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 October, 2004
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/ Katsumi Ihara
(Signature)
Katsumi Ihara
Executive Deputy President,
Group Chief Strategy Officer
and Chief Financial Officer
Date: October 29, 2004
List of materials
Documents attached hereto:
i) A press release regarding Results of Tracking Stock
No. 04-053E
October 28, 2004
Subsidiary Tracking Stock
Sony Communication Network Corporation
Consolidated Financial Results for the Quarter and
Six-month Period ended September 30, 2004
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 second
quarter ended September 30, 2004 (the period from July 1, 2004 to September 30,
2004) and the six-month period ended September 30, 2004 (the period from April
1, 2004 to September 30, 2004).
These results are based on the generally accepted accounting standards of
Japan.
- For the three months ended September 30, 2004, increased revenue and a
large increase in income compared to the year earlier period.
During the quarter under review, sales increased 3.3%, compared with the
year earlier period, to 10,010 million yen. This was a result of increases
in the revenue of Internet-related services. Furthermore, as a result of
cost reduction in the area of Internet provider services and improvements
in profitability at subsidiaries, operating income of 780 million yen was
recorded, compared with an operating loss of 187 million yen in the year
earlier period. Ordinary income of 720 million yen, compared with an
ordinary loss of 110 million yen, was recorded. Net income increased
greatly to 2,367 million yen, compared with a net loss of 155 million yen
in the year earlier period. Net income for the quarter under review
included extraordinary gain from an initial public stock offering by a
subsidiary and sale of subsidiary stock
- So-net subscribers remain flat
At the end of the quarter under review, the number of So-net subscribers
was about flat at 2.29 million. The number of broadband subscribers
reached 580,000, an increase of 90,000 over the end of the year earlier
period.
- Fiscal Year 2004 Forecast (revised)
Regarding the Forecast of Consolidated Results for the year ending March
31, 2005, the forecast announced on September 8, 2004 has been revised.
Currently, the SCN Group expects sales of 40,000 million yen, operating
income of 2,500 million yen, ordinary income of 2,500 million yen, and net
income of 3,300 million yen.
Consolidated Results for the quarter ended September 30, 2004
-------------------------------------------------------------
(Millions of Yen)
Three months ended September 30
2003 2004 Change (%)
Sales 9,691 10,010 +3.3
Operating income (loss) (187) 780 -
Ordinary income (loss) (110) 720 -
Net income (loss) (155) 2,367 -
Consolidated Results for the six-months ended September 30, 2004
----------------------------------------------------------------
(Millions of Yen)
Six-months ended September 30
2003 2004 Change (%)
Sales 19,014 19,640 +3.3
Operating income (loss) (463) 1,500 -
Ordinary income (loss) (412) 1,491 -
Net income (loss) (384) 2,760 -
Summary of Consolidated Operations (July 1, 2004 to September 30, 2004)
----------------------------------
Regarding sales, during the quarter under review, sales increased 3.3% to 10,010
million yen, compared with 9,691 million yen in the year earlier period.
In the area of Internet provider services the market as a whole increased in
size, with the number of broadband users (including ADSL, FTTH(Optical Fiber),
and CATV) in Japan at the end of September having passed 17 million. (Data
according to the Ministry of Public Management, Home Affairs, Posts and
Telecommunications.)
For the SCN Group, in the area of Internet provider services, sales decreased.
Although the number of SCN Group broadband subscribers was 90,000 larger than
the year earlier period, totaling 580,000, the number of narrowband subscribers
decreased.
In the area of Internet-related services, sales increased. This was mainly a
result of an increase in viewer fees for CS broadcasting and an increase in
sales at subsidiaries. Also, there was an increase in the area of merchandise
sales.
Furthermore, the total number of So-net subscribers at the end of the period
under review was 2.29 million, roughly flat with the year earlier period.
Regarding operating income, there was an improvement. During the quarter under
review, an operating profit of 780 million yen was recorded, compared with an
operating loss of 187 million yen in the year earlier period.
