6-K 1 a51889752.htm SONY CORPORATION 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 2018
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/  Hiroki Totoki
 
                (Signature)
 
Hiroki Totoki
 
Senior Executive Vice President and
 
Chief Financial Officer
 
Date: October 30, 2018

List of materials

Documents attached hereto:
 
i) Quarterly Financial Statements for the Second Quarter Ended September 30, 2018 And Outlook for the Fiscal Year Ending March 31, 2019
 

 
Quarterly Financial Statements
for the Second Quarter Ended September 30, 2018
And
Outlook for the Fiscal Year Ending March 31, 2019


October 30, 2018
Sony Corporation


Quarterly Financial Statements (Unaudited)
F-1
   
Consolidated Balance Sheets
F-1
Consolidated Statements of Income (Three months ended September 30)
F-2
Consolidated Statements of Comprehensive Income (Three months ended September 30)
F-2
Consolidated Statements of Income (Six months ended September 30)
F-3
Consolidated Statements of Comprehensive Income (Six months ended September 30)
F-3
Consolidated Statements of Cash Flows (Six months ended September 30)
F-4
Notes to Consolidated Financial Statements
F-5
-Business Segment Information
F-5
-Going Concern Assumption
F-12
-Significant Changes in Shareholders’ Equity
F-12
-Accounting Policies and Other Information
F-12
   
Outlook for the Fiscal Year Ending March 31, 2019
1
   
Outlook for the Fiscal Year Ending March 31, 2019
1
   
Cautionary Statement
4

 

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”.
 

(Unaudited)
                 
Consolidated Financial Statements
                 
Consolidated Balance Sheets
                 
   
 
   
(Millions of yen)
       
   
March 31
   
September 30
   
Change from
 
ASSETS
 
2018
   
2018
   
March 31, 2018
 
Current assets:
                 
Cash and cash equivalents
 
¥
1,586,329
   
¥
1,540,779
   
¥
-45,550
 
Marketable securities
   
1,176,601
     
1,335,735
     
+159,134
 
Notes and accounts receivable, trade and contract assets
   
1,061,442
     
1,290,317
     
+228,875
 
Allowance for doubtful accounts
   
(48,663
)
   
(24,349
)
   
+24,314
 
Inventories
   
692,937
     
814,639
     
+121,702
 
Other receivables
   
190,706
     
305,880
     
+115,174
 
                         
Prepaid expenses and other current assets
   
516,744
     
480,714
     
-36,030
 
 Total current assets
   
5,176,096
     
5,743,715
     
+567,619
 
                         
Film costs
   
327,645
     
416,527
     
+88,882
 
                         
Investments and advances:
                       
Affiliated companies
   
157,389
     
171,798
     
+14,409
 
Securities investments and other
   
10,598,669
     
11,133,787
     
+535,118
 
     
10,756,058
     
11,305,585
     
+549,527
 
                         
Property, plant and equipment:
                       
Land
   
84,358
     
84,549
     
+191
 
Buildings
   
655,434
     
666,852
     
+11,418
 
Machinery and equipment
   
1,798,722
     
1,852,401
     
+53,679
 
Construction in progress
   
38,295
     
29,245
     
-9,050
 
     
2,576,809
     
2,633,047
     
+56,238
 
Less-Accumulated depreciation
   
1,837,339
     
1,891,203
     
+53,864
 
     
739,470
     
741,844
     
+2,374
 
                         
Other assets:
                       
Intangibles, net
   
527,168
     
522,616
     
-4,552
 
Goodwill
   
530,492
     
551,058
     
+20,566
 
Deferred insurance acquisition costs
   
586,670
     
605,989
     
+19,319
 
Deferred income taxes
   
96,772
     
98,652
     
+1,880
 
Other
   
325,167
     
339,464
     
+14,297
 
     
2,066,269
     
2,117,779
     
+51,510
 
  Total assets
 
¥
19,065,538
   
¥
20,325,450
   
¥
+1,259,912
 
                         
                         
LIABILITIES AND EQUITY
                       
Current liabilities:
                       
Short-term borrowings
 
¥
496,093
   
¥
628,528
   
¥
+132,435
 
Current portion of long-term debt
   
225,522
     
166,423
     
-59,099
 
Notes and accounts payable, trade
   
468,550
     
781,338
     
+312,788
 
Accounts payable, other and accrued expenses
   
1,514,433
     
1,549,389
     
+34,956
 
Accrued income and other taxes
   
145,905
     
197,721
     
+51,816
 
Deposits from customers in the banking business
   
2,159,246
     
2,252,480
     
+93,234
 
Other
   
610,792
     
655,871
     
+45,079
 
 Total current liabilities
   
5,620,541
     
6,231,750
     
+611,209
 
                         
Long-term debt
   
623,451
     
510,165
     
-113,286
 
Accrued pension and severance costs
   
394,504
     
388,955
     
-5,549
 
Deferred income taxes
   
449,863
     
430,704
     
-19,159
 
Future insurance policy benefits and other
   
5,221,772
     
5,452,484
     
+230,712
 
Policyholders’ account in the life insurance business
   
2,820,702
     
2,998,376
     
+177,674
 
Other
   
278,338
     
291,417
     
+13,079
 
  Total liabilities
   
15,409,171
     
16,303,851
     
+894,680
 
                         
Redeemable noncontrolling interest
   
9,210
     
8,442
     
-768
 
                         
Equity:
                       
