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 August 2017
Commission File Number: 001-06439

SONY CORPORATION
(Translation of registrant's name into English)

1-7-1 KONAN, MINATO-KU, TOKYO, 108-0075, 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/  Kenichiro Yoshida
 
                (Signature)
 
Kenichiro Yoshida
 
Executive Deputy President and
 
Chief Financial Officer
 
Date: August 1, 2017

List of materials

Documents attached hereto:
 
i) Press release Announcing Consolidated Financial Results for the First Quarter Ended June 30, 2017
 

 
 
1-7-1 Konan, Minato-ku
Tokyo 108-0075 Japan
News & Information
 
 
No. 17-069E
August 1, 2017
 
Consolidated Financial Results for the First Quarter Ended June 30, 2017

Tokyo, August 1, 2017 -- Sony Corporation today announced its consolidated financial results for the first quarter ended June 30, 2017 (April 1, 2017 to June 30, 2017).

 
 
(Billions of yen, millions of U.S. dollars, except per share amounts)         
 
   
First Quarter ended June 30
 
   
2016
   
2017
   
Change in yen
   
2017
*
Sales and operating revenue
 
¥
1,613.2
   
¥
1,858.1
     
+15.2
%
 
$
16,590
 
Operating income
   
56.2
     
157.6
     
+180.5
     
1,407
 
Income before income taxes
   
57.0
     
148.9
     
+161.1
     
1,329
 
Net income attributable to Sony Corporation’s stockholders
   
21.2
     
80.9
     
+282.1
     
722
 
Net income attributable to Sony Corporation’s stockholders per share of common stock:
                               
    - Basic
 
¥
16.78
   
¥
64.03
     
+281.6
   
$
0.57
 
    - Diluted
   
16.44
     
62.70
     
+281.4
     
0.56
 

* U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 112 yen = 1 U.S. dollar, the approximate Tokyo foreign exchange market rate as of June 30, 2017.

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

Sony Corporation and its consolidated subsidiaries are together referred to as “Sony”.

The average foreign exchange rates during the quarters ended June 30, 2016 and 2017 are presented below.

   
First Quarter ended June 30
   
   
2016
   
2017
   
Change
 
The average rate of yen
                      
1 U.S. dollar
 
¥
108.1
   
¥
111.1
   
2.7
%
(yen depreciation)
1 Euro
   
122.1
     
122.1
   
   

Consolidated Results for the First Quarter Ended June 30, 2017

Sales and operating revenue (“Sales”) increased by 15.2% compared to the same quarter of the previous fiscal year (“year-on-year”) to 1,858.1 billion yen.  This significant increase was primarily due to increases in Financial Services and Semiconductors segment sales.  On a constant currency basis, sales increased 14%. For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Note on page 7.

Operating income increased 101.4 billion yen year-on-year to 157.6 billion yen.  This significant increase was mainly due to the improvements of operating results in the Semiconductors and Imaging Products & Solutions (“IP&S”) segments, partially offset by a decrease in operating income in the Game & Network Services (“G&NS”) segment.

Operating income in the current quarter included a 27.5 billion yen gain recorded in the Semiconductors segment resulting from the sale of the entire equity interest in Sony Electronics Huanan Co., Ltd. (“SEH”), a manufacturing subsidiary in the camera module business.  Additionally, 6.7 billion yen and 2.6 billion yen in insurance recoveries, mainly for opportunity losses related to the earthquakes in the Kumamoto region in 2016 (“the 2016 Kumamoto Earthquakes”), were recorded in the Semiconductors and the IP&S segments, respectively.

1

Operating income in the same quarter of the previous fiscal year included a 20.3 billion yen impairment charge against long-lived assets resulting from the termination of development and manufacturing of certain high-functionality camera modules for external sale, as well as net charges of 13.6 billion yen in expenses resulting from the 2016 Kumamoto Earthquakes, both in the Semiconductors segment.

During the current quarter, restructuring charges, net, increased 0.7 billion yen year-on-year to 2.4 billion yen.  This amount is recorded as an operating expense and is included in operating income.

Equity in net income (loss) of affiliated companies, recorded within operating income, was income of 1.1 billion yen, compared to a loss of 0.8 billion yen in the same quarter of the previous fiscal year.

The net effect of other income and expenses was an expense of 8.7 billion yen, compared to income of 0.8 billion yen in the same quarter of the previous fiscal year.  This was primarily due to the recording of a net foreign exchange loss in the current quarter, compared to the recording of a net foreign exchange gain in the same quarter of the previous fiscal year.

Income before income taxes increased 91.9 billion yen year-on-year to 148.9 billion yen.

During the current quarter, Sony recorded 54.5 billion yen of income tax expense, resulting in an effective tax rate of 36.6% which exceeded the effective tax rate of 35.9% in the same quarter of the previous fiscal year.  This higher effective tax rate was mainly due to the fact that certain foreign subsidiaries, which have established valuation allowances for deferred tax assets, recorded losses during the current quarter, compared to the recording of profits in the same quarter of the previous fiscal year.

Net income attributable to Sony Corporation’s stockholders, which deducts net income attributable to noncontrolling interests, increased 59.7 billion yen year-on-year to 80.9 billion yen.

Operating Performance Highlights by Business Segment

“Sales and operating revenue” in each business segment represents sales and operating revenue recorded before intersegment transactions are eliminated.  “Operating income (loss)” in each business segment represents operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses.  For details regarding each segment’s product categories, please refer to page F-6.  For details regarding business segment realignment, please refer to Note 3 on page F-12.

Mobile Communications (MC)

   
(Billions of yen)
   
First Quarter ended June 30
   
2016
   
2017
   
Change
Sales and operating revenue
 
¥
185.9
   
¥
181.2
     
-2.5
%
Operating income
   
0.4
     
3.6
     
+771.3
 

Sales were 181.2 billion yen, essentially flat year-on-year (a 3% decrease on a constant currency basis).  This was mainly due to a change in product mix, partially offset by an increase in unit sales, both in smartphones.

Operating income increased 3.2 billion yen year-on-year to 3.6 billion yen.  This increase was primarily due to reductions in operating costs and research and development expenses, partially offset by an increase in the price of key components.  During the current quarter, there was a 1.4 billion yen positive impact from foreign exchange rate fluctuations (which includes the impact of foreign exchange hedging).

2

Game & Network Services (G&NS)

   
(Billions of yen)
   
First Quarter ended June 30
   
2016
   
2017
   
Change
Sales and operating revenue
 
¥
330.4
   
¥
348.1
     
+5.4
%
Operating income
   
44.0
     
17.7
     
-59.7
 

Sales increased 5.4% year-on-year (a 4% increase on a constant currency basis) to 348.1 billion yen.  This increase was primarily due to an increase in PlayStation®4 (“PS4”) software sales including sales through the network, as well as the contribution of PlayStation®VR, partially offset by the impact of a price reduction for PS4 hardware which took place in September 2016.

Operating income decreased 26.3 billion yen year-on-year to 17.7 billion yen.  This significant decrease was primarily due to the absence of the significant contribution of a highly profitable first-party software title released in the same quarter of the previous fiscal year, as well as the above-mentioned impact of a price reduction for PS4 hardware.  During the current quarter, there was a 2.4 billion yen negative impact from foreign exchange rate fluctuations.
 