The main factor in the improvement was a series of cost reductions. For example,
for the item cost of sales, there were cost reductions related to integration of
access points, including outsourcing work charge in network operation, for
network lines costs, and for leases charge of servers and such. Furthermore, for
the item selling, general and administrative expenses, there were reductions in
costs for outsourcing work stemming from more efficient use of call centers, and
improvements in advertising and marketing expenses as well as other fixed costs.
In addition, there were improvements in the profitability of subsidiaries.
Regarding ordinary income, during the quarter under review, ordinary income of
720 million yen was recorded, compared with an ordinary loss of 110 million yen
in the year earlier period.
Under the item of non-operating income, equity income of 4 million yen was
recorded. Under the item of non-operating expenses, there were one-time expenses
connected with a public stock offering of a subsidiary, and disposition of fixed
assets.
Regarding net income, during the quarter under review, net income of 2,367
million yen was recorded, a significant improvement over a net loss of 155
million yen recorded during the year earlier period.
This was largely the result of the public offering of shares in an SCN Group
subsidiary, So-net M3. Inc. Due to this offering, extraordinary gain was
recorded, including gains from issuance of subsidiary stock of 1,821 million yen
and gains from sale of subsidiary stock of 2,344 million yen. On the other hand,
concerning unlisted equity investment, loss on investments in other securities
of 878 million yen was recorded as a result of a decline in the fair value of
such stock resulting from a worsening of financial conditions of investee
companies. Also, an extraordinary loss of 295 million yen was recorded as a
result of impairment losses in subsidiaries' fixed assets. As a result of the
above, net income before income taxes was 3,604 million yen and taxes including
corporate tax totaled 1,226 million yen during the quarter under review.
Sales by Category
Three-months ended September 30, 2004
-------------------------------------
Three months Percentage Three months Percentage Year-on-
ended of total ended of year
Sept.30,2003 (%) Sept. 30,2004 total change
(millions (millions (%) (%)
of yen) of yen)
Operating Internet 7,813 80.6 7,290 72.8 (6.7)
revenue provider
services
Internet- 1,670 17.2 2,463 24.6 47.5
related
services
Merchandise sales 207 2.2 258 2.6 24.2
Total 9,691 100.0 10,010 100.0 3.3
Six-months ended September 30, 2004
-----------------------------------
Six-months Percentage Six-months Percentage Year-on-
ended of total ended of year
Sept. 30,2003 (%) Sept. 30,2004 total change
(millions (millions (%) (%)
of yen) of yen)
Operating Internet 15,584 82.0 14,608 74.4 (6.3)
revenue provider
services
Internet- 3,022 15.9 4,578 23.3 51.5
related
services
Merchandise sales 408 2.1 454 2.3 11.4
Total 19,014 100.0 19,640 100.0 3.3
Operating revenue
ISP services
In this category, the SCN Group has worked to expand its service area for ADSL
and FTTH by cooperating with telecom carriers and has worked to enrich its FTTH
offerings. The SCN Group has also worked to carry out promotional campaigns to
acquire new subscribers, and for narrowband subscribers, the SCN Group has
worked to solicit subscriber transitions to broadband services.
As a result, the number of broadband subscribers increased, but the number of
narrowband subscribers decreased. Overall, sales of ISP services for the quarter
under review were 7,290 million yen, a decrease of 6.7% compared with the year
earlier period. Such sales accounted for 72.8% of total sales.
Internet-related services
In this category, the SCN Group increased sales of services, such as systems for
online games and viewer fees for CS broadcasting "So-net Channel 749," which is
programming focused on popular Korean dramas such as "Truth" and "Shoes of
Glass." Also, at group subsidiary Skygate, Co., Ltd., there were increases in
commission revenue related to increased air ticket transactions, and at So-net
M3 Inc., which carried out a public stock offering in September, there were
revenue increases stemming from expansion of "MR-kun." As a result, sales in
this category during the quarter under review increased 47.5% to 2,463 million
yen. Sales in this category accounted for 24.6% total sales.
