Annual R E P O Rt 2007
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Annual R e p o r t 2007 2007 年 3 月 期 アニュアルレポート 2007年 3月期 ソニー株式会社 Printed in Japan Contents Financial Highlights Pictures: An Interview 2 21 with Top Management Letter to Shareholders: Collaboration in 4 A Message from 25 the Music Business Howard Stringer, CEO 8 “Sony United” 26 Business Overview Electronics: A Discussion Review of Operations 10 among Top Management 28 Electronics Game: An Interview Game 17 with Top Management 34 28 Sony United: Where Sony’s Revolution Begins Entertainment Financial Section 38 56 Table of Contents 43 Financial Services 57 A Message from the CFO 45 Research and Development 110 Stock Information Corporate Governance/ Stock Acquisition Rights 48 New Directors and 111 and Bond Information Corporate Executive Officers 52 Corporate Social Responsibility 112 Investor Information Cover pag e design c The representa oncept: tion of the ener gy created through “Sony Unit ed”—the collab oration of Sony’s many bus inesses, people and technolog ies 291 Financial Highlights Sony Corporation and Consolidated Subsidiaries Years ended March 31 Dollars in millions* Yen in millions Percent except per except per share amounts and number of employees change share amounts 2005 2006 2007 2007/2006 2007 FOR THE YEAR Sales and operating revenue . ¥7,191,325 ¥7,510,597 ¥ 8,295,695 +10.5.% $70,303 Operating income. 145,628 226,416 71,750 –68.3. 608 Income before income taxes . 157,207 286,329 102,037 –64.4. 865 Income taxes . 16,044 176,515 53,888 –69.5. 457 Equity in net income of affiliated companies . 29,039 13,176 78,654 +496.9. 667 Net income . 163,838 123,616 126,328 +2.2. 1,071 Cash flows from operating activities . 646,997 399,858 561,028 +40.3. 4,754 Cash flows from investing activities . (931,172) (871,264) (715,430) — (6,063) Per share data: (Yen, dollars) Net income —Basic . ¥ 175.90. ¥ 122.58. ¥ 126.15. +2.9.% $ 1.07. —Diluted . 158.07. 116.88. 120.29. +2.9. 1.02. Cash dividends . 25.00. 25.00. 25.00. — 0.21. AT YEAR-END Stockholders’ equity . ¥2,870,338 ¥ 3,203,852 ¥ 3,370,704 +5.2.% $28,565 Total assets . 9,499,100 10,607,753 11,716,362 +10.5. 99,291 Number of employees . 151,400 158,500 163,000 +2.8. * U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥118=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 30, 2007. 2 Sales and Operating income Net income and ROE (Yen in trillions) (Yen in billions) 0 2 4 6810 0 40 80 120 160 200 7.2 6.2% 2005 2005 163.8 145.6 7.5 4.1% 2006 2006 123.6 226.4 8.3 3.8% 2007 2007 126.3 71.8 0 200 400 600 800 1,000 0468102 (Yen in billions) (%) Sales and operating revenue (top axis) Net income Operating income (bottom axis) ROE *Years ended March 31 *Years ended March 31 Stockholders’ equity and Stockholders’ equity ratio Cash flows (Yen in trillions) (Yen in billions) 0 1 2 34 5 -1,200 -800 -400 0 400 800 30.2% 647.0 2005 2.9 2005 (931.2) 30.2% 399.9 2006 3.2 2006 (871.3) 28.8% 561.0 2007 3.4 2007 (715.4) 040620 080100 (%) Stockholders’ equity Cash flows from operating activities Stockholders’ equity ratio Cash flows from investing activities *As of March 31 *Years ended March 31 Shares of sales* by business segment Shares of sales* by region 3.7% 7.5% 22.9% 25.6% 11.7% Electronics Japan Game U.S.A. 2007 Pictures 2007 Europe 11.7% Financial Services Other 65.4% All Other 24.6% 26.9% *Year ended March 31 *Year ended March 31 *Percentage of sales and operating revenue to outside customers *Percentage of sales and operating revenue to outside customers *Sales and operating revenue accounted for by customers in each particular region 3 Letter to Shareholders: A Message from Howard Stringer, CEO Over the course of fiscal year 2006 (the year ended March 31, 2007), Sony has taken many important and successful steps toward the completion of its revitalization plan announced in September 2005. In the year that lies ahead, we expect to complete the transition from revitalization to enhanced growth and profitability. During fiscal year 2006, we achieved or exceeded many of the targets we had set for ourselves. First, under Dr. Chubachi’s leadership, our key Electronics business recorded an operating margin of over 4% (excluding one-time and restructuring charges1) and, in doing so, achieved its goal a full year ahead of our plan. Notable achievements included our Cyber-shot™ digital cameras recording greatly improved profitability and our BRAVIA™ LCD televisions capturing the No. 1 position worldwide2. In addition, our Handycam® video cameras continued to perform extremely well. Sony Ericsson Mobile Communications AB, our equity method joint venture with LM Ericsson of Sweden, reported strong growth in profit and increased market share led by the great success of its Walkman® and Cyber-shot