6-K 1 a51209600.htm SONY CORPORATION 6-K a51209600.htm
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 2015
Commission File Number: 001-06439

SONY CORPORATION
(Translation of registrant's name into English)

1-7-1 KONAN, 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  X
Form 40-F __
 
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 No X
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-______
 
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/  Kenichiro Yoshida
 
                (Signature)
 
Kenichiro Yoshida
 
Executive Deputy President and
 
Chief Financial Officer
 
Date: October 29, 2015

List of materials

Documents attached hereto:
 
i) Press release announcing Consolidated Financial Results for the Second Quarter Ended September 30, 2015
 

 
 

 
 
 
logo
1-7-1 Konan, Minato-ku
 
Tokyo 108-0075 Japan
News & Information
 
 
No. 15-085E
3:00 P.M. JST, October 29, 2015
 
Consolidated Financial Results for the Second Quarter Ended September 30, 2015

Tokyo, October 29, 2015 -- Sony Corporation today announced its consolidated financial results for the second quarter ended September 30, 2015 (July 1, 2015 to September 30, 2015).
 
      (Billions of yen, millions of U.S. dollars, except per share amounts)
     
Second Quarter ended September 30
     
2014
   
2015 
 
Change in yen
   
2015* 
Sales and operating revenue
  ¥ 
1,901.5
    ¥ 
1,892.7
   
-0.5
%
 
15,773
 
Operating income (loss)
   
(85.6
)
   
88.0
   
-
     
733
 
Income (loss) before income taxes
   
(90.0
)
   
72.2
   
-
     
602
 
Net income (loss) attributable to Sony Corporation’s stockholders
   
(136.0
)
   
33.6
 
 
-
     
280
 
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock:
                             
    - Basic
  ¥ 
(124.32
)
  ¥ 
26.64
   
-
   
0.22
 
    - Diluted
   
(124.32
)
   
26.10
   
-
     
0.22
 

*
U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 120 yen = 1 U.S. dollar, the approximate Tokyo foreign exchange market rate as of September 30, 2015.

All amounts are presented on the basis of Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”).

Sony Corporation and its consolidated subsidiaries are together referred to as “Sony”.

The average foreign exchange rates during the quarters ended September 30, 2014 and 2015 are presented below.

   
Second Quarter ended September 30
 
   
2014
 
2015
 
Change
 
The average rate of yen
                   
1 U.S. dollar
  ¥ 103.9     ¥ 122.2      15.0 %
(yen depreciation)
1 Euro
    137.8       135.9    
 1.4
 
(yen appreciation)

Consolidated Results for the Second Quarter Ended September 30, 2015

Sales and operating revenue (“Sales”) decreased 0.5% compared to the same quarter of the previous fiscal year (“year-on-year”) to 1,892.7 billion yen (15,773 million U.S. dollars).  Sales were essentially flat year-on-year mainly due to a decrease in Financial Services segment revenue, reflecting a deterioration in investment performance in the separate account, and a decrease in Mobile Communications (“MC”) segment sales, reflecting a significant decrease in smartphone unit sales, substantially offset by the impact of foreign exchange rates and a significant increase in Game & Network Services (“G&NS”) segment sales, reflecting an increase in PlayStation®4 (“PS4”) software sales.  On a constant currency basis, sales decreased 7% year-on-year.  For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Notes on page 10.

Operating income of 88.0 billion yen (733 million U.S. dollars) was recorded, compared to an operating loss of 85.6 billion yen in the same quarter of the previous fiscal year.  This significant improvement was primarily due to the 176.0 billion yen impairment of goodwill recorded in the MC segment in the same quarter of the previous fiscal year.  This improvement was partially offset by a significant deterioration in the operating results of the Pictures segment.
 
 
1

 
 
During the current quarter, restructuring charges, net, decreased 3.8 billion yen year-on-year to 5.6 billion yen (48 million U.S. dollars).

Equity in net income of affiliated companies, recorded within operating income (loss), increased 0.3 billion yen year-on-year to 0.9 billion yen (8 million U.S. dollars).

The net effect of other income and expenses was an expense of 15.8 billion yen (132 million U.S. dollars), a deterioration of 11.5 billion yen year-on-year mainly due to an increase in foreign exchange loss, net.

Income before income taxes of 72.2 billion yen (602 million U.S. dollars) was recorded, compared to a loss of 90.0 billion yen in the same quarter of the previous fiscal year.

Income taxes: During the current quarter, Sony recorded 23.9 billion yen (199 million U.S. dollars) of income tax expense, resulting in an effective tax rate of 33.1%.  In the same quarter of the previous fiscal year, 30.1 billion yen of income tax expense was recorded despite the net loss before income taxes.  This was primarily due to the nondeductible goodwill impairment recorded during the same quarter of the previous fiscal year.

Net income attributable to Sony Corporation’s stockholders, which deducts net income attributable to noncontrolling interests, of 33.6 billion yen (280 million U.S. dollars) was recorded, compared to a loss of 136.0 billion yen in the same quarter of the previous fiscal year.

Operating Performance Highlights by Business Segment

“Sales and operating revenue” in each business segment represents sales and operating revenue recorded before intersegment transactions are eliminated.  “Operating income (loss)” in each business segment represents operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses.

Mobile Communications (MC)

   
(Billions of yen, millions of U.S. dollars)
   
Second Quarter ended September 30
   
2014
 
2015
 
Change in yen
 
2015
Sales and operating revenue
  ¥ 329.5     ¥ 279.2       -15.2 %   $ 2,327  
Operating loss
    (170.6 )     (20.6 )     -       (172 )

Due to certain changes in Sony’s organizational structure, sales and operating revenue and operating income (loss) of the MC segment of the comparable prior period have been reclassified to conform to the current presentation.  For details, please see Notes on page 10.

Sales decreased 15.2% year-on-year (a 17% decrease on a constant currency basis) to 279.2 billion yen (2,327 million U.S. dollars).  This decrease was due to a significant decrease in smartphone unit sales resulting from a strategic decision not to pursue scale in order to improve profitability.

Operating loss decreased 150.0 billion yen year-on-year to 20.6 billion yen (172 million U.S. dollars).  This significant decrease in the operating loss was primarily due to the above-mentioned 176.0 billion yen impairment charge of goodwill recorded in the same quarter of the previous fiscal year.  The operating results were also primarily affected by the negative impact of the appreciation of the U.S. dollar, reflecting the high ratio of U.S. dollar-denominated costs, and an increase in restructuring charges.  The negative impact of the above-mentioned decrease in smartphone unit sales was offset by an improvement in product mix reflecting a shift to high value-added models, as well as reductions in costs including marketing and research and development expenses.  During the current quarter there was a 24.4 billion yen negative impact from foreign exchange rate fluctuations.
 
