Form 6-K

6-K 1 d6k.htm FORM 6-K Form 6-K

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 October 2002

SONY CORPORATION

(Translation of registrant’s name into English)

7-35 KITASHINAGAWA 6-CHOME

SHINAGAWA-KU, TOKYO, JAPAN

(Address of principal executive offices)

The registrant files annual reports under cover of Form 20-F.

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/ TERUHISA TOKUNAKA

		Teruhisa Tokunaka Executive Deputy President and Chief Financial Officer

Date: October 28th, 2002

List of materials

Documents attached hereto:

Press Release regarding the Consolidated Financial Results for the Second Quarter ended September 30, 2002.

SONY

News & Information

6-7-35 Kitashinagawa

Shinagawa-ku

Tokyo 141-0001 Japan

Consolidated Financial Results for the Second Quarter ended September 30, 2002

No: 02-047E

3:00 P.M. JST, October 28, 2002

Large Improvement in Consolidated Operating and Net Income

Electronics and Game Segments Contribute to Improved Profitability

Tokyo, October 28, 2002—Sony Corporation announced today its consolidated results for the second quarter ended September 30, 2002 (July 1, 2002 to September 30, 2002).

Highlights

•

Despite relatively flat sales year on year of ¥1,789.7 billion ($14.7 billion), Sony was able to achieve operating income of ¥50.5 billion ($414 million) and net income of ¥44.1 billion ($361 million) compared to an operating loss and net loss recorded in the same quarter of the previous year—a significant improvement in profitability.

•

In the Electronics business, while sales decreased, the contribution to profit of the consumer AV business and the benefit of improvements in profitability from business unit restructuring, primarily in the components business, resulted in a significant improvement in operating performance compared with the previous year and the recording of operating income. The mobile phone business that recorded operating losses in the same quarter of the previous year was transferred to Sony Ericsson Mobile Communications, AB (“SEMC”), an affiliate accounted for by the equity method. Sony recorded an equity loss from SEMC in this quarter.

•

In the Game business, an increase in unit sales of both hardware and software in Europe and the U.S. yielded an increase in both sales and profit.

•

In the Pictures business, the strong theatrical performance from a number of films, including Men in Black II, Mr. Deeds and xXx, contributed to a large increase in sales. However, higher advertising and promotion expenses incurred in support of a greater number of major summer releases resulted in a decline in operating income.

•

As a result of the decision to merge with Aiwa Co., Ltd. (“Aiwa”), Sony recognized a tax benefit of ¥46.5 billion ($381 million) due to the reversal of valuation allowances on deferred tax assets held by Aiwa. The effect of this adjustment, net of a minority interest in income of consolidated subsidiaries therein of ¥10.4 billion ($85 million), was a positive impact to net income of ¥36.1 billion ($296 million).

•

Cash flow significantly improved compared with the same period of the previous year due to an increase in the operating income of the Electronics and Game businesses, a prioritization of investments in the Electronics business and a decrease in funds used for operations. As a result, total interest-bearing debt significantly decreased.

•

Sony revised downward by ¥100 billion to ¥7,600 billion ($62 billion) its sales forecast for the fiscal year ending March 31, 2003, announced in July. Operating income and income before income taxes remained unchanged while net income was revised upward by ¥30 billion to ¥180 billion ($1.5 billion).

	Second quarter ended September 30
	2001			2002		Change		2002*
	(Billions of yen, millions of U.S. dollars, except per share amounts)
Sales and operating revenue	¥	1,780.9		¥	1,789.7	+0.5	%	$	14,669
Operating income (loss)		(3.4	)		50.5	—			414
Income before income taxes		0.6			48.8	+7,903			400
Net income (loss)		(13.2	)		44.1	—			361
Net income (loss) per share for common stock
—Basic	¥	(14.34	)	¥	47.89	—		$	0.39
—Diluted		(14.34	)		44.70	—			0.37

U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥122=U.S.$1, the approximate Tokyo foreign exchange market rate as of September 30, 2002.

Remarks by Nobuyuki Idei, Chairman and CEO of Sony Corporation

During the second quarter of this fiscal year which began so well for Sony, we achieved a significant improvement in profitability compared with the same quarter of the previous year.

Especially in the Electronics business, strong sales of consumer AV products, a recovery in our semiconductor and components businesses, and the positive impact of the restructuring activities that we accelerated since last year caused a steady improvement in profitability. In the Game business, we achieved an increase in sales and operating income, and our PS 2 business continued its remarkable expansion.

However, looking forward to the second half of the fiscal year ending March 31, 2003, we are concerned that consumer confidence may deteriorate even further. To deal with this environment, we will strive to improve profitability further by restructuring and reducing investment, offering more network-capable products that will drive future growth, and enhancing our brand strategy through the merger with Aiwa.

Consolidated Results for the Second Quarter

Note I: During the second quarter ended September 30, 2002, the average value of the yen was ¥118.2 against the U.S. dollar and ¥115.8 against the euro, which was 2.1% higher against the U.S. dollar and 7.8% lower against the euro, compared with the average rate for the second quarter of the previous fiscal year. Operating results on a local currency basis described in the following pages reflect sales and operating revenue (“sales”) and operating income (loss) obtained by applying the yen’s average exchange rate in the second quarter of the previous fiscal year to local currency-denominated monthly sales, cost of sales, and selling, general and administrative expenses in the second quarter of the current fiscal year. Local currency basis results are not reflected in Sony’s financial statements and are not measures conforming with Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”). In addition, Sony does not believe that these measures are a substitute for U.S. GAAP measures. However, Sony believes that local currency basis results provide additional useful information to investors regarding operating performance.

Note II: Commencing with the first quarter ended June 30, 2002, Sony has partly realigned its business segment configuration and Electronics segment product category configuration. In accordance with this realignment, results of the second quarter of the previous fiscal year have been reclassified to conform to the presentation for the second quarter ended September 30, 2002. Sales of related businesses in the Network Application and Contents Service Sector (“NACS”), established in April 2002 to enhance network businesses, are included in the “Other” segment. In addition to Sony Communication Network Corporation, which was originally contained in the “Other” segment, NACS-related businesses include an in-house oriented information system service business, a subscriber-based wireless access system (“WLL”) business and an IC card business formerly contained in the “Other” category of the Electronics segment.

Note III: On October 1, 2002, Sony implemented a share exchange as a result of which Aiwa Co., Ltd. became a wholly-owned subsidiary, and signed a merger agreement to absorb Aiwa by merger on December 1, 2002. As a result of this share exchange, Sony issued 2,502,491 new shares, and additional paid-in capital increased ¥15.8 billion.

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Sales were ¥1,789.7 billion ($14.7 billion), almost flat year on year (flat on a local currency basis).

