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 2017

Commission File Number: 001-06439

SONY CORPORATION

(Translation of registrant's name into English)

1-7-1 KONAN, MINATO-KU, TOKYO, 108-0075, JAPAN

(Address of principal executive offices)

The registrant files annual reports under cover of Form 20-F.

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F,

 

Form 20-F  X

Form 40-F __

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, Yes No X

 

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-______

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

	SONY CORPORATION
	(Registrant)
	By:  /s/  Kenichiro Yoshida
	(Signature)
	Kenichiro Yoshida
	Executive Deputy President and
	Chief Financial Officer

 

Date: October 31, 2017

List of materials

Documents attached hereto:

 

i) Press release Announcing Consolidated Financial Results for the Second Quarter Ended September 30, 2017 

   No. 17-103E

October 31, 2017

Tokyo, October 31, 2017 -- Sony Corporation today announced its consolidated financial results for the second quarter ended September 30, 2017 (July 1, 2017 to September 30, 2017).

* U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 113 yen = 1 U.S. dollar, the approximate Tokyo foreign exchange market rate as of September 30, 2017.

All amounts are presented on the basis of Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”).

Sony Corporation and its consolidated subsidiaries are together referred to as “Sony”.

The average foreign exchange rates during the quarters ended September 30, 2016 and 2017 are presented below.

Sales and operating revenue (“Sales”) increased by 22.1% compared to the same quarter of the previous fiscal year (“year-on-year”) to 2,062.5 billion yen.  This significant increase was primarily due to the impact of foreign exchange rates and an increase in Game & Network Services (“G&NS”) segment sales.  On a constant currency basis, sales increased 15%.  For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Note on page 8.

Operating income increased 158.5 billion yen year-on-year to 204.2 billion yen.  This significant increase was mainly due to the improvements of operating results in the Semiconductors and G&NS segments as well as All Other.

Operating income in the same quarter of the previous fiscal year included 9.4 billion yen in inventory write-downs of certain image sensors for mobile products and net charges of 1.2 billion yen in expenses resulting from the earthquakes in the Kumamoto region in 2016 (“the 2016 Kumamoto Earthquakes”), both recorded in the Semiconductors segment, and a 32.8 billion yen impairment charge related to the transfer of the battery business recorded in All Other.

 

During the current quarter, restructuring charges, net, decreased 31.0 billion yen year-on-year to 1.6 billion yen mainly due to the absence in the current quarter of the above-mentioned impairment charge related to the transfer of the battery business recorded in the same quarter of the previous fiscal year.  Restructuring charges are recorded as an operating expense and are included in operating income.

Equity in net income of affiliated companies, recorded within operating income, increased 0.9 billion yen year-on-year to 2.0 billion yen.

The net effect of other income and expenses was an expense of 5.7 billion yen, a deterioration of 0.4 billion yen compared to the same quarter of the previous fiscal year.

Income before income taxes increased 158.0 billion yen year-on-year to 198.6 billion yen.

During the current quarter, Sony recorded 55.8 billion yen of income tax expense, resulting in an effective tax rate of 28.1% which was lower than the effective tax rate of 58.0% in the same quarter of the previous fiscal year.  This lower effective tax rate was mainly due to the fact that Sony Corporation and its national tax filing group in Japan, which has established valuation allowances for deferred tax assets, recorded profits during the current quarter, compared to the losses recorded in the same quarter of the previous fiscal year.

Net income attributable to Sony Corporation’s stockholders, which deducts net income attributable to noncontrolling interests, increased 126.0 billion yen year-on-year to 130.9 billion yen.

“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.  For details regarding each segment’s product categories, please refer to page F-8.  For details regarding business segment realignment, please refer to Note 3 on page F-17.

Mobile Communications (MC)

Sales were 172.0 billion yen, essentially flat year-on-year (a 3% decrease on a constant currency basis).  This was mainly due to the impact of foreign exchange rates as well as an increase in sales of the fixed line communications business, substantially offset by a decrease in unit sales of smartphones.

