Form 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of July 2005
Commission File Number: 001-06439
SONY CORPORATION
(Translation of registrant's name into English)
7-35 KITASHINAGAWA 6-CHOME, SHINAGAWA-KU, TOKYO, JAPAN
(Address of principal executive offices)
The registrant files annual reports under cover of Form 20-F.
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F,
Form 20-F X Form 40-F __
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934,
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):82-______
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SONY CORPORATION
(Registrant)
By: /s/ Nobuyuki Oneda
(Signature)
Nobuyuki Oneda
Executive Vice President and
Chief Financial Officer
Date: July 28, 2005
List of materials
Documents attached hereto:
i) Results of Tracking Stock
Sony Corporation
6-7-35 Kita-shinagawa
Shinagawa-ku
Tokyo, 141-0001 Japan
News & Information
No.05-038E
2005/7/27
13:00
Subsidiary Tracking Stock
Sony Communication Network Corporation
Consolidated Financial Results for the Three-months ended June 30, 2005
Sony Communication Network Corporation (hereinafter, the "SCN Group"), a
subsidiary the performance of which is linked to a tracking stock issued by Sony
Corporation, announced today its consolidated results for the three-months ended
June 30, 2005 (the period from April 1, 2005 to June 30, 2005).
These results are based on the generally accepted accounting standards of Japan.
- Increased sales compared to year earlier period; increased net income
During the quarter under review, sales increased 4.0% compared with the year
earlier period, to 10,016 million yen. Operating income of 10 million yen,
compared with 721 million yen in the year earlier period, and ordinary income
of 110 million yen, compared with 771 million yen in the year earlier period,
were recorded. Due to the recording of gain on sale of investment in affiliate
and subsidiary stock, under extraordinary income, of 17,795 million yen, net
income of 10,303 million yen, compared with 393 million yen in the year
earlier period, was recorded.
- Subscribers at 2.51 million; big increase in broadband subscribers,
especially for FTTH
At the end of the quarter under review, the number of So-net subscribers
totaled 2.51 million, an increase of 9.1% over the end of the year earlier
period. Within this, the number of broadband subscribers increased by 21.1%
to 690,000. New broadband subscribers, in particular for FTTH, increased 2.5
times compared to the year earlier period, to about 50,000.
Sales of Connection Services (see note 1) decreased 6.6% to 6,835 million
yen, compared to 7,318 million yen in the year earlier period, due to the
effects of free promotional campaigns. Also, due to customer acquisition
measures, acquisition costs increased, but it is expected that this will make
a contribution to profitability from the second half of the year ending March
31, 2006.
- Portal Services advances smoothly
Sales in Portal Services (see note 2) increased by 37.6%, from 2,312 million
yen in the year earlier period, to 3,181 million yen. This was a result
CS-broadcasting of Korean dramas, web contents, and increased sales of
products such as goods and related DVDs.
Note 1: The sales category known as "Internet provider services" through the
fiscal year ended March 31, 2005 is now known as "Connection Services." There
has not been any change in type of services in this sales category.
Note 2: The closely related sales categories known as "Internet-related
services" and "Merchandise sales" through the fiscal year ended March 31, 2005
are now consolidated into one category called "Portal Services.". Within this,
during the quarter under review, the sale "Merchandise sales" was 397million
yen.
Consolidated Results for the three-months ended June 30, 2005
-------------------------------------------------------------
(Millions of Yen)
Three-months ended June 30
2004 2005 Change (%)
Sales 9,630 10,016 +4.0
Operating income 721 10 -98.6
Ordinary income 771 110 -85.8
Net income 393 10,303 +2,521.1
Summary of Consolidated Operations (April 1, 2005 to June 30, 2005)
----------------------------------
Regarding sales, during the quarter under review, sales increased 4.0% to
10,016 million yen, compared with 9,630 million yen in the year earlier period.
