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 April 2019
Commission File Number: 001-06439

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

1-7-1 KONAN, MINATO-KU, TOKYO, 108-0075, JAPAN
(Address of principal executive offices)

The registrant files annual reports under cover of Form 20-F.

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F,
 
Form 20-F  X
Form 40-F __
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, Yes No X
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-______
 
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
SONY CORPORATION
 
(Registrant)
   
   
 
By:  /s/  Hiroki Totoki
 
                (Signature)
 
Hiroki Totoki
 
Senior Executive Vice President and
 
Chief Financial Officer
 
Date: April 26, 2019



Financial Statements and Consolidated Financial Results
for the Fiscal Year Ended March 31, 2019
And
Outlook for the Fiscal Year Ending March 31, 2020

April 26, 2019
Sony Corporation


Financial Statements (Unaudited)
F-1
   
Consolidated Balance Sheets
F-1
Consolidated Statements of Income (Fiscal year ended March 31)
F-2
Consolidated Statements of Comprehensive Income (Fiscal year ended March 31)
F-2
Consolidated Statements of Income (Three months ended March 31)
F-3
Consolidated Statements of Comprehensive Income (Three months ended March 31)
F-3
Consolidated Statements of Changes in Stockholders' Equity
F-4
Consolidated Statements of Cash Flows
F-5
Notes to Consolidated Financial Statements
F-6
-Business Segment Information
F-6
-Going Concern Assumption
F-13
-Accounting Policies and Other Information
F-13
   
Consolidated Results for the Fiscal Year Ended March 31, 2019
1
   
Outlook for the Fiscal Year Ending March 31, 2020
4
   
Business Segment Information
(Consolidated Results for the Fiscal year ended March 31, 2019 and Outlook for the Fiscal year ending March 31, 2020)
5
   
Basic Views on Selection of Accounting Standards
10
 

All amounts are presented on the basis of Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”).
 
Sony Corporation and its consolidated subsidiaries are together referred to as “Sony”.


(Unaudited)
                 
Consolidated Financial Statements
                 
Consolidated Balance Sheets
                 
    (Millions of yen)        
    March 31     March 31     Changes from
 
ASSETS
  2018     2019     March 31, 2018
 
Current assets:
                 
Cash and cash equivalents
 
¥
1,586,329
   
¥
1,470,073
   
¥
-116,256
 
Marketable securities
   
1,176,601
     
1,324,538
     
+147,937
 
Notes and accounts receivable, trade and contract assets
   
1,061,442
     
1,091,242
     
+29,800
 
Allowance for doubtful accounts
   
(48,663
)
   
(25,440
)
   
+23,223
 
Inventories
   
692,937
     
653,278
     
-39,659
 
Other receivables
   
190,706
     
223,620
     
+32,914
 
Prepaid expenses and other current assets
   
516,744
     
509,301
     
-7,443
 
Total current assets
   
5,176,096
     
5,246,612
     
+70,516
 
Film costs    
327,645
     
409,005
     
+81,360
 
                         
Investments and advances:                        
Affiliated companies
   
157,389
     
163,365
     
+5,976
 
Securities investments and other
   
10,598,669
     
11,561,286
     
+962,617
 
     
10,756,058
     
11,724,651
     
+968,593
 
Property, plant and equipment:                        
Land
   
84,358
     
83,992
     
-366
 
Buildings
   
655,434
     
664,157
     
+8,723
 
Machinery and equipment
   
1,798,722
     
1,585,382
     
-213,340
 
Construction in progress
   
38,295
     
39,208
     
+913
 
     
2,576,809
     
2,372,739
     
-204,070
 
Less-Accumulated depreciation
   
1,837,339
     
1,595,686
     
-241,653
 
     
739,470
     
777,053
     
+37,583
 
Other assets:                        
Intangibles, net
   
527,168
     
917,966
     
+390,798
 
Goodwill
   
530,492
     
768,552
     
+238,060
 
Deferred insurance acquisition costs
   
586,670
     
595,265
     
+8,595
 
Deferred income taxes
   
96,772
     
202,486
     
+105,714
 
Other
   
325,167
     
339,996
     
+14,829
 
     
2,066,269
     
2,824,265
     
+757,996
 
Total assets  
¥
19,065,538
   
¥
20,981,586
   
¥
+1,916,048
 
                         
                         
LIABILITIES AND EQUITY                        
Current liabilities:                        
Short-term borrowings
 
¥
496,093
   
¥
618,618
   
¥
+122,525
 
Current portion of long-term debt
   
225,522
     
172,461
     
-53,061
 
Notes and accounts payable, trade
   
468,550
     
492,124
     
+23,574
 
Accounts payable, other and accrued expenses
   
1,514,433
     
1,693,048
     
+178,615
 
Accrued income and other taxes
   
145,905
     
135,226
     
-10,679
 
Deposits from customers in the banking business
   
2,159,246
     
2,302,314
     
+143,068
 
Other
   
610,792
     
666,024
     
+55,232
 
Total current liabilities
   
5,620,541
     
6,079,815
     
+459,274
 
Long-term debt    
623,451
     
568,372
     
-55,079
 
Accrued pension and severance costs    
394,504
     
384,232
     
-10,272
 
Deferred income taxes    
449,863
     
531,421
     
+81,558
 
Future insurance policy benefits and other    
5,221,772
     
5,642,671
     
+420,899
 
Policyholders’ account in the life insurance business    
2,820,702
     
3,048,202
     
+227,500
 
Other    
278,338
     
281,382
     
+3,044
 
Total liabilities
   
15,409,171
     
16,536,095
     
+1,126,924
 
                         
Redeemable noncontrolling interest    
9,210
     
8,801
     
-409
 
Equity:                        
Sony Corporation’s stockholders’ equity:
                       
Common stock
   
865,678
     
874,291
     
+8,613
 
Additional paid-in capital
   
1,282,577
     
1,266,874
     
-15,703
 
Retained earnings
   
1,440,387
     
2,320,586
     
+880,199
 
Accumulated other comprehensive income
   
(616,746
)
   
(610,670
)
   
+6,076
 
Treasury stock, at cost
   
(4,530
)
   
(104,704
)
   
-100,174
 
     
2,967,366
     
3,746,377
     
+779,011
 
Noncontrolling interests    
679,791
     
690,313
     
+10,522
 
  Total equity    
3,647,157
     
4,436,690
     
+789,533
 
  Total liabilities and equity  
¥
19,065,538
   
¥
20,981,586
   
¥
+1,916,048
 

F-1

Consolidated Statements of Income
                 
   
(Millions of yen, except per share amounts)
 
   
Fiscal year ended March 31
 
    2018     2019     Change  
Sales and operating revenue:
                 
Net sales
 
¥
7,231,613
   
¥
7,306,235
   
¥
+74,622
 
Financial services revenue
   
1,221,235
     
1,274,708
     
+53,473
 
Other operating revenue
   
91,134
     
84,744
     
-6,390
 
     
8,543,982
     
8,665,687
     
+121,705
 
                         
Costs and expenses:
                       
Cost of sales
   
5,188,259
     
5,150,750
     
-37,509
 
Selling, general and administrative
   
1,583,197
     
1,576,825
     
-6,372
 
Financial services expenses
   
1,042,163
     
1,112,446
     
+70,283
 
Other operating (income) expense, net
   
4,072
     
(71,568
)
   
-75,640
 
     
7,817,691
     
7,768,453
     
-49,238
 
                         
Equity in net income (loss) of affiliated companies
   
8,569
     
(2,999
)
   
-11,568
 
                         
Operating income
   
734,860
     
894,235
     
+159,375
 
                         
Other income:
                       
Interest and dividends
   
19,784
     
21,618
     
+1,834
 
Gain on sale of securities investments, net
   
1,517
   
     
-1,517
 
Gain on equity securities, net
 
     
118,677
     
+118,677
 
Other
   
2,427
     
4,440
     
+2,013
 
     
23,728
     
144,735
     
+121,007
 
                         
Other expenses:
                       
Interest expenses
   
13,566
     
12,467
     
-1,099
 
Loss on devaluation of securities investments
   
4,955
   
     
-4,955
 
Foreign exchange loss, net
   
30,634
     
11,279
     
-19,355
 
Other
   
10,384
     
3,576
     
-6,808
 
     
59,539
     
27,322
     
-32,217
 
                         
Income before income taxes
   
699,049
     
1,011,648
     
+312,599
 
                         
Income taxes
   
151,770
     
45,098
     
-106,672
 
Net income
   
547,279
     
966,550
     
+419,271
 
                         
Less - Net income attributable to noncontrolling interests
   
56,485
     
50,279
     
-6,206
 
                         
Net income attributable to Sony Corporation’s stockholders
 
¥
490,794
   
¥
916,271
   
¥
+425,477
 
                         
                         
                         
Per share data:
                       
Net income attributable to Sony Corporation’s stockholders
                       
   — Basic
 
¥
388.32
   
¥
723.41
   
¥
+335.09
 
   — Diluted
   
379.75
     
707.74
     
+327.99
 

Consolidated Statements of Comprehensive Income
                 
    (Millions of yen)        
    Fiscal year ended March 31  
    2018     2019     Change  
                   
Net income
 
¥
547,279
   
¥
966,550
   
¥
+419,271
 
                         
Other comprehensive income, net of tax –
                       
Unrealized gains on securities
   
1,070
     
33,285
     
+32,215
 
Unrealized gains (losses) on derivative instruments
   
(1,184
)
   
1,223
     
+2,407
 
Pension liability adjustment
   
12,390
     
(13,960
)
   
-26,350
 
Foreign currency translation adjustments
   
(6,335
)
   
8,444
     
+14,779
 
Total comprehensive income
   
553,220
     
995,542
     
+442,322
 
                         
Less - Comprehensive income attributable to noncontrolling interests
   
60,403
     
57,669
     
-2,734
 

                       
Comprehensive income attributable to Sony Corporation’s stockholders  
¥
492,817
   
¥
937,873
   
¥
+445,056
 

F-2

Consolidated Statements of Income
                 
   
(Millions of yen, except per share amounts)
 
   
Three months ended March 31
 
    2018     2019     Change  
Sales and operating revenue:
                 
Net sales
 
¥
1,658,340
   
¥
1,674,178
   
¥
+15,838
 
Financial services revenue
   
270,943
     
428,345
     
+157,402
 
Other operating revenue
   
21,738
     
24,975
     
+3,237
 
     
1,951,021
     
2,127,498
     
+176,477
 
                         
Costs and expenses:
                       
Cost of sales
   
1,230,559
     
1,234,143
     
+3,584
 
Selling, general and administrative
   
424,007
     
399,910
     
-24,097
 
Financial services expenses
   
231,196
     
384,200
     
+153,004
 
Other operating expense, net
   
44,203
     
28,183
     
-16,020
 
     
1,929,965
     
2,046,436
     
+116,471
 
                         
Equity in net income of affiliated companies
   
1,128
     
1,668
     
+540
 
                         
Operating income
   
22,184
     
82,730
     
+60,546
 
                         
Other income:
                       
Interest and dividends
   
3,228
     
5,877
     
+2,649
 
Gain on sale of securities investments, net
   
38
           
-38
 
Gain on equity securities, net
         
38,740
     
+38,740
 
Other
   
(102
)
   
319
     
+421
 
     
3,164
     
44,936
     
+41,772
 
Other expenses:
                       
Interest
   
2,784
     
1,763
     
-1,021
 
Loss on devaluation of securities investments
   
3,152
           
-3,152
 
Foreign exchange loss, net
   
5,480
     
12,453
     
+6,973
 
Other
   
5,461
     
816
     
-4,645
 
     
16,877
     
15,032
     
-1,845
 
                         
Income before income taxes
   
8,471
     
112,634
     
+104,163
 
                         
Income taxes
   
13,289
     
11,331
     
-1,958
 

                       
Net income (loss)
   
(4,818
)
   
101,303
     
+106,121
 
                         
Less - Net income attributable to noncontrolling interests
   
12,008
     
13,442
     
+1,434
 
                         
Net income (loss) attributable to Sony Corporation’s stockholders
 
¥
(16,826
)
 
