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Sony 6-K 2012

Documents found in this filing:

  1. 6-K
  2. 6-K
Unassociated Document
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of February 2012
Commission File Number: 001-06439
SONY CORPORATION
(Translation of registrant’s name into English)
7-1, KONAN 1-CHOME, 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 þ                    Form 40-F o
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  o   No  þ
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-                    
 
 


 
 
 
 

 
 
Quarterly Securities Report
For the three months ended December 31, 2011
 
(TRANSLATION)
 
Sony Corporation
 
 
 

 
 
CONTENTS

 
 
 

 
 
On February 14, 2012, Sony Corporation (the “Company” or “Sony Corporation”) filed its Japanese-language Quarterly Securities Report (Shihanki Houkokusho) for the three months ended December 31, 2011 with the Director-General of the Kanto Local Finance Bureau in Japan pursuant to the Financial Instruments and Exchange Act of Japan. This document is an English translation of the Quarterly Securities Report in its entirety, except for (i) information that had been previously filed with or submitted to the U.S. Securities and Exchange Commission (the “SEC”) in a Form 20-F, Form 6-K or any other form and (ii) a description of differences between generally accepted accounting principles in the U.S. (“U.S. GAAP”) and generally accepted accounting principles in Japan (“J-GAAP”), which are required to be described in the Quarterly Securities Report under the Financial Instruments and Exchange Act of Japan if the Company prepares its financial statements in conformity with accounting principles other than J-GAAP.
 
Statements made in this translation with respect to the current plans, estimates, strategies and beliefs and other statements of the Company and its consolidated subsidiaries (collectively “Sony”) 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 you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to (i) the global economic environment in which Sony operates and the economic conditions in Sony’s markets, particularly levels of consumer spending; (ii) foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony’s assets and liabilities are denominated; (iii) Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including LCD televisions and game platforms, which are offered in highly competitive markets characterized by continual new product and service introductions, rapid development in technology and subjective and changing consumer preferences; (iv) Sony’s ability and timing to recoup large-scale investments required for technology development and production capacity; (v) Sony’s ability to implement successful business restructuring and transformation efforts under changing market conditions; (vi) Sony’s ability to implement successful hardware, software, and content integration strategies for all segments excluding the Financial Services segment, and to develop and implement successful sales and distribution strategies in light of the Internet and other technological developments; (vii) Sony’s continued ability to devote sufficient resources to research and development and, with respect to capital expenditures, to prioritize investments correctly (particularly in the Consumer Products & Services and the Professional, Device & Solutions segments); (viii) Sony’s ability to maintain product quality; (ix) the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures and other strategic investments; (x) Sony’s ability to forecast demands, manage timely procurement and control inventories; (xi) the outcome of pending legal and/or regulatory proceedings; (xii) 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; (xiii) the impact of 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; and (xiv) risks related to catastrophic disasters or similar events, including the Great East Japan Earthquake and its aftermath as well as the October 2011 floods in Thailand. Risks and uncertainties also include the impact of any future events with material adverse impact.
 
 
1

 
 
 
   
Yen in millions, Yen per share amounts
 
   
Nine months Ended December 31, 2010
   
Nine months Ended December 31, 2011
   
Fiscal year Ended March 31, 2011
 
Sales and operating revenue
    5,600,447       4,892,786       7,181,273  
Operating income (loss)
    273,189       (65,863 )     199,821  
Income (loss) before income taxes
    273,155       (82,700 )     205,013  
Net income (loss) attributable to Sony Corporation’s stockholders
    129,217       (201,447 )     (259,585 )
Comprehensive income (loss)
    (2,328 )     (262,502 )     (359,727 )
Total equity
    3,266,792       2,655,542       2,936,579  
Total assets
    13,086,208       12,916,000       12,924,988  
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock, basic (yen)
    128.76       (200.73 )     (258.66 )
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock, diluted (yen)
    128.58       (200.73 )     (258.66 )
Ratio of stockholders’ equity to total assets (%)
    22.3       17.2       19.7  
Net cash provided by operating activities
    403,911       283,791       616,245  
Net cash used in investing activities
    (582,405 )     (607,168 )     (714,439 )
Net cash provided by (used in) financing activities
    (10,263 )     159,495       (10,112 )
Cash and cash equivalents at end of the period
    919,765       801,708       1,014,412  

   
Yen in millions, Yen per share amounts
 
   
Three months Ended December 31, 2010
   
Three months Ended December 31, 2011
 
Sales and operating revenue
    2,206,246       1,822,876  
Net income (loss) attributable to Sony Corporation’s stockholders
    72,334       (158,968 )
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock, basic (yen)
    72.08       (158.40 )

Notes:
 
1.
The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP.
2.
The Company reports equity in net income (loss) of affiliated companies as a component of operating income (loss).
3.
Consumption taxes are not included in sales and operating revenue.
4.
Total equity is presented based on U.S. GAAP.
5.
Ratio of stockholders’ equity to total assets is calculated by using total equity attributable to the stockholders of the Company.
6.
The Company prepares consolidated financial statements. Therefore parent-only selected financial data is not presented.
 
 
2

 
 
There was no significant change in the business of Sony during the nine months ended December 31, 2011.
 
Sony realigned its reportable segments effective from the first quarter of the fiscal year ending March 31, 2012. For further information on the realignment, please refer to “IV Financial Statements – Notes to Consolidated Financial Statements – 9. Business segment information.”
 
As of December 31, 2011, the Company had 1,290 subsidiaries and 97 affiliated companies, of which 1,259 companies are consolidated subsidiaries (including variable interest entities) of the Company. The Company has applied the equity accounting method for 89 affiliated companies.

 
3

 
 
 
Note for readers of this English translation:
 
Except for the revised risk factors below, there was no significant change from the information presented in the Risk Factors section of the Annual Report on Form 20-F filed with the Securities and Exchange Commission (the “SEC”) on June 28, 2011. The changes are indicated by underline below. Any forward-looking statement included in the descriptions below is based on the current judgment of management.
 
URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm
 
Sony’s business restructuring and transformation efforts are costly and may notattain their objectives.>
 
Sony continued to implement restructuring initiatives in the fiscal year ended March 31, 2011 that focused on a review of the Sony group’s investment plan, the realignment of its manufacturing sites, the reallocation of its workforce, and headcount reductions. As a result of these restructuring initiatives, a total of 67.1 billion yen in restructuring charges has been recorded in the fiscal year ended March 31, 2011. While Sony anticipates recording approximately 55 billion yen of restructuring charges for the fiscal year ending March 31, 2012, significant additional or future restructuring charges may be recorded due to reasons such as the impact of economic downturns or exiting from unprofitable businesses. Restructuring charges are recorded in cost of sales, selling, general and administrative expenses and loss (gain) on sale, disposal or impairment of assets and other (net) and thus initially adversely affect Sony’s operating income (loss) and net income (loss) attributable to Sony’s stockholders. Sony plans to continue rationalizing its manufacturing operations, shifting and consolidating manufacturing to lower-cost countries, increasing the utilization of OEMs and ODMs and outsourcing its support functions and information processing operations to external partners. In addition, Sony continues to undertake business process optimization and enhance profitability through four horizontal platforms for (i) global sales and marketing, (ii) manufacturing, logistics, procurement and customer services, (iii) R&D, and (iv) common software development functions.
 
Due to internal or external factors, efficiencies and cost savings from the above-mentioned restructuring and transformation initiatives may not be realized as scheduled and, even if those benefits are realized, Sony may not be able to achieve the level of profitability expected due to market conditions worsening beyond expectations. Such possible internal factors may include, for example, changes in restructuring and transformation plans, an inability to implement the initiatives effectively with available resources, an inability to coordinate effectively across different business groups, delays in implementing the new business processes or strategies, or an inability to effectively manage and monitor the post-transformation performance of the operation. Possible external factors may include, for example, increased burdens from regional labor regulations, labor union agreements and Japanese customary labor practices that may prevent Sony from executing its restructuring initiatives as planned. The inability to fully and successfully implement restructuring and transformation programs may adversely affect Sony’s operating results and financial condition. Additionally, operating cash flows may be reduced as a result of the payment for restructuring charges.
 
 
4

 
 
Sony’s acquisitions and joint ventures within strategic business areas may not be successful.>
 
Sony actively engages in acquisitions, joint ventures and other strategic investments in order to acquire new technologies, efficiently develop new businesses, and enhance its business competitiveness.
 
Sony may incur significant integration expenses to incorporate acquired businesses. Additionally, Sony may not achieve strategic objectives, planned revenue improvements and cost savings, and may not retain key personnel of the acquired businesses. Sony’s operating results may also be adversely affected by the assumption of liabilities related to any acquired businesses.
 
Sony currently has investments in several joint ventures, including Sharp Display Products Corporation, a joint venture with Sharp Corporation for the production and sale of large-sized liquid crystal display (“LCD”) panels and modules. If Sony and its partners are unable to reach their common financial objectives successfully, due to changes in the competitive environment or other reasons, Sony’s operating results may be adversely affected. Sony’s operating results may also be adversely affected in the short- and medium-term during the partnership, even if Sony and its partners remain on course to achieve their common financial objectives. In addition, by participating in joint ventures or other strategic investments, Sony may encounter conflicts of interest, may not maintain sufficient control over these relationships, including over cash flow, and may be faced with an increased risk of the loss of proprietary technology or know-how. Sony’s reputation may be harmed by the actions or activities of a joint venture that uses the Sony brand. Sony may also be required to provide additional funding or debt guarantees to a joint venture, whether as a result of significant or persistent underperformance, or otherwise.
 
Sony recorded an impairment loss of 63.4 billion yen on its equity interest in S-LCD Corporation (“S-LCD”) in the third quarter of the fiscal year ending on March 31, 2012. In addition, Sony sold all of its equity interest in S-LCD to Samsung Electronics Co., Ltd. (“Samsung”) for a sale price of 1.07 trillion Korean Won (72.3 billion yen as of the sale date) in January 2012 and terminated the LCD panel manufacturing joint venture of the two companies pursuant to agreements signed with Samsung on December 26, 2011.
 
On October 27, 2011, Sony and Telefonaktiebolaget LM Ericsson (“Ericsson”) agreed that Sony would acquire Ericsson’s 50 percent equity interest in Sony Ericsson Mobile Communications AB (“Sony Ericsson”) and establish a broad intellectual property cross-licensing agreement covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology. Sony and Ericsson also agreed to make Sony Ericsson a wholly-owned subsidiary of Sony and thereby to terminate the mobile handset business joint venture between Sony and Ericsson. The acquisition is expected to close in February 2012, subject to customary closing conditions including regulatory approvals, and Sony will pay Ericsson cash consideration of 1.05 billion euros.
 
 
5

 
 
Sony may not be able to recoup the capital expenditures or investments it makes to increase production capacity.>
 
Sony continues to invest in production equipment in the CPS and PDS segments. Sony also invests in production-related joint ventures. One example is the investment Sony and Samsung Electronics Co., Ltd. (“Samsung”) made in connection with 8th generation production capacity for amorphous thin film transistor (“TFT”) LCD panel production, following investments in 7th generation production capacity at S-LCD, a joint venture of the two companies in Korea. Another example is the additional investment by Sony in image sensor fabrication facilities to meet the increasing demand for image sensors. Sony anticipates investing approximately 120 billion yen to increase its image sensor fabrication capacity for the year ending March 31, 2012. If unforeseen market changes and corresponding decline in demand result in a mismatch between sales volume and anticipated production volumes, or if unit sales prices decline due to market oversupply, Sony may not be able to recover its capital expenditures or investments, in part or in full, or the recovery of these capital expenditures or investments may take longer than expected. As a result, the carrying value of the related assets may be subject to an impairment charge, which may adversely affect Sony’s profitability. Sony recorded an impairment loss of 63.4 billion yen on its equity interest in S-LCD in the third quarter of the fiscal year ending on March 31, 2012; in addition, Sony sold all of its equity interest in S-LCD to Samsung for a sale price of 1.07 trillion Korean Won (72.3 billion yen as of the sale date) in January 2012,
 
There were no material contracts executed during the three months ended December 31, 2011.
 