In the category of Connection Services, in conjunction with active customer
acquisition efforts, particularly for FTTH, the number of So-net broadband
subscribers increased by 120,000 compared to the end of the year earlier period,
to 690,000. However, with the impact of free promotional campaigns, sales in
this category declined.
On the other hand, in the category of Portal Services, sales increased as a
result of sales in CS-broadcasting and web contents, as well as greatly
increased sales of consolidated subsidiaries.
Furthermore, the total number of So-net subscribers increased by 210,000 from
the end of the year earlier period, to 2,510,000. This was mainly a result of
increases in the number of broadband subscribers and the number of content
users.
Regarding operating income, during the quarter under review, operating income
declined 98.6% compared with the year earlier period, from 721 million yen to 10
million yen. Because active efforts were made in the area of customer
acquisitions compared to the year earlier period, there was a great increase in
costs such as for television commercials and customer acquisition commissions
which are recorded under "selling, general and administrative expenses".
Regarding ordinary income, during the quarter under review, ordinary income
decreased 85.8%, from 771 million yen to 110 million yen. Factors offsetting the
impact of the decline in operating income included an improvement in net
non-operating income compared with the year earlier period, in particular, 75
million yen of equity in net income of affiliated companies was recorded,
stemming from the recording of a profit by DeNA Co., Ltd.
Regarding net income before income taxes, during the quarter under review,
net income before income taxes increased by 2,223.2%, from 771 million yen to
17,905 million yen.
This was a result of partial sales of the SCN Group's shares in So-net M3
Inc., a consolidated subsidiary, and DeNA Co., Ltd., a company accounted for by
the equity method. As a result of these sales, a gain on sale of investment in
affiliate and subsidiary stock of 17,795 million yen was recorded as an
extraordinary gain.
As a result, the total income tax charges, including both income tax current
and income tax deferred were 7,552 million yen. Furthermore, minority interest
income of 50 million yen was recorded, compared with 10 million yen in the year
earlier period.
Regarding net income, there was an increase of 2,521.1% compared with the year
earlier period, from 393 million yen to 10,303 million yen .
Sales by Category
Three-months ended June 30, 2005
--------------------------------
Three-months Percentage Three-months Percentage Year-on-
ended June of total ended June of total year
30, 2004 (%) 30, 2005 (%) change
(millions of (millions of (%)
yen) yen)
Connection Services(1) 7,318 76.0 6,835 68.2 (6.6)
Portal Services(2) 2,312 24.0 3,181 31.8 37.6
Total 9,630 100.0 10,016 100.0 4.0
Note 1: The sales category known as "Internet provider services" through the
fiscal year ended March 31, 2005 is now known as "Connection Services." There
has not been any change in types of services in this sales category.
Note 2: The closely related sales categories known as "Internet-related
services" and "Merchandise sales" through the fiscal year ended March 31, 2005
are now consolidated into one category called "Portal Services.". Within this,
during the quarter under review, "Merchandise sales" increased from 197million
yen in the year earlier period, to 397million yen.
Operating revenue
Connection Services
-------------------
In this category, as a result of always-on broadband connections becoming the
mainstream, the SCN Group has aggressively worked to promote customer
acquisitions for FTTH connection plans. By utilizing television commercials, the
SCN Group is working to raise awareness of these services, and the SCN Group has
also worked towards customer acquisition activities at high-volume retailers and
cooperating retailers.
As a result, new customers for broadband connections were 2.5 times the year
earlier period, at 50,000 members. At the end of the quarter under review, there
were 690,000 broadband subscribers, an increase of 21.3% over the year earlier
period. Also, they accounted for 27% of the total number of So-net subscribers.
On the other hand, there were effects from free promotional campaigns aimed at
attracting new broadband subscribers, and there was also a decline in the number
of narrowband subscribers. As a result, sales of Connection Services for the
quarter ended June 30, 2005 were 6,835 million yen, a decrease of 6.6% compared
with the year earlier period. Such sales accounted for 68.2% of total sales.
