Edgar Filing: SONY CORP

a6374264.htm

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 2010

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/ Masaru Kato
	(Signature)
	Masaru Kato
	Executive Vice President and
	Chief Financial Officer

Date: July 29, 2010

List of materials

Documents attached hereto:

i) Press release announcing Consolidated Financial Results for the First Quarter Ended June 30, 2010

	1-7-1 Konan, Minato-ku
	Tokyo 108-0075 Japan
News & Information
	No.10-096E
	3:00 P.M. JST, July 29, 2010

Consolidated Financial Results

for the First Quarter Ended June 30, 2010

Tokyo, July 29, 2010 -- Sony Corporation today announced its consolidated results for the first quarter ended June 30, 2010 (April 1, 2010 to June 30, 2010).

l	Operating income of 67.0 billion yen was recorded, a significant improvement over the loss recorded in the same quarter of the previous fiscal year.
l	The Consumer, Professional & Devices and Networked Products & Services segments contributed significantly to the improved operating results.
l	Net income attributable to Sony Corporation’s stockholders of 25.7 billion yen was recorded for the current quarter, compared to a net loss in the same quarter of the previous fiscal year.
l	Forecasted operating income for the fiscal year has been revised upward, even though further appreciation of the yen against the euro is expected for the remainder of the fiscal year.

	(Billions of yen, millions of U.S. dollars, except per share amounts)
	First quarter ended June 30
	2009			2010		Change in yen				2010	*
Sales and operating revenue	¥	1,599.9		¥	1,661.0		+3.8	%	$	18,663
Operating income (loss)		(25.7	)		67.0		-			753
Income (loss) before income taxes		(32.9	)		78.9		-			887
Net income (loss) attributable to Sony Corporation’s stockholders		(37.1	)		25.7		-			289
Net income (loss) attributable to
Sony Corporation’s stockholders
per share of common stock:
- Basic	¥	(36.96	)	¥	25.65		-		$	0.29
- Diluted		(36.96	)		25.61		-			0.29

Unless otherwise specified, all amounts are presented on the basis of Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”).

Supplemental Information

In addition to operating income (loss), Sony’s management also evaluates Sony’s performance using non-U.S. GAAP adjusted operating income. Operating income, as adjusted, which excludes equity in net income (loss) of affiliated companies and restructuring charges, is not a presentation in accordance with U.S. GAAP, and is presented to enhance investors’ understanding of Sony’s operating income (loss) by providing an alternative measure that may be useful to understand Sony’s historical and prospective operating performance.

	(Billions of yen, millions of U.S. dollars)
	First quarter ended June 30
	2009			2010		Change in yen			2010
Operating income (loss)	¥	(25.7	)	¥	67.0		-	%	$	753
Less: Equity in net income (loss) of affiliated companies		(15.1	)		6.7		-			75
Add: Restructuring charges recorded within operating expenses		33.9			7.2		-78.9			80
Operating income, as adjusted	¥	23.3		¥	67.5		+189.8	%	$	758

Sony’s management uses this measure to review operating trends, perform analytical comparisons and assess whether its structural transformation initiatives are achieving their objectives. This supplemental non-U.S. GAAP measure should be considered in addition to, not as a substitute for, Sony’s operating income (loss) in accordance with U.S. GAAP.

* U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 89 yen=1 U.S. dollar, the approximate Tokyo foreign exchange market rate as of June 30, 2010.

Sony realigned its reportable segments from the first quarter of the fiscal year ending March 31, 2011, to reflect modifications to the organizational structure as of April 1, 2010, primarily repositioning the operations of the previously reported B2B & Disc Manufacturing segment. In connection with this realignment, the Consumer Products & Devices segment was renamed the Consumer, Professional & Devices (“CPD”) segment. The CPD segment includes televisions, digital imaging, audio and video, semiconductors and components as well as professional solutions (the B2B business which was previously included in the B2B & Disc Manufacturing segment). The equity results of S-LCD Corporation (“S-LCD”), a joint venture with Samsung Electronics Co., Ltd., are also included within the CPD segment. The disc manufacturing business previously included in the B2B & Disc Manufacturing segment is now included in All Other.

The Networked Products & Services (“NPS”), Pictures, Music and Financial Services segments remain unchanged. The equity earnings from Sony Ericsson Mobile Communications AB (“Sony Ericsson”) continue to be presented as a separate segment.

In connection with this realignment, both the sales and operating income (loss) of each segment in the first quarter ended June 30 of the previous fiscal year have been revised to conform to the current quarter’s presentation.

Consolidated Results for the First Quarter Ended June 30, 2010

Sales and operating revenue (“sales”) was 1,661.0 billion yen (18,663 million U.S. dollars), an increase of 3.8% compared to the same quarter of the previous fiscal year (“year-on-year”) primarily due to an increase in sales in the NPS and CPD segments, partially offset by factors including unfavorable exchange rates, and a decrease in revenue in the Financial Services segment resulting from a decline in the Japanese stock market.

During the quarter ended June 30, 2010, the average rate of the yen was 91.0 yen against the U.S. dollar and 115.5 yen against the euro, which was 5.8% and 13.5% higher, respectively, than the previous year’s first quarter. On a local currency basis, sales increased 8% year-on-year. For references to sales on a local currency basis, see Note on page 8.

Operating income was 67.0 billion yen (753 million U.S. dollars) as compared to an operating loss of 25.7 billion yen in the same quarter of the previous fiscal year. This was mainly due to improved operating results in the CPD and NPS segments as a result of an improvement in the cost of sales ratio and an increase in gross profit from higher sales. Excluding equity in net income (loss) of affiliated companies and restructuring charges, operating income on an as adjusted basis increased by 44.2 billion yen to 67.5 billion yen (758 million U.S. dollars) year-on-year.

Equity in net income of affiliated companies, recorded within operating income, was 6.7 billion yen (75 million U.S. dollars) as compared to a loss of 15.1 billion yen in the same quarter of the previous fiscal year. Sony recorded equity in net income for Sony Ericsson of 0.6 billion yen (7 million U.S. dollars) compared to equity in net loss of 14.5 billion yen in the same quarter of the previous fiscal year. Equity in net income for S-LCD was 4.5 billion yen (50 million U.S. dollars) as compared to a loss of 1.8 billion yen in the same quarter of the previous fiscal year.

The net effect of other income and expenses was income of 11.9 billion yen (134 million U.S. dollars), an improvement of 19.1 billion yen year-on-year, primarily due to the recording of a net foreign exchange gain in the current quarter versus a net foreign exchange loss in the same quarter of the previous fiscal year.

Income before income taxes of 78.9 billion yen (887 million U.S. dollars) was recorded as compared to a loss of 32.9 billion yen in the same quarter of the previous fiscal year.

Income taxes: During the first quarter of the current fiscal year, Sony recorded 43.7 billion yen (491 million U.S. dollars) of income taxes, resulting in an effective tax rate of 55.3%. The effective tax rate was higher than the Japanese statutory tax rate mainly because Sony revised its estimate of the final outcome of the Bilateral Advance Pricing Agreements related to Sony’s intercompany transfer pricing based on the most recent government to government negotiations. Sony believes that the more likely than not outcome will reallocate profits and losses between Sony Corporation and its foreign subsidiaries and, therefore, additional tax expenses were recorded.

