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 2016
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: July 29, 2016

List of materials

Documents attached hereto:
 
i) Press release announcing Consolidated Financial Results for the First Quarter Ended June 30, 2016
 

 
1-7-1 Konan, Minato-ku
 
Tokyo 108-0075 Japan
News & Information
 

   No. 16-071E
July 29, 2016
 
Consolidated Financial Results for the First Quarter Ended June 30, 2016

Tokyo, July 29, 2016 -- Sony Corporation today announced its consolidated financial results for the first quarter ended June 30, 2016 (April 1, 2016 to June 30, 2016).

   
(Billions of yen, millions of U.S. dollars, except per share amounts) 
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
   
2016*
Sales and operating revenue
 
¥1,808.1
   
¥1,613.2
     
–10.8
%
 
$15,662
 
Operating income
   
96.9
     
56.2
     
–42.0
     
546
 
Income before income taxes
   
138.7
     
57.0
     
–58.9
     
554
 
Net income attributable to Sony Corporation’s stockholders
   
82.4
     
21.2
     
–74.3
     
205
 
Net income attributable to Sony Corporation’s stockholders per share of common stock:
                               
    – Basic
 
¥70.52
   
¥16.78
     
–76.2
   
$0.16
 
    – Diluted
   
70.36
     
16.44
     
–76.6
     
0.16
 

* U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 103 yen = 1 U.S. dollar, the approximate Tokyo foreign exchange market rate as of June 30, 2016.

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, 2015 and 2016 are presented below.

   
First Quarter ended June 30
 
   
2015
 
2016
 
Change
 
The average rate of yen
                      
1 U.S. dollar
 
¥121.3
   
¥108.1
     
12.3
%
(yen appreciation)
1 Euro
   
134.2
     
122.1
   
 9.9
 
(yen appreciation)

Consolidated Results for the First Quarter Ended June 30, 2016

Sales and operating revenue (“Sales”) decreased by 10.8% compared to the same quarter of the previous fiscal year (“year-on-year”) to 1,613.2 billion yen (15,662 million U.S. dollars).  This significant decrease was mainly due to the impact of foreign exchange rates, a decrease in Mobile Communications (“MC”) segment sales reflecting a significant decrease in smartphone unit sales, a decrease in revenues in the Financial Services segment due to the deterioration in investment performance in the separate account at Sony Life Insurance Co., Ltd. (“Sony Life”), as well as decreases in sales in the Semiconductors and Imaging Products & Solutions (“IP&S”) segments due to the impact of the earthquakes in the Kumamoto region in 2016 (“2016 Kumamoto Earthquakes”).  This decrease was partially offset by an increase in Game & Network Services (“G&NS”) segment sales reflecting increases in PlayStation 4 (“PS4”) software sales.  On a constant currency basis, sales decreased 3% year-on-year.  For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Notes on page 8.
 

1

 
Operating income decreased 40.7 billion yen year-on-year to 56.2 billion yen (546 million U.S. dollars).  This significant decrease was mainly due to the deterioration of operating results in the Semiconductors segment, partially offset by an improvement in the G&NS and MC segments.

Operating income in the current quarter includes a 20.3 billion yen (197 million U.S. dollars) impairment charge against long-lived assets in the Semiconductors segment 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 (132 million U.S. dollars) in expenses resulting from the 2016 Kumamoto Earthquakes in the Semiconductors segment.  6.8 billion yen (66 million U.S. dollars) was incurred in expenses, which includes repair costs of certain fixed assets and a loss on disposal of inventories directly damaged by the 2016 Kumamoto Earthquakes.  Of these charges, approximately 1.3 billion yen (12 million U.S. dollars) was offset by probable insurance recoveries.  In addition, there were idle facility costs at manufacturing sites affected by the earthquakes, totaling 8.1 billion yen (78 million U.S. dollars).

Operating income in the same quarter of the previous fiscal year included a 151 million U.S. dollar (18.1 billion yen) gain on the remeasurement to fair value of Sony Music Entertainment (“SME”)’s 51% equity interest in Orchard Media, Inc. (“The Orchard”), which had previously been accounted for under the equity method, as a result of SME increasing its ownership interest to 100%, in the Music Segment, as well as a gain of 12.3 billion yen from the sale of a part of the logistics business, in connection with the formation of a logistics joint venture, recorded in Corporate and elimination.

During the current quarter, restructuring charges, net, decreased 8.4 billion yen year-on-year to 1.7 billion yen (17 million U.S. dollars).

Equity in net income of affiliated companies, recorded within operating income, was a loss of 0.8 billion yen (8 million U.S. dollars), compared to income of 0.4 billion yen in the same quarter of the previous fiscal year.  This deterioration was mainly due to a deterioration of equity in net income (loss) for SA Reinsurance Ltd. in the Financial Services segment.

The net effect of other income and expenses decreased 41.0 billion yen year-on-year to income of 0.8 billion yen (8 million U.S. dollars), primarily due to the absence of a 46.8 billion yen gain on the sale of certain shares of Olympus Corporation (“Olympus”) and a 2.7 billion yen gain on the sale of shares in connection with the above-mentioned formation of a logistics joint venture, recorded in the same quarter of the previous fiscal year.

Income before income taxes decreased 81.7 billion yen year-on-year to 57.0 billion yen (554 million U.S. dollars).

Income taxes: During the current quarter, Sony recorded 20.5 billion yen (199 million U.S. dollars) of income tax expense, resulting in an effective tax rate of 35.9% which exceeded the effective tax rate of 28.7% in the same quarter of the previous fiscal year.  This higher effective tax rate was mainly due to the fact that Sony Corporation and its national tax filing group in Japan, which has established valuation allowances for deferred tax assets, had losses during the current quarter compared to having 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, decreased 61.3 billion yen year-on-year to 21.2 billion yen (205 million U.S. dollars).

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.

Mobile Communications (MC)

   
(Billions of yen, millions of U.S. dollars) 
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
 
2016
Sales and operating revenue
 
¥280.5
   
¥185.9
     
–33.7
%
 
$1,805
 
Operating income (loss)
   
(22.9
)
   
0.4
     
     
4
 
 
2

 
Sales decreased 33.7% year-on-year (a 30% decrease on a constant currency basis) to 185.9 billion yen (1,805 million U.S. dollars).  This decrease was mainly due to a reduction in mid-range smartphone unit sales, as well as a reduction in smartphone unit sales in unprofitable geographical areas where downsizing measures were implemented during the previous fiscal year, partially offset by an improvement in product mix of smartphones reflecting an increased focus on high value-added models.

Operating income of 0.4 billion yen (4 million U.S. dollars) was recorded, compared to an operating loss of 22.9 billion yen recorded in the same quarter of the previous fiscal year.  Despite the significant decrease in sales, profitability improved significantly primarily due to the improvement in product mix, cost reductions mainly  resulting from the benefit of restructuring initiatives and a significant decrease in restructuring charges.  During the current quarter, there was a 4.4 billion yen positive impact from foreign exchange rate fluctuations (net of the impact of foreign exchange hedging).

