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<TITLE>SONY CORPORATION</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
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<DIV align="center" style="font-size: 13.0pt;color: #000000; background: #ffffff; margin-top: 4pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 11.0pt;color: #000000; background: #ffffff;">
<B>Washington,&nbsp;D.C. 20549</B>
</DIV>

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<B>Form&nbsp;<FONT style="white-space: nowrap">20-F</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
ANNUAL REPORT PURSUANT TO SECTION&nbsp;13 OR 15(d) OF
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
THE SECURITIES EXCHANGE ACT OF 1934
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
For the fiscal year ended March&nbsp;31, 2006
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Commission file number 1-6439
</DIV>

<DIV align="center" style="font-size: 22.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Sony Kabushiki Kaisha</B>
</DIV>

<DIV align="center" style="font-size: 8.0pt;color: #000000; background: #ffffff;">
<I>(Exact name of Registrant as specified in its charter)</I>
</DIV>

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    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
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<TR>
    <TD align="center" valign="top">
    <B>SONY CORPORATION</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <B>JAPAN</B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>(Translation of Registrant&#146;s name into English)</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    <I>(Jurisdiction of incorporation or organization)</I></TD>
</TR>

</TABLE>
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<DIV align="center" style="font-size: 12.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>7-35, KITASHINAGAWA 6-CHOME, SHINAGAWA-KU,</B>
</DIV>

<DIV align="center" style="font-size: 12.0pt;color: #000000; background: #ffffff;">
<B>TOKYO 141-0001, JAPAN</B>
</DIV>

<DIV align="center" style="font-size: 8.0pt;color: #000000; background: #ffffff;">
<I>(Address of principal executive offices)</I>
</DIV>

<DIV align="center" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 8pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Securities registered pursuant to Section&nbsp;12(b) of the Act.
</DIV>

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    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
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<TR style="font-size: 8.0pt;">
    <TD align="center" nowrap><B>Title of Each Class</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Name of Each Exchange on Which Registered</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    American Depositary Shares*</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    New York Stock Exchange</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    Common Stock**</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    New York Stock Exchange</TD>
</TR>

</TABLE>
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<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
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    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*&nbsp;</TD>
    <TD align="left">
    American Depositary Shares evidenced by American Depositary
    Receipts. <BR>
     <BR>
     Each American Depositary Share represents one share of Common
    Stock.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
**&nbsp;No par value per share.
</DIV>

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    <TD width="2%"></TD>
    <TD width="98%"></TD>
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<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;</TD>
    <TD align="left">
    Not for trading, but only in connection with the listing of
    American Depositary Shares pursuant to the requirements of the
    New York Stock Exchange.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Securities registered pursuant to Section&nbsp;12(g) of the Act.
</DIV>

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<B>None</B>
</DIV>

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<DIV style="width: 67%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 9.0pt;color: #000000; background: #ffffff;">
(Title of Class)
</DIV>

<DIV align="center" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Securities for which there is a reporting obligation pursuant to
Section&nbsp;15(d) of the Act.
</DIV>

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<B>None</B>
</DIV>

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<DIV style="width: 67%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

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(Title of Class)
</DIV>

<DIV align="left" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;Indicate the number of outstanding
shares of each of the issuer&#146;s classes of capital or common
stock as of the close of the period covered by the annual report.
</DIV>

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<TR style="font-size: 1pt;">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
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<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Outstanding as of</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>March&nbsp;31, 2006</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>March&nbsp;30, 2006</B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Title of Class</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>(Tokyo Time)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>(New York Time)</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common Stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    1,000,938,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    American Depositary Shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    145,074,404</TD>
</TR>

</TABLE>
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&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule&nbsp;405 of
the Securities
Act.&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;If this report is an annual or
transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section&nbsp;13 or
15(d) of the Securities Exchange Act of
1934.&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#254;
</FONT>
</DIV>

<DIV align="left" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the
registrant (1)&nbsp;has filed all reports required to be filed
by Section&nbsp;13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12&nbsp;months (or for such shorter
period that the registrant was required to file such reports),
and (2)&nbsp;has been subject to such filing requirements for
the past
90&nbsp;days.&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;
</DIV>

<DIV align="left" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of &#147;accelerated
filer and large accelerated filer&#148; in
Rule&nbsp;<FONT style="white-space: nowrap">12b-2</FONT> of the
Exchange Act. (Check one):
</DIV>

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    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Large Accelerated Filer&nbsp;&nbsp;<FONT face="wingdings">&#254;
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    Accelerated Filer&nbsp;&nbsp;<FONT face="wingdings">&#111;
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    Non-Accelerated Filer&nbsp;&nbsp;<FONT face="wingdings">&#111;
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark which financial
statement item the registrant has elected to
follow.&nbsp;&nbsp;Item&nbsp;17&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;Item&nbsp;18&nbsp;<FONT face="wingdings">&#254;
</FONT>
</DIV>

<DIV align="left" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;If this is an annual report, indicate by
check mark whether the registrant is a shell company (as defined
in Rule&nbsp;<FONT style="white-space: nowrap">12b-2</FONT> of
the Exchange
Act).&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#254;
</FONT>
</DIV>

<DIV align="left" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;In this document, Sony Corporation and
its consolidated subsidiaries are together referred to as
&#147;Sony.&#148; In addition, sales and operating revenue is
referred to as &#147;sales&#148; in the narrative description
except in the Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;The noon buying rate for yen in New York
City as certified for customs purposes by the Federal Reserve
Bank of New York on August&nbsp;30, 2006 was
117.07&nbsp;yen&nbsp;= 1&nbsp;U.S.&nbsp;dollar.
</DIV>

<DIV align="left" style="font-size: 9.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, Sony
Corporation had 936 consolidated subsidiaries (including
variable interest entities). It has applied the equity
accounting method with respect to its 58 affiliated companies.
</DIV>

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<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

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<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Cautionary Statement</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Statements made in this annual report with respect to
Sony&#146;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 &#147;believe,&#148;
&#147;expect,&#148; &#147;plans,&#148; &#147;strategy,&#148;
&#147;prospects,&#148; &#147;forecast,&#148;
&#147;estimate,&#148; &#147;project,&#148;
&#147;anticipate,&#148; &#147;aim,&#148; &#147;may&#148; or
&#147;might&#148; 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&#146;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)&nbsp;the global economic environment in which
Sony operates, as well as the economic conditions in Sony&#146;s
markets, particularly levels of consumer spending;
(ii)&nbsp;exchange rates, particularly between the yen and the
U.S.&nbsp;dollar, the Euro and other currencies in which Sony
makes significant sales or in which Sony&#146;s assets and
liabilities are denominated; (iii)&nbsp;Sony&#146;s ability to
continue to design and develop and win acceptance of, as well as
achieve sufficient cost reductions for, its products and
services, which are offered in highly competitive markets
characterized by continual new product introductions, rapid
development in technology and subjective and changing consumer
preferences (particularly in the Electronics, Game and Pictures
segments, and music business); (iv)&nbsp;Sony&#146;s ability to
recoup large-scale investment required for technology
development, increasing production capacity and by the Game
segment for the development and introduction of a new platform;
(v)&nbsp;Sony&#146;s ability to implement successfully personnel
reduction and other business reorganization activities in its
Electronics segment; (vi)&nbsp;Sony&#146;s ability to implement
successfully its network strategy for its Electronics, Game and
Pictures segments, All Other and the music business, and to
develop and implement successful sales and distribution
strategies in its Pictures segment and music business in light
of the Internet and other technological developments;
(vii)&nbsp;Sony&#146;s continued ability to devote sufficient
resources to research and development and, with respect to
capital expenditures, to correctly prioritize investments
(particularly in the Electronics segment); (viii)&nbsp;shifts in
customer demand for financial services such as life insurance
and Sony&#146;s ability to conduct successful Asset Liability
Management in the Financial Services segment; and (ix)&nbsp;the
success of Sony&#146;s joint ventures and alliances. Risks and
uncertainties also include the impact of any future events with
material unforeseen impacts.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Important information regarding risks and uncertainties is also
set forth elsewhere in this annual report, including in
&#147;Risk Factors&#148; included in &#147;Item&nbsp;3. <I>Key
Information</I>,&#148; &#147;Item&nbsp;4. <I>Information on the
Company</I>,&#148; &#147;Item&nbsp;5. <I>Operating and Financial
Review and Prospects</I>,&#148; &#147;Legal Proceedings&#148;
included in &#147;Item&nbsp;8. <I>Financial
Information</I>,&#148; Sony&#146;s Consolidated Financial
Statements referenced in &#147;Item&nbsp;8. <I>Financial
Information</I>,&#148; and &#147;Item&nbsp;11. <I>Quantitative
and Qualitative Disclosures about Market Risk</I>.&#148;
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">2

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<A name="tocpage"></A>
</DIV>

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<B>TABLE OF CONTENTS</B>
</DIV>

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<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#101'>Item&nbsp;1. <I>Identity of Directors,
    Senior Management and Advisers</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#102'>Item&nbsp;2. <I>Offer Statistics and
    Expected Timetable</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#103'>Item&nbsp;3. <I>Key Information</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#104'>Selected Financial Data</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#105'>Capitalization and Indebtedness</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#106'>Reasons for the Offer and Use of
    Proceeds</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#107'>Risk Factors</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#108'>Item&nbsp;4. <I>Information on the
    Company</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#109'>History and Development of the Company</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#110'>Principal Capital Investments</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#111'>Business Overview</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#112'>Important Changes during the Fiscal
    Year</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#113'>Products and Services</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#114'>Sales and Distribution</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#115'>Sources of Supply</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#116'>After-Sales Service</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#117'>Patents and Licenses</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#118'>Competition</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#119'>Government Regulations</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#120'>Organizational Structure</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#121'>Property, Plant and Equipment</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#122'>Item&nbsp;5. <I>Operating and Financial
    Review and Prospects</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#123'>Operating Results</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#124'>Operating Results for the Fiscal Year
    Ended March&nbsp;31, 2006 compared with the Fiscal Year Ended
    March&nbsp;31, 2005</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#125'>Operating Results for the Fiscal Year
    Ended March&nbsp;31, 2005 compared with the Fiscal Year Ended
    March&nbsp;31, 2004</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#126'>Liquidity and Capital Resources</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#127'>Research and Development</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#128'>Trend Information</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#129'>Issues Facing Sony and Management&#146;s
    Response to those Issues</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#130'>Critical Accounting Policies</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#131'>Recently Adopted Accounting Standards</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#132'>Recent Pronouncements</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#133'>Item&nbsp;6. <I>Directors, Senior
    Management and Employees</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#134'>Directors and Senior Management</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#135'>Compensation</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#136'>Board Practices</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>94</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#137'>Employees</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#138'>Share Ownership</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#139'>Item&nbsp;7. <I>Major Shareholders and
    Related Party Transactions</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#140'>Major Shareholders</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#141'>Related Party Transactions</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#142'>Interests of Experts and Counsel</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">3

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#143'>Item&nbsp;8. <I>Financial
    Information</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#144'>Consolidated Statements and Other Financial
    Information</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#145'>Legal Proceedings</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#146'>Dividend Policy</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#147'>Significant Changes</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#148'>Item&nbsp;9. <I>The Offer and
    Listing</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#149'>Offer and Listing Details</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#150'>Plan of Distribution</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#151'>Markets</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#152'>Trading Markets</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>&nbsp;<A HREF='#153'>Trading on the TSE and NYSE</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>102</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#154'>Selling Shareholders</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#155'>Dilution</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#156'>Expenses of the Issue</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#157'>Item&nbsp;10. <I>Additional
    Information</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#158'>Share Capital</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#159'>Memorandum and Articles of Association</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#160'>Material Contracts</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#161'>Exchange Controls</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#162'>Taxation</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#163'>Dividends and Paying Agent</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#164'>Statement by Experts</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#165'>Documents on Display</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#166'>Subsidiary Information</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#167'>Item&nbsp;11. <I>Quantitative and
    Qualitative Disclosures about Market Risk</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#168'>Item&nbsp;12<I>. Description of Securities
    Other Than Equity Securities</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#169'>Item&nbsp;13<I>. Defaults, Dividend
    Arrearages and Delinquencies</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#170'>Item&nbsp;14. <I>Material Modifications to
    the Rights of Security Holders and Use of Proceeds</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#171'>Item&nbsp;15. <I>Controls and
    Procedures</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#172'>Item&nbsp;16. <I>[Reserved]</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#173'>Item&nbsp;16A. <I>Audit Committee Financial
    Expert</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#174'>Item&nbsp;16B. <I>Code of Ethics</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#175'>Item&nbsp;16C. <I>Principal Accountant Fees
    and Services</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#176'>Audit and Non-Audit Fees</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#177'>Audit Committee&#146;s Pre-Approval
    Policies and Procedures</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#178'>Item&nbsp;16D. <I>Exemptions from Listing
    Standards for Audit Committees</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>119</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#179'>Item&nbsp;16E. <I>Purchases of Equity
    Securities by the Issuer and Affiliated Purchasers</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>119</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#180'>Item&nbsp;17. <I>Financial
    Statements</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#181'>Item&nbsp;18. <I>Financial
    Statements</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#182'>Item&nbsp;19. <I>Exhibits</A></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01183exv1w1.htm">EX-1.1 ARTICLES OF INCORPORATION</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01183exv1w2.htm">EX-1.2 SHARE HANDLING REGULATIONS</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01183exv1w3.htm">EX-1.3 CHARTER OF THE BOARD OF DIRECTORS</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01183exv12w1.htm">EX-12.1 CERTIFICATIONS</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01183exv12w2.htm">EX-12.2 CERTIFICATIONS</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01183exv13w1.htm">EX-13.1 SECTION 1350 CERTIFICATIONS</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01183exv15w1.htm">EX-15.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</A></FONT></TD></TR>
</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">4
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='101'></A>
</DIV>

<!-- link1 "Item 1. Identity of Directors, Senior Management and Advisers" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;1.</B></TD>
    <TD>
    <B><I>Identity of Directors, Senior Management and
    Advisers</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='102'></A>
</DIV>

<!-- link1 "Item 2. Offer Statistics and Expected Timetable" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;2.</B></TD>
    <TD>
    <B><I>Offer Statistics and Expected Timetable</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='103'></A>
</DIV>

<!-- link1 "Item 3. Key Information" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;3.</B></TD>
    <TD>
    <B><I>Key Information</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='104'></A>
</DIV>

<!-- link1 "Selected Financial Data" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Selected Financial Data</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>(Yen in millions, Yen per share amounts)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income Statement Data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,578,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,473,633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475,436</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>185,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191,255</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>247,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>286,329</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>176,515</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before cumulative effect of accounting changes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Data per Share of Common Stock:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before cumulative effect of accounting changes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Basic</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122.58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Basic</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122.58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash dividends declared</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interim</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3"><FONT style="font-size: 9pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.07 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.50 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.37 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12.12 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.36 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal year-end</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3"><FONT style="font-size: 9pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9.78 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.53 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.26 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.29 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.04 cents</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Depreciation and amortization</B>*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>354,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>351,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>366,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>372,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>381,843</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Capital expenditures (additions to fixed assets)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>326,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>261,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>378,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>356,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>384,347</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Research and development costs</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>433,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>443,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>514,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>502,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>531,795</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance Sheet Data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net working capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>778,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>719,166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>381,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>746,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>569,296</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>838,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>807,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>777,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>678,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>764,898</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,370,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,280,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,378,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,870,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,203,852</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,185,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,370,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,090,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,499,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,607,753</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Number of shares issued at fiscal year-end (thousands of shares
    of common stock)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>919,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>922,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>926,418</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>997,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,001,680</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; equity per share of common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,570.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,466.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,563.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,872.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,200.85</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    Depreciation and amortization includes amortization expenses for
    intangible assets and for deferred insurance acquisition costs.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">5

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average*</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>High</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Low</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Period-End</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Yen Exchange Rates per U.S.&nbsp;Dollar:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal year ended March&nbsp;31</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>134.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132.70</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>121.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118.07</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>104.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>104.18</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>107.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>102.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>107.22</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>104.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117.78</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    January</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    February</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115.82</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    March</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>119.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117.48</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    April</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.79</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    May</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>110.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112.26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    June</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114.51</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    July</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114.44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    August (through August&nbsp;30)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117.07</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The noon buying rate for yen in New York City as certified for
customs purposes by the Federal Reserve Bank of New York on
August&nbsp;30, 2006 was 117.07 yen&nbsp;=
1&nbsp;U.S.&nbsp;dollar.
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>*</TD>
    <TD align="left">
    The average yen exchange rates represent average noon buying
    rates on the last business day of each month during the
    respective period.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Notes to Selected Financial Data:</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>1.&nbsp;</TD>
    <TD align="left">
    In July 2003, the Accounting Standards Executive Committee of
    the American Institute of Certified Public Accountants issued
    Statement of Position (&#147;SOP&#148;)
    <FONT style="white-space: nowrap">03-1,</FONT> &#147;Accounting
    and Reporting by Insurance Enterprises for Certain
    Nontraditional Long-Duration Contracts and for Separate
    Accounts&#148;.
    SOP&nbsp;<FONT style="white-space: nowrap">03-1</FONT> requires
    insurance enterprises to record additional reserves for
    long-duration life insurance contracts with minimum guarantee or
    annuity receivable options. Additionally, SOP
    <FONT style="white-space: nowrap">03-1</FONT> provides guidance
    for the presentation of separate accounts. This statement is
    effective for fiscal years beginning after December&nbsp;15,
    2003. Sony adopted SOP
    <FONT style="white-space: nowrap">03-1</FONT> on April&nbsp;1,
    2004. As a result of the adoption of SOP
    <FONT style="white-space: nowrap">03-1,</FONT> Sony&#146;s
    operating income decreased by 5,156&nbsp;million yen for the
    fiscal year ended March&nbsp;31, 2005. Additionally, on
    April&nbsp;1, 2004, Sony recognized a charge of
    4,713&nbsp;million yen (net of income taxes of
    2,675&nbsp;million yen) as a cumulative effect of an accounting
    change.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>2.&nbsp;</TD>
    <TD align="left">
    In July 2004, the Emerging Issues Task Force (&#147;EITF&#148;)
    issued EITF Issue
    No.&nbsp;<FONT style="white-space: nowrap">04-8,</FONT>
    &#147;The Effect of Contingently Convertible Instruments on
    Diluted Earnings per Share&#148;. In accordance with Statement
    of Financial Accounting Standards (&#147;FAS&#148;)
    No.&nbsp;128, &#147;Earnings per Share&#148;, Sony had not
    previously included in the computation of diluted earnings per
    share (&#147;EPS&#148;) the number of potential common stock
    issuable upon the conversion of contingently convertible debt
    instruments
    <FONT style="white-space: nowrap">(&#147;Co-Cos&#148;)</FONT>
    that had not met the conditions to exercise the stock
    acquisition rights. EITF Issue
    No.&nbsp;<FONT style="white-space: nowrap">04-8</FONT> requires
    that the maximum number of common stock that could be issued
    upon the conversion of
    <FONT style="white-space: nowrap">Co-Cos</FONT> be included in
    diluted EPS computations from the date of issuance regardless of
    whether the conditions to exercise the stock acquisition rights
    have been met. EITF Issue
    No.&nbsp;<FONT style="white-space: nowrap">04-8</FONT> is
    effective for reporting periods ending after December&nbsp;15,
    2004. Sony adopted EITF Issue
    No.&nbsp;<FONT style="white-space: nowrap">04-8</FONT> during
    the quarter ended December&nbsp;31, 2004. As a result of the
    adoption of EITF Issue
    No.&nbsp;<FONT style="white-space: nowrap">04-8,</FONT>
    Sony&#146;s diluted EPS of income before cumulative effect of an
    accounting change and net income for the fiscal year ended
    March&nbsp;31, 2004 were restated. Sony&#146;s diluted EPS of
    income before cumulative effect of an accounting change and net
    income for the fiscal year ended</TD>
</TR>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD></TD>
    <TD align="left">
    March&nbsp;31, 2005 decreased by 7.26 yen and 7.06 yen,
    respectively, as a result of adopting EITF Issue
    No.&nbsp;<FONT style="white-space: nowrap">04-8.</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>3.&nbsp;</TD>
    <TD align="left">
    In January 2003, the Financial Accounting Standards Board
    (&#147;FASB&#148;) issued FASB Interpretation (&#147;FIN&#148;)
    No.&nbsp;46, &#147;Consolidation of Variable Interest
    Entities&nbsp;&#151; an Interpretation of Accounting Research
    Bulletin (&#147;ARB&#148;) No.&nbsp;51&#148;.
    FIN&nbsp;No.&nbsp;46 addresses consolidation by a primary
    beneficiary of a variable interest entity (&#147;VIE&#148;).
    Sony early adopted the provisions of FIN No.&nbsp;46 on
    July&nbsp;1, 2003. As a result of adopting the original
    FIN&nbsp;No.&nbsp;46, Sony recognized a one-time charge with no
    tax effect of 2,117&nbsp;million yen as a cumulative effect of
    accounting change in the consolidated statement of income, and
    Sony&#146;s assets and liabilities increased by
    95,255&nbsp;million yen and 97,950&nbsp;million yen,
    respectively. These increases were treated as non-cash
    transactions in the consolidated statement of cash flows. In
    addition, cash and cash equivalents increased by
    &#165;1,521&nbsp;million. Sony subsequently early adopted the
    provisions of FIN&nbsp;No.&nbsp;46R, which replaced
    FIN&nbsp;No.&nbsp;46, upon issuance in December 2003. The
    adoption of FIN&nbsp;No.&nbsp;46R did not have an impact on
    Sony&#146;s results of operations and financial position or
    impact the way Sony had previously accounted for&nbsp;VIEs.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='105'></A>
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Capitalization and Indebtedness</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

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<A name='106'></A>
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Reasons for the Offer and Use of Proceeds</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

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<A name='107'></A>
</DIV>

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<B>Risk Factors</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This section contains forward-looking statements that are
subject to the Cautionary Statement appearing on page&nbsp;2 of
this annual report. Risks to Sony are also discussed elsewhere
in this annual report, including without limitation in the other
sections of this annual report referred to in the Cautionary
Statement.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD></TD>
    <TD>
    <B><I>Sony must overcome increasingly intense pricing
    competition, especially in the Electronics and Game
    segments.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s Electronics segment produces consumer products that
compete against products sold by an increasing number of
competitors on the basis of factors including price. In order to
produce products that appeal to changing and increasingly
diverse consumer preferences, and to overcome the fact that a
relatively high percentage of consumers already possess products
similar to those that Sony offers, Sony&#146;s Electronics and
Game segments must develop superior technology, anticipate
consumer tastes and rapidly develop attractive products. In the
Electronics segment, Sony faces increasingly intense pricing
pressure in a variety of consumer product areas. Sony&#146;s
sales and operating income depend on Sony&#146;s ability to
continue to develop and offer Electronics and Game products at
competitive prices that meet changing and increasingly diverse
consumer preferences.
</DIV>

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    <TD width="1%"></TD>
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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony is subject to competition from firms that may be more
    specialized.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s businesses, primarily within the Electronics
segment, face a broad range of competitors, from large
international companies to an increasing number of relatively
small, rapidly growing, and highly specialized organizations.
Sony has a portfolio of businesses in different industries while
many of its competitors specialize in one or more of these
business areas. As a result, Sony may not fund or invest in
certain of its businesses to the same degree that its
competitors do, and these competitors may have greater
financial, technical, and marketing resources available to them
than the businesses of Sony against which they compete.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Sony may not be able to recover its increasingly diverse
    and increasingly expensive investments in technology development
    and production capacity.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s businesses, particularly the Electronics and Game
segments, compete in intensely competitive markets characterized
by changing consumer preferences and rapid technological
innovation. In order to be profitable in such markets, Sony is
continuing to invest heavily in research and development and
semiconductor fabrication equipment. Recent examples of such
expenditures include research and development investment in 65
nanometer semiconductor process technology and related capital
expenditures with IBM Corporation and Toshiba Corporation for
production of the Cell chip within the Electronics segment for
sale primarily to the Game segment, and an investment in a joint
venture, <FONT style="white-space: nowrap">S-LCD</FONT>
Corporation
<FONT style="white-space: nowrap">(&#147;S-LCD&#148;),</FONT>
with Samsung Electronics Co., Ltd. (&#147;Samsung&#148;) to
produce 7th&nbsp;generation amorphous thin film transistor
(&#147;TFT&#148;) LCD panels. In addition, in July 2006, Sony
and Samsung signed the final contract regarding the manufacture
of 8th&nbsp;generation TFT LCD Panels at
<FONT style="white-space: nowrap">S-LCD.</FONT> The total amount
of the investment required is expected to be approximately
1.9&nbsp;billion U.S.&nbsp;dollars (approximately
50&nbsp;percent of which will be borne by Sony). Sony may not be
able to recover these investments, in part or in full, and its
mid-term profitability could be adversely affected as a result.
(Refer to &#147;Trend Information&#148; in &#147;Item&nbsp;5.
<I>Operating and Financial Review and Prospects.</I>&#148;)
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

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    <TD></TD>
    <TD>
    <B><I>Sony&#146;s business reorganization efforts are costly and
    may not attain their objectives.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has engaged in significant reorganization initiatives in an
effort to allocate managerial resources into core areas and
improve operating efficiency and profitability. These efforts
have included the concentration of resources into profitable
businesses by withdrawing from or downsizing selected
businesses. Other efforts include the execution of a plan to
reduce costs including a reduction in the number of Sony&#146;s
employees around the world.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;22, 2005, Sony announced its mid-term
corporate strategy for the three fiscal years ending
March&nbsp;31, 2006 through March&nbsp;31, 2008. This mid-term
corporate strategy includes restructuring initiatives focused on
the reduction in the number of business categories and the
number of product models, the rationalization of manufacturing
sites, the streamlining of administrative and headquarter
functions, as well as the sale of non-core assets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In association with these restructuring initiatives
138.7&nbsp;billion yen of restructuring charges were recorded
for the fiscal year ended March&nbsp;31, 2006. Sony anticipates
the recording of 50&nbsp;billion yen in restructuring charges
for the fiscal year ending March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Restructuring charges are recorded in cost of sales, selling,
general and administrative expenses and loss on sale, disposal
or impairment of assets, net and thus decrease Sony&#146;s
consolidated operating and net income. Moreover, due to internal
or external factors, the improved efficiencies and cost savings
projected may not be realized as scheduled and, even if those
benefits are realized, Sony may not be able to achieve the level
of profitability expected due to a worsening of market
conditions beyond expectations. Such possible internal factors
could include, for example, a decision to implement new
restructuring initiatives not already planned or a decision to
increase research and development outlays or other investments
beyond currently projected levels, either of which might
increase total costs. Possible external factors could include,
for example, increased burdens from regional labor regulations
and union contracts that could prevent Sony from executing its
restructuring initiatives as planned. Therefore, such
reorganizations may not result in improved efficiency, increased
ability to respond to market changes or reallocation of
resources to more profitable activities. The inability to fully
and successfully implement restructuring programs may cause Sony
to have insufficient financial resources to carry out its
research and development plans and to invest in targeted growth
business areas.
</DIV>

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</TR>

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    <TD></TD>
    <TD>
    <B><I>Foreign exchange rate fluctuations can affect financial
    results because a large portion of Sony&#146;s sales and assets
    are denominated in currencies other than the yen.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s consolidated statements of income are prepared from
the local currency-denominated financial results of each of Sony
Corporation&#146;s subsidiaries around the world which are
translated into yen at the
</DIV>

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average market rate during each financial period. Sony&#146;s
consolidated balance sheets are prepared using local
currency-denominated assets and liabilities of each of Sony
Corporation&#146;s subsidiaries around the world, which are
translated into yen at the market rate at the end of each
financial period. A large proportion of Sony&#146;s consolidated
financial results, assets and liabilities is accounted for in
currencies other than the Japanese yen. For example, only
29.0&nbsp;percent of Sony&#146;s sales and operating revenue in
the fiscal year ended March&nbsp;31, 2006 were originally
recorded in Japan. Accordingly, Sony&#146;s consolidated
results, assets and liabilities in Sony&#146;s businesses that
operate internationally, principally in its Electronics, Game
and Pictures segments, may be materially affected by changes in
the exchange rates of foreign currencies when translating into
Japanese yen. In the fiscal year ended March&nbsp;31, 2006, for
example, Sony&#146;s consolidated operating income prepared on
the basis of Generally Accepted Accounting Principles in the
U.S.&nbsp;(&#147;U.S.&nbsp;GAAP&#148;) in yen increased from the
preceding fiscal year by 67.9&nbsp;percent; however, if
Sony&#146;s consolidated operating income had been prepared on a
local currency basis, it would have increased by
23&nbsp;percent. (Refer to &#147;Operating Results&#148; in
&#147;Item&nbsp;5. <I>Operating and Financial Review and
Prospects.</I>&#148;) Operating results on a local currency
basis described herein reflect sales and operating revenue and
operating income obtained by applying the yen&#146;s monthly
average exchange rate in the previous fiscal year to local
currency-denominated monthly sales, cost of sales, and selling,
general and administrative expenses in the current fiscal year.
Foreign exchange fluctuations may have a negative impact on
Sony&#146;s results in the future, especially if the yen
strengthens significantly against the U.S.&nbsp;dollar or Euro.
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

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    <TD></TD>
    <TD>
    <B><I>Foreign exchange fluctuations can affect Sony&#146;s
    results of operations due to sales and expenses in different
    currencies.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Exchange rate fluctuations affect Sony&#146;s operating
profitability because many of Sony&#146;s products are sold in
countries other than the ones in which they were manufactured.
The concentration of research and development, administrative
functions and manufacturing activities within the Electronics
segment largely in Japan, makes this segment particularly
sensitive to the yen&#146;s appreciation as the ratio of
yen-denominated costs to total costs is higher than the ratio of
yen-denominated revenue to total revenue. Volatile mid- to
long-term changes in exchange rate levels, such as the
decade-long strengthening of the yen against major currencies
between 1985 and 1995, when the yen appreciated from a level in
excess of 260&nbsp;yen to the U.S.&nbsp;dollar to a level of
less than 80&nbsp;yen to the U.S.&nbsp;dollar, may interfere
with Sony&#146;s global allocation of resources and hinder
Sony&#146;s ability to execute procurement, production,
logistics, and sales activities in a manner that is profitable
after the effect of such exchange rate changes.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although Sony hedges the net foreign currency exposure resulting
from import and export transactions shortly before they are
projected to occur, such hedging activity cannot entirely
eliminate the risk of adverse exchange rate fluctuations.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Sony must efficiently manage its procurement of parts, the
    market conditions for which are volatile, and control its
    inventory of products and parts, the demand for which is
    volatile.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics and Game segments Sony places orders for
components, determines production and plans inventory in advance
based on its forecast of consumer demand, which is highly
volatile and difficult to predict. In the past Sony has
experienced both a shortage of semiconductors, which resulted in
Sony&#146;s inability to meet demand for its personal computers
(&#147;PCs&#148;) and audio visual products, and a surplus in
certain semiconductors that resulted in the recognition of
losses when semiconductor prices fell. Sony consumes a
tremendous volume of parts and components for its products such
as semiconductors and LCD panels. Consequently, market
fluctuations may cause a shortage of parts and components, and
may affect Sony&#146;s production or the cost of goods sold.
Sony&#146;s profitability may also be adversely affected by
supply or inventory shortages or inventory adjustments that, as
a result of efforts to reduce inventory by temporarily halting
production or by reducing the price of goods, will lead to an
increase in the ratio of cost of sales to sales. Sony writes
down the value of its inventory when components or products have
become obsolete, when inventory exceeds the amount expected to
be used, or when the value of the inventory is otherwise
recorded at a higher value than net realizable value. Such
inventory adjustments have had and, if Sony is not successful in
managing its inventory in the future, will have a material
adverse effect on Sony&#146;s operating income and
</DIV>

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profitability. (For more information on sources of supply refer
to <I>&#147;Sources of Supply&#148;</I> in &#147;Item&nbsp;4.
<I>Information on the Company.</I>&#148;)
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony&#146;s sales and profitability are sensitive to
    economic trends in Sony&#146;s major markets.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A consumer&#146;s decision to purchase products such as those
offered by Sony&#146;s Electronics, Game and Pictures segments,
as well as by companies within All Other, is to a very
significant extent discretionary. Accordingly, weakening
economic conditions or outlook can reduce consumption in any of
Sony&#146;s major markets, causing material declines in
Sony&#146;s sales and operating income. In the fiscal year ended
March&nbsp;31, 2006, 29.0&nbsp;percent, 26.2&nbsp;percent and
23.0&nbsp;percent of Sony&#146;s sales and operating revenue
were attributable to Japan, the U.S. and Europe, respectively.
If economic conditions in Japan, the U.S.&nbsp;or Europe
deteriorate, or if the effects of international political and
military instability depress consumer confidence, Sony&#146;s
short- to mid-term sales and profitability may be significantly
adversely affected.
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Large-scale investment is required within the Game and
    Electronics segments, particularly during the development and
    launch period of a new gaming platform.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within the Game segment, providing and developing products that
maintain competitiveness over an extended life-cycle requires
large-scale investment relating to research and development,
particularly during the development and launch period of a new
platform. In addition, large-scale investment relating to
capital expenditures and research and development is also
required within the Electronics segment for the fabrication and
manufacture of key components, including semiconductors, used in
products within the Game segment. Moreover, it is particularly
important in the Game segment that these products be provided to
consumers at competitive prices to ensure the favorable market
penetration of the platform. Should the platform fail to achieve
such favorable market penetration, there is a risk that part of,
or the whole of, this investment will not be recouped, resulting
in a significant negative impact on Sony&#146;s mid-term
profitability. In addition, even if Sony is able to sufficiently
recoup its investment, it is probable that a significant
negative impact on Sony&#146;s operating results could occur
during the launch period of the platform.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An example of this kind of large-scale investment is the new
PLAYSTATION<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>3
(&#147;PS3&#148;) platform scheduled to be launched in November
2006, related charges for which are anticipated to result in a
significant loss within the Game segment for the fiscal year
ending March&nbsp;31, 2007, reflecting primarily an expected
negative margin as a result of strategic pricing on PS3 hardware
sales. In connection with this, during the fiscal year ended
March&nbsp;31, 2006, a write-down of approximately
25.0&nbsp;billion yen for semiconductor components for use in
PS3 was recorded within the Game segment.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony&#146;s Game and Electronics segments are particularly
    sensitive to year-end holiday season demand.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since the Game segment offers a relatively small range of
hardware products (including
PlayStation<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>2
and
PSP<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP>
(PlayStation<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>Portable))
and a significant portion of overall demand is weighted towards
the year-end holiday season, factors such as changes in the
competitive environment, changes in market conditions, delays in
the release of highly anticipated software titles and
insufficient supply of hardware during the year-end holiday
season can negatively impact the financial performance of the
segment.
</DIV>

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The Electronics segment is also dependent upon year-end holiday
season demand and, to a lesser extent than the Games segment, is
susceptible to weak sales and supply shortages that prevent it
from meeting demand for its products during this season.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Operating results for Sony&#146;s Pictures segment vary
    according to the cost of productions, customer acceptance, and
    competing products.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating results for the Pictures segment&#146;s motion picture
and television productions can materially fluctuate depending
primarily upon the cost of such productions and acceptance of
such productions by the public, which are difficult to predict.
In addition, the commercial success of the Pictures
segment&#146;s motion picture and television productions depend
upon the acceptance of other competing productions, and the
availability of alternative forms of entertainment and leisure
activities.
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony&#146;s Pictures segment is subject to labor
    interruption.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Pictures segment is dependent upon highly specialized union
members who are essential to the production of motion pictures
and television programs. A strike by one or more of these unions
could delay or halt production activities. Such a delay or halt,
depending on the length of time involved, could cause delay or
interruption in the release of new motion pictures and
television programs and thereby could adversely affect revenues
and cash flows in the Pictures segment.
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

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    <TD></TD>
    <TD>
    <B><I>In addition to the need for maintaining a prudent and
    prescient Asset Liability Management, Sony&#146;s Financial
    Services segment is subject to unrealized holding losses and
    valuation losses associated with market fluctuations, shifts in
    customers&#146; demand and a variability in claims, at Sony Life
    Insurance Co., Ltd., Sony Assurance Inc. and Sony Bank Inc., as
    well as mandatory contributions to the Life Insurance
    Policyholders Protection Corporation of Japan by Sony
    Life.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s Financial Services segment faces rapid shifts in
customer demand from more profitable protection-orientated
products such as term insurance to less profitable
savings-oriented products such as endowment insurance, as well
as a risk of unpredictable increases in insurance claims. This
segment also may incur valuation losses and unrealized holding
losses if there is a decrease in the value of securities and
other financial instruments purchased for investment purposes
resulting from fluctuations in interest rates, foreign exchange
rates, or in the equity markets. In addition, if it fails to
conduct Asset Liability Management (&#147;ALM&#148;) in a
prudent and prescient manner to pursue an optimal combination of
possible risks and expected returns on investment assets,
financing liabilities and underwriting risks on insurance policy
benefits, Sony&#146;s Financial Services segment may not be able
to keep providing competitive products and services to customers
on a long-term basis. Sony Life Insurance Co., Ltd. (&#147;Sony
Life&#148;), which constitutes the largest portion of this
segment, is also subject to mandatory contributed reserves for
the Life Insurance Policyholders Protection Corporation of Japan
(&#147;PPC&#148;), the organization that provides support to
insolvent life insurance companies. Sony Life&#146;s estimated
required contribution based on the assessments made by the PPC
is incorporated in other expenses within Sony Life&#146;s
statements of income and long-term liabilities in its balance
sheets. If there are bankruptcies of life insurers, solvent life
insurers including Sony Life may be required to contribute
additional financial resources.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony&#146;s Music business, Sony&#146;s investment in SONY
    BMG MUSIC ENTERTAINMENT, and the Pictures segment are subject to
    digital piracy, which may become increasingly more prevalent
    with the development of new technologies.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In Sony&#146;s Music business, including its investment in SONY
BMG MUSIC ENTERTAINMENT (&#147;SONY BMG&#148;), as well as in
the Pictures segment, the development of digital technology has
created new risks with respect to Sony&#146;s ability to protect
its copyrights. Advances in technology that enable the transfer
and downloading of digital audio and visual files from the
Internet without authorization from the owners of rights to such
content threaten the conventional copyright-based business model
by making it easier to create and redistribute unauthorized
audio and visual files. Such unauthorized distribution has
adversely affected sales and operating results within the Music
business, as well as in Sony&#146;s investment in SONY BMG, and
threatens to adversely affect sales and operating income in the
Pictures segment. These technological advances include new
digital devices such as hard disk drive video and audio
recorders, CD and DVD recorders and
<FONT style="white-space: nowrap">peer-to</FONT>-peer digital
distribution services. As a result, Sony has incurred and will
continue to incur expenses to develop new services for the
authorized digital distribution of music, movies and television
programs and to combat unauthorized digital distribution of its
copyrighted content. These initiatives will increase Sony&#146;s
near-term expenses and may not achieve their intended result.
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony&#146;s Music business and Sony&#146;s investment in
    SONY BMG are dependent on establishing new artists, and together
    with Sony&#146;s Pictures segment are subject to increasing
    prices for talent.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The success of Sony&#146;s Music business and Sony&#146;s
investment in SONY BMG is highly dependent on establishing
artists that appeal to customers, and the competition with other
entertainment companies for such talent is intense. If the Music
business and SONY BMG are unable to find and establish new
talented artists,
</DIV>

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sales, operating income and equity in net income (loss) of
affiliated companies may be adversely affected. In addition,
with respect to the Music business and the Pictures segment, as
well as SONY BMG, Sony has experienced and may continue to
experience significant increases in talent-related spending.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>SONY BMG is subject to renewed regulatory approval from
    European Union competition authorities.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In August 2004, Sony combined its recorded music business
outside of Japan with the recorded music business of Bertelsmann
AG forming SONY BMG, after approval from, among others, the
European Commission competition authorities. On December&nbsp;3,
2004, Impala, an international association consisting of 2,500
independent recorded music companies applied for annulment of
the decision to clear the merger. On July&nbsp;13, 2006, the
European Court of First Instance overruled the Commission&#146;s
decision to allow the merger to go forward, requiring the
Commission to
<FONT style="white-space: nowrap">re-examine</FONT> the merger.
While the Commission completes its reexamination, Sony continues
to account for the results of Sony BMG under the equity method.
If the Commission does not approve the merger and the previously
combined company is forced to unwind the merger, Sony may incur
significant costs and may not be able to achieve its objectives
with respect to its recorded music business.
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony may not be successful in implementing its broadband
    network strategy.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony believes that the utilization of broadband networks to
facilitate the integration of hardware and content is essential
to differentiating itself in the marketplace. Sony also believes
that this strategy will eventually lead to consistent revenue
streams. However, this strategy depends on the development (both
inside and outside of Sony) of certain network technologies,
coordination among Sony&#146;s various business units, and the
standardization of technological and interface specifications
across business units and within industries. If Sony is not
successful in implementing this strategy, it could adversely
affect Sony&#146;s mid- to long-term competitiveness.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony&#146;s utilization of joint ventures and alliances
    within strategic business areas may not be successful.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The composition of Sony during the last several years has
reflected a shift towards the establishment of joint ventures
and strategic alliances in order to supplement or replace
functions that were previously performed by divisions of Sony
Corporation or wholly-owned subsidiaries, to mitigate the burden
of substantial investments and to achieve operating efficiencies
through cooperation with other companies.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony currently has investments in several joint ventures,
including Sony Ericsson Mobile Communications, AB (&#147;Sony
Ericsson&#148;), S.T.&nbsp;Liquid Crystal Display Corporation
<FONT style="white-space: nowrap">(&#147;ST-LCD&#148;),</FONT> a
joint venture with Toyota Industries Corporation, and other
companies. In April 2004, Sony established
<FONT style="white-space: nowrap">S-LCD,</FONT> a joint venture
with Samsung for the production of 7th&nbsp;generation amorphous
TFT LCD panels. In August 2004, Sony combined its recorded music
business outside of Japan with the recorded music business of
Bertelsmann AG forming the jointly-owned company, SONY BMG. In
April 2005, a consortium led by Sony Corporation of America and
its equity partners, Providence Equity Partners, Texas Pacific
Group, Comcast Corporation and DLJ Merchant Banking Partners,
completed the acquisition of Metro-Goldwyn-Mayer Inc.
(&#147;MGM&#148;). If Sony and its partners are not able to
reach their common financial objectives successfully,
Sony&#146;s financial performance as a whole may be adversely
affected. Sony&#146;s financial performance may also be
temporarily adversely affected by the establishment of those
alliances, joint ventures and strategic investments even if Sony
and its partners remain on course to achieve those common
objectives. Recent examples of how Sony&#146;s financial
performance has been adversely affected in the course of these
types of relationships are the equity in net losses recorded for
MGM Holdings, Inc. and
<FONT style="white-space: nowrap">S-LCD</FONT> during the fiscal
year ended March&nbsp;31, 2006 of 16.9&nbsp;billion yen and
7.2&nbsp;billion yen, respectively.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony&#146;s physical facilities and information systems
    are subject to damage as a result of disasters, outages,
    malfeasance or similar events.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s headquarters, some of Sony&#146;s major data centers
and many of Sony&#146;s most advanced device manufacturing
facilities, including those for semiconductors, are located in
Japan, where the possibility of
</DIV>

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disaster or damage from earthquake is generally higher than in
other parts of the world. In addition, Sony&#146;s offices and
facilities, including those used for research and development,
material procurement, manufacturing, logistics, sales and
services are located throughout the world and are subject to
possible destruction, temporary stoppage or disruption as a
result of any number of unexpected events. If any of these
facilities or offices were to experience a significant loss as a
result of any of the above events, it could disrupt Sony&#146;s
operations, delay production, shipments and revenue, and result
in large expenses to repair or replace these facilities or
offices.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, as network and information systems become more
important to Sony&#146;s operating activities, network and
information system shutdowns caused by unforeseen events such as
power outages, disasters, terrorist attack, hardware or software
defects, computer viruses and computer hacking pose increasing
risks. Such an event could also result in the disruption of
Sony&#146;s operations, delay production, shipments and revenue,
and result in large expenditures necessary to repair or replace
such network information systems. Furthermore, Sony&#146;s
operating activities could be subject to risks caused by
misappropriation, misuse, leakage, falsification, and
disappearance of internal databases, including customer and
vendor data. Judging from the experience of other similarly
situated companies, it is possible that Sony could be exposed to
significant monetary liability if such risks were to
materialize, and it is also possible that such events could harm
Sony&#146;s reputation and credibility. Considering the
increasing social awareness concerning the importance of
personal information and relevant legislation (Refer to
&#147;Government Regulations&#148; in &#147;Item&nbsp;4.
<I>Information on the Company</I>&#148;), such risks are
increasing particularly for businesses that handle a large
amount of customer and consumer data. Although Sony continues to
take precautions against such unforeseen risks, such as by
undertaking efforts to educate operators and administrators who
have access to databases about appropriate ways to protect such
information, these measures may be insufficient, and Sony may be
unable to avoid or prevent such events.
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony is subject to financial and reputational risks due to
    product quality and liability issues.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony products, such as software (including software for mobile
phone handsets) and electronic devices including semiconductors
are becoming increasingly sophisticated and complicated as rapid
advancements in technologies occur, and as demand increases for
digital equipment. At the same time product quality and
liability issues present greater risks. Such issues may occur
not only in relation to Sony&#146;s own branded products but
also in association with appliances and devices designed or
manufactured for third parties. Sony&#146;s efforts to manage
the rapid advancements in technologies and increased demand, as
well as to control product quality, may not be successful, and
if they are not, Sony may incur expenses in connection with, for
example, product recalls, service and lawsuits, and Sony&#146;s
brand image and reputation as a producer of high-quality
products may suffer. An example of this includes the recall by
Dell Inc. and Apple Computer Inc. of
<FONT style="white-space: nowrap">lithium-ion</FONT> battery
packs, containing battery cells originally manufactured by Sony,
used in their notebook computers (refer to &#147;Performance by
Product Category&#148; for &#147;Electronics&#148; within
<I>&#147;Operating Results for the Fiscal Year Ended
March&nbsp;31, 2006&#148;</I> in &#147;Item&nbsp;5. <I>Operating
and Financial Review and Prospects</I>&#148;).
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony may be adversely affected by its employee benefit
    obligations.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony recognizes an unfunded pension obligation (in an amount
equal to (i)&nbsp;its Projected Benefit Obligation
(&#147;PBO&#148;) less (ii)&nbsp;the fair value of plan assets
and accrued pension and severance costs) as a pension cost in a
systematic and gradual manner over employees&#146; average
remaining service periods as required under
FAS&nbsp;No.&nbsp;87, &#147;Employers&#146; Accounting for
Pensions.&#148; Any decrease of pension asset value due to low
returns from investments or increases in PBO due to a lower
discount rate may increase unfunded pension obligations,
resulting in an increase in pension expenses recorded as cost of
sales or as a selling, general and administrative expense. Refer
to Note&nbsp;14 of Notes to Consolidated Financial Statements
for more information regarding Sony&#146;s pension and severance
plans. Also refer to &#147;Critical Accounting Policies&#148; in
&#147;Item&nbsp;5. <I>Operating and Financial Review and
Prospects.</I>&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Most pension assets and liabilities recognized on Sony&#146;s
consolidated balance sheets relate to Japanese plans, which are
subject to the Japanese Defined Benefit Corporate Pension Plan
Act pursuant to which Sony is required to meet certain financial
criteria including periodic actuarial revaluation and annual
settlement of
</DIV>

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gain or loss of the plan. In the eventuality that the actuarial
reserve required by law exceeds the fair value of pension
assets, Sony may be required to make an additional contribution
to the plan, which would reduce consolidated cash flow.
</DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony may be accused of infringing others&#146;
    intellectual property rights.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s products incorporate a wide variety of technologies.
Claims have been and could be asserted against Sony that such
technology infringes intellectual property owned by others, and
the outcome of any such claim would be uncertain.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony is dependent upon certain intellectual property
    rights of others, and Sony may not be able to continue to obtain
    necessary licenses to employ technology covered by such
    rights.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Many of Sony&#146;s products are designed to include
intellectual property licensed from third parties. Based upon
past experience and industry practice, Sony believes that it
will be able to obtain or renew licenses relating to various
intellectual properties useful in its business that it needs in
the future; however, such licenses may not be available at all
or on acceptable terms.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Increased reliance on external suppliers may increase
    financial, reputational and other risks to Sony.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
With the increasing necessity of pursuing quick business
development and high operating efficiency with limited
managerial resources, Sony increasingly procures from
third-party suppliers components (including LCD panels for
televisions), and technologies (such as operating systems for
PCs). In addition, it consigns to external suppliers extensive
activities including procurement, manufacturing, logistics,
sales and other services. Reliance on outside sources increases
the chance that Sony will be unable to prevent products from
incorporating defective or inferior third-party technology or
components. Products with such defects can adversely affect
Sony&#146;s consolidated sales and its reputation for quality
products. This reliance on external suppliers may also expose
Sony to the effects of suppliers&#146; insufficient compliance
with applicable regulations or infringement of third-party
intellectual property rights.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
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<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony is subject to environmental and occupational health
    and safety regulations that can increase the costs of operations
    or limit its activities.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony is subject to environmental and occupational health and
safety regulations relating to matters such as reductions or
prohibitions in the use of harmful substances, comprehensive
compliance and risk management practices in manufacturing
activities and products, decreases in the level of standby power
of certain products, protection of natural resources and
remediation as a result of certain manufacturing operations and
the recycling of products, batteries and packaging materials.
The European Parliament and the Council of the European Union
have published directives on waste electrical and electronic
equipment and on the restriction of the use of certain hazardous
substances in electrical and electronic equipment. Similar
regulations are being formulated in other parts of the world
including China.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since August 2005 these European directives have required
electronics producers to bear the cost of collection, treatment,
recovery and safe disposal of future products from end-users and
beginning July 2006 require that new electrical and electronic
equipment does not contain specified hazardous substances. Under
the current situation where all individual member states have
not yet adopted regulations based upon these directives, the
compliance cost for Sony cannot precisely be estimated, but it
could be substantial. In the event it is determined that Sony
has not complied in a material way with certain environmental
laws and regulations, Sony may incur remediation costs or
sustain injury to its brand image. Sony&#146;s activities also
may be limited if Sony is unable to comply with such
regulations, which could adversely affect Sony&#146;s results.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sony is subject to the risks of operations in different
    countries.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A substantial portion of Sony&#146;s activities are conducted
outside Japan, including in developing and emerging markets.
Sony operates its manufacturing subsidiaries in
20&nbsp;countries and its sales subsidiaries in
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
43&nbsp;countries. Countries where Sony manufactures its
principal products are Japan, Malaysia, China, the U.S., the
U.K., Singapore, Spain and Mexico.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
International operations bring challenges. Production in China
and other Asian countries of electronics products increases the
time necessary to supply products to Europe and the U.S., which
can make it more difficult to meet changing customer demand and
preferences. Concentration of the production of PC components in
China and Taiwan could lead to production interruptions if a
catastrophe or widespread contagion, similar to the spread of
Severe Acute Respiratory Syndrome (&#147;SARS&#148;), occurs in
the region. Further, Sony may encounter difficulty in planning
and managing operations due to unfavorable political or economic
factors, such as instability in the Middle East resulting from
the Iraq War, cultural and religious conflicts, foreign exchange
controls, or unexpected legal or regulatory changes such as
import or export controls, nationalization of assets or
restrictions on repatriation of returns from foreign investments.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

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    <TD></TD>
    <TD>
    <B><I>American Depositary Shareholders have fewer rights than
    shareholders and may not be able to enforce judgments based on
    U.S.&nbsp;securities laws.</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The rights of shareholders under Japanese law to take actions,
including voting their shares, receiving dividends and
distributions, bringing derivative actions, examining
Sony&#146;s accounting books and records and exercising
appraisal rights are available only to shareholders of record.
Because the depositary, through its custodian agents, is the
record holder of the shares underlying the American Depositary
Shares (&#147;ADSs&#148;), only the depositary can exercise
those rights in connection with the deposited shares. The
depositary will make efforts to vote the shares underlying ADSs
in accordance with the instructions of ADS holders and will pay
the dividends and distributions collected from Sony. However,
ADS holders will not be able to bring a derivative action,
examine Sony&#146;s accounting books and records, or exercise
appraisal rights through the depositary.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation is incorporated in Japan with limited
liability. A substantial portion of the assets of Sony
Corporation are located outside the U.S. As a result, it may be
more difficult for investors to enforce against Sony Corporation
judgments obtained in U.S.&nbsp;courts predicated upon the civil
liability provisions of the Federal securities laws of the U.S.
or judgments obtained in other courts outside Japan. There is
doubt as to the enforceability in Japanese courts, in original
actions or in actions for enforcement of judgments of
U.S.&nbsp;courts, of civil liabilities predicated solely upon
the Federal securities laws of the U.S.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='108'></A>
</DIV>

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    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;4.</B></TD>
    <TD>
    <B><I>Information on the Company</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='109'></A>
</DIV>

<!-- link1 "History and Development of the Company" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>History and Development of the Company</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation, the ultimate parent company of Sony, was
established in Japan in May 1946 as Tokyo Tsushin Kogyo
Kabushiki Kaisha, a joint stock company (<I>Kabushiki
Kaisha</I>) under the Japanese Commercial Code (<I>Shoho</I>).
In January 1958, it changed its name to Sony Kabushiki Kaisha
(&#147;Sony Corporation&#148; in English).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 1958, Sony Corporation was listed on the Tokyo Stock
Exchange (the &#147;TSE&#148;). In June 1961, Sony Corporation
issued American Depositary Receipts (&#147;ADRs&#148;) in the
U.S.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 1968, Sony Corporation established CBS/ Sony Records
Inc. in Japan, currently Sony Music Entertainment (Japan) Inc.
(&#147;SMEJ&#148;), as a 50:50 joint venture company between
Sony Corporation and CBS Inc. in the U.S. In January 1988, SMEJ
became a wholly-owned subsidiary of Sony Corporation. In
November 1991, SMEJ was listed on the Second Section of the TSE.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 1970, Sony Corporation was listed on the New York
Stock Exchange (the &#147;NYSE&#148;).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In August 1979, Sony Corporation established Sony Prudential
Life Insurance Co., Ltd. in Japan, currently Sony Life Insurance
Co., Ltd. (&#147;Sony Life&#148;), as a 50:50 joint venture
company between Sony Corporation and The Prudential Insurance
Company of America. In March 1996, Sony Life became a
wholly-owned subsidiary of Sony Corporation, and in April 2004,
with the establishment of a financial holding company Sony
Financial Holdings Inc. (&#147;SFH&#148;), Sony Life became a
wholly-owned subsidiary of SFH.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 1984, Sony Magnescale Inc., a subsidiary of Sony
Corporation and currently Sony Precision Technology Inc., was
listed on the Second Section of the TSE. In July 1987, Sony
Chemicals Corporation, a subsidiary of Sony Corporation, was
listed on the Second Section of the TSE.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January 1988, Sony Corporation acquired CBS Records Inc., a
music business division of CBS Inc. in the U.S. In January 1991,
CBS Records Inc. changed its name to Sony Music Entertainment
Inc. (&#147;SMEI&#148;). In November 1989, Sony Corporation
acquired Columbia Pictures Entertainment, Inc. in the U.S. In
August 1991, Columbia Pictures Entertainment, Inc. changed its
name to Sony Pictures Entertainment Inc. (&#147;SPE&#148;).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In November 1993, Sony established Sony Computer Entertainment
Inc. (&#147;SCEI&#148;) in Japan.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January 2000, acquisition transactions by way of exchanges of
stock were completed such that SMEJ, Sony Chemicals Corporation,
and Sony Precision Technology Inc. became wholly-owned
subsidiaries of Sony Corporation. In June 2001, Sony Corporation
issued shares of subsidiary tracking stock in Japan, the
economic value of which was intended to be linked to the
economic value of Sony Communication Network Corporation
(&#147;SCN&#148;). All shares of subsidiary tracking stock were
terminated and converted to shares of Sony&#146;s common stock
in December 2005. SCN was listed on the Mother&#146;s market of
the TSE in December 2005. Sony Corporation continues to hold a
majority of shares of SCN.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2001, Sony Ericsson Mobile Communications, AB
(&#147;Sony Ericsson&#148;), a 50:50 joint venture company
between Sony Corporation and Telefonaktiebolaget LM Ericsson of
Sweden, was established.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2002, Aiwa Co., Ltd. (&#147;Aiwa&#148;) became a
wholly-owned subsidiary of Sony Corporation. In December 2002,
Aiwa was merged into Sony Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2003, Sony Corporation adopted the &#147;Company with
Committees&#148; system in line with the revised Japanese
Commercial Code. (Refer to &#147;Board Practices&#148; in
&#147;Item&nbsp;6. <I>Directors, Senior Management and
Employees.</I>&#148;)
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In April 2004, Sony Corporation established SFH in Japan. Sony
Life, Sony Assurance Inc., and Sony Bank became subsidiaries of
SFH.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In April 2004, <FONT style="white-space: nowrap">S-LCD</FONT>
Corporation, a joint venture between Sony Corporation and
Samsung Electronics Co., Ltd. of Korea, was established in Korea.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In August 2004, Sony combined its worldwide recorded music
business, excluding its recorded music business in Japan, with
the worldwide recorded music business of Bertelsmann AG forming
the 50:50 joint venture, SONY BMG MUSIC ENTERTAINMENT
(&#147;SONY BMG&#148;).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In April 2005, a consortium led by Sony Corporation of America
(&#147;SCA&#148;) and its equity partners, Providence Equity
Partners, Texas Pacific Group, Comcast Corporation and DLJ
Merchant Banking Partners, completed the acquisition of
Metro-Goldwyn-Mayer Inc. (&#147;MGM&#148;).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation&#146;s registered office is located at
<FONT style="white-space: nowrap">7-35,</FONT> Kitashinagawa
<FONT style="white-space: nowrap">6-chome,</FONT>
<FONT style="white-space: nowrap">Shinagawa-ku,</FONT> Tokyo
<FONT style="white-space: nowrap">141-0001,</FONT> Japan,
telephone
<FONT style="white-space: nowrap">+81-3-5448-2111.</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The agent in the U.S. for purposes of this Item&nbsp;4 is Sony
Corporation of America, 550 Madison Avenue, New York, NY 10022
(Attn: Office of the General Counsel).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='110'></A>
</DIV>

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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Principal Capital Investments</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal years ended March&nbsp;31, 2004, 2005 and 2006,
Sony&#146;s capital expenditures (additions to fixed assets on
the balance sheets) were 378.3&nbsp;billion yen,
356.8&nbsp;billion yen and 384.3&nbsp;billion yen, respectively.
Sony&#146;s capital expenditures are expected to be
460&nbsp;billion yen during the fiscal year ending
March&nbsp;31, 2007. For a breakdown of principal capital
expenditures and divestitures (including interests in other
companies), refer to &#147;Item&nbsp;5. <I>Operating and
Financial Review and Prospects</I>.&#148; Sony invested
approximately 140&nbsp;billion yen in the semiconductor business
during the fiscal year ended March&nbsp;31, 2006. Sony plans to
invest approximately 170&nbsp;billion yen in the semiconductor
business in the fiscal year ending March&nbsp;31, 2007. To
finance
</DIV>

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capital expenditures for the development and manufacturing of
semiconductors such as Cell, a highly advanced processor that
will be embedded in next-generation digital consumer electronics
products, as well as capital expenditures related to other key
devices, including display devices, Sony raised 250&nbsp;billion
yen through the issuance of Euro yen zero coupon convertible
bonds in December 2003, as well as separate funds generated
through self-financing. Refer to &#147;Property, Plant and
Equipment&#148; below for a geographic distribution of these
investments.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='111'></A>
</DIV>

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<B>Business Overview</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='112'></A>
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Important Changes during the Fiscal Year</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Effective April&nbsp;1, 2005, Sony no longer breaks out its
music business as a reportable segment as it no longer meets the
materiality threshold. Accordingly, the results for Sony&#146;s
music business are now included within All Other and the results
for the fiscal years ended March&nbsp;31, 2004 and
March&nbsp;31, 2005 have been reclassified to All Other for
comparative purposes. Results for the fiscal year ended
March&nbsp;31, 2006 in All Other include the results of
SMEI&#146;s music publishing business and SMEJ, excluding
Sony&#146;s Japan-based disc manufacturing business which,
effective April&nbsp;1, 2005, has been reclassified to the
Electronics segment. However, results for the previous fiscal
year in All Other include the consolidated results for
SMEI&#146;s recorded music business for the period through
August&nbsp;1, 2004, as well as the results for SMEI&#146;s
music publishing business and SMEJ excluding Sony&#146;s
Japan-based disc manufacturing business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On April&nbsp;8, 2005, a consortium led by SCA and its equity
partners, Providence Equity Partners, Texas Pacific Group,
Comcast Corporation and DLJ Merchant Banking Partners, completed
the acquisition of MGM. Under the terms of the acquisition
agreement, the aforementioned investor group acquired MGM for
12.00 U.S.&nbsp;dollars in cash per MGM share, for a total
purchase price of approximately 5.0&nbsp;billion
U.S.&nbsp;dollars. In conjunction with the acquisition, SPE
entered into agreements to
<FONT style="white-space: nowrap">co-finance</FONT> and produce
new motion pictures with MGM, and to distribute MGM&#146;s
existing film and television content through SPE&#146;s global
distribution channels. MGM continues to operate under the
Metro-Goldwyn-Mayer name as a private company headquartered in
Los Angeles. As part of the acquisition, SCA invested
257&nbsp;million U.S.&nbsp;dollars in exchange for
20&nbsp;percent of the total equity capital. However, based on
the percentage of common stock owned, Sony records
45&nbsp;percent of MGM Holdings, Inc.&#146;s net income (loss)
as equity in net income of affiliated companies.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2006, MGM and SPE modified this arrangement with respect
to the <FONT style="white-space: nowrap">co-financing</FONT> of
motion pictures and further to allow MGM to bring its worldwide
television distribution business
<FONT style="white-space: nowrap">in-house</FONT> and to
consolidate substantially all of its worldwide home
entertainment distribution activities with another major studio.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In August 2004, Sony combined its recorded music business
outside of Japan with the recorded music business of Bertelsmann
AG forming SONY BMG, after approval from, among others, the
European Commission competition authorities. On December&nbsp;3,
2004, Impala, an international association consisting of 2500
independent recorded music companies applied for annulment of
the decision to clear the merger. On July&nbsp;13, 2006, the
European Court of First Instance overruled the Commission&#146;s
decision to allow the merger to go forward, requiring the
Commission to
<FONT style="white-space: nowrap">re-examine</FONT> the merger.
While the Commission completes its reexamination, Sony continues
to account for the results of Sony BMG under the equity method.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Commencing April&nbsp;1, 2005, Sony partly realigned its product
category configuration in the Electronics segment. Accordingly,
results of the previous fiscal year have been reclassified. The
primary changes are as follows;
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Main Product</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Previous Product Category</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>New Product Category</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Professional-use projector</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &#147;Televisions&#148;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>&#147;Information and Communications&#148;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">17

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='113'></A>
</DIV>

<!-- link1 "Products and Services" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Products and Services</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth Sony&#146;s sales and operating
revenue by operating segments. Figures in parentheses indicate
percentage of sales and operating revenue.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>



<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,858,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(64.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,806,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(67.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,763,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(63.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>753,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>702,524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>918,251</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>756,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>733,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>745,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>565,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>537,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>720,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>561,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>379,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>327,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Electronics</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth Sony&#146;s Electronics segment
sales and operating revenue by product categories. Figures in
parentheses indicate percentage of sales and operating revenue.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>



<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Audio</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>675,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13.9</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>571,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.9</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>536,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Video</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>949,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,036,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,021,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Televisions</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>884,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>921,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>927,769</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Information and Communications</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>878,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>816,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>842,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Semiconductors</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>253,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>246,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Components</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>623,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>619,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12.9</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>656,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Other</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>593,324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>595,166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>538,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,858,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,806,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,763,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Note:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Sony manages the Electronics segment as a single operating
segment. However, Sony believes that the product category
information in the Electronics segment is useful to investors in
understanding the sales contributions of the products in this
business segment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics segment, Sony is engaged in the development,
design, manufacture, and sale of various kinds of electronic
equipment, instruments, and devices for consumer and
professional markets. Sony&#146;s principal manufacturing
facilities are located in Japan, Malaysia, China, the U.S.,
Singapore, Spain and Mexico, and its products are marketed by
sales subsidiaries and unaffiliated local distributors and sold
through direct sales via the Internet throughout the world. In
addition to internationalizing its production operations, Sony
has been promoting the transfer of research and development
activities and management functions overseas to bring its
overseas operations into closer proximity to local communities
and markets.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">18

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Audio:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;Audio&#148; includes home audio, portable audio, car audio
    and car navigation systems.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Video:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;Video&#148; includes video cameras, digital cameras, video
    decks, and DVD-Video players/recorders.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Televisions:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;Televisions&#148; includes televisions incorporating
    cathode ray tubes (&#147;CRTs&#148;), rear-projection
    televisions, liquid crystal displays (&#147;LCD&#148;)
    televisions, and computer displays.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Information and Communications:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;Information and Communications&#148; includes PCs, printer
    systems, broadcast- and professional-use audio, video and
    monitors and other professional-use equipment.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Semiconductors:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;Semiconductors&#148; includes LCDs, charge coupled devices
    (&#147;CCDs&#148;) and other semiconductors.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Components:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;Components&#148; includes optical pickups, batteries,
    audio/video/data recording media, and data recording systems.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Other:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &#147;Other&#148; includes sales to outside customers, such as
    sales of mobile phone handsets to Sony Ericsson by Sony
    EMCS&nbsp;Corporation (&#147;Sony EMCS&#148;), an Integrated
    Circuit (&#147;IC&#148;) card business, CD and DVD disc
    manufacturing and physical distribution businesses, and products
    and services that are not included in the above categories.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Game</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Computer Entertainment Inc. (&#147;SCEI&#148;) develops,
produces, markets and distributes
PlayStation<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,
PS
one<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP>,
PlayStation<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>2
(&#147;PS2&#148;) and
PSP<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP>
(PlayStation<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>Portable)
(&#147;PSP&#148;) hardware and related software in Japan, and is
developing the
PLAYSTATION<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>3
(&#147;PS3&#148;) computer entertainment system scheduled to be
launched in November 2006. Sony Computer Entertainment America
Inc. (&#147;SCEA&#148;) and Sony Computer Entertainment Europe
Ltd. (&#147;SCEE&#148;) market and distribute PlayStation,
PS&nbsp;one, PS2 and PSP hardware, and develop, produce, market
and distribute related software in the U.S. and Europe. SCEI,
SCEA and SCEE enter into licenses with third-party software
developers.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Pictures</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Global operations in the Pictures segment encompass motion
picture production, acquisition and distribution; television
production, acquisition and distribution; home entertainment
production, acquisition and distribution; television
broadcasting; digital content creation and distribution; and
operation of studio facilities.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SPE&#146;s motion picture arm, the Columbia TriStar Motion
Picture Group, includes SPE&#146;s principal motion picture
production organizations, Columbia Pictures, TriStar Pictures,
Screen Gems and Sony Pictures Classics, as well as Sony Pictures
Home Entertainment, Sony Pictures Releasing and Sony Pictures
Releasing International. SPE also holds a 7.5&nbsp;percent
equity interest in Revolution Studios and has the rights to
market and distribute its motion picture product throughout most
of the world. Upon delivery of Revolution Studios&#146; films,
SPE advances a portion of the production cost and then incurs
distribution and marketing costs in those markets where SPE
distributes. SPE retains a fee for its distribution services in
addition to its participation in
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">19

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Revolution Studios&#146; profits and losses as a result of its
equity ownership stake. In conjunction with the acquisition of
MGM in April 2005 by SCA and its equity partners, SPE entered
into agreements to
<FONT style="white-space: nowrap">co-finance</FONT> and produce
new motion pictures with MGM and to distribute MGM&#146;s
existing film and television content through SPE&#146;s global
distribution channels.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2006, MGM and SPE modified this arrangement with respect
to the <FONT style="white-space: nowrap">co-financing</FONT> of
motion pictures and further to allow MGM to bring its worldwide
television distribution business
<FONT style="white-space: nowrap">in-house</FONT> and to
consolidate substantially all of its worldwide home
entertainment distribution activities with another major studio.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SPE&#146;s Television Group is primarily comprised of Sony
Pictures Television and Sony Pictures Television International
with various broadcast channel investments. SPE develops and
produces network television series, first-run syndication
programming, made-for-cable programming, daytime serials,
syndicated games shows, animated series, made for television
movies, miniseries and other television programming and
distributes such programs to the networks, syndication and cable
markets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Pictures Digital operates SPE&#146;s digital content
creation and distribution businesses including Sony Online
Entertainment, as well as operating Sony Pictures Imageworks and
Sony Pictures Animation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SPE manages a studio facility, Sony Pictures Studios, which
includes post production facilities, at SPE&#146;s world
headquarters in Culver City, California. A second studio
facility, The Culver Studios, which was owned and operated by
SPE, was sold by SPE in April 2004. SPE initially leased back a
portion of this facility for a two-year period and subsequently
extended the lease for an additional one-year period expiring
April&nbsp;20, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Financial Services</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Financial Services segment, on April&nbsp;1, 2004 Sony
established a wholly-owned subsidiary, SFH, a holding company
for Sony Life, Sony Assurance Inc. (&#147;Sony Assurance&#148;)
and Sony Bank Inc. (&#147;Sony&nbsp;Bank&#148;), with the aim of
integrating various financial services including savings and
loans, and offering individual customers high value-added
products and high-quality services.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony conducts insurance operations primarily through Sony Life,
a Japanese life insurance company, and Sony Assurance, a
Japanese non-life insurance company, both wholly-owned by SFH.
Sony also operates an Internet-based banking business in Japan
through Sony Bank, which is an 88&nbsp;percent owned subsidiary
of SFH. Aside from SFH, Sony is also engaged in a leasing and
credit financing business in Japan through Sony Finance
International Inc. (&#147;Sony&nbsp;Finance&#148;), a
wholly-owned subsidiary of Sony Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>All Other</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All Other is mainly comprised of SMEJ, a Japanese domestic
recorded music business that produces recorded music and music
videos through contracts with many artists in all musical
genres; SMEI&#146;s music publishing business, which owns and
acquires rights to musical compositions, exploits and markets
these compositions and receives royalties or fees for their use;
Sony Communication Network Corporation (&#147;SCN&#148;), an
Internet-related service business subsidiary operating mainly in
Japan; an in-house facilities management business in Japan; and
an advertising agency business in Japan.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">20

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='114'></A>
</DIV>

<!-- link1 "Sales and Distribution" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Sales and Distribution</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows Sony&#146;s sales in each of its major
markets for the periods indicated. Figures in parentheses
indicate the percentage of worldwide sales and operating revenue
for which the particular market accounts.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>



<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Japan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,220,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(29.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,100,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(29.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,168,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(29.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    United States</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,121,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,977,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,957,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Europe</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,765,053</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,612,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,715,704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other Areas</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,389,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,468,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,633,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Electronics</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s electronics products and services are marketed
throughout the world under the trademark &#147;Sony&#148;, which
has been registered in 204 countries and territories.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In most cases, sales of Sony&#146;s electronics products are
made to sales subsidiaries of Sony Corporation located in or
responsible for sales in the countries and territories where
Sony&#146;s products and services are marketed. These
subsidiaries then sell those products to local distributors and
dealers. In some regions, sales of certain products and services
are made directly to local distributors by Sony Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales in the Electronics segment are particularly seasonal and
also vary significantly with the timing of new product
introductions and economic conditions of each country. Sales for
the third quarter ending December&nbsp;31 of each fiscal year
are generally higher than other quarters of the same fiscal year
due to demand in the year-end holiday season.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Japan:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Sony Marketing (Japan) Inc. markets consumer electronics
    products through retailers and also markets professional
    electronics products and services. For electronic components,
    Sony sells products directly to wholesalers and manufacturers.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>United States:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Sony markets its electronics products and services through Sony
    Electronics Inc. and other wholly owned subsidiaries in
    the&nbsp;U.S.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Europe:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    In Europe, Sony&#146;s consumer electronics products and
    services are marketed through sales subsidiaries including Sony
    United&nbsp;Kingdom Limited, Sony Deutschland G.m.b.H., and Sony
    France&nbsp;S.A. Sales of electronics products for professional
    use, electronic components, and services are made through
    several divisions, differentiated by product, covering all of
    Europe.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Other Areas:</I></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    In overseas areas other than the U.S. and Europe, Sony&#146;s
    electronics products and services are marketed through sales
    subsidiaries including Sony Corporation of Hong Kong Limited,
    Sony Gulf FZE in the United Arab Emirates, Sony
    Electr&#243;nicos de M&#233;xico, S.A. de C.V., Sony of Canada
    Ltd., and Sony Australia Limited.</TD>
</TR>

</TABLE>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Game</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SCEI, SCEA, SCEE and subsidiaries in Asia market and distribute
PlayStation, PS&nbsp;one, PS2, and PSP entertainment hardware
and related software.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales in the Game segment are dependent on the timing of the
introduction of attractive software and a significant portion of
overall demand is weighted towards the year-end holiday season.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Pictures</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SPE, with global operations in 72&nbsp;countries, generally
retains all rights relating to the worldwide distribution of its
internally produced motion pictures, including rights for
theatrical exhibition, videocassette, DVD and
<FONT style="white-space: nowrap">Blu-ray</FONT> distribution,
pay and free television exhibition and other markets. SPE also
acquires distribution rights to motion pictures produced by
other companies, and jointly produces films with other studios
or production companies. These rights may be limited to
particular geographic regions, specific forms of media or period
of time. SPE uses its own distribution service business, Sony
Pictures Releasing, for the U.S.&nbsp;theatrical release of its
films and for the theatrical release of films acquired from and
produced by others.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Outside the U.S., SPE generally distributes and markets its
films through one of its Sony Pictures Releasing International
subsidiaries. In certain countries, however, SPE has joint
distribution arrangements with other studios or arrangements
with independent local distributors.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SPE&#146;s theatrical release strategy focuses on offering a
diverse slate of films with a mix of genres, talent and budgets.
For the fiscal year ending March&nbsp;31, 2007, 48 films are
currently slated for release by SPE, including 16&nbsp;films
under the Columbia banner, six films under the Screen Gems or
TriStar banner, 19&nbsp;Sony Pictures Classics releases, five
Revolution Studios releases, and two films
<FONT style="white-space: nowrap">co-financed</FONT> with MGM.
SPE has a motion picture library of more than 3,500 feature
films, including 12&nbsp;with Best Picture Academy
Awards<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.
Currently, SPE is converting its library (including acquired
product) to a digital format and approximately 2,000&nbsp;titles
have been converted. In addition, SPE and four other motion
picture studios are equal investors in Movielink LLC, an online
movie download service offering feature films on an
<FONT style="white-space: nowrap">on-demand</FONT> basis.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The worldwide home entertainment distribution of SPE&#146;s
motion pictures and television programming (and programming
acquired or licensed from others) is handled through Sony
Pictures Home Entertainment, except in certain countries where
SPE has joint distribution arrangements with other studios or
arrangements with independent local distributors. Product is
distributed on both videocassette and DVD formats.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SPE produces local language programming in key markets around
the world, some of which are
<FONT style="white-space: nowrap">co-produced</FONT> with local
partners and sells
<FONT style="white-space: nowrap">SPE-owned</FONT> formats in
approximately 25&nbsp;countries. This programming, along with
SPE&#146;s library of television programming and motion
pictures, is licensed to affiliated and independent stations and
broadcasters in the U.S., and to affiliated and independent
international television stations and other broadcasters
throughout the world. In the U.S., SPE owns and operates the
cable channel GSN (formerly Game Show Network) jointly with
Liberty Media Corporation. SPE also has investments in more than
40&nbsp;international networks, which are available in more than
100&nbsp;countries worldwide.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Financial Services</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Life conducts a life insurance business primarily in Japan,
utilizing Sony Life&#146;s highly trained
Lifeplanner<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
life insurance professionals and independent agencies to serve
individual customers. Sony Life provides tailor-made life
insurance products that are optimized for each customer. In
order to provide a sense of reassurance to its diversified
customer base, Sony Life provides an extensive lineup of
products and services supplemented with consulting and
after-sales <FONT style="white-space: nowrap">follow-up.</FONT>
As of March&nbsp;31, 2006, Sony Life employed
3,826&nbsp;Lifeplanner life insurance professionals. Sony Life
maintains an extensive service network including
83&nbsp;Lifeplanner branch offices, 26&nbsp;regional sales
offices, and 2,264&nbsp;independent agencies in Japan. In
addition, Sony has aimed to apply Sony Life&#146;s insurance
expertise in countries other than Japan, operating Sony Life
Insurance (Philippines) Corporation in the Philippines since
November 1999.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Assurance has conducted a non-life insurance business in
Japan since October 1999 utilizing a &#147;direct insurance
provider&#148; business model. As a direct insurance provider,
Sony Assurance communicates directly with customers over the
telephone or via the Internet. These
<FONT style="white-space: nowrap">one-to</FONT>-one
relationships help to provide a clear understanding of
customers&#146; opinions and needs, which Sony Assurance can
reflect in its product and service offerings. Sony Assurance
principally sells automobile insurance, as well as medical and
cancer insurance.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Bank has conducted banking operations in Japan since June
2001 and, as a general rule, provides its services via the
Internet 24&nbsp;hours a day, 365&nbsp;days a year. Sony Bank
has developed new products and services in a proactive and
flexible manner based on its consistent policy of providing
financial services, primarily for asset management, to
independent individual customers. Sony Bank&#146;s main product
and service lineups now include yen deposits, foreign currency
deposits in eight currencies, investment trusts, and mortgage
loans. By using the MONEYKit tool, Sony Bank&#146;s transaction
channel, account holders can invest and manage assets according
to their life plans over the Internet.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Finance conducts a leasing business for corporations, and a
consumer financing business including &#147;My Sony Card,&#148;
a credit card for individual customers, through Sony&#146;s
electronic retailers and other affiliated partners.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>All Other</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SMEJ produces, markets, and distributes CDs, MDs, DVDs, and
pre-recorded audio and video software. SMEJ conducts business in
Japan under &#147;Sony Records,&#148; &#147;Epic Records,&#148;
&#147;Ki/oon Records,&#148; &#147;SMEJ Associated Records,&#148;
&#147;Defstar Records,&#148; and other labels.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SMEI owns and acquires rights to musical compositions, exploits
and markets these compositions, receives royalties or fees for
their use and conducts its music publishing business in
countries other than Japan primarily under the Sony/ ATV Music
Publishing name.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SCN provides Internet broadband network services to subscribers
as well as creating and distributing content through its portal
service to various platforms including PCs, mobile phones and
other home electronics devices including TVs and game consoles.
Both fee-based and charge-free services are provided via these
content distribution platforms.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='115'></A>
</DIV>

<!-- link1 "Sources of Supply" -->

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    <TD></TD>
    <TD>
    <B><I>Sources of Supply</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony pursues procurement of raw materials, parts and components
to be used in the production of its products on a global basis
on the most favorable terms that it can achieve. These items are
purchased from various suppliers around the world. Generally,
Sony maintains multiple suppliers for most significant
categories of parts and components.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
However, when raw materials, parts and components become scarce,
the cost of production rises. For example, the recent sharp rise
in the market price of copper has the potential to
proportionately affect the cost of parts that utilize copper
such as printed circuit boards and power cables. In addition,
there is growing concern that the price of resin may rise
resulting in an increase to the cost of plastic parts.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='116'></A>
</DIV>

<!-- link1 "After-Sales Service" -->

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    <B><I>After-Sales Service</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics and Game segments, Sony provides repair and
servicing functions in the areas where its products are sold.
Sony provides these services through its own service centers,
factories, authorized independent service centers, authorized
servicing dealers and subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In line with the industry practices of the electronics and game
businesses, almost all of Sony&#146;s products sold in Japan
carry a warranty, generally for a period of one year from the
date of purchase, covering repairs, free of charge, in the case
of a malfunction in the course of ordinary use of the product.
In the case of broadcast- and professional-use products, Sony
maintains support contracts with customers in addition to
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
warranties. Overseas warranties are generally provided for
various periods of time depending on the product and the area in
which it is marketed.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To further ensure customer satisfaction, Sony maintains customer
information centers in its principal markets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='117'></A>
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Patents and Licenses</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has a number of Japanese and foreign patents relating to
its products. Sony is licensed to use a number of patents owned
by others, covering a wide range of products. Certain licenses
are important to Sony&#146;s business, such as that for optical
disc related products. Sony products that employ
<FONT style="white-space: nowrap">DVD-Video</FONT> player
functions, including PS2 hardware, are substantially dependent
upon certain patents licensed by MPEG&nbsp;LA&nbsp;LLC, Dolby
Laboratories Licensing Corporation and Nissim Corp. These
patents relate to technologies essential to DVD specification.
Sony considers its overall license position beneficial to its
operations. While Sony believes that its various proprietary
intellectual property rights are important to its success, it
believes that neither its business as a whole nor any business
segment is materially dependent on any particular patent or
license, or any particular group of patents or licenses, except
as set forth above.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='118'></A>
</DIV>

<!-- link1 "Competition" -->

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    <TD></TD>
    <TD>
    <B><I>Competition</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In each of its principal product lines, Sony encounters intense
competition throughout the world. Sony believes, however, that
in the aggregate it competes successfully and has a major
position in all of the principal product lines in which it is
engaged, although the strength of its position varies with
products and markets. Refer to &#147;Risk Factors&#148; in
&#147;Item&nbsp;3. <I>Key&nbsp;Information.</I>&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics segment, Sony believes that its product
planning and product design expertise, the high quality of its
products, its record of innovative product introductions and
product improvements, its price competitiveness derived from
reductions in manufacturing and indirect costs, and its
extensive marketing and servicing efforts are important factors
in maintaining its competitive position.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Game segment is in a historically volatile and highly
dynamic industry and SCEI&#146;s competitive position is
affected by changing technology and product introductions,
limited platform life cycles, popularity of software titles,
seasonality, consumer spending and other economic trends. To be
successful in the game industry, it is important to win customer
acceptance of SCEI&#146;s format.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Pictures segment, SPE faces intense competition from
other major motion picture studios and, to a lesser extent, from
independent production companies. SPE must compete to obtain
story rights and talent, including writers, actors, directors
and producers, which are essential to the success of SPE&#146;s
products. SPE also competes to attract the attention of
audiences worldwide and to obtain exhibition and distribution
outlets and optimal release dates for its products. Competition
in television production, distribution, and syndication is also
intense because available broadcast time is limited and the
audience is increasingly fragmented among broadcast networks,
cable, and other independent television stations both in the
U.S. and internationally. Furthermore, broadcast networks are
increasingly producing their own shows internally. This
competitive environment has resulted in fewer opportunities to
produce shows for networks and a shorter lifespan for ordered
shows that do not immediately achieve favorable ratings.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Financial Services segment, it is critical for Sony Life,
Sony Assurance and Sony Bank to maintain customer confidence and
satisfaction. To be credible and competitive in the financial
services market, it is important to maintain a strong and
healthy financial foundation for the business as well as to meet
diversifying customer needs. Sony Life has maintained a high
solvency margin ratio, based on a Japanese domestic criteria
that stipulates the maintenance of a certain level of solvency
margin ratio in order for the business to be evaluated as
financially sound, and differentiates itself from competitors
through its unique needs-based consulting sales approach from
its Lifeplanner sales force, Sony Life&#146;s team of highly
trained life insurance professionals. Sony Assurance, through
direct communications over the telephone or via the Internet,
endeavors to provide products and services that customers
recognize as clearly distinctive from other companies&#146;
offerings and has maintained a leading position in the
direct-type of non-insurance business in
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Japan. Sony Assurance also has maintained a high solvency margin
ratio based on the aforementioned Japanese domestic criteria.
Sony Bank has strengthened its financial base and has maintained
an adequate capital adequacy ratio based on Japanese domestic
criteria concerning this ratio. By taking advantage of the
special characteristics of the Internet, Sony Bank, as an
Internet bank for independent individual customers&#146; asset
management, offers a variety of unique products and services.
Sony Finance faces competitive pressure to achieve a leading
position in the new arena of secure payment systems on the
Internet by utilizing new technology.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within All Other, success at SMEJ is dependent to a large extent
upon the artistic and creative abilities of employees and
outside talent and is subject to the vagaries of public taste.
SMEJ&#146;s future competitive position depends on its
continuing ability to attract and develop artists who can
achieve a high degree of public acceptance. SCN faces
competition in Japan from many existing large companies, as well
as from new entrants to the market. Telecommunication companies
that possess a large Internet-ready infrastructure and other
entrants that compete solely on the basis of price have created
a market in which competitive price reductions are the norm.
Rapid technological advancement has created many new
opportunities but it has also increased the rate at which new
and more efficient services must be brought to market to earn
customer approval. Customer price elasticity is high, and users
are able to change Internet service providers with increasing
ease. The penetration of mobile Internet services provided by
telecommunications companies may also provide a substitute to
the home-centric Internet service provided by SCN.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='119'></A>
</DIV>