Operating loss of 2.5 billion yen was recorded, compared to operating income of 3.7 billion yen recorded in the same quarter of the previous fiscal year.  This deterioration was primarily due to a change in the geographic mix of smartphone sales, an increase in the price of key components, as well as the negative impact of the appreciation of the yen against the U.S. dollar, primarily reflecting a high ratio of U.S. dollar-denominated costs, partially offset by reductions in operating costs and marketing expenses.  During the current quarter, there was a 1.2 billion yen negative impact from foreign exchange rate fluctuations (which includes the impact of foreign exchange hedging).

Game & Network Services (G&NS)

 

 

Sales increased 35.4% year-on-year (a 25% increase on a constant currency basis) to 433.2 billion yen.  This significant increase was primarily due to an increase in PlayStation®4 (“PS4”) software sales including sales through the network, the impact of foreign exchange rates, as well as an increase in PS4 hardware sales.

Operating income increased 35.8 billion yen year-on-year to 54.8 billion yen.  This significant increase was primarily due to the above-mentioned increase in sales, partially offset by an increase in selling, general and administrative expenses.  During the current quarter, there was a 3.1 billion yen positive impact from foreign exchange rate fluctuations.

Operating income includes a favorable adjustment of 5.1 billion yen that resulted from the recognition of internal royalties in the current quarter, rather than in the first quarter of the fiscal year ending March 31, 2018.  This adjustment resulted from a discrepancy in the timing of when internal royalties were recognized at the relevant subsidiaries within the segment.

Imaging Products & Solutions (IP&S)

Sales increased 15.8% year-on-year (a 7% increase on a constant currency basis) to 156.7 billion yen.  This significant increase in sales was mainly due to the impact of foreign exchange rates as well as the absence in the current quarter of the impact from the 2016 Kumamoto Earthquakes in the same quarter of the previous fiscal year.

Operating income increased 4.0 billion yen year-on-year to 18.9 billion yen.  This increase was mainly due to the positive impact of foreign exchange rates and the above-mentioned increase in sales, partially offset by an increase in selling, general and administrative expenses.  During the current quarter, there was a 5.2 billion yen positive impact from foreign exchange rate fluctuations.

Home Entertainment & Sound (HE&S)

Sales increased 28.1% year-on-year (a 17% increase on a constant currency basis) to 300.9 billion yen.  This significant increase was primarily due to an improvement in the product mix of televisions reflecting a shift to high value-added models, as well as the impact of foreign exchange rates.

Operating income increased 6.8 billion yen year-on-year to 24.4 billion yen.  This significant increase was primarily due to the above-mentioned increase in sales as well as the positive impact of foreign exchange rates, partially offset by an increase in the price of key components and an increase in marketing costs.  During the current quarter, there was a 7.0 billion yen positive impact from foreign exchange rate fluctuations.

 

Semiconductors

Sales increased 17.9% year-on-year (a 10% increase on a constant currency basis) to 228.4 billion yen.  This increase was primarily due to a significant increase in unit sales of image sensors for mobile products, as well as the absence of the impact of a decrease in image sensor production due to the 2016 Kumamoto Earthquakes in the same quarter of the previous fiscal year, partially offset by a significant decrease in sales of camera modules, a business which was downsized.

Operating income of 49.4 billion yen was recorded, compared to an operating loss of 4.2 billion yen recorded in the same quarter of the previous fiscal year.  This significant improvement in operating results was primarily due to the impact of the above-mentioned increase in sales, the positive impact of foreign exchange rates, as well as the absence of 9.4 billion yen in inventory write-downs of certain image sensors for mobile products recorded in the same quarter of the previous fiscal year.  During the current quarter, there was a 9.0 billion yen positive impact from foreign exchange rate fluctuations.

Pictures

The results presented in Pictures are a yen-translation of the results of Sony Pictures Entertainment Inc. (“SPE”), a U.S.-based operation that aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.  Management analyzes the results of SPE in U.S. dollars, so discussion of certain portions of its results is specified as being on “a U.S. dollar basis.”

Sales increased 27.0% year-on-year (a 17% increase on a U.S. dollar basis) to 244.0 billion yen.  The significant increase in sales on a U.S. dollar basis was primarily due to higher sales in Motion Pictures and Media Networks.  Motion Pictures sales increased significantly due to the strong worldwide theatrical performance of Spider-Man: Homecoming.  Media Networks sales increased significantly primarily due to higher advertising and subscription revenues from TEN Sports Network, a sports network in India acquired by SPE in February 2017, and from SPE’s other networks in India.