Game & Network Services (G&NS)

   
(Billions of yen, millions of U.S. dollars) 
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
 
2016
Sales and operating revenue
 
¥288.6
   
¥330.4
     
+14.5
%
 
$3,208
 
Operating income
   
19.5
     
44.0
     
+126.3
     
427
 

The G&NS segment includes the Hardware, Network, and Other categories.  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.

Sales increased 14.5% year-on-year (a 25% increase on a constant currency basis) to 330.4 billion yen (3,208 million U.S. dollars).  This significant increase was primarily due to a significant increase in PS4 software sales including sales through the network, partially offset by the impact of foreign exchange rates and decreases in PlayStation®3 hardware and software sales.

Operating income increased 24.6 billion yen year-on-year to 44.0 billion yen (427 million U.S. dollars).  This significant increase was primarily due to the above-mentioned increase in PS4 software sales and PS4 hardware cost reductions, partially offset by an increase in marketing costs.  During the current quarter, there was a 1.3 billion yen negative impact from foreign exchange rate fluctuations.

Imaging Products & Solutions (IP&S)

   
(Billions of yen, millions of U.S. dollars) 
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
 
2016
Sales and operating revenue
 
¥164.7
   
¥122.2
     
–25.8
%
 
$1,187
 
Operating income
   
17.7
     
7.5
     
–57.7
     
73
 

The IP&S segment includes the Still and Video Cameras as well as Other categories.  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.  Due to certain changes in Sony’s organizational structure, sales and operating revenue and operating income (loss) of the IP&S segment of the comparable prior period have been reclassified to conform to the current presentation.  For details, please see Notes on page 8.

Sales decreased 25.8% year-on-year (an 18% decrease on a constant currency basis) to 122.2 billion yen (1,187 million U.S. dollars).  This significant decrease in sales was mainly due to lower sales of Still and Video Cameras, reflecting the difficulty of procuring components due to the 2016 Kumamoto Earthquakes and a contraction of the market, as well as the impact of foreign exchange rates, partially offset by an improvement in the product mix of Still and Video Cameras, reflecting a shift to high value-added models.

Operating income decreased 10.2 billion yen year-on-year to 7.5 billion yen (73 million U.S. dollars).  This significant decrease was mainly due to the impact of the above-mentioned decrease in sales and the negative impact of foreign exchange rates, partially offset by the above-mentioned improvement in product mix and a reduction of fixed costs.  During the current quarter, there was a 5.7 billion yen negative impact from foreign exchange rate fluctuations.
 
3

 
Home Entertainment & Sound (HE&S)

   
(Billions of yen, millions of U.S. dollars) 
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
 
2016
Sales and operating revenue
 
¥253.1
   
¥235.9
     
–6.8
%
 
$2,290
 
Operating income
   
10.9
     
20.2
     
+85.3
     
197
 

The HE&S segment includes the Televisions as well as Audio and Video categories.  Televisions includes LCD televisions; Audio and Video includes Blu-ray DiscTM players and recorders, home audio, headphones and memory-based portable audio devices.

Sales decreased 6.8% year-on-year (a 4% increase on a constant currency basis) to 235.9 billion yen (2,290 million U.S. dollars).  This decrease was primarily due to the impact of foreign exchange rates, partially offset by an increase in LCD television unit sales.

Operating income increased 9.3 billion yen year-on-year to 20.2 billion yen (197 million U.S. dollars).  This increase was primarily due to cost reductions and an improvement in product mix reflecting a shift to high value-added models, partially offset by an increase in research and development expenses, as well as the negative impact of foreign exchange rates.  During the current quarter, there was a 2.6 billion yen negative impact from foreign exchange rate fluctuations.

Semiconductors

   
(Billions of yen, millions of U.S. dollars)
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
 
2016
Sales and operating revenue
 
¥187.4
   
¥144.4
     
–22.9
%
 
$1,402
 
Operating income (loss)
   
32.7
     
(43.5
)
   
     
(423
)

The Semiconductors segment includes image sensors and camera modules.  Due to certain changes in Sony’s organizational structure, sales and operating revenue and operating income (loss) of the former Devices segment of the comparable prior period have been reclassified to conform to the current presentation.  For details, please see Notes on page 8.

Sales decreased 22.9% year-on-year (a 14% decrease on a constant currency basis) to 144.4 billion yen (1,402 million U.S. dollars).  This decrease was primarily due to a significant decrease in sales of image sensors, reflecting the impact of a decrease in image sensor production due to the 2016 Kumamoto Earthquakes, lower demand for image sensors for mobile products, and the impact of foreign exchange rates.  Sales to external customers decreased 21.4% year-on-year.

Operating loss of 43.5 billion yen (423 million U.S. dollars) was recorded, compared to operating income of 32.7 billion yen recorded in the same quarter of the previous fiscal year.  This significant deterioration was due to the impact of the above-mentioned decrease in sales, the 20.3 billion yen (197 million U.S. dollars) impairment charge against long-lived assets for camera modules, net charges of 13.6 billion yen (132 million U.S. dollars) for expenses resulting from the 2016 Kumamoto Earthquakes and the negative impact of foreign exchange rates.  During the current quarter, there was a 8.2 billion yen negative impact from foreign exchange rate fluctuations.
 
4


Components

   
(Billions of yen, millions of U.S. dollars)
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
 
2016
Sales and operating revenue
 
¥57.1
   
¥44.1
     
–22.7
%
 
$429
 
Operating loss
   
(2.3
)
   
(4.7
)
   
     
(46
)

The Components segment includes batteries and recording media.  Due to certain changes in Sony’s organizational structure, sales and operating revenue and operating income (loss) of the former Devices segment of the comparable prior period have been reclassified to conform to the current presentation.  For details, please see Notes on page 8.

Sales decreased 22.7% year-on-year (a 14% decrease on a constant currency basis) to 44.1 billion yen (429 million U.S. dollars).  This decrease was primarily due to a significant decrease in sales in the battery business and the impact of foreign exchange rates.

Operating loss increased 2.4 billion yen year-on-year to 4.7 billion yen (46 million U.S. dollars).  This increase was primarily due to the above-mentioned decrease in sales and impairment charges against the long-lived assets in the recording media business, partially offset by a decrease in depreciation expenses in the battery business pursuant to a 30.6 billion yen impairment charge against its long-lived assets recorded in the previous fiscal year.  During the current quarter, there was a 1.2 billion yen negative impact from foreign exchange rate fluctuations.

 *    *    *    *    *

Total inventory of the six Electronics* segments above as of June 30, 2016 was 636.2 billion yen (6,177 million U.S. dollars), a decrease of 41.6 billion yen, or 6.1% year-on-year.  Inventory increased by 36.1 billion yen, or 6.0% compared with the level as of March 31, 2016.