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    <B><I>Government Regulations</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s business activities are subject to various
governmental regulations in countries in which it operates,
including regulations relating to business/investment approvals,
import and export regulations including customs and export
control, antitrust, intellectual property, consumer and business
taxation, exchange controls, personal information protection,
and environmental and recycling requirements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In Japan, insurance and banking businesses are subject to
approvals and oversight from the Financial Services Agency. In
addition, telecommunication businesses are subject to approvals
from the Ministry of Internal Affairs and Communications.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony is also subject to environmental and occupational health
and safety regulations in the jurisdictions in which it
operates, particularly those in which it has manufacturing,
research, or similar operations in its Electronics and Game
segments. Refer to &#147;Risk Factors&#148; in
&#147;Item&nbsp;3. <I>Key Information.</I>&#148;
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='120'></A>
</DIV>

<!-- link1 "Organizational Structure" -->

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<B>Organizational Structure</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the significant subsidiaries
owned, directly or indirectly, by Sony Corporation.
</DIV>

<CENTER>
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Country of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(As of March&nbsp;31, 2006)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Name of company</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>incorporation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percentage owned</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony EMCS&nbsp;Corporation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Semiconductor Kyushu Corporation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Marketing (Japan) Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Computer Entertainment Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Financial Holdings, Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Life Insurance Co., Ltd.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Music Entertainment (Japan) Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Japan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Americas Holding Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Corporation of America</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Electronics Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony DADC US Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Computer Entertainment America Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Pictures Entertainment Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>U.S.A.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Europe Holding B.V.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Netherlands</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Europe G.m.b.H.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Germany</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony United Kingdom Ltd.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>U.K.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Computer Entertainment Europe Ltd.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>U.K.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Global Treasury Services Plc</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>U.K.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Holding (Asia) B.V.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Netherlands</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Electronics Asia Pacific Pte. Ltd.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Singapore</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='121'></A>
</DIV>

<!-- link1 "Property, Plant and Equipment" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Property, Plant and Equipment</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has a number of offices, plants and warehouses throughout
the world. Most of the buildings and land in and on which they
are located are owned by Sony, free from significant
encumbrances.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">26

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information as of March&nbsp;31,
2006 with respect to plants for the manufacturing of products
for the Electronics segment and for the Game segment with floor
space of more than 500,000&nbsp;square feet:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Approximate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="left" nowrap><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>floor space</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal products manufactured</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(square&nbsp;feet)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>In Japan:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    Nagasaki<BR>
    (Sony Semiconductor Kyushu Corporation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Nagasaki TEC)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,232,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Semiconductors</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    Kokubu, Kagoshima<BR>
    (Sony Semiconductor Kyushu Corporation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Kagoshima TEC)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,132,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Semiconductors</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    Kumamoto<BR>
    (Sony Semiconductor Kyushu Corporation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Kumamoto TEC)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>980,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Semiconductors</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    Kohda, Aichi<BR>
    (Sony EMCS&nbsp;Corporation&nbsp;&#151; Kohda TEC)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>957,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Video cameras, digital cameras, Memory Sticks, and printers</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    Inazawa, Aichi<BR>
    (Sony EMCS&nbsp;Corporation&nbsp;&#151; Inazawa TEC)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>862,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    LCD televisions</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    Kanuma, Tochigi<BR>
    (Sony Chemicals Corporation)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>843,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Magnetic tapes, adhesives, and electronic components</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    Ichinomiya, Aichi<BR>
    (Sony EMCS&nbsp;Corporation&nbsp;&#151; Ichinomiya TEC)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>833,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Rear projection televisions, and digital cameras</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    Tochigi, Tochigi<BR>
    (Sony Energy Devices Corporation)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>609,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Magnetic and optical storage media and batteries</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    Kisarazu, Chiba<BR>
    (Sony EMCS&nbsp;Corporation&nbsp;&#151; Kisarazu TEC)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>601,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    DVD Recorders and PCs</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    Koriyama, Fukushima<BR>
    (Sony Energy Devices Corporation)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>581,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Batteries</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    Kosai, Shizuoka<BR>
    (Sony EMCS&nbsp;Corporation&nbsp;&#151; Kosai TEC)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>562,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Broadcast- and professional-use video equipment</TD>
</TR>

<TR>
    <TD colspan="8">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    Minokamo, Gifu<BR>
    (Sony EMCS&nbsp;Corporation&nbsp;&#151; Minokamo TEC)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>542,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Video cameras, digital cameras, mobile phones, and modules</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">27

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Approximate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>floor space</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal products manufactured</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(square&nbsp;feet)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <B>Overseas:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Pittsburgh, Pennsylvania, U.S.A.<BR>
    (Sony Electronics Inc.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,820,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Rear projection televisions</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    San&nbsp;Diego, California, U.S.A.<BR>
    (Sony Electronics Inc.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,249,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    CRTs</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Wuxi, China<BR>
    (Sony Electronics (Wuxi) Co., Ltd., Sony Digital Products (Wuxi)
    Co., Ltd. and Sony (China) Ltd.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,160,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Batteries, televisions, PCs, and digital cameras</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    Penang, Malaysia<BR>
    (Sony EMCS (Malaysia) Sdn. Bhd.&nbsp;&#151; PG TEC)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>988,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Audio equipment and data storage systems</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Huizhou, China<BR>
    (Sony Precision Devices (Huizhou) Co., Ltd.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>985,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Optical pickups and DVD players</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    Tijuana, Mexico<BR>
    (Sony de Tijuana Este, S.A. de C.V.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>935,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    LCD televisions, rear projection televisions, TV tuners,
    computer displays, and audio equipment</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Dothan, Alabama, U.S.A.<BR>
    (Sony Electronics Inc.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>809,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Magnetic tape products and polarized film for LCD</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    Bangi, Malaysia<BR>
    (Sony EMCS (Malaysia) Sdn. Bhd.&nbsp;&#151; KL TEC)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>797,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    CRT televisions, rear projection televisions, TV tuners, DVD
    players, and VTRs</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Jurong, Singapore<BR>
    (Sony Display Device (Singapore))</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>786,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    CRTs</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    Pencoed, Wales, U.K.<BR>
    (Sony Manufacturing Company U.K.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>707,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Broadcast cameras and professional-use displays</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Terre Haute, Indiana, U.S.A.<BR>
    (Sony Music Entertainment Inc.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>665,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    CDs, CD-ROMs, DVDs, and DVD-ROMs</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    Nuevo Laredo, Mexico<BR>
    (Sony Electronics Inc.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>608,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Magnetic storage media and batteries</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Pitman, New Jersey, U.S.A.<BR>
    (Sony Music Entertainment Inc.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>568,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    CDs, CD-ROMs, DVDs, and DVD-ROMs</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    Viladecavallas, Spain<BR>
    (Sony Espana, S.A.)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>566,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    LCD televisions, TV components, projectors, and flat panel
    televisions</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">28
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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony plans to increase its semiconductor manufacturing capacity
at Sony Semiconductor Kyushu Corporation. Sony plans to invest
170.0&nbsp;billion yen in semiconductor fabrication facilities
and equipment during the fiscal year ending March&nbsp;31, 2007.
This investment includes investment in the production capacity
for chips used for PS3, LCD televisions, LCD rear projection
televisions, and mobile products.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the facilities above, Sony has a number of other
plants for electronic products throughout the world. Sony owns
research and development facilities and employee housing and
recreation facilities, as well as Sony Corporation&#146;s
headquarters buildings in Tokyo, Japan, where administrative
functions and product development activities are carried out.
SCEI leases its corporate headquarters buildings located in
Tokyo, where administrative functions, product development, and
software development are carried out. SCEA and SCEE lease their
offices in the U.S. and Europe, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Most of SMEJ&#146;s offices, including leased premises, are
located in Tokyo, Japan.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SPE&#146;s corporate offices and motion picture and television
production facilities are headquartered in Culver City,
California, where it owns and operates a studio facility, Sony
Pictures Studios. A second studio facility, The Culver Studios,
which was owned and operated by SPE was sold by SPE in April
2004. SPE initially leased back a portion of this facility for a
two-year period and subsequently extended the lease for an
additional one-year period expiring April&nbsp;20, 2007. SPE
also leases office space and motion picture and television
support facilities from affiliates of Sony Corporation and other
third parties in various worldwide locations. SPE&#146;s film
and videotape storage operations are located in various leased
locations in the U.S. and Europe.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2001, SCA entered into a lease with a Variable
Interest Entity, which is consolidated by Sony, for its
corporate headquarters. Sony has the option to purchase the
building at any time during the lease term which expires in
December 2008. The aggregate floor space of this building is
approximately 723,000&nbsp;square feet.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='122'></A>
</DIV>

<!-- link1 "Item 5. Operating and Financial Review and Prospects" -->

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<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;5.</B></TD>
    <TD>
    <B><I>Operating and Financial Review and Prospects</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='123'></A>
</DIV>

<!-- link1 "OPERATING RESULTS" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>OPERATING RESULTS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='124'></A>
</DIV>

<!-- link1 "Operating Results for the Fiscal Year Ended March 31, 2006 compared with the Fiscal Year Ended March 31, 2005" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Operating Results for the Fiscal Year Ended March&nbsp;31,
2006 compared with the Fiscal Year Ended March&nbsp;31,
2005</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After translation of Sony&#146;s financial results into yen (the
currency in which Sony&#146;s financial statements are
prepared), in accordance with Generally Accepted Accounting
Principles in the U.S.&nbsp;(&#147;U.S.&nbsp;GAAP&#148;),
Sony&#146;s sales and operating revenue (&#147;sales&#148;) for
the fiscal year ended March&nbsp;31, 2006 increased
4.4&nbsp;percent compared with the previous fiscal year. On a
local currency basis (regarding references to results of
operations expressed on a local currency basis, refer to
<I>&#147;Foreign Exchange Fluctuations and Risk
Hedging&#148;</I> below), sales for the fiscal year increased
slightly. The 4.4&nbsp;percent increase is mainly due to an
increase in revenues within the Financial Services segment, as a
result of an improvement in gains and losses on investments at
Sony Life Insurance Co., Ltd. (&#147;Sony Life&#148;) due to the
favorable Japanese domestic equity market conditions, and
increased sales within the Game segment, as the result of the
contribution from
PSP<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP>
(PlayStation<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
Portable) (&#147;PSP&#148;). In the Electronics segment,
although sales benefited from the depreciation of the yen and
there was an increase in sales of liquid crystal display
(&#147;LCD&#148;) televisions, sales to outside customers
decreased 0.9&nbsp;percent compared with the previous fiscal
year. There was a decline in sales of CRT televisions, due to a
continued shift in demand towards flat panel televisions, and in
plasma televisions, where new product development has been
terminated.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating income increased 67.9&nbsp;percent compared with the
previous fiscal year. On a local currency basis, operating
income increased approximately 23&nbsp;percent compared with the
previous fiscal year. Operating income includes a one-time net
gain of 73.5&nbsp;billion yen, which resulted from the transfer
to the Japanese Government of the substitutional portion of
Sony&#146;s Employee Pension Fund. Of this, a gain of
64.5&nbsp;billion yen was recorded within the Electronics
segment. In the Financial Services segment, operating income
increased
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
due to an improvement in gains and losses on investments at Sony
Life resulting from the above-mentioned favorable Japanese
domestic equity market conditions. In the Electronics segment,
although restructuring charges increased compared with the
previous fiscal year, the amount of operating loss decreased as
a result of a net gain resulting from the transfer to the
Japanese Government of the substitutional portion of Sony&#146;s
Employee Pension Fund mentioned above and favorable exchange
rates. Operating income within the Game segment declined
primarily as a result of an increase in research and development
costs associated mainly with
PLAYSTATION<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>3
(&#147;PS3&#148;). In the Pictures segment, operating income
also declined due to lower worldwide theatrical and home
entertainment revenues on feature films.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Restructuring</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2006, Sony recorded
restructuring charges of 138.7&nbsp;billion yen, an increase
from the 90.0&nbsp;billion yen recorded in the previous fiscal
year. The primary restructuring activities were in the
Electronics segment and All Other.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Of the total 138.7&nbsp;billion yen, Sony recorded
48.3&nbsp;billion yen in personnel-related costs. This expense
was incurred because 5,700 people, mainly in Japan, the U.S. and
Western Europe, left Sony primarily through early retirement
programs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For more detailed information about restructuring, please refer
to Note&nbsp;17 of Notes to the Consolidated Financial
Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Electronics</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Restructuring charges in the Electronics segment for the fiscal
year ended March&nbsp;31, 2006 were 125.8&nbsp;billion yen,
compared to 83.2&nbsp;billion yen in the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Due to the worldwide market shrinkage and demand shift from CRT
televisions to plasma and LCD panel televisions, Sony has been
implementing a worldwide plan to rationalize CRT and CRT
television production facilities and has been downsizing its
business over several years. In the fiscal year ended
March&nbsp;31, 2006, as part of this restructuring program, Sony
recorded a non-cash impairment charge of 25.5&nbsp;billion yen
for CRT TV display manufacturing facilities located in the
U.S.&nbsp;The impairment charge was calculated as the difference
between the carrying value of the asset group and the present
value of estimated future cash flows. The charge was recorded in
loss on sale, disposal or impairment of assets, net in the
consolidated statements of income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the above restructuring efforts, Sony undertook
several headcount reduction programs to further reduce operating
costs in the Electronics segment. As a result of these programs,
Sony recorded restructuring charges of 45.1&nbsp;billion yen for
the fiscal year ended March&nbsp;31, 2006, and these charges
were included in selling, general and administrative expenses in
the consolidated statements of income. These staff reductions
were achieved worldwide mostly through the implementation of
early retirement programs. The remaining liability balance as of
March&nbsp;31, 2006 was 19.4&nbsp;billion yen and will be paid
through the fiscal year ending March&nbsp;31, 2007. Sony will
continue seeking the appropriate headcount level to optimize the
workforce in the Electronics segment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>All Other</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Restructuring charges within All Other for the fiscal year ended
March&nbsp;31, 2006 were 10.4&nbsp;billion yen, compared to
5.3&nbsp;billion yen recorded in the previous fiscal year. The
main component of the restructuring charges recorded during the
fiscal year ended March&nbsp;31, 2006 was an 8.5&nbsp;billion
yen asset impairment write-down associated with the sale of the
Metreon, a U.S.&nbsp;entertainment complex.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">30

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Operating Performance</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+4.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+67.9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>286.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+82.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity in net income of affiliated companies</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-54.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-24.5</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Sales</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2006 increased by
315.8&nbsp;billion yen, or 4.4&nbsp;percent, to
7,475.4&nbsp;billion yen compared with the previous fiscal year.
A further breakdown of sales figures is presented under
<I>&#147;Operating Performance by Business Segment&#148;
</I>below.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Sales&#148; in this analysis of the ratio of selling,
general and administrative expenses to sales refers only to the
&#147;net sales&#148; and &#147;other operating revenue&#148;
portions of consolidated sales and operating revenue, and
excludes Financial service revenue. This is because Financial
service expenses are recorded separately from cost of sales and
selling, general and administrative expenses. Furthermore, in
the analysis of cost of sales, including research and
development costs, to sales, only &#147;net sales&#148; are
used. This is because cost of sales is an expense associated
only with net sales. The calculations of all ratios below that
pertain to business segments include intersegment transactions.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Cost of Sales and Selling, General and Administrative
Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of sales for the fiscal year ended March&nbsp;31, 2006
increased by 151.3&nbsp;billion yen, or 3.0&nbsp;percent, to
5,151.4&nbsp;billion yen compared with the previous fiscal year,
and increased from 76.2&nbsp;percent to 77.0&nbsp;percent as a
percentage of sales. Year on year, the cost of sales ratio
increased from 81.8&nbsp;percent to 81.9&nbsp;percent in the
Electronics segment, increased from 73.0&nbsp;percent to
80.4&nbsp;percent in the Game segment, and increased from
58.7&nbsp;percent to 60.2&nbsp;percent in the Pictures segment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics segment, there was a deterioration in the
cost of sales ratio for several products, in particular image
sensors and CRT televisions. In the Game segment, there was an
increase in the cost of sales ratio as a result of research and
development costs associated with PS3. In the Pictures segment,
the cost of sales ratio also increased primarily due to lower
worldwide theatrical and home entertainment revenues on feature
films.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There was a decrease in personnel-related costs included in cost
of sales of 9.8&nbsp;billion yen, primarily within the
Electronics segment, compared with the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development costs (all research and development
costs are included within cost of sales) for the fiscal year
ended March&nbsp;31, 2006 increased by 29.8&nbsp;billion yen to
531.8&nbsp;billion yen compared with the previous fiscal year.
The ratio of research and development costs to sales was
7.9&nbsp;percent compared to 7.6&nbsp;percent in the previous
fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Selling, general and administrative expenses for the fiscal year
ended March&nbsp;31, 2006 decreased by 8.0&nbsp;billion yen, or
0.5&nbsp;percent, to 1,527.0&nbsp;billion yen compared with the
previous fiscal year. The ratio of selling, general and
administrative expenses to sales improved from 23.2&nbsp;percent
in the previous fiscal year to 22.6&nbsp;percent. Year on year,
the ratio of selling, general and administrative expenses to
sales improved from 19.0&nbsp;percent to 18.1&nbsp;percent in
the Electronics segment and from 21.0&nbsp;percent to
18.7&nbsp;percent in the Game segment. On the other hand, the
ratio of selling, general and administrative expenses to sales
increased from 32.5&nbsp;percent to 36.0&nbsp;percent in the
Pictures segment.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Personnel-related costs in selling, general and administrative
expenses decreased by 60.4&nbsp;billion yen compared with the
previous fiscal year mainly due to a decrease in
severance-related expenses in the Electronics segment resulting
from the implementation of restructuring initiatives. In
addition, advertising and publicity expenses for the fiscal year
increased by 59.8&nbsp;billion yen compared with the previous
fiscal year. This was due to the fact that advertising and
publicity expenses increased, primarily within the Pictures and
Game segments.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Loss on sale, disposal or impairment of assets, net was
73.9&nbsp;billion yen, compared with 28.0&nbsp;billion in the
previous fiscal year. This increase was as a result of losses
recorded on the sale, disposal and impairment of CRT and CRT
television production equipment in the Electronics segment, as
well as an asset impairment write-down associated with the sale
of the Metreon, a U.S.&nbsp;entertainment complex.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Operating Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating income for the fiscal year ended March&nbsp;31, 2006
increased by 77.3&nbsp;billion yen, or 67.9&nbsp;percent, to
191.3&nbsp;billion yen compared with the previous fiscal year.
The operating income margin increased from 1.6&nbsp;percent to
2.6&nbsp;percent. In descending order by amount of financial
impact, the Financial Services segment, the Pictures segment,
All Other and the Game segment contributed to operating income.
On the other hand, although there was a net gain from the
transfer to the Japanese Government of the substitutional
portion of Sony&#146;s Employee Pension Fund and the
depreciation of the yen, the Electronics segment recorded an
operating loss mainly due to a decrease in sales to outside
customers, an increase in loss on sale, disposal or impairment
of assets and a deterioration in the cost of sales ratio
associated with a decline in unit selling prices. For a further
breakdown of operating income for each segment, please refer to
<I>&#147;Operating Performance by Business Segment&#148;</I>
below.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Other Income and Expenses</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the consolidated results for the fiscal year ended
March&nbsp;31, 2006, other income increased by 56.0&nbsp;billion
yen, or 57.4&nbsp;percent, to 153.6&nbsp;billion yen, while
other expenses increased by 4.2&nbsp;billion yen, or
7.7&nbsp;percent, to 58.5&nbsp;billion yen, compared with the
previous fiscal year. The net amount of other income and other
expenses was net other income of 95.1&nbsp;billion yen, an
increase of 51.8&nbsp;billion yen, compared with the previous
fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The gain on change in interest in subsidiaries and equity
investees increased by 44.5&nbsp;billion yen, or
272.7&nbsp;percent compared to the previous fiscal year to
60.8&nbsp;billion yen. This was mainly the result of a gain of
21.5&nbsp;billion yen on the change in interest in subsidiaries
and equity investees resulting from the initial public offering
of Sony Communication Network Corporation (&#147;SCN&#148;), a
gain of 20.6&nbsp;billion yen on the change in interest
resulting from the partial sale of Sony&#146;s investment in
Monex Beans Holdings, Inc., and gains of 12.0&nbsp;billion yen
and 6.6&nbsp;billion yen respectively on the change of interest
at So-net M3 Inc., a consolidated subsidiary of SCN and at DeNA
Co., Ltd., an equity affiliate of SCN accounted for by the
equity method.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest and dividends of 24.9&nbsp;billion yen was recorded in
the fiscal year ended March&nbsp;31, 2006 an increase of
10.2&nbsp;billion yen, or 69.5&nbsp;percent, compared with the
previous year. This increase was mainly the result of an
increase in interest received resulting from an improvement in
the rate of return on overseas investments.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the fiscal year ended March&nbsp;31, 2006, interest payments
totaling 29.0&nbsp;billion yen were recorded, an increase of
4.4&nbsp;billion yen, or 18.0&nbsp;percent, compared with the
previous year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, a net foreign exchange loss of 3.1&nbsp;billion yen
was recorded in the fiscal year ended March&nbsp;31, 2006,
compared to a net foreign exchange loss of 0.5&nbsp;billion yen
recorded in the previous fiscal year. The net foreign exchange
loss was recorded because the value of the yen, especially
during the first and third quarters of the fiscal year ended
March&nbsp;31, 2006, was lower than the value of the yen at the
time that Sony entered into foreign exchange forward contracts
and foreign currency option contracts. These contracts are
entered into by Sony to mitigate the foreign exchange rate risk
to cash flows that arises from settlements of foreign currency
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
denominated accounts receivable and accounts payable, as well as
foreign currency denominated transactions between consolidated
subsidiaries.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Income before Income Taxes</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Income before income taxes for the fiscal year ended
March&nbsp;31, 2006 increased 129.1&nbsp;billion yen, or
82.1&nbsp;percent, to 286.3&nbsp;billion yen compared with the
previous fiscal year, as a result of the increase in operating
income and the increase in the net amount of other income and
other expenses mentioned above.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Income Taxes</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Income taxes for the fiscal year ended March&nbsp;31, 2006
increased by 160.5&nbsp;billion yen to 176.5&nbsp;billion yen.
Compared to an effective tax rate of 10.2&nbsp;percent in the
previous fiscal year, the effective tax rate was
61.6&nbsp;percent in the current fiscal year. This effective tax
rate exceeded the Japanese statutory tax rate primarily due to
the recording of additional valuation allowances against
deferred tax assets by Sony Corporation and several of
Sony&#146;s Japanese domestic and overseas consolidated
subsidiaries, mainly within the Electronics segment, due to
continued losses recorded at these businesses and the recording
of an additional tax provision for the undistributed earnings of
certain foreign subsidiaries. The effective tax rate was
significantly lower than the Japanese statutory rate in the
previous fiscal year as a result of the reversal of valuation
allowances at Sony&#146;s U.S.&nbsp;subsidiaries associated with
an improvement in operating performance.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;30, 2006, Sony Corporation and SCEI each received
notification from the Tokyo Regional Taxation Bureau
(&#147;TRTB&#148;) of a reassessment of the profits they
reported from transactions between SCEI and its subsidiary Sony
Computer Entertainment America Inc. (&#147;SCEA&#148;), for the
fiscal years ended March&nbsp;31, 2000 through 2005. On the same
date, Sony Corporation also received notification of a
reassessment of the profits reported from transactions related
to CD and DVD disc manufacturing operations with a number of its
overseas subsidiaries for the fiscal years ended March&nbsp;31,
2004 and 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation and SCEI believe that their allocation of
income for the periods in question was appropriate and that they
have paid the proper amount of taxes in each of the
jurisdictions. Therefore Sony Corporation and SCEI disagree with
the position of the TRTB and have lodged an objection. In
addition, Sony Corporation and SCEI plan to formally request
bilateral consultations (where available) to obtain relief from
double taxation under the applicable tax treaties of various
countries.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Transfer pricing was reassessed in accordance with the
notification from the TRTB, resulting in additional Japanese
income of 74.4&nbsp;billion yen, which led to Sony Corporation
and SCEI incurring an estimated additional cash tax (including
corporate tax and others) of approximately 27.9&nbsp;billion
yen. Sony Corporation and SCEI believe that double taxation will
be avoided through the procedure described above, and therefore
Sony does not expect any material impact on its consolidated
profit and loss as a result of this reassessment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Results of Affiliated Companies Accounted for under the
Equity Method</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Equity in net income of affiliated companies during the fiscal
year ended March&nbsp;31, 2006 was 13.2&nbsp;billion yen, a
decrease of 15.9&nbsp;billion yen, or 54.6&nbsp;percent compared
to the previous fiscal year. Equity in net income of affiliated
companies for the previous fiscal year included the recording of
12.6&nbsp;billion yen as equity in net income for InterTrust
Technologies Corporation (&#147;InterTrust&#148;), which
reflected InterTrust&#146;s proceeds from a license agreement
arising from the settlement of a patent-related suit. In the
current fiscal year, Sony Ericsson, as a result of increased
sales of products including camera phone and
&#147;Walkman<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>&#148;
phone models, contributed 29.0&nbsp;billion yen to equity in net
income, an increase of 11.6&nbsp;billion yen compared to the
previous fiscal year. Sony recorded equity income of
5.8&nbsp;billion yen for SONY BMG MUSIC ENTERTAINMENT
(&#147;SONY BMG&#148;) during the current fiscal year, compared
to an equity loss of 3.4&nbsp;billion yen in the previous fiscal
year as a result of a reduction in restructuring charges and the
realization of incremental cost savings. However, Sony recorded
an equity in net loss of 7.2&nbsp;billion yen for S-LCD
Corporation (&#147;S-LCD&#148;), a joint-venture with Samsung
Electronics Co., Ltd. for the manufacture of amorphous TFT LCD
panels and equity in
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
net loss of 16.9&nbsp;billion yen for MGM Holdings, Inc.
(&#147;MGM Holdings&#148;). The equity in net loss for MGM
Holdings includes non-cash interest of 6.0&nbsp;billion yen on
cumulative preferred stock.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Minority Interest in Income (Loss) of Consolidated
Subsidiaries</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2006, minority interest
in loss of consolidated subsidiaries of 0.6&nbsp;billion yen was
recorded compared to minority interest in income of
1.7&nbsp;billion yen previous year. This loss was primarily due
to the recording of loss at ST Mobile Display Corporation, a
joint venture with Toyota Industries Corporation for the
manufacture of low-temperature polysilicon thin film transistor
liquid crystal display panels for mobile products.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Net Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net income for the fiscal year ended March&nbsp;31, 2006
decreased by 40.2&nbsp;billion yen, or 24.5&nbsp;percent, to
123.6&nbsp;billion yen compared with the previous fiscal year.
This decrease was primarily the result of the above-mentioned
increase in income taxes and decrease in equity in net income of
affiliated companies. As a percentage of sales, net income
decreased from 2.3&nbsp;percent to 1.7&nbsp;percent. Return on
stockholders&#146; equity decreased from 6.2&nbsp;percent to
4.1&nbsp;percent. (This ratio is calculated by dividing net
income by the simple average of stockholders&#146; equity at the
end of the previous fiscal year and at the end of the fiscal
year ended March&nbsp;31, 2006.)
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Basic net income per share was 122.58 yen compared with 175.90
yen in the previous fiscal year, and diluted net income per
share was 116.88 yen compared with 158.07 yen in the previous
fiscal year. Refer to Notes&nbsp;2 and 21 of Notes to
Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Operating Performance by Business Segment</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following discussion is based on segment information. Sales
and operating revenue in each business segment include
intersegment transactions. Refer to Note&nbsp;24 of Notes to
Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B><I>Business Segment
Information</I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Sales and operating revenue</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,066.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,150.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+1.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>729.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>958.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+31.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>733.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>745.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+1.7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>743.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+32.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>459.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>408.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-11.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Elimination</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(391.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(531.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+4.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">34

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating income (loss)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(30.9</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-79.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-57.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+239.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+286.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sub-Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>209.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+58.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Elimination and unallocated corporate expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+67.9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of August&nbsp;1, 2004, Sony and Bertelsmann AG combined
their recorded music businesses in a joint venture. The newly
formed company, SONY BMG, is 50&nbsp;percent owned by each
parent company. Under U.S.&nbsp;GAAP, SONY BMG is accounted for
by Sony using the equity method and, since August&nbsp;1, 2004,
50&nbsp;percent of net profits or losses of this business have
been included under &#147;Equity in net income (loss) of
affiliated companies.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the establishment of this joint venture,
Sony&#146;s non-Japan-based disc manufacturing and physical
distribution businesses, formerly included within the Music
segment, a separate reporting segment until the end of the
previous fiscal year, have been reclassified to the Electronics
segment to recognize the new management reporting structure
whereby Sony&#146;s Electronics segment has now assumed
responsibility for these businesses. Effective April&nbsp;1,
2005, a similar change was made with respect to Sony&#146;s
Japan-based disc manufacturing business. Results for the fiscal
year ended March&nbsp;31, 2005 in the Electronics segment have
been restated to account for these reclassifications.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Effective April&nbsp;1, 2005, Sony no longer breaks out its
music business as a reportable segment as it no longer meets the
materiality threshold. Accordingly, the results for Sony&#146;s
music business are now included within All Other, and the
results for the fiscal year ended March&nbsp;31, 2005 have been
reclassified to All Other for comparative purposes. Results for
the fiscal year ended March&nbsp;31, 2006 in All Other include
the results of Sony Music Entertainment Inc.&#146;s
(&#147;SMEI&#148;) music publishing business and Sony Music
Entertainment (Japan) Inc. (&#147;SMEJ&#148;), excluding
Sony&#146;s Japan-based disc manufacturing business which, as
noted above, has been reclassified to the Electronics segment.
However, results for the previous fiscal year in All Other
include the consolidated results for SMEI&#146;s recorded music
business for the period through August&nbsp;1, 2004, as well as
the results for SMEI&#146;s music publishing business and SMEJ
excluding Sony&#146;s Japan-based disc manufacturing business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Electronics</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2006 increased
83.6&nbsp;billion yen, or 1.7&nbsp;percent, to
5,150.5&nbsp;billion yen compared with the previous fiscal year.
An operating loss of 30.9&nbsp;billion in the Electronics
segment was recorded compared to the operating loss of
34.3&nbsp;billion yen in the previous fiscal year. Sales to
outside customers on a yen basis decreased 0.9&nbsp;percent
compared to the previous fiscal year. Regarding sales to outside
customers by geographical area, although sales decreased in
Japan by 12&nbsp;percent, in the U.S.&nbsp;by 1&nbsp;percent and
in Europe by 4&nbsp;percent, sales increased by 11&nbsp;percent
in non-Japan Asia and other geographic areas (&#147;Other
Areas&#148;).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In Japan, although there was a significant increase in the sales
of LCD televisions, as well as increased sales for flash memory
and hard drive digital audio players, sales decreased for such
products as mobile phones, principally to Sony Ericsson, CRT
televisions and plasma televisions. In the U.S., although there
was an increase in sales of LCD and rear projection televisions,
sales decreased for such products as CRT and
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
plasma televisions. In Europe, although sales increased for such
products as LCD televisions, there was a decline in sales of
such products as CRT and plasma televisions, and mobile phones,
primarily to Sony Ericsson. In Other Areas, sales of such
products as LCD televisions and PCs increased, while sales of
such products as CD-R/ RW drives and CRT televisions decreased.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Performance by Product Category</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales and operating revenue by product category discussed below
represent sales to outside customers, which do not include
intersegment transactions. Refer to Note&nbsp;24 of Notes to
Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Audio&#148; sales decreased by 35.7&nbsp;billion yen, or
6.2&nbsp;percent, to 536.2&nbsp;billion yen. Sales of flash
memory and hard drive digital audio players increased
significantly, in conjunction with an increase in shipments to
approximately 4.5&nbsp;million units, compared to approximately
850,000&nbsp;unit shipments recorded in the previous fiscal
year. On the other hand, there was a significant decrease in the
unit shipments of both CD and MD format headphone stereos due to
a shift in market demand. In addition, car audio experienced a
decrease in sales, and there was a slight decrease in home audio
sales.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Video&#148; sales decreased by 15.0&nbsp;billion yen, or
1.4&nbsp;percent, to 1,021.3&nbsp;billion yen. In addition to a
decrease in sales of digital cameras in Japan, the U.S. and
Europe, there was a decrease in sales of VHS video recorders.
Sales of digital cameras decreased, coupled with a decrease in
worldwide shipments by approximately 0.5&nbsp;million units to
approximately 13.5&nbsp;million units. Worldwide shipments of
DVD recorders increased by approximately 300,000&nbsp;units to
approximately 2.0&nbsp;million units, while sales increased
slightly. Worldwide shipments of home-use video cameras
increased by approximately 250,000&nbsp;units to approximately
7.6&nbsp;million units. DVD-Video player unit shipments
decreased by approximately 1.5&nbsp;million units to
approximately 8.0&nbsp;million units.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Televisions&#148; sales increased by 6.6&nbsp;billion yen,
or 0.7&nbsp;percent, to 927.8&nbsp;billion yen. There was a
significant increase in worldwide sales of LCD televisions, as
worldwide shipments of LCD televisions increased by
approximately 1.8&nbsp;million units, to approximately
2.8&nbsp;million units. Sales of projection televisions
increased as the sales percentage of higher priced units
increased, although worldwide shipments remained largely
unchanged at approximately 1.2&nbsp;million units. On the other
hand, there was a significant decrease in worldwide sales of CRT
televisions, primarily as a result of both a decrease in
worldwide shipments of CRT televisions by approximately
2.7&nbsp;million units to approximately 6.8&nbsp;million units
due to the continued shift in demand towards flat panel
televisions, as well as a fall in unit prices. In addition,
sales of plasma televisions, where new product development has
been terminated, also decreased worldwide.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Information and Communications&#148; sales increased by
26.4&nbsp;billion yen, or 3.2&nbsp;percent, to
842.5&nbsp;billion yen. Although sales of desktop PCs decreased,
overall sales increased as a result of favorable worldwide sales
of notebook PCs. Worldwide unit shipments of PCs increased
approximately 400,000&nbsp;units to approximately
3.7&nbsp;million units. Sales of broadcast- and professional-use
products increased as a result of favorable sales of
high-definition related products.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Semiconductors&#148; sales decreased by 5.5&nbsp;billion
yen, or 2.3&nbsp;percent, to 240.8&nbsp;billion yen. The
decrease was due to a decrease in sales of CCDs as the result of
pricing pressures.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Components&#148; sales increased by 37.3&nbsp;billion yen,
or 6.0&nbsp;percent, to 656.8&nbsp;billion yen. This increase
was primarily due to an increase in sales of lithium-ion
batteries, primarily for use in PCs and power tools, and Memory
Sticks. On the other hand, sales of CD-R/ RW drives and optical
pickups declined, primarily as a result of significant unit
price declines. Sales of DVD+/-R/ RW drives increased, despite a
deterioration in unit selling prices, as a result of a
significant growth in units sold in association with the
expansion of the market.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Other&#148; sales decreased by 57.0&nbsp;billion yen, or
9.6&nbsp;percent, to 538.2&nbsp;billion yen. This decrease was
the result of a decrease in sales of mobile phones, primarily to
Sony Ericsson.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics segment, cost of sales for the fiscal year
ended March&nbsp;31, 2006 increased by 67.5&nbsp;billion yen, or
1.6&nbsp;percent to 4,184.5&nbsp;billion yen compared with the
previous fiscal year. The cost of sales ratio deteriorated by
0.1&nbsp;percent to 81.9&nbsp;percent compared to
81.8&nbsp;percent in the previous fiscal year. Although there
was an improvement in the cost of sales ratio for such products
as video cameras and PCs, products that contributed to the
deterioration in the cost of sales ratio included image sensors
and CRT televisions, which experienced decreased sales.
Restructuring charges recorded in cost of sales amounted to
23.8&nbsp;billion yen, an increase of 14.2&nbsp;billion yen
compared with the 9.6&nbsp;billion yen recorded in the previous
fiscal year. Research and development costs decreased
15.2&nbsp;billion yen, or 3.5&nbsp;percent, from
433.3&nbsp;billion yen in the previous fiscal year to
418.1&nbsp;billion yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Selling, general and administrative expenses decreased by
27.2&nbsp;billion yen, or 2.8&nbsp;percent to 933.0&nbsp;billion
yen compared with the previous fiscal year. The primary reason
for this decrease was the recording of a 64.5&nbsp;billion yen
net gain resulting from the transfer to the Japanese Government
of the substitutional portion of Sony&#146;s Employee Pension
Fund. Of the restructuring charges recorded in the Electronics
segment, the amount recorded in selling, general and
administrative expenses decreased by 4.1&nbsp;billion yen from
53.6&nbsp;billion yen in the previous fiscal year to
49.5&nbsp;billion yen. Of the restructuring charges recorded in
selling, general and administrative expenses, the amount
recorded for headcount reductions, including reductions through
the early retirement program, was 45.1&nbsp;billion yen, a
decrease of 5.8&nbsp;billion yen compared with the previous
fiscal year. On the other hand, royalty expenses decreased
17.2&nbsp;billion yen. The ratio of selling, general and
administrative expenses to sales decreased 0.9&nbsp;percentage
points from the 19.0&nbsp;percent recorded in the previous
fiscal year to 18.1&nbsp;percent.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Loss on sale, disposal or impairment of assets, net increased
40.0&nbsp;billion yen to 63.9&nbsp;billion yen compared with the
previous fiscal year. This amount includes 52.5&nbsp;billion yen
in restructuring charges, which includes 25.5&nbsp;billion yen
of restructuring charges related to CRT and CRT television
manufacturing facilities in the U.S.&nbsp;The amount of
restructuring charges included in loss on sale, disposal or
impairment, net in the previous fiscal year was
19.2&nbsp;billion yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The amount of operating loss recorded in the Electronics segment
for the fiscal year ended March&nbsp;31, 2006 decreased as a
result of the net gain resulting from the transfer to the
Japanese Government of the substitutional portion of Sony&#146;s
Employee Pension Fund, despite the recording of increased
restructuring charges. Regarding profit performance by product,
excluding restructuring charges and the impact of the net gain
resulting from the transfer to the Japanese Government of the
substitutional portion of Sony&#146;s Employee Pension Fund,
operating losses recorded by CRT televisions and LCD televisions
increased, in addition to a decrease in operating income
recorded by image sensors. On the other hand, the amount of
operating loss recorded by DVD recorders (including
PSX<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP>)
decreased. In addition, there was an increase in operating
income for video cameras and PCs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In August 2006, Dell Inc. (&#147;Dell&#148;) and Apple Computer
Inc. (&#147;Apple&#148;) each announced voluntary recalls of
lithium-ion battery packs used in certain notebook computers
sold by these two companies. The recalled packs contain battery
cells originally manufactured by Sony. Sony supports these
recalls by our customers Dell and Apple.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of August&nbsp;31, 2006, Sony anticipates no further recalls
of battery packs using these particular battery cells.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The recall arises because, on rare occasions, microscopic metal
particles in the recalled battery cells may come into contact
with other parts of the battery cell, leading to a short circuit
within the cell. Typically, a battery pack will simply power off
when a cell short circuit occurs. However, under certain rare
conditions, an internal short circuit may lead to cell
overheating and potentially flames. The potential for this to
occur can be affected by variations in the system configurations
found in different notebook computers. Sony has introduced a
number of additional safeguards into its battery manufacturing
process to address this condition and to provide a greater level
of safety and security.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of August&nbsp;31, 2006, Sony estimates that the overall cost
to Sony in supporting the recall programs of Apple and Dell will
amount to between 20&nbsp;billion yen and 30&nbsp;billion yen.
This overall cost is an estimate based on the costs of
replacement battery packs and any other related costs to be
incurred by Sony.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Manufacturing by Geographic Area</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Slightly more than 50&nbsp;percent of the Electronics
segment&#146;s total annual production during the fiscal year
ended March&nbsp;31, 2006 took place in Japan, including the
production of digital cameras, video cameras, flat panel
televisions, PCs, semiconductors and components such as
batteries and Memory Stick. Approximately 65&nbsp;percent of the
annual production in Japan was destined for other regions. China
accounted for slightly more than 10&nbsp;percent of total annual
production, approximately 70&nbsp;percent of which was destined
for other regions. Asia, excluding Japan and China, accounted
for slightly more than 10&nbsp;percent of total annual
production, with approximately 60&nbsp;percent destined for
Japan, the U.S. and Europe. The Americas and Europe together
accounted for the remaining slightly less than 25&nbsp;percent
of total annual production, most of which was destined for local
distribution and sale.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Comparison of Results on a Local Currency Basis and
    Results on a Yen Basis</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics segment, operating results benefited from the
positive effect of the depreciation of the yen against the
U.S.&nbsp;dollar and the Euro. Sales for the fiscal year ended
March&nbsp;31, 2006 increased, on a yen basis, by
1.7&nbsp;percent, but decreased on a local currency basis by
approximately 3&nbsp;percent. In terms of operating performance,
there was a decrease in the amount of operating loss compared to
the previous fiscal year, but if calculated on a local currency
basis, this operating loss was larger when compared to the
actual results on a yen basis.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales to outside customers by geographic area on a yen basis
decreased in Japan by 12&nbsp;percent, in the U.S.&nbsp;by
1&nbsp;percent and in Europe by 4&nbsp;percent. However, sales
increased in Other Areas by 11&nbsp;percent. Sales on a local
currency basis for regions outside Japan decreased in the U.S.
and Europe by 7&nbsp;percent, but increased by 2&nbsp;percent in
Other Areas.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Game</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2006 increased by
228.9&nbsp;billion yen, or 31.4&nbsp;percent, to
958.6&nbsp;billion yen compared with the previous fiscal year.
Operating income decreased by 34.4&nbsp;billion yen, or
79.7&nbsp;percent, to 8.7&nbsp;billion yen compared with the
previous fiscal year, and the operating income margin decreased
from 5.9&nbsp;percent to 0.9&nbsp;percent.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales in the Game segment on a local currency basis increased
approximately 27&nbsp;percent. In addition, on a local currency
basis, operating income decreased approximately 62&nbsp;percent
compared to the previous fiscal year. By region, although sales
decreased slightly in Japan, there was a significant increase in
sales in the U.S. and Europe.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There was a significant increase in hardware sales compared to
the previous fiscal year. Sales increased significantly, mainly
in the U.S and Europe, and sales in Japan remained relatively
unchanged compared to the previous fiscal year, primarily due to
a significant contribution to sales from PSP, which experienced
favorable growth in all geographic areas and the fact that
PlayStation<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>2
(&#147;PS2&#148;) sales were on a par with those in the previous
fiscal year. In addition, although PS2 software sales decreased,
as a result of the contribution to sales from PSP software,
software sales in Japan, the U.S. and Europe were relatively
unchanged compared to the previous fiscal year.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total worldwide production shipments of hardware and software
were as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Worldwide hardware production shipments:*
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="17%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;&nbsp;PS2:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    16.22&nbsp;million units (an increase of 0.05&nbsp;million units)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;&nbsp;PSP:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    14.06&nbsp;million units (an increase of 11.09&nbsp;million
    units)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Worldwide software production shipments:*/**
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="17%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;&nbsp;PS2:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    223&nbsp;million units (a decrease of 29&nbsp;million units)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;&nbsp;PSP:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    41.6&nbsp;million units (an increase of 35.9&nbsp;million units)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="2%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*&nbsp;</TD>
    <TD align="left">
    Production shipments of hardware and software are counted upon
    shipment of the products from manufacturing bases. Sales of such
    products are recognized when the products are delivered to
    customers.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>**&nbsp;</TD>
    <TD align="left">
    Including those both from Sony and third parties under Sony
    licenses.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating income decreased significantly compared with the
previous fiscal year. Although profits from the PS2 and PSP
businesses exceeded those in the previous fiscal year, the
decrease in operating income was mainly the result of continued
high research and development costs associated with PS3, as well
as the recording of charges associated with preparation for the
launch of the PS3 platform including a write-down of
approximately 25.0&nbsp;billion yen for semiconductor components
for use in PS3.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The cost of sales to sales ratio deteriorated by
7.4&nbsp;percent, from 73.0&nbsp;percent in the previous fiscal
year, to 80.4&nbsp;percent for the reasons mentioned above for
operating income. The ratio of selling, general and
administrative expenses to sales decreased by 2.3&nbsp;percent,
compared to 21.0&nbsp;percent in the previous fiscal year, to
18.7&nbsp;percent as a result of the sales increase.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Charges related to the launch of the PS3 platform are
anticipated to result in a significant loss within the Game
segment for the fiscal year ending March&nbsp;31, 2007,
reflecting primarily an expected negative margin as a result of
strategic pricing on PS3 hardware sales.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Pictures</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2006 increased by
12.2&nbsp;billion yen, or 1.7&nbsp;percent, to
745.9&nbsp;billion yen compared with the previous fiscal year.
Operating income decreased by 36.5&nbsp;billion yen, or
57.1&nbsp;percent, to 27.4&nbsp;billion yen and the operating
income margin decreased from 8.7&nbsp;percent to
3.7&nbsp;percent. The results in the Pictures segment consist of
the results of Sony Pictures Entertainment Inc.
(&#147;SPE&#148;), a
<FONT style="white-space: nowrap">U.S.-based</FONT> subsidiary.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On a U.S.&nbsp;dollar basis, sales for the fiscal year in the
Pictures segment decreased approximately 4&nbsp;percent and
operating income decreased by approximately 61&nbsp;percent.
Sales decreased primarily due to lower worldwide theatrical and
home entertainment revenues on feature films, partially offset
by an increase in television product revenues. The lower
theatrical and home entertainment revenues primarily resulted
from the strong performance of <I>Spider-Man 2 </I>in the prior
fiscal year coupled with the disappointing performance of
certain films in the current fiscal year film slate,
particularly <I>Stealth</I>,<I> Zathura </I>and the <I>Legend of
Zorro. </I>Sales for the fiscal year release slate decreased
967&nbsp;million U.S.&nbsp;dollars as compared to the previous
fiscal year. Television product revenues increased by
approximately 220&nbsp;million U.S.&nbsp;dollars primarily due
to higher advertising and subscription sales from several of
SPE&#146;s international channels, higher sales of television
library product and the extension of a licensing agreement for
<I>Wheel of Fortune.</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating income for the segment decreased significantly,
primarily due to the disappointing overall performance of the
current fiscal year&#146;s film slate in both the theatrical and
home entertainment markets. Operating loss from the current
fiscal year release slate increased 623&nbsp;million
U.S.&nbsp;dollars as compared to the prior fiscal year&#146;s
release slate due to the same factors contributing to the
decrease in film revenue noted above. Partially offsetting this
was an increase in operating income of 83&nbsp;million
U.S.&nbsp;dollars for television product due to the same factors
noted above for revenue.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">39
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;31, 2006, unrecognized license fee revenue at
SPE was approximately 1.2&nbsp;billion U.S.&nbsp;dollars. SPE
expects to record this amount in the future having entered into
contracts with television broadcasters to provide those
broadcasters with completed motion picture and television
product. The license fee revenue will be recognized in the
fiscal year that the product is available for broadcast.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Financial Services</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Please note that the revenue and operating income at Sony Life,
Sony Assurance Inc. (&#147;Sony Assurance&#148;) and Sony Bank
Inc. (&#147;Sony Bank&#148;) discussed below on a U.S.&nbsp;GAAP
basis differ from the results that Sony Life, Sony Assurance and
Sony Bank disclose on a Japanese statutory basis.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financial Services revenue for the fiscal year ended
March&nbsp;31, 2006 increased by 182.7&nbsp;billion yen, or
32.6&nbsp;percent, to 743.2&nbsp;billion yen compared with the
previous fiscal year. Operating income increased by
132.8&nbsp;billion yen, or 239.4&nbsp;percent, to
188.3&nbsp;billion yen and the operating income margin increased
to 25.3&nbsp;percent compared with the 9.9&nbsp;percent of the
previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At Sony Life, revenue increased by 170.8&nbsp;billion yen, or
36.0&nbsp;percent, to 645.0&nbsp;billion yen compared with the
previous fiscal year. The main reasons for this increase were an
improvement in gains and losses from investments at Sony Life,
primarily within the general account, as well as an increase in
revenue from insurance premiums reflecting an increase of
<FONT style="white-space: nowrap">insurance-in</FONT>-force. The
improvement in gains and losses from investments in the general
account was principally a result of an improvement in valuation
gains from stock conversion rights in convertible bonds
resulting from the aforementioned favorable Japanese domestic
stock market conditions. Operating income at Sony Life increased
by 127.4&nbsp;billion yen or 208.8&nbsp;percent to
188.4&nbsp;billion yen, mainly as a result of a significant
improvement in gains and losses on investments in the general
account mentioned above.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At Sony Assurance, revenue increased due to higher insurance
revenue brought about by an expansion in automobile
<FONT style="white-space: nowrap">insurance-in</FONT>-force.
Operating income increased due to an increase in insurance
revenue and an improvement in the expense ratio (the ratio of
sales, general and administrative expenses to premiums).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At Sony Bank, which started operations in June 2001, although
foreign exchange losses were recorded as a result of the
depreciation of the yen on part of Sony Bank&#146;s foreign
currency deposits, revenue rose as there was an increase in
interest revenue associated with an increase in the balance of
assets from investing activities, in addition to revenues from
other investing activities. The amount of the operating loss
decreased compared with the previous fiscal year, as a result of
the increase in revenue.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At Sony Finance International, Inc. (&#147;Sony Finance&#148;),
a leasing and credit financing business subsidiary in Japan,
revenue increased due to an increase in leasing and credit card
revenue. In terms of profitability, a reduced operating loss was
recorded compared to the previous fiscal year, as a result of
improved profitability at a credit card business at Sony Finance.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Condensed Statements of Income Separating Out the
Financial Services Segment (Unaudited)</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following schedule shows unaudited condensed statements of
income for the Financial Services segment and all other segments
excluding Financial Services as well as condensed consolidated
statements of income. This presentation is not required under
U.S.&nbsp;GAAP, which is used in Sony&#146;s consolidated
financial statements. However, because the Financial Services
segment is different in nature from Sony&#146;s other segments,
Sony believes that a comparative presentation may be useful in
understanding and analyzing Sony&#146;s consolidated financial
statements.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">40

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Transactions between the Financial Services segment and all
other segments excluding Financial Services are eliminated in
the consolidated figures shown below.
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Condensed Statements of Income</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap>2005</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap>(Yen in millions)</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Financial Services</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial service revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>743,215</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial service expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>505,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>554,892</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188,323</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other income (expenses), net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,522</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before income taxes</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>212,845</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80,586</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before cumulative effect of an accounting change</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132,259</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,713</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132,259</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap>2005</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap>(Yen in millions)</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Sony without Financial Services</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net sales and operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,632,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,763,907</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Costs and expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,575,354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,762,375</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,532</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other income (expenses), net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,952</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before income taxes</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73,484</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(37,043</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,127</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income (loss) before cumulative effect of an accounting
    change</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,643</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net income (loss)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,643</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">41

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial service revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>537,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>720,566</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net sales and operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,621,901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,754,870</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475,436</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Costs and expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,045,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,284,181</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191,255</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other income (expenses), net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,074</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before income taxes</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>286,329</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,344</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162,713</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before cumulative effect of an accounting change</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,713</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>All Other</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2006, sales within
All Other were comprised mainly of sales from SMEJ, a Japanese
domestic recorded music business; SMEI&#146;s music publishing
business; SCN, an Internet-related service business subsidiary
operating mainly in Japan; a retailer of imported general
merchandise in Japan; an in-house facilities management business
in Japan; and an advertising agency business in Japan. Results
for the first four months of the previous fiscal year in All
Other incorporated the results for SMEI&#146;s recorded music
business, which, as noted above, was combined with Bertelsmann
AG&#146;s recorded music business to form the SONY BMG joint
venture which is accounted for by the equity method.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2006 decreased by
51.0&nbsp;billion yen, or 11.1&nbsp;percent, to
408.9&nbsp;billion yen, compared with the previous fiscal year.
Of total segment sales, 80&nbsp;percent were sales to outside
customers. In terms of profit performance, operating income for
All Other increased for the fiscal year from 4.2&nbsp;billion
yen to 16.2&nbsp;billion yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year, the sales decrease within All Other
reflects the fact that, as noted above, the results for the
first four months of the previous fiscal year in All Other
incorporated the results for SMEI&#146;s recorded music business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales at SMEJ were relatively unchanged compared with the
previous fiscal year. Best selling albums during the fiscal year
included <I>Ken Hirai 10th&nbsp;Anniversary Complete Single
Collection&nbsp;<FONT style="white-space: nowrap">&#146;95-&#146;05</FONT>
&#147;Uta&nbsp;Baka&#148; </I>by Ken Hirai, <I>NATURAL </I>by
ORANGE RANGE and <I>BEST </I>by Mika Nakashima.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Excluding sales recorded within Sony&#146;s music business,
there was an increase in sales within All Other. This increase
was mainly due to strong sales at a business engaged in the
production and marketing of animation products, favorable sales
both at SCN and its subsidiaries, as well as an increase in
sales recorded at an imported general merchandise retail
business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Regarding profit performance within All Other, operating income
of 16.2&nbsp;billion yen was recorded, an 12.0&nbsp;billion yen
increase compared to the 4.2&nbsp;billion yen of operating
income recorded in the previous fiscal year. This increase was
mainly the result of the fact that the results for SMEI&#146;s
recorded music business, which recorded an operating loss in the
previous fiscal year, are now recorded as part of the results of
the SONY BMG joint venture, and the continued strong performance
at SMEJ, where operating income increased approximately
40&nbsp;percent compared to the previous fiscal year mainly due
to an improvement in the cost of sales ratio and the recording
of a net gain resulting from the transfer to the Japanese
government of the substitutional portion of Sony&#146;s Employee
Pension Fund.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">42

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Excluding the operating income recorded in the music business, a
loss was recorded within All Other mainly as the result of an
asset impairment write-down associated with the sale of the
Metreon, a U.S.&nbsp;entertainment complex. This was offset to
some extent by cost reductions at network related businesses
within Sony Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2006, Sony Corporation transferred 51&nbsp;percent stock
of StylingLife Holdings Inc., a holding company covering six
retail companies within Sony previously included within All
Other, to a wholly-owned subsidiary of Nikko Principal
Investments Japan Ltd. As a result of this transaction, Sony
recognized a 18.0&nbsp;billion yen gain on change in interest in
subsidiaries and equity investees during the first quarter of
the fiscal year ending March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Foreign Exchange Fluctuations and Risk Hedging</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2006, the average
value of the yen was 112.3 yen against the U.S.&nbsp;dollar, and
136.3 yen against the Euro, which was 5.1&nbsp;percent lower
against the U.S.&nbsp;dollar and 2.0&nbsp;percent lower against
the Euro, respectively, compared with the average of the
previous fiscal year. Operating results on a local currency
basis described in &#147;Overview&#148; and &#147;Operating
Performance&#148; show results of sales and operating revenue
and operating income obtained by applying the yen&#146;s monthly
average exchange rate in the previous fiscal year to monthly
local currency-denominated sales, cost of sales, and selling,
general and administrative expenses for the fiscal year ended
March&nbsp;31, 2006, as if the value of the yen had remained
constant.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Pictures segment, Sony translates into yen the
U.S.&nbsp;dollar consolidated results of SPE (a
<FONT style="white-space: nowrap">U.S.-based</FONT> operation
that has worldwide subsidiaries).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Therefore, analysis and discussion of certain portions of the
operating results of SPE are specified as being on &#147;a
U.S.&nbsp;dollar basis.&#148; Results on a local currency basis
and results on a U.S.&nbsp;dollar basis are not on the same
basis as Sony&#146;s consolidated financial statements and do
not conform with U.S.&nbsp;GAAP. In addition, Sony does not
believe that these measures are a substitute for U.S.&nbsp;GAAP
measures. However, Sony believes that local currency basis
results provide additional useful information to investors
regarding operating performance.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s consolidated results are subject to foreign currency
rate fluctuations mainly derived from the fact that the
countries where manufacturing takes place may be different from
those where such products are sold. In order to reduce the risk
caused by such fluctuations, Sony employs derivatives, including
foreign exchange forward contracts and foreign currency option
contracts, in accordance with a consistent risk management
strategy. Such derivatives are used primarily to mitigate the
effect of foreign currency exchange rate fluctuations on cash
flows generated by anticipated intercompany transactions and
intercompany accounts receivable and payable denominated in
foreign currencies.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Global Treasury Services Plc (&#147;SGTS&#148;) in London
provides integrated treasury services for Sony Corporation and
its subsidiaries. Sony&#146;s policy is that Sony Corporation
and all subsidiaries with foreign exchange exposures should
enter into commitments with SGTS for hedging their exposures.
Sony Corporation and most of its subsidiaries utilize SGTS for
this purpose. The concentration of foreign exchange exposures at
SGTS means that, in effect, SGTS hedges the net foreign exchange
exposure of Sony Corporation and its subsidiaries. SGTS in turn
enters into foreign exchange transactions with creditworthy
third-party financial institutions. Most of the transactions are
entered into against projected exposures before the actual
export and import transactions take place. In general, SGTS
hedges the projected exposures on average three months before
the actual transactions take place. However, in certain cases
SGTS partially hedges the projected exposures one month before
the actual transactions take place when business requirements
such as shorter production-sales cycle for certain products
arise. Sony enters into foreign exchange transactions with
financial institutions primarily for hedging purposes. Sony does
not use these derivative financial instruments for trading or
speculative purposes except for certain derivatives in the
Financial Services segment utilized for portfolio investments
and Asset Liability Management (&#147;ALM&#148;).
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To minimize the adverse effects of foreign exchange fluctuations
on its financial results, particularly in the Electronics
segment, Sony seeks, when appropriate, to localize material and
parts procurement, design, and manufacturing operations in areas
outside of Japan.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the fair value of derivatives designated as cash flow
hedges, including foreign exchange forward contracts and foreign
currency option contracts, are initially recorded in accumulated
other comprehensive income and reclassified into earnings when
the hedged transaction affects earnings. Foreign exchange
forward contracts, foreign currency option contracts and other
derivatives that do not qualify as hedges are
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in Other Income and Expenses. The
notional amounts of foreign exchange forward contracts, currency
option contracts purchased and currency option contracts written
as of March&nbsp;31, 2006 were 1,489.2&nbsp;billion yen,
457.4&nbsp;billion yen and 163.7&nbsp;billion yen, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='125'></A>
</DIV>

<!-- link1 "Operating Results for the Fiscal Year Ended March 31, 2005 compared with the Fiscal Year Ended March 31, 2004" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Operating Results for the Fiscal Year Ended March&nbsp;31,
    2005 compared with the Fiscal Year Ended March&nbsp;31,
    2004</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
After translation of Sony&#146;s financial results into yen (the
currency in which Sony&#146;s financial statements are
prepared), in accordance with Generally Accepted Accounting
Principles in the U.S. (&#147;U.S.&nbsp;GAAP&#148;), Sony&#146;s
sales and operating revenue (&#147;sales&#148;) for the fiscal
year ended March&nbsp;31, 2005 decreased 4.5&nbsp;percent
compared with the previous fiscal year. On a local currency
basis (regarding references to results of operations expressed
on a local currency basis, refer to <I>&#147;Foreign Exchange
Fluctuations and Risk Hedging&#148;</I> below), sales for the
fiscal year decreased approximately 3&nbsp;percent. This
decrease is mainly due to the fact that, as of August&nbsp;1,
2004, the sales of Sony&#146;s overseas recorded music business
are no longer recorded within Sony&#146;s consolidated sales as
a result of the establishment of SONY BMG, which is accounted
for by the equity method, through the merger of Sony&#146;s
overseas recorded music business with Bertelsmann AG&#146;s
recorded music business, and a change in the method of
recognizing insurance premiums received on certain products at
Sony Life, as of the third quarter beginning October&nbsp;1,
2003, from being recorded as revenues to being offset against
the related provision for future insurance policy benefits.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating income increased 15.2&nbsp;percent compared with the
previous fiscal year. On a local currency basis, operating
income increased approximately 26&nbsp;percent compared with the
previous fiscal year. In addition to a decrease in restructuring
charges compared to the previous fiscal year, increased
operating income was recorded in the Pictures segment, where
<I>Spider-Man&nbsp;2 </I>was a significant contributor, and
operating income was recorded in All Other, where several
best-selling albums and singles at SMEJ contributed to improved
profitability. On the other hand, the Electronics segment, where
the cost of sales ratio deteriorated due to pricing pressures,
and the Game segment, where there was a decrease in hardware
sales, both experienced deteriorated profitability.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Restructuring</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2005, Sony recorded
restructuring charges of 90.0&nbsp;billion yen, a decrease from
the 168.1&nbsp;billion yen recorded in the previous fiscal year.
The primary restructuring activities were in the Electronics
segment and All Other.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Of the total 90.0&nbsp;billion yen, Sony recorded
53.6&nbsp;billion yen in personnel-related costs. This expense
was incurred because 12,000 people, mainly in Japan, the U.S.
and Western Europe, left the company primarily through early
retirement programs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For more detailed information about restructuring, please refer
to Note&nbsp;17 of Notes to the Consolidated Financial
Statements.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Electronics</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Restructuring charges in the Electronics segment for the fiscal
year ended March&nbsp;31, 2005 were 83.2&nbsp;billion yen,
compared to 145.7&nbsp;billion yen in the previous fiscal year.
Of these restructuring charges, for
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
the fiscal year ended March&nbsp;31, 2004 restructuring charges
of 2.1&nbsp;billion yen were recorded in Sony&#146;s non-Japan
disc manufacturing and physical distribution businesses,
formerly included within the Music segment, a separate reporting
segment until the end of the previous fiscal year, have been
reclassified to the Electronics segment to recognize the new
management reporting structure whereby Sony&#146;s Electronics
segment has now assumed responsibility for these businesses. See
Note&nbsp;24 of Notes to the Consolidated Financial Statements
for more information on this reclassification.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2004, Sony made a
decision to shut down certain CRT TV display manufacturing
operations in Japan to rationalize production facilities and
downsize its business, due to a contraction in the market as a
result of a shift in demand from CRT televisions to plasma and
LCD panel televisions. In the fiscal year ended March&nbsp;31,
2005, as part of this restructuring program, Sony recorded a
non-cash impairment charge of 7.5&nbsp;billion yen for the CRT
TV display manufacturing facilities located in Europe. The
impairment charge was calculated as the difference between the
carrying value of the asset group and the present value of
estimated future cash flows. The charge was recorded in loss on
sale, disposal or impairment of assets, net in the consolidated
statements of income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the above restructuring efforts, Sony undertook
several headcount reduction programs to further reduce operating
costs in the Electronics segment. As a result of these programs,
Sony recorded restructuring charges of 51.0&nbsp;billion yen for
the fiscal year ended March&nbsp;31, 2005, and these charges
were included in selling, general and administrative expenses in
the consolidated statements of income. These staff reductions
were achieved worldwide mostly through the implementation of
early retirement programs. The remaining liability balance as of
March&nbsp;31, 2005 was 14.0&nbsp;billion yen and will be paid
through the fiscal year ended March&nbsp;31, 2006.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>All Other</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Restructuring charges in All Other, including at SMEJ, for the
fiscal year ended March&nbsp;31, 2005 were 5.3&nbsp;billion yen,
compared to 13.7&nbsp;billion yen in the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
With regard to Sony&#146;s music business included within All
Other, due to the continued contraction of the worldwide music
market caused by slow worldwide economic growth, the saturation
of the CD market, the effects of piracy and other illegal
duplication, parallel imports, pricing pressures and the
diversification of customer preferences, Sony has been actively
repositioning its music business for the future by looking to
create a more effective and profitable business model. As a
result, Sony&#146;s music business has undertaken a worldwide
restructuring program since the fiscal year ended March&nbsp;31,
2001 to reduce staffing and other costs through the
consolidation and rationalization of facilities worldwide.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2005, in
continuation of the worldwide restructuring program and in
connection with the merger of its recorded music business into a
joint venture with Bertelsmann AG, Sony recorded restructuring
charges totaling 3.0&nbsp;billion yen within its music business.
These restructuring charges exclude restructuring charges that
were recorded in the disc manufacturing and physical
distribution businesses that were formerly included within the
Music segment, a separate reporting segment until the end of the
previous fiscal year, but have now been reclassified to the
Electronics segment. Restructuring activities included the
shutdown of certain distribution operations after the
establishment of the recorded music joint venture with
Bertelsmann AG as well as the further rationalization of
overhead functions through staff reductions. The restructuring
charges consisted of personnel-related costs of 0.9&nbsp;billion
yen and other related costs of 2.1&nbsp;billion yen. These
charges are included in selling, general and administrative
expenses in the consolidated statements of income. Positions
were eliminated across various employee levels, business
functions, operating units, and geographic regions during this
phase of the worldwide restructuring program.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Excluding restructuring within Sony&#146;s consolidated music
business, 2.0&nbsp;billion yen of restructuring charges were
recorded within All Other during the fiscal year ended
March&nbsp;31, 2005, mainly as a result of non-cash impairment
charges recorded at resulting network-related businesses within
Sony Corporation as a result of business reorganizations. The
restructuring charges consisted of personnel-related costs of
0.7&nbsp;billion yen and other related costs of
1.3&nbsp;billion&nbsp;yen.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">45

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Operating Performance</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-4.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+15.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+9.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity in net income of affiliated companies</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+1,594.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+85.1</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Sales</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2005 decreased by
336.8&nbsp;billion yen, or 4.5&nbsp;percent, to
7,159.6&nbsp;billion yen compared with the previous fiscal year.
A further breakdown of sales figures is presented under
<I>&#147;Operating Performance by Business Segment&#148;
</I>below.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Sales&#148; in this analysis of the ratio of selling,
general and administrative expenses to sales refers only to the
&#147;net sales&#148; and &#147;other operating revenue&#148;
portions of consolidated sales and operating revenue, and
excludes Financial service revenue. This is because Financial
Service expenses are recorded separately from cost of sales and
selling, general and administrative expenses. Furthermore, in
the analysis of cost of sales, including research and
development costs, to sales, only &#147;net sales&#148; are
used. This is because cost of sales is an expense associated
only with net sales. The calculations of all ratios below that
pertain to business segments include intersegment transactions.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Cost of Sales and Selling, General and Administrative
Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of sales for the fiscal year ended March&nbsp;31, 2005
decreased by 58.1&nbsp;billion yen, or 1.1&nbsp;percent, to
5,000.1&nbsp;billion yen compared with the previous fiscal year,
but increased from 73.5&nbsp;percent to 76.2&nbsp;percent as a
percentage of sales. Year on year, the cost of sales ratio rose
from 78.9&nbsp;percent to 81.8&nbsp;percent in the Electronics
segment, increased from 70.1&nbsp;percent to 73.0&nbsp;percent
in the Game segment and decreased from 74.0&nbsp;percent to
73.7&nbsp;percent in All Other. On the other hand, the cost of
sales ratio improved in the Pictures segment from
60.0&nbsp;percent to 58.7&nbsp;percent.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics segment, there was a deterioration in the
cost of sales ratio particularly within the CRT television,
portable audio, DVD recorder (including PSX) and video camera
businesses. In the Game segment, there was an increase in the
cost of sales ratio as a result of costs associated with both
the launch of PSP and the changeover to the new PS2 model. In
the Pictures segment, the cost of sales ratio also improved
primarily due to the substantial contribution from
<FONT style="white-space: nowrap"><I>Spider-Man&nbsp;</FONT>2</I>.
In All Other, there was an improvement in the cost of sales
ratio in the music business due to the establishment of SONY BMG
which is accounted for under the equity method resulting in a
higher percentage of sales being derived from SMEJ which
benefited from the contribution of greatest hits album sales.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Personnel-related costs included in cost of sales decreased by
52.5&nbsp;billion yen compared with the previous fiscal year,
primarily within the Electronics segment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development costs (all research and development
costs are included within cost of sales) for the fiscal year
ended March&nbsp;31, 2005 decreased by 12.5&nbsp;billion yen to
502.0&nbsp;billion yen compared with the previous fiscal year.
The ratio of research and development costs to sales was
7.6&nbsp;percent compared to 7.5&nbsp;percent in the previous
fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Selling, general and administrative expenses for the fiscal year
ended March&nbsp;31, 2005 decreased by 263.2&nbsp;billion yen,
or 14.6&nbsp;percent, to 1,535.0&nbsp;billion yen compared with
the previous fiscal year. The ratio of selling, general and
administrative expenses to sales improved from 25.9&nbsp;percent
in the previous fiscal year to 23.2&nbsp;percent. Year on year,
the ratio of selling, general and administrative expenses to
sales improved from 21.2&nbsp;percent to 19.0&nbsp;percent in
the Electronics segment, from 21.1&nbsp;percent to
21.0&nbsp;percent in the Game
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
segment, and improved from 39.5&nbsp;percent to
37.3&nbsp;percent in All Other, and from 35.0&nbsp;percent to
32.5&nbsp;percent in the Pictures segment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Personnel-related costs in selling, general and administrative
expenses decreased by 169.3&nbsp;billion yen compared with the
previous fiscal year mainly due to a decrease in severance
related expenses in the Electronics segment resulting from the
implementation of restructuring initiatives, and the fact that
personnel-related costs in Sony&#146;s recorded music business
outside Japan are no longer recorded within Sony&#146;s
consolidated selling, general and administrative expenses due to
the establishment of SONY BMG mentioned above. In addition,
advertising and publicity expenses for the fiscal year decreased
by 51.6&nbsp;billion yen compared to the previous fiscal year.
This was primarily due to the fact that advertising and
publicity expenses that were recorded in All Other decreased due
to the establishment of SONY BMG and a reduction in advertising
and publicity expenses in the Pictures segment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Loss on sale, disposal or impairment of assets, net was
28.0&nbsp;billion yen, compared with 35.5&nbsp;billion in the
previous fiscal year. Although losses were recorded on the sale,
disposal and impairment of CRT and CRT television production
equipment in the Electronics segment, gains were recorded mainly
from the sale of land and buildings in both the Electronics
segment and All Other.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Operating Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating income for the fiscal year ended March&nbsp;31, 2005
increased by 15.0&nbsp;billion yen, or 15.2&nbsp;percent, to
113.9&nbsp;billion yen compared with the previous fiscal year.
The operating income margin increased from 1.3&nbsp;percent to
1.6&nbsp;percent. The business segments that contributed the
most to operating income, in descending order by amount of
financial impact, were the Pictures, Financial Services and Game
segments. On the other hand, the Electronics segment recorded an
operating loss mainly due to the appreciation of the yen against
the U.S.&nbsp;dollar as well as an increase in cost of sales
that exceeded the reduction in selling, general and
administrative expenses. For a further breakdown of operating
income for each segment, please refer to <I>&#147;Operating
Performance by Business Segment&#148; </I>below.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Other Income and Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the consolidated results for the fiscal year ended
March&nbsp;31, 2005, other income decreased by 24.7&nbsp;billion
yen, or 20.2&nbsp;percent, to 97.6&nbsp;billion yen, while other
expenses decreased by 22.8&nbsp;billion yen, or
29.5&nbsp;percent, to 54.3&nbsp;billion yen, compared with the
previous fiscal year. The net amount of other income and other
expenses was net other income of 43.3&nbsp;billion yen, a
decrease of 1.9&nbsp;billion yen, or 4.2&nbsp;percent, compared
with the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A net foreign exchange loss of 0.5&nbsp;billion yen was recorded
in the fiscal year ended March&nbsp;31, 2005, compared to a net
foreign exchange gain of 18.1&nbsp;billion yen recorded in the
previous fiscal year. The net foreign exchange loss was recorded
because the value of the yen, especially during the first
quarter of the fiscal year ended March&nbsp;31, 2005, was lower
than the value of the yen at the time that Sony entered into
foreign exchange forward contracts and foreign currency option
contracts. These contracts are entered into by Sony to mitigate
the foreign exchange rate risk to cash flows that arises from
settlements of foreign currency denominated accounts receivable
and accounts payable, as well as foreign currency denominated
transactions between consolidated subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the fiscal year ended March&nbsp;31, 2005, a loss on
devaluation of securities investments of 3.7&nbsp;billion yen
was recorded, an improvement of 12.8&nbsp;billion yen, or
77.5&nbsp;percent, compared with the previous year. This
improvement was primarily due to the recording of valuation
losses of 10.3&nbsp;billion yen in the previous fiscal year
related to securities issued by a privately held Japanese
company engaged in cable broadcasting and other businesses which
Sony accounted for under the cost method.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The gain on change in interest in subsidiaries and equity
investees increased by 11.5&nbsp;billion yen, or
235.2&nbsp;percent compared to the previous fiscal year to
16.3&nbsp;billion yen. This was mainly the result of gains of
9.0&nbsp;billion yen from a change in interest from Monex Inc.,
an equity affiliate of Sony, following its business integration
by way of share transfer with Nikko Beans, Inc and total gains
of 4.7&nbsp;billion yen from the sale of
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
stock and a change in interest in a subsidiary resulting from
the initial public offering of
<FONT style="white-space: nowrap">So-net</FONT> M3&nbsp;Inc., a
consolidated subsidiary of&nbsp;SCN.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the net gain recorded on sales of securities
investments decreased 6.3&nbsp;billion yen, or
53.8&nbsp;percent, to 5.4&nbsp;billion yen. This was primarily a
result of the recording of a deferred gain of 6.0&nbsp;billion
yen in the fiscal year ended March&nbsp;31, 2004, from
Sony&#146;s sale, during the fiscal year ended March&nbsp;31,
2003, of its equity interest in Telemundo Communications Group,
Inc. and its subsidiaries, a
<FONT style="white-space: nowrap">U.S.-based</FONT> Spanish
language television network and station group that was accounted
for under the equity method.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Income before Income Taxes</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Income before income taxes for the fiscal year ended
March&nbsp;31, 2005 increased 13.1&nbsp;billion yen, or
9.1&nbsp;percent, to 157.2&nbsp;billion yen compared with the
previous fiscal year, as a result of the increase in operating
income and the decrease in net amount of other income and other
expenses mentioned above.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Income Taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Income taxes for the fiscal year ended March&nbsp;31, 2005
decreased by 36.7&nbsp;billion yen, or 69.6&nbsp;percent, to
16.0&nbsp;billion yen. Compared to an effective tax rate of
36.6&nbsp;percent in the previous fiscal year, the effective tax
rate was 10.2&nbsp;percent in the current fiscal year. As a
result of the recording of operating losses in the past, the
U.S.&nbsp;subsidiaries of Sony have had valuation allowances
against deferred tax assets for U.S.&nbsp;federal taxes and
certain state taxes. However, in the fiscal year ended
March&nbsp;31, 2005, based on both improved operating results in
recent years and a sound outlook for the future operating
performance at Sony&#146;s U.S.&nbsp;subsidiaries, Sony reversed
67.9&nbsp;billion yen of such valuation allowances, resulting in
a reduction to income tax expense. On the other hand, certain of
Sony&#146;s subsidiaries recorded new valuation allowances
against deferred tax assets during the fiscal year ended
March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Results of Affiliated Companies Accounted for under the
Equity Method</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Equity in net income of affiliated companies during the fiscal
year ended March&nbsp;31, 2005 was 29.0&nbsp;billion yen, an
increase of 27.3&nbsp;billion yen, or 1,594.2&nbsp;percent,
compared to 1.7&nbsp;billion yen recorded in the previous fiscal
year. Equity in net income of Sony Ericsson, a joint venture
focused on mobile phone handsets, was 17.4&nbsp;billion yen, an
increase of 11.0&nbsp;billion yen, or 171.9&nbsp;percent,
compared to the 6.4&nbsp;billion yen recorded in the previous
fiscal year. Equity in net income of affiliated companies for
the current fiscal year includes the recording of
12.6&nbsp;billion yen as equity in net income from InterTrust.
This amount reflects InterTrust&#146;s proceeds from a license
agreement with Microsoft Corporation arising from the settlement
of a patent-related lawsuit. In addition, due to significant
restructuring costs, an equity loss of 3.4&nbsp;billion yen was
recorded at SONY BMG. Furthermore, equity in net loss was
recorded at affiliates such as Star Channel Inc., a Japan-based
subscription television company specializing in the broadcast of
movies, and <FONT style="white-space: nowrap">S-LCD,</FONT> a
joint-venture with Samsung Electronics Co., Ltd. for the
manufacture of amorphous TFT&nbsp;LCD panels.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Minority Interest in Income of Consolidated
Subsidiaries</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2005, minority interest
in income of consolidated subsidiaries decreased by
0.7&nbsp;billion yen, or 30.6&nbsp;percent, to 1.7&nbsp;billion
yen. This decrease was primarily due to the recording of
minority interest at certain television and home entertainment
subsidiaries in the Pictures segment in the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Net Income</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net income for the fiscal year ended March&nbsp;31, 2005
increased by 75.3&nbsp;billion yen, or 85.1&nbsp;percent, to
163.8&nbsp;billion yen compared with the previous fiscal year.
This increase was the result primarily of the abovementioned
increase in income before income taxes, a decrease in the
effective tax rate, as well as an increase in equity in net
income of affiliated companies. As a percentage of sales, net
income increased from 1.2&nbsp;percent to 2.3&nbsp;percent.
Return on stockholders&#146; equity increased from
3.8&nbsp;percent to 6.2&nbsp;percent. (This
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
ratio is calculated by dividing net income by the simple average
of stockholders&#146; equity at the end of the previous fiscal
year and at the end of the fiscal year ended March&nbsp;31,
2005.)
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Basic net income per share was 175.90 yen compared with 95.97
yen in the previous fiscal year, and diluted net income per
share was 158.07 yen compared with 87.00 yen in the previous
fiscal year. Refer to Notes&nbsp;2 and 21 of Notes to
Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Operating Performance by Business Segment</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following discussion is based on segment information. Sales
and operating revenue in each business segment include
intersegment transactions. Refer to Note&nbsp;24 of Notes to
Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Business Segment Information</I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Sales and operating revenue</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,087.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,066.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-0.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>780.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>729.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-6.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>756.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>733.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-3.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>593.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-5.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>662.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>459.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-30.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Elimination</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(384.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(391.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-4.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating income (loss)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-36.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+81.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+0.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-0.9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Elimination and unallocated corporate expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+15.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of August&nbsp;1, 2004, Sony and Bertelsmann&nbsp;AG combined
their recorded music businesses in a joint venture. The newly
formed company, SONY&nbsp;BMG, is 50&nbsp;percent owned by each
parent company. Under U.S.&nbsp;GAAP, SONY&nbsp;BMG is accounted
for by Sony using the equity method and, since August&nbsp;1,
2004, 50&nbsp;percent of net profits or losses of this business
have been included under &#147;Equity in net income (loss) of
affiliated companies.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the establishment of this joint venture,
Sony&#146;s non-Japan-based disc manufacturing and physical
distribution businesses, formerly included within All Other,
have been reclassified to the Electronics segment to recognize
the new management reporting structure whereby Sony&#146;s
Electronics segment has now assumed responsibility for these
businesses. Effective April&nbsp;1, 2005, a similar change was
made with respect to Sony&#146;s Japan-based disc manufacturing
business. Results for the fiscal years ended
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">49

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
March&nbsp;31, 2004 and March&nbsp;31, 2005 in the Electronics
segment have been restated to account for these
reclassifications.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Effective April&nbsp;1, 2005, Sony no longer breaks out its
music business as a reportable segment as it no longer meets the
materiality threshold. Accordingly, the results for Sony&#146;s
music business are now included within All Other and the results
for the fiscal year ended March&nbsp;31, 2004 and March&nbsp;31,
2005 have been reclassified to All Other for comparative
purposes. Results for the fiscal year ended March&nbsp;31, 2005
in All Other include the consolidated results for SMEI&#146;s
recorded music business for the period through August&nbsp;1,
2004, as well as the results for SMEI&#146;s music publishing
business and SMEJ excluding Sony&#146;s Japan-based disc
manufacturing business. However, results for the fiscal year
ended March&nbsp;31, 2004 include the consolidated results for
SMEI&#146;s recorded music business for the full twelve month
period, as well as the results for SMEI&#146;s music publishing
business and SMEJ excluding Sony&#146;s Japan-based disc
manufacturing business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2004, Sony completed the integration of its
semiconductor manufacturing business in order to establish a
more efficient and coordinated semiconductor supply structure by
transferring Sony Computer Entertainment&#146;s semiconductor
manufacturing operation from the Game segment to the Electronics
segment. As a result of this transfer, sales revenue and
expenditures associated with this operation are now recorded
within the &#147;Semiconductor&#148; category in the Electronics
segment. The results for the same period of the prior fiscal
years have not been restated as such comparable figures cannot
be practically obtained given that the semiconductor
manufacturing operation was not operated as a separate line of
business within the Game segment. This integration of the
semiconductor manufacturing businesses is a part of Sony&#146;s
semiconductor strategy of utilizing semiconductor technologies
and manufacturing equipment originally developed or designed for
the Game business within Sony as a whole.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Electronics</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2005 decreased
20.6&nbsp;billion yen, or 0.4&nbsp;percent, to
5,066.8&nbsp;billion yen compared with the previous fiscal year.
An operating loss of 34.3&nbsp;billion in the Electronics
segment was recorded compared to the operating loss of
8.1&nbsp;billion yen in the previous fiscal year. Sales to
outside customers on a yen basis decreased 1.1&nbsp;percent
compared to the previous fiscal year. Regarding sales to outside
customers by geographical area, although sales decreased in
Japan by 10&nbsp;percent and in the U.S.&nbsp;by 4&nbsp;percent,
they remained almost unchanged in Europe and increased by
9&nbsp;percent in non-Japan Asia and other geographic areas
(&#147;Other Areas&#148;).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In Japan, although there was a significant increase in the sales
of LCD televisions, and an increase in the sales of DVD
recorders (including PSX), there was a decrease in the sales of
PCs, mobile phones, primarily to Sony Ericsson, broadcast- and
professional-use equipment and CRT televisions. In the U.S.,
there was an increase in sales of LCD rear projection
televisions and digital cameras, although sales mainly of CRT
televisions, PCs, computer displays and portable audio declined.
In Europe, sales increased, primarily of digital cameras, LCD
televisions and plasma televisions. However, there was a
decrease in the sales mainly of CRT televisions and portable
audio. In Other Areas, sales mainly of digital cameras, CD-R/RW
and DVD+/ -R/RW drives and PCs increased while sales of
primarily portable audio, optical pickups and home audio
decreased.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Performance by Product Category</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales and operating revenue by product category discussed below
represent sales to outside customers, which do not include
intersegment transactions. Refer to Note&nbsp;24 of Notes to
Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Audio&#148; sales decreased by 103.6&nbsp;billion yen, or
15.3&nbsp;percent, to 571.9&nbsp;billion yen. Sales of headphone
stereos declined as a result of a significant decrease in the
unit shipments of both CD format and MD format devices due to a
shift in demand towards hard disc- and flash-based memory
players. Worldwide shipments of CD format devices decreased by
approximately 3.68&nbsp;million units to approximately
7.28&nbsp;million units and worldwide shipments of MD format
devices decreased by approximately 1.44&nbsp;million units to
1.92&nbsp;million
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">50

