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 August 2013
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 June 30, 2013

(TRANSLATION)




Sony Corporation
 
 
 
 
 

 
 
 

CONTENTS

 
   
  
Page
     
Note for readers of this English translation
Cautionary Statement
  
1
1
       
I
Corporate Information
  
2
 
(1)     Selected Consolidated Financial Data
  
2
 
(2)     Business Overview
  
3
       
II
State of Business
  
4
 
(1)     Risk Factors
  
4
 
(2)     Material Contracts
  
4
 
(3)     Management’s Discussion and Analysis of Financial Condition, Results of Operations and
Status of Cash Flows
  
4
       
III
Company Information
  
8
 
(1)     Information on the Company’s Shares
  
8
 
(2)     Directors and Corporate Executive Officers
  
10
       
IV
Financial Statements
  
11
 
(1)   Consolidated Financial Statements
  
12
 
(2)   Other Information
  
31

 
 
 
 
Note for readers of this English translation
On August 9, 2013, Sony Corporation (the “Company” or “Sony Corporation”) filed its Japanese-language Quarterly Securities Report (Shihanki Houkokusho) for the three months ended June 30, 2013 with the Director-General of the Kanto Local Finance Bureau in Japan pursuant to the Financial Instruments and Exchange Act of Japan.  This document is an English translation of the Quarterly Securities Report in its entirety, except for (i) information that had been previously filed with or submitted to the U.S. Securities and Exchange Commission (the “SEC”) in a Form 20-F, Form 6-K or any other form and (ii) a description of differences between generally accepted accounting principles in the U.S. (“U.S. GAAP”) and generally accepted accounting principles in Japan (“J-GAAP”), which are required to be described in the Quarterly Securities Report under the Financial Instruments and Exchange Act of Japan if the Company prepares its financial statements in conformity with accounting principles other than J-GAAP.
Cautionary Statement
Statements made in this release with respect to Sony’s current plans, estimates, strategies and beliefs and other statements　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 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 smart phones, 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.
 
 
- 1 -
 

I            Corporate Information
 
(1) Selected Consolidated Financial Data
 
 
Yen in millions, Yen per share amounts
 
Three months ended
 June 30, 2012
Three months ended
June 30, 2013
Fiscal Year ended
March 31, 2013
Sales and operating revenue
1,515,183   
1,712,712   
6,800,851   
Operating income
6,275   
36,357   
230,100   
Income before income taxes
9,413   
46,253   
245,681   
Net income (loss) attributable to Sony Corporation’s stockholders
(24,641)   
3,480   
43,034   
Comprehensive income (loss)
(87,845)   
64,900   
326,523   
Total equity
2,397,682   
2,740,842   
2,681,178   
Total assets
13,130,985   
14,726,051   
14,206,292   
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock, basic (yen)
(24.55)   
3.44   
42.80   
Net income (loss) attributable to Sony Corporation’s stockholders per share of common stock, diluted (yen)
(24.55)   
2.98   
40.19   
Ratio of stockholders’ equity to total assets (%)
14.7   
15.3   
15.5   
Net cash provided by (used in) operating activities
(25,561)   
(131,669)   
481,512   
Net cash used in investing activities
(263,224)   
(41,664)   
(705,280)   
Net cash provided by financing activities
78,298   
120,701   
83,181   
Cash and cash equivalents at end of the period
658,094   
801,191   
826,361   
       
Notes:
1.  
The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP.
2.  
The Company reports equity in net loss of affiliated companies as a component of operating income.
3.  
Consumption taxes are not included in sales and operating revenue.
4.  
Total equity is presented based on U.S. GAAP.
5.  
Ratio of stockholders’ equity to total assets is calculated by using total equity attributable to the stockholders of the Company.
6.  
The Company prepares consolidated financial statements.  Therefore parent-only selected financial data is not presented.

 
- 2 -
 

(2) Business Overview
 
There was no significant change in the business of Sony during the three months ended June 30, 2013.

As of June 30, 2013, the Company had 1,322 subsidiaries and 109 affiliated companies, of which 1,300 companies are consolidated subsidiaries (including variable interest entities) of the Company.  The Company has applied the equity accounting method for 102 affiliated companies.


 
- 3 -
 

II            State of Business
 
(1) Risk Factors
 
Note for readers of this English translation:
 
There was no significant change from the information presented in the Risk Factors section of the Annual Report on Form 20-F filed with the Securities and Exchange Commission (the “SEC”) on June 27, 2013.   Any forward-looking statements included in the descriptions below are based on management’s current judgment.

URL: The Annual Report on Form 20-F filed with the SEC on June 27, 2013
http://www.sec.gov/Archives/edgar/data/313838/000119312513273660/d519176d20f.htm
 
 
(2) Material Contracts
 
Given the recent spread of certain codec standards on smartphone products, Sony changed the description of “Material Contracts” in the Securities Report for the fiscal year ended March 31, 2013 (Yukashoken Houkokusho) filed on June 27, 2013, as follows.  The change is indicated below by underline.  There were no material contracts executed or determined to be executed during the three months ended June 30, 2013.

“Sony has a number of Japanese and foreign patents relating to its products. Sony is licensed to use a number of patents owned by others, covering a wide range of products. Certain licenses are important to Sony’s business, such as those for optical disc-related and smartphone products. With respect to optical disc-related products, Sony products that employ DVD player functions, including PS3 and PS2 hardware, are substantially dependent upon certain patents that relate to technologies specified in the DVD specification and are licensed by MPEG LA LLC, Dolby Laboratories Licensing Corporation and Nissim Corp. Sony products that employ Blu-ray Disc player functions, including PS3 hardware, and that also employ DVD player functions, are substantially dependent upon certain patents that relate to technologies specified in the Blu-ray Disc specification and are licensed by MPEG LA LLC, AT&T Inc. and One-Blue, LLC, in addition to the patents that relate to technologies specified in the DVD specification, as described above. Sony’s smartphone products are substantially dependent upon certain patents that relate to technologies specified in certain codec standards and are licensed by MPEG LA LLC, AT&T Inc. and Via Licensing Corporation, and certain patents that relate to CDMA technologies specified by the standard setting bodies within the telecommunications industry and are licensed by Qualcomm Incorporated. Sony considers its overall license position beneficial to its operations.”
 
Note for readers of this English translation:
 
 
Except for the above, 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 27, 2013.

URL: The Annual Report on Form 20-F filed with the SEC on June 27, 2013
http://www.sec.gov/Archives/edgar/data/313838/000119312513273660/d519176d20f.htm
 

(3) Management’s Discussion and Analysis of Financial Condition, Results of Operations and Status of Cash Flows
 
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 June 30, 2013, since it is the same as described in a press release previously submitted to the SEC.  Please refer to “Consolidated Financial Results for the First Quarter Ended June 30, 2013” submitted to the SEC on Form 6-K on August 1, 2013.

URL: The press release titled “Consolidated Financial Results for the First Quarter Ended June 30, 2013”
http://www.sec.gov/Archives/edgar/data/313838/000115752313003774/a50680913.htm
 
 

 
- 4 -
 

Foreign Exchange Fluctuations and Risk Hedging
 
Note for readers of this English translation:
 
 
Except for the information set forth below, there was no significant change from the information presented in the Foreign Exchange Fluctuations and Risk Hedging section of the Annual Report on Form 20-F filed with the SEC on June 27, 2013.  Although foreign exchange rates have fluctuated during the three-month period ended June 30, 2013, there has been no significant change in Sony’s risk hedging policy as described in the Annual Report on Form 20-F.