* The term “Electronics” refers to the sum of the MC, G&NS, IP&S, HE&S, Semiconductors and Components segments.

In connection with the realignment made from the first quarter of the fiscal year ending March 31, 2017, total inventory of the six Electronics segments as of June 30, 2015 and March 31, 2016 has been reclassified to conform to the current presentation.  For further details, please see Notes on page 8.

*    *    *    *    *

Pictures

   
(Billions of yen, millions of U.S. dollars)
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
 
2016
Sales and operating revenue
 
¥171.5
   
¥183.3
     
+6.9
%
 
$1,780
 
Operating loss
   
(11.7
)
   
(10.6
)
   
     
(103
)

The Pictures segment is comprised of the Motion Pictures, Television Productions, and Media Networks categories.  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.

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 6.9% year-on-year (a 20% increase on a U.S. dollar basis) to 183.3 billion yen (1,780 million U.S. dollars).  The increase in sales on a U.S. dollar basis was primarily due to higher sales of Motion Pictures and Media Networks.  Sales of Motion Pictures were significantly higher than the same quarter of the previous fiscal year primarily due to higher theatrical and television licensing revenues.  Theatrical revenues increased due to the strong worldwide theatrical performance of films released in the current quarter including The Angry Birds Movie.  Sales of Media Networks increased primarily due to higher advertising revenues in India and Latin America.
 
5

 
Operating loss decreased 1.0 billion yen year-on-year to 10.6 billion yen (103 million U.S. dollars) due to the impact of the appreciation of the yen against the U.S. dollar.  On a U.S. dollar basis, the operating loss increased slightly as the benefit from the increase in sales was more than offset by significantly higher worldwide theatrical marketing expenses in the current quarter.

Music

   
(Billions of yen, millions of U.S. dollars)
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
 
2016
Sales and operating revenue
 
¥130.2
   
¥141.5
     
+8.7
%
 
$1,374
 
Operating income
   
31.8
     
15.9
     
–49.8
     
155
 

The Music segment is comprised of the Recorded Music, Music Publishing as well as Visual Media and Platform categories.  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 various service offerings for music and visual products and the production and distribution of animation titles.

The results presented in Music include the yen-translated results of SME, a U.S.-based operation which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis, the results of Sony Music Entertainment (Japan) Inc., a Japan-based music company which aggregates its results in yen, and the yen-translated consolidated results of Sony/ATV Music Publishing LLC* (“Sony/ATV”), a 50% owned and consolidated U.S.-based joint venture in the music publishing business which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.

* Sony and the Estate of Michael Jackson (the “Estate”) entered into a binding Memorandum of Understanding on March 14, 2016 and a definitive agreement on April 18, 2016, for Sony to obtain full ownership of Sony/ATV by acquiring the 50% interest in Sony/ATV held by the Estate.  The closing of the transaction is subject to certain closing conditions, including regulatory approval.

Sales increased 8.7% year-on-year (a 17% increase on a constant currency basis) to 141.5 billion yen (1,374 million U.S. dollars).  The increase in sales was primarily due to an increase in sales of Recorded Music and Visual Media and Platform reflecting the continued strong performance of a game application for mobile devices, partially offset by the negative impact of the appreciation of the yen against the U.S. dollar.  Recorded Music sales increased primarily due to an increase in digital streaming revenues.  Best-selling titles included Beyoncé’s Lemonade, Kazumasa Oda’s Anohi Anotoki, and Nogizaka46’s Sorezore no Isu.

Operating income decreased 15.8 billion yen year-on-year to 15.9 billion yen (155 million U.S. dollars).  This decrease was primarily due to the absence of the 151 million U.S. dollar (18.1 billion yen) gain that was recorded in the same quarter of the previous fiscal year, on the remeasurement of SME’s equity interest in The Orchard, as well as the negative impact of the appreciation of the yen against the U.S. dollar, partially offset by the impact of increase in sales.

Financial Services

   
(Billions of yen, millions of U.S. dollars)
   
First Quarter ended June 30
   
2015
 
2016
 
Change in yen
 
2016
Financial services revenue
 
¥279.4
   
¥232.7
     
–16.7
%
 
$2,259
 
Operating income
   
46.0
     
48.5
     
+5.6
     
471
 

The Financial Services segment results include Sony Financial Holdings Inc. (“SFH”) and SFH’s consolidated subsidiaries such as 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 decreased 16.7% year-on-year to 232.7 billion yen (2,259 million U.S. dollars) primarily due to a significant decrease in revenue at Sony Life.  Revenue at Sony Life decreased 20.5% year-on-year to 199.5 billion yen (1,937 million U.S. dollars) mainly due to a deterioration in investment performance in the separate account, partially offset by an increase in insurance premium revenue reflecting an increase in the policy amount in force.  The deterioration in investment performance was mainly due to a decline in the Japanese stock market during the current quarter, as compared with a rise in the same quarter of the previous fiscal year.
 
6

 
Operating income increased 2.6 billion yen year-on-year to 48.5 billion yen (471 million U.S. dollars).  This increase was mainly due to an increase in operating income at Sony Bank, reflecting a foreign exchange gain on foreign currency-denominated customer deposits compared to a loss in the same quarter of the previous fiscal year.  Operating income at Sony Life was 41.5 billion yen (403 million U.S. dollars), essentially flat year-on-year.

*    *    *    *    *

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-12.

Operating Activities: During the current quarter, there was a net cash inflow of 16.2 billion yen (157 million U.S. dollars) from operating activities, compared to a net cash outflow of 154.3 billion yen in the same quarter of the previous fiscal year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 80.9 billion yen (786 million U.S. dollars), a decrease of 153.7 billion yen, or 65.5% year-on-year.  This decrease was primarily due to a smaller decrease in accrued expenses in other current liabilities and an improvement in net income after taking into account non-cash adjustments (including depreciation and amortization, gain on sales of securities investments and other operating income (expense)).

The Financial Services segment had a net cash inflow of 110.8 billion yen (1,076 million U.S. dollars), an increase of 20.0 billion yen, or 22.0% year-on-year.  This increase was primarily due to an increase 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 219.2 billion yen (2,128 million U.S. dollars) of net cash in investing activities, an increase of 47.2 billion yen, or 27.4% year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 101.1 billion yen (982 million U.S. dollars), an increase of 93.7 billion yen, or 1,255% year-on-year.  The increase was mainly due to the absence of the cash inflow from the sales of certain shares of Olympus recorded in the same quarter of the previous fiscal year and an increase in the amount of fixed asset purchases.

The Financial Services segment used 117.7 billion yen (1,143 million U.S. dollars) of net cash, a decrease of 46.9 billion yen, or 28.5% year-on-year.  This decrease was mainly due to a year-on-year decrease in payments for investments and advances at 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 182.0 billion yen (1,767 million U.S. dollars), a decrease of 60.1 billion yen, or 24.8% year-on-year.

