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Sony 6-K 2013

Documents found in this filing:

  1. 6-K
  2. Graphic
  3. Graphic
a50680913.htm
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  August 2013
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/  Masaru Kato
 
                (Signature)
 
Masaru Kato
 
Executive Vice President and
 
Chief Financial Officer
 
Date: August 1, 2013

List of materials

Documents attached hereto:
 
i) Press release announcing Consolidated Financial Results for the First Quarter Ended June 30, 2013

 
 

 
 
LOGO
 
News & Information
1-7-1 Konan, Minato-ku
Tokyo 108-0075 Japan
 
No. 13-090E
3:00 P.M. JST, August 1, 2013
 
Consolidated Financial Results
for the First Quarter Ended June 30, 2013
 
Tokyo, August 1, 2013 -- Sony Corporation today announced its consolidated financial results for the first quarter ended June 30, 2013 (April 1, 2013 to June 30, 2013).
 
   
(Billions of yen, millions of U.S. dollars, except per share amounts)
 
   
First Quarter ended June 30
 
   
2012
   
2013
   
Change in yen
    2013*  
Sales and operating revenue
  ¥ 1,515.2     ¥ 1,712.7       +13.0 %   $ 17,300  
Operating income
    6.3       36.4       +479.4       367  
Income before income taxes
    9.4       46.3       +391.4       467  
Net income (loss) attributable to Sony Corporation’s
stockholders
    (24.6 )     3.5       -       35  
Net income (loss) attributable to Sony Corporation’s
stockholders per share of common stock:
                               
    - Basic
  ¥ (24.55 )   ¥ 3.44       -     $ 0.03  
    - Diluted
    (24.55 )     2.98       -       0.03  

U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 99 yen = 1 U.S. dollar, the approximate Tokyo foreign exchange market rate as of June 30, 2013.

All amounts are presented on the basis of Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”).

The average foreign exchange rates during the quarters ended June 30, 2012 and 2013 are presented below.

   
First quarter ended June 30
 
   
2012
   
2013
   
Change
 
The average rate of yen
                   
1 U.S. dollar
  ¥ 80.2     ¥ 98.7       18.7 %
(yen depreciation)
1 Euro
    103.0       128.9       20.1  
(yen depreciation)


Consolidated Results for the First Quarter Ended June 30, 2013

Sales and operating revenue (“sales”) >were 1,712.7 billion yen (17,300 million U.S. dollars), an increase of 13.0% compared to the same quarter of the previous fiscal year (“year-on-year”).  This increase was primarily due to the favorable impact of foreign exchange rates, an increase in financial services revenue, and an increase in unit sales of smartphones.  On a constant currency basis, sales decreased 3% year-on-year.  This decrease was primarily due to the absence of the sales from the chemical products related business, as well as a decrease in sales of video cameras and compact digital cameras.  For further details about sales on a constant currency basis, see Note on page 8.

Operating income increased 30.1 billion yen year-on-year to 36.4 billion yen (367 million U.S. dollars).  This improvement was primarily due to a significant improvement in the Mobile Products & Communications (“MP&C”) segment reflecting strong smartphone sales, and significantly higher operating income in the Financial Services segment, as well as the favorable impact of foreign exchange rates.  Operating income during the current quarter includes a gain of 106 million U.S. dollars (10.3 billion yen) recognized on the sale of Sony Pictures Entertainment’s (“SPE”) music publishing catalog in the Pictures segment, and a benefit of 7.0 billion yen (71 million U.S. dollars) in the MP&C segment due to the reversal of a patent royalty accrual.  Operating loss in the Game segment increased significantly primarily due to an increase in research and development expenses related to the upcoming introduction of the PlayStation®4 (“PS4”).  During the current quarter, restructuring charges, net, decreased 6.6 billion yen year-on-year to 4.7 billion yen (47 million U.S. dollars).
 
 
1

 
 




Net income attributable to Sony Corporation’s stockholders>, which excludes net income attributable to noncontrolling interests, was 3.5 billion yen (35 million U.S. dollars) compared to a net loss of 24.6 billion yen in the same quarter of the previous fiscal year.
 
Operating Performance Highlights by Business Segment

“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.
 
Imaging Products & Solutions (IP&S)

   
(Billions of yen, millions of U.S. dollars)
   
First quarter ended June 30
   
2012
   
2013
   
Change in yen
 
2013
Sales and operating revenue
  ¥ 193.8     ¥ 173.6       -10.4 %   $ 1,753  
Operating income
    12.6       8.1       -36.0       82  

The IP&S segment includes the Digital Imaging Products and Professional Solutions categories.  Digital Imaging Products includes compact digital cameras, video cameras and interchangeable single-lens cameras; Professional Solutions includes broadcast- and professional-use products.

Sales decreased 10.4% year-on-year (a 26% decrease on a constant currency basis) to 173.6 billion yen (1,753 million U.S. dollars).  This decrease was primarily due to a significant decrease in unit sales of video cameras and compact digital cameras reflecting a contraction of these markets, partially offset by the favorable impact of foreign exchange rates during the current quarter.

Operating income decreased 4.5 billion yen year-on-year to 8.1 billion yen (82 million U.S. dollars).  This decrease was mainly due to the impact of the above-mentioned decrease in sales of video cameras.

