6-K 1 d525012d6k.htm SONY CORPORATION 6-K SONY CORPORATION 6-K
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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 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/ Kenichiro Yoshida
          (Signature)
Kenichiro Yoshida
Executive Deputy President and
Chief Financial Officer

Date: February 8, 2018


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Quarterly Securities Report

For the three months ended December 31, 2017

(TRANSLATION)

Sony Corporation


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CONTENTS

 

    

Page

 

 

Note for readers of this English translation

     1     

Cautionary Statement

     1     
  

    I   Corporate Information

     3     

(1)   Selected Consolidated Financial Data

     3     

(2)   Business Overview

 

     4     

    II   State of Business

     5     

(1)   Risk Factors

     5     

(2)   Material Contracts

     5     

(3)   Management’s Discussion and Analysis of Financial Condition, Results of Operations and Status of Cash Flows

 

     5     

   III   Company Information

     14    

(1)   Information on the Company’s Shares

     14    

(2)   Directors and Corporate Executive Officers

 

     18    

  IV  Financial Statements

     19    

(1)   Consolidated Financial Statements

     20    

(2)   Other Information

     46    


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Note for readers of this English translation

On February 8, 2018, Sony Corporation (the “Company” or “Sony Corporation”) filed its Japanese-language Quarterly Securities Report (Shihanki Houkokusho) for the three months ended December 31, 2017 with the Director-General of the Kanto Local Finance Bureau in Japan pursuant to the Financial Instruments and Exchange Act of Japan. This document is an English translation of the Quarterly Securities Report in its entirety, except for (i) information that had been previously filed with or submitted to the U.S. Securities and Exchange Commission (the “SEC”) in a Form 20-F, Form 6-K or any other form and (ii) a description of differences between generally accepted accounting principles in the U.S. (“U.S. GAAP”) and generally accepted accounting principles in Japan (“J-GAAP”), which are required to be described in the Quarterly Securities Report under the Financial Instruments and Exchange Act of Japan if the Company prepares its financial statements in conformity with accounting principles other than J-GAAP.

Cautionary Statement

Statements made in this release with respect to Sony’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore investors should not place undue reliance on them. Investors also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to:

(i)

the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending;

(ii)

foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony’s assets and liabilities are denominated;

(iii)

Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including 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;

(iv)

Sony’s ability and timing to recoup large-scale investments required for technology development and production capacity;

(v)

Sony’s ability to implement successful business restructuring and transformation efforts under changing market and regulatory conditions;

(vi)

changes in laws, regulations and government policies in the markets in which Sony operates, including those related to taxation and corporate social responsibility;

(vii)

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;

(viii)

Sony’s continued ability to devote sufficient resources to research and development and, with respect to capital expenditures, to prioritize investments correctly (particularly in the electronics businesses);

(ix)

Sony’s ability to maintain product quality and customer satisfaction with its products and services;

(x)

the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures and other strategic investments;

(xi)

significant volatility and disruption in the global financial markets or a ratings downgrade;

(xii)

Sony’s ability to forecast demands, manage timely procurement and control inventories;

(xiii)

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, supply and distribution of its products, and its other business operations;



 

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(xiv)

the outcome of pending and/or future legal and/or regulatory proceedings;

(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)

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;

(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, potential business disruptions or financial losses; and

(xviii) 

risks related to catastrophic disasters or similar events.

Risks and uncertainties also include the impact of any future events with material adverse impact.



 

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I     Corporate Information

(1) Selected Consolidated Financial Data

    Yen in millions, Yen per share amounts  
      Nine months ended  
  December 31, 2016  
      Nine months ended  
  December 31, 2017  
      Fiscal year ended  
  March 31, 2017  
 

 

 
  Sales and operating revenue     5,699,646          6,592,961          7,603,250     

 

 
  Operating income     194,311          712,676          288,702     

 

 
  Income before income taxes     163,763          690,578          251,619     

 

 

Net income attributable to Sony Corporation’s stockholders

    45,639          507,620          73,289     

 

 
  Comprehensive income     75,551          600,028          143,652     

 

 
  Total equity     3,079,285          3,714,947          3,135,422     

 

 
  Total assets     17,695,074          19,420,676          17,660,556     

 

 

Net income attributable to Sony Corporation’s stockholders per share of common stock, basic (yen)

    36.17          401.76          58.07     

 

 

Net income attributable to Sony Corporation’s stockholders per share of common stock, diluted (yen)

    35.43          393.05          56.89     

 

 

Ratio of stockholders’ equity to total assets (%)

    13.9          15.7          14.1     

 

 

Net cash provided by operating activities

    313,252          660,329          809,262     

 

 
  Net cash used in investing activities     (981,514)         (566,913)         (1,253,973)    

 

 

Net cash provided by financing activities

    467,851          265,188          452,302     

 

 

Cash and cash equivalents at end of the period

    771,676          1,328,925          960,142     

 

 
    Yen in millions, Yen per share amounts        
      Three months ended  
  December 31, 2016  
      Three months ended  
  December 31, 2017  
   

 

   

Sales and operating revenue

    2,397,499          2,672,317       

 

   

Net income attributable to Sony Corporation’s stockholders

    19,631          295,897       

 

   

Net income attributable to Sony Corporation’s stockholders per share of common stock, basic (yen)

    15.55          234.08       

 

   

Net income attributable to Sony Corporation’s stockholders per share of common stock, diluted (yen)

    15.24          228.91       

 

   

  Notes:

  1.

The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP.

  2.

The Company reports equity in net income of affiliated companies as a component of operating income.

  3.

Consumption taxes are not included in sales and operating revenue.

  4.

Total equity is presented based on U.S. GAAP.

  5.

Ratio of stockholders’ equity to total assets is calculated by using total equity attributable to the stockholders of the Company.

  6.

The Company prepares consolidated financial statements. Therefore parent-only selected financial data is not presented.

 

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(2) Business Overview

There was no significant change in the business of Sony during the nine months ended December 31, 2017.

Sony realigned its reportable segments effective from the first quarter of the fiscal year ending March 31, 2018. For further information on the realignment, please refer to “IV Financial Statements – Notes to Consolidated Financial Statements – 7. Business segment information”.

As of December 31, 2017, the Company had 1,338 subsidiaries and 115 affiliated companies, of which 1,308 companies are consolidated subsidiaries (including variable interest entities) of the Company. The Company has applied the equity accounting method for 109 affiliated companies.

 

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II    State of Business

(1) Risk Factors

 

Note for readers of this English translation:

There was no significant change from the information presented in the Risk Factors section of the Annual Report on Form 20-F filed with the Securities and Exchange Commission (the “SEC”) on June 15, 2017. Any forward-looking statements included in the descriptions below are based on management’s current judgment.

URL: The Annual Report on Form 20-F filed with the SEC on June 15, 2017

https://www.sec.gov/Archives/edgar/data/313838/000119312517203939/d358485d20f.htm

(2) Material Contracts

There were no material contracts executed or determined to be executed during the three months ended December 31, 2017.

 

Note for readers of this English translation:

There was no significant change from the information presented in the Annual Report on Form 20-F (“Patents and Licenses” in Item 4) filed with the SEC on June 15, 2017.

URL: The Annual Report on Form 20-F filed with the SEC on June 15, 2017

https://www.sec.gov/Archives/edgar/data/313838/000119312517203939/d358485d20f.htm

(3) Management’s Discussion and Analysis of Financial Condition, Results of Operations and Status of Cash Flows

i) Results of Operations

All amounts are presented on the basis of U.S. GAAP. “Sales and operating revenue” (“sales”) in each business segment represents sales and operating revenue recorded before intersegment transactions are eliminated. “Operating income (loss)” in each business segment represents operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses. For details regarding each segment’s product categories and regarding business segment realignment, please refer to “IV Financial Statements – Notes to Consolidated Financial Statements – 7. Business segment information”.

Consolidated Financial Results

 

     (Billions of yen)  
                 Nine months ended        
December 31
 
      2016     2017  

  Sales and operating revenue

     5,699.6       6,593.0  

  Operating income

     194.3       712.7  

  Income before income taxes

     163.8       690.6  

  Net income attributable to Sony Corporation’s stockholders

     45.6       507.6  

Sales for the nine months ended December 31, 2017 (“the current nine months”) increased by 893.3 billion yen compared to the same period in the previous fiscal year (“year-on-year”) to 6 trillion 593.0 billion yen. This significant increase was primarily due to the impact of foreign exchange rates as well as increases in sales in all segments except for the Mobile Communications segment.

Operating income for the current nine months increased 518.4 billion yen year-on-year to 712.7 billion yen. This significant increase was primarily due to a significant improvement in the operating results in the Semiconductors segment and the absence in the current nine months of the impairment charge of goodwill recorded in the Pictures segment in the same period of the previous fiscal year.

 

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Operating income for the current nine months included the following:

 

A gain resulting from the sale of the entire equity interest in a manufacturing subsidiary in the camera module business: 28.3 billion yen (Semiconductors segment)

 

Insurance recoveries, mainly for opportunity losses related to the 2016 Kumamoto Earthquakes (the “Kumamoto Earthquakes”): 6.7 billion yen (Semiconductors segment) and 2.6 billion yen (IP&S segment)

 

A gain resulting from the sale of manufacturing equipment: 6.7 billion yen (Semiconductors segment)

Operating income for the same period of the previous fiscal year included the following:

 

An impairment charge of goodwill: 112.1 billion yen (962 million U.S. dollars) (Pictures segment)

 

An impairment charge related to the transfer of the battery business: 32.8 billion yen (All Other)

 

An impairment charge against long-lived assets, resulting from the termination of the development and manufacturing of certain high-functionality camera modules for external sale: 23.9 billion yen (Semiconductors segment)

 

Net charges in expenses resulting from the Kumamoto Earthquakes: 14.9 billion yen (Semiconductors segment)

 

Inventory write-downs of certain image sensors for mobile products: 8.3 billion yen (Semiconductors segment)

During the current nine months, restructuring charges, net, decreased 32.3 billion yen year-on-year to 7.1 billion yen, mainly due to the absence in the current nine months of the above-mentioned impairment charge related to the transfer of the battery business. Restructuring charges are recorded as an operating expense and are included in operating income.

Equity in net income of affiliated companies, recorded within operating income, increased 5.8 billion yen year-on-year to 7.4 billion yen.

The net effect of other income and expenses was an expense of 22.1 billion yen, an improvement of 8.5 billion yen year-on-year, mainly due to an increase in interest and dividend income.

Income before income taxes increased 526.8 billion yen to 690.6 billion yen.

During the current nine months, Sony recorded 138.5 billion yen of income tax expense, resulting in an effective tax rate of 20.1% which was lower than the effective tax rate of 49.4% in the same period of the previous fiscal year. This lower effective tax rate was mainly due to profits recorded in Sony Corporation and its national tax filing group in Japan, and in the U.S. consolidated tax filing group, both of which have established valuation allowances for deferred tax assets, compared to the losses recorded in the same period for those groups in the previous fiscal year. In addition, during the three months ended December 31, 2017, Sony recorded a 13.8 billion yen tax benefit related to deferred tax liabilities as a result of U.S. tax reform.

Net income attributable to Sony Corporation’s stockholders increased 462.0 billion yen year-on-year to 507.6 billion yen.