Operating income increased 4.5 billion yen year-on-year to 7.7 billion yen.  This increase in operating income was primarily due to the above-mentioned increase in sales, partially offset by higher programming and marketing expenses for Media Networks.

 

Music

The Music segment results include the yen-translated results of Sony Music Entertainment (“SME”) and Sony/ATV Music Publishing LLC (“Sony/ATV”), both U.S.-based operations which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis and the results of Sony Music Entertainment (Japan) Inc., a Japan-based music company which aggregates its results in yen.  The segment also includes equity in net income for EMI Music Publishing (“EMI”), an affiliated company accounted for under the equity method for which Sony records 39.8% of EMI’s net income in the segment’s operating income.

Sales increased 37.5% year-on-year (a 32% increase on a constant currency basis) to 206.6 billion yen.  This significant increase in sales was mainly due to higher Visual Media and Platform sales and higher Recorded Music sales.  Visual Media and Platform sales increased significantly due to the continued strong performance of Fate/Grand Order, a game application for mobile devices.  Recorded Music sales increased significantly primarily due to a continued increase in digital streaming revenues.  Best-selling titles during the quarter included Nogizaka46’s Nigemizu, Keyakizaka46’s Masshiro na Mono wa Yogoshitaku naru and DJ Khaled’s Grateful.

Operating income increased 16.0 billion yen year-on-year to 32.5 billion yen.  This increase in operating income was primarily due to the above-mentioned increase in sales.

Financial Services

The Financial Services segment results include Sony Financial Holdings Inc. (“SFH”) and SFH’s consolidated subsidiaries such as Sony Life Insurance Co., Ltd. (“Sony Life”), Sony Assurance Inc. (“Sony Assurance”) and Sony Bank Inc. (“Sony Bank”).  The results of Sony Life discussed in the Financial Services segment differ from the results that SFH and Sony Life disclose separately on a Japanese statutory basis.

Financial services revenue increased 7.2% year-on-year to 279.2 billion yen primarily due to an increase in revenue at Sony Life.  Revenue at Sony Life increased 6.6% year-on-year to 246.0 billion yen mainly due to higher insurance premiums revenue reflecting an increase in the policy amount in force, as well as an improvement in investment performance in the separate account.  This improvement in investment performance was mainly due to favorable financial market conditions.

Operating income increased 3.0 billion yen year-on-year to 36.6 billion yen, primarily due to a decline in the loss ratio for automobile insurance at Sony Assurance and the above-mentioned increase in insurance premiums revenue at Sony Life.  Operating income at Sony Life increased 1.2 billion yen year-on-year to 32.2 billion yen.

*    *    *    *    *

For Consolidated Statements of Income and Business Segment Information for the six months ended September 30, 2016 and 2017, please refer to pages F-3 and F-7 respectively.

Sales for the six months ended September 30, 2017 (“the current six months”) increased 18.7% year-on-year to 3,920.6 billion yen.  This significant increase was primarily due to the impact of foreign exchange rates as well as increases in sales in all segments except for the MC segment.  On a constant currency basis, consolidated sales increased 14% year-on-year.  For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Note on page 8.  During the current six months, the average rates of the yen were 111.1 yen against the U.S. dollar and 126.3 yen against the euro, which were 5.2% and 6.4% lower, respectively, as compared with the same period in the previous fiscal year.

In the MC segment, sales were essentially flat.  In the G&NS segment, sales increased significantly primarily due to the significant contribution of PS4 software sales including sales through the network.  In the IP&S segment, sales increased significantly as the same period of the previous fiscal year was negatively impacted by the 2016 Kumamoto Earthquakes.  In the HE&S segment, sales increased significantly primarily due to an improvement in the product mix of televisions reflecting a shift to high value-added models, as well as the impact of foreign exchange rates.  In the Semiconductors segment, sales increased significantly primarily due to a significant increase in unit sales of image sensors for mobile products as well as the absence of a decrease in image sensor production in the same period of the previous fiscal year due to the 2016 Kumamoto Earthquakes.  In the Pictures segment, sales increased due to higher advertising and subscription revenues for Media Networks, higher licensing revenues for Television Productions and higher theatrical revenues for Motion Pictures.  In the Music segment, sales increased significantly primarily due to higher Visual Media and Platform sales as well as higher Recorded Music sales.  In the Financial Services segment, revenue increased significantly mainly due to a substantial improvement in investment performance in the separate account at Sony Life, resulting from favorable financial market conditions during the current six months compared to the same period of the previous fiscal year.