•

Increased sales in the Pictures and Financial Services segments offset decreased sales in the Electronics segment.

In terms of profitability, operating income of ¥50.5 billion ($414 million) was recorded compared with an operating loss of ¥3.4 billion, an improvement of ¥53.9 billion year on year.

•

Operating performance in the Electronics segment improved a significant ¥49.6 billion from an operating loss recorded in the same quarter of the previous year. Operating income in the Game segment increased ¥20.7 billion. On the other hand, operating income in the Pictures segment decreased ¥12.2 billion.

•

Selling, general and administrative expenses increased ¥10.2 billion primarily due to an increase in advertising and marketing expenses. Although such expenses decreased in the Electronics business, they increased significantly in the Pictures business.

Income before income taxes was ¥48.8 billion ($400 million), an increase of ¥48.2 billion, or 7,903%, year on year.

•

Income before income taxes increased because operating income increased ¥53.9 billion and other income increased ¥1.3 billion despite a ¥7.0 billion increase in other expenses.

Other expenses increased because a ¥6.3 billion ($52 million) foreign exchange loss was recorded during the quarter, compared with a ¥4.4 billion foreign exchange gain recorded in other income in the same quarter of the previous year, and because loss on devaluation of securities investments increased ¥2.7 billion.

Partially offsetting the increase in other expenses was a ¥4.1 billion decrease in interest expense.

The primary reasons for the increase in other income were a recording of ¥3.5 billion ($29 million) in gain on sale of securities investments and a ¥2.7 billion increase in royalty income, despite the absence of the ¥4.4 billion foreign exchange gain mentioned above.

Net income of ¥44.1 billion ($361 million) was recorded, compared with a net loss of ¥13.2 billion in the same quarter of the previous year, an improvement of ¥57.2 billion year on year.

•

The significant improvement occurred as a result of the increase in income before income taxes discussed above and a decrease in income taxes.

Income taxes decreased ¥29.7 billion, changing from a tax expense of ¥14.8 billion recorded in the same quarter of the previous year to a tax benefit of ¥14.9 billion ($122 million). This was because a tax benefit of ¥46.5 billion ($381 million) was recorded due to the reversal of valuation allowances on deferred tax assets held by Aiwa Co., Ltd. (“Aiwa”) because these assets became recoverable as a result of Sony’s decision to merge with Aiwa.

•

Partially offsetting the improvement was the recording of a minority interest in income of consolidated subsidiaries and an increase in equity in net losses of affiliated companies.

The increase in minority interest in income of Aiwa that resulted from the recognition of the tax benefit mentioned above was ¥10.4 billion ($85 million). As a result, minority interest in income of consolidated companies amounted to ¥8.4 billion ($68 million) compared with a minority interest in loss of consolidated companies of ¥5.7 billion recorded in the same quarter of the previous year.

Equity in net losses of affiliated companies increased ¥6.7 billion to ¥11.3 billion ($93 million) primarily because Sony recorded a ¥5.4 billion ($44 million) loss for its portion of the loss generated by Sony Ericsson Mobile Communications, AB, a mobile handset joint venture established in October 2001.

Operating Performance Highlights by Business Segment

Note IV: “Sales and operating revenue” in each business segment represents sales and operating revenue recorded before intersegment transactions are eliminated. “Operating income” in each business segment represents operating income recorded before intersegment transactions and unallocated corporate expenses are eliminated.

Note V: Sales of mobile handsets are no longer recorded in the “Information and Communications” product category of the Electronics segment as of the second half of the previous fiscal year. From the second half of the previous fiscal year, sales of mobile handsets manufactured for Sony Ericsson Mobile Communications, AB, established in October 2001, are recorded in the “Other” product category of the Electronics segment.

Electronics

	Second quarter ended September 30
	2001			2002		Change		2002
	(Billions of yen, millions of U.S. dollars)
Sales and operating revenue	¥	1,274.2		¥	1,228.0	-3.6	%	$	10,066
Operating income (loss)		(23.3	)		26.3	—			215

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Sales were ¥1,228.0 billion ($10 billion), a decrease of 3.6% year on year (4% decrease on a local currency basis).

•

On a product category basis, sales increased in “Semiconductors” by 13.2%, in “Video” by 4.3%, and in “Components” by 2.3%.

•

Sales decreased in “Audio” by 9.9%, “Information and Communications” (excluding the sales of the mobile phone business in the previous year) by 8.7%, and in “Televisions” by 0.8%.

On a local currency basis:

Products with significant increases in sales were digital still cameras (“Cybershot”), desktop VAIO PCs, semiconductors (especially LCDs for camcorder use and CCDs for digital still camera use), and personal digital assistants (“CLIÉ”).

Products with significant decreases in sales were mobile phones (see Note V on page 3), computer displays, and home telephones from which Sony withdrew (home use telephones were contained in the “Audio” category).

On a geographic basis, sales in Other areas increased, while sales in Japan, the U.S. and Europe decreased.

In terms of profitability, operating income of ¥26.3 billion ($215 million) was recorded compared with an operating loss of ¥23.3 billion in the same quarter of the previous year, an improvement of ¥49.6 billion.

•

In addition to the strong performance of consumer AV products, the following factors led to the significant change from loss to profit:

An improvement in profitability from the rationalization and downsizing of loss-making businesses (primarily in the components business, including CRTs) and a reduction in fixed costs.

The mobile phone business that recorded operating losses in the same quarter of the previous year became an equity affiliate as a result of the establishment of the joint venture with Ericsson.

A decrease in selling, general and administrative expenses including advertising and marketing expenses and personnel expenses.

•

On a product category basis, “Video,” in which unit sales of digital still cameras increased, and “Audio,” in which unit sales of CD Walkman increased and restructuring initiatives took effect, increased in profitability. “Components,” in which restructuring initiatives resulted in the improvement of the CRTs for display, optical pick-ups, battery and recording media businesses, and “Semiconductors,” which enjoyed an increase in demand for CCDs used in digital still cameras, changed from loss to profit.

Regarding the performance during the quarter of Aiwa Co., Ltd. (“Aiwa”), sales decreased and operating loss decreased slightly. Sony took Aiwa private on October 1, 2002 (see Note III on page 2).

Inventory as of September 30, 2002 was ¥595.6 billion ($4,882 million), a ¥175.2 billion, or 22.7%, decrease compared with the level as of September 30, 2001.

Game

Second quarter ended September 30

2001

2002

Change

2002

(Billions of yen, millions of U.S. dollars)

Sales and operating revenue

242.8

250.4

+ 3.1

2,052

Operating income

4.1

24.8

508.4

203

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Sales were ¥250.4 billion ($2,052 million), an increase of 3.1% compared with the same quarter of the previous year (2% increase on a local currency basis).