¥
87,861
   
¥
+104,687
 
                         
                         
                         
Per share data:
                       
Net income (loss) attributable to Sony Corporation’s stockholders
                       
   — Basic
 
¥
(13.30
)
 
¥
69.68
   
¥
+82.98
 
   — Diluted
   
(13.30
)
   
68.23
     
+81.53
 

Consolidated Statements of Comprehensive Income
                 
   
(Millions of yen)
 
   
Three months ended March 31
 
    2018     2019     Change  
                   
Net income (loss)
 
¥
(4,818
)
 
¥
101,303
   
¥
+106,121
 
                         
Other comprehensive income, net of tax –
                       
Unrealized gains (losses) on securities
   
(5,960
)
   
29,365
     
+35,325
 
Unrealized losses on derivative instruments
   
(1,334
)
   
(18
)
   
+1,316
 
Pension liability adjustment
   
5,381
     
(21,045
)
   
-26,426
 
Foreign currency translation adjustments
   
(40,077
)
   
4,139
     
+44,216
 
                         
Total comprehensive income (loss)
   
(46,808
)
   
113,744
     
+160,552
 
                         
Less - Comprehensive income attributable to noncontrolling interests
   
11,444
     
23,804
     
+12,360
 

                       
   Comprehensive income (loss) attributable to Sony Corporation’s stockholders
 
¥
(58,252
)
 
¥
89,940
   
¥
+148,192
 

F-3

Consolidated Statements of Changes in Stockholders' Equity
                         
                                     
(Millions of yen)
 
    Common stock    
Additional paid-
in capital
   
Retained
earnings
   
Accumulated
other
comprehensive
income
   
Treasury stock,
at cost
   
Sony
Corporation’s stockholders’
equity
   
Noncontrolling
interests
    Total equity  
Balance at March 31, 2017
 
¥
860,645
   
¥
1,275,337
   
¥
984,368
   
¥
(618,769
)
 
¥
(4,335
)
 
¥
2,497,246
   
¥
638,176
   
¥
3,135,422
 
Issuance of new shares
   
488
     
488
                             
976
             
976
 
Exercise of stock acquisition rights
   
4,533
     
4,532
                             
9,065
             
9,065
 
Conversion of convertible bonds
   
12
     
12
                             
24
             
24
 
Stock based compensation
           
3,160
                             
3,160
             
3,160
 
                                                                 
Comprehensive income:
                                                               
Net income
                   
490,794
                     
490,794
     
56,485
     
547,279
 
Other comprehensive income, net of tax
                                                               
Unrealized gains (losses) on securities
                           
(444
)
           
(444
)
   
1,514
     
1,070
 
Unrealized losses on derivative instruments
                           
(1,184
)
           
(1,184
)
           
(1,184
)
Pension liability adjustment
                           
12,292
             
12,292
     
98
     
12,390
 
Foreign currency translation adjustments
                           
(8,641
)
           
(8,641
)
   
2,306
     
(6,335
)
Total comprehensive income
                                           
492,817
     
60,403
     
553,220
 
                                                                 
Stock issue costs, net of tax
           
(879
)
                           
(879
)
           
(879
)
Dividends declared
                   
(34,775
)
                   
(34,775
)
   
(14,361
)
   
(49,136
)
Purchase of treasury stock
                                   
(199
)
   
(199
)
           
(199
)
Reissuance of treasury stock
           
0
                     
4
     
4
             
4
 

                                                               
Transactions with noncontrolling interests shareholders and other
           
(73
)
                           
(73
)
   
(4,427
)
   
(4,500
)
Balance at March 31, 2018
 
¥
865,678
   
¥
1,282,577
   
¥
1,440,387
   
¥
(616,746
)
   
(4,530
)
   
2,967,366
     
679,791
     
3,647,157
 

                                       
(Millions of yen)
 
    Common stock    
Additional paid-
in capital
   
Retained
earnings
   
Accumulated
other
comprehensive
income
   
Treasury stock,
at cost
   
Sony
Corporation’s stockholders’
equity
   
Noncontrolling
interests
    Total equity  
Balance at March 31, 2018
 
¥
865,678
   
¥
1,282,577
   
¥
1,440,387
   
¥
(616,746
)
 
¥
(4,530
)
 
¥
2,967,366
   
¥
679,791
   
¥
3,647,157
 
Cumulative effect of newly adopted ASUs
                   
7,976
     
(15,526
)
           
(7,550
)
   
5,432
     
(2,118
)
Issuance of new shares
   
431
     
431
                             
862
             
862
 
Exercise of stock acquisition rights
   
8,174
     
8,174
                             
16,348
             
16,348
 
Conversion of convertible bonds
   
8
     
8
                             
16
             
16
 
Stock based compensation
           
1,159
                             
1,159
             
1,159
 
                                                                 
Comprehensive income:
                                                               
Net income
                   
916,271
                     
916,271
     
50,279
     
966,550
 
Other comprehensive income, net of tax
                                                               
Unrealized gains on securities
                           
24,370
             
24,370
     
8,915
     
33,285
 
Unrealized gains on derivative instruments
                           
1,223
             
1,223
             
1,223
 
Pension liability adjustment
                           
(14,013
)
           
(14,013
)
   
53
     
(13,960
)
Foreign currency translation adjustments
                           
10,022
             
10,022
     
(1,578
)
   
8,444
 
Total comprehensive income
                                           
937,873
     
57,669
     
995,542
 
                                                                 
Stock issue costs, net of tax
           
(147
)
                           
(147
)
           
(147
)
Dividends declared
                   
(44,048
)
                   
(44,048
)
   
(28,961
)
   
(73,009
)
Purchase of treasury stock
                                   
(100,177
)
   
(100,177
)
           
(100,177
)
Reissuance of treasury stock
           
1
                     
3
     
4
             
4
 
Transactions with noncontrolling interests shareholders and other
           
(25,329
)
                           
(25,329
)
   
(23,618
)
   
(48,947
)
Balance at March 31, 2019
 
¥
874,291
     
1,266,874
     
2,320,586
     
(610,670
)
   
(104,704
)
   
3,746,377
     
690,313
     
4,436,690
 

In July 2018, Sony Corporation of America acquired from the Estate of Michael Jackson (the “Estate”) the 25.1% interest in Nile Acquisition LLC (“Nile”) held by the Estate.   A total of 287.5 million U.S. dollars was paid to the Estate for the acquisition, which payment also includes reimbursement of various expenses and costs related to the acquisition.   The difference between cash consideration paid of 287.5 million U.S. dollars and the carrying amount of the noncontrolling interests was recognized as a decrease to additional paid-in capital of 295.9 million U.S. dollars. As a result of the acquisition, Nile became a wholly-owned subsidiary of Sony.
F-4

Consolidated Statements of Cash Flows
           
   
(Millions of yen)
 
   
Fiscal year ended March 31
 
    2018     2019  
Cash flows from operating activities:
           
Net income
 
¥
547,279
   
¥
966,550
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
 Depreciation and amortization, including amortization of deferred insurance acquisition costs and contract costs
   
361,444
     
374,026
 
Amortization of film costs
   
359,274
     
348,493
 
Accrual for pension and severance costs, less payments
   
4,113
     
(33,631
)
Other operating (income) expense, net
   
4,072
     
(71,568
)
(Gain) loss on securities investments, net (other than financial services business)
   
3,438
     
(118,630
)
 Gain on marketable securities and securities investments held in the financial services business, net
   
(47,119
)
   
(66,383
)
Deferred income taxes
   
24,085
     
(121,650
)
Equity in net (income) loss of affiliated companies, net of dividends
   
(2,956
)
   
7,947
 
Changes in assets and liabilities:
               
   (Increase) decrease in notes, accounts receivable, trade and contract assets
   
(80,004
)
   
1,144
 
   (Increase) decrease in inventories
   
(51,508
)
   
30,455
 
   Increase in film costs
   
(362,496
)
   
(410,994
)
   Increase (decrease) in notes and accounts payable, trade
   
(87,939
)
   
18,534
 
   Increase (decrease) in accrued income and other taxes
   
29,181
     
(20,039
)
   Increase in future insurance policy benefits and other
   
495,419
     
544,179
 
   Increase in deferred insurance acquisition costs
   
(86,779
)
   
(88,807
)
   Increase in marketable securities held in the life insurance business
   
(89,797
)
   
(64,034
)
   Decrease in other current assets
   
3,776
     
16,576
 
   Increase in other current liabilities
   
151,805
     
56,723
 
Other
 
78,683
     
(110,153
)
        Net cash provided by operating activities
   
1,253,971
     
1,258,738
 
                 
Cash flows from investing activities:
               
Payments for purchases of fixed assets
   
(262,989
)
   
(312,644
)
Proceeds from sales of fixed assets
   
60,599
     
17,585
 
Payments for investments and advances by financial services business
   
(963,210
)
   
(1,078,250
)
Payments for investments and advances (other than financial services business)
   
(13,801
)
   
(53,525
)
Proceeds from sales or return of investments and collections of advances by financial services business
   
317,159
     
309,498
 
Proceeds from sales or return of investments and collections of advances (other than financial services business)
   
6,596
     
2,442
 
Payment for EMI Music Publishing acquisition, net of cash acquired
 
     
(244,197
)
Proceeds from sales of businesses
   
44,624
   

 
Proceeds related to sales of Spotify Technology S.A. Shares
 
     
82,467
 
Other
   
(12,046
)
   
(30,821
)
        Net cash used in investing activities
   
(823,068
)
   
(1,307,445
)
                 
Cash flows from financing activities:
               
Proceeds from issuance of long-term debt
   
125,092
     
94,351
 
Payments of long-term debt
   
(44,561
)
   
(382,671
)
Increase in short-term borrowings, net
   
35,145
     
123,979
 
Increase in deposits from customers in the financial services business, net
   
169,479
     
246,945
 
Dividends paid
   
(28,490
)
   
(38,067
)
Payments for purchase of treasury stock
   
(198
)
   
(100,177
)
Payment for purchase of Nile Acquisition LLC shares from noncontrolling interests
 
     
(32,041
)
Other
   
(10,011
)
   
(35,203
)
        Net cash provided by (used in) financing activities
   
246,456
     
(122,884
)
                 
Effect of exchange rate changes on cash and cash equivalents, including restricted
   
(53,044
)
   
52,465
 
                 
Net increase (decrease) in cash and cash equivalents, including restricted
   
624,315
     
(119,126
)
Cash and cash equivalents, including restricted, at beginning of the fiscal year
   
968,624
     
1,592,939
 
                 
Cash and cash equivalents, including restricted, at end of the fiscal year
   
1,592,939
     
1,473,813
 
                 
Less - restricted cash and cash equivalents, included in other current assets and other assets
   
6,610
     
3,740
 
Cash and cash equivalents at end of the fiscal year
 
¥
1,586,329
   
¥
1,470,073
 

F-5

Notes to Consolidated Financial Statements
                 
Business Segment Information
                 
(Business Segments)
                 
   
(Millions of yen)
 
   
Fiscal year ended March 31
 
Sales and operating revenue
  2018     2019     Change  
Game & Network Services
                 
Customers
 
¥
1,848,298
   
¥
2,224,622
   
¥
+376,324
 
Intersegment
   
95,514
     
86,250
     
-9,264
 
Total
   
1,943,812
     
2,310,872
     
+367,060
 
                         
Music
                       
Customers
   
784,792
     
795,025
     
+10,233
 
Intersegment
   
15,203
     
12,464
     
-2,739
 
Total
   
799,995
     
807,489
     
+7,494
 
                         
Pictures
                       
Customers
   
1,010,173
     
985,270
     
-24,903
 
Intersegment
   
894
     
1,603
     
+709
 
Total
   
1,011,067
     
986,873
     
-24,194
 
                         
Home Entertainment & Sound
                       
Customers
   
1,221,734
     
1,154,533
     
-67,201
 
Intersegment
   
999
     
878
     
-121
 
Total
   
1,222,733
     
1,155,411
     
-67,322
 
                         
Imaging Products & Solutions
                       
Customers
   
647,163
     
661,304
     
+14,141
 
Intersegment
   
8,729
     
9,146
     
+417
 
Total
   
655,892
     
670,450
     
+14,558
 
                         
Mobile Communications
                       
Customers
   
713,916
     
487,330
     
-226,586
 
Intersegment
   
9,826
     
10,670
     
+844
 
Total
   
723,742
     
498,000
     
-225,742
 
                         
Semiconductors
                       
Customers
   
726,892
     
770,622
     
+43,730
 
Intersegment
   
123,118
     
108,708
     
-14,410
 
Total
   
850,010
     
879,330
     
+29,320
 
                         
Financial Services
                       
Customers
   
1,221,235
     
1,274,708
     
+53,473
 
Intersegment
   
7,142
     
7,831
     
+689
 
Total
   
1,228,377
     
1,282,539
     
+54,162
 
                         
All Other
                       
Customers
   
351,527
     
299,806
     
-51,721
 
Intersegment
   
55,647
     
45,931
     
-9,716
 
Total
   
407,174
     
345,737
     
-61,437
 
                         
Corporate and elimination
   
(298,820
)
   
(271,014
)
   
+27,806
 
Consolidated total
 
¥
8,543,982
   
¥
8,665,687
     
+121,705
 

Game & Network Services (“G&NS”) intersegment amounts primarily consist of transactions with All Other.
Semiconductors intersegment amounts primarily consist of transactions with the G&NS segment, the Imaging Products & Solutions (“IP&S”) segment and the Mobile Communications (“MC”) segment.
All Other intersegment amounts primarily consist of transactions with the G&NS segment, the Music segment and the Pictures segment.
Corporate and elimination includes certain brand and patent royalty income.

