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 2005
Commission File Number: 001-06439
SONY CORPORATION
(Translation of registrant's name into English)
7-35 KITASHINAGAWA 6-CHOME, SHINAGAWA-KU, TOKYO, JAPAN
(Address of principal executive offices)
The registrant files annual reports under cover of Form 20-F.
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F,
Form 20-F X Form 40-F __
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934,
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):82-______
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SONY CORPORATION
(Registrant)
By: /s/ Nobuyuki Oneda
(Signature)
Nobuyuki Oneda
Executive Vice President and
Chief Financial Officer
Date: October 26, 2005
List of materials
Documents attached hereto:
i) Press release announcing Results of Subsidiary Tracking Stock
Sony Corporation
6-7-35 Kitashinagawa
Shinagawa-ku
Tokyo, 141-0001 Japan
No.05-062E
2005/10/26
15:00
Subsidiary Tracking Stock
Sony Communication Network Corporation
Consolidated Financial Results for the Three-month and Six-month Periods ended
September 30, 2005
Sony Communication Network Corporation (hereinafter, the "SCN Group"), a
subsidiary the performance of which is linked to a tracking stock issued by Sony
Corporation, announced today its consolidated results for the second quarter
ended September 30, 2005 (the period from July 1, 2005 to September 30, 2005)
and the six-month period ended September 30, 2005 (the period from April 1, 2005
to September 30, 2005).
These results are based on the generally accepted accounting standards of Japan.
- During the quarter, increased sales but decreased profitability compared to
year earlier period. Although Portal Services turned in a positive
performance, there were increased costs for new subscriber acquisitions.
During the quarter under review, sales increased 5.3% compared with the year
earlier period, to 10,545 million yen. This was due to increased sales in the
category of Portal Services. However, profitability decreased at each stage
due to a focus on customer acquisition activities. An operating loss of 45
million yen was recorded, compared with an operating profit of 780 million
yen in the year earlier period; an ordinary loss of 44 million yen was
recorded, compared to an ordinary profit of 720 million yen; and a net loss
of 392 million yen was recorded, compared with a net profit of 2,367 million
yen.
- Subscribers at 2.81 million; big increase in broadband subscribers,
especially for FTTH.
At the end of the quarter under review, the number of So-net subscribers
totaled 2.81 million, an increase of 22.3% over the total of 2.29 million at
the end of the year earlier period. Within this, the number of new broadband
subscribers was 44,000, which was three times that of the year earlier
period. The total number of broadband subscribers at the end of the quarter
under review was 730,000, an increase of 26.0% over the total of 580,000 at
the end of the year earlier period.
- Connection Services see decreased revenue due to the effects of promotional
campaigns, but increased sales for Portal Services compensates.
Sales of Connection Services (see note 1) decreased 8.9% from the year
earlier period, to 6,641 million yen, due to the effects of both promotional
campaigns that offer free installation and usage fees and the decline in
narrowband subscribers. Sales in Portal Services (see note 2) increased by
43.5% from the year earlier period, to 3,904 million yen, due to an increase
of content revenue, merchandise sales, advertising revenue and others.
Note 1: The sales category known as "Internet provider services" through the
fiscal year ended March 31, 2005 is now known as "Connection Services." There
has not been any change in the sales breakdown of this category.
Note 2: Until the end of the fiscal year ended March 31, 2005, the sales
categories known as "Internet-related services" and "Merchandise sales" were
recorded separately. However, because web contents and sales of goods are
both related, from this year, they are now consolidated into one category
called "Portal Services." Within this, during the quarter under review, sales
of "Merchandise sales" were 319 million yen.
Consolidated Results for the three-months ended September 30, 2005
(Millions of Yen)
Three-months ended September 30
2004 2005 Change (%)
Sales 10,010 10,545 +5.3
Operating income (loss) 780 (45) --
Ordinary income (loss) 720 (44) --
Net income (loss) 2,367 (392) --
Consolidated Results for the six-months ended September 30, 2005
(Millions of Yen)
Six-months ended September 30
2004 2005 Change (%)
Sales 19,640 20,561 +4.7
Operating income (loss) 1,500 (35) --
Ordinary income 1,491 66 (95.6)
Net income 2,760 9,911 +259.1
Summary of Consolidated Operations (July 1, 2005 to September 30, 2005)
Regarding sales, during the quarter under review, sales increased 5.3% to 10,545
million yen, compared with 10,010 million yen in the year earlier period.