Portal Services
---------------
In this category, there were increases in sales of web contents and of
advertising sales. Also, sales related to Korean dramas on the CS-broadcasted
So-net channel 749 smoothly progressed.
In the area of e-commerce, sales were strong for products connected with
contents related to sports such as pro-baseball and J-League, anime, theaters,
and fashion.
With respect to subsidiary companies, sales increased at So-net M3 Inc. and
Skygate, Co., Ltd.
As a result, sales in this category during the quarter under review increased
37.6% compared with the year earlier period, to 3,181 million yen. Sales in this
category accounted for 31.8% of total sales.
Results of Consolidated Subsidiaries and of Affiliated Companies Accounted for
by the Equity Method
The SCN Group includes the following five consolidated subsidiaries: So-net
Sports.com Corp., So-net M3 Inc., So-net M3 U.S.A. Corp., Medi C&C Co. Ltd. (see
note 3), and Skygate, Co., Ltd. The SCN Group includes the following two
affiliated companies accounted for by the equity method: Label Gate Co., Ltd.
and DeNA Co., Ltd.
During the quarter under review, the SCN Group sold a portion of its shares in
So-net M3 Inc. and DeNA Co., Ltd. As a result, its share of So-net M3 Inc.
declined from 74.8% to 60.8%, and its share of DeNA Co., Ltd. declined from
24.7% to 20.0%.
With regards to So-net M3 Inc., during the quarter under review, the
medically-related site "m3.com" topped 100,000 in physician members. Also,
So-net M3 Inc. has taken actions to grow, including cooperation with the
American company Medsite (see note 4), acquire the Korean company Medi C&C Co.
Ltd., and, by expanding available information of diseases for its general
service Q&A website for asking questions of 100,000 subscriber doctors,
"AskDoctors B" (a beta-stage site).
At Skygate, Co., Ltd., turnover increased thanks to an emphasis on
international airplane tickets.
Also, during the quarter under review, equity in net income of affiliated
companies of 75 million yen was recorded, compared with 5 million yen in the
year earlier period. This was largely due to strong growth at DeNA Co., Ltd. and
its subsidiary Mbok Inc., which offers auction services for mobile phones.
Furthermore, DeNA began charging a 315 yen (tax included) per month fee from
July 1, 2005, with the aim of making its auction services more secure and
user-friendly.
In conjunction with the recent expansion of the music download market, Label
Gate Co., Ltd. also saw increases in available songs and the number of paid
downloads.
Note 3: Medi C&C Co. Ltd operates "Medigate," a website for doctors which has
gained 86% of Korean doctors as members.
Note 4: Medsite has over 450,000 members, over 50% of American doctors. It
offers online educational programs for doctors and online marketing services for
medically related businesses.
Cash Flow
Cash and cash equivalents were 27,663 million yen at the end of the quarter
ended June 30, 2005, an increase of 25,236 million yen from the end of the year
earlier period, and an increase of 17,023 million yen from March 31, 2005.
During the quarter under review, the SCN Group used 876 million yen of cash in
operating activities, generated 17,896 million yen of cash in investing
activities, and saw no change in cash in financing activities.
Cash flows from operating activities
During the quarter ended June 30, 2005, regarding cash flows from operating
activities, the SCN Group used 876 million yen, compared with the quarter ended
June 30, 2004 when the SCN Group generated 326 million yen. During the quarter
under review, while net income before income taxes of 17,905 million yen was
recorded, an overwhelming portion of that was a gain on sale of investment in
affiliate and subsidiary stock of 17,795 million yen. The main reason for the
decline in cash flows from operating activities compared with the year earlier
period was payment of 827 million yen in income taxes, compared with payment of
197 million yen in the year earlier period. Also, during the quarter under
review, included in net income before income taxes were non-cash depreciation
expense of 203 million yen and amortization of goodwill of 71 million yen.