 
2

 
 
Game

   
(Billions of yen, millions of U.S. dollars)
   
First quarter ended June 30
   
2012
 
2013
 
Change in yen
 
2013
Sales and operating revenue
  ¥ 118.0     ¥ 117.9       -0.0 %   $ 1,191  
Operating loss
    (3.5 )     (14.8 )     -       (149 )

Sales were essentially flat year-on-year (a 15% decrease on a constant currency basis) at 117.9 billion yen (1,191 million U.S. dollars).  This was primarily due to a decrease in unit sales of PlayStation®3, PSP® (PlayStation Portable), and PlayStation®2 hardware, offset by the favorable impact of foreign exchange rates and increased software sales compared to the same quarter of the previous fiscal year.  The decrease in sales on a constant currency basis was primarily due to the above-mentioned decrease in hardware unit sales.  Sales to external customers decreased 7.2% year-on-year.

 
Mobile Products & Communications (MP&C)

   
(Billions of yen, millions of U.S. dollars)
   
First quarter ended June 30
   
2012
 
2013
   
Change in yen
 
2013
Sales and operating revenue
  ¥ 285.6     ¥ 389.0       +36.2 %   $ 3,929  
Operating income (loss)
    (28.1 )     5.9       -       60  

The MP&C segment includes the Mobile Communications and Personal and Mobile Products categories.  Mobile Communications includes mobile phones; Personal and Mobile Products includes personal computers.

Sales increased 36.2% year-on-year (a 14% increase on a constant currency basis) to 389.0 billion yen (3,929 million U.S. dollars).  This significant increase was primarily due to the favorable impact of foreign exchange rates, a significant increase in unit sales of smartphones and an increase in the average selling price of smartphones.

Operating income of 5.9 billion yen (60 million U.S. dollars) was recorded, compared to an operating loss of 28.1 billion yen in the same quarter of the previous fiscal year.  This significant improvement was primarily due to the above-mentioned increase in sales of smartphones.  Operating income during the current quarter included a benefit of 7.0 billion yen (71 million U.S. dollars) due to the reversal of a patent royalty accrual.
 
Home Entertainment & Sound (HE&S)

   
(Billions of yen, millions of U.S. dollars)
   
First quarter ended June 30
   
2012
 
2013
   
Change in yen
 
2013
Sales and operating revenue
  ¥ 251.8     ¥ 275.2       +9.3 %   $ 2,780  
Operating income (loss)
    (10.0 )     3.4       -       34  

The HE&S segment includes the Televisions and Audio and Video categories.  Televisions includes LCD televisions; Audio and Video includes home audio, Blu-ray DiscTM players and recorders and memory-based portable audio devices.
 
 
3

 
 
Sales increased 9.3% year-on-year (a 9% decrease on a constant currency basis) to 275.2 billion yen (2,780 million U.S. dollars) primarily due to the favorable impact of foreign exchange rates.  The decrease on a constant currency basis was primarily due to lower sales in the Audio and Video category.

Operating income of 3.4 billion yen (34 million U.S. dollars) was recorded, compared to an operating loss of 10.0 billion yen in the same quarter of the previous fiscal year.  This significant improvement in operating results was primarily due to the favorable impact of foreign exchange rates and a significant improvement in operating results in Televisions.

In Televisions, sales increased 18.2% year-on-year to 185.6 billion yen (1,874 million U.S. dollars).  Operating income* of 5.2 billion yen (53 million U.S. dollars) was recorded, compared with an operating loss of 6.6 billion yen in the same quarter of the previous fiscal year.  This improvement was primarily due to an improved product mix in LCD televisions and cost reductions, partially offset by a significant decrease in unit sales of LCD televisions year-on-year.

The operating income (loss) in Televisions excludes restructuring charges, which are included in the overall segment results and are not allocated to product categories.
 
Devices

   
(Billions of yen, millions of U.S. dollars)
   
First quarter ended June 30
   
2012
   
2013
   
Change in yen
 
2013
Sales and operating revenue
  ¥ 217.3     ¥ 196.2       -9.7 %   $ 1,982  
Operating income
    15.9       10.8       -32.0       110  

The Devices segment includes the Semiconductors and Components categories.  Semiconductors includes image sensors; Components includes batteries, recording media and data recording systems.

Sales decreased 9.7% year-on-year (a 25% decrease on a constant currency basis) to 196.2 billion yen (1,982 million U.S. dollars).  This decrease was primarily due to a decrease in sales of system LSIs for the game business, and the absence of the sales from the chemical products related business which was sold in September 2012, partially offset by the favorable impact of foreign exchange rates and a significant increase in sales of image sensors reflecting higher demand for mobile products.  Sales to external customers increased 6.8% year-on-year, primarily due to an increase in sales of image sensors.

Operating income decreased 5.1 billion yen year-on-year to 10.8 billion yen (110 million U.S. dollars).  This decrease was primarily due to a significantly lower net benefit from insurance recoveries related to damages and losses incurred from the floods in Thailand in 2011, compared to the same quarter of the previous fiscal year and a decrease in sales of system LSIs for the game business, partially offset by the favorable impact of foreign exchange rates and an increase in sales of image sensors during the current quarter.  Restructuring charges, net, decreased 3.9 billion yen year-on-year to 1.4 billion yen (14 million U.S. dollars).

*    *    *    *    *

Total inventory> of the five Electronics* segments above as of June 30, 2013 was 751.6 billion yen (7,592 million U.S. dollars), an increase of 41.8 billion yen, or 5.9% year-on-year.  This increase was primarily due to the impact of the depreciation of the yen.  Inventory increased by 128.7 billion yen, or 20.7% compared with the level as of March 31, 2013.

