-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LqIC629jxLM2GVfKJAwjVJSXfrEhPO6YtkiqtW/V+0w73Z3I2LBSIRRm7phQfhBE hmnnPyji3U6EXqqpdrqB0Q== 0000903423-10-000461.txt : 20100811 0000903423-10-000461.hdr.sgml : 20100811 20100811165520 ACCESSION NUMBER: 0000903423-10-000461 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20100811 FILED AS OF DATE: 20100811 DATE AS OF CHANGE: 20100811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SONY CORP CENTRAL INDEX KEY: 0000313838 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651] IRS NUMBER: 000000000 STATE OF INCORPORATION: M0 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06439 FILM NUMBER: 101008567 BUSINESS ADDRESS: STREET 1: 7-1, KONAN STREET 2: 1-CHOME, MINATO-KU CITY: TOKYO STATE: M0 ZIP: 108-0075 BUSINESS PHONE: 0367482180 MAIL ADDRESS: STREET 1: 7-1, KONAN STREET 2: 1-CHOME, MINATO-KU CITY: TOKYO STATE: M0 ZIP: 108-0075 6-K 1 sony-6k_0811.htm Unassociated Document
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of June 2010
Commission File Number: 001-06439
SONY CORPORATION
(Translation of registrant’s name into English)
7-1, KONAN 1-CHOME, MINATO-KU, TOKYO 108-0075, JAPAN
(Address of principal executive offices)
The registrant files annual reports under cover of Form 20-F.
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F,
Form 20-F þ                    Form 40-F o
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, Yes  o   No  þ
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-                    
 
 
 
 
 

 
 
 
 
 

 






Quarterly Securities Report
For the three months ended June 30, 2010

(TRANSLATION)




Sony Corporation
 
 
 
 
 
 
 

 
 

 

CONTENTS
 
   
  
Page
     
Note for readers of this English translation
Cautionary Statement
 
1
1
       
I
Corporate Information
 
2
 
(1)     Selected Consolidated Financial Data
  
2
 
(2)     Business Overview
 
2
 
(3)     Changes in Subsidiaries and Affiliated Companies
 
3
 
(4)     Number of Employees
 
3
       
II
State of Business
 
4
 
(1)     Manufacturing, Orders Received and Sales
 
4
 
(2)     Risk Factors
 
4
 
(3)     Material Contracts
 
5
 
(4)     Management’s Discussion and Analysis of Financial Condition, Results of Operations and
         Status of Cash Flows
 
5
       
III
Property, Plant and Equipment
 
9
 
(1)   Major Property, Plant and Equipment
 
9
 
(2)   Plans for the Purchase and Retirement of Major Property, Plant and Equipment
 
9
       
IV
Company Information
 
10
 
(1)     Information on the Company’s Shares
 
10
 
(2)     Stock Price Range
 
14
 
(3)     Directors and Corporate Executive Officers
 
14
       
V
Financial Statements
  
15
 
(1)   Consolidated Financial Statements
 
16
 
(2)   Other Information
 
34

 
 

 
 
 
 
Note for readers of this English translation
 
On August 11, 2010, Sony Corporation (the “Company”) filed its Japanese-language Quarterly Securities Report (Shihanki Houkokusho) for the three months ended June 30, 2010 with the Kanto Local Finance Bureau in Japan pursuant to the Financial Instruments and Exchange Act of Japan. This document is an English translation of the Quarterly Securities Report in its entirety, except for (i) information that had been filed previously with or submitted to the U.S. Securities and Exchange Commission (the “SEC”) in a Form 20-F, Form 6-K or any other forms and (ii) a description of differences between generally accepted accounting principles in the U.S. (“U.S. GAAP”) and generally accepted accounting principles in Japan (“J-GAA P”), which are required to be described in the Quarterly Securities Report under the Financial Instruments and Exchange Act of Japan if the Company prepares its financial statements in conformity with accounting principles other than J-GAAP.
 
 
Cautionary Statement
 
Statements made in this translation with respect to the current plans, estimates, strategies and beliefs and other statements of the Company and its consolidated subsidiaries (collectively “Sony”) that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and wo rds of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions and beliefs in light of the information currently available to it. Sony cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to (i) the global economic environment in which Sony operates and the economic conditions in Sony’s markets, particularly leve ls of consumer spending; (ii) exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony’s assets and liabilities are denominated; (iii) Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including LCD televisions and game platforms, which are offered in highly competitive markets characterized by continual new product and service introductions, rapid development in technology and subjective and changing consumer preferences; (iv) Sony’s ability and timing to recoup large-scale investments required for technology development and production capacity; (v) Sony’s ability to implement successful business restructuring and transformation efforts under changing market conditions; (vi) Sony’s ability to implement successful hardware, software, and content integration st rategies for all segments excluding the Financial Services segment, and to develop and implement successful sales and distribution strategies in light of the Internet and other technological developments; (vii) Sony’s continued ability to devote sufficient resources to research and development and, with respect to capital expenditures, to prioritize investments correctly (particularly in the Consumer, Professional & Devices segment); (viii) Sony’s ability to maintain product quality; (ix) the success of Sony’s acquisitions, joint ventures and other strategic investments; (x) Sony’s ability to forecast demands, manage timely procurement and control inventories; (xi) the outcome of pending legal and/or regulatory proceedings; (xii) shifts in customer demand for financial services such as life insurance and Sony’s ability to conduct successful asset liability management in the Financial Services segment; and (xiii) the impact of unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue and operating income of the Financial Services segment. Risks and uncertainties also include the impact of any future events with material adverse impacts.
 
 
 

 
1

 

 I    Corporate Information
 
(1) Selected Consolidated Financial Data
 
 
Yen in millions, Yen per share amounts
 
Three Months
Ended June 30, 2009
Three Months
Ended June 30, 2010
Fiscal Year
Ended March 31, 2010
Sales and operating revenue
1,599,853 
1,661,049 
7,213,998 
Operating income (loss)
(25,700))
67,016 
31,772 
Income (loss) before income taxes
(32,944))
78,911 
26,912 
Net income (loss) attributable to Sony Corporation’s stockholders
(37,093))
25,737 
(40,802))
Total equity
3,244,539 
3,204,956 
3,285,555 
Total assets
12,366,462 
12,741,481 
12,866,114 
Stockholders’ equity per share of common stock (yen)
2,958.91 
2,866.98 
2,955.47 
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock, basic (yen)
(36.96))
25.65 
(40.66))
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock, diluted (yen)
(36.96))
25.61 
(40.66))
Ratio of stockholders’ equity to total assets (%)
24.0 
22.6 
23.1 
Net cash provided by (used in) operating activities
56,918 
(6,848))
912,907  
Net cash used in investing activities
(172,858))
(181,791))
(746,004))
Net cash provided by financing activities
265,254 
26,200 
365,014 
Cash and cash equivalents at end of the period
807,931  
994,627 
1,191,608 
Number of employees
170,800  
171,900 
167,900 
Notes:
1.  
The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP.
2.  
The Company reports equity in net income (loss) of affiliated companies as a component of operating income (loss).
3.  
Consumption taxes are not included in sales and operating revenue.
4.  
Total equity is presented based on U.S. GAAP.
5.  
Stockholders’ equity per share of common stock and Ratio of stockholders’ equity to total assets are calculated by using total equity attributable to the stockholders of the Company.
6.  
The Company prepares consolidated financial statements.  Therefore parent-only selected financial data is not presented.

 
(2) Business Overview
 
There was no significant change in the business of Sony during the three months ended June 30, 2010.
Sony realigned its reportable segments effective from the first quarter of the fiscal year ending March 31, 2011.  For further information on the realignment, please refer to “V Financial Statements – Notes to Consolidated Financial Statements –7. Business segment information”.
As of June 30, 2010, the Company had 1,304 subsidiaries and 87 affiliated companies, of which 1,273 companies are consolidated subsidiaries (including variable interest entities) of the Company.  The Company has applied the equity accounting method for 80 affiliated companies.