Financing Activities: Net cash used by financing activities during the current quarter was 98.6 billion yen (957 million U.S. dollars), an increase of 90.7 billion yen, or 1,160% year-on-year.

For all segments excluding the Financial Services segment, there was a 79.6 billion yen (773 million U.S. dollars) net cash outflow, an increase of 17.7 billion yen, or 28.6% year-on-year.  This increase was primarily due to a decrease in short-term borrowings compared to an increase in the same quarter of the previous fiscal year, partially offset by a year-on-year decrease in repayment of long-term debt.

In the Financial Services segment, there was a 33.0 billion yen (320 million U.S. dollars) net cash outflow, compared to a 43.6 billion yen net cash inflow in the same quarter of the previous fiscal year.  This change was primarily due to a decrease in short-term borrowings at Sony Life in the current quarter, compared to an increase in the same quarter of the previous fiscal year.
 
7

 
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, 2016 was 631.1 billion yen (6,127 million U.S. dollars).  Cash and cash equivalents of all segments excluding the Financial Services segment was 437.2 billion yen (4,245 million U.S. dollars) at June 30, 2016, a decrease of 13.4 billion yen, or 3.0% compared with the balance as of June 30, 2015, and a decrease of 312.7 billion yen, or 41.7% compared with the balance as of March 31, 2016.  Sony believes that it continues to maintain sufficient liquidity through access to a total, translated into yen, of 505.8 billion yen (4,911 million U.S. dollars) of unused committed lines of credit with financial institutions in addition to the cash and cash equivalents balance at June 30, 2016.  Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 193.8 billion yen (1,882 million U.S. dollars) at June 30, 2016, an increase of 16.4 billion yen, or 9.2% compared with the balance as of June 30, 2015, and a decrease of 39.9 billion yen, or 17.1% compared with the balance as of March 31, 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-12.  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:

   
(Billions of yen, millions of U.S. dollars)
   
First quarter ended June 30
   
2015
 
2016
 
2016
                   
Net cash provided by (used in) operating activities reported in the consolidated statements of cash flows
 
¥
(154.3
)
 
¥
16.2
   
$
157
 
Net cash used in investing activities reported in the consolidated statements of cash flows
   
(172.0
)
   
(219.2
)
   
(2,128
)
     
(326.3
)
   
(203.0
)
   
(1,971
)
                         
Less: Net cash provided by operating activities within the Financial Services segment
   
90.8
     
110.8
     
1,076
 
Less: Net cash used in investing activities within the Financial Services segment
   
(164.5
)
   
(117.7
)
   
(1,143
)
Eliminations *2
   
10.5
     
14.1
     
137
 
                         
Cash flow used by operating and investing activities combined excluding the Financial Services segment’s activities
 
¥
(242.1
)
 
¥
(182.0
)
 
$
(1,767
)

*2 Eliminations primarily consist of intersegment dividend payments.

*    *    *    *    *

Notes

Business Segment Realignment
Sony realigned its business segments from the first quarter of the fiscal year ending March 31, 2017 to reflect a change in the Corporate Executive Officers in charge of certain segments and modifications to the organizational structure of certain segments as of April 1, 2016.  As a result of this realignment, Sony has separated the Devices segment into a Semiconductors segment and a Components segment.  In addition, the operations of the automotive camera business, which were included in the IP&S segment, and the operations of the Imaging Device Development Division, which were included in Corporate and elimination, are now included in the Semiconductors segment.  The sales and operating revenue and operating income (loss) of each segment in the fiscal year ended March 31, 2016 have been reclassified to conform to the current presentation.

Impact of Foreign Exchange Rate Fluctuations on Sales and Operating Income (Loss)
For all segments other than Pictures and Music, the impact of foreign exchange rate fluctuations on sales is calculated by applying the change in the yen’s periodic weighted average exchange rates for the first quarter ended June 30, 2015 from the first quarter ended June 30, 2016 to the major transactional currencies in which the sales are denominated.  The impact of foreign exchange rate fluctuations on operating income (loss) described herein is calculated by subtracting from the impact on sales the impact on cost of sales and selling, general and administrative expenses calculated by applying the same major transactional currencies calculation process to cost of sales and selling, general and administrative expenses 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.  Since the worldwide subsidiaries of the Pictures segment and of SME and Sony/ATV in the Music segment are aggregated on a U.S. dollar basis and are translated into yen, the impact of foreign exchange rate fluctuations is calculated by applying the change in the periodic weighted average exchange rates for the first quarter ended June 30, 2015 from the first quarter ended June 30, 2016 from U.S. dollar to yen to the U.S. dollar basis operating results.  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.

*    *    *    *    *
 
8


Outlook for the Fiscal Year Ending March 31, 2017

The forecast for consolidated results for the fiscal year ending March 31, 2017, as announced on May 24, 2016, has been revised as follows.

   
(Billions of yen)
 
Change – July Forecast from
   
March 31, 2016
Results
 
May
Forecast
 
July
Forecast
 
March 31, 2016
Results
 
May
Forecast
Sales and operating revenue
 
¥8,105.7
   
¥7,800
   
¥7,400
     
–8.7
%
   
–5.1
%
Operating income
   
294.2
     
300
     
300
   
+ ¥5.8
 bil     
 
Income before income taxes
   
304.5
     
270
     
270
   
34.5
 bil     
 
Net income attributable to Sony Corporation’s stockholders
   
147.8
     
80
     
80
   
67.8
 bil     
 

Assumed foreign currency exchange rates for the remainder of the current fiscal year ending March 31, 2017 are the following.
 
 
 
Remainder of the current
fiscal year
 
(For your reference)
Remainder of the current fiscal year
at the time of the May forecast*
 
Consolidated forecast and
forecasts for each segment
 
Consolidated forecast
Forecasts for each segment
1 U.S. dollar
approximately 103 yen
 
approximately 110 yen
approximately 113 yen
1 Euro
approximately 114 yen
 
approximately 120 yen
approximately 129 yen

* The assumed foreign currency exchange rates for the segments were different from the assumed foreign currency exchange rates for the consolidated forecasts.  The financial impact of the difference between the rates was included in the forecast for All Other, Corporate and elimination.

Consolidated sales for the fiscal year ending March 31, 2017 are expected to be lower than the May forecast primarily due to the impact of foreign exchange rates as well as a decrease in sales of the MC, Pictures and G&NS segments, partially offset by an increase in sales in the IP&S segment.

Consolidated operating income is expected to remain unchanged from the May forecast due to an expected decrease in operating loss in All Other, Corporate and elimination and expected increases in operating income in the IP&S and HE&S segments.  This increase is expected to be offset by deterioration in the operating results of the Semiconductors, Components and Pictures segments.