   
(Millions of yen)
 
   
Fiscal year ended March 31
 
Operating income (loss)
  2018     2019     Change  
                   
Game & Network Services
 
¥
177,478
   
¥
311,092
   
¥
+133,614
 
Music
   
127,786
     
232,487
     
+104,701
 
Pictures
   
41,110
     
54,599
     
+13,489
 
Home Entertainment & Sound
   
85,841
     
89,669
     
+3,828
 
Imaging Products & Solutions
   
74,924
     
83,975
     
+9,051
 
Mobile Communications
   
(27,636
)
   
(97,136
)
   
-69,500
 
Semiconductors
   
164,023
     
143,874
     
-20,149
 
Financial Services
   
178,947
     
161,477
     
-17,470
 
All Other
   
(23,530
)
   
(11,127
)
   
+12,403
 
Total
   
798,943
     
968,910
     
+169,967
 
Corporate and elimination
   
(64,083
)
   
(74,675
)
   
-10,592
 
Consolidated total
 
¥
734,860
   
¥
894,235
   
¥
+159,375
 

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.
F-6


(Business Segments)
                 
   
(Millions of yen)
 
   
Three months ended March 31
 
Sales and operating revenue
 
2018
   
2019
   
Change
 
                   
Game & Network Services
                 
Customers
 
¥
429,343
   
¥
479,779
   
¥
+50,436
 
Intersegment
   
15,237
     
18,314
     
+3,077
 
Total
   
444,580
     
498,093
     
+53,513
 
                         
Music
                       
Customers
   
202,612
     
211,736
     
+9,124
 
Intersegment
   
3,816
     
1,076
     
-2,740
 
Total
   
206,428
     
212,812
     
+6,384
 
                         
Pictures
                       
Customers
   
300,715
     
293,682
     
-7,033
 
Intersegment
   
221
     
502
     
+281
 
Total
   
300,936
     
294,184
     
-6,752
 
                         
Home Entertainment & Sound
                       
Customers
   
234,895
     
219,375
     
-15,520
 
Intersegment
   
191
     
187
     
-4
 
Total
   
235,086
     
219,562
     
-15,524
 
                         
Imaging Products & Solutions
                       
Customers
   
158,764
     
151,562
     
-7,202
 
Intersegment
   
3,671
     
2,802
     
-869
 
Total
   
162,435
     
154,364
     
-8,071
 
                         
Mobile Communications
                       
Customers
   
149,891
     
107,112
     
-42,779
 
Intersegment
   
3,080
     
3,339
     
+259
 
Total
   
152,971
     
110,451
     
-42,520
 
                         
Semiconductors
                       
Customers
   
142,503
     
169,556
     
+27,053
 
Intersegment
   
23,953
     
22,762
     
-1,191
 
Total
   
166,456
     
192,318
     
+25,862
 
                         
Financial Services
                       
Customers
   
270,943
     
428,345
     
+157,402
 
Intersegment
   
1,779
     
1,950
     
+171
 
Total
   
272,722
     
430,295
     
+157,573
 
                         
All Other
                       
Customers
   
65,220
     
61,667
     
-3,553
 
Intersegment
   
11,312
     
10,677
     
-635
 
Total
   
76,532
     
72,344
     
-4,188
 
                         
Corporate and elimination
   
(67,125
)
   
(56,925
)
   
+10,200
 
Consolidated total
 
¥
1,951,021
   
¥
2,127,498
   
¥
+176,477
 
                         

G&NS intersegment amounts primarily consist of transactions with All Other.
Semiconductors intersegment amounts primarily consist of transactions with the G&NS segment, the IP&S segment and the MC segment.
All Other intersegment amounts primarily consist of transactions with the G&NS segment, the Music segment and the Pictures segment.
Corporate and elimination includes certain brand and patent royalty income.


   
(Millions of yen)
 
   
Three months ended March 31
 
Operating income (loss)
 
2018
   
2019
   
Change
 
                   
Game & Network Services
 
¥
19,631
   
¥
63,938
   
¥
+44,307
 
Music
   
30,908
     
21,786
     
-9,122
 
Pictures
   
32,422
     
27,077
     
-5,345
 
Home Entertainment & Sound
   
(7,342
)
   
347
     
+7,689
 
Imaging Products & Solutions
   
6,868
     
1,844
     
-5,024
 
Mobile Communications
   
(44,600
)
   
(41,062
)
   
+3,538
 
Semiconductors
   
(1,347
)
   
20,299
     
+21,646
 
Financial Services
   
39,838
     
43,842
     
+4,004
 
All Other
   
(17,526
)
   
(22,567
)
   
-5,041
 
Total
   
58,852
     
115,504
     
+56,652
 
                         
Corporate and elimination
   
(36,668
)
   
(32,774
)
   
+3,894
 
Consolidated total
 
¥
22,184
   
¥
82,730
   
¥
+60,546
 
                         

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, which are not allocated to segments.

F-7


(Sales to Customers by Product Category)
                 
                   
The following tables include a breakdown of sales and operating revenue to external customers for certain segments shown in the Business Segment Information on page F-6 and F-7. Sony management views each segment as a single operating segment. However, Sony believes that the breakdown of sales and operating revenue to external customers for the segments in these tables is useful to investors in understanding sales by product category.
 
                   
                   
                   
   
(Millions of yen)
 
   
Fiscal year ended March 31
 
Sales and operating revenue (to external customers)
 
2018
   
2019
   
Change
 
Game & Network Services
                 
Digital Software and Add-on Content
 
¥
762,220
   
¥
1,102,231
   
¥
+340,011
 
Network Services
   
270,972
     
326,524
     
+55,552
 
Hardware and Others
   
815,106
     
795,867
     
-19,239
 
Total
   
1,848,298
     
2,224,622
     
+376,324
 
                         
Music
                       
Recorded Music
   
446,960
     
426,926
     
-20,034
 
Music Publishing
   
74,360
     
106,666
     
+32,306
 
Visual Media and Platform
   
263,472
     
261,433
     
-2,039
 
Total
   
784,792
     
795,025
     
+10,233
 
                         
Pictures
                       
Motion Pictures
   
448,945
     
436,017
     
-12,928
 
Television Productions
   
289,024
     
288,816
     
-208
 
Media Networks
   
272,204
     
260,437
     
-11,767
 
Total
   
1,010,173
     
985,270
     
-24,903
 
                         
Home Entertainment & Sound
                       
Televisions
   
861,763
     
788,423
     
-73,340
 
Audio and Video
   
357,194
     
362,580
     
+5,386
 
Other
   
2,777
     
3,530
     
+753
 
Total
   
1,221,734
     
1,154,533
     
-67,201
 
                         
Imaging Products & Solutions
                       
Still and Video Cameras
   
415,318
     
421,506
     
+6,188
 
Other
   
231,845
     
239,798
     
+7,953
 
Total
   
647,163
     
661,304
     
+14,141
 
                         
Mobile Communications
   
713,916
     
487,330
     
-226,586
 
                         
Semiconductors
   
726,892
     
770,622
     
+43,730
 
                         
Financial Services
   
1,221,235
     
1,274,708
     
+53,473
 
                         
All Other
   
351,527
     
299,806
     
-51,721
 
                         
Corporate
   
18,252
     
12,467
     
-5,785
 
Consolidated total
 
¥
8,543,982
   
¥
8,665,687
   
¥
+121,705
 

F-8


(Sales to Customers by Product Category)
                 
   
(Millions of yen)
 
   
Three months ended March 31
 
Sales and operating revenue (to external customers)
 
2018
   
2019
   
Change
 
                   
Game & Network Services
                 
Digital Software and Add-on Content
 
¥
234,946
   
¥
265,116
   
¥
+30,170
 
Network Services
   
79,551
     
95,283
     
+15,732
 
Hardware and Others
   
114,846
     
119,380
     
+4,534
 
Total
   
429,343
     
479,779
     
+50,436
 
                         
Music
                       
Recorded Music
   
109,722
     
104,374
     
-5,348
 
Music Publishing
   
19,667
     
35,392
     
+15,725
 
Visual Media and Platform
   
73,223
     
71,970
     
-1,253
 
Total
   
202,612
     
211,736
     
+9,124
 
                         
Pictures
                       
Motion Pictures
   
146,940
     
117,796
     
-29,144
 
Television Productions
   
87,510
     
110,493
     
+22,983
 
Media Networks
   
66,265
     
65,393
     
-872
 
Total
   
300,715
     
293,682
     
-7,033
 
                         
Home Entertainment & Sound
                       
Televisions
   
161,360
     
145,910
     
-15,450
 
Audio and Video
   
72,530
     
72,309
     
-221
 
Other
   
1,005
     
1,156
     
+151
 
Total
   
234,895
     
219,375
     
-15,520
 
                         
Imaging Products & Solutions
                       
Still and Video Cameras
   
88,956
     
82,449
     
-6,507
 
Other
   
69,808
     
69,113
     
-695
 
Total
   
158,764
     
151,562
     
-7,202
 
                         
Mobile Communications
   
149,891
     
107,112
     
-42,779
 
                         
Semiconductors
   
142,503
     
169,556
     
+27,053
 
                         
Financial Services
   
270,943
     
428,345
     
+157,402
 
                         
All Other
   
65,220
     
61,667
     
-3,553
 
                         
Corporate
   
(3,865
)
   
4,684
     
+8,549
 
Consolidated total
 
¥
1,951,021
   
¥
2,127,498
   
¥
+176,477
 
                         

Sony has realigned its product category configuration in the G&NS segment from the fourth quarter of the fiscal year ended March 31, 2019. In connection with the realignment, all prior period sales amounts by product category in the table above have been reclassified to conform to the current presentation.
 
In the G&NS segment, Digital Software and Add-on Content includes distribution of software titles and add-on contents through network by Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; Hardware and Others includes home and portable game consoles, packaged software and peripheral devices.  In the Music segment, Recorded Music includes the distribution of physical and digital recorded music and revenue derived from artists’ live performances; Music Publishing includes the management and licensing of the words and music of songs; Visual Media and Platform includes the production and distribution of animation titles, including game applications based on the animation titles, and various service offerings for music and visual products.  In the Pictures segment, Motion Pictures includes the worldwide production, acquisition and distribution of motion pictures and direct-to-video content; Television Productions includes the production, acquisition and distribution of television programming; Media Networks includes the operation of television and digital networks worldwide.  In the HE&S segment, Televisions includes LCD and OLED televisions; Audio and Video includes Blu-ray disc players and recorders, home audio, headphones and memory-based portable audio devices.  In the IP&S segment, Still and Video Cameras includes interchangeable lens cameras, compact digital cameras, consumer video cameras and video cameras for broadcast; Other includes display products such as projectors and medical equipment.