 

 
2

 
 
(3) Changes in Subsidiaries and Affiliated Companies
 
Changes in subsidiaries and affiliated companies for the three months ended June 30, 2010 include the following
Name
Address
Common stock in millions of yen
Main business
Percentage of voting
rights held (%)
Business relationship
(Consolidated Subsidiary)
         
Sony Business
Solutions Corporation
Minato-ku
Tokyo
Japan
1,111
Consumer,
Professional
 & Devices
(100.0)
100.0
The subsidiary is renting buildings from the Company for office use.
 
There is concurrent assignment of directors/officers between the Company and this subsidiary.
Notes:
1.  
The description of Main business shows the name of applicable operating segment.
 
2.  
The number inside the parenthesis of Percentage of voting rights held presents the percentage of voting rights indirectly owned by the Company.

 
(4) Number of Employees
 
The following table shows the number of employees as of June 30, 2010. 
 
Consolidated
171,900*
Parent-only
16,805
* Figures less than one hundred are rounded to the nearest unit.
 
 
 

 
 
3

 
 
II   State of Business
 
(1) Manufacturing, Orders Received and Sales
 
The products that Sony manufactures and sells are extremely diverse.  Due to the cyclical nature of electronic devices, home game consoles, game software, and music and video software, Sony generally manufactures products based on forecasts.  Because Sony carries out the manufacturing of its products such that it maintains a relatively stable and necessary level of product inventory, its level of production in the Consumer, Professional & Devices (“CPD”) and Networked Products & Services (“NPS”) segments is generally similar to the level of sales in these segments.  Accordingly the status of production and sales in the CPD and NPS segments is discussed in connection with the operating results of these segments in “(4) Management’s Discussion and Analysis of Finan cial Condition, Results of Operations and Status of Cash Flows” below.
 
(2) Risk Factors
 
Note for readers of this English translation:
 
Aside from the amount of the revised estimate of the restructuring charges for the fiscal year ending March 31, 2011 in the risk factor below, there was no significant change from the information presented in the Risk Factors section of the Annual Report on Form 20-F filed with the SEC on June 28, 2010. Any forward-looking statement included in the descriptions below is based on the current judgment of management.
 
URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2010
 
http://www.sec.gov/Archives/edgar/data/313838/000095012310061435/k02298e20vf.htm
 
Sony’s business restructuring and transformation efforts are costly and may not attain their objectives.
 
Sony continued to implement restructuring initiatives in the fiscal year ended March 31, 2010 that focused on a review of the Sony Group’s investment plan, the realignment of its manufacturing sites, the reallocation of its workforce and headcount reductions.  As a result of these restructuring initiatives, a total of 124.3 billion yen in restructuring charges, including 7.9 billion yen of non-cash charges related to depreciation associated with restructured assets, has been recorded in the fiscal year ended March 31, 2010.  Sony expects to record approximately 75 billion yen of restructuring charges for the fiscal year ending March 31, 2011.  Restructuring charges are recorded in cost of sales, selling, general and administrative expenses and loss (gain) on sale, disposal or impairment of assets and other, net and thus initially deteriorate Sony’s operating income (loss) and net income (loss) attributable to Sony’s stockholders.  Sony expects to continue rationalizing its manufacturing operations, shifting and aggregating manufacturing to lower-cost countries and increasing the utilization of third-party original equipment and design manufacturers (OEMs and ODMs).  In addition, as a part of its transformation efforts, since April 1, 2009 Sony has established three horizontal platforms for (1) manufacturing, logistics, procurement and customer services, (2) R&D and common software development and (3) global sales and marketing functions, and has been undertaking business process optimization to enhance profitability.  Furthermore Sony started developing a common procurement platform as well as consolidating its suppliers during the fiscal year ended March 31, 2010.  In January 2010, Sony announced that it would outsource a part of the human re sources and accounting operation services of Sony and certain of its subsidiaries in Japan starting in April 2010.  Sony has and will become more reliant upon outsourcing services provided by external business partners.

 
4

 
Due to internal or external factors, projected growth, efficiencies and cost savings from the above-noted restructuring and transformation initiatives may not be realized as scheduled and, even if those benefits are realized, Sony may not be able to achieve the level of profitability expected due to the worsening of market conditions beyond expectations.  Such possible internal factors may include, for example, changes in restructuring and transformation plans, an inability to implement the initiatives effectively with available resources, or delays in implementing the new business processes or strategies.  Possible external factors may include, for example, increased burdens from regional labor regulations, labor union agreements and Japanese customary labor practices that may prevent Sony from executing its restru cturing initiatives as planned.  The inability to fully and successfully implement restructuring and transformation programs may adversely affect Sony’s operating results and financial condition.  Additionally, operating cash flows may be reduced as a result of the payment for restructuring charges.

(3) Material Contracts
 
There were no material contracts executed during the three months ended June 30, 2010.
 
Note for readers of this English translation:
 
The above means that there is no update from the description in the Annual Report on Form 20-F (“Patents and Licenses” in item 4) filed with the SEC on June 28, 2010.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2010
 
http://www.sec.gov/Archives/edgar/data/313838/000095012310061435/k02298e20vf.htm
 
(4) Management’s Discussion and Analysis of Financial Condition, Results of Operations and Status of Cash Flows
 
i) Results of Operations
 
Note for readers of this English translation:

Except for information specifically included in this English translation, this document omits certain information set out in the Japanese-language Quarterly Securities Report for the three month period ended June 30, 2010, since it is the same as described in the press release previously submitted to the SEC.  Please refer to “Consolidated Financial Results for the First Quarter Ended June 30, 2010” submitted to the SEC on Form 6-K on July 29, 2010.

URL: The press release titled “Consolidated Financial Results for the First Quarter Ended June 30, 2010”
 
http://www.sec.gov/Archives/edgar/data/313838/000115752310004424/a6374264.htm
 
 
 
5

 

Foreign Exchange Fluctuations and Risk Hedging
 
Note for readers of this English translation:
 
Even though foreign exchange rates fluctuated, there was no significant change in risk hedging policy from the description in the Annual Report on Form 20-F filed with the SEC on June 28, 2010.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2010
 
http://www.sec.gov/Archives/edgar/data/313838/000095012310061435/k02298e20vf.htm
 
Status of Cash Flow
 
Note for readers of this English translation:
 
Except for information specifically included in this English translation, this document omits certain information set out in the Japanese-language Quarterly Securities Report for the three month period ended June 30, 2010, since it is the same as described in the press release previously submitted to the SEC.  Please refer to “Consolidated Financial Results for the First Quarter Ended June 30, 2010” submitted to the SEC on Form 6-K on July 29, 2010.

URL: The press release titled “Consolidated Financial Results for the First Quarter Ended June 30, 2010”
 
http://www.sec.gov/Archives/edgar/data/313838/000115752310004424/a6374264.htm

ii) Issues Facing Sony and Management’s Response to those Issues
 
Note for readers of this English translation:
 
Excluding the below, there was no significant change from the information presented as Issues Facing Sony and Management’s Response to those Issues in the Trend Information section of the Annual Report on Form 20-F filed with the SEC on June 28, 2010.  Any forward-looking statement included in the descriptions below is based on the current judgment of management.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2010
 
http://www.sec.gov/Archives/edgar/data/313838/000095012310061435/k02298e20vf.htm
 
Sony expects to record restructuring charges of approximately 75 billion yen in the fiscal year ending March 31, 2011, compared with the 124.3 billion yen, including 7.9 billion yen of non-cash charges related to depreciation associated with restructured assets, recorded in the fiscal year ended March 31, 2010.

Sony realigned its reportable segments from the first quarter of the fiscal year ending March 31, 2011, to reflect modifications to the organizational structure as of April 1, 2010, primarily repositioning the operations of the previously reported B2B & Disc Manufacturing segment.  In connection with this realignment, the Consumer Products & Devices segment was renamed the Consumer, Professional & Devices (“CPD”) segment.  The CPD segment includes televisions, digital imaging, audio and video, semiconductors and components as well as professional solutions (the B2B business
 
 
6

 
 
which was previously included in the B2B & Disc Manufacturing segment).  The equity results of S-LCD Corporation, a joint venture with Samsung Electronics Co., Ltd., are also included within the CPD segment.  The disc manufacturing business previously included in the B2B & Disc Manufacturing segment is now included in All Other.
 