The negative impact on consolidated operating income related to the 2016 Kumamoto Earthquakes is expected to be approximately 26 billion yen in the IP&S segment and approximately 48 billion yen in the Semiconductors segment.  In addition, since the sales of these two segments are expected to be lower than the level anticipated prior to the earthquakes, approximately 6 billion yen in fixed costs that were scheduled to be allocated to these two segments based on sales are no longer expected to be allocated from All Other, Corporate and elimination, resulting in a total expected negative impact on consolidated operating income of approximately 80 billion yen.  However, this impact is expected to be partially offset by approximately 10 billion yen in insurance recoveries for the fiscal year ending March 31, 2017 that are expected to be included in the Semiconductors segment.  At the time of the May forecast, the total negative impact on consolidated operating income related to the 2016 Kumamoto Earthquakes was expected to be approximately 115 billion yen, of which approximately 45 billion yen was expected to be in the IP&S segment, approximately 60 billion yen was expected to be in the Semiconductors segment and approximately 10 billion yen was expected to be in All Other, Corporate and elimination.  At the time of the May forecast, Sony also expected this impact to be partially offset by approximately 10 billion yen in insurance recoveries for the fiscal year ending March 31, 2017, in the Semiconductors segment.
 
9

 
Restructuring charges are expected to be approximately 12 billion yen for the Sony Group in the fiscal year ending March 31, 2017, which remains unchanged from the May forecast, compared to 38.3 billion yen recorded in the fiscal year ended March 31, 2016.  This amount will be recorded as an operating expense included in the above-mentioned forecast for operating income.

Net income attributable to Sony Corporation’s stockholders is expected to remain unchanged from the May forecast.

The forecast for each business segment has been revised as follows:

   
(Billions of yen)
 
Change – July Forecast from
   
March 31, 2016
Results
 
May
Forecast
 
July
Forecast
 
March 31, 2016
 Results
 
May
Forecast
Mobile Communications
                             
Sales and operating revenue
 
¥1,127.5
   
¥940
   
¥840
     
–25.5
%
   
–10.6
%
Operating income (loss)
   
(61.4
)
   
5
     
5
   
+ ¥66.4
 bil     
 
Game & Network Services
                                       
Sales and operating revenue
   
1,551.9
     
1,680
     
1,590
     
+2.5
%
   
–5.4
%
Operating income
   
88.7
     
135
     
135
   
+ ¥46.3
 bil    
 
Imaging Products & Solutions
                                       
Sales and operating revenue
   
684.0
     
530
     
540
     
–21.1
%
   
+1.9
%
Operating income
   
69.3
     
16
     
22
   
– ¥47.3
 bil  
+ ¥6.0
 bil
Home Entertainment & Sound
                                       
Sales and operating revenue
   
1,159.0
     
1,040
     
1,000
     
–13.7
%
   
–3.8
%
Operating income
   
50.6
     
36
     
41
   
– ¥9.6
 bil  
+ ¥5.0
 bil
Semiconductors
                                       
Sales and operating revenue
   
739.1
     
740
     
700
     
–5.3
%
   
–5.4
%
Operating income (loss)
   
14.5
     
(37
)
   
(64
)
 
– ¥78.5
 bil  
– ¥27.0
 bil
Components
                                       
Sales and operating revenue
   
224.6
     
220
     
200
     
–11.0
%
   
–9.1
%
Operating loss
   
(42.9
)
   
(3
)
   
(12
)
 
+ ¥30.9
 bil  
– ¥9.0
 bil
Pictures
                                       
Sales and operating revenue
   
938.1
     
1,010
     
920
     
–1.9
%
   
–8.9
%
Operating income
   
38.5
     
43
     
38
   
– ¥0.5
 bil  
– ¥5.0
 bil
Music
                                       
Sales and operating revenue
   
617.6
     
550
     
550
     
–11.0
%
   
 
Operating income
   
87.3
     
63
     
63
   
– ¥24.3
 bil    
 
Financial Services
                                       
Financial services revenue
   
1,073.1
     
1,140
     
1,140
     
+6.2
%
   
 
Operating income
   
156.5
     
150
     
150
   
– ¥6.5
 bil    
 
All Other, Corporate and Elimination
                                 
Operating loss
   
(106.9
)
   
(108
)
   
(78
)
 
+ ¥28.9
 bil  
+ ¥30.0
 bil
Consolidated
                                       
Sales and operating revenue
   
8,105.7
     
7,800
     
7,400
     
–8.7
%
   
–5.1
%
Operating income
   
294.2
     
300
     
300
   
+ ¥5.8
 bil    
 

Mobile Communications
Sales are expected to be lower than the May forecast primarily due to an expected decrease in smartphone unit sales and the impact of foreign exchange rates.  The forecast for operating income remains unchanged from the May forecast despite the above-mentioned downward revision in sales, due to the positive impact of the appreciation of the yen against the U.S. dollar, primarily reflecting a high ratio of U.S. dollar-denominated costs, as well as higher than originally anticipated selling prices of smartphones and reductions in material costs.

Game & Network Services
Sales are expected to be lower than the May forecast due to the impact of foreign exchange rates, partially offset by an increase in PS4 software sales, including sales through the network.  The forecast for operating income remains unchanged from the May forecast mainly due to the above-mentioned increase in PS4 software sales, offset by the negative impact of foreign exchange rates and an increase in marketing costs.

 
10


Imaging Products & Solutions
Sales are expected to be higher than the May forecast due to a shorter-than-expected delay in the supply of components used for Still and Video Cameras resulting from the 2016 Kumamoto Earthquakes, partially offset by the impact of foreign exchange rates.  Operating income is expected to be higher than the May forecast mainly due to the above-mentioned increase in sales and an expected improvement in product mix resulting from a shift to high value-added models in Still and Video Cameras, partially offset by the negative impact of foreign exchange rates.

Home Entertainment & Sound
Sales are expected to be lower than the May forecast primarily due to the impact of foreign exchange rates.  Operating income is expected to be higher than the May forecast mainly due to cost reductions and an expected improvement in product mix, partially offset by the negative impact of foreign exchange rates.

Semiconductors
Sales are expected to be lower than the May forecast primarily due to lower-than-expected image sensor sales reflecting the impact of foreign exchange rates, partially offset by a faster-than-expected recovery from the 2016 Kumamoto Earthquakes.  Operating income is expected to be lower than the May forecast mainly due to the negative impact of foreign exchange rates, partially offset by the favorable impact of the above-mentioned recovery.

Components
Sales are expected to be lower than the May forecast due to lower-than-expected sales in the battery business.  Operating income is expected to be lower than the May forecast primarily due to the above-mentioned decrease in sales and impairment charges against long-lived assets in the recording media business in the current quarter.  As announced on July 28, 2016, there is a possibility of recording a loss related to the transfer of the battery business if the binding definitive agreements are signed.  This potential loss is not reflected in the consolidated results forecast because the amount of such loss will depend on the final negotiated terms of the definitive agreements.

Pictures
The forecasts for sales and operating income are expected to be lower than the May forecast primarily due to the negative impact of the appreciation of the yen against the U.S. dollar.

