Financial Highlights:
Sales and operating revenue (sales) decreased 12.9% compared to the previous fiscal year and losses were recorded due to such factors as the slowdown of the global economy, the appreciation of the yen and the decline of the Japanese stock market.

An operating loss of ¥227.8 billion was recorded, a deterioration of ¥703.1 billion year on year. Some of the significant factors that caused the year-on-year deterioration in operating income were an approximate ¥279.0 billion impact from the appreciation of the yen against the U.S. dollar and the euro, a ¥125.9 billion impact from deterioration in results at equity affiliates, including Sony Ericsson Mobile Communications AB (a mobile phone business joint venture), and a ¥53.8 billion deterioration in operating results in the Financial Services segment, mainly due to a significant decline in the Japanese stock market. Restructuring charges, recorded as operating expenses, amounted to ¥75.4 billion, compared with ¥47.3 billion for the previous fiscal year.

In the prior year a gain of ¥81.0 billion in other income from the change in ownership in interest in subsidiaries and investees was recorded as a result of the global initial public offering of shares of Sony Financial Holdings Inc., which prompted a worsening of the net amount of other income and other expenses. Due to this, an income tax benefit of ¥72.7 billion and other factors, net loss of ¥98.9 billion was reported compared with net income of ¥369.4 billion in the previous fiscal year.

Business Overview:
ELECTRONICS
The Electronics business comprises audio, video, televisions, information and communications, semiconductors, components and other products.

Sales and operating revenue in the Electronics business decreased 17.0% year on year, to ¥5,488.0 billion.

• Sales to outside customers decreased 15.2%.
• Unit sales increased for BRAVIA™ LCD televisions, but declined significantly for products such as Handycam® video cameras, Cyber-shot™ compact digital cameras and VAIO™ PCs.
• The absence of the previous year’s sales of LCD rear-projection televisions and CRT televisions, both businesses that Sony has exited, also contributed to the decline in segment sales.

The business recorded a ¥168.1 billion operating loss, a deterioration of ¥609.9 billion.

• This result was primarily due to the negative impact from the appreciation of the yen; the higher cost of sales ratio, due to intensified price competition and deterioration in the business environment; and a decline in equity in net income (loss) for Sony Ericsson Mobile Communications AB.
• Operating income decreased significantly for such products as Cyber-shot compact digital cameras, VAIO PCs, BRAVIA LCD televisions and Handycam® video cameras.

GAME
Sony’s Game business consists of game consoles and software offered by Sony Computer Entertainment Inc. (SCE).

Game business sales and operating revenue declined 18.0% year on year, to ¥1,053.1 billion.

• Overall hardware sales decreased, mainly due to the impact of the appreciation of the yen against the U.S. dollar and the euro, in addition to a decrease in unit sales of PlayStation®2 (PS2).
• Despite an increase in sales of software for PLAYSTATION®3 (PS3™), overall sales of software declined as a result of the appreciation of the yen against the U.S. dollar and the euro, as well as the decline in PS2 software sales.

The business posted an operating loss of ¥58.5 billion, an improvement of ¥66.1 billion.

• The decrease in operating loss was due to an improvement in the operating performance of the PS3™ business as a result of hardware cost reductions and increased software sales despite the impact of the decrease in sales in the PS2 business.

PICTURES
The Pictures business centers on motion pictures and television programming distributed by Sony Pictures Entertainment (SPE).

Sales and operating revenue in the Pictures business decreased 16.4% year on year, to ¥717.5 billion.

• Motion pictures revenues were down primarily due to lower home entertainment revenues owing to an accelerated contraction in this market, brought on principally by the global economic downturn, as well as fewer films being sold into the home entertainment market.
• The decline in sales also reflected the fact that sales in the previous fiscal year had benefited from the sale of a bankruptcy claim against a former licensee for film and television products.
• Theatrical releases contributing to sales included Hancock, Quantum of Solace and Paul Blart: Mall Cop.

Operating income in the business fell 48.9%, to ¥29.9 billion.

• This decrease was primarily due to the lower home entertainment sales and the absence of the previous year’s sale of the bankruptcy claim noted above. Television operating income benefited from higher advertising revenues from several international channels.

FINANCIAL SERVICE
Sony’s Financial Services business is composed of Sony Financial Holdings Inc. (SFH) and its consolidated subsidiaries, Sony Life Insurance Co., Ltd. (Sony Life), Sony Assurance Inc. and Sony Bank Inc., as well as Sony Finance International Inc.