URL: The Annual Report on Form 20-F filed with the SEC on June 27, 2013
http://www.sec.gov/Archives/edgar/data/313838/000119312513273660/d519176d20f.htm
 
 
During the three months ended June 30, 2013, the average rates of the yen were 98.7 yen against the U.S. dollar and 128.9 yen against the euro, which were 18.7 percent and 20.1 percent lower, respectively, than the same quarter of the previous fiscal year (“year-on-year”).

For the three months ended June 30, 2013, sales were 1,712.7 billion yen, an increase of 13.0 percent year-on-year, while on a constant currency basis, sales decreased approximately 3 percent year-on-year.  For references to information on a constant currency basis, see Note at the bottom of this section.

Consolidated operating income of 36.4 billion yen was recorded for the three months ended June 30, 2013, an increase of 30.1 billion yen year-on-year (an improvement of approximately 15.1 billion yen year-on-year on a constant currency basis).  Most of the foreign exchange rate impact was attributable to the Imaging Products & Solutions (“IP&S”), Game, Mobile Products & Communications (“MP&C”), Home Entertainment & Sound (“HE&S”) and Devices segments.

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

 
(Billions of yen)
   
Change on constant currency basis
Impact of changes in  foreign exchange rates
  Three months ended 
June 30
Change in yen
2012
2013
IP&S
Sales
193.8   
   173.6   
-10.4%
-26%
+30.0
Operating income
12.6   
8.1   
-4.5
-6.1
+1.5
Game
Sales
118.0   
117.9   
-0.0%
-15%
+18.1
Operating loss
(3.5)  
(14.8)  
-11.2
-13.3
+2.0
MP&C
Sales
285.6   
389.0   
+36.2%
+14%
+62.4
Operating income (loss)
(28.1)  
5.9   
+34.1
+32.2
+1.9
HE&S
Sales
251.8   
275.2   
+9.3%
-9%
+46.3
Operating income (loss)
(10.0)  
3.4   
+13.4
+4.3
+9.1
Devices
Sales
217.3   
196.2   
-9.7%
-25%
+33.7
Operating income
15.9   
10.8   
-5.1
-11.0
+5.9

In addition, sales for the Pictures segment increased 3.6 percent year-on-year to 158.9 billion yen, an approximate 16 percent decrease on a constant currency (U.S. dollar) basis.  In the Music segment, sales increased 13.3 percent year-on-year to 112.0 billion yen, an approximate 1 percent decrease on a constant currency basis.  For a detailed analysis of segment performance, please refer to the Pictures and Music segments under the “Results of Operations” section above.  Sony’s Financial Services segment consolidates the yen-based results of Sony Financial Holdings Inc.  As most of the operations in this segment are based in Japan, Sony’s management analyzes the performance of the Financial Services segment on a yen basis only.
 
- 5 -
 
Note: In this section, 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 three months ended June 30, 2013.  The impact of foreign exchange rate fluctuations on operating income (loss) described herein is estimated by deducting cost of sales and selling, general and administrative (“SGA”) expenses on a constant currency basis from sales on a constant currency basis.  Cost of sales and SGA expenses on a constant currency basis are obtained by applying the yen’s monthly average exchange rates from the same quarter of the previous fiscal year to the corresponding local currency-denominated monthly cost of sales and SGA expenses for the three months ended June 30, 2013.  In certain cases, most significantly in the Pictures segment, and Sony Music Entertainment and Sony/ATV Music Publishing LLC in the Music segment, the constant currency amounts are after aggregation on a U.S. dollar basis.  Sales and operating income (loss) on a constant currency basis are not reflected in Sony’s consolidated financial statements and are not measured 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 and operating income information on a constant currency basis provides additional useful analytical information to investors regarding the operating performance of Sony.
 
Status of Cash Flow
 
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 June 30, 2013, since it is the same as described in a press release previously submitted to the SEC.  Please refer to “Consolidated Financial Results for the First Quarter Ended June 30, 2013” submitted to the SEC on Form 6-K on August 1, 2013.

URL: The press release titled “Consolidated Financial Results for the First Quarter Ended June 30, 2013”
http://www.sec.gov/Archives/edgar/data/313838/000115752313003774/a50680913.htm
 
 
ii) Issues Facing Sony and Management’s Response to those Issues
 
Note for readers of this English translation:
 
There was no significant change from the information presented 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 27, 2013.  Any forward-looking statements included in the descriptions below are based on management’s current judgment.

URL: The Annual Report on Form 20-F filed with the SEC on June 27, 2013
http://www.sec.gov/Archives/edgar/data/313838/000119312513273660/d519176d20f.htm
 

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 27, 2013.

URL: The Annual Report on Form 20-F filed with the SEC on June 27, 2013
http://www.sec.gov/Archives/edgar/data/313838/000119312513273660/d519176d20f.htm
 
 
The following significant changes in research and development activities occurred during the period.

The Advanced Device Technology Platform, the Corporate R&D and the System & Software Technology Platform were realigned in June 2013, to form the R&D Platform and the Software Design Group to accelerate the development of next generation core technology to deliver Sony products and services in order to increase customer value.
Research and development costs for the three months ended June 30, 2013 totaled 110.6 billion yen.

 
- 6 -
 

iv) Liquidity and Capital Resources
 
Note for readers of this English translation:
 
Except for the information related to the committed lines of credit and the issuance of unsecured straight bonds below, there was no significant change from the information presented in the Annual Report on Form 20-F filed with the SEC on June 27, 2013.  The changes are indicated by underline below.  Any forward-looking statements included in the descriptions below are based on management’s current judgment.

URL: The Annual Report on Form 20-F filed with the SEC on June 27, 2013
http://www.sec.gov/Archives/edgar/data/313838/000119312513273660/d519176d20f.htm
 
 
Sony typically raises funds through straight bonds, CP programs and bank loans (including syndicated loans).  If market disruption and volatility occur and if Sony could not raise sufficient funds from these sources, Sony may also draw down funds from contractually committed lines of credit from various financial institutions.  Sony has a total, translated into yen, of 822.0 billion yen in unused committed lines of credit, as of June 30, 2013.  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 2015, 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 2.02 billion U.S. dollar multi-currency committed line of credit contracted with a syndicate of foreign banks, effective until April 2015.  In all of these committed lines of credit, Sony Corporation and Sony Global Treasury Services Plc are defined as borrowers.  These contracts are aimed at securing sufficient liquidity in a quick and stable manner even in the event of turmoil within the financial and capital markets.
In June 2013, Sony issued unsecured straight bonds for Japanese retail investors in the aggregate principal amount of 150.0 billion yen.  The proceeds from the issuance of the bonds are to be applied to the repayment of borrowings and debt, and to capital expenditures.
 