* The term “Electronics” refers to the sum of the IP&S, Game, MP&C, HE&S and Devices segments.

*    *    *    *    *
 
 
4

 
 
Pictures

   
(Billions of yen, millions of U.S. dollars)
 
   
First quarter ended June 30
 
   
2012
 
2013
   
Change in yen
 
2013
 
Sales and operating revenue
  ¥ 153.4     ¥ 158.9       +3.6 %   $ 1,605  
Operating income (loss)
    (4.9 )     3.7       -       38  

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

Sales increased 3.6% year-on-year (a 16% decrease on a constant currency (U.S. dollar) basis) to 158.9 billion yen (1,605 million U.S. dollars) primarily due to the favorable impact of the depreciation of the yen against the U.S. dollar.  On a U.S. dollar basis, sales decreased significantly due to lower theatrical and home entertainment revenues.  The first quarter of the previous fiscal year benefitted from the worldwide theatrical release of Men in Black 3 and a greater number of home entertainment releases.  The above-mentioned decrease in sales was partially offset by an increase in television network revenues as a result of higher advertising revenues in India.

Operating income of 3.7 billion yen (38 million U.S. dollars) was recorded, compared to an operating loss of 4.9 billion yen in the same quarter of the previous fiscal year.  This improvement was primarily due to a gain of 106 million U.S. dollars (10.3 billion yen) recognized on the sale of SPE’s music publishing catalog in the current quarter.  Lower year-on-year theatrical marketing expenses were offset by the above-mentioned decrease in theatrical and home entertainment revenues.  The results for the current quarter also reflect the theatrical underperformance of After Earth.
 
Music

   
(Billions of yen, millions of U.S. dollars)
 
   
First quarter ended June 30
 
   
2012
   
2013
   
Change in yen
 
2013
 
Sales and operating revenue
  ¥ 98.8     ¥ 112.0       +13.3 %   $ 1,131  
Operating income
    7.3       10.8       +48.1       109  

The results presented in Music include the yen-translated results of Sony Music Entertainment (“SME”), a U.S.-based operation which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis, the results of Sony Music Entertainment (Japan) Inc., a Japan-based music company which aggregates its results in yen, and the yen-translated consolidated results of Sony/ATV Music Publishing LLC (“Sony/ATV”), a 50% owned U.S.-based joint venture in the music publishing business which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.

Sales increased 13.3% year-on-year (a 1% decrease on a constant currency basis) to 112.0 billion yen (1,131 million U.S. dollars) primarily due to the favorable impact of the depreciation of the yen against the U.S. dollar.  On a constant currency basis, sales remained essentially flat year-on year due to the growth in digital revenues and the success of a number of recent releases in the U.S. and Europe being offset by the continued worldwide contraction of the physical music market.  Best-selling titles included Daft Punk’s Random Access Memories, P!nk’s The Truth about Love, and Justin Timberlake’s The 20/20 Experience.

Operating income increased 3.5 billion yen year-on-year to 10.8 billion yen (109 million U.S. dollars).  This increase was primarily due to the favorable impact of the depreciation of the yen and an improvement in equity earnings.  The current quarter’s operating results benefitted from the equity earnings of EMI Music Publishing, which Sony and other third-parties acquired on June 29, 2012.

 
5

 
 
Financial Services

   
(Billions of yen, millions of U.S. dollars)
   
First quarter ended June 30
   
2012
   
2013
   
Change in yen
 
2013
Financial services revenue
  ¥ 194.5     ¥ 252.7       +29.9 %   $ 2,553  
Operating income
    27.6       46.0       +66.6       464  

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


Operating income increased 18.4 billion yen year-on-year to 46.0 billion yen (464 million U.S. dollars).  This increase was mainly due to a significant increase in operating income at Sony Life.  Operating income at Sony Life increased 14.2 billion yen year-on-year to 40.4 billion yen (408 million U.S. dollars).  This increase was primarily due to decreases in the amortization of deferred insurance acquisition costs and in the provision of policy reserves both pertaining to variable insurance, driven primarily by the above-mentioned improved investment performance in the separate account.  An improvement in investment performance in the general account also contributed to the increase in operating income.

*    *    *    *    *
 
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-4 and F-10.


For all segments excluding the Financial Services segment, there was a net cash outflow of 194.1 billion yen (1,962 million U.S. dollars) for the current quarter, an increase of outflow of 59.9 billion yen, or 44.6% year-on-year.  This increase of outflow was primarily due to the negative impact of an increase in other receivables from component assembly companies compared to a decrease in the same quarter of the previous fiscal year, included in other current assets, and an increase in notes and accounts receivable, trade compared to a decrease in the same quarter of the previous fiscal year primarily reflecting the expansion of smartphone production and an increase in unit sales of smartphones.  This increase of outflow was partially offset by the positive impact of an increase in notes and accounts payable, trade primarily due to the expansion of smartphone production.

The Financial Services segment had a net cash inflow of 69.2 billion yen (699 million U.S. dollars), a decrease of 49.7 billion yen, or 41.8% year-on-year.  This decrease was primarily due to the negative impact of a valuation gain in the current quarter on marketable securities held for trading purposes, which is included in net income and has a non-cash impact, compared to a valuation loss in the same quarter of the previous fiscal year, and a larger increase in other current assets.  These factors were partially offset by a contribution from the steady increase in policy amount in force at Sony Life and the increase in net income of Financial Services in the current quarter.