 
2

 

Game & Network Services (G&NS)

   
(Billions of yen, millions of U.S. dollars)
   
Second Quarter ended September 30
   
2014
 
2015
 
Change in yen
 
2015
Sales and operating revenue
  ¥ 309.5     ¥ 360.7       +16.5 %   $ 3,006  
Operating income
    21.8       23.9       +9.8       199  

The G&NS segment includes the Hardware, Network, and Other categories.  Hardware includes home and portable game consoles; Network includes network services relating to game, video and music content provided by Sony Network Entertainment International LLC; Other includes packaged software and peripheral devices.

Sales increased 16.5% year-on-year (a 10% increase on a constant currency basis) to 360.7 billion yen (3,006 million U.S. dollars).  This significant increase was primarily due to an increase in PS4 software sales as well as the impact of foreign exchange rates, partially offset by a decrease in PlayStation®3 (“PS3”) software sales.

Operating income increased 2.1 billion yen year-on-year to 23.9 billion yen (199 million U.S. dollars).  This increase was primarily due to the above-mentioned increase in PS4 software sales, partially offset by the negative impact of the appreciation of the U.S. dollar, reflecting the high ratio of U.S. dollar-denominated costs and the above-mentioned decrease in PS3 software sales.  During the current quarter there was a 13.1 billion yen negative impact from foreign exchange rate fluctuations.

Imaging Products & Solutions (IP&S)

   
(Billions of yen, millions of U.S. dollars)
   
Second Quarter ended September 30
   
2014
 
2015
 
Change in yen
 
2015
Sales and operating revenue
  ¥ 178.6     ¥ 186.0       +4.1 %   $ 1,550  
Operating income
    20.1       25.9       +28.6       215  

The IP&S segment includes the Digital Imaging Products and Professional Solutions categories.  Digital Imaging Products includes compact digital cameras, interchangeable single-lens cameras and video cameras; Professional Solutions includes broadcast- and professional-use products.

Sales increased 4.1% year-on-year (a 3% decrease on a constant currency basis) to 186.0 billion yen (1,550 million U.S. dollars), primarily due to an improvement in product mix of digital cameras* reflecting a shift to high value-added models and the impact of foreign exchange rates, partially offset by a decrease in unit sales of digital cameras reflecting a contraction of the market.

Operating income increased 5.8 billion yen year-on-year to 25.9 billion yen (215 million U.S. dollars).  This increase was mainly due to the improvement in digital camera product mix and cost reductions, partially offset by the impact of the above-mentioned decrease in unit sales of digital cameras.  During the current quarter there was a 1.9 billion yen positive impact from foreign exchange rate fluctuations.
 
* Digital cameras includes compact digital cameras, interchangeable single-lens cameras and interchangeable lenses.

Home Entertainment & Sound (HE&S)

   
(Billions of yen, millions of U.S. dollars)
   
Second Quarter ended September 30
   
2014
 
2015
 
Change in yen
 
2015
Sales and operating revenue
  ¥ 289.7     ¥ 289.1       -0.2 %   $ 2,409  
Operating income
    9.1       15.8       +73.9       131  
 
 
3

 
 
The HE&S segment includes the Televisions and Audio and Video categories. Televisions includes LCD televisions; Audio and Video includes Blu-ray DiscTM players and recorders, home audio, headphones and memory-based portable audio devices. Due to certain changes in Sony’s organizational structure, sales and operating revenue and operating income (loss) of the HE&S segment of the comparable prior period have been reclassified to conform to the current presentation. For details, please see Notes on page 10.
 
Sales decreased 0.2% year-on-year (a 7% decrease on a constant currency basis) to 289.1 billion yen (2,409 million U.S. dollars).  Sales were essentially flat primarily due to a decrease in home audio and video unit sales reflecting a contraction of the market, offset by an improvement in product mix of LCD televisions reflecting a shift to high value-added models and the impact of foreign exchange rates.

Operating income increased 6.7 billion yen year-on-year to 15.8 billion yen (131 million U.S. dollars).  This increase was primarily due to cost reductions and an improvement in product mix, partially offset by the negative impact of the appreciation of the U.S. dollar, reflecting the high ratio of U.S. dollar-denominated costs as well as the impact of the above-mentioned decrease in home audio and video unit sales.  During the current quarter there was a 10.4 billion yen negative impact from foreign exchange rate fluctuations.

In Televisions, sales* increased 1.6% year-on-year to 203.0 billion yen (1,692 million U.S. dollars).  This increase was primarily due to an improvement in product mix reflecting a shift to high value-added models and the impact of foreign exchange rates, partially offset by a decrease in LCD television unit sales resulting from a strategic decision not to pursue scale in order to improve profitability.  Operating income** increased 4.8 billion yen year-on-year to 9.7 billion yen (81 million U.S. dollars).  This increase was primarily due to cost reductions and an improvement in product mix, partially offset by the negative impact of the appreciation of the U.S. dollar, reflecting the high ratio of U.S. dollar-denominated costs, and the impact of the decrease in unit sales.

*
Sales for Televisions do not include operating revenue.
**
The operating income in Televisions excludes restructuring charges, which are included in the overall segment results and are not allocated to product categories.

Devices

   
(Billions of yen, millions of U.S. dollars)
   
Second Quarter ended September 30
   
2014
 
2015
 
Change in yen
 
2015
Sales and operating revenue
  ¥ 240.4     ¥ 258.1       +7.4 %   $ 2,151  
Operating income
    28.3       32.7       +15.4       272  

The Devices segment includes the Semiconductors and Components categories.  Semiconductors includes image sensors; Components includes batteries and recording media.  Due to certain changes in Sony’s organizational structure, sales and operating revenue and operating income (loss) of the Devices segment of the comparable prior period have been reclassified to conform to the current presentation.  For details, please see Notes on page 10.

Sales increased 7.4% year-on-year (a 5% decrease on a constant currency basis) to 258.1 billion yen (2,151 million U.S. dollars).  This increase was primarily due to the impact of foreign exchange rates and an increase in demand for image sensors, partially offset by a decrease in battery business sales.  Sales to external customers increased 17.3% year-on-year.
 
Operating income increased 4.4 billion yen year-on-year to 32.7 billion yen (272 million U.S. dollars).  This increase was primarily due to the positive impact of foreign exchange rates and the above-mentioned impact of an increase in sales of image sensors, partially offset by an increase in depreciation and amortization, an increase in research and development expenses and a decrease in battery business sales.  During the current quarter there was a 12.0 billion yen positive impact from foreign exchange rate fluctuations.

 *    *    *    *    *
 
 
4

 
 
Total inventory of the five Electronics* segments above as of September 30, 2015 was 831.0 billion yen (6,925 million U.S. dollars), an increase of 7.8 billion yen, or 0.9% year-on-year.  Inventory increased by 155.4 billion yen, or 23.0% compared with the level as of June 30, 2015.

* The term “Electronics” refers to the sum of the MC, G&NS, IP&S, HE&S and Devices segments.

In connection with the realignment made from the first quarter of the fiscal year ending March 31, 2016, total inventory of the five Electronics segments as of September 30, 2014 has been reclassified to conform to the presentation for the fiscal year ending March 31, 2016.  For further details, please see Notes on page 10.