Imaging Products & Solutions (IP&S)

   
(Billions of yen)
   
First Quarter ended June 30
   
2016
   
2017
   
Change
Sales and operating revenue
 
¥
122.2
   
¥
155.6
     
+27.3
%
Operating income
   
7.5
     
23.2
     
+209.1
 

Sales increased 27.3% year-on-year (a 26% increase on a constant currency basis) to 155.6 billion yen.  This significant increase in sales was mainly due to the absence of the impact from the 2016 Kumamoto Earthquakes in the same quarter of the previous fiscal year as well as an increase in unit sales and an improvement in product mix reflecting a shift to high value-added models, both in Still and Video Cameras.

Operating income increased 15.7 billion yen year-on-year to 23.2 billion yen.  This significant increase was mainly due to the impact of the above-mentioned significant increase in sales, partially offset by an increase in selling, general and administrative expenses.  Operating income for the current quarter included the above-mentioned 2.6 billion yen in insurance recoveries related to the 2016 Kumamoto Earthquakes.  During the current quarter, there was no material impact from foreign exchange rate fluctuations.

Home Entertainment & Sound (HE&S)

   
(Billions of yen)
   
First Quarter ended June 30
   
2016
   
2017
   
Change
Sales and operating revenue
 
¥
235.9
   
¥
256.9
     
+8.9
%
Operating income
   
20.2
     
22.6
     
+11.6
 

Sales increased 8.9% year-on-year (a 7% increase on a constant currency basis) to 256.9 billion yen.  This increase was primarily due to an improvement in product mix reflecting a shift to high value-added models, partially offset by a decrease in unit sales, both in televisions.

Operating income increased 2.3 billion yen year-on-year to 22.6 billion yen.  This increase was primarily due to the above-mentioned improvement in product mix of televisions reflecting a shift to high value-added models, partially offset by an increase in the price of key components and an increase in marketing costs.  During the current quarter, there was a 0.2 billion yen positive impact from foreign exchange rate fluctuations.
3

Semiconductors

   
(Billions of yen)
   
First Quarter ended June 30
   
2016
   
2017
   
Change
Sales and operating revenue
 
¥
144.4
   
¥
204.3
     
+41.4
%
Operating income (loss)
   
(43.5
)
   
55.4
     
 

Sales increased 41.4% year-on-year (a 38% increase on a constant currency basis) to 204.3 billion yen.  This increase was primarily due to a significant increase in unit sales of image sensors for mobile products, as well as the absence of the impact of a decrease in image sensor production due to the 2016 Kumamoto Earthquakes in the same quarter of the previous fiscal year, partially offset by a significant decrease in sales of camera modules, a business which was downsized.

Operating income of 55.4 billion yen was recorded, compared to an operating loss of 43.5 billion yen recorded in the same quarter of the previous fiscal year.  This significant improvement in operating results was primarily due to the impact of the above-mentioned increase in sales, the above-mentioned 27.5 billion yen gain resulting from the sale of the entire equity interest in SEH, and 6.7 billion yen in insurance recoveries related to the 2016 Kumamoto Earthquakes, as well as the absence of the 20.3 billion yen impairment charge against long-lived assets for camera modules and the net charges of 13.6 billion yen for expenses resulting from the 2016 Kumamoto Earthquakes recorded in the same quarter of the previous fiscal year.  During the current quarter, there was a 2.5 billion yen positive impact from foreign exchange rate fluctuations.
 
Pictures

   
(Billions of yen)
   
First Quarter ended June 30
   
2016
   
2017
   
Change
Sales and operating revenue
 
¥
183.3
   
¥
205.8
     
+12.3
%
Operating loss
   
(10.6
)
   
(9.5
)
   
 

The results presented in Pictures are a yen-translation of the results of Sony Pictures Entertainment Inc. (“SPE”), a U.S.-based operation that aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.  Management analyzes the results of SPE in U.S. dollars, so discussion of certain portions of its results is specified as being on “a U.S. dollar basis.”

Sales increased 12.3% year-on-year (a 9% increase on a U.S. dollar basis) to 205.8 billion yen.  The increase in sales on a U.S. dollar basis was primarily due to higher sales in Television Productions and Media Networks, partially offset by lower sales in Motion Pictures.  Television Productions sales increased significantly primarily due to higher licensing revenue for U.S. television series including The Last Tycoon and Better Call Saul.  Sales for Media Networks increased primarily due to higher advertising revenues in India.  The decrease in Motion Pictures sales was primarily due to lower worldwide theatrical revenues in the current quarter, compared to the same quarter of the previous fiscal year which benefitted from the strong worldwide theatrical performance of The Angry Birds Movie.

Operating loss decreased 1.1 billion yen year-on-year to 9.5 billion yen.  The improvement in operating results is primarily due to the increase in sales for Television Productions and Media Networks discussed above, partially offset by higher worldwide theatrical marketing expenses for unreleased titles in the current quarter, compared to the same quarter of the previous fiscal year, primarily due to the July 2017 release of Spider-Man: Homecoming.

4

Music

   
(Billions of yen)
   
First Quarter ended June 30
   
2016
   
2017
   
Change
Sales and operating revenue
 
¥
141.9
   
¥
168.6
     
+18.8
%
Operating income
   
15.9
     
25.0
     
+57.6
 

The Music segment results include the yen-translated results of Sony Music Entertainment (“SME”) and Sony/ATV Music Publishing LLC (“Sony/ATV”), both U.S.-based operations which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis and the results of Sony Music Entertainment (Japan) Inc., a Japan-based music company which aggregates its results in yen. The segment also includes equity in net income for EMI Music Publishing (“EMI”), an affiliated company accounted for under the equity method for which Sony records 39.8% of EMI’s net income in the segment operating income.

Sales increased 18.8% year-on-year (a 17% increase on a constant currency basis) to 168.6 billion yen.  The significant increase in sales was mainly due to higher Visual Media and Platform sales and higher Recorded Music sales.  Visual Media and Platform sales increased due to the strong performance of Fate/Grand Order, a game application for mobile devices.  Recorded Music sales increased primarily due to an increase in digital streaming revenues.  Best-selling titles during the quarter included the self-titled debut album from Harry Styles, Nogizaka46’s umaretekara hajimete mita yume, and The Chainsmokers’ Memories...Do Not Open.

Operating income increased 9.1 billion yen year-on-year to 25.0 billion yen.  This increase in operating income was primarily due to the above-mentioned increase in Visual Media and Platform sales and Recorded Music sales.

Financial Services

   
(Billions of yen)
   
First Quarter ended June 30
   
2016
   
2017
   
Change
Financial services revenue
 
¥
232.7
   
¥
303.2
     
+30.3
%
Operating income
   
48.5
     
46.2
     
-4.8
 

The Financial Services segment results include Sony Financial Holdings Inc. (“SFH”) and SFH’s consolidated subsidiaries such as Sony Life Insurance Co., Ltd. (“Sony Life”), Sony Assurance Inc. and Sony Bank Inc. (Sony Bank”).  The results of Sony Life discussed in the Financial Services segment differ from the results that SFH and Sony Life disclose separately on a Japanese statutory basis.

