6-K 1 sony-6k_0812.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 August 2011
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, 2011

(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
 
3
       
II
State of Business
 
4
 
(1)     Risk Factors
 
4
 
(2)     Material Contracts
 
4
 
(3)     Management’s Discussion and Analysis of Financial Condition, Results of Operations and
Status of Cash Flows
 
4
       
III
Company Information
 
7
 
(1)     Information on the Company’s Shares
 
7
 
(2)     Directors and Corporate Executive Officers
 
10
       
IV
Financial Statements
  
11
 
(1)   Consolidated Financial Statements
 
12
 
(2)   Other Information
 
31

 
 

 
 
Note for readers of this English translation
On August 12, 2011, Sony Corporation (the “Company” or “Sony Corporation”) filed its Japanese-language Quarterly Securities Report (Shihanki Houkokusho) for the three months ended June 30, 2011 with the Director-General of 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 previously filed with or submitted to the U.S. Securities and Exchange Commission (the “SEC”) in a Form 20-F, Form 6-K or any other form 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-GAAP”), 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 words 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 levels 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 strategies 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 Products & Services segment and Professional, Device & Solutions segment); (viii) Sony’s ability to maintain product quality; (ix) the effectiveness of Sony’s strategies and their execution, including but not limited to 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; (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; and (xiv) those related to catastrophic disasters or similar events, including the Great East Japan Earthquake and its aftermath.  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, 2010
Three Months
Ended June 30, 2011
Fiscal Year
Ended March 31, 2011
Sales and operating revenue
1,661,049
1,494,921
7,181,273
Operating income
67,016
27,500
199,821
Income before income taxes
78,911
23,119
205,013
Net income (loss) attributable to Sony Corporation’s stockholders
25,737
(15,502)
(259,585)
Comprehensive income (loss)
(77,252)
(14,424)
(359,727)
Total equity
3,204,956
2,916,340
2,936,579
Total assets
12,741,481
12,857,253
12,924,988
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock, basic (yen)
25.65
(15.45)
(258.66)
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock, diluted (yen)
25.61
(15.45)
(258.66)
Ratio of stockholders’ equity to total assets (%)
22.6
19.6
19.7
Net cash provided by (used in) operating activities
(6,848)
(39,893)
616,245
Net cash used in investing activities
(181,791)
(148,125)
(714,439)
Net cash provided by (used in) financing activities
26,200
9,050
10,112)
Cash and cash equivalents at end of the period
994,627
816,588
1,014,412
       
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.
3.  
Consumption taxes are not included in sales and operating revenue.
4.  
Total equity is presented based on U.S. GAAP.
5.  
Ratio of stockholders’ equity to total assets is 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 -

 

(2) Business Overview
There was no significant change in the business of Sony during the three months ended June 30, 2011.

Sony realigned its reportable segments effective from the first quarter of the fiscal year ending March 31, 2012.  For further information on the realignment, please refer to “IV Financial Statements – Notes to Consolidated Financial Statements – 8. Business segment information”.

As of June 30, 2011, the Company had 1,307 subsidiaries and 88 affiliated companies, of which 1,275 companies are consolidated subsidiaries (including variable interest entities) of the Company.  The Company has applied the equity accounting method for 80 affiliated companies.


 

 

 
- 3 -

 
 
II       State of Business
 
(1) Risk Factors
 
Note for readers of this English translation:
 
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 Securities and Exchange Commission (the “SEC”) on June 28, 2011.  Based on the current judgment of management, there is also no significant change to any forward-looking statement included in the Risk Factors section of the Annual Report on Form 20-F filed on June 28, 2011.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm
 
 
(2) Material Contracts
There were no material contracts executed during the three months ended June 30, 2011.
 
 
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, 2011.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm

 
(3) 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, 2011, 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, 2011” submitted to the SEC on Form 6-K on July 28, 2011.

URL: The press release titled “Consolidated Financial Results for the First Quarter Ended June 30, 2011”
http://www.sec.gov/Archives/edgar/data/313838/000115752311004351/a6806790.htm

Foreign Exchange Fluctuations and Risk Hedging
 
Note for readers of this English translation:
 
Even though foreign exchange rates have 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, 2011.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm
 
 
- 4 -

 
 
Status of Cash Flows
 
 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, 2011, 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, 2011” submitted to the SEC on Form 6-K on July 28, 2011.

URL: The press release titled “Consolidated Financial Results for the First Quarter Ended June 30, 2011”
http://www.sec.gov/Archives/edgar/data/313838/000115752311004351/a6806790.htm
 

ii) Issues Facing Sony and Management’s Response to those Issues
 
Note for readers of this English translation:
There was no significant change from the information presented as the 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, 2011.  Based on the current judgment of management, there is also no significant change to any forward-looking statement included in the Trend Information section of the Annual Report on Form 20-F filed on June 28, 2011.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm

iii)  Research and Development
 
Note for readers of this English translation:
Excluding the below, there was no significant change from the information presented as the Research and Development in the Annual Report on Form 20-F filed with the SEC on June 28, 2011.

URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm
 
Research and development costs for the three months ended June 30, 2011 totaled 96.1 billion yen.  There were no significant changes in research and development activities for the period.