•

Software sales and hardware sales increased compared with the same quarter of the previous year.

Software sales increased in Europe and the U.S., but decreased in Japan.

Hardware sales increased in Europe and the U.S. as unit sales of PlayStation 2 (“PS 2”) hardware increased, while hardware sales decreased in Japan as unit sales decreased.

•

Worldwide hardware production shipments:*

PS 2: 8.29 million units (an increase of 3.67 million units)

PS one: 1.90 million units (a decrease of 0.92 million units)

•

Worldwide software production shipments:*

PS 2: 42.00 million units (an increase of 19.30 million units)

PlayStation: 16.00 million units (a decrease of 3.00 million units)

Production shipment units of hardware and software are counted upon shipment of the products from manufacturing bases.

Sales

of such products are recognized when the products are delivered to customers.

Operating income was ¥24.8 billion ($203 million), an increase of ¥20.7 billion, or 508.4%, year on year (416% increase on a local currency basis).

•

An improvement in the profitability of PS 2 hardware due to lower manufacturing costs, and strong software sales especially in Europe and the U.S., led to the increase in operating income.

Inventory as of September 30, 2002 was ¥167.2 billion ($1,370 million), a ¥24.5 billion, or 12.8%, decrease compared with the level as of September 30, 2001.

Music

	Second quarter ended September 30
	2001			2002			Change		2002
	(Billions of yen, millions of U.S. dollars)
Sales and operating revenue	¥	138.3		¥	147.9		+ 6.9	%	$	1,212
Operating income (loss)		(5.3	)		(5.6	)	—			(46	)

The amounts presented above are the sum of the yen-translated results of Sony Music Entertainment Inc. (“SMEI”), a U.S. based operation which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis and the results of Sony Music Entertainment (Japan) Inc. (“SMEJ”), a Japan based operation which aggregates results in yen. Management analyzes the results of SMEI in U.S. dollars, so discussion of certain portions of its results are specified as on “a U.S. dollar basis.”

Sales were ¥147.9 billion ($1,212 million), an increase of 6.9% year on year (8% increase on a local currency basis). Of the Music segment’s sales, 71% were generated by SMEI, and 29% were generated by SMEJ.

•

SMEI’s sales (on a U.S. dollar basis) increased 15%.

The sales increase was due to higher manufacturing sales of DVD software to the Pictures and Game segments.

Despite the continued contraction of the global music industry brought on by digital piracy and other factors, SMEI increased its album sales during the quarter resulting in an increase in market share.

Best selling albums included Bruce Springsteen’s The Rising and Dixie Chicks’ Home.

•

SMEJ’s sales decreased 5%.

Sales decreased because, in addition to a slight decrease in album sales, sales of books and miscellaneous items at certain subsidiaries declined.

Best selling albums included Mika Nakashima’s TRUE and Chitose Hajime’s Hainumikaze.

In terms of profitability, an operating loss of ¥5.6 billion ($46 million) was recorded compared with an operating loss of ¥5.3 billion in the same quarter of the previous year.

•

SMEI’s operating loss (on a U.S. dollar basis) increased compared to the same quarter of the previous year.

The loss was impacted by increased costs incurred for ongoing restructuring activities, including the closure and consolidation of certain international distribution facilities and worldwide headcount reductions.

Operating results were negatively impacted by higher talent-related costs.

Partially offsetting the increased loss were higher profits from the DVD software manufacturing mentioned above and the benefit of aggressive worldwide restructuring and cost reduction initiatives.

•

SMEJ recorded operating income compared with an operating loss in the same quarter of the previous year.

Despite the lower sales, profitability improved due to contributions from the best selling albums TRUE and Hainumikaze and a reduction in operating expenses.

In August 2002, SMEI’s joint venture publishing company Sony/ATV Music Publishing LLC purchased from Gaylord Entertainment Company the music publishing catalogue and real estate of Acuff-Rose, a music publishing business, for $157 million in cash.

Pictures

	Second quarter ended September 30
	2001		2002		Change		2002
	(Billions of yen, millions of U.S. dollars)
Sales and operating revenue	¥	146.5	¥	185.6	+ 26.6	%	$	1,521
Operating income		22.1		9.9	- 55.2			81

The results presented above are a yen translation of the results of Sony Pictures Entertainment (“SPE”), a U.S. based operation which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis. Management analyzes the results of SPE in U.S. dollars, so discussion of certain portions of its results are specified as on “a U.S. dollar basis.”

Sales were ¥185.6 billion ($1,521 million), an increase of 26.6% year on year (29% increase on a U.S. dollar basis).

•

The reasons for the increase in sales (on a U.S. dollar basis) were:

The strong worldwide theatrical performance of current year releases including Spider-Man, Men in Black II, Mr. Deeds and xXx, each of which exceeded $100 million at the worldwide box office during the quarter.

Worldwide box office for Spider-Man, the highest grossing film in SPE’s history, has surpassed $800 million since its release in May.

Higher television syndication sales, primarily from cable sales of VIP and Seinfeld.

•

The increase in sales was partially offset (on a U.S. dollar basis) by:

Lower DVD and VHS title revenues due to fewer releases this quarter as compared to the same quarter of the previous fiscal year, despite the successful releases of Panic Room and Resident Evil in the current quarter.

Operating income was ¥9.9 billion ($81 million), a decrease of ¥12.2 billion, or 55.2% year on year (55% decrease on a U.S. dollar basis).

•

The reasons for the decline in profitability (on a U.S. dollar basis) were:

Much higher advertising and promotion expenses incurred during the quarter in support of the greater number of major summer releases. These expenditures are expensed when incurred, while a significant portion of the revenue from these releases will be realized in subsequent periods in the home entertainment and other ancillary markets.

Disappointing U.S. box office performance of Stuart Little 2, Stealing Harvard and Trapped.

Fewer major DVD and VHS title releases during the quarter.

The results for the same quarter of the previous year were favorably impacted by recognition of an insurance recovery for prior film losses.

•

Partially offsetting the decline in profitability (on a U.S. dollar basis) was:

Increased profit contributions in the second quarter from current year releases, including Spider-Man and Men in Black II.

Higher television operating income from the syndication sales of Seinfeld.

Financial Services

	Second quarter ended September 30
	2001			2002		Change		2002
	(Billions of yen, millions of U.S. dollars)
Financial service revenue	¥	109.8		¥	129.1	+ 17.5	%	$	1,058
Operating income (loss)		(0.3	)		5.9	—			48

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Financial service revenue was ¥129.1 billion ($1,058 million), an increase of 17.5% year on year.