*    *    *    *    *

Pictures

   
(Billions of yen, millions of U.S. dollars)
   
Second Quarter ended September 30
   
2014
 
2015
 
Change in yen
 
2015
Sales and operating revenue
  ¥ 182.2     ¥ 183.7       +0.9 %   $ 1,531  
Operating loss
    (1.0 )     (22.5 )     -       (187 )

The Pictures segment is comprised of the Motion Pictures, Television Productions, and Media Networks categories.  Motion Pictures includes the production, acquisition and distribution of motion pictures; Television Productions includes the production, acquisition and distribution of television programming; Media Networks includes the operation of television and digital networks.

The results presented in Pictures are a yen-translation of the results of Sony Pictures Entertainment Inc. (“SPE”), a U.S.-based operation that 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 is specified as being on “a U.S. dollar basis.”

Sales increased 0.9% year-on-year (a 14% decrease on a U.S. dollar basis) to 183.7 billion yen (1,531 million U.S. dollars).  The decrease in sales on a U.S. dollar basis was primarily due to significantly lower sales for Motion Pictures reflecting lower home entertainment revenues, as the same quarter of the previous fiscal year benefitted from the home entertainment performances of The Amazing Spider-Man 2 and Heaven is for Real, as well as lower television licensing revenues.

Operating loss increased 21.4 billion yen year-on-year to 22.5 billion yen (187 million U.S. dollars).  This deterioration in operating results was primarily due to the impact of the above-mentioned decrease in Motion Pictures sales as well as higher worldwide theatrical marketing expenses due to a greater number of significant theatrical releases in the current quarter as compared to the same quarter of the previous fiscal year.

Music

   
(Billions of yen, millions of U.S. dollars)
   
Second Quarter ended September 30
   
2014
 
2015
 
Change in yen
 
2015
Sales and operating revenue
  ¥ 120.6     ¥ 138.7       +15.0 %   $ 1,156  
Operating income
    12.2       14.6       +20.0       122  

The Music segment is comprised of the Recorded Music, Music Publishing and Visual Media and Platform categories.  Recorded Music includes the distribution of physical and digital recorded music and revenue derived from artists’ live performances; Music Publishing includes the management and licensing of the words and music of songs; Visual Media and Platform includes various service offerings for music and visual products and the production and distribution of animation titles.

The results presented in Music include the yen-translated results of Sony Music Entertainment (“SME”), a U.S.-based operation which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis, the results of Sony Music Entertainment (Japan) Inc., a Japan-based music company which aggregates its results in yen, and the yen-translated consolidated results of Sony/ATV Music Publishing LLC (“Sony/ATV”), a 50% owned U.S.-based joint venture in the music publishing business which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.
 
Due to certain changes in Sony’s organizational structure, sales and operating revenue and operating income (loss) of the Music segment of the comparable prior period have been reclassified to conform to the current presentation. For details, please see Notes on page 10.
 
 
5

 
 
Sales increased 15.0% year-on-year (a 4% increase on a constant currency basis) to 138.7 billion yen (1,156 million U.S. dollars) primarily due to the impact of the depreciation of the yen against the U.S. dollar.  The increase in sales on a constant currency basis was primarily due to an increase in Visual Media and Platform sales reflecting higher live entertainment venue revenue and higher sales of animation products.  Best-selling titles included David Gilmour’s Rattle that Lock, Future’s DS2 and Maitre Gims’ Mon Coeur Avait Raison.

Operating income increased 2.4 billion yen year-on-year to 14.6 billion yen (122 million U.S. dollars).  This increase was primarily due to an improvement in product mix, reflecting an increase in digital streaming revenues.

Financial Services

   
(Billions of yen, millions of U.S. dollars)
   
Second Quarter ended September 30
   
2014
 
2015
 
Change in yen
 
2015
Financial services revenue
  ¥ 269.6     ¥ 210.7       -21.8 %   $ 1,756  
Operating income
    47.7       41.2       -13.7       343  

The Financial Services segment results include Sony Financial Holdings Inc. (“SFH”) and SFH’s consolidated subsidiaries such as Sony Life Insurance Co., Ltd. (“Sony Life”), Sony Assurance Inc. and Sony Bank Inc.  The results of Sony Life discussed in the Financial Services segment differ from the results that SFH and Sony Life disclose separately on a Japanese statutory basis.

Financial services revenue decreased 21.8% year-on-year to 210.7 billion yen (1,756 million U.S. dollars) primarily due to a significant decrease in revenue at Sony Life.  Revenue at Sony Life decreased 26.7% year-on-year to 177.7 billion yen (1,481 million U.S. dollars) due to a significant deterioration in investment performance in the separate account, partially offset by an increase in insurance premium revenue reflecting a steady increase in policy amount in force.  The significant deterioration in investment performance was primarily due to a significant decline in the Japanese stock market during the current quarter, as compared with a rise in the same quarter of the previous fiscal year.

Operating income decreased 6.5 billion yen year-on-year to 41.2 billion yen (343 million U.S. dollars) mainly due to a decrease in operating income at Sony Life.  Operating income at Sony Life decreased 11.0 billion yen year-on-year to 34.7 billion yen (289 million U.S. dollars).  This decrease was primarily due to increases in the amortization of deferred insurance acquisition costs, pertaining to variable insurance, and the provision of policy reserves, pertaining to minimum guarantees for variable insurance, driven by the above-mentioned deterioration in investment performance in the separate account.
 
All Other

   
(Billions of yen, millions of U.S. dollars)
   
Second Quarter ended September 30
   
2014
 
2015
 
Change in yen
 
2015
Sales and operating revenue
  ¥ 86.5     ¥ 87.4       +1.0 %   $ 728  
Operating income (loss)
    (19.8 )     0.5       -       5  

All Other included costs related to the PC business in the same quarter of the previous fiscal year.  Due to certain changes in Sony’s organizational structure, sales and operating revenue and operating income (loss) of All Other of the comparable prior period have been reclassified to conform to the current presentation.  For details, please see Notes on page 10.

Sales increased 1.0% year-on-year to 87.4 billion yen (728 million U.S. dollars).
 
Operating income of 0.5 billion yen (5 million U.S. dollars) was recorded, compared to an operating loss of 19.8 billion yen in the same quarter of the previous fiscal year. This significant improvement was primarily due to a decrease in PC exit costs, including restructuring charges and after-sales service expenses, as well as the absence of sales company fixed costs charged to the PC business in the same quarter of the previous fiscal year which were allocated based on the prior year results.
 
 
6

 

Consolidated Results for the Six Months ended September 30, 2015

For Consolidated Statements of Income and Business Segment Information for the six months ended September 30, 2015 and 2014, please refer to pages F-3 and F-7 respectively.

Sales for the six months ended September 30, 2015 (“the current six months”) were 3,700.8 billion yen (30,840 million U.S. dollars), essentially flat year-on-year.  This was primarily due to the significant decrease in sales in the MC segment, offset by the significant increase in sales in the G&NS and the Devices segments, and the impact of foreign exchange rates.

