Sony Corp

Consolidated Financial Results for the Second Q...

Consolidated Financial Results for the Second Quarter Ended September 30, 2014

Sony Corporation

Sony Corporation
1-7-1 Konan, Minato-ku
Tokyo 108-0075 Japan

No. 14-109E

Consolidated Financial Results for the Second Quarter Ended September 30, 2014

Tokyo, October 31, 2014 -- Sony Corporation today announced its consolidated financial results for the second quarter ended September 30, 2014 (July 1, 2014 to September 30, 2014).

 

(Billions of yen, millions of U.S. dollars, except per share amounts)

 

Second Quarter ended September 30

   

2013  

   

2014  

    Change in yen   2014*  
Sales and operating revenue   ¥1,774.2   ¥1,901.5   +7.2 %   $17,445
Operating income (loss) 13.9 (85.6 ) - (785 )
Income (loss) before income taxes 5.1 (90.0 ) - (825 )

Net (loss) attributable to Sony Corporation’s
 stockholders

(19.6

) (136.0 ) - (1,247 )

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

- Basic ¥(19.25 ) ¥(124.32 ) - $(1.14 )
- Diluted (19.25 ) (124.32 ) - (1.14 )

* U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 109 yen = 1 U.S. dollar, the approximate Tokyo foreign exchange market rate as of September 30, 2014.

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

Sony realigned its business segments from the first quarter of the fiscal year ending March 31, 2015 to reflect modifications to its organizational structure as of April 1, 2014, primarily repositioning the operations of the previously reported Game and Mobile Products & Communications (“MP&C”) segments. In connection with this realignment, the previously-reported operations of the network business which were included in All Other have been integrated with the previously-reported Game segment and are now reported as the Game & Network Services (“G&NS”) segment. The previously reported Mobile Communications category which was included in the MP&C segment has been reclassified as the newly established Mobile Communications (“MC”) segment, while the other categories in the previously reported MP&C segment are now included in All Other. This includes the reclassification of the PC business into All Other.

In addition, as of the first quarter of the fiscal year ending March 31, 2015, the power supply business, which was previously included in the Devices segment, has been integrated into All Other to reflect modifications Sony made to its organizational structure as of June 1, 2014.

In connection with these realignments, the sales and operating revenue (“sales”) and operating income (loss) of each segment in the fiscal year ended March 31, 2014 have been reclassified to conform to the presentation of the fiscal year ending March 31, 2015.

Certain figures for the fiscal year ended March 31, 2014 related to the Financial Services segment have been revised from the versions previously disclosed. For further details, please see Note 8 on page F-19.

The average foreign exchange rates during the quarters ended September 30, 2013 and 2014 are presented below.

   

Second Quarter ended September 30

 
     

2013 

 

2014 

  Change    
        The average rate of yen    

1 U.S. dollar

¥ 98.9 ¥ 103.9 4.8 % (yen depreciation)

1 Euro

131.1 137.8 4.9 (yen depreciation)
 

Consolidated Results for the Second Quarter Ended September 30, 2014

Sales were 1,901.5 billion yen (17,445 million U.S. dollars), an increase of 7.2% compared to the same quarter of the previous fiscal year (“year-on-year”). This increase was primarily due to a significant increase in G&NS segment sales, reflecting the contribution of the PlayStation 4 (“PS4”), a significant increase in Devices segment sales primarily due to the strong performance of image sensors, as well as the favorable impact of foreign exchange rates. This increase was partially offset by a significant decrease in sales in All Other, primarily related to Sony’s exit from the PC business. On a constant currency basis, sales increased 3% year-on-year. For further details about sales on a constant currency basis, see Note on page 11.

An operating loss of 85.6 billion yen (785 million U.S. dollars) was recorded, compared to operating income of 13.9 billion yen in the same quarter of the previous fiscal year. This significant detrioration was primarily due to the 176.0 billion yen (1,615 million U.S. dollars) impairment of goodwill recorded in the MC segment. As announced on September 17, 2014, Sony performed its interim goodwill impairment test during the current quarter and concluded that the fair value of the MC business has decreased. As a result, an impairment of goodwill of 176.0 billion yen was recorded. This deterioration in the current quarter’s operating results was partially offset by a significant improvement in the operating results of the G&NS, Imaging Products & Solutions (“IP&S”), Home Entertainment & Sound (“HE&S”), Devices and Pictures segments.

Operating loss in the current quarter includes a net benefit of 4.2 billion yen (39 million U.S. dollars) from insurance recoveries related to damages and losses incurred from the floods in Thailand in the fiscal year ended March 31, 2012 (the “Floods”). In the same quarter of the previous fiscal year, a gain of 12.8 billion yen from the sale of certain shares of M3, Inc. (“M3”) and a net benefit of 4.8 billion yen from the above-mentioned insurance recoveries were recorded.

During the current quarter, restructuring charges, net, increased 1.6 billion yen year-on-year to 9.4 billion yen (86 million U.S. dollars). PC exit costs of 7.7 billion yen (70 million U.S. dollars) were recorded in the current quarter, which includes 4.1 billion yen (38 million U.S. dollars) of restructuring charges. For further details about PC exit costs, see page 7.

Equity in net income of affiliated companies, recorded within operating loss, was 0.6 billion yen (6 million U.S. dollars), compared to a loss of 2.0 billion yen in the same quarter of the previous fiscal year. This improvement was mainly due to the improvement of equity in net income (loss) for EMI Music Publishing.

The net effect of other income and expenses was an expense of 4.4 billion yen (40 million U.S. dollars), an improvement of 4.4 billion yen year-on-year. This was primarily due to a decrease in net foreign exchange losses.

A loss before income taxes of 90.0 billion yen (825 million U.S. dollars) was recorded, compared to income of 5.1 billion yen in the same quarter of the previous fiscal year.

Income taxes: During the current quarter, Sony recorded 30.1 billion yen (276 million U.S. dollars) of income tax expense. Income tax expense was recorded despite the net loss before income taxes primarily due to the nondeductible goodwill impairment recorded during the current quarter.

Net loss attributable to Sony Corporation’s stockholders, which excludes net income attributable to noncontrolling interests, increased 116.3 billion yen year-on-year to 136.0 billion yen (1,247 million U.S. dollars).

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