•

Revenue at Sony Life Insurance Co., Ltd. (“Sony Life”) increased primarily due to an increase in insurance revenue brought on by an increase in insurance-in-force, an improvement in valuation gains and losses from investment under separate account for variable life insurance and variable annuity products, and a reduction in the amount of the decrease in valuation gains on conversion rights for convertible bonds. Valuation gains and losses from investment under separate account accrue directly to the account of policyholders and, therefore, do not affect operating income.

•

In addition, the following factors affected the results of the Financial Services segment:

Revenue at Sony Assurance Inc. increased significantly due to an increase in insurance revenue brought about by an expansion of newly acquired insurance-in-force.

Revenue at Sony Finance International, Inc. (“Sony Finance”) increased slightly as a result of an increase in leasing and other revenue, despite a decrease in revenues from rent.

Revenue at Sony Bank increased only slightly due to a reduction in gains and losses from investment.

In terms of profitability, operating income of ¥5.9 billion ($48 million) was recorded compared with an operating loss of ¥0.3 billion in the same quarter of the previous year, an improvement of ¥6.2 billion year on year.

•

Operating income at Sony Life increased mainly due to the increase in insurance revenue, and a reduction in the amount of the decrease of valuation gains on conversion rights for convertible bonds.

•

In addition, the following factors affected the results of the Financial Services segment:

Sony Assurance Inc. recorded slight losses despite an improvement in profitability brought on by the increase in insurance revenue.

Losses were recorded at Sony Finance due to a deterioration of profitability brought about by an increase in operating expenses, despite the increase in leasing and other revenue.

Sony Bank, which began operations in June 2001, recorded a loss due to start-up expenses.

Other

	Second quarter ended September 30
	2001			2002			Change		2002
	(Billions of yen, millions of U.S. dollars)
Sales and operating revenue	¥	50.6		¥	61.9		+22.3	%	$	507
Operating income (loss)		(3.6	)		(7.8	)	—			(64	)

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Sales were ¥61.9 billion ($507 million), an increase of 22.3% year on year.

•

Sales of NACS-related businesses (see Note II on page 2) and sales at the advertising agency business subsidiary in Japan increased.

In terms of profitability, an operating loss of ¥7.8 billion ($64 million) was recorded compared with an operating loss of ¥3.6 billion in the same quarter of the previous year, a deterioration of ¥4.2 billion year on year.

•

Loss increased at NACS-related businesses in the aggregate, mainly because of losses incurred in conjunction with the creation of a platform business for the networked era, although operating income was recorded at Sony Communication Network Corporation.

Cash Flow

Six months ended September 30

2001

2002

Difference

2002

(Billions of yen, millions of U.S. dollars)

Cash flow

— From operating activities

(¥120.0)

252.0

¥+372.0

2,066

— From investing activities

(403.7)

(251.1

)

+152.6

(2,059

)

— From financing activities

666.2

(21.6

)

-687.9

(177

)

Cash and cash equivalents as of September 30

741.6

643.0

-98.6

5,271

Cash provided by operating activities was ¥252.0 billion ($2,066 million), an increase of ¥372.0 billion.

•

While uses of cash, including an increase in inventories in the Electronics and Game businesses, took place during the six months, the contribution to profit of the Electronics and Game business, which exhibited improvements in operating performance, and an increase in notes and accounts payable caused cash generated to exceed expenditures.

•

Although notes and accounts receivable changed from a decrease to an increase, leading to a decrease in cash provided by operating activities, an increase in the operating income of the Electronics and Game businesses and a change from a decrease to an increase in notes and accounts payable contributed to the significant increase in cash provided by operating activities compared with the same period of the previous year.

Cash used in investing activities was ¥251.1 billion ($2,059 million), a decrease of ¥152.6 billion.

•

The use of cash derived primarily from the fact that, reflecting an increase in assets under management in the life insurance and banking businesses, investments and advances of ¥462.8 billion ($3,793 million) exceeded sales and maturities of securities investments and collections of advances of ¥242.3 billion ($1,986 million) in the Financial Services business.

•

In addition, ¥136.4 billion ($1,118 million), compared with ¥220.2 billion in the same period of the previous year, was used to purchase fixed assets, primarily in the Electronics business, which is continuing to engage in the prioritization of investments, and ¥18.5 billion* was invested in Acuff-Rose, a music publishing business.

•

On the other hand, cash proceeds of ¥122.2 billion ($1,002 million) from the sales of securities investments and collections of advances, including ¥88.4 billion* from the sale of equity in Telemundo and ¥17.8 billion ($146 million) from the sale of equity in CHC were realized. (*The U.S. dollar amount of the cash payment recorded for the purchase of Acuff-Rose was $157 million and the U.S. dollar amount of the cash proceeds recorded on the sale of Telemundo was $679 million.)

Cash used in financing activities was ¥21.6 billion ($177 million) compared to ¥666.2 billion of cash provided by financing activities in the same quarter of the previous year.

•

Although cash was provided by an increase in deposits from customers in the banking business, cash was used during the six months to pay down borrowings of the Sony group as a whole.

Outlook for the Fiscal Year ending March 31, 2003

We believe that the business environment in which Sony operates will become even more difficult because uncertainty regarding economic recovery is increasing and consumer confidence is waning. Due to this belief, we have revised our July forecast for sales from ¥7,700 billion to ¥7,600 billion, mainly because we believe market conditions in our Electronics segment will deteriorate in the second half of the fiscal year. However, we have made no change to our forecast for operating income and income before income taxes because we believe improvements in operations (such as materials cost reductions in the Electronics business) and a revision in our yen to dollar exchange rate assumption to reflect the depreciation of the yen will have a positive effect on profitability.

We have revised our July forecast for net income from ¥150 billion to ¥180 billion mainly due to the tax benefit made possible by the recording of deferred tax assets held at Aiwa Co., Ltd., scheduled to be merged with Sony in December 2002.

			Change from previous year
Sales and operating revenue	¥	7,600 billion	Unchanged
Operating income		280 billion	+ 108	%
Income before income taxes		310 billion	+ 234
Net income		180 billion	+ 1,076

Assumed exchange rates from the third quarter: approximately ¥120 to the dollar and ¥115 to the euro. (Exchange rates assumed in July: approximately ¥115 to the dollar and ¥115 to the euro.)

No change was made in capital expenditures and depreciation and amortization.

Capital expenditures (additions to fixed assets)	¥280 billion	-14	%
Depreciation and amortization*	350 billion	-1
(Depreciation expenses for tangible assets	260 billion	-13	)

Including amortization of intangible assets and amortization of deferred insurance acquisition costs.