The NPS, Pictures, Music and Financial Services segments remain unchanged.  The equity earnings from Sony Ericsson Mobile Communications AB continue to be presented as a separate segment.

Despite the realignment of Sony’s reportable segments mentioned above, there has been no change in either the issues management believes each business continues to face or how each business is addressing those issues.

iii)  Research and Development
 
Note for readers of this English translation:
 
Excluding the below, Research and Development is the same as that found in the Research and Development section of the Annual Report on Form 20-F filed with the SEC on June 28, 2010.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2010
 
http://www.sec.gov/Archives/edgar/data/313838/000095012310061435/k02298e20vf.htm
 
Research and development costs for the three months ended June 30, 2010 decreased 0.7 billion yen, or 0.7%, to 99.1 billion yen, compared with the same quarter of the previous fiscal year.  The ratio of research and development costs to sales (which excludes financial services segment revenue) decreased from 7.3% to 6.6% due to the sales increase.  Expenses in the CPD segment decreased 0.5 billion yen, or 0.7%, to 66.7 billion yen and expenses in the NPS segment decreased 1.4 billion yen, or 6.2%, to 21.0 billion yen.  In the CPD segment, approximately 72% of expenses were for the development of new product prototypes while the remaining 28% was spent on the development of mid- to long-term new technologies in areas such as next-generation displays, semiconductors, new materials and software.

 
(iv)  Liquidity and Capital Resources
 
Note for readers of this English translation:
 
Aside from the description of a translated amount into yen of the total amount of committed lines of credit below, there was no significant change from the information presented in the Annual Report on Form 20-F filed with the SEC on June 28, 2010.  Any forward-looking statement included in the descriptions below is based on the current judgment of management.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2010
 
http://www.sec.gov/Archives/edgar/data/313838/000095012310061435/k02298e20vf.htm


 
7

 
 
Sony typically raises funds through straight bonds, CP programs and bank loans (including syndicated loans); however, in the event Sony cannot access liquidity from these sources, Sony could also draw on committed lines of credit from various financial institutions.  Sony has a total, translated into yen, of 773.1 billion yen in committed lines of credit, none of which had been used as of June 30, 2010.  Details of those committed lines of credit are: a 475 billion yen committed line of credit contracted with a syndicate of Japanese banks, effective until November 2012, a 1.5 billion U.S. dollar multi-currency committed line of credit also with a syndicate of Japanese banks, effective until December 2013, and a 1.87 billion U.S. dollar multi-currency committed line of credit contracted with a syndicate of global banks, effective until April 2012, in all of which Sony Corporation and Sony Glob al Treasury Services Plc, a consolidated subsidiary of Sony Corporation, are defined as the borrowers.  These contracts are aimed at securing sufficient liquidity in the event of financial and capital markets turmoil like that seen in the period following September 2008.
 
 
 
 
 
 
 
 
 
 
 
 
8

 

 
 
III      Property, Plant and Equipment
 
(1) Major Property, Plant and Equipment
 
There was no significant change during the three months ended June 30, 2010.
 

 
(2) Plans for the Purchase and Retirement of Major Property, Plant and Equipment
 
During the three months ended June 30, 2010, primarily as a result of the increase of the planned capital expenditures in the Semiconductor business, Sony’s planned capital expenditures for the fiscal year ending March 31, 2011 are 230 billion yen, an increase of 10 billion yen from the plan at the end of March 31, 2010.  During the three months ended June 30, 2010, there was no significant new firm plan for the purchase, retirement and other measures of major property, plant and equipment.

 

 
9

 

IV      Company Information
 
(1) Information on the Company’s Shares
 
i)  Total Number of Shares
 
1)  Total Number of Shares
 
Class
Total number of shares authorized to be issued
Common stock
3,600,000,000
Total
3,600,000,000

2)  Number of Shares Issued
 
Class
Number of shares issued
Name of Securities Exchanges where the shares are listed or authorized Financial Instruments Firms Association where the shares are registered
Description
As of the end of the first
quarterly period
(June 30, 2010)
As of the filing date
of the Quarterly
Securities Report
(August 11, 2010)
Common stock
1,004,583,564
1,004,583,564
Tokyo Stock Exchange
Osaka Securities Exchange
New York Stock Exchange
London Stock Exchange
The number of shares constituting one full unit is one hundred (100).
Total
1,004,583,564
1,004,583,564
 
Notes:
1.  
The Company’s shares of common stock are listed on the First Sections of the Tokyo Stock Exchange and the Osaka Securities Exchange in Japan.
2.  
The number of shares issued as of the filing date of the Quarterly Securities Report does not include shares issued upon the exercise of stock acquisition rights (“SARs”) (including the conversion of convertible bonds issued under the former Commercial Code in Japan) during August 2010, the month in which this Quarterly Securities Report (Shihanki Houkokusho) was filed.

ii)  Stock Acquisition Rights
 
Note for readers of this English translation:
 
The Japanese-language Quarterly Securities Report includes a summary of the main terms and conditions of the SARs and convertible bonds listed below.  A summary of such terms and conditions has previously been filed with or submitted to the SEC under Form 20-F, Form 6-K and Form S-8.  There has been no change to such terms and conditions since the applicable date of such filings or submissions, except a revision of the total outstanding number of SARs issued and number of outstanding shares to be issued or transferred and outstanding balance of convertible bonds, as provided in the schedule below.

URL: The list of documents previously submitted by the Company
 
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000313838&owner=include&count=40


 
10

 
 
Stock acquisition rights (Outstanding as of June 30, 2010)
 
Name
(Date of shareholders’ resolution)
Total outstanding
number of
SARs issued
Number of shares of
common stock to be issued
or transferred
The first series of Common Stock Acquisition Rights
(June 20, 2002)
              9,878
987,800
The third series of Common Stock Acquisition Rights
(June 20, 2002)
              9,282
928,200
The fourth series of Common Stock Acquisition Rights
(June 20, 2003)
              8,145
814,500
The sixth series of Common Stock Acquisition Rights
(June 20, 2003)
              8,941
894,100
The seventh series of Common Stock Acquisition Rights
(June 22, 2004)
              9,540
954,000
The ninth series of Common Stock Acquisition Rights
(June 22, 2004)
              8,085
808,500
The tenth series of Common Stock Acquisition Rights
(June 22, 2005)
              10,093
1,009,300
The eleventh series of Common Stock Acquisition Rights
(June 22, 2005)
              10,437
1,043,700
The twelfth series of Common Stock Acquisition Rights
(June 22, 2006)
              10,579
1,057,900
The thirteenth series of Common Stock Acquisition Rights
(June 22, 2006)
              13,734
1,373,400
The fourteenth series of Common Stock Acquisition Rights
(June 21, 2007)
              7,962
796,200
The fifteenth series of Common Stock Acquisition Rights
(June 21, 2007)
              15,844
1,584,400
The sixteenth series of Common Stock Acquisition Rights
(June 20, 2008)
              8,318
831,800
The seventeenth series of Common Stock Acquisition Rights
(June 20, 2008)
              16,615
1,661,500
The eighteenth series of Common Stock Acquisition Rights
(June 19, 2009)
7,905
790,500
The nineteenth series of Common Stock Acquisition Rights
(June 19, 2009)
15,283
1,528,300

Convertible bonds (Outstanding as of June 30, 2010)
 
Name (Date of issuance)
Outstanding balance
(Thousands of U.S. dollars)
2011 due U.S. Dollar denominated convertible bonds (April 16, 2001)
44,968
2012 due U.S. Dollar denominated convertible bonds (April 15, 2002)
32,239

iii)  Status of the Exercise of Moving Strike Convertible Bonds

Not applicable.

iv)  Description of Rights Plan

Not applicable.


 
11

 
 
v)  Changes in the Total Number of Shares Issued and the Amount of Common Stock, etc.
 
