-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IG/xkQKij5EOc2MaZWxgKURLlDOtKnXKFumxgkT25RMhQe0aKbKVeA42Z3Pk0VJn kN3r3cbpR+a5mT1OqMTQvg== 0001191638-05-002101.txt : 20051026 0001191638-05-002101.hdr.sgml : 20051026 20051026082549 ACCESSION NUMBER: 0001191638-05-002101 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20051026 FILED AS OF DATE: 20051026 DATE AS OF CHANGE: 20051026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SONY CORP CENTRAL INDEX KEY: 0000313838 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651] IRS NUMBER: 000000000 STATE OF INCORPORATION: M0 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06439 FILM NUMBER: 051155632 BUSINESS ADDRESS: STREET 1: 7-35 KITASHINAGAWA STREET 2: 6-CHOME SHINAGAWA-KU CITY: TOKYO 141 JAPAN STATE: M0 BUSINESS PHONE: 0354482180 MAIL ADDRESS: STREET 1: 7-35 KITASHINAGAWA STREET 2: 6-CHOME, SHINAGAWA-KU CITY: TOKYO 141 JAPAN STATE: M0 6-K 1 son200510266k4.txt RESULTS OF TRACKING STOCK Form 6-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of October 2005 Commission File Number: 001-06439 SONY CORPORATION (Translation of registrant's name into English) 7-35 KITASHINAGAWA 6-CHOME, SHINAGAWA-KU, TOKYO, JAPAN (Address of principal executive offices) The registrant files annual reports under cover of Form 20-F. 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/ Nobuyuki Oneda (Signature) Nobuyuki Oneda Executive Vice President and Chief Financial Officer Date: October 26, 2005 List of materials Documents attached hereto: i) Press release announcing Results of Subsidiary Tracking Stock Sony Corporation 6-7-35 Kitashinagawa Shinagawa-ku Tokyo, 141-0001 Japan No.05-062E 2005/10/26 15:00 Subsidiary Tracking Stock Sony Communication Network Corporation Consolidated Financial Results for the Three-month and Six-month Periods ended September 30, 2005 Sony Communication Network Corporation (hereinafter, the "SCN Group"), a subsidiary the performance of which is linked to a tracking stock issued by Sony Corporation, announced today its consolidated results for the second quarter ended September 30, 2005 (the period from July 1, 2005 to September 30, 2005) and the six-month period ended September 30, 2005 (the period from April 1, 2005 to September 30, 2005). These results are based on the generally accepted accounting standards of Japan. - - During the quarter, increased sales but decreased profitability compared to year earlier period. Although Portal Services turned in a positive performance, there were increased costs for new subscriber acquisitions. During the quarter under review, sales increased 5.3% compared with the year earlier period, to 10,545 million yen. This was due to increased sales in the category of Portal Services. However, profitability decreased at each stage due to a focus on customer acquisition activities. An operating loss of 45 million yen was recorded, compared with an operating profit of 780 million yen in the year earlier period; an ordinary loss of 44 million yen was recorded, compared to an ordinary profit of 720 million yen; and a net loss of 392 million yen was recorded, compared with a net profit of 2,367 million yen. - - Subscribers at 2.81 million; big increase in broadband subscribers, especially for FTTH. At the end of the quarter under review, the number of So-net subscribers totaled 2.81 million, an increase of 22.3% over the total of 2.29 million at the end of the year earlier period. Within this, the number of new broadband subscribers was 44,000, which was three times that of the year earlier period. The total number of broadband subscribers at the end of the quarter under review was 730,000, an increase of 26.0% over the total of 580,000 at the end of the year earlier period. - - Connection Services see decreased revenue due to the effects of promotional campaigns, but increased sales for Portal Services compensates. Sales of Connection Services (see note 1) decreased 8.9% from the year earlier period, to 6,641 million yen, due to the effects of both promotional campaigns that offer free installation and usage fees and the decline in narrowband subscribers. Sales in Portal Services (see note 2) increased by 43.5% from the year earlier period, to 3,904 million yen, due to an increase of content revenue, merchandise sales, advertising revenue and others. Note 1: The sales category known as "Internet provider services" through the fiscal year ended March 31, 2005 is now known as "Connection Services." There has not been any change in the sales breakdown of this category. Note 2: Until the end of the fiscal year ended March 31, 2005, the sales categories known as "Internet-related services" and "Merchandise sales" were recorded separately. However, because web contents and sales of goods are both related, from this year, they are now consolidated into one category called "Portal Services." Within this, during the quarter under review, sales of "Merchandise sales" were 319 million yen. Consolidated Results for the three-months ended September 30, 2005