 
 
 
 

 
 
- 7 -
 

Ⅲ           Company Information
 
(1) Information on the Company’s Shares
 
i) Total Number of Shares
 
 
1) Total Number of Shares
 
Class
Total number of shares authorized to be issued
Common stock
3,600,000,000
Total
3,600,000,000

 
2) Number of Shares Issued
 
Class
Number of shares issued
Name of Securities Exchanges where the shares are listed or authorized Financial Instruments Firms Association where the shares are registered
Description
As of the end of the
first quarterly period
(June 30, 2013)
As of the filing date of
the Quarterly
Securities Report
(August 9, 2013)
Common stock
1,011,977,604
1,011,988,304
Tokyo Stock Exchange
New York Stock Exchange
London Stock Exchange
The number of shares constituting one full unit is one hundred (100).
Total
1,011,977,604
1,011,988,304
—
—
Notes:
  
1.
The Company’s shares of common stock are listed on the First Section of the Tokyo Stock Exchange in Japan.
2.
The number of shares issued as of the filing date of this Quarterly Securities Report does not include shares issued upon the exercise of stock acquisition rights (“SARs”) (including the exercise of stock acquisition rights of the Zero Coupon Convertible Bonds) during August 2013, the month in which this Quarterly Securities Report (Shihanki Houkokusho) was filed.

ii) Stock Acquisition Rights
 
     Not Applicable.
 
Note for readers of this English translation:
 
The above means that there was no issuance of SARs during the three months ended June 30, 2013.
 
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 legal capital surplus
Balance of the legal capital surplus
(Thousands)
(Thousands)
(Yen in Millions)
(Yen in Millions)
(Yen in Millions)
(Yen in Millions)
From April 1 to
June 30, 2013
27
1,011,978
16
630,939
16
844,632
Notes:
1.
The increase is due to the exercise of SARs.
2.
Upon the exercise of SARs during the period from July 1, 2013 to July 31, 2013, the total number of shares issued increased by 11 thousand shares, the amount of common stock and the legal capital surplus increased by 12 million yen, respectively.

 
- 8 -
 
vi) Status of Major Shareholders
 
(As of June 30, 2013)
Name
Address
Number of
shares held
(Thousands)
Percentage of shares held to total shares issued (%)
Moxley and Co. LLC *1
(Local Custodian: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)
New York, U.S.A.
(2-7-1, Marunouchi, Chiyoda-ku,
Tokyo)
71,023
7.02
Japan Trustee Services Bank, Ltd.
(Trust account) *2
1-8-11, Harumi, Chuo-ku, Tokyo
40,095
3.96
The Master Trust Bank of Japan, Ltd.
(Trust account) *2
2-11-3, Hamamatsu-cho, Minato-ku,
Tokyo
36,325
3.59
Goldman, Sachs & Co. Reg *3
(Local Custodian: Goldman Sachs Japan Co., Ltd.)
New York, U.S.A.
(Roppongi Hills Mori Tower 6-10-1, Roppongi, Minato-ku, Tokyo)
21,585
2.13
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)
21,442
2.12
Japan Trustee Services Bank, Ltd.
(Trust account 9) *2
1-8-11, Harumi, Chuo-ku, Tokyo
12,401
1.23
Japan Trustee Services Bank, Ltd.
(Trust account 1) *2
1-8-11, Harumi, Chuo-ku, Tokyo
11,400
1.13
Japan Trustee Services Bank, Ltd.
(Trust account 6) *2
1-8-11, Harumi, Chuo-ku, Tokyo
10,952
1.08
State Street Bank West Client - Treaty *3
(Local Custodian: Mizuho Corporate Bank, Ltd.)
Quincy, U.S.A.
(4-16-13, Tsukishima, Chuo-ku,
Tokyo)
10,319
1.02
MSCO Customer Securities *3
(Local Custodian: Morgan Stanley MUFG Securities Co., Ltd.)
New York, U.S.A.
(Yebisu Garden Place Tower 4-20-3, Ebisu, Shibuya-ku, Tokyo)
10,304
1.02
Total
245,847
24.29
Notes:
  
*1.
Moxley and Co. LLC is the nominee of JPMorgan Chase Bank, N.A., which is the Depositary for holders of the Company’s American Depositary Receipts .
*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.


 
- 9 -
 

vii) Status of Voting Rights
 
1) Shares Issued
 
 (As of June 30, 2013)
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.)
1,055,600
—
—
Shares with full voting rights (Others)
1,008,500,000
10,085,000
—
Shares constituting less than one full unit
2,422,004
—
Shares constituting less than one full unit
(100 shares)
Total number of shares issued
1,011,977,604
—
—
Total voting rights held by all shareholders
—
10,085,000
—
Note:
Included in “Shares with full voting rights (Others)” under “Number of shares of common stock” are 19,500 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 195 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 June 30, 2013)
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
1,055,600
—
1,055,600
0.10
Total
—
1,055,600
 —
1,055,600
0.10
Note:
In addition to the 1,055,600 shares listed above, there are 300 shares of common stock held in the name of the Company in the register of shareholders that the Company does not beneficially own.  These shares are included in “Shares with full voting rights (Others)” in Table 1 “Shares Issued” above.

(2)           Directors and Corporate Executive Officers
 
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, 2013 to the filing date of this Quarterly Securities
Report (Shihanki Houkokusho).


 
- 10 -
 

IV           Financial Statements
 
Page
(1) Consolidated Financial Statements
12
 
(i)
Consolidated Balance Sheets
12
 
(ii)
Consolidated Statements of Income
14
 
(iii)
Consolidated Statements of Comprehensive Income
15
 
(iv)
Consolidated Statements of Cash Flows
16
(2) Other Information
31

 

 

 
- 11 -
 

(1) Consolidated Financial Statements

 (i)  Consolidated Balance Sheets (Unaudited)
Sony Corporation and Consolidated Subsidiaries
 
Yen in millions
 
At March 31,
2013
At June 30,
2013
ASSETS
    
Current assets:
    
Cash and cash equivalents
826,361   
801,191   
Marketable securities
697,597   
722,582   
Notes and accounts receivable, trade
844,117   
920,481   
Allowance for doubtful accounts and sales returns
(67,625)   
(64,068)   
Inventories
710,054   
841,199   
Other receivables
148,142   
205,347   
Deferred income taxes
44,615   
45,307   
Prepaid expenses and other current assets
443,272   
514,691   
     Total current assets
3,646,533   
3,986,730   
Film costs
270,089   
305,402   
Investments and advances:
        
Affiliated companies
198,621   
    199,690   
Securities investments and other
7,118,504   
7,204,380   
 
7,317,125   
7,404,070   
Property, plant and equipment:
        
Land
131,484   
132,036   
Buildings
778,514   
787,214   
Machinery and equipment
1,934,520   
1,926,865   
Construction in progress
47,839   
48,258   
 
2,892,357   
2,894,373   
Less – Accumulated depreciation
2,030,807   
2,028,809   
 
861,550   
865,564   
Other assets:
        
Intangibles, net   
527,507   
539,493   
Goodwill
643,243   
668,368   
Deferred insurance acquisition costs
460,758   
468,918   
Deferred income taxes
107,688   
111,517   
Other
371,799   
375,989   
 
2,110,995   
2,164,285   
Total assets
14,206,292   
14,726,051   
(Continued on following page.)