Period
Change in the total number of shares issued
(Thousands)
Balance of the total number of shares issued
(Thousands)
Change in the amount of common stock
(Millions of yen)
Balance of the amount of common stock
(Millions of yen)
Change in the additional paid-in capital
(Millions of yen)
Balance of the additional paid-in capital
(Millions of yen)
From April 1 to
June 30, 2010
12
1,004,584
19
630,841
19
837,529
 
Note:
1       The increase is due to the exercise of SARs.
2       The total number of shares issued, the amount of common stock and the additional paid-in capital did not change during the period from July 1 to July 31, 2010.

vi)  Status of Major Shareholders
(As of June 30, 2010)
Name
Address
Number of
shares held
(Thousands)
Number of
shares held as
a percentage
of total shares issued (%)
Moxley and Company *1
(Local Custodian: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)
New York, U.S.A.
(2-7-1, Marunouchi, Chiyoda-ku, Tokyo)
92,288
9.19
Japan Trustee Services Bank, Ltd. (Trust account) *2
1-8-11, Harumi, Chuo-ku, Tokyo
56,915
5.67
The Master Trust Bank of Japan, Ltd.
(Trust account) *2
2-11-3, Hamamatsu-cho, Minato-ku, Tokyo
41,187
4.10
State Street Bank and Trust Company *3
(Local Custodian: The Hongkong and Shanghai Banking Corporation Limited)
Boston, U.S.A.
(3-11-1, Nihonbashi, Chuo-ku, Tokyo)
20,694
2.06
JPMorgan Chase Bank 380055 *3
(Local Custodian: Mizuho Corporate Bank, Ltd.)
New York, U.S.A.
(4-16-13, Tsukishima, Chuo-ku, Tokyo)
16,726
1.66
SSBT OD05 Omnibus China Treaty 808150 *3
(Local Custodian: The Hongkong and Shanghai Banking Corporation Limited)
Sydney, Australia
(3-11-1, Nihonbashi, Chuo-ku, Tokyo)
13,657
1.36
Japan Trustee Services Bank, Ltd.
(Trust account 9) *2
1-8-11, Harumi, Chuo-ku, Tokyo
13,300
1.32
State Street Bank and Trust Company 505225 *3
(Local Custodian: Mizuho Corporate Bank, Ltd.)
Boston, U.S.A.
(4-16-13, Tsukishima, Chuo-ku, Tokyo)
10,841
1.08
Mellon Bank, N.A. as Agent for its Client Mellon Omnibus US Pension *3
(Local Custodian: Mizuho Corporate Bank, Ltd.)
Boston, U.S.A.
(4-16-13, Tsukishima, Chuo-ku, Tokyo)
9,719
0.97
The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account *3
(Local Custodian: Mizuho Corporate Bank, Ltd.)
London, U.K.
(4-16-13, Tsukishima, Chuo-ku, Tokyo)
8,558
0.85
Total
283,884
28.26
 
Notes:
 
*1.
Moxley and Company is the nominee of JPMorgan Chase Bank, N.A., which is the Depositary for holders of the Company’s American Depositary Receipts (“ADRs”).
 
*2.
The shares held by each shareholder are held in trust for investors, including shares in securities investment trusts.
 
 
12

 
 
 
*3.
Each shareholder provides depositary services for shares owned by institutional investors, mainly in Europe and North America.  They are also the nominees for these investors.
 
  4.
Dodge & Cox sent a copy of the “Amendment to the Bulk Shareholding Report” (which was filed with the Kanto Local Finance Bureau in Japan) to the Company as of August 6, 2009 and reported that they held shares of the Company (including ADRs) as of July 31, 2009 as provided in the below table.  The Company has not been able to confirm any entry of Dodge & Cox in the register of shareholders as of June 30, 2010.
 
Name
Number of shares held
(Thousands)
Number of shares held as a percentage
of total shares issued (%)
Dodge & Cox
51,320
5.11
 

vii)  Status of Voting Rights
 
1)  Shares Issued
 
(As of June 30, 2010)
Classification
Number of shares of
common stock
Number of voting rights
(Units)
Description
Shares without voting rights
Shares with restricted voting rights
(Treasury stock, etc.)
Shares with restricted voting rights
(Others)
Shares with full voting rights
(Treasury stock, etc.)
1,047,100     
Shares with full voting rights
(Others)
1,000,868,900     
10,008,689
Fractional unit shares
2,667,564     
Shares less than
one full unit of stock
(100 shares)
Total number of shares issued
1,004,583,564     
Total voting rights held by all shareholders
10,008,689
 
Note:
Included in “Shares with full voting rights (Others)” under “Number of shares of common stock” are 19,700 shares of common stock held under the name of Japan Securities Depository Center, Inc.  Also included in “Shares with full voting rights (Others)” under “Number of voting rights (Units)” are 197 units of voting rights relating to the shares of common stock with full voting rights held under the name of Japan Securities Depository Center, Inc.


 
13

 

 
2)  Treasury Stock, Etc.
 
(As of June 30, 2010)
Name of shareholder
Address of shareholder
Number of shares held under own name
Number of shares
held under the
names of others
Total number
of shares held
Total of shares
held to total
shares issued
(%)
Sony Corporation
(Treasury stock)
1-7-1, Konan, Minato-ku, Tokyo
1,047,100
1,047,100
0.10
Total
1,047,100
 —
1,047,100
0.10
 
Note:
In addition to the 1,047,100 shares listed here, there are 300 shares of common stock held by the name of the Company in the register of shareholders that the Company does not beneficially own.  These shares are included in “Shares with full voting rights (Others)” in table 1 “Shares Issued” above.

(2)     Stock Price Range
 
Highest and lowest prices during the three months ended June 30, 2010
 
Month of 2010
April
May
June
Highest (Yen)
3,620
3,225
2,810
Lowest (Yen)
3,230
2,691
2,350
Note:          As quoted on the First Section of the Tokyo Stock Exchange.
 

(3)     Directors and Corporate Executive Officers
 
There was no change in directors and corporate executive officers between the filing date of the Securities Report (Yukashoken Houkokusho) for the fiscal year ended March 31, 2010 and the filing date of this Quarterly Securities Report (Shihanki Houkokusho).
 
 
14

 
V           Financial Statements
 
Page
(1) Consolidated Financial Statements
16
 
(i)
Consolidated Balance Sheets
16
 
(ii)
Consolidated Statements of Income
18
 
(iii)
Consolidated Statements of Cash Flows
19
(2) Other Information
34


 
15

 

(1) Consolidated Financial Statements

(i)  Consolidated Balance Sheets (Unaudited)

Sony Corporation and Consolidated Subsidiaries
     
 
Yen in millions
 
At June 30,  2010
At March 31,  2010
ASSETS
   
Current assets:
   
Cash and cash equivalents
994,627 
1,191,608 
Marketable securities
592,751 
579,493 
Notes and accounts receivable, trade
918,613 
996,100 
Allowance for doubtful accounts and sales returns
(83,978))
(104,475))
Inventories
748,586 
645,455 
Deferred income taxes
171,697 
197,598 
Prepaid expenses and other current assets
687,198 
627,093 
     Total current assets
4,029,494 
4,132,872 
     
Film costs
295,415 
310,065 
     
Investments and advances:
    
Affiliated companies
216,908 
229,051 
Securities investments and other
5,180,369 
5,070,342 
 
5,397,277 
5,299,393 
     
Property, plant and equipment:
   
Land
149,643 
153,067 
Buildings
855,320 
897,054 
Machinery and equipment
2,108,254 
2,235,032 
Construction in progress
75,987 
71,242 
 
3,189,204 
3,356,395 
Less – Accumulated depreciation
2,225,988 
2,348,444 
 
963,216 
1,007,951 
     
Other assets:
   
Intangibles, net
361,220 
378,917 
Goodwill
424,883 
438,869 
Deferred insurance acquisition costs
416,449 
418,525 
Deferred income taxes
392,958 
403,537 
Other
460,569 
475,985 
 
2,056,079 
2,115,833 
   
Total assets
12,741,481
12,866,114
(Continued on following page.)

