Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014
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Consolidated Financial Statements For the fiscal year ended March 31, 2014 Sony Corporation TOKYO, JAPAN Contents Management’s Annual Report on Internal Control over Financial Reporting 2 Report of Independent Registered Public Accounting Firm 3 Consolidated Balance Sheets 4 Consolidated Statements of Income 6 Consolidated Statements of Comprehensive Income 8 Consolidated Statements of Cash Flows 9 Consolidated Statements of Changes in Stockholders’ Equity 11 Index to Notes to Consolidated Financial Statements 14 Notes to Consolidated Financial Statements 15 1 Management’s Annual Report on Internal Control over Financial Reporting Sony’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Sony’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Sony’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Sony; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Sony are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Sony’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Sony’s management evaluated the effectiveness of Sony’s internal control over financial reporting as of March 31, 2014 based on the criteria established in “Internal Control — Integrated Framework (1992)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the evaluation, management has concluded that Sony maintained effective internal control over financial reporting as of March 31, 2014. Sony’s independent registered public accounting firm, PricewaterhouseCoopers Aarata, has issued an audit report on Sony’s internal control over financial reporting as of March 31, 2014, presented on page 3. 2 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Sony Corporation (Sony Kabushiki Kaisha) In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, comprehensive income, cash flows and stockholders’ equity present fairly, in all material respects, the financial position of Sony Corporation and its subsidiaries (the “Company”) at March 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ PricewaterhouseCoopers Aarata Tokyo, Japan May 29, 2014 3 SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets March 31 Yen in millions 2013 2014 ASSETS Current assets: Cash and cash equivalents 826,361 1,046,466 Marketable securities 697,597 832,566 Notes and accounts receivable, trade 844,117 946,553 Allowance for doubtful accounts and sales returns (67,625) (75,513) Inventories 710,054 733,943 Other receivables 148,142 177,685 Deferred income taxes 44,615 53,068 Prepaid expenses and other current assets 443,272 490,118 Total current assets 3,646,533 4,204,886 Film costs 270,089 275,799 Investments and advances: Affiliated companies 198,621 181,263 Securities investments and other 7,118,504 7,737,748 7,317,125 7,919,011 Property, plant and equipment: Land 131,484 125,890 Buildings 778,514 674,841 Machinery and equipment 1,934,520 1,705,774 Construction in progress 47,839 39,771 2,892,357 2,546,276 Less – Accumulated depreciation 2,030,807 1,796,266 861,550 750,010 Other assets: Intangibles, net 694,621 675,663 Goodwill 643,243 691,803 Deferred insurance acquisition costs 465,499 497,772 Deferred income taxes 107,688 105,442 Other 204,685 213,334 2,115,736 2,184,014 Total assets 14,211,033 15,333,720 (Continued on following page.) 4 SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets (Continued) Yen in millions 2013 2014 LIABILITIES Current liabilities: Short-term borrowings 87,894 111,836 Current portion of long-term debt 156,288 265,918 Notes and accounts payable, trade 572,102 712,829 Accounts payable, other and accrued expenses 1,097,253 1,175,413 Accrued income and other taxes 75,080 81,842 Deposits from customers in the banking business 1,857,448 1,890,023 Other 469,024 545,753 Total current liabilities 4,315,089 4,783,614 Long-term debt 938,428 916,648 Accrued pension and severance costs 311,469 284,963 Deferred income taxes 369,919 410,896 Future insurance policy benefits and other 3,535,532 3,824,572 Policyholders’ account in the life insurance business 1,715,610 2,023,472 Other 349,985 302,299 Total liabilities 11,536,032 12,546,464 Redeemable noncontrolling interest 2,997 4,115 Commitments and contingent liabilities EQUITY Sony Corporation’s stockholders’ equity: Common stock, no par value – 2013– Shares authorized: 3,600,000,000, shares issued: 1,011,950,206 630,923 2014– Shares authorized: 3,600,000,000, shares issued: 1,044,707,767 646,654 Additional paid-in capital 1,110,531 1,127,090 Retained earnings 1,094,775 940,262 Accumulated other