Consolidated Financial Results for the Fiscal Year Ended March 31, 2011

TOKYO--(BUSINESS WIRE)--

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

No.11-060E

Consolidated Financial Results for the Fiscal Year Ended March 31, 2011

Tokyo, May 26, 2011 -- Sony Corporation today announced its consolidated results for the fiscal year ended March 31, 2011 (April 1, 2010 to March 31, 2011).

• Consolidated operating income was significantly higher, 6.3 times the previous fiscal year’s amount, despite the large unfavorable impact of foreign exchange rates.
• The increase in consolidated operating income was driven primarily by improved results in the Networked Products & Services segment due principally to the contribution of the game business.
• A net loss attributable to Sony Corporation’s stockholders was recorded, mainly due to a non-cash charge to establish a valuation allowance against certain deferred tax assets in Japan.

	(Billions of yen, millions of U.S. dollars, except per share amounts)
	Fiscal year ended March 31
	2010		2011		Change in yen		2011*
Sales and operating revenue	¥7,214.0		¥7,181.3		-0.5	%	$86,521
Operating income	31.8		199.8		+528.9		2,407
Income before income taxes	26.9		205.0		+661.8		2,470
Net income (loss) attributable to  Sony Corporation’s stockholders	(40.8	)	(259.6	)	-		(3,128	)
Net income (loss) attributable to  Sony Corporation’s stockholders  per share of common stock:
- Basic	¥(40.66	)	¥(258.66	)	-		$(3.12	)
- Diluted	(40.66	)	(258.66	)	-		(3.12	)

Unless otherwise specified, all amounts are presented on the basis of Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”).

Supplemental Information

In addition to operating income, Sony’s management also evaluates Sony’s performance using non-U.S. GAAP adjusted operating income. Operating income, as adjusted, which excludes equity in net income (loss) of affiliated companies, restructuring charges and LCD television asset impairment, is not a presentation in accordance with U.S. GAAP, and is presented to enhance investors’ understanding of Sony’s operating income by providing an alternative measure that may be useful to understand Sony’s historical and prospective operating performance.

	(Billions of yen, millions of U.S. dollars)
	Fiscal year ended March 31
	2010		2011	Change in yen		2011*
Operating income	¥31.8		¥199.8	+528.9	%	$2,407
Less: Equity in net income (loss) of affiliated companies	(30.2	)	14.1	-		169
Add: Restructuring charges recorded within operating expenses**	124.3		67.1	-46.1		808
Add: LCD television asset impairment ***	27.1		-	-		-
Operating income, as adjusted	¥213.4		¥252.8	+18.5	%	$3,046

Sony’s management uses this measure to review operating trends, perform analytical comparisons and assess whether its structural transformation initiatives are achieving their objectives. This supplemental non-U.S. GAAP measure should be considered in addition to, not as a substitute for, Sony’s operating income in accordance with U.S. GAAP.

* U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 83 yen=1 U.S. dollar, the approximate Tokyo foreign exchange market rate as of March 31, 2011.

** Sony is undertaking structural transformation initiatives to enhance profitability through implementation of various cost reduction programs as well as adoption of horizontal platforms. Restructuring charges are recorded, depending on the nature of the individual items, in cost of sales, selling, general and administrative expenses as well as (gain) loss on sale, disposal or impairment of assets and other, net, in the consolidated statement of income.

*** The 27.1 billion yen loss on impairment, a non-cash charge recorded within operating income in the previous fiscal year, primarily reflected a decrease in the estimated fair value of property, plant and equipment, and certain intangible assets. Sony has excluded the loss on impairment from restructuring charges as it is not directly related to Sony’s restructuring initiatives. Sony defines restructuring initiatives as activities initiated by Sony, such as exiting a business or product category or implementing a headcount reduction program, which are designed to generate a positive impact on future profitability.

Sony realigned its reportable segments from the first quarter of the fiscal year ended March 31, 2011 to reflect modifications to the organizational structure as of April 1, 2010, primarily repositioning the operations of the previously reported B2B & Disc Manufacturing segment. In connection with this realignment, the Consumer Products & Devices segment was renamed the Consumer, Professional & Devices (“CPD”) segment. The CPD segment includes televisions, digital imaging, audio and video, semiconductors and components as well as professional solutions (the B2B business which was previously included in the B2B & Disc Manufacturing segment). The equity results of S-LCD Corporation (“S-LCD”), a joint venture with Samsung Electronics Co., Ltd., are also included within the CPD segment. The disc manufacturing business previously included in the B2B & Disc Manufacturing segment is now included in All Other.

The Networked Products & Services (“NPS”), Pictures, Music and Financial Services segments remain unchanged. The equity earnings from Sony Ericsson Mobile Communications AB (“Sony Ericsson”) continue to be presented as a separate segment.