 
16

 

Consolidated Balance Sheets (Unaudited)


     
 
Yen in millions
 
At June 30,    2010
At March 31,  2010
LIABILITIES
   
Current liabilities:
   
Short-term borrowings
67,421 
48,785 
Current portion of long-term debt
241,937 
235,822 
Notes and accounts payable, trade
846,826 
817,118 
Accounts payable, other and accrued expenses
892,196 
1,003,197 
Accrued income and other taxes
55,906 
69,175 
Deposits from customers in the banking business
1,515,917 
1,509,488 
Other
376,262 
376,340 
     Total current liabilities
3,996,465 
  4,059,925 
       
Long-term debt
898,893 
924,207 
Accrued pension and severance costs
286,861 
295,526 
Deferred income taxes
240,747 
236,521 
Future insurance policy benefits and other
3,931,079 
3,876,292 
Other
182,480 
188,088 
Total liabilities
9,536,525 
 9,580,559 
Commitments and contingent liabilities
   
     
EQUITY
Sony Corporation’s stockholders’ equity:
Common stock, no par value –
At June 30, 2010–Shares authorized: 3,600,000,000, shares issued: 1,004,583,564
At March 31, 2010– Shares authorized: 3,600,000,000, shares issued: 1,004,571,464
 
 
 
630,841 
 
 
 
 
630,822 
Additional paid-in capital
1,158,282 
1,157,812 
Retained earnings
1,876,741 
1,851,004 
Accumulated other comprehensive income –
   
   Unrealized gains on securities, net
60,432 
62,337 
   Unrealized gains (losses) on derivative instruments, net
70 
(36))
   Pension liability adjustment
(146,805))
(148,989))
   Foreign currency translation adjustments
(697,746))
(582,370))
 
(784,049))
(669,058))
Treasury stock, at cost
   
Common stock
At June 30, 2010–1,047,156 shares
At March 31, 2010–1,039,656 shares
 
(4,697))
 
 
(4,675))
 
2,877,118 
2,965,905 
Noncontrolling interests
327,838 
319,650 
Total equity
3,204,956 
3,285,555 
       
Total liabilities and equity
12,741,481 
12,866,114 
The accompanying notes are an integral part of these statements.

 
17

 

(ii)  Consolidated Statements of Income (Unaudited)

Sony Corporation and Consolidated Subsidiaries
 
Yen in millions
 
Three Months Ended June 30
 
2009
2010
Sales and operating revenue:
   
Net sales
1,354,765 
1,473,473 
Financial services revenue
223,352 
166,598 
Other operating revenue
21,736 
20,978 
 
1,599,853 
1,661,049 
Costs and expenses:
     
Cost of sales
1,061,424 
1,109,291 
Selling, general and administrative
378,037 
359,770 
Financial services expenses
174,703 
136,100 
(Gain) loss on sale, disposal or impairment of assets and other, net
(3,669))
(4,464))
 
1,610,495 
1,600,697 
Equity in net income (loss) of affiliated companies
(15,058))
6,664  
Operating income (loss)
(25,700))
67,016  
Other income:
   
Interest and dividends
4,420 
3,213 
Foreign exchange gain, net
13,931 
Other
3,979 
2,914 
 
8,399 
20,058 
Other expenses:
   
Interest
6,033 
6,102 
Foreign exchange loss, net
4,968 
Other
4,642 
2,061 
 
15,643 
8,163 
Income (loss) before income taxes
(32,944))
78,911 
Income taxes
(12,188))
43,673 
Net income (loss)
(20,756))
35,238 
Less - Net income attributable to noncontrolling interests
16,337 
9,501 
Net income (loss) attributable to Sony Corporation's stockholders
(37,093))
25,737 


 
Yen
 
Three Months Ended June 30
 
2009
2010
Per share data:
 
 
Net income (loss) attributable to Sony Corporation's stockholders
 
 
Basic
(36.96)
25.65
Diluted
(36.96)
25.61
The accompanying notes are an integral part of these statements.

 
18

 

(iii)  Consolidated Statements of Cash Flows (Unaudited)

Sony Corporation and Consolidated Subsidiaries
 
Yen in millions
 
Three Months Ended June 30
 
2009
2010
Cash flows from operating activities:
   
 Net income (loss)
(20,756))
35,238 
 Adjustments to reconcile net income (loss) to net cash
   
provided by (used in) operating activities –
   
Depreciation and amortization, including amortization
     of deferred insurance acquisition costs
87,240 
86,824 
Amortization of film costs
67,280 
48,300 
  Stock-based compensation expense
586 
980 
    Accrual for pension and severance costs, less payments
(8,280))
(2,574))
    Gain on sale, disposal or impairment of assets and other, net
(3,669))
(4,464))
(Gain) loss on revaluation of marketable securities held in the
financial service business for trading purpose, net
(8,683))
29,837 
(Gain) loss on revaluation or impairment of securities investments
held in the financial service business, net
(36,348))
1,841 
    Deferred income taxes
(2,127))
6,265 
Equity in net (income) losses of affiliated companies, net of dividends
15,805 
(6,656))
    Changes in assets and liabilities:
   
     Decrease in notes and accounts receivable, trade
22,856 
5,842 
     Increase in inventories
(11,911))
(158,549))
     Increase in film costs
(65,392))
(48,863))
     Increase in notes and accounts payable, trade
108,011 
68,211 
     Decrease in accrued income and other taxes
(632))
(15,020))
     Increase in future insurance policy benefits and other
81,652 
36,175 
     Increase in deferred insurance acquisition costs
(17,352))
(16,345))
     Increase in marketable securities held in the
financial service business for trading purpose
(8,413))
(2,739))
     Increase in other current assets
(55,599))
(100,319))
     Decrease in other current liabilities
(79,151))
(44,207))
    Other
(8,199))
73,375 
          Net cash provided by (used in) operating activities
56,918 
(6,848))
(Continued on following page.)

 
19

 

Consolidated Statements of Cash Flows (Unaudited)

 

 
 
Yen in millions
 
Three Months Ended June 30
 
2009
2010
Cash flows from investing activities:
   
 Payments for purchases of fixed assets
(97,432))
(71,896))
 Proceeds from sales of fixed assets
3,997 
1,668 
Payments for investments and advances by financial service business
(424,973))
(362,970))
Payments for investments and advances (other than financial service business)
(10,180))
(5,271))
Proceeds from maturities of marketable securities, sales of securities
investments and collections of advances by financial service business
347,948 
253,150 
Proceeds from maturities of marketable securities, sales of
securities investments and collections of advances
(other than financial service business)
9,042 
2,531 
Other
(1,260))
997 
          Net cash used in investing activities
(172,858))
(181,791))
Cash flows from financing activities:
     
 Proceeds from issuance of long-term debt
413,913 
582 
 Payments of long-term debt
(84,458))
(5,744))
 Increase (decrease) in short-term borrowings, net
(86,116))
19,187 
Increase in deposits from customers in the financial service business, net
25,603 
28,895 
 Dividends paid
(12,623))
(12,618))
 Other
8,935 
(4,102))
          Net cash provided by financing activities
265,254 
26,200 
Effect of exchange rate changes on cash and cash equivalents
(2,172))
(34,542))
Net increase (decrease) in cash and cash equivalents
147,142 
(196,981))
Cash and cash equivalents at beginning of the fiscal year
660,789 
1,191,608 
Cash and cash equivalents at end of the period
807,931 
994,627 
     
The accompanying notes are an integral part of these statements.



 
20

 

Index to Notes to Consolidated Financial Statements

Sony Corporation and Consolidated Subsidiaries

 
Notes to Consolidated Financial Statements
Page
 
1.
Summary of significant accounting policies
22
 
2.
Marketable securities and securities investments
24
 
3.
Fair value measurements
25
 
4.
Supplemental equity and comprehensive income information
26
 
5.
Reconciliation of the differences between basic and diluted EPS
27
 
6.
Commitments and contingent liabilities
28
 
7.
Business segment information
29
       


 

 
21

 

Notes to Consolidated Financial Statements (Unaudited)
Sony Corporation and Consolidated Subsidiaries

 
1. Summary of significant accounting policies
 
Sony Corporation and its subsidiaries in Japan maintain their records and prepare their financial statements in accordance with accounting principles generally accepted in Japan while its foreign subsidiaries maintain their records and prepare their financial statements in conformity with accounting principles generally accepted in the countries of their domiciles.  Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform with accounting principles generally accepted in the United States of America (“U.S. GAAP”), except for certain disclosures which have been omitted.