Cautionary Statement

Statements made in this release with respect to Sony’s current plans, estimates, strategies and beliefs and other statements 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 using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “may” or “might” and words of similar meaning in connection with a discussion of future operations or financial performance. 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, as well as the economic conditions in Sony’s markets, particularly levels of consumer spending; (ii) exchange rates, particularly between the yen and the U.S. dollar, euro, and other currencies in which Sony makes significant sales or in which Sony’s assets and liabilities are denominated; (iii) Sony’s ability to continue to design and develop and win acceptance of its products and services, which are offered in highly competitive markets characterized by continual new product introductions, rapid development in technology (particularly in the Electronics business), and subjective and changing consumer preferences (particularly in the Game, Music, and Pictures businesses); (iv) Sony’s ability to implement successfully the restructuring initiatives in its Electronics, Music and Pictures businesses and its network strategy for its Electronics, Music and Pictures businesses; (v) Sony’s ability to compete and develop and implement successful sales and distribution strategies in light of Internet and other technological developments in its Music and Pictures businesses; (vi) Sony’s continued ability to devote sufficient resources to research and development and, with respect to capital expenditures, to prioritize investments (particularly in the Electronics business); (vii) the success of Sony’s joint ventures and alliances; and (viii) the outcome of contingencies. Risks and uncertainties also include the impact of any future events with material unforeseen impacts.

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Business Segment Information (Unaudited)

Three months ended September 30

Sales and operating revenue

2001

2002

Change

2002

(Millions of yen, millions of U.S. dollars)

Electronics

Customers

1,140,579

1,077,699

-5.5

8,834

Intersegment

133,616

150,330

1,232

Total

1,274,195

1,228,029

-3.6

10,066

Game

Customers

239,152

245,997

+2.9

2,016

Intersegment

3,643

4,394

Total

242,795

250,391

+3.1

2,052

Music

Customers

125,390

127,414

+1.6

1,044

Intersegment

12,931

20,464

168

Total

138,321

147,878

+6.9

1,212

Pictures

Customers

146,539

185,569

+26.6

1,521

Intersegment

Total

146,539

185,569

+26.6

1,521

Financial Services

Customers

102,627

122,011

+18.9

1,000

Intersegment

7,209

7,046

Total

109,836

129,057

+17.5

1,058

Other

Customers

26,618

31,040

+16.6

254

Intersegment

23,985

30,871

253

Total

50,603

61,911

+22.3

507

Elimination

(181,384

)

(213,105

)

—

(1,747

)

Consolidated total

1,780,905

1,789,730

+0.5

14,669

Electronics intersegment amounts primarily consist of transactions with the Game business.

Music intersegment amounts primarily consist of transactions with Game and Pictures businesses.

Other intersegment amounts primarily consist of transactions with the Electronics business.

Operating income (loss)	2001			2002			Change		2002
Electronics	¥	(23,299	)	¥	26,252		—	%	$	215
Game		4,074			24,785		+508.4			203
Music		(5,255	)		(5,623	)	—			(46	)
Pictures		22,078			9,901		-55.2			81
Financial Services		(339	)		5,891		—			48
Other		(3,602	)		(7,825	)	—			(64	)

Total		(6,343	)		53,381		—			437
Corporate and elimination		2,952			(2,860	)	—			(23	)

Consolidated total	¥	(3,391	)	¥	50,521		—	%	$	414

Commencing with the first quarter ended June 30, 2002, Sony has partly realigned its business segment configuration.

In accordance with this change, results of the previous year have been reclassified to conform to the presentation for the current year.

F-1

Six months ended September 30

Sales and operating revenue

2001

2002

Change

2002

(Millions of yen, millions of U.S. dollars)

Electronics

Customers

2,208,866

2,204,419

-0.2

18,069

Intersegment

285,361

242,488

1,988

Total

2,494,227

2,446,907

-1.9

20,057

Game

Customers

390,042

395,532

+1.4

3,242

Intersegment

7,694

8,038

Total

397,736

403,570

+1.5

3,308

Music

Customers

258,980

249,244

-3.8

2,043

Intersegment

24,649

35,802

293

Total

283,629

285,046

+0.5

2,336

Pictures

Customers

282,707

359,198

+27.1

2,944

Intersegment

Total

282,707

359,198

+27.1

2,944

Financial Services

Customers

222,227

244,361

+10.0

2,003

Intersegment

14,183

13,865

114

Total

236,410

258,226

+9.2

2,117

Other

Customers

51,579

58,782

+14.0

482

Intersegment

45,186

58,126

476

Total

96,765

116,908

+20.8

958

Elimination

(377,073

)

(358,319

)

—

(2,937

)

Consolidated total

3,414,401

3,511,536

+2.8

28,783

Electronics intersegment amounts primarily consist of transactions with the Game business.

Music intersegment amounts primarily consist of transactions with Game and Pictures businesses.

Other intersegment amounts primarily consist of transactions with the Electronics business.

Operating income (loss)	2001			2002			Change		2002
Electronics	¥	(21,820	)	¥	75,378		—	%	$	618
Game		947			27,358		+2,788.9			224
Music		(864	)		(15,875	)	—			(130	)
Pictures		19,368			19,167		-1.0			157
Financial Services		9,283			16,757		+80.5			137
Other		(7,949	)		(14,647	)	—			(120	)

Total		(1,035	)		108,138		—			886
Corporate and elimination		647			(5,747	)	—			(47	)

Consolidated total	¥	(388	)	¥	102,391		—	%	$	839

Commencing with the first quarter ended June 30, 2002, Sony has partly realigned its business segment configuration.

In accordance with this change, results of the previous year have been reclassified to conform to the presentation for the current year.

F-2

Electronics Sales and Operating Revenue to Customers by Product Category

Three months ended September 30

Sales and operating revenue

2001

2002

Change

2002

(Millions of yen, millions of U.S. dollars)

Audio

190,809

171,917

-9.9

1,409

Video

199,275

207,824

+4.3

1,703

Televisions

189,576

188,029

-0.8

1,541

Information and Communications

283,021

212,434

-24.9

1,741

Semiconductors

45,118

51,059

+13.2

419

Components

127,586

130,558

+2.3

1,070

Other

105,194

115,878

+10.2

951

Total

1,140,579

1,077,699

-5.5

8,834

Six months ended September 30

Sales and operating revenue

2001

2002

Change

2002

Audio

360,651

333,397

-7.6

2,733

Video

399,231

419,188

+5.0

3,436

Televisions

342,045

382,727

+11.9

3,137

Information and Communications

547,014

464,023

-15.2

3,803

Semiconductors

97,372

99,413

+2.1

815

Components

249,368

259,557

+4.1

2,128

Other

213,185

246,114

+15.4

2,017

Total

2,208,866

2,204,419

-0.2

18,069

The above table is a breakdown of Electronics sales and operating revenue to customers in the Business Segment Information on page F-1 F-2. The Electronics business is managed as a single operating segment by Sony’s management. However, Sony believes that the information in this table is useful to investors in understanding the sales contributions of the products in this business segment. In addition, commencing with the first quarter ended June 30, 2002, Sony has partly realigned its product category configuration in the Electronics business. In accordance with this change, results of the previous year have been reclassified to conform to the presentations for the current year.