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
units. Sales of home audio declined primarily due to a
contraction of the market. On the other hand, overall sales of
car audio increased slightly due to strong sales in the European
market and Other Areas.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Video&#148; sales increased by 87.0&nbsp;billion yen, or
9.2&nbsp;percent, to 1,036.3&nbsp;billion yen. There was a
growth in the sales of digital cameras outside of Japan and DVD
recorders (including PSX) recorded a significant increase in
sales worldwide. Worldwide shipments of digital cameras
increased by approximately 4.0&nbsp;million units to
approximately 14.0&nbsp;million units. Worldwide shipments of
DVD recorders were approximately 650,000&nbsp;units in the
previous fiscal year but increased to approximately
1.7&nbsp;million units in the fiscal year ended March&nbsp;31,
2005. Worldwide shipments of home-use video cameras increased by
approximately 750,000&nbsp;units to approximately
7.35&nbsp;million units, but overall sales remained almost
unchanged, due to increased price competition. DVD-Video player
sales decreased due to pricing pressure, although unit shipments
increased by approximately 1.0&nbsp;million units to
approximately 9.5&nbsp;million units.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Televisions&#148; sales increased by 36.6&nbsp;billion
yen, or 4.1&nbsp;percent, to 921.2&nbsp;billion yen. In addition
to a significant increase in worldwide sales of LCD televisions,
there was a significant increase in the sales of plasma
televisions outside of Japan, particularly in Europe, and of
projection televisions in the U.S.&nbsp;Worldwide shipments of
LCD televisions increased by approximately 570,000&nbsp;units,
compared to the previous fiscal year, to approximately
1.0&nbsp;million units; plasma television shipments increased by
approximately 90,000&nbsp;units to approximately
300,000&nbsp;units; and projection televisions shipments
increased by approximately 280,000&nbsp;units to approximately
1.2&nbsp;million units. On the other hand, although there was an
increase in worldwide shipments of CRT televisions by
approximately 100,000&nbsp;units to approximately
9.5&nbsp;million units, sales decreased significantly as a
result of a fall in unit prices due to the continued shift in
demand towards flat panel televisions. In addition, sales of
computer displays also decreased worldwide.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Information and Communications&#148; sales decreased by
62.7&nbsp;billion yen, or 7.1&nbsp;percent, to
816.2&nbsp;billion yen. Despite an increase in notebook PC sales
due to strong sales outside Japan, overall sales decreased due
to a decrease in sales of desktop PCs. Worldwide unit shipments
of PCs increased approximately 100,000&nbsp;units to
approximately 3.3&nbsp;million units. Sales of personal digital
assistants decreased significantly due to a downsizing of the
business. Sales of broadcast- and professional-use products
decreased slightly compared to the previous fiscal year, despite
recording increased sales outside Japan, as sales in Japan
decreased as a result of the recording of higher sales, in the
previous fiscal year, from the sale of equipment to two
television stations which opened new broadcasting facilities.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Semiconductors&#148; sales decreased by 6.9&nbsp;billion
yen, or 2.7&nbsp;percent, to 246.3&nbsp;billion yen. The
decrease was due to a decrease in sales of CCDs as the result of
pricing pressures. Regarding LCDs, sales of low temperature
polysilicon LCDs for mobile phones increased significantly.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Components&#148; sales decreased by 4.3&nbsp;billion yen,
or 0.7&nbsp;percent, to 619.5&nbsp;billion yen. The decrease was
primarily due to a decrease in sales of
<FONT style="white-space: nowrap">CD-R/RW</FONT> drives and
optical pickups associated mainly with significant declines in
unit prices. Sales of
<FONT style="white-space: nowrap">DVD+/-R/RW</FONT> drives
increased due to a production and sales alliance with a third
party. Regarding lithium-ion batteries, sales for use in digital
cameras and mobile phones increased.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Other&#148; sales increased by 1.8&nbsp;billion yen, or
0.3&nbsp;percent, to 595.2&nbsp;billion yen. The increase
resulted from increased sales at Sony&#146;s non-Japan-based
disc manufacturing business. However, there was a slight
decrease in sales of mobile phone handsets mainly to Sony
Ericsson.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics segment, cost of sales for the fiscal year
ended March&nbsp;31, 2005 increased by 131.5&nbsp;billion yen,
or 3.3&nbsp;percent to 4,117.0&nbsp;billion yen compared with
the previous fiscal year. The cost of sales to sales ratio
deteriorated by 2.9&nbsp;percent to 81.8&nbsp;percent compared
to 78.9&nbsp;percent in the previous fiscal year. Products that
contributed to the deterioration in the cost of sales to sales
ratio were CRT televisions and portable audio products, which
both experienced a decrease in sales, and DVD recorders
(including PSX) and video cameras, which were both impacted by
falling unit prices. Restructuring charges recorded in cost of
sales amounted to 9.6&nbsp;billion yen, a decrease of
0.5&nbsp;billion yen compared with the 10.1&nbsp;billion yen
recorded in the previous fiscal year. Research and development
costs increased 2.4&nbsp;billion yen, or 0.6&nbsp;percent, from
431.0&nbsp;billion yen in the previous fiscal year to
433.3&nbsp;billion yen. Although there was an increase in
research and development costs within the segment as a result of
the transfer of semiconductor manufacturing operations
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">51

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
from the Game segment to the Electronics segment in association
with the business integration of Sony&#146;s semiconductor
manufacturing operations, overall research and development costs
within the segment only increased slightly as a result of the
carrying out of a stringent process for the selection of
research and development activities.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Selling, general and administrative expenses decreased by
119.2&nbsp;billion yen, or 11.0&nbsp;percent to
960.2&nbsp;billion yen compared with the previous fiscal year.
The primary reason for this decrease was a decrease in
restructuring charges. Of the restructuring charges recorded in
the Electronics segment, the amount recorded in selling, general
and administrative expenses decreased by 71.4&nbsp;billion yen
from 125.0&nbsp;billion yen in the previous fiscal year to
53.6&nbsp;billion yen. Of the restructuring charges recorded in
selling, general and administrative expenses, the amount
recorded for headcount reductions, including reductions through
the early retirement program, was 51.0&nbsp;billion yen, a
decrease of 63.3&nbsp;billion yen compared with the previous
fiscal year. On the other hand, royalty expenses increased
17.0&nbsp;billion yen. The ratio of selling, general and
administrative expenses to sales decreased 2.2&nbsp;percentage
points from the 21.2&nbsp;percent recorded in the previous
fiscal year to 19.0&nbsp;percent.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Loss on sale, disposal or impairment of assets, net decreased
6.7&nbsp;billion yen to 23.9&nbsp;billion yen compared with the
previous fiscal year. This amount includes 19.2&nbsp;billion yen
in restructuring charges, which includes 7.5&nbsp;billion yen
related to CRT and CRT televisions manufacturing facilities in
Europe. The amount of restructuring charges included in loss on
sale, disposal or impairment, net in the previous fiscal year
was 10.6&nbsp;billion&nbsp;yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An increased operating loss was recorded in the Electronics
segment for the fiscal year ended March&nbsp;31, 2005 due to a
significant deterioration in the cost of sales ratio, as
mentioned above. Regarding profit performance by product,
excluding restructuring charges, semiconductors recorded an
operating loss for the fiscal year, compared to the operating
profit of the previous fiscal year. This loss was due to the
recording, within the Electronics segment, of research and
development costs related to system large scale integration
(&#147;LSI&#148;) manufacturing, in particular the next
generation processor chip, as a result of the integration of
Sony&#146;s semiconductor manufacturing business operations
within the Electronics segment mentioned above. These costs were
previously recorded within the Game segment. CRT televisions and
portable audio products recorded a loss for the fiscal year
compared to the operating income recorded in the previous fiscal
year. DVD recorders (including PSX) also experienced an
increased operating loss. The operating income for video cameras
also decreased.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On the other hand, results were positively affected by a
decreased operating loss from personal digital assistants
through the implementation of significant business downsizing,
and a significant increase in operating income recorded for PCs
and broadcast- and professional-use products.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Manufacturing by Geographic Area</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approximately 50&nbsp;percent of the Electronics segment&#146;s
total annual production during the fiscal year ended
March&nbsp;31, 2005 took place in Japan, including the
production of digital cameras, video cameras, flat panel
televisions, PCs, semiconductors and components such as
batteries and Memory Sticks. Approximately 60&nbsp;percent of
the annual production in Japan was destined for other regions.
China accounted for approximately 10&nbsp;percent of total
annual production, approximately 70&nbsp;percent of which was
destined for other regions. Asia, excluding Japan and China,
accounted for slightly more than 10&nbsp;percent of total annual
production, with approximately 60&nbsp;percent destined for
Japan, the U.S. and Europe. The Americas and Europe together
accounted for the remaining total annual production of slightly
less than 30&nbsp;percent, most of which was destined for local
distribution and sale.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Comparison of Results on a Local Currency Basis and
Results on a Yen Basis</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics segment, the negative effect of the
appreciation of the yen against the U.S.&nbsp;dollar exceeded
the positive effect of the appreciation of the Euro against the
yen. Sales for the fiscal year ended March&nbsp;31, 2005
decreased, on a yen basis, by 1.1&nbsp;percent, but increased on
a local currency basis by approximately 1&nbsp;percent. In terms
of operating performance, there was a deterioration in the
operating loss
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">52

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
compared to the previous fiscal year, but if calculated on a
local currency basis, this operating loss was smaller compared
to the actual results on a yen basis.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales to outside customers by geographic area on a yen basis
decreased in Japan by 10&nbsp;percent, and in the U.S.&nbsp;by
4&nbsp;percent: however, sales in Europe remained relatively
unchanged and sales increased in Other Areas by 9&nbsp;percent.
Sales on a local currency basis for regions outside Japan
increased in the U.S.&nbsp;by 1&nbsp;percent and in Other Areas
by 13&nbsp;percent, but decreased in Europe by 2&nbsp;percent.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Game</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2005 decreased by
50.5&nbsp;billion yen, or 6.5&nbsp;percent, to
729.8&nbsp;billion yen compared with the previous fiscal year.
Operating income decreased by 24.4&nbsp;billion yen, or
36.1&nbsp;percent, to 43.2&nbsp;billion yen compared with the
previous fiscal year, and the operating income margin decreased
from 8.7&nbsp;percent to 5.9&nbsp;percent.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales in the Game segment on a local currency basis decreased
approximately 6&nbsp;percent. In addition, on a local currency
basis, operating income decreased approximately 45&nbsp;percent
compared to the previous fiscal year. By region, although sales
increased in Japan, there was a decrease in sales in the U.S.
and Europe.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Hardware sales declined. Although there was an increase in sales
in Japan primarily associated with the launch of PSP in December
2004, there was a decline in hardware sales in the U.S. and
Europe associated with a decline in unit sales, and strategic
price reductions, of PS2. On the other hand, both unit sales and
overall sales of software increased in Japan, the U.S. and
Europe.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total worldwide production shipments of hardware and software
were as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Cumulative as of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>March&nbsp;31, 2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Million units)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Production Shipments of Hardware*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PlayStation<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    + PS
    one<SUP style="font-size: 85%; vertical-align: text-top">&#153;</SUP></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>102.49</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PlayStation 2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87.47</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PlayStation Portable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.97</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Production Shipments of Software*/**</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PlayStation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>959.00</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PlayStation 2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>222.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>252.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>824.00</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PlayStation Portable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.70</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>*</TD>
    <TD align="left">
    Production shipments of hardware and software are counted upon
    shipment of the products from manufacturing bases. Sales of such
    products are recognized when the products are delivered to
    customers.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>**&nbsp;</TD>
    <TD align="left">
    Including those both from Sony and third parties under Sony
    licenses.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating income decreased compared with the previous fiscal
year. Although there was an increase in software sales, the
decrease in operating income was the result of a decrease in
hardware sales coupled primarily with start up costs for the
PSP. The cost of sales to sales ratio deteriorated as a result
of costs associated with both the launch of the PSP and with the
changeover to the new PS2 model. The ratio of selling, general
and administrative expenses to sales compared to the previous
fiscal year was relatively unchanged.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Pictures</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2005 decreased by
22.7&nbsp;billion yen, or 3.0&nbsp;percent, to
733.7&nbsp;billion yen compared with the previous fiscal year.
Operating income increased by 28.7&nbsp;billion yen, or
81.4&nbsp;percent, to 63.9&nbsp;billion yen and the operating
income margin increased from 4.7&nbsp;percent to
8.7&nbsp;percent. The results in the Pictures segment consist of
the results of SPE, a
<FONT style="white-space: nowrap">U.S.-based</FONT> subsidiary.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">53

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On a U.S.&nbsp;dollar basis, sales for the fiscal year in the
Pictures segment increased approximately 1&nbsp;percent and
operating income increased by approximately 76&nbsp;percent.
Sales increased primarily due to higher worldwide home
entertainment, international television syndication and
worldwide theatrical revenues on films. Worldwide home
entertainment and international television syndication revenues
were higher as a result of the performance of films from the
prior year release slate including <I>50 First Dates, Big Fish
</I>and <I>Bad Boys 2.</I> For theatrical revenues, the success
of the current year film slate, particularly <I>Spider-Man
2</I>, <I>Hitch </I>and <I>The Grudge,</I> more than offset the
impact of releasing fewer films this fiscal year. Sales for the
fiscal year release slate decreased 70&nbsp;million
U.S.&nbsp;dollars as compared to the previous fiscal year.
However, sales in the fiscal year ended March&nbsp;31, 2005 from
the prior year release slate increased 304&nbsp;million
U.S.&nbsp;dollars as compared to sales in the previous fiscal
year from the release slate for the fiscal year ended
March&nbsp;31, 2003. While benefiting from higher theatrical
revenues, total fiscal year release slate revenues were lower
due to the timing of the fiscal year&#146;s film slate&#146;s
release in the home entertainment market. The higher sales from
films were partially offset by a 248&nbsp;million
U.S.&nbsp;dollar decrease in sales resulting from the absence in
the fiscal year ended March&nbsp;31, 2005 of several
transactions in the television business that occurred in the
prior fiscal year. These included syndication sales of <I>King
of Queens </I>and <I>Seinfeld </I>as well as the extension of a
licensing agreement for <I>Wheel of Fortune</I>. Television
sales in the fiscal year ended March&nbsp;31, 2005 benefited
from the highly successful DVD release of <I>Seinfeld</I>.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating income for the segment increased significantly,
resulting in record operating income for the segment, due to the
strong overall performance of the current fiscal year&#146;s
film slate and the home entertainment and international
television syndication carryover performance of the prior fiscal
year&#146;s film slate noted above. Operating loss from the
fiscal year release slate decreased 415&nbsp;million
U.S.&nbsp;dollars and operating income for the prior fiscal
year&#146;s release slate increased 173&nbsp;million
U.S.&nbsp;dollars as compared to the prior fiscal year.
<FONT style="white-space: nowrap"><I>Spider-Man&nbsp;</FONT>2</I>&#146;s
worldwide success contributed substantially to this fiscal
year&#146;s earnings, offset somewhat by the disappointing
theatrical performance of <I>Spanglish</I>. Further improving
operating income was a 38&nbsp;million U.S.&nbsp;dollar decrease
in restructuring charges. Partially offsetting these increases
in operating income was the impact of the absence of the
television transactions noted above, which reduced operating
income by approximately 150&nbsp;million U.S.&nbsp;dollars due
primarily to the factors noted above for revenue.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;31, 2005, unrecognized license fee revenue at
SPE was approximately 1.3&nbsp;billion U.S.&nbsp;dollars. SPE
expects to record this amount in the future having entered into
contracts with television broadcasters to provide those
broadcasters with completed motion picture and television
product. The license fee revenue will be recognized in the
fiscal year that the product is available for broadcast.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Financial Services</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Please note that the revenue and operating income at Sony Life,
Sony&nbsp;Assurance and Sony&nbsp;Bank discussed below differ
from the results that Sony Life, Sony Assurance and Sony Bank
disclose on a Japanese statutory basis.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financial Services revenue for the fiscal year ended
March&nbsp;31, 2005 decreased by 33.0&nbsp;billion&nbsp;yen, or
5.6&nbsp;percent, to 560.6&nbsp;billion&nbsp;yen compared with
the previous fiscal year. Operating income increased by
0.3&nbsp;billion&nbsp;yen, or 0.6&nbsp;percent, to
55.5&nbsp;billion&nbsp;yen and the operating income margin
increased to 9.9&nbsp;percent compared with the 9.3&nbsp;percent
of the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At Sony Life, revenue decreased by 38.7&nbsp;billion&nbsp;yen,
or 7.5&nbsp;percent, to 474.3&nbsp;billion&nbsp;yen compared
with the previous fiscal year. The main reasons for the decrease
in revenue were a change in the method of recognizing insurance
premiums received on certain products, as of the third quarter
beginning October&nbsp;1, 2003, from being recorded as revenues
to being offset against the related provision for future
insurance policy benefits, coupled with a small decrease in
valuation gains in the current fiscal year compared to the
previous fiscal year in which significant valuation gains were
recorded against stock conversion rights from convertible bonds.
Although there was a decrease in insurance premium revenue as a
result of the above mentioned change in accounting method, there
were increases in
<FONT style="white-space: nowrap">insurance-in</FONT>-force at
the end of the fiscal year compared to the end of the previous
fiscal year. Operating income at Sony Life decreased by
2.2&nbsp;billion&nbsp;yen or
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
3.4&nbsp;percent to 61.0&nbsp;billion&nbsp;yen, mainly due to a
decrease in valuation gains against stock conversion rights from
convertible bonds, although this was partially offset by an
increase in revenue from insurance premiums excluding the effect
of the change in revenue recognition method noted above. In
addition, the impact on operating income from the change in
revenue recognition method noted above was slight.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At Sony Assurance, revenue increased due to higher insurance
revenue brought about by an expansion in automobile
<FONT style="white-space: nowrap">insurance-in</FONT>-force.
Operating income increased due to an increase in insurance
revenue, although there was a deterioration in the loss ratio
(the ratio of insurance payouts to premiums).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At Sony Bank, which started operations in June 2001, revenue
rose as there was an increase in interest revenue associated
with an increase in the balance of assets from investing
activities. Although revenue increased, an increase in operating
expenses resulted in a relatively unchanged operating loss
compared with the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At Sony Finance, a leasing and credit financing business
subsidiary in Japan, revenue decreased due to a fall in leasing
revenue. In terms of profitability, the operating loss decreased
due to the recording of a loss, in the previous fiscal year
ended March&nbsp;31, 2004, from the lease of certain fixed
assets to Crosswave Communications Inc (&#147;Crosswave&#148;),
which commenced reorganization proceedings under the Corporate
Reorganization Law of Japan during the same fiscal year.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Condensed Statements of Income Separating Out the
    Financial Services Segment (Unaudited)</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following schedule shows unaudited condensed statements of
income for the Financial Services segment and all other segments
excluding Financial Services as well as condensed consolidated
statements of income. This presentation is not required under
U.S.&nbsp;GAAP, which is used in Sony&#146;s consolidated
financial statements. However, because the Financial Services
segment is different in nature from Sony&#146;s other segments,
Sony believes that a comparative presentation may be useful in
understanding and analyzing Sony&#146;s consolidated financial
statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Transactions between the Financial Services segment and all
other segments excluding Financial Services are eliminated in
the consolidated figures shown below.
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Condensed Statements of Income</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Financial Services</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial service revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>593,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560,557</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial service expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>538,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>505,067</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,490</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other income (expenses), net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,204</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before income taxes</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,694</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,698</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before cumulative effect of an accounting change</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,996</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,713</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,283</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">55

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Sony without Financial Services</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net sales and operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,939,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,632,728</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Costs and expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,896,377</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,575,354</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,374</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other income (expenses), net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,639</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before income taxes</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,013</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(37,043</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before cumulative effect of an accounting change</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,417</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,117</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial service revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>565,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>537,715</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net sales and operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,930,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,621,901</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Costs and expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,397,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,045,697</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,919</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other income (expenses), net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,288</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before income taxes</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157,207</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,344</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before cumulative effect of an accounting change</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,551</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,117</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,713</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,838</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>All Other</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2005, sales within
All Other were comprised mainly of sales from SMEJ; SMEI&#146;s
recorded music business for the four months through
August&nbsp;1, 2004 prior to the establishment of SONY BMG;
SMEI&#146;s music publishing business; SCN, an Internet-related
service business subsidiary operating mainly in Japan; a
retailer of imported general merchandise in Japan; an
<FONT style="white-space: nowrap">in-house</FONT> facilities
management business in Japan; and an advertising agency business
in Japan. Results for the previous fiscal year in All Other
include the consolidated results for SMEI&#146;s recorded music
business for all twelve months, as well as the full year&#146;s
results for SMEI&#146;s publishing business and&nbsp;SMEJ.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales for the fiscal year ended March&nbsp;31, 2005 decreased by
202.9&nbsp;billion&nbsp;yen, or 30.6&nbsp;percent, to
459.9&nbsp;billion&nbsp;yen, compared with the previous fiscal
year. Of total segment sales, 82&nbsp;percent were sales to
outside customers. In terms of profit performance, operating
income of 4.2&nbsp;billion&nbsp;yen was recorded for All Other
compared to the operating loss of 16.2&nbsp;billion&nbsp;yen
recorded in the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year, the significant sales decrease within
All Other reflects the fact that, as noted above, the results
for the twelve months of the previous fiscal year in All Other
incorporated the results for SMEI&#146;s recorded music business.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">56

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales at SMEJ increased 5.7&nbsp;percent compared with the
previous fiscal year mainly due to an increase in album and
single sales. Best-selling albums and singles during the fiscal
year included <I>musiQ </I>by ORANGE RANGE,
<I>SENTIMENTALovers</I> by&nbsp;Ken&nbsp;Hirai and <I>PORNO
GRAFFITTI BEST BLUE&#146;S </I>by Porno Graffitti.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Excluding sales recorded in Sony&#146;s music business, there
was a decrease in sales within All Other. This was principally a
result of a decrease in intersegment sales due to contract
changes at a Japanese subsidiary involved in the advertising
agency business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Regarding profit performance within All Other, operating income
was recorded compared to the operating loss in the previous
fiscal year as a result of significantly increased operating
income at SMEJ due mainly to the higher sales noted above and an
improvement in the cost of sales ratio associated with strong
sales of greatest hits albums, coupled with reduced fixed costs
at network related businesses within Sony Corporation, and a
gain from the sale of a retail and showroom building in Japan.
Operating income was recorded despite the absence in the fiscal
year ended March&nbsp;31, 2005 of a 7.7&nbsp;billion&nbsp;yen
one-time gain recorded at a business operated by a
U.S.&nbsp;subsidiary on the sale of rights related to a portion
of the Sony Credit Card portfolio in the previous fiscal year.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Foreign Exchange Fluctuations and Risk Hedging</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2005, the average
value of the yen was 106.5 yen against the U.S.&nbsp;dollar, and
133.7 yen against the Euro, which was 5.2&nbsp;percent higher
against the U.S.&nbsp;dollar and 1.9&nbsp;percent lower against
the Euro, respectively, compared with the average of the
previous fiscal year. Operating results on a local currency
basis described in &#147;Overview&#148; and &#147;Operating
Performance&#148; show results of sales and operating revenue
and operating income obtained by applying the yen&#146;s monthly
average exchange rate in the previous fiscal year to monthly
local currency-denominated sales, cost of sales, and selling,
general and administrative expenses for the fiscal year ended
March&nbsp;31, 2005, as if the value of the yen had remained
constant.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Pictures segment, Sony translates into yen the
U.S.&nbsp;dollar consolidated results of SPE (a
<FONT style="white-space: nowrap">U.S.-based</FONT> operation
that has worldwide subsidiaries). Therefore, analysis and
discussion of certain portions of the operating results of SPE
are specified as being on &#147;a U.S.&nbsp;dollar basis.&#148;
Results on a local currency basis and results on a
U.S.&nbsp;dollar basis are not on the same basis as Sony&#146;s
consolidated financial statements and do not conform with
U.S.&nbsp;GAAP. In addition, Sony does not believe that these
measures are a substitute for U.S.&nbsp;GAAP measures. However,
Sony believes that local currency basis results provide
additional useful information to investors regarding operating
performance.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In All Other, Sony consolidates the yen-translated results of
SMEI (a <FONT style="white-space: nowrap">U.S.-based</FONT>
operation that aggregates the results of its worldwide
subsidiaries on a U.S.&nbsp;dollar basis) and the results of
SMEJ (a Japan-based operation that aggregates the results of its
operations in yen). In addition, in All Other, results for this
fiscal year only include the results of SMEI&#146;s recorded
music business for the months of April through July 2004, and
the twelve month results for SMEI&#146;s music publishing
business and SMEJ. However, results for the previous fiscal year
in All Other include the consolidated results for SMEI&#146;s
recorded music business for all twelve months, as well as the
full year&#146;s results for SMEI&#146;s publishing business
and&nbsp;SMEJ.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s consolidated results are subject to foreign currency
rate fluctuations mainly derived from the fact that the
countries where manufacturing takes place may be different from
those where such products are sold. In order to reduce the risk
caused by such fluctuations, Sony employs derivatives, including
foreign exchange forward contracts and foreign currency option
contracts, in accordance with a consistent risk management
strategy. Such derivatives are used primarily to mitigate the
effect of foreign currency exchange rate fluctuations on cash
flows generated by anticipated intercompany transactions and
intercompany accounts receivable and payable denominated in
foreign currencies.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Global Treasury Services Plc (&#147;SGTS&#148;) in London
provides integrated treasury services for Sony Corporation and
its subsidiaries. Sony&#146;s policy is that Sony Corporation
and all subsidiaries with foreign exchange exposures should
enter into commitments with SGTS for hedging their exposures.
Sony Corporation and most of its subsidiaries utilize SGTS for
this purpose. The concentration of foreign exchange exposures at
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
SGTS means that, in effect, SGTS hedges the net foreign exchange
exposure of Sony Corporation and its subsidiaries. SGTS in turn
enters into foreign exchange transactions with creditworthy
third-party financial institutions. Most of the transactions are
entered into against projected exposures before the actual
export and import transactions take place. In general, SGTS
hedges the projected exposures on average three months before
the actual transactions take place. However, in certain cases
SGTS partially hedges the projected exposures one month before
the actual transactions take place when business requirements
such as shorter production-sales cycle for certain products
arise. Sony enters into foreign exchange transactions with
financial institutions primarily for hedging purposes. Sony does
not use these derivative financial instruments for trading or
speculative purposes except for certain derivatives in the
Financial Services segment utilized for portfolio investments.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To minimize the adverse effects of foreign exchange fluctuations
on its financial results, particularly in the Electronics
segment, Sony seeks, when appropriate, to localize material and
parts procurement, design, and manufacturing operations in areas
outside of Japan.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the fair value of derivatives designated as cash flow
hedges, including foreign exchange forward contracts and foreign
currency option contracts, are initially recorded in other
comprehensive income and reclassified into earnings when the
hedged transaction affects earnings. Foreign exchange forward
contracts, foreign currency option contracts and other
derivatives that do not qualify as hedges are
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in Other Income and Expenses. The
notional amounts of foreign exchange forward contracts, currency
option contracts purchased and currency option contracts written
as of March&nbsp;31, 2005 were 1,545.8&nbsp;billion&nbsp;yen,
428.3&nbsp;billion&nbsp;yen and 146.5&nbsp;billion&nbsp;yen,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Assets, Liabilities and Stockholders&#146; Equity</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Assets</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total assets on March&nbsp;31, 2006 increased by
1,108.7&nbsp;billion&nbsp;yen, or 11.7&nbsp;percent, to
10,607.8&nbsp;billion&nbsp;yen, compared with the previous
fiscal year-end. Total assets on March&nbsp;31, 2006 in all
segments excluding the Financial Services segment increased by
364.4&nbsp;billion&nbsp;yen, or 6.0&nbsp;percent, to
6,392.3&nbsp;billion&nbsp;yen and total assets on March&nbsp;31,
2006 in the Financial Services segment increased by
680.1&nbsp;billion&nbsp;yen, or 17.5&nbsp;percent, to
4,565.6&nbsp;billion&nbsp;yen, compared with the previous fiscal
year-end. Total assets on March&nbsp;31, 2006 in all segments
excluding the Financial Services segment would have increased by
approximately 2&nbsp;percent compared with the previous fiscal
year-end if the value of the yen had remained the same on
March&nbsp;31, 2006 as it was on March&nbsp;31, 2005.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Current Assets</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Current assets on March&nbsp;31, 2006 increased by
213.4&nbsp;billion&nbsp;yen, or 6.0&nbsp;percent, to
3,769.5&nbsp;billion&nbsp;yen compared with the previous fiscal
<FONT style="white-space: nowrap">year-end.</FONT> Current
assets on March&nbsp;31, 2006 in all segments excluding the
Financial Services segment increased by
363.7&nbsp;billion&nbsp;yen, or 14.0&nbsp;percent, to
2,956.5&nbsp;billion&nbsp;yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cash and cash equivalents on March&nbsp;31, 2006 in all segments
excluding the Financial Services segment increased
65.7&nbsp;billion&nbsp;yen, or 12.6&nbsp;percent, to
585.5&nbsp;billion&nbsp;yen compared with the previous fiscal
year-end. This is primarily a result of an increase in cash
equivalents in association with the issuance of straight bonds
carried out by Sony Corporation and the initial public offering
of&nbsp;SCN.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notes and accounts receivable, trade (net of allowance for
doubtful accounts and sales returns) on March&nbsp;31, 2006
excluding the Financial Services segment increased
21.0&nbsp;billion&nbsp;yen, or 2.2&nbsp;percent, compared with
the previous fiscal year-end to 973.7&nbsp;billion&nbsp;yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories on March&nbsp;31, 2006 increased by
173.4&nbsp;billion&nbsp;yen, or 27.5&nbsp;percent, to
804.7&nbsp;billion&nbsp;yen compared with the previous fiscal
year-end. This increase was primarily a result of both increased
semiconductor inventory, primarily for use in PS3, and LCD
television inventory in the Electronics segment and increased
inventory in the Game segment resulting from the world-wide
full-scale introduction of the PSP platform. The inventory to
cost of sales turnover ratio (based on the average of
inventories at the end of each
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
fiscal year and previous fiscal year) was 1.67&nbsp;months
compared to 1.56&nbsp;months at the end of the previous fiscal
year. Sony considers this level of inventory to be appropriate
in the aggregate.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Current assets on March&nbsp;31, 2006 in the Financial Services
segment decreased by 138.7&nbsp;billion&nbsp;yen, or
14.0&nbsp;percent, to 851.5&nbsp;billion&nbsp;yen, compared with
the previous fiscal year-end. This decrease was primarily
attributable to the fact that cash and cash equivalents were
utilized for investments and advances.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Investments and Advances</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Investments and advances on March&nbsp;31, 2006 increased by
774.2&nbsp;billion&nbsp;yen, or 28.2&nbsp;percent, to
3,519.9&nbsp;billion&nbsp;yen, compared with the previous fiscal
<FONT style="white-space: nowrap">year-end.</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Investments and advances on March&nbsp;31, 2006 in all segments
excluding the Financial Services segment increased by
31.6&nbsp;billion&nbsp;yen, or 7.1&nbsp;percent, to
477.1&nbsp;billion&nbsp;yen. This was primarily a result of an
increase in investments and advances towards affiliated
companies such as MGM&nbsp;Holdings,&nbsp;Inc.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Investments and advances on March&nbsp;31, 2006 in the Financial
Services segment increased by 749.8&nbsp;billion&nbsp;yen, or
31.5&nbsp;percent, to 3,128.7&nbsp;billion yen, compared with
the previous fiscal year-end. This increase was primarily due to
investments mainly in Japanese fixed income securities resulting
from an increase in insurance premiums at Sony Life, and an
increase in mortgage loans at Sony&nbsp;Bank.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also see &#147;Investments&#148; below.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Property, Plant and Equipment (after deduction of
    accumulated depreciation)</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Property, plant and equipment on March&nbsp;31, 2006 increased
by 16.1&nbsp;billion yen, or 1.2&nbsp;percent, to
1,388.5&nbsp;billion&nbsp;yen, compared with the previous fiscal
<FONT style="white-space: nowrap">year-end.</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Property, plant and equipment on March&nbsp;31, 2006 in all
segments excluding the Financial Services segment increased by
17.3&nbsp;billion&nbsp;yen, or 1.3&nbsp;percent, to
1,351.1&nbsp;billion&nbsp;yen, compared with the previous fiscal
<FONT style="white-space: nowrap">year-end.</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Capital expenditures (part of the increase in property, plant
and equipment) for the fiscal year ended March&nbsp;31, 2006
increased by 27.5&nbsp;billion&nbsp;yen, or 7.7&nbsp;percent, to
384.3&nbsp;billion&nbsp;yen compared with the previous fiscal
year. Capital expenditures in the Electronics segment increased
by 17.5&nbsp;billion&nbsp;yen, or 5.6&nbsp;percent, to
328.6&nbsp;billion&nbsp;yen but decreased in the Game segment by
10.4&nbsp;billion&nbsp;yen, or 55.3&nbsp;percent, to
8.4&nbsp;billion&nbsp;yen. Capital expenditures in the
semiconductor business within the Electronics segment, including
capital expenditures related to the Cell microprocessor,
amounted to 140.0&nbsp;billion&nbsp;yen. Capital expenditures in
the Pictures segment increased by 4.3&nbsp;billion&nbsp;yen, or
73.8&nbsp;percent to 10.1&nbsp;billion&nbsp;yen. In All Other,
which includes Sony&#146;s consolidated music business,
4.2&nbsp;billion&nbsp;yen of capital expenditures were recorded,
compared to the 9.0&nbsp;billion&nbsp;yen of capital
expenditures recorded in the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Property, plant and equipment on March&nbsp;31, 2006 in the
Financial Services segment decreased by
1.1&nbsp;billion&nbsp;yen, or 2.9&nbsp;percent, to
37.4&nbsp;billion&nbsp;yen compared with the previous fiscal
year-end. Capital expenditures in the Financial Services segment
increased by 0.6&nbsp;billion&nbsp;yen, or 15.9&nbsp;percent, to
4.5&nbsp;billion&nbsp;yen.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Other Assets</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other assets on March&nbsp;31, 2006 increased by
23.5&nbsp;billion&nbsp;yen, or 1.5&nbsp;percent, to
1,569.4&nbsp;billion&nbsp;yen, compared with the previous fiscal
<FONT style="white-space: nowrap">year-end.</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other assets on March&nbsp;31, 2006 in all segments excluding
the Financial Services segment decreased by
129.6&nbsp;billion&nbsp;yen to 1,059.8&nbsp;billion&nbsp;yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred tax assets on March&nbsp;31, 2006 decreased by
61.6&nbsp;billion&nbsp;yen, or 25.6&nbsp;percent, to
178.8&nbsp;billion&nbsp;yen compared with the previous fiscal
year-end. This was due to the recording of additional valuation
allowances against deferred tax assets by Sony Corporation and
several of Sony&#146;s Japanese domestic and overseas
consolidated subsidiaries, mainly within the Electronics segment
due to continued losses recorded at these businesses.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other assets in the Financial Services segment on March&nbsp;31,
2006 increased by 70.2&nbsp;billion&nbsp;yen, or
14.7&nbsp;percent, to 548.0&nbsp;billion&nbsp;yen compared with
the previous fiscal
<FONT style="white-space: nowrap">year-end.</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Liabilities</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total current and long-term liabilities on March&nbsp;31, 2006
increased by 761.9&nbsp;billion&nbsp;yen, or 11.5&nbsp;percent,
to 7,366.8&nbsp;billion&nbsp;yen compared with the previous
fiscal year-end. Total current and long-term liabilities on
March&nbsp;31, 2006 in all segments excluding the Financial
Services segment increased by 185.5&nbsp;billion&nbsp;yen, or
5.5&nbsp;percent, to 3,551.9&nbsp;billion&nbsp;yen. Total
current and long-term liabilities in the Financial Services
segment on March&nbsp;31, 2006 increased by
512.3&nbsp;billion&nbsp;yen, or 14.8&nbsp;percent, to
3,977.6&nbsp;billion&nbsp;yen, compared with the previous fiscal
year-end. Total current and long-term liabilities on
March&nbsp;31, 2006 in all segments excluding the Financial
Services segment would have increased by approximately
2&nbsp;percent compared with the previous fiscal
<FONT style="white-space: nowrap">year-end</FONT> if the value
of the yen had remained the same on March&nbsp;31, 2006 as it
was on March&nbsp;31, 2005.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Current Liabilities</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Current liabilities on March&nbsp;31, 2006 increased by
390.9&nbsp;billion&nbsp;yen, or 13.9&nbsp;percent, to
3,200.2&nbsp;billion&nbsp;yen compared with the previous fiscal
year-end. Current liabilities on March&nbsp;31, 2006 in all
segments excluding the Financial Services segment increased by
191.8&nbsp;billion&nbsp;yen, or 9.0&nbsp;percent, to
2,329.3&nbsp;billion&nbsp;yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Short-term borrowings and current portion of long-term debt on
March&nbsp;31, 2006 in all segments excluding the Financial
Services segment increased 21.1&nbsp;billion&nbsp;yen, or
10.3&nbsp;percent, to 225.1&nbsp;billion&nbsp;yen compared with
the previous fiscal
<FONT style="white-space: nowrap">year-end.</FONT> This was
principally a result of an increase in the current portion of
<FONT style="white-space: nowrap">long-term</FONT> debt.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notes and accounts payable, trade on March&nbsp;31, 2006 in all
segments excluding the Financial Services segment increased by
3.1&nbsp;billion&nbsp;yen, or 0.4&nbsp;percent, to
804.4&nbsp;billion&nbsp;yen compared with the previous fiscal
year-end.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Current liabilities on March&nbsp;31, 2006 in the Financial
Services segment increased by 209.7&nbsp;billion&nbsp;yen, or
29.6&nbsp;percent, to 918.3&nbsp;billion&nbsp;yen, mainly due to
an increase in short-term borrowing and an increase in deposits
from customers at Sony&nbsp;Bank.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Long-term Liabilities</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Long-term liabilities on March&nbsp;31, 2006 increased by
371.0&nbsp;billion&nbsp;yen, or 9.8&nbsp;percent, to
4,166.6&nbsp;billion&nbsp;yen compared with the previous fiscal
<FONT style="white-space: nowrap">year-end.</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Long-term liabilities on March&nbsp;31, 2006 in all segments
excluding the Financial Services segment decreased by
6.3&nbsp;billion&nbsp;yen, or 0.5&nbsp;percent, to
1,222.6&nbsp;billion&nbsp;yen. In addition, Long-term debt on
March&nbsp;31, 2006 in all segments excluding the Financial
Services segment increased 74.0&nbsp;billion&nbsp;yen, or
11.8&nbsp;percent, to 701.4&nbsp;billion&nbsp;yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Long-term debt increased primarily due to the issuance of
straight bonds in order to redeem bonds maturing during the
fiscal years ending March&nbsp;31, 2006 and March&nbsp;31, 2007.
Long-term liabilities decreased, as accrued pension and
severance costs decreased by 169.3&nbsp;billion&nbsp;yen, or
50.1&nbsp;percent, to 168.8&nbsp;billion&nbsp;yen, principally
as a result of the transfer to the Japanese Government of the
substitutional portion of Sony&#146;s Employee Pension Fund.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Long-term liabilities on March&nbsp;31, 2006 in the Financial
Services segment increased by 302.6&nbsp;billion&nbsp;yen, or
11.0&nbsp;percent, to 3,059.3&nbsp;billion&nbsp;yen. This was
due to an increase in
<FONT style="white-space: nowrap">insurance-in</FONT>-force in
the life insurance business which resulted in an increase in
future insurance policy benefits and other of
280.0&nbsp;billion&nbsp;yen, or 11.4&nbsp;percent, to
2,744.3&nbsp;billion&nbsp;yen.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Total Interest-bearing Debt</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total interest-bearing debt on March&nbsp;31, 2006 increased by
192.0&nbsp;billion yen, or 21.1&nbsp;percent, to
1,101.2&nbsp;billion&nbsp;yen, compared with the previous fiscal
year-end. Total interest-bearing debt on March&nbsp;31, 2006
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">60

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
in all segments excluding the Financial Services segment
increased by 95.1&nbsp;billion&nbsp;yen, or 11.4&nbsp;percent,
to 926.5&nbsp;billion&nbsp;yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Stockholders&#146; Equity</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stockholders&#146; equity on March&nbsp;31, 2006 increased by
333.5&nbsp;billion&nbsp;yen, or 11.6&nbsp;percent, to
3,203.9&nbsp;billion&nbsp;yen compared with the previous fiscal
year-end. Retained earnings increased 96.6&nbsp;billion&nbsp;yen
compared with the previous fiscal year-end, and accumulated
other comprehensive income (net of tax) was
156.4&nbsp;billion&nbsp;yen. This was primarily due to
comprehensive income of 140.5&nbsp;billion&nbsp;yen arising from
foreign currency translation adjustments in current fiscal year
due to the depreciation of the yen against the U.S.&nbsp;dollar,
partially offset by the recording of a change in accumulated
other comprehensive income of 38.1&nbsp;billion&nbsp;yen arising
from unrealized gains on securities in the current fiscal year.
The ratio of stockholders&#146; equity to total assets remained
unchanged at 30.2&nbsp;percent compared to the previous fiscal
year-end.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Condensed Balance Sheets Separating Out the Financial
    Services Segment (Unaudited)</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following schedule shows an unaudited condensed balance
sheet for the Financial Services segment and all other segments
excluding Financial Services as well as the condensed
consolidated balance sheet. This presentation is not required
under U.S.&nbsp;GAAP, which is used in Sony&#146;s consolidated
financial statements. However, because the Financial Services
segment is different in nature from Sony&#146;s other segments,
Sony believes that a comparative presentation may be useful in
understanding and analyzing Sony&#146;s consolidated
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">61

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
financial statements. Transactions between the Financial
Services segment and all other segments excluding Financial
Services are eliminated in the consolidated figures shown below.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Financial Services</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="10" align="left" valign="top">
    <B>ASSETS</B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>259,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117,630</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Marketable securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>456,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>532,895</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes and accounts receivable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,236</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>197,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>183,693</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>990,191</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>851,454</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="10">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investments and advances</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,378,966</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,128,748</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,422</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred insurance acquisition costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>374,805</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>383,156</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103,004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>164,827</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>477,809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>547,983</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,885,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,565,607</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="10">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="10" align="left" valign="top">
    <B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Short-term borrowings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>136,723</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes and accounts payable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,707</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deposits from customers in the banking business</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>546,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>599,952</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,956</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>708,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>918,338</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>128,097</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued pension and severance costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,479</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future insurance policy benefits and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,464,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,744,321</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>142,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>173,354</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,756,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,059,251</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="10">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minority interest in consolidated subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,089</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>414,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>583,929</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,885,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,565,607</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">62

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Sony without Financial Services</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="10" align="left" valign="top">
    <B>ASSETS</B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>519,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>585,468</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Marketable securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,072</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,073</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes and accounts receivable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>952,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>973,675</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,116,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,393,306</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,592,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,956,522</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="10">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Film costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>278,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,372</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investments and advances</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>445,446</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>477,089</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investments in Financial Services, at cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>187,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>187,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,333,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,351,125</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,189,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,059,786</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,027,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,392,294</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="10">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="10" align="left" valign="top">
    <B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Short-term borrowings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>204,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225,082</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes and accounts payable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>801,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>804,394</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,132,201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,299,809</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,137,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,329,285</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>627,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>701,372</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued pension and severance costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>338,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,768</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>263,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>352,457</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,228,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,222,597</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="10">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minority interest in consolidated subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,623</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,643,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,807,789</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,027,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,392,294</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">63

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Consolidated</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="10" align="left" valign="top">
    <B>ASSETS</B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>779,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>703,098</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Marketable securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>460,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>536,968</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes and accounts receivable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,025,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>985,508</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,291,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,543,950</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,556,171</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,769,524</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="10">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Film costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>278,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,372</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investments and advances</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,745,689</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,519,907</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,372,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,388,547</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred insurance acquisition costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>374,805</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>383,156</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,171,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,186,247</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,545,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,569,403</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,499,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,607,753</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="10">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="10" align="left" valign="top">
    <B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Short-term borrowings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>230,266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>336,321</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes and accounts payable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>806,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>813,332</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deposits from customers in the banking business</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>546,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>599,952</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,226,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,450,623</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,809,368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,200,228</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>678,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>764,898</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued pension and severance costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>352,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>182,247</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future insurance policy benefits and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,464,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,744,321</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>299,858</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>475,106</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,795,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,166,572</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="10">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minority interest in consolidated subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,101</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,870,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,203,852</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,499,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,607,753</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Investments</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony regularly evaluates its investment portfolio to identify
other-than-temporary impairments of individual securities.
Factors that are considered by Sony in determining whether an
other-than-temporary decline in value has occurred include: the
length of time and extent to which the market value of the
security has been less than its original cost, the financial
condition, operating results, business plans and estimated
future cash flows of the issuer of the security, other specific
factors affecting the market value, deterioration of
issuer&#146;s credit condition, sovereign risk, and whether or
not Sony is able to retain the investment for a period of time
sufficient to allow for the anticipated recovery in market value.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">64

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In evaluating the factors for available-for-sale securities with
readily determinable fair values, management presumes a decline
in value to be other-than-temporary if the fair value of the
security is 20&nbsp;percent or more below its original cost for
an extended period of time (generally a period of up to six to
twelve months). The presumption of an other-than-temporary
impairment in such cases may be overcome if there is evidence to
support that the decline is temporary in nature due to the
existence of other factors which overcome the duration or
magnitude of the decline. On the other hand, there may be cases
where impairment losses are recognized when the decline in the
fair value of the security is not more than 20&nbsp;percent or
such decline has not existed for an extended period of time, as
a result of considering specific factors which may indicate the
decline in the fair value is other-than-temporary.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The assessment of whether a decline in the value of an
investment is other-than-temporary is often judgmental in nature
and involves certain assumptions and estimates concerning the
expected operating results, business plans and future cash flows
of the issuer of the security. Accordingly, it is possible that
investments in Sony&#146;s portfolio that have had a decline in
value that Sony currently believes to be temporary may be
determined to be other-than-temporary in the future based on
Sony&#146;s evaluation of additional information such as
continued poor operating results, future broad declines in value
of worldwide equity markets and the effect of world wide
interest rate fluctuations. As a result, unrealized losses
recorded for investments may be recognized into income in future
periods.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table contains available for sale and held to
maturity securities, breaking out the unrealized gains and
losses by investment category.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
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    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>March&nbsp;31, 2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Cost</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unrealized gain</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unrealized Loss</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair Market Value</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(Yen in Millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services Business:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Available for sale</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Debt securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Life</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,062,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15,122</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,057,990</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>453,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,561</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>452,650</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Life</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>155,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,137</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>266,971</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(33</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,466</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Held to maturity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Debt securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Life</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(221</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,100</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,714,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,074</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,824,177</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-Financial Services:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Available for sale securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(546</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,409</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Held to maturity securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Non-Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(546</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,413</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,783,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>189,074</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,620</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,947,590</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The most significant portion of these unrealized losses relate
to investments held by Sony Life. Sony Life principally invests
in debt securities in various industries. Most securities were
rated &#147;BBB&#148; or better by Standard&nbsp;&#38;
Poor&#146;s, Moody&#146;s or others. As of March&nbsp;31, 2006,
Sony Life had debt and equity securities which had gross
unrealized losses of 15.1&nbsp;billion yen and 1.1&nbsp;billion
yen, respectively. Of the unrealized loss amounts recorded by
Sony Life, less than 1&nbsp;percent relate to securities being
in an unrealized loss position of greater than 12&nbsp;months.
These unrealized losses related to numerous investments, with no
single investment being in a material unrealized loss position.
In addition, there was no individual security with unrealized
losses that met
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">65

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
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
determined to be temporary in nature. The percentage of
non-investment grade securities held by Sony Life represents
approximately 1&nbsp;percent of Sony Life&#146;s total
investment portfolio, while the percentage of unrealized losses
that relate to those non-investment grade securities was
approximately 2&nbsp;percent of Sony Life&#146;s total
unrealized losses as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For fixed maturity securities with unrecognized losses held by
Sony Life as of March&nbsp;31, 2006 (15.1&nbsp;billion yen),
maturity dates vary as follows:
</DIV>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#149;&nbsp;Within 1&nbsp;year:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">
    5&nbsp;percent</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#149;&nbsp;1 to 5&nbsp;years:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">
    44&nbsp;percent</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#149;&nbsp;5 to 10&nbsp;years:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">
    50&nbsp;percent</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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&nbsp;31, 2006
was 59.6&nbsp;billion yen. A non-public equity investment is
valued at cost as fair value is not readily determinable. If the
value is estimated to have declined and such decline is judged
to be other than temporary, the impairment of the investment is
recognized and the carrying value is reduced to its fair value.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the fiscal years ended March&nbsp;31, 2004, 2005 and 2006,
total impairment losses were 16.7&nbsp;billion yen,
4.2&nbsp;billion yen and 4.0&nbsp;billion yen of which
0.2&nbsp;billion yen, 0.5&nbsp;billion yen and 0.2&nbsp;billion
yen, respectively, were recorded by Sony Life in Financial
Services revenue (refer to &#147;Financial Services&#148; under
<I>&#147;Operating Performance by Business Segment&#148;</I> for
the fiscal years ended March&nbsp;31, 2006 and March&nbsp;31,
2005). Impairment losses other than at Sony Life in each of the
three fiscal years were reflected in non-operating expenses and
primarily relate to the certain strategic investments in
non-financial services businesses. These investments primarily
relate to the certain strategic investments 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 fiscal
years as these companies failed to successfully develop and
market such technology, the operating performance of the
companies was more unfavorable than previously expected and the
decline in fair value of these companies was judged as
other-than-temporary. None of these impairment losses was
individually material to Sony, except for the devaluation of
securities explained in &#147;Other Income and Expenses&#148;
for the fiscal years ended March&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon determination that the value of an investment is impaired,
the value of the investment is written down to its fair value.
For publicly 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
determined through the use of such methodologies as discounted
cash flows, valuation of recent financings and comparable
valuations of similar companies. The impairment losses that were
recorded in each of the three years related to the unique facts
and circumstances of each individual investment and did not
significantly impact other investments.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Life and Sony Bank&#146;s investments constitute the
majority of the investments in the Financial Services segment.
Sony Life and Sony Bank account for approximately
82&nbsp;percent and 16&nbsp;percent of the investments of the
Financial Services segment, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Life&#146;s fundamental investment policy is to build an
investment portfolio capable of ensuring stable mid- to
long-term returns through the efficient investment of funds,
taking into account both expected returns and investment risks
and responding flexibly to changes in financial conditions and
the investment environment, while maintaining a sound asset
base. Moreover, as its fundamental stance towards Asset
Liability Management (&#147;ALM&#148;), a method of managing
interest rate fluctuation risk through the comprehensive
identification of differences in duration and cash flows between
assets and liabilities, Sony Life takes the distinct
characteristics of liability into account in order to control
price fluctuation risks and establish a portfolio that ensures a
certain level of returns. Sony Life adjusts its investing style
depending on changes in the investment environment, in the first
half of the fiscal year ended March&nbsp;31, 2006, when stock
prices in Japan remained low, Sony Life invested mainly in
convertible bonds, while in the second half of the fiscal year
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">66

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
ended March&nbsp;31, 2006, when interest rates in Japan started
to trend upward, Sony Life invested mainly in long-term Japanese
government bonds.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Bank operates using a similar basic investment policy as
Sony Life, taking expected returns and investment risks into
account in order to disperse associated risks, and structuring
its asset portfolio to ensure steady returns from investments.
In addition, Sony Bank is careful to match the duration of its
asset portfolio with the duration of liabilities resulting from
customer deposits, in order to ensure that significant
discrepancies do not occur. Government bonds and corporate bonds
in yen or other currencies constitute a majority of Sony
Bank&#146;s current portfolio. To safeguard its assets Sony Bank
does not invest in equity securities but invests in various
types of government and corporate bonds in many countries,
companies and industries, to diversify associated risks. With
respect to loans, Sony Bank mainly offers housing loans to
individuals and does not have any corporate loan exposure.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Contractual obligations, commitments, and contingent
liabilities</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes Sony&#146;s contractual
obligations and major commitments as of March&nbsp;31, 2006.
References to Note below represents a particular note within the
Notes to Consolidated Financial Statements.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Payments Due by Period</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Less than</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>1 to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>3 to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>After</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>1&nbsp;Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>3&nbsp;Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>5&nbsp;Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>5&nbsp;Year</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Contractual Obligations and Major Commitments:*</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt (Note&nbsp;11)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital lease obligations<BR>
    (Notes&nbsp;8 and 11)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>38,280</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,966</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,642</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,330</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other long-term debt (Note&nbsp;11)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>920,173</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>176,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>306,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>172,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>264,670</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum rental payments required under operating leases
    (Note&nbsp;8)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>195,537</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,932</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase commitments for property, plant and equipment and other
    assets (Note&nbsp;23)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>69,286</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expected cost for the production or purchase of films and
    television programming or certain rights (Note&nbsp;23)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>76,736</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Partnership program contract with F&#233;d&#233;ration
    Internationale de Football Association (Note&nbsp;23)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>34,639</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,354</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
*&nbsp;The total amount of expected future pension payments is
not included in the above table or the total amount of
commitments outstanding at March&nbsp;31, 2006 discussed below
as such amount is not currently determinable. Sony expects to
contribute approximately 33.0&nbsp;billion yen to the Japanese
pension plans and approximately 6.0&nbsp;billion yen to the
foreign pension plans during the fiscal year ending
March&nbsp;31, 2007 (Note&nbsp;14).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
*&nbsp;The total unused portion of the line of credit extended
under loan agreements in the Financial Services segment is not
included in the above table or the amount of commitments
outstanding at March&nbsp;31, 2006 discussed below as it is not
foreseeable how many loans will be executed. The total unused
portion of the line of credit extended under these contracts was
326.7&nbsp;billion yen as of March&nbsp;31, 2006 (Note&nbsp;23).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
*&nbsp;The 5&nbsp;year Revolving Credit Agreement with Sony BMG,
which matures on August&nbsp;5, 2009 and provides for a base
commitment of 300&nbsp;million U.S.&nbsp;dollars and additional
incremental borrowings of up to 150&nbsp;million
U.S.&nbsp;dollars, is not included in the above table or the
amount of commitments outstanding at March&nbsp;31, 2006
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">67

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
discussed below as such amount is not currently determinable.
Sony&#146;s outstanding commitment under this Credit Agreement
as of March&nbsp;31, 2006 was 26.3&nbsp;billion yen
(Note&nbsp;23).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The total amount of commitments outstanding at March&nbsp;31,
2006 was 285.8&nbsp;billion yen (Note&nbsp;23). The commitments
include major purchase obligations as shown above.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the ordinary course of business, Sony makes commitments for
the purchase of property, plant and equipment. As of
March&nbsp;31, 2006, such commitments outstanding were
69.3&nbsp;billion yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A subsidiary in the Pictures segment has committed to fund a
portion of the production cost of completed films and is
responsible for all distribution and marketing expenses relating
to these films under a distribution agreement with a third
party. Further, certain subsidiaries in the Pictures segment
have entered into agreements with creative talent for the
development and production of films and television programming
as well as agreements with third parties to acquire completed
films, or certain rights therein. As of March&nbsp;31, 2006, the
total amount of the expected cost for the production or purchase
of films and television programming or certain rights under the
above commitments was 76.7&nbsp;billion yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation has entered into a partnership program contract
with F&#233;d&#233;ration Internationale de Football Association
(&#147;FIFA&#148;). Through this program Sony Corporation will
be able to exercise various rights as an official sponsor of
FIFA events from 2007 to 2014. As of March&nbsp;31, 2006, Sony
Corporation was committed to make payments under such contract
of 34.6&nbsp;billion yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to fulfill its commitments, Sony will use cash
generated by its operating activities, intra-group loans and
borrowings from subsidiaries with excess funds to subsidiaries
that are short of funds through its finance subsidiaries, and
raise funds from the global capital markets and from banks when
necessary.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes Sony&#146;s contingent
liabilities as of March&nbsp;31, 2006.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total Amounts of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Contingent Liabilities</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Contingent Liabilities: (Note&nbsp;23)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loan guarantees to related parties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,325</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,747</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total contingent liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,072</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Off-Balance Sheet Arrangements</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has several off-balance sheet arrangements to provide
liquidity, capital resources and/or credit risk support.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2005, Sony entered
into new accounts receivable sales programs that provide for the
accelerated receipt of up to 47.5&nbsp;billion yen of eligible
trade accounts receivable of Sony Corporation. Through these
programs, Sony can sell receivables to special purpose entities
owned and operated by banks. These transactions are accounted
for as a sale in accordance with FAS&nbsp;No.&nbsp;140,
&#147;Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities&#148;, because Sony has
relinquished control of the receivables. Accordingly, accounts
receivable sold under these transactions are excluded from
receivables in the accompanying consolidated balance sheet. The
initial sale of these receivables was in March 2005, and Sony
sold a total of 10.0&nbsp;billion yen for the fiscal year ended
March&nbsp;31, 2005. Sony sold a total of 146.2&nbsp;billion yen
of receivables during the fiscal year ended March&nbsp;31, 2006.
Losses from these transactions were insignificant. Although Sony
continues servicing the sold receivables, no servicing
liabilities are recorded because costs regarding collection of
the sold receivables are insignificant.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Through May 2005, Sony had set up an accounts receivable
securitization program in the United States that provided for
the accelerated receipt of up to 500&nbsp;million
U.S.&nbsp;dollars of cash on eligible trade accounts receivable
of Sony&#146;s U.S.&nbsp;electronics subsidiary. Through this
program, Sony could securitize and sell a percentage of an
undivided interest in that pool of receivables to several
multi-seller commercial paper
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">68

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
conduits owned and operated by a bank. These securitization
transactions were accounted for as a sale in accordance with
FAS&nbsp;No.&nbsp;140, because Sony had relinquished control of
the receivables. Accordingly, accounts receivable sold under
these transactions were excluded from receivables in the
accompanying consolidated balance sheet. During the period from
April 2004 to January 2005, Sony sold a total of
80.3&nbsp;billion yen of accounts receivable under this program.
There were no outstanding amounts due at March&nbsp;31, 2005
relating to the existing undivided interests in the pool of
receivables that had been sold. Losses from these transactions
were insignificant. This program was terminated in May 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Refer to Note&nbsp;6 of Notes to Consolidated Financial
Statements for more information on the accounts receivable
securitization.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, a subsidiary in the Picture segment entered into a
production/co-financing agreement with a Variable Interest
Entity (&#147;VIE&#148;) on December&nbsp;30, 2005, to
co-finance 11 films scheduled to be released over the following
15&nbsp;months. The subsidiary is not the primary beneficiary of
the VIE and therefore does not consolidate the results of the
VIE. Under the production/co-financing agreement, the subsidiary
will receive approximately 400&nbsp;million U.S.&nbsp;dollars
over the term of the agreement. The subsidiary is responsible
for the marketing and distribution of the product through its
global distribution channels. The VIE shares in the net profits
of the films after the subsidiary recoups a distribution fee,
its marketing and distribution expenses, and third party
participation and residual costs. As of March&nbsp;31, 2006,
only one co-financed film has been released by the subsidiary.
The subsidiary did not make any equity investment in the VIE nor
does it issue any guarantees with respect to the VIE. In April
2006, the subsidiary entered into a second
production/co-financing agreement with a VIE to co-finance an
additional 11 films scheduled to be released over the following
24&nbsp;months. The subsidiary will receive approximately
330&nbsp;million U.S.&nbsp;dollars over the term of the
agreement. Similar to the first agreement, the subsidiary is
responsible for the marketing and distribution of the product
through its global distribution channels. The VIE shares in the
net profits of the films after the subsidiary recoups a
distribution fee, its marketing and distribution expenses, and
third party participation and residual costs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has, from time to time, entered into various arrangements
with VIEs. In several of the arrangements in which Sony holds a
significant variable interest, Sony is the primary beneficiary
and therefore consolidates these VIEs. These arrangements
include facilities which provide for the leasing of certain
property, the financing of film production, the implementation
of a stock option plan for Japanese employees and the
<FONT style="white-space: nowrap">U.S.-based</FONT> music
publishing business. The assets and liabilities associated with
certain of these arrangements previously qualified for
off-balance sheet treatment. In addition, Sony holds a
significant variable interest in VIEs in which Sony is not the
primary beneficiary and therefore does not consolidate. These
VIEs include the film production/co-financing arrangements noted
above.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Cash Flows</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
(The fiscal year ended March&nbsp;31, 2006 compared with the
fiscal year ended March&nbsp;31, 2005)
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating Activities: During the fiscal year ended
March&nbsp;31, 2006, Sony generated 399.9&nbsp;billion yen of
net cash from operating activities, a decrease of
247.1&nbsp;billion yen, or 38.2&nbsp;percent compared with the
previous fiscal year. Of this total, all segments excluding the
Financial Services segment generated 252.0&nbsp;billion yen of
net cash from operating activities, a decrease of
233.5&nbsp;billion yen, or 48.1&nbsp;percent, compared with the
previous fiscal year, and the Financial Services segment
generated 147.1&nbsp;billion yen of net cash from operating
activities, a decrease of 20.9&nbsp;billion yen, or
12.5&nbsp;percent, compared with the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year, there was a positive impact on operating
cash flow mainly from the effect of the profit contribution from
the Financial Services segment, and after taking account of
depreciation and amortization, as well as the effect of the loss
on sale, disposal or impairment of assets, net. However,
primarily offsetting these contributions was an increase in
inventory, particularly within the Electronics and Game
segments, the effect of the non-cash net gain on the transfer to
the Japanese Government of the substitutional portion of the
employee pension fund, an increase in deferred acquisition costs
within the Financial Services segment and effect of the gain on
change in interest in subsidiaries and equity investees.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">69

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Compared with the previous fiscal year, net cash provided by
operating activities decreased mainly as a result of taking into
account the lower net income recorded during the fiscal year as
compared to the previous fiscal year, and, as noted above, the
increase in inventory during the fiscal year compared with the
previous fiscal year, the effect of the gain on the transfer to
the Japanese Government of the substitutional portion of the
employee pension fund, and of the gain on change in interest in
subsidiaries and equity investees.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Investing Activities: During the fiscal year, Sony used
871.3&nbsp;billion yen of net cash in investing activities, an
decrease of 59.9&nbsp;billion yen, or 6.4&nbsp;percent, compared
with the previous fiscal year. Of this total, all segments
excluding the Financial Services segment used 296.4&nbsp;billion
yen of net cash in investing activities, an decrease of
175.7&nbsp;billion yen, or 37.2&nbsp;percent, compared with the
previous fiscal year, and the Financial Services segment used
563.8&nbsp;billion yen in net cash, an increase of
142.4&nbsp;billion yen, or 33.8&nbsp;percent. During the fiscal
year, purchases of fixed assets (capital expenditures) were
made, primarily due to proactive capital expenditures in
semiconductors mainly within the Electronics segment, mostly
associated with image sensors.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within the Financial Services segment, payments for investments
and advances exceeded proceeds from maturities of marketable
securities, sales of securities investments and collections of
advances primarily as a result of investments in mainly Japanese
fixed income securities resulting from an increase in insurance
premiums at Sony Life, and an increase in the outstanding
balance of mortgage loans at Sony Bank.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Compared with the previous fiscal year, net cash used in
investing activities decreased, due primarily to the fact that
in the previous fiscal year, investments were carried out
principally in relation to S-LCD and in semiconductor
fabrication equipment, particularly investments associated with
the advanced microprocessor Cell On the other hand, within the
Financial Services segment, net cash used in investing
activities increased due to an increase in investments and
advances compared to the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In all segments excluding the Financial Services segment, the
difference between cash generated from operating activities and
cash used in investing activities was a use of cash of
44.4&nbsp;billion yen, as compared to the 13.3&nbsp;billion yen
of cash generated in the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financing Activities: During the fiscal year ended
March&nbsp;31, 2006, 359.9&nbsp;billion yen of net cash was
provided by financing activities. Of the total,
74.6&nbsp;billion yen of net cash was generated from financing
activities in all segments excluding the Financial Services
segment compared to a use of net cash in the previous fiscal
year of 95.4&nbsp;billion yen. This was a result of straight
bonds issued in order to redeem bonds maturing during the fiscal
years ended March&nbsp;31, 2006 and March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Financial Services segment, as a result of an increase in
policyholder accounts at Sony Life, and an increase in deposits
from customers, as well as call loan borrowings carried out at
Sony Bank, 274.9&nbsp;billion yen of net cash was generated by
financing activities.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounting for all these factors and the effect of exchange rate
changes, the total outstanding balance of cash and cash
equivalents at the end of the fiscal year decreased by
76.0&nbsp;billion yen, or 9.8&nbsp;percent, to
703.1&nbsp;billion yen, compared with the end of the previous
fiscal year. The total outstanding balance of cash and cash
equivalents of all segments excluding the Financial Services
segment increased by 65.7&nbsp;billion yen, or
12.6&nbsp;percent, to 585.5&nbsp;billion yen, and for the
Financial Services segment, decreased by 141.7&nbsp;billion, or
54.6&nbsp;percent, to 117.6&nbsp;billion yen, compared with the
end of the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Condensed Statements of Cash Flows Separating Out the
Financial Services Segment (Unaudited)</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following schedule shows unaudited condensed statements of
cash flow for the Financial Services segment and all other
segments excluding the Financial Services segment as well as
condensed consolidated statements of cash flow. These
presentations are not required under U.S.&nbsp;GAAP, which is
used in Sony&#146;s consolidated financial statements. However,
because the Financial Services segment is different in nature
from Sony&#146;s other segments, Sony believes that a
comparative presentation may be useful in understanding and
analyzing Sony&#146;s consolidated financial statements.
Transactions between the Financial Services segment and
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
all other segments excluding the Financial Services segment are
eliminated in the consolidated figures shown below.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><U>Condensed Statements of Cash Flows</U></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Financial Services</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>147,149</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(421,384</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(563,753</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>256,361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>274,863</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase (decrease) in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(141,741</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>256,316</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>259,371</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>259,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117,630</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Sony without Financial Services</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>485,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>251,975</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(472,119</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(296,376</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by (used in) financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(95,373</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74,600</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of exchange rate changes on cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase (decrease) in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(73,163</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,736</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>592,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>519,732</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>519,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>585,468</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>646,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>399,858</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(931,172</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(871,264</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>205,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>359,864</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of exchange rate changes on cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase (decrease) in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(70,108</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(76,005</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>849,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>779,103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>779,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>703,098</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Cash Flows</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
(The fiscal year ended March&nbsp;31, 2005 compared with the
fiscal year ended March&nbsp;31, 2004)
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating Activities: During the fiscal year ended
March&nbsp;31, 2005, Sony generated 647.0&nbsp;billion yen of
net cash from operating activities, a increase of
14.4&nbsp;billion yen, or 2.3&nbsp;percent compared with the
previous fiscal year. Of this total, all segments excluding the
Financial Services segment generated 485.4&nbsp;billion yen of
net cash from operating activities, a increase of
84.3&nbsp;billion yen, or 21.0&nbsp;percent, compared with the
previous
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">71

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
fiscal year, and the Financial Services segment generated
168.1&nbsp;billion yen of net cash from operating activities, a
decrease of 73.5&nbsp;billion yen, or 30.4&nbsp;percent,
compared with the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year, in addition to profit contributions from
the Pictures segment, Financial Services segment, Game segment
and All Other and depreciation expenses, operating cash flow
benefited from an increase in notes and accounts payable, trade,
primarily associated with an increase in sales and procurement
related primarily to the PSP within the Game segment during the
fourth quarter of the fiscal year, a decrease in notes and
accounts receivable, trade, associated with a sales decrease in
the Pictures segment during the fourth quarter and within All
Other associated with the decrease in sales after August 2004,
and a decrease in inventory mainly within the Game and
Electronics segments. Partially offsetting these contributions
were factors including an increase in notes and accounts
receivable, trade primarily within the Game segment. In
addition, in the Financial Services segment, an increase in
future insurance policy benefits and other, due to an increase
in <FONT style="white-space: nowrap">insurance-in</FONT>-force,
contributed to operating cash flow in the Financial Services
segment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Compared with the previous fiscal year, net cash provided by
operating activities increased, due to a decrease in inventory
during the fiscal year compared to an increase in inventory in
the previous fiscal year, and there was a smaller increase in
notes and accounts receivable, trade, compared with the previous
fiscal year associated with the decrease in sales. These factors
were partially offset by factors such as a smaller increase in
notes and accounts payable, trade.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Investing Activities: During the fiscal year, Sony used
931.2&nbsp;billion yen of net cash in investing activities, an
increase of 169.4&nbsp;billion yen, or 22.2&nbsp;percent,
compared with the previous fiscal year. Of this total, all
segments excluding the Financial Services segment used
472.1&nbsp;billion yen of net cash in investing activities, an
increase of 119.6&nbsp;billion yen, or 33.9&nbsp;percent,
compared with the previous fiscal year, and the Financial
Services segment used 421.4&nbsp;billion yen in net cash, an
increase of 19.8&nbsp;billion yen, or 4.9&nbsp;percent.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year, purchases of fixed assets (capital
expenditures) were made, primarily due to proactive capital
expenditures in semiconductors mainly within the Electronics
segment, mostly associated with system LSI including the
advanced microprocessor Cell as well as investments associated
with the establishment of the amorphous TFT LCD panel
manufacturing joint venture S-LCD. Within the Financial Services
segment, payments for investments and advances exceeded proceeds
from maturities of marketable securities, sales of securities
investments and collections of advances primarily as a result of
investments in mainly Japanese fixed income securities resulting
from an increase in insurance premiums at Sony Life, and a
mortgage loan campaign carried out at Sony Bank.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Compared with the previous fiscal year, net cash used in
investing activities increased, due primarily to investments
associated with S-LCD. In all segments excluding the Financial
Services segment, the amount of payments for investments and
advances increased by 124.8&nbsp;billion yen from
33.3&nbsp;billion yen to 158.2&nbsp;billion yen due to the
abovementioned investments at S-LCD. On the other hand, in the
Financial Services segment, net cash used in investing
activities increased due to an increase in proceeds from
investments and advances year on year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In all segments excluding the Financial Services segment, the
difference between cash generated from operating activities and
cash used in investing activities was 13.3&nbsp;billion yen for
the fiscal year, a decrease of 35.3&nbsp;billion yen, or
72.6&nbsp;percent, compared with the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financing Activities: During the fiscal year ended
March&nbsp;31, 2005, 205.2&nbsp;billion yen of net cash was
provided by financing activities. Of the total,
95.4&nbsp;billion yen of net cash was used for financing
activities in all segments excluding the Financial Services
segment as a result of 89.7&nbsp;billion yen being used for the
repayment of long term debt and 23.0&nbsp;billion yen in cash
being used for the payment of dividends.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2005, net cash was used
for financing activities compared to 153.8&nbsp;billion yen of
net cash procured in the previous fiscal year. This change was
due mainly to the issuance of 250.0&nbsp;billion yen in Euro yen
convertible bonds (bonds with stock acquisition rights) within
the previous fiscal year.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">72

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Financial Services segment, as a result of a
294.4&nbsp;billion yen increase in customer deposits due to
factors such as an increase in
<FONT style="white-space: nowrap">insurance-in</FONT>-force at
Sony Life and an increase in deposits from customers at Sony
Bank, 256.4&nbsp;billion yen was procured by financing
activities.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounting for all these factors and the effect of exchange rate
changes, the total outstanding balance of cash and cash
equivalents at the end of the fiscal year decreased by
70.1&nbsp;billion yen, or 8.3&nbsp;percent, to
779.1&nbsp;billion yen, compared with the end of the previous
fiscal year. The total outstanding balance of cash and cash
equivalents of all segments excluding the Financial Services
segment decreased by 73.2&nbsp;billion yen, or
12.3&nbsp;percent, to 519.7&nbsp;billion yen, and for the
Financial Services segment, increased by 3.1&nbsp;billion, or
1.2&nbsp;percent, to 259.4&nbsp;billion yen, compared with the
end of the previous fiscal year.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Condensed Statements of Cash Flows Separating Out the
    Financial Services Segment (Unaudited)</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following schedule shows unaudited condensed statements of
cash flow for the Financial Services segment and all other
segments excluding the Financial Services segment as well as
condensed consolidated statements of cash flow. These
presentations are not required under U.S.&nbsp;GAAP, which is
used in Sony&#146;s consolidated financial statements. However,
because the Financial Services segment is different in nature
from Sony&#146;s other segments, Sony believes that a
comparative presentation may be useful in understanding and
analyzing Sony&#146;s consolidated financial statements.
Transactions between the Financial Services segment and all
other segments excluding the Financial Services segment are
eliminated in the consolidated figures shown below.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><U>Condensed Statements of Cash Flows</U></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Financial Services</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>241,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,078</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(401,550</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(421,384</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,696</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>256,361</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase (decrease) in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18,227</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,055</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>274,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>256,316</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>256,316</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>259,371</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Sony without Financial Services</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>401,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>485,439</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(352,496</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(472,119</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by (used in) financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(95,373</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of exchange rate changes on cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(47,973</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,890</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase (decrease) in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>154,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(73,163</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>438,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>592,895</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>592,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>519,732</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">73

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Consolidated</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>632,635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>646,997</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(761,792</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(931,172</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>313,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>205,177</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of exchange rate changes on cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(47,973</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,890</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase (decrease) in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>136,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(70,108</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>713,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>849,211</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>849,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>779,103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='126'></A>
</DIV>

<!-- link1 "LIQUIDITY AND CAPITAL RESOURCES" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>LIQUIDITY AND CAPITAL RESOURCES</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s financial policy is to secure adequate liquidity, to
ensure the smooth financing of its operations and to maintain
the strength of its balance sheet.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony intends to continue both structural reform and various
investments for future growth. Sony believes that it can
maintain sufficient liquidity and financial flexibility to
satisfy its various capital needs, including funding
requirements that arise from its business strategy, working
capital needs, repayment of existing debt, payment of dividends
and all its other capital needs, through cash flows and cash and
cash equivalents, its ability to procure necessary funds from
the financial and capital markets, its commitment lines with
banks, and other means.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Market Access</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation and SGTS, a finance subsidiary in the U.K.,
procure funds from the financial and capital markets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to meet long-term funding requirements, Sony
Corporation utilizes its access to global equity and bond
markets. During the fiscal year ended March&nbsp;31, 2006, based
on a bond shelf registration filed in Japan, Sony issued three
series of straight bonds totaling 120&nbsp;billion yen in
September 2005 for the purpose of debt redemption, and another
three series of straight bonds totaling 100&nbsp;billion yen in
February 2006 for the redemption bonds maturing during the
fiscal year ending March&nbsp;31, 2007, respectively. As the
total amount of shelf registrations outstanding decreased after
these bond issues, Sony filed a new shelf registration of
300&nbsp;billion yen in April 2006, which is effective for two
years.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to meet the working capital requirements of Sony, SGTS
maintains commercial paper (&#147;CP&#148;) programs and a
medium-term note (&#147;MTN&#148;) program. SGTS maintains CP
programs for the U.S., Euro and Japanese CP markets. As of
March&nbsp;31, 2006, the total amount of these CP programs was
1,321.9&nbsp;billion yen. During the fiscal year ended
March&nbsp;31, 2006, the largest month-end outstanding balance
of CP was 111.4&nbsp;billion yen in September 2005. There was no
outstanding balance of CP as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SGTS maintains a Euro MTN program of whose amount as of
March&nbsp;31, 2006 was 587.1&nbsp;billion yen. There was no
outstanding balance as of March&nbsp;31, 2006. Sony Capital
Corporation (&#147;SCC&#148;), a Sony finance subsidiary in the
U.S., had an outstanding MTN balance of approximately
58.7&nbsp;billion yen as of March&nbsp;31, 2006. However, Sony
does not intend to utilize SCC&#146;s program for future
financing requirements as SCC&#146;s financing function was
integrated into that of SGTS.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Liquidity Management</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s working capital needs grow significantly in the
third quarter (from October to December) as a result of the
general seasonality to Sony&#146;s business. Sony&#146;s basic
liquidity management policy is to secure sufficient liquidity
throughout the relevant fiscal year, covering such factors as
short-term cash flow volatility
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">74

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
mentioned above, repayments for debts whose due date fall within
a year, and possible downward earnings risk due to changes in
the business environment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony defines its liquidity sources as the amount of cash, cash
equivalents (&#147;cash balance&#148;), and committed lines of
credit contracted with financial institutions. Regarding its
cash balance, Sony&#146;s policy is to maintain more than a
certain level of cash balance to absorb any working capital
needs daily and monthly. The balance of cash and marketable
securities on March&nbsp;31, 2006, was 589.5&nbsp;billion yen. A
short-term shortage in the cash balance is financed by the
issuance of CP. However, Sony controls the outstanding CP amount
through internal limits as part of its short-term debt risk
management strategy. In the fiscal year ended March&nbsp;31,
2006, there was no outstanding CP amount.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its additional liquidity sources, Sony has a total of
683.4&nbsp;billion yen in committed lines of credit with various
financial institutions, of which the unused amount was
676.4&nbsp;billion yen as of March&nbsp;31, 2006. Major
committed lines of credit include a total of 502.6&nbsp;billion
yen of Global Commitment Facilities contracted with a syndicate
of global banks, and a 150&nbsp;billion yen of committed line of
credit contracted with Japanese financial institutions. During
the fiscal year ended March&nbsp;31, 2006, Sony reorganized the
total amount and composition of terms to maturity of both
facilities. With regards to the Global Commitment Facilities, as
of March&nbsp;31, 2005, Sony had two facilities consisting of a
<FONT style="white-space: nowrap">5-year</FONT> contract (amount
as of March&nbsp;31, 2005 is 459.4&nbsp;billion yen, maturity
March 2009) and a
<FONT style="white-space: nowrap">364-day</FONT> contract
(amount as of March&nbsp;31, 2005 is 114.9&nbsp;billion yen)
totaling 574.3&nbsp;billion yen. During the fiscal year ended
March&nbsp;31, 2006, the
<FONT style="white-space: nowrap">364-day</FONT> portion was
terminated. With regards to the committed line with Japanese
financial institutions, as of March&nbsp;31, 2005, Sony had two
facilities consisting of a 100&nbsp;billion yen
<FONT style="white-space: nowrap">3-year</FONT> contract and a
150&nbsp;billion yen
<FONT style="white-space: nowrap">364-day</FONT> contract,
totaling 250&nbsp;billion yen. During the fiscal year ended
March&nbsp;31, 2006, upon expiry of the
<FONT style="white-space: nowrap">3-year</FONT> contract, Sony
newly entered into a 150&nbsp;billion yen
<FONT style="white-space: nowrap">3-year</FONT> contract
(maturing in July 2008) while the
<FONT style="white-space: nowrap">364-day</FONT> contract was
terminated. As a result, although the total amount of the
facilities has been reduced by 185.3&nbsp;billion yen compared
with the fiscal year ended March&nbsp;31, 2005, Sony believes it
maintains long-term secured and sufficient liquidity. Sony uses
these lines for general corporate purposes, including the
support of CP programs and for emergency purposes. There are no
financial covenants in any of Sony&#146;s material financial
agreements that would cause an acceleration of the obligation in
the event of a downgrade in Sony&#146;s credit ratings. However,
a downgrade in Sony&#146;s credit ratings could increase the
cost of borrowings. There are no restrictions on how Sony&#146;s
borrowings can be used except that some borrowings may not be
used to acquire securities listed on a U.S.&nbsp;exchange or
traded <FONT style="white-space: nowrap">over-the</FONT>-counter
in U.S., and use of such borrowings must comply with the rules
and regulations issued by authorities such as the Board of
Governors of the Federal Reserve Board.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Ratings</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony considers it to be one of management&#146;s top priorities
to maintain a stable and appropriate credit rating in order to
ensure financial flexibility for liquidity and capital
management, and to continue to maintain adequate access to
sufficient funding resources in the financial and capital
markets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to facilitate access to global capital markets, Sony
obtains credit ratings from two rating agencies, Moody&#146;s
Investors Service (&#147;Moody&#146;s&#148;) and Standard and
Poor&#146;s Rating Services (&#147;S&#38;P&#148;). In addition,
Sony maintains a rating from Rating and Investment Information,
Inc. (&#147;R&#38;I&#148;), a rating agency in Japan, for access
to the Japanese capital market.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s current debt ratings from each agency are noted
below:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Moody&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>S&#38;P</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>R&#38;I</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    A2 (Outlook: Stable)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    A- Outlook: Stable)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    AA- (Outlook: Stable)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Short-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    P-1</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    A-2</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    a-1+</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
S&#38;P downgraded Sony&#146;s long-term debt rating from A to
A- and short-term debt rating from A-1 to A-2 in October 2005,
R&#38;I downgraded Sony&#146;s long-term debt rating from AA to
AA- in November 2005 and Moody&#146;s downgraded Sony&#146;s
long-term debt rating from A1 to A2 in December 2005,
respectively. Sony&#146;s short-term debt rating from
Moody&#146;s and R&#38;I have been unaffected. These downgrades
of debt ratings
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">75
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
reflected rating agencies&#146; concern mainly of low
profitability in the Electronics segment and the low level of
Sony&#146;s cash flows. The outlook after the downgrades of
long-term debt ratings from the three agencies is stable.
Despite these downgrades of debt ratings, Sony believes its
access to the global capital markets and ability to issue CP for
its working capital needs have not been restricted.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Cash Management</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony is centralizing and working to make more efficient its
global cash management activities through SGTS. The excess or
shortage of cash at most of Sony&#146;s subsidiaries is invested
or funded by SGTS after having been netted out, although Sony
recognizes that fund transfers are limited in certain countries
and geographical areas due to restrictions on capital
transactions. In order to pursue more efficient cash management,
Sony manages uneven cash distribution among its subsidiaries
directly or indirectly through SGTS so that Sony can reduce
unnecessary cash and cash equivalents as well as borrowings as
much as possible.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The above description covers liquidity and capital resources for
consolidated Sony excluding the Financial Services segment which
secure liquidity on their own.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Financial Services segment</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Financial Services segment, the management of SFH, Sony
Life, Sony Assurance and Sony Bank recognize the importance of
securing sufficient liquidity to cover the payment obligations
that they take on as a result of their ordinary course of
business, and these companies abide by the regulations imposed
by regulatory authorities and establish and operate under
company guidelines that comply with these regulations. Their
purpose in doing so is to maintain sufficient cash and cash
equivalents and secure sufficient means to pay their
obligations. For instance, Sony Life&#146;s cash inflows come
mainly from policyholders&#146; insurance premiums and Sony Life
keeps sufficient liquidity in the form of investments primarily
in various securities. Sony Bank, on the other hand, uses its
cash inflows, which come mainly from customers&#146; deposits in
local or foreign currencies, in order to offer mortgage loans to
individuals or to make bond investments, and establish a
necessary level of liquidity for the smooth settlement of
transactions.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Life currently obtains ratings from five rating agencies:
A+ by S&#38;P for long-term counterparty and insurer financial
strength rating, Aa3 by Moody&#146;s for insurance financial
strength rating, A+ by AM&nbsp;Best Company Inc. for financial
strength rating, and AA by R&#38;I for insurance claims paying
ability and AA by the Japan Credit Rating Agency Ltd for ability
to pay insurance claims. Sony Bank obtained an A-/ A-2 rating
from S&#38;P for its long-term/short-term local/foreign currency
issuer ratings.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='127'></A>
</DIV>

<!-- link1 "RESEARCH AND DEVELOPMENT" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>RESEARCH AND DEVELOPMENT</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In its mid-term corporate strategy announced on
September&nbsp;22, 2005, Sony stressed that the most pressing
issue confronting the company today is the revitalization of its
electronics business. The strengthening of the competitiveness
of Sony&#146;s technologies and its products is an important
element of both the revitalization of the Electronics business
and the company&#146;s growth strategy, and Sony considers
research and development activities that support this
competitiveness will remain pivotal to its mid- to long term
strategy.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and Development is focused in three key domains: a
common development platform technology for home and mobile
electronics; semiconductor and device technology essential for
product differentiation and for creating added-value to
products; and software technology.
</DIV>