(1)  Recently adopted accounting pronouncements:
 
Multiple element arrangements and software deliverables -
 
In October 2009, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance for arrangements with multiple deliverables.  Specifically, the new standard requires an entity to allocate consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices.  In the absence of the vendor-specific objective evidence or third-party evidence of the selling prices, consideration must be allocated to the deliverables based on management’s best estimate of the selling prices.  In addition, the guidance eliminates the use of the residual method of allocation.  Also in October 2009, the FASB issued accounting guidance which changes revenue recognition for tangible products containing software and hardware elements. &# 160;Specifically, tangible products containing software and hardware that function together to deliver the tangible products’ essential functionality are scoped out of the existing software revenue recognition guidance and will be accounted for under the revenue recognition guidance for multiple element arrangements.  Sony adopted the new guidance on April 1, 2010.  The adoption of the new guidance did not have a material impact on Sony’s results of operations and financial position.


Transfers of financial assets -
 
In June 2009, the FASB issued new accounting guidance on accounting for transfers of financial assets.  This guidance amends previous guidance by including: the elimination of the qualifying special-purpose entity (“QSPE”) concept; a new participating interest definition that must be met for transfers of portions of financial assets to be eligible for sale accounting; clarifications and changes to the derecognition criteria for a transfer to be accounted for as a sale; and a change to the amount of recognized gain or loss on a transfer of financial assets accounted for as a sale when beneficial interests are received by the transferor.  Additionally, the guidance requires new disclosures regarding an entity's involvement in a transfer of financial assets.  Finally, existing QSPEs must be eval uated for consolidation in accordance with the applicable consolidation guidance upon the elimination of this concept.  This guidance is effective for Sony as of April 1, 2010.  The adoption of this guidance did not have a material impact on Sony’s results of operations and financial position.

Variable interest entities -
 
In June 2009, the FASB issued new accounting guidance for determining whether to consolidate a variable interest entity (“VIE”).  This guidance changes the approach for determining the primary beneficiary of a VIE from a quantitative risk and reward model to a qualitative model based on control, and requires an ongoing reassessment of whether an entity is the primary beneficiary.  This guidance is effective for Sony as of April 1, 2010.  The adoption of this guidance did not have a material impact on Sony’s results of operations and financial position.

(2)  
Accounting methods used specifically for interim consolidated financial statements:
 
Income Taxes -
 
Sony estimates the annual effective tax rate (“ETR”) derived from a projected annual net income before taxes and calculates interim period income tax provision based on the year-to-date income tax provision computed by applying the ETR to the year-to-date net income before taxes at the end of each interim period.  The income tax provision based on the ETR reflects anticipated income tax credits and net operating loss carryforwards; however, it excludes income tax provision related to significant unusual or extraordinary transactions.  Such income tax provision will be separately reported from the provision based on the ETR in the interim period in which they occur.

 
22

 
(3)  
Reclassifications:
 
Certain reclassifications of the financial statements for the three months ended June 30, 2009 have been made to conform to the presentation for the interim period ended June 30, 2010.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23

 

2. Marketable securities and securities investments 

Marketable securities and securities investments, mainly included in the Financial Services segment, are comprised of debt and equity securities of which the aggregate cost, gross unrealized gains and losses and fair value pertaining to available-for-sale securities and held-to-maturity securities are as follows:

   
Yen in millions
   
June 30, 2010
 
March 31, 2010
   
Cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair value
 
Cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair value
                                 
Available-for-sale:
                               
Debt securities:
                               
Japanese national
government bonds
 
 
1,227,132
 
 
59,269
 
 
(2,213)
 
 
1,284,188
 
 
1,264,725
 
 
29,496
 
 
(3,397)
 
 
1,290,824
                                 
Japanese local
government bonds
 
 
12,912
 
 
286
 
 
-
 
 
13,198
 
 
27,750
 
 
1,097
 
 
(5)
 
 
28,842
                                 
Japanese corporate
bonds
 
 
330,583
 
 
2,781
 
 
(79)
 
 
333,285
 
 
360,554
 
 
3,773
 
 
(106)
 
 
364,221
                                 
Foreign corporate bonds
 
294,643
 
3,403
 
(9,966)
 
288,080
 
281,003
 
4,818
 
(6,492)
 
279,329
                                 
Other
 
8,045
 
104
 
(226)
 
7,923
 
11,141
 
83
 
(123)
 
11,101
   
1,873,315
 
65,843
 
(12,484)
 
1,926,674
 
1,945,173
 
39,267
 
(10,123)
 
1,974,317
                                 
Equity securities
 
107,232
 
59,912
 
(8,828)
 
158,316
 
99,753
 
74,430
 
(3,437)
 
170,746
                                 
Held-to-maturity
                               
securities:
                               
Japanese national
  government bonds
 
 
2,455,548
 
 
145,125
 
 
-
 
 
2,600,673
 
 
2,248,230
 
 
3,318
 
 
(30,740)
 
 
2,220,808
                                 
  Japanese local
  government bonds
 
 
23,406
 
 
429
 
 
-
 
 
23,835
 
 
23,617
 
 
346
 
 
-
 
 
23,963
                                 
  Japanese
  corporate bonds
 
 
32,503
 
 
1,469
 
 
-
 
 
33,972
 
 
32,041
 
 
150
 
 
(321)
 
 
31,870
                                 
Foreign corporate bonds
 
48,801
 
15
 
(1)
 
48,815
 
50,831
 
18
 
(7)
 
50,842
 
 
2,560,258
 
147,038
 
(1)
 
2,707,295
 
2,354,719
 
3,832
 
(31,068)
 
2,327,483
 
                               
Total
 
4,540,805
 
272,793
 
(21,313)
 
4,792,285
 
4,399,645
 
117,529
 
(44,628)
 
4,472,546




 
24

 

3. Fair value measurements

The fair value of Sony’s assets and liabilities that are measured at fair value on a recurring basis are as follows:

   
Yen in millions
   
At June 30, 2010
   
Level 1
 
Level 2
 
Level 3
 
Total
                 
Assets:
               
Trading securities
 
164,778
 
161,715
 
-
 
326,493
Available-for-sale securities
               
   Debt securities
               
           Japanese national government bonds
 
-
 
1,284,188
 
-
 
1,284,188
           Japanese local government bonds
 
-
 
13,198
 
-
 
13,198
           Japanese corporate bonds
 
-
 
331,663
 
1,622
 
333,285
           Foreign corporate bonds
 
-
 
266,064
 
22,016
 
288,080
           Other
 
-
 
7,923
 
-
 
7,923
   Equity securities
 
148,610
 
5,779
 
3,927
 
158,316
Other investments
 
5,212
 
-
 
67,375
 
72,587
Derivative assets *
 
-
 
35,267
 
-
 
35,267
Total assets
 
318,600
 
2,105,797
 
94,940
 
2,519,337
Liabilities:
               
Derivative liabilities *
 
-
 
32,140
 
-
 
32,140
Total liabilities
 
-
 
32,140
 
-
 
32,140

   
Yen in millions
   
At March 31, 2010
   
Level 1
 
Level 2
 
Level 3
 
Total
                 
Assets:
               
Trading securities
 
180,414
 
172,939
 
-
 
353,353
Available-for-sale securities
               
   Debt securities
               
         Japanese national government bonds
 
-
 
1,290,824
 
-
 
1,290,824
         Japanese local government bonds
 
-
 
28,842
 
-
 
28,842
         Japanese corporate bonds
 
4,937
 
358,187
 
1,097
 
364,221
         Foreign corporate bonds
 
-
 
261,896
 
17,433
 
279,329
         Other
 
365
 
10,736
 
-
 
11,101
   Equity securities
 
160,128
 
6,682
 
3,936
 
170,746
Other investments
 
5,377
 
38
 
69,672
 
75,087
Derivative assets *
 
-
 
23,796
 
-
 
23,796
Total assets
 
351,221
 
2,153,940
 
92,138
 
2,597,299
Liabilities:
               
Derivative liabilities *
 
-
 
48,599
 
-
 
48,599
Total liabilities
 
-
 
48,599
 
-
 
48,599

* Derivative assets and liabilities are recognized and disclosed on a gross basis.
 