 
- 12 -
 

Consolidated Balance Sheets (Unaudited)
 
 
Yen in millions
 
At March 31,
2013
At June 30,
2013
LIABILITIES
    
Current liabilities:
    
Short-term borrowings
87,894   
100,190   
Current portion of long-term debt
156,288   
362,029   
Notes and accounts payable, trade
572,102   
747,451   
Accounts payable, other and accrued expenses
1,097,253   
1,046,968   
Accrued income and other taxes
75,080   
72,155   
Deposits from customers in the banking business
1,857,448   
1,849,091   
Other
469,024   
473,087   
     Total current liabilities
4,315,089   
4,650,971   
Long-term debt
938,428   
950,487   
Accrued pension and severance costs
311,469   
314,562   
Deferred income taxes
373,999   
377,546   
Future insurance policy benefits and other
3,540,031   
3,616,805   
Policyholders’ account in the life insurance business
1,693,116   
1,749,128   
Other
349,985   
322,685   
Total liabilities
11,522,117   
11,982,184   
Redeemable noncontrolling interest
2,997   
3,025   
Commitments and contingent liabilities
    
EQUITY
    
Sony Corporation’s stockholders’ equity:
    
Common stock, no par value –
    
 At March 31, 2013–Shares authorized: 3,600,000,000, shares issued: 1,011,950,206
630,923   
  
   At June 30, 2013–Shares authorized: 3,600,000,000, shares issued: 1,011,977,604
  
630,939   
Additional paid-in capital
1,110,531   
1,110,933   
Retained earnings
1,102,297   
1,105,778   
Accumulated other comprehensive income –
 
  
   Unrealized gains on securities, net
107,061   
102,690   
 Unrealized losses on derivative instruments, net
(742)   
(549)   
   Pension liability adjustment
(191,816)   
(195,066)   
   Foreign currency translation adjustments
(556,016)   
(493,999)   
 
(641,513)   
(586,924)   
Treasury stock, at cost
    
Common stock
    
At March 31, 2013–1,048,870 shares
(4,472)   
  
At June 30, 2013–1,055,618 shares
  
(4,483)   
 
2,197,766   
2,256,243   
Noncontrolling interests
483,412   
484,599   
Total equity
2,681,178   
2,740,842   
Total liabilities and equity
14,206,292   
14,726,051   
The accompanying notes are an integral part of these statements.

 
- 13 -
 

(ii)  Consolidated Statements of Income (Unaudited)
Sony Corporation and Consolidated Subsidiaries
 
Yen in millions
 
Three months ended June 30
 
2012
2013
Sales and operating revenue:
    
Net sales
1,295,452   
1,438,936   
Financial services revenue
193,717   
251,463   
Other operating revenue
26,014   
22,313   
 
1,515,183   
1,712,712   
Costs and expenses:
        
Cost of sales
1,006,413   
1,098,880   
Selling, general and administrative
346,750   
384,993   
Financial services expenses
165,652   
204,730   
Other operating (income) expense, net
(10,186)   
(12,673)   
 
1,508,629   
1,675,930   
Equity in net loss of affiliated companies
(279)   
(425)   
Operating income
6,275   
36,357   
Other income:
    
Interest and dividends
5,710   
3,887   
Foreign exchange gain, net
5,422   
6,191   
Other
1,197   
8,962   
 
12,329   
19,040   
Other expenses:
        
Interest
7,563   
6,956   
Other
1,628   
2,188   
 
9,191   
9,144   
Income before income taxes
9,413   
46,253   
Income taxes
20,002   
26,740   
Net income (loss)
(10,589)   
19,513   
Less - Net income attributable to noncontrolling interests
14,052   
16,033   
Net income (loss) attributable to Sony Corporation’s stockholders
(24,641)   
3,480   

 
Yen
 
Three months ended June 30
 
2012
2013
Per share data:
 
-
Net income (loss) attributable to Sony Corporation’s stockholders
    
– Basic
(24.55)   
3.44   
– Diluted
(24.55)   
2.98   
The accompanying notes are an integral part of these statements.

 
- 14 -
 

 (iii)  Consolidated Statements of Comprehensive Income (Unaudited)
Sony Corporation and Consolidated Subsidiaries
 
Yen in millions
 
Three months ended June 30
 
2012
2013
Net income (loss)
(10,589)   
19,513   
Other comprehensive income, net of tax ―
    
Unrealized gains (losses) on securities
107   
(13,931)   
Unrealized gains on derivative instruments
166   
193   
Pension liability adjustment
1,610   
(3,247)   
Foreign currency translation adjustments
(79,139)   
62,372   
Total comprehensive income (loss)
(87,845)   
64,900   
Less – Comprehensive income attributable to noncontrolling interests
13,869   
6,831   
Comprehensive income (loss) attributable to Sony Corporation's stockholders
(101,714)   
58,069   
The accompanying notes are an integral part of these statements.

 
- 15 -
 

 (iv)  Consolidated Statements of Cash Flows (Unaudited)
Sony Corporation and Consolidated Subsidiaries
 
Yen in millions
 
Three months ended June 30
 
2012
2013
Cash flows from operating activities:
    
Net income (loss)
(10,589)   
19,513   
Adjustments to reconcile net income (loss) to net cash
        
used in operating activities –
    
Depreciation and amortization, including amortization
   of deferred insurance acquisition costs
85,051   
80,870   
Amortization of film costs
41,316   
56,324   
Stock-based compensation expense
409   
374   
Accrual for pension and severance costs, less payments
(1,418)   
(1,702)   
Other operating (income) expense, net
(10,186)   
(12,673)   
(Gain) loss on revaluation of marketable securities held in the
   financial services business for trading purposes, net
24,526   
(21,569)   
Loss on revaluation or impairment of securities investments
   held in the financial services business, net
3,319   
266   
Deferred income taxes
7,076   
(4,381)   
Equity in net loss of affiliated companies, net of dividends
578   
648   
Changes in assets and liabilities:
    
(Increase) decrease in notes and accounts receivable, trade
34,763   
(51,916)   
Increase in inventories
(119,612)   
(113,680)   
Increase in film costs
(36,683)   
(79,056)   
Increase (decrease) in notes and accounts payable, trade
(28,647)   
162,054   
Decrease in accrued income and other taxes
(22,682)   
(19,473)   
Increase in future insurance policy benefits and other
63,693   
106,992   
Increase in deferred insurance acquisition costs
(17,618)   
(20,049)   
Increase in marketable securities held in the
   financial services business for trading purposes
 
(4,893)   
(10,814)   
Increase in other current assets
(7,054)   
(106,791)   
Decrease in other current liabilities
(78,018)   
(108,160)   
Other
51,108   
(8,446)   
Net cash used in operating activities
(25,561)   
(131,669)   
(Continued on following page.)
 