During the current six months, the average rates of the yen were 121.8 yen against the U.S. dollar and 135.0 yen against the euro, which were 15.4% lower and 2.9% higher, respectively, as compared with the same period in the previous fiscal year.  On a constant currency basis, consolidated sales decreased 7%.  For further detail about sales on a constant currency basis, see Notes on page 10.

In the MC segment, sales decreased primarily due to a significant decrease in smartphone unit sales resulting from a strategic decision not to pursue scale in order to improve profitability.  In the G&NS segment, sales increased significantly primarily due to the contribution of PS4 software sales.  In the IP&S segment, sales increased primarily due to an improvement in the product mix of digital cameras reflecting a shift to high value-added models.  In the HE&S segment, sales decreased primarily due to a decrease in LCD televisions and home audio and video unit sales.  In the Devices segment, sales increased significantly mainly due to an increase in sales of image sensors for mobile devices and the impact of foreign exchange rates.  In the Pictures segment, sales decreased due to lower theatrical, television licensing and home entertainment revenues for Motion Pictures.  In the Music segment, sales increased significantly primarily due to the favorable impact of the depreciation of the yen against the U.S. dollar and higher Visual Media and Platform sales.  In the Financial Services segment, revenue decreased primarily due to a deterioration in investment performance in the separate account at Sony Life.

Operating income of 184.9 billion yen (1,541 million U.S. dollars) was recorded, compared to an operating loss of 15.8 billion yen in the same period of the previous fiscal year.  This improvement was primarily due to the impairment of goodwill of 176.0 billion yen recorded in the MC segment in the same period of the previous fiscal year, as well as the improvement in the operating results of Devices, Music, G&NS, IP&S and HE&S segments, partially offset by a significant deterioration in the operating results of the Pictures segment.

Operating income during the current six months includes a 151 million U.S. dollar (18.1 billion yen) gain on the remeasurement to fair value of SME’s 51% equity interest in Orchard Media, Inc. (“The Orchard”), which had previously been accounted for under the equity method, as a result of SME increasing its ownership interest to 100%, recorded in the Music Segment, as well as a gain of 12.3 billion yen (101 million U.S. dollars) from the sale of a part of the logistics business, in connection with the formation of a logistics joint venture, recorded in Corporate and elimination.  The operating loss in the same period of the previous fiscal year included a gain of 14.8 billion yen recognized on the sale of certain buildings and premises at the Gotenyama Technology Center in Japan, recorded in Corporate and elimination.

In the MC segment, operating loss decreased significantly year-on-year mainly due to the above-mentioned impairment charge recorded in this segment in the same period of the previous fiscal year.  In the G&NS segment, operating income increased significantly year-on-year primarily due to the contribution of PS4 software sales.  In the IP&S segment, operating income increased year-on-year primarily due to an improvement in digital camera product mix.  In the HE&S segment, operating income increased year-on-year primarily due to cost reductions and an improvement in product mix reflecting a shift to high value-added models.  In the Devices segment, operating income increased mainly due to the favorable impact of exchange rates and an increase in sales of image sensors.  In the Pictures segment, operating results deteriorated significantly primarily due to the above-mentioned decrease in Motion Pictures sales.  In the Music segment, operating income increased significantly primarily due to the above-mentioned gain recorded on the remeasurement to fair value of SME’s 51% equity interest in The Orchard.  In the Financial Services segment, operating income was essentially flat year-on-year.  This result was primarily due to increases in the amortization of deferred insurance acquisition costs, pertaining to variable insurance, and the provision of policy reserves, pertaining to minimum guarantees for variable insurance, driven by the deterioration in investment performance in the separate account, offset by an improvement in investment performance in the general account at Sony Life.
 
 
7

 
 
Restructuring charges, net, recorded as operating expenses, amounted to 15.7 billion yen (131 million U.S. dollars) for the current six months, compared to 24.7 billion yen for the same period of the previous fiscal year.

Equity in net income of affiliated companies, recorded within operating income, decreased 2.5 billion yen year-on-year to 1.4 billion yen (11 million U.S. dollars).  This decrease was mainly due to the deterioration of equity in net income for Intertrust Technologies Corporation.

The net effect of other income and expenses was income of 26.0 billion yen (216 million U.S. dollars), compared to an expense of 5.8 billion yen in the same period of the previous fiscal year.  This was primarily due to an increase in the gain on sales of securities investments.

Income before income taxes was 210.9 billion yen (1,758 million U.S. dollars) compared to loss of 21.6 billion yen in the same period of the previous fiscal year.

Income taxes: During the current six months, Sony recorded 63.7 billion yen (531 million U.S. dollars) of income tax expense, resulting in an effective tax rate of 30.2%.  This effective tax rate was lower than the Japanese statutory tax rate primarily as a result of profits recorded in the insurance business, which is subject to lower tax rates, coupled with lower income tax expenses due to profits recorded at Sony Corporation and its national tax filing group in Japan which currently have valuation allowances.  In the same period of the previous fiscal year, 56.1 billion yen of income tax expense was recorded despite the net loss before income taxes.  This was primarily due to the nondeductible goodwill impairment recorded during the same period of the previous fiscal year.

Net income attributable to Sony Corporation’s stockholders of 116.0 billion yen (967 million U.S. dollars) was recorded in the current six months, compared to a loss of 109.2 billion yen in the same period of the previous fiscal year.

*    *    *    *    *

Cash Flows

For Consolidated Statements of Cash Flows, charts showing Sony’s cash flow information for all segments, all segments excluding the Financial Services segment and the Financial Services segment alone, please refer to pages F-5 and F-17.

Operating Activities: During the current six months, there was a net cash inflow of 25.5 billion yen (213 million U.S. dollars) from operating activities, a decrease of 78.5 billion yen, or 75.5% year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 211.9 billion yen (1,766 million U.S. dollars), an increase of 101.7 billion yen, or 92.3% year-on-year.  This increase was primarily due to a larger increase in inventories and an increase in film costs, partially offset by factors such as a larger increase in notes and accounts payable, trade.

The Financial Services segment had a net cash inflow of 247.9 billion yen (2,066 million U.S. dollars), an increase of 25.8 billion yen, or 11.6% year-on-year.  This increase was primarily due to an increase in insurance premium revenue at Sony Life.

Investing Activities: During the current six months, Sony used 457.1 billion yen (3,809 million U.S. dollars) of net cash in investing activities, an increase of 174.2 billion yen, or 61.6% year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 93.5 billion yen (779 million U.S. dollars), an increase of 93.4 billion yen.  The net cash outflow was due to factors such as an increase in the amount of fixed asset purchases, partially offset by factors such as cash inflow from the sale of certain shares of Olympus Corporation.

 
8

 
 
The Financial Services segment used 363.5 billion yen (3,029 million U.S. dollars) of net cash, an increase of 80.8 billion yen, or 28.6% year-on-year. This increase was mainly due to a year-on-year increase in payments for investments and advances at Sony Life.
 