 
25

 

4. Supplemental equity and comprehensive income information
 
A reconciliation of the beginning and ending carrying amounts of Sony Corporation’s stockholders’ equity, noncontrolling interests and the total equity for the three months ended June 30, 2009 is as follows:

   
Yen in millions
 
 
Sony Corporation’s
stockholders’ equity
Noncontrolling interests
Total equity
Balance at March 31, 2009
2,964,653 
2251,949 
3,216,602  
Stock-based compensation
553 
-  
553  
Comprehensive income:
     
Net income (loss)
(37,093))
16,337 
(20,756))
Other comprehensive income, net of tax ―
     
Unrealized gains on securities
19,261 
10,122 
29,383 
Unrealized gains (losses) on derivative instruments
(871))
(871))
Pension liability adjustment
(511))
(511))
Foreign currency translation adjustments
23,283 
58 
23,341 
Total comprehensive income
4,069 
26,517 
30,586 
Dividends
(3,374))
(3,374))
Purchase of treasury stock
(33))
(33))
Reissuance of treasury stock
38 
38 
Transactions with noncontrolling interests
shareholders and other
69 
98 
167 
Balance at June 30, 2009
2,969,349 
275,190275,190 
3,244,539 

A reconciliation of the beginning and ending carrying amounts of Sony Corporation’s stockholders’ equity, noncontrolling interests and the total equity for the three months ended June 30, 2010 is as follows:

   
Yen in millions
 
 
Sony Corporation’s stockholders’ equity
Noncontrolling interests
Total equity
Balance at March 31, 2010
2,965,905 
319,650
3,285,555 
Exercise of stock acquisition rights
38 
13
51 
Stock-based compensation
457 
-
457 
Comprehensive income:
     
Net income
25,737 
9,501
35,238 
Other comprehensive income, net of tax ―
     
Unrealized gains (losses) on securities
(1,905))
3,002
1,097 
Unrealized gains on derivative instruments
106 
-
106 
Pension liability adjustment
2,184 
-
2,184 
Foreign currency translation adjustments
(115,376))
(501))
(115,877))
Total comprehensive income
(89,254))
12,002
(77,252))
Stock issue costs, net of tax
-
1  
Dividends
(4,027))
(4,027))
Purchase of treasury stock
(30))
-
(30))
Reissuance of treasury stock
-
Transactions with noncontrolling interests
shareholders and other
(4))
200 
 196 
Balance at June 30, 2010
2,877,118  
327,838 
 3,204,956 

There was no material effect of changes in Sony Corporation’s ownership interest in its subsidiaries on Sony Corporation’s stockholders’ equity for the three months ended June 30, 2009 and June 30, 2010.

 
26

 

 
5. Reconciliation of the differences between basic and diluted EPS
 
Reconciliation of the differences between basic and diluted net income (loss) attributable to Sony Corporation's stockholders per share (“EPS”) for the three months ended June 30, 2009 and 2010 is as follows:

 
Yen in millions
 
Three Months Ended June 30
 
2009
 
2010
Net income (loss) attributable to Sony Corporation’s
   stockholders for basic and diluted EPS computation
(37,093))
 
25,737

 
Thousands of shares
Weighted-average shares outstanding
1,003,529 
 
1,003,538
Effect of dilutive securities:
     
Stock acquisition rights
 
324
Convertible bonds
 
1,248
Weighted-average shares for diluted EPS computation
1,003,529 
 
1,005,110

 
Yen
Basic EPS
(36.96))
 
25.65
Diluted EPS
(36.96))
 
25.61

Potential shares of common stock upon the exercise of stock acquisition rights, which were excluded from the computation of diluted EPS for the three months ended June 30, 2009 and 2010 were 16,423 thousand shares and 16,740 thousand shares, respectively.  The potential shares were excluded as anti-dilutive for the three months ended June 30, 2009 due to Sony incurring a net loss for the period, and the potential shares were excluded as anti-dilutive for the three months ended June 30, 2010 as the exercise price for those shares was in excess of the average market value of Sony’s common stock during the period.


 
 
 
 

 

 
27

 

6. Commitments and contingent liabilities
 
(1)  
Commitments:
 
 
A. Loan commitments
 
Subsidiaries in the Financial Services segment have entered into loan agreements with their customers in accordance with the condition of the contracts.  At June 30, 2010, the total unused portion of the line of credit extended under these contracts was 126,001 million yen.  The aggregate amounts of future year-by-year payments for these loan commitments cannot be determined.


 
B. Purchase commitments and other
 
Purchase commitments and other outstanding at June 30, 2010 amounted to 280,572 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.  At June 30, 2010, such commitments outstanding were 27,041 million yen.

Certain subsidiaries in the Pictures segment have entered into agreements with creative talent for the development and production of motion pictures and television programming as well as agreements with third parties to acquire completed motion pictures, or certain rights therein, and to acquire the rights to broadcast certain live action sporting events.  These agreements cover various periods mainly within 5 years.  At June 30, 2010, these subsidiaries were committed to make payments under such contracts of 120,233 million yen.

Certain subsidiaries in the Music segment have entered into long-term contracts with recording artists and companies for the production and/or distribution of prerecorded music and videos.  These contracts cover various periods mainly within 5 years.  At June 30, 2010, these subsidiaries were committed to make payments of 40,431 million yen under such long-term contracts.


(2)  
Contingent liabilities:
 
Sony had contingent liabilities including guarantees given in the ordinary course of business, which amounted to 76,038 million yen at June 30, 2010.  The major components of the contingent liabilities are as follows:

Sony has issued a guarantee to a creditor of the third party investor pursuant to which Sony will provide a minimum offer of 300 million U.S. dollars to the creditor to purchase certain assets that are being held as collateral by the third party creditor against the obligation of the third party investor.  At June 30, 2010, the fair value of the collateral exceeded 300 million U.S. dollars.

At June 30, 2010, Sony had agreed to guarantee a portion of Sony Ericsson’s debt and its facilities up to a maximum of 250 million euros.  At June 30, 2010, Sony had guaranteed 16,389 million yen (150 million euros) for a portion of Sony Ericsson’s debt under this arrangement.  These guarantees expire by March 2012.

Sony is subject to laws and regulations in various countries that make producers of electrical goods financially responsible for collection, recycling, treatment and disposal of past and future covered products.  For example, the Waste Electrical and Electronic Equipment (“WEEE”) directive, issued in February 2003, requires electronics producers to finance the cost for collection, treatment, recovery and safe disposal of waste products.  In most member states of the European Union (“EU”), the directive has been transposed into national legislation subject to which Sony recognizes the liability for obligations associated with WEEE.  At June 30, 2010, the accrued amounts in respect to the above mentioned WEEE were not significant.

Sony Corporation and certain of its subsidiaries are defendants or otherwise involved in pending legal and regulatory proceedings.  However, based upon the information currently available to Sony and its legal counsel, the management of Sony believes that the outcome from such legal and regulatory proceedings would not have a material effect on Sony’s consolidated financial statements.

 
28

 

7. Business segment information
 
The reportable segments presented below are the segments of Sony for which separate financial information is available and for which operating profit or loss amounts are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance.  The CODM does not evaluate segments using discrete asset information.  Sony’s CODM is its Chairman, Chief Executive Officer and President.

Sony realigned its reportable segments from the first quarter of the fiscal year ending March 31, 2011, to reflect modifications to the organizational structure as of April 1, 2010, primarily repositioning the operations of the previously reported B2B & Disc Manufacturing segment.  In connection with this realignment, the Consumer Products & Devices segment was renamed the Consumer, Professional & Devices (“CPD”) segment.