Net income attributable to Sony Corporation’s stockholders, which excludes net income attributable to noncontrolling interests, was 25.7 billion yen (289 million U.S. dollars) as compared to a net loss of 37.1 billion yen in the same quarter of the previous fiscal year.

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.

Consumer, Professional & Devices

	(Billions of yen, millions of U.S. dollars)
	First quarter ended June 30
	2009			2010		Change in yen			2010
Sales and operating revenue	¥	831.2		¥	889.5		+7.0	%	$	9,994
Operating income (loss)		(8.9	)		50.1		-			563

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Sales increased 7.0% year-on-year (a 12% increase on a local currency basis) to 889.5 billion yen (9,994 million U.S. dollars). Sales to outside customers increased 8.9% year-on-year. This was primarily due to an increase in television sales resulting from increased unit sales of LCD televisions.

Operating income of 50.1 billion yen (563 million U.S. dollars) was recorded in the current quarter, compared to a loss of 8.9 billion yen in the same quarter of the previous fiscal year. This was driven primarily by an improvement in the cost of sales ratio, an increase in gross profit due to higher sales and a decrease in restructuring charges. These factors were partially offset by an increase in selling, general and administrative expenses primarily associated with the higher sales and unfavorable foreign currency exchange rates. Restructuring charges were 3.9 billion yen (44 million U.S. dollars) in the current quarter, compared with 23.5 billion yen recorded in the same quarter of the previous fiscal year. Categories contributing to the improvement in operating results (excluding restructuring charges) include semiconductors, reflecting an increase in sales of imaging sensors, and televisions, reflecting the increase in sales.

Networked Products & Services

	(Billions of yen, millions of U.S. dollars)
	First quarter ended June
	2009			2010			Change in yen			2010
Sales and operating revenue	¥	246.1		¥	325.9			+32.4	%	$	3,662
Operating income (loss)		(36.7	)		(3.8	)		-			(43	)

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Sales increased 32.4% year-on-year (a 41% increase on a local currency basis) to 325.9 billion yen (3,662 million U.S. dollars). This was due to an increase in PC sales brought on by an increase in unit sales, as well as an increase in sales in the game business brought on by an increase in unit sales of PlayStation®3 (“PS3”) hardware and software.

An operating loss of 3.8 billion yen (43 million U.S. dollars) was recorded, an improvement of 32.9 billion yen year-on-year. This was due to an improvement in the cost of sales ratio and an increase in gross profit from the increase in sales, partially offset by the impact of unfavorable foreign exchange rates and an increase in selling, general and administrative expenses primarily associated with the higher sales. Categories contributing to the improvement in operating results (excluding restructuring charges) include the game business, reflecting cost reductions of PS3 hardware, and PCs, reflecting an increase in unit sales.

* * * * *

Total Inventory for the CPD and NPS segments, as of June 30, 2010, was 657.1 billion yen (7,383 million U.S. dollars), a decrease of 71.8 billion yen, or 9.9% year-on-year. Inventory increased by 98.4 billion yen, or 17.6% compared with the level as of March 31, 2010.

Pictures

	(Billions of yen, millions of U.S. dollars)
	First quarter ended June 30
	2009		2010		Change in yen			2010
Sales and operating revenue	¥	170.0	¥	132.1		-22.3	%	$	1,484
Operating income		1.8		2.9		+58.2			32

Unless otherwise specified, all amounts are reported on a U.S. GAAP basis. The results presented above are a yen-translation of the results of Sony Pictures Entertainment (“SPE”), a U.S.-based operation which 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 decreased 22.3% year-on-year (an 18% decrease on a U.S. dollar basis) to 132.1 billion yen (1,484 million U.S. dollars). While the current quarter benefited from the strong U.S. theatrical performance of The Karate Kid, theatrical revenues declined significantly as the previous fiscal year’s first quarter benefited from the strong worldwide release of Angels & Demons and the international theatrical performance of Terminator Salvation. Home entertainment revenues also declined year-on-year due to lower sales of catalog product. Television revenues increased in the current quarter due to higher advertising and subscription revenues from several of SPE’s international channels.

Operating income increased by 1.1 billion yen year-on-year to 2.9 billion yen (32 million U.S. dollars). Operating income benefited from lower marketing expenses due to fewer major theatrical releases in the current quarter and the higher television advertising and subscription revenues mentioned above. This increase was partially offset by the lower home entertainment revenues also mentioned above. The previous fiscal year’s first quarter results included an 8.3 billion yen gain from the sale of a portion of SPE’s equity interest in a U.S. cable network (Game Show Network). There was no similar transaction in the current quarter.

Music

	(Billions of yen, millions of U.S. dollars)
	First quarter ended June 30
	2009		2010		Change in yen			2010
Sales and operating revenue	¥	108.8	¥	110.3		+1.3	%	$	1,239
Operating income		5.4		7.5		+39.4			84

Unless otherwise specified, all amounts are reported on a U.S. GAAP basis. The results presented above include the yen-translated results of Sony Music Entertainment, 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 results of Sony/ATV Music Publishing LLC, a 50% owned U.S.-based joint venture in the music publishing business which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.

Sales increased 1.3% year-on-year (a 5% increase on a local currency basis) to 110.3 billion yen (1,239 million U.S. dollars). The increase reflects the strong sales of a number of key releases which more than offset the continued contraction of the physical music market. Best-selling titles during the current quarter included AC/DC’s soundtrack to Iron Man 2, music from the hit U.S. television show Glee, Kana Nishino’s to LOVE, Usher’s Raymond v Raymond and Christina Aguilera’s Bionic.

Operating income increased by 2.1 billion yen year-on-year to 7.5 billion yen (84 million U.S. dollars). The improved results were primarily due to the contribution from the titles mentioned above and a year-on-year decrease in marketing and overhead costs as a result of cost reduction efforts.

Financial Services

	(Billions of yen, millions of U.S. dollars)
	First quarter ended June 30
	2009		2010		Change in yen			2010
Financial services revenue	¥	227.6	¥	169.0		-25.7	%	$	1,899
Operating income		48.2		30.0		-37.8			337

In Sony’s Financial Services segment, the results include Sony Financial Holdings, Inc. (“SFH”) and SFH’s consolidated subsidiaries such as Sony Life Insurance Co., Ltd. (“Sony Life”), Sony Assurance Inc. and Sony Bank Inc. (“Sony Bank”), as well as the results for Sony Finance International Inc. (“SFI”). Unless otherwise specified, all amounts are reported on a U.S. GAAP basis. Therefore, the results of Sony Life discussed below differ from the results that SFH and Sony Life disclose separately on a Japanese statutory basis.

Financial services revenue decreased 25.7% year-on-year to 169.0 billion yen (1,899 million U.S. dollars). This was mainly due to a decrease in revenue at Sony Life to 138.9 billion yen (1,561 million U.S. dollars), a 30.7% decrease year-on-year. Revenue at Sony Life decreased primarily due to a deterioration in net gains (losses) from investments in the separate account resulting from a significant decline in the Japanese stock market during the current quarter compared with a significant rise in the same quarter of the previous fiscal year, and due to net valuation gains from investments in convertible bonds in the general account recorded in the same quarter of the previous fiscal year. The decrease in revenue at Sony Life was partially offset by an increase in revenue from insurance premiums, reflecting higher policy amount in force driven by favorable growth of newly acquired policies.