Financial services revenue increased 30.3% year-on-year to 303.2 billion yen primarily due to a significant increase in revenue at Sony Life.  Revenue at Sony Life increased 35.5% year-on-year to 270.4 billion yen mainly due to an improvement in investment performance in the separate accountThis improvement in investment performance was mainly due to a rise in the Japanese stock market during the current quarter, as compared with a decline in the same quarter of the previous fiscal year.

Operating income decreased 2.3 billion yen year-on-year to 46.2 billion yen, primarily due to a decrease in operating income at Sony LifeOperating income at Sony Life decreased 2.4 billion yen year-on-year to 39.1 billion yen, mainly due to a deterioration in net gains and losses on derivative transactions for hedging purposes pertaining to other securities, as well as a decrease of net gains on sales of securities, both in the general account.

*    *    *    *    *

Cash Flows

For Consolidated Statements of Cash Flows, charts showing Sony’s cash flow information for all segments, all segments excluding the Financial Services segment and the Financial Services segment alone, please refer to pages F-4 and F-11.

Operating Activities: During the current quarter, there was a net cash inflow of 51.1 billion yen from operating activities, an increase of 34.9 billion yen, or 215.8% year-on-year.

5

For all segments excluding the Financial Services segment, there was a net cash outflow of 23.2 billion yen, a decrease of 57.7 billion yen, or 71.4% year-on-year.  This decrease was primarily due to a larger increase in notes and accounts payable, trade.

The Financial Services segment had a net cash inflow of 89.3 billion yen, a decrease of 21.5 billion yen, or 19.4% year-on-year.  This decrease was primarily due to a decrease in net income after taking into account depreciation and amortization, including amortization of deferred insurance acquisition costs.

Investing Activities: During the current quarter, Sony used 193.4 billion yen of net cash in investing activities, a decrease of 25.8 billion yen, or 11.8% year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 28.1 billion yen, a decrease of 73.0 billion yen, or 72.2% year-on-year.  This decrease was mainly due to a decrease in payments for fixed asset purchases such as semiconductor manufacturing equipment.

The Financial Services segment used 165.3 billion yen of net cash, an increase of 47.6 billion yen, or 40.4% year-on-year.  This increase was mainly due to a year-on-year increase in payments for investments and advances at Sony Bank and Sony Life.

In all segments excluding the Financial Services segment, net cash used in operating and investing activities combined*1 for the current quarter was 51.3 billion yen, a decrease of 130.8 billion yen, or 71.8% year-on-year.

Financing Activities: Net cash provided by financing activities during the current quarter was 165.7 billion yen, compared to a net cash outflow of 98.6 billion yen in the same quarter of the previous fiscal year.

For all segments excluding the Financial Services segment, there was a 10.3 billion yen net cash outflow, a decrease of 69.3 billion yen, or 87.0% year-on-year.  This decrease was primarily due to a year-on-year decrease in repayment of debt.

In the Financial Services segment, there was a 161.0 billion yen net cash inflow, compared to a 33.0 billion yen net cash outflow in the same quarter of the previous fiscal year.  This change was primarily due to increases in long-term borrowings and short-term debt at Sony Bank, an increase in short-term borrowings at Sony Life compared to a decrease in the same quarter of the previous fiscal year as well as an increase in deposits from customers at Sony Bank compared to a decrease in the same quarter of the previous fiscal year.

Total Cash and Cash Equivalents: Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents at June 30, 2017 was 984.2 billion yen.  Cash and cash equivalents of all segments excluding the Financial Services segment was 630.8 billion yen at June 30, 2017, a decrease of 61.0 billion yen, or 8.8% compared with the balance as of March 31, 2017, and an increase of 193.5 billion yen, or 44.3% compared with the balance as of June 30, 2016.  Sony believes that it continues to maintain sufficient liquidity through access to a total, translated into yen, of 526.8 billion yen of unused committed lines of credit with financial institutions in addition to the cash and cash equivalents balance at June 30, 2017.  Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 353.4 billion yen at June 30, 2017, an increase of 85.0 billion yen, or 31.7% compared with the balance as of March 31, 2017, and an increase of 159.6 billion yen, or 82.3% compared with the balance as of June 30, 2016.

*1
Sony has included the information for cash flow from operating and investing activities combined, excluding the Financial Services segment’s activities, as Sony’s management frequently monitors this financial measure and believes this non-U.S. GAAP measurement is important for use in evaluating Sony’s ability to generate cash to maintain liquidity and fund debt principal and dividend payments from business activities other than its Financial Services segment. This information is derived from the reconciliations prepared in the Condensed Statements of Cash Flows on page F-11. This information and the separate condensed presentations shown below are not required or prepared in accordance with U.S. GAAP. The Financial Services segment’s cash flow is excluded from the measure because SFH, which constitutes a majority of the Financial Services segment, is a separate publicly traded entity in Japan with a significant minority interest and it, as well as its subsidiaries, secure liquidity on their own. This measure may not be comparable to those of other companies. This measure has limitations because it does not represent residual cash flows available for discretionary expenditures principally due to the fact that the measure does not deduct the principal payments required for debt service. Therefore, Sony believes it is important to view this measure as supplemental to its entire statement of cash flows and together with Sony’s disclosures regarding investments, available credit facilities and overall liquidity.
 
 
 
A reconciliation of the differences between the Consolidated Statement of Cash Flows reported and cash flows from operating and investing activities combined excluding the Financial Services segment’s activities is as follows:
6

   
(Billions of yen)
       
   
Three months ended June 30
       
   
2016
   
2017
       
                   
Net cash provided by operating activities reported in the consolidated statements of cash flows
 
¥
16.2
   
¥
51.1
       
Net cash used in investing activities reported in the consolidated statements of cash flows
   
(219.2
)
   
(193.4
)
     
     
(203.0
)
   
(142.3
)
 
(1)
 
                       
Less: Net cash provided by operating activities within the Financial Services segment
   
110.8
     
89.3
   
(2)
 
Less: Net cash used in investing activities within the Financial Services segment
   
(117.7
)
   
(165.3
)
 
(3)
 
Eliminations *2
   
14.1
     
15.0
   
(4)
 
                       
Cash flow used by operating and investing activities combined excluding the Financial Services segment’s activities
 
¥
(182.0
)
 
¥
(51.3
)
 
(1)-(2)-(3)+(4)
 
 
*2
Eliminations primarily consist of intersegment dividend payments.
 
 
*    *    *    *    *

Note

Impact of Foreign Exchange Rate Fluctuations on Sales and Operating Income (Loss)
The descriptions of sales on a constant currency basis reflect sales calculated by applying the yen’s monthly average exchange rates from the previous fiscal year, or the same quarter of the previous fiscal year, to local currency-denominated monthly sales in the current fiscal year, or the current quarter, respectively.  In the Pictures segment as well as SME and Sony/ATV in the Music segment, the constant currency amounts are after aggregation on a U.S. dollar basis.