For all segments excluding the Financial Services segment, 37.2 billion yen (375 million U.S. dollars) was provided, compared to 85.9 billion yen used in the same quarter of the previous fiscal year.  Cash was provided primarily due to a year-on-year increase in cash inflow from the sale of fixed assets, including the sale and leaseback of machinery and equipment during the current quarter.
 
 
6

 
 
The Financial Services segment used 78.8 billion yen (796 million U.S. dollars) of net cash, a decrease of 100.0 billion yen, or 55.9% year-on-year.  This decrease was mainly due to a year-on-year increase in proceeds from the maturities of marketable securities and sales of investment securities at Sony Bank.

In all segments excluding the Financial Services segment, net cash used in operating and investing activities combined*1 for the current quarter was 156.9 billion yen (1,587 million U.S. dollars), a decrease of 63.1 billion yen, or 28.7% year-on-year.


For all segments excluding the Financial Services segment, there was a 94.2 billion yen (952 million U.S. dollars) net cash inflow, an increase of 44.5 billion yen, or 89.5% year-on-year.  This increase was primarily due to a year-on-year increase in financing.  In the same quarter of the previous fiscal year, commercial paper was issued while straight bonds were redeemed and a syndicated loan was repaid.  In the current quarter, funds were raised through the issuance of straight bonds for Japanese retail investors.

In the Financial Services segment, financing activities provided 19.7 billion yen (199 million U.S. dollars) of net cash, a decrease of 0.1 billion yen, or 0.5% year-on-year.  The amount provided was essentially flat year-on-year due to a smaller increase in customer deposits at Sony Bank, which was offset by the issuance of long-term debt 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 June 30, 2013 was 801.2 billion yen (8,093 million U.S. dollars).  Cash and cash equivalents of all segments excluding the Financial Services segment was 589.6 billion yen (5,956 million U.S. dollars) at June 30, 2013, an increase of 66.5 billion yen, or 12.7% compared with the balance as of June 30, 2012, and a decrease of 35.2 billion yen, or 5.6% compared with March 31, 2013.  Sony believes that it continues to maintain sufficient liquidity through access to a total, translated into yen, of 822.0 billion yen (8,303 million U.S. dollars) of unused committed lines of credit with financial institutions in addition to the cash and cash equivalents balance at June 30, 2013.  Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 211.6 billion yen (2,137 million U.S. dollars) at June 30, 2013, an increase of 76.6 billion yen, or 56.8% compared with the balance as of June 30, 2012, and an increase of 10.1 billion yen, or 5.0% compared with the balance as of March 31, 2013.

*1
Sony has included the information for cash flow from operating and investing activities combined, excluding the Financial Services segment’s activities, as Sony’s management frequently monitors this financial measure, and believes this non-U.S. GAAP measurement is important for use in evaluating Sony’s ability to generate cash to maintain liquidity and fund debt principal and dividend payments from business activities other than its Financial Services segment.  This information is derived from the reconciliations prepared in the Condensed Statements of Cash Flows on page F-10.  This information and the separate condensed presentations shown below are not required or prepared in accordance with U.S. GAAP.  The Financial Services segment’s cash flow is excluded from the measure because SFH, which constitutes a majority of the Financial Services segment, is a separate publicly traded entity in Japan with a significant minority interest and it, as well as its subsidiaries, secure liquidity on their own.  This measure may not be comparable to those of other companies.  This measure has limitations because it does not represent residual cash flows available for discretionary expenditures principally due to the fact that the measure does not deduct the principal payments required for debt service.  Therefore, Sony believes it is important to view this measure as supplemental to its entire statement of cash flows and together with Sony’s disclosures regarding investments, available credit facilities and overall liquidity.
 
 
7

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

   
(Billions of yen, millions of U.S. dollars)
 
   
First quarter ended June 30
 
   
2012
   
2013
   
2013
 
                   
Net cash used in operating activities reported in the consolidated statements of cash flows
  ¥ (25.6 )   ¥ (131.7 )   $ (1,331 )
Net cash used in investing activities reported in the consolidated statements of cash flows
    (263.2 )     (41.7 )     (421 )
      (288.8 )     (173.3 )     (1,751 )
                         
Less: Net cash provided by operating activities within the Financial Services segment
    118.9       69.2       699  
Less: Net cash used in investing activities within the Financial Services segment
    (178.9 )     (78.8 )     (796 )
Eliminations *2
    8.8       6.8       69  
                         
Cash flow used in operating and investing activities combined excluding the Financial
Services segment’s activities
  ¥ (220.0 )   ¥ (156.9 )   $ (1,587 )

*2
Eliminations primarily consist of intersegment dividend payments.

*    *    *    *    *

Note

The descriptions of sales on a constant currency basis reflect sales obtained by applying the yen’s monthly average exchange rates from the same quarter of the previous fiscal year to local currency-denominated monthly sales in the current quarter.  In certain cases, most significantly in the Pictures segment and SME and Sony/ATV in the Music segment, the constant currency amounts are after aggregation on a U.S. dollar basis.  Sales on a constant currency basis are not reflected in Sony’s consolidated financial statements and are not measures in accordance with U.S. GAAP.  Sony does not believe that these measures are a substitute for U.S. GAAP measures.  However, Sony believes that disclosing sales information on a constant currency basis provides additional useful analytical information to investors regarding the operating performance of Sony.

