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 FEBRUARY 2021

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

Executive Deputy President and

Chief Financial Officer

Date: February 3, 2021

List of materials

Documents attached hereto:

i) Press release: Quarterly Financial Statement for the Third Quarter Ended December 31, 2020 And Outlook for the Fiscal Year Ending March 31, 2021

 

Quarterly Financial Statements

for the Third Quarter Ended December 31, 2020

And

Outlook for the Fiscal Year Ending March 31, 2021

February 3, 2021

Sony Corporation

Quarterly Financial Statements (Unaudited)	F-1
Consolidated Balance Sheets	F-1
Consolidated Statements of Income (Three months ended December 31)	F-2
Consolidated Statements of Comprehensive Income (Three months ended December 31)	F-2
Consolidated Statements of Income (Nine months ended December 31)	F-3
Consolidated Statements of Comprehensive Income (Nine months ended December 31)	F-3
Consolidated Statements of Cash Flows (Nine months ended December 31)	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, 2021	1
Outlook for the Fiscal Year Ending March 31, 2021	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			December 31			Change from
ASSETS	2020			2020			March 31, 2020
Current assets:
Cash and cash equivalents	¥	1,512,357		¥	1,878,047		¥	+365,690
Marketable securities		1,847,772			2,771,000			+923,228
Notes and accounts receivable, trade and contract assets		1,028,793			1,310,227			+281,434
Allowance for credit losses		(25,873	)		(25,143	)		+730
Inventories		589,969			605,437			+15,468
Other receivables		188,106			308,178			+120,072
Prepaid expenses and other current assets		594,021			540,302			-53,719
Total current assets		5,735,145			7,388,048			+1,652,903
Film costs		427,336			421,382			-5,954
Investments and advances:
Affiliated companies		207,922			220,221			+12,299
Securities investments and other		12,526,210			13,635,160			+1,108,950
Allowance for credit losses	–				(8,370	)		-8,370
		12,734,132			13,847,011			+1,112,879
Property, plant and equipment:
Land		81,482			78,285			-3,197
Buildings		659,556			659,679			+123
Machinery and equipment		1,725,720			1,683,264			-42,456
Construction in progress		76,391			126,502			+50,111
		2,543,149			2,547,730			+4,581
Less-Accumulated depreciation		1,634,505			1,584,620			-49,885
		908,644			963,110			+54,466
Other assets:
Operating lease right-of-use assets		359,510			336,112			-23,398
Finance lease right-of-use assets		33,100			43,763			+10,663
Intangibles, net		906,310			920,148			+13,838
Goodwill		783,888			791,000			+7,112
Deferred insurance acquisition costs		600,901			639,831			+38,930
Deferred income taxes		210,372			182,494			-27,878
Other		340,005			348,223			+8,218
		3,234,086			3,261,571			+27,485
Total assets	¥	23,039,343		¥	25,881,122		¥	+2,841,779
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	¥	810,176		¥	1,320,595		¥	+510,419
Current portion of long-term debt		29,807			119,192			+89,385
Current portion of long-term operating lease liabilities		68,942			73,203			+4,261
Notes and accounts payable, trade		380,810			657,458			+276,648
Accounts payable, other and accrued expenses		1,630,197			1,660,096			+29,899
Accrued income and other taxes		145,996			208,063			+62,067
Deposits from customers in the banking business		2,440,783			2,723,808			+283,025
Other		733,732			1,108,847			+375,115
Total current liabilities		6,240,443			7,871,262			+1,630,819
Long-term debt		634,966			737,258			+102,292
Long-term operating lease liabilities		314,836			286,235			-28,601
Accrued pension and severance costs		324,655			314,559			-10,096
Deferred income taxes		549,538			340,015			-209,523
Future insurance policy benefits and other		6,246,047			6,463,972			+217,925
Policyholders’ account in the life insurance business		3,642,271			4,159,852			+517,581
Other		289,285			266,611			-22,674
Total liabilities		18,242,041			20,439,764			+2,197,723
Redeemable noncontrolling interest		7,767			8,035			+268
Equity:
Sony Corporation’s stockholders’ equity:
Common stock		880,214			880,214		–
Additional paid-in capital		1,289,719			1,486,104			+196,385
Retained earnings		2,768,856			3,788,596			+1,019,740
Accumulated other comprehensive income		(580,980	)		(624,047	)		-43,067
Treasury stock, at cost		(232,503	)		(140,307	)		+92,196
		4,125,306			5,390,560			+1,265,254
Noncontrolling interests		664,229			42,763			-621,466
Total equity		4,789,535			5,433,323			+643,788
Total liabilities and equity	¥	23,039,343		¥	25,881,122		¥	+2,841,779

 

F -1

 

Consolidated Statements of Income
	(Millions of yen, except per share amounts)
	Three months ended December 31
	2019			2020		Change
Sales and operating revenue:
Net sales	¥	2,034,826		¥	2,252,904	¥	+218,078
Financial services revenue		405,382			423,432		+18,050
Other operating revenue		22,954			20,200		-2,754
		2,463,162			2,696,536		+233,374
Costs and expenses:
Cost of sales		1,411,228			1,554,843		+143,615
Selling, general and administrative		400,032			409,835		+9,803
Financial services expenses		372,540			376,833		+4,293
Other operating (income) expense, net		(18,056	)		295		+18,351
		2,165,744			2,341,806		+176,062
Equity in net income of affiliated companies		2,714			4,496		+1,782
Operating income		300,132			359,226		+59,094
Other income:
Interest and dividends		3,900			1,753		-2,147
Gain on equity securities, net		13,392			120,234		+106,842
Foreign exchange gain, net	–				60		+60
Other		1,286			1,413		+127
		18,578			123,460		+104,882
Other expenses:
Interest expenses		1,129			2,756		+1,627
Foreign exchange loss, net		427		–			-427
Loss on pension plan amendment		6,358		–			-6,358
Other		475			2,559		+2,084
		8,389			5,315		-3,074
Income before income taxes		310,321			477,371		+167,050
Income taxes		69,977			103,661		+33,684
Net income		240,344			373,710		+133,366
Less - Net income attributable to noncontrolling interests		10,806			1,819		-8,987
Net income attributable to Sony Corporation’s stockholders	¥	229,538		¥	371,891	¥	+142,353
Per share data:
Net income attributable to Sony Corporation’s stockholders
— Basic	¥	187.02		¥	301.09	¥	+114.07
— Diluted		182.89			297.35		+114.46