The impact of foreign exchange rate fluctuations on operating income (loss) is calculated by subtracting the foreign exchange impact on cost of sales and selling, general and administrative expenses (“COGS & SGA”) from the foreign exchange impact on sales.  The foreign exchange impact on sales is calculated by applying the change in the yen’s periodic weighted average exchange rates for the previous fiscal year, or the same quarter of the previous fiscal year, from the current fiscal year, or the current quarter, respectively, to the major transactional currencies in which the sales are denominated.  The foreign exchange impact on COGS & SGA is calculated by applying the same major transactional currencies calculation process to COGS & SGA as for the impact on sales.  Additionally, the MC segment enters into its own foreign exchange hedging transactions.  The impact of those transactions is included in the impact of foreign exchange rate fluctuations on operating income (loss) for that segment.

This information is not a substitute for Sony’s consolidated financial statements measured in accordance with U.S. GAAP.  However, Sony believes that these disclosures provide additional useful analytical information to investors regarding the operating performance of Sony.

 
*    *    *    *    *

Outlook for the Fiscal Year Ending March 31, 2018

The forecast for consolidated results for the fiscal year ending March 31, 2018, as announced on April 28, 2017, has been revised as follows:

   
(Billions of yen)
   
Change - August Forecast from
   
March 31, 2017
Results
   
April
Forecast
   
August
Forecast
   
March 31, 2017
Results
 
April
Forecast
Sales and operating revenue
 
¥
7,603.3
   
¥
8,000
   
¥
8,300
   
+9.2
%
 
+3.8
%
Operating income
   
288.7
     
500
     
500
   
+211.3
bil   
-
 
Income before income taxes
   
251.6
     
470
     
470
   
+218.4
bil   
-
 
Net income attributable to Sony Corporation’s stockholders
   
73.3
     
255
     
255
   
+181.7
bil   
-
 

Assumed foreign currency exchange rates for the remainder of the fiscal year ending March 31, 2018 are below.  The impact of the difference between the assumed rates used for the consolidated forecast and the rates used for each segment has been included in the forecast for All Other, Corporate and elimination.

7

Assumed foreign currency exchange rates for the remainder of the current fiscal year
 
Consolidated forecast
Forecasts for each segment
1 U.S. dollar
approximately 110 yen
approximately 112 yen
1 Euro
approximately 120 yen
approximately 128 yen

(For your reference)
Assumed foreign currency exchange rates for the current fiscal year at the time of the April forecast
 
Consolidated forecast
Forecasts for each segment
1 U.S. dollar
approximately 105 yen
approximately 110 yen
1 Euro
approximately 110 yen
approximately 115 yen
 
Consolidated sales for the fiscal year ending March 31, 2018 are expected to be higher than the April forecast primarily due to the impact of foreign exchange rates.

Consolidated operating income is expected to remain unchanged from the April forecast due to an allocation for contingencies incorporated in All Other, Corporate and elimination, despite an expected increase in operating income in the IP&S, G&NS and Semiconductors segments primarily from the impact of foreign exchange rates.

Restructuring charges for the Sony Group are expected to be approximately 15 billion yen in the fiscal year ending March 31, 2018, which remains unchanged from the April forecast, compared to 60.2 billion yen recorded in the fiscal year ended March 31, 2017.  This amount will be recorded as an operating expense included in the above-mentioned forecast for operating income.

The forecast for each business segment for the fiscal year ending March 31, 2018 has been revised as follows:

   
(Billions of yen)
   
Change - August Forecast from
   
March 31, 2017
Results
   
April
Forecast
   
August
Forecast
   
March 31, 2017
Results
 
April
Forecast
Mobile Communications
                             
Sales and operating revenue
 
¥
759.1
   
¥
820
   
¥
820
   
+8.0
%
 
 
Operating income
   
10.2
     
5
     
5
   
- ¥5.2
bil   
 
Game & Network Services
                                   
Sales and operating revenue
   
1,649.8
     
1,890
     
1,980
   
+20.0
%
 
+4.8
%
Operating income
   
135.6
     
170
     
180
   
+ ¥44.4
bil   
+ ¥10.0
bil 
Imaging Products & Solutions
                                   
Sales and operating revenue
   
579.6
     
640
     
650
   
+12.1
%
 
+1.6
%
Operating income
   
47.3
     
60
     
72
   
+ ¥24.7
bil   
+ ¥12.0
bil 
Home Entertainment & Sound
                                   
Sales and operating revenue
   
1,039.0
     
1,120
     
1,170
   
+12.6
%
 
+4.5
%
Operating income
   
58.5
     
58
     
58
   
- ¥0.5
bil   
 
Semiconductors
                                   
Sales and operating revenue
   
773.1
     
880
     
860
   
+11.2
%
 
-2.3
%
Operating income (loss)
   
(7.8
)
   
120
     
130
   
+ ¥137.8
bil   
+ ¥10.0
bil 
Pictures
                                   
Sales and operating revenue
   
903.1
     
1,020
     
1,020
   
+12.9
%
 
 
Operating income (loss)
   
(80.5
)
   
39
     
39
   
+ ¥119.5
bil   
 
Music
                                   
Sales and operating revenue
   
647.7
     
630
     
630
   
-2.7
%
 
 
Operating income
   
75.8
     
75
     
75
   
- ¥0.8
bil   
 
Financial Services
                                   
Financial services revenue
   
1,087.5
     
1,170
     
1,170
   
+7.6
%
 
 
Operating income
   
166.4
     
170
     
170
   
+ ¥3.6
bil   
 
All Other, Corporate and Elimination
                             
Operating loss
   
(116.7
)
   
(197
)
   
(229
)
 
- ¥112.3
bil   
- ¥32.0
bil 
Consolidated
                                   
Sales and operating revenue
   
7,603.3
     
8,000
     
8,300
   
+9.2
%
 
+3.8
%
Operating income
   
288.7
     
500
     
500
   
+ ¥211.3
bil   
 
8

Game & Network Services
Sales and operating income are expected to be higher than the April forecast primarily due to the impact of foreign exchange rates.

Imaging Products & Solutions
Sales and operating income are expected to be higher than the April forecast primarily due to the impact of foreign exchange rates.

Home Entertainment & Sound
Sales are expected to be higher than the April forecast primarily due to the impact of foreign exchange rates.  The forecast for operating income remains unchanged from the April forecast mainly due to a more conservative estimation of unit selling prices, offset by the positive impact of foreign exchange rates.

Semiconductors
Sales are expected to be lower than the April forecast primarily due to lower-than-expected image sensor unit sales for mobile products, partially offset by the impact of foreign exchange rates.  Operating income is expected to be higher than the April forecast mainly due to lower-than-expected production costs as well as the positive impact of foreign exchange rates, partially offset by the impact of the above-mentioned decrease in sales.

The forecasts for sales and operating income for the MC, Pictures, Music and Financial Services segments remain unchanged from the April forecast.

The effects of future gains and losses on investments held by the Financial Services segment due to market fluctuations have not been incorporated within the above forecast as it is difficult for Sony to predict market trends in the future.  Accordingly, future market fluctuations could further impact the current forecast.