*    *    *    *    *

Outlook for the Fiscal Year ending March 31, 2014

The forecast for consolidated results for the fiscal year ending March 31, 2014 has been revised as follows:

   
(Billions of yen)
 
   
August
Forecast
   
Change from
May
Forecast
 
May
Forecast
   
Change from
March 31, 2013
Actual Results
 
March 31, 2013
Actual Results
 
Sales and operating revenue
  ¥ 7,900       +5.3 %   ¥ 7,500       +16.2 %   ¥ 6,800.9  
Operating income
    230       -       230       -0.0       230.1  
Income before income taxes
    210       -       210       -14.5       245.7  
Net income attributable to Sony
Corporation’s stockholders
    50       -       50       +16.2       43.0  

Assumed foreign currency exchange rates for the remainder of the fiscal year ending March 31, 2014: approximately 100 yen to the U.S. dollar and approximately 130 yen to the euro.  (Assumed foreign currency exchange rates for the current fiscal year at the time of the May forecast: approximately 90 yen to the U.S. dollar and approximately 120 yen to the euro.)

The forecast for consolidated sales for the current fiscal year was revised upward primarily due to the positive impact of the depreciation of the yen, partially offset by downward revisions in annual unit sales forecasts of certain electronics products.

The forecast for consolidated operating income remains unchanged from the May forecast despite the upward revision in sales, primarily due to the unfavorable outlook regarding the market conditions surrounding electronics products and the expected negative impact of currencies in emerging markets falling against the U.S. dollar.
 
 
8

 
 
Restructuring charges are expected to be approximately 50 billion yen for the Sony group, unchanged from the May forecast, compared to 77.5 billion yen recorded in the fiscal year ended March 31, 2013.  This amount will be recorded as an operating expense included in the above-mentioned forecast for operating income.

Sony’s forecasts for income before income taxes and net income attributable to Sony Corporation’s stockholders remain unchanged from the May forecast.

The forecast for each business segment is as follows:

Imaging Products & Solutions

The outlook for overall segment sales remains unchanged from the May forecast primarily due to the favorable impact of foreign exchange rates, offset by a downward revision in the annual unit sales forecasts of video cameras and digital cameras.  The outlook for operating income also remains unchanged from the May forecast due to the favorable impact of foreign exchange rates and expected cost improvements, despite a downward revision in the forecast for unit sales.  Sales are expected to increase and operating income is expected to improve significantly year-on-year.

Game

Sales are expected to be higher than the May forecast primarily due to the favorable impact of foreign exchange rates.  Operating results are expected to be significantly lower than the May forecast due to the negative impact of the depreciation of the yen against the U.S. dollar, reflecting the high ratio of U.S. dollar denominated hardware costs.  Sales are expected to increase significantly and operating results are expected to deteriorate significantly year-on-year.

Mobile Products & Communications

Overall segment sales are expected to exceed the May forecast primarily due to the favorable impact of foreign exchange rates, partially offset by a downward revision in the annual unit sales forecast of PCs.  Operating income is expected to be lower than the May forecast due to the downward revision of the forecast for unit sales of PCs and the negative impact of the depreciation of the yen against the U.S. dollar, reflecting the high ratio of U.S. dollar denominated hardware costs in the segment.  Sales are expected to increase significantly and operating income is expected to be recorded, reflecting an expected significant improvement in operating results year-on-year.

Home Entertainment & Sound

The outlook for overall segment sales remains unchanged from the May forecast primarily due to the favorable impact of foreign exchange rates, offset by a downward revision in the annual unit sales forecast for LCD TVs and a downward revision in sales on a local currency basis in the Audio and Video category.  Operating income is expected to be lower than the May forecast primarily due to the expected decrease in sales on a local currency basis in the Audio and Video category.  Sales are expected to increase significantly and operating income is expected to be recorded, reflecting an expected significant improvement in operating results year-on-year.

Devices

The outlook for overall segment sales remains unchanged from the May forecast primarily due to the favorable impact of foreign exchange rates, offset by a downward revision in sales on a local currency basis mainly in the Semiconductors category.  Operating income is expected to be higher than the May forecast primarily due to the favorable impact of foreign exchange rates and expected cost improvements.  Sales are expected to be essentially flat and operating income is expected to decrease year-on-year.

Pictures

Sales and operating income are expected to exceed the May forecast, primarily due to the favorable impact of the depreciation of the yen against the U.S. dollar, although results on a local currency basis are expected to be approximately the same as the May forecast.  Sales are expected to increase significantly and operating income is expected to increase year-on-year.

 
9

 
 
Music

Sales and operating income are expected to exceed the May forecast primarily due to the favorable impact of the depreciation of the yen against the U.S. dollar, although results on a local currency basis are expected to be the same as the May forecast.  Sales are expected to increase significantly and operating income is expected to increase year-on-year.

Financial Services

Expected financial services revenue remains unchanged from the May forecast.  Operating income for the current fiscal year is expected to exceed the May forecast due to the recording of higher operating income in the first quarter of the current fiscal year than was expected in the May forecast.  Financial services revenue is expected to be essentially flat and operating income is expected to increase year-on-year.

The effects of 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.
 
Sony’s forecast for capital expenditures, depreciation and amortization, as well as research and development expenses for the current fiscal year has been changed due to the impact of foreign exchange rates as per the table below.