F-9


(Condensed Financial Services Financial Statements)
                               
                                     
The following schedules show unaudited condensed financial statements for the Financial Services segment and all other segments excluding Financial Services. These presentations are not in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which is used by Sony to prepare its consolidated financial statements. However, because the Financial Services segment is different in nature from Sony’s other segments, Sony believes that a comparative presentation may be useful in understanding and analyzing Sony’s consolidated financial statements. Transactions between the Financial Services segment and Sony without the Financial Services segment, including noncontrolling interests, are included in those respective presentations, then eliminated in the consolidated figures shown below.
 
                                     
                                     
                                     
Condensed Balance Sheets
                                   
                                     
   
(Millions of yen)
 
   
Financial Services
   
Sony without
Financial Services
   
Consolidated
 
                                     
   
March 31
   
March 31
   
March 31
   
March 31
   
March 31
   
March 31
 
   
2018
   
2019
   
2018
   
2019
   
2018
   
2019
 
  ASSETS
                                   
Current assets:
                                   
Cash and cash equivalents
 
¥
393,133
   
¥
509,595
   
¥
1,193,196
   
¥
960,478
   
¥
1,586,329
   
¥
1,470,073
 
Marketable securities
   
1,176,601
     
1,324,538
   
   
     
1,176,601
     
1,324,538
 
Notes and accounts receivable, trade and contract assets
   
15,612
     
16,479
     
1,003,558
     
1,055,669
     
1,012,779
     
1,065,802
 
Inventories
 
   
     
692,937
     
653,278
     
692,937
     
653,278
 
Other receivables
   
60,819
     
63,921
     
130,393
     
159,758
     
190,706
     
223,620
 
Prepaid expenses and other current assets
   
137,539
     
133,214
     
379,893
     
376,778
     
516,744
     
509,301
 
 Total current assets
   
1,783,704
     
2,047,747
     
3,399,977
     
3,205,961
     
5,176,096
     
5,246,612
 
                                                 
Film costs
 
   
     
327,645
     
409,005
     
327,645
     
409,005
 
                                                 
Investments and advances
   
10,560,933
     
11,400,938
     
272,545
     
399,696
     
10,756,058
     
11,724,651
 
                                                 
Investments in Financial Services, at cost
 
   
     
133,514
     
153,968
   
   
 
                                                 
Property, plant and equipment
   
22,424
     
22,920
     
715,760
     
752,847
     
739,470
     
777,053
 
                                                 
Other assets:
                                               
Intangibles, net
   
34,622
     
42,968
     
492,546
     
874,998
     
527,168
     
917,966
 
Goodwill
   
7,225
     
7,225
     
523,267
     
761,327
     
530,492
     
768,552
 
Deferred insurance acquisition costs
   
586,670
     
595,265
   
   
     
586,670
     
595,265
 
Deferred income taxes
   
1,684
     
3,533
     
95,088
     
198,953
     
96,772
     
202,486
 
Other
   
33,267
     
32,085
     
295,650
     
311,653
     
325,167
     
339,996
 
     
663,468
     
681,076
     
1,406,551
     
2,146,931
     
2,066,269
     
2,824,265
 
Total assets
 
¥
13,030,529
   
¥
14,152,681
   
¥
6,255,992
   
¥
7,068,408
   
¥
19,065,538
   
¥
20,981,586
 
                                                 
LIABILITIES AND EQUITY
                                               
Current liabilities:
                                               
Short-term borrowings
 
¥
433,119
   
¥
564,609
   
¥
288,496
   
¥
226,470
   
¥
721,615
   
¥
791,079
 
Notes and accounts payable, trade
 
   
     
468,550
     
492,124
     
468,550
     
492,124
 
Accounts payable, other and accrued expenses
   
37,479
     
40,228
     
1,477,875
     
1,653,895
     
1,514,433
     
1,693,048
 
Accrued income and other taxes
   
19,401
     
19,655
     
126,504
     
115,571
     
145,905
     
135,226
 
Deposits from customers in the banking business
   
2,159,246
     
2,302,314
   
   
     
2,159,246
     
2,302,314
 
Other
   
181,467
     
197,123
     
435,996
     
474,926
     
610,792
     
666,024
 
 Total current liabilities
   
2,830,712
     
3,123,929
     
2,797,421
     
2,962,986
     
5,620,541
     
6,079,815
 
                                                 
Long-term debt
   
205,373
     
235,761
     
421,817
     
336,349
     
623,451
     
568,372
 
Accrued pension and severance costs
   
33,062
     
33,979
     
361,442
     
350,253
     
394,504
     
384,232
 
Deferred income taxes
   
342,405
     
355,356
     
107,458
     
176,065
     
449,863
     
531,421
 
Future insurance policy benefits and other
   
5,221,772
     
5,642,671
   
   
     
5,221,772
     
5,642,671
 
Policyholders’ account in the life insurance business
   
2,820,702
     
3,048,202
   
   
     
2,820,702
     
3,048,202
 
Other
   
17,778
     
15,488
     
284,270
     
288,164
     
278,338
     
281,382
 
  Total liabilities
   
11,471,804
     
12,455,386
     
3,972,408
     
4,113,817
     
15,409,171
     
16,536,095
 
                                                 
Redeemable noncontrolling interest
 
   
     
9,210
     
8,801
     
9,210
     
8,801
 
                                                 
Equity:
                                               
Stockholders’ equity of Financial Services
   
1,557,062
     
1,695,563
   
   
   
   
 
Stockholders’ equity of Sony without Financial Services
 
   
     
2,173,128
     
2,850,380
   
   
 
Sony Corporation’s stockholders’ equity
 
   
   
   
     
2,967,366
     
3,746,377
 
Noncontrolling interests
   
1,663
     
1,732
     
101,246
     
95,410
     
679,791
     
690,313
 
  Total equity
   
1,558,725
     
1,697,295
     
2,274,374
     
2,945,790
     
3,647,157
     
4,436,690
 
  Total liabilities and equity
 
¥
13,030,529
   
¥
14,152,681
   
¥
6,255,992
   
¥
7,068,408
   
¥
19,065,538
   
¥
20,981,586
 

F-10


Condensed Statements of Income
                                   
                                     
                                     
   
(Millions of yen)
 
   
Fiscal year ended March 31
 
                                     
   
Financial Services
   
Sony without
Financial Services
   
Consolidated
 
   
2018
   
2019
   
2018
   
2019
   
2018
   
2019
 
                                     
Financial services revenue
 
¥
1,228,377
   
¥
1,282,539
   
¥
     
¥
     
¥
1,221,235
   
¥
1,274,708
 
Net sales and operating revenue
 
   
     
7,329,755
     
7,396,401
     
7,322,747
     
7,390,979
 
     
1,228,377
     
1,282,539
     
7,329,755
     
7,396,401
     
8,543,982
     
8,665,687
 
                                                 
Cost of sales
 
   
     
5,199,748
     
5,160,284
     
5,188,259
     
5,150,750
 
Selling, general and administrative
 
   
     
1,578,716
     
1,572,714
     
1,583,197
     
1,576,825
 
Financial services expenses
   
1,049,305
     
1,120,276
   
   
     
1,042,163
     
1,112,446
 
Other operating (income) expense, net
   
64
     
104
     
4,008
     
(71,672
)
   
4,072
     
(71,568
)
     
1,049,369
     
1,120,380
     
6,782,472
     
6,661,326
     
7,817,691
     
7,768,453
 
                                                 
Equity in net income (loss) of affiliated companies
   
(61
)
   
(682
)
   
8,630
     
(2,317
)
   
8,569
     
(2,999
)
                                                 
Operating income
   
178,947
     
161,477
     
555,913
     
732,758
     
734,860
     
894,235
 
                                                 
Other income (expenses), net
 
     
(73
)
   
(20,738
)
   
133,929
     
(35,811
)
   
117,413
 
                                                 
Income before income taxes
   
178,947
     
161,404
     
535,175
     
866,687
     
699,049
     
1,011,648
 
                                                 
Income taxes
   
51,825
     
44,763
     
99,945
     
335
     
151,770
     
45,098
 
                                                 
Net Income
   
127,122
     
116,641
     
435,230
     
866,352
     
547,279
     
966,550
 
                                                 
Less - Net income attributable to noncontrolling interests
   
201
     
235
     
9,311
     
8,778
     
56,485
     
50,279
 
                                                 
Net income of Financial Services
 
¥
126,921
   
¥
116,406
   
¥
     
¥
     
¥
     
¥
   
                                                 
Net income of Sony without Financial Services
 
¥
     
¥
     
¥
425,919
   
¥
857,574
   
¥
     
¥
   
                                                 
Net income attributable to Sony Corporation's stockholders
 
¥
     
¥
     
¥
     
¥
     
¥
490,794
   
¥
916,271
 
                                                 
                                                 
   
Three months ended March 31
 
                                                 
   
Financial Services
   
Sony without
Financial Services
   
Consolidated
 
     
2018
     
2019
     
2018
     
2019
     
2018
     
2019
 
                                                 
Financial services revenue
 
¥
272,722
   
¥
430,295
   
¥
     
¥
     
¥
270,943
   
¥
428,345
 
Net sales and operating revenue
 
   
     
1,682,102
     
1,698,835
     
1,680,078
     
1,699,153
 
     
272,722
     
430,295
     
1,682,102
     
1,698,835
     
1,951,021
     
2,127,498
 
                                                 
Cost of sales
 
   
     
1,233,348
     
1,234,482
     
1,230,559
     
1,234,143
 
Selling, general and administrative
 
   
     
423,241
     
399,255
     
424,007
     
399,910
 
Financial services expenses
   
232,975
     
386,148
   
   
     
231,196
     
384,200
 
Other operating expense, net
   
30
     
53
     
44,173
     
28,130
     
44,203
     
28,183
 
     
233,005
     
386,201
     
1,700,762
     
1,661,867
     
1,929,965
     
2,046,436
 
                                                 
Equity in net income (loss) of affiliated companies
   
121
     
(252
)
   
1,007
     
1,920
     
1,128
     
1,668
 
                                                 
Operating income (loss)
   
39,838
     
43,842
     
(17,653
)
   
38,888
     
22,184
     
82,730
 
                                                 
Other income (expenses), net
 
     
(18
)
   
(13,713
)
   
29,922
     
(13,713
)
   
29,904
 
                                                 
Income (loss) before income taxes
   
39,838
     
43,824
     
(31,366
)
   
68,810
     
8,471
     
112,634
 
                                                 
Income taxes
   
11,775
     
12,257
     
1,515
     
(927
)
   
13,289
     
11,331
 
                                                 
Net Income (loss)
   
28,063
     
31,567
     
(32,881
)
   
69,737
     
(4,818
)
   
101,303
 
                                                 
Less - Net income attributable to noncontrolling interests
   
62
     
51
     
1,558
     
2,382
     
12,008
     
13,442
 
                                                 
Net income of Financial Services
 
¥
28,001
   
¥
31,516
   
¥
     
¥
     
¥
     
¥
 
                                                 
Net income (loss) of Sony without Financial Services
 
¥
     
¥
     
¥
(34,439
)
 
¥
67,355
   
¥
     
¥
   
                                                 
Net income (loss) attributable to Sony Corporation's stockholders
 
¥
     
¥
     
¥
     
¥
     
¥
(16,826
)
 
¥
87,861
 

F-11


Condensed Statements of Cash Flows
                                   
                                     
   
(Millions of yen)
 
   
Fiscal year ended March 31
 
                                     
   