Operating income increased 259.9 billion yen year-on-year to 361.8 billion yen.  This significant increase was primarily due to a significant improvement in the operating results in the Semiconductors segment.

Operating income in the current six months includes a 27.5 billion yen gain recorded in the Semiconductors segment resulting from the sale of the entire equity interest in a manufacturing subsidiary in the camera module business.  Additionally, 6.7 billion yen and 2.6 billion yen in insurance recoveries, mainly for opportunity losses related to the 2016 Kumamoto Earthquakes, were recorded in the Semiconductors and the IP&S segments, respectively.

Operating income in the same period of the previous fiscal year included a 23.9 billion yen impairment charge against long-lived assets, resulting from the termination of the development and manufacturing of certain high-functionality camera modules for external sale, net charges of 14.7 billion yen in expenses resulting from the 2016 Kumamoto Earthquakes, as well as 11.2 billion yen in inventory write-downs of certain image sensors for mobile products, all recorded in the Semiconductors segment.  Additionally, in All Other, a 32.8 billion yen impairment charge was recorded in the same period of the previous fiscal year, related to the transfer of the battery business.

In the MC segment, operating income decreased year-on-year mainly due to an increase in the price of key components, partially offset by reductions in operating costs.  In the G&NS segment, operating income increased year-on-year primarily due to the contribution of increased PS4 software sales including sales through the network, partially offset by an increase in selling, general and administrative expenses.  In the IP&S segment, operating income increased significantly year-on-year primarily due to the impact of the above-mentioned increase in sales, partially offset by an increase in selling, general and administrative expenses.  In the HE&S segment, operating income increased significantly year-on-year primarily due to an improvement in the product mix of televisions reflecting a shift to high value-added models, partially offset by an increase in the price of key components and an increase in marketing costs.  In the Semiconductors segment, operating results improved significantly compared to the same period of the previous fiscal year.  This improvement was primarily due to the impact of the above-mentioned increase in sales, a gain resulting from the sale of the entire equity interest in a manufacturing subsidiary in the camera module business, and insurance recoveries related to the 2016 Kumamoto Earthquakes in the current six months.  Additionally, in the same period of the previous fiscal year, the Semiconductors segment operating results included the above-mentioned impairment charge against long-lived assets relating to camera modules, net expenses relating to the 2016 Kumamoto Earthquakes, and inventory write-downs of certain image sensors for mobile products.  In the Pictures segment, the operating loss decreased primarily due to the above-mentioned increase in sales partially offset by higher programming and marketing expenses for Media Networks.  In the Music segment, operating income increased significantly primarily due to the above-mentioned increase in sales.  In the Financial Services segment, operating income was essentially flat.

During the current six months, restructuring charges, net, decreased 30.3 billion yen year-on-year to 4.0 billion yen, mainly due to the absence in the current six months of above-mentioned impairment charge related to the transfer of the battery business.  Restructuring charges are recorded as an operating expense and are included in operating income.

Equity in net income of affiliated companies, recorded within operating income, increased 2.8 billion yen year-on-year to 3.1 billion yen.

The net effect of other income and expenses was an expense of 14.4 billion yen, a deterioration of 10.0 billion yen compared to the same period of the previous fiscal year, mainly due to an increase in net foreign exchange losses.

Income before income taxes increased 249.9 billion yen to 347.5 billion yen.

During the current six months, Sony recorded 110.2 billion yen of income tax expense, resulting in an effective tax rate of 31.7% which was lower than the effective tax rate of 45.1% in the same period of the previous fiscal year. This lower effective tax rate was mainly due to the fact that Sony Corporation and its national tax filing group in Japan, which has established valuation allowances for deferred tax assets, recorded profits during the current six months, compared to the losses recorded in the same period of the previous fiscal year.

Net income attributable to Sony Corporation’s stockholders increased 185.7 billion yen year-on-year to 211.7 billion yen.

*    *    *    *    *

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-5 and F-16.