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Reflecting Sony&#146;s mid-term corporate strategy, in October
2005, the company established the Display Device Development
Group, to accelerate the development of organic light-emitting
diode (OLED)&nbsp;displays, and the Technology Development
Group, to strengthen software development.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Moreover, Sony continues to strengthen the fundamental research
and development structure at three of its corporate
laboratories, Information Technology Laboratories (communication
and security technologies), Material Laboratories (material and
device technologies) and A3&nbsp;Laboratories (signal processing
technologies).
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development costs for the fiscal year ended
March&nbsp;31, 2006 increased 29.8&nbsp;billion&nbsp;yen, or
5.9&nbsp;percent, to 531.8&nbsp;billion&nbsp;yen, compared with
the previous fiscal year. The ratio of research and development
costs to net sales (which excludes Financial service revenue and
other operating revenue) increased from 7.6&nbsp;percent to
7.9&nbsp;percent. The bulk of research and development costs
were incurred in the Electronics and Game segments. Expenses in
the Electronics segment decreased 15.2&nbsp;billion&nbsp;yen, or
3.5&nbsp;percent, to 418.1&nbsp;billion&nbsp;yen, whereas
expenses in the Game segment increased
40.2&nbsp;billion&nbsp;yen, or 58.7&nbsp;percent, to
108.7&nbsp;billion&nbsp;yen. In the Electronics segment,
approximately 64&nbsp;percent of expenses were for the
development of new product prototypes while the remaining
36&nbsp;percent were for the development of mid- to long-term
new technologies in such areas as semiconductors,
communications, displays and next generation optical discs. In
addition, within the Game segment, there was an increase
primarily of hardware-related research and development costs
associated with&nbsp;PS3.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development costs for the fiscal year ended
March&nbsp;31, 2005 decreased 12.5&nbsp;billion&nbsp;yen, or
2.4&nbsp;percent, to 502.0&nbsp;billion&nbsp;yen, compared with
the previous fiscal year. The ratio of research and development
costs to net sales increased from 7.5&nbsp;percent to
7.6&nbsp;percent. The bulk of research and development costs
were incurred in the Electronics and Game segments. Expenses in
the Electronics segment increased 2.4&nbsp;billion&nbsp;yen, or
0.6&nbsp;percent, to 433.3&nbsp;billion&nbsp;yen, and expenses
in the Game segment decreased 14.9&nbsp;billion&nbsp;yen, or
17.9&nbsp;percent, to 68.5&nbsp;billion&nbsp;yen. In the
Electronics segment, approximately 62&nbsp;percent of expenses
were for the development of new product prototypes while the
remaining 38&nbsp;percent were for the development of mid- to
long-term new technologies in such areas as semiconductors,
communications, displays and next generation optical discs.
There was an increase in research and development costs related
to semiconductor process technology associated with the transfer
of Sony Computer Entertainment&#146;s semiconductor
manufacturing operations from the Game segment to the
Electronics segment. However, the stringent selection of
research and development activities resulted in a small increase
in research and development expenses within the Electronics
segment. Research and development expenses in the Game segment
remained high due to the research and development associated
with PSP and&nbsp;PS3.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development costs for the fiscal year ended
March&nbsp;31, 2004 were 514.5&nbsp;billion&nbsp;yen. The bulk
of research and development costs were incurred in the
Electronics and Game segments; expenses in the Electronics
segment were 431.0&nbsp;billion&nbsp;yen, and expenses in the
Game segment were 83.4&nbsp;billion&nbsp;yen. In the Electronics
segment, approximately 62&nbsp;percent of expenses were for the
development of new product prototypes while the remaining
approximately 38&nbsp;percent were for the development of mid-
to long-term new technologies in such areas as semiconductors,
communications, displays and next generation optical discs.
</DIV>

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<A name='128'></A>
</DIV>

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<B>TREND INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This section contains forward-looking statements about the
possible future performance of Sony and should be read in light
of the cautionary statement on that subject, which appears on
the inside front cover page and which applies to this entire
document.
</DIV>

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<A name='129'></A>
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Issues Facing Sony and Management&#146;s Response to those
    Issues</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Competition in many of Sony&#146;s business segments continues
to intensify and price erosion, especially in the Electronics
segment, remains persistent. Competition has intensified due to
the penetration of broadband, which has led to an augmentation
of network infrastructure, making it easier for companies in
other sectors to enter the markets in which Sony competes.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In response to these challenges, Sony has been undertaking
initiatives to improve its competitiveness and strengthen the
quality of its management, such as a reduction in the number of
business categories and the number of models, a rationalization
of manufacturing sites and the creation of a more efficient
administrative structure, as well as the sale of non-core assets
(See &#147;Restructuring&#148; in &#147;Item&nbsp;5.
<I>Operating and Financial Review and Prospects</I>&#148; for
more detailed information about restructuring). This plan,
developed in consultation with Sony&#146;s stakeholders both
inside and outside the company, moved to strengthen Sony&#146;s
competitiveness in three core sectors&nbsp;&#151; Electronics,
Game and Entertainment&nbsp;&#151; through a balanced mix of
restructuring and growth initiatives combined with a new
organizational structure. In particular, it is the
revitalization of
</DIV>

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Electronics that management regards as the most pressing issue
confronting Sony today. As well as reorganizing its Electronics
business to place centralized decision-making authority over key
areas under the Electronics CEO, Sony is implementing
reorganization initiatives to strengthen horizontal coordination
in the key areas of product planning, technology, procurement,
manufacturing, and sales and marketing. For Sony&#146;s growth
strategy in Electronics, resources will be focused on the
development and commercialization of high-definition products,
mobile products and advanced semiconductors and other key
devices that can further differentiate these products, targeting
enhanced competitiveness and improved profitability.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to this cost-cutting and investment for growth, each
of Sony&#146;s business segments grappled with issues specific
to that segment. Below is a description of the issues management
believes each segment continues to face and an explanation as to
how each segment is approaching those issues.
</DIV>

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    <TD></TD>
    <TD>
    <I>Electronics</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although the Electronics segment continues to hold a very strong
position in the worldwide consumer audio visual products market,
that position has become increasingly threatened as a result of
the entrance of new manufacturers and distributors. These new
entrants are threatening Sony&#146;s position due to the
industry shift from analog to digital technology. In the analog
era, complicated functionality of electronics products was made
possible through the combination of several complex parts, and
Sony held a competitive advantage in the design and manufacture
of those parts as a result of its accumulated expertise. In the
digital era, however, complicated functionality has become
concentrated on semiconductors and other key digital devices.
Since these semiconductors and key devices are able to be mass
produced, they have become readily available to new market
entrants, and the functionality that once commanded a high
premium has become more affordable. This has led to intense
price erosion in the consumer audio visual products market. To
respond to these challenges, Sony is striving to keep pace with
price erosion by reducing its manufacturing and other costs. It
is seeking to maintain the premium pricing it enjoys on many of
its <FONT style="white-space: nowrap">end-user</FONT> products
by adding functionality to those products and developing new
applications and ways of use that appeal to the consumer. In
addition, it is taking steps to increase its competitive edge by
developing high value-added semiconductors and other digital key
devices <FONT style="white-space: nowrap">in-house.</FONT> By
enhancing the <FONT style="white-space: nowrap">in-house</FONT>
production of key devices, Sony aims to incorporate added-value
into these key devices.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the area of semiconductors, in the fiscal years ended
March&nbsp;31, 2005 and 2006, Sony carried out
150&nbsp;billion&nbsp;yen and 140&nbsp;billion&nbsp;yen,
respectively, of capital expenditure mainly on system large
scale integrations (&#147;LSI&#148;) and CCDs. These totals also
include Sony&#146;s investment in semiconductor fabrication
equipment built at the 65&nbsp;nanometer process technology
level. Chips that will be manufactured using this equipment will
be some of the most highly advanced on the market, and will
include system LSI, in particular the Cell microprocessor, for
anticipated use in the next generation computer entertainment
system, PS3, as well as digital consumer electronics products
for the broadband era. Over the last five years, Sony, Sony
Computer Entertainment, IBM&nbsp;Corporation (&#147;IBM&#148;)
and Toshiba Corporation (&#147;Toshiba&#148;) have carried out
joint development focused on 90 and 65&nbsp;nanometer process
technology for utilization in the design and manufacturing of
the Cell microprocessor. Moreover, in 2006 Sony Corporation,
IBM, and Toshiba concluded a new joint development agreement to
begin a new <FONT style="white-space: nowrap">5-year</FONT>
alliance for the research and development of advanced
semiconductor technology.
</DIV>

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In the area of other key devices,
<FONT style="white-space: nowrap">S-LCD,</FONT> Sony&#146;s
joint venture with Samsung Electronics Co., Ltd. based in South
Korea, started production of 7th&nbsp;generation amorphous
TFT&nbsp;LCD panel (glass panel size: approximately
1,870mm&nbsp;&#215;&nbsp;2,200mm) in April 2005 and since
October 2005 has been producing 60,000 sheets a month. In July
2006, <FONT style="white-space: nowrap">S-LCD</FONT> increased
its production capacity to 75,000&nbsp;panels a month, and
further investment has been committed that will raise its
production capacity to 90,000&nbsp;panels at the start of
calendar 2007. The total amount of these new investments, to be
self-financed by <FONT style="white-space: nowrap">S-LCD,</FONT>
is approximately 10&nbsp;billion&nbsp;yen and approximately
28&nbsp;billion&nbsp;yen, respectively.
</DIV>

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In July 2006, Sony and Samsung signed the final contract
regarding the manufacturing of 8th&nbsp;generation
TFT&nbsp;LCD&nbsp;panels (glass panel size: approximately
2,200mm&nbsp;&#215;&nbsp;2,500mm) at the
<FONT style="white-space: nowrap">S-LCD</FONT> joint venture.
The total amount of the investment is expected to be
approximately 1.9&nbsp;billion U.S.&nbsp;dollars (approximately
</DIV>

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50&nbsp;percent of which will be borne by Sony), targeting a
production capacity of 50,000 panels a month from
fall,&nbsp;2007.
</DIV>

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    <TD>
    <I>Game</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Game segment, although it is anticipated that the size of
the PS2 business, six years into its business cycle after its
domestic launch in Japan in March 2000, will begin to contract,
SCE will endeavor to maintain a continued high share of the
global game console market for both PS2 hardware and software.
Furthermore, through the addition of software and hardware
system upgrades and new peripherals, which will work in tandem
with PSP software to propose new ways of enjoying the handheld,
SCE will promote further penetration of the platform. In
addition, the new PS3 computer entertainment platform is
scheduled to launch in November 2006. Through the provision of
an appealing software
<FONT style="white-space: nowrap">line-up,</FONT> SCE will
promote the launch of the PS3 platform (See &#147;Game&#148; in
<I>&#147;Operating Results for the Fiscal Year Ended
March&nbsp;31, 2006 compared with the Fiscal Year Ended
March&nbsp;31, 2005&#148;</I> within &#147;Item&nbsp;5.
<I>Operating and Financial Review and Prospects</I>&#148; for
more detailed information regarding the impact of the PS3
launch).
</DIV>

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    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Pictures</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Pictures segment, Sony faces intense competition, rising
advertising and promotion expenses and a growing trend toward
digital piracy. In addition, the DVD format is nine years old
and is showing signs of maturation. To meet these challenges,
Sony is working to distribute a diversified portfolio of motion
pictures with broad worldwide appeal on existing and new home
entertainment formats, including Blu-ray, and on other emerging
platforms, including digital download.
</DIV>

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    <TD></TD>
    <TD>
    <I>Financial Services</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Financial Services segment, the value of assets
accumulated by the businesses in the segment has grown
continuously over the past several years, resulting in a large
portion (approximately 43&nbsp;percent) of Sony&#146;s total
assets being accounted for by the Financial Services segment. To
strengthen asset management and risk management in parallel with
this growing asset value, enhance disclosure of business
details, and offer customers integrated financial services
tailored to their individual needs, in April 2004 Sony
established Sony Financial Holdings Inc., a holding company
overseeing Sony Life, Sony Assurance and Sony Bank, with the aim
of both increasing the synergies between these businesses and
targeting an initial public offering at some point in the fiscal
year ending March&nbsp;31, 2008 or subsequent fiscal year
thereafter, as deemed appropriate by Sony after taking into
account equity market conditions.
</DIV>

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<A name='130'></A>
</DIV>

<!-- link1 "CRITICAL ACCOUNTING POLICIES" -->

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<B>CRITICAL ACCOUNTING POLICIES</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preparation of the consolidated financial statements in
conformity with U.S.&nbsp;GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. On an ongoing basis, Sony evaluates its estimates which
are based on historical experience and on various other
assumptions that are believed to be reasonable under the
circumstances. The results of these evaluations form the basis
for making judgments about the carrying values of assets and
liabilities and the reported amounts of expenses that are not
readily apparent from other sources. Actual results may differ
from these estimates under different assumptions. Sony considers
an accounting policy to be critical if it is important to its
financial condition and results, and requires significant
judgments and estimates on the part of management in its
application. Sony believes that the following represent the
critical accounting policies of the company.
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</TR>

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    <TD></TD>
    <TD>
    <B><I>Investments</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s investments are comprised of debt and equity
securities accounted for under both the cost and equity method
of accounting. If it has been determined that an investment has
sustained an other-than-temporary decline in its value, the
investment is written down to its fair value by a charge to
earnings. Sony
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
regularly evaluates its investment portfolio to identify
other-than-temporary impairments of individual securities.
Factors that are considered by Sony in determining whether an
other-than-temporary decline in value has occurred include: the
length of time and extent to which the market value of the
security has been less than its original cost, the financial
condition, operating results, business plans and estimated
future cash flows of the issuer of the security, other specific
factors affecting the market value, deterioration of credit
condition of the issuers, sovereign risk, and ability to retain
the investment for a period of time sufficient to allow for the
anticipated recovery in market value.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In evaluating the factors for available-for-sale securities
whose fair values are readily determinable, management presumes
a decline in value to be other-than-temporary if the fair value
of the security is 20&nbsp;percent or more below its original
cost for an extended period of time (generally a period of up to
six to twelve months). This criteria is employed as a threshold
to identify securities which may have a decline in value that is
other-than-temporary. The presumption of an other-than-temporary
impairment in such cases may be overcome if there is evidence to
support that the decline is temporary in nature due to the
existence of other factors which overcome the duration or
magnitude of the decline. On the other hand, there may be cases
where impairment losses are recognized when the decline in the
fair value of the security is not more than 20&nbsp;percent or
such decline has not existed for an extended period of time, as
a result of considering specific factors which may indicate the
decline in the fair value is other-than-temporary.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The assessment of whether a decline in the value of an
investment is other-than-temporary often requires management
judgment based on evaluation of relevant factors. Those factors
include business plans and future cash flows of the issuer of
the security, the regulatory, economic or technological
environment of the investee, and the general market condition of
either the geographic area or the industry in which the investee
operates. Accordingly, it is possible that investments in
Sony&#146;s portfolio that have had a decline in value that are
currently believed to be temporary may determine to be
other-than-temporary in the future based on Sony&#146;s
evaluation of additional information such as continued poor
operating results, future broad declines in value of worldwide
equity markets or circumstances in market interest rate
fluctuations. As a result, unrealized losses recorded for
investments may be recognized into income in future periods.
</DIV>

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    <TD width="99%"></TD>
</TR>

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    <TD></TD>
    <TD>
    <B><I>Impairment of long-lived assets</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony reviews the carrying value of its long-lived assets held
and used and long-lived assets to be disposed of whenever events
or changes in circumstances indicate that the carrying value of
the assets may not be recoverable. This review is performed
using estimates of future cash flows by product category
(e.g.&nbsp;CRT&nbsp;TV&nbsp;displays) or entity
(e.g.&nbsp;semiconductor manufacturing division in
the&nbsp;U.S.). If the carrying value of the asset is considered
impaired, an impairment charge is recorded for the amount by
which the carrying value of the asset exceeds its fair value.
Fair value is determined using the present value of estimated
net cash flows or comparable market values.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Management believes that the estimates of future cash flows and
fair value are reasonable; however, changes in estimates
resulting in lower future cash flows and fair value due to
unforeseen changes in business assumptions could negatively
affect the valuations of those long-lived assets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2004, Sony recorded
impairment charges for long-lived assets totaling
16.1&nbsp;billion&nbsp;yen. It included
5.3&nbsp;billion&nbsp;yen for the impairment of long-lived
assets such as semiconductor and CRT&nbsp;TV&nbsp;display
manufacturing equipment to be abandoned or sold in connection
with certain restructuring activities in the Electronics
segment. It also included 3.0&nbsp;billion&nbsp;yen for the
impairment of long-lived assets in the Music business such as a
certain CD&nbsp;manufacturing facility to be abandoned or sold
and a recording studio and equipment to be held and used in
Japan. Fair value of these assets was determined using estimated
future discounted cash flows which were based on the best
information available.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2005, Sony recorded
impairment charges for long-lived assets totaling
19.2&nbsp;billion&nbsp;yen. It included
7.5&nbsp;billion&nbsp;yen for the impairment of long-lived
assets of CRT&nbsp;TV&nbsp;display manufacturing facilities to
be held and used in Europe in connection with certain
restructuring activities in the Electronics segment. Fair value
of these assets was determined using estimated future discounted
cash flows which were based on the best information available.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2006, Sony recorded
impairment charges for long-lived assets totaling
59.8&nbsp;billion&nbsp;yen. It included
25.5&nbsp;billion&nbsp;yen for the impairment of long-lived
assets of CRT&nbsp;TV&nbsp;display manufacturing facilities to
be held and used in the U.S. in connection with certain
restructuring activities in the Electronics segment. Fair value
of these assets was determined using estimated future discounted
cash flows which were based on the best information available.
The impairment charge also included 8.5&nbsp;billion&nbsp;yen
for the impairment of long-lived assets of the Metreon, an
entertainment complex to be held for sale in the U.S. in
connection with restructuring activities of
<FONT style="white-space: nowrap">non-core</FONT> businesses in
All Other. The impairment charge was based on the negotiated
sales price of the complex.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Goodwill and other intangible assets</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Goodwill and other intangible assets that are determined to have
an indefinite life are not amortized, but are tested for
impairment in accordance with FAS No.&nbsp;142 during the fourth
quarter of fiscal year on an annual basis and between annual
tests if an event occurs or circumstances change that would more
likely than not reduce the fair value of these assets below
their carrying amount. Such an event would include unfavorable
variances from established business plans, significant changes
in forecasted results or volatility inherent to external markets
and industries, which are periodically reviewed by management.
Specifically, goodwill impairment is determined using a two-step
process. The first step of the goodwill impairment test is used
to identify potential impairment by comparing the fair value of
a reporting unit (Sony&#146;s operating segments or one level
below the operating segments) with its carrying amount,
including goodwill. If the fair value of a reporting unit
exceeds its carrying amount, goodwill of the reporting unit is
considered not impaired and the second step of the impairment
test is unnecessary. If the carrying amount of a reporting unit
exceeds its fair value, the second step of the goodwill
impairment test is performed to measure the amount of impairment
loss, if any. The second step of the goodwill impairment test
compares the implied fair value of the reporting unit&#146;s
goodwill with the carrying amount of that goodwill. If the
carrying amount of the reporting unit&#146;s goodwill exceeds
the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to that excess. The implied fair
value of goodwill is determined in the same manner as the amount
of goodwill recognized in a business combination. That is, the
fair value of the reporting unit is allocated to all of the
assets and liabilities of that unit (including any unrecognized
intangible assets) as if the reporting unit had been acquired in
a business combination and the fair value of the reporting unit
was the purchase price paid to acquire the reporting unit. Other
intangible assets are tested for impairment by comparing the
fair value of the intangible asset with its carrying value. If
the carrying value of the intangible asset exceeds its fair
value, an impairment loss is recognized in an amount equal to
that excess.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Determining the fair value of a reporting unit under the first
step of the goodwill impairment test and determining the fair
value of individual assets and liabilities of a reporting unit
(including unrecognized intangible assets) under the second step
of the goodwill impairment test is judgmental in nature and
often involves the use of significant estimates and assumptions.
Similarly, estimates and assumptions are used in determining the
fair value of other intangible assets. These estimates and
assumptions could significantly impact whether or not an
impairment charge is recognized as well as the magnitude of any
such charge. In its impairment review, Sony performs internal
valuation analyses or utilizes third-party valuations when
management believes it to be appropriate, and considers other
market information that is publicly available. Estimates of fair
value are primarily determined using discounted cash flow
analysis. This approach uses significant estimates and
assumptions including projected future cash flows, the timing of
such cash flows, discount rates reflecting the risk inherent in
future cash flows, perpetual growth rates, determination of
appropriate market comparables and the determination of whether
a premium or discount should be applied to comparables. During
the fourth quarter of the year ended March&nbsp;31, 2006, Sony
performed the annual impairment test for goodwill and recorded
an impairment loss of 0.5&nbsp;billion&nbsp;yen in a reporting
unit in All Other. This impairment charge reflected the overall
decline in the fair value of a subsidiary. The fair value of the
subsidiary was estimated principally using the expected present
value of future cash flows.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Management believes that the estimates of future cash flows and
fair value are reasonable; however, changes in estimates
resulting in lower future cash flows and fair value due to
unforeseen changes in business assumptions could negatively
affect the valuations, which may result in Sony recognizing
impairment charges
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">81

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
for goodwill and other intangible assets in the future. In order
to evaluate the sensitivity of the fair value calculations on
the impairment analysis, Sony applied a hypothetical
10&nbsp;percent decrease to the fair value of each reporting
unit. As of March&nbsp;31, 2006, a 10&nbsp;percent hypothetical
decrease to the fair value of each reporting units would not
have resulted in a material impairment loss.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Pension benefits costs</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Employee pension benefit costs and obligations are dependent on
certain assumptions including discount rates, retirement rates
and mortality rates, which are based upon current statistical
data, as well as expected long-term rates of return on plan
assets and other factors. Specifically, the discount rate and
expected long-term rate of return on assets are two critical
assumptions in the determination of periodic pension costs and
pension liabilities. Assumptions are evaluated at least
annually, or at the time when events occur or circumstances
change and these events or changes could have a significant
effect on these critical assumptions. In accordance with
U.S.&nbsp;GAAP, actual results that differ from the assumptions
are accumulated and amortized over future periods. Therefore,
actual results generally affect recognized costs and the
recorded obligations for pensions in future periods. While
management believes that the assumptions used are appropriate,
differences in actual experience or changes in assumptions may
affect Sony&#146;s pension obligations and future costs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s principal pension plans are its Japanese pension
plans. Foreign pension plans are not significant individually
with total assets and pension obligations amounting to less than
10&nbsp;percent of those of the aggregate of the Japanese
pension plans.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To determine the benefit obligation of the Japanese pension
plans, Sony used a discount rate of 2.2&nbsp;percent for its
Japanese pension plans as of March&nbsp;31, 2006. The discount
rate was determined by using currently available information
about rates of return on high-quality fixed-income investments
available and expected to be available during the period to
maturity of the pension benefit obligation in consideration of
amounts and timing of cash outflows for expected benefit
payments. Such available information about rates of returns is
collected from Bloomberg and credit rating agencies. The
2.2&nbsp;percent discount rate represents a 10&nbsp;basis point
decrease from the 2.3&nbsp;percent discount rate used for fiscal
year ended March&nbsp;31, 2005. The reduction of the average
duration of benefit payments in consideration of amounts and
timing of cash outflows for expected benefit payments is mainly
due to the fact that more retiring employees selected
<FONT style="white-space: nowrap">lump-sum</FONT> amounts
instead of monthly pension payments. For Japanese pension plans,
a 10&nbsp;basis point decrease in the discount rate would
increase pension costs by approximately
0.8&nbsp;billion&nbsp;yen for the fiscal year ending
March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To determine the expected long-term rate of return on pension
plan assets, Sony considers the current and expected asset
allocations, as well as historical and expected long-term rates
of return on various categories of plan assets. For Japanese
pension plans, the expected long-term rate of return on pension
plan assets was 3.2&nbsp;percent and 3.5&nbsp;percent as of
March&nbsp;31, 2005 and 2006 respectively. The actual gain on
pension plan assets for the fiscal year ended March&nbsp;31,
2006 was 10.6&nbsp;percent. Actual results that differ from the
expected return on plan assets are accumulated and amortized as
a component of pension costs over the average future service
period, thereby reducing the year-to-year volatility in pension
costs. As of March&nbsp;31, 2005 and 2006, Sony had unrecognized
actuarial losses of 322.2&nbsp;billion&nbsp;yen and
169.9&nbsp;billion&nbsp;yen, respectively, including losses
related to plan assets. As a result of the transfer to the
Japanese government of the substitutional portion, unrecognized
actuarial losses related to the substitutional portion was
recognized as a settlement loss. Therefore unrecognized
actuarial losses were reduced. The unrecognized actuarial losses
reflect the overall unfavorable return on investment over the
past several years and will result in an increase in pension
costs as they are recognized.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony recorded a liability for the unfunded accumulated benefit
obligation for Japanese pension plans of
128.6&nbsp;billion&nbsp;yen and 35.8&nbsp;billion&nbsp;yen as of
March&nbsp;31, 2005 and 2006, respectively. This liability
represents the excess of the accumulated benefit obligation
under Sony&#146;s qualified defined benefit pension plans over
the fair value of the plans&#146; assets. This liability was
established by a charge to stockholders&#146; equity, resulting
in no impact to the accompanying consolidated statements of
income.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">82

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table illustrates the sensitivity to a change in
the discount rate and the expected return on pension plan
assets, while holding all other assumptions constant, for
Japanese pension plans as of March&nbsp;31, 2006. As benefit
obligation and plan assets decreased due to the transfer to the
government of the substitutional portion, the sensitivity also
decreased.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Pre-Tax</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Pension</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Equity</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Change in Assumption</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>PBO</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Costs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Net of Tax)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    25 basis point increase/decrease in discount rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-/+24.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-/+2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+/-1.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    25 basis point increase/decrease in expected return on assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>-/+1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>+/-0.7</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Deferred tax asset valuation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony records a valuation allowance to reduce the deferred tax
assets to an amount that management believes is more likely than
not to be realized. In establishing the appropriate valuation
allowance for deferred tax assets (including deferred tax assets
on tax loss carry-forwards), all available evidence, both
positive and negative, is considered. Information on historical
results is supplemented by all currently available information
on future years, because realization of deferred tax assets is
dependent on whether each tax-filing unit generates sufficient
taxable income. The estimates and assumptions used in
determining future taxable income are consistent with those used
in Sony&#146;s approved forecasts of future operations. Although
realization is not assured, management believes it is more
likely than not that all of the deferred tax assets, less
valuation allowance, will be realized.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Film accounting</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An aspect of film accounting that requires the exercise of
judgment relates to the process of estimating the total revenues
to be received throughout a film&#146;s life cycle. Such
estimate of a film&#146;s ultimate revenue is important for two
reasons. First, while a film is being produced and the related
costs are being capitalized, it is necessary for management to
estimate the ultimate revenue, less additional costs to be
incurred, including exploitation costs which are expensed as
incurred, in order to determine whether the value of a film has
been impaired and thus requires an immediate write off of
unrecoverable film costs. Second, the amount of film costs
recognized as cost of sales for a given film as it is exhibited
in various markets throughout its life cycle is based upon the
proportion that current period actual revenues bear to the
estimated ultimate total revenues.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Management bases its estimates of ultimate revenue for each film
on several factors including the historical performance of
similar genre films, the star power of the lead actors and
actresses, the expected number of theaters at which the film
will be released, anticipated performance in the home
entertainment, television and other ancillary markets, and
agreements for future sales. Management updates such estimates
based on the actual results to date of each film. For example, a
film that has resulted in lower than expected theatrical
revenues in its initial weeks of release would generally have
its theatrical, home entertainment and television distribution
ultimate revenues adjusted downward; a failure to do so would
result in the understatement of amortized film costs for the
period. Since the total film cost to be amortized for a given
film is fixed, the estimate of ultimate revenues impacts only
the timing of film cost amortization.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Future insurance policy benefits</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Liabilities for future insurance policy benefits are established
in amounts adequate to meet the estimated future obligations of
policies in force. These liabilities are computed by the net
level premium method based upon estimates as to future
investment yield, mortality, morbidity, withdrawals and other
factors. Future policy benefits are computed using interest
rates ranging from approximately 0.90&nbsp;percent to
5.10&nbsp;percent. Mortality, morbidity and withdrawal
assumptions for all policies are based on either the life
insurance subsidiary&#146;s own experience or various actuarial
tables. Generally these assumptions are
<FONT style="white-space: nowrap">&#147;locked-in&#148;</FONT>
upon the issuance of new insurance. While management believes
that the assumptions used are appropriate, differences in actual
experience or changes in assumptions may affect Sony&#146;s
future insurance policy benefits.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">83
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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='131'></A>
</DIV>

<!-- link1 "RECENTLY ADOPTED ACCOUNTING STANDARDS" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>RECENTLY ADOPTED ACCOUNTING STANDARDS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate
Accounts</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2003, the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants issued
Statement of Position (&#147;SOP&#148;) 03-1, &#147;Accounting
and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate
Accounts.&#148; SOP 03-1 requires insurance enterprises to
record additional reserves for long-duration life insurance
contracts with minimum guarantee or annuity receivable options.
Additionally, SOP 03-1 provides guidance for the presentation of
separate accounts. This statement is effective for fiscal years
beginning after December&nbsp;15, 2003. Sony adopted SOP 03-1 on
April&nbsp;1, 2004. As a result of the adoption of SOP 03-1,
Sony&#146;s operating income decreased by 5.2&nbsp;billion yen
for the fiscal year ended March&nbsp;31, 2005. Additionally, on
April&nbsp;1, 2004, Sony recorded a 4.7&nbsp;billion yen charge
(net of income taxes of 2.7&nbsp;billion yen) as a cumulative
effect of an accounting change.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>The Effect of Contingently Convertible Instruments on
Diluted Earnings per Share</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2004, the Emerging Issues Task Force (&#147;EITF&#148;)
issued EITF Issue No.&nbsp;04-8, &#147;The Effect of
Contingently Convertible Instruments on Diluted Earnings per
Share.&#148; In accordance with Statement of Financial
Accounting Standards (&#147;FAS&#148;) No.&nbsp;128,
&#147;Earnings per Share&#148;, Sony had not previously included
in the computation of diluted earnings per share
(&#147;EPS&#148;) the number of potential common stock issuable
upon the conversion of contingently convertible debt instruments
(&#147;Co-Cos&#148;) that had not met the conditions to exercise
the stock acquisition rights. EITF Issue No.&nbsp;04-8 requires
that the maximum number of common stock that could be issued
upon the conversion of Co-Cos be included in diluted EPS
computations from the date of issuance regardless of whether the
conditions to exercise the stock acquisition rights have been
met. EITF Issue No.&nbsp;04-8 is effective for reporting periods
ending after December&nbsp;15, 2004. Sony adopted EITF Issue
No.&nbsp;04-8 during the quarter ended December&nbsp;31, 2004.
As a result of the adoption of EITF Issue No.&nbsp;04-8,
Sony&#146;s diluted EPS of income before cumulative effect of an
accounting change and net income for the fiscal year ended
March&nbsp;31, 2004 were restated. Sony&#146;s diluted EPS of
income before cumulative effect of an accounting change and net
income for the fiscal year ended March&nbsp;31, 2005 decreased
by 7.26 yen and 7.06 yen, respectively, as a result of adopting
EITF Issue No.&nbsp;04-8.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Consolidation of Variable Interest Entities</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January 2003, the Financial Accounting Standards Board
(&#147;FASB&#148;) issued FASB Interpretation (&#147;FIN&#148;)
No.&nbsp;46, &#147;Consolidation of Variable Interest
Entities&nbsp;&#151; an Interpretation of Accounting Research
Bulletin (&#147;ARB&#148;) No.&nbsp;51&#148;.
FIN&nbsp;No.&nbsp;46 addresses consolidation by a primary
beneficiary of a variable interest entity (&#147;VIE&#148;).
Sony early adopted the provisions of FIN&nbsp;No.&nbsp;46 on
July&nbsp;1, 2003. As a result of adopting the original
FIN&nbsp;No.&nbsp;46, Sony recognized a one-time charge with no
tax effect of 2.1&nbsp;billion yen as a cumulative effect of
accounting change in the consolidated statement of income, and
Sony&#146;s assets and liabilities increased by
95.3&nbsp;billion yen and 98.0&nbsp;billion yen, respectively.
These increases were treated as non-cash transactions in the
consolidated statement of cash flows. In addition, cash and cash
equivalents increased by 1.5&nbsp;billion yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony subsequently early adopted the provisions of
FIN&nbsp;No.&nbsp;46 R, which replaced FIN&nbsp;No.&nbsp;46,
upon issuance in December 2003. The adoption of
FIN&nbsp;No.&nbsp;46R did not have an impact on Sony&#146;s
results of operations and financial position or impact the way
Sony had previously accounted for VIEs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Exchanges of Nonmonetary Assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, the FASB issued FAS No.&nbsp;153,
&#147;Exchanges of Nonmonetary Assets, an amendment of
Accounting Principle Board Opinion (&#147;APB&#148;)
No.&nbsp;29&#148;. This statement requires that exchanges of
productive assets be accounted for at fair value unless fair
value cannot be reasonably determined or the transaction lacks
commercial substance. This statement is effective for
nonmonetary asset exchanges that have occurred in the fiscal
periods beginning after June&nbsp;15, 2005. Sony adopted FAS
No.&nbsp;153 on July&nbsp;1, 2005. The adoption of FAS
No.&nbsp;153 did not have a material impact on Sony&#146;s
results of operations and financial position.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting for Conditional Asset Retirement
Obligations</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2005, the FASB issued FIN&nbsp;No.&nbsp;47,
&#147;Accounting for Conditional Asset Retirement
Obligations&nbsp;&#151; an Interpretation of FAS
No.&nbsp;143&#148;. FIN&nbsp;No.&nbsp;47 clarifies that an
entity is required to recognize a liability for the fair value
of a conditional retirement obligation when incurred if the
liability&#146;s fair value can be reasonably estimated.
FIN&nbsp;No.&nbsp;47 also clarifies when an entity would have
sufficient information to reasonably estimate the fair value of
an asset retirement obligation. This interpretation is effective
no later than the end of fiscal years ending after
December&nbsp;15, 2005. Sony adopted FIN&nbsp;No.&nbsp;47 on
March&nbsp;31, 2006. The adoption of FIN&nbsp;No.&nbsp;47 did
not have a material impact on Sony&#146;s results of operations
and financial position.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Determining Whether to Aggregate Operating Segments That
Do Not Meet the Quantitative Thresholds</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2004, the EITF issued EITF Issue No.&nbsp;04-10,
&#147;Applying Paragraph&nbsp;19 of FASB Statement No.&nbsp;131,
Disclosures about Segments of an Enterprise and Related
Information, in Determining Whether to Aggregate Operating
Segments That Do Not Meet the Quantitative Thresholds.&#148;
EITF Issue No.&nbsp;04-10 clarifies how an enterprise should
evaluate the aggregation criteria in paragraph&nbsp;17 of FAS
No.&nbsp;131 when determining whether operating segments that do
not meet the quantitative thresholds may be aggregated in
accordance with paragraph&nbsp;19 of FAS No.&nbsp;131. EITF
Issue No.&nbsp;04-10 is effective for fiscal years ending after
September&nbsp;15, 2005. Sony adopted EITF Issue No.&nbsp;04-10
during the fiscal year ended March&nbsp;31, 2006. The adoption
of EITF Issue No.&nbsp;04-10 did not have an impact on
Sony&#146;s results of operation and financial position.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='132'></A>
</DIV>

<!-- link1 "RECENT PRONOUNCEMENTS" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>RECENT PRONOUNCEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting for Stock-Based Compensation</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, the FASB issued FAS No.&nbsp;123 (revised
2004), &#147;Share-Based Payment&#148; (&#147;FAS
No.&nbsp;123(R)&#148;). This statement requires the use of the
fair value based method of accounting for employee stock-based
compensation and eliminates the alternative use of the intrinsic
value method prescribed by APB No.&nbsp;25. With limited
exceptions, FAS No.&nbsp;123(R) requires that the grant-date
fair value of share-based payments to employees be expensed over
the period the service is received. Sony has accounted for its
employee stock-based compensation in accordance with the
provisions prescribed by APB No.&nbsp;25 and its related
interpretations and has disclosed the net effect on net income
and net income per share allocated to the common stock if Sony
had applied the fair value recognition provisions of FAS
No.&nbsp;123 to stock-based compensation as described in
Note&nbsp;2 of Notes to the Consolidated Financial Statements
(2)&nbsp;Significant accounting policies&nbsp;&#151; Stock-based
compensation. Sony adopted FAS No.&nbsp;123(R) on April&nbsp;1,
2006. Sony has elected the modified prospective method of
transition prescribed in FAS No.&nbsp;123(R), which requires
that compensation expense be recorded for all unvested stock
acquisition rights as the requisite service is rendered
beginning with the first period of adoption. As of
March&nbsp;31, 2006, the aggregate value of the unvested stock
acquisition rights was 4.4&nbsp;billion yen. Sony expects the
total expenses to be recorded in the future periods will be
consistent with the pro forma information shown in Note&nbsp;2
of Notes to the Consolidated Financial Statements
(2)&nbsp;Significant accounting policies&nbsp;&#151; Stock-based
compensation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Inventory Costs</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In November 2004, the FASB issued FAS No.&nbsp;151,
&#147;Inventory Costs, an amendment of ARB No.&nbsp;43,
Chapter&nbsp;4.&#148; This statement requires certain abnormal
expenditures to be recognized as expenses in the current period.
It also requires that the amount of fixed production overhead
allocated to the costs of conversion be based on the normal
capacity of the production facilities. This statement shall be
effective for fiscal years beginning after June&nbsp;15, 2005,
with early adoption during the fiscal years beginning after the
date this statement is issued encouraged. The adoption of FAS
No.&nbsp;151 is not expected to have a material impact on
Sony&#146;s results of operations and financial position.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Derivative instruments and hedging activities</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In February 2006, the FASB issued FAS No.&nbsp;155,
&#147;Accounting for Certain Hybrid Financial Instruments,&#148;
an amendment of FAS No.&nbsp;133 and FAS No.&nbsp;140. This
statement permits an entity to elect fair value remeasurement
for any hybrid financial instrument (with changes in fair value
recognized in earnings) if the hybrid instrument contains an
embedded derivative that would otherwise be required to be
bifurcated and accounted for separately under FAS No.&nbsp;133.
The election to measure the hybrid instrument at fair value is
made on an instrument-by-instrument basis and is irreversible.
The statement will be effective for all financial instruments
acquired, issued, or subject to a remeasurement event occurring
after the beginning of an entity&#146;s fiscal years beginning
after September&nbsp;15, 2006, with earlier adoption permitted
as of the beginning of fiscal year, provided that financial
statements for any interim period of that fiscal year have not
been issued. The adoption of FAS No.&nbsp;155 is not expected to
have a material impact on Sony&#146;s results of operations and
financial position.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting for Servicing of Financial Assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2006, the FASB issued FAS&nbsp;No.&nbsp;156,
&#147;Accounting for Servicing of Financial Assets&nbsp;&#151;
an amendment of FASB Statement No.&nbsp;140&#148;. This
statement amends FASB Statement No.&nbsp;140, &#147;Accounting
for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities&#148; with respect to the
accounting for separately recognized servicing assets and
servicing liabilities. This statement shall be effective for
fiscal years beginning after September&nbsp;15, 2006. Sony is
currently evaluating the impact of adopting this new
pronouncement.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting for Uncertainty in Income Taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2006, the FASB issued FIN&nbsp;No.&nbsp;48,
&#147;Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No.&nbsp;109.&#148;
FIN&nbsp;No.&nbsp;48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise&#146;s financial
statements in accordance with FAS&nbsp;No.&nbsp;109,
&#147;Accounting for Income Taxes.&#148; FIN&nbsp;No.&nbsp;48
prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return.
FIN&nbsp;No.&nbsp;48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim
periods, disclosure, and transition. FIN&nbsp;No. 48 is
effective for fiscal years beginning after December&nbsp;15,
2006. Early application of the provisions of this Interpretation
is encouraged if financial statements have not been issued,
including interim financial statements, in the period this
Interpretation is adopted. Sony is currently evaluating the
impact of adopting this Interpretation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='133'></A>
</DIV>

<!-- link1 "Item 6. Directors, Senior Management and Employees" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;6.</B></TD>
    <TD>
    <B><I>Directors, Senior Management and Employees</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='134'></A>
</DIV>

<!-- link1 "Directors and Senior Management" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Directors and Senior Management</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth below are the current members of the Board of
Directors and Corporate Executive Officers of Sony Corporation,
their date of birth, the year in which they were first elected,
their current position at Sony, prior positions, and other
principal business activities outside Sony as of July&nbsp;31,
2006.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><U>Board of Directors</U></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <B>Sir Howard Stringer</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Date of Birth: February&nbsp;19, 1942</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Director (Member of the Board) Since: 1999</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Corporate Executive Officer Since: 2003</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current Positions within Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman and Chief Executive Officer, Representative Corporate
    Executive Officer Chairman and Chief Executive Officer, Sony
    Corporation of America<BR>
    Member of the Nominating Committee</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Vice Chairman, Chief Operating Officer in charge of
    Entertainment Business Group, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1997</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, Sony Corporation of America</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1995</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman and Chief Executive Officer, TELE-TV</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1988</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, CBS Broadcast Group, CBS Inc.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1986</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, CBS News</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Principal Business Activities Outside Sony: Director of
    InterContinental Hotels Group</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Ryoji Chubachi</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: September&nbsp;4, 1947</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Director (Member of the Board) Since: 2005</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Corporate Executive Officer Since: 2004</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current Positions within Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, Representative Corporate Executive Officer,
    Electronics Chief Executive Officer<BR>
    Member of the Nominating Committee</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chief Operating Officer in charge of Micro Systems Network
    Company (&#147;MSNC&#148;) and Engineering, Manufacturing and
    Customer Services (&#147;EMCS&#148;), President, Production
    Strategy Group, Sony Corporation Executive Deputy President,
    Corporate Executive Officer, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Executive Vice President, Executive Officer, NC President, MSNC,
    Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    NC President, Core Technology&nbsp;&#38; Network Company
    (&#147;CNC&#148;), Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Senior Vice President, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Vice President, President, Recording Media Company,
    CNC, Senior Vice President, CNC, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1977</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Entered Sony Corporation</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Principal Business Activities Outside Sony: None</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">87

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Katsumi Ihara</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: September&nbsp;24, 1950</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Director (Member of the Board) Since: 2005</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Corporate Executive Officer Since: 2004</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Current Positions within Sony:&nbsp;Executive Deputy President,
    Representative Corporate Executive Officer Officer in charge of
    Procurement Strategies and TV&nbsp;&#38; Video Business</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    NC President of Home Electronics Network Company, Sony
    Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Executive Deputy President and Group Chief Strategy
    Officer&nbsp;&#38; Group Chief Financial Officer, Sony
    Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Group Executive Officer, Sony Corporation President, Sony
    Ericsson Mobile Communications AB</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Senior Vice President, NC President, Personal IT
    Network Company, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1997</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Vice President, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1996</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, Home A&#38;V Products Company, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1981</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Entered Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1973</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Entered Mitsui Knowledge Industry Co., Ltd.</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Principal Business Activities Outside Sony: None</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Akishige Okada</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: April&nbsp;9, 1938</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2002</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Current Position within Sony:&nbsp;Chairman of the Compensation
    Committee</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal Business Activities Outside Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Advisor, Sumitomo Mitsui Banking Corporation<BR>
    Director, Daicel Chemical Industries, Ltd.<BR>
    Director, Mitsui&nbsp;&#38; Co., Ltd.<BR>
    Auditor, Toyota Motor Corporation<BR>
    Auditor, Mitsui Fudosan Co., Ltd.</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman of the Board (Representative Director), Sumitomo Mitsui
    Financial Group, Inc.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman of the Board (Representative Director), Sumitomo Mitsui
    Banking Corporation</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Hirobumi Kawano</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: January&nbsp;1, 1946</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2003</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Current Position within Sony:&nbsp;Vice Chairman of the Board<BR>
    Member of the Nominating Committee</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Principal Business Activities Outside Sony:&nbsp;Senior Vice
    President, JFE Steel Corporation</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director-General, Agency for Natural Resources and Energy,
    Ministry of International Trade and Industry (&#147;MITI&#148;)
    (later renamed the Ministry of Economy, Trade and Industry)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1998</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director-General, Basic Industries Bureau, MITI</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1996</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director-General, Machinery and Information Industries Policy,
    Machinery and Information Industries Bureau, MITI</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1995</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director-General, Petroleum Department, Agency of Natural
    Resources and Energy, MITI</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">88

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <B>Yotaro Kobayashi</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Date of Birth: April&nbsp;25, 1933</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2003</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Current Position within Sony: Chairman of the Board and Chairman
    of the Nominating Committee</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal Business Activities Outside Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chief Corporate Advisor, Fuji Xerox Co., Ltd.<BR>
    Director, Callaway Golf Company<BR>
    Director, Nippon Telegraph and Telephone Corporation</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman of the Board, Fuji Xerox Co., Ltd.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1992</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman and Chief Executive Officer, Fuji Xerox Co., Ltd.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1987</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director, Xerox Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1978</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President and Chief Executive Officer, Fuji Xerox Co., Ltd.</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Sakie T. Fukushima</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: September&nbsp;10, 1949</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2003</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Current Position within Sony: Member of the Audit Committee</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal Business Activities Outside Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Representative Director&nbsp;&#38; Regional Managing
    Director&nbsp;&#151; Japan, Korn/ Ferry International<BR>
    Member, Board of Directors, Korn/ Ferry International, U.S.A.<BR>
    Director, Benesse Corporation</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Position:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Managing Director, Korn/ Ferry International&nbsp;&#151; Japan</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Yoshihiko Miyauchi</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: September&nbsp;13, 1935</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2003</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Current Position within Sony: Member of the Compensation
    Committee</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal Business Activities Outside Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director, Representative Executive Officer,<BR>
    Chairman and Chief Executive Officer, ORIX Corporation Director,
    Showa Shell Sekiyu K.K<BR>
    Director, Daikyo Incorporated Director, Sojitz Corporation<BR>
    Director, Access Co., Ltd.</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Representative Director, Chairman and Chief Executive Officer,
    ORIX Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1980</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Representative Director, President, ORIX Corporation</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">89

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="17%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <B>Yoshiaki Yamauchi</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Date of Birth: June&nbsp;30, 1937</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2003</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Current Position within Sony: Chairman of the Audit Committee</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal Business Activities Outside Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director, Sumitomo Mitsui Financial Group, Inc.<BR>
    Director, Sumitomo Mitsui Banking Corporation<BR>
    Director, Amana Inc.<BR>
    Statutory Auditor, Stanley Electric Co., Ltd.<BR>
    Deputy President, ARI Research Institute</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director, Sumitomo Banking Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1993</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Executive Director, Asahi&nbsp;&#38; Co.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1991</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, Inoue Saito Eiwa Audit Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1986</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, Eiwa Audit Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Country Managing Partner&nbsp;&#151; Japan, Arthur
    Andersen&nbsp;&#38; Co.</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Sir Peter Bonfield</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: June&nbsp;3, 1944</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2005</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Current Position within Sony: Member of the Nominating Committee</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal Business Activities Outside Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Member of the Board, AstraZeneca plc, U.K.<BR>
    Member of Audit Committee and the Board, Telefonaktiebolaget LM
    Ericsson, Sweden<BR>
    Member of the Board, Mentor Graphics, Inc.<BR>
    Member of the Board and Chairman of Audit Committee, Taiwan
    Semiconductor Manufacturing Company Ltd.</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1996</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chief Executive Officer, British Telecom plc</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1986</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman, ICL plc, U.K.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1984</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Managing Director, ICL plc, U.K.</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Fueo Sumita</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: May&nbsp;24, 1938</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2005</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Current Position within Sony: Member of the Audit Committee</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Principal Business Activities Outside Sony:&nbsp;Chief of Sumita
    Accounting Office</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Executive Vice President, Kawada Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Vice Chairman, Ernst&nbsp;&#38; Young ShinNihon</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Deputy Director, Ohta-Showa Century Audit Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman, Century Audit Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1985</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Deputy General Manager, Corporate Accounting Dept., Hitachi, Ltd.</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">90

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <B>Fujio Cho</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Date of Birth: February&nbsp;2, 1937</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2006</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Current Position within Sony: Member of the Compensation
    Committee</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal Business Activities Outside Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman, Toyota Motor Corporation<BR>
    Director, Central Japan Railway Company<BR>
    Auditor, Denso Corporation</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="76%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, Toyota Motor Corporation</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Ned Lautenbach</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: February&nbsp;2, 1944</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Outside Director (Member of the Board) Since: 2006</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal Business Activities Outside Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Operating Partner, Clayton, Dubilier&nbsp;&#38; Rice, Inc.<BR>
    Member of the Board, Fidelity Investments<BR>
    Member of the Board, Eaton Corporation</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1998</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Senior Vice President&nbsp;&#38; Group Executive, IBM Worldwide
    Sales&nbsp;&#38; Services, International Business Machines
    Corporation</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>G&#246;ran Lindahl</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: April&nbsp;28, 1945</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Director (Member of the Board) Since: 2001</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Current Position within Sony: Member of the Compensation
    Committee</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Executive Officer, Sony Group Europe Representative,
    Chairman of Sony Group in Europe</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Director, Telefonaktiebolaget LM Ericsson, Sweden</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1997</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President and Chief Executive Officer, Asea Brown Boveri Ltd.,
    Switzerland</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1985</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, ASEA Transmission AB, Sweden</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1983</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, ASEA Transformers AB, Sweden</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal Business Activities Outside Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Chairman and Chief Executive Officer, LivSafe AB, Sweden<BR>
    Chairman and Chief Executive Officer, LivSafe, Inc., U.S.A.<BR>
    Director, iGATE Corporation, U.S.A.<BR>
    Director, INGKA Holding B.V., Netherlands</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">91

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><U>Corporate Executive Officers</U></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to Messrs.&nbsp;Stringer, Chubachi and Ihara, the
four individuals set forth below are the current Corporate
Executive Officers of Sony Corporation as of July&nbsp;31, 2006.
Refer to &#147;Board Practices&#148; below.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Nobuyuki Oneda</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: May&nbsp;6, 1945</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Corporate Executive Officer Since: 2004</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Current Positions within Sony: Executive Vice President and
    Chief Financial Officer</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Senior Vice President, Officer in charge of Corporate
    Planning&nbsp;&#38; Control, Accounting and Information Systems,
    Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Senior Vice President, Executive Officer, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Officer and Chief Financial Officer, Network
    Application&nbsp;&#38; Content Service Sector, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Senior Vice President, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Deputy President and Chief Financial Officer, Sony Electronics
    Inc.</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Group Executive Officer, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Executive Vice President and Chief Financial Officer, Sony
    Electronics Inc. (a U.S.&nbsp;subsidiary of Sony Corporation)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1996</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    General Manager, Corporate Planning&nbsp;&#38; Control
    Department, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1969</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Entered Sony Corporation</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Principal Business Activities Outside Sony: None</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Keiji Kimura</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: April&nbsp;4, 1952</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Corporate Executive Officer Since: 2004</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current Positions within Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Executive Vice President, Officer in charge of Technology
    Strategies and Intellectual Property</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    NC President, Information Technology&nbsp;&#38; Communications
    Network Company, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Senior Executive Vice President, Corporate Executive Officer,
    Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Senior Vice President, Executive Officer, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Senior Vice President, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    NC President, Mobile Network Company, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Vice President, Sony Corporation</TD>
</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    NC President, Information Technology Company, Personal Network
    Company, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1977</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Entered Sony Corporation</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Principal Business Activities Outside Sony: None</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">92

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <B>Nicole Seligman</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Date of Birth: October&nbsp;25, 1956</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    Corporate Executive Officer Since: 2003</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current Positions within Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Executive Vice President and General Counsel<BR>
    Executive Vice President and General Counsel, Sony Corporation
    of America</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Group Deputy General Counsel, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Entered Sony Corporation of America as Executive Vice President
    and General Counsel</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1992</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Partner, Williams&nbsp;&#38; Connolly LLP</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1985</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Entered Williams&nbsp;&#38; Connolly LLP</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1978</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Associate Editorial Page Editor for The Asian Wall Street
    Journal, Hong Kong</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Principal Business Activities Outside Sony: None</TD>
</TR>

<TR>
    <TD colspan="4">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <B>Yutaka Nakagawa</B></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Date of Birth: December&nbsp;4, 1945</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current Positions within Sony:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Executive Vice President, Officer in charge of Products
    Strategies, Digital Imaging Business and Audio Business</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Prior Positions:</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    NC President, Personal Audio Visual Network Company, Sony
    Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Deputy President, Micro Systems Network Company, President,
    Energy Company, MSNC, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1999</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Senior Vice President, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1998</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    President, Personal and Mobile Communication Company, Sony
    Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1997</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Corporate Vice President, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1992</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    General Manager, Camcorder Products Division, Personal Video
    Group, Sony Corporation</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1968</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Entered Sony Corporation</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    Principal Business Activities Outside Sony: None</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All of the aforementioned persons, with the exception of
Messrs.&nbsp;Okada, Kawano, Kobayashi, Miyauchi, Yamauchi,
Bonfield, Sumita, Lindahl, Cho, Lautenbach and
Ms.&nbsp;Fukushima, are engaged on a full-time basis by Sony.
There is no family relationship between any of the persons named
above. There is no arrangement or understanding with major
shareholders, customers, suppliers, or others pursuant to which
any person named above was selected as a Director or a Corporate
Executive Officer.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='135'></A>
</DIV>

<!-- link1 "Compensation" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The aggregate amount of remuneration, including bonuses paid and
benefits in kind granted by Sony during the fiscal year ended
March&nbsp;31, 2006 to all Directors and Corporate Executive
Officers (refer to &#147;Board Practices&#148; below) of Sony
Corporation who served during the fiscal year ended
March&nbsp;31, 2006, as a group (29 people), totaled
2,666&nbsp;million yen. Also, as a part of Sony&#146;s incentive
compensation arrangements, Sony Corporation issued stock
acquisition rights during the fiscal year ended March&nbsp;31,
2006. The stock acquisition rights, which represent rights to
subscribe for shares of common stock of Sony Corporation, have
been granted to the Directors, Corporate Executive Officers,
Corporate Executives, Group Executives, and selected employees.
The stock acquisition rights generally vest ratably up to three
years from the date of grant and are generally exercisable up to
ten years from the date of grant. The portion of those stock
acquisition rights which was granted by Sony during the fiscal
year ended March&nbsp;31, 2006 to the Directors&nbsp;and
Corporate Executive Officers confers rights to purchase a total
number of 605,200&nbsp;shares of Sony Corporation&#146;s Common
Stock. The exercise price for these yen-denominated stock
acquisition rights issued as of November&nbsp;17, 2005 was
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
4,060 yen per share, and the exercise price for these
U.S.&nbsp;dollar-denominated stock acquisition rights issued as
of November&nbsp;17, 2005 was 34.14&nbsp;U.S.&nbsp;dollars.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Regarding the above compensation plans, refer to Note&nbsp;16 of
Notes to Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2006, the retirement
allowance scheme was terminated and a new stock-based retirement
remuneration (phantom restricted stock plan) was introduced.
With the introduction of this plan, there was no amount accrued
for <FONT style="white-space: nowrap">lump-sum</FONT> severance
indemnities by Sony during the fiscal year ended March&nbsp;31,
2006 for Directors and Corporate Executive Officers of Sony
Corporation as of March&nbsp;31, 2006, as a group
(14&nbsp;people).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under this new plan, points fixed every year by the Compensation
Committee shall be granted to Directors and Corporate Executive
Officers every year during his/her tenure in office, and at the
time of resignation, the remuneration amount shall be calculated
by multiplying Sony&#146;s common stock price by accumulated
points. The resigning Directors and Corporate Executive Officers
shall purchase Sony&#146;s common stock with this remuneration.
The aggregate number of points granted to Directors and
Corporate Executive Officers of Sony Corporation as of
March&nbsp;31, 2006, as a group (14 people) totaled 27,900
points.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='136'></A>
</DIV>

<!-- link1 "Board Practices" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Board Practices</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has adopted a &#147;Company with Committees&#148; corporate
governance system under the Japanese Company Law (Kaishaho) and
related legislation (collectively the &#147;Company Law&#148;).
Under this system, Sony Corporation has three committees: the
Nominating Committee, the Audit Committee and the Compensation
Committee. Under the Company Law, each committee is required to
consist of not less than three Directors, the majority of whom
must be outside Directors. Under the committee system, Directors
as such have no power to execute the business of Sony
Corporation except for limited circumstances as permitted by
law. The Board of Directors must elect Corporate Executive
Officers (Shikko-yaku), who are responsible for the execution of
the business of Sony Corporation. A summary of the governance
system adopted by Sony Corporation is set forth below.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors determines fundamental management policy
and other important matters related to the management of Sony
and oversees the performance of the duties of Directors and
Corporate Executive Officers. Under the Company Law, all
Directors must be elected at the General Meeting of Shareholders
from the candidates determined by the Nominating Committee.
Under the Company Law, the terms of office of Directors expire
at the conclusion of the General Meeting of Shareholders held
with respect to the last business year ending within one year
after their election. Directors may serve any number of
consecutive terms although, under the Charter of the Board of
Directors of Sony Corporation, outside Directors may not be
reelected more than five times without the consent of all
Directors.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Nominating Committee, which pursuant to the Charter of the
Board of Directors of Sony Corporation consists of five or more
Directors, determines the content of proposals to be submitted
for approval at the General Meeting of Shareholders regarding
the appointment and dismissal of Directors. As stated above,
under the Company Law, a majority of the members of the
Nominating Committee must be outside Directors. In order to
qualify as an outside Director under the Company Law, a Director
must be a person (i)&nbsp;who is not a director of Sony
Corporation or any of its subsidiaries engaged in the business
operations of Sony Corporation or such subsidiary, as the case
may be, or a corporate executive officer or general manager or
other employee of Sony Corporation or any of its subsidiaries,
and (ii)&nbsp;who has never been a director of Sony Corporation
or any of its subsidiaries engaged in the business operations of
Sony Corporation or such subsidiary, as the case may be, or a
corporate executive officer or general manager or other employee
of Sony Corporation or any of its subsidiaries. Under the
Charter of the Board of Directors of Sony Corporation, two or
more members of the Nominating Committee must concurrently be
Corporate Executive Officers. The Nominating Committee is
composed of the following members as of July&nbsp;31, 2006:
Yotaro Kobayashi, who is the Chairman of the Nominating
Committee and an outside Director; Hirobumi Kawano and Peter
Bonfield who are outside Directors; and Howard Stringer and
Ryoji Chubachi, who are Corporate Executive Officers.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Charter of the Board of Directors of Sony Corporation,
the Audit Committee must consist of three or more Directors, a
majority of whom, as stated above, must be outside Directors. In
addition, under the Company Law, a member of the Audit Committee
may not concurrently be a director of Sony Corporation or any of
its subsidiaries who is engaged in the business operations of
Sony Corporation or such subsidiary, as the case may be, or a
corporate executive officer of Sony Corporation or any of its
subsidiaries, or an accounting counselor, general manager or
other employee of any of such subsidiaries. Further, under the
Charter of the Board of Directors of Sony Corporation, members
of the Audit Committee must meet the independence and other
equivalent requirements of U.S.&nbsp;securities laws and
regulations to the extent applicable to Sony Corporation. The
Audit Committee&#146;s primary responsibility is to audit the
consolidated and non-consolidated financial statements and
business reports to be submitted by the Board of Directors at
the General Meeting of Shareholders; to audit the performance of
duties by Directors and Corporate Executive Officers (with
regard to preparation process of financial statements,
disclosure controls and procedures, internal controls,
compliance structure, risk management structure, internal audit
structure, internal hotline system and other matters), in each
case pursuant to the Company Law; and to propose
appointment/dismissal or non-reappointment of, approve the
compensation of, and oversee and evaluate the work of
Sony&#146;s independent auditors. Under the Company Law, the
Audit Committee has a statutory duty to prepare and submit its
audit report to the Corporate Executive Officer designated by
the Board of Directors each year. A member of the Audit
Committee may note his or her opinion in the audit report if it
is different from the opinion of the Audit Committee that is
expressed in the audit report.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee discusses with Sony Corporation&#146;s
independent auditor, ChuoAoyama PricewaterhouseCoopers, the
scope and results of audits by the independent auditor including
their evaluation of Sony Corporation&#146;s internal controls,
compatibility with Generally Accepted Accounting Principles in
the U.S., and the overall quality of financial reporting. The
Audit Committee makes an assessment of the independence of
ChuoAoyama PricewaterhouseCoopers by overseeing their activities
through regular communications and discussions with ChuoAoyama
PricewaterhouseCoopers, and shall pre-approve audit and
non-audit services to be provided. The Audit Committee is
composed of the following members as of July&nbsp;31, 2006:
Yoshiaki Yamauchi, who is the Chairman of the Audit Committee
and an outside Director; and Sakie T. Fukushima and Fueo Sumita,
who are also outside Directors. Both Yoshiaki Yamauchi and Fueo
Sumita are &#147;audit committee financial experts&#148; within
the meaning of Item&nbsp;16A of this report.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As required by the Company Law, the Compensation Committee
determines the compensation, bonus and any other benefits
(including equity-related rights or options given for the
purpose of stock incentive options) to be received by each
Director and Corporate Executive Officer in consideration of the
execution of their duties. In addition to such statutory duties,
the Compensation Committee sets policy on the composition of
individual compensation to be received by other senior
management of Sony Group (Directors or other officers of Sony
Group companies whose appointment is subject to approval by the
CEO of Sony Corporation), and also submits proposals to the
Board of Directors regarding the issuance of stock acquisition
rights for the purpose of granting stock options and other forms
of stock price-based compensation utilizing shares etc. of Sony
Group, as individual compensation to the aforementioned senior
management. Under the Charter of the Board of Directors, the
Compensation Committee shall consist of three or more Directors,
and as a general rule, at least one member shall concurrently
serve as Corporate Executive Officer; provided, however, that a
Director who is the CEO (Chief Executive Officer), or the COO
(Chief Operating Officer) of Sony Group or in any equivalent
position shall not be a member of the Compensation Committee. As
stated above, a majority of the members of the Compensation
Committee must be outside Directors. The Compensation Committee
is composed of the following members as of July&nbsp;31, 2006:
Akishige Okada, who is the Chairman of the Compensation
Committee and an outside Director; and Yoshihiko Miyauchi and
Fujio Cho, who are also outside Directors, and G&#246;ran
Lindahl, who was a Corporate Executive Officer of Sony Group.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2006, the Board of
Directors met 8 times. The Nominating Committee met 5 times, the
Audit Committee 11 times and the Compensation Committee 7 times.
In the fiscal year ended March&nbsp;31, 2006, each incumbent
Director attended at least 75&nbsp;percent of the aggregate
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
number of meetings of the Board and Committees on which he/she
served (during the period that he/she served).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No Directors have service contracts with Sony providing for
benefits upon termination of service as a Director.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Company Law and the Articles of Incorporation of Sony
Corporation, Sony Corporation may, by a resolution of the Board
of Directors, exempt Directors from liabilities to Sony
Corporation to the extent permitted by law arising in connection
with their failure to execute their duties. Accordingly, Sony
Corporation has entered into a liability limitation agreement
with each outside Director that limits the maximum amount of
their liabilities owed to Sony Corporation arising in connection
with their failure to execute their duties to the greater of
either 30&nbsp;million yen or an amount equal to the aggregate
sum of the amounts prescribed in each item of Article&nbsp;425,
Paragraph&nbsp;1 of the Company Law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors must appoint one or more Corporate
Executive Officers who are authorized to determine matters
delegated to them by the Board of Directors. The Corporate
Executive Officers are responsible for conducting all the
business operations of Sony within the scope of authority
delegated by the Board of Directors. As of July&nbsp;31, 2006,
there are 7 Corporate Executive Officers, some of whom are also
Directors. Significant decision-making authority has been
delegated to the CEO and also to each Corporate Executive
Officer with regard to investments, strategic alliances and
other actions related to the execution of business operations.
Sony Corporation believes that this significant delegation
enables Sony to be managed in a more dynamic and responsive
manner. The terms of office of Corporate Executive Officers must
expire at the conclusion of the first meeting of the Board of
Directors held immediately after the conclusion of the General
Meeting of Shareholders held with respect to the last business
year ending within one year after their election. From among the
Corporate Executive Officers who as a general rule are also
Directors, the Board of Directors shall elect Representative
Corporate Executive Officers. Each Representative Corporate
Executive Officer has the statutory authority to represent Sony
Corporation in the conduct of its affairs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(Reference)</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
At a Board meeting held on April&nbsp;26, 2006, the Board of
Directors reaffirmed the existing internal control and
governance framework and determined to continue to evaluate and
improve such framework going forward, as appropriate. This
determination met the requirements of the Japanese Company Law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Detail of the determination is posted on the following website:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<U>http://www.sony.net/ SonyInfo/ IR/library/control.html</U>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
For an explanation as to the significant differences between the
New York Stock Exchange&#146;s corporate governance standards
and Sony&#146;s corporate governance practices, please visit us
on the Internet at:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<U>http://www.sony.net/ SonyInfo/ IR/ NYSEGovernance.html</U>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='137'></A>
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Employees</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;31, 2006, Sony had approximately 158,500
employees, an increase of approximately 7,000 employees from the
end of March 2005. Although there was a reduction in employees
associated with the implementation of restructuring activities
in Japan, the U.S., Europe and Southeast Asia, the total number
of employees increased as a result of a significant increase in
employees at manufacturing facilities in East Asia excluding
Japan. As of March&nbsp;31, 2005, Sony had approximately 151,400
employees, a decrease of approximately 10,600 from
March&nbsp;31, 2004. As of March&nbsp;31, 2005, approximately
62,300 employees were located in Japan and approximately 89,100
outside Japan, and approximately 16&nbsp;percent were members of
labor unions.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fiscal year-end totals for the fiscal years ended
March&nbsp;31, 2006 and 2005 include approximately 1,200
employees in Japan who left Sony mainly through the early
retirement program as of March&nbsp;31, 2006 and 2,000 employees
in Japan who left Sony mainly through the program as of
March&nbsp;31, 2005. As of March&nbsp;31, 2006, approximately
61,600 employees were located in Japan and approximately 96,900
outside Japan, and approximately 19&nbsp;percent were members of
labor unions.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows the number of employees by segment as
of March&nbsp;31, 2004, 2005 and 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Number of Employees by Segment</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>128,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>124,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>130,800</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,700</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,900</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unallocated&nbsp;&#151; Corporate employees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,200</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>151,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the average number of employees for the fiscal
years ended March&nbsp;31, 2004, 2005 and 2006 calculated by
averaging the total number of employees at the end of each
quarter, was 165,300, 154,200 and 156,200 respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony generally considers its labor relations to be good. Only a
few manufacturing facilities have labor unions and, of these,
only a few have union contracts.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Regarding labor relations in the Electronics segment by area, in
Asia, where Sony operates many manufacturing facilities, a few
manufacturing facilities have labor unions that have union
contracts. In the U.S., no manufacturing facilities have labor
unions. In Mexico, one manufacturing facility has a labor union
that has a union contract, but labor relations are good and
there have been no significant problems in renegotiating the
contract. In Europe, Sony maintains good labor relations with
the Work Councils in each country, and, while some employees
belong to unions, they are not eligible for union contracts.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Pictures segment, Sony also generally considers its labor
relations to be good. A number of Pictures&#146; subsidiaries
are signatories to union contracts. During the fiscal year ended
March&nbsp;31, 2006, renegotiations for new three-year
agreements were successfully concluded with the International
Alliance of Theatrical Stage Employees and Moving Picture
Technicians, Artists and Allied Crafts for the West Coast Studio
Local Agreements and the New York Local 52 and 161 Agreements,
the British Columbia (Canada) Council of Unions and the Teamster
Casting Directors and the American Federation of Musicians
Agreement negotiated last fiscal year was ratified by the its
membership. Negotiations were also successfully concluded with
the Screen Actors Guild (&#147;SAG&#148;) for a two and a half
year agreement covering made-for-basic cable animation
performers. Negotiations with SAG for made-for-basic cable live
action performers commenced in January 2006 and are continuing.
It is not anticipated that SAG negotiations will interrupt
television production.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony continuously strives to provide competitive wages and
benefits and good working conditions for all of its employees.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='138'></A>
</DIV>

<!-- link1 "Share Ownership" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Share Ownership</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is the total number of shares of Sony
Corporation&#146;s Common Stock beneficially owned by Directors
and Corporate Executive Officers as of July&nbsp;31, 2006 (18
people). Refer to &#147;Board Practices&#148; above.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percentage</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Title of class</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Identity of person or group</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>beneficially owned</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of class</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common Stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    Directors and Corporate Executive Officers</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.005</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Regarding compensation plans, following the amendments to the
Commercial Code of Japan effective May 2002, Sony integrated
different equity-related securities it had previously issued for
the purpose of giving stock incentives into one unified stock
option right. During the fiscal year ended March&nbsp;31, 2006,
Sony granted
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">97

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
stock acquisition rights, which represent rights to subscribe
for shares of Common Stock of Sony Corporation, to Directors,
Corporate Executive Officers, Corporate Executives, Group
Executives, and selected employees. The stock acquisition rights
generally vest ratably up to three years from the date of grant
and are generally exercisable up to ten years from the date of
grant. The following table shows the portion of those stock
acquisition rights which were granted by Sony to Directors and
Corporate Executive Officers as of July&nbsp;31, 2006 and which
were outstanding as of the same date.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Year granted</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>shares subject to stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>(Fiscal Year ended March&nbsp;31)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>acquisition rights</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Exercise price per share</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    34.14 U.S.&nbsp;dollars</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    4,060 yen</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    40.34 U.S.&nbsp;dollars</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    3,782 yen</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    40.90 U.S.&nbsp;dollars</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    4,101 yen</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    36.57 U.S.&nbsp;dollars</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    5,396 yen</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to the introduction of stock acquisition rights, Sony had
granted warrants, which represent rights to subscribe for Sony
Corporation&#146;s Common Stock, to Directors, Executive
Officers, Group Executive Officers, and selected employees. The
warrants generally vest ratably up to three years from the date
of grant and are generally exercisable up to six years from the
date of grant. The following table shows the portion of those
warrants which were granted by Sony to current Directors and
Corporate Executive Officers as of July&nbsp;31, 2006 and which
were outstanding as of the same date. The exercise price per
share has been adjusted for the two-for-one stock split
effective on May&nbsp;19, 2000 and is subject to anti-dilution
adjustment.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Year granted</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total number of shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>(Fiscal Year ended March&nbsp;31)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>subject to warrants</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise price per share</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(yen)</B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,457</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,039</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, in order to provide equity-based compensation to
selected executives at Sony&#146;s U.S.&nbsp;subsidiaries, Sony
Corporation has issued U.S.&nbsp;dollar-denominated Convertible
Bonds (&#147;CBs&#148;) to a holding company in the U.S. and the
holding company has sold the CBs to those executives. For the
purpose of carrying out this plan, the holding company lent an
amount equal to the principal amount of CBs to such executives
for their purchase of the CBs until the date of conversion. The
CBs generally vest ratably up to three years from the date of
sale and are generally exercisable up to ten years from the date
of sale. The following table shows the portion of those CBs
which were held by current Directors and Corporate Executive
Officers as of July&nbsp;31, 2006 and which were outstanding as
of the same date.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Year issued</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total number of shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>(Fiscal Year ended March&nbsp;31)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>subject to CBs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise price per share</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(U.S.&nbsp;dollars)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122.98</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71.28</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52.29</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Furthermore, Sony has granted stock appreciation rights
(&#147;SARs&#148;) in Japan, Europe, and the U.S.&nbsp;to
selected employees. Under the terms of these plans, employees
receive upon exercise cash equal to the amount by which the
market price of Sony Corporation&#146;s Common Stock exceeds the
strike price of the SARs. The SARs generally vest ratably up to
three years from the date of grant and are generally exercisable
up to ten years from the date of grant. The following table
shows the portion of those SARs which were granted by Sony
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">98

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
to selected employees who are Directors and Corporate Executive
Officers as of July&nbsp;31, 2006 and which were outstanding as
of the same date.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Year granted</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total number of shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>(Fiscal Year ended March&nbsp;31)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>subject to SARs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise price per share</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(U.S.&nbsp;dollars)</B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    The U.S.&nbsp;plan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44.00</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Regarding the above compensation plans, refer to Note&nbsp;16 of
Notes to Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='139'></A>
</DIV>

<!-- link1 "Item 7. Major Shareholders and Related Party Transactions" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;7.</B></TD>
    <TD>
    <B><I>Major Shareholders and Related Party Transactions</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='140'></A>
</DIV>

<!-- link1 "Major Shareholders" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Major Shareholders</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dodge&nbsp;&#38; Cox, an institutional investor based in
San&nbsp;Francisco, California, filed a Schedule&nbsp;13-F with
the SEC on August&nbsp;9, 2006. According to this filing,
Dodge&nbsp;&#38; Cox owned 66,112,621 ADRs of Sony Corporation
as of June&nbsp;30, 2006. In addition, while Sony assumes no
responsibility for the accuracy of this supplemental
information, according to the website of Dodge&nbsp;&#38; Cox,
as of June&nbsp;30, 2006, Dodge&nbsp;&#38; Cox owned
10,837,600&nbsp;shares of outstanding Sony Corporation Common
Stock. As a result, it appears that in total, Dodge&nbsp;&#38;
Cox beneficially owned 76,950,221&nbsp;shares of outstanding
Sony Corporation Common Stock representing 7.7&nbsp;percent of
the total. To the knowledge of Sony Corporation, there is no
other significant change in the percentage ownership held by any
major beneficial shareholders during the past three years. Major
shareholders of Sony Corporation do not have different voting
rights.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;31, 2006, there were 1,000,938,776&nbsp;shares
of Common Stock outstanding, of which 145,074,404&nbsp;shares
were in the form of ADRs and 120,852,878&nbsp;shares were held
of record in the form of Common Stock by residents in the
U.S.&nbsp;The number of registered ADR holders was 7,134, and
the number of registered holders of shares of Common Stock in
the U.S.&nbsp;was 257.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To the knowledge of Sony Corporation, it is not directly or
indirectly owned or controlled by any other corporation, by any
foreign government or by any other natural or legal person
severally or jointly. As far as is known to Sony Corporation,
there are no arrangements the operation of which may, at a
subsequent date, result in a change in control of Sony
Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='141'></A>
</DIV>

<!-- link1 "Related Party Transactions" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Related Party Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the ordinary course of business, Sony purchases materials,
supplies, and services from numerous suppliers throughout the
world, including firms with which certain members of the Board
of Directors are affiliated. In addition, in the fiscal year
ended March&nbsp;31, 2006, Sony entered into the following
sales/purchase transactions with equity affiliates accounted for
under the equity method: sales to Sony Ericsson Mobile
Communications, AB (&#147;Sony Ericsson&#148;), a joint venture
focused on mobile phone handsets, totaling 143.2&nbsp;billion
yen; sales to Kyoshin Technosonic Co., Ltd.
(&#147;Kyoshin&#148;), a joint venture focused on marketing
semiconductors and other electronic components, totaling
48.6&nbsp;billion yen; sales to SONY BMG MUSIC ENTERTAINMENT
(&#147;SONY BMG&#148;), a recorded music business joint venture,
totaling 33.1&nbsp;billion yen; purchases from S-LCD Corporation
(&#147;S-LCD&#148;), a joint venture with Samsung Electronics
Co., Ltd. for the manufacture of amorphous TFT LCD panels,
totaling 159.4&nbsp;billion yen; purchases from Oita TS
Semiconductor Corporation (&#147;OTSS&#148;), a semiconductor
manufacturing joint venture in Japan, totaling 58.8&nbsp;billion
yen and purchases from S.T. Liquid Crystal Display Corp., a
liquid crystal display (&#147;LCD&#148;) joint venture in Japan,
totaling 52.5&nbsp;billion yen. As of March&nbsp;31, 2006, Sony
held notes and accounts receivable, trade due from Sony
Ericsson, SONY BMG, and Kyoshin worth 27.4&nbsp;billion yen,
6.5&nbsp;billion yen, and 6.2&nbsp;billion yen, respectively, in
addition to notes and accounts payable, trade due to S-LCD and
OTSS totaling 16.3&nbsp;billion yen and 9.9&nbsp;billion yen,
respectively. Sony held advances to SONY BMG worth
15.8&nbsp;billion yen. Because of the size of these
transactions, Sony does not consider the amounts involved to be
material to its business. Refer to Note&nbsp;5 of Notes to
Consolidated Financial Statements for additional information
regarding Sony&#146;s investments in and transactions with
equity affiliates.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">99

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sumitomo Mitsui Financial Group, Inc. and Sumitomo Mitsui
Banking Corporation have performed and continue to perform
commercial banking services for Sony. Akishige Okada, who has
served as a Sony Corporation Director since June&nbsp;20, 2002,
had been a Representative Director of Sumitomo Mitsui Financial
Group, Inc. and Sumitomo Mitsui Banking Corporation until
June&nbsp;28, 2005. Yoshiaki Yamauchi, who has served as a Sony
Corporation Director since June&nbsp;20, 2003, is a Director of
Sumitomo Mitsui Financial Group, Inc. and Sumitomo Mitsui
Banking Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='142'></A>
</DIV>

<!-- link1 "Interests of Experts and Counsel" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Interests of Experts and Counsel</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='143'></A>
</DIV>

<!-- link1 "Item 8. Financial Information" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;8.</B></TD>
    <TD>
    <B><I>Financial Information</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='144'></A>
</DIV>

<!-- link1 "Consolidated Statements and Other Financial Information" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Consolidated Statements and Other Financial Information</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Refer to Consolidated Financial Statements and Notes to
Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='145'></A>
</DIV>

<!-- link1 "Legal Proceedings" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Legal Proceedings</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation and certain of its subsidiaries are defendants
in several pending legal proceedings. However, based upon the
information currently available to Sony, management of Sony
believes that damages from such legal proceedings, if any, would
not have a material effect on Sony&#146;s consolidated financial
results and condition.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='146'></A>
</DIV>

<!-- link1 "Dividend Policy" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Dividend Policy</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony believes that continuously increasing corporate value and
providing dividends are essential to rewarding shareholders. It
is Sony&#146;s policy to utilize retained earnings, after
ensuring the perpetuation of stable dividends, to carry out
various investments that contribute to an increase in corporate
value such as those investments that ensure future growth and
strengthen competitiveness.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A fiscal year-end cash dividend of 12.5 yen per share of Sony
Corporation Common Stock was approved at the Board of Directors
meeting held on May&nbsp;17, 2006 and was paid on June&nbsp;1,
2006. Sony Corporation has already paid an interim dividend for
Common Stock of 12.5 yen per share to each shareholder;
accordingly, the total annual cash dividend per share of Common
Stock is 25.0 yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All shares of shares of Subsidiary Tracking Stock, the economic
value of which was intended to be linked with Sony Communication
Network Corporation&#146;s economic value, were converted to
shares of Sony Corporation Common Stock on December&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='147'></A>
</DIV>

<!-- link1 "Significant Changes" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Significant Changes</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No significant change has occurred since the date of the annual
financial statements included in this annual report.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">100

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='148'></A>
</DIV>

<!-- link1 "Item 9. The Offer and Listing" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;9.</B></TD>
    <TD>
    <B><I>The Offer and Listing</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='149'></A>
</DIV>

<!-- link1 "Offer and Listing Details" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Offer and Listing Details</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='150'></A>
</DIV>

<!-- link1 "Plan of Distribution" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Plan of Distribution</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='151'></A>
</DIV>

<!-- link1 "Markets" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Markets</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='152'></A>
</DIV>

<!-- link1 "Trading Markets" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Trading Markets</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The principal trading markets for Sony Corporation&#146;s
ordinary shares are the Tokyo Stock Exchange (the
&#147;TSE&#148;) in the form of Common Stock and the New York
Stock Exchange (the &#147;NYSE&#148;) in the form of American
Depositary Shares (&#147;ADSs&#148;) evidenced by American
Depositary Receipts (&#147;ADRs&#148;). Each ADS represents one
share of Common Stock.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation&#146;s Common Stock, with no par value per
share, has been listed on the TSE since 1958, and is also listed
on the London Stock Exchange in the United Kingdom and the Osaka
Securities Exchange in Japan. In October 2005, due to the
prevalence of borderless stock trading, and the fact that the
trading volume of Sony&#146;s shares on the following exchanges
has been extremely low, the Board of Directors of Sony
Corporation resolved to apply for delisting from the following
exchanges: Pacific, Chicago, Toronto, Paris, Frankfurt,
D&#252;sseldorf, Brussels, Vienna, and Swiss. The delisting
procedures of these stock exchanges was completed as of
March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation&#146;s ADRs have been traded in the
U.S.&nbsp;since 1961 and have been listed on the NYSE since 1970
under the symbol &#147;SNE.&#148; Sony Corporation&#146;s ADRs
are issued and exchanged by JPMorgan Chase Bank, as Depositary.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2001, Sony Corporation issued shares of subsidiary
tracking stock in Japan, the economic value of which was
intended to be linked to the economic value of Sony
Communication Network Corporation, a consolidated subsidiary of
Sony Corporation which is engaged in Internet-related services.
The subsidiary tracking stock, totaling 3,072,000&nbsp;shares,
was issued at 3,300 yen per share and listed on the TSE. The
shares were not offered or sold in the U.S.&nbsp;In October
2005, the Board of Directors of Sony Corporation decided to
terminate all shares of subsidiary tracking stock with the
method of compulsory conversion to shares of Sony&#146;s common
stock. All shares of subsidiary tracking stock were converted to
shares of Sony&#146;s common stock on December&nbsp;1, 2005.
Refer to &#147;History and Development of the Company&#148; in
&#147;Item&nbsp;4. <I>Information on the Company.</I>&#148;
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">101

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='153'></A>
</DIV>

<!-- link1 "Trading on the TSE and NYSE" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Trading on the TSE and NYSE</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth for the periods indicated the
reported high and low sales prices per share of Sony
Corporation&#146;s Common Stock on the TSE and the reported high
and low sales prices per share of Sony Corporation&#146;s ADS on
the NYSE.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Tokyo Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>New York Stock</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Exchange Price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Exchange Price</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Per Share of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Per Share of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Common Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>ADS</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>High</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Low</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>High</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Low</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(U.S.&nbsp;dollars)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Annual highs and lows*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    The fiscal year ended March&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32.80</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    The fiscal year ended March&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34.85</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    The fiscal year ended March&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23.16</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Quarterly highs and lows*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    The fiscal year ended March&nbsp;31, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1st&nbsp;quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33.95</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2nd&nbsp;quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32.35</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    3rd&nbsp;quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33.77</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    4th&nbsp;quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36.26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    The fiscal year ended March&nbsp;31, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1st&nbsp;quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34.38</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2nd&nbsp;quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32.38</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    3rd&nbsp;quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31.80</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    4th&nbsp;quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40.90</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Monthly highs and lows*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    January</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40.90</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    February</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    March</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44.39</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    April</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.70</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    May</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44.75</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    June</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40.67</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    July</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39.30</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    August (through August&nbsp;30)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.26</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    Stock price data are based on prices throughout the sessions for
    each corresponding period at each stock exchange.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On August&nbsp;30, 2006, the closing sales price per share of
Sony Corporation&#146;s Common Stock on the TSE was 4,990 yen.
On August&nbsp;30, 2006, the closing sales price per share of
Sony Corporation&#146;s ADS on the NYSE was 42.72
U.S.&nbsp;dollars.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">102

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='154'></A>
</DIV>

<!-- link1 "Selling Shareholders" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Selling Shareholders</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='155'></A>
</DIV>

<!-- link1 "Dilution" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Dilution</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='156'></A>
</DIV>

<!-- link1 "Expenses of the Issue" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Expenses of the Issue</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='157'></A>
</DIV>

<!-- link1 "Item 10. Additional Information" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;10.</B></TD>
    <TD>
    <B><I>Additional Information</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='158'></A>
</DIV>

<!-- link1 "Share Capital" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Share Capital</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='159'></A>
</DIV>

<!-- link1 "Memorandum and Articles of Association" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Memorandum and Articles of Association</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Organization</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation is a joint stock corporation <I>(Kabushiki
Kaisha)</I> incorporated in Japan under the Company Law
<I>(Kaishaho) </I>of Japan. It is registered in the Commercial
Register <I>(Shogyo Tokibo) </I>maintained by the Shinagawa
Branch Office of the Tokyo Bureau of Legal Affairs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Objects and purposes</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Articles of Incorporation of Sony Corporation provide that
its purpose is to engage in the following business activities:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(i)</TD>
    <TD align="left">
    manufacture and sale of electronic and electrical machines and
    equipment, medical instruments, optical instruments and other
    equipment, machines and instruments;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(ii)</TD>
    <TD align="left">
    planning, production and sale of audio-visual software and
    computer software programs;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(iii)</TD>
    <TD align="left">
    manufacture and sale of metal industrial products, chemical
    industrial products and ceramic industrial products, textile
    products, paper products and wood-crafted articles, daily
    necessities, foodstuffs and toys, transportation machines,
    equipment, petroleum and coal products;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(iv)</TD>
    <TD align="left">
    real estate activities, construction business, transportation
    business and warehousing business;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(v)</TD>
    <TD align="left">
    publishing business and printing business;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(vi)</TD>
    <TD align="left">
    advertising agency business, insurance agency business,
    broadcasting enterprise, recreation business such as travel,
    management of sporting facilities, etc. and other service
    enterprises;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(vii)</TD>
    <TD align="left">
    financial business;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(viii)</TD>
    <TD align="left">
    Type I and Type&nbsp;II telecommunications business under the
    Telecommunications Business Law;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(ix)</TD>
    <TD align="left">
    investing in stocks and bonds, etc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(x)</TD>
    <TD align="left">
    manufacture, sale, export and import of products which are
    incidental to or related to those mentioned above;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(xi)</TD>
    <TD align="left">
    rendering of services related to those mentioned above;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(xii)</TD>
    <TD align="left">
    investment in businesses mentioned above operated by other
    companies or persons;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(xiii)</TD>
    <TD align="left">
    all businesses which are incidental to or related to those
    mentioned above.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">103

