Table of Contents
Advertisement
(Yen in millions)
Financial Services Business:
Available for sale
Debt securities
Sony Life . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities
Sony Life . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . .
Held to maturity
Debt securities
Sony Life . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . .
Total Financial Services . . . . . . . . . . . .
Non-Financial Services:
Available for sale securities . . . . . . . . . . . . .
Held to maturity securities . . . . . . . . . . . . .
Total Non-Financial Services . . . . . . . .
Consolidated . . . . . . . . . . . . . . . . . . . . . . .
alized losses relate to investments held by Sony
Life. Sony Life principally invests in debt securi-
ties in various industries. Almost all of these
securities were rated "BBB" or better by Stan-
dard and Poor's Rating Services ("S&P"),
Moody's Investors Services, Inc. ("Moody's") or
others. As of March 31, 2004, Sony Life had
debt and equity securities which had gross un-
realized losses of 1.8 billion yen and 0.1 billion
yen, respectively. Of the unrealized loss
amounts recorded by Sony Life, less than 1
percent relate to securities being in an unreal-
ized loss position of greater than 12 months.
These unrealized losses related to numerous
investments, with no single investment being
in a material unrealized loss position. In addi-
tion, there was no individual security with un-
realized losses that met the test discussed
above for impairment as the declines in value
were observed to be small both in amounts
and percentage, and therefore, the decline in
value for those investments was still deter-
mined to be temporary in nature. The percent-
age of noninvestment grade securities held by
Sony Life represents approximately 3 percent
of Sony Life's total investment portfolio, while
the percentage of unrealized losses that relate
to those noninvestment grade securities was
approximately 7 percent of Sony Life's total
unrealized losses as of March 31, 2004.
For fixed maturity securities with unrecog-
March 31, 2004
Unrealized
Cost
gain
1,581,723
54,645
348,443
971
33,694
16,398
2,384
4,365
–
–
26,437
381
1,992,681
76,760
58,946
42,768
2
–
58,948
42,768
2,051,629
119,528
nized losses held by Sony Life as of March 31,
2004 (1.8 billion yen), maturity dates vary as
follows:
Within 1 year:
1 to 5 years:
5 to 10 years:
Sony also maintains long-term investment
securities issued by a number of non-public
companies. The aggregate carrying amount of
the investments in non-public companies at
March 31, 2004, which were valued at the lower
of cost or fair value, was 51.4 billion yen.
For the years ended March 31, 2002, 2003
and 2004, total impairment losses were 27.6
billion yen, 25.5 billion yen and 16.7 billion
yen of which 9.2 billion yen, 2.3 billion yen
and 0.2 billion yen, respectively, were recorded
by Sony Life in Financial Services revenue (refer
to "Financial Services" under "Operating Per-
formance by Business Segment" for the fiscal
years ended March 31, 2004 and March 31,
2003). Impairment losses other than at Sony
Life in each of the three years were reflected in
non-operating expenses and primarily relate to
the certain strategic investments in non-finan-
cial services businesses. These investments
primarily relate to the certain strategic invest-
ments in Japan, the U.S. and Europe with
which Sony has strategic relationships for the
purposes of developing and marketing new
technologies. The impairment losses were
recorded for each of the three years as these
Unrealized
Fair market
companies failed to successfully develop and
loss
value
market such technology, the operating perfor-
mance of the companies was more unfavor-
able than previously expected and the decline
in fair value of these companies was judged as
1,828
1,634,540
other-than-temporary. None of these impair-
232
349,182
ment losses was individually material to Sony,
except for the devaluation of securities ex-
149
49,943
0
6,749
plained in "Other Income and Expenses" for
the fiscal years ended March 31, 2004, March
31, 2003, and March 31, 2002, except for the
–
–
devaluation of securities in the cases of com-
28
26,790
panies such as Candescent Technologies
2,237
2,067,204
Corporation, a developer of flat-screen tech-
nology and Trimedia Technologies Inc., a
1,749
99,965
developer of microprocessor technologies.
–
2
1,749
99,967
investment is impaired, the value of the invest-
3,986
2,167,171
ment is written down to its fair value. For pub-
licly traded investments, fair value is determined
by the closing stock price as of the date on
which the impairment determination is made.
For non-public investments, fair value is deter-
9 percent
mined through the use of such methodologies
54 percent
as discounted cash flows, valuation of recent
financings and comparable valuations of
37 percent
similar companies. The impairment losses that
were recorded in each of the three years re-
lated to the unique facts and circumstances of
each individual investment and did not signifi-
cantly impact other investments.
stitute the majority of the investments in the
Financial Services segment. Sony Life and Sony
Bank account for approximately 81 percent
and 17 percent of the investments of the
Financial Services segment, respectively.
both expected returns and investment risks into
account in order to maintain sound asset
quality, structuring its asset management port-
folio to ensure steady medium- and long-term
returns by investing assets in an efficient
manner and responding flexibly to changes in
financial conditions and the investment
environment. Moreover, Sony Life analyzes the
character of future insurance policy benefits by
utilizing Asset Liability Management ("ALM"), a
method of managing interest rate fluctuation
risk through the comprehensive identification
of the mismatches of duration and cash flows
Upon determination that the value of an
Sony Life and Sony Bank's investments con-
Sony Life's basic investment policy is to take
75
Advertisement
Table of Contents