Sony Corporation’s stockholders’ equity:
                       
Common stock
   
865,678
     
871,925
     
+6,247
 
Additional paid-in capital
   
1,282,577
     
1,264,863
     
-17,714
 
Retained earnings
   
1,440,387
     
1,828,777
     
+388,390
 
Accumulated other comprehensive income
   
(616,746
)
   
(595,900
)
   
+20,846
 
Treasury stock, at cost
   
(4,530
)
   
(4,627
)
   
-97
 
     
2,967,366
     
3,365,038
     
+397,672
 
                         
Noncontrolling interests
   
679,791
     
648,119
     
-31,672
 
  Total equity
   
3,647,157
     
4,013,157
     
+366,000
 
  Total liabilities and equity
 
¥
19,065,538
   
¥
20,325,450
   
¥
+1,259,912
 
 
F-1

Consolidated Statements of Income
                   
 
 
 
(Millions of yen, except per share amounts)
 
 
 
 
Three months ended September 30
 
 
 
 
2017
   
2018
   
Change
 
Sales and operating revenue:
                   
Net sales
 
¥
1,764,916
   
¥
1,809,739
   
¥
+44,823
 
Financial services revenue
   
277,434
     
351,493
     
+74,059
 
Other operating revenue
   
20,181
     
21,528
     
+1,347
 
     
2,062,531
     
2,182,760
     
+120,229
 
Costs and expenses:
                       
Cost of sales
   
1,234,646
     
1,222,744
     
-11,902
 
Selling, general and administrative
   
386,279
     
397,129
     
+10,850
 
Financial services expenses
   
240,305
     
312,334
     
+72,029
 
Other operating (income) expense, net
   
(901
)
   
13,383
     
+14,284
 
     
1,860,329
     
1,945,590
     
+85,261
 
                         
Equity in net income of affiliated companies
   
2,026
     
2,341
     
+315
 
                         
Operating income
   
204,228
     
239,511
     
+35,283
 
                         
Other income:
                       
Interest and dividends
   
4,252
     
4,571
     
+319
 
Gain on equity securities, net
 
 
     
9,935
     
+9,935
 
Other
   
511
     
1,461
     
+950
 
      4,763        15,967        +11,204   
Other expenses:
                       
Interest
   
2,730
     
3,876
     
+1,146
 
Foreign exchange loss, net
   
6,298
     
4,922
     
-1,376
 
Other
   
1,398
     
282
     
-1,116
 
     
10,426
     
9,080
     
-1,346
 
                         
Income before income taxes
   
198,565
     
246,398
     
+47,833
 
                         
Income taxes
   
55,751
     
59,268
     
+3,517
 
Net income
   
142,814
     
187,130
     
+44,316
 
                         
Less - Net income attributable to noncontrolling interests
   
11,962
     
14,129
     
+2,167
 
                         
Net income attributable to Sony Corporation’s stockholders
 
¥
130,852
   
¥
173,001
   
¥
+42,149
 
                         
Per share data:
                       
Net income attributable to Sony Corporation’s stockholders
                       
   — Basic
 
¥
103.57
   
¥
136.38
   
¥
+32.81
 
   — Diluted
   
101.35
     
133.43
     
+32.08
 
 
Consolidated Statements of Comprehensive Income
                       
 
 
 
(Millions of yen)
 
 
 
 
Three months ended September 30
 
     
2017
     
2018
   
Change
 
                         
Net income
 
¥
142,814
   
¥
187,130
   
¥
+44,316
 
                         
Other comprehensive income, net of tax –
                       
Unrealized losses on securities
   
(1,469
)
   
(24,337
)
   
-22,868
 
Unrealized gains (losses) on derivative instruments
   
594
     
(563
)
   
-1,157
 
Pension liability adjustment
   
2,339
     
2,467
     
+128
 
Foreign currency translation adjustments
   
16,502
     
32,168
     
+15,666
 
Total comprehensive income
   
160,780
     
196,865
     
+36,085
 
 Less - Comprehensive income attributableto noncontrolling interests
   
13,178
     
5,314
     
-7,864
 
Comprehensive income attributableto Sony Corporation’s stockholders
 
¥
147,602
   
¥
191,551
   
¥
+43,949
 
 
F-2

Consolidated Statements of Income
                 
   
 