   
(Billions of yen)
   
   
August
Forecast
   
Change from
May
Forecast
 
May
Forecast
   
Change from
March 31, 2013
Results
 
March 31, 2013
Results
Capital expenditures
(additions to property, plant and equipment)
  ¥ 190       +5.6 %   ¥ 180       +0.7 %   ¥ 188.6  
Depreciation and amortization*
    340       +3.0       330       +2.9       330.6  
[for property, plant and
equipment (included above)
    200       -       200       +0.4       199.2 ]
Research and development expenses
    460       +2.2       450       -2.9       473.6  

*
The forecast for depreciation and amortization includes amortization expenses for intangible assets and for deferred insurance acquisition costs.

This 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.
 
 
10

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

Investor Relations Contacts:

Tokyo
New York
London
Yoshinori Hashitani
Justin Hill
Yas Hasegawa
+81-(0)3-6748-2111
+1-212-833-6722
+44-(0)20-7426-8696

IR home page: http://www.sony.net/IR/
Presentation slides: http://www.sony.net/SonyInfo/IR/financial/fr/13q1_sonypre.pdf
 
 
11

 
 
(Unaudited)
                       
Consolidated Financial Statements
                       
Consolidated Balance Sheets
                       
 
(Millions of yen, millions of U.S. dollars)
 
 
March 31
   
June 30
   
Change from
   
June 30
 
ASSETS
2013
   
2013
   
March 31, 2013
   
2013
 
Current assets:
                       
Cash and cash equivalents
  ¥ 826,361     ¥ 801,191     ¥ -25,170     $ 8,093  
Marketable securities
    697,597       722,582       +24,985       7,299  
Notes and accounts receivable, trade
    844,117       920,481       +76,364       9,298  
Allowance for doubtful accounts and sales returns
    (67,625 )     (64,068 )     +3,557       (647 )
Inventories
    710,054       841,199       +131,145       8,497  
Other receivables
    148,142       205,347       +57,205       2,074  
Deferred income taxes
    44,615       45,307       +692       458  
Prepaid expenses and other current assets
    443,272       514,691       +71,419       5,198  
 Total current assets
    3,646,533       3,986,730       +340,197       40,270  
                                 
Film costs
    270,089       305,402       +35,313       3,085  
                                 
Investments and advances:
                               
Affiliated companies
    198,621       199,690       +1,069       2,017  
Securities investments and other
    7,118,504       7,204,380       +85,876       72,772  
      7,317,125       7,404,070       +86,945       74,789  
                                 
Property, plant and equipment:
                               
Land
    131,484       132,036       +552       1,334  
Buildings
    778,514       787,214       +8,700       7,952  
Machinery and equipment
    1,934,520       1,926,865       -7,655       19,463  
Construction in progress
    47,839       48,258       +419       487  
      2,892,357       2,894,373       +2,016       29,236  
Less-Accumulated depreciation
    2,030,807       2,028,809       -1,998       20,493  
      861,550       865,564       +4,014       8,743  
                                 
Other assets:
                               
Intangibles, net
    527,507       539,493       +11,986       5,449  
Goodwill
    643,243       668,368       +25,125       6,751  
Deferred insurance acquisition costs
    460,758       468,918       +8,160       4,737  
Deferred income taxes
    107,688       111,517       +3,829       1,126  
Other
    371,799       375,989       +4,190       3,798  
      2,110,995       2,164,285       +53,290       21,861  
                                 
  Total assets
  ¥ 14,206,292     ¥ 14,726,051     ¥ +519,759     $ 148,748  
                                 
                                 
LIABILITIES AND EQUITY
                               
Current liabilities:
                               
Short-term borrowings
  ¥ 87,894     ¥ 100,190     ¥ +12,296     $ 1,012  
Current portion of long-term debt
    156,288       362,029       +205,741       3,657  
Notes and accounts payable, trade
    572,102       747,451       +175,349       7,550  
Accounts payable, other and accrued expenses
    1,097,253       1,046,968       -50,285       10,575  
Accrued income and other taxes
    75,080       72,155       -2,925       729  
Deposits from customers in the banking business
    1,857,448       1,849,091       -8,357       18,678  
Other
    469,024       473,087       +4,063       4,779  
 Total current liabilities
    4,315,089       4,650,971       +335,882       46,980  
                                 
Long-term debt
    938,428       950,487       +12,059       9,601  
Accrued pension and severance costs
    311,469       314,562       +3,093       3,177  
Deferred income taxes
    373,999       377,546       +3,547       3,814  
Future insurance policy benefits and other
    3,540,031       3,616,805       +76,774       36,533  
Policyholders’ account in the life insurance business
    1,693,116       1,749,128       +56,012       17,668  
Other
    349,985       322,685       -27,300       3,259  
  Total liabilities
    11,522,117       11,982,184       +460,067       121,032  
                                 
Redeemable noncontrolling interest
    2,997       3,025       +28       31  
                                 
Equity:
                               
Sony Corporation’s stockholders’ equity:
                               
Common stock
    630,923       630,939       +16       6,373  
Additional paid-in capital
    1,110,531       1,110,933       +402       11,222  
Retained earnings
    1,102,297       1,105,778       +3,481       11,169  
Accumulated other comprehensive income
    (641,513 )     (586,924 )     +54,589       (5,929 )
Treasury stock, at cost
    (4,472 )     (4,483 )     -11       (45 )
      2,197,766       2,256,243       +58,477       22,790  
                                 