Financial Services
   
Sony without
Financial Services
   
Consolidated
 
   
2018
   
2019
   
2018
   
2019
   
2018
   
2019
 
Cash flows from operating activities:
                                   
Net income  (loss)
 
¥
127,122
   
¥
116,641
   
¥
435,230
   
¥
866,352
   
¥
547,279
   
¥
966,550
 
Adjustments to reconcile net income (loss) to net cash
                                         
provided by (used in) operating activities:
                                               
Depreciation and amortization, including amortization of
                                 
deferred insurance acquisition costs and contract costs
   
79,843
     
91,179
     
281,601
     
282,847
     
361,444
     
374,026
 
Amortization of film costs
 
   
     
359,274
     
348,493
     
359,274
     
348,493
 
Other operating (income) expense, net
   
64
     
104
     
4,008
     
(71,672
)
   
4,072
     
(71,568
)
(Gain) loss on marketable securities and
                                               
securities investments, net
   
(47,119
)
   
(66,383
)
   
3,438
     
(118,630
)
   
(43,681
)
   
(185,013
)
Changes in assets and liabilities:
                                               
(Increase) decrease in notes, accounts receivable, trade
                                         
and contract assets
   
(3,880
)
   
(867
)
   
(77,793
)
   
2,056
     
(80,004
)
   
1,144
 
(Increase) decrease in inventories
 
   
     
(51,508
)
   
30,455
     
(51,508
)
   
30,455
 
(Increase) decrease in film costs
 
   
     
(362,496
)
   
(410,994
)
   
(362,496
)
   
(410,994
)
Increase (decrease) in notes and accounts
                                               
payable, trade
 
   
     
(87,939
)
   
18,534
     
(87,939
)
   
18,534
 
Increase (decrease) in future insurance policy
                                         
benefits and other
   
495,419
     
544,179
   
   
     
495,419
     
544,179
 
(Increase) decrease in deferred insurance
                                               
acquisition costs
   
(86,779
)
   
(88,807
)
 
   
     
(86,779
)
   
(88,807
)
(Increase) decrease in marketable securities held
                                         
in the life insurance business
   
(89,797
)
   
(64,034
)
 
   
     
(89,797
)
   
(64,034
)
Other
   
23,714
     
(10,334
)
   
266,834
     
(194,002
)
   
288,687
     
(204,227
)
Net cash provided by (used in) operating activities
   
498,587
     
521,678
     
770,649
     
753,439
     
1,253,971
     
1,258,738
 
                                                 
Cash flows from investing activities:
                                               
Payments for purchases of fixed assets
   
(13,386
)
   
(18,610
)
   
(249,770
)
   
(294,044
)
   
(262,989
)
   
(312,644
)
Payments for investments and advances
   
(963,210
)
   
(1,078,250
)
   
(13,801
)
   
(53,525
)
   
(977,011
)
   
(1,131,775
)
Proceeds from sales or return of investments and
                                         
collections of advances
   
317,159
     
309,498
     
6,596
     
84,909
     
323,755
     
394,407
 
Other
   
162
     
287
     
93,017
     
(257,719
)
   
93,177
     
(257,433
)
Net cash provided by (used in) investing activities
   
(659,275
)
   
(787,075
)
   
(163,958
)
   
(520,379
)
   
(823,068
)
   
(1,307,445
)
                                                 
Cash flows from financing activities:
                                               
Increase (decrease) in borrowings, net
   
140,055
     
160,902
     
(24,379
)
   
(325,247
)
   
115,676
     
(164,341
)
Increase (decrease) in deposits from customers, net
   
169,479
     
246,945
   
   
     
169,479
     
246,945
 
Dividends paid
   
(23,921
)
   
(26,100
)
   
(28,490
)
   
(38,067
)
   
(28,490
)
   
(38,067
)
Other
   
(174
)
   
112
     
(1,214
)
   
(157,799
)
   
(10,209
)
   
(167,421
)
Net cash provided by (used in) financing activities
   
285,439
     
381,859
     
(54,083
)
   
(521,113
)
   
246,456
     
(122,884
)
                                                 
Effect of exchange rate changes on cash and cash equivalents
 
   
     
(53,044
)
   
52,465
     
(53,044
)
   
52,465
 
                                                 
Net increase (decrease) in cash and cash equivalents,
                                         
including restricted
   
124,751
     
116,462
     
499,564
     
(235,588
)
   
624,315
     
(119,126
)
Cash and cash equivalents, including restricted,
                                               
at beginning of the fiscal year
   
268,382
     
393,133
     
700,242
     
1,199,806
     
968,624
     
1,592,939
 
Cash and cash equivalents, including restricted,
                                               
at end of the fiscal year
   
393,133
     
509,595
     
1,199,806
     
964,218
     
1,592,939
     
1,473,813
 
Less - restricted cash and cash equivalents,
                                               
included in other current assets and other assets
 
   
     
6,610
     
3,740
     
6,610
     
3,740
 
Cash and cash equivalents at end of the fiscal year
 
¥
393,133
   
¥
509,595
   
¥
1,193,196
   
¥
960,478
   
¥
1,586,329
   
¥
1,470,073
 

F-12

Going Concern Assumption
Not Applicable

Accounting Policies and Other Information

(Recently adopted accounting pronouncements)
Revenue from contracts with customers
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 addressing revenue recognition which superseded the previous revenue recognition requirements, including most industry-specific guidance.  The guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Sony adopted the updated guidance from the fiscal year beginning April 1, 2018 on a modified retrospective method.  Under this method, Sony applied the new guidance to all open contracts existing as of April 1, 2018, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change.

Although the adoption of this new guidance did not have a material impact on Sony’s results of operations and financial position, there are several areas where Sony’s revenue recognition changed as compared with historical U.S. GAAP.  The more significant of these areas are as follows:

In the Pictures segment, (1) licensing revenue associated with certain renewals or extensions of existing agreements for motion pictures and television programming is recognized at a later point in time, which is when the licensee can use and benefit from the content, instead of when the agreement is renewed or extended, and (2) licensing revenue associated with minimum guarantees for symbolic intellectual property (e.g., brands, trademarks and logos) is recognized over the license term instead of at the inception of the license term.

In the MC segment, the incremental costs of obtaining contracts for the internet-related service business are recognized as assets and amortized to expense over the contract period.

In addition, the ASU changed the presentation of certain items in the consolidated financial statements, such as sales returns, with no impact to the timing of the recognition of revenue or expense.

Recognition and measurement of financial assets and financial liabilities
In January 2016, the FASB issued ASU 2016-01 amending various aspects of the recognition, measurement, presentation, and disclosure requirements for financial instruments.  The changes mainly relate to the requirement to measure equity investments in unconsolidated subsidiaries, other than those accounted for under the equity method of accounting, at fair value with changes in fair value recognized in earnings.  However, this ASU permits entities to elect to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.  This ASU is effective for Sony as of April 1, 2018.  As a result of the adoption of this ASU, Sony reclassified 15,526 million yen in the unrealized gains and losses, net of tax, on equity securities previously classified as available-for-sale, from accumulated other comprehensive income to retained earnings.  In addition, changes in value due to the revaluation of equity securities held in the Financial Services segment at the end of the period are recorded in financial services revenue, and changes in value due to the revaluation of equity securities held in all segments other than the Financial Services segment are recorded in gain on equity securities, net in the consolidated statement of income.

F-13


Intra-entity transfers of assets other than inventory
In October 2016, the FASB issued ASU 2016-16, which amends the accounting for income taxes.  This update requires recognition of the income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs.  Under historical U.S. GAAP, the income tax consequences for asset transfers other than inventory could not be recognized until the asset was sold to a third party.  This ASU is required to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.  This ASU is effective for Sony as of April 1, 2018.  The adoption of this ASU did not have a material impact on Sony’s results of operations and financial position.

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

 
 
Yen in millions
 
 
 
March 31,
2018
   
Impact of Adoption
   
April 1,
2018
 
 
ASU2014-09
   
ASU2016-01
   
ASU2016-16
 
ASSETS
                             
Current assets:
                             
Notes and accounts receivable, trade
   
1,061,442
     
(2,993
)
   
-
     
-
     
1,058,449
 
Allowance for doubtful accounts and sales returns *
   
(48,663
)
   
25,114
     
-
     
-
     
(23,549
)
Inventories
   
692,937
     
(12,404
)
   
-
     
-
     
680,533
 
Other receivables
   
190,706
     
9,628
     
-
     
-
     
200,334
 
Prepaid expenses and other current assets
   
516,744
     
(5,520
)
   
-
     
-
     
511,224
 
Film costs
   
327,645
     
7,647
     
-
     
-
     
335,292
 
Other assets:
                                       
Deferred income taxes
   
96,772
     
(326
)
   
-
     
-
     
96,446
 
Other
   
325,167
     
1,068
     
-
     
-
     
326,235
 
Total assets
   
19,065,538
     
22,214
     
-
     
-
     
19,087,752
 
LIABILITIES
                                       
Current liabilities:
                                       
Accounts payable, other and accrued expenses
   
1,514,433
     
(3,290
)
   
-
     
-
     
1,511,143
 
Other *
   
610,792
     
31,777
     
-
     
-
     
642,569
 
Deferred income taxes
   
449,863
     
-
     
-
     
(14,680
)
   
435,183
 
Other
   
278,338
     
10,525
     
-
     
-
     
288,863
 
Total liabilities
   
15,409,171
     
39,012
     
-
     
(14,680
)
   
15,433,503
 
EQUITY
                                       
Retained earnings
   
1,440,387
     
(16,798
)
   
15,526
     
9,248
     
1,448,363
 
Accumulated other comprehensive income
   
(616,746
)
   
-
     
(15,526
)
   
-
     
(632,272
)
Noncontrolling interests
   
679,791
     
-
     
-
     
5,432
     
685,223
 
Total equity
   
3,647,157
     
(16,798
)
   
-
     
14,680
     
3,645,039
 
Total liabilities and equity
   
19,065,538
     
22,214
     
-
     
-
     
19,087,752
 
* Under the new guidance, Sony presents sales returns as a liability instead of as a contra-asset allowance.  Accordingly, Sony changed the presentation from “Allowance for doubtful accounts and sales returns” to “Allowance for doubtful accounts” on the consolidated  balance sheet.

Restricted Cash
In November 2016, the FASB issued ASU 2016-18, which requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents in the statement of cash flows.  This ASU also requires entities to disclose how the statement of cash flows that includes restricted cash and restricted cash equivalents with cash and cash equivalents reconciles to the balance sheet.  This ASU is effective for Sony as of April 1, 2018.  This ASU is required to be applied on a retrospective basis.  The adoption of this ASU did not have a material impact on Sony’s results of operations and financial position.

F-14


Presentation of net periodic pension and postretirement benefit costs
In March 2017, the FASB issued ASU 2017-07, which requires separate presentation of service costs and other components of net benefit costs.  Only the service costs will be presented with other employee compensation costs in operating income or capitalized, while the other components of net benefit costs will be presented outside of operating income, and will not be eligible for capitalization.  This ASU is effective for Sony as of April 1, 2018.  This ASU is required to be applied on a retrospective basis for the presentation of service costs and other components of net benefit costs, and on a prospective basis for the capitalization of only the service costs component of net benefit costs.  The adoption of this ASU did not have a material impact on Sony’s results of operations and financial position.

(Number of Consolidated Subsidiaries and Affiliated Companies)
As of March 31, 2019, Sony had 1,556 consolidated subsidiaries (including variable interest entities) and 133 affiliated companies accounted for under the equity method.

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

   
(Thousands of shares)
 
   
Fiscal year ended March 31
 
Net income attributable to Sony Corporation’s stockholders
 
2018
   
2019  
— Basic
   
1,263,895
     
1,266,592
 
— Diluted
   
1,292,420
     
1,294,646
 

   
(Thousands of shares)
 
   
Three months ended March 31
 
Net income (loss) attributable to Sony Corporation’s stockholders
 
2018    
2019
 
— Basic
   
1,265,126
     
1,261,003
 
— Diluted
   
1,265,126
     
1,287,808
 

The dilutive effect in the weighted-average number of outstanding shares for the fiscal year ended March 31, 2018 and the fiscal year and three months ended March 31, 2019 primarily resulted from convertible bonds which were issued in July 2015.    All potential shares were excluded as anti-dilutive for the three months ended March 31, 2018 due to Sony incurring a net loss attributable to Sony Corporation’s stockholders.