The CPD segment includes televisions, digital imaging, audio and video, semiconductors and components as well as professional solutions (the B2B business which was previously incorporated in the B2B & Disc Manufacturing segment).  The equity results of S-LCD Corporation are also included within the CPD segment.  The disc manufacturing business previously included in the B2B & Disc Manufacturing segment is now included in All Other.  The Networked Products & Services (“NPS”), Pictures, Music and Financial Services segments remain unchanged.  The equity earnings from Sony Ericsson Mobile Communications AB continue to be presented as a separate segment.  In connection with the realignment, all prior period amounts in the segment disclosures have been revised to co nform to the current presentation.
 
 
 
 
 
 
 
 

 
29

 

Business segments -
 

Sales and operating revenue:

   
Yen in millions
   
Three Months Ended June 30
   
2009
 
2010
Sales and operating revenue:
       
Consumer, Professional & Devices -
       
Customers
 
761,968
 
829,509
Intersegment
 
69,187
 
59,949
Total
 
831,155
 
889,458
Networked Products & Services -
       
Customers
 
238,085
 
310,399
Intersegment
 
8,008
 
15,540
Total
 
246,093
 
325,939
Pictures -
       
Customers
 
170,020
 
132,085
Intersegment
 
-
 
-
Total
 
170,020
 
132,085
Music -
       
Customers
 
106,382
 
107,090
Intersegment
 
2,445
 
3,182
Total
 
108,827
 
110,272
Financial Services -
       
Customers
 
223,352
 
166,598
Intersegment
 
4,199
 
2,397
Total
 
227,551
 
168,995
All Other -
       
Customers
 
84,432
 
89,738
Intersegment
 
15,492
 
17,087
Total
 
99,924
 
106,825
Corporate and elimination
 
(83,717)
 
(72,525)
Consolidated total
 
1,599,853
 
1,661,049


CPD intersegment amounts primarily consist of transactions with the NPS segment.

NPS intersegment amounts primarily consist of transactions with the CPD segment.

All Other intersegment amounts primarily consist of transactions with the Pictures segment, the Music segment and the NPS segment.

Corporate and elimination includes certain royalty income of brand and patent.


 
30

 

Segment profit or loss:

   
Yen in millions
   
Three Months Ended June 30
   
2009
 
2010
Operating income (loss):
       
Consumer, Professional & Devices
 
(8,894)
 
50,089
Networked Products & Services
 
(36,737)
 
(3,791)
Pictures
 
1,808
 
2,860
Music
 
5,375
 
7,493
Financial Services
 
48,215
 
29,976
Equity in net income (loss) of Sony Ericsson
 
(14,476)
 
582
All Other
 
(4,634)
 
(3,892)
Total
 
(9,343)
 
83,317
Corporate and elimination
 
(16,357)
 
(16,301)
Consolidated operating income (loss)
 
(25,700)
 
67,016
Other income
 
8,399
 
20,058
Other expenses
 
(15,643)
 
(8,163)
Consolidated income (loss) before income taxes
 
(32,944)
 
78,911


Operating income (loss) is Sales and operating revenue less Costs and expenses, and includes Equity in net income (loss) of affiliated companies.

Corporate and elimination includes certain restructuring costs and other corporate expenses, which are attributable principally to headquarters and are not allocated to segments.

As a result of a modification of internal management reporting during the previous fiscal year, certain amounts previously included within corporate and elimination have been reclassified into the segment operating income (loss) for all periods presented.  The revision had no impact on the consolidated results.
 
 

 
31

 

Other Significant Items:

The following table includes a breakdown of sales and operating revenue to external customers by product category in the CPD and NPS segments.  The CPD and NPS segments are each managed as a single operating segment by Sony’s management.

   
Yen in millions
   
Three Months Ended June 30
Sales and operating revenue:
 
2009
 
2010
Consumer, Professional & Devices
       
Televisions
 
        237,144
 
        291,935
Digital Imaging
 
        180,432
 
        172,231
Audio and Video
 
        101,315
 
          95,245
Semiconductors
 
          67,810
 
          90,233
Components
 
        111,690
 
        107,204
Professional Solutions
 
          60,982
 
          67,759
Other
 
            2,595
 
            4,902
Total
 
        761,968
 
        829,509
         
Networked Products & Services
   
Game
 
        110,514
 
        142,102
PC and Other Networked Businesses
 
        127,571
 
        168,297
Total
 
        238,085
 
        310,399
         
Pictures
 
        170,020
 
        132,085
Music
 
        106,382
 
        107,090
Financial Services
 
        223,352
 
        166,598
All Other
 
          84,432
 
          89,738
Corporate
 
          15,614
 
          25,630
Consolidated total
 
     1,599,853
 
     1,661,049


Sony has partially realigned its product category configuration from the first quarter of the fiscal year ending March 31, 2011.  In connection with the realignment, all prior period sales amounts by product category in the table above have been revised to conform to the current presentation.  In the CPD segment, Televisions includes LCD televisions; Digital Imaging includes digital still cameras, digital interchangeable lens cameras and digital video cameras; Audio and Video includes home audio, Blu-ray disc players and recorders; Semiconductors includes image sensors and small and medium sized LCD panels; Components includes batteries, recording media and data recording systems; Professional Solutions includes broadcast- and professional-use products.  In the NPS segment, Game includes game consoles and software; PC and Other Networked Businesses includes personal computers and memory-based portable audio devices.

 
32

 

Geographic Information -
 
Sales and operating revenue attributed to countries based on location of external customers are as follows:

   
Yen in millions
   
Three Months Ended June 30
Sales and operating revenue
 
2009
 
2010
Japan
 
                494,721
 
456,097
U.S.A.
 
                371,317
 
360,039
Europe
 
                323,195
 
330,632
Other Areas
 
                410,620
 
514,281
Total
 
             1,599,853
 
1,661,049



There are not any individually material countries with respect to the sales and operating revenue included in Europe and Other areas.

Transfers between reportable business segments or geographic areas are made at amounts that Sony’s management believes appropriate as arms-length transactions.

There were no sales and operating revenue with any single major external customer for the three months ended June 30, 2009 and 2010.


 
33

 

 (2)  Other Information

(1) Dividends declared
A year-end dividend for Sony Corporation’s common stock was approved at the Board of Directors meeting held on May 12, 2010 as below:

1. Total amount of year-end cash dividends:
12,544 million yen
2. Amount of year-end cash dividends per share:
12.50 yen
3. Payment date:
June 2, 2010
Year-end cash dividends for the fiscal year ended March 31, 2010, have been incorporated in the consolidated financial statements of the previous fiscal year.

Note: Year-end cash dividends were distributed to the shareholders recorded or registered as the holders or pledgees of one or more unit of shares in Sony Corporation’s register of shareholders at the end of March 31, 2010.

(2) Subsequent events
There were no applicable subsequent events.

(3) Litigation
In October 2009, Sony Corporation’s U.S. subsidiary, Sony Optiarc America Inc., received a subpoena from the U.S. Department of Justice (the “DOJ”) Antitrust Division seeking information about its optical disk drive business.  Sony Corporation understands that the DOJ and agencies outside the United States are investigating competition in optical disk drives. Sony Corporation intends to cooperate fully with the DOJ and other agencies in this inquiry.  Subsequently, a number of purported class action lawsuits were filed in certain jurisdictions, including the United States, in which the plaintiffs allege that Sony Corporation, Sony Optiarc Inc., Sony Optiarc America Inc., other named defendants and other unnamed parties violated antitrust laws and seek recovery of damages and other remedies.
In addition, Sony Corporation and certain of its subsidiaries are defendants or otherwise involved in other pending legal and regulatory proceedings.  However, based upon the information currently available to Sony and its legal counsel, the management of Sony believes that the outcome from such legal and regulatory proceedings would not have a material effect on Sony’s consolidated financial statements.

 
34

 

 
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
  SONY CORPORATION
(Registrant)


 
  By:   /s/ Masaru Kato  
    (Signature) 

Masaru Kato
Executive Vice President and Chief Financial Officer
 
       
 
August 11, 2010 -----END PRIVACY-ENHANCED MESSAGE-----