(iv) Liquidity and Capital Resources
 
 
Note for readers of this English translation:
 
Excluding the 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, 2011.  The changes are indicated by underline below.  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, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm

 
- 5 -

 

 
Sony typically raises funds through straight bonds, CP programs and bank loans (including syndicated loans); however, in the unlikely event Sony could not access liquidity from these sources, Sony can also draw on committed lines of credit from various financial institutions.  Sony has a total, translated into yen, of 747.1 billion yen in committed lines of credit, none of which had been used as of June 30, 2011.  Details of those committed lines of credit are: a 475.0 billion yen committed line of credit contracted with a syndicate of Japanese banks, effective until November 2013; 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 its consolidated subsidiary, Sony Global Treasury Services Plc are defined as the borrowers.  These contracts are aimed at securing sufficient liquidity by enabling Sony to raise funds in a quick and stable manner even in the event of financial and capital market turmoil similar to that which occurred in the period following the fall of 2008.

(v) Property, Plant and Equipment
 
On April 1, 2011, Sony Semiconductor Kyushu Corporation, a wholly owned subsidiary of Sony Corporation, acquired semiconductor fabrication equipment from Toshiba Corporation for 51,083 million yen in order to increase the production capacity for CMOS image sensors in Sony Semiconductor Kyushu Corporation’s Nagasaki Technology Center.



 
- 6 -

 

         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, 2011)
As of the filing date of
the Quarterly
Securities Report
(August 12, 2011)
Common
stock
1,004,638,164
1,004,638,164
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
1,004,638,164
1,004,638,164
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 this 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 of Japan) during August 2011, the month in which this Quarterly Securities Report (Shihanki Houkokusho) was filed.

ii) Stock Acquisition Rights
Not applicable.
 
 
Note for readers of this English translation:
The above means that there was no issuance of stock acquisition rights during the three months ended June 30, 2011.

iii) Status of the Exercise of Moving Strike Convertible Bonds
Not applicable.

iv) Description of Rights Plan
Not applicable.

 
- 7 -

 
 

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
Balance of the total number of shares issued
Change in
the amount of
common stock
Balance of
the amount of
common stock
Change in the additional
paid-in capital
Balance of the additional
paid-in capital
(Thousands)
(Thousands)
(Yen in Millions)
(Yen in Millions)
(Yen in Millions)
(Yen in Millions)
From April 1 to
June 30, 2011
2
1,004,638
2
630,923
2
837,611
Notes:
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, 2011 to July 31, 2011.
 
 
 
 
 
 
 
 

 
 
- 8 -

 

vi) Status of Major Shareholders
(As of June 30, 2011)
Name
Address
Number of
shares held
(Thousands)
Percentage
of shares held to 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)
83,524
8.31
Japan Trustee Services Bank, Ltd. (Trust account) *2
1-8-11, Harumi, Chuo-ku, Tokyo
58,566
5.83
The Master Trust Bank of Japan, Ltd.
(Trust account) *2
2-11-3, Hamamatsu-cho, Minato-ku, Tokyo
44,597
4.44
SSBT OD05 Omnibus Account - Treaty Clients *3
(Local Custodian: The Hongkong and Shanghai Banking Corporation Limited)
Sydney, Australia
(3-11-1, Nihonbashi, Chuo-ku,
Tokyo)
22,456
2.24
Japan Trustee Services Bank, Ltd.
(Trust account 9) *2
1-8-11, Harumi, Chuo-ku,
Tokyo
17,890
1.78
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)
16,049
1.60
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)
9,334
0.93
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)
9,194
0.92
State Street Bank West Client - Treaty *3
(Local Custodian: Mizuho Corporate Bank, Ltd.)
Quincy, U.S.A.
(4-16-13, Tsukishima, Chuo-ku,
Tokyo)
8,863
0.88
State Street Bank - West Pension Fund Clients - Exempt *3
(Local Custodian: Mizuho Corporate Bank, Ltd.)
Quincy, U.S.A.
(4-16-13, Tsukishima, Chuo-ku,
Tokyo)
8,782
0.87
Total
279,257
27.80
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.
*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.


 
- 9 -

 

vii) Status of Voting Rights
1) Shares Issued
(As of June 30, 2011)
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.)
1,073,200
Shares with full voting rights
(Others)
1,000,989,600
10,009,896
Shares constituting less than one full unit
2,575,364
Shares constituting less than
one full unit
(100 shares)
Total number of shares issued
1,004,638,164
Total voting rights held by all shareholders
10,009,896
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, Incorporated.  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, Incorporated.
 

 
2) Treasury Stock, Etc.
 
(As of June 30, 2011)
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
Percentage of shares held to total shares issued
(%)
Sony Corporation
(Treasury stock)
1-7-1, Konan, Minato-ku, Tokyo
1,073,200
1,073,200
0.11
Total
1,073,200
 —
1,073,200
0.11
Note:
In addition to the 1,073,200 shares listed above, there are 300 shares of common stock held in 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)           Directors and Corporate Executive Officers
There was no change in directors or corporate executive officers in the period from the filing date of the Securities Report (Yukashoken Houkokusho) for the fiscal year ended March 31, 2011 to the filing date of this Quarterly Securities Report (Shihanki Houkokusho).