(Millions of Yen) Three-months ended September 30 2004 2005 Change (%) Sales 10,010 10,545 +5.3 Operating income (loss) 780 (45) -- Ordinary income (loss) 720 (44) -- Net income (loss) 2,367 (392) -- Consolidated Results for the six-months ended September 30, 2005 (Millions of Yen) Six-months ended September 30 2004 2005 Change (%) Sales 19,640 20,561 +4.7 Operating income (loss) 1,500 (35) -- Ordinary income 1,491 66 (95.6) Net income 2,760 9,911 +259.1
Summary of Consolidated Operations (July 1, 2005 to September 30, 2005) Regarding sales, during the quarter under review, sales increased 5.3% to 10,545 million yen, compared with 10,010 million yen in the year earlier period. In the category of Connection Services, in conjunction with active customer acquisition efforts, as in the prior quarter, particularly for FTTH, the number of So-net broadband subscribers increased by 150,000 compared to the end of the year earlier period, to 730,000. However, with the effects of free promotional campaigns, which offer free installation and monthly usage, as well as of the decline in narrowband users, sales in this category declined. On the other hand, in the category of Portal Services, sales increased due to an increase of revenue from content revenue aimed at cellular phones devices, air ticket sales at Skygate Co., Ltd. and advertising revenue. Furthermore, the total number of So-net subscribers increased by 520,000 from the end of the year earlier period, to 2,810,000. This was mainly a result of increases in broadband subscribers and, from the quarter under review, the integration as So-net subscribers of 210,000 members of "Television Kingdom," an EPG (electronic programming guide). Regarding operating income, during the quarter under review, an operating loss of 45 million yen was recorded, compared with operating income of 780 million yen in the year earlier period. This was a result of large increases in customer acquisition costs including such items as acquisition commissions and sales promotion expenses aimed at active efforts in the area of customer acquisitions, particularly for FTTH. This also resulted from expenditure for line connection costs incurred during the free promotional campaigns. Regarding ordinary income, during the quarter under review, an ordinary loss of 44 million yen was recorded, compared with ordinary income of 720 million yen in the year earlier period. Within this, net non-operating income improved over the year earlier period, the reason being the recording of equity in net income of 25 million yen, stemming from strong results in equity affiliate DeNA, Co., Ltd. Regarding net income before income taxes, during the quarter under review, a net loss before income taxes of 142 million yen was recorded, compared with net income before income taxes of 3,604 million yen in the year earlier period. During the quarter under review, factors affecting net income (loss) before income taxes included a revaluation of investment securities of 49 million yen and a one-time transfer allowance of 78 million yen that was recorded as an extraordinary loss. As a result, the total income tax charges, including both income tax current and income tax deferred were 155 million yen. Furthermore, minority interest income of 96 million yen, compared with 10 million yen in the year earlier period, was recorded, due to increased profitability, and an increase in the minority interest, at So-net M3 Inc. Regarding net income, a net loss of 392 million yen was recorded, compared with net income of 2,367 million yen in the year earlier period. Sales by Category Three-months ended September 30, 2005
Three-months Percentage Three-months Percentage Year-on- ended of total ended September of total year September 30, (%) 30, 2005 (%) change 2004 (millions (millions of (%) of yen) yen) Connection 7,290 72.8 6,641 63.0 (8.9) Services(1) Portal Services(2) 2,721 27.2 3,904 37.0 +43.5 Total 10,010 100.0 10,545 100.0 +5.3 Six-months ended September 30, 2005 Six-months Percentage Six-months Percentage Year-on- ended of total ended September of total year September 30, (%) 30, 2005 (%) change 2004 (millions (millions of (%) of yen) yen) Connection 14,608 74.4 13,475 65.5 (7.8) Services(1) Portal Services(2) 5,033 25.6 7,085 34.5 +40.8 Total 19,640 100.0 20,561 100.0 +4.7
Note 1: The sales category known as "Internet provider services" through the fiscal year ended March 31, 2005 is now known as "Connection Services." There has not been any change in the sales breakdown of this sales category. Note 2: Until the end of the fiscal year ended March 31, 2005, the sales categories known as "Internet-related services" and "Merchandise sales" were recorded separately. However, because web contents and sales of goods are both related, from this year, they are now consolidated into one category called "Portal Services." Within this, during the quarter under review, sales of "Merchandise sales" were 319 million yen, compared with 258 million yen in the year earlier period. For the six-month period under review, the figures were 717 million yen and 454 million yen, respectively. Operating revenue Connection Services In this category, the SCN Group has aggressively worked to acquire new customers for its connection service plans, especially for FTTH. The SCN Group has been carrying out customer acquisition activities primarily at volume retailers