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Directors</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Company Law, Directors have no power to execute the
business of Sony Corporation except in limited circumstances as
permitted by law. If a Director also serves concurrently as a
Corporate Executive Officer, then he or she can execute the
business of Sony Corporation in the capacity of Corporate
Executive Officer. Under the Company Law, Directors must refrain
from engaging in any business competing with Sony Corporation
unless approved by the Board of Directors, and any Director who
has a material interest in the subject matter of a resolution to
be taken by the Board of Directors cannot vote on such
resolution. The amount of remuneration to each Director is
determined by the Compensation Committee, which consists of
Directors, the majority of whom are outside Directors (Refer to
&#147;Board Practices&#148; in &#147;Item&nbsp;6. <I>Directors,
Senior Management and Employees</I>&#148;). No member of the
Compensation Committee may vote on a resolution with respect to
his or her own compensation as a Director or a Corporate
Executive Officer.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Neither the Company Law nor Sony Corporation&#146;s Articles of
Incorporation make a special provision as to the borrowing
powers exercisable by Directors (subject to requisite internal
authorizations as required by the Company Law), their retirement
age, or a requirement to hold any shares of capital stock of
Sony Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For more information on Directors, see &#147;Board
Practices&#148; in &#147;Item&nbsp;6. <I>Directors, Senior
Management and Employees.</I>&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Capital stock</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(General)</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unless indicated otherwise, set forth below is information
relating to Sony Corporation&#146;s capital stock, including
brief summaries of the relevant provisions of Sony
Corporation&#146;s Articles of Incorporation and Share Handling
Regulations, as currently in effect, and of the Company Law,
which came into effect on May&nbsp;1, 2006, and related
legislation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All issued shares are fully-paid and non-assessable, and are in
registered form. Transfer of shares is effected by delivery of
share certificates, but in order to assert shareholders&#146;
rights against Sony Corporation, a shareholder must, except as
set forth below, have its name and address registered on Sony
Corporation&#146;s register of shareholders, in accordance with
Sony Corporation&#146;s Share Handling Regulations. The
registered beneficial holder of deposited shares underlying the
American Depositary Shares (&#147;ADSs&#148;) is the Depositary
for the ADSs. Accordingly, holders of ADSs will not be able to
directly assert shareholders&#146; rights against Sony
Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mitsubishi UFJ Trust and Banking Corporation is the transfer
agent for Sony Corporation&#146;s capital stock. As such, it
keeps Sony Corporation&#146;s registers of shareholders and
beneficial shareholders in its office at 4-5, Marunouchi
1-chome, Chiyoda-ku, Tokyo and records transfers of shares upon
presentation of the certificates representing the transferred
shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A holder of shares may choose, at its discretion, to participate
in the central clearing system for share certificates under the
Law Concerning Central Clearing of Share Certificates and Other
Securities of Japan. Participating shareholders must deposit
certificates representing all of the shares to be included in
this clearing system with Japan Securities Depository Center,
Inc., or JASDEC. If a holder is not a participating institution
in JASDEC, it must participate through a participating
institution, such as a securities company or bank having a
clearing account with JASDEC. All shares deposited with JASDEC
will be registered in the name of JASDEC on Sony
Corporation&#146;s register of shareholders. Each participating
shareholder will in turn be registered on Sony
Corporation&#146;s register of beneficial shareholders and be
treated in the same way as shareholders registered on Sony
Corporation&#146;s register of shareholders. Entry of the share
transfer in the book maintained by JASDEC for participating
institutions, or in the book maintained by a participating
institution for its customers, has the same effect as delivery
of share certificates. The registered beneficial shareholders
may exercise the rights attached to the shares, such as voting
rights, and will receive dividends (if any) and notices to
shareholders directly from Sony Corporation. The shares held by
a person as a registered
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">104

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
shareholder and those held by the same person as a registered
beneficial shareholder are aggregated for these purposes.
Beneficial owners may at any time withdraw their shares from
deposit and receive share certificates.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A law to establish a new central clearing system for shares of
listed companies and to eliminate the issuance and use of
certificates for such shares was promulgated in June 2004 and
the relevant part of the law will come into effect within five
years of the date of the promulgation. On the effective date, a
new central clearing system will be established and the shares
of all Japanese companies listed on any Japanese stock exchange,
including the shares of Common Stock of Sony Corporation, will
be subject to the new central clearing system. On the same day,
all existing share certificates will become null and void. The
transfer of such shares will be effected through entry in the
books maintained under the new central clearing system.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(Authorized capital)</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Articles of Incorporation of Sony Corporation, Sony
Corporation may only issue shares of Common Stock. Sony
Corporation&#146;s Articles of Incorporation provide that the
total number of shares authorized to be issued by Sony
Corporation is 3.6&nbsp;billion shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All shares of capital stock of Sony Corporation have no par
value.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(Distribution of Surplus)</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Distribution of Surplus&nbsp;&#151; General</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Company Law, distributions of cash or other assets by
joint stock corporations to their shareholders, so called
&#147;dividends&#148;, are referred to as &#147;distributions of
Surplus&#148; (&#147;Surplus&#148; is defined in
&#147;&#151;&nbsp;Restriction on distributions of
Surplus&#148;). Sony Corporation may make distributions of
Surplus to shareholders any number of times per business year,
subject to certain limitations described in &#147;&#151;
Restriction on distributions of Surplus.&#148; Distributions of
Surplus are required in principle to be authorized by a
resolution of a General Meeting of Shareholders, but Sony
Corporation shall authorize distributions of Surplus by a
resolution of the Board of Directors as long as its
non-consolidated annual financial statements and certain
documents for the last business year present fairly its assets
and profit or loss, as required by ordinances of the Ministry of
Justice.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Distributions of Surplus may be made in cash or in kind in
proportion to the number of shares of Common Stock held by each
shareholder. A resolution of a General Meeting of Shareholders
or the Board of Directors authorizing a distribution of Surplus
must specify the kind and aggregate book value of the assets to
be distributed, the manner of allocation of such assets to
shareholders, and the effective date of the distribution. If a
distribution of Surplus is to be made in kind, Sony Corporation
may, pursuant to a resolution of a General Meeting of
Shareholders or (as the case may be) the Board of Directors,
grant a right to the shareholders to require Sony Corporation to
make such distribution in cash instead of in kind. If no such
right is granted to shareholders, the relevant distribution of
Surplus must be approved by a special resolution of a General
Meeting of Shareholders (see &#147;&#151;&nbsp;Voting
Rights&#148; with respect to a &#147;special resolution&#148;).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Articles of Incorporation of Sony Corporation,
year-end dividends and interim dividends may be distributed to
shareholders of record as of March&nbsp;31 and September&nbsp;30
each year, respectively, in proportion to the number of shares
of Common Stock held by each shareholder following approval by
the General Meeting of Shareholders or the Board of Directors.
Sony Corporation is not obliged to pay any dividends unclaimed
for a period of five years after the date on which they first
became payable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In Japan, the ex-dividend date and the record date for dividends
precede the date of determination of the amount of the dividends
to be paid. The price of the shares of Common Stock generally
goes ex-dividend on the third business day prior to the record
date.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Distribution of Surplus&nbsp;&#151; Restriction on
distribution of Surplus</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In making a distribution of Surplus, Sony Corporation must,
until the sum of its additional paid-in capital and legal
reserve reaches one quarter of its stated capital, set aside in
its additional paid-in capital and/or legal reserve an amount
equal to one-tenth of the amount of Surplus so distributed.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The amount of Surplus at any given time must be calculated in
accordance with the following formula:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A + B + C + D - (E + F + G)
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the above formula:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="5%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#147;A&#148;</TD>
    <TD align="left">
    the total amount of other capital surplus and other retained
    earnings, each such amount being that appearing on the
    non-consolidated balance sheet as of the end of the last
    business year</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#147;B&#148;</TD>
    <TD align="left">
    (if Sony Corporation has disposed of its treasury stock after
    the end of the last business year) the amount of the
    consideration for such treasury stock received by Sony
    Corporation less the book value thereof</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#147;C&#148;</TD>
    <TD align="left">
    (if Sony Corporation has reduced its stated capital after the
    end of the last business year) the amount of such reduction less
    the portion thereof that has been transferred to additional
    paid-in capital or legal reserve (if any)</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#147;D&#148;</TD>
    <TD align="left">
    (if Sony Corporation has reduced its additional paid-in capital
    or legal reserve after the end of the last business year) the
    amount of such reduction less the portion thereof that has been
    transferred to stated capital (if any)</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#147;E&#148;</TD>
    <TD align="left">
    (if Sony Corporation has cancelled its treasury stock after the
    end of the last business year) the book value of such treasury
    stock</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#147;F&#148;</TD>
    <TD align="left">
    (if Sony Corporation has distributed Surplus to its shareholders
    after the end of the last business year) the total book value of
    the Surplus so distributed</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#147;G&#148;</TD>
    <TD align="left">
    certain other amounts set forth in ordinances of the Ministry of
    Justice, including (if Sony Corporation has reduced Surplus and
    increased its stated capital, additional paid-in capital or
    legal reserve after the end of the last business year) the
    amount of such reduction and (if Sony Corporation has
    distributed Surplus to the shareholders after the end of the
    last business year) the amount set aside in additional paid-in
    capital or legal reserve (if any) as required by ordinances of
    the Ministry of Justice.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The aggregate book value of Surplus distributed by Sony
Corporation may not exceed a prescribed distributable amount
(the &#147;Distributable Amount&#148;), as calculated on the
effective date of such distribution. The Distributable Amount at
any given time shall be equal to the amount of Surplus less the
aggregate of the followings:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(a)</TD>
    <TD align="left">
    the book value of its treasury stock;</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(b)</TD>
    <TD align="left">
    the amount of consideration for any of treasury stock disposed
    of by Sony Corporation after the end of the last business
    year;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(c)</TD>
    <TD align="left">
    certain other amounts set forth in ordinances of the Ministry of
    Justice, including (if the sum of one-half of goodwill and the
    deferred assets exceeds the total of stated capital, additional
    paid-in capital and legal reserve, each such amount being that
    appearing on the non-consolidated balance sheet as of the end of
    the last business year) all or certain part of such exceeding
    amount as calculated in accordance with the ordinances of the
    Ministry of Justice.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If Sony Corporation has become at its option a company with
respect to which consolidated balance sheets should also be
considered in the calculation of the Distributable Amount
(<I>renketsu haito kisei tekiyo kaisha</I>), Sony Corporation
shall further deduct from the amount of Surplus the excess
amount, if any, of (x)&nbsp;the total amount of
stockholders&#146; equity appearing on the non-consolidated
balance sheet as of the end of the last business year and
certain other amounts set forth by an ordinance of the Ministry
of Justice over (y)&nbsp;the total amount of stockholders&#146;
equity and certain other amounts set forth by an ordinance of
the Ministry of Justice appearing on the consolidated balance
sheet as of the end of the last business year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If Sony Corporation has prepared interim financial statements as
described below, and if such interim financial statements have
been approved by the Board of Directors or (if so required by
the Company Law) by
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
a General Meeting of Shareholders, then the Distributable Amount
must be adjusted to take into account the amount of profit or
loss, and the amount of consideration for any of the treasury
stock disposed of by Sony Corporation, during the period in
respect of which such interim financial statements have been
prepared. Sony Corporation may prepare non-consolidated interim
financial statements consisting of a balance sheet as of any
date subsequent to the end of the last business year and an
income statement for the period from the first day of the
current business year to the date of such balance sheet. Interim
financial statements so prepared by Sony Corporation must be
audited by the Audit Committee and the independent auditor, as
required by ordinances of the Ministry of Justice.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(Stock splits)</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation may at any time split shares in issue into a
greater number of shares at the determination of the CEO.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event of a stock split, generally, shareholders will not
be required to exchange share certificates for new share
certificates, but certificates representing the additional
shares resulting from the stock split will be issued to
shareholders. When a stock split is to be made Sony Corporation
must give public notice of the stock split, specifying the
record date thereof, at least two weeks prior to such record
date.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(Consolidation of shares)</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation may at any time consolidate issued shares into
a smaller number of shares by a special shareholders resolution
(as defined in &#147;<I>(Voting Rights)</I>&#148;). When a
consolidation of shares is to be made, Sony Corporation must
give public notice and notice to each shareholder that, within a
period of not less than one month specified in the notice, share
certificates must be submitted to Sony Corporation for exchange.
Sony Corporation must disclose the reason for the consolidation
of shares at the general meeting of shareholders.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(General Meeting of Shareholders)</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Ordinary General Meeting of Shareholders of Sony Corporation
for each business year is normally held in June of each year in
Tokyo, Japan. In addition, Sony Corporation may hold an
Extraordinary General Meeting of Shareholders whenever necessary
by giving notice thereof at least two weeks prior to the date
set for the meeting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notice of a shareholders&#146; meeting setting forth the place,
time and purpose thereof must be mailed to each shareholder
having voting rights (or, in the case of a non-resident
shareholder, to such shareholder&#146;s resident proxy or
mailing address in Japan) at least two weeks prior to the date
set for the meeting. Under the Company Law, such notice may be
given to shareholders by electronic means, subject to obtaining
consent by the relevant shareholders. The record date for an
Ordinary General Meeting of Shareholders is March&nbsp;31 of
each year.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any shareholder or group of shareholders holding at least three
percent of the total number of voting rights for a period of six
months or more may require the convocation of a General Meeting
of Shareholders for a particular purpose. Unless such a
shareholders&#146; meeting is convened promptly or a convocation
notice of a meeting which is to be held not later than eight
weeks from the day of such demand is dispatched, the requiring
shareholder may, upon obtaining a court approval, convene such a
shareholders&#146; meeting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any shareholder or group of shareholders holding at least 300
voting rights or one percent of the total number of voting
rights for a period of six months or more may propose a matter
to be considered at a General Meeting of Shareholders by
submitting a written request to Sony Corporation at least eight
weeks prior to the date set for such meeting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the Articles of Incorporation so provide, any of the minimum
voting rights or percentages, time periods and number of voting
rights necessary for exercising the minority shareholder rights
described above may be decreased or shortened.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">107

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(Voting rights)</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
So long as Sony Corporation maintains the unit share system, a
holder of shares constituting one or more units is entitled to
one vote for each such unit of stock (Refer to &#147;<I>(Unit
share system)</I>&#148; below, currently 100&nbsp;shares
constitute one unit), except that no voting rights with respect
to shares of capital stock of Sony Corporation are afforded to
Sony Corporation or any corporate or certain other entity more
than one-quarter of the total voting rights of which are
directly or indirectly held by Sony Corporation. If Sony
Corporation eliminates from its Articles of Incorporation the
provisions relating to units of stock, holders of capital stock
will have one vote for each share they hold. Except as otherwise
provided by law or by the Articles of Incorporation of Sony
Corporation, a resolution can be adopted at a General Meeting of
Shareholders by a majority of the number of voting rights of all
the shareholders represented at the meeting. The Company Law and
Sony Corporation&#146;s Articles of Incorporation provide,
however, that the quorum for the election of Directors shall not
be less than one-third of the total number of voting rights of
all the shareholders. Sony Corporation&#146;s shareholders are
not entitled to cumulative voting in the election of Directors.
Shareholders may cast their votes in writing and may also
exercise their voting rights through proxies, provided that the
proxies are also shareholders holding voting rights.
Shareholders may also exercise their voting rights by electronic
means pursuant to the method designated by Sony Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company Law and the Articles of Incorporation of Sony
Corporation provide that in order to amend the Articles of
Incorporation and in certain other instances, including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(1)</TD>
    <TD align="left">
    acquisition of its own shares from a specific party other than
    its subsidiaries;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(2)</TD>
    <TD align="left">
    consolidation of shares;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(3)</TD>
    <TD align="left">
    any offering of new shares at a &#147;specially favorable&#148;
    price (or any offering of stock acquisition rights to acquire
    shares of capital stock, or bonds with stock acquisition rights
    at &#147;specially favorable&#148; conditions) to any persons
    other than shareholders;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(4)</TD>
    <TD align="left">
    the exemption of liability of a Director, Corporate Executive
    Officer or independent auditor with certain exceptions;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(5)</TD>
    <TD align="left">
    a reduction of stated capital with certain exceptions;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(6)</TD>
    <TD align="left">
    a distribution of in-kind dividends which meets certain
    requirements;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(7)</TD>
    <TD align="left">
    dissolution, merger, consolidation, or corporate split with
    certain exceptions;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(8)</TD>
    <TD align="left">
    the transfer of the whole or a material part of the business;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(9)</TD>
    <TD align="left">
    the taking over of the whole of the business of any other
    corporation with certain exceptions;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(10)</TD>
    <TD align="left">
    share exchange or share transfer for the purpose of establishing
    100&nbsp;percent parent-subsidiary relationships with certain
    exceptions,</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
the quorum shall be one-third of the total number of voting
rights of all the shareholders, and the approval by at least
two-thirds of the number of voting rights of all the
shareholders represented at the meeting is required (the
&#147;special shareholders resolutions&#148;).
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(Issue of additional shares and pre-emptive rights)</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Holders of Sony Corporation&#146;s shares of capital stock have
no pre-emptive rights under its Articles of Incorporation.
Authorized but unissued shares may be issued at such times and
upon such terms as the Board of Directors or the CEO determines,
subject to the limitations as to the offering of new shares at a
&#147;specially favorable&#148; price mentioned under
&#147;<I>(Voting rights)</I>&#148; above. The Board of Directors
or the CEO may, however, determine that shareholders of a
particular class of stock shall be given subscription rights
regarding a particular issue of new shares of that class, in
which case such rights must be given on uniform terms to all
shareholders of that class of stock as at a record date of which
not less than two weeks&#146; prior public notice must be given.
Each of the shareholders to whom such rights are given must also
be given notice of the expiry thereof at least two weeks prior
to the date on which such rights expire.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to certain conditions, Sony Corporation may issue stock
acquisition rights by a resolution of the Board of Directors or
a determination by the CEO. Holders of stock acquisition rights
may exercise their rights to acquire a certain number of shares
within the exercise period as prescribed in the terms of their
stock acquisition rights. Upon exercise of stock acquisition
rights, Sony Corporation will be obliged to issue the relevant
number of new shares or alternatively to transfer the necessary
number of treasury stock held by it.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In cases where a particular issue of new shares or stock
acquisition rights (i)&nbsp;violates laws and regulations or
Sony Corporation&#146;s Articles of Incorporation, or
(ii)&nbsp;will be performed in a manner materially unfair, and
shareholders may suffer disadvantages therefrom, such
shareholder may file an injunction to enjoin such issue with a
court.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(Liquidation rights)</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event of a liquidation of Sony Corporation, the assets
remaining after payment of all debts, liquidation expenses and
taxes will be distributed among the holders of shares of Common
Stock in proportion to the respective numbers of shares of
Common Stock held.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(Record date)</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As mentioned above, March&nbsp;31 is the record date for Sony
Corporation&#146;s year-end dividends, if declared. So long as
Sony Corporation maintains the unit share system, the
shareholders and beneficial shareholders who are registered as
the holders of one or more unit of stock in Sony
Corporation&#146;s register of shareholders and/or beneficial
shareholders at the end of each March&nbsp;31 are also entitled
to exercise shareholders&#146; rights at the Ordinary General
Meeting of Shareholders with respect to the business year ending
on such March&nbsp;31. September&nbsp;30 is the record date for
interim dividends. In addition, Sony Corporation may set a
record date for determining the shareholders and/or beneficial
shareholders entitled to other rights and for other purposes by
giving at least two weeks prior public notice.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(Acquisition by Sony Corporation of its capital stock)</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Company Law and the Articles of Incorporation of Sony
Corporation, Sony Corporation may acquire shares of Common Stock
(i)&nbsp;by soliciting all the shareholders to offer to sell
shares held by them (in this case, the certain terms of such
acquisition, such as the total number of shares to be purchased
and the total amount of consideration, shall be set by (as long
as its non-consolidated annual financial statements and certain
documents for the last business year present fairly its assets
and profit or loss, as required by ordinances of the Ministry of
Justice) a resolution of Board of Directors or an ordinary
resolution of a General Meeting of Shareholders in advance, and
acquisition shall be effected pursuant to a resolution of the
Board of Directors), (ii)&nbsp;from a specific shareholder other
than any of its subsidiaries (pursuant to a special resolution
of a General Meeting of Shareholders), (iii)&nbsp;from any of
its subsidiaries (pursuant to a determination by the CEO), or
(iv)&nbsp;by way of purchase on any Japanese stock exchange on
which Sony Corporation&#146;s shares of common stock are listed
or by way of tender offer (in either case pursuant to an
ordinary resolution of a General Meeting of Shareholders or a
resolution of the Board of Directors). In the case of
(ii)&nbsp;above, any other shareholder may make a request to
Sony Corporation that such other shareholder be included as a
seller in the proposed purchase, provided that no such right
will be available if the purchase price or any other
consideration to be received by the relevant specific
shareholder will not exceed the last trading price of the shares
on the relevant stock exchange on the day immediately preceding
the date on which the resolution mentioned in (ii)&nbsp;above
was adopted (or, if there is no trading in the shares on the
stock exchange or if the stock exchange is not open on such day,
the price at which the shares are first traded on such stock
exchange thereafter).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The total amount of the purchase price of shares of Common Stock
may not exceed the Distributable Amount, as described in
&#147;&#151;&nbsp;Distributions of Surplus&nbsp;&#151;
Restriction on distributions of Surplus.&#148;
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shares acquired by Sony Corporation may be held for any period
or may be retired at the determination of the CEO. Sony
Corporation may also transfer (by public or private sale or
otherwise) to any person the shares held by it, subject to a
determination by the CEO, and subject also to other requirements
similar to
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
those applicable to the issuance of new shares, as described in
&#147;<I>(Issue of additional shares and pre-emptive
rights)</I>&#148; above. Sony Corporation may also utilize its
treasury stock for the purpose of transfer to any person upon
exercise of stock acquisition rights or for the purpose of
acquiring another company by way of merger, share exchange or
corporate split through exchange of treasury stock for shares or
assets of the acquired company.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(Unit share system)</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Articles of Incorporation of Sony Corporation provide that
100&nbsp;shares constitute one &#147;unit&#148; of shares of
stock. The Board of Directors or the Corporate Executive Officer
to whom the authority to make such a determination has been
delegated by a resolution of the Board of Directors is permitted
to amend the Articles of Incorporation to reduce the number of
shares that constitute a unit or to abolish the unit share
system entirely. The number of shares constituting one unit
cannot exceed 1,000&nbsp;shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the unit share system, shareholders have one voting right
for each unit of stock that they hold. Any number of shares less
than one full unit have neither voting rights nor rights related
to voting rights. The Articles of Incorporation and Share
Handling Regulations of Sony Corporation provide that no share
certificates shall be issued with respect to any number of
shares constituting less than one full unit, unless Sony
Corporation deems the issue of such share certificates to be
necessary for any shareholder(s). As the transfer of shares
normally requires delivery of the certificates, fractions of a
unit for which no share certificate has been issued are not
transferable. Moreover, holders of shares constituting less than
one unit will have no other shareholder rights if Sony
Corporation&#146;s Articles of Incorporation so provide, except
that such holders may not be deprived of certain rights
specified in the Company Law or an ordinance of the Ministry of
Justice, including the right to receive distribution of Surplus.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A holder of shares constituting less than one full unit may
require Sony Corporation to purchase such Shares at their market
value in accordance with the provisions of the Share Handling
Regulations of Sony Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Articles of Incorporation of Sony Corporation provide that a
holder of shares constituting less than one full unit may
request Sony Corporation to sell to such holder such amount of
shares which will, when added together with the shares
constituting less than one full unit, constitute one full unit
of stock. Such request by a holder and the sale by Sony
Corporation must be made in accordance with the provisions of
the Share Handling Regulations of Sony Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A holder who owns ADRs evidencing less than 100&nbsp;ADSs will
indirectly own less than one full unit. Although, as discussed
above, under the unit share system holders of less than one full
unit have the right to require Sony Corporation to purchase
their shares or sell shares held by Sony Corporation to such
holders, holders of ADRs evidencing ADSs that represent other
than integral multiples of whole units are unable to withdraw
the underlying shares of capital stock representing less than
one full unit and, therefore, are unable, as a practical matter,
to exercise the rights to require Sony Corporation to purchase
such underlying shares or sell shares held by Sony Corporation
to such holders. As a result, access to the Japanese markets by
holders of ADRs through the withdrawal mechanism will not be
available for dispositions of shares in lots less than one full
unit. The unit share system does not affect the transferability
of ADSs, which may be transferred in lots of any size.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(Sale by Sony Corporation of shares held by shareholders
    whose location is unknown)</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation is not required to send a notice to a
shareholder if a notice to such shareholder fails to arrive at
the registered address of the shareholder in Sony
Corporation&#146;s register of shareholders or at the address
otherwise notified to Sony Corporation continuously for five
years or more.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, Sony Corporation may sell or otherwise dispose of
shares of capital stock for which the location of the
shareholder is unknown. Generally, if (i)&nbsp;notices to a
shareholder fail to arrive continuously for five years or more
at the shareholder&#146;s registered address in Sony
Corporation&#146;s register of shareholders or at the address
otherwise notified to Sony Corporation, and (ii)&nbsp;the
shareholder fails to receive distributions of
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Surplus on the shares continuously for five years or more at the
address registered in Sony Corporation&#146;s register of
shareholders or at the address otherwise notified to Sony
Corporation, Sony Corporation may sell or otherwise dispose of
the shareholder&#146;s shares at the then market price of the
shares by a determination of a Corporate Executive Officer and
after giving at least three months&#146; prior public and
individual notice, and hold or deposit the proceeds of such sale
or disposal of shares for such shareholder.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Reporting of substantial shareholdings</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Securities and Exchange Law of Japan and its related
regulations require any person, regardless of residence, who has
become, beneficially and solely or jointly, a holder of more
than five percent of the total issued shares of capital stock of
a company listed on any Japanese stock exchange or whose shares
are traded on the
<FONT style="white-space: nowrap">over-the</FONT>-counter market
in Japan to file with the Director General of the competent
Regional Finance Bureau of the Ministry of Finance within five
business days a report concerning such shareholdings.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A similar report must also be filed in respect of any subsequent
change of one percent or more in any such holding, with certain
exceptions. For this purpose, shares issuable to such persons
upon conversion of convertible securities or exercise of share
subscription warrants or stock acquisition rights are taken into
account in determining both the number of shares held by such
holders and the issuer&#146;s total issued share capital. Copies
of such report must also be furnished to the issuer of such
shares and all Japanese stock exchanges on which the shares are
listed.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Except for the general limitation under Japanese anti-trust and
anti-monopoly regulations against holding of shares of capital
stock of a Japanese corporation which leads or may lead to a
restraint of trade or monopoly, and except for general
limitations under the Company Law or Sony Corporation&#146;s
Articles of Incorporation on the rights of shareholders
applicable regardless of residence or nationality, there is no
limitation under Japanese laws and regulations applicable to
Sony Corporation or under its Articles of Incorporation on the
rights of non-resident or foreign shareholders to hold or
exercise voting rights on the shares of capital stock of Sony
Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There is no provision in Sony Corporation&#146;s Articles of
Incorporation or
<FONT style="white-space: nowrap">by-laws</FONT> that would have
an effect of delaying, deferring or preventing a change in
control of Sony Corporation and that would operate only with
respect to merger, acquisition or corporate restructuring
involving Sony Corporation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='160'></A>
</DIV>

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<B>Material Contracts</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='161'></A>
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Exchange Controls</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Foreign Exchange and Foreign Trade Law of Japan and its
related cabinet orders and ministerial ordinances (the
&#147;Foreign Exchange Regulations&#148;) govern the acquisition
and holding of shares of capital stock of Sony Corporation by
&#147;exchange non-residents&#148; and by &#147;foreign
investors.&#148; The Foreign Exchange Regulations currently in
effect do not, however, affect transactions between exchange
non-residents to purchase or sell shares outside Japan using
currencies other than Japanese yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Exchange non-residents are:
</DIV>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    individuals who do not reside in Japan;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    corporations whose principal offices are located outside Japan.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Generally, branches and other offices of non-resident
corporations that are located within Japan are regarded as
residents of Japan. Conversely, branches and other offices of
Japanese corporations located outside Japan are regarded as
exchange non-residents.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Foreign investors are:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    individuals who are exchange non-residents;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    corporations that are organized under the laws of foreign
    countries or whose principal offices are located outside of
    Japan;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    corporations (1)&nbsp;of which 50&nbsp;percent or more of their
    shares are held by individuals who are exchange non-residents
    and/or corporations (a)&nbsp;that are organized under the laws
    of foreign countries or (b)&nbsp;whose principal offices are
    located outside of Japan or (2)&nbsp;a majority of whose
    officers, or officers having the power of representation, are
    individuals who are exchange non- residents.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In general, the acquisition of shares of a Japanese company
(such as the shares of capital stock of Sony Corporation) by an
exchange non-resident from a resident of Japan is not subject to
any prior filing requirements. In certain limited circumstances,
however, the Minister of Finance may require prior approval of
an acquisition of this type. While prior approval, as described
above, is not required, in the case where a resident of Japan
transfers shares of a Japanese company (such as the shares of
capital stock of Sony Corporation) for consideration exceeding
100&nbsp;million yen to an exchange non-resident, the resident
of Japan who transfers the shares is required to report the
transfer to the Minister of Finance within 20&nbsp;days from the
date of the transfer, unless the transfer was made through a
bank, securities company or financial futures trader licensed
under Japanese law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a foreign investor acquires shares of a Japanese company that
is listed on a Japanese stock exchange (such as the shares of
capital stock of Sony Corporation) or that is traded on an
<FONT style="white-space: nowrap">over-the</FONT>-counter market
in Japan and, as a result of the acquisition, the foreign
investor, in combination with any existing holdings, directly or
indirectly holds 10&nbsp;percent or more of the issued shares of
the relevant company, the foreign investor must file a report of
the acquisition with the Minister of Finance and any other
competent Ministers having jurisdiction over that Japanese
company within 15&nbsp;days from and including the date of the
acquisition, except where the offering of the company&#146;s
shares was made overseas. In limited circumstances, such as
where the foreign investor is in a country that is not listed on
an exemption schedule in the Foreign Exchange Regulations, a
prior notification of the acquisition must be filed with the
Minister of Finance and any other competent Ministers, who may
then modify or prohibit the proposed acquisition.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Foreign Exchange Regulations, dividends paid on and
the proceeds from sales in Japan of shares of capital stock of
Sony Corporation held by non-residents of Japan may generally be
converted into any foreign currency and repatriated abroad.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='162'></A>
</DIV>

<!-- link1 "Taxation" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Taxation</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a summary of the major Japanese national tax
and U.S.&nbsp;federal income tax consequences of the ownership,
acquisition and disposition of shares of Common Stock of Sony
Corporation and of ADRs evidencing ADSs representing shares of
Common Stock of Sony Corporation by a non-resident of Japan or a
non-Japanese corporation without a permanent establishment in
Japan. The summary does not purport to be a comprehensive
description of all of the tax considerations that may be
relevant to any particular investor, and does not take into
account any specific individual circumstances of any particular
investor. Accordingly, holders of shares of Common Stock or ADSs
of Sony Corporation are encouraged to consult their tax advisors
regarding the application of the considerations discussed below
to their particular circumstances.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This summary is based upon the representations of the Depositary
and the assumption that each obligation in the deposit agreement
in relation to the ADSs dated as of June&nbsp;1, 1961, as
amended and restated as of October&nbsp;31, 1991, as further
amended and restated as of March&nbsp;17, 1995, and in any
related agreement, will be performed in accordance with its
terms.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For purposes of the income tax convention between Japan and the
United States (the &#147;Treaty&#148;) and the
U.S.&nbsp;Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;), U.S.&nbsp;holders of ADSs generally will be
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
treated as owning shares of Common Stock of Sony Corporation
underlying the ADSs evidenced by the ADRs. For the purposes of
the following discussion, a &#147;U.S.&nbsp;holder&#148; is a
holder that:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(i)</TD>
    <TD align="left">
    is a resident of the U.S.&nbsp;for purposes of the Treaty;</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(ii)</TD>
    <TD align="left">
    does not maintain a permanent establishment in Japan
    (a)&nbsp;with which shares of Common Stock or ADSs of Sony
    Corporation are effectively connected and through which the
    U.S.&nbsp;holder carries on or has carried on business or
    (b)&nbsp;of which shares of Common Stock or ADSs of Sony
    Corporation form part of the business property;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(iii)</TD>
    <TD align="left">
    is eligible for benefits under the Treaty with respect to income
    and gain derived in connection with shares of Common Stock or
    ADSs of Sony Corporation.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Japanese Taxation</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a summary of the principal Japanese tax
consequences (limited to national taxes) to holders of shares of
Common Stock of Sony Corporation and of ADRs evidencing ADSs
representing shares of Common Stock of Sony Corporation who are
non-residents of Japan or non-Japanese corporations, without a
permanent establishment in Japan (&#147;non-resident
Holders&#148;).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Generally, a non-resident of Japan or a non-Japanese corporation
is subject to Japanese withholding tax on dividends paid by
Japanese corporations. Sony Corporation withholds taxes from
dividends it pays as required by Japanese law. Stock splits are,
in general, not a taxable event.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the absence of an applicable tax treaty, convention or
agreement reducing the maximum rate of Japanese withholding tax
or allowing exemption from Japanese withholding tax, the rate of
Japanese withholding tax applicable to dividends paid by
Japanese corporations to non-residents of Japan or non-Japanese
corporations is generally 20&nbsp;percent, provided, with
respect to dividends paid on listed shares issued by a Japanese
corporation (such as the shares of Common Stock of Sony
Corporation) to any non-resident corporate or individual
shareholders (including non-resident Holders) other than any
individual shareholder who holds 5&nbsp;percent or more of the
total shares issued by the relevant Japanese corporation, the
aforementioned 20&nbsp;percent withholding tax rate is reduced
to (i)&nbsp;7&nbsp;percent for dividends due and payable on or
before March&nbsp;31, 2008, and (ii)&nbsp;15&nbsp;percent for
dividends due and payable on or after April&nbsp;1, 2008. As of
the date of this document, Japan has income tax treaties,
conventions or agreements whereby the above-mentioned
withholding tax rate is reduced, in most cases to
15&nbsp;percent for portfolio investors with, among other
countries, Australia, Belgium, Canada, Denmark, Finland, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, New
Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
the&nbsp;U.K.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Treaty, the maximum rate of Japanese withholding tax
that may be imposed on dividends paid by a Japanese corporation
to a U.S.&nbsp;holder that does not own directly or indirectly
at least 10&nbsp;percent of the voting stock of the Japanese
corporation is generally reduced to 10&nbsp;percent of the gross
amount actually distributed, and Japanese withholding tax with
respect to dividends paid by a Japanese corporation to a
U.S.&nbsp;holder that is a pension fund is exempt from Japanese
taxation by way of withholding or otherwise unless such
dividends are derived from the carrying on of a business,
directly or indirectly, by such pension fund.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the maximum tax rate provided for in the income tax treaty
applicable to dividends paid by Sony Corporation to any
particular non-resident Holder is lower than the withholding tax
rate otherwise applicable under Japanese tax law or any
particular non-resident Holder is exempt from Japanese income
tax with respect to such dividends under the income tax treaty
applicable to such particular non-resident Holder, such
non-resident Holder is required to submit an Application Form
for Income Tax Convention Regarding Relief from Japanese Income
Tax on Dividends (together with any other required forms and
documents) in advance through Sony Corporation to the relevant
tax authority before the payment of dividends. A standing proxy
for non-resident Holders of a Japanese corporation may provide
this application service. With respect to ADSs, this reduced
rate or exemption is applicable if the Depositary or its agent
submits two Application Forms (one before payment of dividends
and the other within eight months after Sony Corporation&#146;s
fiscal year-end or semi-fiscal year-end). To claim this reduced
rate or exemption, a non-resident Holder of ADSs will be
required to file a proof of taxpayer status, residence and
beneficial ownership (as applicable) and to provide
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
other information or documents as may be required by the
Depositary. A non-resident Holder who is entitled, under an
applicable income tax treaty, to a reduced rate which is lower
than the withholding tax rate otherwise applicable under
Japanese tax law or an exemption from the withholding tax, but
failed to submit the required application in advance will be
entitled to claim the refund of taxes withheld in excess of the
rate under an applicable tax treaty (if such non-resident Holder
is entitled to a reduced treaty rate under the applicable income
tax treaty) or the full amount of tax withheld (if such
non-resident Holder is entitled to an exemption under the
applicable income tax treaty) from the relevant Japanese tax
authority. Sony Corporation does not assume any responsibility
to ensure withholding at the reduced treaty rate or to ensure
not withholding for shareholders who would be eligible under any
applicable income tax treaty but do not follow the required
procedures as stated above.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Gains derived from the sale of shares of Common Stock or ADSs of
Sony Corporation outside Japan by a non-resident Holder holding
such shares or ADSs as portfolio investors are, in general, not
subject to Japanese income tax or corporation tax.
U.S.&nbsp;holders are not subject to Japanese income or
corporation tax with respect to such gains under the Treaty.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Japanese inheritance and gift taxes at progressive rates may be
payable by an individual who has acquired shares of Common Stock
or ADSs of Sony Corporation as a legatee, heir or donee even
though neither the individual nor the deceased nor donor is a
Japanese resident.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Holders of shares of Common Stock or ADSs of Sony Corporation
should consult their tax advisors regarding the effect of these
taxes and, in the case of U.S.&nbsp;holders, the possible
application of the Estate and Gift Tax Treaty between the
U.S.&nbsp;and Japan.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>United States Taxation with respect to shares of Common
Stock and ADSs</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The U.S.&nbsp;dollar amount of dividends received (prior to
deduction of Japanese taxes) by a U.S.&nbsp;holder of ADSs or
Common Stock will be includable in income as ordinary income for
U.S.&nbsp;federal income tax purposes to the extent paid out of
current or accumulated earnings and profits of Sony Corporation
as determined for U.S.&nbsp;federal income tax purposes. Subject
to certain exceptions for short-term and hedged positions, the
U.S.&nbsp;dollar amount of dividends received by an individual
prior to January&nbsp;1, 2011 with respect to the ADSs or Common
Stock will be subject to taxation at a maximum rate of
15&nbsp;percent if the dividends are &#147;qualified
dividends.&#148; Dividends paid on the Common Stock or ADSs will
be treated as qualified dividends if Sony Corporation was not,
in the year prior to the year in which the dividend was paid,
and is not, in the year in which the dividend is paid a passive
foreign investment company (&#147;PFIC&#148;). Based on Sony
Corporation&#146;s audited financial statements and relevant
market and shareholder data, Sony Corporation believes that it
was not treated as a PFIC for U.S.&nbsp;federal income tax
purposes with respect to its 2005 taxable year. In addition,
based on Sony Corporation&#146;s audited financial statements
and Sony Corporation&#146;s current expectations regarding the
value and nature of its assets, the sources and nature of its
income, and relevant market and shareholder data, Sony
Corporation does not anticipate becoming a PFIC for the 2006
taxable year. The U.S.&nbsp;Treasury has announced its intention
to promulgate rules pursuant to which holders of ADSs or Common
Stock and intermediaries through whom such securities are held
will be permitted to rely on certifications from issuers to
treat dividends as qualified for tax reporting purposes. Because
such procedures have not yet been issued, it is not clear
whether Sony Corporation will be able to comply with them.
Holders of ADSs and Common Stock should consult their own tax
advisors regarding the availability of the reduced dividend tax
rate in light of the considerations discussed above and their
own particular circumstances.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to applicable limitations and special considerations
discussed below, a U.S.&nbsp;holder of ADSs or Common Stock of
Sony Corporation will be entitled to a credit for Japanese tax
withheld in accordance with the Tax Convention from dividends
paid by Sony Corporation. For purposes of the foreign tax credit
limitation, dividends will be foreign source income, and will
constitute &#147;passive&#148; or &#147;financial services&#148;
income. Foreign tax credits will not be allowed for withholding
taxes imposed in respect of certain short-term of hedged
positions and may not be allowed in respect of arrangements in
which economic profit, after
<FONT style="white-space: nowrap">non-U.S.&nbsp;</FONT>taxes, is
insubstantial. Holders of Ads and Common Stock should consult
their own tax advisors regarding the implications of these rules
in light of their particular circumstances.
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dividends paid by Sony Corporation to U.S.&nbsp;corporate
holders of ADSs or Common Stock will not be eligible for the
dividends-received deduction.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In general, a U.S.&nbsp;holder will recognize capital gain or
loss upon the sale or other disposition of ADSs or Common Stock
equal to the difference between the amount realized on the sale
or disposition and the U.S.&nbsp;holder&#146;s tax basis in the
ADSs or Common Stock. Such capital gain or loss will be
long-term capital gain or loss if the ADSs or Common Stock have
been held for more than one year on the date of the sale or
disposition. The net amount of long-term capital gain recognized
by an individual holder after May&nbsp;5, 2003 and before
January&nbsp;1, 2011 generally is subject to taxation at a
maximum rate of 15&nbsp;percent. The net long-term capital gain
recognized by an individual holder before May&nbsp;6, 2003 or
after December&nbsp;31, 2010 generally is subject to taxation at
a maximum rate of 20&nbsp;percent.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='163'></A>
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Dividends and Paying Agent</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

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<A name='164'></A>
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Statement by Experts</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

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<A name='165'></A>
</DIV>

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<B>Documents on Display</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
It is possible to read and copy documents referred to in this
annual report on
Form&nbsp;<FONT style="white-space: nowrap">20-F</FONT> that
have been filed with the SEC at the SEC&#146;s public reference
room located at 100&nbsp;F&nbsp;Street, N.E.,
Washington,&nbsp;D.C. 20549. Please call the SEC at
<FONT style="white-space: nowrap">1-800-SEC-0330</FONT> for
further information on the public reference rooms and their copy
charges. You can also access the documents at the SEC&#146;s
home page (http://www.sec.gov/index.html).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='166'></A>
</DIV>

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Subsidiary Information</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='167'></A>
</DIV>

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<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;11.</B></TD>
    <TD>
    <B><I>Quantitative and Qualitative Disclosures about Market
    Risk</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s normal course of business is continuously exposed to
market fluctuation, such as fluctuations in currency exchange
rates, interest rates or stock prices. Sony utilizes several
derivative instruments, such as foreign exchange forward
contracts, foreign currency option contracts, interest rate swap
agreements and currency swap agreements in order to hedge the
potential downside risk on the cash flow from the normal course
of business caused by market fluctuation. Sony uses foreign
exchange forward contracts and foreign currency option contracts
primarily to reduce the foreign exchange volatility risk that
accounts receivable or accounts payable denominated in yen,
U.S.&nbsp;dollars, Euros or other currencies have through the
normal course of Sony&#146;s worldwide business. Interest rate
swap agreements and currency swap agreements are utilized to
diversify funding conditions or to reduce funding costs, and in
Financial Services segment, these transactions are used for
asset liability management. Sony uses these derivative financial
instruments mainly for risk-hedging purposes as described above,
and few derivative transactions, such as bond futures and bond
options are held or utilized for trading purposes in Financial
Services segment. If hedge accounting cannot be applied because
the accounts receivable or accounts payable to be hedged are not
yet booked, or because cash flows from derivative transactions
do not coincide with the underlying exposures recorded on
Sony&#146;s balance sheet, then Sony understands that such
derivatives agreements should be subject to a
<FONT style="white-space: nowrap">mark-to</FONT>-market
evaluation and their unrealized gains or losses are recognized
in earnings. In addition, Sony holds marketable securities such
as straight bonds, convertible bonds, and stocks in yen or other
currencies in the Financial Services segment in order to obtain
interest income or capital gain on the financial assets under
management. Sony understands that such investment in marketable
securities is also subjected to market fluctuation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony measures the economic impact of market fluctuations on the
value of derivatives agreements and marketable securities by
using Value-at-Risk (&#147;VaR&#148;) analysis in order to
comply with Item&nbsp;11 disclosure
</DIV>

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requirements. VaR in this context indicates the potential
maximum amount of loss in fair value resulting from adverse
market fluctuations for a selected period of time and at a
selected level of confidence.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows the results of VaR. These analyses for
the fiscal year ended March&nbsp;31, 2006 indicate the potential
maximum loss in fair value as predicted by the VaR analysis
resulting from market fluctuations in one day at a
95&nbsp;percent confidence level. The VaR of currency exchange
rate risk principally consists of risks arising from the
volatility of the exchange rates between the yen and
U.S.&nbsp;dollar and between the yen and the Euro, the
currencies in which a significant amount of financial assets and
liabilities and derivative transactions are maintained on a
consolidated basis. The VaR of interest rate risk and stock
price risk consists of risks arising from the volatility of the
interest rates and stock prices against invested securities and
derivatives transactions in the Financial Services segment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The net VaR for Sony&#146;s entire portfolio is smaller than the
simple aggregate of VaR for each component of market risk. This
is due to the fact that market risk factors such as currency
exchange rates, interest rates, and stock prices are not
completely independent, and potential profits and losses arising
from each market risk may to some degree be mutually offsetting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The disclosed VaR amounts simply represent the calculated
potential maximum loss on the specified date and does not
necessarily indicate an estimate of actual or future loss.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Consolidated</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>September&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net VaR</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    VaR of currency exchange rate risk</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    VaR of interest rate risk</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    VaR of stock price risk</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.3</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Financial Services</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>September&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net VaR</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    VaR of currency exchange rate risk</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    VaR of interest rate risk</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    VaR of stock price risk</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.3</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>All other segments excluding Financial Services</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>September&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(Yen in billions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net VaR</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    VaR of currency exchange rate risk</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    VaR of interest rate risk</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    VaR of stock price risk</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.0</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">116

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='168'></A>
</DIV>

<!-- link1 "Item 12. Description of Securities Other Than Equity Securities" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;12.</B></TD>
    <TD>
    <B><I>Description of Securities Other Than Equity
    Securities</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not Applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='169'></A>
</DIV>

<!-- link1 "Item 13. Defaults, Dividend Arrearages and Delinquencies" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;13.</B></TD>
    <TD>
    <B><I>Defaults, Dividend Arrearages and Delinquencies</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='170'></A>
</DIV>

<!-- link1 "Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;14.</B></TD>
    <TD>
    <B><I>Material Modifications to the Rights of Security Holders
    and Use of Proceeds</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='171'></A>
</DIV>

<!-- link1 "Item 15. Controls and Procedures" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;15.</B></TD>
    <TD>
    <B><I>Controls and Procedures</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has carried out an evaluation under the supervision and
with the participation of Sony&#146;s management, including the
Chief Executive Officer, President, and Chief Financial Officer,
of the effectiveness of the design and operation of Sony&#146;s
disclosure controls and procedures as of March&nbsp;31, 2006.
There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures, including the
possibility of human error and the circumvention or overriding
of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives. Based upon
Sony&#146;s evaluation, the Chief Executive Officer, President
and Chief Financial Officer have concluded that, as of
March&nbsp;31, 2006, the disclosure controls and procedures were
effective to provide reasonable assurance that information
required to be disclosed in the reports Sony files and submits
under the Securities and Exchange Act of 1934 is recorded,
processed, summarized and reported as and when required, within
the time periods specified in the applicable rules and forms,
and that it is accumulated and communicated to Sony&#146;s
management, including the Chief Executive Officer, President,
and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There has been no change in Sony&#146;s internal control over
financial reporting during the fiscal year ended March&nbsp;31,
2006 that has materially affected, or is reasonably likely to
materially affect, Sony&#146;s internal control over financial
reporting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='172'></A>
</DIV>

<!-- link1 "Item 16. [Reserved]" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;16.</B></TD>
    <TD>
    <B><I>[Reserved]</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='173'></A>
</DIV>

<!-- link1 "Item 16A. Audit Committee Financial Expert" -->

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;16A.</B></TD>
    <TD>
    <B><I>Audit Committee Financial Expert</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s Board of Directors has determined that
Mr.&nbsp;Yoshiaki Yamauchi and Mr.&nbsp;Fueo Sumita both qualify
as an &#147;audit committee financial expert&#148; as defined in
this Item&nbsp;16A. In addition, both are independent as defined
under the New York Stock Exchange Corporate Governance Standards.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='174'></A>
</DIV>

<!-- link1 "Item 16B. Code of Ethics" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;16B.</B></TD>
    <TD>
    <B><I>Code of Ethics</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has adopted a code of ethics, as defined in Item&nbsp;16B
of Form&nbsp;<FONT style="white-space: nowrap">20-F</FONT> under
the Securities Exchange Act of 1934, as amended. The code of
ethics applies to Sony&#146;s chief executive officer, chief
financial officer, chief accounting officer and persons
performing similar functions, as well as to directors and all
other officers and employees of Sony, as defined in the code of
ethics. The code of ethics is available at
<FONT style="white-space: nowrap"><I>http://www.sony.net/SonyInfo/Environment/management/compliance/qfhh7c000006e52h-att/</FONT>
code<U>&nbsp;</U>of<U>&nbsp;</U>conduct.pdf</I>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">117

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='175'></A>
</DIV>

<!-- link1 "Item 16C. Principal Accountant Fees and Services" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;16C.</B></TD>
    <TD>
    <B><I>Principal Accountant Fees and Services</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='176'></A>
</DIV>

<!-- link1 "Audit and Non-Audit Fees" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Audit and Non-Audit Fees</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ChuoAoyama PricewaterhouseCoopers is a network firm of
PricewaterhouseCoopers in Japan. The following table presents
fees for audit and other services rendered by
PricewaterhouseCoopers for the fiscal years ended March&nbsp;31,
2005 and 2006.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="76%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Audit Fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,180</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Audit-Related Fees(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>206</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tax Fees(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>486</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other Fees(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,884</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Audit-Related Fees consist primarily of services related to the
    implementation of Sarbanes-Oxley Act Section&nbsp;404 and
    employee benefit plan audits.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Tax Fees primarily include tax compliance, tax advice and
    expatriate tax services.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    All Other Fees comprise fees for all other services not included
    in any of the other categories noted above.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='177'></A>
</DIV>

<!-- link1 "Audit Committee&#146;s Pre-Approval Policies and Procedures" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Audit Committee&#146;s Pre-Approval Policies and
Procedures</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Consistent with U.S.&nbsp;Securities and Exchange Commission
rules regarding auditor independence, Sony&#146;s Audit
Committee is responsible for appointing, reviewing and setting
compensation, retaining, and overseeing the work of Sony&#146;s
independent auditor, so that the auditor&#146;s independence
will not be impaired, including overseeing any separate firm
that audits the financial statements of any subsidiary if
Sony&#146;s independent auditor expressly relies on the audit
report of such firm. The Audit Committee has established a
formal policy requiring pre-approval of all audit and
permissible non-audit services provided by the independent
auditor to Sony or any of its subsidiaries. The Audit Committee
shall periodically review this policy with due regard for
compliance with laws and regulations of host countries where
Sony is listed.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to the engagement of the independent auditor for the
following fiscal year&#146;s audit, management shall submit an
application form to the Audit Committee for comprehensive
pre-approval of all recurring services expected to be rendered
during that year. In order to obtain comprehensive pre-approval,
management shall provide sufficient information regarding each
service so that each service can be classified into one of four
categories (Audit, Audit-related, Tax, or All Other) as well as
information regarding the fees expected to be budgeted for each
service. Management shall describe each service in detail and
indicate precisely and unambiguously the nature and scope of
each particular service. Any additional services not
contemplated in the application form shall require the Audit
Committee&#146;s separate pre-approval on an individual basis.
The Audit Committee will approve, if necessary, any changes in
terms, conditions and fees, resulting from changes in the scope
of services to be provided or from other circumstances. The
Audit Committee Chairman retains pre-approval authority and
evaluates items for approval on a weekly basis. The Audit
Committee or its designee shall establish procedures to assure
that the independent auditor is aware in a timely manner of the
services that have been pre-approved.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2006, in order to
further enhance auditor independence, individual tax services,
recruiting services and corporate tax services were added, at
Sony&#146;s initiative, to the list of prohibited services
stipulated by U.S.&nbsp;Securities and Exchange Commission rules
and related regulations. The Audit Committee has withheld
approval regarding the rendering of these services except for
instances where the services had already been pre-approved prior
to the effective date June&nbsp;23, 2005 and instances in
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">118

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
which difficulties were encountered in finding an alternative
service provider immediately or a brief transitional period has
been needed.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='178'></A>
</DIV>

<!-- link1 "Item 16D. Exemptions From Listing Standards for Audit Committees" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;16D.</B></TD>
    <TD>
    <B><I>Exemptions From Listing Standards for Audit
    Committees</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='179'></A>
</DIV>

<!-- link1 "Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;16E.</B></TD>
    <TD>
    <B><I>Purchases of Equity Securities by the Issuer and
    Affiliated Purchasers</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets out information concerning purchases
made by Sony during the fiscal year ended March&nbsp;31, 2006.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(c) Total Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(d) Maximum</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of Shares</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(a) Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Purchased as Part</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>that May Yet Be</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(b) Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Publicly</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Purchased Under</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price Paid</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Announced Plans</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>the Plans or</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Purchased</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>per Share</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>or Programs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Programs</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    April&nbsp;1st&nbsp;&#151; 30th, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,262.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    May&nbsp;1st&nbsp;&#151; 31st, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,008.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    June&nbsp;1st&nbsp;&#151; 30th, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,923.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    July&nbsp;1st&nbsp;&#151; 31st, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,885.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    August&nbsp;1st&nbsp;&#151; 31st, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,728.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    September&nbsp;1st&nbsp;&#151; 30th, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,906.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    October&nbsp;1st&nbsp;&#151; 31st, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,784.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    November&nbsp;1st&nbsp;&#151; 30th, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,022.68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;1st&nbsp;&#151; 31st, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,450.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    January&nbsp;1st&nbsp;&#151; 31st, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,171</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,914.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    February&nbsp;1st&nbsp;&#151; 28th, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,669.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    March&nbsp;1st&nbsp;&#151; 31st, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,466.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,405.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Company Law of Japan, a holder of shares constituting
less than one full unit may require Sony Corporation to purchase
such shares at their market value (See &#147;Memorandum and
Articles of Association&nbsp;&#151; Capital stock&nbsp;&#151;
<I>(Unit share system)</I>&#148; in &#147;Item&nbsp;10.
<I>Additional Information&#148;</I>). During the fiscal year
ended March&nbsp;31, 2006, Sony Corporation purchased
89,449&nbsp;shares for a total purchase price of 394,028,170 yen
upon such requests from holders of shares constituting less than
one full unit.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">119

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<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='180'></A>
</DIV>

<!-- link1 "Item 17. Financial Statements" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;17.</B></TD>
    <TD>
    <B><I>Financial Statements</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not applicable
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='181'></A>
</DIV>

<!-- link1 "Item 18. Financial Statements" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;18.</B></TD>
    <TD>
    <B><I>Financial Statements</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Refer to Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='182'></A>
</DIV>

<!-- link1 "Item 19. Exhibits" -->

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Item&nbsp;19. <I>Exhibits</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Documents filed as exhibits to this annual report:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="89%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1.1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Articles of Incorporation, as amended (English Translation)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1.2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Share Handling Regulations, as amended (English Translation)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1.3</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Charter of the Board of Directors, as amended (English
    Translation)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8.1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Significant subsidiaries (as defined in &#167;210.1-02(w) of
    Regulation&nbsp;S-X) of Sony Corporation, including additional
    subsidiaries that management has deemed to be significant, as of
    March&nbsp;31, 2006: Incorporated by reference to &#147;Business
    Overview and Organizational Structure&#148; in
    &#147;Item&nbsp;4. Information on the Company&#148;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    12.1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Principal Executive Officer Certification Pursuant to
    17&nbsp;C.F.R. 240.13a-14(a)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    12.2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Principal Financial Officer Certification Pursuant to
    17&nbsp;C.F.R. 240.13a-14(a)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    13.1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certification Pursuant to 18&nbsp;U.S.C. Section&nbsp;1350</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    15.1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of ChuoAoyama PricewaterhouseCoopers</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">120

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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SIGNATURES</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of Section&nbsp;12 of the
Securities Exchange Act of 1934, the registrant hereby certifies
that it meets all of the requirements for filing on
Form&nbsp;<FONT style="white-space: nowrap">20-F</FONT> and that
it has duly caused and authorized the undersigned to sign this
annual report on its behalf.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT style="font-variant:SMALL-CAPS">Sony Corporation
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    (Registrant)</TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">Nobuyuki Oneda
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid black; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10.0pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    (Signature)</TD>
</TR>

<TR valign="top"  style="font-size: 10.0pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Nobuyuki Oneda</TD>
</TR>

<TR valign="top"  style="font-size: 10.0pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Executive Vice President</TD>
</TR>

<TR valign="top"  style="font-size: 10.0pt;color: #000000; background: #ffffff;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Chief Financial Officer</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Date: August&nbsp;31, 2006
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">121
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<DIV align="center" style="font-size: 14.0pt;color: #000000; background: #ffffff; margin-top: 162pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Consolidated Financial Statements</B>
</DIV>

<DIV align="center" style="font-size: 14.0pt;color: #000000; background: #ffffff;">
<B>Sony Corporation and Consolidated Subsidiaries</B>
</DIV>

<DIV align="center" style="font-size: 14.0pt;color: #000000; background: #ffffff;">
<B>March&nbsp;31, 2006</B>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#301'>Report of Independent Registered Public
    Accounting Firm</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#302'>Consolidated Balance Sheets at
    March&nbsp;31, 2005 and 2006</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#303'>Consolidated Statements of Income for the
    years ended March&nbsp;31, 2004, 2005 and 2006</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#304'>Consolidated Statements of Cash Flows for
    the years ended March&nbsp;31, 2004, 2005 and 2006</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#305'>Consolidated Statements of Changes in
    Stockholders&#146; Equity for the years ended March&nbsp;31,
    2004, 2005 and 2006</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-10</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#306'>Index to Notes to Consolidated Financial
    Statements</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#307'>Notes to Consolidated Financial
    Statements</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#308'>Financial Statement Schedule&nbsp;II for
    the years ended March&nbsp;31, 2004, 2005 and 2006&nbsp;&#151;
    Valuation and Qualifying Accounts</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-78</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All other schedules are omitted because they are not applicable
or the required information is shown in the financial statements
or the notes thereto.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financial statements of majority-owned subsidiaries of the
registrant not consolidated and of 50% or less owned persons
accounted for by the equity method have been omitted because the
registrant&#146;s proportionate share of the income from
continuing operations before income taxes, and total assets of
each such company is less than 20% of the respective
consolidated amounts, and the investment in and advances to each
company is less than 20% of consolidated total assets.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-1

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='301'></A>
</DIV>

<!-- link1 "REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
To the Stockholders and Board of Directors of
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
Sony Corporation (Sony Kabushiki Kaisha)
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion, the consolidated financial statements listed in
the accompanying index present fairly, in all material respects,
the financial position of Sony Corporation and its subsidiaries
(&#147;the Company&#148;) at March&nbsp;31, 2005 and 2006, and
the results of their operations and their cash flows for each of
the three years in the period ended March&nbsp;31, 2006, in
conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related
consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the
Company&#146;s management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="56%"></TD>
    <TD width="44%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">ChuoAoyama
    PricewaterhouseCoopers
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Tokyo, Japan
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
May&nbsp;26, 2006
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-2
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">

</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 21pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
[THIS PAGE INTENTIONALLY LEFT BLANK]
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 27pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">

</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-3

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='302'></A>
</DIV>

<!-- link1 "CONSOLIDATED BALANCE SHEETS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>CONSOLIDATED BALANCE SHEETS</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="10" align="center" valign="top">
    <B>ASSETS</B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Current assets:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>779,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>703,098</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Marketable securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>460,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>536,968</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes and accounts receivable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,113,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,075,071</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Allowance for doubtful accounts and sales returns</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(87,709</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(89,563</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventories</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>631,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>804,724</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221,311</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid expenses and other current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>519,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>517,915</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,556,171</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,769,524</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Film costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>278,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,372</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Investments and advances:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Affiliated companies</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>252,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>285,870</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Securities investments and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,492,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,234,037</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,745,689</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,519,907</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Property, plant and equipment</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Land</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>182,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>178,844</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Buildings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>925,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>926,783</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Machinery and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,192,038</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,327,676</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Construction in progress</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116,149</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,393,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,549,452</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less&nbsp;&#151; Accumulated depreciation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,020,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,160,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,372,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,388,547</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Other assets:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intangibles, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>187,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>207,034</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Goodwill</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>283,923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>299,024</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred insurance acquisition costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>374,805</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>383,156</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>178,751</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>459,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>501,438</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,545,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,569,403</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total assets:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,499,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,607,753</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="right" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(Continued on following page.)</I>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-4

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CONSOLIDATED BALANCE SHEETS&nbsp;&#151; (Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="10" align="center" valign="top">
    <B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Current liabilities:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Short-term borrowings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>142,766</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current portion of long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>166,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>193,555</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes and accounts payable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>806,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>813,332</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable, other and accrued expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>746,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>854,886</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued income and other taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87,295</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deposits from customers in the banking business</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>546,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>599,952</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>424,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>508,442</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,809,368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,200,228</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>678,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>764,898</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued pension and severance costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>352,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>182,247</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>216,497</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future insurance policy benefits and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,464,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,744,321</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>227,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>258,609</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total liabilities:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,604,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Minority interest in consolidated subsidiaries</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,101</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Stockholders&#146; equity:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subsidiary tracking stock, no par value&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005&nbsp;&#151; Authorized 100,000,000&nbsp;shares, outstanding
    3,072,000&nbsp;shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock, no par value&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005&nbsp;&#151; Authorized 3,500,000,000&nbsp;shares,
    outstanding 997,211,213&nbsp;shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>617,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006&nbsp;&#151; Authorized 3,500,000,000&nbsp;shares,
    outstanding 1,001,679,664&nbsp;shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>624,124</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional paid-in capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,134,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,136,638</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Retained earnings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,506,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,602,654</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive income&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gains on securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,804</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized losses on derivative instruments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,490</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,049</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(90,030</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(39,824</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(355,824</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(215,368</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(385,675</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(156,437</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Treasury stock, at cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subsidiary tracking stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005&nbsp;&#151; 32&nbsp;shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005&nbsp;&#151; 1,118,984&nbsp;shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006&nbsp;&#151; 740,888&nbsp;shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,127</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,870,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,203,852</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Commitments and contingent liabilities</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total liabilities and stockholders&#146; equity:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,499,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,607,753</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>The accompanying notes are an integral part of these
statements.</I>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-5

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='303'></A>
</DIV>

<!-- link1 "SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CONSOLIDATED STATEMENTS OF INCOME</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Sales and operating revenue:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,883,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,565,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,692,776</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial service revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>565,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>537,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>720,566</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other operating revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,094</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475,436</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Costs and expenses:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,058,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,000,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,151,397</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Selling, general and administrative</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,798,239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,535,015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,527,036</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial service expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>505,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>482,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>531,809</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loss on sale, disposal or impairment of assets, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73,939</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,397,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,045,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,284,181</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191,255</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Other income:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest and dividends</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,937</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Royalty income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,161</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign exchange gain, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on sale of securities investments, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,645</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on change in interest in subsidiaries and equity investees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,834</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,039</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Other expenses:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,996</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loss on devaluation of securities investments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,878</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign exchange loss, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,065</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,603</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>54,335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,542</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before income taxes</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>286,329</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income taxes:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,445</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(69,466</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80,115</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>176,515</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="right" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(Continued on following page.)</I>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-6

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CONSOLIDATED STATEMENTS OF INCOME&nbsp;&#151; (Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before minority interest, equity in net income of
    affiliated companies and cumulative effect of an accounting
    change</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109,814</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minority interest in income (loss) of consolidated Subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(626</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity in net income of affiliated companies</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,176</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Income before cumulative effect of an accounting change</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (2004: Net of income taxes of 0&nbsp;million</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005: Net of income taxes of 2,675&nbsp;million)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,117</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,713</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net income</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Per share data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Basic</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122.58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Basic</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.29</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5.06</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.03</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4.52</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Basic</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122.58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Diluted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash dividends</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subsidiary tracking stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151; Basic</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41.80</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>The accompanying notes are an integral part of these
statements.</I>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-7

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='304'></A>
</DIV>

<!-- link1 "SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Cash flows from operating activities:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustments to reconcile net income to net cash provided by
    operating activities&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization, including amortization of
    deferred insurance acquisition costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>366,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>372,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>381,843</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of film costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>305,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>276,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>286,655</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrual for pension and severance costs, less payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,562</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,563</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on the transfer to the Japanese Government of the
    substitutional portion of employee pension fund, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(73,472</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loss on sale, disposal or impairment of assets, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73,939</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on sale or loss on devaluation of securities investments,
    net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,722</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,767</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on evaluation of marketable securities held in the
    financial service business for trading purpose, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,988</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,246</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(44,986</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on change in interest in subsidiaries and equity investees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,870</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,322</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(60,834</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,445</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(69,466</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80,115</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity in net (income) losses of affiliated companies, net of
    dividends</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15,648</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,794</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in assets and liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Increase) decrease in notes and accounts receivable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(63,010</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22,056</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,464</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Increase) decrease in inventories</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(78,656</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(164,772</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in film costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(299,843</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(294,272</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(339,697</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase (decrease) in notes and accounts payable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,078</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase (decrease) in accrued income and other taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(46,067</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,009</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in future insurance policy benefits and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>264,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>143,122</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in deferred insurance acquisition costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(71,219</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(65,051</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(51,520</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Increase) decrease in marketable securities held in the
    financial service business for trading purpose</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26,096</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(35,346</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in other current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,991</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(29,699</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,792</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in other current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105,865</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(49,737</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>632,635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>646,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>399,858</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="right" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(Continued on following page.)</I>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-8

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CONSOLIDATED STATEMENTS OF CASH FLOWS&nbsp;&#151;
(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Cash flows from investing activities:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Payments for purchases of fixed assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(427,344</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(453,445</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(462,473</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from sales of fixed assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,987</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,168</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Payments for investments and advances by financial service
    Business</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,167,945</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,309,092</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,368,158</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Payments for investments and advances (other than Financial
    service business)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(33,329</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(158,151</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(36,947</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from maturities of marketable securities, sales of
    securities investments and collections of advances by financial
    service business</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>791,188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>923,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>857,376</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from maturities of marketable securities, sales of
    securities investments and collections of advances (other than
    financial service business)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,527</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from sales of subsidiaries&#146; and equity
    investees&#146; stocks</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,897</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>346</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(761,792</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(931,172</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(871,264</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Cash flows from financing activities:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from issuance of long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>267,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>246,326</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Payments of long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(32,042</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(94,862</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(138,773</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase (decrease) in short-term borrowings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(57,708</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,045</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in deposits from customers in the financial service
    business</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>129,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>294,352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>190,320</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase (decrease) in call money and bills sold in the banking
    business</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(40,400</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86,100</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dividends paid</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23,106</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22,978</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,810</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from issuance of stocks by subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,937</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,151</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,587</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,809</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>313,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>205,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>359,864</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of exchange rate changes on cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(47,973</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase (decrease) in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>136,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(70,108</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(76,005</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>713,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>849,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>779,103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>849,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>779,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>703,098</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Supplemental data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash paid during the fiscal year for&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,019</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,651</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-cash investing and financing activities&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of convertible bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>282,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Obtaining assets by entering into capital lease</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,682</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Contribution of net assets into the joint venture with
    Bertelsmann AG</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>The accompanying notes are an integral part of these
statements.</I>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-9

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='305'></A>
</DIV>

<!-- link1 "CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#146; EQUITY" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#146;
EQUITY</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Subsidiary</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Treasury</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>tracking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>paid-in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Retained</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>stock, at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>earnings</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>cost</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>472,361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>984,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,301,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(471,978</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,341</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,280,895</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of convertible bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,977</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock issued under exchange offering</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,409</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,511</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income, net of tax&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gains on securities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,971</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,679</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,679</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized losses on derivative instruments:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,344</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,344</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,415</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustments:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Translation adjustments arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(129,113</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(129,113</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,232</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>110,530</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock issue costs, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(53</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(53</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dividends declared</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23,138</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23,138</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of treasury stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,523</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,523</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reissuance of treasury stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(776</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>476,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>992,817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,367,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(449,959</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,183</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,378,002</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="right" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(Continued on following page.)</I>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-10

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#146;
EQUITY&nbsp;&#151; (Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Subsidiary</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Treasury</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>tracking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>paid-in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Retained</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>stock, at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>earnings</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>cost</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>476,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>992,817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,367,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(449,959</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,183</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,378,002</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise of stock acquisition rights</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of convertible bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>282,744</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock based compensation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>340</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,838</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income, net of tax&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gains on securities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,643</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,924</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,924</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized losses on derivative instruments:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(209</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(209</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,681</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,681</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(769</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(769</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustments:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Translation adjustments arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74,224</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74,224</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>228,122</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="32">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock issue costs, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(541</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(541</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dividends declared</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,030</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,030</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of treasury stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(416</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(416</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reissuance of treasury stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(342</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(245</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,012</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>617,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,134,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,506,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(385,675</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,870,338</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="right" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>(Continued on following page.)</I>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-11

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS&#146;
EQUITY&nbsp;&#151; (Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Subsidiary</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Treasury</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>tracking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>paid-in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Retained</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>stock, at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>earnings</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>cost</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>617,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,134,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,506,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(385,675</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,870,338</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise of stock acquisition rights</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,863</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of convertible bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,484</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,484</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,968</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of subsidiary tracking stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,917</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gains on securities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79,630</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41,495</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41,495</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized losses on derivative instruments:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,865</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,424</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,424</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,206</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustments:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Translation adjustments arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>140,473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>140,473</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>352,854</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock issue costs, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(780</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(780</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dividends declared</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,968</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,968</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase of treasury stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(394</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(394</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reissuance of treasury stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,296</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,971</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>624,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,136,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,602,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(156,437</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,127</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,203,852</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-12

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='306'></A>
</DIV>

<!-- link1 "INDEX TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>INDEX TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Notes to Consolidated Financial Statements</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#401'>1.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#401'>Nature of operations</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#402'>2.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#402'>Summary of significant accounting
    policies</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#403'>3.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#403'>Inventories</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#404'>4.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#404'>Film costs</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#405'>5.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#405'>Related party transactions</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#406'>6.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#406'>Accounts receivable securitization
    programs</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-28</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#407'>7.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#407'>Marketable securities and securities
    investments and other</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-29</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#408'>8.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#408'>Leased assets</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-30</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#409'>9.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#409'>Goodwill and intangible assets</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-31</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#410'>10.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#410'>Insurance-related accounts</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#411'>11.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#411'>Short-term borrowings and long-term debt</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-35</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#412'>12.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#412'>Deposits from customers in the banking
    business</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-37</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#413'>13.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#413'>Financial instruments</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-37</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#414'>14.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#414'>Pension and severance plans</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-41</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#415'>15.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#415'>Stockholders&#146; equity</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-47</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#416'>16.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#416'>Stock-based compensation plans</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-51</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#417'>17.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#417'>Restructuring charges and asset
    impairments</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#418'>18.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#418'>Research and development costs, advertising
    costs and shipping and handling costs</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-60</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#419'>19.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#419'>Gain on change in interest in subsidiaries
    and equity investees</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-61</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#420'>20.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#420'>Income taxes</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-62</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#421'>21.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#421'>Reconciliation of the differences between
    basic and diluted net income per share (&#147;EPS&#148;)</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#422'>22.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#422'>Variable interest entities</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-68</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#423'>23.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#423'>Commitments and contingent liabilities</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-69</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="right" valign="top">&nbsp;<A HREF='#424'>24.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#424'>Business segment information</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-72</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-13
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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='307'></A>
</DIV>

<!-- link1 "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='401'></A>
</DIV>

<!-- link1 "1. Nature of operations" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>1.</B></TD>
    <TD>
    <B><I>Nature of operations</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation and its consolidated subsidiaries (hereinafter
collectively referred to as &#147;Sony&#148;) are engaged in the
development, design, manufacture, and sale of various kinds of
electronic equipment, instruments, and devices for consumer and
industrial markets. Sony also develops, produces, manufactures,
and markets home-use game consoles and software. Sony&#146;s
principal manufacturing facilities are located in Japan, the
United States of America, Europe, and Asia. Its electronic
products are marketed throughout the world and game products are
marketed mainly in Japan, the United States of America and
Europe by sales subsidiaries and unaffiliated local distributors
as well as direct sales via the Internet. Sony is engaged in the
development, production, manufacture, marketing, distribution
and broadcasting of image-based software, including film, video
and television product. Sony is also engaged in various
financial service businesses including insurance operations
through a Japanese life insurance subsidiary and a non-life
insurance subsidiary, banking operations through a Japanese
internet-based banking subsidiary and leasing and credit
financing operations in Japan. In addition to the above, Sony is
engaged in the development, production, manufacture, and
distribution of recorded music, network service business
including Internet-related businesses, an animation production
and marketing business, an imported general merchandise retail
business and an advertising agency business in Japan.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='402'></A>
</DIV>

<!-- link1 "2. Summary of significant accounting policies" -->

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<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>2.</B></TD>
    <TD>
    <B><I>Summary of significant accounting policies</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation and its subsidiaries in Japan maintain their
records and prepare their financial statements in accordance
with accounting principles generally accepted in Japan while its
foreign subsidiaries maintain their records and prepare their
financial statements in conformity with accounting principles
generally accepted in the countries of their domiciles. Certain
adjustments and reclassifications have been incorporated in the
accompanying consolidated financial statements to conform with
accounting principles generally accepted in the United States of
America (&#147;U.S.&nbsp;GAAP&#148;). These adjustments were not
recorded in the statutory books of account.
</DIV>

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<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(1)</B></TD>
    <TD>
    <B>Newly adopted accounting pronouncements:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate
Accounts -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2003, the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants issued
Statement of Position (&#147;SOP&#148;)
<FONT style="white-space: nowrap">03-1,</FONT> &#147;Accounting
and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate
Accounts&#148;.
SOP&nbsp;<FONT style="white-space: nowrap">03-1</FONT> requires
insurance enterprises to record additional reserves for
long-duration life insurance contracts with minimum guarantee or
annuity receivable options. Additionally, SOP
<FONT style="white-space: nowrap">03-1</FONT> provides guidance
for the presentation of separate accounts. This statement is
effective for fiscal years beginning after December&nbsp;15,
2003. Sony adopted SOP
<FONT style="white-space: nowrap">03-1</FONT> on April&nbsp;1,
2004. As a result of the adoption of SOP
<FONT style="white-space: nowrap">03-1,</FONT> Sony&#146;s
operating income decreased by 5,156&nbsp;million yen for the
fiscal year ended March&nbsp;31, 2005. Additionally, on
April&nbsp;1, 2004, Sony recorded a 4,713&nbsp;million yen
charge (net of income taxes of 2,675&nbsp;million yen) as a
cumulative effect of an accounting change.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>The Effect of Contingently Convertible Instruments on
Diluted Earnings per Share -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2004, the Emerging Issues Task Force (&#147;EITF&#148;)
issued EITF Issue
No.&nbsp;<FONT style="white-space: nowrap">04-8,</FONT>
&#147;The Effect of Contingently Convertible Instruments on
Diluted Earnings per Share&#148;. In accordance with Statement
of Financial Accounting Standards (&#147;FAS&#148;)
No.&nbsp;128, &#147;Earnings per Share&#148;, Sony had not
previously included in the computation of diluted earnings per
share (&#147;EPS&#148;) the number of potential common stock
issuable upon the conversion of contingently convertible debt
instruments (&#147;Co-Cos&#148;) that had not met the conditions
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-14

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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
to exercise the stock acquisition rights. EITF Issue
No.&nbsp;04-8 requires that the maximum number of common stock
that could be issued upon the conversion of Co-Cos be included
in diluted EPS computations from the date of issuance regardless
of whether the conditions to exercise the stock acquisition
rights have been met. EITF Issue No.&nbsp;04-8 is effective for
reporting periods ending after December&nbsp;15, 2004. Sony
adopted EITF Issue No.&nbsp;04-8 during the quarter ended
December&nbsp;31, 2004. As a result of the adoption of EITF
Issue No.&nbsp;04-8, Sony&#146;s diluted EPS of income before
cumulative effect of an accounting change and net income for the
fiscal year ended March&nbsp;31, 2004 were restated. Sony&#146;s
diluted EPS of income before cumulative effect of an accounting
change and net income for the fiscal year ended March&nbsp;31,
2005 decreased by 7.26&nbsp;yen and 7.06&nbsp;yen, respectively,
as a result of adopting EITF Issue
No.&nbsp;<FONT style="white-space: nowrap">04-8.</FONT>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Consolidation of Variable Interest Entities -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January 2003, the Financial Accounting Standards Board
(&#147;FASB&#148;) issued FASB Interpretation (&#147;FIN&#148;)
No.&nbsp;46, &#147;Consolidation of Variable Interest
Entities&nbsp;&#151; an Interpretation of Accounting Research
Bulletin (&#147;ARB&#148;) No.&nbsp;51&#148;.
FIN&nbsp;No.&nbsp;46 addresses consolidation by a primary
beneficiary of a variable interest entity (&#147;VIE&#148;).
Sony early adopted the provisions of FIN&nbsp;No.&nbsp;46 on
July&nbsp;1, 2003. As a result of adopting the original
FIN&nbsp;No.&nbsp;46, Sony recognized a one-time charge with no
tax effect of 2,117&nbsp;million yen as a cumulative effect of
accounting change in the consolidated statement of income, and
Sony&#146;s assets and liabilities increased by
95,255&nbsp;million yen and 97,950&nbsp;million yen,
respectively. These increases were treated as non-cash
transactions in the consolidated statement of cash flows. In
addition, cash and cash equivalents increased by
1,521&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony subsequently early adopted the provisions of
FIN&nbsp;No.&nbsp;46R, which replaced FIN&nbsp;No.&nbsp;46, upon
issuance in December 2003. The adoption of FIN&nbsp;No. 46R did
not have an impact on Sony&#146;s results of operations and
financial position or impact the way Sony had previously
accounted for VIEs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Exchanges of Nonmonetary Assets -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, the FASB issued FAS&nbsp;No.&nbsp;153,
&#147;Exchanges of Nonmonetary Assets, an amendment of
Accounting Principle Board Opinion (&#147;APB&#148;)
No.&nbsp;29&#148;. This statement requires that exchanges of
productive assets be accounted for at fair value unless fair
value cannot be reasonably determined or the transaction lacks
commercial substance. This statement is effective for
nonmonetary asset exchanges that have occurred in the fiscal
periods beginning after June&nbsp;15, 2005. Sony adopted
FAS&nbsp;No.&nbsp;153 on July&nbsp;1, 2005. The adoption of
FAS&nbsp;No.&nbsp;153 did not have a material impact on
Sony&#146;s results of operations and financial position.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting for Conditional Asset Retirement Obligations
-</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2005, the FASB issued FIN&nbsp;No.&nbsp;47,
&#147;Accounting for Conditional Asset Retirement
Obligations&nbsp;&#151; an Interpretation of
FAS&nbsp;No.&nbsp;143&#148;. FIN&nbsp;No.&nbsp;47 clarifies that
an entity is required to recognize a liability for the fair
value of a conditional retirement obligation when incurred if
the liability&#146;s fair value can be reasonably estimated.
FIN&nbsp;No.&nbsp;47 also clarifies when an entity would have
sufficient information to reasonably estimate the fair value of
an asset retirement obligation. This interpretation is effective
no later than the end of fiscal years ending after
December&nbsp;15, 2005. Sony adopted FIN&nbsp;No.&nbsp;47 on
March&nbsp;31, 2006. The adoption of FIN&nbsp;No.&nbsp;47 did
not have a material impact on Sony&#146;s results of operations
and financial position.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Determining Whether to Aggregate Operating Segments That
Do Not Meet the Quantitative Thresholds -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2004, the EITF issued EITF Issue No.&nbsp;04-10,
&#147;Applying Paragraph&nbsp;19 of FASB Statement No.&nbsp;131,
Disclosures about Segments of an Enterprise and Related
Information, in Determining Whether to Aggregate Operating
Segments That Do Not Meet the Quantitative Thresholds&#148;.
EITF Issue
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-15

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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
No.&nbsp;<FONT style="white-space: nowrap">04-10</FONT>
clarifies how an enterprise should evaluate the aggregation
criteria in paragraph&nbsp;17 of FAS&nbsp;No.&nbsp;131 when
determining whether operating segments that do not meet the
quantitative thresholds may be aggregated in accordance with
paragraph&nbsp;19 of FAS&nbsp;No.&nbsp;131. EITF Issue
No.&nbsp;<FONT style="white-space: nowrap">04-10</FONT> is
effective for fiscal years ending after September&nbsp;15, 2005.
Sony adopted EITF Issue
No.&nbsp;<FONT style="white-space: nowrap">04-10</FONT> during
the fiscal year ended March&nbsp;31, 2006. The adoption of EITF
Issue No.&nbsp;<FONT style="white-space: nowrap">04-10</FONT>
did not have an impact on Sony&#146;s results of operation and
financial position.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(2)</B></TD>
    <TD>
    <B>Significant accounting policies:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Basis of consolidation and accounting for investments in
affiliated companies -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The consolidated financial statements include the accounts of
Sony Corporation and its majority-owned subsidiary companies,
general partnerships in which Sony has a controlling interest,
and variable interest entities for which Sony is the primary
beneficiary. All intercompany transactions and accounts are
eliminated. Investments in business entities in which Sony does
not have control, but has the ability to exercise significant
influence over operating and financial policies generally
through 20-50% ownership, are accounted for under the equity
method. In addition, investments in general partnerships in
which Sony does not have a controlling interest and limited
partnerships are also accounted for under the equity method.
Under the equity method, investments are stated at cost
plus/minus Sony&#146;s equity in undistributed earnings or
losses. Consolidated net income includes Sony&#146;s equity in
current earnings or losses of such companies, after elimination
of unrealized intercompany profits. If the value of an
investment has declined and is judged to be other than
temporary, the investment is written down to its fair value.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On occasion, a consolidated subsidiary or an affiliated company
accounted for by the equity method may issue its shares to third
parties in either a public or private offering or upon
conversion of convertible debt to common stock at amounts per
share in excess of or less than Sony&#146;s average per share
carrying value. With respect to such transactions, where the
sale of such shares is not part of a broader corporate
reorganization and the reacquisition of such shares is not
contemplated at the time of issuance, the resulting gains or
losses arising from the change in interest are recorded in
income for the year the change in interest transaction occurs.
If the sale of such shares is part of a broader corporate
reorganization, the reacquisition of such shares is contemplated
at the time of issuance or realization of such gain is not
reasonably assured (i.e.,&nbsp;the entity is newly formed,
non-operating, a research and development or
<FONT style="white-space: nowrap">start-up/development</FONT>
stage entity, or where the entity&#146;s ability to continue in
existence is in question), the transaction is accounted for as a
capital transaction.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The excess of the cost over the underlying net equity of
investments in consolidated subsidiaries and affiliated
companies accounted for on an equity basis is allocated to
identifiable assets and liabilities based on fair values at the
date of acquisition. The unassigned residual value of the excess
of the cost over the underlying net equity is recognized as
goodwill.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Use of estimates -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preparation of the consolidated financial statements in
conformity with U.S.&nbsp;GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Translation of foreign currencies -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All asset and liability accounts of foreign subsidiaries and
affiliates are translated into Japanese yen at appropriate
year-end current rates and all income and expense accounts are
translated at rates that approximate those rates prevailing at
the time of the transactions. The resulting translation
adjustments are accumulated as a component of accumulated other
comprehensive income.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-16