The forecast for additions to long-lived assets, depreciation and amortization, as well as research and development expenses for the current fiscal year remains unchanged from the April forecast:

Consolidated

   
(Billions of yen)
       
   
March 31, 2017
Results
   
August
Forecast
   
Change from
March 31, 2017 Results
Additions to Long-lived Assets*
 
¥
272.2
   
¥
330
     
+21.2
%
[additions to property, plant and equipment (included above)
   
184.0
     
235
     
+27.7
]
[additions to intangible assets (included above)
   
88.2
     
95
     
+7.7
]
Depreciation and amortization**
   
327.0
     
355
     
+8.5
 
[for property, plant and equipment (included above)
   
169.3
     
175
     
+3.4
]
[for intangible assets (included above)
   
157.8
     
180
     
+14.1
]
Research and development expenses
   
447.5
     
450
     
+0.6
 
Excluding additions from business combinations.
** Including amortization expenses for deferred insurance acquisition costs.

Sony without Financial Services

   
(Billions of yen)
       
   
March 31, 2017
Results
   
August
Forecast
   
Change from
March 31, 2017 Results
Additions to Long-lived Assets*
 
¥
257.6
   
¥
310
     
+20.3
%
[additions to property, plant and equipment (included above)
   
179.3
     
230
     
+28.3
]
[additions to intangible assets (included above)
   
78.3
     
80
     
+2.1
]
Depreciation and amortization
   
280.0
     
280
     
+0.0
 
[for property, plant and equipment (included above)
   
167.4
     
170
     
+1.6
]
[for intangible assets (included above)
   
112.6
     
110
     
-2.3
]
Excluding additions from business combinations.

This forecast is based on management’s current expectations and is subject to uncertainties and changes in circumstances.  Actual results may differ materially from those included in this forecast due to a variety of factors.  See “Cautionary Statement” below.
9

Cautionary Statement
Statements made in this release with respect to Sony’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors 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 investors should not place undue reliance on them. Investors also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to:
 
(i)
the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending;
(ii)
foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony’s assets and liabilities are denominated;
(iii)
Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, rapid development in technology and subjective and changing customer preferences;
(iv)
Sony’s ability and timing to recoup large-scale investments required for technology development and production capacity;
(v)
Sony’s ability to implement successful business restructuring and transformation efforts under changing market and regulatory conditions;
(vi)
changes in laws, regulations and government policies in the markets in which Sony operates, including those related to taxation and corporate social responsibility;
(vii)
Sony’s ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms;
(viii)
Sony’s continued ability to devote sufficient resources to research and development and, with respect to capital expenditures, to prioritize investments correctly (particularly in the electronics businesses);
(ix)
Sony’s ability to maintain product quality and customer satisfaction with its products and services;
(x)
the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures and other strategic investments;
(xi)
significant volatility and disruption in the global financial markets or a ratings downgrade;
(xii)
Sony’s ability to forecast demands, manage timely procurement and control inventories;
(xiii)
Sony's reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing, supply and distribution of its products, and its other business operations;
(xiv)
the outcome of pending and/or future legal and/or regulatory proceedings;
(xv)
shifts in customer demand for financial services such as life insurance and Sony’s ability to conduct successful asset liability management in the Financial Services segment;
(xvi)
the impact of changes in interest rates and unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue and operating income of the Financial Services segment;
(xvii)
the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information, potential business disruptions or financial losses; and
(xviii)
risks related to catastrophic disasters or similar events.
Risks and uncertainties also include the impact of any future events with material adverse impact.

Investor Relations Contacts:

Tokyo
New York
London
Atsuko Murakami
Justin Hill
Toshiyuki Takahashi
+81-(0)3-6748-2111
+1-212-833-6722
+44-(0)1932-816-000

IR home page: http://www.sony.net/IR/
Presentation slides: http://www.sony.net/SonyInfo/IR/library/er.html
10

 
 
(Unaudited)
                 
Consolidated Financial Statements
                 
Consolidated Balance Sheets
                 
   
(Millions of yen) 
 
   
March 31
   
June 30
   
Change from
 
ASSETS
 
2017
   
2017
   
March 31, 2017
 
Current assets:
                 
Cash and cash equivalents
 
¥
960,142
   
¥
984,165
   
¥
+24,023
 
Marketable securities
   
1,051,441
     
1,098,894
     
+47,453
 
Notes and accounts receivable, trade
   
1,006,961
     
1,075,304
     
+68,343
 
Allowance for doubtful accounts and sales returns
   
(53,150
)
   
(48,627
)
   
+4,523
 
Inventories
   
640,835
     
728,124
     
+87,289
 
Other receivables
   
223,632
     
254,852
     
+31,220
 
Prepaid expenses and other current assets
   
525,861
     
566,326
     
+40,465
 
Total current assets
   
4,355,722
     
4,659,038
     
+303,316
 
                         
Film costs
   
336,928
     
352,128
     
+15,200
 
                         
Investments and advances:
                       
Affiliated companies
   
149,371
     
150,263
     
+892
 
Securities investments and other
   
9,962,422
     
10,141,062
     
+178,640
 
     
10,111,793
     
10,291,325
     
+179,532
 
                         
Property, plant and equipment:
                       
Land
   
117,293
     
117,180
     
-113
 
Buildings
   
666,381
     
670,453
     
+4,072
 
Machinery and equipment
   
1,842,852
     
1,848,760
     
+5,908
 
Construction in progress
   
28,779
     
35,934
     
+7,155
 
     
2,655,305
     
2,672,327
     
+17,022
 
Less-Accumulated depreciation
   
1,897,106
     
1,915,217
     
+18,111
 
     
758,199
     
757,110
     
-1,089
 
                         
Other assets:
                       
Intangibles, net
   
584,185
     
576,217
     
-7,968
 
Goodwill
   
522,538
     
525,920
     
+3,382
 
Deferred insurance acquisition costs
   
568,837
     
578,186
     
+9,349
 
Deferred income taxes
   
98,958
     
75,775
     
-23,183
 
Other
   
323,396
     
322,520
     
-876
 
     
2,097,914
     
2,078,618
     
-19,296
 
Total assets
 
¥
17,660,556
   
¥
18,138,219
   
¥
+477,663
 
                         
                         
LIABILITIES AND EQUITY
                       
Current liabilities:
                       
Short-term borrowings
 
¥
464,655
   
¥
534,092
   
¥
+69,437
 
Current portion of long-term debt
   
53,424
     
204,275
     
+150,851
 
Notes and accounts payable, trade
   
539,900
     
676,663
     
+136,763
 
Accounts payable, other and accrued expenses
   
1,394,758
     
1,312,946
     
-81,812
 
Accrued income and other taxes
   
106,037
     
117,048
     
+11,011
 
Deposits from customers in the banking business
   
2,071,091
     
2,103,944
     
+32,853
 
Other
   
591,874
     
589,113
     
-2,761
 
Total current liabilities
   
5,221,739
     
5,538,081
     
+316,342
 
                         
Long-term debt
   
681,462
     
601,540
     
-79,922
 
Accrued pension and severance costs
   
396,715
     
399,383
     
+2,668
 
Deferred income taxes
   
432,824
     
430,614
     
-2,210
 
Future insurance policy benefits and other
   
4,834,492
     
4,921,431
     
+86,939
 
Policyholders’ account in the life insurance business
   
2,631,073
     
2,699,854
     
+68,781
 
Other
   
314,771
     
301,837
     
-12,934
 
Total liabilities
   
14,513,076
     
14,892,740
     
+379,664
 
                         
Redeemable noncontrolling interest
   
12,058
     
12,241
     
+183
 
                         
Equity:
                       