 
- 10 -

 
 
IV           Financial Statements
 
Page
(1) Consolidated Financial Statements
12
 
(i)
Consolidated Balance Sheets
12
 
(ii)
Consolidated Statements of Income
14
 
(iii)
Consolidated Statements of Cash Flows
15
(2) Other Information
31

 
 
 
 
 

 
- 11 -

 

(1) Consolidated Financial Statements

 (i)  Consolidated Balance Sheets (Unaudited)

Sony Corporation and Consolidated Subsidiaries
     
 
Yen in millions
 
At March 31,
2011
At June 30,
2011
ASSETS
   
Current assets:
   
Cash and cash equivalents
1,014,412 
816,588 
Marketable securities
646,171 
616,478 
Notes and accounts receivable, trade
834,221 
784,498 
Allowance for doubtful accounts and sales returns
(90,531))
(79,690))
Inventories
704,043 
808,862 
Deferred income taxes
133,059 
110,436 
Prepaid expenses and other current assets
602,671 
592,161 
     Total current assets
3,844,046 
3,649,333 
     
Film costs
275,389 
283,449 
     
Investments and advances:
   
Affiliated companies
221,993 
190,092 
Securities investments and other
5,670,662 
5,831,691 
 
5,892,655 
6,021,783 
     
Property, plant and equipment:
   
Land
145,968 
145,291 
Buildings
868,615 
864,725 
Machinery and equipment
2,016,956 
2,081,567 
Construction in progress
53,219 
50,898 
 
3,084,758 
3,142,481 
Less – Accumulated depreciation
2,159,890 
2,172,549 
 
924,868 
969,932 
     
Other assets:
   
Intangibles, net
391,122 
379,281 
Goodwill
469,005 
462,629 
Deferred insurance acquisition costs
428,262 
430,502 
Deferred income taxes
239,587 
213,135 
Other
460,054 
447,209 
 
1,988,030 
1,932,756 
     
Total assets
12,924,988 
12,857,253 
(Continued on following page.)

 
- 12 -

 
Consolidated Balance Sheets (Unaudited)

     
 
Yen in millions
 
At March 31,
2011
At June 30,
2011
LIABILITIES
   
Current liabilities:
   
Short-term borrowings
53,737 
63,924 
Current portion of long-term debt
109,614 
205,846 
Notes and accounts payable, trade
793,275 
761,451 
Accounts payable, other and accrued expenses
1,013,037 
929,394 
Accrued income and other taxes
79,076 
60,588 
Deposits from customers in the banking business
1,647,752 
1,663,387 
Other
430,488 
383,538 
     Total current liabilities
4,126,979 
4,068,128 
     
Long-term debt
812,235 
745,186 
Accrued pension and severance costs
271,320 
267,911 
Deferred income taxes
306,227 
324,703 
Future insurance policy benefits and other
4,225,373 
4,323,522 
Other
226,952 
192,647 
Total liabilities
9,969,086 
9,922,097 
Redeemable noncontrolling interest
19,323 
18,816 
Commitments and contingent liabilities
   
     
EQUITY
Sony Corporation’s stockholders’ equity:
Common stock, no par value –
At March 31, 2011–Shares authorized: 3,600,000,000, shares issued: 1,004,636,664
 
630,921 
 
 
 
At June 30, 2011–Shares authorized: 3,600,000,000, shares issued: 1,004,638,164  
630,923
Additional paid-in capital
1,159,666 
1,159,668 
Retained earnings
1,566,274 
1,550,771 
Accumulated other comprehensive income –
 
 
   Unrealized gains on securities, net
50,336 
61,551 
   Unrealized losses on derivative instruments, net
(1,589))
(1,137))
   Pension liability adjustment
(152,165))
(151,592))
   Foreign currency translation adjustments
(700,786))
(729,535))
 
(804,204))
(820,713))
Treasury stock, at cost
   
Common stock
At March 31, 2011–1,051,588 shares
At June 30, 2011–1,073,217 shares
 
(4,670))
 
 
(4,724))
 
2,547,987
2,515,925 
Noncontrolling interests
388,592
400,415 
Total equity
2,936,579
2,916,340 
     
Total liabilities and equity
12,924,988
12,857,253 

The accompanying notes are an integral part of these statements.

 
- 13 -

 

(ii)  Consolidated Statements of Income (Unaudited)
Sony Corporation and Consolidated Subsidiaries
 
 
Yen in millions
 
Three months ended June 30
 
2010
2011
Sales and operating revenue:
   
Net sales
1,473,473
1,275,940
Financial services revenue
166,598
200,903
Other operating revenue
20,978
18,078
 
1,661,049
1,494,921
Costs and expenses:
   
Cost of sales
1,109,291
973,569
Selling, general and administrative
359,770
320,146
Financial services expenses
136,100
171,648
(Gain) loss on sale, disposal or impairment of assets and other, net
(4,464)
(2,777)
 
1,600,697
1,462,586
Equity in net income (loss) of affiliated companies
6,664
(4,835)
Operating income
67,016
27,500
Other income:
   
Interest and dividends
3,213
4,274
Gain on sale of securities investments, net
991
739
Foreign exchange gain, net
13,931
-
Other
1,923
1,998
 
20,058
7,011
Other expenses:
   
Interest
6,102
6,112
Foreign exchange loss, net
-
3,635
Other
2,061
1,645
 
8,163
11,392
Income before income taxes
78,911
23,119
Income taxes
43,673
27,534
Net income (loss)
35,238
(4,415)
Less - Net income attributable to noncontrolling interests
9,501
11,087
Net income (loss) attributable to Sony Corporation’s stockholders
25,737
(15,502)


 
Yen
 
Three months ended June 30
 
2010
2011
Per share data:
   
Net income (loss) attributable to Sony Corporation’s stockholders
   
Basic
25.65
(15.45))
Diluted
25.61
(15.45))

The accompanying notes are an integral part of these statements.