Sales of mobile phones are no longer recorded in the “Information and Communications” category as of the third quarter ended December 31, 2001. From the third quarter of the previous year, sales of mobile phones manufactured for Sony Ericsson Mobile Communications, AB are recorded in the “Other” product category.

Geographic Segment Information (Unaudited)

Three months ended September 30

Sales and operating revenue

2001

2002

Change

2002

(Millions of yen, millions of U.S. dollars)

Japan

522,336

495,870

-5.1

4,064

United States

608,736

615,611

+1.1

5,046

Europe

351,954

365,708

+3.9

2,997

Other Areas

297,879

312,541

+4.9

2,562

Total

1,780,905

1,789,730

+0.5

14,669

Six months ended September 30

Sales and operating revenue

2001

2002

Change

2002

Japan

1,055,093

999,004

-5.3

8,189

United States

1,111,410

1,173,825

+5.6

9,622

Europe

662,531

711,435

+7.4

5,830

Other Areas

585,367

627,272

+7.2

5,142

Total

3,414,401

3,511,536

+2.8

28,783

Classification of Geographic Segment Information shows sales and operating revenue recognized by location of customers.

F-3

Consolidated Statements of Income (Unaudited)

	Three months ended September 30
	2001			2002			Change	2002
	(Millions of yen, millions of U.S. dollars, except per share amounts)
Sales and operating revenue							%
Net sales	¥	1,668,871		¥	1,657,050			$	13,582
Financial service revenue		102,627			122,011				1,000
Other operating revenue		9,407			10,669				87

		1,780,905			1,789,730		+0.5		14,669
Costs and expenses
Cost of sales		1,263,204			1,194,772				9,793
Selling, general and administrative		418,127			428,317				3,510
Financial service expenses		102,965			116,120				952

		1,784,296			1,739,209				14,255
Operating income (loss)		(3,391	)		50,521		—		414
Other income
Interest and dividends		3,544			2,883				24
Royalty income		8,718			11,376				93
Foreign exchange gain, net		4,408			—				—
Gain on sale of securities investments, net		—			3,509				29
Other		9,506			9,676				79

		26,176			27,444				225
Other expenses
Interest		10,615			6,560				54
Loss on devaluation of securities investments		2,023			4,681				38
Foreign exchange loss, net		—			6,326				52
Other		9,537			11,578				95

		22,175			29,145				239

Income before income taxes		610			48,820		+7,903.3		400
Income taxes		14,814			(14,926	)			(122	)

Income (loss) before minority interest and equity in net losses of affiliated companies		(14,204	)		63,746		—		522
Minority interest in income (loss) of consolidated subsidiaries		(5,715	)		8,350				68
Equity in net losses of affiliated companies		4,688			11,345				93

Net income (loss)	¥	(13,177	)	¥	44,051		—	$	361

Per share data:
Common stock
Net income (loss)
—Basic	¥	(14.34	)	¥	47.89		—	$	0.39
—Diluted		(14.34	)		44.70		—		0.37
Subsidiary tracking stock
Net income (loss)
—Basic		(0.58	)		19.47		—		0.16

F-4

Consolidated Statements of Income (Unaudited)

Six months ended September 30

2001

2002

Change

2002

(Millions of yen, millions of U.S. dollars,

except per share amounts)

Sales and operating revenue

Net sales

3,175,263

3,246,208

26,608

Financial service revenue

222,227

244,361

2,003

Other operating revenue

16,911

20,967

172

3,414,401

3,511,536

+2.8

28,783

Costs and expenses

Cost of sales

2,375,860

2,331,021

19,107

Selling, general and administrative

825,986

850,520

6,971

Financial service expenses

212,943

227,604

1,866

3,414,789

3,409,145

27,944

Operating income (loss)

(388

)

102,391

—

839

Other income

Interest and dividends

7,645

6,821

Royalty income

13,894

16,665

137

Gain on sale of securities investments, net

—

71,875

589

Other

21,235

16,663

136

42,774

112,024

918

Other expenses

Interest

22,697

13,390

110

Loss on devaluation of securities investments

10,826

16,205

133

Foreign exchange loss, net

215

648

Other

22,365

18,709

153

56,103

48,952

401

Income (loss) before income taxes

(13,717

)

165,463

—

1,356

Income taxes

35,081

38,707

317

Income (loss) before minority interest, equity in net losses of affiliated companies and cumulative effect of accounting changes

(48,798

)

126,756

—

1,039

Minority interest in income (loss) of consolidated subsidiaries

(8,929

)

5,743

Equity in net losses of affiliated companies

9,364

19,781

162

Income (loss) before cumulative effect of accounting changes

(49,233

)

101,232

—

830

Cumulative effect of accounting changes

(2001:Net of income taxes of ¥2,975 million)

5,978

—

Net income (loss)

(43,255

)

101,232

—

830

Per share data:

Common stock

Income (loss) before cumulative effect of accounting changes

— Basic

(53.60

)

110.12

—

0.90

—Diluted

(53.60

)

102.60

—

0.84

Net income (loss)

—Basic

(47.09

)

110.12

—

0.90

—Diluted

(47.09

)

102.60

—

0.84

Subsidiary tracking stock

Net income (loss)

—Basic

(0.84

)

26.77

—

0.22

F-5

Additional Paid-in Capital and Retained Earnings (Unaudited)

The following information shows change in additional paid-in capital for the six months ended September 30, 2002 and change in retained earnings for the six months ended September 30, 2001 and 2002.

Sony discloses this supplemental information in accordance with disclosure requirements of the Japanese Securities and Exchange Law, to which Sony, as a Japanese public company, is subject.