Operating performance by business segment for the current nine months is as follows:

Game & Network Services (G&NS)

Sales increased 231.3 billion yen to 1 trillion 499.2 billion yen, primarily due to an increase in PlayStation®4 (“PS4”) software sales including sales through the network, as well as the impact of foreign exchange rates. Operating income increased 44.8 billion yen year-on-year to 157.8 billion yen, primarily due to the impact of the above-mentioned increase in sales.

Music

The Music segment results include the yen-translated results of Sony Music Entertainment (“SME”) and Sony/ATV Music Publishing (“Sony/ATV”), both U.S.-based operations which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis, and the results of Sony Music Entertainment (Japan) Inc., a Japan-based music company which aggregates its results in yen. The segment also includes equity in net income (loss) for EMI Music Publishing (“EMI”), an affiliated company accounted for under the equity method for which Sony records 39.8% of EMI’s net income in the segment’s operating income.

Sales increased 122.9 billion yen year-on-year to 593.6 billion yen, primarily due to higher Visual Media and Platform sales due to the continued strong performance of the mobile game application Fate/Grand Order, as well as higher Recorded Music sales due to an increase in digital streaming revenues. Operating income increased 36.5 billion yen year-on-year to 96.9 billion yen primarily due to the above-mentioned increase in sales.

 

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Pictures

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

Sales increased 109.5 billion yen year-on-year to 710.1 billion yen. This significant increase in sales was due to higher advertising and subscription revenues for Media Networks in India primarily due to the acquisition of TEN Sports Network and improved ratings, higher licensing revenues for Television Productions primarily due to various U.S. television series, and higher theatrical revenues for Motion Pictures primarily due to the strong worldwide theatrical performances of Spider-Man: Homecoming and Jumanji: Welcome to the Jungle. Operating income of 8.7 billion yen was recorded compared to an operating loss of 114.2 billion yen in the same period of previous fiscal year. This significant improvement in operating results was due to the absence of a 112.1 billion yen (962 million U.S. dollars) impairment of goodwill that was recorded in the same period of the previous fiscal year as well as the above-mentioned increase in sales.

Home Entertainment & Sound (HE&S)

Sales increased 163.4 billion yen year-on-year to 987.6 billion yen, primarily due to an improvement in the product mix of televisions reflecting a shift to high value-added models, as well as the impact of foreign exchange rates. Operating income increased 29.5 billion yen year-on-year to 93.2 billion yen, primarily due to the above-mentioned improvement in the product mix of televisions, partially offset by an increase in marketing costs and an increase in the price of key components.

Imaging Products & Solutions (IP&S)

Sales increased 68.7 billion yen year-on-year to 493.5 billion yen, mainly due to the absence in the current nine months of the impact from the Kumamoto Earthquakes that was recorded in the same period of the previous fiscal year, as well as the impact of foreign exchange rates. Operating income increased by 24.6 billion yen year-on-year to 68.1 billion yen, primarily due to the impact of the above-mentioned increase in sales.

Mobile Communications (MC)

Sales decreased 32.5 billion yen year-on-year to 570.8 billion yen, mainly due to a decrease in smartphone unit sales. Operating income decreased 8.4 billion yen year-on-year to 17.0 billion yen, mainly due to the above-mentioned decrease in sales as well as an increase in the price of key components, partially offset by reductions in operating costs.

Semiconductors

Sales increased 111.5 billion yen year-on-year to 683.6 billion yen, primarily due to a significant increase in unit sales of image sensors for mobile products as well as the absence in the current nine months of a decrease in image sensor production due to the Kumamoto Earthquakes in the same period of the previous fiscal year. Operating income of 165.4 billion yen was recorded, compared to an operating loss of 20.6 billion yen recorded in the same period of the previous fiscal year. This improvement in operating results was primarily due to the impact of the above-mentioned increase in sales, the 28.3 billion yen gain resulting from the sale of the entire equity interest in a manufacturing subsidiary in the camera module business, a 6.7 billion yen gain resulting from the sale of manufacturing equipment, as well as 6.7 billion yen in insurance recoveries related to the Kumamoto Earthquakes, each in the current nine months. Additionally, in the same period of the previous fiscal year, the Semiconductors segment operating results included the above-mentioned 23.9 billion yen impairment charge against long-lived assets relating to camera modules, net charges of 14.9 billion yen in expenses resulting from the Kumamoto Earthquakes, and 8.3 billion yen in inventory write-downs of certain image sensors for mobile products.

Financial Services

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

Revenue increased by 143.3 billion yen year-on-year to 955.7 billion yen, mainly due to a significant increase in net gains from investment performance in the separate account at Sony Life, resulting from favorable financial market conditions during the current nine months compared to the same period of the previous fiscal year, as well as higher insurance premiums revenue reflecting an increase in the policy amount in force. Operating income increased by 28.0 billion yen year-on-year to 139.1 billion yen, mainly due to a gain recorded on the sale of real estate held for investment purposes in the general account at Sony Life.

 

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Operating Performance by Geographic Area

For operating performance by geographic area, please refer to “sales and operating revenue attributed to countries and areas based on location of external customers” in “IV Financial Statements – Notes to Consolidated Financial Statements – 7. Business segment information”.

*    *    *    *    *

Foreign Exchange Fluctuations and Risk Hedging

 

Note for readers of this English translation:

Except for the information set forth below, there was no significant change from the information presented in the Foreign Exchange Fluctuations and Risk Hedging section of the Annual Report on Form 20-F filed with the SEC on June 15, 2017. Although foreign exchange rates have fluctuated during the nine-month period ended December 31, 2017, there has been no significant change in Sony’s risk hedging policy as described in the Annual Report on Form 20-F.

URL: The Annual Report on Form 20-F filed with the SEC on June 15, 2017

https://www.sec.gov/Archives/edgar/data/313838/000119312517203939/d358485d20f.htm

During the current nine months, the average rates of the yen were 111.7 yen against the U.S. dollar and 128.5 yen against the euro, which were 5.1 yen and 10.4 yen lower year-on-year.

For the current nine months, sales were 6 trillion 593.0 billion yen, an increase of 15.7% year-on-year, while on a constant currency basis, sales increased approximately 11% year-on-year. For further details about the impact of foreign exchange rate fluctuations on sales and operating income, please refer to the below Note.

Consolidated operating income was 712.7 billion yen for the current nine months, an increase of 518.4 billion yen year-on-year. Most of the foreign exchange rate impact was attributable to the impact of foreign exchange rates in the G&NS, HE&S, IP&S, MC and Semiconductors segments.

The table below indicates the impact of changes in foreign exchange rates on sales and operating results of each of the above-mentioned five segments. For a detailed analysis of segment performance, please refer to the “Results of Operations” section, which discusses the impact of foreign exchange rates within segments and categories where foreign exchange rate fluctuations had a significant impact.

 

              (Billions of yen)
                     Impact of
changes in
foreign
exchange rates
                          Nine months ended        
December 31
    
              2016           2017     
 

  G&NS

       Sales      1,268.0       1,499.2              +79.4
           Operating income      113.1       157.8              +13.1
 

  HE&S

       Sales      824.2       987.6              +55.3
           Operating income      63.7       93.2              +16.3
 

  IP&S

       Sales      424.7       493.5              +22.2
           Operating income      43.5       68.1              +10.2
 

  MC

       Sales      603.3       570.8              +15.7
           Operating income      25.3       17.0                 -5.2
    Semiconductors        Sales      572.0       683.6              +26.6
           Operating income (loss)      (20.6     165.4              +15.7

 

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In addition, sales for the Music segment increased 26.1% year-on-year to 593.6 billion yen, an approximate 23% increase on a constant currency basis. In the Pictures segment, sales increased 18.2% year-on-year to 710.1 billion yen, an approximate 13% increase on a U.S. dollar basis. As most of the operations in Sony’s Financial Services segment are based in Japan, Sony’s management analyzes the performance of the Financial Services segment on a yen basis only.

Note:

The descriptions of sales on a constant currency basis reflect sales calculated by applying the yen’s monthly average exchange rates from the previous nine months to local currency-denominated monthly sales in the current nine months. For SME and Sony/ATV in the Music segment, and in the Pictures segment, the constant currency amounts are calculated by applying the monthly average U.S. dollar / yen exchange rates after aggregation on a U.S. dollar basis.

The impact of foreign exchange rate fluctuations on sales is calculated by applying the change in the yen’s periodic weighted average exchange rate for the previous nine months from the current nine months to the major transactional currencies in which the sales are denominated. The impact of foreign exchange rate fluctuations on operating income (loss) is calculated by subtracting from the impact on sales the impact on cost of sales and selling, general and administrative expenses calculated by applying the same major transactional currencies calculation process to cost of sales and selling, general and administrative expenses as for the impact on sales. Additionally, the MC segment enters into its own foreign exchange hedging transactions. The impact of those transactions is included in the impact of foreign exchange rate fluctuations on operating income (loss) for that segment.

This information is not a substitute for Sony’s consolidated financial statements measured in accordance with U.S. GAAP. However, Sony believes that these disclosures provide additional useful analytical information to investors regarding the operating performance of Sony.

*    *    *    *    *

Status of Cash Flows

Operating Activities: During the current nine months, there was a net cash inflow of 660.3 billion yen from operating activities, an increase of 347.1 billion yen year-on-year.

For all segments excluding the Financial Services segment, there was a 378.8 billion yen net cash inflow, an increase of 298.2 billion yen year-on-year. This increase was primarily due to an increase in net income after taking into account non-cash adjustments (including depreciation and amortization, other operating (income) expense, net, deferred income taxes and equity in net (income) loss of affiliated companies), as well as an increase in accrued expenses in other current liabilities. This increase in net cash inflow was partially offset by the negative impact of a larger increase in notes and accounts receivable, trade.

The Financial Services segment had a net cash inflow of 295.6 billion yen, an increase of 49.9 billion yen year-on-year. This increase was primarily due to an increase in net income after taking into account non-cash adjustments such as depreciation and amortization, including amortization of deferred insurance acquisition costs.

Investing Activities: During the current nine months, Sony used 566.9 billion yen of net cash in investing activities, a decrease of 414.6 billion yen year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 141.1 billion yen, a decrease of 100.0 billion yen year-on-year. This decrease was mainly due to a decrease in payments for fixed asset purchases such as semiconductor manufacturing equipment.

The Financial Services segment used 424.8 billion yen of net cash, a decrease of 314.5 billion yen year-on-year. This decrease was mainly due to a year-on-year decrease in payments for investments and advances at Sony Life and Sony Bank.

In all segments excluding the Financial Services segment, net cash generated in operating and investing activities combined *1 for the current nine months was 237.7 billion yen, a 398.3 billion yen improvement from net cash used in the same period of the previous fiscal year.

Financing Activities: During the current nine months, there was a net cash inflow of 265.2 billion yen from financing activities, a decrease of 202.7 billion yen year-on-year.

 

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Table of Contents

For all segments excluding the Financial Services segment, there was a 38.1 billion yen net cash outflow, a decrease of 59.0 billion yen year-on-year. This decrease was mainly due to a year-on-year decrease in repayment of long-term debt, as well as the absence in the current nine months of the payment for the purchase of Sony/ATV shares from noncontrolling interests in the same period of the previous fiscal year. On the other hand, during the same period of the previous fiscal year, Sony raised capital from the issuance of straight bonds.