Consolidated Statements of Comprehensive Income
	(Millions of yen)
	Three months ended December 31
	2019			2020			Change
Net income	¥	240,344		¥	373,710		¥	+133,366
Other comprehensive income, net of tax –
Unrealized losses on securities		(25,168	)		(26,546	)		-1,378
Unrealized gains on derivative instruments		368			1,539			+1,171
Pension liability adjustment		80,122			2,346			-77,776
Foreign currency translation adjustments		46,249			(3,317	)		-49,566
Debt valuation adjustments	–				(644	)		-644
Total comprehensive income		341,915			347,088			+5,173
Less - Comprehensive income attributable to noncontrolling interests		2,538			1,758			-780
Comprehensive income attributable to Sony Corporation’s stockholders	¥	339,377		¥	345,330		¥	+5,953

F -2

Consolidated Statements of Income
	(Millions of yen, except per share amounts)
	Nine months ended December 31
	2019			2020			Change
Sales and operating revenue:
Net sales	¥	5,318,782		¥	5,481,349		¥	+162,567
Financial services revenue		1,115,291			1,240,455			+125,164
Other operating revenue		77,072			57,137			-19,935
		6,511,145			6,778,941			+267,796
Costs and expenses:
Cost of sales		3,629,246			3,753,504			+124,258
Selling, general and administrative		1,105,115			1,040,308			-64,807
Financial services expenses		997,211			1,102,877			+105,666
Other operating income, net		(24,017	)		(16,491	)		+7,526
		5,707,555			5,880,198			+172,643
Equity in net income of affiliated companies		6,422			6,642			+220
Operating income		810,012			905,385			+95,373
Other income:
Interest and dividends		14,658			7,109			-7,549
Gain on equity securities, net		372			205,727			+205,355
Other		4,441			4,210			-231
		19,471			217,046			+197,575
Other expenses:
Interest expenses		8,793			7,265			-1,528
Foreign exchange loss, net		9,376			8,684			-692
Loss on pension plan amendment		6,358		–				-6,358
Other		1,523			9,588			+8,065
		26,050			25,537			-513
Income before income taxes		803,433			1,096,894			+293,461
Income taxes		196,916			12,641			-184,275
Net income		606,517			1,084,253			+477,736
Less - Net income attributable to noncontrolling interests		36,970			19,477			-17,493
Net income attributable to Sony Corporation’s stockholders	¥	569,547		¥	1,064,776		¥	+495,229
Per share data:
Net income attributable to Sony Corporation’s stockholders
— Basic	¥	460.11		¥	867.17		¥	+407.06
— Diluted		450.08			852.04			+401.96

Consolidated Statements of Comprehensive Income
	(Millions of yen)
	Nine months ended December 31
	2019			2020			Change
Net income	¥	606,517		¥	1,084,253		¥	+477,736
Other comprehensive income, net of tax –
Unrealized gains (losses) on securities		14,757			(64,428	)		-79,185
Unrealized gains on derivative instruments		60			668			+608
Pension liability adjustment		86,162			6,805			-79,357
Foreign currency translation adjustments		(17,501	)		(26,787	)		-9,286
Debt valuation adjustments	–				(1,837	)		-1,837
Total comprehensive income		689,995			998,674			+308,679
Less - Comprehensive income attributable to noncontrolling interests		41,635			6,866			-34,769
Comprehensive income attributable to Sony Corporation’s stockholders	¥	648,360		¥	991,808		¥	+343,448

 

F -3

Consolidated Statements of Cash Flows
	(Millions of yen)
	Nine months ended December 31
	2019			2020
Cash flows from operating activities:
Net income	¥	606,517		¥	1,084,253
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		281,393			286,563
Amortization of film costs		212,684			197,849
Accrual for pension and severance costs, less payments		4,714			1,748
Other operating income, net		(24,017	)		(16,491	)
Gain on securities investments, net (other than financial services business)		(392	)		(205,721	)
Gain on marketable securities and securities investments held in the financial services business, net		(127,002	)		(339,714	)
Deferred income taxes		23,594			(155,881	)
Equity in net income of affiliated companies, net of dividends		(2,737	)		(2,211	)
Changes in assets and liabilities:
Increase in notes, accounts receivable, trade and contract assets		(237,477	)		(300,544	)
(Increase) decrease in inventories		34,865			(41,039	)
Increase in film costs		(296,377	)		(193,344	)
Increase (decrease) in notes and accounts payable, trade		(12,640	)		277,309
Increase in accrued income and other taxes		34,419			136,263
Increase in future insurance policy benefits and other		554,596			619,049
Increase in deferred insurance acquisition costs		(73,385	)		(69,433	)
Increase in marketable securities held in the life insurance business		(103,746	)		(119,871	)
Increase in other current assets		(15,047	)		(150,801	)
Increase (decrease) in other current liabilities		(16,443	)		66,950
Other		(9,452	)		12,574
Net cash provided by operating activities		834,067			1,087,508
Cash flows from investing activities:
Payments for purchases of fixed assets		(314,791	)		(391,439	)
Proceeds from sales of fixed assets		12,445			13,699
Payments for investments and advances by financial services business		(970,438	)		(1,197,359	)
Payments for investments and advances (other than financial services business)		(40,423	)		(93,368	)
Proceeds from sales or return of investments and collections of advances by financial services business		208,164			292,090
Proceeds from sales or return of investments and collections of advances (other than financial services business)		13,169			19,604
Proceeds from sales of businesses		13,404			1,605
Proceeds from sales of Olympus Corporation Shares		80,357		–
Other		(27,969	)		(17,019	)
Net cash used in investing activities		(1,026,082	)		(1,372,187	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		110,535			336,960
Payments of long-term debt		(189,790	)		(93,913	)
Increase in short-term borrowings, net		278,028			311,912
Proceeds from issuance of short-term borrowings in connection with payment for purchase of noncontrolling interest in Sony Financial Holdings Inc.	–				396,500
Payments of short-term borrowings in connection with payment for purchase of noncontrolling interest in Sony Financial Holdings Inc.	–				(200,000	)
Increase in deposits from customers in the financial services business, net		211,135			392,891
Dividends paid		(49,621	)		(61,153	)
Payments for purchase of treasury stock		(156,187	)		(211	)
Payment for purchase of noncontrolling interest in Game Show Network, LLC		(39,894	)	–
Payment for purchase of noncontrolling interest in Sony Financial Holdings Inc.	–				(396,698	)
Other		(19,110	)		(9,628	)
Net cash provided by financing activities		145,096			676,660
Effect of exchange rate changes on cash and cash equivalents, including restricted		(14,887	)		(28,538	)
Net increase (decrease) in cash and cash equivalents, including restricted		(61,806	)		363,443
Cash and cash equivalents, including restricted, at beginning of the fiscal year		1,473,813			1,515,295
Cash and cash equivalents, including restricted, at end of the period		1,412,007			1,878,738
Less - restricted cash and cash equivalents, included in other current assets and other assets		3,131			691
Cash and cash equivalents at end of the period	¥	1,408,876		¥	1,878,047