Operating income decreased by 18.2 billion yen year-on-year to 30.0 billion yen (337 million U.S. dollars) mainly due to a decrease in operating income at Sony Life. Operating income at Sony Life was 27.5 billion yen (309 million U.S. dollars), a 20.0 billion yen decrease year-on-year. This was mainly due to the above-mentioned net valuation gains from investments in convertible bonds in the general account recorded in the same quarter of the previous fiscal year, and an increase in the amortization of deferred acquisition costs of variable life insurance products, as a result of the above-mentioned fluctuations in the Japanese stock market.

Sony Ericsson

The following operating results for Sony Ericsson, which is accounted for by the equity method as Sony Corporation’s ownership percentage is 50%, are not consolidated in Sony’s consolidated financial statements. However, Sony believes that this disclosure provides additional useful analytical information to investors regarding Sony’s operating performance.

	(Millions of euro)
	Quarter ended June 30
	2009			2010		Change in euro
Sales and operating revenue	€	1,684		€	1,757		+4.4	%
Income (loss) before taxes		(292	)		25		-
Net income (loss)		(219	)		7		-

Unless otherwise specified, all amounts are on a U.S. GAAP basis.

Sales for the quarter ended June 30, 2010 increased 4.4% year-on-year to 1,757 million euro. This was mainly driven by the significant rise in average selling price as a result of improved product and geographical mix as well as favorable foreign currency exchange rates, partly offset by the decline in unit shipments due to the reduction in size of the product portfolio. Income before taxes of 25 million euro was recorded for the current quarter, compared to a loss before taxes of 292 million euro in the same quarter of the previous fiscal year, due to the positive impact of the cost reduction program and favorable product mix. As a result, Sony recorded equity in net income of Sony Ericsson of 0.6 billion yen (7 million U.S. dollars) for the current quarter, compared to a loss of 14.5 billion yen in the same quarter of the previous fiscal 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-3 and F-9 respectively.

Operating Activities: During the current quarter, there was a net cash outflow of 6.8 billion yen (77 million U.S. dollars) from operating activities, compared to a net cash inflow of 56.9 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 110.3 billion yen (1,239 million U.S. dollars) for the current quarter, an increase of 76.5 billion yen, or 226.2% year-on-year. The net cash outflow during the current quarter was mainly due to an increase in inventories associated with sales enhancements in Other Areas, partially offset by factors including a cash contribution from net income after taking into account depreciation and amortization (including amortization of film costs) and an increase in notes and accounts payable, trade. Compared with the same quarter of the previous fiscal year, the net cash outflow increased mainly due to a higher increase in inventories, partially offset by an increase in cash contribution from net income after taking into account depreciation and amortization in the current quarter.

The Financial Services segment had a net cash inflow of 109.8 billion yen (1,233 million U.S. dollars), an increase of 12.9 billion yen, or 13.3% year-on-year. For the current quarter, net cash inflow was generated primarily due to an increase in revenue from insurance premiums as a result of a steady increase in policy amount in force at Sony Life. Compared with the same quarter of the previous fiscal year, net cash inflow increased primarily due to diminution of an increase in marketable securities held for trading purposes.

Investing Activities: During the current quarter, Sony used 181.8 billion yen (2,043 million U.S. dollars) of net cash in investing activities, an increase of 8.9 billion yen, or 5.2% year-on-year.

For all segments excluding the Financial Services segment, there was a use of 45.5 billion yen (512 million U.S. dollars), a decrease of 32.7 billion yen, or 41.8% year-on-year. During the current quarter, net cash was used mainly for purchases of manufacturing equipment. The net cash used decreased year-on-year primarily due to lower purchases of manufacturing equipment.

The Financial Services segment used 115.2 billion yen (1,295 million U.S. dollars) of net cash, an increase of 30.3 billion yen, or 35.7% year-on-year. Payments for investments and advances, carried out primarily at Sony Life and Sony Bank, where operations are expanding, exceeded proceeds from the maturities of marketable securities, sales of securities investments and collections of advances. The net cash used within the Financial Services segment increased year-on-year primarily due to a decrease in proceeds from maturities of marketable securities, sales of securities investments and collection of advances.

In all segments excluding the Financial Services segment, net cash used by operating and investing activities combined* for the current quarter was 155.8 billion yen (1,751 million U.S. dollars), an increase of 43.8 billion yen, or 39.0% year-on-year.

Financing Activities: During the current quarter, 26.2 billion yen (294 million U.S. dollars) of net cash was provided by financing activities, a decrease of 239.1 billion yen, or 90.1% year-on-year. For all segments excluding the Financial Services segment, there was a 13.4 billion yen (151 million U.S. dollars) of net cash outflow, compared to a net cash inflow of 214.2 billion yen in the same quarter of the previous fiscal year. This was primarily due to significantly higher issuances of long-term corporate bonds and borrowings from banks in the same quarter of the previous fiscal year. There was no comparable issuances or borrowings during the current quarter. In the Financial Services segment, financing activities generated 12.3 billion yen (138 million U.S. dollars) of net cash, a decrease of 22.9 billion yen, or 65.2% year-on-year, primarily due to short-term borrowings, net moving into a decrease during the current quarter from an increase during the same quarter in the previous fiscal year.

Total Cash and Cash Equivalents: Accounting for the above factors and the effect of fluctuations in exchange rates, the total outstanding balance of cash and cash equivalents at June 30, 2010 was 994.6 billion yen (11,176 million U.S. dollars). Cash and cash equivalents of all segments excluding the Financial Services segment was 781.1 billion yen (8,777 million U.S. dollars) at June 30, 2010, a decrease of 203.8 billion yen, or 20.7%, compared with the balance as of March 31, 2010. This was an increase of 116.2 billion yen, or 17.5%, compared with the balance as of June 30, 2009. Sony believes it continues to maintain sufficient liquidity through access to a total, translated into yen, of 773.1 billion yen (8,687 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, 2010. Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 213.5 billion yen (2,399 million U.S. dollars) at June 30, 2010, an increase of 6.8 billion yen, or 3.3%, compared with the balance as of March 31, 2010. This was an increase of 70.5 billion yen, or 49.3%, compared with the balance as of June 30, 2009.

* Sony has included the information for cash flow from operating and investing activities combined excluding the Financial Services segment’s activities, as management frequently monitors this financial measure, and believes this non-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 section Condensed Statements of Cash Flows on page F-9. 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
	2009			2010			2010

Net cash provided by (used in) operating activities reported in the consolidated statements of cash flows	¥	56.9		¥	(6.8	)	$	(77	)
Net cash used in investing activities reported in the consolidated statements of cash flows		(172.9	)		(181.8	)		(2,043	)
		(116.0	)		(188.6	)		(2,120	)
Less: Net cash provided by operating activities within the Financial Services segment		96.9			109.8			1,233
Less: Net cash used in investing activities within the Financial Services segment		(84.9	)		(115.2	)		(1,295	)
Eliminations **		(16.0	)		(27.4	)		(307	)
Cash flow used by operating and investing activities combined excluding the Financial Services segment’s activities	¥	(112.0	)	¥	(155.8	)	$	(1,751	)

** Eliminations primarily consist of intersegment loans and dividend payments. Intersegment loans are between Sony Corporation and SFI, an entity included within the Financial Services segment.