Sony Corporation’s stockholders’ equity:
                       
Common stock
   
860,645
     
861,362
     
+717
 
Additional paid-in capital
   
1,275,337
     
1,276,718
     
+1,381
 
Retained earnings
   
984,368
     
1,065,238
     
+80,870
 
Accumulated other comprehensive income
   
(618,769
)
   
(607,084
)
   
+11,685
 
Treasury stock, at cost
   
(4,335
)
   
(4,371
)
   
-36
 
     
2,497,246
     
2,591,863
     
+94,617
 
                         
Noncontrolling interests
   
638,176
     
641,375
     
+3,199
 
Total equity
   
3,135,422
     
3,233,238
     
+97,816
 
Total liabilities and equity
  ¥ 
17,660,556
    ¥ 
18,138,219
    ¥ 
+477,663
 
 

F-1

Consolidated Statements of Income
                 
   
(Millions of yen, except per share amounts)
   
Three months ended June 30
   
2016
   
2017
   
Change from 2016
Sales and operating revenue:
                 
Net sales
 
¥
1,362,517
   
¥
1,528,643
       
Financial services revenue
   
230,909
     
301,360
       
Other operating revenue
   
19,773
     
28,110
       
     
1,613,199
     
1,858,113
     
+15.2
%
                         
Costs and expenses:
                       
Cost of sales
   
1,015,623
     
1,115,092
         
Selling, general and administrative
   
338,097
     
357,379
         
Financial services expenses
   
181,631
     
255,258
         
Other operating (income) expense, net
   
20,873
     
(26,111
)
       
     
1,556,224
     
1,701,618
     
+9.3
 
                         
Equity in net income (loss) of affiliated companies
   
(783
)
   
1,116
     
 
                         
Operating income
   
56,192
     
157,611
     
+180.5
 
                         
Other income:
                       
Interest and dividends
   
3,227
     
8,785
         
Foreign exchange gain, net
   
1,615
     
         
Other
   
1,102
     
1,133
         
     
5,944
     
9,918
     
+66.9
 
                         
Other expenses:
                       
Interest
   
3,801
     
4,516
         
Foreign exchange loss, net
   
     
12,968
         
Other
   
1,319
     
1,151
         
     
5,120
     
18,635
     
+264.0
 
                         
Income before income taxes
   
57,016
     
148,894
     
+161.1
 
                         
Income taxes
   
20,475
     
54,496
         
                         
Net income
   
36,541
     
94,398
     
+158.3
 
                         
Less - Net income attributable to noncontrolling interests
   
15,375
     
13,527
         
                         
Net income attributable to Sony Corporation’s
                       
stockholders
 
¥
21,166
   
¥
80,871
     
+282.1
%
                         
                         
                         
Per share data:
                       
Net income attributable to Sony Corporation’s
                       
   stockholders
                       
   — Basic
 
¥
16.78
   
¥
64.03
     
+281.6
%
   — Diluted
   
16.44
     
62.70
     
+281.4
 
                         
                         
Consolidated Statements of Comprehensive Income
                       
   
(Millions of yen)
   
Three months ended June 30
     
2016
     
2017
   
Change from 2016
                         
Net income
 
¥
36,541
   
¥
94,398
     
+158.3
%
                         
Other comprehensive income, net of tax –
                       
Unrealized gains (losses) on securities
   
20,395
     
(3,189
)
       
Unrealized losses on derivative instruments
   
(145
)
   
(365
)
       
Pension liability adjustment
   
3,226
     
2,305
         
Foreign currency translation adjustments
   
(90,998
)
   
13,585
         
                         
Total comprehensive income (loss)
   
(30,981
)
   
106,734
     
 
                         
Less - Comprehensive income attributable
                       
   to noncontrolling interests
   
25,000
     
14,178
         
                         
Comprehensive income (loss) attributable
                       
   to Sony Corporation’s stockholders
 
¥
(55,981
)
 
¥
92,556
     
%
 
 
F-2

 
Supplemental equity and comprehensive income information
             
   
(Millions of yen)
 
   
Sony Corporation’s
stockholders’ equity
   
Noncontrolling
interests
   
Total equity
 
Balance at March 31, 2016
 
¥
2,463,340
   
¥
661,070
   
¥
3,124,410
 
Exercise of stock acquisition rights
   
268
     
     
268
 
Stock based compensation
   
568
     
     
568
 
                         
Comprehensive income:
                       
Net income
   
21,166
     
15,375
     
36,541
 
Other comprehensive income, net of tax –
                       
Unrealized gains on securities
   
9,029
     
11,366
     
20,395
 
Unrealized losses on derivative instruments
   
(145
)
   
     
(145
)
Pension liability adjustment
   
3,216
     
10
     
3,226
 
Foreign currency translation adjustments
   
(89,247
)
   
(1,751
)
   
(90,998
)
Total comprehensive income (loss)
   
(55,981
)
   
25,000
     
(30,981
)
                         
Dividends declared
   
     
(16,434
)
   
(16,434
)
Transactions with noncontrolling interests shareholders and other
   
(26
)
   
(9,359
)
   
(9,385
)
Balance at June 30, 2016
 
¥
2,408,169
   
¥
660,277
   
¥
3,068,446
 
                         
Balance at March 31, 2017
 
¥
2,497,246
   
¥
638,176
   
¥
3,135,422
 
Exercise of stock acquisition rights
   
1,434
     
     
1,434
 
Stock based compensation
   
530
     
     
530
 
                         
Comprehensive income:
                       
Net income
   
80,871
     
13,527
     
94,398
 
Other comprehensive income, net of tax –
                       
Unrealized losses on securities
   
(2,943
)
   
(246
)
   
(3,189
)
Unrealized losses on derivative instruments
   
(365
)
   
     
(365
)
Pension liability adjustment
   
2,299
     
6
     
2,305
 
Foreign currency translation adjustments
   
12,694
     
891
     
13,585
 
Total comprehensive income
   
92,556
     
14,178
     
106,734
 
                         
Dividends declared
   
     
(12,134
)
   
(12,134
)
Transactions with noncontrolling interests shareholders and other
   
97
     
1,155
     
1,252
 
Balance at June 30, 2017
 
¥
2,591,863
   
¥
641,375
   
¥
3,233,238
 
 
 
F-3

 
Consolidated Statements of Cash Flows
           
   
(Millions of yen)
 
   
Three months ended June 30
 
    2016      2017   
Cash flows from operating activities:
           
Net income
 
¥
36,541
   
¥
94,398
 
Adjustments to reconcile net income to net cash
               
provided by operating activities:
               