In all segments excluding the Financial Services segment, net cash used in operating and investing activities combined*1 for the current six months was 305.4 billion yen (2,545 million U.S. dollars), an increase of 195.1 billion yen, or 176.9% year-on-year.

Financing Activities: Net cash provided by financing activities during the current six months was 501.3 billion yen (4,178 million U.S. dollars), compared to a net cash outflow of 273.0 billion yen in the same period of the previous fiscal year.

For all segments excluding the Financial Services segment, there was a 324.8 billion yen (2,707 million U.S. dollars) net cash inflow, compared to a net cash outflow of 255.4 billion yen in the same period of the previous fiscal year.  This change was primarily due to the issuance of new stock and convertible bonds in the current quarter.

In the Financial Services segment, financing activities provided 166.0 billion yen (1,383 million U.S. dollars) of net cash, compared to 25.5 billion yen of net cash used in the same period of the previous fiscal year.  This change was primarily due to an increase in short-term borrowings at Sony Life.

Total Cash and Cash Equivalents: Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents at September 30, 2015 was 1,010.1 billion yen (8,418 million U.S. dollars).  Cash and cash equivalents of all segments excluding the Financial Services segment was 752.2 billion yen (6,269 million U.S. dollars) at September 30, 2015, an increase of 295.9 billion yen, or 64.8% compared with the balance as of September 30, 2014, and an increase of 10.3 billion yen, or 1.4% compared with the balance as of March 31, 2015.  Sony believes that it continues to maintain sufficient liquidity through access to a total, translated into yen, of 536.9 billion yen (4,474 million U.S. dollars) of unused committed lines of credit with financial institutions in addition to the cash and cash equivalents balance at September 30, 2015.  Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 257.9 billion yen (2,149 million U.S. dollars) at September 30, 2015, an increase of 103.7 billion yen, or 67.3% compared with the balance as of September 30, 2014, and an increase of 50.4 billion yen, or 24.3% compared with the balance as of March 31, 2015.

*1
Sony has included the information for cash flow from operating and investing activities combined, excluding the Financial Services segment’s activities, as Sony’s management frequently monitors this financial measure, and believes this non-U.S. GAAP measurement is important for use in evaluating Sony’s ability to generate cash to maintain liquidity and fund debt principal and dividend payments from business activities other than its Financial Services segment.  This information is derived from the reconciliations prepared in the Condensed Statements of Cash Flows on page F-17.  This information and the separate condensed presentations shown below are not required or prepared in accordance with U.S. GAAP.  The Financial Services segment’s cash flow is excluded from the measure because SFH, which constitutes a majority of the Financial Services segment, is a separate publicly traded entity in Japan with a significant minority interest and it, as well as its subsidiaries, secure liquidity on their own.  This measure may not be comparable to those of other companies.  This measure has limitations because it does not represent residual cash flows available for discretionary expenditures principally due to the fact that the measure does not deduct the principal payments required for debt service.  Therefore, Sony believes it is important to view this measure as supplemental to its entire statement of cash flows and together with Sony’s disclosures regarding investments, available credit facilities and overall liquidity.
 
A reconciliation of the differences between the Consolidated Statements of Cash Flows reported and cash flows from operating and investing activities combined excluding the Financial Services segment’s activities is as follows:

   
(Billions of yen, millions of U.S. dollars)
   
Six months
ended September 30
   
2014
 
2015
 
2015
                   
Net cash provided by operating activities reported in the consolidated statements of cash flows
  ¥ 104.1     ¥ 25.5     $ 213  
Net cash used in investing activities reported in the consolidated statements of cash flows
    (282.9 )     (457.1 )     (3,809 )
      (178.8 )     (431.6 )     (3,596 )
                         
Less: Net cash provided by operating activities within the Financial Services segment
    222.1       247.9       2,066  
Less: Net cash used in investing activities within the Financial Services segment
    (282.8 )     (363.5 )     (3,029 )
Eliminations *2
    7.8       10.6       88  
                         
Cash flow used by operating and investing activities combined excluding the Financial Services segment’s activities
  ¥ (110.3 )   ¥ (305.4 )   $ (2,545 )
*2
Eliminations primarily consist of intersegment dividend payments.
 
 
9

 
 
Notes

Business Segment Realignment
Sony realigned its business segments from the first quarter of the fiscal year ending March 31, 2016 to reflect modifications to its organizational structure as of April 1, 2015, primarily repositioning certain operations in All Other and the Devices segment.  In connection with this realignment, the operations of Sony’s disc manufacturing business in Japan, which were included in All Other, are now included in the Music segment and the operations of So-net Corporation and its subsidiaries, which were included in All Other, are now included in the MC segment.  Certain operations regarding pre-installed automotive audio products which were included in the Devices segment are now included in the HE&S segment.

In connection with these realignments, the sales and operating income (loss) of each segment in the fiscal year ended March 31, 2015 have been reclassified to conform to the presentation of the fiscal year ending March 31, 2016.

Impact of Foreign Exchange Rate Fluctuations on Sales and Operating Income (Loss)
For all segments other than Pictures and Music, the impact of foreign exchange rate fluctuations on sales is calculated by applying the change in the yen’s periodic weighted average exchange rates for the three and six months ended September 30, 2014 from the three and six months ended September 30, 2015 to the major transactional currencies in which the sales are denominated.  The impact of foreign exchange rate fluctuations on operating income (loss) described herein is calculated by subtracting from the impact on sales the impact on cost of sales and selling, general and administrative expenses calculated by applying the same major transactional currencies calculation process to cost of sales and selling, general and administrative expenses as for the impact on sales.  Since the worldwide subsidiaries of the Pictures segment and of SME and Sony/ATV in the Music segment are aggregated on a U.S. dollar basis and are translated into yen, the impact of foreign exchange rate fluctuations is calculated by applying the change in the periodic weighted average exchange rates for the three and six months ended September 30, 2014 from the three and six months ended September 30, 2015 from U.S. dollar to yen to the U.S. dollar basis operating results.  This information is not a substitute for Sony’s consolidated financial statements measured in accordance with U.S. GAAP.  However, Sony believes that these disclosures provide additional useful analytical information to investors regarding the operating performance of Sony.

*    *    *    *    *
 
 
10

 

Outlook for the Fiscal Year Ending March 31, 2016

The forecast for consolidated results for the fiscal year ending March 31, 2016, as announced on July 30, 2015, remains unchanged, as per the table below.
 
   
(Billions of yen)
   
October
Forecast
 
March 31, 2015
Results
 
Change from
March 31, 2015 Results
Sales and operating revenue
  ¥ 7,900     ¥ 8,215.9       -3.8 %
Operating income
    320       68.5    
+ ¥251.5 bil
Income before income taxes
    345       39.7    
+ ¥305.3 bil
Net income (loss) attributable to Sony Corporation’s stockholders
    140       (126.0 )  
+ ¥266.0 bil

Assumed foreign currency exchange rates for the remainder of the fiscal year ending March 31, 2016 are the following.  Due to the recent volatility in foreign exchange rates, the assumed foreign currency exchange rates were revised after the individual segments had already completed their forecasts.  Accordingly, the impact of the difference between the currently assumed rates and the rates used when the individual segments completed their forecasts has been included in the forecast for All Other.