 
- 14 -

 
Consolidated Statements of Income (Unaudited)
 (iii)  Consolidated Statements of Cash Flows (Unaudited)
Sony Corporation and Consolidated Subsidiaries
 
Yen in millions
 
Three months ended June 30
 
2010
2011
Cash flows from operating activities:
   
 Net income (loss)
35,238 
(4,415))
 Adjustments to reconcile net income (loss) to net cash
   
   used in operating activities –
   
Depreciation and amortization, including amortization of deferred insurance acquisition costs
86,824 
78,194 
Amortization of film costs
48,300 
37,529 
Stock-based compensation expense
980 
571 
    Accrual for pension and severance costs, less payments
(2,574))
(1,613))
    (Gain) loss on sale, disposal or impairment of assets and other, net
(4,464))
(2,777))
    (Gain) loss on sale of securities investments, net
(991))
(739))
(Gain) loss on revaluation of marketable securities held in the financial service business for trading purpose, net
29,837 
(2,979))
(Gain) loss on revaluation or impairment of securities investments held in the financial service business, net
1,841 
2,802 
    Deferred income taxes
6,265 
(4,740))
Equity in net (income) losses of affiliated companies, net of dividends
(6,656))
20,128 
    Changes in assets and liabilities:
   
       Decrease in notes and accounts receivable, trade
5,842 
26,872 
       Increase in inventories
(158,549))
(110,160))
       Increase in film costs
(48,863))
(53,606))
       Increase (decrease) in notes and accounts payable, trade
68,211
(24,076))
       Decrease in accrued income and other taxes
(15,020))
(15,578))
       Increase in future insurance policy benefits and other
36,175 
81,213
       Increase in deferred insurance acquisition costs
(16,345))
(17,085))
       Increase in marketable securities held in the
financial service business for trading purpose
 
(2,739))
 
(7,463))
       Increase in other current assets
(100,319))
(16,851))
       Decrease in other current liabilities
(44,207))
(62,858))
    Other
74,366 
37,738 
          Net cash used in operating activities
(6,848))
(39,893))

(Continued on following page.)

 
- 15 -

 

Consolidated Statements of Cash Flows (Unaudited)


 
Yen in millions
 
Three months ended June 30
 
2010
2011
Cash flows from investing activities:
   
  Payments for purchases of fixed assets
(71,896))
(71,222))
  Proceeds from sales of fixed assets
1,668 
2,350 
  Payments for investments and advances by financial service business
(362,970))
(244,974))
  Payments for investments and advances (other than financial service business)
(5,271))
(695))
  Proceeds from sales or return of investments and collections of advances by financial service business
253,150 
141,586 
  Proceeds from sales or return of investments and collections of advances (other than financial service business)
2,531 
16,306 
  Proceeds from sales of businesses
1,425
2,502 
  Other
(428))
6,022 
          Net cash used in investing activities
(181,791))
(148,125))
Cash flows from financing activities:
   
 Proceeds from issuance of long-term debt
582 
622 
 Payments of long-term debt
(5,744))
(21,245))
 Increase in short-term borrowings, net
19,187 
11,376 
 Increase in deposits from customers in the financial service business, net
28,895 
37,482 
 Dividends paid
(12,618))
(12,614))
 Other
(4,102))
(6,571))
          Net cash provided by financing activities
26,200 
9,050 
Effect of exchange rate changes on cash and cash equivalents
(34,542))
(18,856))
Net decrease in cash and cash equivalents
(196,981))
(197,824))
Cash and cash equivalents at beginning of the fiscal year
1,191,608 
1,014,412 
Cash and cash equivalents at end of the period
994,627 
816,588 
     
The accompanying notes are an integral part of these statements.


 
- 16 -

 

Index to Notes to Consolidated Financial Statements

Sony Corporation and Consolidated Subsidiaries

 
Notes to Consolidated Financial Statements
Page
 
1.
Summary of significant accounting policies
18
 
2.
Marketable securities and securities investments
19
 
3.
Fair value measurements
20
 
4.
Supplemental equity and comprehensive income information
21
 
5.
Acquisitions
22
 
6.
Reconciliation of the differences between basic and diluted EPS
23
 
7.
Commitments, contingent liabilities and other
24
 
8.
Business segment information
26
       


 

 
- 17 -

 

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 Sony Corporation’s 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:
 
Goodwill impairment testing for reporting units with zero or negative carrying amounts -
 
In December 2010, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance that modifies the first step of the goodwill impairment test for reporting units with zero or negative carrying amounts.  For those reporting units, an entity is required to perform the second step of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.  In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist.  The qualitative factors are consistent with existing authoritative guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  This guidance is effective for Sony as of April 1, 2011.  The adoption of this guidance did not have a material impact on Sony’s results of operations and financial position.

 
Disclosure of supplementary pro forma information for business combinations -
 
In December 2010, the FASB issued new accounting guidance addressing when a business combination should be assumed to have occurred for the purpose of providing pro forma disclosure.  The new guidance requires disclosure of revenue and income of the combined entity as though the business combination occurred as of the beginning of the comparable prior reporting period.  The guidance also expands the supplemental pro forma disclosure to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  The guidance is effective for Sony as of April 1, 2011.  Since this guidance impacts disclosures only, its adoption 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 the 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 the income tax provision related to significant unusual or extraordinary transactions.  Such income tax provision is separately reported from the provision based on the ETR in the interim period in which they occur.