- 16 -
 

Consolidated Statements of Cash Flows (Unaudited)

 
Yen in millions
 
Three months ended June 30
 
2012
2013
Cash flows from investing activities:
    
Payments for purchases of fixed assets
(77,310)   
(62,926)   
Proceeds from sales of fixed assets
7,895   
84,658   
Payments for investments and advances by financial services
   business
(263,359)   
(244,629)   
Payments for investments and advances (other than financial
   services business)
(28,448)   
(1,858)   
Proceeds from sales or return of investments and collections of
   advances by financial services business
                86,038   
                167,185   
Proceeds from sales or return of investments and collections of
   advances (other than financial services business)
                11,045   
                2,339   
Other
915   
13,567   
          Net cash used in investing activities
(263,224)   
(41,664)   
Cash flows from financing activities:
       
Proceeds from issuance of long-term debt
59,452   
161,007   
Payments of long-term debt
(101,449)   
(33,304)   
Increase in short-term borrowings, net
105,264   
14,894   
Increase in deposits from customers in the financial services
    business, net
31,860   
16,972   
Dividends paid
(12,600)   
(12,679)   
Other
(4,229)   
(26,189)   
          Net cash provided by financing activities
78,298   
120,701   
Effect of exchange rate changes on cash and cash equivalents
(25,995)   
27,462   
Net decrease in cash and cash equivalents
(236,482)   
(25,270)   
Cash and cash equivalents at beginning of the fiscal year
894,576   
826,361   
Cash and cash equivalents at end of the period
658,094   
801,191   
The accompanying notes are an integral part of these statements.

 
- 17 -
 

 Index to Notes to Consolidated Financial Statements
Sony Corporation and Consolidated Subsidiaries

 
Notes to Consolidated Financial Statements
Page
 
1.
Summary of significant accounting policies
19
 
2.
Marketable securities and securities investments
20
 
3.
Fair value measurements
21
 
4.
Supplemental equity and comprehensive income information
23
 
5.
Sale and leaseback transactions
24
 
6.
Reconciliation of the differences between basic and diluted EPS
24
 
7.
Commitments, contingent liabilities and other
25
 
8.
Business segment information
26


 
 
 
 
 
 

 
- 18 -
 

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

 
(1)  Recently adopted accounting pronouncements:
 
Disclosure about balance sheet offsetting -
 
In December 2011, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance which requires entities to disclose information about offsetting and related arrangements to enable financial statement users to understand the effect of such arrangements on their financial position as well as to improve comparability of balance sheets prepared under U.S. GAAP and International Financial Reporting Standards.  Subsequently, in January 2013, the FASB issued updated accounting guidance clarifying the scope of disclosures about offsetting assets and liabilities.　The new guidance is required to be applied retrospectively and was effective for Sony as of April 1, 2013.  Since this guidance impacts disclosures only, its adoption did not have an impact on Sony’s results of operations and financial position.
 
Testing indefinite lived intangible assets for impairment -
 
In July 2012, the FASB issued new accounting guidance to simplify how entities test indefinite lived intangible assets for impairment.  The new guidance allows entities an option to first assess qualitative factors to determine whether it is more likely than not that indefinite lived intangible assets are impaired as a basis for determining if it is necessary to perform the quantitative impairment test.  Under the new guidance, entities are no longer required to calculate the fair value of the assets unless the entities determine, based on the qualitative assessment, that it is more likely than not that indefinite lived intangible assets are impaired.  The new guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  This guidance was effective for Sony as of April 1, 2013.  The adoption of this guidance is not expected to have a material impact on Sony’s results of operations and financial position.
 
Presentation of amounts reclassified out of accumulated other comprehensive income -
 
In February 2013, the FASB issued new accounting guidance for reporting of amounts reclassified out of accumulated other comprehensive income.  The amendments require entities to report the significant reclassifications out of accumulated other comprehensive income if the amount is required to be reclassified in its entirety to net income.  For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, entities are required to cross-reference other disclosures required that provide additional detail about those amounts.  This guidance was effective for Sony as of April 1, 2013.  Sony applied this guidance prospectively from the date of adoption.  Since this guidance impacts disclosure only, its adoption did not have an 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)  Reclassifications:
 
Certain reclassifications of the financial statements and accompanying footnotes for the three months ended June 30, 2012 have been made to conform to the presentation for the three months ended June 30, 2013.

 
- 19 -
 
 
2.  Marketable securities and securities investments
 
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, 2013
  
June 30, 2013
   
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
  
 
1,106,265
  
 
114,806
  
 
(463)
  
 
1,220,608
  
 
1,056,217
  
 
79,640
  
 
(1,031)
  
 
1,134,826
                                 
Japanese local
government bonds
  
 
66,553
  
 
643
  
 
(1)
  
 
67,195
  
 
62,162
  
 
395
  
 
(4)
  
 
62,553
                                 
Japanese corporate
bonds
  
 
210,519
  
 
1,715
  
 
(70)
  
 
212,164
  
 
195,643
  
 
1,237
  
 
(44)
  
 
196,836
                                 
Foreign corporate bonds
  
425,892
  
17,502
  
(620)
  
442,774
  
416,048
  
15,157
  
(795)
  
430,410
                                 
Other
  
20,607
  
4,431
  
(2)
  
25,036
  
23,340
  
3,833
  
(60)
  
27,113
   
1,829,836
  
139,097
  
(1,156)
  
1,967,777
  
1,753,410
  
100,262
  
(1,934)
  
1,851,738
                                 
Equity securities
  
89,079
  
44,443
  
(997)
  
132,525
  
90,400
  
75,292
  
(198)
  
165,494
                                 
Held-to-maturity
                                
securities:
                                
Japanese national
government bonds
  
 
3,876,600
  
 
545,188
  
 
-
  
 
4,421,788
  
 
4,014,901
  
 
291,556
  
 
(24)
  
 
4,306,433
                                 
Japanese local
government bonds
  
 
7,195
  
 
432
  
 
-
  
 
7,627
  
 
6,813
  
 
307
  
 -
  
 
7,120
                                 
Japanese corporate
bonds
  
 
28,918
  
 
3,571
  
 
-
  
 
32,489
  
 
28,550
  
 
2,121
  
 
-
  
 
30,671
                                 
Foreign corporate bonds
  
52,738
  
20
  
-
  
52,758
  
52,562
  
15
  
-
  
52,577
                                 
Other
  
-
  
-
  
-
  
-
  
1,114
  
-
  
(64)
  
1,050
   
3,965,451
  
549,211
  
-
  
4,514,662
  
4,103,940
  
293,999
  
(88)
  
4,397,851
 
                                
Total
  
5,884,366
  
732,751
  
(2,153)
  
6,614,964
  
5,947,750
  
469,553
  
(2,220)
  
6,415,083




 
- 20 -
 
 
3.  Fair value measurements
 
The fair value of Sony’s assets and liabilities that are measured at fair value on a recurring basis are as follows:

   
Yen in millions
   
March 31, 2013
     
Presentation in the consolidated balance sheets
   
Level 1
  
Level 2
  
Level 3
  
Total
  
Marketable securities
  
Securities investments and other
  
Other current assets/
liabilities
  
Other noncurrent assets/
liabilities
                                 
Assets:
                                