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Foreign currency receivables and payables are translated at
appropriate year-end current rates and the resulting translation
gains or losses are taken into income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Cash and cash equivalents -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cash and cash equivalents include all highly liquid investments,
generally with original maturities of three months or less, that
are readily convertible to known amounts of cash and are so near
maturity that they present insignificant risk of changes in
value because of changes in interest rates.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Marketable debt and equity securities -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Debt and equity securities designated as available-for-sale,
whose fair values are readily determinable, are carried at fair
value with unrealized gains or losses included as a component of
accumulated other comprehensive income, net of applicable taxes.
Debt and equity securities classified as trading securities are
carried at fair value with unrealized gains or losses included
in income. Debt securities that are expected to be
<FONT style="white-space: nowrap">held-to</FONT>-maturity are
carried at amortized cost. Individual securities classified as
either available-for-sale or
<FONT style="white-space: nowrap">held-to</FONT>-maturity are
reduced to net realizable value by a charge to income for other
than temporary declines in fair value. Realized gains and losses
are determined on the average cost method and are reflected in
income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Equity securities in non-public companies -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Equity securities in non-public companies are carried at cost as
fair value is not readily determinable. If the value of a
non-public equity investment is estimated to have declined and
such decline is judged to be other than temporary, Sony
recognizes the impairment of the investment and the carrying
value is reduced to its fair value. Determination of impairment
is based on the consideration of such factors as operating
results, business plans and estimated future cash flows. Fair
value is determined through the use of such methodologies as
discounted cash flows, valuation of recent financings and
comparable valuations of similar companies.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Inventories -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories in electronics and game as well as non-film
inventories for pictures are valued at cost, not in excess of
market, cost being determined on the &#147;average cost&#148;
basis except for the cost of finished products carried by
certain subsidiary companies in electronics which is determined
on the <FONT style="white-space: nowrap">&#147;first-in,</FONT>
first-out&#148; basis.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Film costs -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Film costs related to theatrical and television product (which
includes direct production costs, production overhead and
acquisition costs) are stated at the lower of unamortized cost
or estimated fair value and classified as non-current assets.
Film costs are amortized, and the estimated liabilities for
residuals and participations are accrued, for an individual
product based on the proportion that current period actual
revenues bear to the estimated remaining total lifetime
revenues. These estimates are reviewed on a periodic basis.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Property, plant and equipment and depreciation -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Property, plant and equipment are stated at cost. Depreciation
of property, plant and equipment is primarily computed on the
declining-balance method for Sony Corporation and its Japanese
subsidiaries, except for certain semiconductor manufacturing
facilities whose depreciation is computed on the straight-line
method, and on the straight-line method for its foreign
subsidiaries at rates based on estimated useful lives of the
assets, principally, ranging from 15&nbsp;years up to
50&nbsp;years for buildings and from 2&nbsp;years up to
10&nbsp;years for machinery and equipment. Significant renewals
and additions are capitalized at cost. Maintenance and repairs,
and minor renewals and betterments are charged to income as
incurred.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-17

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Goodwill and other intangible assets -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Goodwill and certain other intangible assets that are determined
to have an indefinite life are not amortized and are tested for
impairment during the fourth quarter of fiscal year on an annual
basis and between annual tests if an event occurs or
circumstances change that would more likely than not reduce the
fair value below its carrying amount. Fair value for those
assets is generally determined using a discounted cash flow
analysis.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Intangible assets with finite lives that are determined not to
have an indefinite life mainly consist of artist contracts,
music catalogs, acquired patent rights and software to be sold,
leased or otherwise marketed. Artist contracts and music
catalogs are amortized on a straight-line basis over 10 to
40&nbsp;years. Acquired patent rights and software to be sold,
leased or otherwise marketed are amortized on a straight-line
basis over 3 to 10&nbsp;years.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Accounting for computer software to be sold -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony accounts for software development costs in accordance with
FAS&nbsp;No.&nbsp;86, &#147;Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed&#148;.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Electronics segment, costs related to establishing the
technological feasibility of a software product are expensed as
incurred as a part of research and development in cost of sales.
Costs that are incurred to produce the finished product after
technological feasibility is established are capitalized and
amortized over the estimated economic life of the product, which
is generally three years. Sony performs periodic reviews to
ensure that unamortized program costs remain recoverable from
future revenue.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the Game segment, technological feasibility of the underlying
software is reached shortly before the products are released to
manufacturing. Costs incurred after technological feasibility is
established are not material, and accordingly, Sony expenses
software development costs for the Game segment as incurred as a
part of research and development in cost of sales.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Deferred insurance acquisition costs -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Costs that vary with and are primarily related to acquiring new
insurance policies are deferred as long as they are recoverable.
The deferred insurance acquisition costs include such items as
commission, medical examination and inspection report fees. The
deferred insurance acquisition costs for traditional life
insurance contracts are amortized over the premium-paying period
of the related insurance policies using assumptions consistent
with those used in computing policy reserves. The deferred
insurance acquisition costs for non-traditional life insurance
contracts are amortized over the expected life in proportion to
the estimated gross profits.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Product warranty -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony provides for the estimated cost of product warranties at
the time revenue is recognized by either product category group
or individual product. The product warranty is calculated based
upon product sales, estimated probability of failure and
estimated cost per claim. The variables used in the calculation
of the provision are reviewed on a periodic basis. Certain
subsidiaries in the Electronics segment offer extended warranty
programs. The consideration received through extended warranty
service is deferred and amortized on a straight-line basis over
the term of the extended warranty.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Future insurance policy benefits -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Liabilities for future insurance policy benefits are primarily
comprised of the present value of estimated future payments to
policyholders. These liabilities are computed by the net level
premium method based upon the assumptions such as future
investment yield, morbidity, mortality and withdrawals. These
assumptions are
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-18

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
reviewed on a periodic basis. Liabilities for future insurance
policy benefits also include liabilities for guaranteed benefits
related to certain non-traditional long-duration life and
annuity contracts.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Accounting for the impairment of long-lived assets
    -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony periodically reviews the carrying value of its long-lived
assets held and used, other than goodwill and intangible assets
with indefinite lives, and assets to be disposed of, whenever
events or changes in circumstances indicated that the carrying
amount may not be recoverable. Long-lived assets to be held and
used are reviewed for impairment by comparing the carrying value
of the assets with their estimated undiscounted future cash
flows. If it is determined that an impairment loss has occurred,
the loss would be recognized during the period. The impairment
loss would be calculated as the difference between asset
carrying value and the present value of estimated net cash flows
or comparable market values, giving consideration to recent
operating performance. Long-lived assets that are to be disposed
of other than by sale are considered held and used until they
are disposed of. Long-lived assets that are to be disposed of by
sale are reported at the lower of their carrying value or fair
value less cost to sell. Reductions in carrying value are
recognized in the period in which the long-lived assets are
classified as held for sale.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Derivative financial instruments -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All derivatives, including certain derivative financial
instruments embedded in other contracts, are recognized as
either assets or liabilities in the balance sheet at fair value.
Changes in the fair value of derivative financial instruments
are either recognized periodically in income or
stockholders&#146; equity (as a component of accumulated other
comprehensive income), depending on whether the derivative
financial instrument qualifies as a hedge and the derivative is
being used to hedge changes in fair value or cash flows.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with FAS&nbsp;No.&nbsp;133, &#147;Accounting for
Derivative Instruments and Hedging Activities&#148;, the
derivative financial instruments held by Sony are classified and
accounted as below.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Fair value hedges</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the fair value of derivatives designated and
effective as fair value hedges for recognized assets or
liabilities or unrecognized firm commitments are recognized in
earnings as offsets to changes in the fair value of the related
hedged assets or liabilities.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Cash flow hedges</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the fair value of derivatives designated and
effective as cash flow hedges for forecasted transactions or
exposures associated with recognized assets or liabilities are
initially recorded in other comprehensive income and
reclassified into earnings when the hedged transaction affects
earnings. Changes in the fair value of the ineffective portion
are recognized in current period earnings.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Derivatives not designated as hedges</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the fair value of derivatives that are not designated
as hedges under FAS&nbsp;No.&nbsp;133 are recognized in current
period earnings.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony formally documents all hedging relationships between the
derivatives designated as hedges and hedged items, as well as
its risk management objectives and strategies for undertaking
various hedging activities. Sony links all hedges that are
designated as fair value or cash flow hedges to specific assets
or liabilities on the balance sheet or to the specific
forecasted transaction. Sony also assesses, both at the
inception of the hedge and on an on-going basis, whether the
derivatives that are designated as hedges are
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-19

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
highly effective in offsetting changes in fair value or cash
flows of hedged items. When it is determined that a derivative
is not highly effective as a hedge, Sony discontinues hedge
accounting.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock-based compensation -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony applies APB No.&nbsp;25, &#147;Accounting for Stock Issued
to Employees&#148;, and its related interpretations in
accounting for its stock-based compensation plans and follows
the disclosure-only provisions of FAS&nbsp;No.&nbsp;148,
&#147;Accounting for Stock-Based Compensation&nbsp;&#151;
Transition and Disclosure&nbsp;&#151; an Amendment of FASB
Statement No.&nbsp;123&#148;. In accordance with APB
No.&nbsp;25, stock-based compensation cost is recognized in
income based on the excess, if any, of the quoted market price
of the common stock of Sony Corporation at the grant date of the
award or other measurement date over the stated exercise price
of the award. As the exercise prices for Sony&#146;s stock-based
compensation plans are generally determined based on the
prevailing market price shortly before the date of grant, the
compensation expense for these plans is not significant. For
awards that generate compensation expense as defined under APB
No.&nbsp;25, Sony calculates the amount of compensation expense
and recognizes the expense over the vesting period of the award.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table reflects the net effect on net income and
net income per share allocated to the common stock if Sony had
applied the fair value recognition provisions of
FAS&nbsp;No.&nbsp;123, &#147;Accounting for Stock-Based
Compensation&#148;, to its stock-based compensation. See
Note&nbsp;16 for detailed assumptions.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before cumulative effect of an accounting change
    allocated to common stock:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,498</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122,308</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deduct: Total stock-based compensation expense determined under
    the fair value based method, net of related tax effects</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,334</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,690</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,182</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118,126</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income allocated to common stock:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122,308</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deduct: Total stock-based compensation expense determined under
    the fair value based method, net of related tax effects</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,334</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,690</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,182</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>159,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118,126</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-20

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 24pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before cumulative effect of an accounting change
    allocated to common stock:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Basic EPS:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122.58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175.92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118.39</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Diluted EPS:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112.91</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="14">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income allocated to common stock:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Basic EPS:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122.58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>170.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118.39</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#151;&nbsp;Diluted EPS:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112.91</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Free distribution of common stock -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On occasion, Sony Corporation may make a free distribution of
common stock which is accounted for either by a transfer from
additional paid-in capital to the common stock account or with
no entry if free shares are distributed from the portion of
previously issued shares in the common stock account.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Japanese Commercial Code, a stock dividend can be
effected by an appropriation of retained earnings to the common
stock account, followed by a free share distribution with
respect to the amount appropriated by resolution of the Board of
Directors&#146; meeting.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Free distribution of common stock is recorded in the
consolidated financial statements only when it becomes
effective, except for the calculation and presentation of per
share amounts.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock issue costs -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stock issue costs are directly charged to retained earnings, net
of tax, in the accompanying consolidated financial statements as
the Japanese Commercial Code prohibits charging such stock issue
costs to capital accounts which is the prevailing practice in
the United States of America.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Revenue recognition -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenues from electronics and game sales are recognized upon
delivery which is considered to have occurred when the customer
has taken title to the product and the risk and rewards of
ownership have been substantively transferred. If the sales
contract contains a customer acceptance provision, then sales
are recognized after customer acceptance occurs or the
acceptance provisions lapse.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Revenues from the theatrical exhibition of motion pictures are
recognized as the customer exhibits the film. Revenues from the
licensing of feature films and television programming are
recorded when the material is available for telecast by the
licensee and when any restrictions regarding the exhibition or
exploitation of the
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-21

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
product lapse. Revenues from the sale of home videocassettes and
DVDs are recognized upon availability of sale to the public.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Traditional life insurance policies that the life insurance
subsidiary writes, most of which are categorized as
long-duration contracts, mainly consist of whole life, term life
and accident and health insurance contracts. Premiums from these
policies are reported as revenue when due from policyholders.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Amounts received as payment for non-traditional contracts such
as interest sensitive whole life contracts, single payment
endowment contracts, single payment juvenile contracts and other
contracts without life contingencies are recognized as deposits
to policyholder account balances and included in future
insurance policy benefits and other. Revenues from these
contracts are comprised of fees earned for administrative and
contract-holder services, which are recognized over the period
of the contracts, and included in financial service revenue.
Property and casualty insurance policies that the non-life
insurance subsidiary writes are primarily automotive insurance
contracts which are categorized as short-duration contracts.
Premiums from these policies are reported as revenue over the
period of the contract in proportion to the amount of insurance
protection provided.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Accounting for consideration given to a customer or a
    reseller -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with EITF Issue No.&nbsp;01-9, &#147;Accounting
for Consideration Given by a Vendor to a Customer or Reseller of
the Vendor&#146;s Products&#148;, cash consideration given to a
customer or a reseller including payments for buydowns, slotting
fees and cooperative advertising programs, is accounted for as a
reduction of revenue unless Sony receives an identifiable
benefit (goods or services) in exchange for the consideration,
can reasonably estimate the fair value of this benefit and
receives documentation from the reseller to support the amounts
spent. Any payments meeting these criteria are treated as
selling, general and administrative expenses. For the fiscal
years ended March&nbsp;31, 2004, 2005 and 2006, consideration
given to a reseller, primarily for free promotional shipping and
cooperative advertising programs included in selling, general
and administrative expense totaled 30,338&nbsp;million yen,
27,946&nbsp;million yen and 29,489&nbsp;million yen,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Cost of sales -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Costs classified as cost of sales relate to the producing and
manufacturing of products and include such items as material
cost, subcontractor cost, depreciation of fixed assets,
amortization of intangible assets, personnel expenses, research
and development costs, and amortization of film cost related to
theatrical and television products.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Research and development costs -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development costs are expensed as incurred.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Selling, general and administrative -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Costs classified as selling expense relate to the promoting and
selling of products and include such items as advertising,
promotion, shipping, and warranty expenses.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
General and administrative expenses include operating items such
as officer&#146;s salaries, personnel expenses, depreciation of
fixed assets, office rental for sales, marketing and
administrative divisions, a provision for doubtful accounts and
amortization of intangible assets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Selling, general and administrative expenses are expensed as
incurred.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-22

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Financial service expenses -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financial service expenses include a provision for policy
reserves and amortization of deferred insurance acquisition
cost, and all other operating costs such as personnel expenses,
depreciation of fixed assets, and office rental of subsidiaries
in the Financial Services segment.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Advertising costs -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Advertising costs are expensed when the advertisement or
commercial appears in the selected media, except for advertising
costs for acquiring new insurance policies which are deferred
and amortized as part of insurance acquisition costs.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Shipping and handling costs -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The majority of shipping and handling, warehousing and internal
transfer costs for finished goods are included in selling,
general and administrative expenses. An exception to this is in
the Pictures segment where such costs are charged to cost of
sales as they are integral part of producing and distributing
the film under SOP 00-2, &#147;Accounting by Producers or
Distributors of Films&#148;. All other costs related to
Sony&#146;s distribution network are included in cost of sales,
including inbound freight charges, purchasing and receiving
costs, inspection costs and warehousing costs for raw materials
and in-process inventory. Amounts paid by customers for shipping
and handling costs are included in net sales.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Income taxes -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of income. The
asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences
of temporary differences between the carrying amounts and the
tax bases of assets and liabilities. Sony records valuation
allowances to reduce deferred tax assets to the amount that
management believes is more likely than not to be realized. In
assessing the likelihood of realization, Sony considers all
currently available evidence for future years, both positive and
negative, supplemented by information of historical results for
each tax jurisdiction.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Net income per share -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to December&nbsp;1, 2005, Sony calculated and presented
per share data separately for Sony&#146;s common stock and for
the subsidiary tracking stock by the &#147;two-class&#148;
method based on FAS&nbsp;No.&nbsp;128. As the holders of the
subsidiary tracking stock had the right to participate in
earnings, together with common stockholders, under this method,
basic net income per share (&#147;EPS&#148;) for each class of
stock was calculated based on the earnings allocated to each
class of stock for the applicable period, divided by the
weighted-average number of outstanding shares in each class
during the applicable period.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The earnings allocated to the subsidiary tracking stock were
determined based on the subsidiary tracking stock holders&#146;
economic interest in the targeted subsidiary&#146;s earnings
available for dividends. As defined by Sony Corporation&#146;s
articles of incorporation, the amount distributable to the
subsidiary tracking stock holders was based on the declared
dividends of the targeted subsidiary, which might only be
declared from the amounts available for dividends of the
targeted subsidiary. The targeted subsidiary&#146;s earnings
available for dividends were, as stipulated by the Japanese
Commercial Code, not including those of the targeted
subsidiary&#146;s subsidiaries. If the targeted subsidiary had
accumulated losses, a change in accumulated losses was also
allocated to the subsidiary tracking stock. The subsidiary
tracking stock holders&#146; economic interest was calculated as
the number of the subsidiary tracking stock outstanding divided
by the number of the targeted subsidiary&#146;s common stock
outstanding subject to multiplying by the Standard Ratio
(tracking stock: subsidiary&#146;s common stock
=&nbsp;1:&nbsp;100, as defined in the articles of
incorporation). The earnings allocated to the
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-23

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
common stock were calculated by subtracting the earnings
allocated to the subsidiary tracking stock from Sony&#146;s net
income for the period.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;26, 2005, the Board of Directors of Sony
Corporation decided to terminate all shares of subsidiary
tracking stock and convert such shares to shares of Sony common
stock at a conversion rate of 1.114&nbsp;share of Sony common
stock per share of subsidiary tracking stock. All shares of
subsidiary tracking stock were converted to shares of Sony
common stock on December&nbsp;1, 2005. As a result of the
conversion, for the fiscal year ended March&nbsp;31, 2006, Sony
calculated per share data separately for Sony&#146;s common
stock and for the subsidiary tracking stock by the
&#147;two-class&#148; method based on FAS&nbsp;No.&nbsp;128, but
did not present per share data for the subsidiary tracking
stock. The earnings allocated to common stock for the fiscal
year ended March&nbsp;31, 2006 were calculated by subtracting
the earnings allocated to the subsidiary tracking stock for the
eight months ended November&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The computation of diluted net income per common stock reflects
the maximum possible dilution from conversion, exercise, or
contingent issuance of securities including the conversion of
Co-Cos regardless of whether the conditions to exercise the
conversion rights have been met.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(3)</B></TD>
    <TD>
    <B>Recent Pronouncements:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Accounting for Stock-Based Compensation&nbsp;-</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, the FASB issued FAS&nbsp;No.&nbsp;123 (revised
2004), &#147;Share-Based Payment&#148;
(&#147;FAS&nbsp;No.&nbsp;123(R)&#148;). This statement requires
the use of the fair value based method of accounting for
employee stock-based compensation and eliminates the alternative
to use of the intrinsic value method prescribed by APB
No.&nbsp;25. With limited exceptions, FAS&nbsp;No.&nbsp;123(R)
requires that the grant-date fair value of share-based payments
to employees be expensed over the period the service is
received. Sony has accounted for its employee stock-based
compensation in accordance with the provisions prescribed by APB
No.&nbsp;25 and its related interpretations and has disclosed
the net effect on net income and net income per share allocated
to the common stock if Sony had applied the fair value
recognition provisions of FAS&nbsp;No.&nbsp;123 to stock-based
compensation as described above in (2)&nbsp;Significant
accounting policies&nbsp;&#151; Stock-based compensation. Sony
adopted FAS&nbsp;No.&nbsp;123(R) on April&nbsp;1, 2006. Sony has
elected the modified prospective method of transition prescribed
in FAS&nbsp;No.&nbsp;123(R), which requires that compensation
expense be recorded for all unvested stock acquisition rights as
the requisite service is rendered beginning with the first
period of adoption. As of March&nbsp;31, 2006, the aggregate
value of the unvested stock acquisition rights was
4,402&nbsp;million yen. Sony expects the total expenses to be
recorded in the future periods will be consistent with the pro
forma information shown above in (2) Significant accounting
policies&nbsp;&#151; Stock-based compensation.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Inventory Costs -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In November 2004, the FASB issued FAS&nbsp;No.&nbsp;151,
&#147;Inventory Costs, an amendment of ARB No.&nbsp;43,
Chapter&nbsp;4&#148;. This statement requires certain abnormal
expenditures to be recognized as expenses in the current period.
It also requires that the amount of fixed production overhead
allocated to the costs of conversion be based on the normal
capacity of the production facilities. This statement shall be
effective for fiscal years beginning after June&nbsp;15, 2005,
with early adoption during the fiscal years beginning after the
date this statement is issued encouraged. The adoption of
FAS&nbsp;No.&nbsp;151 is not expected to have a material impact
on Sony&#146;s results of operations and financial position.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Derivative instruments and hedging activities -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In February 2006, the FASB issued FAS&nbsp;No.&nbsp;155,
&#147;Accounting for Certain Hybrid Financial Instruments&#148;,
an amendment of FAS&nbsp;No.&nbsp;133 and FAS&nbsp;No.&nbsp;140.
This statement permits an entity to elect fair value
remeasurement for any hybrid financial instrument if the hybrid
instrument contains an embedded
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-24

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
derivative that would otherwise be required to be bifurcated and
accounted for separately under FAS&nbsp;No.&nbsp;133. The
election to measure the hybrid instrument at fair value is made
on an instrument-by-instrument basis and is irreversible. The
statement will be effective for all financial instruments
acquired, issued, or subject to a remeasurement event occurring
after the beginning of an entity&#146;s fiscal years beginning
after September&nbsp;15, 2006, with earlier adoption permitted
as of the beginning of fiscal year, provided that financial
statements for any interim period of that fiscal year have not
been issued. The adoption of FAS&nbsp;No.&nbsp;155 is not
expected to have material impact on Sony&#146;s results of
operations and financial position.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Accounting for Servicing of Financial Assets -</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2006, the FASB issued FAS&nbsp;No.&nbsp;156,
&#147;Accounting for Servicing of Financial Assets&nbsp;&#151;
an amendment of FASB Statement No.&nbsp;140&#148;. This
statement amends FASB Statement No.&nbsp;140, &#147;Accounting
for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities&#148; with respect to the
accounting for separately recognized servicing assets and
servicing liabilities. This statement shall be effective for
fiscal years beginning after September&nbsp;15, 2006. Sony is
currently evaluating the impact of adopting this new
pronouncement.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(4)</B></TD>
    <TD>
    <B>Reclassifications:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain reclassifications of the financial statements for the
fiscal years ended March&nbsp;31, 2004 and 2005 have been made
to conform to the presentation for the fiscal year ended
March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='403'></A>
</DIV>

<!-- link1 "3. Inventories" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.</B></TD>
    <TD>
    <B><I>Inventories</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories comprise the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Finished products</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>405,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>534,766</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Work in process</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,381</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Raw materials, purchased components and supplies</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>146,577</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>631,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>804,724</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='404'></A>
</DIV>

<!-- link1 "4. Film costs" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>4.</B></TD>
    <TD>
    <B><I>Film costs</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Film costs comprise the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Theatrical:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Released (including acquired film libraries)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>119,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153,992</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Completed not released</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,377</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    In production and development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>156,019</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Television licensing:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Released (including acquired film libraries)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,918</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    In production and development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>278,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,372</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-25

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony estimates that approximately 88% of unamortized costs of
released films (excluding amounts allocated to acquired film
libraries) at March&nbsp;31, 2006 will be amortized within the
next three years. Approximately 102,207&nbsp;million yen of
released film costs are expected to be amortized during the next
twelve months. As of March&nbsp;31, 2006, unamortized acquired
film libraries of approximately 10,820&nbsp;million yen remained
to be amortized on a straight-line basis over an average of the
remaining life of 4&nbsp;years. Approximately
137,400&nbsp;million yen of accrued participation liabilities
included in accounts payable, other and accrued expenses are
expected to be paid during the next twelve months.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='405'></A>
</DIV>

<!-- link1 "5. Related party transactions" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.</B></TD>
    <TD>
    <B><I>Related party transactions</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony accounts for its investments in affiliated companies over
which Sony has significant influence or ownership of 20% or more
but less than or equal to 50% under the equity method. In
addition, investments in general partnerships in which Sony does
not have a controlling interest and limited partnerships are
also accounted for under the equity method. Such investments
include but are not limited to Sony&#146;s interest in Sony
Ericsson Mobile Communications, AB (50%), SONY BMG MUSIC
ENTERTAINMENT (&#147;SONY BMG&#148;) (50%), S-LCD Corporation
(&#147;S-LCD&#148;) (50% minus 1&nbsp;share), ST Liquid Crystal
Display Corporation (50%), InterTrust Technologies Corporation
(49.5%), MGM Holdings, Inc. (&#147;MGM Holdings&#148;) (20%),
bit Wallet, Inc (34.6%), and STAR CHANNEL, INC. (17.8%).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Summarized combined financial information that is based on
information provided by equity investees is shown below:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>942,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>991,440</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>361,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>376,155</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>903,873</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,553,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,271,468</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>876,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,009,895</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>660,504</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>561,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>601,069</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities and stockholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,553,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,271,468</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Number of companies at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,009,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,473,273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,357,172</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>231,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>477,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>668,226</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,404</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,982</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
S-LCD, a joint venture with Samsung Electronics Co., LTD focused
on manufacturing amorphous TFT panel, was established in April
2004 as a joint venture in which Sony has an ownership interest
of 50% minus 1&nbsp;share. Sony invested 100,073&nbsp;million
yen in S-LCD during the fiscal year ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of August&nbsp;1, 2004, Sony combined its recorded music
business, except for the operations of its recorded music
business in Japan, with the recorded music business of
Bertelsmann AG in a joint venture. The newly formed company,
known as SONY BMG, is 50% owned by each parent company. As a
result, the
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-26
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
results of the recorded music business, except for the recorded
music business in Japan, are no longer consolidated but are
accounted for under the equity method.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On April&nbsp;8, 2005, a consortium led by Sony Corporation of
America (&#147;SCA&#148;) and its equity partners, Providence
Equity Partners, Texas Pacific Group, Comcast Corporation and
DLJ Merchant Banking Partners, completed the acquisition of
Metro-Goldwyn-Mayer Inc. (&#147;MGM&#148;). Under the terms of
the acquisition agreement, the aforementioned investor group
acquired MGM for 12.00 U.S.&nbsp;dollars in cash per MGM share,
for a total purchase price of approximately 5.0&nbsp;billion
U.S.&nbsp;dollars. In conjunction with the acquisition, Sony
Pictures Entertainment (&#147;SPE&#148;) entered into agreements
to co-finance and produce new motion pictures with MGM, and to
distribute MGM&#146;s existing film and television content
through SPE&#146;s global distribution channels. MGM continues
to operate under the Metro-Goldwyn-Mayer name as a private
company, headquartered in Los Angeles, focused on new film
production and distribution activities. As part of the
acquisition, SCA invested 257&nbsp;million U.S.&nbsp;dollars for
20% of the total equity capital, which includes both common
stock and a significant amount of non-voting preferred stock
with detachable common stock warrants. Though Sony owns 20% of
MGM Holdings&#146; total equity on a fully diluted basis as a
result of the warrants dilution, Sony owns 45% of the total
outstanding common stock and therefore, records 45% of MGM
Holdings&#146; net income (loss) as equity in net income of
affiliated companies.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2005, Sony sold 230,000&nbsp;shares of Monex Beans
Holdings, Inc. As a result of this sale, Sony&#146;s ownership
interest has been reduced from 20.1% to 10.3%. Therefore, Monex
Beans Holdings, Inc. is no longer accounted for under the equity
method. The financial position and operating results of Monex
Beans Holdings, Inc. as of and for the fiscal year ended
March&nbsp;31, 2006 are not included in the above summarized
combined financial information. See Note&nbsp;19 for more
information on this transaction.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The proportionate share in the underlying net assets of the
investee exceeded the carrying value of investments in
affiliated companies by 42,731&nbsp;million yen and
36,875&nbsp;million yen at March&nbsp;31, 2005 and 2006,
respectively. These differences primarily relate to the
differences in the carrying value of the net assets contributed
by Sony and Bertelsmann AG upon the formation of SONY BMG in
August 2004. The contribution of assets to SONY BMG was
accounted for at book value. Acquisitions by Bertelsmann
AG&#146;s recorded music business shortly prior to the formation
of SONY BMG resulted in goodwill comprising a significant
portion of the assets contributed to SONY BMG by Bertelsmann AG,
whereas Sony&#146;s contributed assets had a lower historical
basis. As a result, Sony&#146;s carrying value of the investment
in SONY BMG is below its 50% share of the underlying assets of
SONY BMG. As the contributions for both Sony and Bertelsmann AG
were recorded at historical book value by SONY BMG, there is a
basis difference attributable to a non-depreciable asset which
is not being amortized. Differences in the carrying value of
Sony&#146;s other equity investments and the proportionate share
of the fair value of underlying net assets primarily relates to
unamortizable goodwill.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Affiliated companies accounted for under the equity method with
an aggregate carrying amount of 17,676&nbsp;million yen and
4,588&nbsp;million yen at March&nbsp;31, 2005 and 2006, were
quoted on established markets at an aggregate value of
95,246&nbsp;million yen and 34,462&nbsp;million yen,
respectively.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-27

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Account balances and transactions with affiliated companies
accounted for under the equity method are presented below:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,062</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,837</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Advances</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,985</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable, trade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,507</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>258,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>256,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>234,636</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>106,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>282,071</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of April&nbsp;1, 2004, Sony Corporation made Sony Computer
Entertainment Inc. (&#147;SCE&#148;) a wholly-owned subsidiary
through a stock for stock exchange pursuant to the provision of
Article&nbsp;358 of the Japanese Commercial Code which does not
require the approval of the General Meeting of Shareholders. The
stock for stock exchange ratio was determined based on the
estimated equity values of SCE and Sony on a consolidated basis.
Through the stock for stock exchange, Sony Corporation provided
1,000,000&nbsp;shares of its common stock to the then Executive
Deputy President, Corporate Executive Officer of Sony
Corporation who had owned 100&nbsp;shares of SCE&#146;s common
stock. This transaction did not have a material impact on
Sony&#146;s results of operations and financial position for the
fiscal year ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dividends from affiliated companies accounted for under the
equity method for the fiscal years ended March&nbsp;31, 2004,
2005 and 2006 were 3,446&nbsp;million yen, 13,391&nbsp;million
yen and 22,970&nbsp;million yen, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='406'></A>
</DIV>

<!-- link1 "6. Accounts receivable securitization programs" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.</B></TD>
    <TD>
    <B><I>Accounts receivable securitization programs</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In Japan, Sony set up several accounts receivable sales programs
whereby Sony can sell up to 47,500&nbsp;million yen of eligible
trade accounts receivable. Through these programs, Sony can sell
receivables to special purpose entities owned and operated by
banks. Sony can sell receivables in which the agreed upon
original due dates are no more than 190&nbsp;days after the
sales of receivables. These transactions are accounted for as
sales in accordance with FAS&nbsp;No.&nbsp;140, &#147;Accounting
for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities&#148;, because Sony has
relinquished control of the receivables. The initial sale of
these receivables was in March 2005 in which Sony sold a total
of 10,041&nbsp;million yen. Sony sold a total of
146,193&nbsp;million yen of receivables during the fiscal year
ended March&nbsp;31, 2006. Losses from these transactions were
insignificant. Although Sony continues servicing the sold
receivables, no servicing liabilities are recorded because costs
for collection of the sold receivables are insignificant.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Through May 2005, Sony had set up an accounts receivable
securitization program in the United States of America whereby
Sony could sell interests in up to 500&nbsp;million
U.S.&nbsp;dollars of eligible trade accounts receivable, as
defined. Through this program, Sony could securitize and sell a
percentage of an undivided interest in that pool of receivables
to several multi-seller commercial paper conduits owned and
operated by a bank. Sony could sell receivables in which the
agreed upon original due dates were no more than 90&nbsp;days
after the invoice dates. The value assigned to undivided
interests retained in securitized trade receivables was based on
the relative fair values of the interest retained and sold in
the securitization. Sony had assumed that the fair value of the
retained interest was equivalent to its carrying value as the
receivables were short-term in nature,
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-28

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
high quality and had appropriate reserves for bad debt
incidence. These securitization transactions were accounted for
as a sale in accordance with FAS&nbsp;No.&nbsp;140, because Sony
had relinquished control of the receivables. During the period
from April 2004 to January 2005, Sony sold a total of
80,250&nbsp;million yen of accounts receivable under this
program. There were no outstanding amounts due at March&nbsp;31,
2005 relating to the existing undivided interests in the pool of
receivables that had been sold. Losses from these transactions
were insignificant. This program was terminated in May 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='407'></A>
</DIV>

<!-- link1 "7. Marketable securities and securities investments and other" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.</B></TD>
    <TD>
    <B><I>Marketable securities and securities investments and
    other</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Marketable securities and securities investments and other
include debt and equity securities of which the aggregate cost,
gross unrealized gains and losses and fair value pertaining to
available-for-sale securities and
<FONT style="white-space: nowrap">held-to</FONT>-maturity
securities are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>March&nbsp;31, 2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>March&nbsp;31, 2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>unrealized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>unrealized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>unrealized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>unrealized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Cost</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>gains</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>losses</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Cost</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>gains</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>losses</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair value</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="30" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Available-for-sale:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Debt securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,090,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,464</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,146,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,522,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22,810</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,517,075</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>107,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(814</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>155,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>227,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>171,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,589</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>397,411</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Held-to-maturity Securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(221</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,104</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,225,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>108,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,291</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,329,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,783,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>189,074</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,620</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,947,590</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At March&nbsp;31, 2006, debt securities classified as
available-for-sale securities and
<FONT style="white-space: nowrap">held-to</FONT>-maturity
securities mainly consist of Japanese government and municipal
bonds and corporate debt securities with maturities of one to
ten years.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Proceeds from sales of available-for-sale securities were
397,817&nbsp;million yen, 613,035&nbsp;million yen and
524,268&nbsp;million yen for the fiscal years ended
March&nbsp;31, 2004, 2005 and 2006, respectively. On those
sales, gross realized gains computed on the average cost basis
were 9,525&nbsp;million yen, 24,080&nbsp;million yen and
68,096&nbsp;million yen and gross realized losses were
1,906&nbsp;million yen, 5,940&nbsp;million yen and
3,143&nbsp;million yen, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Marketable securities classified as trading securities at
March&nbsp;31, 2005 and 2006 were 315,946&nbsp;million yen and
401,561&nbsp;million yen, respectively, which consist of debt
and equity securities including short-term investments in money
market funds.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the ordinary course of business, Sony maintains long-term
investment securities, included in securities investments and
other, issued by a number of non-public companies. The aggregate
carrying amounts of the investments in non-public companies at
March&nbsp;31, 2005 and 2006, were 48,877&nbsp;million yen and
59,575&nbsp;million yen, respectively. Non-public equity
investments are valued at cost as fair value is not readily
determinable. If the value is estimated to have declined and
such decline is judged to be other than temporary, the
impairment of the investment is recognized and the carrying
value is reduced to its fair value.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the fiscal years ended March&nbsp;31, 2004, 2005 and 2006,
Sony booked 4,988&nbsp;million yen, 5,696&nbsp;million yen and
45,092&nbsp;million yen of net unrealized gain on trading
securities primarily in the life insurance business.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-29

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents the gross unrealized losses on, and
fair value of, Sony&#146;s investment securities with unrealized
losses, aggregated by investment category and the length of time
that individual investment securities have been in a continuous
unrealized loss position, at March&nbsp;31, 2006.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Less than 12&nbsp;Months</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>12&nbsp;months or More</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unrealized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unrealized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unrealized</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>losses</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>losses</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>losses</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Available-for-sale:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Debt securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,860,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22,590</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(220</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,881,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22,810</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>266,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,108</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(481</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>284,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,589</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Held-to-maturity Securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,278</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(208</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,907</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(221</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,147,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23,906</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(714</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,186,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,620</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In evaluating the factors for available-for-sale securities
whose fair values are readily determinable, Sony presumes a
decline in value to be other-than-temporary if the fair value of
the security is 20&nbsp;percent or more below its original cost
for an extended period of time (generally a period of up to six
to twelve months). This criteria is employed as a threshold to
identify securities which may have a decline in value that is
other-than-temporary. The presumption of an other-than-temporary
impairment in such cases may be overcome if there is evidence to
support that the decline is temporary in nature due to the
existence of other factors which overcome the duration or
magnitude of the decline. On the other hand, there may be cases
where impairment losses are recognized when the decline in the
fair value of the security is not more than 20&nbsp;percent or
such decline has not existed for an extended period of time, as
a result of considering specific factors which may indicate the
decline in the fair value is other-than-temporary.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At March&nbsp;31, 2006, Sony determined that the decline in
value for securities with unrealized losses shown in the above
table is not other-than-temporary in nature.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='408'></A>
</DIV>

<!-- link1 "8. Leased assets" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.</B></TD>
    <TD>
    <B><I>Leased assets</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony leases certain communication and commercial equipment,
plant, office space, warehouses, employees&#146; residential
facilities and other assets. Certain of these leases have
renewal and purchase options.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An analysis of leased assets under capital leases is as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Class of property</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Land</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>193</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Buildings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,437</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Machinery, equipment and others</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,870</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated depreciation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18,509</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14,820</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,680</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-30

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a schedule by year of the future minimum lease
payments under capital leases together with the present value of
the net minimum lease payments as of March&nbsp;31, 2006:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Yen in</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>millions</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal Year Ending March&nbsp;31:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,322</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,650</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,325</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,081</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,149</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Later years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,725</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total minimum lease payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,252</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less&nbsp;&nbsp;&#151; Amount representing interest</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,972</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Present value of net minimum lease payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less&nbsp;&nbsp;&#151; Current obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,966</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term capital lease obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,314</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Minimum lease payments have not been reduced by minimum sublease
income of 10,022&nbsp;million yen due in the future under
noncancelable subleases.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Minimum rental expenses under operating leases for the fiscal
years ended March&nbsp;31, 2004, 2005 and 2006 were
92,649&nbsp;million yen, 81,391&nbsp;million yen and
80,014&nbsp;million yen, respectively. Sublease rentals received
under operating leases for the fiscal years ended March&nbsp;31,
2004, 2005 and 2006 were 2,923&nbsp;million yen,
1,933&nbsp;million yen and 1,350&nbsp;million yen, respectively.
The total minimum rentals to be received in the future under
noncancelable subleases as of March&nbsp;31, 2006 were
21,843&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The minimum rental payments required under operating leases that
have initial or remaining noncancelable lease terms in excess of
one year at March&nbsp;31, 2006 are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Yen in</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>millions</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal Year Ending March&nbsp;31:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,715</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,529</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,320</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,541</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Later years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,932</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total minimum future rentals</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>195,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='409'></A>
</DIV>

<!-- link1 "9. Goodwill and intangible assets" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.</B></TD>
    <TD>
    <B><I>Goodwill and intangible assets</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Intangible assets acquired during the fiscal year ended
March&nbsp;31, 2006 totaled 36,237&nbsp;million yen, which are
subject to amortization and primarily consist of acquired patent
rights of 9,922&nbsp;million yen and software to be sold, leased
or otherwise marketed of 17,653&nbsp;million yen. The weighted
average amortization period for
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-31
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
acquired patent rights and software to be sold, leased or
otherwise marketed is 8&nbsp;years and 3&nbsp;years,
respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Intangible assets subject to amortization comprise the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>carrying</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>carrying</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amortization</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amortization</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Artist contracts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,094</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,218</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Music catalog</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19,641</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,012</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acquired patent rights</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26,139</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(30,200</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Software to be sold, leased or otherwise marketed</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,907</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,181</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,194</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,625</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,978</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15,133</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>195,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(84,680</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>235,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(105,757</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The aggregate amortization expenses for intangible assets for
the fiscal years ended March&nbsp;31, 2004, 2005 and 2006 was
28,866&nbsp;million yen, 24,993&nbsp;million yen and
28,390&nbsp;million yen, respectively. The estimated aggregate
amortization expense for intangible assets for the next five
years is as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen in</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Year Ending March&nbsp;31,</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,636</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,862</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,857</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,593</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,125</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total carrying amount of intangible assets having an indefinite
life comprise the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Trademarks</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,195</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distribution agreement</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,848</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,043</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,043</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-32

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The changes in the carrying amount of goodwill by operating
segment for the fiscal years ended March&nbsp;31, 2005 and 2006
are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Financial</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>All</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Electronics</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Game</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Pictures</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Services</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>110,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>277,870</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reallocated from Music business to Electronics segment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,329</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Goodwill acquired during year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,651</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Goodwill contributed to the Joint Venture with Bertelsmann AG</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15,626</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15,626</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other *</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,344</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,028</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>283,923</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Goodwill acquired during year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,519</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reallocated from Music business to Electronics segment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(634</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Impairment losses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(534</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(534</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other *</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,116</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>299,024</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    Other consists of translation adjustments and reclassification
    to/from other accounts.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Notes&nbsp;5 and&nbsp;24, as of August&nbsp;1,
2004, Sony and Bertelsmann AG combined their recorded music
business in a joint venture. In connection with the
establishment of the joint venture, assets contributed by Sony
included 15,626&nbsp;million yen of goodwill. In addition, the
non-Japan based disc manufacturing and physical distribution
businesses, formerly included within the Music segment, have
been reclassified to the Electronics segment and accordingly,
Sony reallocated 12,329&nbsp;million yen of goodwill relating to
the non-Japan based disc manufacturing and physical distribution
business from the Music segment to the Electronics segment.
Effective April&nbsp;1, 2005, a similar change was made with
respect to the Japan based disc manufacturing businesses and
accordingly, Sony reallocated 634&nbsp;million yen of goodwill
from the Music segment to the Electronics segment. Consistent
with the presentation of business segment information in
Note&nbsp;24, the Music segment is included within All Other.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the year ended March&nbsp;31, 2006, Sony performed the
annual impairment test for goodwill and recorded an impairment
loss of 534&nbsp;million yen in a reporting unit included in All
Other. This impairment charge reflected the overall decline in
the fair value of a subsidiary. The fair value of the subsidiary
was estimated principally using the expected present value of
future cash flows.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='410'></A>
</DIV>

<!-- link1 "10. Insurance-related accounts" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.</B></TD>
    <TD>
    <B><I>Insurance-related accounts</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s life and non-life insurance subsidiaries in Japan
maintain their accounting records as described in Note&nbsp;2 in
accordance with the accounting principles and practices
generally accepted in Japan, which vary in some respects from
U.S.&nbsp;GAAP.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Those differences are mainly that insurance acquisition costs
for life and non-life insurance are charged to income when
incurred in Japan whereas in the United States of America those
costs are deferred and amortized generally over the
premium-paying period of the related insurance policies, and
that future policy benefits for life insurance calculated
locally under the authorization of the supervisory
administrative agencies are comprehensively adjusted to a net
level premium method with certain adjustments of actuarial
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-33
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
assumptions for U.S.&nbsp;GAAP purposes. For purposes of
preparing the consolidated financial statements, appropriate
adjustments have been made to reflect such items in accordance
with U.S.&nbsp;GAAP.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The amounts of statutory net equity of the subsidiaries as of
March&nbsp;31, 2005 and 2006 were 153,228&nbsp;million yen and
229,543&nbsp;million yen, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(1)</B></TD>
    <TD>
    <B>Insurance policies:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Life insurance policies that the life insurance subsidiary
writes, most of which are categorized as long-duration
contracts, mainly consist of whole life, term life and accident
and health insurance contracts. The life insurance revenues for
the fiscal years ended March&nbsp;31, 2004, 2005 and 2006 were
437,835&nbsp;million yen, 426,774&nbsp;million yen and
453,496&nbsp;million yen, respectively. Property and casualty
insurance policies that the non-life insurance subsidiary writes
are primarily automotive insurance contracts which are
categorized as short-duration contracts. The non-life insurance
revenues for the fiscal years ended March&nbsp;31, 2004, 2005
and 2006 were 28,371&nbsp;million yen, 35,454&nbsp;million yen
and 42,743&nbsp;million yen, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(2)</B></TD>
    <TD>
    <B>Deferred insurance acquisition costs:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Insurance acquisition costs, including such items as commission,
medical examination and inspection report fees, that vary with
and are primarily related to acquiring new insurance policies
are deferred as long as they are recoverable. The deferred
insurance acquisition costs for traditional life insurance
contracts are amortized over the premium-paying period of the
related insurance policies using assumptions consistent with
those used in computing policy reserves. The deferred insurance
acquisition costs for non-traditional life insurance contracts
are amortized over the expected life in proportion to the
estimated gross profits. Amortization charged to income for the
fiscal years ended March&nbsp;31, 2004, 2005 and 2006 amounted
to 50,492&nbsp;million yen, 47,120&nbsp;million yen and
42,933&nbsp;million yen, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(3)</B></TD>
    <TD>
    <B>Future insurance policy benefits:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Liabilities for future policy benefits are established in
amounts adequate to meet the estimated future obligations of
policies in force. These liabilities are computed by the net
level premium method based upon estimates as to future
investment yield, mortality, morbidity and withdrawals. Future
policy benefits are computed using interest rates ranging from
approximately 0.90% to 5.10%. Mortality, morbidity and
withdrawal assumptions for all policies are based on either the
subsidiary&#146;s own experience or various actuarial tables. At
March&nbsp;31, 2005 and 2006, future insurance policy benefits
amounted to 1,782,850&nbsp;million yen and
1,901,716&nbsp;million yen, respectively.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-34

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='411'></A>
</DIV>

<!-- link1 "11. Short-term borrowings and long-term debt" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>11.</B></TD>
    <TD>
    <B><I>Short-term borrowings and long-term debt</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Short-term borrowings comprise the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured loans, principally from banks:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    with weighted-average interest rate of 2.79%</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    with weighted-average interest rate of 3.63%</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,066</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Secured call money:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    with weighted-average interest rate of 0.01%</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Secured bills sold:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    with weighted-average interest rate of 0.00%</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    with weighted-average interest rate of 0.01%</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,700</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>142,766</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At March&nbsp;31, 2006, marketable securities and securities
investments with a book value of 119,598&nbsp;million yen were
pledged as collateral for call money and bills sold by a
Japanese bank subsidiary.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-35

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Long-term debt comprises the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Secured loans, representing obligations to banks:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Due 2005 to 2008 with interest of 2.20%&nbsp;per annum</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured loans, representing obligations principally to banks:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Due 2005 to 2017 with interest ranging from 0.23% to
    5.89%&nbsp;per annum</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Due 2006 to 2015 with interest ranging from 0.13% to
    5.89%&nbsp;per annum</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>128,148</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Medium-term notes of consolidated subsidiaries:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Due 2006 with interest ranging from 2.78% to 4.95%&nbsp;per annum</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,755</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Due 2006 with interest of 4.95%&nbsp;per annum</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,698</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured zero coupon convertible bonds, due 2008, convertible
    currently at 5,605&nbsp;yen for one common share, redeemable
    before due date</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 0.1% bonds, due 2005 with detachable warrants, net of
    unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 1.55% bonds, due 2006 with detachable warrants</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 0.9% bonds, due 2007 with detachable warrants</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,300</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 0.9% bonds, due 2007 with detachable warrants</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 1.42% bonds, due 2005, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 0.64% bonds, due 2006, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99,999</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 1.01% bonds, due 2010, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,996</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 2.04% bonds, due 2010, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,987</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 0.80% bonds, due 2010, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,991</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 1.52% bonds, due 2011, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,997</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 1.16% bonds, due 2012, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,981</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 1.52% bonds, due 2013, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,997</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 1.57% bonds, due 2015, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,980</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 1.75% bonds, due 2015, net of unamortized discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,993</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 2.0% bonds, due 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 1.99% bonds, due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured 2.35% bonds, due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,900</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital lease obligations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Due 2005 to 2019 with interest ranging from 1.55% to
    30.00%&nbsp;per annum</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Due 2006 to 2019 with interest ranging from 1.45% to
    16.00%&nbsp;per annum</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Guarantee deposits received</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>845,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>958,453</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less&nbsp;&#151; Portion due within one year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>166,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>193,555</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>678,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>764,898</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There are no adverse debt covenants or cross-default provisions
relating to Sony&#146;s borrowings.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-36

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A summary of the exercise rights of the detachable warrants as
of March&nbsp;31, 2006 is as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="center" nowrap><B>Exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Number of shares per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Issued on</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Exercisable during</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Yen</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Dollars</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>warrant</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Status of exercise</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    October&nbsp;19, 2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    November&nbsp;1, 2001 through October&nbsp;18, 2006</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">
    12,457</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    100&nbsp;shares of common stock of Sony Corporation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    9,224 warrants outstanding</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;21, 2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    January&nbsp;6, 2003 through December&nbsp;20, 2007</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">
    6,039</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    100&nbsp;shares of common stock of Sony Corporation</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    11,459 warrants outstanding</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Aggregate amounts of annual maturities of long-term debt during
the next five years are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="78%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen in</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Fiscal Year Ending March&nbsp;31</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>193,555</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,781</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>285,924</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66,431</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>110,762</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At March&nbsp;31, 2006, Sony had unused committed lines of
credit amounting to 676,449&nbsp;million yen and can generally
borrow up to 90&nbsp;days from the banks with whom Sony has
committed line contracts. Furthermore, Sony has Commercial Paper
Programs, the size of which was 1,321,940&nbsp;million yen.
There was no commercial paper outstanding at March&nbsp;31,
2006. Under those programs, Sony can issue commercial paper for
the period generally not in excess of 270&nbsp;days up to the
size of the programs. In addition, Sony has Medium Term Notes
programs, the size of which was 587,100&nbsp;million yen. At
March&nbsp;31, 2006, the total outstanding balance of Medium
Term Notes was 58,698&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='412'></A>
</DIV>

<!-- link1 "12. Deposits from customers in the banking business" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.</B></TD>
    <TD>
    <B><I>Deposits from customers in the banking business</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All deposits from customers in the banking business are interest
bearing deposits, and are owned by a Japanese bank subsidiary
which was established as an Online Internet bank for
individuals. At March&nbsp;31, 2005 and 2006, the balance of
time deposits issued in amounts of 10&nbsp;million yen or more
were 67,387&nbsp;million yen and 75,459&nbsp;million yen,
respectively. At March&nbsp;31, 2006, aggregate amounts of
annual maturities of time deposits with a remaining term of more
than one year are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="78%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen in</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Fiscal Year Ending March&nbsp;31</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,568</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,657</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,637</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2012</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='413'></A>
</DIV>

<!-- link1 "13. Financial instruments" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>13.</B></TD>
    <TD>
    <B><I>Financial instruments</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(1)</B></TD>
    <TD>
    <B>Derivative instruments and hedging activities:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has certain financial instruments including financial
assets and liabilities incurred in the normal course of
business. Such financial instruments are exposed to market risk
arising from the changes of foreign currency exchange rates and
interest rates. In applying a consistent risk management
strategy for the purpose
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-37

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
of reducing such risk, Sony uses derivative financial
instruments, which include foreign exchange forward contracts,
foreign currency option contracts, and interest rate and
currency swap agreements. Foreign exchange forward contracts and
foreign currency option contracts are utilized primarily to
limit the exposure affected by changes in foreign currency
exchange rates on cash flows generated by anticipated
intercompany transactions and intercompany accounts receivable
and payable denominated in foreign currencies. Interest rate and
currency swap agreements are utilized primarily to lower funding
costs, to diversify sources of funding and to limit Sony&#146;s
exposure associated with underlying debt instruments and
available-for-sale debt securities resulting from adverse
fluctuations in interest rates, foreign currency exchange rates
and changes in the fair value. These instruments are executed
with creditworthy financial institutions, and virtually all
foreign currency contracts are denominated in U.S.&nbsp;dollars,
euros and other currencies of major countries. Although Sony may
be exposed to losses in the event of nonperformance by
counterparties or unfavorable interest and currency rate
movements, it does not anticipate significant losses due to the
nature of Sony&#146;s counterparties or the hedging
arrangements. These derivatives generally mature or expire
within 6&nbsp;months after the balance sheet date. Sony does not
use these derivative financial instruments for trading or
speculative purposes except for certain derivatives utilized for
portfolio investments such as interest rate swap agreements and
bond future contracts in the Financial Services segment. These
derivative transactions utilized for portfolio investments in
the Financial Services segment are executed within a certain
limit in accordance with an internal risk management policy.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Derivative financial instruments held by Sony are classified and
accounted for as described below pursuant to
FAS&nbsp;No.&nbsp;133.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Fair value hedges</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The derivatives designated as fair value hedges include interest
rate and currency swap agreements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Both the derivatives designated as fair value hedges and the
hedged items are reflected at fair value in the consolidated
balance sheet. Changes in the fair value of the derivatives
designated as fair value hedges as well as offsetting changes in
the carrying value of the underlying hedged items are recognized
in income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the fiscal years ended March&nbsp;31, 2004 and 2005, the
amount of ineffectiveness of these fair value hedges, that was
reflected in earnings, was not material. For the fiscal year
ended March&nbsp;31, 2006, these fair value hedges were fully
effective. In addition, there were no amounts excluded from the
assessment of hedge effectiveness of fair value hedges.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Cash flow hedges</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The derivatives designated as cash flow hedges include foreign
exchange forward contracts, foreign currency option contracts
and interest rate and currency swap agreements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the fair value of derivatives designated as cash flow
hedges are initially recorded in other comprehensive income and
reclassified into earnings when the hedged transaction affects
earnings. For the fiscal years ended March&nbsp;31, 2004 and
2006, these cash flow hedges were fully effective. For the
fiscal year ended March&nbsp;31, 2005, the amount of
ineffectiveness of these cash flow hedges that was reflected in
earnings was not material. In addition, there were no amounts
excluded from the assessment of hedge effectiveness of cash flow
hedges. At March&nbsp;31, 2006, amounts related to derivatives
qualifying as cash flow hedges amounted to a net reduction of
equity of 2,049&nbsp;million yen. Within the next twelve months,
1,453&nbsp;million yen is expected to be reclassified from
equity into earnings as loss. For the fiscal year ended
March&nbsp;31, 2006, there were no forecasted transactions that
failed to occur which resulted in the discontinuance of cash
flow hedges.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-38

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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Derivatives not designated as hedges</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The derivatives not designated as hedges under
FAS&nbsp;No.&nbsp;133 include foreign exchange forward
contracts, foreign currency option contracts, interest rate and
currency swap agreements, interest rate and bond future
contracts, stock price index option contracts, convertible
rights included in convertible bonds and other derivatives.
Changes in the fair value of derivatives not designated as
hedges are recognized in income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A description of the purpose and classification of the
derivative financial instruments held by Sony is as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Foreign exchange forward contracts and foreign currency
option contracts</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony enters into foreign exchange forward contracts and
purchased and written foreign currency option contracts
primarily to fix the cash flows from intercompany accounts
receivable and payable and forecasted transactions denominated
in functional currencies (Japanese yen, U.S.&nbsp;dollars and
euros) of Sony&#146;s major operating units. The majority of
written foreign currency option contracts are a part of range
forward contract arrangements and expire in the same month with
the corresponding purchased foreign currency option contracts.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony also enters into foreign exchange forward contracts, which
effectively fix the cash flows from foreign currency denominated
debt. Accordingly, these derivatives have been designated as
cash flow hedges in accordance with FAS&nbsp;No.&nbsp;133.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Foreign exchange forward contracts and foreign currency option
contracts that do not qualify as hedges are
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in other income and expenses.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Foreign exchange forward contracts and foreign currency option
contracts held by certain subsidiaries in the Financial Services
segment are
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in financial service revenue.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Interest rate and currency swap agreements</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony enters into interest rate and currency swap agreements,
which are used for reducing the risk arising from the changes in
the fair value of fixed rate debt and available-for-sale debt
securities. For example, Sony enters into interest rate and
currency swap agreements, which effectively swap foreign
currency denominated fixed rate debt for functional currency
denominated variable rate debt. These derivatives are considered
to be a hedge against changes in the fair value of Sony&#146;s
foreign denominated fixed-rate obligations. Accordingly, these
derivatives have been designated as fair value hedges in
accordance with FAS&nbsp;No.&nbsp;133.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony also enters into interest rate and currency swap agreements
that are used for reducing the risk arising from the changes in
anticipated cash flow of variable rate debt and foreign currency
denominated debt. For example, Sony enters into interest rate
and currency swap agreements, which effectively swap foreign
currency denominated variable rate debt for functional currency
denominated fixed rate debt. These derivatives are considered to
be a hedge against changes in the anticipated cash flow of
Sony&#146;s foreign denominated variable rate obligations.
Accordingly, these derivatives have been designated as cash flow
hedges in accordance with FAS&nbsp;No.&nbsp;133.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain subsidiaries in the Financial Services segment have
interest rate swap agreements as part of their portfolio
investments, which are
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in financial service revenue.
Interest rate and currency swap agreements held by certain
subsidiaries in the Financial Services segment are also
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in financial service revenue.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-39

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any other interest rate and currency swap agreements that do not
qualify as hedges, which are used for reducing the risk arising
from changes of variable rate debt, are
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in other income and expenses.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Interest rate and bond future contracts</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain subsidiaries in the Financial Services segment have
interest rate and bond future contracts as part of their
portfolio investments, which are
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in financial service revenue.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Stock price index option contracts</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain subsidiaries in the Financial Services segment have
stock price index option contracts as part of their portfolio
investments, which are
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in financial service revenue.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Embedded derivatives</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the fair value of embedded derivatives that must be
separated from the host contracts and accounted for as
derivative instruments under FAS&nbsp;No.&nbsp;133 are
recognized in income. For example, the convertible rights
included in convertible bonds held by Sony&#146;s life insurance
subsidiary, which are classified as available-for-sale debt
securities, are considered embedded derivatives and are
<FONT style="white-space: nowrap">marked-to</FONT>-market with
changes in value recognized in financial service revenue.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(2)</B></TD>
    <TD>
    <B>Fair value of financial instruments:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The estimated fair values of Sony&#146;s financial instruments
are summarized as follows. The following summary excludes cash
and cash equivalents, time deposits, notes and accounts
receivable, trade, short-term borrowings, notes and accounts
payable, trade and deposits from customers in the banking
business that are
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-40

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
carried at amounts which approximate fair value. The summary
also excludes debt and equity securities which are disclosed in
Note&nbsp;7.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Notional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Carrying</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Estimated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Notional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Carrying</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Estimated</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>fair value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>fair&nbsp;value</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt including the current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(845,862</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(856,321</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(958,453</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(981,006</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign exchange forward contracts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,545,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(55</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(55</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,489,213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,184</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Currency option contracts purchased</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>428,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>457,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,540</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Currency option contracts written</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>146,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,390</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,390</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,576</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,576</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest rate swap agreements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>147,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,968</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,968</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>172,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(165</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(165</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest rate and currency swap agreements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,318</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,318</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(488</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(488</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest rate future contracts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>136,470</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(92</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(92</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bond future contracts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock price index option purchased</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Embedded derivatives</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>405,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>411,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,712</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,712</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following are explanatory notes regarding the estimation
method of fair values in the above table.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Long-term debt including the current portion</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair values of long-term debt, including the current
portion, were estimated based on either the market value or the
discounted amounts of future cash flows using Sony&#146;s
current incremental debt rates for similar liabilities.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Derivative financial instruments</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair values of foreign exchange forward contracts and
foreign currency option contracts were estimated based on market
quotations. The fair values of interest rate and currency swap
agreements were estimated based on the discounted amounts of
future net cash flows. The fair values of convertible rights,
which were a majority of embedded derivatives, were estimated
based on the market price of stock which will be acquired by the
exercise of these rights.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='414'></A>
</DIV>

<!-- link1 "14. Pension and severance plans" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>14.</B></TD>
    <TD>
    <B><I>Pension and severance plans</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon terminating employment, employees of Sony Corporation and
its subsidiaries in Japan are entitled, under most
circumstances, to lump-sum indemnities or pension payments as
described below. For employees voluntarily retiring, payments
are determined based on current rates of pay and lengths of
service. In calculating the payments for employees involuntarily
retiring, including employees retiring due to meeting mandatory
retirement age requirements, Sony may grant additional benefits.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July, 2004, Sony Corporation and certain of its subsidiaries
amended their pension plans and introduced a point-based plan
under which a point is added every year reflecting the
individual employee&#146;s
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-41

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
performance over that year. Under the point-based plan the
amount of payment is determined based on sum of cumulative
points from past services and interest points earned on the
cumulative points regardless of whether or not the employee is
voluntarily retiring. As a result of the plan amendment, the
projected benefit obligation was decreased by
120,873&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation and most of its subsidiaries in Japan had
contributory funded defined benefit pension plans pursuant to
the Japanese Welfare Pension Insurance Law, which consisted of a
substitutional portion of the governmental welfare pension
program and an additional portion which was established at the
discretion of each employer. In June, 2001, the Japanese
Government issued the Defined Benefit Corporate Pension Plan
Act, which permits each employer and employees&#146; pension
fund plan to separate the substitutional portion from its
employees&#146; pension fund and transfer the obligation and
related assets to the government. In July, 2004, in accordance
with the law, the Japanese Government approved applications
submitted by Sony Corporation and most of its subsidiaries in
Japan for an exemption from the obligation to pay benefits for
future employee services related to the substitutional portion
of the governmental welfare pension program. In January 2005,
the government also approved applications for an exemption from
the obligation to pay benefits for past employee services
related to the substitutional portion. On September&nbsp;20,
2005, the benefit obligation for past employee services related
to the substitutional portion and the related
government-specified portion of the plan assets were transferred
to the government. As a result of the transfer to the government
of the substitutional portion, as of March&nbsp;31, 2006, Sony
Corporation and most of its subsidiaries in Japan maintain
contributory funded defined benefit plans, which were
established by succeeding the additional portion established at
the discretion of each employer, pursuant to the Corporate
Defined Benefit Pension Plan Law.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the contributory pension plans, in general, the defined
benefits cover 65% of the indemnities under existing regulations
to employees. The remaining indemnities are covered by severance
payments by the companies. The pension benefits are payable at
the option of the retiring employee either in a lump-sum amount
or monthly pension payments. Contributions to the plans are
funded through several financial institutions in accordance with
the applicable laws and regulations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
EITF Issue No.&nbsp;03-2, &#147;Accounting for the Transfer to
the Japanese Government of the Substitutional Portion of
Employee Pension Fund&nbsp;Liabilities&#148;, requires employers
to account for the entire separation process of a substitutional
portion from an entire plan upon completion of the transfer of
the substitutional portion of the benefit obligation and related
plan assets to the government as the culmination of a series of
steps in a single settlement transaction. For the fiscal year
ended March&nbsp;31, 2006, in accordance with EITF Issue
No.&nbsp;03-2, Sony recognized a government subsidy of
133,322&nbsp;million yen which is the net of the amount of the
accumulated benefit obligation settled and the plan assets
transferred to the government. Sony also recognized a settlement
loss of 59,850&nbsp;million yen, the amount of which is the net
of 100,253&nbsp;million yen of unrecognized losses related to
the substitutional portion and 40,403&nbsp;million yen for the
derecognition of previously accrued salary progression. The net
gain of 73,472&nbsp;million yen is included in selling, general
and administrative expenses.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Many foreign subsidiaries have defined benefit pension plans or
severance indemnity plans, which substantially cover all of
their employees. Under such plans, the related cost of benefits
is currently funded or accrued. Benefits awarded under these
plans are based primarily on the current rate of pay and length
of service.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony uses a measurement date of March&nbsp;31 for substantially
all of its pension and severance plans.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-42

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The components of net pension and severance costs, which exclude
employee termination benefits paid in restructuring activities,
for the fiscal years ended March&nbsp;31, 2004, 2005 and 2006
were as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Japanese plans:</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Service cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>54,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,561</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,504</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expected return on plan assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22,812</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,120</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17,290</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of net transition asset</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(375</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(375</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(104</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Recognized actuarial loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,393</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of prior service cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(939</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,216</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,229</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gains on curtailments and settlements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(876</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Settlement loss resulting from the transfer of the
    substitutional portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59,850</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net periodic benefit cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,685</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Foreign plans:</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Service cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,852</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,318</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expected return on plan assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,812</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,712</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,112</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of net transition asset</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Recognized actuarial loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,674</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amortization of prior service cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(117</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(114</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(240</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Losses on curtailments and settlements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>915</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net periodic benefit cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,428</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-43

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The changes in benefit obligation and plan assets, funded status
and composition of amounts recognized in the consolidated
balance sheets were as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Japanese plans</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Foreign plans</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Change in benefit obligation:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Benefit obligation at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>993,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>901,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>155,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153,598</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Service cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,852</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,318</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Plan participants&#146; contributions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>609</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amendments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(120,873</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,522</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>238</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Actuarial (gain)&nbsp;loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,200</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,183</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency exchange rate changes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,506</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Curtailments and settlements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,988</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(628</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,465</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Benefits paid</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,042</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18,630</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,639</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,670</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Divestiture</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(32,140</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transfer of the substitutional portion to the government</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(291,570</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Benefit obligation at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>901,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>619,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>194,169</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Change in plan assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fair value of plan assets at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>513,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>534,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92,025</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Actual return (loss) on plan assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(354</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,513</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,209</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency exchange rate changes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,059</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Employer contribution</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,867</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,493</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Plan participants&#146; contributions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>609</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Curtailments and settlements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(112</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,006</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Benefits paid</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14,982</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,911</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,168</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,995</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Divestiture</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,666</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transfer of the substitutional portion to the government</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(117,845</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fair value of plan assets at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>534,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>489,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>104,394</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the establishment of the SONY BMG joint
venture with Bertelsmann AG as discussed in Note&nbsp;5, Sony
transferred 32,140&nbsp;million yen of its benefit obligation
and 12,666&nbsp;million yen of its plan assets which were
included in Sony&#146;s foreign plans to the joint venture as of
August&nbsp;1, 2004.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-44

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 18pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Japanese plans</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Foreign plans</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Funded status</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(367,275</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(130,541</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(61,573</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(89,775</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrecognized actuarial loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>322,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41,587</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrecognized net transition asset</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(104</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrecognized prior service cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(134,440</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(135,733</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(501</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(911</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net amount recognized</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(179,582</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(96,359</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,684</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(48,946</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Amounts recognized in the consolidated balance sheet consist of:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid benefit cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,226</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued pension and severance costs, including current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(309,957</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(134,849</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(42,934</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(70,986</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intangibles</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>128,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,858</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,657</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net amount recognized</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(179,582</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(96,359</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24,684</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(48,946</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The accumulated benefit obligation for all defined benefit
pension plan as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Japanese plans</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Foreign plans</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated benefit obligation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>835,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>613,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>121,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>143,031</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The projected benefit obligations, the accumulated benefit
obligations and fair value of plan assets for the pension plans
with accumulated benefit obligations in excess of plan assets
were as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Japanese plans</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Foreign plans</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Projected benefit obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>898,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>617,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158,353</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated benefit obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>835,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>612,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>139,431</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fair value of plan assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>533,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>488,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99,798</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Weighted-average assumptions used to determine benefit
obligations as of March&nbsp;31, 2004, 2005 and 2006 were as
follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Japanese plans:</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discount rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rate of compensation increase</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.4</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-45
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Foreign plans:</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discount rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rate of compensation increase</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.7</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Weighted-average assumptions used to determine net pension and
severance costs for the fiscal years ended March&nbsp;31, 2004,
2005 and 2006 were as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Japanese plans:</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discount rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expected return on plan assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rate of compensation increase</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.4</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Foreign plans:</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="73%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discount rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expected return on plan assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rate of compensation increase</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.7</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As required under FAS&nbsp;No.&nbsp;87, &#147;Employers&#146;
Accounting for Pensions&#148;, the assumptions are reviewed in
accordance with changes in circumstances.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To determine the expected long-term rate of return on pension
plan assets, Sony considers the current and expected asset
allocations, as well as historical and expected long-term rate
of returns on various categories of plan assets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Following
FAS&nbsp;No.&nbsp;132<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,
&#147;Employers&#146; Disclosure about Pensions and Other
Postretirement Benefits&#148;, the weighted-average rate of
compensation increase is calculated based on the pay-related
plans only. The point-based plan discussed above is excluded
from the calculation because payments made under the plan are
not based on employee compensation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Weighted-average pension plan asset allocations based on the
fair value of such assets as of March&nbsp;31, 2005 and 2006
were as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Japanese plans:</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="81%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Debt securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-46
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Foreign plans:</I></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="81%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Debt securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20.8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Real estate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the pension plans of Sony Corporation and most of its
subsidiaries in Japan, the target allocation as of
March&nbsp;31, 2006, is, as a result of our Asset Liability
management, 34% of public equity, 56% of fixed income securities
and 10% of other. When determining an appropriate asset
allocation, diversification among assets is duly considered.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The actual asset allocation as of March&nbsp;31, 2005 for
Sony&#146;s principal pension plans did not meet the
aforementioned target allocation as the Sony Employees&#146;
Pension Fund tentatively held cash to be paid to the Japanese
government in relation to the transfer of the substitutional
portion of the benefit obligation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result from the transfer of the Japanese Government of the
substitution portion of Sony&#146;s Employee Pension Fund in
September 2005, pension plan assets of the Japanese plans as of
March&nbsp;31, 2006 decreased as compared to March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony makes contributions to its contributory funded defined
benefit pension plans as required by government regulation or as
deemed appropriate by management after considering the fair
value of plan assets, expected return on plan assets and the
present value of benefit obligations. Sony expects to contribute
approximately 33&nbsp;billion yen to the Japanese plans and
approximately 6&nbsp;billion yen to the foreign plans during the
fiscal year ending March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The future benefit payments are expected as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Japanese plans</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Foreign plans</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal Year Ending March&nbsp;31,</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,262</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,764</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,532</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,326</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,994</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2012&nbsp;&#151;&nbsp;2016</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,418</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='415'></A>
</DIV>

<!-- link1 "15. Stockholders&#146; equity" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>15.</B></TD>
    <TD>
    <B><I>Stockholders&#146; equity</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</B></TD>
    <TD>
    <B>Subsidiary tracking stock:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;20, 2001, Sony Corporation issued shares of
subsidiary tracking stock in Japan, the economic value of which
is intended to be linked to the economic value of Sony
Communication Network Corporation (&#147;SCN&#148;), a directly
and indirectly wholly owned subsidiary of Sony Corporation which
is engaged in Internet-related services. The subsidiary tracking
stock holders had no direct rights in the equity or assets of
SCN or the assets of Sony Corporation.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-47

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;26, 2005, the Board of Directors of Sony
Corporation decided to terminate all shares of subsidiary
tracking stock and convert such shares to shares of Sony common
stock. All shares of subsidiary tracking stock were converted to
shares of Sony common stock on December&nbsp;1, 2005. As a
result of the conversion, the number of shares of Sony common
stock to be issued upon conversion was calculated by multiplying
the number of shares of subsidiary tracking stock as of
November&nbsp;30, 2005, by 1.114, and the number of shares of
Sony common stock to be issued upon conversion was 3,452,808.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</B></TD>
    <TD>
    <B>Common stock:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in the number of shares of common stock issued and
outstanding during the fiscal years ended March&nbsp;31, 2004,
2005 and 2006 have resulted from the following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>shares</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>922,385,176</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of convertible bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,944,800</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock issued under exchange offering</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,088,304</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>926,418,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of convertible bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,765,533</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise of stock acquisition rights</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>997,211,213</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of convertible bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>484,200</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion of subsidiary tracking stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,452,808</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercise of stock acquisition rights</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>531,443</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,001,679,664</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At March&nbsp;31, 2006, 58,976,132&nbsp;shares of common stock
would be issued upon conversion or exercise of all convertible
bonds, warrants and stock acquisition rights outstanding.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;1, 2003, Sony Corporation implemented a share
exchange as a result of which CIS&nbsp;Corporation became a
wholly-owned subsidiary. As a result of this share exchange,
Sony Corporation issued 1,088,304 new shares, and additional
paid-in capital increased 5,409&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;20, 1991, Sony Corporation made a free share
distribution of 33,908,621&nbsp;shares in ratios of one share
for each ten shares held for which no accounting entry was
required in Japan. Had the distribution been accounted for in
the manner adopted by companies in the United States of America,
201,078&nbsp;million yen would have been transferred from
retained earnings to the appropriate capital accounts. This has
been the only free distribution of common stock where no
accounting entry was required in Japan.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Conversions of convertible bonds into common stock are accounted
for in accordance with the provisions of the Japanese Commercial
Code by crediting approximately one-half of the conversion
proceeds to the common stock account and the remainder to the
additional paid-in capital account.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Ordinary General Meeting of Shareholders held on
June&nbsp;20, 2003 approved that Sony Corporation acquire up to
a total not exceeding 90&nbsp;million outstanding shares of its
common stock at an amount in total not exceeding
400&nbsp;billion yen and a total not exceeding 300 thousand
outstanding shares of the subsidiary tracking stock at an amount
in total not exceeding 1&nbsp;billion yen. As a result, Sony
Corporation had acquired 2&nbsp;million outstanding shares of
its common stock at an amount in 8,200&nbsp;million yen.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-48

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Ordinary General Meeting of Shareholders held on
June&nbsp;22, 2004 approved to amend the articles of
incorporation that Sony Corporation may purchase its own shares
by a resolution of the Board of Directors, in accordance with
the amendments to the Japanese Commercial Code enacted on
September&nbsp;25, 2003. With the amendment of the articles of
incorporation, Sony Corporation may purchase its own shares at
any time by a resolution of the Board of Directors up to the
retained earnings available for dividends to shareholders. No
common stock and subsidiary tracking stock had been acquired by
the resolution of the Board of Directors during the fiscal year
ended March&nbsp;31, 2005 and 2006.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(3)</B></TD>
    <TD>
    <B>Retained earnings:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The amount of statutory retained earnings of Sony Corporation
available for dividends to shareholders as of March&nbsp;31,
2006 was 565,936&nbsp;million yen. The appropriation of retained
earnings for the fiscal year ended March&nbsp;31, 2006 including
cash dividends for the six-month period ended March&nbsp;31,
2006 has been incorporated in the accompanying consolidated
financial statements. This appropriation of retained earnings
was approved at the meeting of the Board of Directors of Sony
Corporation held on May&nbsp;17, 2006 and was then recorded in
the statutory books of account, in accordance with the Japanese
Commercial Code.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Retained earnings include Sony&#146;s equity in undistributed
earnings of affiliated companies accounted for by the equity
method in the amount of 2,724&nbsp;million yen and
13,557&nbsp;million yen at March&nbsp;31, 2005 and 2006,
respectively.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-49

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(4)</B></TD>
    <TD>
    <B>Other comprehensive income:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other comprehensive income for the fiscal years ended
March&nbsp;31, 2004, 2005 and 2006 were as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Pre-tax</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Tax</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net-of-tax</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>expense</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    For the fiscal year ended March&nbsp;31, 2004:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gains on securities&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(31,890</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,971</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,371</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,679</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized losses on derivative instruments&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,049</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,961</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,344</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(68,993</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,415</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustments&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Translation adjustments arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(134,312</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(129,113</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,232</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(95,424</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,019</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    For the fiscal year ended March&nbsp;31, 2005:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gains on securities&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,541</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,643</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18,140</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,924</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized losses on derivative instruments&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,015</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(209</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,848</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,681</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,700</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(769</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustments&nbsp;&#151; Translation
    adjustments arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,361</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74,224</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64,284</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-50

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 18pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Pre-tax</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Tax</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net-of-tax</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>expense</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>amount</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    For the fiscal year ended March&nbsp;31, 2006:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gains on securities&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(45,633</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79,630</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(64,953</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41,495</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized losses on derivative instruments&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized holding gains (losses) arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,023</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,865</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,597</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,424</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minimum pension liability adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(38,735</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,206</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation adjustments&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Translation adjustments arising during the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>143,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,415</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>140,473</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Reclassification adjustment included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>295,413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(66,175</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>229,238</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal years ended March&nbsp;31, 2004 and 2006,
losses of 1,232&nbsp;million yen and gains of 17&nbsp;million
yen of foreign currency translation adjustments were transferred
respectively from other comprehensive income to net income as a
result of the liquidation of certain foreign subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Note&nbsp;5, as of August&nbsp;1, 2004, Sony and
Bertelsmann AG combined their recorded music businesses in a
joint venture. In connection with the establishment of the joint
venture, the minimum pension liability attributable to employees
who were transferred to SONY BMG totaling 6,053&nbsp;million yen
was transferred from other comprehensive income to the carrying
value of Sony&#146;s investment in SONY&nbsp;BMG.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='416'></A>
</DIV>

<!-- link1 "16. Stock-based compensation plans" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
    <TD>
    <B><I>Stock-based compensation plans</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has four types of stock-based compensation plans as
incentive plans for selected directors, corporate executive
officers and employees.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(1)</B></TD>
    <TD>
    <B>Warrant plan:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon issuance of unsecured bonds with detachable warrants which
are described in Note&nbsp;11, Sony Corporation has purchased
all of the detachable warrants and distributed them to selected
directors, corporate executive officers and employees of Sony.
By exercising a warrant, directors, corporate executive officers
and employees can purchase the common stock of Sony Corporation,
the number of which is designated by each plan. The warrants
generally vest ratably over a period of three years, and are
exercisable up to six years from the date of grant.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-51

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Presented below is a summary of the activities regarding common
stock warrants for the fiscal years shown:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Dollars)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,190,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,190,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,626,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72.93</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expired</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(563,992</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(558,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61.26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,190,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,626,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,068,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76.08</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercisable at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,808,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,626,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,068,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76.08</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There were no warrants granted or exercised during the fiscal
years ended March&nbsp;31, 2004, 2005 and 2006. At
March&nbsp;31, 2006, there were 1,145,900 and
922,400&nbsp;shares outstanding under warrants with exercise
prices of 6,039 yen and 12,457 yen and average remaining lives
of 1.75&nbsp;years and 0.58&nbsp;years, respectively. The
weighted average exercise price and remaining life of
outstanding warrants was 8,901 yen and 1.23&nbsp;years,
respectively. All outstanding warrants were exercisable at
March&nbsp;31, 2006.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(2)</B></TD>
    <TD>
    <B>Convertible Bond plan:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has an equity-based compensation plan for selected
executives of Sony&#146;s United States of America subsidiaries
using U.S.&nbsp;dollar-denominated non-interest bearing
convertible bonds which have characteristics similar to that of
an option plan. Each convertible bond can be converted into
100&nbsp;shares of the common stock of Sony Corporation at an
exercise price based on the prevailing market rate shortly
before the date of grant. The convertible bonds vest ratably
over a three-year period and are exercisable up to ten years
from the date of grant. As the convertible bonds were issued in
exchange for a non-interest bearing employee loan and a right of
offset exists between the convertible bonds and the employee
loans, no accounting recognition was given to either the
convertible bonds or the employee loans in Sony&#146;s
consolidated balance sheet.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-52

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Presented below is a summary of the activities regarding
convertible bond plan for the fiscal years shown:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Dollars)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,802,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,341,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,136,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58.64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(484,200</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.87</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Forfeited</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(461,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(205,300</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(158,700</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68.28</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,341,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,136,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,493,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69.51</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercisable at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,614,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,042</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,923,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,493,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69.51</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There were no shares granted under the convertible bond plan
during the fiscal years ended March&nbsp;31, 2004, 2005 and
2006. All shares under the convertible bond plan were
exercisable as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A summary of convertible bond options outstanding and
exercisable at March&nbsp;31, 2006 is as follows:
</DIV>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Outstanding and Exercisable</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="center" nowrap><B>Exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="center" nowrap><B>range</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>remaining life</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Dollars)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Years)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">5,952&#126;10,000</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,117,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.96</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">10,001&#126;13,220</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>376,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.08</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">5,952&#126;13,220</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,493,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.98</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(3)</B></TD>
    <TD>
    <B>Stock Acquisition Rights:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2003, Sony adopted
an equity-based compensation plan that issues common stock
acquisition rights for the purpose of granting stock options to
selected directors, corporate executive officers and employees
of Sony, pursuant to the Commercial Code of Japan. The stock
acquisition rights generally vest ratably over a period of three
years and are exercisable up to ten years from the date of grant.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-53

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Presented below is a summary of the activities regarding stock
acquisition rights plan for the fiscal years shown:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Dollars)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,647,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,173,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,350,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36.65</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Granted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,621,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,433,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,491,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33.64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27,400</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(364,800</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36.06</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Forfeited</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(95,700</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(229,300</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(376,600</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37.96</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,173,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,350,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,100,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37.19</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercisable at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,674,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,136,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39.56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A summary of stock acquisition rights outstanding and
exercisable at March&nbsp;31, 2006 is as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="14%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Outstanding</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Exercisable</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="center" nowrap><B>Exercise price</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="center" nowrap><B>range</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>remaining life</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="center" nowrap><B>(Yen)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Dollars)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Years)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Dollars)</B></TD><TD></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    3,782&#126;5,396</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,100,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,136,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39.56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As the exercise prices for the warrant, convertible bond and
stock acquisition rights plans were determined based on the
prevailing market price shortly before the date of grant, the
compensation expense for these plans was not significant for the
fiscal years ended March&nbsp;31, 2004, 2005 and 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Notes&nbsp;2 and&nbsp;15, all shares of
subsidiary tracking stock were converted to shares of Sony
common stock on December&nbsp;1, 2005. As a result of the
conversion, all subsidiary tracking stock warrants and
acquisition rights were converted to Sony common stock warrants
and acquisition rights. In addition to the above tables,
166,643&nbsp;shares were issued by the exercise of those
warrants and acquisition rights. At March&nbsp;31, 2006, there
were no common stock warrants and acquisition rights outstanding
which were granted by the conversion.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of the establishment of the joint venture between
Sony&#146;s recorded music business with the recorded music
business of Bertelsmann AG (Note&nbsp;5), employees of
Sony&#146;s recorded music business who were granted options
under the convertible bond and stock acquisition rights plans
prior to the establishment of the joint venture are no longer
considered employees of Sony under FAS&nbsp;No.&nbsp;123 as
these individual are now employees of SONY BMG which is
accounted for under the equity method. As a result, a
compensation charge of 340&nbsp;million yen was recorded in the
fiscal year ended March&nbsp;31, 2005 based on the fair value
method of accounting for stock-based compensation using the
Black-Scholes option-pricing model.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The weighted-average fair value per share at the date of grant
of stock acquisition rights granted during the fiscal years
ended March&nbsp;31, 2004, 2005 and 2006 were 1,413 yen, 1,085
yen and 1,585 yen, respectively. The fair value of stock
acquisition rights granted on the date of grant, which is
amortized to expense over the
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-54
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
vesting period in determining the pro forma impact, is estimated
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
</DIV>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B>Weighted-average assumptions</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Risk-free interest rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.18%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.04%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.90%</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expected lives</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.67&nbsp;years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.54&nbsp;years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.14&nbsp;years</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expected volatility</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.83%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.56%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39.50%</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expected dividend</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.57%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.62%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.61%</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>(4)</B></TD>
    <TD>
    <B>SAR plan:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony granted stock appreciation rights (&#147;SARs&#148;) in
Japan, Europe and the United States of America for selected
employees. Under the terms of these plans, employees on exercise
receive cash equal to the amount that the market price of Sony
Corporation&#146;s common stock exceeds the strike price of the
SARs. The SARs generally vest ratably over a period of three
years, and are generally exercisable up to six to ten years from
the date of grant. Sony uses various strategies to minimize the
compensation expense associated with the SAR plans in the United
States of America and Europe.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The status of the SAR plans is summarized as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>SARs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>SARs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>SARs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Dollars)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,343,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,526,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>865,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63.56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(241,134</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(50,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.91</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expired or forfeited</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(816,460</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(420,350</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(628,584</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62.72</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,526,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>865,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>186,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78.73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercisable at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,462,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>856,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>186,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78.73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There were no SARs granted during the fiscal years ended
March&nbsp;31, 2004, 2005 and 2006. All SARs were exercisable as
of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A summary of SARs outstanding and exercisable at March&nbsp;31,
2006 is as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Outstanding and Exercisable</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted-</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="center" nowrap><B>Exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="center" nowrap><B>range</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>SARs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>exercise price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>remaining life</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Dollars)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Years)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">4,345&#126;7,000</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.91</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">7,001&#126;10,000</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">10,001&#126;14,440</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>104.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.19</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">4,345&#126;14,440</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>186,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with APB No.&nbsp;25 and its related
interpretations, the SARs compensation expense is measured as
the excess of the quoted market price of Sony Corporation&#146;s
common stock over the SARs strike price, which is consistent
with the accounting treatment prescribed for SAR plans in
FAS&nbsp;No.&nbsp;123. For the fiscal year ended March&nbsp;31,
2004, Sony recognized 105&nbsp;million yen of SARs compensation
expense. For the fiscal year ended March&nbsp;31, 2005, Sony
recognized a reduction in SARs compensation expense of
74&nbsp;million yen. For the fiscal year ended March&nbsp;31,
2006, Sony recognized 70&nbsp;million yen of SARs compensation
expense.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='417'></A>
</DIV>