In the Financial Services segment, there was a 288.2 billion yen net cash inflow, a decrease of 262.7 billion yen year-on-year. This decrease was primarily due to a decrease in short-term borrowings at Sony Life, as well as a smaller increase in deposits from customers at Sony Bank.

Total Cash and Cash Equivalents: Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents at December 31, 2017 was 1 trillion 328.9 billion yen. Cash and cash equivalents of all segments excluding the Financial Services segment was 901.5 billion yen at December 31, 2017, an increase of 209.8 billion yen compared with the balance as of March 31, 2017, and an increase of 420.9 billion yen, compared with the balance as of December 31, 2016. Sony believes that it continues to maintain sufficient liquidity through access to a total, translated into yen, of 528.8 billion yen of unused committed lines of credit with financial institutions in addition to the cash and cash equivalents balance at December 31, 2017. Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 427.4 billion yen at December 31, 2017, an increase of 159.0 billion yen compared with the balance as of March 31, 2017, and an increase of 136.4 billion yen compared with the balance as of December 31, 2016.

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

A reconciliation of the differences between the Consolidated Statement of Cash Flows reported and cash flows from operating and investing activities combined excluding the Financial Services segment’s activities is as follows:

 

    (Billions of yen)  
                Nine months ended        
December 31
 
    2016     2017  

  Net cash provided by operating activities reported in the consolidated statements of cash flows

    313.3       660.3  

  Net cash used in investing activities reported in the consolidated statements of cash flows

    (981.5     (566.9
 

 

 

   

 

 

 

  Subtotal (A)

    (668.3     93.4  

  Less: Net cash provided by operating activities within the Financial Services segment (B)

    245.7       295.6  

  Less: Net cash used in investing activities within the Financial Services segment (C)

    (739.3     (424.8

  Eliminations *2 (D)

    14.1       15.1  
 

 

 

   

 

 

 

  Cash flow provided by (used in) operating and investing activities combined excluding the Financial Services segment’s activities (A)-(B)-(C)+(D)

    (160.6     237.7  
 

 

 

   

 

 

 

 

*2

Eliminations primarily consist of intersegment dividend payments.

 

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Table of Contents
     (Yen in millions)  
     Nine months ended December 31  
     Financial Services     Sony without
Financial Services
    Consolidated  
     2016     2017     2016     2017     2016     2017  

 

   

 

 

   

 

 

 

Cash flows from operating activities:

            

Net income (loss)

     79,331       99,059       17,856       468,111       82,832       552,097  

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

     52,350       47,887       207,204       210,300       259,554       258,187  

Amortization of film costs

     -       -       190,539       259,709       190,539       259,709  

Other operating (income) expense, net

     69       33       165,385       (40,165     165,454       (40,131

(Gain) loss on sale or devaluation of securities investments,  net

     29       213       4,706       324       4,735       537  

(Gain) loss on revaluation of marketable securities held for trading purposes, net

     (42,727     (109,888     -       -       (42,727     (109,888

Changes in assets and liabilities:

            

(Increase) decrease in notes and accounts receivable, trade

     (2,261     (3,165     (371,914     (484,877     (372,978     (488,285

(Increase) decrease in inventories

     -       -       (18,622     (88,954     (18,622     (88,954

(Increase) decrease in film costs

     -       -       (242,875     (279,082     (242,875     (279,082

Increase (decrease) in notes and accounts payable, trade

     -       -       87,698       90,484       87,698       90,484  

Increase (decrease) in future insurance policy benefits and other

     336,157       424,084       -       -       336,157       424,084  

(Increase) decrease in deferred insurance acquisition costs

     (70,070     (65,248     -       -       (70,070     (65,248

(Increase) decrease in marketable securities held for trading purposes

     (60,868     (64,727     -       -       (60,868     (64,727

Other

     (46,339     (32,631     40,605       242,971       (5,577     211,546  

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     245,671       295,617       80,582       378,821       313,252       660,329  

 

   

 

 

   

 

 

 

Cash flows from investing activities:

            

Payments for purchases of fixed assets

     (10,452     (10,553     (250,005     (179,240     (260,457     (189,780

Payments for investments and advances

     (943,712     (671,982     (7,410     (16,456     (951,199     (688,508

Proceeds from sales or return of investments and collections of advances

     213,629       257,582       13,837       5,404       226,461       262,056  

Other

     1,256       157       2,425       49,167       3,681       49,319  

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (739,279     (424,796     (241,153     (141,125     (981,514     (566,913

 

   

 

 

   

 

 

 

Cash flows from financing activities:

            

Increase (decrease) in borrowings, net

     319,188       157,271       28,914       (12,094     347,830       145,176  

Increase (decrease) in deposits from customers, net

     254,279       154,374       -       -       254,279       154,374  

Dividends paid

     (23,926     (23,921     (25,308     (27,750     (25,308     (27,750

Other

     1,355       457       (100,734     1,750       (108,950     (6,612

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     550,896       288,181       (97,128     (38,094     467,851       265,188  

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     -       -       (11,525     10,179       (11,525     10,179  

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     57,288       159,002       (269,224     209,781       (211,936     368,783  

Cash and cash equivalents at beginning of the fiscal year

     233,701       268,382       749,911       691,760       983,612       960,142  

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of the period

     290,989       427,384       480,687       901,541       771,676       1,328,925  

 

 

 

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Table of Contents

ii) Issues Facing Sony and Management’s Response to those Issues

 

Note for readers of this English translation:

There was no significant change from the information presented in the Trend Information section of the Annual Report on Form 20-F filed with the SEC on June 15, 2017. Any forward-looking statements included in the descriptions below are based on management’s current judgment.

URL: The Annual Report on Form 20-F filed with the SEC on June 15, 2017

https://www.sec.gov/Archives/edgar/data/313838/000119312517203939/d358485d20f.htm

iii) Research and Development

 

Note for readers of this English translation:

There was no significant change from the information presented as the Research and Development in the Annual Report on Form 20-F filed with the SEC on June 15, 2017.

URL: The Annual Report on Form 20-F filed with the SEC on June 15, 2017

https://www.sec.gov/Archives/edgar/data/313838/000119312517203939/d358485d20f.htm

Research and development costs for the nine months ended December 31, 2017 totaled 323.4 billion yen. There were no significant changes in research and development activities for the period.

iv) Employees

 

Note for readers of this English translation:

Excluding the below, there was no significant change from the information presented in the Employees section of the Annual Report on Form 20-F filed with the SEC on June 15, 2017.

URL: The Annual Report on Form 20-F filed with the SEC on June 15, 2017

https://www.sec.gov/Archives/edgar/data/313838/000119312517203939/d358485d20f.htm

As of December 31, 2017, Sony Corporation had 2,555 employees, a decrease of 3,630 employees from 6,185 employees as of March 31, 2017. The total number of employees decreased mainly due to the separation of its IP&S business. There is no significant change in the number of employees of Sony on the consolidated basis.

 

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v) Liquidity and Capital Resources

 

Note for readers of this English translation:

Except for the information related to the committed lines of credit and the issuance of unsecured straight bonds below, there was no significant change from the information presented in the Annual Report on Form 20-F filed with the SEC on June 15, 2017. The changes are indicated by underline below. Any forward-looking statements included in the descriptions below are based on management’s current judgment.

URL: The Annual Report on Form 20-F filed with the SEC on June 15, 2017

https://www.sec.gov/Archives/edgar/data/313838/000119312517203939/d358485d20f.htm

Sony typically raises funds through straight bonds, CP programs and bank loans (including syndicated loans). If market disruption and volatility occur and Sony could not raise sufficient funds from these sources, Sony may also draw down funds from contractually committed lines of credit from various financial institutions. Sony has a total, translated into yen, of 528.8 billion yen in unused committed lines of credit, as of December 31, 2017. Details of those committed lines of credit are: a 300.0 billion yen committed line of credit contracted with a syndicate of Japanese banks, effective until July 2019, a 1.5 billion U.S. dollar multi-currency committed line of credit also with a syndicate of Japanese banks, effective until December 2018, and a 525 million U.S. dollar multi-currency committed line of credit contracted with a syndicate of foreign banks, effective until March 2018, in all of which Sony Corporation and Sony Global Treasury Services Plc are defined as borrowers. These contracts are aimed at securing sufficient liquidity in a quick and stable manner even in the event of turmoil within the financial and capital markets.

 

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Table of Contents

  III    Company Information

  (1) Information on the Company’s Shares

  i) Total Number of Shares

  1) Total Number of Shares

 

Class

   Total number of shares authorized to be issued

Common stock

   3,600,000,000

Total

   3,600,000,000

  2) Number of Shares Issued

 

Class        Number of shares issued    Name of Securities Exchanges
where the shares are listed or
authorized Financial
Instruments Firms Association
where the shares are registered
   Description
  

As of the end of the    

third quarterly period    

(December 31, 2017)    

  

As of the filing date of    

the Quarterly    

Securities Report    

(February 8, 2018)    

     
Common stock      1,265,651,953    1,265,827,151   

Tokyo Stock Exchange

New York Stock Exchange

   The number of shares constituting one full unit is one hundred (100).

 

Total    

 

  

 

1,265,651,953

 

  

 

1,265,827,151

 

  

 

 

  

 

 

  Notes:

  1.

The Company’s shares of common stock are listed on the First Section of the Tokyo Stock Exchange in Japan.

  2.

The number of shares issued as of the filing date of this Quarterly Securities Report (Shihanki Houkokusho) does not include shares issued upon the exercise of stock acquisition rights (“SARs”) (including the exercise of unsecured convertible bonds with SARs (6th series)) during February 2018, the month in which this Quarterly Securities Report was filed.

ii) Stock Acquisition Rights

 

  Note for readers of this English translation:

  The Japanese-language Quarterly Securities Report includes a summary of the main terms and conditions of the SARs listed below which were issued during the three months ended December 31, 2017. A summary of such terms and conditions has previously been filed with or submitted to the SEC under Form 6-K or Form S-8. There has been no change to such terms and conditions since the applicable date of such filings or submissions.

URL: The list of documents previously filed or submitted by the Company

http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000313838&owner=include&count=40

Stock acquisition rights issued during the three months ended December 31, 2017

 

Name

(Date of resolution of the Board of Directors)

  

Number of

SARs issued

  

Number of shares of

common stock to be issued

or transferred

The thirty-fourth series of Common Stock Acquisition Rights (October 31, 2017)    13,915    1,391,500
The thirty-fifth series of Common Stock Acquisition Rights (October 31, 2017)    15,549    1,554,900

iii) Status of the Exercise of Moving Strike Convertible Bonds

   Not applicable.

 

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iv) Description of Rights Plan

   Not applicable.

v) Changes in the Total Number of Shares Issued and the Amount of Common Stock, etc.

 

Period       Change in the  
total number of  
shares issued  
(Thousands)   
  Balance of the
 total number of   
shares issued  
(Thousands)   
 

Change in  

the amount of  

common stock  
(Yen in Millions)   

 

Balance of  

the amount of  

common stock  
(Yen in Millions)   

 

Change in the  
legal capital  
surplus  

(Yen in Millions)   

 

Balance of the  
legal capital  
surplus  

(Yen in Millions)   

From October 1 to
December 31, 2017 

 

  1,003   1,265,652   1,922   864,078   1,922   1,077,771

Notes:

1.

