe | 1,665,976 | 1,765,053 | 1,612,536 | |||||||||||
Other | 1,309,831 | 1,389,481 | 1,468,977 | |||||||||||
Total | 7,473,633 | 7,496,391 | 7,159,616 | |||||||||||
March 31 | ||||||||||||||
2003 | 2004 | 2005 | ||||||||||||
(Yen in millions) | ||||||||||||||
Long-lived assets: | ||||||||||||||
Japan | 1,365,160 | 1,430,443 | 1,414,632 | |||||||||||
U.S.A. | 713,524 | 671,534 | 662,120 | |||||||||||
Europe | 164,459 | 211,147 | 183,620 | |||||||||||
Other | 148,616 | 133,640 | 144,896 | |||||||||||
Total | 2,391,759 | 2,446,764 | 2,405,268 | |||||||||||
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Year Ended March 31 | |||||||||||||||
2003 | 2004 | 2005 | |||||||||||||
(Yen in millions) | |||||||||||||||
Sales and operating revenue: | |||||||||||||||
Japan — | |||||||||||||||
Customers | 2,247,030 | 2,352,923 | 2,249,548 | ||||||||||||
Intersegment | 2,433,998 | 2,514,698 | 2,575,093 | ||||||||||||
Total | 4,681,028 | 4,867,621 | 4,824,641 | ||||||||||||
U.S.A. — | |||||||||||||||
Customers | 2,632,176 | 2,341,304 | 2,166,323 | ||||||||||||
Intersegment | 189,502 | 198,450 | 235,362 | ||||||||||||
Total | 2,821,678 | 2,539,754 | 2,401,685 | ||||||||||||
Europe — | |||||||||||||||
Customers | 1,520,930 | 1,647,694 | 1,524,182 | ||||||||||||
Intersegment | 121,598 | 66,950 | 52,417 | ||||||||||||
Total | 1,642,528 | 1,714,644 | 1,576,599 | ||||||||||||
Other — | |||||||||||||||
Customers | 1,073,497 | 1,154,470 | 1,219,563 | ||||||||||||
Intersegment | 789,444 | 813,798 | 804,721 | ||||||||||||
Total | 1,862,941 | 1,968,268 | 2,024,284 | ||||||||||||
Elimination | (3,534,542 | ) | (3,593,896 | ) | (3,667,593 | ) | |||||||||
Consolidated total | 7,473,633 | 7,496,391 | 7,159,616 | ||||||||||||
Operating income: | |||||||||||||||
Japan | 11,444 | (69,875 | ) | (765 | ) | ||||||||||
U.S.A. | 98,762 | 85,290 | 72,414 | ||||||||||||
Europe | 62,206 | 78,822 | 12,186 | ||||||||||||
Other | 63,773 | 70,543 | 58,554 | ||||||||||||
Corporate and elimination | (50,745 | ) | (65,878 | ) | (28,470 | ) | |||||||||
Consolidated total | 185,440 | 98,902 | 113,919 | ||||||||||||
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Additions | |||||||||||||||||||||
Balance at | charged to | Balance | |||||||||||||||||||
beginning | costs and | Deductions | Other | at end of | |||||||||||||||||
of period | expenses | (Note 1) | (Note 2) | period | |||||||||||||||||
(Yen in millions) | |||||||||||||||||||||
Year ended March 31, 2003: | |||||||||||||||||||||
Allowance for doubtful accounts and sales returns | 120,826 | 87,330 | (89,284 | ) | (8,378 | ) | 110,494 | ||||||||||||||
Year ended March 31, 2004: | |||||||||||||||||||||
Allowance for doubtful accounts and sales returns | 110,494 | 78,323 | (65,281 | ) | (10,862 | ) | 112,674 | ||||||||||||||
Year ended March 31, 2005: | |||||||||||||||||||||
Allowance for doubtful accounts and sales returns | 112,674 | 56,863 | (84,507 | ) | 2,679 | 87,709 | |||||||||||||||
1. | Amounts written off. |
2. | Translation adjustment. |
Balance at | Balance | ||||||||||||||||||||
beginning | Deductions | Other | at end of | ||||||||||||||||||
of period | Additions | (Note 1) | (Note 2) | period | |||||||||||||||||
(Yen in millions) | |||||||||||||||||||||
Year ended March 31, 2003: | |||||||||||||||||||||
Valuation allowance — Deferred tax assets | 252,208 | 72,303 | (189,843 | ) | (18,600 | ) | 116,068 | ||||||||||||||
Year ended March 31, 2004: | |||||||||||||||||||||
Valuation allowance — Deferred tax assets | 116,068 | 63,936 | (39,199 | ) | (13,228 | ) | 127,577 | ||||||||||||||
Year ended March 31, 2005: | |||||||||||||||||||||
Valuation allowance — Deferred tax assets | 127,577 | 67,889 | (104,670 | ) | (1,686 | ) | 89,110 | ||||||||||||||
1. | Decrease resulting from the reversal of valuation allowances (see Note 20 of Notes to Consolidated Financial Statements) or utilization of deferred tax assets. |
2. | Translation adjustment. |
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