In connection with this realignment, both the sales and operating revenue (“sales”) and operating income (loss) of each segment in the fiscal year ended March 31, 2010 have been revised to conform to the current presentation.

Consolidated Results for the Fiscal Year Ended March 31, 2011

Sales were 7,181.3 billion yen (86,521 million U.S. dollars), a decrease of 0.5% compared to the previous fiscal year (“year-on-year”), primarily due to a decrease in sales in all segments except the CPD and NPS segments.

During the fiscal year ended March 31, 2011, the average rate of the yen was 84.7 yen against the U.S. dollar and 111.6 yen against the euro, which was 8.4% and 16.2% higher, respectively, than the previous year. On a local currency basis, sales increased 6% year-on-year. For references to sales on a local currency basis, see Note on page 10.

Operating income increased 168.0 billion yen year-on-year to 199.8 billion yen (2,407 million U.S. dollars) despite a large unfavorable impact of foreign exchange rates. The significant increase in operating income was mainly due to an improvement in operating results in the NPS and CPD segments. Excluding equity in net income (loss) of affiliated companies, restructuring charges and a non-cash charge related to LCD television asset impairment, operating income on an as adjusted basis increased 39.4 billion yen to 252.8 billion yen (3,046 million U.S. dollars) year-on-year.

Equity in net income of affiliated companies, recorded within operating income, was 14.1 billion yen (169 million U.S. dollars) compared to equity in net loss of 30.2 billion yen in the previous fiscal year. Sony recorded equity in net income for Sony Ericsson of 4.2 billion yen (50 million U.S. dollars) compared to equity in net loss of 34.5 billion yen in the previous fiscal year. Equity in net income for S-LCD increased 6.8 billion yen to 7.2 billion yen (87 million U.S. dollars).

During the fiscal year ended March 31, 2011, Sony recorded charges of 11.9 billion yen (143 million U.S. dollars), consisting principally of idle facility costs at manufacturing sites and an incremental provision for life insurance policy reserves, caused by the Great East Japan Earthquake (the “Earthquake”) that occurred on March 11, 2011. In addition, there was a 5.1 billion yen (61 million U.S. dollars) impact from the estimated net margin loss associated with a decrease in sales resulting from the Earthquake and an estimate of variable costs. Furthermore, Sony incurred incremental expenses, including restoration costs (e.g., repair, removal and cleaning costs) directly related to the damages caused by the disaster to certain fixed assets including buildings, machinery and equipment as well as inventories at manufacturing sites and warehouses, in addition to charges for the disposal or impairment of fixed assets and inventories. The impact of these expenses was 10.9 billion yen (131 million U.S. dollars); however, Sony has insurance policies that cover certain damages to fixed assets and inventories as well as the associated restoration costs, which are expected to offset almost all of these losses and expenses in the fiscal year ended March 31, 2011, as the recoveries from insurance claims are deemed probable.

The net effect of other income and expenses was income of 5.2 billion yen (63 million U.S. dollars), an improvement of 10.1 billion yen year-on-year, primarily due to the recording of a net foreign exchange gain in the current fiscal year compared to the recording of a net foreign exchange loss in the previous fiscal year.

Income before income taxes increased 178.1 billion yen to 205.0 billion yen (2,470 million U.S. dollars).

Income taxes: For the current fiscal year, Sony recorded 425.3 billion yen (5,125 million U.S. dollars) of income taxes, primarily resulting from the recording of a non-cash charge to establish a valuation allowance of 362.3 billion yen (4,365 million U.S. dollars) against certain deferred tax assets in Japan. Sony evaluates its deferred tax assets on a tax jurisdiction basis to determine if a valuation allowance is required. In Japan, Sony Corporation files a stand-alone tax filing for local tax purposes and a consolidated national tax filing with its wholly-owned Japanese subsidiaries for national tax purposes. Sony Corporation and its national tax filing group in Japan are in a three year cumulative loss as of March 31, 2011. Under U.S. GAAP, a three year cumulative loss is considered significant negative evidence regarding the realizability of deferred tax assets, which is difficult to overcome, particularly given the relatively short tax loss carry forward period of seven years in Japan and the adverse impact of the Earthquake on the near-term forecast for entities in Japan. Accordingly, Sony determined in the fourth quarter of the fiscal year ended March 31, 2011 that it was required under U.S. GAAP to establish a valuation allowance against certain deferred tax assets in Japan.

The non-cash charge to establish a valuation allowance does not have any impact on Sony’s consolidated operating income or cash flow, nor does such an allowance preclude Sony from using the loss carry forwards or other deferred tax assets in the future. It is also important to note that the establishment of this valuation allowance does not reflect a change in Sony’s view of its long-term corporate strategy.

Net loss attributable to Sony Corporation’s stockholders, which excludes net income attributable to noncontrolling interests, was 259.6 billion yen (3,128 million U.S. dollars), a deterioration of 218.8 billion yen year-on-year.

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