Operating Activities: During the current six months, there was a net cash inflow of 266.3 billion yen from operating activities, an increase of 184.8 billion yen, or 226.8% year-on-year.

For all segments excluding the Financial Services segment, there was a 70.0 billion yen net cash inflow, compared to a 158.7 billion yen net cash outflow in the same period of the previous fiscal year.  This change was primarily due to a year-on-year improvement in net income after taking into account non-cash adjustments (including depreciation and amortization, other operating (income) expense, net, deferred income taxes and equity in net (income) loss of affiliated companies), as well as a larger year-on-year increase in notes and accounts payable, trade.  This increase in net cash inflow was partially offset by the negative impact of a larger year-on-year increase in notes and accounts receivable, trade.

The Financial Services segment had a net cash inflow of 210.7 billion yen, a decrease of 42.8 billion yen, or 16.9% year-on-year.  This decrease was primarily due to a decrease in net income after taking into account non-cash adjustments such as depreciation and amortization, including amortization of deferred insurance acquisition costs.

Investing Activities: During the current six months, Sony used 411.8 billion yen of net cash in investing activities, a decrease of 255.9 billion yen, or 38.3% year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 96.8 billion yen, a decrease of 103.3 billion yen, or 51.6% year-on-year.  This decrease was mainly due to a decrease in payments for fixed asset purchases such as semiconductor manufacturing equipment.

The Financial Services segment used 314.3 billion yen of net cash, a decrease of 152.5 billion yen, or 32.7% year-on-year.  This decrease was mainly due to a year-on-year decrease in payments for investments and advances at Sony Life.

In all segments excluding the Financial Services segment, net cash used in operating and investing activities combined*¹ for the current six months was 26.8 billion yen, a decrease of 332.0 billion yen, or 92.5% year-on-year.

Financing Activities: During the current six months, there was a net cash inflow of 179.5 billion yen from financing activities, a decrease of 3.7 billion yen, or 2.0% year-on-year.

For all segments excluding the Financial Services segment, there was a 22.3 billion yen net cash outflow, an increase of 16.4 billion yen, or 278.2% year-on-year.  This increase was mainly due to the absence in the current six months of the issuance of straight bonds compared to the same period of the previous fiscal year, partially offset by a year-on-year decrease in repayment of long-term debt and the absence of the payment for the purchase of Sony/ATV shares from noncontrolling interests in the same period of the previous fiscal year.

In the Financial Services segment, there was a 186.8 billion yen net cash inflow, an increase of 11.7 billion yen, or 6.7% year-on-year.  This increase was primarily due to an increase in long-term debt at Sony Bank.

Total Cash and Cash Equivalents: Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents at September 30, 2017 was 1,000.8 billion yen.  Cash and cash equivalents of all segments excluding the Financial Services segment was 649.2 billion yen at September 30, 2017, a decrease of 42.5 billion yen, or 6.1% compared with the balance as of March 31, 2017, and an increase of 319.6 billion yen, or 97.0% compared with the balance as of September 30, 2016.  Sony believes that it continues to maintain sufficient liquidity through access to a total, translated into yen, of 528.3 billion yen of unused committed lines of credit with financial institutions in addition to the cash and cash equivalents balance at September 30, 2017.  Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 351.6 billion yen at September 30, 2017, an increase of 83.2 billion yen, or 31.0% compared with the balance as of March 31, 2017, and an increase of 156.1 billion yen, or 79.8% compared with the balance as of September 30, 2016.

*1	Sony has included the information for cash flow from operating and investing activities combined, excluding the Financial Services segment’s activities, as Sony’s management frequently monitors this financial measure and believes this non-U.S. GAAP measurement is important for use in evaluating Sony’s ability to generate cash to maintain liquidity and fund debt principal and dividend payments from business activities other than its Financial Services segment. This information is derived from the reconciliations prepared in the Condensed Statements of Cash Flows on page F-16. 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:

 

 

*2	Eliminations primarily consist of intersegment dividend payments.

 

*    *    *    *    *

The descriptions of sales on a constant currency basis reflect sales calculated by applying the yen’s monthly average exchange rates from the previous fiscal year, or the same quarter of the previous fiscal year, to local currency-denominated monthly sales in the current fiscal year, or the current quarter, respectively.  In the Pictures segment as well as SME and Sony/ATV in the Music segment, the constant currency amounts are after aggregation on a U.S. dollar basis.