Assumed foreign currency exchange rates for the remainder of the current fiscal year
 
Consolidated forecast
Forecasts for each segment
1 U.S. dollar
approximately 125 yen
approximately 121 yen
1 Euro
approximately 130 yen
approximately 132 yen

(For your reference)
Assumed foreign currency exchange rates for the remainder of the current fiscal year at the time of the July forecast
 
Consolidated forecast
Forecasts for each segment
1 U.S. dollar
approximately 125 yen
approximately 123 yen
1 Euro
approximately 130 yen
approximately 134 yen
 
In order to reflect a change as of October 1, 2015 in the Corporate Executive Officer in charge of the medical business, which was previously included in All Other, this business will be included in the IP&S segment from the third quarter of the fiscal year ending March 31, 2016.  In connection with this business segment realignment, the sales and operating revenue and operating income (loss) of the IP&S segment and All Other for the fiscal year ended March 31, 2015 and the July forecast for the fiscal year ending March 31, 2016 have been reclassified in the chart below to conform to the presentation of the October forecast.

Restructuring charges are expected to be approximately 35 billion yen for Sony in the fiscal year ending March 31, 2016, compared to 98.0 billion yen recorded in the fiscal year ended March 31, 2015.  This amount will be recorded as an operating expense included in the above-mentioned forecast for operating income.
 
 
11

 
 
The forecast for each business segment has been revised as follows:
 
   
(Billions of yen)
 
Change - October Forecast from
   
October
Forecast
 
July
Forecast
   
March 31, 2015
Results
 
July
Forecast
 
March 31, 2015
Results
Mobile Communications
                             
Sales and operating revenue
  ¥ 1,190     ¥ 1,190     ¥ 1,410.2     -   -15.6%
Operating loss
    (60 )     (60 )     (217.6 )   -  
+ ¥157.6 bil
Game & Network Services
                                       
Sales and operating revenue
    1,520       1,490       1,388.0     +2.0%   +9.5%
Operating income
    80       60       48.1    
+ ¥20.0 bil
 
+ ¥31.9 bil
Imaging Products & Solutions
                                       
Sales and operating revenue
    720       730       723.9     -1.4%   -0.5%
Operating income
    58       48       41.8    
+ ¥10.0 bil
 
+ ¥16.2 bil
Home Entertainment & Sound
                                       
Sales and operating revenue
    1,140       1,160       1,238.1     -1.7%   -7.9%
Operating income
    25       22       24.1    
+ ¥3.0 bil
 
+ ¥0.9 bil
Devices
                                       
Sales and operating revenue
    1,060       1,100       927.1     -3.6%   +14.3%
Operating income
    121       121       89.0     -  
+ ¥32.0 bil
Pictures
                                       
Sales and operating revenue
    1,000       1,020       878.7     -2.0%   +13.8%
Operating income
    35       64       58.5    
- ¥29.0 bil
 
- ¥23.5 bil
Music
                                       
Sales and operating revenue
    550       550       559.2     -   -1.7%
Operating income
    74       74       60.6     -  
+ ¥13.4 bil
Financial Services
                                       
Financial services revenue
    1,060       1,060       1,083.6     -   -2.2%
Operating income
    175       175       193.3     -  
- ¥18.3 bil
All Other, Corporate and Elimination
                                       
Operating loss
    (188 )     (184 )     (229.3 )  
- ¥4.0 bil
 
+ ¥41.3 bil
Consolidated
                                       
Sales and operating revenue
    7,900       7,900       8,215.9     -   -3.8%
Operating income
    320       320       68.5     -  
+ ¥251.5 bil

Game & Network Services
Sales are expected to be higher than the July forecast primarily due to an expected increase in PS4 hardware unit sales and PS4 software sales.  Operating income is expected to be above the July forecast primarily due to an increase in PS4 software sales and PS4 hardware cost reductions.

Imaging Products & Solutions
Sales are expected to be lower than the July forecast primarily due to the impact of foreign exchange rates, partially offset by an upward revision in the annual unit sales forecast for digital cameras.  Operating income is expected to be higher than the July forecast primarily due to an improvement in the product mix of digital cameras reflecting a shift to high value-added models, partially offset by the above-mentioned decrease in sales.

Home Entertainment & Sound
Sales are expected to be lower than the July forecast primarily due to the impact of foreign exchange rates.  Operating income is expected to be higher than the July forecast primarily due to cost reductions and an improvement in product mix reflecting a shift to high value-added models, partially offset by the negative impact of foreign exchange rates.

Devices
Sales are expected to be lower than the July forecast mainly due to a decrease in sales of lithium-ion polymer batteries and the impact of a temporary decrease in image sensor production due to a production equipment problem.  Although this production equipment problem has been remedied, sales are expected to decrease in the second half of the current fiscal year as well.  The forecast for operating income remains unchanged from the July forecast mainly due to the above-mentioned decrease in sales being offset mainly by an increase in productivity and yield in the image sensor business as well as a reduction in costs.
 
 
12

 
 
Sony is currently in the process of its annual review of its Mid-Range Plan, including for the battery business, which process is ongoing.  With regard to the battery business, increasingly competitive markets affected the current quarter’s financial performance, are a factor in revising downward the full-year forecast, and could continue to adversely affect this business.  It is therefore possible that the above-described business environment might result in an impairment charge against long-lived assets in the battery business.

Pictures
Sales are expected to be lower than the July forecast primarily due to a decrease in Television Productions, Motion Pictures and Media Network sales.  Operating income is expected to be lower than the July forecast primarily due to lower than expected earnings from Motion Pictures’ current year film slate and the negative impact of foreign exchange rates and lower advertising revenues in Media Networks.

The forecasts for sales and operating income for the MC, Music and Financial Services segments remain unchanged from the July forecast.

The effects of future gains and losses on investments held by the Financial Services segment due to market fluctuations have not been incorporated within the above forecast as it is difficult for Sony to predict market trends in the future.  Accordingly, future market fluctuations could further impact the current forecast.

The forecast for capital expenditures, depreciation and amortization, as well as research and development expenses for the current fiscal year remains unchanged from the July forecast.

Consolidated
 
   
(Billions of yen)
   
   
October
Forecast
 
March 31, 2015
Results
 
Change from
March 31, 2015 Results
Capital expenditures*
  ¥ 510     ¥ 251.0       +103.1 %
[additions to property, plant and equipment (included above)
    430       164.8       +160.9 ]
[additions to intangible assets (included above) *
    80       86.2       -7.2 ]
Depreciation and amortization**
    365       354.6       +2.9  
[for property, plant and equipment (included above)
    175       165.9       +5.5 ]
[for intangible assets (included above)
    190       188.8       +0.7 ]
Research and development expenses
    490       464.3       +5.5  
*
Does not include the increase in intangible assets resulting from business acquisitions.
**
The forecast for depreciation and amortization includes amortization expenses for deferred insurance acquisition costs.