Note

Sales on a local currency basis described herein reflect sales obtained by applying the yen’s monthly average exchange rate in the same quarter of the previous fiscal year to local currency-denominated monthly sales in the current quarter. Sales on a local currency basis are not reflected in Sony’s consolidated financial statements and are not measures in accordance with U.S. GAAP. Sony does not believe that these measures are a substitute for U.S. GAAP measures. However, Sony believes that disclosing sales information on a local currency basis provides additional useful analytical information to investors regarding Sony’s operating performance.

Outlook for the Fiscal Year ending March 31, 2011

The forecast for consolidated results for the fiscal year ending March 31, 2011, as announced on May 13, 2010, has been revised as per the table below:

	(Billions of yen)
	Revised Forecast		Change from May Forecast			May Forecast		Change from March 31, 2010 Actual Results			March 31, 2010 Actual Results
Sales and operating revenue	¥	7,600		0	%	¥	7,600		+5	%	¥	7,214.0
Operating income		180		+13			160		+467			31.8
Income before income taxes		170		+21			140		+532			26.9
Net income (loss) attributable to Sony Corporation’s stockholders		60		+20			50		-			(40.8	)

Assumed foreign currency exchange rates for the remainder of the fiscal year ending March 31, 2011: approximately 90 yen to the U.S. dollar and approximately 110 yen to the euro. (Assumed foreign exchange rates for the current fiscal year at the time of the May forecast: approximately 90 yen to the U.S. dollar and approximately 125 yen to the euro.)

Supplemental Information

In addition to operating income, Sony’s management also evaluates Sony’s performance using non-U.S. GAAP adjusted operating income. Operating income, as adjusted, which excludes equity in net income (loss) of affiliated companies, restructuring charges and LCD television asset impairment, is not a presentation in accordance with U.S. GAAP, and is presented to enhance investors’ understanding of Sony’s operating income by providing an alternative measure that may be useful to understand Sony’s historical and prospective operating performance.

	(Billions of yen)
	Revised Forecast		Change from May Forecast			May Forecast		Change from March 31, 2010 Actual Results			March 31, 2010 Actual Results
Operating income	¥	180		+13	%	¥	160		+467	%	¥	31.8
Less: Equity in net income (loss) of affiliated companies		15		+50			10		-			(30.2	)
Add: Restructuring charges recorded within operating expenses		75		-6			80		-40			124.3
Add: LCD television asset impairment *		-		-			-		-			27.1
Operating income, as adjusted	¥	240		+4	%	¥	230		+12	%	¥	213.4

Sony’s management uses this measure to review operating trends, perform analytical comparisons and assess whether its structural transformation initiatives are achieving its objectives. This supplemental non-U.S. GAAP measure should be considered in addition to, not as a substitute for, Sony’s operating income in accordance with U.S. GAAP.

* The 27.1 billion yen loss on impairment, a non-cash charge recorded within operating income in the previous fiscal year, primarily reflects a decrease in the estimated fair value of property, plant and equipment and certain intangible assets. Sony has excluded the loss on impairment from restructuring charges as it is not directly related to Sony’s ongoing restructuring initiatives. Sony defines restructuring initiatives as activities initiated by Sony, such as exiting a business or product category or implementing a headcount reduction program, which are designed to generate a positive impact on future profitability.

Sony’s forecast for consolidated operating income for the fiscal year ending March 31, 2011 has been revised upward compared to the May forecast, primarily due to the upward revision of expected operating results for the CPD segment, partially offset by a downward revision in expected operating results in the NPS segment. Expected operating results of the CPD and NPS segments are detailed below:

–

CPD: First quarter operating results in the CPD segment significantly exceeded expectations, primarily due to improved results from televisions. Anticipated CPD segment results for the fiscal year were revised upward due to better than expected first quarter results and expected favorable business operations for the remainder of the fiscal year. This was partially offset by the impact of updated foreign exchange assumptions, namely, the further appreciation of the yen against the euro, for the remainder of the fiscal year.

–

NPS: First quarter operating results in the NPS segment significantly exceeded expectations primarily due to the strong performance of the game business and PCs. Anticipated operating results for the NPS segment for the fiscal year were revised downward mainly due to the impact of updated foreign exchange assumptions, namely, the further appreciation of the yen against the euro, for the remainder of the fiscal year. Business operations for the remainder of the fiscal year are anticipated to be generally in line with previous expectations.

In addition, the revised forecast for consolidated results was affected by a net foreign exchange gain of 13.9 billion yen within other income and expenses, and by additional tax expenses mentioned previously, both recorded during the first quarter of the current fiscal year.

The forecast for capital expenditures for the current fiscal year ending March 31, 2011, as announced on May 13, 2010, has been revised as per the table below. Forecasts for depreciation and amortization, as well as for research and development expenses are unchanged.

	(Billions of yen)
	Revised Forecast		Change from May Forecast			May Forecast		Change from March 31, 2010 Actual Results			March 31, 2010 Actual Results
Capital expenditures * (additions to Property, Plant and Equipment)	¥	230		+5	%	¥	220		+19	%	¥	192.7
Depreciation and amortization **		340		-			340		-8			371.0
[for Property, Plant and Equipment (included above)		230		-			230		-12			260.2	]
Research and development expenses		450		-			450		+4			432.0

*	Investments in equity affiliates are not included within capital expenditures.
**	Depreciation and amortization includes amortization of intangible assets and amortization of deferred insurance acquisition costs.

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.

As is Sony’s policy, the effects of gains and losses on investments held by Sony Life, due to market fluctuations from July 1, 2010, have not been incorporated within the above forecast as Sony cannot predict where the financial markets will be after that date. Accordingly, these market fluctuations could further impact the current forecast.

Supplemental Business Segment Information

The business segment information for the fiscal year ended March 31, 2010 has been revised in the table below, in order to conform to the new business segment classification as of April 1, 2010.

	(Billions of yen)
	Fiscal Year ended March 31, 2010
	Sales and operating Revenue		Operating income (loss)
Consumer, Professional & Devices	¥	3,508.8	¥	(53.2	)
Networked Products & Services		1,572.6		(83.3	)
Pictures		705.2		42.8
Music		522.6		36.5
Financial Services		851.4		162.5
Equity in net income (loss) of Sony Ericsson		-		(34.5	)
Other *		53.4		(39.1	)
Consolidated total	¥	7,214.0	¥	31.8

*	Other includes All Other, and Corporate and elimination.

"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.

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 and beliefs in light of the information currently available to it. Sony 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. You 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) 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 LCD televisions and game platforms, which are offered in highly competitive markets characterized by 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 Consumer, Professional & Devices segment); (viii) Sony’s ability to maintain product quality; (ix) the success of Sony’s acquisitions, joint ventures and other strategic investments; (x) Sony’s ability to forecast demands, manage timely procurement and control inventories; (xi) the outcome of pending legal and/or regulatory proceedings; (xii) 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; and (xiii) the impact of 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. Risks and uncertainties also include the impact of any future events with material adverse impacts.