The impact of foreign exchange rate fluctuations on operating income (loss) is calculated by subtracting the foreign exchange impact on cost of sales and selling, general and administrative expenses (“COGS & SGA”) from the foreign exchange impact on sales.  The foreign exchange impact on sales is calculated by applying the change in the yen’s periodic weighted average exchange rates for the previous fiscal year, or the same quarter of the previous fiscal year, from the current fiscal year, or the current quarter, respectively, to the major transactional currencies in which the sales are denominated.  The foreign exchange impact on COGS & SGA is calculated by applying the same major transactional currencies calculation process to COGS & SGA as for the impact on sales.  Additionally, the MC segment enters into its own foreign exchange hedging transactions.  The impact of those transactions is included in the impact of foreign exchange rate fluctuations on operating income (loss) for that segment.

This information is not a substitute for Sony’s consolidated financial statements measured in accordance with U.S. GAAP.  However, Sony believes that these disclosures provide additional useful analytical information to investors regarding the operating performance of Sony.

*    *    *    *    *

The forecast for consolidated results for the fiscal year ending March 31, 2018, as announced on August 1, 2017, has been revised as follows:

Assumed foreign exchange rates for the remainder of the fiscal year ending March 31, 2018 are the following:

* The impact of the difference between the assumed foreign exchange rates used for the consolidated forecast and the rates used for each segment was included in the August forecast for All Other, Corporate and elimination.

Consolidated sales for the fiscal year ending March 31, 2018 are expected to be higher than the August forecast primarily due to a revision in the assumed foreign exchange rates for the remainder of the current fiscal year and increased sales in the Music and HE&S segments.

Consolidated operating income is expected to be higher than the August forecast mainly due to the above-mentioned revision in the assumed foreign exchange rates and a decrease in allocations for contingencies incorporated into the August forecast for All Other, Corporate and elimination, as well as expected increases in operating income in the Semiconductors, Music and HE&S segments.

Restructuring charges for the Sony Group are expected to be approximately 15 billion yen in the fiscal year ending March 31, 2018, which remains unchanged from the August forecast, compared to 60.2 billion yen recorded in the fiscal year ended March 31, 2017.  Restructuring charges are recorded as an operating expense and are included in the above-mentioned forecast for operating income.

The forecast for each business segment for the fiscal year ending March 31, 2018 has been revised as follows:

Sales are expected to be lower than the August forecast primarily due to an expected decrease in smartphone unit sales.  The forecast for operating income remains unchanged primarily due to the expected decrease in sales as well as an increase in the price of key components, being substantially offset by an expected reduction in operating costs.

Sales are expected to be slightly higher than the August forecast primarily due to an expected increase in PS4 hardware sales as well as network sales.  The forecast for operating income remains unchanged due to the above-mentioned increase in sales as well as the expected favorable impact of foreign exchange rates, substantially offset by stronger promotions for the holiday season.

Sales are expected to be higher than the August forecast primarily due to an expected increase in television unit sales.  Operating income is expected to be higher than the August forecast due to an expected decrease in the price of key components, as well as the above-mentioned increase in sales.

Sales and operating income are expected to be higher than the August forecast primarily due to an expected increase in image sensor unit sales for mobile products.

Sales and operating income are expected to be significantly higher than the August forecast primarily due to higher-than-expected Visual Media and Platform sales as well as Recorded Music sales.

The forecasts for sales and operating income for the IP&S, Pictures and Financial Services segments remain unchanged from the August forecast.

The effects of future gains and losses on investments held by the Financial Services segment due to market fluctuations have not been incorporated within the above forecast as it is difficult for Sony to predict market trends in the future.  Accordingly, future market fluctuations could further impact the current forecast.

The forecast for additions to long-lived assets, depreciation and amortization, as well as research and development expenses for the current fiscal year remains unchanged from the August forecast:

Consolidated

*  Excluding additions from business combinations.

** Including amortization expenses for deferred insurance acquisition costs.

Sony without Financial Services

*  Excluding additions from business combinations.

This forecast is based on management’s current expectations and is subject to uncertainties and changes in circumstances.  Actual results may differ materially from those included in this forecast due to a variety of factors.  See “Cautionary Statement” below.

Cautionary Statement

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