(3)  Out of period adjustment:
 
In the first quarter of the fiscal year ending March 31, 2012, Sony recorded an out of period adjustment to correct an error in the calculation of indirect taxes at a subsidiary.  The indirect tax calculation error began in 2005 and continued until it was identified by Sony in the first quarter of the fiscal year ending March 31, 2012.  The adjustment, substantially all of which related to the Consumer Products & Services segment, impacted net sales, selling, general and administrative expenses and interest expenses and, in the aggregate, decreased income before income taxes in consolidated statements of income by 4,915 million yen.  Sony determined that the adjustment, recorded in the first quarter of the fiscal year ending March 31, 2012, was not material to the consolidated financial statements for the three months ended June 30, 2011, any prior annual or interim periods and is not expected to be material to the annual results for the year ending March 31, 2012.

 
- 18 -

 
 
(4)  Reclassifications:
 
Certain reclassifications of the financial statements for the three months ended June 30, 2010 have been made to conform to the presentation for the three months ended June 30, 2011.

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
   
March 31, 2011
 
June 30, 2011
   
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
 
 
1,124,704
 
 
24,032
 
 
(4,971)
 
 
1,143,765
 
 
1,117,054
 
 
40,777
 
 
(1,880)
 
 
1,155,951
                                 
Japanese local
government bonds
 
 
22,845
 
 
184
 
 
(64)
 
 
22,965
 
 
25,033
 
 
191
 
 
(14)
 
 
25,210
                                 
Japanese corporate
bonds
 
 
332,567
 
 
1,511
 
 
(440)
 
 
333,638
 
 
339,509
 
 
1,717
 
 
(352)
 
 
340,874
                                 
Foreign corporate bonds
 
332,616
 
4,872
 
(11,368)
 
326,120
 
342,681
 
5,156
 
(10,313)
 
337,524
                                 
Other
 
7,941
 
109
 
(117)
 
7,933
 
16,205
 
160
 
(136)
 
16,229
   
1,820,673
 
30,708
 
(16,960)
 
1,834,421
 
1,840,482
 
48,001
 
(12,695)
 
1,875,788
                                 
Equity securities
 
84,417
 
69,073
 
(3,447)
 
150,043
 
79,143
 
77,119
 
(3,031)
 
153,231
                                 
Held-to-maturity
                               
securities:
                               
Japanese national
government bonds
 
 
2,902,342
 
 
22,420
 
 
(48,149)
 
 
2,876,613
 
 
2,957,193
 
 
77,509
 
 
(15,543)
 
 
3,019,159
                                 
Japanese local
government bonds
 
 
18,912
 
 
218
 
 
(2)
 
 
19,128
 
 
17,197
 
 
266
 
 
(1)
 
 
17,462
                                 
Japanese corporate
bonds
 
 
32,349
 
 
158
 
 
(67)
 
 
32,440
 
 
32,652
 
 
895
 
 
(8)
 
 
33,539
                                 
Foreign corporate bonds
 
47,330
 
13
 
(3)
 
47,340
 
44,927
 
12
 
(1)
 
44,938
 
 
3,000,933
 
22,809
 
(48,221)
 
2,975,521
 
3,051,969
 
78,682
 
(15,553)
 
3,115,098
 
                               
Total
 
4,906,023
 
122,590
 
(68,628)
 
4,959,985
 
4,971,594
 
203,802
 
(31,279)
 
5,144,117
 
 
- 19 -

 
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 March 31, 2011
   
Level 1
 
Level 2
 
Level 3
 
Total
                 
Assets:
               
Trading securities
 
189,320
 
186,482
 
-
 
375,802
Available-for-sale securities
               
   Debt securities
               
        Japanese national government bonds
 
-
 
1,143,765
 
-
 
1,143,765
        Japanese local government bonds
 
-
 
22,965
 
-
 
22,965
        Japanese corporate bonds
 
-
 
329,057
 
4,581
 
333,638
        Foreign corporate bonds
 
-
 
306,070
 
20,050
 
326,120
        Other
 
-
 
7,933
 
-
 
7,933
   Equity securities
 
141,408
 
4,667
 
3,968
 
150,043
Other investments *1
 
5,459
 
51
 
70,058
 
75,568
Derivative assets *2
 
-
 
15,110
 
-
 
15,110
Total assets
 
336,187
 
2,016,100
 
98,657
 
2,450,944
Liabilities:
               
Derivative liabilities *2
 
-
 
33,759
 
-
 
33,759
Total liabilities
 
-
 
33,759
 
-
 
33,759

   
Yen in millions
   
At June 30, 2011
   
Level 1
 
Level 2
 
Level 3
 
Total
                 
Assets:
               
Trading securities
 
194,602
 
191,817
 
-
 
386,419
Available-for-sale securities
               
   Debt securities
               
        Japanese national government bonds
 
-
 
1,155,951
 
-
 
1,155,951
        Japanese local government bonds
 
-
 
25,210
 
-
 
25,210
        Japanese corporate bonds
 
-
 
338,861
 
2,013
 
340,874
        Foreign corporate bonds
 
-
 
324,375
 
13,149
 
337,524
        Other
 
-
 
16,229
 
-
 
16,229
   Equity securities
 
144,639
 
4,640
 
3,952
 
153,231
Other investments *1
 
5,583
 
51
 
67,466
 
73,100
Derivative assets *2
 
-
 
14,901
 
-
 
14,901
Total assets
 
344,824
 
2,072,035
 
86,580
 
2,503,439
Liabilities:
               
Derivative liabilities *2
 
-
 
27,954
 
-
 
27,954
Total liabilities
 
-
 
27,954
 
-
 
27,954

*1 Other investments include certain private equity investments and certain hybrid financial instruments.
*2 Derivative assets and liabilities are recognized and disclosed on a gross basis.