Cash flows from investing activities
During the quarter ended June 30, 2005, regarding cash flows from investing
activities, the SCN Group generated 17,896 million yen, compared with the
quarter ended June 30, 2004 when the SCN Group used 81 million yen. The main
factor in the period under review was the cash proceeds from sale of investment
in affiliate and subsidiary stock of 18,499 million yen as a result of sales of
stock in consolidated subsidiary So-net M3 Inc. and affiliated company DeNA Co.,
Ltd.
Cash flows from financing activities
During the quarter ended June 30, 2005, regarding cash flows from financing
activities, similar to the year earlier period, the SCN Group did not carry out
any financing or repayment activities.
Condensed Consolidated Statements of Income(unaudited)
-----------------------------------------------------
For the three-months ended June 30, 2005
----------------------------------------
(Millions of yen)
Three-months ended June 30
2004 2005 Change
------------- ------------- ------
Sales 9,630 10,016 4.0%
Cost of sales 5,418 5,551
Gross profit 4,212 4,465
Selling, general and administrative 3,491 4,455
expenses
Operating income 721 10 -98.6%
Non-operating income
Equity in net income of affiliated 5 75
companies
Other 55 60 34 109
Non-operating expenses 10 9
Ordinary income 771 110 -85.8%
Extraordinary gain
Gain on sale of investment in - 17,795
affiliate and subsidiary stock
Gain on issuance of stock by equity - - 2 17,798
investee
Extraordinary loss
Loss on issuance of stock by equity - 3
investee
Net income before income taxes 771 17,905 2,223.2%
Income tax current 199 7,918
Income tax deferred 168 367 (366) 7,552
Minority interest income 10 50
Net income 393 10,303 2,521.1%
Condensed Consolidated Balance Sheets(unaudited)
------------------------------------------------
(Millions of yen)
June 30 March 31 June 30
ASSETS 2004 2005 2005
--------- --------- ---------
Current assets 7,627 16,052 34,295
--------- --------- ---------
Cash and bank deposit 1,060 3,861 3,849
Notes and account receivable, trade 3,895 3,755 3,896
Inventories 124 212 342
Deposits in Sony group company 1,366 6,779 23,814
Other 1,203 1,513 2,464
Allowance for bad debt (23) (69) (70)
Noncurrent assets 5,450 5,039 5,278
--------- --------- ---------
Property, plant and equipment 241 181 291
--------- --------- ---------
Intangible assets 2,134 2,126 2,426
--------- --------- ---------
Software 1,215 1,576 1,794
Goodwill 638 425 487
Other 281 125 145
Investment and other assets 3,075 2,732 2,561
--------- --------- ---------
Investment in affiliates and others 1,523 1,471 1,374
Other 1,552 1,380 1,293
Allowance for bad debt - (119) (106)
--------- --------- ---------
Total assets 13,077 21,091 39,573
--------- --------- ---------
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
Current liabilities 4,828 8,092 15,543
--------- --------- ---------
Account payable, trade 2,331 2,553 2,907
Account payable, other 177 1,712 6,996
Accrued expense 1,410 1,936 2,001
Accrued income taxes 84 877 2,705
Other 826 1,014 934
Long-term liabilities 150 388 367
--------- --------- ---------
Total liabilities 4,978 8,481 15,910
--------- --------- ---------
Minority interest 69 840 1,602
--------- --------- ---------
Common stock 5,246 5,246 5,246
Additional paid-in capital 4,765 4,765 4,765
Retained earnings (accumulated losses) (1,980) 1,734 12,037
Unrealized gain on investment securities (1) 27 19
Foreign currency translation adjustments 1 (0) (5)
--------- --------- ---------
Total stockholders' equity 8,030 11,771 22,061
--------- --------- ---------
Total liabilities, minority interest and 13,077 21,091 39,573
stockholders' equity --------- --------- ---------
Consolidated Statements of Cash Flow(unaudited)
----------------------------------------------- (Millions of yen)
Three-months ended June 30
2004 2005
------- -------
I. Cash flows from operating activities
Net income before income taxes 771 17,905
Depreciation and amortization 183 203
Amortization for goodwill 71 71
Gain on issuance of stock by equity investee - (2)