Note for readers of this English translation:
Excluding the matters as updated in the Quarterly Securities Report on Form 6-K submitted to the SEC on November 14, 2011, there was no significant change from the information presented in the Annual Report on Form 20-F (“Patents and Licenses” in item 4) filed with the SEC on June 28, 2011.
 
URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm
 
URL: The Quarterly Securities Report on Form 6-K submitted to the SEC on November 14, 2011
http://www.sec.gov/Archives/edgar/data/313838/000090342311000558/sony-6k_1114.htm
 
 
i) Results of Operations
 
Note for readers of this English translation:
 
Except for information specifically included in this English translation, this document omits certain information set out in the Japanese-language Quarterly Securities Report for the three-month period ended December 31, 2011, since it is the same as described in the press release previously submitted to the SEC. Please refer to “Consolidated Financial Results for the Third Quarter Ended December 31, 2011” submitted to the SEC on Form 6-K on February 2, 2012.
 
URL: The press release titled “Consolidated Financial Results for the Third Quarter Ended December 31, 2012”
http://www.sec.gov/Archives/edgar/data/313838/000115752312000447/a50151420.htm
 
 
6

 
 
Foreign Exchange Fluctuations and Risk Hedging
 
Note for readers of this English translation:
 
Even though foreign exchange rates have fluctuated, there was no significant change in Sony’s risk hedging policy from the description in the Annual Report on Form 20-F filed with the SEC on June 28, 2011.
 
URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm
 
Status of Cash Flows
 
Note for readers of this English translation:
 
Except for information specifically included in this English translation, this document omits certain information set out in the Japanese-language Quarterly Securities Report for the three-month period ended December 31, 2011, since it is the same as described in the press release previously submitted to the SEC. Please refer to “Consolidated Financial Results for the Third Quarter Ended December 31, 2011” submitted to the SEC on Form 6-K on February 2, 2012.
 
URL: The press release titled “Consolidated Financial Results for the Third Quarter Ended December 31, 2011”
http://www.sec.gov/Archives/edgar/data/313838/000115752312000447/a50151420.htm
 
ii) Issues Facing Sony and Management’s Response to those Issues
 
Note for readers of this English translation:
Excluding the matters mentioned below, there was no significant change from the information presented as the Issues Facing Sony and Management’s Response to those Issues in the Trend Information section of the Annual Report on Form 20-F filed with the SEC on June 28, 2011. Any forward-looking statement included in the descriptions below is based on the current judgment of management.
 
URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm
 
The world economy currently faces lingering concerns surrounding the downturn of economic conditions in developed countries due to high unemployment and housing issues in the United States, the debt crisis in Europe, and concern over weakening export growth to Europe and the U.S. by emerging economies, resulting in a heightened sense of uncertainty regarding the future. To respond to these challenges, particularly in the CPS and PDS segments, Sony is implementing measures to reform its operational structure with priority on speed and profitability.
 
Regarding the television business, in the mid-range plan announced in November 2009, Sony outlined plans to create a structure under which it could attain a market share of 20%, or 40 million unit sales, in the fiscal year ending March 31, 2013 based on the expectation that the LCD TV market would continue its high level of growth. However, since then, market conditions have changed drastically, with overall industry growth slowing, and developed countries experiencing negative growth, especially the U.S. and in Europe where economic conditions have deteriorated. Furthermore, while there was an LCD panel shortage at the time of the mid-range plan announcement, there is now a surplus of LCD panels in the market. In light of these changes, Sony is revising its forecasted global unit sales to 20 million in the fiscal year ending March 31, 2012 and implementing a series of measures with the goal of establishing a stable business platform from which Sony aims to generate profit even with this reduced sales volume. Specifically, as presented on November 2, 2011, the following measures are planned to improve profitability. First, Sony is implementing measures to reduce LCD panel costs. Second, Sony plans to enhance product competitiveness and reform operations to improve marginal profit ratio. For this purpose, Sony plans to focus on improving model mix in developed countries, while aiming to expand business in developing nations at a greater than market growth rate by enhancing models designed specifically for the needs of those regions, which can be expected to result in further profitability improvement. In the area of supply chain management,
 
 
7

 
 
new systems are being introduced with the aim of further reducing inventory turnover. Further, Sony aims to deploy unique technology such as super-resolution high image quality engines and accelerate the development of a next generation TV. Additionally, Sony plans to increase added value of TV by providing consumers with an integrated user experience across multiple devices and network services. Third, Sony plans to implement a reduction of selling, general and administrative expenses at sales companies, improve R&D efficiency, and reduce indirect costs. Through these measures, Sony is endeavoring to return the television business to profitability in the near term.
 
On December 26, 2011, Sony signed agreements with Samsung Electronics Co., Ltd. (“Samsung”) to transition the current business relationship with respect to LCD panels, as part of Sony’s plan to reduce LCD panel costs. Under the agreement, Sony sold all of its equity interest in S-LCD Corporation (“S-LCD”), the LCD panel manufacturing joint venture owned by Sony and Samsung, making S-LCD a wholly-owned subsidiary of Samsung. In consideration for the share transfer, cash consideration of 1.07 trillion Korean Won (72.3 billion yen as of the sale date) was paid to Sony by Samsung. Concurrently, the two companies entered into a new strategic agreement for the supply and purchase of LCD panels with the goal of enhancing the competitiveness of both companies.
 
For Sony, this transaction has enabled it to monetize its equity interest in S-LCD and allow it to secure a flexible and steady supply of LCD panels from Samsung, based on market prices and without the responsibility and costs of operating a manufacturing facility. Sony estimates that the transaction will result in substantial savings on and after January 1, 2012 in respect of costs associated with its procurement of LCD panels.
 
On October 27, 2011, Sony and Telefonaktiebolaget LM Ericsson (“Ericsson”) agreed that Sony will acquire Ericsson’s 50 percent equity interest in Sony Ericsson Mobile Communications AB (“Sony Ericsson”), making the mobile handset business a wholly-owned subsidiary of Sony. The acquisition is expected to close in February 2012, subject to customary closing conditions including regulatory approvals. During the past ten years, the mobile market has shifted focus from simple mobile phones to rich smartphones that include access to internet services and content. The transaction is a logical strategic step that takes into account the nature of this evolution and its impact on the marketplace. The transaction gives Sony an opportunity to rapidly integrate smartphones into its broad array of network-connected consumer electronics devices – including tablets, televisions and personal computers – for the benefit of consumers and the growth of its business. The transaction also provides Sony with a broad intellectual property (IP) cross-licensing agreement covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology. Sony believes that this acquisition will afford operational efficiencies in engineering, network development and marketing, among other areas.
 