Music
The forecasts for sales and operating income remain unchanged from the May forecast due to the strong performance of Recorded Music and the strong performance of Visual Media and Platform, which benefitted from a game application for mobile devices, offset by the negative impact of the appreciation of the yen against the U.S. dollar.

Financial Services
The forecasts for financial services revenue and operating income remain unchanged from the May 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.
 
11

 
The forecast for additions to long-lived assets, depreciation and amortization, as well as research and development expenses for the current fiscal year has been revised as follows:

Consolidated

   
(Billions of yen)
 
Change – July Forecast from
   
March 31, 2016
Results
 
May
Forecast
 
July
Forecast
 
March 31, 2016
 Results
 
May
Forecast
Additions to Long-lived Assets*
 
¥468.9
   
¥355
   
¥345
     
–26.4
%
   
–2.8
%
[additions to property, plant and equipment (included above)
   
374.3
     
260
     
250
     
–33.2
     
–3.8
]
[additions to intangible assets (included above)
   
94.6
     
95
     
95
     
+0.4
     
]
Depreciation and amortization**
   
397.1
     
385
     
385
     
–3.0
     
 
[for property, plant and equipment (included above)
   
179.3
     
195
     
195
     
+8.8
     
]
[for intangible assets (included above)
   
217.8
     
190
     
190
     
–12.8
     
]
Research and development expenses
   
468.2
     
460
     
450
     
–3.9
     
–2.2
 
*   Excluding additions for tangible and intangible assets from business combinations.
** Including amortization expenses for deferred insurance acquisition costs.

Sony without Financial Services

   
(Billions of yen)
 
Change – July Forecast from
   
March 31, 2016
Results
 
May
Forecast
 
July
Forecast
 
March 31, 2016
 Results
 
May
Forecast
Additions to Long-lived Assets*
 
¥460.9
   
¥340
   
¥330
     
–28.4
%
   
–2.9
%
[additions to property, plant and equipment (included above)
   
372.4
     
255
     
245
     
–34.2
     
–3.9
]
[additions to intangible assets (included above)
   
88.4
     
85
     
85
     
–3.8
     
]
Depreciation and amortization
   
294.8
     
312
     
312
     
+5.8
     
 
[for property, plant and equipment (included above)
   
177.8
     
193
     
193
     
+8.5
     
]
[for intangible assets (included above)
   
117.0
     
119
     
119
     
+1.7
     
]
Excluding additions for tangible and intangible assets 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.

*    *    *    *    *

12

 
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 environment in which Sony operates and the economic 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 televisions, game and network platforms and smartphones, 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 consumer 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 conditions;
(vi)
Sony’s ability to implement successful hardware, software, and content integration strategies for all segments excluding the Financial Services segment, and to develop and implement successful sales and distribution strategies in light of the Internet and other technological developments;
(vii)
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);
(viii)
Sony’s ability to maintain product quality and customers’ satisfaction with its existing products and services;
(ix)
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;
(x)
significant volatility and disruption in the global financial markets or a ratings downgrade;
(xi)
Sony’s ability to forecast demands, manage timely procurement and control inventories;
(xii)
the outcome of pending and/or future legal and/or regulatory proceedings;
(xiii)
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;
(xiv)
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;
(xv)
Sony’s ability to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information, potential business disruptions or financial losses; and
(xvi)
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
 
13

 
(Unaudited)
                       
Consolidated Financial Statements
                       
Consolidated Balance Sheets
                       
   
(Millions of yen, millions of U.S. dollars)
 
   
March 31
   
June 30
   
Change from
   
June 30
 
ASSETS
 
2016
   
2016
   
March 31, 2016
   
2016
 
Current assets:
                       
Cash and cash equivalents
 
¥
983,612
   
¥
631,074
   
¥
-352,538
   
$
6,127
 
Marketable securities
   
946,397
     
897,494
     
-48,903
     
8,714
 
Notes and accounts receivable, trade
   
926,375
     
917,215
     
-9,160
     
8,905
 
Allowance for doubtful accounts and sales returns
   
(72,783
)
   
(47,800
)
   
+24,983
     
(464
)
Inventories
   
683,146
     
717,930
     
+34,784
     
6,970
 
Other receivables
   
206,058
     
234,730
     
+28,672
     
2,279
 
Deferred income taxes
   
40,940
     
38,744
     
-2,196
     
376
 
Prepaid expenses and other current assets
   
482,982
     
512,999
     
+30,017
     
4,980
 
 Total current assets
   
4,196,727
     
3,902,386
     
-294,341
     
37,887
 
                                 
Film costs
   
301,228
     
310,317
     
+9,089
     
3,013
 
                                 
Investments and advances:
                               
Affiliated companies
   
164,874
     
161,296
     
-3,578
     
1,566
 
Securities investments and other
   
9,069,209
     
9,208,539
     
+139,330
     
89,403
 
     
9,234,083
     
9,369,835
     
+135,752
     
90,969
 
                                 
Property, plant and equipment:
                               
Land
   
121,707
     
120,204
     
-1,503
     
1,167
 
Buildings
   
655,379
     
635,916
     
-19,463
     
6,174
 
Machinery and equipment
   
1,795,991
     
1,773,934
     
-22,057
     
17,223
 
Construction in progress
   
69,286
     
57,891
     
-11,395
     
562
 
     
2,642,363
     
2,587,945
     
-54,418
     
25,126
 
Less-Accumulated depreciation
   
1,821,545
     
1,803,994
     
-17,551
     
17,515
 
     
820,818
     
783,951
     
-36,867
     
7,611
 
                                 
Other assets:
                               
Intangibles, net
   
615,754
     
576,101
     
-39,653
     
5,593
 
Goodwill
   
606,290
     
567,870
     
-38,420
     
5,513
 
Deferred insurance acquisition costs
   
511,834
     
510,568
     
-1,266
     
4,957
 
Deferred income taxes
   
97,639
     
96,533
     
-1,106
     
937
 
Other
   
289,017
     
264,184
     
-24,833
     
2,566
 
     
2,120,534
     
2,015,256
     
-105,278
     
19,566
 
                                 
  Total assets
 
¥
16,673,390
   
¥
16,381,745
   
¥
-291,645
   
$
159,046
 
                                 
                                 
LIABILITIES AND EQUITY
                               
Current liabilities:
                               