Trading securities
  
278,575
  
252,212
  
-
  
530,787
  
530,787
  
-
  
-
  
-
Available-for-sale
    securities
                                
   Debt securities
                                
 Japanese national 
    government bonds
  
 
-
  
 
1,220,608
  
 
-
  
 
1,220,608
  
 
24,335
  
 
1,196,273
  
 
-
  
 
-
Japanese local
    government bonds
  
 
-
  
 
67,195
  
 
-
  
 
67,195
  
 
61
  
 
67,134
  
 
-
  
 
-
Japanese corporate 
   bonds
  
 
-
  
 
209,950
  
 
2,214
  
 
212,164
  
 
40,359
  
 
171,805
  
 
-
  
 
-
Foreign corporate 
   bonds
  
 
-
  
 
422,022
  
 
20,752
  
 
442,774
  
 
96,896
  
 
345,878
  
 
-
  
 
-
Other
  
-
  
25,036
  
-
  
25,036
  
98
  
24,938
  
-
  
-
  Equity securities
  
132,447
  
78
  
-
  
132,525
  
-
  
132,525
  
-
  
-
Other investments *1
  
6,742
  
3,126
  
76,892
  
86,760
  
-
  
86,760
  
-
  
-
Derivative assets *2, *3
  
-
  
21,862
  
-
  
21,862
  
-
  
-
  
20,713
  
1,149
Total assets
  
417,764
  
2,222,089
  
99,858
  
2,739,711
  
692,536
  
2,025,313
  
20,713
  
1,149
Liabilities:
                                
Derivative
   liabilities*2,*3
  
-
  
41,998
  
-
  
41,998
  
-
  
-
  
20,322
  
21,676
Total liabilities
  
-
  
41,998
  
-
  
41,998
  
-
  
-
  
20,322
  
21,676


 
- 21 -
 


   
Yen in millions
   
June 30, 2013
     
Presentation in the consolidated balance sheets
   
Level 1
  
Level 2
  
Level 3
  
Total
  
Marketable securities
  
Securities investments and other
  
Other current assets/
liabilities
  
Other noncurrent assets/
liabilities
                                 
Assets:
                                
Trading securities
  
300,752
  
262,443
  
-
  
563,195
  
563,195
  
-
  
-
  
-
Available-for-sale
   securities
                                
  Debt securities
                                
Japanese national
   government bonds
  
-
  
1,134,826
  
-
  
1,134,826
  
20,679
  
1,114,147
  
-
  
-
Japanese local
   government bonds
  
-
  
62,553
  
-
  
62,553
  
515
  
62,038
  
-
  
-
Japanese corporate
   bonds
  
-
  
194,624
  
2,212
  
196,836
  
46,991
  
149,845
  
-
  
-
Foreign corporate
   bonds
  
-
  
410,903
  
19,507
  
430,410
  
87,470
  
342,940
  
-
  
-
Other
  
-
  
27,113
  
-
  
27,113
  
1,055
  
26,058
  
-
  
-
Equity securities
  
165,413
  
81
  
-
  
165,494
  
-
  
165,494
  
-
  
-
Other investments *1
  
7,484
  
3,410
  
76,644
  
87,538
  
-
  
87,538
  
-
  
-
Derivative assets *2, *3
  
-
  
26,792
  
-
  
26,792
  
-
  
-
  
25,507
  
1,285
Total assets
  
473,649
  
2,122,745
  
98,363
  
2,694,757
  
719,905
  
1,948,060
  
25,507
  
1,285
Liabilities:
                                
Derivative liabilities*2,*3
  
-
  
26,825
  
-
  
26,825
  
-
  
-
  
11,676
  
15,149
Total liabilities
  
-
  
26,825
  
-
  
26,825
  
-
  
-
  
11,676
  
15,149
 
*1
 Other investments include certain hybrid financial instruments and certain private equity investments.
*2
 Derivative assets and liabilities are recognized and disclosed on a gross basis.
*3
 The potential effect of offsetting on assets and liabilities, which primarily consists of derivatives subject to master netting agreements and/or collateral, is insignificant.
 
 
- 22 -
 
 
4.  Supplemental equity and comprehensive income information
 
(1) Stockholders’ Equity
 
A reconciliation of the beginning and ending carrying amounts of Sony Corporation’s stockholders’ equity, noncontrolling interests and the total equity for the three months ended June 30, 2012 and 2013 are as follows:

   
Yen in millions
  
 
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   

   
Yen in millions
  
 
Sony Corporation’s
stockholders’ equity
Noncontrolling interests
Total equity
Balance at March 31, 2013
2,197,766   
483,412   
2,681,178   
Exercise of stock acquisition rights
12   
     
12   
Conversion of zero coupon 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   

There was no material effect of changes in Sony Corporation’s ownership interest in its subsidiaries on Sony Corporation’s stockholders’ equity for the three months ended June 30, 2012 and 2013.


 
- 23 -
 
 
(2) Other Comprehensive Income
 
Changes in accumulated other comprehensive income, net of tax by component for the three months ended June 30, 2013 are as follows:

 
Yen in millions
 
Unrealized gains (losses) on securities
Unrealized gains (losses) on derivative instruments
Pension liability adjustment
Foreign currency translation adjustments
Total
Balance at March 31, 2013
107,061   
(742)   
(191,816)   
(556,016)   
(641,513)   
Other comprehensive income (loss)
before reclassifications
(13,815)   
103   
(3,331)   
62,372   
45,329   
Amounts reclassified out of accumulated other
comprehensive income
(116)   
90   
84
  
58   
Net current-period other comprehensive
income (loss)
(13,931)   
193   
(3,247)   
62,372   
45,387   
Less: Other comprehensive income (loss)
 attributable to noncontrolling interests
(9,560)   
     
3   
355   
(9,202)   
Balance at June 30, 2013
102,690   
(549)   
(195,066)   
(493,999)   
(586,924)   
 
5.  Sale and leaseback transactions
 
On May 15, 2013, Sony entered into sale and leaseback transactions regarding certain machinery and equipment with leasing companies including its equity interest affiliate, SFI Leasing Company, Limited.  Transactions with total proceeds of 76,566 million yen, and terms which averaged three years, have been accounted for as a capital lease and are included within proceeds from sales of fixed assets in the investing activities section of the consolidated statements of cash flows.  There was no gain or loss recorded in the sale and leaseback transactions.

 
6.  Reconciliation of the differences between basic and diluted EPS
 
Reconciliation of the differences between basic and diluted net income (loss) attributable to Sony Corporation’s stockholders per share (“EPS”) for three months ended June 30, 2012 and 2013 is as follows:

 
Yen in millions
 
Three months ended June 30
 
2012
  
2013
Net income (loss) attributable to Sony Corporation’s
   stockholders for basic and diluted EPS computation
(24,641)
 
3,480

 
Thousands of shares
Weighted-average shares outstanding
1,003,574
  
1,010,916
Effect of dilutive securities:
      
Stock acquisition rights
-
  
194
Zero coupon convertible bonds
-
  
156,726
Weighted-average shares for diluted EPS computation
1,003,574
  
1,167,836

 
Yen
Basic EPS
(24.55)
  
3.44
Diluted EPS
(24.55)
  
2.98

Potential shares of common stock which were excluded from the computation of diluted EPS for the three months ended June 30, 2012 and 2013 were 21,882 thousand shares and 16,438 thousand shares, respectively.  The potential shares were excluded as anti-dilutive for the three months ended June 30, 2012 due to Sony incurring a net loss attributable to Sony Corporation’s stockholders for the period, and potential shares related to stock acquisition rights were excluded as anti-dilutive for the three months ended June 30, 2013 when the exercise price for those shares was in excess of the average market value of Sony’s common stock for the period.