 
- 20 -

 
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, 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 (loss)
    (89,254 )     12,002       (77,252 )
Dividends declared
            (4,027 )     (4,027 )
Transactions with noncontrolling interests
shareholders and other
    (28 )     200       172  
Balance at June 30, 2010
    2,877,118       327,838       3,204,956  

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, 2011 is as follows:

         
Yen in millions
       
   
Sony Corporation’s
stockholders’ equity
   
Noncontrolling
interests
   
Total equity
 
Balance at March 31, 2011
    2,547,987       388,592       2,936,579  
Exercise of stock acquisition rights
    4       11       15  
Stock-based compensation
    570               570  
Comprehensive income:
                       
Net income (loss)
    (15,502 )     11,087       (4,415 )
Other comprehensive income, net of tax ―
                       
Unrealized gains on securities
    11,215       7,174       18,389  
Unrealized gains on derivative instruments
    452               452  
Pension liability adjustment
    573               573  
Foreign currency translation adjustments
    (28,749 )     (674 )     (29,423 )
Total comprehensive income (loss)
    (32,011 )     17,587       (14,424 )
Dividends declared
            (5,635 )     (5,635 )
Transactions with noncontrolling interests
shareholders and other
    (625 )     (140 )     (765 )
Balance at June 30, 2011
    2,515,925       400,415       2,916,340  

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, 2010 and June 30, 2011.

 
- 21 -

 

5. Acquisitions

On April 1, 2011, Sony Semiconductor Kyushu Corporation, a wholly owned subsidiary of Sony Corporation, acquired from Toshiba Corporation ("Toshiba") for 57,451 million yen semiconductor fabrication equipment and certain related assets which was operated by Nagasaki Semiconductor Manufacturing Corporation ("NSM"), a joint venture among Toshiba, Sony Corporation and Sony Computer Entertainment Inc., a wholly owned subsidiary of Sony Corporation.  Subsequent to the acquisition, Sony entered into a three year sale and leaseback transaction regarding certain of the acquired machinery and equipment with its equity interest affiliate, SFI Leasing Company, Limited, and received proceeds of 50,537 million yen based on the amounts recorded at fair value in the acquisition.  These transactions are included within other in the investing activities section of the consolidated statements of cash flows.

In connection with the acquisition, Toshiba and Sony terminated their NSM joint venture relationship.  Sony also entered into a supply arrangement to manufacture and supply to Toshiba system LSIs for one year following the acquisition.  Sony's goal in acquiring the assets is to further strengthen its production capacity for CMOS image sensors.

The following table summarizes the estimated fair values of the assets acquired at the acquisition date.

 
Yen in millions
 
Acquired assets recorded
at fair value
Inventories
4,370
Other current assets
82
Machinery and equipment
51,083
Intangibles
1,223
Other noncurrent assets
693
Total acquired assets
57,451

As the purchase price was fully allocated to identifiable tangible and intangible assets and no liabilities were assumed, there was no goodwill recorded as part of the acquisition.  The unaudited supplemental pro forma results of operations have not been presented because the effect of the acquisition was not material.


 
- 22 -

 

6. 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, 2010 and 2011 is as follows:

 
Yen in millions
 
Three months ended June 30
 
2010
 
2011
Net income (loss) attributable to Sony Corporation’s
   stockholders for basic and diluted EPS computation
25,737
 
(15,502))

 
Thousands of shares
Weighted-average shares outstanding
1,003,538
 
1,003,572 
Effect of dilutive securities:
     
Stock acquisition rights
324
 
Convertible bonds
1,248
 
Weighted-average shares for diluted EPS computation
1,005,110
 
1,003,572  

 
Yen
Basic EPS
25.65
 
(15.45))
Diluted EPS
25.61
 
(15.45))

Potential shares of common stock upon the exercise of stock acquisition rights and convertible bonds, which were excluded from the computation of diluted EPS for the three months ended June 30, 2010 and 2011 were 16,740 thousand shares and 19,889 thousand shares, respectively.  The potential shares were excluded as anti-dilutive for the three months ended June 30, 2010 since the exercise price for those shares was in excess of the average market value of Sony Corporation’s common stock during the period, and all potential shares were excluded as anti-dilutive for the three months ended June 30, 2011 due to Sony incurring a net loss attributable to Sony Corporation’s stockholders for the period.


 
- 23 -

 
7. Commitments, contingent liabilities and other

(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.  As of June 30, 2011, the total unused portion of the line of credit extended under these contracts was 18,332 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, 2011 amounted to 296,225 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 June 30, 2011, such commitments outstanding were 64,108 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.  As of June 30, 2011, these subsidiaries were committed to make payments under such contracts of 103,814 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.  As of June 30, 2011, these subsidiaries were committed to make payments of 37,673 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 101,617 million yen at June 30, 2011.  The major components of these contingent liabilities are as follows:

Sony has agreed to repay the outstanding principal plus accrued interest up to a maximum of 303 million U.S. dollars to the creditor of the third party investor of Sony’s U.S. based music publishing subsidiary should the third party investor default on its obligation.  The obligation of the third party investor is collateralized by its 50% interest in Sony’s music publishing subsidiary.  Should Sony have to make a payment under the terms of the guarantee, Sony would assume the creditor’s rights to the underlying collateral.  At June 30, 2011, the fair value of the collateral exceeded 303 million U.S. dollars.