and retailing sales agents. As a result, the number of new broadband subscribers during the quarter under review, 44,000, was three times that of the year earlier period. At the end of the quarter under review, the number of broadband subscribers was 730,000, an increase of 26.0% over the year earlier number of 580,000. Furthermore, they accounted for 26% of the total number of So-net subscribers. During the quarter under review, sales of Connection Services were 6,641 million yen, a decrease of 8.9% compared with the year earlier period. The reason for the decline in revenue in this category was the number of narrowband subscribers decreased and there was the effect of free promotional campaigns. Such sales accounted for 63.0% of total sales. Portal Services In this category, sales such as content revenue aimed at cellular phones devices, air ticket sales at Skygate, Co., Ltd. and advertising revenue showed favorable performance. As a result, sales in this category during the quarter under review increased 43.5% compared with the year earlier period, to 3,904 million yen. Sales in this category accounted for 37.0% of total sales. Results of Consolidated Subsidiaries and of Affiliated Companies Accounted for by the Equity Method The SCN Group includes the following five consolidated subsidiaries: So-net Sports.com Corp., So-net M3 Inc., So-net M3 U.S.A. Corp., Medi C&C Co. Ltd., and Skygate, Co., Ltd. The SCN Group includes the following two affiliated companies accounted for by the equity method: Label Gate Co., Ltd. and DeNA Co., Ltd. During the quarter under review, So-net M3 Inc., which offers marketing support for medically-related companies, saw membership at "m3.com," a sight for medical professionals, top 110,000. Also, there was an increase in sales due to such factors as an increase in the number of customer businesses. At Skygate, Co., Ltd., turnover of air ticket, travel service products increased, especially in the July through September period. Also, during the quarter under review, equity in net income of affiliated companies of 25 million yen was recorded, compared with 4 million yen in the year earlier period. This was largely due to results at DeNA Co., Ltd.'s, which has seen a steady increase in the number of fee-paying users, including at its affiliate network for mobile phones, "Pocket Affiliate," and at its mobile phone service "Mobaoku," which, from July 1, 2005, introduced monthly fees for its mobile phone service. Also, revenue related to settlement, and advertising sales have also grown at DeNA. In conjunction with the recent expansion of the music download market, Label Gate Co., Ltd. also saw increases in available songs and the number of paid downloads. However, as before, profitability continued to be tough. Cash Flow (for the period April 1, 2005 to September 30, 2005) Cash and cash equivalents were 25,509 million yen at the end of the six-month period ended September 30, 2005, an increase of 17,075 million yen from the end of the year earlier period, and an increase of 14,869 million yen from March 31, 2005. During the six-month period under review, the SCN Group used 2,784 million yen of cash in operating activities, generated 17,645 million yen of cash in investing activities, and saw no change in cash in financing activities. Cash flows from operating activities During the six-month period ended September 30, 2005, regarding cash flows from operating activities, the SCN Group used 2,784 million yen, compared with the six-month period ended September 30, 2004 when the SCN Group generated 1,812 million yen. During the six-month period under review, although the SCN Group recorded net income before income taxes of 17,763 million yen, such income included 17,795 million yen of gain on sale of investment in affiliate and subsidiary stock, which is income related to cash flow from investing activities. Also, compared to the year earlier period, payments for income taxes increased greatly. Furthermore, during the six-month period under review, included in net income before income taxes were non-cash depreciation expense of 429 million yen and amortization of goodwill of 143 million yen. Cash flows from investing activities During the six-month period ended September 30, 2005, regarding cash flows from investing activities, the SCN Group generated 17,645 million yen, compared with the six-month period ended September 30, 2004 when the SCN Group generated 2,240 million yen. The main factor in the period under review was the cash proceeds from sale of investment in affiliate and subsidiary stock of 18,499 million yen as a result of sales of stock in consolidated subsidiary So-net M3 Inc. and affiliated company accounted for by the equity method DeNA Co., Ltd. Also, the SCN Group recorded payment for acquisition of intangible assets of 623 million yen for systems and homepage development for connection services and e-commerce activities, compared to payments of 338 million yen in the year earlier period. Cash flows from financing activities During the six-month period ended September 30, 2005, regarding cash flows from financing activities, the SCN Group did not carry out any financing or repayment activities.