 
- 24 -
 
 
7.  Commitments, contingent liabilities and other
 
(1)  Commitments:
 
 
A. Loan commitments
 
Subsidiaries in the Financial Services segment have entered into loan agreements with their customers in accordance with the condition of the contracts.  As of June 30, 2013, the total unused portion of the lines of credit extended under these contracts was 24,166 million yen.  The aggregate amounts of future year-by-year payments for these loan commitments cannot be determined.
 
B. Purchase commitments and other
 
Purchase commitments and other outstanding at June 30, 2013 amounted to 291,810 million yen.  The major components of these commitments are as follows:

Certain subsidiaries in the Pictures segment have entered into agreements with creative talent for the development and production of motion pictures and television programming as well as agreements with third parties to acquire completed motion pictures, or certain rights therein, and to acquire the rights to broadcast certain live action sporting events.  These agreements cover various periods mainly within 5 years.  As of June 30, 2013, these subsidiaries were committed to make payments under such contracts of 120,823 million yen.

Certain subsidiaries in the Music segment have entered into long-term contracts with recording artists and companies for the production and/or distribution of prerecorded music and videos.  These contracts cover various periods mainly within 5 years.  As of June 30, 2013, these subsidiaries were committed to make payments of 56,845 million yen under such long-term contracts.

Sony has entered into long-term sponsorship contracts related to advertising and promotional rights.  These contracts cover various periods mainly within 10 years.  As of June 30, 2013, Sony has committed to make payments of 56,617 million yen under such long-term contracts.

In addition to the above, Sony has other commitments as follows:

During the fiscal year ended March 31, 2012, there was a receipt of an advance payment from a commercial customer.  The advance payment amounts are recouped through product sales to the commercial customer during the period specified in the contract, as amended.  As of June 30, 2013, Sony recorded 7,108 million yen in other current liabilities and 28,432 million yen in other long-term liabilities based on the anticipated recoupment period.  The advance payment is subject to reimbursement under certain contingent conditions including a downgrade of Sony’s credit rating by either S&P (lower than “BBB-”) or Moody’s (lower than “Baa3”).

 
(2)  Contingent liabilities:
 
Sony had contingent liabilities, including guarantees given in the ordinary course of business, which amounted to 87,203 million yen at June 30, 2013.  The major components of these contingent liabilities are as follows:

Sony has agreed to repay the outstanding principal plus accrued interest up to a maximum of 303 million U.S. dollars to the creditor of the third-party investor of Sony’s U.S. based music publishing subsidiary should the third-party investor default on its obligation.  The obligation of the third-party investor is collateralized by its 50% interest in Sony’s music publishing subsidiary.  Should Sony have to make a payment under the terms of the guarantee, Sony would assume the creditor’s rights to the underlying collateral.  At June 30, 2013, the fair value of the collateral exceeded 303 million U.S. dollars.

In May 2011, Sony Corporation’s U.S. subsidiary, Sony Electronics Inc., received a subpoena from the U.S. Department of Justice (“DOJ”) Antitrust Division seeking information about its secondary batteries business.  Sony understands that the DOJ, the EU and certain other governmental agencies outside the United States are investigating competition in the secondary batteries market.  Subsequently, a number of direct and indirect purchaser class action lawsuits were filed in certain jurisdictions, including the United States, in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies.  Based on the stage of these proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of all of these matters.

 
- 25 -
 
Beginning in early 2011, the network services of PlayStation®Network, Qriocity™, Sony Online Entertainment LLC and websites of other subsidiaries came under cyber-attack.  As of August 9, 2013, Sony has not received any confirmed reports of customer identity theft issues or misuse of credit cards from such cyber-attacks.  However, in connection with certain of these matters, Sony has received inquiries from authorities in a number of jurisdictions, including orders for reports issued by the Ministry of Economy, Trade and Industry of Japan as well as the Financial Services Agency of Japan, formal and/or informal requests for information from Attorneys General from a number of states in the United States and the U.S. Federal Trade Commission, various U.S. congressional inquiries and others.  Additionally, Sony Corporation and/or certain of its subsidiaries have been named in a number of purported class actions in certain jurisdictions, including the United States.  Based on the stage of these inquiries and proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of all of these matters.

In October 2009, Sony Corporation’s U.S. subsidiary, Sony Optiarc America Inc., received a subpoena from the DOJ seeking information about its optical disk drive business.  Sony understands that the DOJ, the EU and certain other governmental agencies outside the United States are investigating and/or have investigated competition in optical disk drives.  Subsequently, a number of direct and indirect purchaser lawsuits, including class actions, were filed in certain jurisdictions, including the United States, in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies.  Based on the stage of these proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of all of these matters.

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

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

 
 
 
 
 

 

 
- 26 -
 
 
Business segments -
 
Sales and operating revenue:
 

   
Yen in millions
   
Three months ended June 30
   
2012
  
2013
Sales and operating revenue:
        
Imaging Products & Solutions -
        
Customers
  
193,306
  
172,497
Intersegment
  
462
  
1,063
Total
  
193,768
  
173,560
Game -
        
Customers
  
82,889
  
76,957
Intersegment
  
35,092
  
40,977
Total
  
117,981
  
117,934
Mobile Products & Communications -
        
Customers
  
282,119
  
388,935
Intersegment
  
3,502
  
33
Total
  
285,621
  
388,968
Home Entertainment & Sound -
        
Customers
  
251,705
  
274,114
Intersegment
  
83
  
1,062
Total
  
251,788
  
275,176
Devices -
        
Customers
  
137,882
  
147,213
Intersegment
  
79,403
  
49,027
Total
  
217,285
  
196,240
Pictures -
        
Customers
  
153,298
  
158,802
Intersegment
  
89
  
113
Total
  
153,387
  
158,915
Music -
        
Customers
  
96,702
  
109,175
Intersegment
  
2,140
  
2,784
Total
  
98,842
  
111,959
Financial Services -
        
Customers
  
193,717
  
251,463
Intersegment
  
778
  
1,235
Total
  
194,495
  
252,698
All Other -
        
Customers
  
111,822
  
118,135
Intersegment
  
12,507
  
12,448
Total
  
124,329
  
130,583
Corporate and elimination
  
(122,313)
  
(93,321)
Consolidated total
  
1,515,183
  
1,712,712

Game intersegment amounts primarily consist of transactions with All Other.

Devices intersegment amounts primarily consist of transactions with the Game segment and the Imaging Products & Solutions (“IP&S”) segment.

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

Corporate and elimination includes certain brand and patent royalty income.

 
- 27 -
 
 
Segment profit or loss:
 

   
Yen in millions
   
Three months ended June 30
   
2012
 
2013
Operating income (loss):
        
Imaging Products & Solutions
  
12,609
  
8,075
Game
  
(3,549)
  
(14,794)
Mobile Products & Communications
  
(28,139)
  
5,912
Home Entertainment & Sound
  
(9,986)
  
3,367
Devices
  
15,946
  
10,846
Pictures
  
(4,872)
  
3,742
Music
  
7,275
  
10,771
Financial Services
  
27,585
  
45,969
All Other
  
(7,210)
  
(10,822)
Total
  
9,659
  
63,066
Corporate and elimination
  
(3,384)
  
(26,709)
Consolidated operating income
  
6,275
  
36,357
Other income
  
12,329
  
19,040
Other expenses
  
(9,191)
  
(9,144)
Consolidated income before income taxes
  
9,413
  
46,253

Operating income (loss) is sales and operating revenue less costs and expenses, and includes equity in net income (loss) of affiliated companies.