Due to direct damage from inundation of Sony’s manufacturing facilities and difficulty in procuring parts and components resulting from the floods in Thailand in October 2011, Sony’s business operations were negatively impacted primarily due to temporary cessation of production at several manufacturing facilities, postponement of certain product launches and significantly lowered demand from commercial customers. The site with the largest damage, located in Ayuthaya, temporarily transferred production of interchangeable single lens cameras and other products to manufacturing facilities located in Chunburi (Thailand), China, and Japan. Sony plans to continue to work for the rapid restoration of production. Certain domestic and overseas manufacturing sites not directly affected by the disaster have also temporarily reduced operating rates on some production lines to accommodate difficulties with the procurement of raw materials, parts and other supplies. Sony plans to continue to work for the rapid restoration of disrupted production by reallocating inventory of raw materials and parts within the Sony group, using alternative materials or parts, and expanding sourcing for these materials and parts, among other measures.
 
iii) Research and Development
 
Note for readers of this English translation:
Excluding the below, there was no significant change from the information presented as the Research and Development in the Annual Report on Form 20-F filed with the SEC on June 28, 2011.
 
URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm
  
Research and development costs for the nine months ended December 31, 2011 totaled 304.9 billion yen. There were no significant changes in research and development activities during the period.
 
 
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iv) Liquidity and Capital Resources
 
Note for readers of this English translation:
 
Excluding the change of the description of the commitment lines and changes in credit ratings discussed below, there was no significant change from the information presented in the Annual Report on Form 20-F filed with the SEC on June 28, 2011. The changes are indicated by underline below. Any forward-looking statement included in the descriptions below is based on the current judgment of management.
 
URL: The Annual Report on Form 20-F filed with the SEC on June 28, 2011
http://www.sec.gov/Archives/edgar/data/313838/000095012311062283/k02583e20vf.htm
 
Sony typically raises funds through straight bonds, commercial paper programs and bank loans (including syndicated loans); however, in the unlikely event Sony could not access liquidity from these sources, Sony can also draw on committed lines of credit from various financial institutions. Sony has a total, translated into yen, of 737.0 billion yen in committed lines of credit, none of which had been used as of December 31, 2011. Details of those committed lines of credit are: a 475.0 billion yen committed line of credit contracted with a syndicate of Japanese banks, effective until November 2014; a 1.5 billion U.S. dollar multi-currency committed line of credit also with a syndicate of Japanese banks, effective until December 2013; and a 1.87 billion U.S. dollar multi-currency committed line of credit contracted with a syndicate of global banks, effective until April 2012; in all of which Sony Corporation and its consolidated subsidiary Sony Global Treasury Services Plc are defined as the borrowers. In October 2011, Sony extended by one year the term for the 475 billion yen committed line of credit contracted with a syndicate of Japanese banks. These contracts are aimed at securing sufficient liquidity by enabling Sony to raise funds in a quick and stable manner even in the event of financial and capital market turmoil similar to that which occurred in the period following the fall of 2008.
 
Ratings
 
Sony considers one of its management’s top priorities to be the maintenance of stable and appropriate credit ratings in order to ensure financial flexibility for liquidity and capital management and continued adequate access to sufficient funding resources in the financial and capital markets.
 
In order to facilitate access to global capital markets, Sony obtains credit ratings from two rating agencies, Moody’s Investors Service, Inc. (“Moody’s”) and Standard and Poor’s Rating Services (“S&P”). In addition, Sony maintains a rating from Rating and Investment Information, Inc. (“R&I”), a rating agency in Japan, for access to the Japanese capital market.
 
Sony’s current debt ratings from each agency as of February 14, 2012 are noted below:
 
 
Moody’s
S&P
R&I
Long-term debt
Baa1
(Outlook: negative)
BBB+
(Outlook: negative)
A+
(Outlook: negative)
Short-term debt
P-2
A-2
a-1

v) Property, Plant and Equipment
 
On April 1, 2011, Sony Semiconductor Kyushu Corporation, a wholly owned subsidiary of Sony Corporation, acquired semiconductor fabrication equipment from Toshiba Corporation for 51,083 million yen in order to increase the production capacity for CMOS image sensors in Sony Semiconductor Kyushu Corporation’s Nagasaki Technology Center. Sony Semiconductor Kyushu Corporation has subsequently changed its company name to Sony Semiconductor Corporation, effective November 1, 2011.
 
 
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i) Total Number of Shares
1) Total Number of Shares
 
Class
Total number of shares authorized to be issued
Common stock
3,600,000,000
Total
3,600,000,000
 
2) Number of Shares Issued
 
Class
Number of shares issued
Name of Securities Exchanges where the shares are listed or authorized Financial Instruments Firms Association where the shares are registered
Description
As of the end of the
third quarterly period
(December 31, 2011)
As of the filing date of
the Quarterly
Securities Report
(February 14, 2012)
Common stock
1,004,638,164
1,004,638,164
Tokyo Stock Exchange
Osaka Securities Exchange
New York Stock Exchange
London Stock Exchange
The number of shares constituting one full unit is one hundred (100).
Total
1,004,638,164
1,004,638,164
 
Notes:
1.
The Company’s shares of common stock are listed on the First Sections of the Tokyo Stock Exchange and the Osaka Securities Exchange in Japan.
2.
The number of shares issued as of the filing date of this Quarterly Securities Report does not include shares issued upon the exercise of stock acquisition rights (“SARs”) (including the conversion of convertible bonds issued under the former Commercial Code of Japan) during February 2012, the month in which this Quarterly Securities Report (Shihanki Houkokusho) was filed.
 
ii) Stock Acquisition Rights
 
Note for readers of this English translation:
The Japanese-language Quarterly Securities Report includes a summary of the main terms and conditions of the SARs listed below which were issued during the three months ended December 31, 2011. A summary of such terms and conditions has previously been filed with or submitted to the SEC under Form 6-K or Form S-8. There has been no change to such terms and conditions since the applicable date of such filings or submissions.
URL: The list of documents previously filed or submitted by the Company
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000313838&owner=include&count=40
 
Name
(Date of resolution of the Board of Directors)
Number of
SARs issued
Number of shares of common stock to be issued or transferred
The twenty-second series of Common Stock Acquisition Rights
(November 1, 2011)
8,353
835,300
The twenty-third series of Common Stock Acquisition Rights
(November 1, 2011)
17,022
1,702,200
 
 
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iii) Status of the Exercise of Moving Strike Convertible Bonds
Not applicable.
 
iv) Description of Rights Plan
Not applicable.
 
v) Changes in the Total Number of Shares Issued and the Amount of Common Stock, etc.
 