Condensed Consolidated Statements of Income For the three-months ended September 30, 2005 (unaudited) (Millions of yen) Three-months ended September 30 2004 2005 Change Sales 10,010 10,545 5.3% Cost of sales 5,766 6,453 Gross profit 4,245 4,091 Selling, general and administrative 3,465 4,136 expenses Operating income (loss) 780 (45) --% Non-operating income Equity in net income of affiliated 4 25 companies Other 9 13 18 42 Non-operating expenses 73 41 Ordinary income (loss) 720 (44) --% Extraordinary gain Gain on sale of investment in 2,344 - affiliate and subsidiary stock Gain on issuance of stock by equity 1,821 2 investee Reversal of allowance for bad debt - 27 Gain on sale of fixed assets 25 4,191 - 29 Extraordinary loss Loss on revaluation of investments 878 49 in other securities Loss on impairment of long-lived 295 - assets Provision for allowance for doubtful 133 - accounts Loss on issuance of stock by equity 1 - investee One-time transfer allowance - 1,307 78 126 Net income (loss) before income 3,604 (142) --% taxes Income tax current 1,241 116 Income tax deferred (15) 1,226 39 155 Minority interest income 10 96 Net income (loss) 2,367 (392) --%
For the six-months ended September 30, 2005 (Millions of yen) Six-months ended September 30 2004 2005 Change Sales 19,640 20,561 4.7% Cost of sales 11,184 12,005 Gross profit 8,457 8,556 Selling, general and administrative 6,956 8,591 expenses Operating income (loss) 1,500 (35) --% Non-operating income Equity in net income of affiliated 9 99 companies Other 64 74 51 151 Non-operating expenses 83 50 Ordinary income 1,491 66 (95.6)% Extraordinary gain Gain on sale of investment in 2,344 17,795 affiliate and subsidiary stock Gain on issuance of stock by equity 1,821 4 investee Reversal of allowance for bad debt - 27 Gain on sale of fixed assets 25 4,191 - 17,827 Extraordinary loss Loss on revaluation of investments 878 49 in other securities Loss on impairment of long-lived 295 - assets Provision for allowance for doubtful 133 - accounts Loss on issuance of stock by equity 1 3 investee One-time transfer allowance - 1,307 78 129 Net income before income taxes 4,374 17,763 306.1% Income tax current 1,440 8,033 Income tax deferred 154 1,594 (327) 7,706 Minority interest income 21 146 Net income 2,760 9,911 259.1%
Condensed Consolidated Balance Sheets
(Millions of yen) September 30 March 31 September 30, ASSETS 2004 2005 2005 Current assets 13,525 16,052 32,342 Cash and bank deposit 3,237 3,861 4,001 Notes and account receivable, trade 3,764 3,755 3,898 Inventories 143 212 275 Deposits in Sony group company 5,198 6,779 21,508 Other 1,243 1,513 2,769 Allowance for bad debt (60) (69) (109) Noncurrent assets 4,261 5,039 4,800 Property, plant and equipment 229 181 275 Furniture and fixtures 142 122 195 Other 87 59 79 Intangible assets 2,150 2,126 2,389 Software 1,505 1,576 1,794 Goodwill 567 425 415 Other 78 126 181 Investment and other assets 1,882 2,732 2,136 Investment in affiliates and others 660 1,471 1,380 Other 1,320 1,380 848 Allowance for bad debt (98) (119) (92) Total assets 17,786 21,091 37,142 LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY Current liabilities 6,225 8,092 13,427 Account payable, trade 2,561 2,553 2,840 Account payable, other 1,174 1,712 5,315 Accrued expense 1,322 1,936 1,535 Accrued income taxes 465 877 2,897 Accrued bonuses 226 244 289 Accrued customer incentive program 138 145 229 Other accruals 2 4 5 Other 336 621 317 Long-term liabilities 460 388 346 Accrued severance costs for employees 105 111 127 Accrued severance indemnities for 55 49 60 directors Other 300 228 159 Total liabilities 6,685 8,481 13,773 Minority interest 704 840 1,701 Common stock 5,246 5,246 5,246 Additional paid-in capital 4,765 4,765 4,765 Retained earnings 386 1,734 11,644 Unrealized gain on investment securities 1 27 15 Foreign currency translation adjustments (1) (0) (2) Total stockholders' equity 10,397 11,771 21,668 Total liabilities, minority interest and 17,786 21,091 37,142 stockholders' equity
Consolidated Statements of Additional Paid-in Capital and Retained Earnings
(millions of yen) Item Six-months ended Six-months ended September 30, 2004 September 30, 2005 Additional Paid-in Capital Balance at beginning of 4,765 4,765 fiscal year Balance at the end of period 4,765 4,765 Retained Earnings (Accumulated Losses) Balance at beginning of (2,373) 1,734 fiscal year Increase Net income 2,760 9,911 Balance at the end of period 386 11,644