(Millions of yen, except per share amounts)
 
   
 
Six months ended September 30
 
   
 
2017
   
2018
   
Change
 
Sales and operating revenue:
                   
Net sales
 
¥
3,293,559
   
¥
3,411,934
   
¥
+118,375
 
Financial services revenue
   
578,794
     
684,733
     
+105,939
 
Other operating revenue
   
48,291
     
39,717
     
-8,574
 
     
3,920,644
     
4,136,384
     
+215,740
 
Costs and expenses:
                       
Cost of sales
   
2,349,738
     
2,335,231
     
-14,507
 
Selling, general and administrative
   
743,658
     
746,890
     
+3,232
 
Financial services expenses
   
495,563
     
604,490
     
+108,927
 
Other operating (income) expense, net
   
(27,012
)
   
13,058
     
+40,070
 
     
3,561,947
     
3,699,669
     
+137,722
 
                         
Equity in net income (loss) of affiliated companies
   
3,142
     
(2,198
)
   
-5,340
 
                         
Operating income
   
361,839
     
434,517
     
+72,678
 
                         
Other income:
                       
Interest and dividends
   
13,037
     
9,305
     
-3,732
 
Gain on equity securities, net
 
 
     
124,714
     
+124,714
 
Other
   
1,644
     
2,194
     
+550
 
     
14,681
     
136,213
     
+121,532
 
                         
Other expenses:
                       
Interest
   
7,246
     
7,194
     
-52
 
Foreign exchange loss, net
   
19,266
     
3,911
     
-15,355
 
Other
   
2,549
     
1,141
     
-1,408
 
     
29,061
     
12,246
     
-16,815
 
                         
Income before income taxes
   
347,459
     
558,484
     
+211,025
 
                         
Income taxes
   
110,247
     
134,490
     
+24,243
 
                         
Net income
   
237,212
     
423,994
     
+186,782
 
                         
Less - Net income attributable to noncontrolling interests
   
25,489
     
24,546
     
-943
 
 
                       
Net income attributable to Sony Corporation’s stockholders
 
¥
211,723
   
¥
399,448
   
¥
+187,725
 
                         
Per share data:
                       
Net income attributable to Sony Corporation’s stockholders
                       
   — Basic
 
¥
167.61
   
¥
315.02
   
¥
+147.41
 
   — Diluted
   
164.06
     
308.17
     
+144.11
 
 
Consolidated Statements of Comprehensive Income
                       
   
 
(Millions of yen)
 
   
 
Six months ended September 30
 
     
2017
     
2018
   
Change
 
                         
Net income
 
¥
237,212
   
¥
423,994
   
¥
+186,782
 
                         
Other comprehensive income, net of tax –
                       
Unrealized losses on securities
   
(4,658
)
   
(21,066
)
   
-16,408
 
Unrealized gains on derivative instruments
   
229
     
915
     
+686
 
Pension liability adjustment
   
4,644
     
4,743
     
+99
 
Foreign currency translation adjustments
   
30,087
     
40,465
     
+10,378
 
Total comprehensive income
   
267,514
     
449,051
     
+181,537
 
Less - Comprehensive income attributable to noncontrolling interests
   
27,356
     
13,231
     
-14,125
 
Comprehensive income attributable to Sony Corporation’s stockholders
 
¥
240,158
   
¥
435,820
   
¥
+195,662
 


F-3

Consolidated Statements of Cash Flows
           
   
(Millions of yen)
 
   
Six months ended September 30
 
   
2017
   
2018
 
Cash flows from operating activities:
           
Net income
 
¥
237,212
   
¥
423,994
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization, including amortization of deferred insurance acquisition costs and contract costs
   
169,962
     
171,826
 
Amortization of film costs
   
160,142
     
133,892
 
Accrual for pension and severance costs, less payments
   
2,583
     
(5,310
)
Other operating (income) expense, net
   
(27,012
)
   
13,058
 
Gain on securities investments, net (other than financial services business)
   
(167
)
   
(124,717
)
Gain on marketable securities and securities investments held in the financial services business, net
   
(47,715
)
   
(109,791
)
Deferred income taxes
   
8,160
     
(3,350
)
Equity in net (income) loss of affiliated companies, net of dividends
   
(1,312
)
   
4,559
 
Changes in assets and liabilities:
               
   Increase in notes, accounts receivable, trade and contract assets
   
(197,747
)
   
(185,855
)
   Increase in inventories
   
(272,386
)
   
(118,255
)
   Increase in film costs
   
(188,281
)
   
(190,494
)
   Increase in notes and accounts payable, trade
   
309,160
     
302,979
 
   Increase in accrued income and other taxes
   
49,662
     
62,075
 
   Increase in future insurance policy benefits and other
   
258,762
     
368,871
 
   Increase in deferred insurance acquisition costs
   
(43,394
)
   