<!-- link1 "17. Restructuring charges and asset impairments" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>17.</B></TD>
    <TD>
    <B><I>Restructuring charges and asset impairments</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its effort to improve the performance of the various
businesses, Sony has undertaken a number of restructuring
initiatives within its Electronics segment, Pictures segment and
All Other. For the fiscal years ended March&nbsp;31, 2004, 2005
and 2006, Sony recorded total restructuring charges of
168,091&nbsp;million yen, 89,963&nbsp;million yen and
138,692&nbsp;million yen, respectively. Significant
restructuring charges and asset impairments include the
following:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Electronics Segment</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In an effort to improve the performance of the Electronics
segment, Sony has undergone a number of restructuring efforts to
reduce its operating costs. For the fiscal years ended
March&nbsp;31, 2004, 2005 and 2006, Sony recorded total
restructuring charges of 143,589&nbsp;million yen,
83,227&nbsp;million yen and 125,802&nbsp;million yen,
respectively, within the Electronics segment. In addition to the
above charges, the Electronics segment also reflects
restructuring costs of 2,122&nbsp;million yen for the fiscal
year ended March&nbsp;31, 2004, that relate to the non-Japan
based disc manufacturing and physical distribution businesses
that were part of the restructuring charges of the Music
business which is discussed below. These restructuring charges
were formerly included within the Music segment but were
reclassified to the Electronics segment. See Note&nbsp;24 for
more information on this reclassification. Significant
restructuring activities are as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Downsizing of CRT TV display operations -</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Due to the worldwide market shrinkage and demand shift from CRT
displays to plasma and LCD panel displays, Sony has begun to
implement a worldwide plan to rationalize production facilities
of CRT TV display and has been downsizing its business over
several years.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its worldwide plan, Sony made a decision in the
fiscal year ended March&nbsp;31, 2004 to discontinue certain CRT
TV display manufacturing operations in Japan. Restructuring
charges totaling 8,478&nbsp;million yen consisted of personnel
related costs of 3,139&nbsp;million yen and non-cash equipment
impairment, disposal and other costs of 5,339&nbsp;million yen.
Of the total restructuring charges, 158&nbsp;million yen was
recorded in cost of sales, 3,139&nbsp;million yen was included
in selling, general and administrative expenses, and
5,181&nbsp;million yen was included in loss on sale, disposal or
impairment of assets, net in the consolidated statements of
income. This phase of the restructuring program was completed in
the fiscal year ended March&nbsp;31, 2004 and no liability
existed as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2005, as part of this
restructuring program, Sony recorded a non-cash impairment
charge of 7,479&nbsp;million yen for CRT TV display
manufacturing facilities located in Europe. The impairment
charge was calculated as the difference between the carrying
value of the asset group and the present value of estimated
future cash flows. The charge was recorded in loss on sale,
disposal or impairment of assets, net in the consolidated
statements of income. This phase of the restructuring program
was completed in the fiscal year ended March&nbsp;31, 2005 and
no liability existed as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2006, Sony made a
decision to discontinue certain CRT TV display manufacturing
operations in the U.S.&nbsp;Restructuring charges totaling
32,488&nbsp;million yen consisted of personnel
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-56

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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
related costs of 1,962&nbsp;million yen and non-cash equipment
impairment, disposal and other costs of 30,526&nbsp;million yen.
Of the total restructuring charges, 6,982&nbsp;million yen was
recorded in cost of sales, and 25,506&nbsp;million yen was
included in loss on sale, disposal or impairment of assets, net
in the consolidated statements of income. The impairment charge
was calculated as the difference between the carrying value of
the asset group and the present value of estimated future cash
flows. This phase of the restructuring program was completed in
the fiscal year ended March&nbsp;31, 2006. The remaining
liability balance as of March&nbsp;31, 2006 was
3,852&nbsp;million yen with a large portion of the liabilities
to be paid during the fiscal year ending March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fiscal year ended March&nbsp;31, 2006, as part of this
restructuring program, Sony recorded a non-cash impairment
charge of 2,856&nbsp;million yen for CRT TV display
manufacturing facilities located in Southeast Asia. The
impairment charge was calculated as the difference between the
carrying value of the asset group and the present value of
estimated future cash flows. The charge was recorded in loss on
sale, disposal or impairment of assets, net in the consolidated
statements of income. This phase of the restructuring program
was completed in the fiscal year ended March&nbsp;31, 2006 and
no liability existed as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The worldwide plan to rationalize production facilities of CRT
TV display was substantially completed during the fiscal year
ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Closing of a semiconductor plant in the U.S.&nbsp;-</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Due to a significant decline in the business conditions of the
U.S.&nbsp;semiconductor industry, Sony made a decision in the
fourth quarter of the fiscal year ended March&nbsp;31, 2003, to
close a semiconductor plant in the U.S.&nbsp;This restructuring
activity was completed in the fiscal year ended March&nbsp;31,
2005 and total restructuring charges of 4,936&nbsp;million yen
have been incurred through March&nbsp;31, 2005. The remaining
liability balance as of March&nbsp;31, 2006 was 152&nbsp;million
yen and will be substantially paid through the fiscal year
ending March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2004, Sony recorded
net restructuring charges totaling 874&nbsp;million yen which
consisted of the accelerated depreciation and write-down of
equipment of 1,982&nbsp;million yen, gain on disposal of assets
of 1,962&nbsp;million yen, and 854&nbsp;million yen of other
costs including lease contract termination costs. Among these
charges&nbsp;1,760&nbsp;million yen was recorded in cost of
sales, while asset write-down and disposal costs of
1,076&nbsp;million yen and the gain on asset disposals of
1,962&nbsp;million yen were included in loss on sale, disposal
or impairment of assets, net in the consolidated statements of
income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2005, Sony sold the
facilities and recorded a gain on disposal of 1,794&nbsp;million
yen. The gain was included in loss on sale, disposal or
impairment of assets, net in the consolidated statements of
income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Retirement Programs -</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the restructuring efforts disclosed above, Sony
has undergone several headcount reduction programs to further
reduce operating costs in its Electronics segment. As a result
of these programs, Sony recorded restructuring charges totaling
115,149&nbsp;million yen, 50,960&nbsp;million yen and
45,116&nbsp;million yen for the fiscal years ended
March&nbsp;31, 2004, 2005 and 2006, respectively, and these
charges were included in selling, general and administrative
expenses in the consolidated statements of income. These staff
reductions were achieved worldwide mostly through the
implementation of early retirement programs. The remaining
liability balance as of March&nbsp;31, 2006 was
19,424&nbsp;million yen and will be paid through the fiscal year
ending March&nbsp;31, 2007. Sony will continue to implement
programs to reduce headcount by streamlining business
operations, including closure and consolidation of manufacturing
sites, as well as headquarters and administrative functions.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-57

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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Pictures Segment</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In an effort to improve the performance of the Pictures segment,
Sony has undergone a number of restructuring efforts to reduce
its operating costs. For the fiscal years ended March&nbsp;31,
2004 and 2005, Sony recorded total restructuring charges of
4,611&nbsp;million yen and 385&nbsp;million yen, respectively,
within the Pictures segment. There were no restructuring charges
incurred for the fiscal year ended March&nbsp;31, 2006.
Significant restructuring activities are the following:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Consolidation of Television Operations&nbsp;-</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Due to changes within the television production and distribution
business, the competition between network owned production
companies and other production and distribution companies to
license product to the major televisions networks has become
more intense. This competitive environment has resulted in fewer
opportunities to produce shows for the networks and a shorter
lifespan for ordered shows that do not immediately achieve
favorable ratings. This trend has resulted in an increase in the
number of new programs being distributed yet canceled in their
first or second season, which are generally less profitable, and
a decrease in the number of network programs that are able to
achieve syndication, which are generally more profitable. As a
result, in the fiscal year ended March&nbsp;31, 2002, Sony
decided to consolidate its television operations and downsize
the network television production business in the Pictures
segment. This restructuring program was completed in the fiscal
year ending March&nbsp;31, 2005, and the total cost of the
program from the inception was 8,932&nbsp;million yen. No
liability existed as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Fixed Cost Reduction Program&nbsp;-</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2004, the Pictures
segment implemented a fixed cost reduction program to further
reduce its operating costs. This restructuring program primarily
related to the reduction of staffing levels and the disposal of
certain long-lived assets. This restructuring program was
completed during the fiscal year ended March&nbsp;31, 2005 and
the total cost of this restructuring program was
4,996&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Pictures segment recorded 4,611&nbsp;million yen of these
costs during the fiscal year ended March&nbsp;31, 2004. These
restructuring charges consisted of personnel related costs of
993&nbsp;million yen, non-cash asset impairment and disposal
costs of 1,746&nbsp;million yen, and other costs of
1,872&nbsp;million yen including those relating to the buy-out
of term deal commitments. Of the restructuring costs incurred,
1,525&nbsp;million yen was included in cost of sales,
1,340&nbsp;million yen was included in selling, general and
administrative expenses, and 1,746&nbsp;million yen was included
in loss on sale, disposal or impairment of assets, net in the
consolidated statements of income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2005, the Pictures
segment completed the fixed cost reduction program and recorded
385&nbsp;million yen of additional restructuring costs. These
restructuring charges consisted primarily of personnel related
costs of 292&nbsp;million yen which were included in selling,
general and administrative expenses in the consolidated
statements of income. No liability existed as of March&nbsp;31,
2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>All Other (Music Business)</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Due to the continued contraction of the worldwide music market
due to slow worldwide economic growth, the saturation of the CD
market, the effects of piracy and other illegal duplication,
parallel imports, pricing pressures and the diversification of
customer preferences, Sony has been actively repositioning the
Music business for the future by looking to create a more
effective and profitable business model. As a result, the Music
business has undergone a worldwide restructuring program since
the fiscal year ended March&nbsp;31, 2001 to reduce staffing and
other costs through the consolidation and rationalization of
facilities worldwide excluding Japan. As part of this
restructuring program, Sony combined its recorded music business
with the recorded music business of Bertelsmann AG to
form&nbsp;SONY BMG, a joint venture that is accounted for under
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-58
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<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
the equity method. See Note&nbsp;5 for more information on this
transaction. For the fiscal years ended March&nbsp;31, 2004,
2005 and 2006, Sony recorded total restructuring charges of
10,691&nbsp;million yen, 3,025&nbsp;million yen and
129&nbsp;million yen, respectively, related to the restructuring
of the Music business excluding Japan. Of these restructuring
charges, 2,122&nbsp;million yen for the fiscal year ended
March&nbsp;31, 2004, was recorded in the non-Japan based disc
manufacturing and physical distribution businesses, formerly
included within the Music segment but reclassified to the
Electronics segment. See Note&nbsp;24 for more information on
this reclassification. This worldwide restructuring of the Music
business was completed during the fiscal year ended
March&nbsp;31, 2006, and the total cost of the program was
52,702&nbsp;million yen, which was incurred from the inception
of the program through the fiscal year ended March&nbsp;31,
2006. The restructuring costs within the Music business do not
include the restructuring costs of SONY BMG since the
establishment of the joint venture. At March&nbsp;31, 2006, the
liability balance was 1,193&nbsp;million yen which is expected
to be settled during the fiscal year ending March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the above, Sony also recorded restructuring
charges of 1,291&nbsp;million yen, 803&nbsp;million yen and
346&nbsp;million yen for the fiscal years ended March&nbsp;31,
2004, 2005 and 2006, respectively, in Japan, which were
primarily personnel related costs included in selling, general
and administrative expenses in the consolidated statements of
income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Significant restructuring activities included the following:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2004, Sony broadened
the scope of its worldwide restructuring of the Music business,
which resulted in restructuring charges totaling
10,691&nbsp;million yen. Restructuring activities included the
continuation of the shutdown of the CD manufacturing facility in
the U.S.&nbsp;as well as the restructuring of music label
operations and the further rationalization of overhead functions
through staff reductions. The restructuring charges consisted of
personnel related costs of 5,137&nbsp;million yen, lease
abandonment costs of 1,323&nbsp;million yen and other related
costs of 4,231&nbsp;million yen including non-cash asset
impairment and disposal costs. Most of these charges are
included in selling, general and administrative expenses in the
consolidated statements of income. Employees were eliminated
across various employee levels, business functions, operating
units, and geographic regions during this phase of the worldwide
restructuring program.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2005, in
continuation of the worldwide restructuring program and in
connection with the establishment of the joint venture with
Bertelsmann AG (Note&nbsp;5), Sony recorded restructuring
charges totaling 3,025&nbsp;million yen within the Music
business. Restructuring activities included the shutdown of
certain distribution operations that were no longer required as
a result of the recorded music joint venture with Bertelsmann AG
as well as the further rationalization of overhead functions
through staff reductions. The restructuring charges consisted of
personnel related costs of 883&nbsp;million yen and other
related costs of 2,142&nbsp;million yen. These charges are
included in selling, general and administrative expenses in the
consolidated statements of income. Employees were eliminated
across various employee levels, business functions, operating
units, and geographic regions during this phase of the worldwide
restructuring program.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2006, the worldwide
restructuring program was completed and Sony recorded additional
restructuring charges totaling 129&nbsp;million yen, primarily
consisting of other associated restructuring costs.
Restructuring activities included the further shutdown of
certain distribution operations that were no longer required as
a result of the recorded music joint venture with Bertelsmann
AG. These charges are included in selling, general and
administrative expenses in the consolidated statements of income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>All Other (U.S.&nbsp;Entertainment Complex)</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its efforts to restructure and eliminate certain
non-core businesses, Sony reached an agreement to sell a
U.S.&nbsp;entertainment complex in March 2006. As a result, Sony
recorded an impairment charge of
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-59

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
8,522&nbsp;million yen. The impairment charge was based on the
negotiated sales price of the complex, and is recorded in loss
on sale, disposal or impairment of assets, net in the
consolidated statements of income.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The changes in the accrued restructuring charges for the fiscal
years ended March&nbsp;31, 2004, 2005 and 2006 are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Employee</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Non-cash</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>termination</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>write-downs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other associated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>benefits</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and disposals</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>costs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,571</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Restructuring costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,554</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,091</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-cash charges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19,170</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19,170</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(124,674</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,686</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(138,360</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,506</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,638</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Restructuring costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,564</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,963</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-cash charges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,564</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,564</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(61,523</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,427</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(71,950</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustments*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,705</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,096</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,801</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,286</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Restructuring costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>138,692</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-cash charges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(76,999</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(76,999</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(42,152</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,929</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(50,081</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,227</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,224</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at March&nbsp;31, 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,674</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*&nbsp;</TD>
    <TD align="left">
    Adjustments primarily consist of the transfer of the accrued
    restructuring charges to SONY BMG, a joint venture with
    Bertelsmann AG (Note&nbsp;5).</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='418'></A>
</DIV>

<!-- link1 "18. Research and development costs, advertising costs and shipping and handling costs" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>18.</B></TD>
    <TD>
    <B><I>Research and development costs, advertising costs and
    shipping and handling costs</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</B></TD>
    <TD>
    <B>Research and development costs:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development costs charged to cost of sales for the
fiscal years ended March&nbsp;31, 2004, 2005 and 2006 were
514,483&nbsp;million yen, 502,008&nbsp;million yen and
531,795&nbsp;million yen, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</B></TD>
    <TD>
    <B>Advertising costs:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Advertising costs included in selling, general and
administrative expenses for the fiscal years ended
March&nbsp;31, 2004, 2005 and 2006 were 421,433&nbsp;million
yen, 359,661&nbsp;million yen and 419,508&nbsp;million yen,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</B></TD>
    <TD>
    <B>Shipping and handling costs:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shipping and handling costs for finished goods included in
selling, general and administrative expenses for the fiscal
years ended March&nbsp;31, 2004, 2005 and 2006 were
106,590&nbsp;million yen, 107,983&nbsp;million yen and
114,500&nbsp;million yen, respectively, which included the
internal transportation costs of finished goods.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-60

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='419'></A>
</DIV>

<!-- link1 "19. Gain on change in interest in subsidiaries and equity investees" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>19.</B></TD>
    <TD>
    <B><I>Gain on change in interest in subsidiaries and equity
    investees</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January 2004, FeliCa Networks, Inc., whose field of business
is Mobile FeliCa IC chip development and production/sales
licensing and operation of the Mobile FeliCa service platform,
issued 115,000&nbsp;shares at 100,000 yen per share with a total
value of 11,500&nbsp;million yen in connection with its private
offering. As a result of this issuance, Sony recorded a gain of
3,364&nbsp;million yen and provided deferred taxes on this gain.
This issuance reduced Sony&#146;s ownership interest from 100%
to 60%.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the above transaction, for the fiscal year ended
March&nbsp;31, 2004, Sony recognized 1,506&nbsp;million yen of
other gains on change in interest in subsidiaries and equity
investees resulting in total gains of 4,870&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In August&nbsp;2, 2004, Monex Inc., which provided on-line
security trading services in Japan, and Nikko Beans,&nbsp;Inc.
established Monex Beans Holdings,&nbsp;Inc. by way of share
transfer of the then existing shares of Monex Inc. and Nikko
Beans,&nbsp;Inc.. At this establishment, 1&nbsp;share of Monex
Beans Holdings,&nbsp;Inc. was allotted to each share of Monex
Inc. and 3.4&nbsp;shares of Monex Beans Holdings, Inc. were
allotted to each share of Nikko Beans,&nbsp;Inc.. As a result of
this share transfer, Monex Beans Holdings, Inc. issued
2,344,687&nbsp;shares and Sony recorded a gain of
8,951&nbsp;million yen and provided deferred taxes on this gain.
This issuance reduced Sony&#146;s ownership interest from 29.9%
to 20.1%.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2004, So-net M3 Inc., which provides medical
services via the Internet in Japan, issued 2,800&nbsp;shares at
850,000 yen per share with a total value of 2,380&nbsp;million
yen in connection with its initial public offering. SCN, a
parent company of So-net M3 Inc., sold 3,260&nbsp;shares of
So-net M3&nbsp;Inc., at 790,500 yen per share with a total value
of 2,577&nbsp;million yen. In October 2004, SCN sold
740&nbsp;shares of So-net M3 Inc., at 790,500 yen per share with
a total value of 585&nbsp;million yen. As a result of these
transactions, Sony recorded a 1,823&nbsp;million yen gain on
issuance of stock by So-net M3&nbsp;Inc. and provided deferred
taxes on this gain. In addition, Sony recorded a
2,876&nbsp;million yen gain on the sale of its shares of So-net
M3&nbsp;Inc. These transactions reduced Sony&#146;s ownership
interest from 90.0% to 74.8%.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January 2005, DeNA Co., Ltd., whose field of business is the
operation of on-line auction websites in Japan, issued
14,000&nbsp;shares at 204,600&nbsp;yen per share with a total
value of 2,864&nbsp;million yen in connection with its initial
public offering. In March 2005, SCN, which had owned a 27.7%
interest in DeNA Co., Ltd., sold 2,000&nbsp;shares of DeNA
Co.,&nbsp;Ltd. at 204,600 yen per share with a total value of
409&nbsp;million yen. As a result of these transactions, Sony
recorded a 686&nbsp;million yen gain on issuance of stock by
DeNA Co., Ltd. and provided deferred taxes on this gain. In
addition, Sony recorded a 76&nbsp;million yen gain on the sale
of its shares of DeNA Co., Ltd.. These transactions reduced
Sony&#146;s ownership interest from 27.7% to 24.8%.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the above transactions, for the fiscal year ended
March&nbsp;31, 2005, Sony recognized 1,911&nbsp;million yen of
other gains on change in interest in subsidiaries and equity
investees resulting in total gains of 16,322&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2005, SCN sold 17,935&nbsp;shares of So-net
M3&nbsp;Inc., at 694,600 yen per share with a total value of
12,458&nbsp;million yen. As a result of this sale, Sony recorded
a 11,979&nbsp;million yen gain and provided deferred taxes on
this gain. This sale reduced Sony&#146;s ownership interest from
74.8% to 60.8%.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2005, SCN sold 7,000&nbsp;shares of DeNA Co.,&nbsp;Ltd.
at 863,040 yen per share with a total value of
6,041&nbsp;million yen. In March 2006, DeNA Co., Ltd. issued
14,300&nbsp;shares at 314,138 yen per share with a total value
of 4,492&nbsp;million yen in connection with its private
offering. As a result of these transactions, Sony recorded an
821&nbsp;million yen gain on issuance of stock by DeNA Co., Ltd.
and provided deferred taxes on this gain. In addition, Sony
recorded a 5,817&nbsp;million yen gain on the sale of its shares
of DeNA Co.,&nbsp;Ltd.. These transactions reduced Sony&#146;s
ownership interest from 24.8% to 19.1%.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-61

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2005, Sony Corporation sold 230,000&nbsp;shares of
Monex Beans Holdings, Inc. at 119,040 yen per share with a total
value of 27,379&nbsp;million yen. As a result of this sale, Sony
recorded a 20,590&nbsp;million yen gain and provided deferred
taxes on this gain. This sale reduced Sony&#146;s ownership
interest from 20.1% to 10.3%. See Note&nbsp;5 for more
information on this transaction.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2005, SCN issued 20,000&nbsp;shares at 320,960 yen
per share with a total value of 6,419&nbsp;million yen in
connection with its initial public offering. Sony Corporation
and Sony Finance International Inc., which had owned 82.6% and
17.4% interests in SCN, respectively, sold 66,000&nbsp;shares
and 4,000&nbsp;shares of SCN, respectively, at 320,960 yen per
share with a total value of 22,467&nbsp;million yen. In January
2006, Sony Corporation sold 12,000&nbsp;shares of SCN at 320,960
yen per share with a total value of 3,852&nbsp;million yen. As a
result of these transactions, Sony recorded a 4,226&nbsp;million
yen gain on issuance of stock by SCN and provided deferred taxes
on this gain. In addition, Sony recorded a 17,321&nbsp;million
yen gain on the sale of its shares of SCN. These transactions
reduced Sony&#146;s ownership interest from 100% to 60.1%.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to the above transactions, for the fiscal year ended
March&nbsp;31, 2006, Sony recognized 80&nbsp;million yen of
other gains on change in interest in subsidiaries and equity
investees resulting in total gains of 60,834&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
These transactions were not part of a broader corporate
reorganization and the reacquisition of such shares was not
contemplated at the time of issuance.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='420'></A>
</DIV>

<!-- link1 "20. Income taxes" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>20.</B></TD>
    <TD>
    <B><I>Income taxes</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Income before income taxes and income tax expense comprise the
following:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before income taxes:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Corporation and subsidiaries in Japan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(84,571</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>243,927</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>228,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>152,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,402</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>286,329</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes&nbsp;&#151; Current:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Corporation and subsidiaries in Japan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,154</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64,933</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41,246</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes&nbsp;&#151; Deferred:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sony Corporation and subsidiaries in Japan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(32,845</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105,938</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,600</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(74,442</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,823</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 10pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,445</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(69,466</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80,115</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony is subjected to a number of different income taxes. Due to
changes in Japanese income tax regulations, a consolidated tax
filing system was introduced on April&nbsp;1, 2002. Sony applied
to file its return under the consolidated tax filing system
beginning with the fiscal year ended March&nbsp;31, 2004. Under
the Japanese consolidated tax filing system, a 2% surtax was
imposed only for the fiscal year ended March&nbsp;31, 2004. As a
result, the statutory tax rate was 43.9% for the fiscal year
ended March&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the fiscal year ended March&nbsp;31, 2005, a corporation
size-based enterprise tax was introduced in Japan and the
portion of enterprise tax subject to income was reduced. As a
result, the statutory tax rate for
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-62

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
the fiscal year ended March&nbsp;31, 2005 was approximately 41%
effective April&nbsp;1, 2004. The effect of the change in the
tax rate on the balance of deferred tax assets and liabilities
was insignificant.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Reconciliation of the differences between the statutory tax rate
and the effective income tax rate is as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Statutory tax rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase (reduction)&nbsp;in taxes resulting from:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax credits</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Change in valuation allowances</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase (decrease) in deferred tax liabilities on undistributed
    earnings of foreign subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Lower tax rate applied to life and non-life insurance business
    in Japan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.9</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effective income tax rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-63

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The significant components of deferred tax assets and
liabilities are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating loss carryforwards for tax purposes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>193,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>146,206</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued pension and severance costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>159,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,226</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Film costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51,937</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Warranty reserve and accrued expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future insurance policy benefits</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,785</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued bonus</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,353</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventory&nbsp;&#151; intercompany profits and write-down</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,578</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,052</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tax credit carryforwards</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39,443</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserve for doubtful accounts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,479</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Impairment of investments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,658</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred revenue in the Pictures segment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,713</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,337</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>751,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>739,775</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Valuation allowance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(89,110</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(150,899</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>662,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>588,876</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Insurance acquisition costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(135,083</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(136,919</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unbilled accounts receivable in the Pictures segment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(57,314</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(49,953</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized gains on securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41,564</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(63,739</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intangible assets acquired through stock exchange offerings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(35,418</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,627</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Undistributed earnings of foreign subsidiaries</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(30,865</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(66,719</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on securities contribution to employee retirement benefit
    trust</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,184</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,992</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(58,714</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(65,151</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross deferred tax liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(365,142</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(421,100</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>297,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>167,776</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The valuation allowance mainly relates to deferred tax assets of
Sony Corporation and certain consolidated subsidiaries with
operating loss carryforwards and tax credit carryforwards for
tax purposes that are not expected to be realized. The net
changes in the total valuation allowance were an increase of
11,509&nbsp;million yen for the fiscal year ended March&nbsp;31,
2004, a decrease of 38,467&nbsp;million yen for the fiscal year
ended March&nbsp;31, 2005 and an increase of 61,789&nbsp;million
yen for the fiscal year ended March&nbsp;31, 2006. The increase
during the fiscal year ended March&nbsp;31,2006 resulted from a
provision for additional valuation allowances due to continued
losses recorded by Sony Corporation and certain subsidiaries
mainly in the electronics business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of operating losses in the past, certain
consolidated subsidiaries in the U.S.&nbsp;had recognized
valuation allowances against deferred tax assets for
U.S.&nbsp;federal and certain state taxes. However, because of
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-64

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
improved operating results in recent years and a sound outlook
for the future operating performance of certain consolidated
subsidiaries in the U.S., Sony reversed 67,892&nbsp;million yen
of valuation allowance, resulting in a reduction of income tax
expenses for the fiscal year ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tax benefits which have been realized through utilization of
operating loss carryforwards for the fiscal years ended
March&nbsp;31, 2004, 2005 and 2006 were approximately
12,000&nbsp;million yen, 30,000&nbsp;million yen and
42,000&nbsp;million yen, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net deferred tax assets are included in the consolidated balance
sheets as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets&nbsp;&#151; Deferred income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221,311</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other assets&nbsp;&#151; Deferred income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>178,751</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities&nbsp;&#151; Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,025</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15,789</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term liabilities&nbsp;&#151; Deferred income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(72,227</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(216,497</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>297,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>167,776</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At March&nbsp;31, 2006, no deferred income taxes have been
provided on undistributed earnings of foreign subsidiaries not
expected to be remitted in the foreseeable future totaling
1,065,809&nbsp;million yen, and on the gain of
61,544&nbsp;million yen on a subsidiary&#146;s sale of stock
arising from the issuance of common stock of Sony Music
Entertainment (Japan) Inc. in a public offering to third parties
in November 1991, as Sony does not anticipate any significant
tax consequences on possible future disposition of its
investment based on its tax planning strategies. The
unrecognized deferred tax liabilities as of March&nbsp;31, 2006
for such temporary differences amounted to 228,546&nbsp;million
yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating loss carryforwards for corporate income tax and local
income tax purposes of Sony Corporation and certain consolidated
subsidiaries in Japan at March&nbsp;31, 2006 amounted to
121,530&nbsp;million yen and 484,397&nbsp;million yen,
respectively, which are available as an offset against future
taxable income. Deferred tax asset on the operating loss
carryforwards for corporate income tax and local income tax in
Japan are calculated by multiplying approximately 28% and 13%,
respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating loss carryforwards for tax purposes of certain foreign
consolidated subsidiaries at March&nbsp;31, 2006 amounted to
173,624&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
With the exception of 111,265&nbsp;million yen with no
expiration period, total available operating loss carryforwards
expire at various dates primarily up to 7&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tax credit carryforwards for tax purposes at March&nbsp;31, 2006
amounted to 39,443&nbsp;million yen. With the exception of
9,116&nbsp;million yen with no expiration period, total
available tax credit carryforwards expire at various dates
primarily up to 9&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Realization of deferred tax assets related to loss carryforwards
and tax credit carryforwards is dependent on whether sufficient
taxable income will be generated prior to expiration period.
Although realization is not assured, management believes it is
more likely than not that all of the deferred tax assets, less
valuation allowance, will be realized. The amount of such net
deferred tax assets considered realizable, however, could be
changed in the near term if estimates of future taxable income
during the carryforward period are changed.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-65

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='421'></A>
</DIV>

<!-- link1 "21. Reconciliation of the differences between basic and diluted net income per share (&#147;EPS&#148;)" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>21.</B></TD>
    <TD>
    <B><I>Reconciliation of the differences between basic and
    diluted net income per share (&#147;EPS&#148;)</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="12%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</B></TD>
    <TD>
    <B>Income before cumulative effect of accounting changes and net
    income allocated to each class of stock:</B></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before cumulative effect of an accounting change
    allocated to common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,498</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122,308</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income allocated to subsidiary tracking stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(128</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,308</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before cumulative effect of an accounting change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income allocated to common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122,308</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income allocated to subsidiary tracking stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(128</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,308</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Note&nbsp;2, the earnings allocated to
subsidiary tracking stock were determined based on the
subsidiary tracking stockholders&#146; economic interest. The
accumulated losses of SCN (the subsidiary tracking stock entity
as discussed in Note&nbsp;15) used for computation of earnings
per share attributable to subsidiary tracking stock were
1,764&nbsp;million yen and 1,358&nbsp;million yen as of
March&nbsp;31, 2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Notes&nbsp;2 and&nbsp;15, on October&nbsp;26,
2005, the Board of Directors of Sony Corporation decided to
terminate all shares of subsidiary tracking stock and convert
such shares to shares of Sony common stock at a conversion rate
of 1.114&nbsp;share of Sony common stock per share of subsidiary
tracking stock. All shares of subsidiary tracking stock were
converted to shares of Sony common stock on December&nbsp;1,
2005. As a result of the conversion, the earnings allocated to
common stock for the fiscal year ended March&nbsp;31, 2006 are
calculated by subtracting the earnings allocated to the
subsidiary tracking stock for the eight months ended
November&nbsp;30, 2005. The accumulated gains of SCN used for
computation of earnings per share attributable to subsidiary
tracking stock were 8,578&nbsp;million yen as of
November&nbsp;30, 2005.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="12%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</B></TD>
    <TD>
    <B>EPS attributable to common stock:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Reconciliation of the differences between basic and diluted EPS
for the fiscal years ended March&nbsp;31, 2004, 2005 and 2006 is
as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before cumulative effect of an accounting change
    allocated to common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,498</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122,308</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of dilutive securities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Convertible bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subsidiary tracking stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(29</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before cumulative effect of an accounting change
    allocated to common stock for diluted EPS computation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122,279</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-66

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 24pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Thousands of shares</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Weighted-average shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>923,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>931,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>997,781</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of dilutive securities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Warrants and stock acquisition rights</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>915</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Convertible bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>121,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,468</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Weighted-average shares for diluted EPS computation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,044,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,043,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,046,164</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Yen</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic EPS</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122.58</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted EPS</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.88</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Potential common stock upon the exercise of warrants and stock
acquisition rights, which were excluded from the computation of
diluted EPS since they have an exercise price in excess of the
average market value of Sony&#146;s common stock during the
fiscal year, were 6,796&nbsp;thousand shares,
7,987&nbsp;thousand shares and 10,483&nbsp;thousand shares for
the fiscal years ended March&nbsp;31, 2004, 2005 and 2006,
respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Warrants and stock acquisition rights of subsidiary tracking
stock for the fiscal year ended March&nbsp;31, 2004 which have a
potentially dilutive effect by decreasing net income allocated
to common stock, were excluded from the computation of diluted
EPS since they did not have a dilutive effect.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stock options issued by affiliated companies accounted for under
the equity method for the fiscal years ended March&nbsp;31,
2004, 2005 and 2006, which have a potentially dilutive effect by
decreasing net income allocated to common stock, were excluded
from the computation of diluted EPS since such stock options did
not have a dilutive effect.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;1, 2003, Sony implemented a share exchange as a
result of which CIS&nbsp;Corporation became a wholly-owned
subsidiary. As a result of this share exchange, Sony issued
1,088&nbsp;thousand shares. The shares were included in the
computation of basic and diluted EPS.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of the adoption of EITF Issue No.&nbsp;04-8,
Sony&#146;s diluted EPS of income before cumulative effect of an
accounting change for the fiscal year ended March&nbsp;31, 2004
was restated in the above table (Note&nbsp;2).
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="12%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</B></TD>
    <TD>
    <B>EPS attributable to subsidiary tracking stock:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Weighted-average shares used for computation of EPS attributable
to subsidiary tracking stock for the fiscal years ended
March&nbsp;31, 2004 and 2005 were 3,072&nbsp;thousand shares. At
March&nbsp;31, 2004 and 2005, there were no potentially dilutive
securities for net income per subsidiary tracking stock, as
tracking stock shares outstanding were increased upon potential
subsidiary tracking stocks&#146; being exercised, which resulted
in a proportionate increase in earnings allocated to the
subsidiary tracking stock. However, they could have a dilutive
effect on net income per common stock, as earnings allocated to
the common stock would be decreased.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed, all shares of subsidiary tracking stock were
converted to shares of Sony common stock on December&nbsp;1,
2005. As a result of the conversion, earnings per share of the
subsidiary tracking stock for the fiscal year ended
March&nbsp;31, 2006 are not presented.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-67
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='422'></A>
</DIV>

<!-- link1 "22. Variable interest entities" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>22.</B></TD>
    <TD>
    <B><I>Variable interest entities</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has, from time to time, entered into various arrangements
with VIEs. These arrangements consist of facilities which
provide for the leasing of certain property, the financing of
film production, the implementation of a stock option plan for
Japanese employees and the U.S.&nbsp;based music publishing
business. As described in Note&nbsp;2, the FASB issued
FIN&nbsp;No.&nbsp;46, which requires the consolidation or
disclosure of VIEs. The VIEs that have been consolidated by Sony
are described as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony leases the headquarters of its U.S.&nbsp;subsidiary from a
VIE, which has been consolidated by Sony since July&nbsp;1,
2003. Upon consolidation of the VIE, assets and liabilities
increased by 25,277&nbsp;million yen and 27,035&nbsp;million
yen, respectively, and a cumulative effect of accounting change
of 1,729&nbsp;million yen was charged to net income with no tax
effect. Sony has the option to purchase the building at any time
during the lease term which expires in December 2008 for
29,942&nbsp;million yen. The debt held by the VIE is unsecured.
At the end of the lease term, Sony has agreed to either renew
the lease, purchase the building or remarket it to a third party
on behalf of the owner. If the sales price is less than
29,942&nbsp;million yen, Sony is obligated to make up the lesser
of the shortfall or 25,128&nbsp;million yen.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A subsidiary in the Pictures segment entered into a joint
venture agreement with a VIE for the purpose of funding the
acquisition of certain international film rights. The subsidiary
is required to distribute the product internationally, for
contractually defined fees determined as percentages of gross
receipts, as defined, and is responsible for all distribution
and marketing expenses, which are recouped from such
distribution fees. The VIE was capitalized with total financing
of 47,673&nbsp;million yen. Of this amount, 1,292&nbsp;million
yen was contributed by the subsidiary, 11,155&nbsp;million yen
was provided by unrelated third party investors and the
remaining funding is provided through a 35,226&nbsp;million yen
bank credit facility. On July&nbsp;1, 2003, Sony consolidated
this entity. Upon consolidation of the VIE, assets and
liabilities increased by 10,179&nbsp;million yen and
10,586&nbsp;million yen, respectively, and a cumulative effect
of accounting change of 388&nbsp;million yen was charged to net
income with no tax effect. As of March&nbsp;31, 2006, there were
no amounts outstanding under the bank credit facility. Under the
agreement, the subsidiary&#146;s 1,292&nbsp;million yen equity
investment is the last equity to be repaid. Additionally, it
must pay to the third party investors up to 2,231&nbsp;million
yen of any losses out of a portion of its distribution fees. Any
losses incurred by the VIE over and above 3,523&nbsp;million yen
will be shared by the other investors. The subsidiary acquired
the international distribution rights, as defined, to twelve
pictures meeting certain minimum requirements within the time
period provided in the agreement.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony utilized a VIE to implement a SAR plan (Note&nbsp;16) for
selected Japanese employees. The VIE has been consolidated by
Sony since its establishment. With respect to this entity, there
was no impact to Sony&#146;s results of operations and financial
position upon the adoption of FIN&nbsp;No.&nbsp;46. Under the
terms of the SAR plan, upon exercise, Japanese employees receive
cash equal to the amount that the market price of Sony
Corporation&#146;s common stock exceeds the strike price of the
plan. In order to minimize cash flow exposure associated with
the plan, Sony held treasury stock through the VIE. The VIE
purchased the common stock with funding provided by the
employee&#146;s cash contribution and a bank loan. The SAR plan
was terminated during the fiscal year ended March&nbsp;31, 2006
and there were no amounts outstanding under the bank loan at
March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony&#146;s U.S.&nbsp;based music publishing subsidiary is a
joint venture with a third party investor that was determined to
be a VIE. The subsidiary owns and acquires rights to musical
compositions, exploits and markets these compositions and
receives royalties or fees for their use. Under the terms of the
joint venture, Sony has the obligation to fund any working
capital deficits. In addition, the third party investor receives
a guaranteed annual dividend of up to 7&nbsp;million
U.S.&nbsp;dollars and has the option to put its 50% ownership
interest to Sony in exchange for a payment of 200&nbsp;million
U.S.&nbsp;dollars. At March&nbsp;31, 2006, the fair value of the
third party&#146;s 50% interest exceeded 200&nbsp;million
U.S.&nbsp;dollars.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-68

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
VIEs in which Sony holds a significant variable interest but is
not the primary beneficiary are described as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As described in Note&nbsp;5, on April&nbsp;8, 2005, a consortium
led by SCA and its equity partners completed the acquisition of
MGM. Sony has reviewed the investment and determined that MGM
Holdings is a VIE. However, MGM Holdings is not consolidated but
accounted for under the equity method as Sony is not the primary
beneficiary of this VIE as Sony absorbs less than 50% of
expected losses and does not have the right to receive greater
than 50% of expected residual returns. MGM continues to operate
as a private company and continues to engage in the production
and distribution of film content. Through its current ownership
of MGM Holdings&#146; common stock, Sony records 45% of MGM
Holdings&#146; net income (loss) as equity in net income of
affiliated companies.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;30, 2005, a subsidiary in the Pictures segment
entered into a production/
<FONT style="white-space: nowrap">co-financing</FONT> agreement
with a VIE to co-finance 11 films scheduled to be released over
the following 15&nbsp;months. The subsidiary will receive
approximately 400&nbsp;million U.S.&nbsp;dollars over the term
of the agreement. The subsidiary is responsible for marketing
and distribution of the product through its global distribution
channels. The VIE shares in the net profits of the films after
the subsidiary recoups a distribution fee, its marketing and
distribution expenses, and third party participation and
residual costs. As of March&nbsp;31, 2006, only one co-financed
film has been released by the company. The subsidiary did not
make any equity investment in the VIE nor issue any guarantees
with respect to the VIE. In April 2006, the subsidiary entered
into a second production/co-financing agreement with a VIE to
co-finance an additional 11 films scheduled to be released over
the following 24&nbsp;months. The subsidiary will receive
approximately 330&nbsp;million U.S.&nbsp;dollars over the term
of the agreement. Similar to the first agreement, the subsidiary
is responsible for marketing and distribution of the product
through its global distribution channels. The VIE shares in the
net profits of the films after the subsidiary recoups a
distribution fee, its marketing and distribution expenses, and
third party participation and residual costs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='423'></A>
</DIV>

<!-- link1 "23. Commitments and contingent liabilities" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>23.</B></TD>
    <TD>
    <B><I>Commitments and contingent liabilities</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="12%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</B></TD>
    <TD>
    <B>Commitments:</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>A.</B></TD>
    <TD>
    <B>Purchase Commitments</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Commitments outstanding at March&nbsp;31, 2006 amounted to
    285,774&nbsp;million yen. The major components of these
    commitments are as follows:</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    In the ordinary course of business, Sony makes commitments for
    the purchase of property, plant and equipment. As of
    March&nbsp;31, 2006, such commitments outstanding were
    69,286&nbsp;million yen.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Certain subsidiaries in the Pictures segment have entered into
    agreements with creative talent for the development and
    production of films and television programming as well as
    agreements with third parties to acquire completed films, or
    certain rights therein. These agreements cover various periods
    through March&nbsp;31, 2008. As of March&nbsp;31, 2006, these
    subsidiaries were committed to make payments under such
    contracts of 43,659&nbsp;million yen.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    A subsidiary in the Pictures segment has also entered into a
    distribution agreement with a third party to distribute, in
    certain markets and territories, all feature length films
    produced or acquired by the third party during the term of the
    agreement. The distribution agreement expires on
    December&nbsp;31, 2006 if a minimum of 36 films have been
    delivered as of that date. If 36 films have not been delivered
    by December&nbsp;31, 2006, the distribution agreement expires on
    the earlier of the delivery of the 36th&nbsp;film or
    May&nbsp;25, 2007. It is estimated that the third party will
    produce or acquire a total of 43 films under the distribution
    agreement. The subsidiary has the right to distribute the films
    for 15&nbsp;years from the initial theatrical release of the
    film. Under the terms of the distribution agreement,</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-69

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    the subsidiary must fund a portion of the production cost and is
    responsible for all distribution and marketing expenses. As of
    March&nbsp;31, 2006, 34 films have been released or funded by
    the subsidiary. The subsidiary&#146;s estimated commitment to
    fund the production of the remaining films under this agreement
    is 33,077&nbsp;million yen.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    In April 2005, Sony Corporation has entered into a partnership
    program contract with F&#233;d&#233;ration Internationale de
    Football Association (&#147;FIFA&#148;). Through this program
    Sony Corporation will be able to exercise various rights as an
    official sponsor of FIFA events including the FIFA World
    Cup<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm*</FONT></SUP>
    from 2007 to 2014. As of March&nbsp;31, 2006, Sony Corporation
    was committed to make payments under such contract of
    34,639&nbsp;million yen.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    The schedule of the aggregate amounts of year-by-year payment of
    purchase commitments during the next five years and thereafter
    is as follows:</TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Yen in</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2" align="left" nowrap><B>Fiscal Year Ending March&nbsp;31,</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>139,130</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,538</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46,966</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,003</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,553</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thereafter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,584</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>285,774</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>B.</B></TD>
    <TD>
    <B>Loan&nbsp;Commitments</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    Subsidiaries in the Financial Services segment have entered into
    loan agreements with their customers in accordance with the
    condition of the contracts. As of March&nbsp;31, 2006, the total
    unused portion of the line of credit extended under these
    contracts was 326,691&nbsp;million yen.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    In August 2004, Sony and Bertelsmann AG combined their recorded
    music businesses in a joint venture. In connection with the
    establishment of the SONY BMG joint venture, Sony and
    Bertelsmann AG have entered into a 5&nbsp;year Revolving Credit
    Agreement with the joint venture. Under the terms of the Credit
    Agreement, Sony and Bertelsmann have each agreed to provide
    one-half of the funding. The Credit Agreement, which matures on
    August&nbsp;5, 2009, provides for a base commitment of
    300&nbsp;million U.S.&nbsp;dollars and additional incremental
    borrowings of up to 150&nbsp;million U.S.&nbsp;dollars.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    As of March&nbsp;31, 2006, the joint venture had no borrowings
    outstanding under the Credit Agreement. Accordingly, Sony&#146;s
    outstanding commitment under the Credit Agreement as of
    March&nbsp;31, 2006 was 26,325&nbsp;million yen.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    The aggregate amounts of future year-by-year payments for these
    loan commitments cannot be determined.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

</DIV>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 0pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    FIFA World
    Cup<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP>
    is a registered trademark of FIFA.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-70

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="12%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</B></TD>
    <TD>
    <B>Contingent liabilities:</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony had contingent liabilities including guarantees given in
the ordinary course of business, which amounted to
21,072&nbsp;million yen at March&nbsp;31, 2006. The major
components of the contingent liabilities are as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has issued loan guarantees to related parties comprised of
affiliated companies accounted for under the equity method and
unconsolidated subsidiaries. The terms of these guarantees are
mainly within 1&nbsp;year. Sony would be required to perform
under these guarantees upon non-performance of the primary
borrowers. The contingent liability related to these guarantees
was 9,325&nbsp;million yen and was not recorded on the
consolidated balance sheet as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The European Commission (&#147;EC&#148;) has issued the Waste
Electrical and Electronic Equipment (&#147;WEEE&#148;) directive
in February 2003. The WEEE directive generally requires
electronics producers after August 2005 to be responsible for
financing the cost for collection, treatment, recovery and safe
disposal of waste products. In some member states of the
European Union (&#147;EU&#148;) the directive has been
transposed into national legislation subject to which Sony
recognizes the liability for obligations associated with WEEE.
During the fiscal year ended March&nbsp;31, 2006, the cost that
has been accrued in respect to the above mentioned WEEE
responsibilities was not material to Sony&#146;s results of
operations and financial position. While the cost of this WEEE
directive to Sony cannot be determined before the regulation is
finally adopted in all individual member states that have to
transpose the directive into national legislation, Sony
continues to evaluate the impact of this regulation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony has agreed to indemnify certain third parties against tax
losses resulting from transactions entered into in the normal
course of business. The maximum amount of potential future
payments under these guarantees cannot be estimated at this
time. These guarantees were not recorded on the consolidated
balance sheet as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sony Corporation and certain of its subsidiaries are defendants
in several pending lawsuits. However, based upon the information
currently available to both Sony and its legal counsel,
management of Sony believes that damages from such lawsuits, if
any, would not have a material effect on Sony&#146;s
consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The changes in product warranty liability for the fiscal years
ended March&nbsp;31, 2005 and 2006 are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fiscal Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at beginning of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,919</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional liabilities for warranties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,471</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Settlements (in cash or in kind)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(40,358</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(45,162</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in estimate for pre-existing warranty reserve</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(751</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Translation adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,172</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance at end of the fiscal year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,470</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-71

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='424'></A>
</DIV>

<!-- link1 "24. Business segment information" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>24.</B></TD>
    <TD>
    <B><I>Business segment information</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Effective for the fiscal year ended March&nbsp;31, 2006, Sony
has partly changed its business segment configuration as
described below.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of August&nbsp;1, 2004, Sony and Bertelsmann AG combined
their recorded music businesses in a joint venture. In
connection with the establishment of this joint venture, the
non-Japan based disc manufacturing and physical distribution
businesses, formerly included within the Music segment, have
been reclassified to the &#147;Other&#148; category in the
Electronics segment. In addition, effective April&nbsp;1, 2005,
a similar change was made with respect to the Japan based disc
manufacturing businesses. Results for the fiscal year ended
March&nbsp;31, 2004 and 2005 in the Electronics segment have
been restated to account for these reclassifications. As a
result of these changes in the Music segment, Sony no longer
breaks out the Music segment as a reportable segment as it no
longer meets the materiality threshold. Effective April&nbsp;1,
2005, results for the Music segment are included within All
Other. Accordingly, results for the fiscal year ended
March&nbsp;31, 2004 and 2005 in the Electronics segment and All
Other have been restated to conform to the presentation for the
fiscal year ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2004, in order to establish a more efficient and
coordinated semiconductor supply structure, the Sony group has
integrated its semiconductor manufacturing business by
transferring Sony Computer Entertainment&#146;s semiconductor
manufacturing operation from the Game segment to the Electronics
segment. As a result of this transfer, sales revenue and
expenditures associated with this operation are now recorded
within the &#147;Semiconductor&#148; category in the Electronics
segment. The results for the fiscal year ended March&nbsp;31,
2004 and the three months ended June&nbsp;30, 2004 have not been
restated as such comparable figures cannot be practically
obtained given that it was not operated as a separate line
business within the Game segment. This integration of the
semiconductor manufacturing businesses is a part of Sony&#146;s
semiconductor strategy of utilizing semiconductor technologies
and manufacturing equipment originally developed or designed for
the Game businesses within the Sony group as a whole.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Electronics segment designs, develops, manufactures and
distributes audio-visual, informational and communicative
equipment, instruments and devices throughout the world. The
Game segment designs, develops and sells PlayStation,
PlayStation 2 and PlayStation Portable game consoles and related
software mainly in Japan, the United States of America and
Europe, and licenses to third party software developers. The
Pictures segment develops, produces and manufactures image-based
software, including film, video, and television mainly in the
United States of America, and markets, distributes and
broadcasts in the worldwide market. The Financial Services
segment represents primarily individual life insurance and
non-life insurance businesses in the Japanese market, leasing
and credit financing businesses and bank business in Japan. All
Other consists of various operating activities, primarily
including a business focused on network service business
including Internet-related services, an animation production and
marketing business, an imported general merchandise retail
business, an advertising agency business in Japan, and the Music
business which were formerly reported as a reportable segment,
described above. Sony&#146;s products and services are generally
unique to a single operating segment.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The operating segments reported below are the segments of Sony
for which separate financial information is available and for
which operating profit or loss amounts are evaluated regularly
by executive management in deciding how to allocate resources
and in assessing performance.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-72

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Business segments -</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Sales and operating revenue:</I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and operating revenue:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,858,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,806,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,763,555</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>228,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>260,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>386,922</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,087,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,066,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,150,477</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>753,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>702,524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>918,251</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,488</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,368</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>780,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>729,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>958,619</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>756,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>733,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>745,859</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>756,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>733,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>745,859</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>565,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>537,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>720,566</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,649</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>593,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>743,215</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>561,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>379,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>327,205</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,676</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>662,809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>459,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>408,881</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Elimination</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(384,017</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(391,099</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(531,615</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475,436</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Electronics intersegment amounts primarily consist of
transactions with the Game segment, Pictures segment and All
Other. All Other intersegment amounts primarily consist of
transactions with the Electronics and Game segments.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-73

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Segment profit or loss:</I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income (loss):</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,082</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,273</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(30,930</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,747</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,436</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188,323</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,225</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,183</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132,474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>209,759</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Elimination</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,786</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unallocated amounts:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Corporate expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(47,418</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(32,571</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(32,290</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated operating income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191,255</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>122,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153,616</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(77,125</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(54,335</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(58,542</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated income before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>286,329</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating income is sales and operating revenue less costs and
operating expenses.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Assets:</I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,036,404</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,476,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,548,720</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>684,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>482,037</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>520,394</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>856,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>863,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,029,907</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,475,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,885,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,565,607</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>763,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>577,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>617,868</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,816,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,284,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,282,496</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Elimination</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(282,057</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(398,074</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(361,392</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Corporate assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>556,622</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>612,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>686,649</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,090,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,499,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,607,753</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unallocated corporate assets consist primarily of cash and cash
equivalents, securities investments and property, plant and
equipment maintained for general corporate purposes.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-74

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Other significant items:</I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>214,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>276,704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>304,561</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,087</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,401</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services, including deferred insurance acquisition
    costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,736</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,755</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>362,152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>368,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>377,540</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Corporate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,303</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>366,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>372,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>381,843</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital expenditures for segment assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electronics</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>253,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>312,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>328,625</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Game</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,405</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pictures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,097</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financial Services</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,456</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,186</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>376,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>348,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>355,769</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Corporate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,578</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>378,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>356,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>384,347</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The capital expenditures in the above table represent the
additions to fixed assets of each segment.
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-75

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table is a breakdown of Electronics sales and
operating revenue to external customers by product category. The
Electronics segment is managed as a single operating segment by
Sony&#146;s management. Effective for the fiscal year ended
March&nbsp;31, 2006, Sony has partly changed its product
category configuration. The main change is that the
professional-use projector product group has been moved from
&#147;Televisions&#148; to &#147;Information and
Communications&#148;. Accordingly, sales and operating revenue
for the fiscal years ended March&nbsp;31, 2004 and 2005 have
been restated to conform to the presentation for the fiscal year
ended March&nbsp;31, 2006.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Audio</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>675,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>571,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>536,187</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Video</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>949,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,036,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,021,325</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Televisions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>884,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>921,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>927,769</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Information and Communications</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>878,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>816,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>842,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Semiconductors</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>253,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>246,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240,771</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Components</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>623,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>619,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>656,768</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>593,324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>595,166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>538,198</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,858,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,806,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,763,555</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<I>Geographic information -</I>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales and operating revenue which are attributed to countries
based on location of customers for the fiscal years ended
March&nbsp;31, 2004, 2005 and 2006 and long-lived assets as of
March&nbsp;31, 2004, 2005 and 2006 are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and operating revenue:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Japan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,220,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,100,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,168,723</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    U.S.A.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,121,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,977,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,957,644</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Europe</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,765,053</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,612,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,715,704</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,389,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,468,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,633,365</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475,436</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-lived assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Japan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,430,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,414,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,449,997</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    U.S.A.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>671,534</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>662,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>757,055</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Europe</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>211,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>183,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>165,352</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>159,647</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,446,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,405,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,532,051</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-76

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There are not any individually material countries with respect
to the sales and operating revenue and long-lived assets
included in Europe and Other areas.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Transfers between reportable business or geographic segments are
made at arms-length prices.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There are no sales and operating revenue with a single major
external customer for the fiscal years ended March&nbsp;31,
2004, 2005 and 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following information shows sales and operating revenue and
operating income by geographic origin for the fiscal years ended
March&nbsp;31, 2004, 2005 and 2006. In addition to the
disclosure requirements under FAS&nbsp;No.&nbsp;131, Sony
discloses this supplemental information in accordance with
disclosure requirements of the Japanese Securities and Exchange
Law, to which Sony, as a Japanese public company, is subject.
</DIV>

<CENTER>
<TABLE width="75%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Fiscal Year Ended March&nbsp;31</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and operating revenue:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Japan&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,352,923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,249,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,253,275</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,514,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,575,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,264,281</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,867,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,824,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,517,556</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    U.S.A.&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,341,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,166,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,197,304</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>198,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>235,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>279,203</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,539,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,401,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,476,507</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Europe&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,647,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,524,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,575,779</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,417</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,714,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,576,599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,626,179</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,154,470</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,219,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,449,078</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>813,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>804,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,038,827</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,968,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,024,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,487,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Elimination</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,593,896</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,667,593</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,632,711</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,496,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,159,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,475,436</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Japan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(69,875</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(765</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>199,491</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    U.S.A.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,291</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Europe</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,171</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,554</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41,953</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Corporate and elimination</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(65,878</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28,470</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(36,309</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191,255</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-77