	Six months ended September 30
	2002		2002
	(Millions of yen, millions of U.S. dollars)
Additional Paid-in Capital:
Balance, beginning of year	¥	968,223	$	7,936
Conversion of convertible bonds		118		1
Reissuance of treasury stock		12		0
Balance, as of September 30		968,353		7,937

	Six months ended September 30
	2001			2002			2002
	(Millions of yen, millions of U.S. dollars)
Retained earnings:
Balance, beginning of year	¥	1,217,110		¥	1,209,262		$	9,912
Net income		(43,255	)		101,232			830
Cash dividends		(11,496	)		(11,497	)		(95	)
Common stock issue costs, net of tax		(162	)		(4	)		0
Balance, as of September 30		1,162,197			1,298,993			10,647

F-6

Consolidated Balance Sheets (Unaudited)

	September 30 2001			March 31 2002			September 30 2002			September 30 2002
	(Millions of yen, millions of U.S. dollars)
ASSETS
Current assets:
Cash and cash equivalents	¥	741,563		¥	683,800		¥	643,037		$	5,271
Time deposits		5,053			5,176			5,713			47
Marketable securities		157,003			162,147			168,318			1,380
Notes and accounts receivable, trade		1,300,254			1,363,652			1,325,130			10,862
Allowance for doubtful accounts and sales returns		(112,019	)		(120,826	)		(110,734	)		(908	)
Inventories		1,007,580			673,437			812,724			6,662
Deferred income taxes		144,931			134,299			142,383			1,167
Prepaid expenses and other current assets		410,075			435,527			546,928			4,482

		3,654,440			3,337,212			3,533,499			28,963
Film costs		316,546			313,054			286,321			2,347
Investments and advances:
Affiliated companies		103,682			131,068			81,435			668
Securities investments and other		1,395,973			1,566,739			1,659,247			13,600

		1,499,655			1,697,807			1,740,682			14,268
Property, plant and equipment:
Land		184,429			195,292			192,333			1,577
Buildings		842,147			891,436			875,551			7,177
Machinery and equipment		2,160,719			2,216,347			2,131,273			17,469
Construction in progress		96,832			66,825			58,000			475
Less–Accumulated depreciation		(1,866,414	)		(1,958,234	)		(1,919,220	)		(15,731	)

		1,417,713			1,411,666			1,337,937			10,967
Other assets:
Intangibles, net		223,860			245,639			259,105			2,124
Goodwill		300,107			317,240			297,388			2,438
Deferred insurance acquisition costs		286,947			308,204			320,631			2,628
Other		450,745			554,973			639,468			5,241

		1,261,659			1,426,056			1,516,592			12,431

	¥	8,150,013		¥	8,185,795		¥	8,415,031		$	68,976


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	¥	756,912		¥	113,277		¥	43,038		$	353
Current portion of long-term debt		59,987			240,786			223,269			1,830
Notes and accounts payable, trade		788,583			767,625			878,012			7,197
Accounts payable, other and accrued expenses		745,413			869,533			867,575			7,111
Accrued income and other taxes		94,079			105,470			112,027			918
Deposits from customers in the banking business		34,302			106,472			177,551			1,455
Other		364,300			355,333			355,633			2,916

		2,843,576			2,558,496			2,657,105			21,780
Long-term liabilities:
Long-term debt		955,839			838,617			823,295			6,748
Accrued pension and severance costs		223,632			299,089			307,932			2,524
Deferred income taxes		161,896			159,573			164,715			1,350
Future insurance policy benefits and other		1,495,064			1,680,418			1,796,587			14,726
Other		235,551			255,824			266,580			2,185

		3,071,982			3,233,521			3,359,109			27,533
Minority interest in consolidated subsidiaries		33,020			23,368			37,672			309
Stockholders’ equity:
Capital stock		476,028			476,106			476,224			3,903
Additional paid-in capital		968,144			968,223			968,353			7,937
Retained earnings		1,162,197			1,209,262			1,298,993			10,647
Accumulated other comprehensive income		(397,510	)		(275,593	)		(374,618	)		(3,069	)
Treasury stock, at cost		(7,424	)		(7,588	)		(7,807	)		(64	)

		2,201,435			2,370,410			2,361,145			19,354

	¥	8,150,013		¥	8,185,795		¥	8,415,031		$	68,976

F-7

Consolidated Statements of Cash Flows (Unaudited)

	Six months ended September 30
	2001			2002			2002
	(Millions of yen, millions of U.S. dollars)
Cash flows from operating activities:
Net income (loss)	¥	(43,255	)	¥	101,232		$	830
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		167,576			166,968			1,369
Amortization of film costs		102,717			138,676			1,137
Accrual for pension and severance costs, less payments		3,661			10,390			85
Gain or loss on sale, disposal or impairment of long-lived assets, net		16,865			16,204			133
Gain on sales of securities investments, net		—			(71,875	)		(589	)
Deferred income taxes		(16,400	)		(34,109	)		(280	)
Equity in net losses of affiliated companies, net of dividends		9,505			20,293			166
Cumulative effect of accounting changes		(5,978	)		—			—
Changes in assets and liabilities:
(Increase) decrease in notes and accounts receivable, trade		84,389			(24,953	)		(205	)
Increase in inventories		(77,261	)		(150,766	)		(1,236	)
Increase in film costs		(132,907	)		(137,025	)		(1,123	)
Increase (decrease) in notes and accounts payable, trade		(131,272	)		120,541			988
Increase (decrease) in accrued income and other taxes		(42,113	)		13,687			112
Increase in future insurance policy benefits and other		129,051			116,169			952
Increase in deferred insurance acquisition costs		(35,097	)		(32,118	)		(263	)
Increase in marketable securities held in the insurance business for trading purpose		(58,375	)		—			—
Changes in other current assets and liabilities, net		(83,503	)		(35,833	)		(294	)
Other		(7,573	)		34,541			284

Net cash provided by (used in) operating activities		(119,970	)		252,022			2,066

Cash flows from investing activities:
Payments for purchases of fixed assets		(220,180	)		(136,351	)		(1,118	)
Proceeds from sales of fixed assets		22,904			21,646			177
Payments for investments and advances by financial service business		(275,653	)		(462,765	)		(3,793	)
Payments for investments and advances (other than financial service business)		(35,708	)		(37,378	)		(306	)
Proceeds from sales of securities investments, maturities of marketable securities and collections of advances by financial service business		85,248			242,325			1,986
Proceeds from sales of securities investments, maturities of marketable securities and collections of advances (other than financial service business)		18,863			122,239			1,002
(Increase) decrease in time deposits		795			(857	)		(7	)

Net cash used in investing activities		(403,731	)		(251,141	)		(2,059	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		154,340			8,654			71
Payments of long-term debt		(120,885	)		(22,775	)		(187	)
Increase (decrease) in short-term borrowings		582,853			(55,987	)		(459	)
Increase in deposits from customers in the banking business		34,302			70,984			582
Proceeds from issuance of subsidiary tracking stock		9,529			—			—
Dividends paid		(11,514	)		(11,560	)		(95	)
Other		17,624			(10,956	)		(89	)

Net cash provided by (used in) financing activities		666,249			(21,640	)		(177	)

Effect of exchange rate changes on cash and cash equivalents		(8,230	)		(20,004	)		(164	)

Net increase (decrease) in cash and cash equivalents		134,318			(40,763	)		(334	)
Cash and cash equivalents at beginning of the year		607,245			683,800			5,605

Cash and cash equivalents at end of the second quarter	¥	741,563		¥	643,037		$	5,271

F-8

(Notes)

U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥122 = U.S.$1, the approximate Tokyo foreign exchange market rate as of September 30, 2002.