Sony has agreed to guarantee a portion of Sony Ericsson’s debt and its facilities up to a maximum of 225 million euros.  At June 30, 2011, Sony has guaranteed 26,359 million yen (225 million euros) for a portion of Sony Ericsson’s debt under this arrangement.  These guarantees expire by March 2012.

In May 2011, Sony Corporation’s U.S. subsidiary, Sony Electronics Inc., received a subpoena from the U.S. Department of Justice (“DOJ”) Antitrust Division seeking information about its secondary batteries business.  Sony understands that the DOJ is investigating competition in the secondary batteries market.  Based on the current stage of the proceeding, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of this matter.

Beginning earlier in 2011, the network services of PlayStation®Network, QriocityTM, Sony Online Entertainment LLC and websites of other subsidiaries came under cyber-attack.  As of August 12, 2011, Sony has not received any confirmed reports of customer identity theft issues or misuse of credit cards from such cyber-attacks.  However, in connection with certain of these matters, Sony has received inquiries from authorities in a number of jurisdictions, including orders for reports issued by the Ministry of Economy, Trade and Industry of Japan as well as the Financial Services Agency of Japan, formal and/or informal requests for information from Attorneys General from a number of states in the United States and the U.S. Federal Trade Commission, various U.S. congressional inquiries and others.  Additionally, Sony Corporation and/or certain of its subsidiaries have been named in a number of purported class actions in certain jurisdictions, including the United States. Based on the current stage of these inquiries and proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of these matters.

 
- 24 -

 
 
In October 2009, Sony Corporation’s U.S. subsidiary, Sony Optiarc America Inc., received a subpoena from the DOJ seeking information about its optical disk drive business.  Sony understands that the DOJ and agencies outside the United States are investigating competition in optical disk drives.  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 and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies.  Based on the current stage of these proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of these matters.

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.

(3)  Redeemable noncontrolling interest:
 
  In April 2009, Sony sold a portion of its 50% ownership interest in Game Show Network, LLC (“GSN”), which operates a U.S. cable network and online business, to the other investor in GSN.  In March 2011, Sony acquired an additional 5% equity interest in GSN from the successor in interest to the other investor (“Current Investor”).  In connection with this transaction, Sony granted a put right to the Current Investor for an additional 18% interest in GSN.  The put right is exercisable during three windows starting on April 1 of 2012, 2013 and 2014 and lasting for 60 business days.  The exercise price of the put is calculated using a formula based on an agreed upon multiple of the earnings of GSN with a minimum price of 234 million U.S. dollars and a maximum price of 288 million U.S. dollars.  The portion of the noncontrolling interest that can be put to Sony is accounted for as mandatorily redeemable securities because redemption is outside of Sony’s control and is reported in the mezzanine equity section in the consolidated balance sheets at June 30, 2011.

 

 
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8. 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, 2012, to reflect modifications to the organizational structure as of April 1, 2011, primarily repositioning the operations of the previously reported Consumer, Professional & Devices (“CPD”) and Networked Products & Services (“NPS”) segments.  In connection with this realignment, the operations of the former CPD and NPS segments are included in two newly established segments, namely the Consumer Products & Services (“CPS”) segment and the Professional, Device & Solution (“PDS”) segment.

The CPS segment includes televisions, home audio and video, digital imaging, personal and mobile products, and the game business.  The equity results of S-LCD Corporation are also included within the CPS segment.  The PDS segment includes professional solutions, semiconductors and components.  There are no modifications to the Pictures, Music and Financial Services segments and All Other is substantially unchanged.  The equity results of 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 restated to conform to the current presentation.
 

 
- 26 -

 

Business segments -
 

Sales and operating revenue:

   
Yen in millions
   
Three months ended June 30
   
2010
 
2011
Sales and operating revenue:
       
Consumer Products & Services -
 
 
   
Customers
 
872,172
 
     714,617
Intersegment
 
        19,460
 
       17,648
Total
 
891,632
 
     732,265
Professional, Device & Solutions -
       
Customers
 
267,736
 
     223,133
Intersegment
 
102,959
 
       86,549
Total
 
370,695
 
     309,682
Pictures -
       
Customers
 
132,085
 
     144,376
Intersegment
 
-
 
             23
Total
 
132,085
 
     144,399
Music -
       
Customers
 
107,090
 
     107,330
Intersegment
 
3,182
 
         2,288
Total
 
110,272
 
     109,618
Financial Services -
       
Customers
 
166,598
 
     200,903
Intersegment
 
2,397
 
            735
Total
 
168,995
 
     201,638
All Other -
       
Customers
 
89,738
 
       88,734
Intersegment
 
17,087
 
       14,844
Total
 
106,825
 
     103,578
Corporate and elimination
 
(119,455)
 
   (106,259)
Consolidated total
 
1,661,049
 
  1,494,921


CPS intersegment amounts primarily consist of transactions with the All Other segment.

PDS intersegment amounts primarily consist of transactions with the CPS segment.

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

Corporate and elimination includes certain brand and patent royalty income.