(47,090
)
   Increase in marketable securities held in the life insurance business
   
(44,002
)
   
(43,949
)
   Increase in other current assets
   
(125,652
)
   
(72,246
)
   Increase (decrease) in other current liabilities
   
23,571
     
(43,719
)
Other
   
(6,190
)
   
(125,649
)
        Net cash provided by operating activities
   
265,356
     
410,829
 
                 
Cash flows from investing activities:
               
Payments for purchases of fixed assets
   
(130,254
)
   
(154,819
)
Proceeds from sales of fixed assets
   
6,760
     
11,355
 
Payments for investments and advances by financial services business
   
(461,046
)
   
(563,301
)
Payments for investments and advances (other than financial services business)
   
(10,969
)
   
(25,373
)
Proceeds from sales or return of investments and collections of advances by financial services business
   
152,561
     
140,969
 
Proceeds from sales or return of investments and collections of advances (other than financial services business)
   
4,219
     
1,996
 
Proceeds from sales of businesses
   
18,684
     
 
Proceeds related to sales of Spotify Technology S.A. Shares
   
     
82,467
 
Other
   
8,199
     
(21,295
)
        Net cash used in investing activities
   
(411,846
)
   
(528,001
)
                 
Cash flows from financing activities:
               
Proceeds from issuance of long-term debt
   
72,430
     
50,958
 
Payments of long-term debt
   
(16,299
)
   
(229,504
)
Increase in short-term borrowings, net
   
55,904
     
133,248
 
Increase in deposits from customers in the financial services business, net
   
88,344
     
132,628
 
Dividends paid
   
(12,649
)
   
(18,992
)
Payment for purchase of Nile Acquisition LLC shares from noncontrolling interests
   
     
(32,041
)
Other
   
(8,207
)
   
(36,567
)
        Net cash provided by (used in) financing activities
   
179,523
     
(270
)
                 
Effect of exchange rate changes on cash and cash equivalents, including restricted
   
6,650
     
70,344
 
                 
Net increase (decrease) in cash and cash equivalents, including restricted
   
39,683
     
(47,098
)
Cash and cash equivalents, including restricted, at beginning of the fiscal year
   
968,624
     
1,592,938
 
                 
Cash and cash equivalents, including restricted, at end of the period
   
1,008,307
     
1,545,840
 
                 
Less - restricted cash and cash equivalents, included in other current assets and other assets
   
7,475
     
5,061
 
Cash and cash equivalents at end of the period
 
¥
1,000,832
   
¥
1,540,779
 
 
F-4

Notes to Consolidated Financial Statements
                 
Business Segment Information
                 
(Business Segments)
                 
   
(Millions of yen)
 
   
Three months ended September 30
 
Sales and operating revenue
 
2017
   
2018
   
Change
 
Game & Network Services
                 
Customers
 
¥
414,255
   
¥
535,754
   
¥
+121,499
 
Intersegment
   
18,949
     
14,311
     
-4,638
 
Total
   
433,204
     
550,065
     
+116,861
 
Music
                       
Customers
   
202,837
     
200,294
     
-2,543
 
Intersegment
   
3,729
     
3,562
     
-167
 
Total
   
206,566
     
203,856
     
-2,710
 
Pictures
                       
Customers
   
243,738
     
242,021
     
-1,717
 
Intersegment
   
265
     
(1,150
)
   
-1,415
 
Total
   
244,003
     
240,871
     
-3,132
 
Home Entertainment & Sound
                       
Customers
   
300,770
     
274,496
     
-26,274
 
Intersegment
   
163
     
442
     
+279
 
Total
   
300,933
     
274,938
     
-25,995
 
Imaging Products & Solutions
                       
Customers
   
155,170
     
161,623
     
+6,453
 
Intersegment
   
1,550
     
2,268
     
+718
 
Total
   
156,720
     
163,891
     
+7,171
 
Mobile Communications
                       
Customers
   
169,818
     
114,886
     
-54,932
 
Intersegment
   
2,223
     
2,935
     
+712
 
Total
   
172,041
     
117,821
     
-54,220
 
Semiconductors
                       
Customers
   
193,407
     
222,924
     
+29,517
 
Intersegment
   
34,956
     
31,522
     
-3,434
 
Total
   
228,363
     
254,446
     
+26,083
 
Financial Services
                       
Customers
   
277,434
     
351,493
     
+74,059
 
Intersegment
   
1,790
     
1,960
     
+170
 
Total
   
279,224
     
353,453
     
+74,229
 
All Other
                       
Customers
   
95,592
     
77,226
     
-18,366
 
Intersegment
   
17,228
     
11,892
     
-5,336
 
Total
   
112,820
     
89,118
     
-23,702
 
Corporate and elimination
   
(71,343
)
   
(65,699
)
   
+5,644
 
Consolidated total
 
¥
2,062,531
   
¥
2,182,760
   
¥
+120,229
 
 
Game & Network Services (“G&NS”) intersegment amounts primarily consist of transactions with All Other.
Semiconductors intersegment amounts primarily consist of transactions with the G&NS segment, the Imaging Products & Solutions (“IP&S”) segment and the Mobile Communications (“MC”) segment.
All Other intersegment amounts primarily consist of transactions with the G&NS segment, the Music segment and the Pictures segment.
Corporate and elimination includes certain brand and patent royalty income. 
 