Noncontrolling interests
    483,412       484,599       +1,187       4,895  
  Total equity
    2,681,178       2,740,842       +59,664       27,685  
  Total liabilities and equity
  ¥ 14,206,292     ¥ 14,726,051     ¥ +519,759     $ 148,748  
 
 
F-1

 
 
Consolidated Statements of Income
                       
   
(Millions of yen, millions of U.S. dollars, except per share amounts)
 
   
Three months ended June 30
 
   
2012
   
2013
   
Change from 2012
 
2013
 
Sales and operating revenue:
                       
Net sales
  ¥ 1,295,452     ¥ 1,438,936           $ 14,535  
Financial services revenue
    193,717       251,463             2,540  
Other operating revenue
    26,014       22,313             225  
      1,515,183       1,712,712     +13.0 %     17,300  
                               
Costs and expenses:
                             
Cost of sales
    1,006,413       1,098,880             11,100  
Selling, general and administrative
    346,750       384,993             3,889  
Financial services expenses
    165,652       204,730             2,068  
Other operating (income) expense, net
    (10,186 )     (12,673 )           (128 )
      1,508,629       1,675,930     +11.1       16,929  
                               
Equity in net loss of affiliated companies
    (279 )     (425 )  
      (4 )
                               
Operating income
    6,275       36,357     +479.4       367  
                               
Other income:
                             
Interest and dividends
    5,710       3,887             39  
Foreign exchange gain, net
    5,422       6,191             63  
Other
    1,197       8,962             90  
      12,329       19,040     +54.4       192  
                               
Other expenses:
                             
Interest
    7,563       6,956             70  
Other
    1,628       2,188             22  
      9,191       9,144     -0.5       92  
                               
Income before income taxes
    9,413       46,253     +391.4       467  
                               
Income taxes
    20,002       26,740             270  
                               
Net income (loss)
    (10,589 )     19,513    
      197  
                               
Less - Net income attributable to noncontrolling interests
    14,052       16,033             162  
                               
Net income (loss) attributable to Sony Corporation’s
  ¥ (24,641 )   ¥ 3,480     %   $ 35  
stockholders
                             
                               
                               
                               
Per share data:
                             
Net income (loss) attributable to Sony Corporation’s
                             
stockholders
                             
— Basic
  ¥ (24.55 )   ¥ 3.44     %   $ 0.03  
— Diluted
    (24.55 )     2.98    
      0.03  
                               
                               
Consolidated Statements of Comprehensive Income
                             
   
(Millions of yen, millions of U.S. dollars)
 
   
Three months ended June 30
 
      2012      
2013
   
Change from 2012
    2013  
                               
Net income (loss)
  ¥ (10,589 )   ¥ 19,513     %   $ 197  
                               
Other comprehensive income, net of tax –
                             
Unrealized gains (losses) on securities
    107       (13,931 )           (141 )
Unrealized gains on derivative instruments
    166       193             2  
Pension liability adjustment
    1,610       (3,247 )           (33 )
Foreign currency translation adjustments
    (79,139 )     62,372             630  
                               
Total comprehensive income (loss)
    (87,845 )     64,900    
      655  
                               
Less - Comprehensive income attributable
    13,869       6,831             69  
to noncontrolling interests
                             
                               
Comprehensive income (loss) attributable
  ¥ (101,714 )   ¥ 58,069     %   $ 586  
to Sony Corporation’s stockholders
                             
 
 
F-2

 
 
Supplemental equity and comprehensive income information
                 
   
(Millions of yen, millions of U.S. dollars)
 
     
Sony Corporation’s stockholders’ equity
     
Noncontrolling interests
     
Total equity
 
Balance at March 31, 2012
  ¥ 2,028,891     ¥ 461,216     ¥ 2,490,107  
Exercise of stock acquisition rights
            27       27  
Stock based compensation
    409               409  
                         
Comprehensive income:
                       
Net income (loss)
    (24,641 )     14,052       (10,589 )
Other comprehensive income, net of tax –
                       
Unrealized gains (losses) on securities
    (1,778 )     1,885       107  
Unrealized gains on derivative instruments
    166               166  
Pension liability adjustment
    3,070       (1,460 )     1,610  
Foreign currency translation adjustments
    (78,531 )     (608 )     (79,139 )
Total comprehensive income (loss)
    (101,714 )     13,869       (87,845 )
                         
Dividends declared
            (4,388 )     (4,388 )
Transactions with noncontrolling interests shareholders and other
    8       (636 )     (628 )
Balance at June 30, 2012
  ¥ 1,927,594     ¥ 470,088     ¥ 2,397,682  
                         
Balance at March 31, 2013
  ¥ 2,197,766     ¥ 483,412     ¥ 2,681,178  
Exercise of stock acquisition rights
    12               12  
Conversion of convertible bonds
    20               20  
Stock based compensation
    372               372  
                         
Comprehensive income:
                       
Net income
    3,480       16,033       19,513  
Other comprehensive income, net of tax –
                       
Unrealized losses on securities
    (4,371 )     (9,560 )     (13,931 )
Unrealized gains on derivative instruments
    193               193  
Pension liability adjustment
    (3,250 )     3       (3,247 )
Foreign currency translation adjustments
    62,017       355       62,372  
Total comprehensive income
    58,069       6,831       64,900  
                         
Dividends declared
            (6,046 )     (6,046 )
Transactions with noncontrolling interests shareholders and other
    4       402       406  
Balance at June 30, 2013
  ¥ 2,256,243     ¥ 484,599     ¥ 2,740,842  
                         