In the category of Connection Services, in conjunction with active customer
acquisition efforts, as in the prior quarter, particularly for FTTH, the number
of So-net broadband subscribers increased by 150,000 compared to the end of the
year earlier period, to 730,000. However, with the effects of free promotional
campaigns, which offer free installation and monthly usage, as well as of the
decline in narrowband users, sales in this category declined.
On the other hand, in the category of Portal Services, sales increased due to an
increase of revenue from content revenue aimed at cellular phones devices, air
ticket sales at Skygate Co., Ltd. and advertising revenue.
Furthermore, the total number of So-net subscribers increased by 520,000 from
the end of the year earlier period, to 2,810,000. This was mainly a result of
increases in broadband subscribers and, from the quarter under review, the
integration as So-net subscribers of 210,000 members of "Television Kingdom," an
EPG (electronic programming guide).
Regarding operating income, during the quarter under review, an operating loss
of 45 million yen was recorded, compared with operating income of 780 million
yen in the year earlier period. This was a result of large increases in customer
acquisition costs including such items as acquisition commissions and sales
promotion expenses aimed at active efforts in the area of customer acquisitions,
particularly for FTTH. This also resulted from expenditure for line connection
costs incurred during the free promotional campaigns.
Regarding ordinary income, during the quarter under review, an ordinary loss of
44 million yen was recorded, compared with ordinary income of 720 million yen in
the year earlier period. Within this, net non-operating income improved over the
year earlier period, the reason being the recording of equity in net income of
25 million yen, stemming from strong results in equity affiliate DeNA, Co., Ltd.
Regarding net income before income taxes, during the quarter under review, a net
loss before income taxes of 142 million yen was recorded, compared with net
income before income taxes of 3,604 million yen in the year earlier period.
During the quarter under review, factors affecting net income (loss) before
income taxes included a revaluation of investment securities of 49 million yen
and a one-time transfer allowance of 78 million yen that was recorded as an
extraordinary loss.
As a result, the total income tax charges, including both income tax current and
income tax deferred were 155 million yen. Furthermore, minority interest income
of 96 million yen, compared with 10 million yen in the year earlier period, was
recorded, due to increased profitability, and an increase in the minority
interest, at So-net M3 Inc.
Regarding net income, a net loss of 392 million yen was recorded, compared with
net income of 2,367 million yen in the year earlier period.
Sales by Category
Three-months ended September 30, 2005
Three-months Percentage Three-months Percentage Year-on-
ended of total ended September of total year
September 30, (%) 30, 2005 (%) change
2004 (millions (millions of (%)
of yen) yen)
Connection 7,290 72.8 6,641 63.0 (8.9)
Services(1)
Portal Services(2) 2,721 27.2 3,904 37.0 +43.5
Total 10,010 100.0 10,545 100.0 +5.3
Six-months ended September 30, 2005
Six-months Percentage Six-months Percentage Year-on-
ended of total ended September of total year
September 30, (%) 30, 2005 (%) change
2004 (millions (millions of (%)
of yen) yen)
Connection 14,608 74.4 13,475 65.5 (7.8)
Services(1)
Portal Services(2) 5,033 25.6 7,085 34.5 +40.8
Total 19,640 100.0 20,561 100.0 +4.7
Note 1: The sales category known as "Internet provider services" through the
fiscal year ended March 31, 2005 is now known as "Connection Services." There
has not been any change in the sales breakdown of this sales category.
Note 2: Until the end of the fiscal year ended March 31, 2005, the sales
categories known as "Internet-related services" and "Merchandise sales" were
recorded separately. However, because web contents and sales of goods are both
related, from this year, they are now consolidated into one category called
"Portal Services." Within this, during the quarter under review, sales of
"Merchandise sales" were 319 million yen, compared with 258 million yen in the
year earlier period. For the six-month period under review, the figures were 717
million yen and 454 million yen, respectively.
Operating revenue
Connection Services
In this category, the SCN Group has aggressively worked to acquire new customers
for its connection service plans, especially for FTTH. The SCN Group has been
carrying out customer acquisition activities primarily at volume retailers and
retailing sales agents.
As a result, the number of new broadband subscribers during the quarter under
review, 44,000, was three times that of the year earlier period. At the end of
the quarter under review, the number of broadband subscribers was 730,000, an
increase of 26.0% over the year earlier number of 580,000. Furthermore, they
accounted for 26% of the total number of So-net subscribers.