F -4

Notes to Consolidated Financial Statements
Business Segment Information
(Business Segments)
		(Millions of yen)
		Three months ended December 31
Sales and operating revenue		2019			2020			Change
	Game & Network Services
	Customers	¥	616,576		¥	865,790		¥	+249,214
	Intersegment		15,554			17,436			+1,882
	Total		632,130			883,226			+251,096
	Music
	Customers		213,861			261,724			+47,863
	Intersegment		3,077			2,738			-339
	Total		216,938			264,462			+47,524
	Pictures
	Customers		235,702			191,118			-44,584
	Intersegment		312			57			-255
	Total		236,014			191,175			-44,839
	Electronics Products & Solutions
	Customers		645,818			644,558			-1,260
	Intersegment		4,611			4,430			-181
	Total		650,429			648,988			-1,441
	Imaging & Sensing Solutions
	Customers		277,816			243,809			-34,007
	Intersegment		20,191			23,129			+2,938
	Total		298,007			266,938			-31,069
	Financial Services
	Customers		405,382			423,432			+18,050
	Intersegment		1,846			1,841			-5
	Total		407,228			425,273			+18,045
	All Other
	Customers		63,129			63,995			+866
	Intersegment		9,144			8,505			-639
	Total		72,273			72,500			+227
	Corporate and elimination		(49,857	)		(56,026	)		-6,169
	Consolidated total	¥	2,463,162		¥	2,696,536		¥	+233,374

Game & Network Services (“G&NS”) intersegment amounts primarily consist of transactions with All Other. Imaging & Sensing Solutions (“I&SS”) intersegment amounts primarily consist of transactions with the G&NS segment and the Electronics Products & Solutions (“EP&S”) 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 December 31
Operating income (loss)		2019			2020			Change
	Game & Network Services	¥	53,450		¥	80,183		¥	+26,733
	Music		36,250			59,692			+23,442
	Pictures		5,422			22,207			+16,785
	Electronics Products & Solutions		80,336			105,772			+25,436
	Imaging & Sensing Solutions		75,182			50,396			-24,786
	Financial Services		32,634			46,595			+13,961
	All Other		20,673			8,126			-12,547
	Total		303,947			372,971			+69,024
	Corporate and elimination		(3,815	)		(13,745	)		-9,930
	Consolidated total	¥	300,132		¥	359,226		¥	+59,094

Operating income (loss) is sales and operating revenue less costs and expenses, and includes equity in net income (loss) of affiliated companies.

F -5

(Business Segments)
		(Millions of yen)
		Nine months ended December 31
Sales and operating revenue		2019			2020			Change
	Game & Network Services
	Customers	¥	1,496,372		¥	1,959,383		¥	+463,011
	Intersegment		47,609			36,590			-11,019
	Total		1,543,981			1,995,973			+451,992
	Music
	Customers		630,641			663,878			+33,237
	Intersegment		7,825			8,567			+742
	Total		638,466			672,445			+33,979
	Pictures
	Customers		681,848			557,534			-124,314
	Intersegment		858			1,063			+205
	Total		682,706			558,597			-124,109
	Electronics Products & Solutions
	Customers		1,612,785			1,472,634			-140,151
	Intersegment		15,058			12,858			-2,200
	Total		1,627,843			1,485,492			-142,351
	Imaging & Sensing Solutions
	Customers		774,570			726,134			-48,436
	Intersegment		64,839			54,074			-10,765
	Total		839,409			780,208			-59,201
	Financial Services
	Customers		1,115,291			1,240,455			+125,164
	Intersegment		6,053			5,523			-530
	Total		1,121,344			1,245,978			+124,634
	All Other
	Customers		181,704			150,434			-31,270
	Intersegment		29,057			25,362			-3,695
	Total		210,761			175,796			-34,965
	Corporate and elimination		(153,365	)		(135,548	)		+17,817
	Consolidated total	¥	6,511,145		¥	6,778,941		¥	+267,796

G&NS intersegment amounts primarily consist of transactions with All Other. I&SS intersegment amounts primarily consist of transactions with the G&NS segment and the EP&S 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)
		Nine months ended December 31
Operating income (loss)		2019			2020			Change
	Game & Network Services	¥	192,241		¥	309,152		¥	+116,911
	Music		112,007			147,435			+35,428
	Pictures		45,116			78,700			+33,584
	Electronics Products & Solutions		146,789			150,649			+3,860
	Imaging & Sensing Solutions		201,088			125,657			-75,431
	Financial Services		117,518			137,516			+19,998
	All Other		20,505			14,849			-5,656
	Total		835,264			963,958			+128,694
	Corporate and elimination		(25,252	)		(58,573	)		-33,321
	Consolidated total	¥	810,012		¥	905,385		¥	+95,373

Operating income (loss) is sales and operating revenue less costs and expenses, and includes equity in net income (loss) of affiliated companies.

F -6

(Sales to Customers by Product Category)
The following table is a breakdown of sales and operating revenue to external customers by product category for each segment. Sony management views each segment as a single operating segment.
		(Millions of yen)
		Three months ended December 31
Sales and operating revenue (to external customers)		2019		2020		Change
	Game & Network Services
	Digital Software and Add-on Content	¥	304,982	¥	432,789	¥	+127,807
	Network Services		85,484		95,774		+10,290
	Hardware and Others		226,110		337,227		+111,117
	Total		616,576		865,790		+249,214
	Music
	Recorded Music - Streaming		72,812		88,063		+15,251
	Recorded Music - Others		53,127		54,049		+922
	Music Publishing		39,716		44,997		+5,281
	Visual Media and Platform		48,206		74,615		+26,409
	Total		213,861		261,724		+47,863
	Pictures
	Motion Pictures		101,345		52,633		-48,712
	Television Productions		72,572		75,656		+3,084
	Media Networks		61,785		62,829		+1,044
	Total		235,702		191,118		-44,584
	Electronics Products & Solutions
	Televisions		235,859		247,870		+12,011
	Audio and Video		121,742		116,974		-4,768
	Still and Video Cameras		122,031		121,570		-461
	Mobile Communications		113,500		111,061		-2,439
	Other		52,686		47,083		-5,603
	Total		645,818		644,558		-1,260
	Imaging & Sensing Solutions		277,816		243,809		-34,007
	Financial Services		405,382		423,432		+18,050
	All Other		63,129		63,995		+866
	Corporate		4,878		2,110		-2,768
	Consolidated total	¥	2,463,162	¥	2,696,536	¥	+233,374