Investor Relations Contacts:

Tokyo	New York	London
Gen Tsuchikawa	Sam Levenson	Yas Hasegawa
+81-(0)3-6748-2180	+1-212-833-6722	+44-(0)20-7426-8696

Home Page: http://www.sony.net/IR/

Presentation Slides: http://www.sony.net/SonyInfo/IR/financial/fr/10q1_sonypre.pdf

(Unaudited)
Consolidated Financial Statements
Consolidated Balance Sheets
		(Millions of yen, millions of U.S. dollars)
		March 31			June 30			Change from		June 30
ASSETS		2010			2010			March 31, 2010		2010
Current assets:
	Cash and cash equivalents	¥	1,191,608		¥	994,627		¥	-196,981	$	11,176
	Marketable securities		579,493			592,751			+13,258		6,660
	Notes and accounts receivable, trade		996,100			918,613			-77,487		10,321
	Allowance for doubtful accounts and sales returns		(104,475	)		(83,978	)		+20,497		(944	)
	Inventories		645,455			748,586			+103,131		8,411
	Deferred income taxes		197,598			171,697			-25,901		1,929
	Prepaid expenses and other current assets		627,093			687,198			+60,105		7,722
	Total current assets		4,132,872			4,029,494			-103,378		45,275

Film costs			310,065			295,415			-14,650		3,319

Investments and advances:
	Affiliated companies		229,051			216,908			-12,143		2,437
	Securities investments and other		5,070,342			5,180,369			+110,027		58,207
			5,299,393			5,397,277			+97,884		60,644

Property, plant and equipment:
	Land		153,067			149,643			-3,424		1,681
	Buildings		897,054			855,320			-41,734		9,610
	Machinery and equipment		2,235,032			2,108,254			-126,778		23,688
	Construction in progress		71,242			75,987			+4,745		854
			3,356,395			3,189,204			-167,191		35,833
	Less-Accumulated depreciation		(2,348,444	)		(2,225,988	)		+122,456		(25,010	)
			1,007,951			963,216			-44,735		10,823
Other assets:
	Intangibles, net		378,917			361,220			-17,697		4,059
	Goodwill		438,869			424,883			-13,986		4,774
	Deferred insurance acquisition costs		418,525			416,449			-2,076		4,679
	Deferred income taxes		403,537			392,958			-10,579		4,415
	Other		475,985			460,569			-15,416		5,175
			2,115,833			2,056,079			-59,754		23,102
Total assets		¥	12,866,114		¥	12,741,481		¥	-124,633	$	143,163

LIABILITIES AND EQUITY
Current liabilities:
	Short-term borrowings	¥	48,785		¥	67,421		¥	+18,636	$	758
	Current portion of long-term debt		235,822			241,937			+6,115		2,718
	Notes and accounts payable, trade		817,118			846,826			+29,708		9,515
	Accounts payable, other and accrued expenses		1,003,197			892,196			-111,001		10,025
	Accrued income and other taxes		69,175			55,906			-13,269		628
	Deposits from customers in the banking business		1,509,488			1,515,917			+6,429		17,033
	Other		376,340			376,262			-78		4,227
	Total current liabilities		4,059,925			3,996,465			-63,460		44,904

Long-term debt			924,207			898,893			-25,314		10,100
Accrued pension and severance costs			295,526			286,861			-8,665		3,223
Deferred income taxes			236,521			240,747			+4,226		2,705
Future insurance policy benefits and other			3,876,292			3,931,079			+54,787		44,169
Other			188,088			182,480			-5,608		2,051
Total liabilities			9,580,559			9,536,525			-44,034		107,152

Equity:
Sony Corporation's stockholders' equity:
	Common stock		630,822			630,841			+19		7,088
	Additional paid-in capital		1,157,812			1,158,282			+470		13,014
	Retained earnings		1,851,004			1,876,741			+25,737		21,087
	Accumulated other comprehensive income		(669,058	)		(784,049	)		-114,991		(8,809	)
	Treasury stock, at cost		(4,675	)		(4,697	)		-22		(53	)
			2,965,905			2,877,118			-88,787		32,327

Noncontrolling interests			319,650			327,838			+8,188		3,684
Total equity			3,285,555			3,204,956			-80,599		36,011
Total liabilities and equity		¥	12,866,114		¥	12,741,481		¥	-124,633	$	143,163

F-1

Consolidated Statements of Income
	(Millions of yen, millions of U.S. dollars, except per share amounts)

	Three months ended June 30
	2009			2010			Change from 2009			2010
Sales and operating revenue:
Net sales	¥	1,354,765		¥	1,473,473					$	16,556
Financial service revenue		223,352			166,598						1,872
Other operating revenue		21,736			20,978						235
		1,599,853			1,661,049			+3.8	%		18,663
Costs and expenses:
Cost of sales		1,061,424			1,109,291						12,464
Selling, general and administrative		378,037			359,770						4,042
Financial service expenses		174,703			136,100						1,529
(Gain) loss on sale, disposal or impairment of assets and other, net		(3,669	)		(4,464	)					(50	)
		1,610,495			1,600,697			-0.6			17,985

Equity in net income (loss) of affiliated companies		(15,058	)		6,664			-			75

Operating income (loss)		(25,700	)		67,016			-			753

Other income:
Interest and dividends		4,420			3,213						36
Foreign exchange gain, net		-			13,931						156
Other		3,979			2,914						33
		8,399			20,058			+138.8			225

Other expenses:
Interest		6,033			6,102						68
Foreign exchange loss, net		4,968			-						-
Other		4,642			2,061						23
		15,643			8,163			-47.8			91

Income (loss) before income taxes		(32,944	)		78,911			-			887

Income taxes		(12,188	)		43,673						491

Net income (loss)		(20,756	)		35,238			-			396

Less - Net income attributable to noncontrolling interests		16,337			9,501						107

Net income (loss) attributable to Sony Corporation's stockholders	¥	(37,093	)	¥	25,737			-	%	$	289


Per share data:
Net income (loss) attributable to Sony Corporation's stockholders
— Basic	¥	(36.96	)	¥	25.65			-	%	$	0.29
— Diluted		(36.96	)		25.61			-			0.29

F-2

Consolidated Statements of Cash Flows
	(Millions of yen, millions of U.S. dollars)

	Three months ended June 30
	2009			2010			2010
Cash flows from operating activities:
Net income (loss)	¥	(20,756	)	¥	35,238		$	396
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities-
Depreciation and amortization, including amortization of deferred insurance acquisition costs		87,240			86,824			976
Amortization of film costs		67,280			48,300			543
Stock-based compensation expense		586			980			11
Accrual for pension and severance costs, less payments		(8,280	)		(2,574	)		(29	)
Gain on sale, disposal or impairment of assets and other, net		(3,669	)		(4,464	)		(50	)
(Gain) loss on revaluation of marketable securities held in the financial		(8,683	)		29,837			335
service business for trading purpose, net
(Gain) loss on revaluation or impairment of securities investments held		(36,348	)		1,841			21
in the financial service business, net
Deferred income taxes		(2,127	)		6,265			70
Equity in net (income) losses of affiliated companies, net of dividends		15,805			(6,656	)		(75	)
Changes in assets and liabilities:
Decrease in notes and accounts receivable, trade		22,856			5,842			66
Increase in inventories		(11,911	)		(158,549	)		(1,781	)
Increase in film costs		(65,392	)		(48,863	)		(549	)
Increase in notes and accounts payable, trade		108,011			68,211			766
Decrease in accrued income and other taxes		(632	)		(15,020	)		(169	)
Increase in future insurance policy benefits and other		81,652			36,175			406
Increase in deferred insurance acquisition costs		(17,352	)		(16,345	)		(184	)
Increase in marketable securities held in the financial service business for trading purpose		(8,413	)		(2,739	)		(31	)
Increase in other current assets		(55,599	)		(100,319	)		(1,127	)
Decrease in other current liabilities		(79,151	)		(44,207	)		(497	)
Other		(8,199	)		73,375			825
Net cash provided by (used in) operating activities		56,918			(6,848	)		(77	)