During the quarter under review, sales of Connection Services were 6,641 million
yen, a decrease of 8.9% compared with the year earlier period. The reason for
the decline in revenue in this category was the number of narrowband subscribers
decreased and there was the effect of free promotional campaigns. Such sales
accounted for 63.0% of total sales.
Portal Services
In this category, sales such as content revenue aimed at cellular phones
devices, air ticket sales at Skygate, Co., Ltd. and advertising revenue showed
favorable performance.
As a result, sales in this category during the quarter under review increased
43.5% compared with the year earlier period, to 3,904 million yen. Sales in this
category accounted for 37.0% of total sales.
Results of Consolidated Subsidiaries and of Affiliated Companies Accounted for
by the Equity Method
The SCN Group includes the following five consolidated subsidiaries: So-net
Sports.com Corp., So-net M3 Inc., So-net M3 U.S.A. Corp., Medi C&C Co. Ltd., and
Skygate, Co., Ltd. The SCN Group includes the following two affiliated companies
accounted for by the equity method: Label Gate Co., Ltd. and DeNA Co., Ltd.
During the quarter under review, So-net M3 Inc., which offers marketing support
for medically-related companies, saw membership at "m3.com," a sight for medical
professionals, top 110,000. Also, there was an increase in sales due to such
factors as an increase in the number of customer businesses.
At Skygate, Co., Ltd., turnover of air ticket, travel service products
increased, especially in the July through September period.
Also, during the quarter under review, equity in net income of affiliated
companies of 25 million yen was recorded, compared with 4 million yen in the
year earlier period. This was largely due to results at DeNA Co., Ltd.'s, which
has seen a steady increase in the number of fee-paying users, including at its
affiliate network for mobile phones, "Pocket Affiliate," and at its mobile phone
service "Mobaoku," which, from July 1, 2005, introduced monthly fees for its
mobile phone service. Also, revenue related to settlement, and advertising sales
have also grown at DeNA.
In conjunction with the recent expansion of the music download market, Label
Gate Co., Ltd. also saw increases in available songs and the number of paid
downloads. However, as before, profitability continued to be tough.
Cash Flow (for the period April 1, 2005 to September 30, 2005)
Cash and cash equivalents were 25,509 million yen at the end of the six-month
period ended September 30, 2005, an increase of 17,075 million yen from the end
of the year earlier period, and an increase of 14,869 million yen from March 31,
2005. During the six-month period under review, the SCN Group used 2,784 million
yen of cash in operating activities, generated 17,645 million yen of cash in
investing activities, and saw no change in cash in financing activities.
Cash flows from operating activities
During the six-month period ended September 30, 2005, regarding cash flows from
operating activities, the SCN Group used 2,784 million yen, compared with the
six-month period ended September 30, 2004 when the SCN Group generated 1,812
million yen. During the six-month period under review, although the SCN Group
recorded net income before income taxes of 17,763 million yen, such income
included 17,795 million yen of gain on sale of investment in affiliate and
subsidiary stock, which is income related to cash flow from investing
activities. Also, compared to the year earlier period, payments for income taxes
increased greatly. Furthermore, during the six-month period under review,
included in net income before income taxes were non-cash depreciation expense of
429 million yen and amortization of goodwill of 143 million yen.
Cash flows from investing activities
During the six-month period ended September 30, 2005, regarding cash flows from
investing activities, the SCN Group generated 17,645 million yen, compared with
the six-month period ended September 30, 2004 when the SCN Group generated 2,240
million yen. The main factor in the period under review was the cash proceeds
from sale of investment in affiliate and subsidiary stock of 18,499 million yen
as a result of sales of stock in consolidated subsidiary So-net M3 Inc. and
affiliated company accounted for by the equity method DeNA Co., Ltd. Also, the
SCN Group recorded payment for acquisition of intangible assets of 623 million
yen for systems and homepage development for connection services and e-commerce
activities, compared to payments of 338 million yen in the year earlier period.
Cash flows from financing activities
During the six-month period ended September 30, 2005, regarding cash flows from
financing activities, the SCN Group did not carry out any financing or repayment
activities.