(Segmentation)
The G&NS segment includes network services businesses, the manufacture and sales of home gaming products and production and sales of software.  The Music segment includes the Recorded Music, Music Publishing and Visual Media and Platform businesses.  The Pictures segment includes the Motion Pictures, Television Productions and Media Networks businesses.  The HE&S segment includes Televisions as well as Audio and Video businesses.  The IP&S segment includes the Still and Video Cameras business.  The 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 and recording media businesses.  Sony’s products and services are generally unique to a single operating segment.

(Reclassifications)
Certain reclassifications of the financial statements and accompanying footnotes for the fiscal year and three months ended March 31, 2018 have been made to conform to the presentation for the fiscal year and three months ended March 31, 2019, respectively.

(Spotify Technology S.A. Shares)
On April 3, 2018, Spotify Technology S.A. (“Spotify”) was publicly listed for trading on the New York Stock Exchange.  Sony owned 5.707% of Spotify’s shares at the time of the public listing.

During the fiscal year ended March 31, 2019, Sony sold a portion of the shares for aggregate consideration of 82,616 million yen (768 million U.S. dollars) in cash proceeds.  The sale of shares, offset by costs to be paid to its artists and distributed labels and other transaction costs which directly related to the gains recognized from the Spotify shares, resulted in a net pre-tax realized gain of 54,179 million yen (504 million U.S. dollars) recorded in gain on equity securities, net in the consolidated statement of income.  The payments to its artists and distributed labels are included within other in the cash flows from investing activities of the consolidated statement of cash flows.

F-15


The remaining shares retained as of March 31, 2019 have a gross fair value of 78,947 million yen (711 million U.S. dollars), and resulted in a pre-tax unrealized gain, net of costs to be paid to its artists and distributed labels and other costs which directly related to the gains recognized from the Spotify shares, of 47,543 million yen (449 million U.S. dollars) recorded in gain on equity securities, net in the consolidated statement of income.

(Reversal of valuation allowances of Sony Americas Holding Inc. and its U.S. consolidated tax filing group)
Sony provides a valuation allowance for its deferred tax assets, which includes net operating losses, temporary differences and tax credits, when it is more likely than not that some portion, or all, of its deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the relevant tax jurisdiction.  As of December 31, 2018, Sony Americas Holding Inc. and its U.S. consolidated tax filing group has continued its profitable trend, primarily as a result of the G&NS segment and the Music segment.  Based on an assessment of the available positive and negative evidence, in particular recent profit history and forecasted profitability, in the quarter ended December 31, 2018, Sony reversed the valuation allowances recorded against a significant portion of the deferred tax assets in the U.S., primarily, net operating losses, temporary differences and certain tax credits, and recorded a tax benefit of 154,201 million yen.  Valuation allowances continue to be recorded on the remaining U.S. deferred tax assets, primarily foreign tax credits, due to restrictions on the use of such assets and their relatively short remaining carryforward periods.

(Acquisition of EMI Music Publishing)
On November 14, 2018, Sony Corporation of America, Sony’s wholly-owned subsidiary, completed the acquisition of the entirety of the approximately 60% equity interest held by the investor consortium led by the Mubadala Investment Company in DH Publishing, L.P. (“EMI”), which owned and managed EMI Music Publishing, for the equity purchase price of 257,168 million yen (2,269 million U.S. dollars), which includes payments related to warrants and management equity plans.  Sony paid all the consideration in cash upon the acquisition.  As a result of this acquisition, EMI has become a wholly-owned subsidiary of Sony.  This acquisition allows Sony to build upon its music publishing library by providing the Company with full ownership of the EMI music publishing catalog which was being administered by Sony’s wholly-owned music publishing subsidiary, Sony/ATV Music Publishing.  Sony’s consolidated income statements for the fiscal year ended March 31, 2019 include revenue and operating income of 28,871 million yen (260 million U.S. dollars) and 6,432 million yen (58 million U.S. dollars), respectively, attributable to EMI since the date of acquisition.  Sony’s consolidated income statements for the three months ended March 31, 2019 include revenue and operating income of 18,420 million yen (167 million U.S. dollars) and 4,522 million yen (41 million U.S. dollars), respectively, attributable to EMI.

Prior to the acquisition, Sony’s interest in EMI was accounted for under the equity method of accounting.  As a result of Sony obtaining a controlling interest in EMI, Sony consolidated EMI using the acquisition method of accounting and recorded the fair value of the identifiable assets, liabilities assumed and residual goodwill of EMI.  Sony remeasured the approximately 40% equity interest in EMI that Sony already owned prior to the acquisition at a fair value of 141,141 million yen (1,245 million U.S. dollars) which resulted in the recognition of a non-cash gain of 116,939 million yen (1,032 million U.S. dollars) recorded in other operating income, net for the three months ended December 31, 2018.  Sony did not record any tax expense or deferred tax liability corresponding to this gain.  Sony also assumed EMI’s existing interest-bearing debt of 148,621 million yen (1,311 million U.S. dollars) as a result of this acquisition, of which 108,942 million yen (961 million U.S. dollars) was repaid immediately from Sony’s existing cash.

The following table summarizes the fair values assigned to the assets and liabilities of EMI that were recorded in the Music segment.  The purchase price allocation as of the date of the acquisition is preliminary and is subject to revision as more detailed analyses are completed.  The primary areas of the purchase price allocation that are not yet finalized are related to the income taxes and residual goodwill.

F-16


   
Yen in millions
 
Cash and cash equivalents
   
12,971
 
Notes and accounts receivable, trade
   
32,287
 
Prepaid expenses and other current assets
   
10,220
 
  Securities investments and other
   
1,476
 
Intangibles
   
420,534
 
Goodwill
   
237,271
 
Other
   
10,023
 
      Total assets
   
724,782
 
Notes and accounts payable, trade
   
1,731
 
Accounts payable, other and accrued expenses
   
70,675
 
Accrued income and other taxes
   
3,082
 
Long-term debt
   
148,621
 
Accrued pension and severance costs
   
1,947
 
Deferred income taxes
   
94,849
 
Other
   
5,564
 
Total liabilities
   
326,469
 

Intangibles mainly consists of music publishing catalogues with weighted average amortization periods of 43 years.  Goodwill represents unidentifiable intangible assets, such as future growth from new revenue streams, synergies with existing Sony assets and businesses and an assembled workforce, and is calculated as the excess of the purchase price over the estimated fair value of the tangible and intangible assets acquired and is not deductible for tax purposes.  The goodwill recorded in connection with this acquisition is included in the Music segment.


F-17

Consolidated Results for the Fiscal Year Ended March 31, 2019

 

 

(Billions of yen, except per share amounts)

 

 

 

Fiscal Year ended March 31

 

 

 

2018

   

2019

   

Change

 

Sales and operating revenue

       

¥

8,544.0

   

¥

8,665.7

   


+ ¥121.7

 

Operating income

   

734.9

     

894.2

     

+159.4

 

Income before income taxes

   

699.0

     

1,011.6

     

+312.6

 

Net income attributable to Sony Corporation’s stockholders

   

490.8

     

916.3

     

+425.5

 

 

                       

Net income attributable to Sony Corporation’s stockholders per share of common stock:

         

    - Basic

 

¥

388.32

   

¥

723.41

     

+335.09

 

    - Diluted

   

379.75

     

707.74

     

+327.99

 

The average foreign exchange rates during the fiscal years ended March 31, 2018 and 2019 are presented below.

 
 
Fiscal Year ended March 31
 
  2018
    2019
  Change
 
           
    
The average rate of yen
 
       

1 U.S. dollar
   
¥110.19
     
¥110.19
 
0.1 yen depreciation
1 Euro
   
129.7
      128.5
 
1.2 yen depreciation

Sales and operating revenue (“Sales”) increased 121.7 billion yen (1%) compared to the previous fiscal year (“year-on-year”) to 8,665.7 billion yen.  This increase was mainly due to a significant increase in sales in the Game & Network Services (“G&NS”) segment, partially offset primarily by a significant decrease in sales in the Mobile Communications (“MC”) segment.  On a constant currency basis, sales increased approximately 2% year-on-year.  For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Note on page 10.

Operating income increased 159.4 billion yen year-on-year to 894.2 billion yen.  This significant increase was primarily due to significant increases in operating income in the G&NS and Music segments, partially offset by a significant increase in the operating loss in the MC segment.  Operating income for the current fiscal year as well as the previous fiscal year included the following factors:

Factors included in the current fiscal year operating income:
Remeasurement gain (116.9 billion yen*) and deterioration of equity in net income (loss) (11.6 billion yen) in connection with Sony’s acquisition of the remaining approximately 60% equity interest in EMI Music Publishing (“EMI”) as described below (Music segment)
Impairment charge against long-lived assets: 19.2 billion yen (MC segment)**
Impairment charge against long-lived assets and goodwill: 12.9 billion yen (All Other)***

Factors included in the previous fiscal year operating income:
Impairment charge against long-lived assets: 31.3 billion yen (MC segment)
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)
A gain resulting from the sale of real estate held by a subsidiary: 10.5 billion yen (Music 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 (Imaging Products & Solutions (“IP&S”) segment)
A gain resulting from the sale of manufacturing equipment: 8.6 billion yen (Semiconductors segment)

* For details, please refer to Note “Acquisition of EMI Music Publishing” on page F-16.

** In the fiscal year ended March 31, 2019, as a result of downward revisions in the future profitability forecast for the smartphone business within the MC segment, Sony recorded impairment charges against long-lived assets in the smartphone business.  These impairment charges were recorded as a total operating loss of 19.2 billion yen.

1


*** In the fiscal year ended March 31, 2019, as a result of a downward revision in the future profitability forecast for the storage media business within All Other, Sony recorded impairment charges against long-lived assets and goodwill in the storage media business.  These impairment charges were recorded as an operating loss of 12.9 billion yen.

During the current fiscal year, restructuring charges, net, increased 10.7 billion yen year-on-year to 33.1 billion yen, primarily due to the implementation of restructuring initiatives at manufacturing and other sites outside of Japan to improve the profitability of the smartphone business in the MC segment.  This amount is recorded as an operating expense included in the above-mentioned operating income.

Equity in net income (loss) of affiliated companies, recorded within operating income, was a loss of 3.0 billion yen, compared to income of 8.6 billion yen in the previous fiscal year.  This deterioration primarily resulted from an 11.6 billion yen deterioration in equity in net income (loss) for EMI, mainly due to expenses relating to warrants and management equity plans in connection with Sony’s acquisition of the remaining approximately 60% equity interest in EMI in the Music segment.

The net effect of other income and expenses was income of 117.4 billion yen, compared to an expense of 35.8 billion yen in the previous fiscal year.  This was mainly due to a 101.7 billion yen gain on equity securities, net, recorded in the current fiscal year as a result of Spotify Technology S.A.’s (“Spotify”) public listing.  For details, please refer to Note “Spotify Technology S.A. Shares” on page F-15.

Income before income taxes increased 312.6 billion yen year-on-year to 1,011.6 billion yen.

During the current fiscal year, Sony recorded 45.1 billion yen of income tax expense, resulting in an effective tax rate of 4.5%, which was lower than the effective tax rate of 21.7% in the previous fiscal year.  This lower effective tax rate was mainly due to income tax expense not being recorded on the remeasurement gain for the equity interest in EMI, as well as the reversal of valuation allowances against a significant portion of the deferred tax assets in the U.S. consolidated tax group, resulting in a tax benefit of 154.2 billion yen being recorded in the three months ended December 31, 2018.  For details, please refer to Note “Reversal of valuation allowances of Sony Americas Holding Inc. and its U.S. consolidated tax filing group” on page F-16.