Depreciation and amortization, including amortization of deferred
               
    insurance acquisition costs
   
93,557
     
83,263
 
Amortization of film costs
   
61,229
     
79,318
 
Accrual for pension and severance costs, less payments
   
3,449
     
2,067
 
Other operating (income) expense, net
   
20,873
     
(26,111
)
(Gain) loss on sale or devaluation of securities investments, net
   
(72
)
   
44
 
(Gain) loss on revaluation of marketable securities held in the financial
               
    services business for trading purposes, net
   
47,138
     
(39,151
)
Loss on revaluation or impairment of securities investments held
               
    in the financial services business, net
   
2
     
46
 
Deferred income taxes
   
(266
)
   
9,833
 
Equity in net loss of affiliated companies, net of dividends
   
2,533
     
256
 
Changes in assets and liabilities:
               
   Increase in notes and accounts receivable, trade
   
(80,709
)
   
(68,488
)
   Increase in inventories
   
(75,044
)
   
(83,354
)
   Increase in film costs
   
(98,223
)
   
(94,966
)
   Increase in notes and accounts payable, trade
   
76,274
     
134,162
 
   Increase (decrease) in accrued income and other taxes
   
(2,776
)
   
4,021
 
   Increase in future insurance policy benefits and other
   
55,216
     
137,960
 
   Increase in deferred insurance acquisition costs
   
(20,528
)
   
(21,617
)
   Increase in marketable securities held in the financial services
               
        business for trading purposes
   
(26,702
)
   
(12,944
)
   Increase in other current assets
   
(75,600
)
   
(54,957
)
   Decrease in other current liabilities
   
(62,884
)
   
(92,573
)
Other
   
62,178
     
(99
)
        Net cash provided by operating activities
   
16,186
     
51,108
 
                 
Cash flows from investing activities:
               
Payments for purchases of fixed assets
   
(106,002
)
   
(56,663
)
Proceeds from sales of fixed assets
   
1,829
     
3,257
 
Payments for investments and advances by financial services business
   
(205,729
)
   
(256,254
)
Payments for investments and advances
               
    (other than financial services business)
   
(2,585
)
   
(4,442
)
Proceeds from sales or return of investments and collections of advances
               
   by financial services business
   
88,144
     
94,201
 
Proceeds from sales or return of investments and collections of advances
               
   (other than financial services business)
   
2,383
     
2,363
 
Proceeds from sales of businesses
   
     
9,378
 
Other
   
2,782
     
14,800
 
        Net cash used in investing activities
   
(219,178
)
   
(193,360
)
                 
Cash flows from financing activities:
               
Proceeds from issuance of long-term debt
   
1,031
     
71,316
 
Payments of long-term debt
   
(48,607
)
   
(4,173
)
Increase (decrease) in short-term borrowings, net
   
(34,895
)
   
70,684
 
Increase in deposits from customers in the financial services business, net
   
12,406
     
49,827
 
Dividends paid
   
(12,679
)
   
(12,687
)
Other
   
(15,809
)
   
(9,293
)
        Net cash provided by (used in) financing activities
   
(98,553
)
   
165,674
 
                 
Effect of exchange rate changes on cash and cash equivalents
   
(50,993
)
   
601
 
                 
Net increase (decrease) in cash and cash equivalents
   
(352,538
)
   
24,023
 
Cash and cash equivalents at beginning of the fiscal year
   
983,612
     
960,142
 
                 
Cash and cash equivalents at end of the period
 
¥
631,074
   
¥
984,165
 
 
 
F-4

 
Business Segment Information
                 
   
(Millions of yen)
   
Three months ended June 30
Sales and operating revenue
 
2016
   
2017
   
Change
                   
Mobile Communications
                 
Customers
 
¥
184,868
   
¥
179,066
     
-3.1
%
Intersegment
   
1,055
     
2,121
         
Total
   
185,923
     
181,187
     
-2.5
 
                         
Game & Network Services
                       
Customers
   
310,768
     
323,051
     
+4.0
 
Intersegment
   
19,611
     
25,011
         
Total
   
330,379
     
348,062
     
+5.4
 
                         
Imaging Products & Solutions
                       
Customers
   
120,365
     
154,117
     
+28.0
 
Intersegment
   
1,861
     
1,518
         
Total
   
122,226
     
155,635
     
+27.3
 
                         
Home Entertainment & Sound
                       
Customers
   
234,915
     
256,465
     
+9.2
 
Intersegment
   
1,004
     
402
         
Total
   
235,919
     
256,867
     
+8.9
 
                         
Semiconductors
                       
Customers
   
118,273
     
172,679
     
+46.0
 
Intersegment
   
26,157
     
31,582
         
Total
   
144,430
     
204,261
     
+41.4
 
                         
Pictures
                       
Customers
   
183,123
     
205,670
     
+12.3
 
Intersegment
   
194
     
141
         
Total
   
183,317
     
205,811
     
+12.3
 
                         
Music
                       
Customers
   
138,409
     
165,076
     
+19.3
 
Intersegment
   
3,495
     
3,496
         
Total
   
141,904
     
168,572
     
+18.8
 
                         
Financial Services
                       
Customers
   
230,909
     
301,360
     
+30.5
 
Intersegment
   
1,810
     
1,800
         
Total
   
232,719
     
303,160
     
+30.3
 
                         
All Other
                       
Customers
   
84,936
     
94,104
     
+10.8
 
Intersegment
   
15,828
     
15,136
         
Total
   
100,764
     
109,240
     
+8.4
 
                         
Corporate and elimination
   
(64,382
)
   
(74,682
)
 
 
Consolidated total
 
¥
1,613,199
   
¥
1,858,113
     
+15.2
%
 
Game & Network Services (“G&NS”) intersegment amounts primarily consist of transactions with All Other.
Semiconductors intersegment amounts primarily consist of transactions with the Mobile Communications (“MC”) segment, the G&NS segment and the Imaging Products & Solutions (“IP&S”) segment.
All Other intersegment amounts primarily consist of transactions with the Pictures segment, the Music segment and the G&NS segment.
Corporate and elimination includes certain brand and patent royalty income.
 
   
(Millions of yen)
   
Three months ended June 30
Operating income (loss)
 
2016
   
2017
   
Change
                   
Mobile Communications
 
¥
415
   
¥
3,616
     
+771.3
%
Game & Network Services
   
44,031
     
17,733
     
-59.7
 
Imaging Products & Solutions
   
7,506
     
23,204
     
+209.1
 
Home Entertainment & Sound
   
20,241
     
22,583
     
+11.6
 
Semiconductors
   
(43,549
)
   
55,442
   
 
Pictures
   
(10,640
)
   
(9,497
)
 
 
Music
   
15,876
     
25,022
     
+57.6
 
Financial Services
   
48,547
     
46,223
     
-4.8
 
All Other
   
(6,953
)
   
(8,231
)
 
 
Total
   
75,474
     
176,095
     
+133.3
 
                         
Corporate and elimination
   
(19,282
)
   
(18,484
)
 