Merchandise sales
In this category, sales steadily increased at e-commerce sites, including the
theater-related site "e-oshibai.com", the animation site "Animax Online Shop",
and online fashion shopping mall "Select Square", which brings together a
variety of famous shops. As a result, sales in this category during the quarter
under review increased 24.2% to 258 million yen. Sales in this category
accounted for 2.6% of total sales.
Results of Consolidated Subsidiaries and of Affiliated Companies Accounted for
by the Equity Method
The SCN Group includes the following four consolidated subsidiaries: So-net
Sports.com Corp., So-net M3 Inc., So-net M3 U.S.A. Corp., and Skygate, Co., Ltd.
Affiliated companies accounted for by the equity method include Label Gate Co.,
Ltd. and DeNA Co., Ltd.
During the quarter under review, So-net M3 Inc. listed its shares on the Tokyo
Stock Exchange "Mothers" board on September 16, 2004. At this time, both new
stock was issued and existing stock was sold, so the shareholding ratio of
So-net M3 Inc. and its subsidiary So-net M3 U.S.A. Corp. held by the SCN Group
declined to 74.8%.
During the quarter under review, equity income of 4 million yen was recorded,
compared with 2 million yen during the year earlier period, due to the continued
strength at DeNA Co., Ltd.'s auctions site and other e-commerce sites.
Cash Flow (April 1, 2004 to September 30, 2004)
Cash and cash equivalents were 8,434 million yen at the end of the six-month
period ended September 30, 2004, an increase of 6,253 million yen from the end
of the prior fiscal year, and an increase of 6,880 million yen from the end of
the year earlier period. During the six-month period under review, the SCN Group
generated 1,812 million yen of cash in operating activities, generated 2,240
million yen of cash in investing activities, and generated 2,201 million yen of
cash in financing activities.
Cash flows from operating activities
During the six-month period ended September 30, 2004, regarding cash flows from
operating activities, the SCN Group generated 1,812 million yen, compared with
the six-month period ended September 30, 2003 when the SCN Group used 350
million yen. This was mainly due to net income before income taxes in the period
under review of 4,374 million yen, compared with a net loss before income taxes
of 441 million yen in the year earlier period. Also, included in the net income
before income taxes during the period under review was such non-cash expense as
depreciation of 371 million yen, loss on impairment of long-lived assets of 295
million yen, and amortization of goodwill of 142 million yen, and such non-cash
income as gain on sales of subsidiary stock of 2,344 million yen and gain on
issuance of subsidiary stock of 1,821 million yen.
Cash flows from investing activities
During the six-month period ended September 30, 2004, regarding cash flows from
investing activities, the SCN Group generated 2,240 million yen, compared with
the six-month period ended September 30, 2003 when the SCN Group used 879
million yen. The main factor in the period under review was proceeds of 2,577
million yen from the sale of subsidiary stock, which was a result of the sale of
stock by the SCN Group when the Group's consolidated subsidiary So-net M3 Inc.
listed on the Tokyo Stock Exchange Mothers board. Also, outlays for acquisition
of intangible assets such as connection services, e-commerce related systems,
and homepage development were 338 million yen, compared with outlays of 366
million yen in the year earlier period.
Cash flows from financing activities
During the six-month period ended September 30, 2004, regarding cash flows from
financing activities, the SCN Group generated 2,201 million yen, while during
the six-month period ended September 30, 2003, the SCN Group used 600 million
yen. During the period under review, this reflected the issuance of subsidiary
stock at the time of the listing of the Group's consolidated subsidiary So-net
M3 Inc. on the Tokyo Stock Exchange Mothers board.