Net income attributable to Sony Corporation’s stockholders, which deducts net income attributable to noncontrolling interests, increased 425.5 billion yen year-on-year to 916.3 billion yen.

Cash Flows

For Consolidated Statements of Cash Flows, charts showing Sony’s cash flow information for all segments, all segments excluding the Financial Services segment and the Financial Services segment alone, please refer to pages F-5 and F-12.

Operating Activities: During the current fiscal year, there was a net cash inflow of 1,258.7 billion yen from operating activities, an increase of 4.8 billion yen year-on-year.

For all segments excluding the Financial Services segment, there was a net cash inflow of 753.4 billion yen, a decrease of 17.2 billion yen year-on-year.  This decrease was primarily due to a decrease in accrued expenses in other current liabilities, partially offset by an increase in net income after taking into account non-cash adjustments (including depreciation and amortization, gain on sales of securities investments and other operating income (expense).

The Financial Services segment had a net cash inflow of 521.7 billion yen, an increase of 23.1 billion yen year-on-year.  This increase was primarily due to an increase in insurance premium revenue at Sony Life
Insurance Co., Ltd. (“Sony Life”).

Investing Activities: During the current fiscal year, Sony used 1,307.4 billion yen of net cash in investing activities, an increase of 484.4 billion yen year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 520.4 billion yen, an increase of 356.4 billion yen year-on-year.  This increase was mainly due to a payment for the purchase of the approximately 60% equity interest of EMI and an increase in payments for fixed asset purchases including semiconductor manufacturing equipment, partially offset by cash inflow from the sale of certain shares of Spotify.

The Financial Services segment used 787.1 billion yen of net cash in investing activities, an increase of 127.8 billion yen year-on-year.  This increase was mainly due to a year-on-year increase in payments for investments and advances at Sony Life and Sony Bank Inc. (“Sony Bank”).

2


Financing Activities: Net cash outflow from financing activities during the current fiscal year was 122.9 billion yen, compared to a net cash inflow of 246.5 billion yen in the previous fiscal year.

For all segments excluding the Financial Services segment, there was a 521.1 billion yen net cash outflow, an increase of 467.0 billion yen year-on-year.  This increase was mainly due to the redemption of straight bonds as well as the repayment of long-term debt, partial payment of debt assumed in connection with the consolidation of EMI and a payment for the acquisition of the 25.1% equity interest in Nile Acquisition LLC in the current fiscal year.  Additionally, there was a payment related to the repurchase of shares of Sony’s own common stock (19,309,100 shares repurchased for a total purchase price of 100 billion yen) which was approved at the meeting of its Board of Directors held on February 8, 2019.

In the Financial Services segment, there was a 381.9 billion yen net cash inflow, an increase of 96.4 billion yen year-on-year.  This increase was primarily due to an increase in short-term borrowings at Sony Life and a larger 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 March 31, 2019 was 1,470.1 billion yen.  Cash and cash equivalents of all segments excluding the Financial Services segment was 960.5 billion yen at March 31, 2019, a decrease of 232.7 billion yen compared with the balance as of March 31, 2018.  Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 509.6 billion yen at March 31, 2019, an increase of 116.5 billion yen compared with the balance as of March 31, 2018.


*    *    *    *    *

3

Outlook for the Fiscal Year Ending March 31, 2020

The forecast for consolidated results for the fiscal year ending March 31, 2020 is as follows:

   
(Billions of yen)
   
   
March 31, 2019
Results
   
March 31, 2020
April Forecast
 
Change from
March 31, 2019 Results
 
Sales and operating revenue
 
¥8,665.7
   
¥8,800
 
+¥134.3 bil
   
+ 1.5
%
Operating income
   
894.2
     
810
 
- 84.2 bil
   
- 9.4
 
Income before income taxes
   
1,011.6
     
770
 
- 241.6 bil
   
- 23.9
 
Net income attributable to
Sony Corporation’s stockholders
   
916.3
     
500
 
- 416.3 bil
   
- 45.4
 

Assumed foreign currency exchange rates for the fiscal year ending March 31, 2020 are below.

 
(For your reference)
Average foreign currency exchange rates for the
fiscal year ended March 31, 2019
Assumed foreign currency exchange rates
for the fiscal year ending March 31, 2020
1 U.S. dollar
110.9 yen
approximately 110 yen
1 Euro
128.5 yen
approximately 125 yen

Consolidated sales for the fiscal year ending March 31, 2020 are expected to increase year-on-year due to expected increases in sales in the Semiconductors, Pictures, Financial Services and Music segments, partially offset by decreases in sales in the Electronics Products & Solutions (“EP&S”) segment* and the G&NS segment.
*For further details, refer to “Business Segment Information” below.

Consolidated operating income is expected to decrease year-on-year mainly due to the absence of the remeasurement gain in connection with the consolidation of EMI that was recorded in the fiscal year ended March 31, 2019, partially offset by expected increases in operating income mainly in the EP&S and Pictures segments.  Restructuring charges for the Sony Group are expected to be approximately 24 billion yen in the fiscal year ending March 31, 2020, compared to 33.1 billion yen recorded in the fiscal year ended March 31, 2019.  This amount will be recorded as an operating expense included in the above-mentioned forecast for operating income.

Net income attributable to Sony Corporation’s stockholders is expected to decrease significantly year-on-year mainly due to the impact of the above-mentioned decrease in consolidated operating income, as well as a decrease in non-operating income as a result of the absence of the gain recorded upon the public listing of Spotify shares, and the reduction in tax expense resulting from the reversal of valuation allowances, which were recorded in the fiscal year ended March 31, 2019.

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

*    *    *    *    *

4

Business Segment Information

“Sales and operating revenue” in each business segment represents sales and operating revenue recorded before intersegment transactions are eliminated.  “Operating income (loss)” in each business segment represents operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses.  For details regarding each segment’s product categories, please refer to page F-9.

Sony will realign its business segments from the first quarter of the fiscal year ending March 31, 2020 to reflect a change in the Corporate Executive Officers in charge of certain segments and modifications to the organizational structure of certain segments as of April 1, 2019.  In connection with this decision, the former Home Entertainment & Sound (“HE&S”), IP&S and MC segments will be realigned as the Electronics Products & Solutions (“EP&S”) segment.  The sales and operating revenue and operating income (loss) of each segment for the fiscal years ended March 31, 2018 and March 31, 2019 have been reclassified in the chart below to conform to the presentation for the fiscal year ending March 31, 2020.

This reclassification is not a presentation in accordance with U.S. GAAP (for details, please refer to “Business Segment Information” on page F-6) as noted in Sony’s consolidated financial statements, but is presented to provide investors with an understanding of Sony’s business segment information by providing a measure that aligns with the way Sony will manage its business.  Sony’s management will use this measure to review operating trends, perform analytical comparisons, and assess whether its structural transformation initiatives are achieving their objectives.  This supplemental non-U.S. GAAP measure should be considered in addition to, not as a substitute for, Sony’s sales and operating income in accordance with U.S. GAAP.

   
(Billions of yen)
 
   
March 31, 2018
Results
   
March 31, 2019
Results
   
March 31, 2020
April Forecast
 
Game & Network Services (G&NS)
                 
Sales and operating revenue
   
¥1,943.8
     
¥2,310.9
     
¥2,300
 
Operating income
   
177.5
     
311.1
     
280
 
Music
                       
Sales and operating revenue
   
800.0
     
807.5
     
830
 
Operating income
   
127.8
     
232.5
     
135
 
Pictures
                       
Sales and operating revenue
   
1,011.1
     
986.9
     
1,080
 
Operating income
   
41.1
     
54.6
     
65
 
Electronics Products & Solutions (EP&S) (Reclassified)*
                 
Sales and operating revenue
   
2,600.4
     
2,320.6
     
2,240
 
Operating income
   
133.1
     
76.5
     
121
 
Semiconductors
                       
Sales and operating revenue
   
850.0
     
879.3
     
990
 
Operating income
   
164.0
     
143.9
     
145
 
Financial Services
                       
Financial services revenue
   
1,228.4
     
1,282.5
     
1,330
 
Operating income
   
178.9
     
161.5
     
170
 
All Other, Corporate and elimination (Reclassified)*
                 
Operating loss
   
(87.6
)
   
(85.8
)
   
(106
)
Consolidated
                       
Sales and operating revenue
   
8,544.0
     
8,665.7
     
8,800
 
Operating income
   
734.9
     
894.2
     
810
 
* For a reconciliation, please refer to page 9.

Game & Network Services

Results for the fiscal year ended March 31, 2019
Sales increased 367.1 billion yen (19%) year-on-year to 2,310.9 billion yen (a 19% increase on a constant currency basis).  This increase was primarily due to an increase in game software sales as well as an increase in the number of subscribers for PlayStation®Plus, a paid membership service, partially offset by a decrease in PlayStation®4 (“PS4”) hardware sales.

5

Operating income increased 133.6 billion yen year-on-year to 311.1 billion yen, primarily due to the impact of the above-mentioned increase in sales.  During the current fiscal year, there was a 4.8 billion yen negative impact from foreign exchange rate fluctuations.

Forecast for the fiscal year ending March 31, 2020
Sales are expected to be essentially flat year-on-year mainly due to an expected decrease in PS4 hardware unit sales and the impact of foreign exchange rates, substantially offset by an expected increase in game software sales.  Operating income is expected to decrease primarily due to an increase in development expenses for the next generation console, a decrease in the contribution from highly profitable first-party software titles, and the negative impact of foreign exchange rates, partially offset by PS4 hardware cost reductions.


Music

On November 14, 2018, Sony acquired the entirety of the approximately 60% equity interest held by the investor consortium led by Mubadala Investment Company in EMI, resulting in EMI becoming a wholly-owned subsidiary of Sony. Financial results of EMI included in the Music segment include Sony’s equity earnings (loss) in EMI from April 1 through November 13, 2018 and sales and operating income (loss) of EMI from November 14, 2018 through March 31, 2019, as well as a non-cash gain recorded as a result of the remeasurement to fair value of the approximately 40% equity interest in EMI that Sony owned prior to the acquisition.

The Music segment results include the yen-translated results of Sony Music Entertainment (“SME”), Sony/ATV Music Publishing (“Sony/ATV”) and the above-mentioned EMI, all 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.

Results for the fiscal year ended March 31, 2019
Sales were 807.5 billion yen, essentially flat year-on-year (a 1% increase on a constant currency basis).  This result was primarily due to higher streaming revenues, as well as higher sales for Music Publishing resulting from the consolidation of the results of EMI from November 14, 2018 onward, substantially offset by lower physical sales in Recorded Music primarily due to the impact of the new accounting standard regarding revenue from contracts with customers.

Operating income increased 104.7 billion yen year-on-year to 232.5 billion yen.  This significant increase was primarily due to the above-mentioned recording of a 116.9 billion yen remeasurement gain resulting from the consolidation of EMI, partially offset by the above-mentioned recording of an 11.6 billion yen deterioration of equity in net income (loss) in connection with Sony’s acquisition of the remaining approximately 60% interest in EMI.

Forecast for the fiscal year ending March 31, 2020
Sales are expected to increase year-on-year primarily due to the expectation of higher sales for Music Publishing resulting from the full-year consolidation of the results of EMI, as well as higher streaming revenues for both Recorded Music and Music Publishing, partially offset by an expected decrease in sales for game applications for mobile devices and a decline in physical and digital download sales in Recorded Music.  Operating income is expected to decrease significantly year-on-year primarily due to the absence of the above-mentioned remeasurement gain recorded in the fiscal year ended March 31, 2019, partially offset by an expected increase in operating income resulting from the consolidation of EMI.


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.”