Financial Services revenue declined 7.4% year on year, to ¥538.2 billion.

• The overall decrease in Financial Services revenue was due to a decrease in revenue at Sony Life.
• Revenue at Sony Life was ¥430.5 billion, a decrease of 7.2%. Sony Life’s revenue result reflected an increase in net valuation losses from convertible bonds and an increase in impairment losses on equity securities in the general account, as well as an increase of net losses from investments in the separate account. These losses were partially offset by an increase in revenue from insurance premiums reflecting a higher policy amount in force.

The business recorded an operating loss of ¥31.2 billion, a deterioration of ¥53.8 billion.

• The overall operating loss was mainly due to a deterioration in profitability at Sony Life, which reported an operating loss of ¥29.8 billion, compared to operating income of ¥11.5 billion in the previous fiscal year, as a result of a significant decline in the Japanese stock market.

Note: Results for Sony Life are based on generally accepted accounting principles in the United States (U.S. GAAP). Accordingly, the results for SFH and Sony Life shown here differ from the results published by the two companies in Japan, which are based on Japanese accounting standards.

ALL OTHER
This category encompasses the music recording businesses of Sony Music Entertainment Inc. (SME) and Sony Music Entertainment (Japan) Inc. (SMEJ), and the network services-related business of So-net Entertainment Corporation (So-net).

Aggregate sales and operating revenue of businesses in this category rose 41.2% year on year, to ¥539.6 billion.

• The increase in sales was largely attributable to the consolidation of SONY BMG, effectiveOctober 1, 2008.
• Excluding the impact of SME’s consolidation, sales decreased, due primarily to lower sales at SMEJ, as well as the receipt of a settlement payment related to copyright infringement claims in the prior fiscal year. This was partially offset by an increase of fee revenue from broadband connection services at So-net.

Operating income amounted to ¥30.4 billion, down 50.1%.

• The decline in operating income was mainly due to a ¥10.0 billion gain on the sale of the urban entertainment complex “The Sony Center am Potsdamer Platz” in Berlin, Germany, and the receipt of a settlement payment related to copyright infringement claims, both of which were reported in the previous fiscal year.

Download Sony Annual Report 2009

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CONTENTS
Financial Highlights
Business Overview
Letter to Shareholders
Review of Operations
Board of Directors and Corporate Executive Officers
Financial Section
Supplemental Information

Review of Operations in the Entertainment Business
Sony Pictures Entertainment (SPE) had a successful year on many fronts in the fiscal year ended March 31, 2009 despite facing challenges brought on by the current global economy.

Whi le the studio remains mindful of the economic circumstances, people worldwide continue to show an interest in such entertainment products as motion pictures, television programs, and online, mobile and other content. In particular, theater attendance is greater than in past years as consumers continue to find value in the movie-going experience, even in the midst of a difficult financial climate.

Motion Pictures
SPE’s Motion Picture Group achieved more than $2.7 billion in receipts at the worldwide box office in calendar year 2008, making it the third biggest year on record for the studio. Hancock, SPE’s 2008 summer blockbuster starring Will Smith, was a major hit, taking in more than $600 million in global box office receipts. The latest James Bond film, Quantum of Solace, surpassed Casino Royale—the previous title in the series—with the biggest North American box office opening in the franchise’s history.

You Don’t Mess With the Zohan, Paul Blart:Mall Cop, Step Brothers and Pineapple Express, as well as Screen Gems’ Quarantine and Lakeview Terrace are among the other titles that also performed well at the box office. Sony Pictures Classics enjoyed critical success with multiple Academy Award®, Golden Globe®, Film Independent Spirit Award and Cannes Palme D’Or nominations and five wins for films including Rachel Getting Married, Waltz with Bashir, The Class and Frozen River.

A number of major titles have been released or are slated for the 2009 calendar year including Angels & Demons, The Taking of Pelham 1 2 3, Julie & Julia and an epic Roland Emmerich film, 2012.

Sony Pictures’ International Motion Picture Production Group, SPE’s local-language production arm, achieved box office success in Russia and India with the releases of The Very Best Movie 2 and Raaz 2 debuting at number one in their respective markets.

Sony Pictures Worldwide Acquisitions Group acquired distribution rights to Terminator Salvation in a majority of international territories. In addition, The Take received a Film Independent Spirit Award nomination. ...