 
Consolidated total
 
¥
56,192
   
¥
157,611
     
+180.5
%
 
The 2016 segment disclosure above has been reclassified to reflect the change in the business segment classification discussed in Note 3.
Operating income (loss) is sales and operating revenue less costs and expenses, and includes equity in net income (loss) of affiliated companies.
Corporate and elimination includes headquarters restructuring costs and certain other corporate expenses, including the amortization of certain intellectual property assets such as the cross-licensing of intangible assets acquired from Ericsson at the time of the Sony Mobile Communications acquisition, which are not allocated to segments.
F-5

 
Sales to Customers by Product Category
                 
   
(Millions of yen)
   
Three months ended June 30
Sales and operating revenue (to external customers)
 
2016
   
2017
   
Change
                   
Mobile Communications
 
¥
184,868
   
¥
179,066
     
-3.1
%
                         
Game & Network Services
                       
Hardware
   
119,165
     
98,315
     
-17.5
 
Network
   
145,558
     
195,302
     
+34.2
 
Other
   
46,045
     
29,434
     
-36.1
 
Total
   
310,768
     
323,051
     
+4.0
 
                         
Imaging Products & Solutions
                       
Still and Video Cameras
   
75,529
     
105,863
     
+40.2
 
Other
   
44,836
     
48,254
     
+7.6
 
Total
   
120,365
     
154,117
     
+28.0
 
                         
Home Entertainment & Sound
                       
Televisions
   
166,293
     
179,374
     
+7.9
 
Audio and Video
   
68,307
     
76,722
     
+12.3
 
Other
   
315
     
369
     
+17.1
 
Total
   
234,915
     
256,465
     
+9.2
 
                         
Semiconductors
   
118,273
     
172,679
     
+46.0
 
                         
Pictures
                       
Motion Pictures
   
75,322
     
70,274
     
-6.7
 
Television Productions
   
44,193
     
61,898
     
+40.1
 
Media Networks
   
63,608
     
73,498
     
+15.5
 
Total
   
183,123
     
205,670
     
+12.3
 
                         
Music
                       
Recorded Music
   
89,706
     
99,822
     
+11.3
 
Music Publishing
   
15,651
     
16,858
     
+7.7
 
Visual Media and Platform
   
33,052
     
48,396
     
+46.4
 
Total
   
138,409
     
165,076
     
+19.3
 
                         
Financial Services
   
230,909
     
301,360
     
+30.5
 
All Other
   
84,936
     
94,104
     
+10.8
 
Corporate
   
6,633
     
6,525
     
-1.6
 
Consolidated total
 
¥
1,613,199
   
¥
1,858,113
     
+15.2
%
 
The above table includes a breakdown of sales and operating revenue to external customers for certain segments shown in the Business Segment Information on page F-5. Sony management views each segment as a single operating segment. However, Sony believes that the breakdown of sales and operating revenue to external customers for the segments in this table is useful to investors in understanding sales by product category.
 
In the G&NS segment, Hardware includes home and portable game consoles; Network includes network services relating to game, video and music content provided by Sony Interactive Entertainment; Other includes packaged software and peripheral devices. In the IP&S segment, Still and Video Cameras includes interchangeable lens cameras, compact digital cameras, consumer video cameras and video cameras for broadcast; Other includes display products such as projectors and medical equipment. In the HE&S segment, Televisions includes LCD and OLED televisions; Audio and Video includes Blu-ray disc players and recorders, home audio, headphones and memory-based portable audio devices. In the Pictures segment, Motion Pictures includes the worldwide production, acquisition and distribution of motion pictures and direct-to-video content; Television Productions includes the production, acquisition and distribution of television programming; Media Networks includes the operation of television and digital networks worldwide. In the Music segment, Recorded Music includes the distribution of physical and digital recorded music and revenue derived from artists' live performances; Music Publishing includes the management and licensing of the words and music of songs; Visual Media and Platform includes the production and distribution of animation titles, including game applications based on the animation titles, and various service offerings for music and visual products.
 
F-6

 
Other Items
                 
   
(Millions of yen)
   
Three months ended June 30
Depreciation and amortization
 
2016
   
2017
   
Change
                   
Mobile Communications
 
¥
5,151
   
¥
4,585
   
-11.0
%
Game & Network Services
   
5,529
     
6,904
   
+24.9
 
Imaging Products & Solutions
   
6,085
     
5,861
   
-3.7
 
Home Entertainment & Sound
   
5,153
     
4,989
   
-3.2
 
Semiconductors
   
25,306
     
23,802
   
-5.9
 
Pictures
   
4,934
     
5,972
   
+21.0
 
Music
   
3,687
     
4,142
   
+12.3
 
Financial Services, including deferred insurance acquisition costs
   
24,363
     
15,107
   
-38.0
 
All Other
   
2,305
     
1,723
   
-25.2
 
Total
   
82,513
     
73,085
   
-11.4
 
                       
Corporate
   
11,044
     
10,178
   
-7.8
 
Consolidated total
 
¥
93,557
   
¥
83,263
   
-11.0
%
 
   
(Millions of yen)
 
   
Three months ended June 30, 2016
 
Restructuring charges and associated depreciation
 
Total net restructuring charges
   
Depreciation associated
with
restructured assets
   
Total
 
                         
Mobile Communications
 
¥
322
   
¥
   
¥
322
 
Game & Network Services
   
110
   
     
110
 
Imaging Products & Solutions
   
7
   
     
7
 
Home Entertainment & Sound
   
12
   
     
12
 
Semiconductors
   
3
   
     
3
 
Pictures
   
835
   
     
835
 
Music
   
110
   
     
110
 
Financial Services
 
   
   
 
All Other and Corporate
   
346
   
     
346
 
Consolidated total
 
¥
1,745
   
¥
   
¥
1,745
 
 
   
Three months ended June 30, 2017
 
Restructuring charges and associated depreciation
 
Total net restructuring charges
   
Depreciation associated
with
restructured
assets
   
Total
 
                         
Mobile Communications
 
¥
649
     
0
   
¥
649
 
Game & Network Services
 
   
   
 
Imaging Products & Solutions
   
12
   
     
12
 
Home Entertainment & Sound
   
15
   
     
15
 
Semiconductors
 
   
   
 
Pictures
   
570
   
     
570
 
Music
   
7
   
     
7
 
Financial Services
 
   
   
 
All Other and Corporate
   
1,185
     
0
     
1,185
 
Consolidated total
 
¥
2,438
     
0
   
¥
2,438
 
 
Depreciation associated with restructured assets as used in the context of the disclosures regarding restructuring activities refers to the increase in depreciation expense caused by revising the useful life and the salvage value of depreciable fixed assets under an approved restructuring plan. Any impairment of the assets is recognized immediately in the period it is identified.
 
F-7

Geographic Information
                 
   
(Millions of yen)
   
Three months ended June 30
Sales and operating revenue (to external customers)
 
2016
   
2017
   
Change
                   
Japan
 
¥
511,411
   
¥
619,741
   
+21.2
%
United States
   
353,614
     
360,936
   
+2.1
 
Europe
   
345,517
     
351,750
   
+1.8
 
China
   
109,073
     
162,216
   
+48.7
 
Asia-Pacific
   
191,670
     
247,398
   
+29.1
 
Other Areas
   
101,914
     
116,072
   
+13.9
 
Total
 
¥
1,613,199
   
¥
1,858,113
   
+15.2
%