F -7

(Sales to Customers by Product Category)
		(Millions of yen)
		Nine months ended December 31
Sales and operating revenue (to external customers)		2019		2020		Change
	Game & Network Services
	Digital Software and Add-on Content	¥	747,835	¥	1,124,487	¥	+376,652
	Network Services		253,467		284,966		+31,499
	Hardware and Others		495,070		549,930		+54,860
	Total		1,496,372		1,959,383		+463,011
	Music
	Recorded Music - Streaming		206,091		235,790		+29,699
	Recorded Music - Others		144,012		127,732		-16,280
	Music Publishing		117,413		113,653		-3,760
	Visual Media and Platform		163,125		186,703		+23,578
	Total		630,641		663,878		+33,237
	Pictures
	Motion Pictures		322,586		208,871		-113,715
	Television Productions		180,604		190,895		+10,291
	Media Networks		178,658		157,768		-20,890
	Total		681,848		557,534		-124,314
	Electronics Products & Solutions
	Televisions		550,099		559,056		+8,957
	Audio and Video		284,239		247,942		-36,297
	Still and Video Cameras		321,891		258,212		-63,679
	Mobile Communications		291,764		284,430		-7,334
	Other		164,792		122,994		-41,798
	Total		1,612,785		1,472,634		-140,151
	Imaging & Sensing Solutions		774,570		726,134		-48,436
	Financial Services		1,115,291		1,240,455		+125,164
	All Other		181,704		150,434		-31,270
	Corporate		17,934		8,489		-9,445
	Consolidated total	¥	6,511,145	¥	6,778,941	¥	+267,796

Sony has realigned its product category configuration in the Music segment with a more detailed breakdown in Recorded Music from the fourth quarter of the fiscal year ended March 31, 2020.  In connection with the realignment, all prior period sales amounts by product category in the table above have been reclassified to conform to the current presentation.

In the G&NS segment, Digital Software and Add-on Content includes distribution of software titles and add-on content through network by Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; Hardware and Others includes home gaming consoles, packaged software and peripheral devices.  In the Music segment, Recorded Music - Streaming includes the distribution of digital recorded music by streaming; Recorded Music - Others includes the distribution of recorded music by physical media and digital download as well as 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 live-action and animated motion pictures; Television Productions includes the production, acquisition and distribution of television programming; Media Networks includes the operation of television and digital networks worldwide.  In the EP&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; Still and Video Cameras includes interchangeable lens cameras, compact digital cameras, consumer video cameras and video cameras for broadcast; Mobile Communications includes smartphones and an internet-related service business; Other includes display products such as projectors and medical equipment.

Within the EP&S segment, the operating income of Mobile Communications for the three months ended December 31, 2019 and 2020 was 6,965 million yen and 21,292 million yen, respectively.  In addition, the operating income of Mobile Communications for the nine months ended December 31, 2019 and 2020 was 8,639 million yen and 41,786 million yen, respectively.

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.  Both financial statements include transactions between the Financial Services segment and Sony without the Financial Services segment (including noncontrolling interests) and the figures shown in the respective presentations are before the elimination and offsetting of such transactions and deferred tax assets and deferred tax liabilities of each.  Such intercompany balances are eliminated and/or offset in the consolidated financial statements.

Condensed Balance Sheets
	(Millions of yen)
	Financial Services				Sony without Financial Services				Consolidated
	March 31		December 31		March 31		December 31		March 31		December 31
	2020		2020		2020		2020		2020		2020
ASSETS
Current assets:
Cash and cash equivalents	¥	550,039	¥	552,781	¥	962,318	¥	1,325,266	¥	1,512,357	¥	1,878,047
Marketable securities		1,847,772		2,771,000	–		–			1,847,772		2,771,000
Notes and accounts receivable, trade and contract assets		10,532		23,289		999,976		1,294,307		1,002,920		1,285,084
Inventories	–		–			589,969		605,437		589,969		605,437
Other receivables		73,117		66,620		115,100		241,933		188,106		308,178
Prepaid expenses and other current assets		181,247		200,059		413,496		353,914		594,021		540,302
Total current assets		2,662,707		3,613,749		3,080,859		3,820,857		5,735,145		7,388,048
Film costs	–		–			427,336		421,382		427,336		421,382
Investments and advances		12,457,977		13,249,775		351,936		671,845		12,734,132		13,847,011
Investments in Financial Services, at cost	–		–			153,968		550,484	–		–
Property, plant and equipment		18,247		18,785		890,640		944,577		908,644		963,110
Other assets:
Right-of-use assets		58,897		71,951		333,753		307,928		392,610		379,875
Intangibles, net		49,871		49,657		856,439		870,491		906,310		920,148
Goodwill		10,834		10,834		773,054		780,166		783,888		791,000
Deferred insurance acquisition costs		600,901		639,831	–		–			600,901		639,831
Deferred income taxes		10,365		1,082		200,021		284,766		210,372		182,494
Other		38,949		34,145		305,028		318,032		340,005		348,223
		769,817		807,500		2,468,295		2,561,383		3,234,086		3,261,571
Total assets	¥	15,908,748	¥	17,689,809	¥	7,373,034	¥	8,970,528	¥	23,039,343	¥	25,881,122
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	¥	758,737	¥	1,091,305	¥	81,246	¥	348,482	¥	839,983	¥	1,439,787
Short-term operating lease liabilities		9,363		9,419		59,595		63,785		68,942		73,203
Notes and accounts payable, trade	–		–			380,810		657,458		380,810		657,458
Accounts payable, other and accrued expenses		40,457		31,641		1,591,072		1,629,838		1,630,197		1,660,096
Accrued income and other taxes		22,825		7,031		123,171		201,032		145,996		208,063
Deposits from customers in the banking business		2,440,783		2,723,808	–		–			2,440,783		2,723,808
Other		226,455		673,078		514,368		480,940		733,732		1,108,847
Total current liabilities		3,498,620		4,536,282		2,750,262		3,381,535		6,240,443		7,871,262
Long-term debt		240,143		286,468		398,793		454,751		634,966		737,258
Long-term operating lease liabilities		41,192		37,669		273,668		248,568		314,836		286,235
Accrued pension and severance costs		34,211		34,636		290,444		279,923		324,655		314,559
Deferred income taxes		391,883		359,623		173,022		98,875		549,538		340,015
Future insurance policy benefits and other		6,246,047		6,463,972	–		–			6,246,047		6,463,972
Policyholders’ account in the life insurance business		3,642,271		4,159,852	–		–			3,642,271		4,159,852
Other		21,843		19,758		289,574		267,850		289,285		266,611
Total liabilities		14,116,210		15,898,260		4,175,763		4,731,502		18,242,041		20,439,764
Redeemable noncontrolling interest	–		–			7,767		8,035		7,767		8,035
Equity:
Stockholders’ equity of Financial Services		1,790,333		1,788,814	–		–		–		–
Stockholders’ equity of Sony without Financial Services	–		–			3,159,071		4,190,963	–		–
Sony Corporation’s stockholders’ equity	–		–		–		–			4,125,306		5,390,560
Noncontrolling interests		2,205		2,735		30,433		40,028		664,229		42,763
Total equity		1,792,538		1,791,549		3,189,504		4,230,991		4,789,535		5,433,323
Total liabilities and equity	¥	15,908,748	¥	17,689,809	¥	7,373,034	¥	8,970,528	¥	23,039,343	¥	25,881,122