   
(Millions of yen)
 
   
Three months ended September 30
 
Operating income (loss)
 
2017
   
2018
   
Change
 
Game & Network Services
 
¥
54,750
   
¥
90,622
   
¥
+35,872
 
Music
   
32,514
     
31,501
     
-1,013
 
Pictures
   
7,696
     
23,535
     
+15,839
 
Home Entertainment & Sound
   
24,387
     
24,457
     
+70
 
Imaging Products & Solutions
   
18,870
     
21,813
     
+2,943
 
Mobile Communications
   
(2,453
)
   
(29,814
)
   
-27,361
 
Semiconductors
   
49,370
     
47,928
     
-1,442
 
Financial Services
   
36,599
     
39,160
     
+2,561
 
All Other
   
(28
)
   
5,042
     
+5,070
 
Total
   
221,705
     
254,244
     
+32,539
 
Corporate and elimination
   
(17,477
)
   
(14,733
)
   
+2,744
 
Consolidated total
 
¥
204,228
   
¥
239,511
   
¥
+35,283
 
 
Operating income (loss) is sales and operating revenue less costs and expenses, and includes equity in net income (loss) of affiliated companies.
Corporate and elimination includes headquarters restructuring costs and certain other corporate expenses, including the amortization of certain intellectual property assets such as the cross-licensing of intangible assets acquired from Ericsson at the time of the Sony Mobile Communications acquisition, which are not allocated to segments.
 
Beginning from the first quarter of the fiscal year ending March 31, 2019, a change has been made to the calculation method used for allocating indirect expenses incurred by sales companies to the segments every quarter. As a result of this change, a year-on-year increase in expenses, composed primarily of 0.6 billion yen in the Home Entertainment & Sound (“HE&S”) segment, is included for the three months ended September 30, 2018. However, because a decrease in expenses totaling the same amount is included in Corporate and elimination, this change has no impact on consolidated operating income for the three months ended September 30, 2018. Additionally, because increases and decreases in expenses per quarter for each segment resulting from this change in the calculation method will be offset by the increases and decreases in expenses in other quarters for that segment throughout the current year, this change will also have no impact on operating income (loss) for each segment, or for Corporate and elimination, for the fiscal year ending March 31, 2019.
F-5

(Business Segments)
                 
   
(Millions of yen)
 
   
Six months ended September 30
 
Sales and operating revenue
 
2017
   
2018
   
Change
 
Game & Network Services
                 
Customers
 
¥
737,306
   
¥
985,734
   
¥
+248,428
 
Intersegment
   
43,960
     
36,432
     
-7,528
 
Total
   
781,266
     
1,022,166
     
+240,900
 
Music
                       
Customers
   
367,913
     
378,002
     
+10,089
 
Intersegment
   
7,225
     
7,325
     
+100
 
Total
   
375,138
     
385,327
     
+10,189
 
Pictures
                       
Customers
   
449,408
     
415,248
     
-34,160
 
Intersegment
   
406
     
704
     
+298
 
Total
   
449,814
     
415,952
     
-33,862
 
Home Entertainment & Sound
                       
Customers
   
557,235
     
546,453
     
-10,782
 
Intersegment
   
565
     
572
     
+7
 
Total
   
557,800
     
547,025
     
-10,775
 
Imaging Products & Solutions
                       
Customers
   
309,287
     
324,106
     
+14,819
 
Intersegment
   
3,068
     
3,987
     
+919
 
Total
   
312,355
     
328,093
     
+15,738
 
Mobile Communications
                       
Customers
   
348,884
     
245,240
     
-103,644
 
Intersegment
   
4,344
     
5,088
     
+744
 
Total
   
353,228
     
250,328
     
-102,900
 
Semiconductors
                       
Customers
   
366,086
     
399,597
     
+33,511
 
Intersegment
   
66,538
     
57,088
     
-9,450
 
Total
   
432,624
     
456,685
     
+24,061
 
Financial Services
                       
Customers
   
578,794
     
684,733
     
+105,939
 
Intersegment
   
3,590
     
3,925
     
+335
 
Total
   
582,384
     
688,658
     
+106,274
 
All Other
                       
Customers
   
189,696
     
151,673
     
-38,023
 
Intersegment
   
32,364
     
20,369
     
-11,995
 
Total
   
222,060
     
172,042
     
-50,018
 
Corporate and elimination
   
(146,025
)
   
(129,892
)
   
+16,133
 
Consolidated total
 
¥
3,920,644
   
¥
4,136,384
   
¥
+215,740
 
 
G&NS intersegment amounts primarily consist of transactions with All Other.
Semiconductors intersegment amounts primarily consist of transactions with the G&NS segment, the IP&S segment and the MC segment.
All Other intersegment amounts primarily consist of transactions with the G&NS segment, the Music segment and the Pictures segment.
Corporate and elimination includes certain brand and patent royalty income. 
 