Short-term borrowings
 
¥
149,272
   
¥
111,116
   
¥
-38,156
   
$
1,079
 
Current portion of long-term debt
   
187,668
     
154,189
     
-33,479
     
1,497
 
Notes and accounts payable, trade
   
550,964
     
609,843
     
+58,879
     
5,921
 
Accounts payable, other and accrued expenses
   
1,367,115
     
1,194,303
     
-172,812
     
11,595
 
Accrued income and other taxes
   
88,865
     
89,072
     
+207
     
865
 
Deposits from customers in the banking business
   
1,912,673
     
1,900,796
     
-11,877
     
18,454
 
Other
   
574,193
     
523,156
     
-51,037
     
5,079
 
 Total current liabilities
   
4,830,750
     
4,582,475
     
-248,275
     
44,490
 
                                 
Long-term debt
   
556,605
     
533,718
     
-22,887
     
5,182
 
Accrued pension and severance costs
   
462,384
     
452,981
     
-9,403
     
4,398
 
Deferred income taxes
   
450,926
     
448,895
     
-2,031
     
4,358
 
Future insurance policy benefits and other
   
4,509,215
     
4,601,792
     
+92,577
     
44,678
 
Policyholders’ account in the life insurance business
   
2,401,320
     
2,388,889
     
-12,431
     
23,193
 
Other
   
330,302
     
298,256
     
-32,046
     
2,895
 
  Total liabilities
   
13,541,502
     
13,307,006
     
-234,496
     
129,194
 
                                 
Redeemable noncontrolling interest
   
7,478
     
6,293
     
-1,185
     
61
 
                                 
Equity:
                               
Sony Corporation’s stockholders’ equity:
                               
Common stock
   
858,867
     
859,002
     
+135
     
8,340
 
Additional paid-in capital
   
1,325,719
     
1,326,415
     
+696
     
12,878
 
Retained earnings
   
936,331
     
957,497
     
+21,166
     
9,296
 
Accumulated other comprehensive income
   
(653,318
)
   
(730,465
)
   
-77,147
     
(7,092
)
Treasury stock, at cost
   
(4,259
)
   
(4,280
)
   
-21
     
(42
)
     
2,463,340
     
2,408,169
     
-55,171
     
23,380
 
                                 
Noncontrolling interests
   
661,070
     
660,277
     
-793
     
6,411
 
  Total equity
   
3,124,410
     
3,068,446
     
-55,964
     
29,791
 
  Total liabilities and equity
 
¥
16,673,390
   
¥
16,381,745
   
¥
-291,645
   
$
159,046
 
 
F-1

 
Consolidated Statements of Income
                       
   
(Millions of yen, millions of U.S. dollars, except per share amounts)
 
   
Three months ended June 30
 
   
2015
   
2016
   
Change from 2015
   
2016
 
Sales and operating revenue:
                       
Net sales
 
¥
1,503,311
   
¥
1,362,517
         
$
13,228
 
Financial services revenue
   
277,689
     
230,909
           
2,242
 
Other operating revenue
   
27,059
     
19,773
           
192
 
     
1,808,059
     
1,613,199
     
-10.8
%
   
15,662
 
                                 
Costs and expenses:
                               
Cost of sales
   
1,134,269
     
1,015,623
             
9,860
 
Selling, general and administrative
   
378,722
     
338,097
             
3,282
 
Financial services expenses
   
232,038
     
181,631
             
1,763
 
Other operating (income) expense, net
   
(33,454
)
   
20,873
             
203
 
     
1,711,575
     
1,556,224
     
-9.1
     
15,108
 
                                 
Equity in net income (loss) of affiliated companies
   
423
     
(783
)
 
 
     
(8
)
                                 
Operating income
   
96,907
     
56,192
     
-42.0
     
546
 
                                 
Other income:
                               
Interest and dividends
   
2,652
     
3,227
             
31
 
Gain on sale of securities investments, net
   
50,782
     
72
             
1
 
Foreign exchange gain, net
 
 
     
1,615
             
16
 
Other
   
647
     
1,030
             
10
 
     
54,081
     
5,944
     
-89.0
     
58
 
                                 
Other expenses:
                               
Interest
   
4,394
     
3,801
             
37
 
Foreign exchange loss, net
   
5,746
   
 
           
 
 
Other
   
2,138
     
1,319
             
13
 
     
12,278
     
5,120
     
-58.3
     
50
 
                                 
Income before income taxes
   
138,710
     
57,016
     
-58.9
     
554
 
                                 
Income taxes
   
39,812
     
20,475
             
199
 
                                 
Net income
   
98,898
     
36,541
     
-63.1
     
355
 
                                 
Less - Net income attributable to noncontrolling interests
   
16,457
     
15,375
             
150
 
                                 
Net income attributable to Sony Corporation’s
                               
   stockholders
 
¥
82,441
   
¥
21,166
     
-74.3
%
 
$
205
 
                                 
                                 
                                 
Per share data:
                               
Net income attributable to Sony Corporation’s
                               
   stockholders
                               
   — Basic
 
¥
70.52
   
¥
16.78
     
-76.2
%
 
$
0.16
 
   — Diluted
   
70.36
     
16.44
     
-76.6
     
0.16
 
 
 
Consolidated Statements of Comprehensive Income
                   
   
(Millions of yen, millions of U.S. dollars)
 
   
Three months ended June 30
 
   
2015
   
2016
   
Change from 2015
   
2016
 
                         
Net income
 
¥
98,898
   
¥
36,541
     
-63.1
%
 
$
355
 
                                 
Other comprehensive income, net of tax –
                               
Unrealized gains (losses) on securities
   
(47,066
)
   
20,395
             
198
 
Unrealized losses on derivative instruments
   
(636
)
   
(145
)
           
(1
)
Pension liability adjustment
   
202
     
3,226
             
31
 
Foreign currency translation adjustments
   
27,607
     
(90,998
)
           
(883
)
                                 
Total comprehensive income (loss)
   
79,005
     
(30,981
)
 
 
     
(300
)
                                 
Less - Comprehensive income attributable
                               
   to noncontrolling interests
   
13,460
     
25,000
             
244
 
                                 
Comprehensive income (loss) attributable
                               
   to Sony Corporation’s stockholders
 
¥
65,545
   
¥
(55,981
)
 
 
%
 
$
(544
)
 
F-2

 
Supplemental equity and comprehensive income information
             
 
(Millions of yen, millions of U.S. dollars)
 
 
 
Sony Corporation’s stockholders’ equity
 
 
Noncontrolling
interests
 
 
Total equity
 
Balance at March 31, 2015
 
¥
2,317,077
   
¥
611,392
   
¥
2,928,469
 
Exercise of stock acquisition rights
   
1,130
   
 
 –      
1,130
 
Stock based compensation
   
287
   
 
     
287
 
                         
Comprehensive income:
                       
Net income
   
82,441
     
16,457
     
98,898
 
Other comprehensive income, net of tax –
                       
Unrealized losses on securities
   
(43,356
)
   
(3,710
)
   
(47,066
)
Unrealized losses on derivative instruments
   
(636
)
 
 
     
(636
)
Pension liability adjustment
   
200
     
2
     
202
 
Foreign currency translation adjustments
   
26,896
     
711
     
27,607
 
Total comprehensive income
   
65,545
     
13,460
     
79,005
 
                         
Dividends declared
 
 
     
(9,847
)
   