Sony without Financial Services
 
   
(Billions of yen)
     
   
October
Forecast
   
March 31, 2015
Results
   
Change from
March 31, 2015 Results
Capital expenditures*
  ¥ 501     ¥ 243.9       +105.4 %
[additions to property, plant and equipment (included above)
    428       163.4       +161.9 ]
[additions to intangible assets (included above) *
    73       80.5       -9.3 ]
Depreciation and amortization**
    294       288.4       +1.9  
[for property, plant and equipment (included above)
    174       164.7       +5.7 ]
[for intangible assets (included above)
    120       123.7       -3.0 ]
* Does not include the increase in intangible assets resulting from business acquisitions.

This forecast is based on management’s current expectations and is subject to uncertainties and changes in circumstances.  Actual results may differ materially from those included in this forecast due to a variety of factors.  See “Cautionary Statement” below.
 
 
13

 
 
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 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, judgments and beliefs in light of the information currently available to it.  Sony cautions investors 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 investors should not place undue reliance on them.  Investors 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)  
foreign 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 televisions, game platforms and smartphones, which are offered in highly competitive markets characterized by severe price competition and 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 electronics businesses);
(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)  
significant volatility and disruption in the global financial markets or a ratings downgrade;
(xi)  
Sony’s ability to forecast demands, manage timely procurement and control inventories;
(xii)  
the outcome of pending and/or future legal and/or regulatory proceedings;
(xiii)  
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;
(xiv)  
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;
(xv)  
Sony’s ability to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information, potential business disruptions or financial losses; and
(xvi)  
risks related to catastrophic disasters or similar events.
Risks and uncertainties also include the impact of any future events with material adverse impact.

Investor Relations Contacts:     
Tokyo
New York
London
Atsuko Murakami
Justin Hill
Haruna Nagai
+81-(0)3-6748-2111
+1-212-833-6722
+44-(0)19-3281-6000

IR home page: http://www.sony.net/IR/
Presentation slides: http://www.sony.net/SonyInfo/IR/financial/fr/15q2_sonypre.pdf
 
 
14

 
 
(Unaudited)
 
Consolidated Financial Statements
 
Consolidated Balance Sheets
 
    (Millions of yen, millions of U.S. dollars) 
   
March 31
 
September 30
 
Change from
 
September 30
ASSETS
 
2015
 
2015
 
March 31, 2015
 
2015
Current assets:
                       
Cash and cash equivalents
  ¥ 949,413     ¥ 1,010,120     ¥ +60,707     $ 8,418  
Marketable securities
    936,731       889,623       -47,108       7,414  
Notes and accounts receivable, trade
    986,500       1,095,632       +109,132       9,130  
Allowance for doubtful accounts and sales returns
    (86,598 )     (86,948 )     -350       (725 )
Inventories
    665,432       948,171       +282,739       7,901  
Other receivables
    231,947       321,395       +89,448       2,678  
Deferred income taxes
    47,788       50,675       +2,887       422  
Prepaid expenses and other current assets
    466,688       480,526       +13,838       4,005  
 Total current assets
    4,197,901       4,709,194       +511,293       39,243  
                                 
Film costs
    305,232       384,676       +79,444       3,206  
                                 
Investments and advances:
                               
Affiliated companies
    171,063       168,905       -2,158       1,408  
Securities investments and other
    8,360,290       8,640,342       +280,052       72,002  
      8,531,353       8,809,247       +277,894       73,410  
                                 
Property, plant and equipment:
                               
Land
    123,629       123,027       -602       1,025  
Buildings
    679,125       681,927       +2,802       5,683  
Machinery and equipment
    1,764,241       1,820,603       +56,362       15,172  
Construction in progress
    35,786       61,013       +25,227       508  
      2,602,781       2,686,570       +83,789       22,388  
Less-Accumulated depreciation
    1,863,496       1,870,998       +7,502       15,592  
      739,285       815,572       +76,287       6,796  
                                 
Other assets:
                               
Intangibles, net
    642,361       635,791       -6,570       5,298  
Goodwill
    561,255       610,738       +49,483       5,089  
Deferred insurance acquisition costs
    520,571       530,231       +9,660       4,419  
Deferred income taxes
    89,637       81,847       -7,790       682  
Other
    246,736       253,882       +7,146       2,117  
      2,060,560       2,112,489       +51,929       17,605  
Total assets
  ¥ 15,834,331     ¥ 16,831,178     ¥ +996,847     $ 140,260  
                                 
LIABILITIES AND EQUITY
                               
Current liabilities:
                               
Short-term borrowings
  ¥ 62,008     ¥ 273,133     ¥ +211,125     $ 2,276  
Current portion of long-term debt
    159,517       149,454       -10,063       1,245  
Notes and accounts payable, trade
    622,215       881,130       +258,915       7,343  
Accounts payable, other and accrued expenses
    1,374,099       1,374,279       +180       11,452  
Accrued income and other taxes
    98,414       105,653       +7,239       880  
Deposits from customers in the banking business
    1,872,965       1,790,920       -82,045       14,924  
Other
    556,372       543,601       -12,771       4,531  
 Total current liabilities
    4,745,590       5,118,170       +372,580       42,651  
                                 
Long-term debt
    712,087       766,675       +54,588       6,389  
Accrued pension and severance costs
    298,753       297,205       -1,548       2,477  
Deferred income taxes
    445,876       425,809       -20,067       3,548  
Future insurance policy benefits and other
    4,122,372       4,316,443       +194,071       35,970  
Policyholders’ account in the life insurance business
    2,259,514       2,308,890       +49,376       19,241  
Other
    316,422       324,509       +8,087       2,705  
Total liabilities
    12,900,614       13,557,701       +657,087       112,981  
                                 
Redeemable noncontrolling interest
    5,248       7,475       +2,227       62  
                                 
Equity:
                               
Sony Corporation’s stockholders’ equity:
                               
Common stock
    707,038       858,522       +151,484       7,154  
Additional paid-in capital
    1,185,777       1,323,906       +138,129       11,033  
Retained earnings
    813,765       917,146       +103,381       7,643  
Accumulated other comprehensive income
    (385,283 )     (451,022 )     -65,739       (3,759 )
Treasury stock, at cost
    (4,220 )     (4,205 )     +15       (35 )
      2,317,077       2,644,347       +327,270       22,036  
Noncontrolling interests
    611,392       621,655       +10,263       5,181  
Total equity
    2,928,469       3,266,002       +337,533       27,217  
Total liabilities and equity
  ¥ 15,834,331     ¥ 16,831,178     ¥ +996,847     $ 140,260  

 
F-1

 

Consolidated Statements of Income
 
   
(Millions of yen, millions of U.S. dollars, except per share amounts)
   
Three months ended September 30
   
2014
 
2015
 
Change from 2014
 
2015
Sales and operating revenue:
                       
Net sales
  ¥ 1,606,159     ¥ 1,663,614           $ 13,864  
Financial services revenue
    268,192       209,035             1,742  
Other operating revenue
    27,160       20,091             167  
      1,901,511       1,892,740       -0.5 %     15,773  
                                 