The increase mentioned above is due to the exercise of SARs (including the exercise of unsecured convertible bonds with SARs (6th series)) and the issuance of new shares as restricted stock compensation.

2.

Upon the exercise of SARs during the period from January 1, 2018 to January 31, 2018 the total number of shares issued increased by 175 thousand shares, and the amount of common stock and the legal capital surplus increased by 332 million yen, respectively.

 

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Table of Contents

vi) Status of Major Shareholders

(As of December 31, 2017)

Name   Address  

Number of
shares held

(Thousands)

 

Percentage

of shares held
to total shares
issued (%)

 

Citibank as Depositary Bank for Depositary Receipt Holders *1

(Local Custodian: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)

 

 

New York, U.S.A.

(2-7-1, Marunouchi, Chiyoda-ku,  Tokyo)

  112,844    8.92

 

JPMorgan Chase Bank 380055 *2

(Local Custodian: Mizuho Bank, Ltd.)

 

 

New York, U.S.A.

(Shinagawa Intercity Tower A, 2-15-1, Konan, Minato-ku, Tokyo)

  71,498    5.65

 

The Master Trust Bank of Japan, Ltd.
(Trust account) *3

 

  2-11-3,  Hamamatsu-cho, Minato-ku, Tokyo    69,245    5.47

 

Japan Trustee Services Bank, Ltd.
(Trust account) *3

 

  1-8-11, Harumi, Chuo-ku, Tokyo   67,154    5.31

 

State Street Bank and Trust Company *2

(Local Custodian: The Hongkong and Shanghai Banking Corporation Limited)

 

 

Boston, U.S.A.

(3-11-1, Nihonbashi, Chuo-ku, Tokyo)

  27,359    2.16

 

Japan Trustee Services Bank, Ltd.
(Trust account 5) *3

 

  1-8-11, Harumi, Chuo-ku, Tokyo   25,463    2.01

 

State Street Bank West Client - Treaty 505234 *2

(Local Custodian: Mizuho Bank, Ltd.)

 

 

North Quincy, U.S.A.

(Shinagawa Intercity Tower A, 2-15-1, Konan, Minato-ku, Tokyo)

  21,882    1.73

 

Japan Trustee Services Bank, Ltd.
(Trust account 1) *3

 

  1-8-11, Harumi, Chuo-ku, Tokyo   18,909    1.49

 

Japan Trustee Services Bank, Ltd.
(Trust account 2) *3

 

  1-8-11, Harumi, Chuo-ku, Tokyo   18,683    1.48

 

State Street Bank and Trust Company 505223 *2

(Local Custodian: Mizuho Bank, Ltd.)

 

 

Boston, U.S.A.

(Shinagawa Intercity Tower A, 2-15-1, Konan, Minato-ku, Tokyo)

  17,634    1.39
Total           450,671    35.61

Notes:

*1.

Citibank as Depositary Bank for Depositary Receipt Holders is the nominee of Citibank, N.A.

*2.

Each shareholder provides depositary services for shares owned by institutional investors, mainly in Europe and North America. They are also the nominees for these investors.

*3.

The shares held by each shareholder are held in trust for investors, including shares in securities investment trusts.

  4.

Sumitomo Mitsui Trust Bank, Limited sent a copy of its “Bulk Shareholding Report” as of April 4, 2014 (which was filed with the Kanto Financial Bureau in Japan) to the Company and reported that it held shares, etc. of the Company as of March 31, 2014 as provided in the below table. As of December 31, 2017, the Company has not been able to confirm such entry of Sumitomo Mitsui Trust Bank, Limited in the register of shareholders.

Name  

Number of shares, etc. held  

(Thousands)

 

Percentage of shares, etc. held

to total shares issued (%)

  Sumitomo Mitsui Trust Bank, Limited and the 2 Joint Holders     52,312   5.04

 

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Table of Contents
  5.

BlackRock Japan Co., Ltd. filed its “Amendment to the Bulk Shareholding Report” with the Kanto Financial Bureau in Japan as of March 22, 2017 and reported that it held shares of the Company as of March 15, 2017 as provided in the below table. As of December 31, 2017, the Company has not been able to confirm such entry of BlackRock Japan Co., Ltd. in the register of shareholders.

Name  

Number of shares held

(Thousands)

 

Percentage of shares held

to total shares issued (%)

  BlackRock Japan Co., Ltd. and the 8 Joint Holders                       79,185   6.27
  6.

Capital Research and Management Company filed its “Amendment to the Bulk Shareholding Report” with the Kanto Financial Bureau in Japan as of April 7, 2017 and reported that it held shares of the Company as of March 31, 2017 as provided in the below table. As of December 31, 2017, the Company has not been able to confirm such entry of Capital Research and Management Company in the register of shareholders.

Name  

Number of shares held

(Thousands)

 

Percentage of shares held

to total shares issued (%)

  Capital Research and Management Company                                90,945   7.20

vii) Status of Voting Rights

1) Shares Issued

(As of December 31, 2017)

 

Classification     Number of shares of  
  common stock  
 

  Number of voting rights  

(Units)

  Description       

Shares without voting rights

              —               

Shares with restricted voting rights

(Treasury stock, etc.)

              —               

Shares with restricted voting rights (Others)

              —               

Shares with full voting rights

(Treasury stock, etc.)

         1,105,600    

Shares with full voting rights (Others)

  1,262,510,600   12,625,106  

Shares constituting less than one full unit

         2,035,753     Shares constituting    
less than one full unit    

(100 shares)    

Total number of shares issued

  1,265,651,953    

Total voting rights held by all shareholders

              —              12,625,106  

 

Note:

 

Included in “Shares with full voting rights (Others)” under “Number of shares of common stock” are 19,000 shares of common stock held under the name of Japan Securities Depository Center, Incorporated. Also included in “Shares with full voting rights (Others)” under “Number of voting rights (Units)” are 190 units of voting rights relating to the shares of common stock with full voting rights held under the name of Japan Securities Depository Center, Incorporated.

 

- 17 -


Table of Contents

2) Treasury Stock, Etc.

(As of December 31, 2017)

 

Name of shareholder     Address of shareholder   Number of  
shares held  
under own  
name 
  Number of  
shares held  
under the names  
of others   
  Total number  
of shares  
held  
 

Percentage of  
shares held to  

total shares  
issued (%)  

Sony Corporation

(Treasury stock)

  1-7-1, Konan, Minato-ku,  Tokyo     1,105,600     1,105,600   0.09

Total

    1,105,600     1,105,600   0.09

 

Note:

 

In addition to the 1,105,600 shares listed above, there are 300 shares of common stock held in the name of the Company in the register of shareholders that the Company does not beneficially own. These shares are included in “Shares with full voting rights (Others)” in Table 1) “Shares Issued” above.

(2)    Directors and Corporate Executive Officers

The change in directors or corporate executive officers in the period from the filing date of the Securities Report (Yukashoken Houkokusho) for the fiscal year ended March 31, 2017 to the filing date of this Quarterly Securities Report (Shihanki Houkokusho) is as follows:

i) Retired Corporate Executive Officer

 

Title    Position    Name      Date of Retirement  

Corporate Executive Officer  

  

                    Executive  Vice President                    

(Officer in charge of Game & Network Services Business)

     Andrew House        October 3, 2017  

ii) The number of male and female Directors and Corporate Executive Officers after the change

   The Directors and Corporate Executive Officers are composed of 18 males and 1 female.

   (The percentage of female Directors and Corporate Executive Officers is 5.3%.)

 

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Table of Contents

IV         Financial Statements

     Page

(1) Consolidated Financial Statements

   20

      (i)         Consolidated Balance Sheets

   20

      (ii)        Consolidated Statements of Income

   22

      (iii)       Consolidated Statements of Comprehensive Income

   24

      (iv)       Consolidated Statements of Cash Flows

   25

(2) Other Information

   46

 

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Table of Contents

(1) Consolidated Financial Statements

(i)    Consolidated Balance Sheets (Unaudited)

 

Sony Corporation and Consolidated Subsidiaries

            Yen in millions                  
     At March 31,
            2017            
    At December 31,
            2017            
 

ASSETS

   

Current assets:

   

Cash and cash equivalents

    960,142       1,328,925  

Marketable securities

    1,051,441       1,221,687  

Notes and accounts receivable, trade

    1,006,961       1,535,912  

Allowance for doubtful accounts and sales returns

    (53,150     (62,135

Inventories

    640,835       753,658  

Other receivables

    223,632       234,002  

Prepaid expenses and other current assets

    525,861       548,742  

Total current assets

    4,355,722       5,560,791  

Film costs

    336,928       365,783  

Investments and advances:

   

Affiliated companies

    149,371       155,303  

Securities investments and other

    9,962,422       10,401,319  
      10,111,793       10,556,622  

Property, plant and equipment:

   

Land

    117,293       114,967  

Buildings

    666,381       685,576  

Machinery and equipment

    1,842,852       1,855,459  

Construction in progress

    28,779       45,041  
    2,655,305       2,701,043  

Less – Accumulated depreciation

    1,897,106       1,909,436  
      758,199       791,607  

Other assets:

   

Intangibles, net

    584,185       571,027  

Goodwill

    522,538       552,336  

Deferred insurance acquisition costs

    568,837       595,180  

Deferred income taxes

    98,958       91,452  

Other

    323,396       335,878  
      2,097,914       2,145,873  

Total assets

    17,660,556       19,420,676  

  (Continued on following page.)

 

- 20 -


Table of Contents

            Consolidated Balance Sheets (Unaudited)

 

            Yen in millions                  
    

At March 31,

            2017             

   

At December 31,

            2017             

 

LIABILITIES

   

Current liabilities:

   

Short-term borrowings

    464,655       537,443  

Current portion of long-term debt

    53,424       245,646  

Notes and accounts payable, trade

    539,900       658,250  

Accounts payable, other and accrued expenses

    1,394,758       1,621,542  

Accrued income and other taxes

    106,037       213,874  

Deposits from customers in the banking business

    2,071,091       2,159,747  

Other

    591,874       585,348  

Total current liabilities

    5,221,739       6,021,850  

Long-term debt

    681,462       594,195  

Accrued pension and severance costs

    396,715       403,663  

Deferred income taxes

    432,824       428,147  

Future insurance policy benefits and other

    4,834,492       5,104,322  

Policyholders’ account in the life insurance business

    2,631,073       2,854,660  

Other

    314,771       284,283  

Total liabilities

    14,513,076       15,691,120  

Redeemable noncontrolling interest

    12,058       14,609  

Commitments and contingent liabilities

               

EQUITY

               

Sony Corporation’s stockholders’ equity:

   

Common stock, no par value –

   

At March 31, 2017–Shares authorized: 3,600,000,000, shares issued: 1,263,763,660

    860,645    

At December 31, 2017–Shares authorized: 3,600,000,000, shares issued: 1,265,651,953

      864,078  

Additional paid-in capital

    1,275,337       1,279,422  

Retained earnings

    984,368       1,476,194  

Accumulated other comprehensive income –

   

Unrealized gains on securities, net

    126,635       131,333  

Unrealized gains and losses on derivative instruments, net

    (58     92  

Pension liability adjustment

    (308,736     (301,749

Foreign currency translation adjustments

    (436,610     (404,996
    (618,769     (575,320

Treasury stock, at cost

   

Common stock

   

At March 31, 2017–1,073,222 shares

    (4,335  

At December 31, 2017–1,105,679 shares

            (4,481
      2,497,246       3,039,893  

Noncontrolling interests

    638,176       675,054  

Total equity

    3,135,422       3,714,947  

Total liabilities and equity

    17,660,556       19,420,676  

  The accompanying notes are an integral part of these statements.