Condensed Consolidated Statements of Income
For the three-months ended September 30, 2004
---------------------------------------------
(Millions of yen)
Three-months ended September 30
2003 2004 Change
---------------- ---------------- ---------------
Sales 9,691 10,010 3.3%
Cost of sales 6,071 5,766
Gross profit 3,621 4,245
Selling, general and 3,808 3,465
administrative expenses
Operating income (loss) (187) 780 -%
Non-operating income
Equity in net income of 2 4
affiliated companies
Other 171 173 9 13
Non-operating expenses 96 73
Ordinary income (loss) (110) 720 -%
Extraordinary gain
Gain on sale of - 2,344
subsidiary stock
Gain on issuance of - 1,821
subsidiary stock
Gain on sale of - - 25 4,191
fixed assets
Extraordinary loss
Loss on revaluation of 28 878
investments in other
securities
Loss on impairment of - 295
long-lived assets
Provision for allowance - 133
for doubtful accounts
Loss on issuance of stock - 28 1 1,307
by equity investee
Net income (loss) before (138) 3,604 -%
income taxes
Income tax current 96 1,241
Income tax deferred (86) 10 (15) 1,226
Minority interest income 7 10
Net income (loss) (155) 2,367 -%
For the six-months ended September 30, 2004
-------------------------------------------
(Millions of yen)
Six-months ended September 30
2003 2004 Change
---------------- ---------------- ---------------
Sales 19,014 19,640 3.3%
Cost of sales 11,842 11,184
Gross profit 7,172 8,457
Selling, general and 7,635 6,956
administrative expenses
Operating income (loss) (463) 1,500 -%
Non-operating income
Equity in net income - 9
of affiliated companies
Other 207 207 64 74
Non-operating expenses
Equity in net loss of 18 -
affiliated companies
Other 138 156 83 83
Ordinary income (loss) (412) 1,491 -%
Extraordinary gain
Gain on sale of - 2,344
subsidiary stock
Gain on issuance of - 1,821
subsidiary stock
Gain on sale of fixed - - 25 4,191
assets
Extraordinary loss
Loss on revaluation 28 878
of investments in other
securities
Loss on impairment of - 295
long-lived assets
Provision for allowance - 133
for doubtful accounts
Loss on issuance of 1 29 1 1,307
stock by equity investee
Net income (loss) before (441) 4,374 -%
income taxes
Income tax current 78 1,440
Income tax deferred (149) (71) 154 1,594
Minority interest income 14 21
Net income (loss) (384) 2,760 -%
Condensed Consolidated Balance Sheets
(Millions of yen)
September 30 March 31 September 30
ASSETS 2003 2004 2004
------------ ------------ ------------
Current assets 7,232 7,363 13,525
------------ ------------ ------------
Cash and bank deposit 519 840 3,237
Notes and account receivable, trade 3,866 3,891 3,764
Inventories 161 130 143
Deposits in Sony group company 1,036 1,342 5,198
Other 1,691 1,183 1,243
Allowance for bad debt (40) (23) (60)
Noncurrent assets 5,519 5,637 4,261
------------ ------------ ------------
Property, plant and equipment 311 256 229
------------ ------------ ------------
Furniture and fixtures 203 162 142
Other 108 94 87
Intangible assets 2,432 2,263 2,150
------------ ------------ ------------
Software 1,290 1,286 1,505
Goodwill 948 708 567
Other 194 269 78
Investment and other assets 2,776 3,118 1,882
------------ ------------ ------------
Investment in affiliates and others 1,660 1,495 660
Other 1,116 1,623 1,320
Reserve for doubtful accounts - - (98)
------------ ------------ ------------
Total assets 12,751 13,001 17,786
------------ ------------ ------------
LIABILITIES AND STOCKHOLDERS'EQUITY
Current liabilities 4,929 5,167 6,525
------------ ------------ ------------
Account payable, trade 2,454 2,463 2,561
Current portion of long-term borrowing 200 - -
from parent company
Accrued expense 1,461 1,711 1,322
Accrued income taxes 104 197 465
Accrued bonuses 216 239 226
Accrued customer incentive program - 81 138
Other accruals - - 2
Other 494 475 1,811
Long-term liabilities 119 140 160
------------ ------------ ------------
Accrued severance costs for employees 81 93 105
Accrued severance indemnities for 38 47 55
directors
Total liabilities 5,048 5,306 6,685
------------ ------------ ------------
Minority interest 47 58 704