F -9

Condensed Statements of Income
	(Millions of yen)
	Three months ended December 31
	Financial Services						Sony without Financial Services					Consolidated
	2019			2020			2019			2020		2019			2020
Financial services revenue	¥	407,228		¥	425,273		¥	–		¥	–	¥	405,382		¥	423,432
Net sales and operating revenue		–		–				2,058,759			2,274,388		2,057,780			2,273,104
		407,228			425,273			2,058,759			2,274,388		2,463,162			2,696,536
Cost of sales		–			–			1,413,592			1,557,678		1,411,228			1,554,843
Selling, general and administrative		–						398,647			408,294		400,032			409,835
Financial services expenses		374,384			378,674			–			–		372,540			376,833
Other operating (income) expenses, net		(2	)		4			(18,054	)		291		(18,056	)		295
		374,382			378,678			1,794,185			1,966,263		2,165,744			2,341,806
Equity in net income (loss) of affiliated companies		(212	)		–			2,926			4,496		2,714			4,496
Operating income		32,634			46,595			267,500			312,621		300,132			359,226
Other income (expenses), net		76			(21	)		10,110			118,166		10,189			118,145
Income before income taxes		32,710			46,574			277,610			430,787		310,321			477,371
Income taxes		9,499			14,542			60,477			89,118		69,977			103,661
Net income		23,211			32,032			217,133			341,669		240,344			373,710
Less - Net income attributable to noncontrolling interests		86			243			2,645			1,575		10,806			1,819
Net income of Financial Services	¥	23,125		¥	31,789		¥	–		¥	–	¥	–		¥	–
Net income of Sony without Financial Services	¥	–		¥	–		¥	214,488		¥	340,094	¥	–		¥	–
Net income attributable to Sony Corporation's stockholders	¥	–		¥	–		¥	–		¥	–	¥	229,538		¥	371,891

	Nine months ended December 31
	Financial Services						Sony without Financial Services						Consolidated
	2019			2020			2019			2020			2019			2020
Financial services revenue	¥	1,121,344		¥	1,245,978		¥	–		¥	–		¥	1,115,291		¥	1,240,455
Net sales and operating revenue		–			–			5,400,223			5,542,712			5,395,854			5,538,486
		1,121,344			1,245,978			5,400,223			5,542,712			6,511,145			6,778,941
Cost of sales		–			–			3,637,560			3,761,733			3,629,246			3,753,504
Selling, general and administrative		–			–			1,101,184			1,036,334			1,105,115			1,040,308
Financial services expenses		1,003,263			1,108,400			–			–			997,211			1,102,877
Other operating (income) expenses, net		42			62			(24,073	)		(16,553	)		(24,017	)		(16,491	)
		1,003,305			1,108,462			4,714,671			4,781,514			5,707,555			5,880,198
Equity in net income (loss) of affiliated companies		(521	)		–			6,943			6,642			6,422			6,642
Operating income		117,518			137,516			692,495			767,840			810,012			905,385
Other income (expenses), net		(15	)		(63	)		11,125			211,386			(6,579	)		191,509
Income before income taxes		117,503			137,453			703,620			979,226			803,433			1,096,894
Income taxes		34,234			37,614			162,681			(25,195	)		196,916			12,641
Net income		83,269			99,839			540,939			1,004,421			606,517			1,084,253
Less - Net income attributable to noncontrolling interests		259			500			7,717			3,624			36,970			19,477
Net income of Financial Services	¥	83,010		¥	99,339		¥	–		¥	–		¥	–		¥	–
Net income of Sony without Financial Services	¥	–		¥	–		¥	533,222		¥	1,000,797		¥	–		¥	–
Net income attributable to Sony Corporation's stockholders	¥	–		¥	–		¥	–		¥	–		¥	569,547		¥	1,064,776