 

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Table of Contents

  (ii)    Consolidated Statements of Income (Unaudited)

 

Sony Corporation and Consolidated Subsidiaries

    Yen in millions  
              Nine months ended December 31             
         2016              2017      

Sales and operating revenue:

    

Net sales

    4,834,013        5,573,273  

Financial services revenue

    806,954        950,292  

Other operating revenue

    58,679        69,396  
      5,699,646        6,592,961  

Costs and expenses:

    

Cost of sales

    3,559,927        3,957,700  

Selling, general and administrative

    1,088,096        1,159,190  

Financial services expenses

    693,537        810,967  

Other operating (income) expense, net

    165,454        (40,131
      5,507,014        5,887,726  

Equity in net income of affiliated companies

    1,679        7,441  

Operating income

    194,311        712,676  

Other income:

    

Interest and dividends

    7,859        16,556  

Gain on sale of securities investments, net

    155        1,479  

Other

    1,906        2,529  
      9,920        20,564  

Other expenses:

    

Interest

    11,902        10,782  

Loss on devaluation of securities investments

    4,860        1,803  

Foreign exchange loss, net

    19,230        25,154  

Other

    4,476        4,923  
      40,468        42,662  

Income before income taxes

    163,763        690,578  

Income taxes

    80,931        138,481  

Net income

    82,832        552,097  

Less - Net income attributable to noncontrolling interests

    37,193        44,477  

Net income attributable to Sony Corporation’s stockholders

    45,639        507,620  
    Yen  
            Nine months ended December 31          
         2016              2017      

Per share data:

    

Net income attributable to Sony Corporation’s stockholders

    

– Basic

    36.17        401.76  

– Diluted

    35.43        393.05  

The accompanying notes are an integral part of these statements.

 

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Table of Contents

  Consolidated Statements of Income (Unaudited)

 

Sony Corporation and Consolidated Subsidiaries

                                                             
    Yen in millions  
            Three months ended December 31           
       2016              2017      

Sales and operating revenue:

    

Net sales

    2,059,578        2,279,714  

Financial services revenue

    317,342        371,498  

Other operating revenue

    20,579        21,105  
      2,397,499        2,672,317  

Costs and expenses:

    

Cost of sales

    1,495,036        1,607,962  

Selling, general and administrative

    411,652        415,532  

Financial services expenses

    286,740        315,404  

Other operating (income) expense, net

    113,013        (13,119
      2,306,441        2,325,779  

Equity in net income of affiliated companies

    1,314        4,299  

Operating income

    92,372        350,837  

Other income:

    

Interest and dividends

    2,502        3,519  

Gain on sale of securities investments, net

    92        833  

Other

    189        1,531  
      2,783        5,883  

Other expenses:

    

Interest

    3,749        3,536  

Loss on devaluation of securities investments

    4,810        1,324  

Foreign exchange loss, net

    18,420        5,888  

Other

    1,949        2,853  
      28,928        13,601  

Income before income taxes

    66,227        343,119  

Income taxes

    36,956        28,234  

Net income

    29,271        314,885  

Less - Net income attributable to noncontrolling interests

    9,640        18,988  

Net income attributable to Sony Corporation’s stockholders

    19,631        295,897  
    Yen  
            Three months ended December 31          
     2016      2017  

Per share data:

    

Net income attributable to Sony Corporation’s stockholders

    

– Basic

    15.55        234.08  

– Diluted

    15.24        228.91  

The accompanying notes are an integral part of these statements.

 

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Table of Contents

  (iii)    Consolidated Statements of Comprehensive Income (Unaudited)

 

Sony Corporation and Consolidated Subsidiaries

                                                           
    Yen in millions  
            Nine months ended December 31           
         2016             2017      

Net income

    82,832       552,097  

Other comprehensive income, net of tax —

   

Unrealized gains (losses) on securities

    (25,645     7,030  

Unrealized gains on derivative instruments

    3,690       150  

Pension liability adjustment

    9,297       7,009  

Foreign currency translation adjustments

    5,377       33,742  

Total comprehensive income

    75,551       600,028  

Less – Comprehensive income attributable to noncontrolling interests

    21,307       48,959  

  Comprehensive income attributable to Sony Corporation’s stockholders

    54,244       551,069  
    Yen in millions  
            Three months ended December 31          
         2016             2017      

Net income

    29,271       314,885  

Other comprehensive income, net of tax —

   

Unrealized gains (losses) on securities

    (8,314     11,688  

Unrealized gains (losses) on derivative instruments

    3,430       (79

Pension liability adjustment

    3,250       2,365  

Foreign currency translation adjustments

    112,440       3,655  

Total comprehensive income

    140,077       332,514  

Less – Comprehensive income attributable to noncontrolling interests

    2,152       21,603  

  Comprehensive income attributable to Sony Corporation’s stockholders

    137,925       310,911  

  The accompanying notes are an integral part of these statements.

 

- 24 -


Table of Contents

  (iv)     Consolidated Statements of Cash Flows (Unaudited)

 

Sony Corporation and Consolidated Subsidiaries

 

                                                           
    Yen in millions  
        Nine months ended December 31           
              2016                         2017          

Cash flows from operating activities:

   

Net income

    82,832       552,097  

Adjustments to reconcile net income to net cash provided by operating activities –

   

Depreciation and amortization, including amortization of deferred insurance acquisition costs

    259,554       258,187  

Amortization of film costs

    190,539       259,709  

Accrual for pension and severance costs, less payments

    7,270       3,948  

Other operating (income) expense, net

    165,454       (40,131

Loss on sale or devaluation of securities investments, net

    4,706       324  

Gain on revaluation of marketable securities held in the financial services business for trading purposes, net

    (42,727     (109,888

Loss on revaluation or impairment of securities investments held in the financial services business, net

    29       213  

Deferred income taxes

    4,450       (4,551

Equity in net (income) loss of affiliated companies, net of dividends

    5,770       (2,125

Changes in assets and liabilities:

   

Increase in notes and accounts receivable, trade

    (372,978     (488,285

Increase in inventories

    (18,622     (88,954

Increase in film costs

    (242,875     (279,082

Increase in notes and accounts payable, trade

    87,698       90,484  

Increase in accrued income and other taxes

    65,951       70,983  

Increase in future insurance policy benefits and other

    336,157       424,084  

Increase in deferred insurance acquisition costs

    (70,070     (65,248

Increase in marketable securities held in the financial services business for trading purposes

    (60,868  

 

(64,727

Increase in other current assets

    (46,705     (25,633

Increase in other current liabilities

    55,453       189,524  

Other

    (97,766     (20,600

Net cash provided by operating activities

    313,252       660,329  

(Continued on following page.)

 

 

- 25 -


Table of Contents

            Consolidated Statements of Cash Flows (Unaudited)

 

 

                                                             
     Yen in millions  
         Nine months ended December 31      

 

           2016                     2017          

Cash flows from investing activities:

    

Payments for purchases of fixed assets

     (260,457     (189,780

Proceeds from sales of fixed assets

     9,134       15,095  

Payments for investments and advances by financial services business

     (943,712     (671,982

Payments for investments and advances (other than financial services business)

     (7,487     (16,526

Proceeds from sales or return of investments and collections of advances by financial services business

     212,624       256,652  

Proceeds from sales or return of investments and collections of advances (other than financial services business)

     13,837       5,404  

Proceeds from sales of businesses

     3,262       44,624  

Other

     (8,715     (10,400

Net cash used in investing activities

     (981,514     (566,913

Cash flows from financing activities:

    

Proceeds from issuance of long-term debt

     255,416       92,833  

Payments of long-term debt

     (182,670     (20,570

Increase in short-term borrowings, net

     275,084       72,913  

Increase in deposits from customers in the financial services business, net

     254,279       154,374  

Dividends paid

     (25,308     (27,750

Payment for purchase of Sony/ATV shares from noncontrolling interests

     (76,565     -  

Other

     (32,385     (6,612

Net cash provided by financing activities

     467,851       265,188  

Effect of exchange rate changes on cash and cash equivalents

     (11,525     10,179  

Net increase (decrease) in cash and cash equivalents

     (211,936     368,783  

Cash and cash equivalents at beginning of the fiscal year

     983,612       960,142  

Cash and cash equivalents at end of the period

     771,676       1,328,925  

  The accompanying notes are an integral part of these statements.

 

- 26 -


Table of Contents

    Index to Notes to Consolidated Financial Statements

 

 

Sony Corporation and Consolidated Subsidiaries

 

Notes to Consolidated Financial Statements   

Page

 

  1.   Summary of significant accounting policies

     28  

  2.   Marketable securities and securities investments

     29  

  3.   Fair value measurements

     30  

  4.   Supplemental equity and comprehensive income information

     32  

  5.   Reconciliation of the differences between basic and diluted EPS

     34  

  6.   Commitments, contingent liabilities and other

     35  

  7.   Business segment information

     37  

 

- 27 -


Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

Sony Corporation and Consolidated Subsidiaries

 

1.

Summary of significant accounting policies

The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), except for certain disclosures which have been omitted. Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform with U.S. GAAP. These adjustments were not recorded in the statutory books and records as Sony Corporation and its subsidiaries in Japan maintain their records and prepare their statutory financial statements in accordance with accounting principles generally accepted in Japan while its foreign subsidiaries maintain their records and prepare their financial statements in conformity with accounting principles generally accepted in the countries of their domiciles.

 

(1)

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 transactions. Such income tax provision is separately reported from the provision based on the ETR in the interim period in which it occurs.

 

(2)

Reclassifications:

Certain reclassifications of the financial statements and accompanying footnotes for the nine and three months ended December 31, 2016 have been made to conform to the presentation for the nine and three months ended December 31, 2017.

 

- 28 -


Table of Contents
2.