Results for the fiscal year ended March 31, 2019
Sales decreased 24.2 billion yen (2%) year-on-year (a 3% decrease on a U.S. dollar basis) to 986.9 billion yen.  The decrease in sales on a U.S. dollar basis was due to lower sales in Motion Pictures, Media Networks and Television Productions.  The decrease in sales for Motion Pictures was primarily due to lower worldwide theatrical revenues due to the stronger performance of the prior year film slate which included Jumanji: Welcome to the Jungle and Spider-Man: Homecoming as compared to the current year film slate which included Venom and Hotel Transylvania 3: Summer Vacation.  The decrease in sales for Media Networks was due to lower advertising and subscription revenues at various international channels as compared to the previous fiscal year, which included revenues for the Indian Premier League cricket competition.  The decrease in sales for Television Productions was due to lower licensing revenues for various U.S. television series and catalog product, partially offset by higher sales due to the impact of the new accounting standard regarding revenue recognition from contracts with customers.

6

Operating income increased by 13.5 billion yen to 54.6 billion yen.  This significant increase was primarily due to an improvement in the profitability of Motion Pictures which benefited from television licensing and home entertainment sales of higher margin titles including Jumanji: Welcome to the Jungle and Peter Rabbit, and lower theatrical marketing expenses.  The current fiscal year also benefited from the 3.8 billion yen impact of the new accounting standard regarding revenue from contracts with customers.  This increase was partially offset by the impact of 12.8 billion yen in programming write-offs and severance expenses related to a review of the channel portfolio within Media Networks undertaken to streamline the business, as well as the impact of lower sales for Media Networks and Television Productions.

Forecast for the fiscal year ending March 31, 2020
Sales are expected to increase year-on-year due to the impact of an expected increase in sales for Motion Pictures as a result of a greater number of upcoming major theatrical releases, as well as an increase in sales for Television Productions resulting from both an increase in the number and an improvement in the product mix of television programs.  Operating income is expected to increase year-on-year due to the absence of the above-mentioned programming write-offs and severance expenses recorded within Media Networks in the fiscal year ended March 31, 2019, and the expected benefit on operating results in the fiscal year ending March 31, 2020 resulting from the above-mentioned channel portfolio review, as well as the expected increase in sales.  This increase in operating income is expected to be partially offset by an increase in marketing costs in support of upcoming major theatrical releases.


Home Entertainment & Sound (Before segment realignment)
   
(Billions of yen)
 
   
March 31, 2018
Results
   
March 31, 2019
Results
 
Sales and operating revenue
   
¥1,222.7
     
¥1,155.4
 
Operating income
   
85.8
     
89.7
 


Results for the fiscal year ended March 31, 2019
Sales decreased 67.3 billion yen (6%) year-on-year (a 3% decrease on a constant currency basis) to 1,155.4 billion yen, due to a decrease in television unit sales resulting from a strategic decision not to pursue scale in order to focus on profitability, as well as the impact of foreign exchange rates.  This decrease was partially offset by an improvement in the product mix reflecting a shift to high value-added models.

Operating income increased 3.8 billion yen year-on-year to 89.7 billion yen.  This increase was primarily due to an improvement in the product mix reflecting a shift to high value-added models, partially offset by the negative impact of foreign exchange rates and the above-mentioned decrease in sales.  During the current fiscal year, there was a 21.6 billion yen negative impact from foreign exchange rate fluctuations.


Imaging Products & Solutions (Before segment realignment)
   
(Billions of yen)
 
   
March 31, 2018
Results
   
March 31, 2019
Results
 
Sales and operating revenue
   
¥655.9
     
¥670.5
 
Operating income
   
74.9
     
84.0
 


7

Results for the fiscal year ended March 31, 2019
Sales increased 14.6 billion yen (2%) year-on-year (a 3% increase on a constant currency basis) to 670.5 billion yen.  This increase was mainly due to an improvement in the product mix reflecting a shift to high value-added models such as mirrorless single-lens cameras and the interchangeable lens lineup, partially offset by a decrease in compact digital camera unit sales reflecting a contraction of the market.

Operating income increased 9.1 billion yen year-on-year to 84.0 billion yen.  This increase was mainly due to the above-mentioned improvement in product mix as well as reductions in operating costs.  During the current fiscal year, there was a 3.2 billion yen negative impact from foreign exchange rate fluctuations.


Mobile Communications (Before segment realignment)
   
(Billions of yen)
 
   
March 31, 2018
Results
   
March 31, 2019
Results
 
Sales and operating revenue
   
¥723.7
     
¥498.0
 
Operating loss
   
-27.6
     
-97.1
 

Results for the fiscal year ended March 31, 2019
Sales decreased 225.7 billion yen (31%) year-on-year (a 31% decrease on a constant currency basis) to 498.0 billion yen, due to a significant decrease in smartphone unit sales.

Operating loss increased 69.5 billion yen year-on-year to 97.1 billion yen.  This significant increase in the operating loss was mainly due to the above-mentioned decrease in unit sales, the recording of expenses primarily for the write-down of excess components in inventory, and an increase in restructuring charges, partially offset by reductions in operating costs as well as a year-on-year decrease in the above-mentioned impairment charges recorded against long-lived assets.  During the current fiscal year, there was a 2.0 billion yen positive impact from foreign exchange rate fluctuations (which includes the impact of foreign exchange hedging).


Electronics Products & Solutions (Reclassified)

Forecast for the fiscal year ending March 31, 2020
Sales are expected to decrease primarily due to a significant decrease in smartphone unit sales. Operating income is expected to increase significantly year-on-year primarily due to reductions in operating costs for the smartphone business, including cost reductions resulting from restructuring initiatives undertaken in the fiscal year ended March 31, 2019.


Semiconductors

Results for the fiscal year ended March 31, 2019
Sales increased 29.3 billion yen (3%) year-on-year (a 3% increase on a constant currency basis) to 879.3 billion yen.  This increase was primarily due to a significant increase in sales of image sensors for mobile products, partially offset by a significant decrease in sales of camera modules.

Operating income decreased 20.1 billion yen year-on-year to 143.9 billion yen.  This decrease was primarily due to an increase in research and development expenses and in depreciation and amortization expenses, as well as the absence of the above-mentioned 28.3 billion yen gain resulting from the sale of the entire equity interest in a manufacturing subsidiary in the camera module business, an 8.6 billion yen gain resulting from the sale of manufacturing equipment and 6.7 billion yen in insurance recoveries related to the Kumamoto Earthquakes, each recorded in the previous fiscal year. These negative factors were partially offset by the impact of the above-mentioned increase in sales. During the current fiscal year, there was a 0.5 billion yen negative impact from foreign exchange rate fluctuations.

8


Forecast for the fiscal year ending March 31, 2020
Sales are expected to increase significantly primarily due to a significant increase in sales of image sensors for mobile products mainly resulting from a significant increase in unit sales and an improvement in product mix, partially offset by the impact of foreign exchange rates.  Operating income is expected to be essentially flat year-on-year primarily due to an increase in depreciation and amortization expenses as well as research and development expenses, and the negative impact of foreign exchange rates, substantially offset by the impact of the above-mentioned increase in sales.


Financial Services

The Financial Services segment results include Sony Financial Holdings Inc. (“SFH”) and SFH’s consolidated subsidiaries such as Sony Life, Sony Assurance Inc. and Sony Bank.  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.

Results for the fiscal year ended March 31, 2019
Financial services revenue increased 54.2 billion yen (4%) year-on-year to 1,282.5 billion yen.  This was primarily due to an increase in revenue at Sony Life.  Revenue at Sony Life increased 49.5 billion yen year-on-year to 1,143.1 billion yen, primarily due to higher insurance premium revenue reflecting an increase in the policy amount in force.

Operating income decreased 17.5 billion yen year-on-year to 161.5 billion yen primarily due to decreases in operating income at Sony Life and Sony Bank.  Operating income at Sony Life decreased 13.5 billion yen year-on-year to 145.6 billion yen, mainly due to the absence of the gain on the sale of real estate held for investment purposes in the general account recorded in the previous fiscal year, as well as a loss on the valuation of investment securities recorded in the current fiscal year.  These decreases were partially offset by the impact of the above-mentioned increase in sales.  Operating income at Sony Bank decreased primarily due to the recording of a loss on the valuation of securities.

Forecast for the fiscal year ending March 31, 2020
Financial services revenue and operating income are expected to increase year-on-year primarily due to an increase in insurance premium revenue, reflecting an increase in the policy amount in force at Sony Life.

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


*
A reconciliation between the sales and operating revenue and operating income (loss) of the total of the HE&S, IP&S and MC segments, and of the EP&S segment (reclassified) for the fiscal years ended March 31, 2018 and March 31, 2019 is as follows.  Reconciliation in the following table consists of intersegment sales within the HE&S, IP&S and MC segments, which were eliminated in All Other, Corporate and elimination in the fiscal years ended March 31, 2018 and March 31, 2019.  These amounts have been added to All Other, Corporate and elimination (Reclassified).

   
(Billions of yen)
 
   
March 31, 2018
Results
   
March 31, 2019
Result
 
Total of HE&S segment, IP&S segment and MC segment:
       
Sales and operating revenue
   
2,602.4
     
2,323.9
 
Operating income
   
133.1
     
76.5
 
Reconciliation (Less):
 
Sales and operating revenue
   
2.0
     
3.3
 
Operating income
   
-
     
-
 
EP&S segment (Reclassified):
         
Sales and operating revenue
   
2,600.4
     
2,320.6
 
Operating income
   
133.1
     
76.5
 


*    *    *    *    *



9

Basic Views on Selection of Accounting Standards

Sony’s consolidated financial statements are prepared in accordance with U.S. GAAP.  Sony’s business is globally diversified and Sony believes that financial statements based on U.S. GAAP contribute to smooth communication with shareholders, investors, and other stakeholders inside and outside of Japan.  Sony is considering whether to adopt International Financial Reporting Standards (“IFRS”) while closely monitoring the development of new accounting standards and the stance of regulatory bodies at home and abroad.

Note
Sales on a Constant Currency Basis and Impact of Foreign Exchange Rate Fluctuations
The descriptions of sales on a constant currency basis reflect sales calculated by applying the yen’s monthly average exchange rates from the same period of the previous fiscal year to local currency-denominated monthly sales in the relevant period of the current fiscal year. For SME, Sony/ATV and EMI in the Music 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.

Results for the Pictures segment are described on a U.S. dollar basis as the Pictures segment reflects the operationsof SPE, a U.S.-based operation that aggregates the results of its worldwide subsidiaries in U.S. dollars.

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 same period of the previous fiscal year from the relevant period of the current fiscal year 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 costof 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.


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

(i)
Sony’s ability to maintain product quality and customer satisfaction with its products and services;
(ii)
Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, rapid development in technology and subjective and changing customer preferences;
(iii)
Sony’s ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms;
(iv)
the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures, investments, capital expenditures, restructurings and other strategic initiatives;
(v)
changes in laws, regulations and government policies in the markets in which Sony and its third-party suppliers, service providers and business partners operate, including those related to taxation, as well as growing consumer focus on corporate social responsibility;
(vi)
Sony’s continued ability to identify the products, services and market trends with significant growth potential, to devote sufficient resources to research and development, to prioritize investments and capital expenditures correctly and to recoup its investments and capital expenditures, including those required for technology development and product capacity;
(vii)
Sony’s reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing, marketing and distribution of its products, and its other business operations;
(viii)
the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending;
(ix)
Sony’s ability to meet operational and liquidity needs as a result of significant volatility and disruption in the global financial markets or a ratings downgrade;
(x)
Sony’s ability to forecast demands, manage timely procurement and control inventories;
(xi)
foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony’s assets, liabilities and operating results are denominated;
(xii)
Sony’s ability to recruit, retain and maintain productive relations with highly skilled personnel;
(xiii)
Sony’s ability to prevent unauthorized use or theft of intellectual property rights, to obtain or renew licenses relating to intellectual property rights and to defend itself against claims that its products or services infringe the intellectual property rights owned by others;
(xiv)
the impact of changes in interest rates and unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue and operating income of the Financial Services segment;
(xv)
shifts in customer demand for financial services such as life insurance and Sony’s ability to conduct successful asset liability management in the Financial Services segment;
(xvi)
risks related to catastrophic disasters or similar events;
(xvii)
the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and
(xviii)
the outcome of pending and/or future legal and/or regulatory proceedings.

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





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