Corporate and elimination includes headquarters restructuring costs and certain other corporate expenses, including the amortization of certain intellectual property assets such as the cross-licensing of intangible assets acquired from Telefonaktiebolaget LM Ericsson at the time of the Sony Mobile Communications AB acquisition, which are not allocated to segments.

Due to certain changes in the organizational structure, operating income (loss) of All Other and Corporate and elimination of the previous fiscal quarter have been restated to conform to the current quarter's presentation.

Within the Home Entertainment & Sound (“HE&S”) segment, the operating income (loss) of Televisions, which primarily consists of LCD televisions, for the three months ended June 30, 2012 and 2013 was (6,639) million yen and 5,207 million yen, respectively.  The operating income (loss) of Televisions excludes restructuring charges which are included in the overall segment results and not allocated to product categories.

 
- 28 -
 

Other Significant Items:
 
The following table includes a breakdown of sales and operating revenue to external customers by product category in the following segments: IP&S, Mobile Products & Communication (“MP&C”) segment, HE&S and Devices.  The IP&S, MP&C, HE&S and Devices segments are each managed as a single operating segment by Sony’s management.

   
Yen in millions
   
Three months ended June 30
Sales and operating revenue:
  
2012
  
2013
Imaging Products & Solutions
        
Digital Imaging Products
  
129,916
  
107,758
Professional Solutions
  
60,807
  
60,812
Other
  
2,583
  
3,927
Total
  
193,306
  
172,497
         
Game
  
82,889
  
76,957
         
Mobile Products & Communications
    
Mobile Communications
  
171,104
  
285,457
Personal and Mobile Products
  
109,635
  
102,216
Other
  
1,380
  
1,262
Total
  
282,119
  
388,935
         
Home Entertainment & Sound
    
Televisions
  
157,016
  
185,579
Audio and Video
  
93,750
  
87,381
Other
  
939
  
1,154
Total
  
251,705
  
274,114
         
Devices
    
Semiconductors
  
69,485
  
85,257
Components
  
68,141
  
61,432
Other
  
256
  
524
Total
  
137,882
  
147,213
         
Pictures
  
153,298
  
158,802
Music
  
96,702
  
109,175
Financial Services
  
193,717
  
251,463
All Other
  
111,822
  
118,135
Corporate
  
11,743
  
15,421
Consolidated total
  
1,515,183
  
1,712,712

In the IP&S segment, Digital Imaging Products includes compact digital cameras, video cameras and interchangeable single lens cameras; Professional Solutions includes broadcast- and professional-use products.  In the MP&C segment, Mobile Communications includes mobile phones; Personal and Mobile Products includes personal computers.  In the HE&S segment, Televisions includes LCD televisions; Audio and Video includes home audio, Blu-ray disc players and recorders, and memory-based portable audio devices.  In the Devices segment, Semiconductors includes image sensors; Components includes batteries, recording media and data recording systems.

 
- 29 -
 
 
Geographic Information -
 
Sales and operating revenue attributed to countries based on location of external customers are as follows:

   
Yen in millions
   
Three months ended June 30
Sales and operating revenue:
  
2012
　
2013
Japan
  
471,511
  
533,043
United States
  
242,415
  
252,542
Europe
  
293,041
  
328,204
China
  
121,792
  
123,231
Asia-Pacific
  
191,202
  
257,410
Other Areas
  
195,222
  
218,282
Total
  
1,515,183
  
1,712,712

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

 
  (1) Europe:   United Kingdom, France, Germany, Russia, Spain and Sweden
  (2) Asia-Pacific:   India, South Korea and Oceania
  (3) Other Areas:  The Middle East/Africa, Brazil, Mexico and Canada
 
There are not any individually material countries with respect to the sales and operating revenue included in Europe, Asia-Pacific and Other Areas.

Transfers between reportable business segments or geographic areas are made at amounts which Sony’s management believes approximate as arms-length transactions.

There were no sales and operating revenue with any single major external customer for the three months ended June 30, 2012 and 2013.


 
- 30 -
 
 
(2)  Other Information
 
(1) Dividends declared
 
A year-end dividend for Sony Corporation’s common stock was approved at the Board of Directors meeting held on May 8, 2013 as below:

1. Total amount of year-end cash dividends:
12,636 million yen
2. Amount of year-end cash dividends per share:
12.50 yen
3. Payment date:
June 4, 2013
Year-end cash dividends for the fiscal year ending March 31, 2013 have been incorporated in the consolidated financial statements for the fiscal year ended March 31, 2013.

Note: Year-end cash dividends were distributed to the shareholders recorded or registered as the holders or pledgees of shares in Sony Corporation’s register of shareholders at the end of March 31, 2013.

 
(2) Litigation
 
In May 2011, Sony Corporation’s U.S. subsidiary, Sony Electronics Inc., received a subpoena from the U.S. Department of Justice (“DOJ”) Antitrust Division seeking information about its secondary batteries business.  Sony understands that the DOJ, the EU and certain other governmental agencies outside the United States are investigating competition in the secondary batteries market. Subsequently, a number of direct and indirect purchaser class action lawsuits were filed in certain jurisdictions, including the United States, in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies.  Based on the stage of these proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of all of these matters.

Beginning in early 2011, the network services of PlayStation®Network, Qriocity™, Sony Online Entertainment LLC and websites of other subsidiaries came under cyber-attack.  As of August 9, 2013, Sony has not received any confirmed reports of customer identity theft issues or misuse of credit cards from such cyber-attacks.  However, in connection with certain of these matters, Sony has received inquiries from authorities in a number of jurisdictions, including orders for reports issued by the Ministry of Economy, Trade and Industry of Japan as well as the Financial Services Agency of Japan, formal and/or informal requests for information from Attorneys General from a number of states in the United States and the U.S. Federal Trade Commission, various U.S. congressional inquiries and others.  Additionally, Sony Corporation and/or certain of its subsidiaries have been named in a number of purported class actions in certain jurisdictions, including the United States.  Based on the stage of these inquiries and proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of all of these matters.

In October 2009, Sony Corporation’s U.S. subsidiary, Sony Optiarc America Inc., received a subpoena from the DOJ seeking information about its optical disk drive business.  Sony understands that the DOJ, the EU and certain other governmental agencies outside the United States are investigating and/or have investigated competition in optical disk drives.  Subsequently, a number of direct and indirect purchaser lawsuits, including class actions, were filed in certain jurisdictions, including the United States, in which the plaintiffs allege that Sony Corporation and certain of its subsidiaries violated antitrust laws and seek recovery of damages and other remedies.  Based on the stage of these proceedings, it is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements or other resolution of all of these matters.

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

 

 
- 31 -
 
 
 
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
  
       
 
August 9, 2013