Marketable securities and securities investments

Marketable securities and securities investments, primarily included in the Financial Services segment, are comprised of debt and equity securities for which the aggregate cost, gross unrealized gains and losses and fair value pertaining to available-for-sale securities and held-to-maturity securities are as follows:

 

    Yen in millions  
    March 31, 2017     December 31, 2017  
    Cost     Gross
unrealized
gains
    Gross
unrealized
losses
    Fair value     Cost     Gross
unrealized
gains
    Gross
unrealized
losses
    Fair value  

Available-for-sale:

               

Debt securities:

               

Japanese national government bonds

    1,161,493         182,836         (928)         1,343,401         1,189,954         180,640         (504)         1,370,090    

Japanese local government bonds

    60,450         144         (63)         60,531         66,022         97         (105)         66,014    

Japanese corporate bonds

    163,785         7,864         (1,846)         169,803         194,204         8,572         (1,386)         201,390    

Foreign government bonds

    27,601         359         (918)         27,042         47,633         2,203         (314)         49,522    

Foreign corporate bonds

    396,097         4,168         (719)         399,546         375,729         2,372         (444)         377,657    

Other

    15,192         -          (0)         15,192         82,236         1         -          82,237    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    1,824,618         195,371         (4,474)         2,015,515         1,955,778         193,885         (2,753)         2,146,910    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities

    55,928         69,937         (377)         125,488         55,711         78,807         (269)         134,249    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Held-to-maturity securities:

               

Japanese national government bonds *

    5,661,191         1,520,904         (30,553)         7,151,542         5,832,482         1,547,982         (28,878)         7,351,586    

Japanese local government bonds

    4,101         449         -          4,550         3,913         420         -          4,333    

Japanese corporate bonds

    230,011         12,346         (22,071)         220,286         320,165         13,646         (21,692)         312,119    

Foreign government bonds

    253,019         5,269         (22,868)         235,420         279,810         15,318         (12,014)         283,114    

Foreign corporate bonds

    198         18         -          216         198         15         -          213    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    6,148,520         1,538,986         (75,492)         7,612,014         6,436,568         1,577,381         (62,584)         7,951,365    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    8,029,066         1,804,294         (80,343)         9,753,017         8,448,057         1,850,073         (65,606)         10,232,524    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

* As of December 31, 2017, held-to-maturity securities include 268,725 million yen of pledged Japanese national government bonds as collateral for transactions with short-term repurchase agreement.

 

- 29 -


Table of Contents
3.

Fair value measurements

The fair value of Sony’s assets and liabilities that are measured at fair value on a recurring basis are as follows:

 

     Yen in millions  
     March 31, 2017  
            Presentation in the consolidated balance sheets  
       Level 1          Level 2          Level 3          Total        Marketable
  securities  
     Securities
investments
  and other  
     Other
current
assets/
  liabilities  
     Other
noncurrent
assets/
liabilities
 

Assets:

                       

Trading securities

     611,108          310,212          -          921,320          921,320          -          -          -    

Available-for-sale securities

                       

Debt securities

                       

Japanese national government bonds

     -          1,343,401          -          1,343,401          18,483          1,324,918          -          -    

Japanese local government bonds

     -          60,531          -          60,531          8,518          52,013          -          -    

Japanese corporate bonds

     -          168,493          1,310          169,803          8,433          161,370          -          -    

Foreign government bonds

     -          27,042          -          27,042          1,007          26,035          -          -    

Foreign corporate bonds

     -          358,369          41,177          399,546          86,708          312,838          -          -    

Other

     -          -          15,192          15,192          -          15,192          -          -    

Equity securities

     125,306          182          -          125,488          -          125,488          -          -    

Other investments *1

     6,589          4,525          10,483          21,597          -          21,597          -          -    

Derivative assets *2, *3

     981          26,279          -          27,260          -          -          25,409          1,851    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

     743,984          2,299,034          68,162          3,111,180          1,044,469          2,039,451          25,409          1,851    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

                       

Derivative liabilities *2, *3

     520          33,930          -          34,450          -          -          15,743          18,707    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

     520          33,930          -          34,450          -          -          15,743          18,707    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents
     Yen in millions  
     December 31, 2017  
            Presentation in the consolidated balance sheets  
       Level 1          Level 2          Level 3          Total        Marketable
  securities  
     Securities
investments
  and other  
     Other
current
assets/
  liabilities  
     Other
noncurrent
assets/
liabilities
 

Assets:

                       

Trading securities

     742,836          343,916          -          1,086,752          1,086,752          -          -          -    

Available-for-sale  securities

                       

Debt securities

                       

Japanese national government bonds

     -          1,370,090          -          1,370,090          20,834          1,349,256          -          -    

Japanese local government bonds

     -          66,014          -          66,014          9,388          56,626          -          -    

Japanese corporate bonds

     -          201,390          -          201,390          9,138          192,252          -          -    

Foreign government bonds

     -          49,522          -          49,522          -          49,522          -          -    

Foreign corporate bonds

     -          349,534          28,123          377,657          89,771          287,886          -          -    

Other

     -          -          82,237          82,237          -          82,237          -          -    

Equity securities

     133,919          330          -          134,249          -          134,249          -          -    

Other investments *1

     7,047          5,463          9,731          22,241          -          22,241          -          -    

Derivative assets *2, *3

     613          16,736          -          17,349          -          -          15,358          1,991    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

     884,415          2,402,995          120,091          3,407,501          1,215,883          2,174,269          15,358          1,991    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

                       

Derivative liabilities *2, *3

     616          35,822          -          36,438          -          -          20,153          16,285    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

     616          35,822          -          36,438          -          -          20,153          16,285    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

*1

Other investments include certain hybrid financial instruments and certain private equity investments.

*2

Derivative assets and liabilities are recognized and disclosed on a gross basis.

*3

The potential effect of offsetting on assets and liabilities, which primarily consists of derivatives subject to master netting agreements and/or collateral, is insignificant.

 

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Table of Contents
4.

Supplemental equity and comprehensive income information

 

(1)

Stockholders’ Equity

A reconciliation of the beginning and ending carrying amounts of Sony Corporation’s stockholders’ equity, noncontrolling interests and the total equity for the nine months ended December 31, 2016 and 2017 are as follows:

 

     Yen in millions  
     Sony Corporation’s
    stockholders’ equity    
    Noncontrolling
interests
        Total equity  
  

 

 

 

Balance at March 31, 2016

     2,463,340       661,070       3,124,410     

Exercise of stock acquisition rights

     2,314       -       2,314     

Stock-based compensation

     1,452       -       1,452     

Comprehensive income:

      

Net income

     45,639       37,193       82,832     

Other comprehensive income, net of tax —

      

Unrealized losses on securities

     (12,064     (13,581     (25,645)    

Unrealized gains on derivative instruments

     3,689       1       3,690     

Pension liability adjustment

     9,175       122       9,297     

Foreign currency translation adjustments

     7,805       (2,428     5,377     
  

 

 

 

Total comprehensive income

     54,244       21,307       75,551     
  

 

 

 

Dividends declared

     (12,625     (16,480     (29,105)    

Transactions with noncontrolling interests shareholders and other

     (55,791     (39,546     (95,337)    
  

 

 

 

Balance at December 31, 2016

     2,452,934       626,351       3,079,285     
  

 

 

 
     Yen in millions  
     Sony Corporation’s
    stockholders’ equity    
    Noncontrolling
interests
        Total equity      
  

 

 

 

Balance at March 31, 2017

     2,497,246       638,176       3,135,422     

Issuance of new shares

     842       -       842     

Exercise of stock acquisition rights

     6,008       -       6,008     

Conversion of convertible bonds

     16       -       16     

Stock-based compensation

     1,320       -       1,320     

Comprehensive income:

      

Net income

     507,620       44,477       552,097     

Other comprehensive income, net of tax —

      

Unrealized gains on securities

     4,698       2,332       7,030     

Unrealized gains on derivative instruments

     150       -       150     

Pension liability adjustment

     6,987       22       7,009     

Foreign currency translation adjustments

     31,614       2,128       33,742     
  

 

 

 

Total comprehensive income

     551,069       48,959       600,028     
  

 

 

 

Dividends declared

     (15,794     (14,473     (30,267)    

Transactions with noncontrolling interests shareholders and other

     (814     2,392       1,578     
  

 

 

 

Balance at December 31, 2017

     3,039,893       675,054       3,714,947     
  

 

 

 

There was no material effect of changes in Sony Corporation’s ownership interest in its subsidiaries on Sony Corporation’s stockholders’ equity for the nine months ended December 31, 2016 and 2017.

 

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Table of Contents
(2)

Other Comprehensive Income

Changes in accumulated other comprehensive income, net of tax by component for the nine months ended December 31, 2016 and 2017 are as follows:

 

    Yen in millions  
   

Unrealized

    gains (losses)    
on securities

    Unrealized
gains (losses)
on derivative
instruments
    Pension
liability
adjustment
    Foreign
currency
translation
adjustments
    Total  
 

 

 

 

Balance at March 31, 2016

    140,736       (1,198     (371,739     (421,117     (653,318)    

Other comprehensive income before reclassifications

    (25,788     6,125       (340     5,377       (14,626)    

Amounts reclassified out of accumulated other comprehensive income

    143       (2,435     9,637       -       7,345     
 

 

 

 

Net current-period other comprehensive income

    (25,645     3,690       9,297       5,377       (7,281)    

Less: Other comprehensive income attributable to noncontrolling interests

    (13,581     1       122       (2,428     (15,886)    
 

 

 

 

Balance at December 31, 2016

    128,672       2,491       (362,564     (413,312     (644,713)    
 

 

 

 
    Yen in millions  
    Unrealized
    gains (losses)    
on securities
    Unrealized
gains (losses)
on derivative
instruments
    Pension
liability
adjustment
    Foreign
currency
translation
adjustments
    Total  
 

 

 

 

Balance at March 31, 2017

    126,635       (58     (308,736     (436,610     (618,769)    

Other comprehensive income before reclassifications

    7,897       (149     (117     36,505       44,136     

Amounts reclassified out of accumulated other comprehensive income

    (867     299       7,126       (2,763     3,795     
 

 

 

 

Net current-period other comprehensive income

    7,030       150       7,009       33,742       47,931     

Less: Other comprehensive income attributable to noncontrolling interests

    2,332       -       22       2,128       4,482     
 

 

 

 

Balance at December 31, 2017

    131,333       92       (301,749     (404,996     (575,320)    
 

 

 

 

 

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Table of Contents
5.

Reconciliation of the differences between basic and diluted EPS

Reconciliation of the differences between basic and diluted net income attributable to Sony Corporation’s stockholders per share (“EPS”) for the nine and three months ended December 31, 2016 and 2017 is as follows:

 

    

Yen in millions

    

  Nine months ended December 31  

    

2016

  

2017

Net income attributable to Sony Corporation’s stockholders for basic and diluted EPS computation

   45,639      507,620  
  

 

  

 

    

Thousands of shares

Weighted-average shares outstanding

   1,261,862      1,263,485  

Effect of dilutive securities:

     

Stock acquisition rights

   2,237      4,051  

Zero coupon convertible bonds

   23,962      23,961  
  

 

  

 

Weighted-average shares for diluted EPS computation

           1,288,061              1,291,497  
  

 

  

 

    

Yen

Basic EPS

   36.17      401.76  
  

 

  

 

Diluted EPS

                   35.43      393.05  
  

 

  

 

Potential shares of common stock that were excluded from the computation of diluted EPS for the nine months ended December 31, 2016 and 2017 were 8,014 thousand shares and 2,946 thousand shares, respectively. The potential shares related to stock acquisition rights were excluded as anti-dilutive for the nine months ended December 31, 2016 and 2017 when the exercise price for those shares was in excess of the average market value of Sony’s common stock for the period. The zero coupon convertible bonds issued in July 2015 were included in the diluted EPS calculation under the if-converted method beginning upon issuance.