F -10

Condensed Statements of Cash Flows
	(Millions of yen)
	Nine months ended December 31
	Financial Services						Sony without Financial Services						Consolidated
	2019			2020			2019			2020			2019			2020
Cash flows from operating activities:
Net income (loss)	¥	83,269		¥	99,839		¥	540,939		¥	1,004,421		¥	606,517		¥	1,084,253
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization, including amortization of deferred insurance acquisition costs and contract costs		60,154			41,519			221,239			245,044			281,393			286,563
Amortization of film costs	–			–				212,684			197,849			212,684			197,849
Other operating (income) expenses, net		42			62			(24,073	)		(16,553	)		(24,017	)		(16,491	)
(Gain) loss on marketable securities and securities investments, net		(127,002	)		(339,714	)		(392	)		(205,721	)		(127,394	)		(545,435	)
Changes in assets and liabilities:
(Increase) decrease in notes, accounts receivable, trade and contract assets		5,158			(12,757	)		(242,695	)		(312,712	)		(237,477	)		(300,544	)
(Increase) decrease in inventories	–			–				34,865			(41,039	)		34,865			(41,039	)
(Increase) decrease in film costs	–			–				(296,377	)		(193,344	)		(296,377	)		(193,344	)
Increase (decrease) in notes and accounts payable, trade	–			–				(12,640	)		277,309			(12,640	)		277,309
Increase (decrease) in future insurance policy benefits and other		554,596			619,049		–			–				554,596			619,049
(Increase) decrease in deferred insurance acquisition costs		(73,385	)		(69,433	)	–			–				(73,385	)		(69,433	)
(Increase) decrease in marketable securities held in the life insurance business		(103,746	)		(119,871	)	–			–				(103,746	)		(119,871	)
Other		(41,646	)		(20,692	)		60,410			(45,868	)		19,048			(91,358	)
Net cash provided by (used in) operating activities		357,440			198,002			493,960			909,386			834,067			1,087,508
Cash flows from investing activities:
Payments for purchases of fixed assets		(14,425	)		(13,851	)		(300,366	)		(377,654	)		(314,791	)		(391,439	)
Payments for investments and advances		(970,438	)		(1,197,359	)		(40,423	)		(93,368	)		(1,010,861	)		(1,290,727	)
Proceeds from sales or return of investments and collections of advances		208,164			292,090			93,526			19,604			301,690			311,694
Other		125			23			(2,229	)		(1,738	)		(2,120	)		(1,715	)
Net cash provided by (used in) investing activities		(776,574	)		(919,097	)		(249,492	)		(453,156	)		(1,026,082	)		(1,372,187	)
Cash flows from financing activities:
Increase (decrease) in borrowings, net		272,960			361,169			(73,866	)		390,290			198,773			751,459
Increase (decrease) in deposits from customers, net		211,135			392,891		–			–				211,135			392,891
Dividends paid		(27,189	)		(30,454	)		(49,621	)		(61,153	)		(49,621	)		(61,153	)
Other		62			231			(205,734	)		(396,128	)		(215,191	)		(406,537	)
Net cash provided by (used in) financing activities		456,968			723,837			(329,221	)		(66,991	)		145,096			676,660
Effect of exchange rate changes on cash and cash equivalents	–			–				(14,887	)		(28,538	)		(14,887	)		(28,538	)
Net increase (decrease) in cash and cash equivalents, including restricted		37,834			2,742			(99,640	)		360,701			(61,806	)		363,443
Cash and cash equivalents, including restricted, at beginning of the fiscal year		509,595			550,039			964,218			965,256			1,473,813			1,515,295
Cash and cash equivalents, including restricted, at end of the period		547,429			552,781			864,578			1,325,957			1,412,007			1,878,738
Less - restricted cash and cash equivalents, included in other current assets and other assets	–			–				3,131			691			3,131			691
Cash and cash equivalents at end of the period	¥	547,429		¥	552,781		¥	861,447		¥	1,325,266		¥	1,408,876		¥	1,878,047

F -11

Going Concern Assumption

Not Applicable

Significant Changes in Shareholders' Equity

Completion of Making Sony Financial Holdings Inc. a Wholly-owned Subsidiary

In the quarter ended September 30, 2020, Sony Corporation acquired all the common shares and the related stock acquisition rights not held by Sony Corporation of Sony Financial Holdings Inc. (“SFH”), a consolidated subsidiary of Sony Corporation, and SFH has become a wholly-owned subsidiary of Sony Corporation.  Consideration for this acquisition is 396,698 million yen.  The net difference between the consideration, the decrease in the carrying amount of the noncontrolling interests of 622,364 million yen and the increase in accumulated other comprehensive income of 30,203 million yen was recognized as an increase to additional paid-in capital of 195,463 million yen.

Accounting Policies and Other Information

(Recently adopted accounting pronouncements)

Measurement of credit losses on financial instruments

In June 2016, the Financial Accounting Standards Board (“FASB”) issuedAccounting Standards Update (“ASU”) 2016-13, which amends the accounting guidance for credit losses on financial instruments.  The ASU requires the consideration of all available relevant information when estimating expected credit losses, including past events, current conditions and forecasts and their implications for expected credit losses.  This ASU was effective for Sony as of April 1, 2020.  The adoption of this ASU did not have a material impact on Sony’s results of operations and financial position.

Improvements to Accounting for Costs of Films and License Agreements for Program Materials

In March 2019, the FASB issued ASU 2019-02, which updates the guidance for the capitalization of film costs associated with episodic television series, requires the use of fair value rather than net realizable value when determining potential impairments of broadcasting rights, and modifies the presentation and disclosure requirements for films and broadcasting rights.  In addition, upon capitalization of film costs entities are required to determine qualitatively whether the predominant monetization strategy is on a title-by-title basis or together with other films and/or broadcast rights as part of a film group, such as in the case of a release of a film as part of a library of content on a streaming service.  In the case of a film group, impairments are evaluated at the overall film group level rather than the individual title level.  This ASU was effective for Sony as of April 1, 2020 and was applied on a prospective basis.  Upon adoption, Sony reclassified broadcasting rights in the Pictures segment and animation film production costs in the Music segment included in inventories to film costs.

F -12

Changes to the opening balances resulting from the adoption of the above ASUs were as follows:

	Yen in millions
	March 31, 2020			Impact of Adoption									April 1, 2020
				ASU 2016-13			ASU 2019-02			Total
ASSETS
Current assets:
Notes and accounts receivable, trade and contract assets		1,028,793			–			–			–			1,028,793
Allowance for credit losses *		(25,873	)		(280	)		–			(280	)		(26,153	)
Inventories		589,969			–			(31,517	)		(31,517	)		558,452
Other receivables		188,106			(30	)		–			(30	)		188,076
Prepaid expenses and other current assets		594,021			(12	)		–			(12	)		594,009
Total current assets		5,735,145			(322	)		(31,517	)		(31,839	)		5,703,306
Film costs		427,336			–			31,517			31,517			458,853
Investments and advances:
Securities investments and other		12,526,210			780			–			780			12,526,990
Allowance for credit losses		–			(6,341	)		–			(6,341	)		(6,341	)
Total investments and advances		12,734,132			(5,561	)		–			(5,561	)		12,728,571
Other assets:
Deferred income taxes		210,372			45			–			45			210,417
Other		340,005			(721	)		–			(721	)		339,284
Total other assets		3,234,086			(676	)		–			(676	)		3,233,410
Total assets		23,039,343			(6,559	)		–			(6,559	)		23,032,784
LIABILITIES
Deferred income taxes		549,538			(1,504	)		–			(1,504	)		548,034
Total liabilities		18,242,041			(1,504	)		–			(1,504	)		18,240,537
EQUITY
Sony Corporation’s stockholders’ equity:
Retained earnings		2,768,856			(3,669	)		–			(3,669	)		2,765,187
Total Sony Corporation’s stockholders’ equity		4,125,306			(3,669	)		–			(3,669	)		4,121,637
Noncontrolling interests		664,229			(1,386	)		–			(1,386	)		662,843
Total equity		4,789,535			(5,055	)		–			(5,055	)		4,784,480
Total liabilities and equity		23,039,343			(6,559	)		–			(6,559	)		23,032,784

* Under ASU 2016-13, Sony changed the presentation from “Allowance for doubtful accounts” to “Allowance for credit losses” on the consolidatedbalance sheets.