   
(Millions of yen)
 
   
Six months ended September 30
 
Operating income (loss)
 
2017
   
2018
   
Change
 
Game & Network Services
 
¥
72,483
   
¥
174,072
   
¥
+101,589
 
Music
   
57,536
     
63,605
     
+6,069
 
Pictures
   
(1,801
)
   
15,934
     
+17,735
 
Home Entertainment & Sound
   
46,970
     
41,848
     
-5,122
 
Imaging Products & Solutions
   
42,074
     
47,890
     
+5,816
 
Mobile Communications
   
1,163
     
(40,572
)
   
-41,735
 
Semiconductors
   
104,812
     
77,065
     
-27,747
 
Financial Services
   
82,822
     
79,741
     
-3,081
 
All Other
   
(8,259
)
   
5,336
     
+13,595
 
Total
   
397,800
     
464,919
     
+67,119
 
Corporate and elimination
   
(35,961
)
   
(30,402
)
   
+5,559
 
Consolidated total
 
¥
361,839
   
¥
434,517
   
¥
+72,678
 
 
Operating income (loss) is sales and operating revenue less costs and expenses, and includes equity in net income (loss) of affiliated companies.
Corporate and elimination includes headquarters restructuring costs and certain other corporate expenses, including the amortization of certain intellectual property assets such as the cross-licensing of intangible assets acquired from Ericsson at the time of the Sony Mobile Communications acquisition, which are not allocated to segments.
 
Beginning from the first quarter of the fiscal year ending March 31, 2019, a change has been made to the calculation method used for allocating indirect expenses incurred by sales companies to the segments every quarter. As a result of this change, a year-on-year increase in expenses, composed primarily of 3.0 billion yen in the HE&S segment, is included for the six months ended September 30, 2018. However, because a decrease in expenses totaling the same amount is included in Corporate and elimination, this change has no impact on consolidated operating income for the six months ended September 30, 2018. Additionally, because increases and decreases in expenses per quarter for each segment resulting from this change in the calculation method will be offset by the increases and decreases in expenses in other quarters for that segment throughout the current year, this change will also have no impact on operating income (loss) for each segment, or for Corporate and elimination, for the fiscal year ending March 31, 2019.
F-6

(Sales to Customers by Product Category)
 
The following tables include a breakdown of sales and operating revenue to external customers for certain segments shown in the Business Segment Information on page F-5 and F-6. Sony management views each segment as a single operating segment. However, Sony believes that the breakdown of sales and operating revenue to external customers for the segments in these tables is useful to investors in understanding sales by product category.
 
   
(Millions of yen)
 
   
Three months ended September 30
 
Sales and operating revenue (to external customers)
 
2017
   
2018
   
Change
 
                   
Game & Network Services
                 
Network
 
¥
222,986
   
¥
334,264
   
¥
+111,278
 
Hardware and Others
   
191,269
     
201,490
     
+10,221
 
Total
   
414,255
     
535,754
     
+121,499
 
                         
Music
                       
Recorded Music
   
109,177
     
105,463
     
-3,714
 
Music Publishing
   
19,501
     
19,436
     
-65
 
Visual Media and Platform
   
74,159
     
75,395
     
+1,236
 
Total
   
202,837
     
200,294
     
-2,543
 
                         
Pictures
                       
Motion Pictures
   
124,800
     
109,334
     
-15,466
 
Television Productions
   
57,389
     
68,482
     
+11,093
 
Media Networks
   
61,549
     
64,205
     
+2,656
 
Total
   
243,738
     
242,021
     
-1,717
 
                         
Home Entertainment & Sound
                       
Televisions
   
219,553
     
191,705
     
-27,848
 
Audio and Video
   
80,639
     
81,861
     
+1,222
 
Other
   
578
     
930
     
+352
 
Total
   
300,770
     
274,496
     
-26,274
 
                         
Imaging Products & Solutions
                       
Still and Video Cameras
   
99,343
     
103,034
     
+3,691
 
Other
   
55,827
     
58,589
     
+2,762
 
Total
   
155,170
     
161,623
     
+6,453
 
                         
Mobile Communications
   
169,818
     
114,886
     
-54,932
 
                         
Semiconductors
   
193,407
     
222,924
     
+29,517
 
                         
Financial Services
   
277,434
     
351,493
     
+74,059
 
                         
All Other
   
95,592
     
77,226
     
-18,366
 
                         
Corporate
   
9,510
     
2,043
     
-7,467
 
Consolidated total
 
¥
2,062,531
   
¥
2,182,760
   
¥
+120,229
 
 
F-7

(Sales to Customers by Product Category)
                 