 

    

Yen in millions

    

Three months ended December 31

    

2016

  

2017

Net income attributable to Sony Corporation’s stockholders for basic and diluted EPS computation

   19,631      295,897  
  

 

  

 

    

Thousands of shares

Weighted-average shares outstanding

   1,262,223      1,264,083  

Effect of dilutive securities:

     

Stock acquisition rights

   2,187      4,572  

Zero coupon convertible bonds

   23,962      23,960  
  

 

  

 

Weighted-average shares for diluted EPS computation

           1,288,372              1,292,615  
  

 

  

 

    

Yen

Basic EPS

   15.55      234.08  
  

 

  

 

Diluted EPS

                   15.24      228.91  
  

 

  

 

Potential shares of common stock that were excluded from the computation of diluted EPS for the three months ended December 31, 2016 and 2017 were 8,014 thousand shares and 2,946 thousand shares, respectively. The potential shares related to stock acquisition rights were excluded as anti-dilutive for the three months ended December 31, 2016 and 2017 when the exercise price for those shares was in excess of the average market value of Sony’s common stock for the period. The zero coupon convertible bonds issued in July 2015 were included in the diluted EPS calculation under the if-converted method beginning upon issuance.

 

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Table of Contents
6.

Commitments, contingent liabilities and other

 

(1)

  Loan commitments

Subsidiaries in the Financial Services segment have entered into loan agreements with their customers in accordance with the condition of the contracts. As of December 31, 2017, the total unused portion of the lines of credit extended under these contracts was 31,817 million yen. The aggregate amounts of future year-by-year payments for these loan commitments cannot be determined.

 

(2)

  Purchase commitments and other

Purchase commitments and other outstanding commitments as of December 31, 2017 amounted to 410,064 million yen. The major components of these commitments are as follows:

Certain subsidiaries in the Pictures segment have entered into agreements with creative talent for the development and production of motion pictures and television programming as well as agreements with third parties to acquire completed motion pictures, or certain rights therein, and to acquire the rights to broadcast certain live action sporting events. These agreements cover various periods mainly within two years. As of December 31, 2017, these subsidiaries were committed to make payments under such contracts of 118,983 million yen.

Certain subsidiaries in the Music segment have entered into contracts with recording artists, songwriters and companies for the future production, distribution and/or licensing of music product. These contracts cover various periods mainly within five years. As of December 31, 2017, these subsidiaries were committed to make payments of 78,103 million yen under such contracts.

A subsidiary in the Game & Network Services segment has entered into contracts for programming content. These contracts cover various periods mainly within two years. As of December 31, 2017, this subsidiary was committed to make payments of 33,134 million yen under such contracts.

Sony has entered into sponsorship contracts related to advertising and promotional rights. These contracts cover various periods mainly within two years. As of December 31, 2017, Sony has committed to make payments of 6,710 million yen under such contracts.

 

(3)

  Litigation

Beginning in 2009, the U.S. Department of Justice (“DOJ”), the European Commission and certain other governmental agencies outside the United States have conducted investigations relating to competition in the optical disk drives market. Sony Corporation and/or certain of its subsidiaries have been subject to these investigations. Sony understands that the investigations of several agencies, including the DOJ, have ended, and only one agency continues to investigate. However, proceedings initiated by the European Commission as a result of its investigation continue. In October 2015, the European Commission adopted a decision in which it fined Sony Corporation and certain of its subsidiaries 31 million euros; however, Sony filed an appeal against the decision with the European Union’s General Court. In addition, a number of direct and indirect purchaser lawsuits, including class actions, have been filed in certain jurisdictions in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies. Certain of these lawsuits have been settled, including the class actions brought by the direct and indirect purchasers in the United States; however, certain other lawsuits continue. Based on the stage of the pending proceedings, it is not possible to estimate the amount of losses or range of possible losses, if any, that might ultimately result from adverse judgments, settlements or other resolution of all of these matters.

Beginning in 2011, the DOJ, the European Commission and certain other governmental agencies outside the United States conducted investigations relating to competition in the secondary batteries market. Sony Corporation and/or certain of its subsidiaries were subject to these investigations. Sony understands that the investigations by these agencies, including the DOJ and the European Commission, have ended or are no longer active. With respect to the investigation by the European Commission, in December 2016, Sony Corporation and certain of its subsidiaries reached a settlement with the European Commission to pay a fine of approximately 29.8 million euros. In addition, a number of direct and indirect purchaser lawsuits, including class actions, have been filed in certain jurisdictions in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies. Certain of these lawsuits have been settled, including the class actions brought by the direct and indirect purchasers in the United States; however, certain other lawsuits continue. Based on the stage of the pending proceedings, it is not possible to estimate the amount of losses or range of possible losses, if any, that might ultimately result from adverse judgments, settlements or other resolution of all of these matters.

In addition, Sony Corporation and certain of its subsidiaries are defendants or otherwise involved in other pending legal and regulatory proceedings. However, based upon the information currently available, Sony believes that the outcome from such legal and regulatory proceedings would not have a material impact on Sony’s results of operations and financial position.

 

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Table of Contents
(4)    Guarantees

Sony has issued guarantees that contingently require payments to guaranteed parties if certain specified events or conditions occur. The maximum potential amount of future payments under these guarantees as of December 31, 2017 amounted to 3,210 million yen.

 

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Table of Contents
7.

Business segment information

The reportable segments presented below are the segments of Sony for which separate financial information is available and for which operating profit or loss amounts are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM does not evaluate segments using discrete asset information. Sony’s CODM is its Chief Executive Officer and President.

Sony realigned its business segments from the first quarter of the fiscal year ending March 31, 2018. As a result of this realignment, the operation of the former Components segment is now included in All Other. In connection with this realignment, the sales and operating revenue and operating income (loss) of each segment for the comparable period have been reclassified to conform to the current presentation.

The Game & Network Services (“G&NS”) segment includes the manufacture and sales of home gaming products, network services businesses 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 Home Entertainment & Sound (“HE&S”) segment includes Televisions as well as Audio and Video businesses. The Imaging Products & Solutions (“IP&S”) segment includes the Still and Video Cameras business. The Mobile Communications (“MC”) segment includes the manufacture and sales of mobile phones and Internet-related service businesses. The Semiconductors 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 overseas disc manufacturing, recording media and battery businesses. Sony’s products and services are generally unique to a single operating segment.

 

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Table of Contents

Business segments -

Sales and operating revenue:

 

                                                             
     Yen in millions  
             Nine months ended December 31           

 

       2016             2017      

Sales and operating revenue:

    

Game & Network Services -

    

Customers

             1,212,613               1,418,955  

Intersegment

     55,345       80,277  
  

 

 

   

 

 

 

Total

     1,267,958       1,499,232  

Music -

    

Customers

     458,256       582,180  

Intersegment

     12,366       11,387  
  

 

 

   

 

 

 

Total

     470,622       593,567  

Pictures -

    

Customers

     599,920       709,458  

Intersegment

     665       673  
  

 

 

   

 

 

 

Total

     600,585       710,131  

Home Entertainment & Sound -

    

Customers

     820,799       986,839  

Intersegment

     3,422       808  
  

 

 

   

 

 

 

Total

     824,221       987,647  

Imaging Products & Solutions -

    

Customers

     419,662       488,399  

Intersegment

     5,055       5,058  
  

 

 

   

 

 

 

Total

     424,717       493,457  

Mobile Communications -

    

Customers

     598,855       564,025  

Intersegment

     4,435       6,746  
  

 

 

   

 

 

 

Total

     603,290       570,771  

Semiconductors -

    

Customers

     484,332       584,389  

Intersegment

     87,714       99,165  
  

 

 

   

 

 

 

Total

     572,046       683,554  

Financial Services -

    

Customers

     806,954       950,292  

Intersegment

     5,417       5,363  
  

 

 

   

 

 

 

Total

     812,371       955,655  

All Other -

    

Customers

     276,660       286,307  

Intersegment

     57,113       44,335  
  

 

 

   

 

 

 

Total

     333,773       330,642  

Corporate and elimination

     (209,937     (231,695
  

 

 

   

 

 

 
Consolidated total      5,699,646       6,592,961  
  

 

 

   

 

 

 

G&NS intersegment amounts primarily consist of transactions with All Other.

Semiconductors intersegment amounts primarily consist of transactions with the MC segment, the G&NS segment and the IP&S segment.

All Other intersegment amounts primarily consist of transactions with the Pictures segment, the Music segment and the G&NS segment.

Corporate and elimination includes certain brand and patent royalty income.

 

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Table of Contents
                                                             
     Yen in millions  
             Three months ended December 31           

 

       2016             2017      

Sales and operating revenue:

    

Game & Network Services -

    

Customers

             596,997               681,649  

Intersegment

     20,702       36,317  
  

 

 

   

 

 

 

Total

     617,699       717,966  

Music -

    

Customers

     173,218       214,267  

Intersegment

     5,289       4,162  
  

 

 

   

 

 

 

Total

     178,507       218,429  

Pictures -

    

Customers

     224,771       260,050  

Intersegment

     385       267  
  

 

 

   

 

 

 

Total

     225,156       260,317  

Home Entertainment & Sound -

    

Customers

     351,983       429,604  

Intersegment

     1,442       243  
  

 

 

   

 

 

 

Total

     353,425       429,847  

Imaging Products & Solutions -

    

Customers

     165,260       179,112  

Intersegment

     1,859       1,990  
  

 

 

   

 

 

 

Total

     167,119       181,102  

Mobile Communications -

    

Customers

     247,173       215,141  

Intersegment

     1,424       2,402  
  

 

 

   

 

 

 

Total

     248,597       217,543  

Semiconductors -

    

Customers

     205,021       218,303  

Intersegment

     28,847       32,627  
  

 

 

   

 

 

 

Total

     233,868       250,930  

Financial Services -

    

Customers

     317,342       371,498  

Intersegment

     1,800       1,773  
  

 

 

   

 

 

 

Total

     319,142       373,271  

All Other -

    

Customers

     109,933       96,611  

Intersegment

     21,713       11,971  
  

 

 

   

 

 

 

Total

     131,646       108,582  

Corporate and elimination

     (77,660     (85,670
  

 

 

   

 

 

 
Consolidated total      2,397,499       2,672,317  
  

 

 

   

 

 

 

G&NS intersegment amounts primarily consist of transactions with All Other.

Semiconductors intersegment amounts primarily consist of transactions with the MC segment, the G&NS segment and the IP&S segment.

All Other intersegment amounts primarily consist of transactions with the Pictures segment, the Music segment and the G&NS segment.

Corporate and elimination includes certain brand and patent royalty income.

 

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Table of Contents

Segment profit or loss:

 

                                                           
     Yen in millions  
             Nine months ended December 31           

 

   2016      2017  

Operating income (loss):

     

Game & Network Services

             113,051                   157,847     

Music

     60,373           96,878     

Pictures

     (114,207)          8,688     

Home Entertainment & Sound

     63,731           93,183     

Imaging Products & Solutions

     43,467           68,056     

Mobile Communications

     25,331           16,964     

Semiconductors

     (20,567)          165,370     

Financial Services

     111,106           139,109     

All Other

     (41,604)          (6,004)    
  

 

 

    

 

 

 

Total

     240,681           740,091     

Corporate and elimination

     (46,370)          (27,415)    
  

 

 

    

 

 

 
Consolidated operating income      194,311           712,676     
  

 

 

    

 

 

 

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.

