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y the simple average of stockholders’ equity at the end of the previous fiscal year and at the end of the fiscal year ended March 31, 2004.) Basic net income per share was 95.97 yen compared with 125.74 yen in the previous fiscal year, and diluted net income per share was 90.88 yen compared with 118.21 yen in the previous fiscal year. Refer to Notes 2 and 21 of Notes to Consolidated Financial Statements. Net income and ROE (Billion ¥) (%) 150 15 OPERATING PERFORMANCE BY BUSINESS SEGMENT The following discussion is based on segment information. Sales and operating revenue in each business segment include intersegment transactions. Refer to Note 24 of Notes to Consolidated Financial Statements. Business Segment Information (Yen in billions) Year ended March 31 Percent Sales and operating revenue 2003 2004 change Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,940.5 4,897.4 –0.9% Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955.0 780.2 –18.3 Music . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597.5 559.9 –6.3 Pictures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 802.8 756.4 –5.8 Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537.3 593.5 +10.5 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306.3 330.4 +7.9 Elimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (665.7) (421.4) – Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,473.6 7,496.4 +0.3 100 50 0 5.0% 0.7% 02 03 04 Net income ROE *Year ended March 31 Net income per share of common stock 3.8% 10 5 0 (Yen in billions) Year ended March 31 Percent Operating income (loss) 2003 2004 change Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.4 (35.3) – Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112.7 67.6 –40.0% Music . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7.9) 19.0 – Pictures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.0 35.2 –40.3 Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.8 55.2 +142.4 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25.0) (10.0) – Elimination and unallocated corporate expenses . . . . . . . . . . . . . (17.5) (32.7) – Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185.4 98.9 –46.7 (¥) 150 100 50 0 02 03 04 Basic Diluted *Year ended March 31 At the beginning of the fiscal year ended March 31, 2004, Sony partly realigned its business segment configuration. Expenses incurred in connection with the creation of a network platform business have been transferred out of the Other segment and reclassified as unallocated corporate expenses, because the expected future benefits of this business will be spread across the Sony Group. In the Music segment, certain non-core businesses of Sony Music Entertainment (Japan) Inc., such as media, animation, character and cosmetics, were transferred to the newly-established Sony Culture Entertainment, Inc. (“SCU”) and SCU was classified in the Other segment. In accordance with this realignment, results of the previous fiscal year have been reclassified to conform to the presentation for the fiscal year ended March 31, 2004. Share of sales and operating revenue by business segment (%) 7 10 10 7 4 62 *Year ended March 31, 2004 * Including intersegment transactions Electronics Game Music Pictures Financial Services Other ELECTRONICS Sales for the fiscal year ended March 31, 2004 decreased by 43.1 billion yen, or 0.9 percent, to 4,897.4 billion yen compared with the previous fiscal year. An operating loss of 35.3 billion yen was recorded compared to operating income of 41.4 billion yen in the previous fiscal year. 64
The year on year decrease in sales was due to a significant decrease in intersegment sales to the Game segment as a result of the outsourcing of PlayStation 2 game console production to third parties in China. Sales to outside customers on a yen basis increased 4.7 percent compared with the previous fiscal year. Regarding sales to outside customers by geographic area, sales on a yen basis increased in Japan by 11 percent, in Europe by 10 percent, and in non-Japan Asia and other geographic areas (“Other Areas”) by 8 percent. Sales on a yen basis in the U.S. decreased 7 percent. In Japan, mainly due to the strong sales of Sony Ericsson, sales of cellular phones, primarily to Sony Ericsson, increased significantly. In addition, sales of charge coupled devices (“CCDs”), which benefited from an expansion in demand mainly from digital still cameras, DVD recorders (including PSX), plasma and LCD flat panel televisions, and broadcast- and professional-use equipment increased. On the other hand, sales of PCs and CRT televisions decreased. In Europe, sales of digital still cameras, flat panel televisions, cellular phones, and PCs increased significantly. Sales of CRT televisions, portable audio, Aiwa products, and home audio, however, decreased. In Other Areas, sales of CD-R/RW and DVD+/-R/RW drives, digital still cameras, PCs, and video cameras increased while sales of CRT televisions decreased. In the U.S., a significant decrease in the sales of CRT televisions combined with decreased sales of Aiwa products, computer displays, set-top boxes, and personal digital assistants to cause a decline in sales, but sales of flat panel televisions, projection televisions, digital still cameras and PCs increased. Sales and operating income (loss) in the Electronics segment (Billion ¥) (Billion ¥) 6,000 5,000 4,000 3,000 2,000 1,000 0 -0.0% 0.8% 02 03 04 Sales (left) Operating income (loss) (right) Operating margin * Year ended March 31 -0.7% 1,500 1,000 500 0 -250 Performance by Product Category Sales and operating revenue by product category discussed below represent sales to customers, which do not include intersegment transactions. Refer to Note 24 of Notes to Consolidated Financial Statements. “Audio” sales decreased by 58.9 billion yen, or 8.6 percent, to 623.6 billion yen. Sales of home audio declined due to a contraction of the market and increased price competition. Regarding headphone stereos, sales declined primarily due to falling prices, but the unit shipments of both MD format and CD format devices slightly exceeded their levels in the previous year. Worldwide shipments of MD format devices increased by approximately 40,000 units to approximately 3.36 million units and worldwide shipments of CD format devices increased by approximately 240,000 units to approximately 10.96 million units. On the other hand, sales of car audio increased due to strong sales in the European market. “Video” sales increased by 97.0 billion yen, or 