Period
Change in the total number of shares issued
Balance of the total number of shares issued
Change in
the amount of
common stock
Balance of
the amount of
common stock
Change in the additional paid-in capital
Balance of the additional paid-in capital
(Thousands)
(Thousands)
(Yen in Millions)
(Yen in Millions)
(Yen in Millions)
(Yen in Millions)
From October 1 to December 31, 2011
1,004,638
630,923
837,611

Note:
The total number of shares issued, the amount of common stock and the additional paid-in capital did not change during the period from January 1, 2012 to January 31, 2012.
 
 
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vi) Status of Major Shareholders
(As of December 31, 2011)
Name
Address
Number of
shares held (Thousands)
Percentage of shares held to total shares issued (%)
Moxley and Company *1 (Local Custodian: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)
New York, U.S.A. (2-7-1, Marunouchi, Chiyoda-ku, Tokyo)
70,222
6.99
Japan Trustee Services Bank, Ltd. (Trust account) *2
1-8-11, Harumi, Chuo-ku, Tokyo
63,574
6.33
The Master Trust Bank of Japan, Ltd. (Trust account) *2
2-11-3, Hamamatsu-cho, Minato-ku, Tokyo
50,414
5.02
SSBT OD05 Omnibus Account - Treaty Clients *3 (Local Custodian: The Hongkong and Shanghai Banking Corporation Limited)
Sydney, Australia (3-11-1, Nihonbashi, Chuo-ku, Tokyo)
24,027
2.39
Japan Trustee Services Bank, Ltd. (Trust account 9) *2
1-8-11, Harumi, Chuo-ku, Tokyo
20,756
2.07
State Street Bank and Trust Company *3 (Local Custodian: The Hongkong and Shanghai Banking Corporation Limited)
Boston, U.S.A. (3-11-1, Nihonbashi, Chuo-ku, Tokyo)
12,881
1.28
Japan Trustee Services Bank, Ltd. (Trust account 1) *2
1-8-11, Harumi, Chuo-ku, Tokyo
9,724
0.97
State Street Bank - West Pension Fund Clients - Exempt *3 (Local Custodian: Mizuho Corporate Bank, Ltd.)
Quincy, U.S.A. (4-16-13, Tsukishima, Chuo-ku, Tokyo)
9,669
0.96
The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account *3 (Local Custodian: Mizuho Corporate Bank, Ltd.)
London, U.K. (4-16-13, Tsukishima, Chuo-ku, Tokyo)
9,337
0.93
Japan Trustee Services Bank, Ltd. (Trust account 6) *2
1-8-11, Harumi, Chuo-ku, Tokyo
9,307
0.93
Total
279,910
27.86
 
Notes:
*1.
Moxley and Company is the nominee of JPMorgan Chase Bank, N.A., which is the Depositary for holders of the Company’s American Depositary Receipts (“ADRs”).
*2.
The shares held by each shareholder are held in trust for investors, including shares in securities investment trusts.
*3.
Each shareholder provides depositary services for shares owned by institutional investors, mainly in Europe and North America. They are also the nominees for these investors.
 
 
12

 
 
vii) Status of Voting Rights
1) Shares Issued
(As of December 31, 2011)
Classification
Number of shares of common stock
Number of voting rights (Units)
Description
Shares without voting rights
Shares with restricted voting rights (Treasury stock, etc.)
Shares with restricted voting rights (Others)
Shares with full voting rights (Treasury stock, etc.)
1,057,300
Shares with full voting rights (Others)
1,001,017,100
10,010,171
Shares constituting less than one full unit
2,563,764
Shares constituting less than one full unit
(100 shares)
Total number of shares issued
1,004,638,164
Total voting rights held by all shareholders
10,010,171
 
Note:
Included in “Shares with full voting rights (Others)” under “Number of shares of common stock” are 19,700 shares of common stock held under the name of Japan Securities Depository Center, Incorporated. Also included in “Shares with full voting rights (Others)” under “Number of voting rights (Units)” are 197 units of voting rights relating to the shares of common stock with full voting rights held under the name of Japan Securities Depository Center, Incorporated.
 
2) Treasury Stock, Etc.
 
 
(As of December 31, 2011)
Name of shareholder
Address of shareholder
Number of shares held under own name
Number of shares held under the names of others
Total number of shares held
Percentage of shares held to total shares issued (%)
Sony Corporation (Treasury stock)
1-7-1, Konan, Minato-ku, Tokyo
1,057,300
1,057,300
0.11
Total
1,057,300
 —
1,057,300
0.11

Note:
In addition to the 1,057,300 shares listed above, there are 300 shares of common stock held in the name of the Company in the register of shareholders that the Company does not beneficially own. These shares are included in “Shares with full voting rights (Others)” in table 1 “Shares Issued” above.
 
There was no change in directors or corporate executive officers in the period from the filing date of the Securities Report (Yukashoken Houkokusho) for the fiscal year ended March 31, 2011 to the filing date of this Quarterly Securities Report (Shihanki Houkokusho).
 