------------ ------------ ------------
Common stock 5,246 5,246 5,246
Additional paid-in capital 4,765 4,765 4,765
Retained earnings (accumulated losses) (2,345) (2,373) 386
Unrealized exchange gains (losses) (10) - 1
of investment securities
Foreign currency translation - (1) (1)
adjustments
------------ ------------ ------------
Total stockholders' equity 7,655 7,636 10,397
------------ ------------ ------------
Total liabilities and stockholders' 12,751 13,001 17,786
equity
------------ ------------ ------------
Consolidated Statements of Additional Paid-in Capital and Retained Earnings and
Accumulated Losses
(millions of yen)
Item Six-months ended Six-months ended
September 30, 2003 September 30, 2004
Additional Paid-in Capital
Balance at beginning of fiscal 4,765 4,765
year
Balance at the end of period 4,765 4,765
Retained Earnings (Accumulated Losses)
Balance at beginning of fiscal year (1,961) (2,373)
Increase
Net income - 2,760
Decrease
Net loss (384) -
Balance at the end of period (2,345) 386
Consolidated Statements of Cash Flow
(millions of yen)
Six-months ended September 30
2003 2004
------------ ------------
I. Cash flows from operating activities
Net (loss) income before income taxes (441) 4,374
Depreciation and amortization 389 371
Loss on impairment of long-lived assets - 295
Amortization for goodwill 156 142
Equity in net loss (income) of affiliated 18 (9)
companies
Gain on issuances of subsidiary stock - (1821)
Loss on issuance of stock by equity investee 1 1
Loss on revaluation of investments in other 28 878
securities
Gain on sale of subsidiary stock - (2,344)
Stock issuance costs - 13
Decrease in accrued bonuses (1) (14)
Increase in accrued severance costs for employees 17 12
Increase in accrued severance indemnities for 8 9
directors
(Decrease) increase in allowance for bad debt (7) 134
Increase in customer incentive program - 57
Increase in other accruals - 2
Interest income (2) (3)
Interest expenses 2 0
Loss on disposal of tangible fixed assets 77 46
Loss on sales of tangible fixed assets 1 0
Gain on sales of tangible fixed assets (0) (25)
(Increase) decrease in trade receivable (64) 127
Decrease (increase) in inventories 118 (14)
Increase in other current assets (85) (172)
Increase in trade payable 26 97
Decrease in accrued expenses (428) (388)
Decrease in other current liabilities (36) (82)
------------ ------------
Sub Total (223) 1,686
------------ ------------
Receipt of interest 2 3
Payments for interest (2) (0)
(Payments) receipt for income taxes (126) 124
------------ ------------
Net cash (used in) provided by (350) 1,812
operating activities
------------ ------------
(millions of yen)
Six-months ended September 30
2003 2004
------------ ------------
II. Cash flows from investing activities
Payment for securities investment (122) (10)
Proceeds from sales of securities investment - 0
Proceeds from sales of subsidiary stock - 2,577
Payment for acquisition of fixed assets (20) (9)
Proceeds from sales of fixed assets 0 25
Payment for acquisition of intangible assets (366) (338)
Proceeds from sales of intangible assets 0 -
Payment for deposits (0) (2)
Proceeds from deposits 1 -
Payments for long term prepaid expenses (195) (15)
Payments for loan (178) (24)
Prepayment of loan - 35
------------ ------------
Net cash (used in) provided by (879) 2,240
investing activities
------------ ------------
III.Cash flows from financing activities
Payments of long term debt (600) -
Proceeds from issuance of subsidiary stock - 2,201
------------ ------------
Net cash (used in) provided by (600) 2,201
financing activities
------------ ------------
IV. Effect of exchange rate difference on - (0)
cash and cash equivalents
V. (Decrease) increase in cash and cash (1,829) 6,253
equivalents
VI. Cash and cash equivalents at beginning of 3,384 2,182
year
------------ ------------
VII. Cash and cash equivalents at end of 1,555 8,434
the period
============ ============
(Notes)
Consolidated financial statements of the SCN Group are based on the standards
conforming with the Generally Accepted Accounting Principles in Japan.