11.4 percent, to 948.1 billion yen. In addition to a significant increase in the sales of digital still cameras outside of Japan, sales of DVD recorders (including PSX) increased significantly primarily in Japan. Worldwide shipments of digital still cameras increased by approximately 4.4 million units to approximately 10 million units. Worldwide shipments of DVD recorders were approximately 20,000 units in the previous fiscal year but increased to approximately 650,000 units in the fiscal year ended March 31, 2004. Regarding home-use video cameras, worldwide shipments of combined analog and digital devices increased by approximately 850,000 units to approximately 6.6 million units, but overall sales increased only slightly, as sales in Japan and the U.S. decreased due to increased price competition. DVD-video player sales decreased due to pricing pressure, although unit shipments increased. “Televisions” sales decreased by 33.0 billion yen, or 3.5 percent, to 917.2 billion yen. Sales of CRT televisions decreased significantly due to a contraction of the market and declining prices, resulting primarily from a shift in demand to flat panel televisions. Worldwide shipments of CRT televisions decreased approximately 600,000 units to approximately 9.4 million units compared with the previous fiscal year. Sales of computer displays also decreased worldwide. On the other hand, sales of plasma and LCD flat panel televisions increased significantly worldwide and sales of projection televisions in the U.S. increased. Worldwide shipments of flat panel televisions increased approximately 480,000 units to approximately 640,000 units. “Information and Communications” sales decreased by 2.0 billion yen, or 0.2 percent, to 834.8 billion yen. Despite a decrease in sales in Japan, due to price declines in the notebook PC market, overall sales of PCs increased as sales in all regions outside of Japan increased. Worldwide unit shipments of PCs increased approximately 100,000 units to approximately 3.2 million units. Sales of personal digital assistants decreased due to a contraction of the market and the effects of price declines. Sales of broadcast- and professional-use products were almost unchanged year on year as sales in Japan increased due to the sale of equipment installed in two new broadcasting stations, while many broadcasters in the U.S. and other countries outside of Japan reduced their capital expenditures. “Semiconductors” sales increased by 48.5 billion yen, or 23.7 percent, to 253.2 billion yen. The increase was due to a significant increase in sales of CCDs, mainly reflecting the expansion of the market for digital still cameras. Regarding LCDs, sales of low temperature polisilicon LCDs for digital still cameras and cellular phones increased significantly. “Components” sales increased by 96.0 billion yen, or 18.2 percent, to 623.8 billion yen. The increase was primarily due to significant increases in sales of CD-R/RW and DVD+/-R/RW drives, and Memory Sticks. Moreover, sales of lithium-ion batteries increased. Sales of CD-R/ RW drives increased due to a production and sales alliance with a third party, and sales of DVD+/-R/RW drives increased as a result of the expansion of the market for those devices. Worldwide shipments of Memory Stick increased approximately 12 million units to approximately 31 million units due to the continued, strong demand for digital still cameras. On March 31, 2004, Sony’s cumulative shipments of Memory Stick had reached approximately 66 million units. Regarding lithium-ion batteries, sales for use in digital still cameras and PCs increased. 65
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Throughout history, curiosity has b
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Management Message 02 To Our Shareh
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“Transformation 60” is a road m
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Operational restructuring aimed at
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Phase 2 Structural Reforms (1) Inte
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Sony Products File 01-06 A look ins
Page 15 and 16: Setting up a program recording has
Page 17 and 18: I want to see LCD televisionquality
Page 19 and 20: There is no danger of mistakenly re
Page 21 and 22: Taking the initiative to lead the b
Page 23 and 24: Lithium-ion batteries Optical disc
Page 25 and 26: Ikebana (the ancient Japanese art o
Page 27 and 28: Displays Display technology has bee
Page 30 and 31: Sony How Sony makes its products Sp
Page 32 and 33: The inside story from Sony’s Naga
Page 34 and 35: Setting the industry standard for t
Page 36 and 37: Alejandro M. Lopez Sony’s technol
Page 38 and 39: At a Glance: Operating Performance
Page 40 and 41: At a Glance: Operating Performance
Page 42 and 43: Financial Services Convergence - A
Page 44 and 45: Home Electronics Ken Kutaragi, Exec
Page 46 and 47: Mobile Electronics Shizuo Takashino
Page 48 and 49: Game PlayStation 2 Building on the
Page 50 and 51: Entertainment Howard Stringer, Vice
Page 52 and 53: and developing urban talent on beha
Page 54 and 55: Financial Services Teruhisa Tokunak
Page 56 and 57: Other Internet Service Provider The
Page 58 and 59: Corporate Governance Functions of t
Page 60 and 61: New Members of the Board and Corpor
Page 62 and 63: Operating and Financial Review and
Page 64 and 65: The cost of sales ratio decreased f
Page 68 and 69: “Other” sales increased by 67.4
Page 70 and 71: factor contributing to the improved
Page 72 and 73: OTHER During the fiscal year, sales
Page 74 and 75: and Game segments) amounted to 175.
Page 76 and 77: CONDENSED BALANCE SHEETS SEPARATING
Page 78 and 79: etween assets and liabilities. Gove
Page 80 and 81: Compared with the previous fiscal y
Page 82 and 83: In addition, there are no financial
Page 84 and 85: however, complicated functionality
Page 86 and 87: the amortization of deferred insura
Page 88 and 89: Therefore, actual results generally
Page 90 and 91: CONSOLIDATION OF VARIABLE INTEREST
Page 92 and 93: Notes: 1. U.S. dollar amounts have
Page 94 and 95: Segment Information Sony Corporatio
Page 96 and 97: Other Significant Items by Business
Page 98 and 99: Consolidated Balance Sheets Sony Co
Page 100 and 101: Consolidated Statements of Income S
Page 102 and 103: Consolidated Statements of Cash Flo
Page 104 and 105: Consolidated Statements of Changes
Page 106 and 107: Dollars in millions (Note 3) Accumu
Page 108 and 109: Stock Acquisition Rights and Bond I
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