 
13

 
 
 
 
 
14

 
 
Sony Corporation and Consolidated Subsidiaries
 
   
Yen in millions
 
   
At March 31,
2011
   
At December 31,
2011
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
    1,014,412       801,708  
Marketable securities
    646,171       616,058  
Notes and accounts receivable, trade
    834,221       926,384  
Allowance for doubtful accounts and sales returns
    (90,531 )     (80,349 )
Inventories
    704,043       659,446  
Other receivables
    215,181       173,854  
Deferred income taxes
    133,059       95,030  
Prepaid expenses and other current assets
    387,490       450,862  
Total current assets
    3,844,046       3,642,993  
                 
Film costs
    275,389       269,953  
                 
Investments and advances:
               
Affiliated companies
    221,993       105,968  
Securities investments and other
    5,670,662       6,056,081  
      5,892,655       6,162,049  
                 
Property, plant and equipment:
               
Land
    145,968       140,691  
Buildings
    868,615       824,786  
Machinery and equipment
    2,016,956       1,939,983  
Construction in progress
    53,219       30,354  
      3,084,758       2,935,814  
Less – Accumulated depreciation
    2,159,890       2,011,684  
      924,868       924,130  
                 
Other assets:
               
Intangibles, net
    391,122       363,114  
Goodwill
    469,005       452,306  
Deferred insurance acquisition costs
    428,262       432,686  
Deferred income taxes
    239,587       197,120  
Other
    460,054       471,649  
      1,988,030       1,916,875  
Total assets
    12,924,988       12,916,000  
(Continued on following page.)
 
 
15

 
 
Consolidated Balance Sheets (Unaudited)


   
Yen in millions
 
   
At March 31,
2011
   
At December 31,
2011
 
LIABILITIES
           
Current liabilities:
           
Short-term borrowings
    53,737       206,507  
Current portion of long-term debt
    109,614       254,311  
Notes and accounts payable, trade
    793,275       663,567  
Accounts payable, other and accrued expenses
    1,013,037       945,794  
Accrued income and other taxes
    79,076       122,899  
Deposits from customers in the banking business
    1,647,752       1,687,534  
Other
    430,488       414,541  
 Total current liabilities
    4,126,979       4,295,153  
                 
Long-term debt
    812,235       630,565  
Accrued pension and severance costs
    271,320       274,845  
Deferred income taxes
    306,227       261,142  
Future insurance policy benefits and other
    4,225,373       4,510,316  
Other
    226,952       270,018  
Total liabilities
    9,969,086       10,242,039  
Redeemable noncontrolling interest
    19,323       18,419  
Commitments and contingent liabilities
               
                 
EQUITY
               
Sony Corporation’s stockholders’ equity:
               
Common stock, no par value –
               
At March 31, 2011–Shares authorized: 3,600,000,000, shares issued: 1,004,636,664
    630,921          
At December 31, 2011–Shares authorized: 3,600,000,000, shares issued: 1,004,638,164
            630,923  
Additional paid-in capital
    1,159,666       1,159,745  
Retained earnings
    1,566,274       1,352,284  
Accumulated other comprehensive income –
               
Unrealized gains on securities, net
    50,336       57,588  
Unrealized gains (losses) on derivative instruments, net
    (1,589 )     185  
Pension liability adjustment
    (152,165 )     (153,122 )
Foreign currency translation adjustments
    (700,786 )     (815,387 )
      (804,204 )     (910,736 )
Treasury stock, at cost
               
Common stock
               
At March 31, 2011–1,051,588 shares
    (4,670 )        
At December 31, 2011–1,057,347 shares
            (4,632 )
      2,547,987       2,227,584  
Noncontrolling interests
    388,592       427,958  
Total equity
    2,936,579       2,655,542  
Total liabilities and equity
    12,924,988       12,916,000  

The accompanying notes are an integral part of these statements.
 
 
16

 
 
Sony Corporation and Consolidated Subsidiaries

   
Yen in millions
 
   
Nine months ended December 31
 
   
2010
   
2011
 
Sales and operating revenue:
           
Net sales
    4,948,628       4,236,557  
Financial services revenue
    593,104       603,636  
Other operating revenue
    58,715       52,593  
      5,600,447       4,892,786  
Costs and expenses:
               
Cost of sales
    3,729,306       3,278,103  
Selling, general and administrative
    1,126,212       1,021,213  
Financial services expenses
    485,631       516,554  
(Gain) loss on sale, disposal or impairment of assets and other, net
    432       30,269  
      5,341,581       4,846,139  
Equity in net income (loss) of affiliated companies
    14,323       (112,510 )
Operating income (loss)
    273,189       (65,863 )
Other income:
               
Interest and dividends
    8,265       9,084  
Gain on sale of securities investments, net
    3,463       643  
Foreign exchange gain, net
    12,203    
 
Other
    6,025       6,885  
      29,956       16,612  
Other expenses:
               
Interest
    16,518       17,544  
Loss on devaluation of securities investments
    7,059       3,155  
Foreign exchange loss, net
 
      7,436  
Other
    6,413       5,314  
      29,990       33,449  
Income (loss) before income taxes
    273,155       (82,700 )
Income taxes
    112,009       74,807  
Net income (loss)
    161,146       (157,507 )
Less - Net income attributable to noncontrolling interests
    31,929       43,940  
Net income (loss) attributable to Sony Corporation’s stockholders
    129,217       (201,447 )
 
   
Yen
 
   
Nine months ended December 31
 
   
2010
   
2011
 
Per share data:
             
Net income (loss) attributable to Sony Corporation’s stockholders
             
– Basic
    128.76       (200.73 )
– Diluted
    128.58       (200.73 )
 
The accompanying notes are an integral part of these statements.
 