(Number of Consolidated Subsidiaries and Affiliated Companies)

As of December 31, 2020, Sony had 1,413consolidated subsidiaries (including variable interest entities) and 131affiliated companies accounted for under the equity method.

(Weighted-average Number of Outstanding Shares Used for the Computation of EPS of Common Stock)

		(Thousands of shares)
	Three months ended December 31
Net income attributable to Sony Corporation’s stockholders		2019	2020
— Basic		1,227,355	1,235,162
— Diluted		1,255,030	1,250,693

		(Thousands of shares)
	Nine months ended December 31
Net income attributable to Sony Corporation’s stockholders		2019	2020
— Basic		1,237,842	1,227,879
— Diluted		1,265,421	1,249,672

The dilutive effect in the weighted-average number of outstanding shares for the three and nine months ended December 31, 2019 and 2020 primarily resulted from convertible bonds which were issued in July 2015.

F -13

(Segmentation)

The G&NS segment includes network services businesses, the manufacture and sales of home gaming products and production and sales of software.  The Music segment includes the Recorded Music, Music Publishing and Visual Media and Platform businesses.  The Pictures segment includes the Motion Pictures, Television Productions and Media Networks businesses.  The EP&S segment includes the Televisions business, the Audio and Video business, the Still and Video Cameras business, the　smartphone business and internet-related service business.  The I&SS segment includes the image sensors business.  The Financial Services segment primarily represents individual life insurance and non-life insurance businesses in the Japanese market and a bank business in Japan.  All Other consists of various operating activities, including the disc manufacturing and recording media businesses.  Sony’s products and services are generally unique to a single operating segment.

(Accounting Methods Used Specifically for Interim Consolidated Financial Statements)

Income Taxes -

Sony estimates the annual effective tax rate (“ETR”) derived from a projected annual net income before taxes and calculates the interim period income tax provision based on the year-to-date income tax provision computed by applying the ETR to the year-to-date net income before taxes at the end of each interim period.  The income tax provision based on the ETR reflects anticipated income tax credits and net operating loss carryforwards; however, it excludes the income tax provision related to significant unusual or infrequent items.  Such income tax provision is separately reported from the provision based on the ETR in the interim period in which it occurs.

(Reclassifications)

Certain reclassifications of the financial statements and accompanying footnotes for the three and nine months ended December 31, 2019 have been made to conform to the presentation for the three and nine months ended December 31, 2020.

(Reversal of valuation allowances for deferred tax assets of Sony Corporation and its national tax filing group in Japan)

Sony provides a valuation allowance for its deferred tax assets, which includes temporary differences, net operating losses and tax credits, when it is more likely than not that some portion, or all, of its deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the relevant tax jurisdiction.　Despite the spread of COVID-19, as a result of the acquisition of SFH, the taxable income of Sony Corporation and its national tax filing group has increased and is expected to be stable going forward.  Based on an assessment of the available positive and negative evidence, in particular recent profit history and forecasted profitability, in the quarter ended September 30, 2020, Sony reversed the valuation allowances recorded against a significant portion of the deferred tax assets in Japan, primarily for temporary differences and certain net operating losses.  As a result, Sony recorded a tax benefit of 214,900 million yen in the quarter ended September 30, 2020.  Valuation allowances continue to be recorded on the remaining Japan deferred tax assets, primarily foreign tax credits, due to restrictions on the use of such assets and their relatively short remaining carryforward periods.

(Subsequent event)

Acquisition of certain of Kobalt Music Group Limited’s operations

On January 31, 2021, Sony Music Entertainment (“SME”), a wholly-owned subsidiary of Sony, entered into a definitive agreement with Kobalt Music Group Limited (“Kobalt”) to acquire 100% of the shares and related assets of certain Kobalt subsidiaries in order to obtain AWAL, Kobalt’s recorded music label and distribution business mainly for independent recording artists, and Kobalt Neighbouring Rights, Kobalt’s music neighboring rights management business.  The purchase price of this transaction is 430 million U.S. dollars, subject to customary working capital and other adjustments.  This transaction is subject to customary closing conditions, including regulatory approvals.

F -14

Outlook for the Fiscal Year Ending March 31, 2021

The forecast for consolidated results for the fiscal year ending March 31, 2021, as announced on October 28, 2020, has been revised as follows:

	(Billions of yen)
	March 31, 2020 Results		October Forecast		February Forecast		Change from October Forecast
Sales and operating revenue	¥	8,259.9	¥	8,500	¥	8,800	+¥300 billion	+3.5	%
Operating income		845.5		700		940	+¥240 billion	+34.3	%
Income before income taxes		799.5		765		1,120	+¥355 billion	+46.4	%
Net income attributable to Sony Corporation’s stockholders		582.2		800		1,085	+¥285 billion	+35.6	%

For all segments excluding the Financial Services segment *	March 31, 2020 Results		October Forecast		February Forecast		Change from October Forecast
Net cash provided by operating activities	¥	762.9		630		850	+¥220 billion	+34.9	%

* Cash flow for all segments excluding the Financial Services segment is not a measure in accordance with U.S. GAAP.  However, Sony believes that this disclosure may be useful information to investors.  Please refer to page F-9 for details about the preparation of the Condensed Statements of Cash Flows.

Assumed foreign exchange rates are the following:

	Assumed foreign exchange rates for the three months ending March 31, 2021	(For your reference)
		Assumed foreign exchange rates for the six months ending March 31, 2021 at the time of the October forecast
1 U.S. dollar	approximately 103 yen	approximately 105 yen
1 Euro	approximately 126 yen	approximately 123 yen

Consolidated sales and operating revenue (“sales”) for the fiscal year ending March 31, 2021 are expected to be higher than the October forecast due to higher-than-expected sales in all segments except for the Pictures segment.

Consolidated operating income is expected to be significantly higher than the October forecast due to expected increases in operating income in all segments, as well as an expected decrease in operating loss in All Other, Corporate and elimination.