Condensed Consolidated Statements of Income
For the three-months ended September 30, 2005 (unaudited) (Millions of yen)
Three-months ended September 30
2004 2005 Change
Sales 10,010 10,545 5.3%
Cost of sales 5,766 6,453
Gross profit 4,245 4,091
Selling, general and administrative 3,465 4,136
expenses
Operating income (loss) 780 (45) --%
Non-operating income
Equity in net income of affiliated 4 25
companies
Other 9 13 18 42
Non-operating expenses 73 41
Ordinary income (loss) 720 (44) --%
Extraordinary gain
Gain on sale of investment in 2,344 -
affiliate and subsidiary stock
Gain on issuance of stock by equity 1,821 2
investee
Reversal of allowance for bad debt - 27
Gain on sale of fixed assets 25 4,191 - 29
Extraordinary loss
Loss on revaluation of investments 878 49
in other securities
Loss on impairment of long-lived 295 -
assets
Provision for allowance for doubtful 133 -
accounts
Loss on issuance of stock by equity 1 -
investee
One-time transfer allowance - 1,307 78 126
Net income (loss) before income 3,604 (142) --%
taxes
Income tax current 1,241 116
Income tax deferred (15) 1,226 39 155
Minority interest income 10 96
Net income (loss) 2,367 (392) --%
For the six-months ended September 30, 2005 (Millions of yen)
Six-months ended September 30
2004 2005 Change
Sales 19,640 20,561 4.7%
Cost of sales 11,184 12,005
Gross profit 8,457 8,556
Selling, general and administrative 6,956 8,591
expenses
Operating income (loss) 1,500 (35) --%
Non-operating income
Equity in net income of affiliated 9 99
companies
Other 64 74 51 151
Non-operating expenses 83 50
Ordinary income 1,491 66 (95.6)%
Extraordinary gain
Gain on sale of investment in 2,344 17,795
affiliate and subsidiary stock
Gain on issuance of stock by equity 1,821 4
investee
Reversal of allowance for bad debt - 27
Gain on sale of fixed assets 25 4,191 - 17,827
Extraordinary loss
Loss on revaluation of investments 878 49
in other securities
Loss on impairment of long-lived 295 -
assets
Provision for allowance for doubtful 133 -
accounts
Loss on issuance of stock by equity 1 3
investee
One-time transfer allowance - 1,307 78 129
Net income before income taxes 4,374 17,763 306.1%
Income tax current 1,440 8,033
Income tax deferred 154 1,594 (327) 7,706
Minority interest income 21 146
Net income 2,760 9,911 259.1%
Condensed Consolidated Balance Sheets
(Millions of yen)
September 30 March 31 September 30,
ASSETS 2004 2005 2005
Current assets 13,525 16,052 32,342
Cash and bank deposit 3,237 3,861 4,001
Notes and account receivable, trade 3,764 3,755 3,898
Inventories 143 212 275
Deposits in Sony group company 5,198 6,779 21,508
Other 1,243 1,513 2,769
Allowance for bad debt (60) (69) (109)
Noncurrent assets 4,261 5,039 4,800
Property, plant and equipment 229 181 275
Furniture and fixtures 142 122 195
Other 87 59 79
Intangible assets 2,150 2,126 2,389
Software 1,505 1,576 1,794
Goodwill 567 425 415
Other 78 126 181
Investment and other assets 1,882 2,732 2,136
Investment in affiliates and others 660 1,471 1,380
Other 1,320 1,380 848
Allowance for bad debt (98) (119) (92)
Total assets 17,786 21,091 37,142
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
Current liabilities 6,225 8,092 13,427
Account payable, trade 2,561 2,553 2,840
Account payable, other 1,174 1,712 5,315
Accrued expense 1,322 1,936 1,535
Accrued income taxes 465 877 2,897
Accrued bonuses 226 244 289
Accrued customer incentive program 138 145 229
Other accruals 2 4 5
Other 336 621 317
Long-term liabilities 460 388 346
Accrued severance costs for employees 105 111 127
Accrued severance indemnities for 55 49 60
directors
Other 300 228 159
Total liabilities 6,685 8,481 13,773
Minority interest 704 840 1,701
Common stock 5,246 5,246 5,246
Additional paid-in capital 4,765 4,765 4,765
Retained earnings 386 1,734 11,644
Unrealized gain on investment securities 1 27 15
Foreign currency translation adjustments (1) (0) (2)
Total stockholders' equity 10,397 11,771 21,668
Total liabilities, minority interest and 17,786 21,091 37,142
stockholders' equity
Consolidated Statements of Additional Paid-in Capital and Retained Earnings
(millions of yen)