(9,847
)
Transactions with noncontrolling interests shareholders and other
   
26
     
1,985
     
2,011
 
Balance at June 30, 2015
 
¥
2,384,065
   
¥
616,990
   
¥
3,001,055
 
                         
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
 
                         
                         
 
 
Sony Corporation’s stockholders’ equity
 
 
Noncontrolling
interests
 
 
Total equity
 
Balance at March 31, 2016
 
$
23,916
   
$
6,418
   
$
30,334
 
Exercise of stock acquisition rights
   
3
   
 
     
3
 
Stock based compensation
   
6
   
 
     
6
 
                         
Comprehensive income:
                       
Net income
   
205
     
150
     
355
 
Other comprehensive income, net of tax –
                       
Unrealized gains on securities
   
88
     
110
     
198
 
Unrealized losses on derivative instruments
   
(1
)
 
 
     
(1
)
Pension liability adjustment
   
31
     
0
     
31
 
Foreign currency translation adjustments
   
(867
)
   
(16
)
   
(883
)
Total comprehensive income (loss)
   
(544
)
   
244
     
(300
)
                         
Dividends declared
 
 
     
(160
)
   
(160
)
Transactions with noncontrolling interests shareholders and other
   
(1
)
   
(91
)
   
(92
)
Balance at June 30, 2016
 
$
23,380
   
$
6,411
   
$
29,791
 
 
F-3

 
Consolidated Statements of Cash Flows
                 
 
 
(Millions of yen, millions of U.S. dollars)
 
 
 
Three months ended June 30
 
 
  2015     2016     2016  
Cash flows from operating activities:
                 
Net income
 
¥
98,898
   
¥
36,541
   
$
355
 
Adjustments to reconcile net income to net cash
                       
provided by (used in) operating activities:
                       
Depreciation and amortization, including amortization of deferred
                       
    insurance acquisition costs
   
87,021
     
93,557
     
908
 
Amortization of film costs
   
63,356
     
61,229
     
594
 
Accrual for pension and severance costs, less payments
   
(3,035
)
   
3,449
     
33
 
Other operating (income) expense, net
   
(33,454
)
   
20,873
     
203
 
Gain on sale or devaluation of securities investments, net
   
(50,706
)
   
(72
)
   
(1
)
(Gain) loss on revaluation of marketable securities held in the financial
                       
    services business for trading purposes, net
   
(19,088
)
   
47,138
     
458
 
Loss on revaluation or impairment of securities investments held
                       
    in the financial services business, net
   
2,069
     
2
     
0
 
Deferred income taxes
   
5,471
     
(266
)
   
(3
)
Equity in net (income) loss of affiliated companies, net of dividends
   
798
     
2,533
     
25
 
Changes in assets and liabilities:
                       
   Increase in notes and accounts receivable, trade
   
(83,030
)
   
(80,709
)
   
(784
)
   Increase in inventories
   
(103,603
)
   
(75,044
)
   
(729
)
   Increase in film costs
   
(105,273
)
   
(98,223
)
   
(954
)
   Increase in notes and accounts payable, trade
   
132,276
     
76,274
     
741
 
   Decrease in accrued income and other taxes
   
(6,378
)
   
(2,776
)
   
(27
)
   Increase in future insurance policy benefits and other
   
128,265
     
55,216
     
536
 
   Increase in deferred insurance acquisition costs
   
(21,790
)
   
(20,528
)
   
(199
)
   Increase in marketable securities held in the financial services
                       
        business for trading purposes
   
(21,679
)
   
(26,702
)
   
(259
)
   Increase in other current assets
   
(62,015
)
   
(75,600
)
   
(734
)
   Decrease in other current liabilities
   
(147,587
)
   
(62,884
)
   
(611
)
Other
   
(14,806
)
   
62,178
     
605
 
        Net cash provided by (used in) operating activities
   
(154,290
)
   
16,186
     
157
 
                         
Cash flows from investing activities:
                       
Payments for purchases of fixed assets
   
(77,034
)
   
(106,002
)
   
(1,029
)
Proceeds from sales of fixed assets
   
2,484
     
1,829
     
18
 
Payments for investments and advances by financial services business
   
(316,299
)
   
(205,729
)
   
(1,997
)
Payments for investments and advances
                       
    (other than financial services business)
   
(4,323
)
   
(2,585
)
   
(25
)
Proceeds from sales or return of investments and collections of advances
                       
   by financial services business
   
153,984
     
88,144
     
856
 
Proceeds from sales or return of investments and collections of advances
                       
    (other than financial services business)
   
74,358
     
2,383
     
23
 
Proceeds from sales of businesses
   
17,790
   
 
   
 
 
Other
   
(22,962
)
   
2,782
     
26
 
        Net cash used in investing activities
   
(172,002
)
   
(219,178
)
   
(2,128
)
                         
Cash flows from financing activities:
                       
Proceeds from issuance of long-term debt
   
9,712
     
1,031
     
10
 
Payments of long-term debt
   
(84,767
)
   
(48,607
)
   
(472
)
Increase (decrease) in short-term borrowings, net
   
62,111
     
(34,895
)
   
(339
)
Increase in deposits from customers in the financial services
                       
   business, net
   
20,392
     
12,406
     
120
 
Dividends paid
   
(59
)
   
(12,679
)
   
(123
)
Other
   
(15,212
)
   
(15,809
)
   
(153
)
        Net cash used in financing activities
   
(7,823
)
   
(98,553
)
   
(957
)
                         
Effect of exchange rate changes on cash and cash equivalents
   
12,789
     
(50,993
)
   
(495
)
                         
Net decrease in cash and cash equivalents
   
(321,326
)
   
(352,538
)
   
(3,423
)
Cash and cash equivalents at beginning of the fiscal year
   
949,413
     
983,612
     
9,550
 
                         
Cash and cash equivalents at end of the period
 
¥
628,087
   
¥
631,074
   
$
6,127
 
 
F-4

 
Business Segment Information
                       
   
(Millions of yen, millions of U.S. dollars)
 
   
Three months ended June 30
 
Sales and operating revenue
 
2015
    2016    
Change
   
2016
 
                         
Mobile Communications
                       
Customers
 
¥
279,536
   
¥
184,868
     
-33.9
%
 
$
1,795
 
Intersegment
   
988
     
1,055
             
10
 
Total
   
280,524
     
185,923
     
-33.7
     
1,805
 
                                 
Game & Network Services
                               
Customers
   
265,898
     
310,768
     
+16.9
     
3,017
 
Intersegment
   
22,691
     
19,611
             
191
 
Total
   
288,589
     
330,379
     
+14.5
     
3,208
 
                                 
Imaging Products & Solutions
                               
Customers
   
163,514
     
120,365
     
-26.4
     
1,169
 
Intersegment
   
1,233
     
1,861
             
18
 
Total
   
164,747
     
122,226
     
-25.8
     
1,187
 
                                 
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