Restructuring charges for the Sony Group are expected to be approximately 27 billion yen, which remains unchanged from the October forecast, compared to 25 billion yen in the fiscal year ended March 31, 2020.  Restructuring charges are recorded as an operating expense and are included in the forecast for operating income.

Income before income taxes is expected to be 1,120 billion yen, which is significantly higher than the October forecast.  This expected increase is primarily due to the above-mentioned expected increase in operating income, as well as an expected increase in other income primarily resulting from the recording of unrealized gains on securities.

Net income attributable to Sony Corporation’s stockholders is expected to be significantly higher than the October forecast mainly due to the above-mentioned expected increase in income before income taxes.

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The forecast for each business segment for the fiscal year ending March 31, 2021 has been revised as follows:

	(Billions of yen)
	March 31, 2020 Results			October Forecast			February Forecast
Game & Network Services (G&NS)
Sales and operating revenue	¥	1,977.6		¥	2,600		¥	2,630
Operating income		238.4			300			340
Music
Sales and operating revenue		849.9			850			900
Operating income		142.3			152			180
Pictures
Sales and operating revenue		1,011.9			760			750
Operating income		68.2			48			72
Electronics Products & Solutions (EP&S)
Sales and operating revenue		1,991.3			1,870			1,890
Operating income		87.3			67			125
Imaging & Sensing Solutions (I&SS)
Sales and operating revenue		1,070.6			960			1,010
Operating income		235.6			81			136
Financial Services
Financial services revenue		1,307.7			1,460			1,600
Operating income		129.6			155			170
All Other, Corporate and elimination
Operating loss		(55.9	)		(103	)		(83	)
Consolidated
Sales and operating revenue		8,259.9			8,500			8,800
Operating income		845.5			700			940

Game & Network Services (G&NS)

Sales are expected to be higher than the October forecast primarily due to higher-than-expected sales of game software including add-on content, higher-than-expected Network Services sales including PlayStation®Plus, and higher-than-expected unit sales of peripheral devices.  Operating income is expected to be higher than the October forecast mainly due to the above-mentioned expected increase in game software sales, cost reductions, the positive impact of foreign exchange rates and higher-than-expected Network Services sales.

Music

Sales are expected to be higher than the October forecast mainly due to expected increases in Visual Media and Platform and Recorded Music sales.  Sales for Visual Media and Platform are expected to increase primarily due to an increase in sales for the anime business reflecting the strong performance of Demon Slayer – Kimetsu no Yaiba – the Movie: Mugen Train and the strong performance of mobile game applications.  Sales for Recorded Music are expected to increase primarily due to stronger-than-expected sales of physical media.  Operating income is expected to be higher than the October forecast primarily due to the impact of the above-mentioned expected increase in sales.

Pictures

Sales are expected to be lower than the October forecast primarily due to delays in theatrical releases due to theater closures resulting from the impact of COVID-19.  Operating income is expected to be significantly higher than the October forecast primarily due to lower marketing costs as a result of the above-mentioned delays in theatrical releases as well as higher-than-expected home entertainment and television licensing sales from prior year and catalog titles, both in Motion Pictures.

Electronics Products & Solutions (EP&S)

Sales are expected to be higher than the October forecast due to an expected increase in sales of televisions resulting from an expected improvement in the product mix.  Operating income is expected to be significantly higher than the October forecast primarily due to an expected improvement in the product mix of televisions and digital cameras, as well as reductions in operating costs.

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Imaging & Sensing Solutions (I&SS)

Sales are expected to be higher than the October forecast primarily due to higher-than-expected unit sales of image sensors for mobile products and digital cameras.  Operating income is expected to be significantly higher than the October forecast primarily due to the impact of the above-mentioned expected increase in sales and an 8.5 billion yen gain from the reversal of inventory write-downs of certain image sensors for mobile products previously recorded in the quarter ended September 30, 2020.

Financial Services

Financial services revenue is expected to be higher than the October forecast primarily due to an increase in net gains on investments in the separate accounts at Sony Life Insurance Co., Ltd. (“Sony Life”).  Operating income is expected to be higher than the October forecast primarily due to an improvement in foreign exchange gains and losses in U.S. dollar-denominated insurance and a decrease in operating expenses at Sony Life.

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 above forecast.

The above 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.

Notes about Financial Performance of the Music, Pictures and Financial Services segments

The Music segment results include the yen-based results of Sony Music Entertainment (Japan) Inc. and the yen-translated results of Sony Music Entertainment, Sony/ATV Music Publishing LLC and EMI Music Publishing Ltd., which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis.

The Pictures segment results are the yen-translated results of Sony Pictures Entertainment Inc., which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.

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

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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)	Sony’s ability to maintain product quality and customer satisfaction with its products and services;
(ii)	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 image sensors, game and network platforms, smartphones and televisions, 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 customer preferences;
(iii)	Sony’s ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms;
(iv)	the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures, investments, capital expenditures, restructurings and other strategic initiatives;
(v)	changes in laws, regulations and government policies in the markets in which Sony and its third-party suppliers, service providers and business partners operate, including those related to taxation, as well as growing consumer focus on corporate social responsibility;
(vi)	Sony’s continued ability to identify the products, services and market trends with significant growth potential, to devote sufficient resources to research and development, to prioritize investments and capital expenditures correctly and to recoup its investments and capital expenditures, including those required for technology development and product capacity;
(vii)	Sony’s reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing, marketing and distribution of its products, and its other business operations;
(viii)	the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending;
(ix)	Sony’s ability to meet operational and liquidity needs as a result of significant volatility and disruption in the global financial markets or a ratings downgrade;
(x)	Sony’s ability to forecast demands, manage timely procurement and control inventories;
(xi)	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, liabilities and operating results are denominated;
(xii)	Sony’s ability to recruit, retain and maintain productive relations with highly skilled personnel;
(xiii)	Sony’s ability to prevent unauthorized use or theft of intellectual property rights, to obtain or renew licenses relating to intellectual property rights and to defend itself against claims that its products or services infringe the intellectual property rights owned by others;
(xiv)	the impact of changes in interest rates and 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)	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;
(xvi)	risks related to catastrophic disasters, pandemic disease or similar events;
(xvii)	the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and
(xviii)	the outcome of pending and/or future legal and/or regulatory proceedings.

Risks and uncertainties also include the impact of any future events with material adverse impact.  The continued impact of COVID-19 could heighten many of the risks and uncertainties noted above.  Important information regarding risks and uncertainties is also set forth in Sony’s most recent Form 20-F, which is on file with the U.S. Securities and Exchange Commission.

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