 
17

 
 
Consolidated Statements of Income (Unaudited)

Sony Corporation and Consolidated Subsidiaries

   
Yen in millions
 
   
Three months ended December 31
 
   
2010
   
2011
 
Sales and operating revenue:
           
Net sales
    1,980,721       1,588,421  
Financial services revenue
    207,030       219,374  
Other operating revenue
    18,495       15,081  
      2,206,246       1,822,876  
Costs and expenses:
               
Cost of sales
    1,492,388       1,262,557  
Selling, general and administrative
    403,047       355,674  
Financial services expenses
    173,780       186,421  
(Gain) loss on sale, disposal or impairment of assets and other, net
    2,099       1,155  
      2,071,314       1,805,807  
Equity in net income (loss) of affiliated companies
    2,590       (108,797 )
Operating income (loss)
    137,522       (91,728 )
Other income:
               
Interest and dividends
    2,585       2,469  
Gain on sale of securities investments, net
    888       323  
Other
    2,716       1,613  
      6,189       4,405  
Other expenses:
               
Interest
    4,556       4,983  
Loss on devaluation of securities investments
    376       2,341  
Foreign exchange loss, net
    5,528       9,386  
Other
    1,716       1,881  
      12,176       18,591  
Income (loss) before income taxes
    131,535       (105,914 )
Income taxes
    47,590       28,916  
Net income (loss)
    83,945       (134,830 )
Less - Net income attributable to noncontrolling interests
    11,611       24,138  
Net income (loss) attributable to Sony Corporation’s stockholders
    72,334       (158,968 )
 
   
Yen
 
   
Three months ended December 31
 
   
2010
   
2011
 
Per share data:
             
Net income (loss) attributable to Sony Corporation’s stockholders
             
– Basic
    72.08       (158.40 )
– Diluted
    71.96       (158.40 )
 
The accompanying notes are an integral part of these statements.
 
 
18

 
 
Sony Corporation and Consolidated Subsidiaries
 
   
Yen in millions
 
   
Nine months ended December 31
 
   
2010
   
2011
 
Cash flows from operating activities:
           
Net income (loss)
    161,146       (157,507 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities –
               
Depreciation and amortization, including amortization of deferred insurance acquisition costs
    245,637       244,283  
Amortization of film costs
    170,386       124,263  
Stock-based compensation expense
    1,436       1,604  
Accrual for pension and severance costs, less payments
    (18,979 )     9,636  
(Gain) loss on sale, disposal or impairment of assets and other, net
    432       30,269  
Loss on sale or devaluation of securities investments, net
    3,596       2,512  
Loss on revaluation of marketable securities held in the financial service business for trading purposes, net
    15,032       19,300  
Loss on revaluation or impairment of securities investments held in the financial service business, net
    2,345       8,762  
Deferred income taxes
    (5,738 )     (53,716 )
Equity in net (income) losses of affiliated companies, net of dividends
    (13,409 )     129,544  
Changes in assets and liabilities:
               
Increase in notes and accounts receivable, trade
    (223,114 )     (150,924 )
Increase in inventories
    (161,059 )     (7,055 )
Increase in film costs
    (175,574 )     (136,785 )
Increase (decrease) in notes and accounts payable, trade
    83,727       (90,908 )
Increase in accrued income and other taxes
    38,312       31,466  
Increase in future insurance policy benefits and other
    190,550       224,435  
Increase in deferred insurance acquisition costs
    (51,898 )     (53,961 )
Increase in marketable securities held in the financial service business for trading purposes
    (26,778 )     (25,595 )
Increase in other current assets
    (96,887 )     (22,904 )
Increase in other current liabilities
    125,478       25,900  
Other
    139,270       131,172  
Net cash provided by operating activities
    403,911       283,791  
(Continued on following page.)
 
 
19

 
 
Consolidated Statements of Cash Flows (Unaudited)


   
Yen in millions
 
   
Nine months ended December 31
 
   
2010
   
2011
 
Cash flows from investing activities:
           
Payments for purchases of fixed assets
    (208,803 )     (272,614 )
Proceeds from sales of fixed assets
    12,628       16,955  
Payments for investments and advances by financial service business
    (1,201,350 )     (737,689 )
Payments for investments and advances (other than financial service business)
    (14,772 )     (16,907 )
Proceeds from sales or return of investments and collections of advances by financial service business
    731,765       372,619  
Proceeds from sales or return of investments and collections of advances (other than financial service business)
    12,259       22,820  
Proceeds from sales of businesses
    86,311       2,502  
Other
    (443 )     5,146  
Net cash used in investing activities
    (582,405 )     (607,168 )
Cash flows from financing activities:
               
Proceeds from issuance of long-term debt
    1,341       18,961  
Payments of long-term debt
    (173,978 )     (96,887 )
Increase in short-term borrowings, net
    18,221       158,340  
Increase in deposits from customers in the financial service business, net
    164,601       111,494  
Increase in call money and bills sold in the banking business, net
    10,000        
Dividends paid
    (25,112 )     (25,108 )
Other
    (5,336 )     (7,305 )
Net cash provided by (used in) financing activities
    (10,263 )     159,495  
Effect of exchange rate changes on cash and cash equivalents
    (83,086 )     (48,822 )
Net decrease in cash and cash equivalents
    (271,843 )     (212,704 )
Cash and cash equivalents at beginning of the fiscal year
    1,191,608       1,014,412  
Cash and cash equivalents at end of the period
    919,765       801,708  
 
The accompanying notes are an integral part of these statements.
 
 
20

 
 
Index to Notes to Consolidated Financial Statements

Sony Corporation and Consolidated Subsidiaries

 
 
21

 
 
Sony Corporation and Consolidated Subsidiaries

 
Sony Corporation and its subsidiaries in Japan maintain their records and prepare their financial statements in accordance with accounting principles generally accepted in Japan while Sony Corporation’s foreign subsidiaries maintain their records and prepare their financial statements in conformity with accounting principles generally accepted in the countries of their domiciles. Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform with accounting principles generally accepted in the United States of America (“U.S. GAAP”), except for certain disclosures which have been omitted.

(1) Recently adopted accounting pronouncements:
 
Goodwill impairment testing for reporting units with zero or negative carrying amounts -
 
In December 2010, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance that modifies the first step of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform the second step of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with existing authoritative guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This guidance is effective for Sony as of April 1, 2011. The adoption of this guidance did not have a material impact on Sony’s results of operations and financial position.
 
Disclosure of supplementary pro forma information for business combinations -
 
In December 2010, the FASB issued new accounting guidance addressing when a business combination should be assumed to have occurred for the purpose of providing pro forma disclosure. The new guidance requires disclosure of revenue and income of the combined entity as though the business combination occurred as of the beginning of the comparable prior reporting period. The guidance also expands the supplemental pro forma disclosure to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The guidance is effective for Sony as of April 1, 2011. Since this guidance impacts disclosures only, its adoption did not have a material impact on Sony’s results of operations and financial position.