(For reference)
(Millions of yen)
Three-months ended Three-months ended Change
September 30, 2003 September 30, 2004 (%)
Increase in fixed assets 10 8 (21.2)
Increase in intangible assets 269 277 3.1
Depreciation of fixed assets* 25 18 (25.6)
Amortization of intangible 148 148 (0.3)
assets*
Six-months ended Six-months ended Change
September 30, 2003 September 30, 2004 (%)
Increase in fixed assets 20 10 (48.8)
Increase in intangible assets 483 360 (25.4)
Depreciation of fixed assets* 49 35 (28.5)
Amortization of intangible 290 289 (0.4)
assets*
* Includes loss on impairment of long-lived assets (excluding amounts related to
leased assets)
Consolidated Results Forecast (revised)
Regarding the forecast of the consolidated results for the fiscal year ending
March 31, 2005, the SCN Group has revised towards improved profitability the
forecast previously announced on September 8, 2004.
The reasons for the revisions are as follows:
1. Regarding operating income, the main factor is a reduction in fixed costs
stemming from both cost reductions, in areas such as network usage related
to the integration of access points, outsourcing, and leases, and
structural improvements.
2. Regarding ordinary income, the main factor is the above expected
improvement in operating income.
3. Regarding net income, in the quarter under review, a loss on revaluation
of investments in other securities of 878 million yen and a loss on
impairment of long-lived assets, including lease assets at subsidiary, of
295 million yen were recorded. Furthermore, in the third quarter ending
December 31, 2004, it is expected that a gain of 533 million yen from the
sale of 740 shares in an over-allotment relating to the public offering of
So-net M3 Inc. will be recorded. These factors, together with an increase
in the tax expenses related to the revision in ordinary income, and the
revision in ordinary income itself, are the main reasons for the revision
in forecast net income.
The SCN Group announces the following forecast for consolidated results as of
October 28, 2004:
(millions of yen)
Consolidated Results Change from previous forecast
-------------------- -----------------------------
Sales 40,000 0.0%
Operating income 2,500 + 66.7%
Ordinary income 2,500 + 66.7%
Net income 3,300 - 10.8%
Previous forecast announced September 8, 2004:
Consolidated Results Change from previous forecast
-------------------- -----------------------------
Sales 40,000 0.0%
Operating income 1,500 ---
Ordinary income 1,500 ---
Net income 3,700 + 428.6%
Forecast announced July 28, 2004:
Consolidated Results Change from previous forecast
-------------------- -----------------------------
Sales 40,000 + 3.1%
Operating income 1,500 ---
Ordinary income 1,500 ---
Net income 700 + 50.0%
(For reference)
Consolidated Results for the year ended March 31, 2004
Consolidated Results Change from previous year
-------------------- -------------------------
Sales 38,166 (1.6)%
Operating loss 870 ---
Ordinary loss 911 ---
Net loss 412 ---
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.
For enquiries, please contact:
Sony Corp., IR Office
7-35, Kita-Shinagawa 6-chome Shinagawa-ku, Tokyo 141-0001 Tel:(03) 5448-2180
www.sony.co.jp/IR/
Sony Communication Network Corporation, IR Section
7-35, Kita-Shinagawa 4-chome Shinagawa-ku, Tokyo 140-0001 Tel: (03) 3446-7210
www.so-net.ne.jp/corporation/IR/