   
(Millions of yen)
 
   
Six months ended September 30
 
Sales and operating revenue (to external customers)
 
2017
   
2018
   
Change
 
                   
Game & Network Services
                 
Network
 
¥
418,288
   
¥
634,650
   
¥
+216,362
 
Hardware and Others
   
319,018
     
351,084
     
+32,066
 
Total
   
737,306
     
985,734
     
+248,428
 
                         
Music
                       
Recorded Music
   
208,999
     
205,202
     
-3,797
 
Music Publishing
   
36,359
     
40,900
     
+4,541
 
Visual Media and Platform
   
122,555
     
131,900
     
+9,345
 
Total
   
367,913
     
378,002
     
+10,089
 
                         
Pictures
                       
Motion Pictures
   
195,074
     
177,902
     
-17,172
 
Television Productions
   
119,287
     
113,897
     
-5,390
 
Media Networks
   
135,047
     
123,449
     
-11,598
 
Total
   
449,408
     
415,248
     
-34,160
 
                         
Home Entertainment & Sound
                       
Televisions
   
398,927
     
378,255
     
-20,672
 
Audio and Video
   
157,361
     
166,790
     
+9,429
 
Other
   
947
     
1,408
     
+461
 
Total
   
557,235
     
546,453
     
-10,782
 
                         
Imaging Products & Solutions
                       
Still and Video Cameras
   
205,206
     
216,290
     
+11,084
 
Other
   
104,081
     
107,816
     
+3,735
 
Total
   
309,287
     
324,106
     
+14,819
 
                         
Mobile Communications
   
348,884
     
245,240
     
-103,644
 
                         
Semiconductors
   
366,086
     
399,597
     
+33,511
 
                         
Financial Services
   
578,794
     
684,733
     
+105,939
 
                         
All Other
   
189,696
     
151,673
     
-38,023
 
                         
Corporate
   
16,035
     
5,598
     
-10,437
 
Consolidated total
 
¥
3,920,644
   
¥
4,136,384
   
¥
+215,740
 
 
In the G&NS segment, Network includes network services relating to game, video and music content provided by Sony Interactive Entertainment; Hardware and Others includes home and portable game consoles, packaged software and peripheral devices. In the Music segment, 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 the production and distribution of animation titles, including game applications based on the animation titles, and various service offerings for music and visual products. In the Pictures segment, Motion Pictures includes the worldwide production, acquisition and distribution of motion pictures and direct-to-video content; Television Productions includes the production, acquisition and distribution of television programming; Media Networks includes the operation of television and digital networks worldwide. In the HE&S segment, Televisions includes LCD and OLED televisions; Audio and Video includes Blu-ray disc players and recorders, home audio, headphones and memory-based portable audio devices. In the IP&S segment, Still and Video Cameras includes interchangeable lens cameras, compact digital cameras, consumer video cameras and video cameras for broadcast; Other includes display products such as projectors and medical equipment. 
 
F-8

(Condensed Financial Services Financial Statements)
 
The following schedules show unaudited condensed financial statements for the Financial Services segment and all other segments excluding Financial Services. These presentations are not in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which is used by Sony to prepare its consolidated financial statements. However, because the Financial Services segment is different in nature from Sony’s other segments, Sony believes that a comparative presentation may be useful in understanding and analyzing Sony’s consolidated financial statements. Transactions between the Financial Services segment and Sony without the Financial Services segment, including noncontrolling interests, are included in those respective presentations, then eliminated in the consolidated figures shown below.
 
 
Condensed Balance Sheets
                                   
                                     
               
(Millions of yen)
             
   
Financial Services
   
   
Sony without
Financial Services
   
Consolidated
 
                                     
   
March 31
   
September 30
   
March 31
   
September 30
   
March 31
   
September 30
 
   
2018
   
2018
   
2018
   
2018
   
2018
   
2018
 
  ASSETS
                                   
Current assets:
                                   
Cash and cash equivalents
 
¥
393,133
   
¥
465,645
   
¥
1,193,196
   
¥
1,075,134
   
¥
1,586,329
   
¥
1,540,779
 
Marketable securities
   
1,176,601
     
1,335,735
   
   
     
1,176,601
     
1,335,735
 
Notes and accounts receivable, trade and contract assets
   
15,612
     
15,224
     
1,003,558
     
1,256,244
     
1,012,779
     
1,265,968
 
Inventories
 
   
     