mobile phones. Second, during calendar year 2006 our Pictures division set a number of box office records worldwide, including a record 13 No. 1 opening weekends and record total box office revenue in the U.S. market and our most successful theatrical release year ever in markets outside of the United States. Films such as The Da Vinci Code, Talladega Nights: The Ballad of Ricky Bobby, Click and The Pursuit of Happyness were among the significant contributors to this success. Third, we launched the newest PlayStation® platform, PLAYSTATION®3 (PS3™), and 5.5 million units were shipped by fiscal year-end. The PLAYSTATION®Network (PSN), the online service launched together with PS3, opens up new potential revenue streams for the company from online transactions. The opportunity presented by PS3 is enormous, and we are very excited to have recently completed the worldwide launch. A number of our restructuring targets were also achieved more than a year ahead of plan. These include our asset disposal and head-count reduction targets. We fully expect to achieve all of the other targets established in September 2005, including a consolidated operating margin of 5% for the year ending March 31, 2008. While we are proud of what we achieved during the past year, there were also considerable difficulties. In particular, we encountered problems with Sony-manufactured lithium-ion laptop battery cells, which significantly impacted our financial results, and with the cutting-edge technology of blue laser diodes critical to the Blu-ray Disc™ drive in PS3. We have taken aggressive steps to 1 Includes ¥37.4 billion of restructuring charges and a ¥51.2 billion provision for expenses relating to a notebook computer battery pack recall and our voluntary global replacement program 2 DisplaySearch, revenue basis for calendar year 2006 4 ensure that any product safety or quality problems we identify going forward will be swiftly addressed. The successes of the past year were achieved by the thousands of Sony employees who work tirelessly to enhance the Sony brand. A number of key appointments were made which contributed to our success. Within the Electronics segment, Dr. Chubachi and I named Executive Deputy President Katsumi Ihara to the position of Officer in charge of the Consumer Product Group and promoted Executive Vice President Yutaka Nakagawa to the position of Executive Deputy President, Officer in charge of the Semiconductor and Component Business Group. In the Game segment, we announced the promotion of Kaz Hirai from President and CEO of Sony Computer Entertainment America Inc. to President and Group CEO at Sony Computer Entertainment Inc. These individuals are but a few examples of superior executives assuming broader responsibilities in our growing company, and interviews with each of them are included in this annual report. As we look forward to the year ahead, there are many initiatives under way. First and foremost, we must achieve all of the goals we outlined in September 2005 for completion by the end of fiscal year 2007. Sony’s executives and employees are united in this effort. Second, we will continue to champion those products and services most in demand by the consumer and most likely to drive shareholder returns. Future investments will be weighed cautiously to be certain that they are focused on high return opportunities, and we will continue our stringent focus on product quality and innovation. Third, having nearly accomplished our revitalization plan, we must focus again on profitable growth. Sony has many competitive advantages that we must harness. For example, Sony is the only company to participate in the entire high definition (HD) value chain, from the lens to the screen. From capturing images with our professional cameras, digital cameras, single lens reflex cameras or video cameras to editing images on our VAIO™ computers or displaying the images on our BRAVIA televisions or digital 4K projectors for movie theaters, no company offers as many Full HD products as Sony. Complementing these products are our Blu-ray Disc players (both stand-alone and in PS3) and all of the HD content we possess in Sony Pictures Entertainment Inc. As content and technology converge, Sony is uniquely positioned to capitalize on this trend and to create innovative new products and services. Our software and hardware engineers, together with the managers of all of our digital content are united in this effort as well. 5 The current fiscal year will be important for our Game division. In addition to our hardware engineers bringing down the cost of the cutting-edge technologies inside PS3, we have plans in motion for the PSN to serve as a portal for game, movie and music content as well as a free, global network for interactive gamers.