Cash flows from investing activities:
Payments for purchases of fixed assets		(97,432	)		(71,896	)		(808	)
Proceeds from sales of fixed assets		3,997			1,668			19
Payments for investments and advances by financial service business		(424,973	)		(362,970	)		(4,078	)
Payments for investments and advances (other than financial service business)		(10,180	)		(5,271	)		(59	)
Proceeds from maturities of marketable securities, sales of securities investments		347,948			253,150			2,844
and collections of advances by financial service business
Proceeds from maturities of marketable securities, sales of securities investments		9,042			2,531			28
and collections of advances (other than financial service business)
Other		(1,260	)		997			11
Net cash used in investing activities		(172,858	)		(181,791	)		(2,043	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		413,913			582			7
Payments of long-term debt		(84,458	)		(5,744	)		(65	)
Increase (decrease) in short-term borrowings, net		(86,116	)		19,187			216
Increase in deposits from customers in the financial service business, net		25,603			28,895			325
Dividends paid		(12,623	)		(12,618	)		(142	)
Proceeds from issuance of shares under stock-based compensation plans		-			39			-
Other		(3,665	)		(4,102	)		(47	)
Net cash provided by financing activities		265,254			26,200			294

Effect of exchange rate changes on cash and cash equivalents		(2,172	)		(34,542	)		(387	)

Net increase (decrease) in cash and cash equivalents		147,142			(196,981	)		(2,213	)
Cash and cash equivalents at beginning of the fiscal year		660,789			1,191,608			13,389

Cash and cash equivalents at end of the period	¥	807,931			994,627		$	11,176

F-3

Business Segment Information
	(Millions of yen, millions of U.S. dollars)
	Three months ended June 30
Sales and operating revenue		2009			2010		Change				2010
Consumer, Professional & Devices
Customers	¥	761,968		¥	829,509			+8.9	%	$	9,320
Intersegment		69,187			59,949						674
Total		831,155			889,458			+7.0			9,994

Networked Products & Services
Customers		238,085			310,399			+30.4			3,488
Intersegment		8,008			15,540						174
Total		246,093			325,939			+32.4			3,662

Pictures
Customers		170,020			132,085			-22.3			1,484
Intersegment		-			-						-
Total		170,020			132,085			-22.3			1,484

Music
Customers		106,382			107,090			+0.7			1,203
Intersegment		2,445			3,182						36
Total		108,827			110,272			+1.3			1,239

Financial Services
Customers		223,352			166,598			-25.4			1,872
Intersegment		4,199			2,397						27
Total		227,551			168,995			-25.7			1,899

All Other
Customers		84,432			89,738			+6.3			1,008
Intersegment		15,492			17,087						192
Total		99,924			106,825			+6.9			1,200

Corporate and elimination		(83,717	)		(75,525	)		-			(815	)
Consolidated total	¥	1,599,853		¥	1,661,049			+3.8	%	$	18,663

	Consumer, Professional & Devices ("CPD") intersegment amounts primarily consist of transactions with the Networked Products & Services ("NPS") segment.
	NPS intersegment amounts primarily consist of transactions with the CPD segment.
	All Other intersegment amounts primarily consist of transactions with the Pictures segment, the Music segment and the NPS segment.
	Corporate and elimination includes certain royalty income of brand and patent.

Operating income (loss)		2009			2010		Change				2010
Consumer, Professional & Devices	¥	(8,894	)	¥	50,089			-	%	$	563
Networked Products & Services		(36,737	)		(3,791	)		-			(43	)
Pictures		1,808			2,860			+58.2			32
Music		5,375			7,493			+39.4			84
Financial Services		48,215			29,976			-37.8			337
Equity in net income (loss) of Sony Ericsson		(14,476	)		582			-			7
All Other		(4,634	)		(3,892	)		-			(44	)
Total		(9,343	)		83,317			-			936

Corporate and elimination		(16,357	)		(16,301	)		-			(183	)
Consolidated total	¥	(25,700	)	¥	67,016			-	%	$	753

	The 2009 segment disclosure above has been restated to reflect the change in business segment classification discussed in Note 5.
	Operating income (loss) is Sales and operating revenue less Costs and expenses, and includes Equity in net income (loss) of affiliated companies.
	Corporate and elimination includes certain restructuring costs and other corporate expenses, which are attributable principally to headquarters and are not allocated to segments.
	As a result of a modification of internal management reporting during the previous fiscal year, certain amounts previously included within corporate and elimination have been reclassified into the segment operating income (loss) for all periods presented.
	The revision had no impact on the consolidated results.

F-4

Sales to Customers by Product Category
	(Millions of yen, millions of U.S. dollars)
	Three months ended June 30
Sales and operating revenue (to external customers)	2009		2010		Change			2010

Consumer, Professional & Devices
Televisions	¥	237,144	¥	291,935		+23.1	%	$	3,280
Digital Imaging		180,432		172,231		-4.5			1,935
Audio and Video		101,315		95,245		-6.0			1,070
Semiconductors		67,810		90,233		+33.1			1,014
Components		111,690		107,204		-4.0			1,205
Professional Solutions		60,982		67,759		+11.1			761
Other		2,595		4,902		+88.9			55
Total		761,968		829,509		+8.9			9,320

Networked Products & Services
Game		110,514		142,102		+28.6			1,597
PC and Other Networked Businesses		127,571		168,297		+31.9			1,891
Total		238,085		310,399		+30.4			3,488

Pictures		170,020		132,085		-22.3			1,484
Music		106,382		107,090		+0.7			1,203
Financial Services		223,352		166,598		-25.4			1,872
All Other		84,432		89,738		+6.3			1,008
Corporate		15,614		25,630		+64.1			288
Consolidated total	¥	1,599,853	¥	1,661,049		+3.8	%	$	18,663

The above table includes a breakdown of CPD segment and NPS segment sales and operating revenue to customers in the Business Segment Information on page F-4.

Sony management views the CPD segment and the NPS segment as single operating segments. However, Sony believes that the breakdown of CPD segment and NPS segment sales and operating revenue to customers in this table is useful to investors in understanding sales by the product category in these business segments. Additionally, Sony has partially realigned its product category configuration from the first quarter of the fiscal year ending March 31, 2011 to reflect the segment reclassification. In connection with the realignment, all prior period sales amounts by product category in the table above have been restated to conform to the current presentation. In the CPD segment Televisions includes LCD televisions; Digital Imaging includes digital still cameras, digital interchangeable lens cameras and digital video cameras; Audio and Video includes home audio, Blu-ray disc players and recorders; Semiconductors includes image sensors and small and medium sized LCD panels; Components includes batteries, recording media and data recording systems, and Professional Solutions includes broadcast- and professional-use products. In the NPS segment Game includes game consoles and software; PC and Other Networked Businesses includes personal computers and memory-based portable audio devices.

Geographic Information
	(Millions of yen, millions of U.S. dollars)
	Three months ended June 30
Sales and operating revenue (to external customers)	2009		2010		Change			2010
Japan	¥	494,721	¥	456,097		-7.8	%	$	5,125
United States		371,317		360,039		-3.0			4,045
Europe		323,195		330,632		+2.3			3,715
Other Areas		410,620		514,281		+25.2			5,778
Total	¥	1,599,853	¥	1,661,049		+3.8	%	$	18,663

Classification of Geographic Information shows sales and operating revenue recognized by location of customers.