Loss on issuance of stock by equity investee - 3
Equity in net income of affiliated companies (5) (75)
Gain on sale of investment in affiliate and - (17,795)
subsidiary stock
Decrease in accrued bonuses (182) (152)
Increase in accrued severance costs for employees 6 4
Increase in accrued severance indemnities for 4 4
directors
Increase (decrease) in allowance for bad debt 0 (13)
Increase in customer incentive program 31 41
Decrease in other accruals - (3)
Interest income (1) (2)
Interest expense 1 -
Foreign exchange loss - (2)
Loss on disposal of tangible fixed assets 1 6
Loss on sales of tangible fixed assets 0 -
Increase in account receivable, trade (4) (137)
(Increase) decrease in inventories 5 (130)
Increase in other current assets (119) (465)
Increase (decrease) in accounts payable, trade (132) 354
Increase (decrease) in accrued expenses (300) 63
Increase in other current liabilities 194 71
------- -------
Sub Total 523 (51)
------- -------
Receipt of interest 1 2
Payments for interest (1) -
Payments for income taxes (197) (827)
------- -------
Net cash provided by (used in) operating 326 (876)
activities ------- -------
(Millions of yen)
Three-months ended June 30
2004 2005
------- -------
II. Cash flows from investing activities
Payment for securities investment (10) (55)
Proceeds from sales of subsidiary stock - 18,499
Payment for acquisition of fixed assets (2) (109)
Proceeds from sales of fixed assets 0 -
Payment for acquisition of intangible assets (70) (398)
Payment for rent deposits (2) (1)
Proceeds from rent deposits - 49
Payments for long term prepaid expenses (15) (9)
Net proceeds as a result of acquiring subsidiary - 27
company
Payments for loan - (126)
Repayment of loan 18 18
------- -------
Net cash provided by (used in) investing (81) 17,896
activities ------- -------
III.Cash flows from financing activities - -
------- -------
IV. Effect of exchange rate difference on cash and (1) 2
cash equivalents
V. Increase in cash and cash equivalents 245 17,023
VI. Cash and cash equivalents at beginning of year 2,182 10,640
------- -------
VII.Cash and cash equivalents at end of the 2,427 27,663
period ------- -------
(Notes)
1. As of June 30, 2005, the SCN Group included five consolidated
subsidiaries and two affiliated companies accounted for by the equity
method.
2. Consolidated financial statements of the SCN Group are based on the
standards conforming with the Generally Accepted Accounting Principles in
Japan.
3. The SCN Group and some of its consolidated subsidiaries, as
consolidated legal entities under Sony Corp., use a consolidated payment of
taxes system.
(For reference)
(Millions of yen)
Three-months ended Three-months ended Change
June 30, 2004 June 30, 2005 (%)
Increase in fixed assets 3 139 4,888.3
Increase in intangible assets 83 396 376.6
Depreciation of fixed assets 17 25 45.6
Amortization of intangible 141 159 12.2
assets
Consolidated Results Forecast
With regards to the forecast for consolidated results for the year ending
March 31, 2006, the SCN Group is not announcing any changes to the revised
forecast that was announced on June 20, 2005.
For reference, the forecast announced on June 20, 2005 was as follows:
(Millions of yen)
Consolidated Results Forecast Year-on-year Change
-------------------- -------- -------------------
Sales 43,500 +11%
Operating income 1,300 (50%)
Ordinary income 1,500 (41%)
Net income 10,800 +163%
Cautionary statement:
---------------------
Statements made in this release with respect to Sony Corporation and Sony
Communication Network's ("SCN") current plans, estimates, strategies and beliefs
and other statements that are not historical facts are forward-looking
statements about the future performance of SCN. These statements are based on
management's assumptions and beliefs in light of the information currently
available to it. Therefore, SCN cautions you that a number of important risks
and uncertainties could cause actual results to differ materially from those
discussed in the forward-looking statements, and therefore you should not place
undue reliance on them.