Consolidated Statements of Cash Flow
(Millions of yen) Six-months ended September 30 2004 2005 I. Cash flows from operating activities Net income before income taxes 4,374 17,763 Depreciation and amortization 371 429 Loss on impairment of long-lived assets 295 - Amortization for goodwill 142 143 Equity in net income of affiliated companies (9) (99) Gain on issuance of stock by equity investee (1,821) (4) Loss on issuance of stock by equity investee 1 3 Loss on revaluation of investments in other 878 49 securities Gain on sale of investment in affiliate and (2,344) (17,795) subsidiary stock Stock issuance costs 13 - Increase (decrease) in accrued bonuses (14) 45 Increase in accrued severance costs for employees 12 11 Increase in accrued severance indemnities for 9 11 directors Increase (decrease) in allowance for bad debt 134 (27) Increase in customer incentive program 57 84 Increase in other accruals 2 1 Interest income (3) (9) Interest expense 0 0 Foreign exchange loss - (4) Loss on disposal of tangible fixed assets 46 32 Loss on sales of tangible fixed assets 0 - Gain on sales of tangible fixed assets (25) - Decrease (increase) in account receivable, trade 127 (138) Increase in inventories (14) (62) Increase in other current assets (172) (529) Increase in accounts payable, trade 97 287 Decrease in accrued expenses (388) (403) Decrease in other current liabilities (82) (186) Sub Total 1,686 (402) Receipt of interest 3 9 Payments for interest (0) (0) Receipt (payment) for income taxes 124 (2,391) Net cash provided by (used in) operating 1,812 (2,784) activities (Millions of yen) Six-months ended September 30 2004 2005 II. Cash flows from investing activities Payment for securities investment (10) (55) Proceeds from sales of investment in affiliate 2,577 18,499 and subsidiary stock Payment for acquisition of fixed assets (9) (147) Proceeds from sales of fixed assets 25 - Payment for acquisition of intangible assets (338) (623) Payment for rent deposits (2) (2) Proceeds from rent deposits - 56 Payments for long term prepaid expenses (15) (10) Net proceeds as a result of acquiring subsidiary - 27 company Payments for loan (24) (136) Repayment of loan 35 36 Net cash provided by investing activities 2,240 17,645 III. Cash flows from financing activities Proceeds from issuance of subsidiary stock 2,201 - Net cash provided by financing activities 2,201 - IV. Effect of exchange rate difference on cash and (0) 8 cash equivalents V. Increase in cash and cash equivalents 6,253 14,869 VI. Cash and cash equivalents at beginning of year 2,182 10,640 VII. Cash and cash equivalents at end of the 8,434 25,509 period
(Notes) 1. Consolidated financial statements of the SCN Group are based on the standards conforming with the Generally Accepted Accounting Principles in Japan. (For reference)
(Millions of yen) Three-months ended Three-months ended Change September 30, 2004 September 30, 2005 (%) Increase in fixed assets 8 18 128.6 Increase in intangible assets 277 232 (16.2) Depreciation of fixed assets* 18 28 51.1 Amortization of intangible 148 178 20.5 assets* (Millions of yen) Six-months ended Six-months ended Change September 30, 2004 September 30, 2005 (%) Increase in fixed assets 10 156 1,396.3 Increase in intangible assets 360 628 74.3 Depreciation of fixed assets* 35 52 48.4 Amortization of intangible 289 337 16.5 assets*
* Includes loss on impairment of long-lived assets (excluding amounts related to leased assets). Consolidated Results Forecast With regards to the forecast for consolidated results for the year ending March 31, 2006, the SCN Group is not announcing any changes to the revised forecast that was announced on September 12, 2005. For reference, the forecast announced on September 12, 2005 was as follows:
(Millions of yen) Consolidated Results Forecast Year-on-year Change Sales 43,500 +11% Operating income 500 (81%) Ordinary income 700 (72%) Net income 10,200 +148%
Cautionary statement: Statements made in this release with respect to Sony Corporation and Sony Communication Network's ("SCN") current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of SCN. These statements are based on management's assumptions and beliefs in light of the information currently available to it. Therefore, SCN cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. -----END PRIVACY-ENHANCED MESSAGE-----