Costs and expenses:
                               
Cost of sales
    1,168,883       1,228,226               10,236  
Selling, general and administrative
    419,203       418,308               3,486  
Financial services expenses
    220,831       167,076               1,392  
Other operating (income) expense, net
    178,811       (7,945 )             (66 )
      1,987,728       1,805,665       -9.2       15,048  
                                 
Equity in net income of affiliated companies
    629       943       +49.9       8  
                                 
Operating income (loss)
    (85,588 )     88,018    
      733  
                                 
Other income:
                               
Interest and dividends
    2,337       3,664               31  
Gain on sale of securities investments, net
    2,386       795               7  
Other     1,465       539               4  
      6,188       4,998       -19.2       42  
                                 
Other expenses:
                               
Interest     6,047       6,581               55  
Foreign exchange loss, net
    2,592       12,602               105  
Other     1,916       1,639               13  
      10,555       20,822       +97.3       173  
                                 
Income (loss) before income taxes
    (89,955 )     72,194    
      602  
                                 
Income taxes
    30,078       23,866               199  
                                 
Net income (loss)
    (120,033 )     48,328    
      403  
                                 
Less - Net income attributable to noncontrolling interests
    15,936       14,775               123  
                                 
Net income (loss) attributable to Sony Corporation’s stockholders
  ¥ (135,969 )   ¥ 33,553    
%   $ 280  
                                 
Per share data:
                               
Net income (loss) attributable to Sony Corporation’s stockholders
                               
— Basic
  ¥ (124.32 )   ¥ 26.64    
%   $ 0.22  
— Diluted
    (124.32 )     26.10    
      0.22  
                                 
                                 
Consolidated Statements of Comprehensive Income
                               
   
(Millions of yen, millions of U.S. dollars)
   
Three months ended September 30
    2014   2015  
Change from 2014
  2015
                                 
Net income (loss)
  ¥ (120,033 )   ¥ 48,328    
%   $ 403  
                                 
Other comprehensive income, net of tax –
                               
Unrealized gains (losses) on securities
    13,191       (10,800 )             (90 )
Unrealized losses on derivative instruments
 
      (1,105 )             (9 )
Pension liability adjustment
    414       705               6  
Foreign currency translation adjustments
    51,557       (39,508 )             (330 )
                                 
Total comprehensive loss
    (54,871 )     (2,380 )  
      (20 )
                                 
Less - Comprehensive income attributable to noncontrolling interests
    19,655       12,910               107  
                                 
Comprehensive loss attributable to Sony Corporation’s stockholders
  ¥ (74,526 )   ¥ (15,290 )  
%   $ (127 )
 
 
F-2

 
 
Consolidated Statements of Income
 
   
(Millions of yen, millions of U.S. dollars, except per share amounts)
   
Six months ended September 30
   
2014
 
2015
 
Change from 2014
 
2015
Sales and operating revenue:
                       
Net sales
  ¥ 3,145,965     ¥ 3,166,925           $ 26,391  
Financial services revenue
    513,942       486,724             4,056  
Other operating revenue
    51,512       47,150             393  
      3,711,419       3,700,799       -0.3 %     30,840  
                                 
Costs and expenses:
                               
Cost of sales
    2,319,722       2,362,495               19,687  
Selling, general and administrative
    829,650       797,030               6,642  
Financial services expenses
    422,509       399,114               3,326  
Other operating (income) expense, net
    159,142       (41,399 )             (345 )
      3,731,023       3,517,240       -5.7       29,310  
                                 
Equity in net income of affiliated companies
    3,830       1,366       -64.3       11  
                                 
Operating income (loss)
    (15,774 )     184,925    
      1,541  
                                 
Other income:
                               
Interest and dividends
    5,752       6,316               53  
Gain on sale of securities investments, net
    7,586       51,577               430  
Other
    2,082       1,186               10  
      15,420       59,079       +283.1       493  
                                 
Other expenses:
                               
Interest
    12,459       10,975               91  
Foreign exchange loss, net
    4,568       18,348               153  
Other
    4,197       3,777               32  
      21,224       33,100       +56.0       276  
                                 
Income (loss) before income taxes
    (21,578 )     210,904    
      1,758  
                                 
Income taxes
    56,124       63,678               531  
                                 
Net income (loss)
    (77,702 )     147,226    
      1,227  
                                 
Less - Net income attributable to noncontrolling interests
    31,459       31,232               260  
                                 
Net income (loss) attributable to Sony Corporation’s stockholders
  ¥ (109,161 )   ¥ 115,994    
%   $ 967  
                                 
Per share data:
                               
Net income (loss) attributable to Sony Corporation’s stockholders
                               
— Basic
  ¥ (102.14 )   ¥ 95.53    
%   $ 0.80  
— Diluted
    (102.14 )     94.41    
      0.79  
                                 
                                 
Consolidated Statements of Comprehensive Income
                               
   
(Millions of yen, millions of U.S. dollars)
   
Six months ended September 30
    2014   2015  
Change from 2014
  2015
                                 
Net income (loss)
  ¥ (77,702 )   ¥ 147,226    
%   $ 1,227  
                                 
Other comprehensive income, net of tax –
                               
Unrealized gains (losses) on securities
    15,066       (57,866 )             (483 )
Unrealized losses on derivative instruments
 
      (1,741 )             (15 )
Pension liability adjustment
    750       907               8  
Foreign currency translation adjustments
    30,717       (11,901 )             (99 )
                                 
Total comprehensive income (loss)
    (31,169 )     76,625    
      638  
                                 
Less - Comprehensive income attributable to noncontrolling interests
    38,382       26,370               220  
                                 
Comprehensive income (loss) attributable to Sony Corporation’s stockholders
  ¥ (69,551 )   ¥ 50,255    
%   $ 418  
 
 
F-3

 

Supplemental equity and comprehensive income information
 
   
(Millions of yen, millions of U.S. dollars)
   
Sony Corporation’s
 stockholders’ equity
 
Noncontrolling
 interests
 
Total equity
Balance at March 31, 2014
  ¥ 2,258,137     ¥ 525,004     ¥ 2,783,141  
Exercise of stock acquisition rights
    91               91  
Conversion of zero coupon convertible bonds
    100,400      
      100,400  
Stock based compensation
    529      
      529  
                         
Comprehensive income:
                       
Net income (loss)
    (109,161 )     31,459       (77,702 )
Other comprehensive income, net of tax –
                       
Unrealized gains on securities
    10,427       4,639       15,066  
Pension liability adjustment
    788       (38 )     750  
Foreign currency translation adjustments
    28,395       2,322       30,717  
Total comprehensive income (loss)
    (69,551 )     38,382       (31,169 )
                         
Dividends declared
          (12,270 )     (12,270 )
Transactions with noncontrolling interests shareholders and other
    (2,837 )     1,296       (1,541 )
Balance at September 30, 2014
  ¥ 2,286,769     ¥ 552,412     ¥ 2,839,181