692,937
     
814,639
     
692,937
     
814,639
 
Other receivables
   
60,819
     
57,795
     
130,393
     
248,445
     
190,706
     
305,880
 
Prepaid expenses and other current assets
   
137,539
     
126,147
     
379,893
     
355,251
     
516,744
     
480,714
 
 Total current assets
   
1,783,704
     
2,000,546
     
3,399,977
     
3,749,713
     
5,176,096
     
5,743,715
 
                                                 
Film costs
 
   
     
327,645
     
416,527
     
327,645
     
416,527
 
                                                 
Investments and advances
   
10,560,933
     
10,980,688
     
272,545
     
381,124
     
10,756,058
     
11,305,585
 
                                                 
Investments in Financial Services, at cost
 
   
     
133,514
     
153,968
   
   
 
                                                 
Property, plant and equipment
   
22,424
     
22,550
     
715,760
     
718,008
     
739,470
     
741,844
 
                                                 
Other assets:
                                               
Intangibles, net
   
34,622
     
36,882
     
492,546
     
485,734
     
527,168
     
522,616
 
Goodwill
   
7,225
     
7,225
     
523,267
     
543,833
     
530,492
     
551,058
 
Deferred insurance acquisition costs
   
586,670
     
605,989
   
   
     
586,670
     
605,989
 
Deferred income taxes
   
1,684
     
1,972
     
95,088
     
96,680
     
96,772
     
98,652
 
Other
   
33,267
     
32,693
     
295,650
     
310,518
     
325,167
     
339,464
 
     
663,468
     
684,761
     
1,406,551
     
1,436,765
     
2,066,269
     
2,117,779
 
Total assets
 
¥
13,030,529
   
¥
13,688,545
   
¥
6,255,992
   
¥
6,856,105
   
¥
19,065,538
   
¥
20,325,450
 
                                                 
LIABILITIES AND EQUITY
                                               
Current liabilities:
                                               
Short-term borrowings
 
¥
433,119
   
¥
570,421
   
¥
288,496
   
¥
224,530
   
¥
721,615
   
¥
794,951
 
Notes and accounts payable, trade
 
   
     
468,550
     
781,338
     
468,550
     
781,338
 
Accounts payable, other and accrued expenses
   
37,479
     
31,698
     
1,477,875
     
1,518,499
     
1,514,433
     
1,549,389
 
Accrued income and other taxes
   
19,401
     
25,486
     
126,504
     
172,235
     
145,905
     
197,721
 
Deposits from customers in the banking business
   
2,159,246
     
2,252,480
   
   
     
2,159,246
     
2,252,480
 
Other
   
181,467
     
191,608
     
435,996
     
470,003
     
610,792
     
655,871
 
 Total current liabilities
   
2,830,712
     
3,071,693
     
2,797,421
     
3,166,605
     
5,620,541
     
6,231,750
 
                                                 
Long-term debt
   
205,373
     
215,089
     
421,817
     
298,818
     
623,451
     
510,165
 
Accrued pension and severance costs
   
33,062
     
33,452
     
361,442
     
355,503
     
394,504
     
388,955
 
Deferred income taxes
   
342,405
     
318,483
     
107,458
     
112,221
     
449,863
     
430,704
 
Future insurance policy benefits and other
   
5,221,772
     
5,452,484
   
   
     
5,221,772
     
5,452,484
 
Policyholders’ account in the life insurance business
   
2,820,702
     
2,998,376
   
   
     
2,820,702
     
2,998,376
 
Other
   
17,778
     
14,885
     
284,270
     
299,500
     
278,338
     
291,417
 
  Total liabilities
   
11,471,804
     
12,104,462
     
3,972,408
     
4,232,647
     
15,409,171
     
16,303,851
 
                                                 
Redeemable noncontrolling interest
 
   
     
9,210
     
8,442
     
9,210
     
8,442
 
                                                 
Equity:
                                               
Stockholders’ equity of Financial Services
   
1,557,062
     
1,582,327
   
   
   
   
 
Stockholders’ equity of Sony without Financial Services
 
   
     
2,173,128
     
2,522,186
   
   
 
Sony Corporation’s stockholders’ equity
 
   
   
   
     
2,967,366
     
3,365,038
 
Noncontrolling interests
   
1,663
     
1,756
     
101,246
     
92,830
     
679,791
     
648,119
 
  Total equity
   
1,558,725
     
1,584,083
     
2,274,374
     
2,615,016
     
3,647,157
     
4,013,157
 
  Total liabilities and equity
 
¥
13,030,529
   
¥
13,688,545
   
¥
6,255,992
   
¥
6,856,105
   
¥
19,065,538
   
¥
20,325,450
 
 
F-9

Condensed Statements of Income