                         
     
Sony Corporation’s stockholders’ equity
     
Noncontrolling interests
     
Total equity
 
Balance at March 31, 2013
  $ 22,200     $ 4,883     $ 27,083  
Exercise of stock acquisition rights
    0               0  
Conversion of convertible bonds
    0               0  
Stock based compensation
    4               4  
                         
Comprehensive income:
                       
Net income
    35       162       197  
Other comprehensive income, net of tax –
                       
Unrealized losses on securities
    (44 )     (97 )     (141 )
Unrealized gains on derivative instruments
    2               2  
Pension liability adjustment
    (33 )     0       (33 )
Foreign currency translation adjustments
    626       4       630  
Total comprehensive income
    586       69       655  
                         
Dividends declared
            (61 )     (61 )
Transactions with noncontrolling interests shareholders and other
    0       4       4  
Balance at June 30, 2013
  $ 22,790     $ 4,895     $ 27,685  
 
 
F-3

 
 
Consolidated Statements of Cash Flows
                 
   
(Millions of yen, millions of U.S. dollars)
 
   
Three months ended June 30
 
   
2012
    2013    
2013
 
Cash flows from operating activities:
                 
Net income (loss)
  ¥ (10,589 )   ¥ 19,513     $ 197  
Adjustments to reconcile net income (loss) to net cash
                       
used in operating activities-
                       
Depreciation and amortization, including amortization of deferred
    85,051       80,870       817  
    insurance acquisition costs
                       
Amortization of film costs
    41,316       56,324       569  
Stock-based compensation expense
    409       374       4  
Accrual for pension and severance costs, less payments
    (1,418 )     (1,702 )     (17 )
Other operating (income) expense, net
    (10,186 )     (12,673 )     (128 )
(Gain) loss on revaluation of marketable securities held in the financial
    24,526       (21,569 )     (218 )
    services business for trading purposes, net
                       
Loss on revaluation or impairment of securities investments held
    3,319       266       3  
    in the financial services business, net
                       
Deferred income taxes
    7,076       (4,381 )     (44 )
Equity in net loss of affiliated companies, net of dividends
    578       648       7  
Changes in assets and liabilities:
                       
   (Increase) decrease in notes and accounts receivable, trade
    34,763       (51,916 )     (524 )
   Increase in inventories
    (119,612 )     (113,680 )     (1,148 )
   Increase in film costs
    (36,683 )     (79,056 )     (799 )
   Increase (decrease) in notes and accounts payable, trade
    (28,647 )     162,054       1,637  
   Decrease in accrued income and other taxes
    (22,682 )     (19,473 )     (197 )
   Increase in future insurance policy benefits and other
    63,693       106,992       1,081  
   Increase in deferred insurance acquisition costs
    (17,618 )     (20,049 )     (203 )
   Increase in marketable securities held in the financial services
    (4,893 )     (10,814 )     (109 )
        business for trading purposes
                       
   Increase in other current assets
    (7,054 )     (106,791 )     (1,079 )
   Decrease in other current liabilities
    (78,018 )     (108,160 )     (1,093 )
Other
    51,108       (8,446 )     (87 )
        Net cash used in operating activities
    (25,561 )     (131,669 )     (1,331 )
                         
Cash flows from investing activities:
                       
Payments for purchases of fixed assets
    (77,310 )     (62,926 )     (636 )
Proceeds from sales of fixed assets
    7,895       84,658       855  
Payments for investments and advances by financial services business
    (263,359 )     (244,629 )     (2,471 )
Payments for investments and advances
    (28,448 )     (1,858 )     (19 )
    (other than financial services business)
                       
Proceeds from sales or return of investments and collections of advances
    86,038       167,185       1,689  
   by financial services business
                       
Proceeds from sales or return of investments and collections of advances
    11,045       2,339       24  
   (other than financial services business)
                       
Other
    915       13,567       137  
        Net cash used in investing activities
    (263,224 )     (41,664 )     (421 )
                         
Cash flows from financing activities:
                       
Proceeds from issuance of long-term debt
    59,452       161,007       1,626  
Payments of long-term debt
    (101,449 )     (33,304 )     (336 )
Increase in short-term borrowings, net
    105,264       14,894       150  
Increase in deposits from customers in the financial services business, net
    31,860       16,972       171  
Dividends paid
    (12,600 )     (12,679 )     (128 )
Other
    (4,229 )     (26,189 )     (264 )
        Net cash provided by financing activities
    78,298       120,701       1,219  
                         
Effect of exchange rate changes on cash and cash equivalents
    (25,995 )     27,462       278  
                         
Net decrease in cash and cash equivalents
    (236,482 )     (25,170 )     (255 )
Cash and cash equivalents at beginning of the fiscal year
    894,576       826,361       8,348  
                         
Cash and cash equivalents at end of the period
  ¥ 658,094     ¥ 801,191     $ 8,093  
 
 
F-4

 
 
Business Segment Information
                         
     
(Millions of yen, millions of U.S. dollars)
 
     
Three months ended June 30
 
Sales and operating revenue
   
2012
   
2013
   
Change
   
2013
 
Imaging Products & Solutions
                         
Customers
    ¥ 193,306     ¥ 172,497       -10.8 %   $ 1,742  
Intersegment
      462       1,063               11  
Total
      193,768       173,560       -10.4       1,753  
                                   
Game
                                 
Customers
      82,889       76,957       -7.2       777  
Intersegment