 

                                                     
     Yen in millions  
             Three months ended December 31           

 

   2016      2017  

Operating income (loss):

     

Game & Network Services

     50,028           85,364     

Music

     27,982           39,342     

Pictures

     (106,774)          10,489     

Home Entertainment & Sound

     25,934           46,213     

Imaging Products & Solutions

     21,101           25,982     

Mobile Communications

     21,218           15,801     

Semiconductors

     27,166           60,558     

Financial Services

     28,996           56,287     

All Other

     (2,049)          2,255     
  

 

 

    

 

 

 

Total

     93,602           342,291     

Corporate and elimination

     (1,230)          8,546     
  

 

 

    

 

 

 
Consolidated operating income      92,372           350,837     
  

 

 

    

 

 

 

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.

 

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Table of Contents

Other Significant Items:

The following table includes a breakdown of sales and operating revenue to external customers by product category for certain segments. Sony management views each segment as a single operating segment.

 

                                                             
     Yen in millions  
             Nine months ended December 31           
  Sales and operating revenue:    2016      2017  

Game & Network Services

     

Hardware

     505,409           506,366     

Network

     504,868           718,695     

Other

     202,336           193,894     

 

  

 

 

    

 

 

 

Total

     1,212,613           1,418,955     

Music

     

Recorded Music

     294,296           337,238     

Music Publishing

     46,791           54,693     

Visual Media and Platform

     117,169           190,249     

 

  

 

 

    

 

 

 

Total

     458,256           582,180     

Pictures

     

Motion Pictures

     265,701           302,005     

Television Productions

     168,661           201,514     

Media Networks

     165,558           205,939     

 

  

 

 

    

 

 

 

Total

     599,920           709,458     

Home Entertainment & Sound

     

Televisions

     579,811           700,403     

Audio and Video

     239,770           284,664     

Other

     1,218           1,772     

 

  

 

 

    

 

 

 

Total

     820,799           986,839     

Imaging Products & Solutions

     

Still and Video Cameras

     267,962           326,362     

Other

     151,700           162,037     

 

  

 

 

    

 

 

 

Total

     419,662           488,399     

Mobile Communications

     598,855           564,025     

Semiconductors

     484,332           584,389     

Financial Services

     806,954           950,292     

All Other

     276,660           286,307     

Corporate

     21,595           22,117     

 

  

 

 

    

 

 

 

Consolidated total

     5,699,646           6,592,961     
  

 

 

    

 

 

 

 

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Table of Contents
                                                             
     Yen in millions  
         Three months ended December 31      
  Sales and operating revenue:    2016      2017  

Game & Network Services

     

Hardware

         279,858           270,653     

Network

     212,701           300,407     

Other

     104,438           110,589     

 

  

 

 

    

 

 

 

Total

     596,997           681,649     

Music

     

Recorded Music

     114,833           128,239     

Music Publishing

     15,549           18,334     

Visual Media and Platform

     42,836           67,694     

 

  

 

 

    

 

 

 

Total

     173,218           214,267     

Pictures

     

Motion Pictures

     96,427           106,931     

Television Productions

     73,044           82,227     

Media Networks

     55,300           70,892     

 

  

 

 

    

 

 

 

Total

     224,771           260,050     

Home Entertainment & Sound

     

Televisions

     244,421           301,476     

Audio and Video

     106,916           127,303     

Other

     646           825     

 

  

 

 

    

 

 

 

Total

     351,983           429,604     

Imaging Products & Solutions

     

Still and Video Cameras

     110,962           121,156     

Other

     54,298           57,956     

 

  

 

 

    

 

 

 

Total

     165,260           179,112     

Mobile Communications

     247,173           215,141     

Semiconductors

     205,021           218,303     

Financial Services

     317,342           371,498     

All Other

     109,933           96,611     

Corporate

     5,801           6,082     

 

  

 

 

    

 

 

 

Consolidated total

     2,397,499           2,672,317     
  

 

 

    

 

 

 

In the G&NS segment, Hardware includes home and portable game consoles; Network includes network services relating to game, video and music content provided by Sony Interactive Entertainment; Other includes 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.

 

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Table of Contents
     Yen in millions         
             Nine months ended December 31                 
     2016      2017         

Depreciation and amortization:

        

Game & Network Services

     18,803           21,486        

Music

     11,443           12,833        

Pictures

     14,733           18,190        

Home Entertainment & Sound

     14,732           15,611        

Imaging Products & Solutions

     18,627           17,717        

Mobile Communications

     14,998           14,223        

Semiconductors

     75,997           73,394        

Financial Services, including deferred insurance acquisition costs

     52,350           47,887        

All Other

     5,447           4,385        
  

 

 

    

 

 

    

Total

     227,130           225,726        

Corporate

     32,424           32,461        
  

 

 

    

 

 

    

Consolidated total

     259,554           258,187        
  

 

 

    

 

 

    
     Yen in millions  
     Nine months ended December 31, 2016  
     Total net
      restructuring      
charges
     Depreciation
associated with
  restructured assets  
                 Total              

Restructuring charges and associated depreciation:

        

Game & Network Services

     6           -           6     

Music

     1,655           -           1,655     

Pictures

     1,643           (0)          1,643     

Home Entertainment & Sound

     542           -           542     

Imaging Products & Solutions

     174           -           174     

Mobile Communications

     65           127           192     

Semiconductors

     (0)          -           (0)    

Financial Services

     -           -           -     

All Other and Corporate

     35,162           32           35,194     
  

 

 

    

 

 

    

 

 

 

Consolidated total

     39,247           159           39,406     
  

 

 

    

 

 

    

 

 

 
     Yen in millions  
     Nine months ended December 31, 2017  
     Total net
    restructuring    
charges
     Depreciation
associated with
restructured assets
             Total          

Restructuring charges and associated depreciation:

        

Game & Network Services

     -           -           -     

Music

     1,816           -           1,816     

Pictures

     482           -           482     

Home Entertainment & Sound

     27           -           27     

Imaging Products & Solutions

     23           -           23     

Mobile Communications

     1,229           0           1,229     

Semiconductors

     -           -           -     

Financial Services

     -           -           -     

All Other and Corporate

     3,544           0           3,544     
  

 

 

    

 

 

    

 

 

 

Consolidated total

     7,121           0           7,121     
  

 

 

    

 

 

    

 

 

 

Depreciation associated with restructured assets as used in the context of the disclosures regarding restructuring activities refers to the increase in depreciation expense caused by revising the useful life and the salvage value of depreciable fixed assets under an approved restructuring plan. Any impairment of the assets is recognized immediately in the period it is identified.

 

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Table of Contents
     Yen in millions         
         Three months ended December 31             
     2016      2017         

Depreciation and amortization:

        

Game & Network Services

     6,644           7,324        

Music

     4,070           4,444        

Pictures

     5,052           6,243        

Home Entertainment & Sound

     4,962           6,053        

Imaging Products & Solutions

     6,412           6,152        

Mobile Communications

     5,071           4,923        

Semiconductors

     24,620           24,955        

Financial Services, including deferred insurance acquisition costs

     9,999           15,506        

All Other

     1,254           815        
  

 

 

    

 

 

    

Total

     68,084           76,415        

Corporate

     10,410           11,810        
  

 

 

    

 

 

    

Consolidated total

     78,494           88,225        
  

 

 

    

 

 

    
     Yen in millions  
     Three months ended December 31, 2016  
     Total net
      restructuring      
charges
     Depreciation
associated with
  restructured assets  
                 Total              

Restructuring charges and associated depreciation:

        

Game & Network Services

     -           -           -     

Music

     837           -           837     

Pictures

     752           (4)          748     

Home Entertainment & Sound

     529           -           529     

Imaging Products & Solutions

     157           -           157     

Mobile Communications

     38           6           44     

Semiconductors

     (3)          -           (3)    

Financial Services

     -           -           -     

All Other and Corporate

     2,741           32           2,773     
  

 

 

    

 

 

    

 

 

 

Consolidated total

     5,051           34           5,085     
  

 

 

    

 

 

    

 

 

 
     Yen in millions  
     Three months ended December 31, 2017  
     Total net
    restructuring    
charges
     Depreciation
associated with
restructured assets
             Total          

Restructuring charges and associated depreciation:

        

Game & Network Services

     -           -           -     

Music

     1,594           -           1,594     

Pictures

     39           -           39     

Home Entertainment & Sound

     8           -           8     

Imaging Products & Solutions

     2           -           2     

Mobile Communications

     538           -           538     

Semiconductors

     -           -           -     

Financial Services

     -           -           -     

All Other and Corporate

     911           -           911     
  

 

 

    

 

 

    

 

 

 

Consolidated total

     3,092           -           3,092     
  

 

 

    

 

 

    

 

 

 

Depreciation associated with restructured assets as used in the context of the disclosures regarding restructuring activities refers to the increase in depreciation expense caused by revising the useful life and the salvage value of depreciable fixed assets under an approved restructuring plan. Any impairment of the assets is recognized immediately in the period it is identified.

 

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Geographic Information –

Sales and operating revenue attributed to countries and areas based on location of external customers are as follows:

 

     Yen in millions  
     Nine months ended December 31  

  Sales and operating revenue:

               2016                              2017              

Japan

     1,772,928            1,991,848      

United States

     1,259,503            1,412,559      

Europe

     1,240,258            1,421,847      

China

     409,385            521,945      

Asia-Pacific

     657,680            819,837      

Other Areas

     359,892            424,925      

 

  

 

 

    

 

 

 

Total

     5,699,646            6,592,961      
  

 

 

    

 

 

 
     Yen in millions  
     Three months ended December 31  

  Sales and operating revenue:

               2016                              2017              

Japan

     718,286            775,569      

United States

     543,731            614,438      

Europe

     551,263            640,214      

China

     169,318            182,809      

Asia-Pacific

     264,805            293,992      

Other Areas

     150,096            165,295      

 

  

 

 

    

 

 

 

Total

     2,397,499            2,672,317      
  

 

 

    

 

 

 

Major countries and areas in each geographic segment excluding Japan, United States and China are as follows:

 

(1) Europe:

   United Kingdom, France, Germany, Russia, Spain and Sweden    

(2) Asia-Pacific:

   India, South Korea and Oceania

(3) Other Areas:

   The Middle East/Africa, Brazil, Mexico and Canada

There are no individually material countries with respect to sales and operating revenue included in Europe, Asia-Pacific and Other Areas.

Transfers between reportable business segments or geographic areas are made at individually negotiated prices that are intended to reflect a market-based transfer price.

There were no sales and operating revenue with any single major external customer for the nine and three months ended December 31, 2016 and 2017.

 

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(2) Other Information

(i) Dividends declared

An interim cash dividend for Sony Corporation’s common stock was approved at the Board of Directors meeting held on October 31, 2017 as below:

1. Total amount of interim cash dividends:

15,794 million yen

2. Amount of interim cash dividends per share:

12.50 yen

3. Payment date:

December 1, 2017

Note: Interim cash dividends were distributed to the shareholders recorded or registered as the holders or pledgees of shares in Sony Corporation’s register of shareholders at the end of September 30, 2017.

(ii) Litigation

  For the legal proceedings, please refer to “IV Financial Statements – Notes to Consolidated Financial Statements – 6. Commitments, contingent liabilities and other”.

 

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