F-5

Condensed Financial Services Financial Statements

The results of the Financial Services segment are included in Sony’s consolidated financial statements. The following schedules show

unaudited condensed financial statements for the Financial Services segment and all other segments excluding Financial Services.

These presentations are not in accordance with U.S. GAAP, which is used by Sony to prepare its consolidated financial statements.

However, because the Financial Services segment is different in nature from Sony’s other segments, Sony believes that a comparative

presentation may be useful in understanding and analyzing Sony’s consolidated financial statements. Transactions between the

Financial Services segment and Sony without Financial Services are eliminated in the consolidated figures shown below.

Condensed Balance Sheet
	(Millions of yen, millions of U.S. dollars)
Financial Services	March 31		June 30
ASSETS	2010		2010		2010
Current assets:
Cash and cash equivalents	¥	206,742	¥	213,535	$	2,399
Marketable securities		576,129		589,751		6,626
Other		265,465		205,439		2,309
		1,048,336		1,008,725		11,334

Investments and advances		4,967,125		5,088,031		57,169
Property, plant and equipment		34,725		34,841		391
Other assets:
Deferred insurance acquisition costs		418,525		416,449		4,679
Other		108,421		106,754		1,200
		526,946		523,203		5,879
	¥	6,577,132	¥	6,654,800	$	74,773
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	¥	86,102	¥	82,246	$	924
Notes and accounts payable, trade		13,709		10,995		124
Deposits from customers in the banking business		1,509,488		1,515,917		17,033
Other		164,545		165,845		1,863
		1,773,844		1,775,003		19,944

Long-term debt		42,536		37,589		422
Future insurance policy benefits and other		3,876,292		3,931,079		44,169
Other		201,825		209,456		2,354
Total liabilities		5,894,497		5,953,127		66,889

Equity:
Sony Corporation's stockholders' equity		681,500		700,495		7,871
Noncontrolling interests		1,135		1,178		13
Total equity		682,635		701,673		7,884

	¥	6,577,132	¥	6,654,800	$	74,773

F-6

	(Millions of yen, millions of U.S. dollars)
Sony without Financial Services	March 31		June 30
ASSETS	2010		2010		2010
Current assets:
Cash and cash equivalents	¥	984,866	¥	781,092	$	8,777
Marketable securities		3,364		3,000		34
Notes and accounts receivable, trade		887,694		833,126		9,361
Other		1,243,345		1,417,651		15,928
		3,119,269		3,034,869		34,100

Film costs		310,065		295,415		3,319
Investments and advances		376,669		352,094		3,956
Investments in Financial Services, at cost		116,843		116,843		1,313
Property, plant and equipment		973,226		928,375		10,432
Other assets		1,626,764		1,570,988		17,651
	¥	6,522,836	¥	6,298,584	$	70,771
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	¥	230,631	¥	239,622	$	2,692
Notes and accounts payable, trade		804,336		836,225		9,396
Other		1,291,481		1,165,230		13,093
		2,326,448		2,241,077		25,181

Long-term debt		893,418		871,528		9,792
Accrued pension and severance costs		283,382		274,298		3,082
Other		299,808		291,538		3,276
Total liabilities		3,803,056		3,678,441		41,331

Equity:
Sony Corporation's stockholders' equity		2,662,712		2,563,178		28,800
Noncontrolling interests		57,068		56,965		640
Total equity		2,719,780		2,620,143		29,440

	¥	6,522,836	¥	6,298,584	$	70,771

	(Millions of yen, millions of U.S. dollars)
Consolidated	March 31		June 30
ASSETS	2010		2010		2010
Current assets:
Cash and cash equivalents	¥	1,191,608	¥	994,627	$	11,176
Marketable securities		579,493		592,751		6,660
Notes and accounts receivable, trade		891,625		834,635		9,377
Other		1,470,146		1,607,481		18,062
		4,132,872		4,029,494		45,275

Film costs		310,065		295,415		3,319
Investments and advances		5,299,393		5,397,277		60,644
Property, plant and equipment		1,007,951		963,216		10,823
Other assets:
Deferred insurance acquisition costs		418,525		416,449		4,679
Other		1,697,308		1,639,630		18,423
		2,115,833		2,056,079		23,102
	¥	12,866,114	¥	12,741,481	$	143,163
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	¥	284,607	¥	309,358	$	3,476
Notes and accounts payable, trade		817,118		846,826		9,515
Deposits from customers in the banking business		1,509,488		1,515,917		17,033
Other		1,448,712		1,324,364		14,880
		4,059,925		3,996,465		44,904

Long-term debt		924,207		898,893		10,100
Accrued pension and severance costs		295,526		286,861		3,223
Future insurance policy benefits and other		3,876,292		3,931,079		44,169
Other		424,609		423,227		4,756
Total liabilities		9,580,559		9,536,525		107,152

Equity:
Sony Corporation's stockholders' equity		2,965,905		2,877,118		32,327
Noncontrolling interests		319,650		327,838		3,684
Total equity		3,285,555		3,204,956		36,011

	¥	12,866,114	¥	12,741,481	$	143,163

F-7

Condensed Statements of Income
	(Millions of yen, millions of U.S. dollars)
Financial Services	Three months ended June 30
	2009			2010			Change			2010

Financial service revenue	¥	227,551		¥	168,995			-25.7	%	$	1,899
Financial service expenses		179,023			138,575			-22.6			1,557
Equity in net loss of affiliated companies		(313	)		(444	)		-			(5	)
Operating income		48,215			29,976			-37.8			337
Other income (expenses), net		(764	)		9			-			0
Income before income taxes		47,451			29,985			-36.8			337
Income taxes and other		16,188			11,311			-30.1			127
Net income attributable to Sony Corporation's stockholders	¥	31,263		¥	18,674			-40.3	%	$	210

	(Millions of yen, millions of U.S. dollars)
Sony without Financial Services	Three months ended June 30
	2009			2010		Change			2010

Net sales and operating revenue	¥	1,377,804		¥	1,495,580		+8.5	%	$	16,804
Costs and expenses		1,437,376			1,466,265		+2.0			16,475
Equity in net income (loss) of affiliated companies		(14,745	)		7,108		-			80
Operating income (loss)		(74,317	)		36,423		-			409
Other income (expenses), net		(2,115	)		16,466		-			185
Income (loss) before income taxes		(76,432	)		52,889		-			594
Income taxes and other		(27,408	)		34,039		-			382
Net income (loss) attributable to Sony Corporation's stockholders	¥	(49,024	)	¥	18,850		-	%	$	212

	(Millions of yen, millions of U.S. dollars)
Consolidated	Three months ended June 30
	2009			2010		Change			2010

Financial service revenue	¥	223,352		¥	166,598		-25.4	%	$	1,872
Net sales and operating revenue		1,376,501			1,494,451		+8.6			16,791
		1,599,853			1,661,049		+3.8			18,663
Costs and expenses		1,610,495			1,600,697		-0.6			17,985
Equity in net income (loss) of affiliated companies		(15,058	)		6,664		-			75
Operating income (loss)		(25,700	)		67,016		-			753
Other income (expenses), net		(7,244	)		11,895		-			134
Income (loss) before income taxes		(32,944	)		78,911		-			887
Income taxes and other		4,149			53,174		-			598
Net income (loss) attributable to Sony Corporation's stockholders	¥	(37,093	)	¥	25,737		-	%	$	289