Item Six-months ended Six-months ended
September 30, 2004 September 30, 2005
Additional Paid-in Capital
Balance at beginning of 4,765 4,765
fiscal year
Balance at the end of period 4,765 4,765
Retained Earnings (Accumulated
Losses)
Balance at beginning of (2,373) 1,734
fiscal year
Increase
Net income 2,760 9,911
Balance at the end of period 386 11,644
Consolidated Statements of Cash Flow
(Millions of yen)
Six-months ended September 30
2004 2005
I. Cash flows from operating activities
Net income before income taxes 4,374 17,763
Depreciation and amortization 371 429
Loss on impairment of long-lived assets 295 -
Amortization for goodwill 142 143
Equity in net income of affiliated companies (9) (99)
Gain on issuance of stock by equity investee (1,821) (4)
Loss on issuance of stock by equity investee 1 3
Loss on revaluation of investments in other 878 49
securities
Gain on sale of investment in affiliate and (2,344) (17,795)
subsidiary stock
Stock issuance costs 13 -
Increase (decrease) in accrued bonuses (14) 45
Increase in accrued severance costs for employees 12 11
Increase in accrued severance indemnities for 9 11
directors
Increase (decrease) in allowance for bad debt 134 (27)
Increase in customer incentive program 57 84
Increase in other accruals 2 1
Interest income (3) (9)
Interest expense 0 0
Foreign exchange loss - (4)
Loss on disposal of tangible fixed assets 46 32
Loss on sales of tangible fixed assets 0 -
Gain on sales of tangible fixed assets (25) -
Decrease (increase) in account receivable, trade 127 (138)
Increase in inventories (14) (62)
Increase in other current assets (172) (529)
Increase in accounts payable, trade 97 287
Decrease in accrued expenses (388) (403)
Decrease in other current liabilities (82) (186)
Sub Total 1,686 (402)
Receipt of interest 3 9
Payments for interest (0) (0)
Receipt (payment) for income taxes 124 (2,391)
Net cash provided by (used in) operating 1,812 (2,784)
activities
(Millions of yen)
Six-months ended September 30
2004 2005
II. Cash flows from investing activities
Payment for securities investment (10) (55)
Proceeds from sales of investment in affiliate 2,577 18,499
and subsidiary stock
Payment for acquisition of fixed assets (9) (147)
Proceeds from sales of fixed assets 25 -
Payment for acquisition of intangible assets (338) (623)
Payment for rent deposits (2) (2)
Proceeds from rent deposits - 56
Payments for long term prepaid expenses (15) (10)
Net proceeds as a result of acquiring subsidiary - 27
company
Payments for loan (24) (136)
Repayment of loan 35 36
Net cash provided by investing activities 2,240 17,645
III. Cash flows from financing activities
Proceeds from issuance of subsidiary stock 2,201 -
Net cash provided by financing activities 2,201 -
IV. Effect of exchange rate difference on cash and (0) 8
cash equivalents
V. Increase in cash and cash equivalents 6,253 14,869
VI. Cash and cash equivalents at beginning of year 2,182 10,640
VII. Cash and cash equivalents at end of the 8,434 25,509
period
(Notes)
1. 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, 2004 September 30, 2005 (%)
Increase in fixed assets 8 18 128.6
Increase in intangible assets 277 232 (16.2)
Depreciation of fixed assets* 18 28 51.1
Amortization of intangible 148 178 20.5
assets*
(Millions of yen)
Six-months ended Six-months ended Change
September 30, 2004 September 30, 2005 (%)
Increase in fixed assets 10 156 1,396.3
Increase in intangible assets 360 628 74.3
Depreciation of fixed assets* 35 52 48.4
Amortization of intangible 289 337 16.5
assets*
* Includes loss on impairment of long-lived assets (excluding amounts related to
leased assets).
Consolidated Results Forecast
With regards to the forecast for consolidated results for the year ending March
31, 2006, the SCN Group is not announcing any changes to the revised forecast
that was announced on September 12, 2005.
For reference, the forecast announced on September 12, 2005 was as follows:
(Millions of yen)
Consolidated Results Forecast Year-on-year Change
Sales 43,500 +11%
Operating income 500 (81%)
Ordinary income 700 (72%)
Net income 10,200 +148%
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.