 
- 27 -

 
Segment profit or loss:

   
Yen in millions
   
Three months ended June 30
   
2010
 
2011
Operating income (loss):
       
Consumer Products & Services
 
        28,543
 
1,690
Professional, Device & Solutions
 
        17,755
 
         2,338
Pictures
 
          2,860
 
       4,302
Music
 
          7,493
 
        12,094
Financial Services
 
        29,976
 
     28,696
Equity in net income (loss) of Sony Ericsson
 
            582
 
       (3,056)
All Other
 
         (3,931)
 
        (2,979)
Total
 
        83,278
 
        43,085
Corporate and elimination
 
       (16,262)
 
  (15,585)
Consolidated operating income
 
        67,016
 
27,500
Other income
 
20,058
 
7,011
Other expenses
 
(8,163)
 
(11,392)
Consolidated income before income taxes
 
78,911
 
23,119


Operating income 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.


 
- 28 -

 

Other Significant Items:

The following table includes a breakdown of sales and operating revenue to external customers by product category in the CPS and PDS segments.  The CPS and PDS 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:
 
2010
 
2011
Consumer Products & Services
       
Televisions
 
        291,935
 
241,736
Home Audio and Video
 
62,374
 
53,312
Digital Imaging
 
        172,231
 
131,049
Personal and Mobile Products
 
          198,475
 
163,161
Game
 
          142,102
 
125,253
Other
 
            5,055
 
106
Total
 
        872,172
 
714,617
         
Professional, Device & Solutions
   
Professional Solutions
 
        67,759
 
52,704
Semiconductors
 
90,233
 
91,119
Components
 
107,204
 
76,310
Other
 
        2,540
 
3,000
Total
 
        267,736
 
223,133
         
Pictures
 
        132,085
 
144,376
Music
 
        107,090
 
107,330
Financial Services
 
        166,598
 
200,903
All Other
 
          89,738
 
88,734
Corporate
 
          25,630
 
15,828
Consolidated total
 
     1,661,049
 
1,494,921


Sony has partially realigned its product category configuration from the first quarter of the fiscal year ending March 31, 2012.  In connection with the realignment, all prior period sales amounts by product category in the table above have been restated to conform to the current presentation. In the CPS segment, Televisions includes LCD televisions; Home Audio and Video includes home audio, Blu-ray disc players and recorders; Digital Imaging includes compact digital cameras, video cameras and interchangeable single lens cameras; Personal and Mobile Products includes personal computers and memory-based portable audio devices; and Game includes game consoles, software and online services. In the PDS segment, Professional Solutions includes broadcast- and professional-use products; Semiconductors includes image sensors and small- and medium-sized LCD panels; and Components includes batteries, recording media and data recording systems.

 
- 29 -

 
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
 
2010
 
2011
Japan
 
456,097
 
486,013
United States
 
360,039
 
274,398
Europe
 
330,632
 
266,842
China
 
143,453
 
114,166
Asia-Pacific
 
188,998
 
176,045
Other Areas
 
181,830
 
177,457
Total
 
1,661,049
 
1,494,921


The 2010 geographic information in the table above has been restated to reflect the change in geographic classification.

Major areas in each geographic segment excluding Japan, United States and China are as follows:
         (1) Europe:                  United Kingdom, France, Germany, Russia and Spain
         (2) Asia-Pacific:          India, South Korea and Oceania
         (3) Other Areas:         The Middle East/Africa, Brazil, Mexico and Canada

There are not any individually material countries with respect to the sales and operating revenue included in Europe, Asia-Pacific and Other Areas.

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

There were no sales and operating revenue with any single major external customer for the three months ended June 30, 2010 and 2011.





 
- 30 -

 

(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 26, 2011 as below:

1. Total amount of year-end cash dividends:
12,545 million yen
2. Amount of year-end cash dividends per share:
12.50 yen
3. Payment date:
June 9, 2011
Year-end cash dividends for the fiscal year ended March 31, 2011 have been incorporated in the consolidated financial statements for the fiscal year ended March 31, 2011.

Note: Year-end cash dividends were distributed to the shareholders or the pledgees of shares recorded or registered in Sony Corporation’s register of shareholders at the end of March 31, 2011.


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


(3) Litigation
In May 2011, Sony Corporation’s U.S. subsidiary, Sony Electronics Inc., received a subpoena from the U.S. Department of Justice (“DOJ”) Antitrust Division seeking information about its secondary batteries business.  Sony understands that the DOJ is investigating competition in the secondary batteries market.  Based on the current stage of the proceeding, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of this matter.

Beginning earlier in 2011, the network services of PlayStation®Network, QriocityTM, Sony Online Entertainment LLC and websites of other subsidiaries came under cyber-attack.  As of August 12, 2011, Sony has not received any confirmed reports of customer identity theft issues or misuse of credit cards from such cyber-attacks.  However, in connection with certain of these matters, Sony has received inquiries from authorities in a number of jurisdictions, including orders for reports issued by the Ministry of Economy, Trade and Industry of Japan as well as the Financial Services Agency of Japan, formal and/or informal requests for information from Attorneys General from a number of states in the United States and the U.S. Federal Trade Commission, various U.S. congressional inquiries and others.  Additionally, Sony Corporation and/or certain of its subsidiaries have been named in a number of purported class actions in certain jurisdictions, including the United States.  Based on the current stage of these inquiries and proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of these matters.

In October 2009, Sony Corporation’s U.S. subsidiary, Sony Optiarc America Inc., received a subpoena from the DOJ seeking information about its optical disk drive business.  Sony understands that the DOJ and agencies outside the United States are investigating competition in optical disk drives.  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 and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies.  Based on the current stage of these proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of these matters.

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.
 
 
 
 
- 31 -

 


 
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 12, 2011