(2) Accounting methods used specifically for interim consolidated financial statements:

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

(3) Out of period adjustment:
 
In the first quarter of the fiscal year ending March 31, 2012, Sony recorded an out of period adjustment to correct an error in the calculation of indirect taxes at a subsidiary. The indirect tax calculation error began in 2005 and continued until it was identified by Sony in the first quarter of the fiscal year ending March 31, 2012. The adjustment, substantially all of which related to the Consumer Products & Services segment, impacted net sales, selling, general and administrative expenses and interest expenses and, in the aggregate, increased loss before income taxes in consolidated statements of income by 4,413 million yen for the nine months ended December 31, 2011. Sony determined that the adjustment was not material to the consolidated financial statements for the three and nine months ended December 31, 2011 or any prior annual or interim periods, and is not expected to be material to the annual results for the year ending March 31, 2012.
 
 
22

 
 
(4) Tax rate change in Japan:
 
During the three months ended December 31, 2011, the Japanese legislature enacted tax law changes which include lowering the national tax rate. These tax law changes take effect for Sony from the beginning of the fiscal year ending March 31, 2013. However, since the accounting for income taxes requires the measurement of deferred tax assets and liabilities using the enacted tax rates, the tax law changes resulted in a net deferred tax benefit of 32,729 million yen for the three months ended December 31, 2011.

(5) Reclassifications:
 
Certain reclassifications of the financial statements for the prior year have been made to conform to the presentation for the nine and three months ended December 31, 2011. These reclassifications included the separate presentation of other receivables, which were previously included within prepaid expenses and other assets on the consolidated balance sheets. Other receivables include receivables which relate to arrangements with certain component manufacturers whereby Sony procures goods, including product components, for these component manufacturers.
 
 
23

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

   
Yen in millions
 
   
March 31, 2011
   
December 31, 2011
 
   
Cost
   
Gross unrealized gains
   
Gross unrealized losses
   
Fair value
   
Cost
   
Gross unrealized gains
   
Gross unrealized losses
   
Fair value
 
                                                 
Available-for-sale:
                                               
Debt securities:
                                               
Japanese national government bonds
    1,124,704       24,032       (4,971 )     1,143,765       1,033,969       54,311       (904 )     1,087,376  
                                                                 
Japanese local government bonds
    22,845       184       (64 )     22,965       25,559       168       (24 )     25,703  
                                                                 
Japanese corporate bonds
    332,567       1,511       (440 )     333,638       301,131       1,609       (379 )     302,361  
                                                                 
Foreign corporate bonds
    332,616       4,872       (11,368 )     326,120       355,659       2,809       (13,651 )     344,817  
                                                                 
Other
    7,941       109       (117 )     7,933       22,327       787       (66 )     23,048  
      1,820,673       30,708       (16,960 )     1,834,421       1,738,645       59,684       (15,024 )     1,783,305  
                                                                 
Equity securities
    84,417       69,073       (3,447 )     150,043       70,833       53,011       (6,690 )     117,154  
                                                                 
Held-to-maturity securities:
                                                               
Japanese national government bonds
    2,902,342       22,420       (48,149 )     2,876,613       3,262,508       161,355       (5,233 )     3,418,630  
                                                                 
Japanese local government bonds
    18,912       218       (2 )     19,128       13,732       294             14,026  
                                                                 
Japanese corporate bonds
    32,349       158       (67 )     32,440       31,580       1,627             33,207  
                                                                 
Foreign corporate bonds
    47,330       13       (3 )     47,340       40,027       9             40,036  
      3,000,933       22,809       (48,221 )     2,975,521       3,347,847       163,285       (5,233 )     3,505,899  
                                                                 
Total
    4,906,023       122,590       (68,628 )     4,959,985       5,157,325       275,980       (26,947 )     5,406,358  
 
 
24

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

   
Yen in millions
 
   
At March 31, 2011
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
                         
Assets:
                       
Trading securities
    189,320       186,482             375,802  
Available-for-sale securities
                               
Debt securities
                               
Japanese national government bonds
          1,143,765             1,143,765  
Japanese local government bonds
          22,965             22,965  
Japanese corporate bonds
          329,057       4,581       333,638  
Foreign corporate bonds
          306,070       20,050       326,120  
Other
          7,933             7,933  
Equity securities
    141,408       4,667       3,968       150,043  
Other investments *1
    5,459       51       70,058       75,568  
Derivative assets *2
          15,110             15,110  
Total assets
    336,187       2,016,100       98,657       2,450,944  
Liabilities:
                               
Derivative liabilities *2
          33,759             33,759  
Total liabilities
          33,759             33,759  

   
Yen in millions
 
   
At December 31, 2011
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
                         
Assets:
                       
Trading securities
    179,587       201,575             381,162  
Available-for-sale securities
                               
Debt securities
                               
Japanese national government bonds
          1,087,376             1,087,376  
Japanese local government bonds
          25,703             25,703  
Japanese corporate bonds
          298,744       3,617       302,361  
Foreign corporate bonds
          331,602       13,215       344,817  
Other
          22,741       307       23,048  
Equity securities
    108,929       4,275       3,950       117,154  
Other investments *1
    4,900       51       60,970       65,921  
Derivative assets *2
          18,807             18,807  
Total assets
    293,416       1,990,874       82,059       2,366,349  
Liabilities:
                               
Derivative liabilities *2
          36,114             36,114  
Total liabilities
          36,114             36,114  

*1 Other investments include certain private equity investments and certain hybrid financial instruments.
 
*2 Derivative assets and liabilities are recognized and disclosed on a gross basis.
 
 
25

 
 
 
A reconciliation of the beginning and ending carrying amounts of Sony Corporation’s stockholders’ equity, noncontrolling interests and the total equity for the nine months ended December 31, 2010 is as follows:

         
Yen in millions
       
   
Sony Corporation’s stockholders’ equity
   
Noncontrolling interests
   
Total equity
 
Balance at March 31, 2010
    2,965,905       319,650       3,285,555  
Exercise of stock acquisition rights
    132       14       146  
Stock-based compensation
    1,365               1,365  
Comprehensive income:
                       
Net income
    129,217       31,929       161,146  
Other comprehensive income, net of tax ―
                       
Unrealized gains (losses) on securities
    (1,293 )     1,180       (113 )
Unrealized losses on derivative instruments
    (332 )