F-8

Condensed Statements of Cash Flows
	(Millions of yen, millions of U.S. dollars)
Financial Services	Three months ended June 30
	2009				2010				2010

Net cash provided by operating activities		¥	96,901			¥	109,759			$	1,233
Net cash used in investing activities			(84,895	)			(115,229	)			(1,295	)
Net cash provided by financing activities			35,191				12,263				138
Net increase in cash and cash equivalents			47,197				6,793				76
Cash and cash equivalents at beginning of the fiscal year			95,794				206,742				2,323
Cash and cash equivalents at end of the period		¥	142,991			¥	213,535			$	2,399

	(Millions of yen, millions of U.S. dollars)
Sony without Financial Services	Three months ended June 30
	2009			2010			2010

Net cash used in operating activities	¥	(33,807	)	¥	(110,270	)	$	(1,239	)
Net cash used in investing activities		(78,242	)		(45,533	)		(512	)
Net cash provided by (used in) financing activities		214,166			(13,429	)		(151	)
Effect of exchange rate changes on cash and cash equivalents		(2,172	)		(34,542	)		(387	)
Net increase (decrease) in cash and cash equivalents		99,945			(203,774	)		(2,289	)
Cash and cash equivalents at beginning of the fiscal year		564,995			984,866			11,066
Cash and cash equivalents at end of the period	¥	664,940		¥	781,092		$	8,777

	(Millions of yen, millions of U.S. dollars)
Consolidated	Three months ended June 30
	2009			2010			2010

Net cash provided by (used in) operating activities	¥	56,918		¥	(6,848	)	$	(77	)
Net cash used in investing activities		(172,858	)		(181,791	)		(2,043	)
Net cash provided by financing activities		265,254			26,200			294
Effect of exchange rate changes on cash and cash equivalents		(2,172	)		(34,542	)		(387	)
Net increase (decrease) in cash and cash equivalents		147,142			(196,981	)		(2,213	)
Cash and cash equivalents at beginning of the fiscal year		660,789			1,191,608			13,389
Cash and cash equivalents at end of the period	¥	807,931		¥	994,627		$	11,176

F-9

(Notes)

1.	U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥ 89 = U.S. $1, the approximate Tokyo foreign exchange market rate as of June 30, 2010.

2.	As of June 30, 2010, Sony had 1,273 consolidated subsidiaries (including variable interest entities) and 80 affiliated companies accounted for under the equity method.

3.	The weighted-average number of outstanding shares used for the computation of earnings per share of common stock are as follows. The dilutive effect in the weighted-average number of outstanding shares mainly resulted from convertible bonds. All potentially dilutive shares have been excluded from the number of shares used in the computation of diluted earnings per share for the three months ended June 30, 2009, because Sony incurred a net loss attributable to Sony Corporation’s stockholders and their inclusion would be anti-dilutive.

Weighted-average number of outstanding shares	(Thousands of shares)
	Three months ended June 30
	2009		2010
Net income (loss) attributable to Sony Corporation's stockholders
— Basic		1,003,529		1,003,538
— Diluted		1,003,529		1,005,110

4.	Recently adopted accounting pronouncements

Multiple element arrangements and software deliverables -

In October 2009, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance for arrangements with multiple deliverables. Specifically, the new standard requires an entity to allocate consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices. In the absence of the vendor-specific objective evidence or third-party evidence of the selling prices, consideration must be allocated to the deliverables based on management’s best estimate of the selling prices. In addition, the guidance eliminates the use of the residual method of allocation. Also in October 2009, the FASB issued accounting guidance which changes revenue recognition for tangible products containing software and hardware elements. Specifically, tangible products containing software and hardware that function together to deliver the tangible products’ essential functionality are scoped out of the existing software revenue recognition guidance and are accounted for under the revenue recognition guidance for multiple element arrangements. Sony adopted the new guidance on April 1, 2010. The adoption of the new guidance did not have a material impact on Sony’s results of operations and financial position.

Transfers of financial assets -

In June 2009, the FASB issued new accounting guidance on accounting for transfers of financial assets. This guidance amends previous guidance by including: the elimination of the qualifying special-purpose entity (QSPE) concept; a new participating interest definition that must be met for transfers of portions of financial assets to be eligible for sale accounting; clarifications and changes to the derecognition criteria for a transfer to be accounted for as a sale; and a change to the amount of recognized gain or loss on a transfer of financial assets accounted for as a sale when beneficial interests are received by the transferor. Additionally, the guidance requires new disclosures regarding an entity’s involvement in a transfer of financial assets. Finally, existing QSPEs must be evaluated for consolidation in accordance with the applicable consolidation guidance upon the elimination of this concept. This guidance is effective for Sony as of April 1, 2010. The adoption of this guidance did not have a material impact on Sony’s results of operations and financial position.

Variable interest entities -

In June 2009, the FASB issued new accounting guidance for determining whether to consolidate a variable interest entity (“VIE”). This guidance changes the approach for determining the primary beneficiary of a VIE from a quantitative risk and reward model to a qualitative model based on control, and requires an ongoing reassessment of whether an entity is the primary beneficiary. This guidance is effective for Sony as of April 1, 2010. The adoption of this guidance did not have a material impact on Sony’s results of operations and financial position.

Sony realigned its reportable segments from the first quarter of the fiscal year ending March 31, 2011, primarily repositioning the operations of the previously reported B2B & Disc Manufacturing segment. In connection with this realignment, the Consumer Products & Devices segment was renamed the Consumer, Professional & Devices (“CPD”) segment. The CPD segment includes televisions, digital imaging, audio and video, semiconductors and components as well as professional solutions (The B2B business which was previously incorporated in the B2B & Disc Manufacturing segment). The equity results of S-LCD Corporation are also included within the CPD segment. The disc manufacturing business previously incorporated in the B2B & Disc Manufacturing segment is now included in All Other. The Networked Products & Services, Pictures, Music and Financial Services segments remain unchanged. The equity earnings from Sony Ericsson Mobile Communications AB are presented as a separate segment. In connection with the realignment, all prior period amounts in the segment disclosures have been restated to conform to the current presentation.

Sony estimates the annual effective tax rate (“ETR”) derived from a projected annual net income before taxes and calculates interim period income tax provision based on the year-to-date income tax provision computed by applying the ETR to the year-to-date net income before taxes at the end of each interim period. The income tax provision based on the ETR reflects anticipated income tax credits and net operating loss carryforwards; however, it excludes income tax provision related to significant unusual or extraordinary transactions. Such income tax provision will be separately reported from the provision based on the ETR in the interim period in which they occur.

Other Consolidated Financial Data

	(Millions of yen, millions of U.S. dollars)
	Three months ended June 30
	2009			2010			2010
Capital expenditures (additions to property, plant and equipment)	¥	57,265		¥	50,339		$	566
Depreciation and amortization expenses*		87,240			86,824			976
(Depreciation expenses for property, plant and equipment)		(62,668	)		(53,097	)		(597	)
Research and development expenses		99,816			99,070			1,113

* Including amortization expenses for intangible assets and for deferred insurance acquisition costs.