As of September 30, 2002, Sony had 1,052 consolidated subsidiaries. It has applied the equity accounting method in respect to its 81 affiliated companies.

Sony calculates and presents per share data separately for Sony’s Common stock and for the subsidiary tracking stock which is linked to the economic value of Sony Communication Network Corporation, based on Statement of Financial Accounting Standards (“FAS”) No.128, “Earnings per Share”. The holders of the tracking stock have the right to participate in earnings, together with common stock holders. Accordingly, Sony calculates per share data by the “two-class” method based on FAS No.128. Under this method, basic net income per share for each class of stock is calculated based on the earnings allocated to each class of stock for the applicable period, divided by the weighted-average number of outstanding shares in each class during the applicable period. The earnings allocated to the subsidiary tracking stock are determined based on the subsidiary tracking stock holders’ economic interest in the targeted subsidiary’s earnings available for dividends. The earnings allocated to Common stock are calculated by subtracting the earnings allocated to the subsidiary tracking stock from Sony’s net income for the period.

Weighted-average shares used for computation of earnings per share of Common stock are as follows. The dilutive effect mainly resulted from convertible bonds. In accordance with FAS No.128, the computation of diluted net loss per share for the six months ended September 30, 2001 uses the same weighted-average shares used for the computation of diluted loss before cumulative effect of accounting changes per share, and reflects the effect of the assumed conversion of convertible bonds in diluted net loss. No additional shares were included in the computation of diluted net loss per share and in the computation of diluted net loss before cumulative effect of accounting changes per share for the three months and six months ended September 30, 2001 because to do so would have been antidilutive.

Weighted-average shares
	Three months ended September 30
	2001	2002
	(Thousands of shares)
Net income (loss)
—Basic	918,464	918,534
—Diluted	918,464	997,504

Weighted-average shares
	Six months ended September 30
	2001	2002
	(Thousands of shares)
Income (loss) before cumulative effect of accounting changes and net income (loss)
—Basic	918,439	918,525
—Diluted	918,439	997,539

Weighted-average shares used for computation of earnings per share of the subsidiary tracking stock for the three months and six months ended September 30, 2001 and 2002 are 3,072 thousand shares. There were no potentially dilutive securities for the subsidiary tracking stock outstanding at September 30, 2001 and 2002.

Sony’s comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes changes in unrealized gains or losses on securities, unrealized gains or losses on derivative instruments, minimum pension liability adjustment and foreign currency translation adjustments. Net income (loss), other comprehensive income (loss) and comprehensive income (loss) for the three months and six months ended September 30, 2001 and 2002 were as follows;

	Three months ended September 30									Six months ended September 30
	2001			2002			2002			2001			2002			2002
	(Millions of yen, millions of U.S. dollars)
Net income (loss)	¥	(13,177	)	¥	44,051		$	361		¥	(43,255	)	¥	101,232		$	830
Other comprehensive income (loss) :
Unrealized gains (losses) on securities		(18,596	)		(13,423	)		(110	)		(26,662	)		(7,429	)		(61	)
Unrealized gains (losses) on derivative instruments		284			(2,637	)		(22	)		1,734			(2,348	)		(19	)
Foreign currency translation adjustments		(42,238	)		32,277			265			(44,015	)		(89,248	)		(732	)

		(60,550	)		16,217			133			(68,943	)		(99,025	)		(812	)

Comprehensive income (loss)	¥	(73,727	)	¥	60,268		$	494		¥	(112,198	)	¥	2,207		$	18

F-9

On April 1, 2001, Sony adopted FAS No.133, “Accounting for Derivative Instruments and Hedging Activities” as amended by FAS No.138 “Accounting for Certain Derivative Instruments and Certain Hedging Activities—an Amendment of FASB statement No.133”. As a result of the adoption of the new standard, Sony recorded a one-time non-cash after-tax unrealized gain of ¥1,089 million in accumulated other comprehensive income in the consolidated balance sheet, as well as an after-tax gain of ¥5,978 million in the cumulative effect of accounting changes in the consolidated statement of income.

In the fourth quarter of the year ended March 31, 2002, Sony adopted Emerging Issues Task Force Issue No. 01-09, “Accounting for Consideration Given by a Vendor to a Customer or Reseller of the Vendor’s Products”, retroactive to April 1, 2001. As a result of the adoption of new statement, certain cooperative advertising and product placement costs previously classified as selling, general and administrative expenses for the three months and six months ended September 30, 2001 have been reclassified as a reduction of revenues to conform to the presentation for the three months and six months ended September 30, 2002.

Adoption of New Accounting Standards

Impairment or Disposal of Long-Lived Assets

On April 1, 2002, Sony adopted FAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. This statement establishes a single accounting model for long-lived assets to be disposed of by sale and modifies the accounting and disclosure rules for discontinued operations. The adoption of this statement did not have an impact on Sony’s results of operations and financial position.

FAS No.145, “Rescission of FASB Statements No.4, 44 and 64, Amendment of FASB Statement No.13, and Technical Corrections”

In April 2002, the Financial Accounting Standards Board issued FAS No. 145. This statement rescinds certain authoritative pronouncements and amends, clarifies or describes the applicability of others, effective for fiscal years beginning or transactions occurring after May 15, 2002, with early adoption encouraged. Sony elected early adoption of this statement retroactive to the beginning of the fiscal year. The adoption of this statement did not have an impact on Sony’s results of operations and financial position.

Recent pronouncements

Accounting for Costs Associated with Exit or Disposal Activities

In July 2002, the Financial Accounting Standards Board issued FAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. This statement establishes accounting and disclosure rules for costs associated with exit or disposal activities. This statement shall be effective for exit or disposal activities that are initiated after December 31, 2002.

F-10

Other Consolidated Financial Data

	Three months ended September 30
	2001			2002			Change		2002
	(Millions of yen, millions of U.S. dollars)
Capital expenditures (additions to fixed assets)	¥	93,340		¥	67,022		-28.2	%	$	549
Depreciation and amortization expenses*		87,531			83,650		-4.4			686
(Depreciation expenses for tangible assets)		(72,534	)		(67,781	)	(-6.6	)		(556	)
R&D expenses		123,215			108,290		-12.1			888

	Six months ended September 30
	2001			2002			Change		2002
Capital expenditures (additions to fixed assets)	¥	179,434		¥	127,694		-28.8	%	$	1,047
Depreciation and amortization expenses*		167,576			166,968		-0.4			1,369
(Depreciation expenses for tangible assets)		(138,074	)		(134,832	)	(-2.3	)		(1,105	)
R&D expenses		226,365			206,185		-8.9			1,690

Including amortization expenses for intangible assets and for deferred insurance acquisition costs

F-11