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='308'></A>
</DIV>

<!-- link1 "SCHEDULE II" -->

<DIV align="right" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SCHEDULE&nbsp;II</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>VALUATION AND QUALIFYING ACCOUNTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additions</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Balance at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>charged to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Balance</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Beginning</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>costs and</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Deductions</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>at End</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Period</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>expenses</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Note&nbsp;1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Note&nbsp;2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Period</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>(Yen in millions)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal Year Ended March&nbsp;31, 2004:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Allowance for doubtful accounts and sales returns</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>110,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(65,281</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,862</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,674</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal Year Ended March&nbsp;31, 2005:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Allowance for doubtful accounts and sales returns</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(84,507</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87,709</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal Year Ended March&nbsp;31, 2006:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Allowance for doubtful accounts and sales returns</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(56,772</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,563</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Notes:</B>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>1.&nbsp;</TD>
    <TD align="left">
    Amounts written off.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>2.&nbsp;</TD>
    <TD align="left">
    Translation adjustment.</TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Balance at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Balance</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Beginning</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>at End</B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Period</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additions</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Deductions</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Note&nbsp;1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Period</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal Year Ended March&nbsp;31, 2004:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Valuation allowance - Deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(39,199</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,228</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>127,577</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal Year Ended March&nbsp;31, 2005:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Valuation allowance - Deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>127,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(104,670</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,686</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,110</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fiscal Year Ended March&nbsp;31, 2006:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Valuation allowance - Deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,234</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150,899</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Note:</B>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>1.&nbsp;</TD>
    <TD align="left">
    Translation adjustment.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-78
</BODY>
</HTML>
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SONY CORPORATION
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2006
Commission file number 1-6439
Sony Kabushiki Kaisha
(Exact name of Registrant as specified in its charter)
SONY CORPORATION
JAPAN
(Translation of Registrant's name into English)
(Jurisdiction of incorporation or organization)
7-35, KITASHINAGAWA 6-CHOME, SHINAGAWA-KU,
TOKYO 141-0001, JAPAN
(Address of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act.
Title of Each Class
Name of Each Exchange on Which Registered
American Depositary Shares*
New York Stock Exchange
Common Stock**
New York Stock Exchange
*
American Depositary Shares evidenced by American Depositary
    Receipts.
Each American Depositary Share represents one share of Common
    Stock.
** No par value per share.
Not for trading, but only in connection with the listing of
    American Depositary Shares pursuant to the requirements of the
    New York Stock Exchange.
Securities registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding
shares of each of the issuer's classes of capital or common
stock as of the close of the period covered by the annual report.
Outstanding as of
March 31, 2006
March 30, 2006
Title of Class
(Tokyo Time)
(New York Time)
Common Stock
1,000,938,776
American Depositary Shares
145,074,404
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of
the Securities
Act.  Yes
þ
No
o
If this report is an annual or
transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of
1934.  Yes
o
No
þ
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for
the past
90 days.  Yes
þ
No
o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in
Rule
12b-2
of the
Exchange Act. (Check one):
Large Accelerated Filer
þ
Accelerated Filer
o
Non-Accelerated Filer
o
Indicate by check mark which financial
statement item the registrant has elected to
follow.  Item 17
o
Item 18
þ
If this is an annual report, indicate by
check mark whether the registrant is a shell company (as defined
in Rule
12b-2
of
the Exchange
Act).  Yes
o
No
þ
In this document, Sony Corporation and
its consolidated subsidiaries are together referred to as
"Sony." In addition, sales and operating revenue is
referred to as "sales" in the narrative description
except in the Consolidated Financial Statements.
The noon buying rate for yen in New York
City as certified for customs purposes by the Federal Reserve
Bank of New York on August 30, 2006 was
117.07 yen = 1 U.S. dollar.
As of March 31, 2006, Sony
Corporation had 936 consolidated subsidiaries (including
variable interest entities). It has applied the equity
accounting method with respect to its 58 affiliated companies.
Table of Contents
Cautionary Statement
Statements made in this annual report 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," "may" or
"might" 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, as well as 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 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, which are offered in highly competitive markets
characterized by continual new product introductions, rapid
development in technology and subjective and changing consumer
preferences (particularly in the Electronics, Game and Pictures
segments, and music business); (iv) Sony's ability to
recoup large-scale investment required for technology
development, increasing production capacity and by the Game
segment for the development and introduction of a new platform;
(v) Sony's ability to implement successfully personnel
reduction and other business reorganization activities in its
Electronics segment; (vi) Sony's ability to implement
successfully its network strategy for its Electronics, Game and
Pictures segments, All Other and the music business, and to
develop and implement successful sales and distribution
strategies in its Pictures segment and music business 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 correctly prioritize investments
(particularly in the Electronics segment); (viii) 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 (ix) the
success of Sony's joint ventures and alliances. Risks and
uncertainties also include the impact of any future events with
material unforeseen impacts.
Important information regarding risks and uncertainties is also
set forth elsewhere in this annual report, including in
"Risk Factors" included in "Item 3.
Key
Information
," "Item 4.
Information on the
Company
," "Item 5.
Operating and Financial
Review and Prospects
," "Legal Proceedings"
included in "Item 8.
Financial
Information
," Sony's Consolidated Financial
Statements referenced in "Item 8.
Financial
Information
," and "Item 11.
Quantitative
and Qualitative Disclosures about Market Risk
."
2
Table of Contents
TABLE OF CONTENTS
Item 1.
Identity of Directors,
    Senior Management and Advisers
5
Item 2.
Offer Statistics and
    Expected Timetable
5
Item 3.
Key Information
5
Selected Financial Data
5
Capitalization and Indebtedness
7
Reasons for the Offer and Use of
    Proceeds
7
Risk Factors
7
Item 4.
Information on the
    Company
15
History and Development of the Company
15
Principal Capital Investments
16
Business Overview
17
Important Changes during the Fiscal
    Year
17
Products and Services
18
Sales and Distribution
21
Sources of Supply
23
After-Sales Service
23
Patents and Licenses
24
Competition
24
Government Regulations
25
Organizational Structure
26
Property, Plant and Equipment
26
Item 5.
Operating and Financial
    Review and Prospects
29
Operating Results
29
Operating Results for the Fiscal Year
    Ended March 31, 2006 compared with the Fiscal Year Ended
    March 31, 2005
29
Operating Results for the Fiscal Year
    Ended March 31, 2005 compared with the Fiscal Year Ended
    March 31, 2004
44
Liquidity and Capital Resources
74
Research and Development
76
Trend Information
77
Issues Facing Sony and Management's
    Response to those Issues
77
Critical Accounting Policies
79
Recently Adopted Accounting Standards
84
Recent Pronouncements
85
Item 6.
Directors, Senior
    Management and Employees
86
Directors and Senior Management
86
Compensation
93
Board Practices
94
Employees
96
Share Ownership
97
Item 7.
Major Shareholders and
    Related Party Transactions
99
Major Shareholders
99
Related Party Transactions
99
Interests of Experts and Counsel
100
3
Table of Contents
Item 8.
Financial
    Information
100
Consolidated Statements and Other Financial
    Information
100
Legal Proceedings
100
Dividend Policy
100
Significant Changes
100
Item 9.
The Offer and
    Listing
101
Offer and Listing Details
101
Plan of Distribution
101
Markets
101
Trading Markets
101
Trading on the TSE and NYSE
102
Selling Shareholders
103
Dilution
103
Expenses of the Issue
103
Item 10.
Additional
    Information
103
Share Capital
103
Memorandum and Articles of Association
103
Material Contracts
111
Exchange Controls
111
Taxation
112
Dividends and Paying Agent
115
Statement by Experts
115
Documents on Display
115
Subsidiary Information
115
Item 11.
Quantitative and
    Qualitative Disclosures about Market Risk
115
Item 12
. Description of Securities
    Other Than Equity Securities
117
Item 13
. Defaults, Dividend
    Arrearages and Delinquencies
117
Item 14.
Material Modifications to
    the Rights of Security Holders and Use of Proceeds
117
Item 15.
Controls and
    Procedures
117
Item 16.
[Reserved]
117
Item 16A.
Audit Committee Financial
    Expert
117
Item 16B.
Code of Ethics
117
Item 16C.
Principal Accountant Fees
    and Services
118
Audit and Non-Audit Fees
118
Audit Committee's Pre-Approval
    Policies and Procedures
118
Item 16D.
Exemptions from Listing
    Standards for Audit Committees
119
Item 16E.
Purchases of Equity
    Securities by the Issuer and Affiliated Purchasers
119
Item 17.
Financial
    Statements
120
Item 18.
Financial
    Statements
120
Item 19.
Exhibits
120
EX-1.1 ARTICLES OF INCORPORATION
EX-1.2 SHARE HANDLING REGULATIONS
EX-1.3 CHARTER OF THE BOARD OF DIRECTORS
EX-12.1 CERTIFICATIONS
EX-12.2 CERTIFICATIONS
EX-13.1 SECTION 1350 CERTIFICATIONS
EX-15.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
4
Table of Contents
Item 1.
Identity of Directors, Senior Management and
    Advisers
Not Applicable
Item 2.
Offer Statistics and Expected Timetable
Not Applicable
Item 3.
Key Information
Selected Financial Data
Fiscal Year Ended March 31
2002
2003
2004
2005
2006
(Yen in millions, Yen per share amounts)
Income Statement Data:
Sales and operating revenue
7,578,258
7,473,633
7,496,391
7,159,616
7,475,436
Operating income
134,631
185,440
98,902
113,919
191,255
Income before income taxes
92,775
247,621
144,067
157,207
286,329
Income taxes
65,211
80,831
52,774
16,044
176,515
Income before cumulative effect of accounting changes
9,332
115,519
90,628
168,551
123,616
Net income
15,310
115,519
88,511
163,838
123,616
Data per Share of Common Stock:
Income before cumulative effect of accounting changes
— Basic
10.21
125.74
98.26
180.96
122.58
— Diluted
10.18
118.21
89.03
162.59
116.88
Net income
— Basic
16.72
125.74
95.97
175.90
122.58
— Diluted
16.67
118.21
87.00
158.07
116.88
Cash dividends declared
Interim
12.50
12.50
12.50
12.50
12.50
(10.07 cents
)
(10.50 cents
)
(11.37 cents
)
(12.12 cents
)
(10.36 cents
)
Fiscal year-end
12.50
12.50
12.50
12.50
12.50
(9.78 cents
)
(10.53 cents
)
(11.26 cents
)
(11.29 cents
)
(11.04 cents
)
Depreciation and amortization
*
354,135
351,925
366,269
372,865
381,843
Capital expenditures (additions to fixed assets)
326,734
261,241
378,264
356,818
384,347
Research and development costs
433,214
443,128
514,483
502,008
531,795
Balance Sheet Data:
Net working capital
778,716
719,166
381,140
746,803
569,296
Long-term debt
838,617
807,439
777,649
678,992
764,898
Stockholders' equity
2,370,410
2,280,895
2,378,002
2,870,338
3,203,852
Total assets
8,185,795
8,370,545
9,090,662
9,499,100
10,607,753
Number of shares issued at fiscal year-end (thousands of shares
    of common stock)
919,744
922,385
926,418
997,211
1,001,680
Stockholders' equity per share of common stock
2,570.31
2,466.81
2,563.67
2,872.21
3,200.85
*
Depreciation and amortization includes amortization expenses for
    intangible assets and for deferred insurance acquisition costs.
5
Table of Contents
Average*
High
Low
Period-End
(Yen)
Yen Exchange Rates per U.S. Dollar:
Fiscal year ended March 31
2002
125.64
115.89
134.77
132.70
2003
121.10
115.71
133.40
118.07
2004
113.07
120.55
104.18
104.18
2005
107.49
114.30
102.26
107.22
2006
113.15
120.93
104.41
117.78
2006
January
117.55
113.96
116.88
February
118.95
115.82
115.82
March
119.07
115.89
117.48
April
118.66
113.79
113.79
May
113.46
110.07
112.26
June
116.42
111.66
114.51
July
117.44
113.97
114.44
August (through August 30)
117.31
114.21
117.07
The noon buying rate for yen in New York City as certified for
customs purposes by the Federal Reserve Bank of New York on
August 30, 2006 was 117.07 yen =
1 U.S. dollar.
*
The average yen exchange rates represent average noon buying
    rates on the last business day of each month during the
    respective period.
Notes to Selected Financial Data:
1.
In July 2003, the Accounting Standards Executive Committee of
    the American Institute of Certified Public Accountants issued
    Statement of Position ("SOP")
03-1,
"Accounting
    and Reporting by Insurance Enterprises for Certain
    Nontraditional Long-Duration Contracts and for Separate
    Accounts".
    SOP
03-1
requires
    insurance enterprises to record additional reserves for
    long-duration life insurance contracts with minimum guarantee or
    annuity receivable options. Additionally, SOP
03-1
provides guidance
    for the presentation of separate accounts. This statement is
    effective for fiscal years beginning after December 15,
    2003. Sony adopted SOP
03-1
on April 1,
    2004. As a result of the adoption of SOP
03-1,
Sony's
    operating income decreased by 5,156 million yen for the
    fiscal year ended March 31, 2005. Additionally, on
    April 1, 2004, Sony recognized a charge of
    4,713 million yen (net of income taxes of
    2,675 million yen) as a cumulative effect of an accounting
    change.
2.
In July 2004, the Emerging Issues Task Force ("EITF")
    issued EITF Issue
    No.
04-8,
"The Effect of Contingently Convertible Instruments on
    Diluted Earnings per Share". In accordance with Statement
    of Financial Accounting Standards ("FAS")
    No. 128, "Earnings per Share", Sony had not
    previously included in the computation of diluted earnings per
    share ("EPS") the number of potential common stock
    issuable upon the conversion of contingently convertible debt
    instruments
("Co-Cos")
that had not met the conditions to exercise the stock
    acquisition rights. EITF Issue
    No.
04-8
requires
    that the maximum number of common stock that could be issued
    upon the conversion of
Co-Cos
be included in
    diluted EPS computations from the date of issuance regardless of
    whether the conditions to exercise the stock acquisition rights
    have been met. EITF Issue
    No.
04-8
is
    effective for reporting periods ending after December 15,
    2004. Sony adopted EITF Issue
    No.
04-8
during
    the quarter ended December 31, 2004. As a result of the
    adoption of EITF Issue
    No.
04-8,
Sony's diluted EPS of income before cumulative effect of an
    accounting change and net income for the fiscal year ended
    March 31, 2004 were restated. Sony's diluted EPS of
    income before cumulative effect of an accounting change and net
    income for the fiscal year ended
6
Table of Contents
March 31, 2005 decreased by 7.26 yen and 7.06 yen,
    respectively, as a result of adopting EITF Issue
    No.
04-8.
3.
In January 2003, the Financial Accounting Standards Board
    ("FASB") issued FASB Interpretation ("FIN")
    No. 46, "Consolidation of Variable Interest
    Entities — an Interpretation of Accounting Research
    Bulletin ("ARB") No. 51".
    FIN No. 46 addresses consolidation by a primary
    beneficiary of a variable interest entity ("VIE").
    Sony early adopted the provisions of FIN No. 46 on
    July 1, 2003. As a result of adopting the original
    FIN No. 46, Sony recognized a one-time charge with no
    tax effect of 2,117 million yen as a cumulative effect of
    accounting change in the consolidated statement of income, and
    Sony's assets and liabilities increased by
    95,255 million yen and 97,950 million yen,
    respectively. These increases were treated as non-cash
    transactions in the consolidated statement of cash flows. In
    addition, cash and cash equivalents increased by
    ¥1,521 million. Sony subsequently early adopted the
    provisions of FIN No. 46R, which replaced
    FIN No. 46, upon issuance in December 2003. The
    adoption of FIN No. 46R did not have an impact on
    Sony's results of operations and financial position or
    impact the way Sony had previously accounted for VIEs.
Capitalization and Indebtedness
Not Applicable
Reasons for the Offer and Use of Proceeds
Not Applicable
Risk Factors
This section contains forward-looking statements that are
subject to the Cautionary Statement appearing on page 2 of
this annual report. Risks to Sony are also discussed elsewhere
in this annual report, including without limitation in the other
sections of this annual report referred to in the Cautionary
Statement.
Sony must overcome increasingly intense pricing
    competition, especially in the Electronics and Game
    segments.
Sony's Electronics segment produces consumer products that
compete against products sold by an increasing number of
competitors on the basis of factors including price. In order to
produce products that appeal to changing and increasingly
diverse consumer preferences, and to overcome the fact that a
relatively high percentage of consumers already possess products
similar to those that Sony offers, Sony's Electronics and
Game segments must develop superior technology, anticipate
consumer tastes and rapidly develop attractive products. In the
Electronics segment, Sony faces increasingly intense pricing
pressure in a variety of consumer product areas. Sony's
sales and operating income depend on Sony's ability to
continue to develop and offer Electronics and Game products at
competitive prices that meet changing and increasingly diverse
consumer preferences.
Sony is subject to competition from firms that may be more
    specialized.
Sony's businesses, primarily within the Electronics
segment, face a broad range of competitors, from large
international companies to an increasing number of relatively
small, rapidly growing, and highly specialized organizations.
Sony has a portfolio of businesses in different industries while
many of its competitors specialize in one or more of these
business areas. As a result, Sony may not fund or invest in
certain of its businesses to the same degree that its
competitors do, and these competitors may have greater
financial, technical, and marketing resources available to them
than the businesses of Sony against which they compete.
7
Table of Contents
Sony may not be able to recover its increasingly diverse
    and increasingly expensive investments in technology development
    and production capacity.
Sony's businesses, particularly the Electronics and Game
segments, compete in intensely competitive markets characterized
by changing consumer preferences and rapid technological
innovation. In order to be profitable in such markets, Sony is
continuing to invest heavily in research and development and
semiconductor fabrication equipment. Recent examples of such
expenditures include research and development investment in 65
nanometer semiconductor process technology and related capital
expenditures with IBM Corporation and Toshiba Corporation for
production of the Cell chip within the Electronics segment for
sale primarily to the Game segment, and an investment in a joint
venture,
S-LCD
Corporation
("S-LCD"),
with Samsung Electronics Co., Ltd. ("Samsung") to
produce 7th generation amorphous thin film transistor
("TFT") LCD panels. In addition, in July 2006, Sony
and Samsung signed the final contract regarding the manufacture
of 8th generation TFT LCD Panels at
S-LCD.
The total amount
of the investment required is expected to be approximately
1.9 billion U.S. dollars (approximately
50 percent of which will be borne by Sony). Sony may not be
able to recover these investments, in part or in full, and its
mid-term profitability could be adversely affected as a result.
(Refer to "Trend Information" in "Item 5.
Operating and Financial Review and Prospects.
")
Sony's business reorganization efforts are costly and
    may not attain their objectives.
Sony has engaged in significant reorganization initiatives in an
effort to allocate managerial resources into core areas and
improve operating efficiency and profitability. These efforts
have included the concentration of resources into profitable
businesses by withdrawing from or downsizing selected
businesses. Other efforts include the execution of a plan to
reduce costs including a reduction in the number of Sony's
employees around the world.
On September 22, 2005, Sony announced its mid-term
corporate strategy for the three fiscal years ending
March 31, 2006 through March 31, 2008. This mid-term
corporate strategy includes restructuring initiatives focused on
the reduction in the number of business categories and the
number of product models, the rationalization of manufacturing
sites, the streamlining of administrative and headquarter
functions, as well as the sale of non-core assets.
In association with these restructuring initiatives
138.7 billion yen of restructuring charges were recorded
for the fiscal year ended March 31, 2006. Sony anticipates
the recording of 50 billion yen in restructuring charges
for the fiscal year ending March 31, 2007.
Restructuring charges are recorded in cost of sales, selling,
general and administrative expenses and loss on sale, disposal
or impairment of assets, net and thus decrease Sony's
consolidated operating and net income. Moreover, due to internal
or external factors, the improved efficiencies and cost savings
projected may not be realized as scheduled and, even if those
benefits are realized, Sony may not be able to achieve the level
of profitability expected due to a worsening of market
conditions beyond expectations. Such possible internal factors
could include, for example, a decision to implement new
restructuring initiatives not already planned or a decision to
increase research and development outlays or other investments
beyond currently projected levels, either of which might
increase total costs. Possible external factors could include,
for example, increased burdens from regional labor regulations
and union contracts that could prevent Sony from executing its
restructuring initiatives as planned. Therefore, such
reorganizations may not result in improved efficiency, increased
ability to respond to market changes or reallocation of
resources to more profitable activities. The inability to fully
and successfully implement restructuring programs may cause Sony
to have insufficient financial resources to carry out its
research and development plans and to invest in targeted growth
business areas.
Foreign exchange rate fluctuations can affect financial
    results because a large portion of Sony's sales and assets
    are denominated in currencies other than the yen.
Sony's consolidated statements of income are prepared from
the local currency-denominated financial results of each of Sony
Corporation's subsidiaries around the world which are
translated into yen at the
8
Table of Contents
average market rate during each financial period. Sony's
consolidated balance sheets are prepared using local
currency-denominated assets and liabilities of each of Sony
Corporation's subsidiaries around the world, which are
translated into yen at the market rate at the end of each
financial period. A large proportion of Sony's consolidated
financial results, assets and liabilities is accounted for in
currencies other than the Japanese yen. For example, only
29.0 percent of Sony's sales and operating revenue in
the fiscal year ended March 31, 2006 were originally
recorded in Japan. Accordingly, Sony's consolidated
results, assets and liabilities in Sony's businesses that
operate internationally, principally in its Electronics, Game
and Pictures segments, may be materially affected by changes in
the exchange rates of foreign currencies when translating into
Japanese yen. In the fiscal year ended March 31, 2006, for
example, Sony's consolidated operating income prepared on
the basis of Generally Accepted Accounting Principles in the
U.S. ("U.S. GAAP") in yen increased from the
preceding fiscal year by 67.9 percent; however, if
Sony's consolidated operating income had been prepared on a
local currency basis, it would have increased by
23 percent. (Refer to "Operating Results" in
"Item 5.
Operating and Financial Review and
Prospects.
") Operating results on a local currency
basis described herein reflect sales and operating revenue and
operating income obtained by applying the yen's monthly
average exchange rate in the previous fiscal year to local
currency-denominated monthly sales, cost of sales, and selling,
general and administrative expenses in the current fiscal year.
Foreign exchange fluctuations may have a negative impact on
Sony's results in the future, especially if the yen
strengthens significantly against the U.S. dollar or Euro.
Foreign exchange fluctuations can affect Sony's
    results of operations due to sales and expenses in different
    currencies.
Exchange rate fluctuations affect Sony's operating
profitability because many of Sony's products are sold in
countries other than the ones in which they were manufactured.
The concentration of research and development, administrative
functions and manufacturing activities within the Electronics
segment largely in Japan, makes this segment particularly
sensitive to the yen's appreciation as the ratio of
yen-denominated costs to total costs is higher than the ratio of
yen-denominated revenue to total revenue. Volatile mid- to
long-term changes in exchange rate levels, such as the
decade-long strengthening of the yen against major currencies
between 1985 and 1995, when the yen appreciated from a level in
excess of 260 yen to the U.S. dollar to a level of
less than 80 yen to the U.S. dollar, may interfere
with Sony's global allocation of resources and hinder
Sony's ability to execute procurement, production,
logistics, and sales activities in a manner that is profitable
after the effect of such exchange rate changes.
Although Sony hedges the net foreign currency exposure resulting
from import and export transactions shortly before they are
projected to occur, such hedging activity cannot entirely
eliminate the risk of adverse exchange rate fluctuations.
Sony must efficiently manage its procurement of parts, the
    market conditions for which are volatile, and control its
    inventory of products and parts, the demand for which is
    volatile.
In the Electronics and Game segments Sony places orders for
components, determines production and plans inventory in advance
based on its forecast of consumer demand, which is highly
volatile and difficult to predict. In the past Sony has
experienced both a shortage of semiconductors, which resulted in
Sony's inability to meet demand for its personal computers
("PCs") and audio visual products, and a surplus in
certain semiconductors that resulted in the recognition of
losses when semiconductor prices fell. Sony consumes a
tremendous volume of parts and components for its products such
as semiconductors and LCD panels. Consequently, market
fluctuations may cause a shortage of parts and components, and
may affect Sony's production or the cost of goods sold.
Sony's profitability may also be adversely affected by
supply or inventory shortages or inventory adjustments that, as
a result of efforts to reduce inventory by temporarily halting
production or by reducing the price of goods, will lead to an
increase in the ratio of cost of sales to sales. Sony writes
down the value of its inventory when components or products have
become obsolete, when inventory exceeds the amount expected to
be used, or when the value of the inventory is otherwise
recorded at a higher value than net realizable value. Such
inventory adjustments have had and, if Sony is not successful in
managing its inventory in the future, will have a material
adverse effect on Sony's operating income and
9
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profitability. (For more information on sources of supply refer
to
"Sources of Supply"
in "Item 4.
Information on the Company.
")
Sony's sales and profitability are sensitive to
    economic trends in Sony's major markets.
A consumer's decision to purchase products such as those
offered by Sony's Electronics, Game and Pictures segments,
as well as by companies within All Other, is to a very
significant extent discretionary. Accordingly, weakening
economic conditions or outlook can reduce consumption in any of
Sony's major markets, causing material declines in
Sony's sales and operating income. In the fiscal year ended
March 31, 2006, 29.0 percent, 26.2 percent and
23.0 percent of Sony's sales and operating revenue
were attributable to Japan, the U.S. and Europe, respectively.
If economic conditions in Japan, the U.S. or Europe
deteriorate, or if the effects of international political and
military instability depress consumer confidence, Sony's
short- to mid-term sales and profitability may be significantly
adversely affected.
Large-scale investment is required within the Game and
    Electronics segments, particularly during the development and
    launch period of a new gaming platform.
Within the Game segment, providing and developing products that
maintain competitiveness over an extended life-cycle requires
large-scale investment relating to research and development,
particularly during the development and launch period of a new
platform. In addition, large-scale investment relating to
capital expenditures and research and development is also
required within the Electronics segment for the fabrication and
manufacture of key components, including semiconductors, used in
products within the Game segment. Moreover, it is particularly
important in the Game segment that these products be provided to
consumers at competitive prices to ensure the favorable market
penetration of the platform. Should the platform fail to achieve
such favorable market penetration, there is a risk that part of,
or the whole of, this investment will not be recouped, resulting
in a significant negative impact on Sony's mid-term
profitability. In addition, even if Sony is able to sufficiently
recoup its investment, it is probable that a significant
negative impact on Sony's operating results could occur
during the launch period of the platform.
An example of this kind of large-scale investment is the new
PLAYSTATION
®
3
("PS3") platform scheduled to be launched in November
2006, related charges for which are anticipated to result in a
significant loss within the Game segment for the fiscal year
ending March 31, 2007, reflecting primarily an expected
negative margin as a result of strategic pricing on PS3 hardware
sales. In connection with this, during the fiscal year ended
March 31, 2006, a write-down of approximately
25.0 billion yen for semiconductor components for use in
PS3 was recorded within the Game segment.
Sony's Game and Electronics segments are particularly
    sensitive to year-end holiday season demand.
Since the Game segment offers a relatively small range of
hardware products (including
PlayStation
®
2
and
PSP
tm
(PlayStation
®
Portable))
and a significant portion of overall demand is weighted towards
the year-end holiday season, factors such as changes in the
competitive environment, changes in market conditions, delays in
the release of highly anticipated software titles and
insufficient supply of hardware during the year-end holiday
season can negatively impact the financial performance of the
segment.
The Electronics segment is also dependent upon year-end holiday
season demand and, to a lesser extent than the Games segment, is
susceptible to weak sales and supply shortages that prevent it
from meeting demand for its products during this season.
Operating results for Sony's Pictures segment vary
    according to the cost of productions, customer acceptance, and
    competing products.
Operating results for the Pictures segment's motion picture
and television productions can materially fluctuate depending
primarily upon the cost of such productions and acceptance of
such productions by the public, which are difficult to predict.
In addition, the commercial success of the Pictures
segment's motion picture and television productions depend
upon the acceptance of other competing productions, and the
availability of alternative forms of entertainment and leisure
activities.
10
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Sony's Pictures segment is subject to labor
    interruption.
The Pictures segment is dependent upon highly specialized union
members who are essential to the production of motion pictures
and television programs. A strike by one or more of these unions
could delay or halt production activities. Such a delay or halt,
depending on the length of time involved, could cause delay or
interruption in the release of new motion pictures and
television programs and thereby could adversely affect revenues
and cash flows in the Pictures segment.
In addition to the need for maintaining a prudent and
    prescient Asset Liability Management, Sony's Financial
    Services segment is subject to unrealized holding losses and
    valuation losses associated with market fluctuations, shifts in
    customers' demand and a variability in claims, at Sony Life
    Insurance Co., Ltd., Sony Assurance Inc. and Sony Bank Inc., as
    well as mandatory contributions to the Life Insurance
    Policyholders Protection Corporation of Japan by Sony
    Life.
Sony's Financial Services segment faces rapid shifts in
customer demand from more profitable protection-orientated
products such as term insurance to less profitable
savings-oriented products such as endowment insurance, as well
as a risk of unpredictable increases in insurance claims. This
segment also may incur valuation losses and unrealized holding
losses if there is a decrease in the value of securities and
other financial instruments purchased for investment purposes
resulting from fluctuations in interest rates, foreign exchange
rates, or in the equity markets. In addition, if it fails to
conduct Asset Liability Management ("ALM") in a
prudent and prescient manner to pursue an optimal combination of
possible risks and expected returns on investment assets,
financing liabilities and underwriting risks on insurance policy
benefits, Sony's Financial Services segment may not be able
to keep providing competitive products and services to customers
on a long-term basis. Sony Life Insurance Co., Ltd. ("Sony
Life"), which constitutes the largest portion of this
segment, is also subject to mandatory contributed reserves for
the Life Insurance Policyholders Protection Corporation of Japan
("PPC"), the organization that provides support to
insolvent life insurance companies. Sony Life's estimated
required contribution based on the assessments made by the PPC
is incorporated in other expenses within Sony Life's
statements of income and long-term liabilities in its balance
sheets. If there are bankruptcies of life insurers, solvent life
insurers including Sony Life may be required to contribute
additional financial resources.
Sony's Music business, Sony's investment in SONY
    BMG MUSIC ENTERTAINMENT, and the Pictures segment are subject to
    digital piracy, which may become increasingly more prevalent
    with the development of new technologies.
In Sony's Music business, including its investment in SONY
BMG MUSIC ENTERTAINMENT ("SONY BMG"), as well as in
the Pictures segment, the development of digital technology has
created new risks with respect to Sony's ability to protect
its copyrights. Advances in technology that enable the transfer
and downloading of digital audio and visual files from the
Internet without authorization from the owners of rights to such
content threaten the conventional copyright-based business model
by making it easier to create and redistribute unauthorized
audio and visual files. Such unauthorized distribution has
adversely affected sales and operating results within the Music
business, as well as in Sony's investment in SONY BMG, and
threatens to adversely affect sales and operating income in the
Pictures segment. These technological advances include new
digital devices such as hard disk drive video and audio
recorders, CD and DVD recorders and
peer-to
-peer digital
distribution services. As a result, Sony has incurred and will
continue to incur expenses to develop new services for the
authorized digital distribution of music, movies and television
programs and to combat unauthorized digital distribution of its
copyrighted content. These initiatives will increase Sony's
near-term expenses and may not achieve their intended result.
Sony's Music business and Sony's investment in
    SONY BMG are dependent on establishing new artists, and together
    with Sony's Pictures segment are subject to increasing
    prices for talent.
The success of Sony's Music business and Sony's
investment in SONY BMG is highly dependent on establishing
artists that appeal to customers, and the competition with other
entertainment companies for such talent is intense. If the Music
business and SONY BMG are unable to find and establish new
talented artists,
11
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sales, operating income and equity in net income (loss) of
affiliated companies may be adversely affected. In addition,
with respect to the Music business and the Pictures segment, as
well as SONY BMG, Sony has experienced and may continue to
experience significant increases in talent-related spending.
SONY BMG is subject to renewed regulatory approval from
    European Union competition authorities.
In August 2004, Sony combined its recorded music business
outside of Japan with the recorded music business of Bertelsmann
AG forming SONY BMG, after approval from, among others, the
European Commission competition authorities. On December 3,
2004, Impala, an international association consisting of 2,500
independent recorded music companies applied for annulment of
the decision to clear the merger. On July 13, 2006, the
European Court of First Instance overruled the Commission's
decision to allow the merger to go forward, requiring the
Commission to
re-examine
the merger.
While the Commission completes its reexamination, Sony continues
to account for the results of Sony BMG under the equity method.
If the Commission does not approve the merger and the previously
combined company is forced to unwind the merger, Sony may incur
significant costs and may not be able to achieve its objectives
with respect to its recorded music business.
Sony may not be successful in implementing its broadband
    network strategy.
Sony believes that the utilization of broadband networks to
facilitate the integration of hardware and content is essential
to differentiating itself in the marketplace. Sony also believes
that this strategy will eventually lead to consistent revenue
streams. However, this strategy depends on the development (both
inside and outside of Sony) of certain network technologies,
coordination among Sony's various business units, and the
standardization of technological and interface specifications
across business units and within industries. If Sony is not
successful in implementing this strategy, it could adversely
affect Sony's mid- to long-term competitiveness.
Sony's utilization of joint ventures and alliances
    within strategic business areas may not be successful.
The composition of Sony during the last several years has
reflected a shift towards the establishment of joint ventures
and strategic alliances in order to supplement or replace
functions that were previously performed by divisions of Sony
Corporation or wholly-owned subsidiaries, to mitigate the burden
of substantial investments and to achieve operating efficiencies
through cooperation with other companies.
Sony currently has investments in several joint ventures,
including Sony Ericsson Mobile Communications, AB ("Sony
Ericsson"), S.T. Liquid Crystal Display Corporation
("ST-LCD"),
a
joint venture with Toyota Industries Corporation, and other
companies. In April 2004, Sony established
S-LCD,
a joint venture
with Samsung for the production of 7th generation amorphous
TFT LCD panels. In August 2004, Sony combined its recorded music
business outside of Japan with the recorded music business of
Bertelsmann AG forming the jointly-owned company, SONY BMG. In
April 2005, a consortium led by Sony Corporation of America and
its equity partners, Providence Equity Partners, Texas Pacific
Group, Comcast Corporation and DLJ Merchant Banking Partners,
completed the acquisition of Metro-Goldwyn-Mayer Inc.
("MGM"). If Sony and its partners are not able to
reach their common financial objectives successfully,
Sony's financial performance as a whole may be adversely
affected. Sony's financial performance may also be
temporarily adversely affected by the establishment of those
alliances, joint ventures and strategic investments even if Sony
and its partners remain on course to achieve those common
objectives. Recent examples of how Sony's financial
performance has been adversely affected in the course of these
types of relationships are the equity in net losses recorded for
MGM Holdings, Inc. and
S-LCD
during the fiscal
year ended March 31, 2006 of 16.9 billion yen and
7.2 billion yen, respectively.
Sony's physical facilities and information systems
    are subject to damage as a result of disasters, outages,
    malfeasance or similar events.
Sony's headquarters, some of Sony's major data centers
and many of Sony's most advanced device manufacturing
facilities, including those for semiconductors, are located in
Japan, where the possibility of
12
Table of Contents
disaster or damage from earthquake is generally higher than in
other parts of the world. In addition, Sony's offices and
facilities, including those used for research and development,
material procurement, manufacturing, logistics, sales and
services are located throughout the world and are subject to
possible destruction, temporary stoppage or disruption as a
result of any number of unexpected events. If any of these
facilities or offices were to experience a significant loss as a
result of any of the above events, it could disrupt Sony's
operations, delay production, shipments and revenue, and result
in large expenses to repair or replace these facilities or
offices.
In addition, as network and information systems become more
important to Sony's operating activities, network and
information system shutdowns caused by unforeseen events such as
power outages, disasters, terrorist attack, hardware or software
defects, computer viruses and computer hacking pose increasing
risks. Such an event could also result in the disruption of
Sony's operations, delay production, shipments and revenue,
and result in large expenditures necessary to repair or replace
such network information systems. Furthermore, Sony's
operating activities could be subject to risks caused by
misappropriation, misuse, leakage, falsification, and
disappearance of internal databases, including customer and
vendor data. Judging from the experience of other similarly
situated companies, it is possible that Sony could be exposed to
significant monetary liability if such risks were to
materialize, and it is also possible that such events could harm
Sony's reputation and credibility. Considering the
increasing social awareness concerning the importance of
personal information and relevant legislation (Refer to
"Government Regulations" in "Item 4.
Information on the Company
"), such risks are
increasing particularly for businesses that handle a large
amount of customer and consumer data. Although Sony continues to
take precautions against such unforeseen risks, such as by
undertaking efforts to educate operators and administrators who
have access to databases about appropriate ways to protect such
information, these measures may be insufficient, and Sony may be
unable to avoid or prevent such events.
Sony is subject to financial and reputational risks due to
    product quality and liability issues.
Sony products, such as software (including software for mobile
phone handsets) and electronic devices including semiconductors
are becoming increasingly sophisticated and complicated as rapid
advancements in technologies occur, and as demand increases for
digital equipment. At the same time product quality and
liability issues present greater risks. Such issues may occur
not only in relation to Sony's own branded products but
also in association with appliances and devices designed or
manufactured for third parties. Sony's efforts to manage
the rapid advancements in technologies and increased demand, as
well as to control product quality, may not be successful, and
if they are not, Sony may incur expenses in connection with, for
example, product recalls, service and lawsuits, and Sony's
brand image and reputation as a producer of high-quality
products may suffer. An example of this includes the recall by
Dell Inc. and Apple Computer Inc. of
lithium-ion
battery
packs, containing battery cells originally manufactured by Sony,
used in their notebook computers (refer to "Performance by
Product Category" for "Electronics" within
"Operating Results for the Fiscal Year Ended
March 31, 2006"
in "Item 5.
Operating
and Financial Review and Prospects
").
Sony may be adversely affected by its employee benefit
    obligations.
Sony recognizes an unfunded pension obligation (in an amount
equal to (i) its Projected Benefit Obligation
("PBO") less (ii) the fair value of plan assets
and accrued pension and severance costs) as a pension cost in a
systematic and gradual manner over employees' average
remaining service periods as required under
FAS No. 87, "Employers' Accounting for
Pensions." Any decrease of pension asset value due to low
returns from investments or increases in PBO due to a lower
discount rate may increase unfunded pension obligations,
resulting in an increase in pension expenses recorded as cost of
sales or as a selling, general and administrative expense. Refer
to Note 14 of Notes to Consolidated Financial Statements
for more information regarding Sony's pension and severance
plans. Also refer to "Critical Accounting Policies" in
"Item 5.
Operating and Financial Review and
Prospects.
"
Most pension assets and liabilities recognized on Sony's
consolidated balance sheets relate to Japanese plans, which are
subject to the Japanese Defined Benefit Corporate Pension Plan
Act pursuant to which Sony is required to meet certain financial
criteria including periodic actuarial revaluation and annual
settlement of
13
Table of Contents
gain or loss of the plan. In the eventuality that the actuarial
reserve required by law exceeds the fair value of pension
assets, Sony may be required to make an additional contribution
to the plan, which would reduce consolidated cash flow.
Sony may be accused of infringing others'
    intellectual property rights.
Sony's products incorporate a wide variety of technologies.
Claims have been and could be asserted against Sony that such
technology infringes intellectual property owned by others, and
the outcome of any such claim would be uncertain.
Sony is dependent upon certain intellectual property
    rights of others, and Sony may not be able to continue to obtain
    necessary licenses to employ technology covered by such
    rights.
Many of Sony's products are designed to include
intellectual property licensed from third parties. Based upon
past experience and industry practice, Sony believes that it
will be able to obtain or renew licenses relating to various
intellectual properties useful in its business that it needs in
the future; however, such licenses may not be available at all
or on acceptable terms.
Increased reliance on external suppliers may increase
    financial, reputational and other risks to Sony.
With the increasing necessity of pursuing quick business
development and high operating efficiency with limited
managerial resources, Sony increasingly procures from
third-party suppliers components (including LCD panels for
televisions), and technologies (such as operating systems for
PCs). In addition, it consigns to external suppliers extensive
activities including procurement, manufacturing, logistics,
sales and other services. Reliance on outside sources increases
the chance that Sony will be unable to prevent products from
incorporating defective or inferior third-party technology or
components. Products with such defects can adversely affect
Sony's consolidated sales and its reputation for quality
products. This reliance on external suppliers may also expose
Sony to the effects of suppliers' insufficient compliance
with applicable regulations or infringement of third-party
intellectual property rights.
Sony is subject to environmental and occupational health
    and safety regulations that can increase the costs of operations
    or limit its activities.
Sony is subject to environmental and occupational health and
safety regulations relating to matters such as reductions or
prohibitions in the use of harmful substances, comprehensive
compliance and risk management practices in manufacturing
activities and products, decreases in the level of standby power
of certain products, protection of natural resources and
remediation as a result of certain manufacturing operations and
the recycling of products, batteries and packaging materials.
The European Parliament and the Council of the European Union
have published directives on waste electrical and electronic
equipment and on the restriction of the use of certain hazardous
substances in electrical and electronic equipment. Similar
regulations are being formulated in other parts of the world
including China.
Since August 2005 these European directives have required
electronics producers to bear the cost of collection, treatment,
recovery and safe disposal of future products from end-users and
beginning July 2006 require that new electrical and electronic
equipment does not contain specified hazardous substances. Under
the current situation where all individual member states have
not yet adopted regulations based upon these directives, the
compliance cost for Sony cannot precisely be estimated, but it
could be substantial. In the event it is determined that Sony
has not complied in a material way with certain environmental
laws and regulations, Sony may incur remediation costs or
sustain injury to its brand image. Sony's activities also
may be limited if Sony is unable to comply with such
regulations, which could adversely affect Sony's results.
Sony is subject to the risks of operations in different
    countries.
A substantial portion of Sony's activities are conducted
outside Japan, including in developing and emerging markets.
Sony operates its manufacturing subsidiaries in
20 countries and its sales subsidiaries in
14
Table of Contents
43 countries. Countries where Sony manufactures its
principal products are Japan, Malaysia, China, the U.S., the
U.K., Singapore, Spain and Mexico.
International operations bring challenges. Production in China
and other Asian countries of electronics products increases the
time necessary to supply products to Europe and the U.S., which
can make it more difficult to meet changing customer demand and
preferences. Concentration of the production of PC components in
China and Taiwan could lead to production interruptions if a
catastrophe or widespread contagion, similar to the spread of
Severe Acute Respiratory Syndrome ("SARS"), occurs in
the region. Further, Sony may encounter difficulty in planning
and managing operations due to unfavorable political or economic
factors, such as instability in the Middle East resulting from
the Iraq War, cultural and religious conflicts, foreign exchange
controls, or unexpected legal or regulatory changes such as
import or export controls, nationalization of assets or
restrictions on repatriation of returns from foreign investments.
American Depositary Shareholders have fewer rights than
    shareholders and may not be able to enforce judgments based on
    U.S. securities laws.
The rights of shareholders under Japanese law to take actions,
including voting their shares, receiving dividends and
distributions, bringing derivative actions, examining
Sony's accounting books and records and exercising
appraisal rights are available only to shareholders of record.
Because the depositary, through its custodian agents, is the
record holder of the shares underlying the American Depositary
Shares ("ADSs"), only the depositary can exercise
those rights in connection with the deposited shares. The
depositary will make efforts to vote the shares underlying ADSs
in accordance with the instructions of ADS holders and will pay
the dividends and distributions collected from Sony. However,
ADS holders will not be able to bring a derivative action,
examine Sony's accounting books and records, or exercise
appraisal rights through the depositary.
Sony Corporation is incorporated in Japan with limited
liability. A substantial portion of the assets of Sony
Corporation are located outside the U.S. As a result, it may be
more difficult for investors to enforce against Sony Corporation
judgments obtained in U.S. courts predicated upon the civil
liability provisions of the Federal securities laws of the U.S.
or judgments obtained in other courts outside Japan. There is
doubt as to the enforceability in Japanese courts, in original
actions or in actions for enforcement of judgments of
U.S. courts, of civil liabilities predicated solely upon
the Federal securities laws of the U.S.
Item 4.
Information on the Company
History and Development of the Company
Sony Corporation, the ultimate parent company of Sony, was
established in Japan in May 1946 as Tokyo Tsushin Kogyo
Kabushiki Kaisha, a joint stock company (
Kabushiki
Kaisha
) under the Japanese Commercial Code (
Shoho
).
In January 1958, it changed its name to Sony Kabushiki Kaisha
("Sony Corporation" in English).
In December 1958, Sony Corporation was listed on the Tokyo Stock
Exchange (the "TSE"). In June 1961, Sony Corporation
issued American Depositary Receipts ("ADRs") in the
U.S.
In March 1968, Sony Corporation established CBS/ Sony Records
Inc. in Japan, currently Sony Music Entertainment (Japan) Inc.
("SMEJ"), as a 50:50 joint venture company between
Sony Corporation and CBS Inc. in the U.S. In January 1988, SMEJ
became a wholly-owned subsidiary of Sony Corporation. In
November 1991, SMEJ was listed on the Second Section of the TSE.
In September 1970, Sony Corporation was listed on the New York
Stock Exchange (the "NYSE").
In August 1979, Sony Corporation established Sony Prudential
Life Insurance Co., Ltd. in Japan, currently Sony Life Insurance
Co., Ltd. ("Sony Life"), as a 50:50 joint venture
company between Sony Corporation and The Prudential Insurance
Company of America. In March 1996, Sony Life became a
wholly-owned subsidiary of Sony Corporation, and in April 2004,
with the establishment of a financial holding company Sony
Financial Holdings Inc. ("SFH"), Sony Life became a
wholly-owned subsidiary of SFH.
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Table of Contents
In July 1984, Sony Magnescale Inc., a subsidiary of Sony
Corporation and currently Sony Precision Technology Inc., was
listed on the Second Section of the TSE. In July 1987, Sony
Chemicals Corporation, a subsidiary of Sony Corporation, was
listed on the Second Section of the TSE.
In January 1988, Sony Corporation acquired CBS Records Inc., a
music business division of CBS Inc. in the U.S. In January 1991,
CBS Records Inc. changed its name to Sony Music Entertainment
Inc. ("SMEI"). In November 1989, Sony Corporation
acquired Columbia Pictures Entertainment, Inc. in the U.S. In
August 1991, Columbia Pictures Entertainment, Inc. changed its
name to Sony Pictures Entertainment Inc. ("SPE").
In November 1993, Sony established Sony Computer Entertainment
Inc. ("SCEI") in Japan.
In January 2000, acquisition transactions by way of exchanges of
stock were completed such that SMEJ, Sony Chemicals Corporation,
and Sony Precision Technology Inc. became wholly-owned
subsidiaries of Sony Corporation. In June 2001, Sony Corporation
issued shares of subsidiary tracking stock in Japan, the
economic value of which was intended to be linked to the
economic value of Sony Communication Network Corporation
("SCN"). All shares of subsidiary tracking stock were
terminated and converted to shares of Sony's common stock
in December 2005. SCN was listed on the Mother's market of
the TSE in December 2005. Sony Corporation continues to hold a
majority of shares of SCN.
In October 2001, Sony Ericsson Mobile Communications, AB
("Sony Ericsson"), a 50:50 joint venture company
between Sony Corporation and Telefonaktiebolaget LM Ericsson of
Sweden, was established.
In October 2002, Aiwa Co., Ltd. ("Aiwa") became a
wholly-owned subsidiary of Sony Corporation. In December 2002,
Aiwa was merged into Sony Corporation.
In June 2003, Sony Corporation adopted the "Company with
Committees" system in line with the revised Japanese
Commercial Code. (Refer to "Board Practices" in
"Item 6.
Directors, Senior Management and
Employees.
")
In April 2004, Sony Corporation established SFH in Japan. Sony
Life, Sony Assurance Inc., and Sony Bank became subsidiaries of
SFH.
In April 2004,
S-LCD
Corporation, a joint venture between Sony Corporation and
Samsung Electronics Co., Ltd. of Korea, was established in Korea.
In August 2004, Sony combined its worldwide recorded music
business, excluding its recorded music business in Japan, with
the worldwide recorded music business of Bertelsmann AG forming
the 50:50 joint venture, SONY BMG MUSIC ENTERTAINMENT
("SONY BMG").
In April 2005, a consortium led by Sony Corporation of America
("SCA") and its equity partners, Providence Equity
Partners, Texas Pacific Group, Comcast Corporation and DLJ
Merchant Banking Partners, completed the acquisition of
Metro-Goldwyn-Mayer Inc. ("MGM").
Sony Corporation's registered office is located at
7-35,
Kitashinagawa
6-chome,
Shinagawa-ku,
Tokyo
141-0001,
Japan,
telephone
+81-3-5448-2111.
The agent in the U.S. for purposes of this Item 4 is Sony
Corporation of America, 550 Madison Avenue, New York, NY 10022
(Attn: Office of the General Counsel).
Principal Capital Investments
In the fiscal years ended March 31, 2004, 2005 and 2006,
Sony's capital expenditures (additions to fixed assets on
the balance sheets) were 378.3 billion yen,
356.8 billion yen and 384.3 billion yen, respectively.
Sony's capital expenditures are expected to be
460 billion yen during the fiscal year ending
March 31, 2007. For a breakdown of principal capital
expenditures and divestitures (including interests in other
companies), refer to "Item 5.
Operating and
Financial Review and Prospects
." Sony invested
approximately 140 billion yen in the semiconductor business
during the fiscal year ended March 31, 2006. Sony plans to
invest approximately 170 billion yen in the semiconductor
business in the fiscal year ending March 31, 2007. To
finance
16
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capital expenditures for the development and manufacturing of
semiconductors such as Cell, a highly advanced processor that
will be embedded in next-generation digital consumer electronics
products, as well as capital expenditures related to other key
devices, including display devices, Sony raised 250 billion
yen through the issuance of Euro yen zero coupon convertible
bonds in December 2003, as well as separate funds generated
through self-financing. Refer to "Property, Plant and
Equipment" below for a geographic distribution of these
investments.
Business Overview
Important Changes during the Fiscal Year
Effective April 1, 2005, Sony no longer breaks out its
music business as a reportable segment as it no longer meets the
materiality threshold. Accordingly, the results for Sony's
music business are now included within All Other and the results
for the fiscal years ended March 31, 2004 and
March 31, 2005 have been reclassified to All Other for
comparative purposes. Results for the fiscal year ended
March 31, 2006 in All Other include the results of
SMEI's music publishing business and SMEJ, excluding
Sony's Japan-based disc manufacturing business which,
effective April 1, 2005, has been reclassified to the
Electronics segment. However, results for the previous fiscal
year in All Other include the consolidated results for
SMEI's recorded music business for the period through
August 1, 2004, as well as the results for SMEI's
music publishing business and SMEJ excluding Sony's
Japan-based disc manufacturing business.
On April 8, 2005, a consortium led by SCA and its equity
partners, Providence Equity Partners, Texas Pacific Group,
Comcast Corporation and DLJ Merchant Banking Partners, completed
the acquisition of MGM. Under the terms of the acquisition
agreement, the aforementioned investor group acquired MGM for
12.00 U.S. dollars in cash per MGM share, for a total
purchase price of approximately 5.0 billion
U.S. dollars. In conjunction with the acquisition, SPE
entered into agreements to
co-finance
and produce
new motion pictures with MGM, and to distribute MGM's
existing film and television content through SPE's global
distribution channels. MGM continues to operate under the
Metro-Goldwyn-Mayer name as a private company headquartered in
Los Angeles. As part of the acquisition, SCA invested
257 million U.S. dollars in exchange for
20 percent of the total equity capital. However, based on
the percentage of common stock owned, Sony records
45 percent of MGM Holdings, Inc.'s net income (loss)
as equity in net income of affiliated companies.
In June 2006, MGM and SPE modified this arrangement with respect
to the
co-financing
of
motion pictures and further to allow MGM to bring its worldwide
television distribution business
in-house
and to
consolidate substantially all of its worldwide home
entertainment distribution activities with another major studio.
In August 2004, Sony combined its recorded music business
outside of Japan with the recorded music business of Bertelsmann
AG forming SONY BMG, after approval from, among others, the
European Commission competition authorities. On December 3,
2004, Impala, an international association consisting of 2500
independent recorded music companies applied for annulment of
the decision to clear the merger. On July 13, 2006, the
European Court of First Instance overruled the Commission's
decision to allow the merger to go forward, requiring the
Commission to
re-examine
the merger.
While the Commission completes its reexamination, Sony continues
to account for the results of Sony BMG under the equity method.
Commencing April 1, 2005, Sony partly realigned its product
category configuration in the Electronics segment. Accordingly,
results of the previous fiscal year have been reclassified. The
primary changes are as follows;
Main Product
Previous Product Category
New Product Category
Professional-use projector
"Televisions"
"Information and Communications"
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Table of Contents
Products and Services
The following table sets forth Sony's sales and operating
revenue by operating segments. Figures in parentheses indicate
percentage of sales and operating revenue.
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Electronics
4,858,631
(64.8
)
4,806,494
(67.1
)
4,763,555
(63.7
)
Game
753,732
(10.1
)
702,524
(9.8
)
918,251
(12.3
)
Pictures
756,370
(10.1
)
733,677
(10.3
)
745,859
(10.0
)
Financial Services
565,752
(7.5
)
537,715
(7.5
)
720,566
(9.6
)
All Other
561,906
(7.5
)
379,206
(5.3
)
327,205
(4.4
)
Sales and operating revenue
7,496,391
(100.0
)
7,159,616
(100.0
)
7,475,436
(100.0
)
Electronics
The following table sets forth Sony's Electronics segment
sales and operating revenue by product categories. Figures in
parentheses indicate percentage of sales and operating revenue.
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Audio
675,496
(13.9
)
571,864
(11.9
)
536,187
(11.3
)
Video
949,320
(19.6
)
1,036,328
(21.5
)
1,021,325
(21.4
)
Televisions
884,600
(18.2
)
921,195
(19.2
)
927,769
(19.5
)
Information and Communications
878,855
(18.1
)
816,150
(17.0
)
842,537
(17.7
)
Semiconductors
253,237
(5.2
)
246,314
(5.1
)
240,771
(5.0
)
Components
623,799
(12.8
)
619,477
(12.9
)
656,768
(13.8
)
Other
593,324
(12.2
)
595,166
(12.4
)
538,198
(11.3
)
Electronics Total
4,858,631
(100.0
)
4,806,494
(100.0
)
4,763,555
(100.0
)
Note:
Sony manages the Electronics segment as a single operating
segment. However, Sony believes that the product category
information in the Electronics segment is useful to investors in
understanding the sales contributions of the products in this
business segment.
In the Electronics segment, Sony is engaged in the development,
design, manufacture, and sale of various kinds of electronic
equipment, instruments, and devices for consumer and
professional markets. Sony's principal manufacturing
facilities are located in Japan, Malaysia, China, the U.S.,
Singapore, Spain and Mexico, and its products are marketed by
sales subsidiaries and unaffiliated local distributors and sold
through direct sales via the Internet throughout the world. In
addition to internationalizing its production operations, Sony
has been promoting the transfer of research and development
activities and management functions overseas to bring its
overseas operations into closer proximity to local communities
and markets.
18
Table of Contents
Audio:
"Audio" includes home audio, portable audio, car audio
    and car navigation systems.
Video:
"Video" includes video cameras, digital cameras, video
    decks, and DVD-Video players/recorders.
Televisions:
"Televisions" includes televisions incorporating
    cathode ray tubes ("CRTs"), rear-projection
    televisions, liquid crystal displays ("LCD")
    televisions, and computer displays.
Information and Communications:
"Information and Communications" includes PCs, printer
    systems, broadcast- and professional-use audio, video and
    monitors and other professional-use equipment.
Semiconductors:
"Semiconductors" includes LCDs, charge coupled devices
    ("CCDs") and other semiconductors.
Components:
"Components" includes optical pickups, batteries,
    audio/video/data recording media, and data recording systems.
Other:
"Other" includes sales to outside customers, such as
    sales of mobile phone handsets to Sony Ericsson by Sony
    EMCS Corporation ("Sony EMCS"), an Integrated
    Circuit ("IC") card business, CD and DVD disc
    manufacturing and physical distribution businesses, and products
    and services that are not included in the above categories.
Game
Sony Computer Entertainment Inc. ("SCEI") develops,
produces, markets and distributes
PlayStation
®
,
PS
one
tm
,
PlayStation
®
2
("PS2") and
PSP
tm
(PlayStation
®
Portable)
("PSP") hardware and related software in Japan, and is
developing the
PLAYSTATION
®
3
("PS3") computer entertainment system scheduled to be
launched in November 2006. Sony Computer Entertainment America
Inc. ("SCEA") and Sony Computer Entertainment Europe
Ltd. ("SCEE") market and distribute PlayStation,
PS one, PS2 and PSP hardware, and develop, produce, market
and distribute related software in the U.S. and Europe. SCEI,
SCEA and SCEE enter into licenses with third-party software
developers.
Pictures
Global operations in the Pictures segment encompass motion
picture production, acquisition and distribution; television
production, acquisition and distribution; home entertainment
production, acquisition and distribution; television
broadcasting; digital content creation and distribution; and
operation of studio facilities.
SPE's motion picture arm, the Columbia TriStar Motion
Picture Group, includes SPE's principal motion picture
production organizations, Columbia Pictures, TriStar Pictures,
Screen Gems and Sony Pictures Classics, as well as Sony Pictures
Home Entertainment, Sony Pictures Releasing and Sony Pictures
Releasing International. SPE also holds a 7.5 percent
equity interest in Revolution Studios and has the rights to
market and distribute its motion picture product throughout most
of the world. Upon delivery of Revolution Studios' films,
SPE advances a portion of the production cost and then incurs
distribution and marketing costs in those markets where SPE
distributes. SPE retains a fee for its distribution services in
addition to its participation in
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Table of Contents
Revolution Studios' profits and losses as a result of its
equity ownership stake. In conjunction with the acquisition of
MGM in April 2005 by SCA and its equity partners, SPE entered
into agreements to
co-finance
and produce
new motion pictures with MGM and to distribute MGM's
existing film and television content through SPE's global
distribution channels.
In June 2006, MGM and SPE modified this arrangement with respect
to the
co-financing
of
motion pictures and further to allow MGM to bring its worldwide
television distribution business
in-house
and to
consolidate substantially all of its worldwide home
entertainment distribution activities with another major studio.
SPE's Television Group is primarily comprised of Sony
Pictures Television and Sony Pictures Television International
with various broadcast channel investments. SPE develops and
produces network television series, first-run syndication
programming, made-for-cable programming, daytime serials,
syndicated games shows, animated series, made for television
movies, miniseries and other television programming and
distributes such programs to the networks, syndication and cable
markets.
Sony Pictures Digital operates SPE's digital content
creation and distribution businesses including Sony Online
Entertainment, as well as operating Sony Pictures Imageworks and
Sony Pictures Animation.
SPE manages a studio facility, Sony Pictures Studios, which
includes post production facilities, at SPE's world
headquarters in Culver City, California. A second studio
facility, The Culver Studios, which was owned and operated by
SPE, was sold by SPE in April 2004. SPE initially leased back a
portion of this facility for a two-year period and subsequently
extended the lease for an additional one-year period expiring
April 20, 2007.
Financial Services
In the Financial Services segment, on April 1, 2004 Sony
established a wholly-owned subsidiary, SFH, a holding company
for Sony Life, Sony Assurance Inc. ("Sony Assurance")
and Sony Bank Inc. ("Sony Bank"), with the aim of
integrating various financial services including savings and
loans, and offering individual customers high value-added
products and high-quality services.
Sony conducts insurance operations primarily through Sony Life,
a Japanese life insurance company, and Sony Assurance, a
Japanese non-life insurance company, both wholly-owned by SFH.
Sony also operates an Internet-based banking business in Japan
through Sony Bank, which is an 88 percent owned subsidiary
of SFH. Aside from SFH, Sony is also engaged in a leasing and
credit financing business in Japan through Sony Finance
International Inc. ("Sony Finance"), a
wholly-owned subsidiary of Sony Corporation.
All Other
All Other is mainly comprised of SMEJ, a Japanese domestic
recorded music business that produces recorded music and music
videos through contracts with many artists in all musical
genres; SMEI's music publishing business, which owns and
acquires rights to musical compositions, exploits and markets
these compositions and receives royalties or fees for their use;
Sony Communication Network Corporation ("SCN"), an
Internet-related service business subsidiary operating mainly in
Japan; an in-house facilities management business in Japan; and
an advertising agency business in Japan.
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Table of Contents
Sales and Distribution
The following table shows Sony's sales in each of its major
markets for the periods indicated. Figures in parentheses
indicate the percentage of worldwide sales and operating revenue
for which the particular market accounts.
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Japan
2,220,747
(29.6
)
2,100,793
(29.3
)
2,168,723
(29.0
)
United States
2,121,110
(28.3
)
1,977,310
(27.6
)
1,957,644
(26.2
)
Europe
1,765,053
(23.6
)
1,612,536
(22.6
)
1,715,704
(23.0
)
Other Areas
1,389,481
(18.5
)
1,468,977
(20.5
)
1,633,365
(21.8
)
Sales and operating revenue
7,496,391
(100.0
)
7,159,616
(100.0
)
7,475,436
(100.0
)
Electronics
Sony's electronics products and services are marketed
throughout the world under the trademark "Sony", which
has been registered in 204 countries and territories.
In most cases, sales of Sony's electronics products are
made to sales subsidiaries of Sony Corporation located in or
responsible for sales in the countries and territories where
Sony's products and services are marketed. These
subsidiaries then sell those products to local distributors and
dealers. In some regions, sales of certain products and services
are made directly to local distributors by Sony Corporation.
Sales in the Electronics segment are particularly seasonal and
also vary significantly with the timing of new product
introductions and economic conditions of each country. Sales for
the third quarter ending December 31 of each fiscal year
are generally higher than other quarters of the same fiscal year
due to demand in the year-end holiday season.
Japan:
Sony Marketing (Japan) Inc. markets consumer electronics
    products through retailers and also markets professional
    electronics products and services. For electronic components,
    Sony sells products directly to wholesalers and manufacturers.
United States:
Sony markets its electronics products and services through Sony
    Electronics Inc. and other wholly owned subsidiaries in
    the U.S.
Europe:
In Europe, Sony's consumer electronics products and
    services are marketed through sales subsidiaries including Sony
    United Kingdom Limited, Sony Deutschland G.m.b.H., and Sony
    France S.A. Sales of electronics products for professional
    use, electronic components, and services are made through
    several divisions, differentiated by product, covering all of
    Europe.
Other Areas:
In overseas areas other than the U.S. and Europe, Sony's
    electronics products and services are marketed through sales
    subsidiaries including Sony Corporation of Hong Kong Limited,
    Sony Gulf FZE in the United Arab Emirates, Sony
    Electrónicos de México, S.A. de C.V., Sony of Canada
    Ltd., and Sony Australia Limited.
21
Table of Contents
Game
SCEI, SCEA, SCEE and subsidiaries in Asia market and distribute
PlayStation, PS one, PS2, and PSP entertainment hardware
and related software.
Sales in the Game segment are dependent on the timing of the
introduction of attractive software and a significant portion of
overall demand is weighted towards the year-end holiday season.
Pictures
SPE, with global operations in 72 countries, generally
retains all rights relating to the worldwide distribution of its
internally produced motion pictures, including rights for
theatrical exhibition, videocassette, DVD and
Blu-ray
distribution,
pay and free television exhibition and other markets. SPE also
acquires distribution rights to motion pictures produced by
other companies, and jointly produces films with other studios
or production companies. These rights may be limited to
particular geographic regions, specific forms of media or period
of time. SPE uses its own distribution service business, Sony
Pictures Releasing, for the U.S. theatrical release of its
films and for the theatrical release of films acquired from and
produced by others.
Outside the U.S., SPE generally distributes and markets its
films through one of its Sony Pictures Releasing International
subsidiaries. In certain countries, however, SPE has joint
distribution arrangements with other studios or arrangements
with independent local distributors.
SPE's theatrical release strategy focuses on offering a
diverse slate of films with a mix of genres, talent and budgets.
For the fiscal year ending March 31, 2007, 48 films are
currently slated for release by SPE, including 16 films
under the Columbia banner, six films under the Screen Gems or
TriStar banner, 19 Sony Pictures Classics releases, five
Revolution Studios releases, and two films
co-financed
with MGM.
SPE has a motion picture library of more than 3,500 feature
films, including 12 with Best Picture Academy
Awards
®
.
Currently, SPE is converting its library (including acquired
product) to a digital format and approximately 2,000 titles
have been converted. In addition, SPE and four other motion
picture studios are equal investors in Movielink LLC, an online
movie download service offering feature films on an
on-demand
basis.
The worldwide home entertainment distribution of SPE's
motion pictures and television programming (and programming
acquired or licensed from others) is handled through Sony
Pictures Home Entertainment, except in certain countries where
SPE has joint distribution arrangements with other studios or
arrangements with independent local distributors. Product is
distributed on both videocassette and DVD formats.
SPE produces local language programming in key markets around
the world, some of which are
co-produced
with local
partners and sells
SPE-owned
formats in
approximately 25 countries. This programming, along with
SPE's library of television programming and motion
pictures, is licensed to affiliated and independent stations and
broadcasters in the U.S., and to affiliated and independent
international television stations and other broadcasters
throughout the world. In the U.S., SPE owns and operates the
cable channel GSN (formerly Game Show Network) jointly with
Liberty Media Corporation. SPE also has investments in more than
40 international networks, which are available in more than
100 countries worldwide.
Financial Services
Sony Life conducts a life insurance business primarily in Japan,
utilizing Sony Life's highly trained
Lifeplanner
®
life insurance professionals and independent agencies to serve
individual customers. Sony Life provides tailor-made life
insurance products that are optimized for each customer. In
order to provide a sense of reassurance to its diversified
customer base, Sony Life provides an extensive lineup of
products and services supplemented with consulting and
after-sales
follow-up.
As of March 31, 2006, Sony Life employed
3,826 Lifeplanner life insurance professionals. Sony Life
maintains an extensive service network including
83 Lifeplanner branch offices, 26 regional sales
offices, and 2,264 independent agencies in Japan. In
addition, Sony has aimed to apply Sony Life's insurance
expertise in countries other than Japan, operating Sony Life
Insurance (Philippines) Corporation in the Philippines since
November 1999.
22
Table of Contents
Sony Assurance has conducted a non-life insurance business in
Japan since October 1999 utilizing a "direct insurance
provider" business model. As a direct insurance provider,
Sony Assurance communicates directly with customers over the
telephone or via the Internet. These
one-to
-one
relationships help to provide a clear understanding of
customers' opinions and needs, which Sony Assurance can
reflect in its product and service offerings. Sony Assurance
principally sells automobile insurance, as well as medical and
cancer insurance.
Sony Bank has conducted banking operations in Japan since June
2001 and, as a general rule, provides its services via the
Internet 24 hours a day, 365 days a year. Sony Bank
has developed new products and services in a proactive and
flexible manner based on its consistent policy of providing
financial services, primarily for asset management, to
independent individual customers. Sony Bank's main product
and service lineups now include yen deposits, foreign currency
deposits in eight currencies, investment trusts, and mortgage
loans. By using the MONEYKit tool, Sony Bank's transaction
channel, account holders can invest and manage assets according
to their life plans over the Internet.
Sony Finance conducts a leasing business for corporations, and a
consumer financing business including "My Sony Card,"
a credit card for individual customers, through Sony's
electronic retailers and other affiliated partners.
All Other
SMEJ produces, markets, and distributes CDs, MDs, DVDs, and
pre-recorded audio and video software. SMEJ conducts business in
Japan under "Sony Records," "Epic Records,"
"Ki/oon Records," "SMEJ Associated Records,"
"Defstar Records," and other labels.
SMEI owns and acquires rights to musical compositions, exploits
and markets these compositions, receives royalties or fees for
their use and conducts its music publishing business in
countries other than Japan primarily under the Sony/ ATV Music
Publishing name.
SCN provides Internet broadband network services to subscribers
as well as creating and distributing content through its portal
service to various platforms including PCs, mobile phones and
other home electronics devices including TVs and game consoles.
Both fee-based and charge-free services are provided via these
content distribution platforms.
Sources of Supply
Sony pursues procurement of raw materials, parts and components
to be used in the production of its products on a global basis
on the most favorable terms that it can achieve. These items are
purchased from various suppliers around the world. Generally,
Sony maintains multiple suppliers for most significant
categories of parts and components.
However, when raw materials, parts and components become scarce,
the cost of production rises. For example, the recent sharp rise
in the market price of copper has the potential to
proportionately affect the cost of parts that utilize copper
such as printed circuit boards and power cables. In addition,
there is growing concern that the price of resin may rise
resulting in an increase to the cost of plastic parts.
After-Sales Service
In the Electronics and Game segments, Sony provides repair and
servicing functions in the areas where its products are sold.
Sony provides these services through its own service centers,
factories, authorized independent service centers, authorized
servicing dealers and subsidiaries.
In line with the industry practices of the electronics and game
businesses, almost all of Sony's products sold in Japan
carry a warranty, generally for a period of one year from the
date of purchase, covering repairs, free of charge, in the case
of a malfunction in the course of ordinary use of the product.
In the case of broadcast- and professional-use products, Sony
maintains support contracts with customers in addition to
23
Table of Contents
warranties. Overseas warranties are generally provided for
various periods of time depending on the product and the area in
which it is marketed.
To further ensure customer satisfaction, Sony maintains customer
information centers in its principal markets.
Patents and Licenses
Sony has a number of Japanese and foreign patents relating to
its products. Sony is licensed to use a number of patents owned
by others, covering a wide range of products. Certain licenses
are important to Sony's business, such as that for optical
disc related products. Sony products that employ
DVD-Video
player
functions, including PS2 hardware, are substantially dependent
upon certain patents licensed by MPEG LA LLC, Dolby
Laboratories Licensing Corporation and Nissim Corp. These
patents relate to technologies essential to DVD specification.
Sony considers its overall license position beneficial to its
operations. While Sony believes that its various proprietary
intellectual property rights are important to its success, it
believes that neither its business as a whole nor any business
segment is materially dependent on any particular patent or
license, or any particular group of patents or licenses, except
as set forth above.
Competition
In each of its principal product lines, Sony encounters intense
competition throughout the world. Sony believes, however, that
in the aggregate it competes successfully and has a major
position in all of the principal product lines in which it is
engaged, although the strength of its position varies with
products and markets. Refer to "Risk Factors" in
"Item 3.
Key Information.
"
In the Electronics segment, Sony believes that its product
planning and product design expertise, the high quality of its
products, its record of innovative product introductions and
product improvements, its price competitiveness derived from
reductions in manufacturing and indirect costs, and its
extensive marketing and servicing efforts are important factors
in maintaining its competitive position.
The Game segment is in a historically volatile and highly
dynamic industry and SCEI's competitive position is
affected by changing technology and product introductions,
limited platform life cycles, popularity of software titles,
seasonality, consumer spending and other economic trends. To be
successful in the game industry, it is important to win customer
acceptance of SCEI's format.
In the Pictures segment, SPE faces intense competition from
other major motion picture studios and, to a lesser extent, from
independent production companies. SPE must compete to obtain
story rights and talent, including writers, actors, directors
and producers, which are essential to the success of SPE's
products. SPE also competes to attract the attention of
audiences worldwide and to obtain exhibition and distribution
outlets and optimal release dates for its products. Competition
in television production, distribution, and syndication is also
intense because available broadcast time is limited and the
audience is increasingly fragmented among broadcast networks,
cable, and other independent television stations both in the
U.S. and internationally. Furthermore, broadcast networks are
increasingly producing their own shows internally. This
competitive environment has resulted in fewer opportunities to
produce shows for networks and a shorter lifespan for ordered
shows that do not immediately achieve favorable ratings.
In the Financial Services segment, it is critical for Sony Life,
Sony Assurance and Sony Bank to maintain customer confidence and
satisfaction. To be credible and competitive in the financial
services market, it is important to maintain a strong and
healthy financial foundation for the business as well as to meet
diversifying customer needs. Sony Life has maintained a high
solvency margin ratio, based on a Japanese domestic criteria
that stipulates the maintenance of a certain level of solvency
margin ratio in order for the business to be evaluated as
financially sound, and differentiates itself from competitors
through its unique needs-based consulting sales approach from
its Lifeplanner sales force, Sony Life's team of highly
trained life insurance professionals. Sony Assurance, through
direct communications over the telephone or via the Internet,
endeavors to provide products and services that customers
recognize as clearly distinctive from other companies'
offerings and has maintained a leading position in the
direct-type of non-insurance business in
24
Table of Contents
Japan. Sony Assurance also has maintained a high solvency margin
ratio based on the aforementioned Japanese domestic criteria.
Sony Bank has strengthened its financial base and has maintained
an adequate capital adequacy ratio based on Japanese domestic
criteria concerning this ratio. By taking advantage of the
special characteristics of the Internet, Sony Bank, as an
Internet bank for independent individual customers' asset
management, offers a variety of unique products and services.
Sony Finance faces competitive pressure to achieve a leading
position in the new arena of secure payment systems on the
Internet by utilizing new technology.
Within All Other, success at SMEJ is dependent to a large extent
upon the artistic and creative abilities of employees and
outside talent and is subject to the vagaries of public taste.
SMEJ's future competitive position depends on its
continuing ability to attract and develop artists who can
achieve a high degree of public acceptance. SCN faces
competition in Japan from many existing large companies, as well
as from new entrants to the market. Telecommunication companies
that possess a large Internet-ready infrastructure and other
entrants that compete solely on the basis of price have created
a market in which competitive price reductions are the norm.
Rapid technological advancement has created many new
opportunities but it has also increased the rate at which new
and more efficient services must be brought to market to earn
customer approval. Customer price elasticity is high, and users
are able to change Internet service providers with increasing
ease. The penetration of mobile Internet services provided by
telecommunications companies may also provide a substitute to
the home-centric Internet service provided by SCN.
Government Regulations
Sony's business activities are subject to various
governmental regulations in countries in which it operates,
including regulations relating to business/investment approvals,
import and export regulations including customs and export
control, antitrust, intellectual property, consumer and business
taxation, exchange controls, personal information protection,
and environmental and recycling requirements.
In Japan, insurance and banking businesses are subject to
approvals and oversight from the Financial Services Agency. In
addition, telecommunication businesses are subject to approvals
from the Ministry of Internal Affairs and Communications.
Sony is also subject to environmental and occupational health
and safety regulations in the jurisdictions in which it
operates, particularly those in which it has manufacturing,
research, or similar operations in its Electronics and Game
segments. Refer to "Risk Factors" in
"Item 3.
Key Information.
"
25
Table of Contents
Organizational Structure
The following table sets forth the significant subsidiaries
owned, directly or indirectly, by Sony Corporation.
Country of
(As of March 31, 2006)
Name of company
incorporation
Percentage owned
Sony EMCS Corporation
Japan
100.0
Sony Semiconductor Kyushu Corporation
Japan
100.0
Sony Marketing (Japan) Inc.
Japan
100.0
Sony Computer Entertainment Inc.
Japan
100.0
Sony Financial Holdings, Inc.
Japan
100.0
Sony Life Insurance Co., Ltd.
Japan
100.0
Sony Music Entertainment (Japan) Inc.
Japan
100.0
Sony Americas Holding Inc.
U.S.A.
100.0
Sony Corporation of America
U.S.A.
100.0
Sony Electronics Inc.
U.S.A.
100.0
Sony DADC US Inc.
U.S.A.
100.0
Sony Computer Entertainment America Inc.
U.S.A.
100.0
Sony Pictures Entertainment Inc.
U.S.A.
100.0
Sony Europe Holding B.V.
Netherlands
100.0
Sony Europe G.m.b.H.
Germany
100.0
Sony United Kingdom Ltd.
U.K.
100.0
Sony Computer Entertainment Europe Ltd.
U.K.
100.0
Sony Global Treasury Services Plc
U.K.
100.0
Sony Holding (Asia) B.V.
Netherlands
100.0
Sony Electronics Asia Pacific Pte. Ltd.
Singapore
100.0
Property, Plant and Equipment
Sony has a number of offices, plants and warehouses throughout
the world. Most of the buildings and land in and on which they
are located are owned by Sony, free from significant
encumbrances.
26
Table of Contents
The following table sets forth information as of March 31,
2006 with respect to plants for the manufacturing of products
for the Electronics segment and for the Game segment with floor
space of more than 500,000 square feet:
Approximate
Location
floor space
Principal products manufactured
(square feet)
In Japan:
Nagasaki
(Sony Semiconductor Kyushu Corporation
— Nagasaki TEC)
2,232,000
Semiconductors
Kokubu, Kagoshima
(Sony Semiconductor Kyushu Corporation
— Kagoshima TEC)
1,132,000
Semiconductors
Kumamoto
(Sony Semiconductor Kyushu Corporation
— Kumamoto TEC)
980,000
Semiconductors
Kohda, Aichi
(Sony EMCS Corporation — Kohda TEC)
957,000
Video cameras, digital cameras, Memory Sticks, and printers
Inazawa, Aichi
(Sony EMCS Corporation — Inazawa TEC)
862,000
LCD televisions
Kanuma, Tochigi
(Sony Chemicals Corporation)
843,000
Magnetic tapes, adhesives, and electronic components
Ichinomiya, Aichi
(Sony EMCS Corporation — Ichinomiya TEC)
833,000
Rear projection televisions, and digital cameras
Tochigi, Tochigi
(Sony Energy Devices Corporation)
609,000
Magnetic and optical storage media and batteries
Kisarazu, Chiba
(Sony EMCS Corporation — Kisarazu TEC)
601,000
DVD Recorders and PCs
Koriyama, Fukushima
(Sony Energy Devices Corporation)
581,000
Batteries
Kosai, Shizuoka
(Sony EMCS Corporation — Kosai TEC)
562,000
Broadcast- and professional-use video equipment
Minokamo, Gifu
(Sony EMCS Corporation — Minokamo TEC)
542,000
Video cameras, digital cameras, mobile phones, and modules
27
Table of Contents
Approximate
Location
floor space
Principal products manufactured
(square feet)
Overseas:
Pittsburgh, Pennsylvania, U.S.A.
(Sony Electronics Inc.)
2,820,000
Rear projection televisions
San Diego, California, U.S.A.
(Sony Electronics Inc.)
1,249,000
CRTs
Wuxi, China
(Sony Electronics (Wuxi) Co., Ltd., Sony Digital Products (Wuxi)
    Co., Ltd. and Sony (China) Ltd.)
1,160,000
Batteries, televisions, PCs, and digital cameras
Penang, Malaysia
(Sony EMCS (Malaysia) Sdn. Bhd. — PG TEC)
988,000
Audio equipment and data storage systems
Huizhou, China
(Sony Precision Devices (Huizhou) Co., Ltd.)
985,000
Optical pickups and DVD players
Tijuana, Mexico
(Sony de Tijuana Este, S.A. de C.V.)
935,000
LCD televisions, rear projection televisions, TV tuners,
    computer displays, and audio equipment
Dothan, Alabama, U.S.A.
(Sony Electronics Inc.)
809,000
Magnetic tape products and polarized film for LCD
Bangi, Malaysia
(Sony EMCS (Malaysia) Sdn. Bhd. — KL TEC)
797,000
CRT televisions, rear projection televisions, TV tuners, DVD
    players, and VTRs
Jurong, Singapore
(Sony Display Device (Singapore))
786,000
CRTs
Pencoed, Wales, U.K.
(Sony Manufacturing Company U.K.)
707,000
Broadcast cameras and professional-use displays
Terre Haute, Indiana, U.S.A.
(Sony Music Entertainment Inc.)
665,000
CDs, CD-ROMs, DVDs, and DVD-ROMs
Nuevo Laredo, Mexico
(Sony Electronics Inc.)
608,000
Magnetic storage media and batteries
Pitman, New Jersey, U.S.A.
(Sony Music Entertainment Inc.)
568,000
CDs, CD-ROMs, DVDs, and DVD-ROMs
Viladecavallas, Spain
(Sony Espana, S.A.)
566,000
LCD televisions, TV components, projectors, and flat panel
    televisions
28
Table of Contents
Sony plans to increase its semiconductor manufacturing capacity
at Sony Semiconductor Kyushu Corporation. Sony plans to invest
170.0 billion yen in semiconductor fabrication facilities
and equipment during the fiscal year ending March 31, 2007.
This investment includes investment in the production capacity
for chips used for PS3, LCD televisions, LCD rear projection
televisions, and mobile products.
In addition to the facilities above, Sony has a number of other
plants for electronic products throughout the world. Sony owns
research and development facilities and employee housing and
recreation facilities, as well as Sony Corporation's
headquarters buildings in Tokyo, Japan, where administrative
functions and product development activities are carried out.
SCEI leases its corporate headquarters buildings located in
Tokyo, where administrative functions, product development, and
software development are carried out. SCEA and SCEE lease their
offices in the U.S. and Europe, respectively.
Most of SMEJ's offices, including leased premises, are
located in Tokyo, Japan.
SPE's corporate offices and motion picture and television
production facilities are headquartered in Culver City,
California, where it owns and operates a studio facility, Sony
Pictures Studios. A second studio facility, The Culver Studios,
which was owned and operated by SPE was sold by SPE in April
2004. SPE initially leased back a portion of this facility for a
two-year period and subsequently extended the lease for an
additional one-year period expiring April 20, 2007. SPE
also leases office space and motion picture and television
support facilities from affiliates of Sony Corporation and other
third parties in various worldwide locations. SPE's film
and videotape storage operations are located in various leased
locations in the U.S. and Europe.
In December 2001, SCA entered into a lease with a Variable
Interest Entity, which is consolidated by Sony, for its
corporate headquarters. Sony has the option to purchase the
building at any time during the lease term which expires in
December 2008. The aggregate floor space of this building is
approximately 723,000 square feet.
Item 5.
Operating and Financial Review and Prospects
OPERATING RESULTS
Operating Results for the Fiscal Year Ended March 31,
2006 compared with the Fiscal Year Ended March 31,
2005
Overview
After translation of Sony's financial results into yen (the
currency in which Sony's financial statements are
prepared), in accordance with Generally Accepted Accounting
Principles in the U.S. ("U.S. GAAP"),
Sony's sales and operating revenue ("sales") for
the fiscal year ended March 31, 2006 increased
4.4 percent compared with the previous fiscal year. On a
local currency basis (regarding references to results of
operations expressed on a local currency basis, refer to
"Foreign Exchange Fluctuations and Risk
Hedging"
below), sales for the fiscal year increased
slightly. The 4.4 percent increase is mainly due to an
increase in revenues within the Financial Services segment, as a
result of an improvement in gains and losses on investments at
Sony Life Insurance Co., Ltd. ("Sony Life") due to the
favorable Japanese domestic equity market conditions, and
increased sales within the Game segment, as the result of the
contribution from
PSP
tm
(PlayStation
®
Portable) ("PSP"). In the Electronics segment,
although sales benefited from the depreciation of the yen and
there was an increase in sales of liquid crystal display
("LCD") televisions, sales to outside customers
decreased 0.9 percent compared with the previous fiscal
year. There was a decline in sales of CRT televisions, due to a
continued shift in demand towards flat panel televisions, and in
plasma televisions, where new product development has been
terminated.
Operating income increased 67.9 percent compared with the
previous fiscal year. On a local currency basis, operating
income increased approximately 23 percent compared with the
previous fiscal year. Operating income includes a one-time net
gain of 73.5 billion yen, which resulted from the transfer
to the Japanese Government of the substitutional portion of
Sony's Employee Pension Fund. Of this, a gain of
64.5 billion yen was recorded within the Electronics
segment. In the Financial Services segment, operating income
increased
29
Table of Contents
due to an improvement in gains and losses on investments at Sony
Life resulting from the above-mentioned favorable Japanese
domestic equity market conditions. In the Electronics segment,
although restructuring charges increased compared with the
previous fiscal year, the amount of operating loss decreased as
a result of a net gain resulting from the transfer to the
Japanese Government of the substitutional portion of Sony's
Employee Pension Fund mentioned above and favorable exchange
rates. Operating income within the Game segment declined
primarily as a result of an increase in research and development
costs associated mainly with
PLAYSTATION
®
3
("PS3"). In the Pictures segment, operating income
also declined due to lower worldwide theatrical and home
entertainment revenues on feature films.
Restructuring
In the fiscal year ended March 31, 2006, Sony recorded
restructuring charges of 138.7 billion yen, an increase
from the 90.0 billion yen recorded in the previous fiscal
year. The primary restructuring activities were in the
Electronics segment and All Other.
Of the total 138.7 billion yen, Sony recorded
48.3 billion yen in personnel-related costs. This expense
was incurred because 5,700 people, mainly in Japan, the U.S. and
Western Europe, left Sony primarily through early retirement
programs.
For more detailed information about restructuring, please refer
to Note 17 of Notes to the Consolidated Financial
Statements.
Electronics
Restructuring charges in the Electronics segment for the fiscal
year ended March 31, 2006 were 125.8 billion yen,
compared to 83.2 billion yen in the previous fiscal year.
Due to the worldwide market shrinkage and demand shift from CRT
televisions to plasma and LCD panel televisions, Sony has been
implementing a worldwide plan to rationalize CRT and CRT
television production facilities and has been downsizing its
business over several years. In the fiscal year ended
March 31, 2006, as part of this restructuring program, Sony
recorded a non-cash impairment charge of 25.5 billion yen
for CRT TV display manufacturing facilities located in the
U.S. The impairment charge was calculated as the difference
between the carrying value of the asset group and the present
value of estimated future cash flows. The charge was recorded in
loss on sale, disposal or impairment of assets, net in the
consolidated statements of income.
In addition to the above restructuring efforts, Sony undertook
several headcount reduction programs to further reduce operating
costs in the Electronics segment. As a result of these programs,
Sony recorded restructuring charges of 45.1 billion yen for
the fiscal year ended March 31, 2006, and these charges
were included in selling, general and administrative expenses in
the consolidated statements of income. These staff reductions
were achieved worldwide mostly through the implementation of
early retirement programs. The remaining liability balance as of
March 31, 2006 was 19.4 billion yen and will be paid
through the fiscal year ending March 31, 2007. Sony will
continue seeking the appropriate headcount level to optimize the
workforce in the Electronics segment.
All Other
Restructuring charges within All Other for the fiscal year ended
March 31, 2006 were 10.4 billion yen, compared to
5.3 billion yen recorded in the previous fiscal year. The
main component of the restructuring charges recorded during the
fiscal year ended March 31, 2006 was an 8.5 billion
yen asset impairment write-down associated with the sale of the
Metreon, a U.S. entertainment complex.
30
Table of Contents
Operating Performance
Fiscal Year Ended
March 31
2005
2006
Percent change
(Yen in billions)
Sales and operating revenue
7,159.6
7,475.4
+4.4
%
Operating income
113.9
191.3
+67.9
Income before income taxes
157.2
286.3
+82.1
Equity in net income of affiliated companies
29.0
13.2
-54.6
Net income
163.8
123.6
-24.5
Sales
Sales for the fiscal year ended March 31, 2006 increased by
315.8 billion yen, or 4.4 percent, to
7,475.4 billion yen compared with the previous fiscal year.
A further breakdown of sales figures is presented under
"Operating Performance by Business Segment"
below.
"Sales" in this analysis of the ratio of selling,
general and administrative expenses to sales refers only to the
"net sales" and "other operating revenue"
portions of consolidated sales and operating revenue, and
excludes Financial service revenue. This is because Financial
service expenses are recorded separately from cost of sales and
selling, general and administrative expenses. Furthermore, in
the analysis of cost of sales, including research and
development costs, to sales, only "net sales" are
used. This is because cost of sales is an expense associated
only with net sales. The calculations of all ratios below that
pertain to business segments include intersegment transactions.
Cost of Sales and Selling, General and Administrative
Expenses
Cost of sales for the fiscal year ended March 31, 2006
increased by 151.3 billion yen, or 3.0 percent, to
5,151.4 billion yen compared with the previous fiscal year,
and increased from 76.2 percent to 77.0 percent as a
percentage of sales. Year on year, the cost of sales ratio
increased from 81.8 percent to 81.9 percent in the
Electronics segment, increased from 73.0 percent to
80.4 percent in the Game segment, and increased from
58.7 percent to 60.2 percent in the Pictures segment.
In the Electronics segment, there was a deterioration in the
cost of sales ratio for several products, in particular image
sensors and CRT televisions. In the Game segment, there was an
increase in the cost of sales ratio as a result of research and
development costs associated with PS3. In the Pictures segment,
the cost of sales ratio also increased primarily due to lower
worldwide theatrical and home entertainment revenues on feature
films.
There was a decrease in personnel-related costs included in cost
of sales of 9.8 billion yen, primarily within the
Electronics segment, compared with the previous fiscal year.
Research and development costs (all research and development
costs are included within cost of sales) for the fiscal year
ended March 31, 2006 increased by 29.8 billion yen to
531.8 billion yen compared with the previous fiscal year.
The ratio of research and development costs to sales was
7.9 percent compared to 7.6 percent in the previous
fiscal year.
Selling, general and administrative expenses for the fiscal year
ended March 31, 2006 decreased by 8.0 billion yen, or
0.5 percent, to 1,527.0 billion yen compared with the
previous fiscal year. The ratio of selling, general and
administrative expenses to sales improved from 23.2 percent
in the previous fiscal year to 22.6 percent. Year on year,
the ratio of selling, general and administrative expenses to
sales improved from 19.0 percent to 18.1 percent in
the Electronics segment and from 21.0 percent to
18.7 percent in the Game segment. On the other hand, the
ratio of selling, general and administrative expenses to sales
increased from 32.5 percent to 36.0 percent in the
Pictures segment.
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Table of Contents
Personnel-related costs in selling, general and administrative
expenses decreased by 60.4 billion yen compared with the
previous fiscal year mainly due to a decrease in
severance-related expenses in the Electronics segment resulting
from the implementation of restructuring initiatives. In
addition, advertising and publicity expenses for the fiscal year
increased by 59.8 billion yen compared with the previous
fiscal year. This was due to the fact that advertising and
publicity expenses increased, primarily within the Pictures and
Game segments.
Loss on sale, disposal or impairment of assets, net was
73.9 billion yen, compared with 28.0 billion in the
previous fiscal year. This increase was as a result of losses
recorded on the sale, disposal and impairment of CRT and CRT
television production equipment in the Electronics segment, as
well as an asset impairment write-down associated with the sale
of the Metreon, a U.S. entertainment complex.
Operating Income
Operating income for the fiscal year ended March 31, 2006
increased by 77.3 billion yen, or 67.9 percent, to
191.3 billion yen compared with the previous fiscal year.
The operating income margin increased from 1.6 percent to
2.6 percent. In descending order by amount of financial
impact, the Financial Services segment, the Pictures segment,
All Other and the Game segment contributed to operating income.
On the other hand, although there was a net gain from the
transfer to the Japanese Government of the substitutional
portion of Sony's Employee Pension Fund and the
depreciation of the yen, the Electronics segment recorded an
operating loss mainly due to a decrease in sales to outside
customers, an increase in loss on sale, disposal or impairment
of assets and a deterioration in the cost of sales ratio
associated with a decline in unit selling prices. For a further
breakdown of operating income for each segment, please refer to
"Operating Performance by Business Segment"
below.
Other Income and Expenses
In the consolidated results for the fiscal year ended
March 31, 2006, other income increased by 56.0 billion
yen, or 57.4 percent, to 153.6 billion yen, while
other expenses increased by 4.2 billion yen, or
7.7 percent, to 58.5 billion yen, compared with the
previous fiscal year. The net amount of other income and other
expenses was net other income of 95.1 billion yen, an
increase of 51.8 billion yen, compared with the previous
fiscal year.
The gain on change in interest in subsidiaries and equity
investees increased by 44.5 billion yen, or
272.7 percent compared to the previous fiscal year to
60.8 billion yen. This was mainly the result of a gain of
21.5 billion yen on the change in interest in subsidiaries
and equity investees resulting from the initial public offering
of Sony Communication Network Corporation ("SCN"), a
gain of 20.6 billion yen on the change in interest
resulting from the partial sale of Sony's investment in
Monex Beans Holdings, Inc., and gains of 12.0 billion yen
and 6.6 billion yen respectively on the change of interest
at So-net M3 Inc., a consolidated subsidiary of SCN and at DeNA
Co., Ltd., an equity affiliate of SCN accounted for by the
equity method.
Interest and dividends of 24.9 billion yen was recorded in
the fiscal year ended March 31, 2006 an increase of
10.2 billion yen, or 69.5 percent, compared with the
previous year. This increase was mainly the result of an
increase in interest received resulting from an improvement in
the rate of return on overseas investments.
For the fiscal year ended March 31, 2006, interest payments
totaling 29.0 billion yen were recorded, an increase of
4.4 billion yen, or 18.0 percent, compared with the
previous year.
In addition, a net foreign exchange loss of 3.1 billion yen
was recorded in the fiscal year ended March 31, 2006,
compared to a net foreign exchange loss of 0.5 billion yen
recorded in the previous fiscal year. The net foreign exchange
loss was recorded because the value of the yen, especially
during the first and third quarters of the fiscal year ended
March 31, 2006, was lower than the value of the yen at the
time that Sony entered into foreign exchange forward contracts
and foreign currency option contracts. These contracts are
entered into by Sony to mitigate the foreign exchange rate risk
to cash flows that arises from settlements of foreign currency
32
Table of Contents
denominated accounts receivable and accounts payable, as well as
foreign currency denominated transactions between consolidated
subsidiaries.
Income before Income Taxes
Income before income taxes for the fiscal year ended
March 31, 2006 increased 129.1 billion yen, or
82.1 percent, to 286.3 billion yen compared with the
previous fiscal year, as a result of the increase in operating
income and the increase in the net amount of other income and
other expenses mentioned above.
Income Taxes
Income taxes for the fiscal year ended March 31, 2006
increased by 160.5 billion yen to 176.5 billion yen.
Compared to an effective tax rate of 10.2 percent in the
previous fiscal year, the effective tax rate was
61.6 percent in the current fiscal year. This effective tax
rate exceeded the Japanese statutory tax rate primarily due to
the recording of additional valuation allowances against
deferred tax assets by Sony Corporation and several of
Sony's Japanese domestic and overseas consolidated
subsidiaries, mainly within the Electronics segment, due to
continued losses recorded at these businesses and the recording
of an additional tax provision for the undistributed earnings of
certain foreign subsidiaries. The effective tax rate was
significantly lower than the Japanese statutory rate in the
previous fiscal year as a result of the reversal of valuation
allowances at Sony's U.S. subsidiaries associated with
an improvement in operating performance.
On June 30, 2006, Sony Corporation and SCEI each received
notification from the Tokyo Regional Taxation Bureau
("TRTB") of a reassessment of the profits they
reported from transactions between SCEI and its subsidiary Sony
Computer Entertainment America Inc. ("SCEA"), for the
fiscal years ended March 31, 2000 through 2005. On the same
date, Sony Corporation also received notification of a
reassessment of the profits reported from transactions related
to CD and DVD disc manufacturing operations with a number of its
overseas subsidiaries for the fiscal years ended March 31,
2004 and 2005.
Sony Corporation and SCEI believe that their allocation of
income for the periods in question was appropriate and that they
have paid the proper amount of taxes in each of the
jurisdictions. Therefore Sony Corporation and SCEI disagree with
the position of the TRTB and have lodged an objection. In
addition, Sony Corporation and SCEI plan to formally request
bilateral consultations (where available) to obtain relief from
double taxation under the applicable tax treaties of various
countries.
Transfer pricing was reassessed in accordance with the
notification from the TRTB, resulting in additional Japanese
income of 74.4 billion yen, which led to Sony Corporation
and SCEI incurring an estimated additional cash tax (including
corporate tax and others) of approximately 27.9 billion
yen. Sony Corporation and SCEI believe that double taxation will
be avoided through the procedure described above, and therefore
Sony does not expect any material impact on its consolidated
profit and loss as a result of this reassessment.
Results of Affiliated Companies Accounted for under the
Equity Method
Equity in net income of affiliated companies during the fiscal
year ended March 31, 2006 was 13.2 billion yen, a
decrease of 15.9 billion yen, or 54.6 percent compared
to the previous fiscal year. Equity in net income of affiliated
companies for the previous fiscal year included the recording of
12.6 billion yen as equity in net income for InterTrust
Technologies Corporation ("InterTrust"), which
reflected InterTrust's proceeds from a license agreement
arising from the settlement of a patent-related suit. In the
current fiscal year, Sony Ericsson, as a result of increased
sales of products including camera phone and
"Walkman
®
"
phone models, contributed 29.0 billion yen to equity in net
income, an increase of 11.6 billion yen compared to the
previous fiscal year. Sony recorded equity income of
5.8 billion yen for SONY BMG MUSIC ENTERTAINMENT
("SONY BMG") during the current fiscal year, compared
to an equity loss of 3.4 billion yen in the previous fiscal
year as a result of a reduction in restructuring charges and the
realization of incremental cost savings. However, Sony recorded
an equity in net loss of 7.2 billion yen for S-LCD
Corporation ("S-LCD"), a joint-venture with Samsung
Electronics Co., Ltd. for the manufacture of amorphous TFT LCD
panels and equity in
33
Table of Contents
net loss of 16.9 billion yen for MGM Holdings, Inc.
("MGM Holdings"). The equity in net loss for MGM
Holdings includes non-cash interest of 6.0 billion yen on
cumulative preferred stock.
Minority Interest in Income (Loss) of Consolidated
Subsidiaries
In the fiscal year ended March 31, 2006, minority interest
in loss of consolidated subsidiaries of 0.6 billion yen was
recorded compared to minority interest in income of
1.7 billion yen previous year. This loss was primarily due
to the recording of loss at ST Mobile Display Corporation, a
joint venture with Toyota Industries Corporation for the
manufacture of low-temperature polysilicon thin film transistor
liquid crystal display panels for mobile products.
Net Income
Net income for the fiscal year ended March 31, 2006
decreased by 40.2 billion yen, or 24.5 percent, to
123.6 billion yen compared with the previous fiscal year.
This decrease was primarily the result of the above-mentioned
increase in income taxes and decrease in equity in net income of
affiliated companies. As a percentage of sales, net income
decreased from 2.3 percent to 1.7 percent. Return on
stockholders' equity decreased from 6.2 percent to
4.1 percent. (This ratio is calculated by dividing net
income by the simple average of stockholders' equity at the
end of the previous fiscal year and at the end of the fiscal
year ended March 31, 2006.)
Basic net income per share was 122.58 yen compared with 175.90
yen in the previous fiscal year, and diluted net income per
share was 116.88 yen compared with 158.07 yen in the previous
fiscal year. Refer to Notes 2 and 21 of Notes to
Consolidated Financial Statements.
Operating Performance by Business Segment
The following discussion is based on segment information. Sales
and operating revenue in each business segment include
intersegment transactions. Refer to Note 24 of Notes to
Consolidated Financial Statements.
Business Segment
Information
Fiscal Year Ended
March 31
2005
2006
Percent change
(Yen in billions)
Sales and operating revenue
Electronics
5,066.8
5,150.5
+1.7
%
Game
729.8
958.6
+31.4
Pictures
733.7
745.9
+1.7
Financial Services
560.6
743.2
+32.6
All Other
459.9
408.9
-11.1
Elimination
(391.1
)
(531.6
)
—
Consolidated
7,159.6
7,475.4
+4.4
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Table of Contents
Fiscal Year Ended
March 31
2005
2006
Percent change
(Yen in billions)
Operating income (loss)
Electronics
(34.3
)
(30.9
)
—
Game
43.2
8.7
-79.7
%
Pictures
63.9
27.4
-57.1
Financial Services
55.5
188.3
+239.4
All Other
4.2
16.2
+286.4
Sub-Total
132.5
209.8
+58.3
Elimination and unallocated corporate expenses
(18.6
)
(18.5
)
—
Consolidated
113.9
191.3
+67.9
As of August 1, 2004, Sony and Bertelsmann AG combined
their recorded music businesses in a joint venture. The newly
formed company, SONY BMG, is 50 percent owned by each
parent company. Under U.S. GAAP, SONY BMG is accounted for
by Sony using the equity method and, since August 1, 2004,
50 percent of net profits or losses of this business have
been included under "Equity in net income (loss) of
affiliated companies."
In connection with the establishment of this joint venture,
Sony's non-Japan-based disc manufacturing and physical
distribution businesses, formerly included within the Music
segment, a separate reporting segment until the end of the
previous fiscal year, have been reclassified to the Electronics
segment to recognize the new management reporting structure
whereby Sony's Electronics segment has now assumed
responsibility for these businesses. Effective April 1,
2005, a similar change was made with respect to Sony's
Japan-based disc manufacturing business. Results for the fiscal
year ended March 31, 2005 in the Electronics segment have
been restated to account for these reclassifications.
Effective April 1, 2005, Sony no longer breaks out its
music business as a reportable segment as it no longer meets the
materiality threshold. Accordingly, the results for Sony's
music business are now included within All Other, and the
results for the fiscal year ended March 31, 2005 have been
reclassified to All Other for comparative purposes. Results for
the fiscal year ended March 31, 2006 in All Other include
the results of Sony Music Entertainment Inc.'s
("SMEI") music publishing business and Sony Music
Entertainment (Japan) Inc. ("SMEJ"), excluding
Sony's Japan-based disc manufacturing business which, as
noted above, has been reclassified to the Electronics segment.
However, results for the previous fiscal year in All Other
include the consolidated results for SMEI's recorded music
business for the period through August 1, 2004, as well as
the results for SMEI's music publishing business and SMEJ
excluding Sony's Japan-based disc manufacturing business.
Electronics
Sales for the fiscal year ended March 31, 2006 increased
83.6 billion yen, or 1.7 percent, to
5,150.5 billion yen compared with the previous fiscal year.
An operating loss of 30.9 billion in the Electronics
segment was recorded compared to the operating loss of
34.3 billion yen in the previous fiscal year. Sales to
outside customers on a yen basis decreased 0.9 percent
compared to the previous fiscal year. Regarding sales to outside
customers by geographical area, although sales decreased in
Japan by 12 percent, in the U.S. by 1 percent and
in Europe by 4 percent, sales increased by 11 percent
in non-Japan Asia and other geographic areas ("Other
Areas").
In Japan, although there was a significant increase in the sales
of LCD televisions, as well as increased sales for flash memory
and hard drive digital audio players, sales decreased for such
products as mobile phones, principally to Sony Ericsson, CRT
televisions and plasma televisions. In the U.S., although there
was an increase in sales of LCD and rear projection televisions,
sales decreased for such products as CRT and
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Table of Contents
plasma televisions. In Europe, although sales increased for such
products as LCD televisions, there was a decline in sales of
such products as CRT and plasma televisions, and mobile phones,
primarily to Sony Ericsson. In Other Areas, sales of such
products as LCD televisions and PCs increased, while sales of
such products as CD-R/ RW drives and CRT televisions decreased.
Performance by Product Category
Sales and operating revenue by product category discussed below
represent sales to outside customers, which do not include
intersegment transactions. Refer to Note 24 of Notes to
Consolidated Financial Statements.
"Audio" sales decreased by 35.7 billion yen, or
6.2 percent, to 536.2 billion yen. Sales of flash
memory and hard drive digital audio players increased
significantly, in conjunction with an increase in shipments to
approximately 4.5 million units, compared to approximately
850,000 unit shipments recorded in the previous fiscal
year. On the other hand, there was a significant decrease in the
unit shipments of both CD and MD format headphone stereos due to
a shift in market demand. In addition, car audio experienced a
decrease in sales, and there was a slight decrease in home audio
sales.
"Video" sales decreased by 15.0 billion yen, or
1.4 percent, to 1,021.3 billion yen. In addition to a
decrease in sales of digital cameras in Japan, the U.S. and
Europe, there was a decrease in sales of VHS video recorders.
Sales of digital cameras decreased, coupled with a decrease in
worldwide shipments by approximately 0.5 million units to
approximately 13.5 million units. Worldwide shipments of
DVD recorders increased by approximately 300,000 units to
approximately 2.0 million units, while sales increased
slightly. Worldwide shipments of home-use video cameras
increased by approximately 250,000 units to approximately
7.6 million units. DVD-Video player unit shipments
decreased by approximately 1.5 million units to
approximately 8.0 million units.
"Televisions" sales increased by 6.6 billion yen,
or 0.7 percent, to 927.8 billion yen. There was a
significant increase in worldwide sales of LCD televisions, as
worldwide shipments of LCD televisions increased by
approximately 1.8 million units, to approximately
2.8 million units. Sales of projection televisions
increased as the sales percentage of higher priced units
increased, although worldwide shipments remained largely
unchanged at approximately 1.2 million units. On the other
hand, there was a significant decrease in worldwide sales of CRT
televisions, primarily as a result of both a decrease in
worldwide shipments of CRT televisions by approximately
2.7 million units to approximately 6.8 million units
due to the continued shift in demand towards flat panel
televisions, as well as a fall in unit prices. In addition,
sales of plasma televisions, where new product development has
been terminated, also decreased worldwide.
"Information and Communications" sales increased by
26.4 billion yen, or 3.2 percent, to
842.5 billion yen. Although sales of desktop PCs decreased,
overall sales increased as a result of favorable worldwide sales
of notebook PCs. Worldwide unit shipments of PCs increased
approximately 400,000 units to approximately
3.7 million units. Sales of broadcast- and professional-use
products increased as a result of favorable sales of
high-definition related products.
"Semiconductors" sales decreased by 5.5 billion
yen, or 2.3 percent, to 240.8 billion yen. The
decrease was due to a decrease in sales of CCDs as the result of
pricing pressures.
"Components" sales increased by 37.3 billion yen,
or 6.0 percent, to 656.8 billion yen. This increase
was primarily due to an increase in sales of lithium-ion
batteries, primarily for use in PCs and power tools, and Memory
Sticks. On the other hand, sales of CD-R/ RW drives and optical
pickups declined, primarily as a result of significant unit
price declines. Sales of DVD+/-R/ RW drives increased, despite a
deterioration in unit selling prices, as a result of a
significant growth in units sold in association with the
expansion of the market.
"Other" sales decreased by 57.0 billion yen, or
9.6 percent, to 538.2 billion yen. This decrease was
the result of a decrease in sales of mobile phones, primarily to
Sony Ericsson.
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In the Electronics segment, cost of sales for the fiscal year
ended March 31, 2006 increased by 67.5 billion yen, or
1.6 percent to 4,184.5 billion yen compared with the
previous fiscal year. The cost of sales ratio deteriorated by
0.1 percent to 81.9 percent compared to
81.8 percent in the previous fiscal year. Although there
was an improvement in the cost of sales ratio for such products
as video cameras and PCs, products that contributed to the
deterioration in the cost of sales ratio included image sensors
and CRT televisions, which experienced decreased sales.
Restructuring charges recorded in cost of sales amounted to
23.8 billion yen, an increase of 14.2 billion yen
compared with the 9.6 billion yen recorded in the previous
fiscal year. Research and development costs decreased
15.2 billion yen, or 3.5 percent, from
433.3 billion yen in the previous fiscal year to
418.1 billion yen.
Selling, general and administrative expenses decreased by
27.2 billion yen, or 2.8 percent to 933.0 billion
yen compared with the previous fiscal year. The primary reason
for this decrease was the recording of a 64.5 billion yen
net gain resulting from the transfer to the Japanese Government
of the substitutional portion of Sony's Employee Pension
Fund. Of the restructuring charges recorded in the Electronics
segment, the amount recorded in selling, general and
administrative expenses decreased by 4.1 billion yen from
53.6 billion yen in the previous fiscal year to
49.5 billion yen. Of the restructuring charges recorded in
selling, general and administrative expenses, the amount
recorded for headcount reductions, including reductions through
the early retirement program, was 45.1 billion yen, a
decrease of 5.8 billion yen compared with the previous
fiscal year. On the other hand, royalty expenses decreased
17.2 billion yen. The ratio of selling, general and
administrative expenses to sales decreased 0.9 percentage
points from the 19.0 percent recorded in the previous
fiscal year to 18.1 percent.
Loss on sale, disposal or impairment of assets, net increased
40.0 billion yen to 63.9 billion yen compared with the
previous fiscal year. This amount includes 52.5 billion yen
in restructuring charges, which includes 25.5 billion yen
of restructuring charges related to CRT and CRT television
manufacturing facilities in the U.S. The amount of
restructuring charges included in loss on sale, disposal or
impairment, net in the previous fiscal year was
19.2 billion yen.
The amount of operating loss recorded in the Electronics segment
for the fiscal year ended March 31, 2006 decreased as a
result of the net gain resulting from the transfer to the
Japanese Government of the substitutional portion of Sony's
Employee Pension Fund, despite the recording of increased
restructuring charges. Regarding profit performance by product,
excluding restructuring charges and the impact of the net gain
resulting from the transfer to the Japanese Government of the
substitutional portion of Sony's Employee Pension Fund,
operating losses recorded by CRT televisions and LCD televisions
increased, in addition to a decrease in operating income
recorded by image sensors. On the other hand, the amount of
operating loss recorded by DVD recorders (including
PSX
tm
)
decreased. In addition, there was an increase in operating
income for video cameras and PCs.
In August 2006, Dell Inc. ("Dell") and Apple Computer
Inc. ("Apple") each announced voluntary recalls of
lithium-ion battery packs used in certain notebook computers
sold by these two companies. The recalled packs contain battery
cells originally manufactured by Sony. Sony supports these
recalls by our customers Dell and Apple.
As of August 31, 2006, Sony anticipates no further recalls
of battery packs using these particular battery cells.
The recall arises because, on rare occasions, microscopic metal
particles in the recalled battery cells may come into contact
with other parts of the battery cell, leading to a short circuit
within the cell. Typically, a battery pack will simply power off
when a cell short circuit occurs. However, under certain rare
conditions, an internal short circuit may lead to cell
overheating and potentially flames. The potential for this to
occur can be affected by variations in the system configurations
found in different notebook computers. Sony has introduced a
number of additional safeguards into its battery manufacturing
process to address this condition and to provide a greater level
of safety and security.
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As of August 31, 2006, Sony estimates that the overall cost
to Sony in supporting the recall programs of Apple and Dell will
amount to between 20 billion yen and 30 billion yen.
This overall cost is an estimate based on the costs of
replacement battery packs and any other related costs to be
incurred by Sony.
Manufacturing by Geographic Area
Slightly more than 50 percent of the Electronics
segment's total annual production during the fiscal year
ended March 31, 2006 took place in Japan, including the
production of digital cameras, video cameras, flat panel
televisions, PCs, semiconductors and components such as
batteries and Memory Stick. Approximately 65 percent of the
annual production in Japan was destined for other regions. China
accounted for slightly more than 10 percent of total annual
production, approximately 70 percent of which was destined
for other regions. Asia, excluding Japan and China, accounted
for slightly more than 10 percent of total annual
production, with approximately 60 percent destined for
Japan, the U.S. and Europe. The Americas and Europe together
accounted for the remaining slightly less than 25 percent
of total annual production, most of which was destined for local
distribution and sale.
Comparison of Results on a Local Currency Basis and
    Results on a Yen Basis
In the Electronics segment, operating results benefited from the
positive effect of the depreciation of the yen against the
U.S. dollar and the Euro. Sales for the fiscal year ended
March 31, 2006 increased, on a yen basis, by
1.7 percent, but decreased on a local currency basis by
approximately 3 percent. In terms of operating performance,
there was a decrease in the amount of operating loss compared to
the previous fiscal year, but if calculated on a local currency
basis, this operating loss was larger when compared to the
actual results on a yen basis.
Sales to outside customers by geographic area on a yen basis
decreased in Japan by 12 percent, in the U.S. by
1 percent and in Europe by 4 percent. However, sales
increased in Other Areas by 11 percent. Sales on a local
currency basis for regions outside Japan decreased in the U.S.
and Europe by 7 percent, but increased by 2 percent in
Other Areas.
Game
Sales for the fiscal year ended March 31, 2006 increased by
228.9 billion yen, or 31.4 percent, to
958.6 billion yen compared with the previous fiscal year.
Operating income decreased by 34.4 billion yen, or
79.7 percent, to 8.7 billion yen compared with the
previous fiscal year, and the operating income margin decreased
from 5.9 percent to 0.9 percent.
Sales in the Game segment on a local currency basis increased
approximately 27 percent. In addition, on a local currency
basis, operating income decreased approximately 62 percent
compared to the previous fiscal year. By region, although sales
decreased slightly in Japan, there was a significant increase in
sales in the U.S. and Europe.
There was a significant increase in hardware sales compared to
the previous fiscal year. Sales increased significantly, mainly
in the U.S and Europe, and sales in Japan remained relatively
unchanged compared to the previous fiscal year, primarily due to
a significant contribution to sales from PSP, which experienced
favorable growth in all geographic areas and the fact that
PlayStation
®
2
("PS2") sales were on a par with those in the previous
fiscal year. In addition, although PS2 software sales decreased,
as a result of the contribution to sales from PSP software,
software sales in Japan, the U.S. and Europe were relatively
unchanged compared to the previous fiscal year.
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Total worldwide production shipments of hardware and software
were as follows:
Worldwide hardware production shipments:*
—  PS2:
16.22 million units (an increase of 0.05 million units)
—  PSP:
14.06 million units (an increase of 11.09 million
    units)
Worldwide software production shipments:*/**
—  PS2:
223 million units (a decrease of 29 million units)
—  PSP:
41.6 million units (an increase of 35.9 million units)
*
Production shipments of hardware and software are counted upon
    shipment of the products from manufacturing bases. Sales of such
    products are recognized when the products are delivered to
    customers.
**
Including those both from Sony and third parties under Sony
    licenses.
Operating income decreased significantly compared with the
previous fiscal year. Although profits from the PS2 and PSP
businesses exceeded those in the previous fiscal year, the
decrease in operating income was mainly the result of continued
high research and development costs associated with PS3, as well
as the recording of charges associated with preparation for the
launch of the PS3 platform including a write-down of
approximately 25.0 billion yen for semiconductor components
for use in PS3.
The cost of sales to sales ratio deteriorated by
7.4 percent, from 73.0 percent in the previous fiscal
year, to 80.4 percent for the reasons mentioned above for
operating income. The ratio of selling, general and
administrative expenses to sales decreased by 2.3 percent,
compared to 21.0 percent in the previous fiscal year, to
18.7 percent as a result of the sales increase.
Charges related to the launch of the PS3 platform are
anticipated to result in a significant loss within the Game
segment for the fiscal year ending March 31, 2007,
reflecting primarily an expected negative margin as a result of
strategic pricing on PS3 hardware sales.
Pictures
Sales for the fiscal year ended March 31, 2006 increased by
12.2 billion yen, or 1.7 percent, to
745.9 billion yen compared with the previous fiscal year.
Operating income decreased by 36.5 billion yen, or
57.1 percent, to 27.4 billion yen and the operating
income margin decreased from 8.7 percent to
3.7 percent. The results in the Pictures segment consist of
the results of Sony Pictures Entertainment Inc.
("SPE"), a
U.S.-based
subsidiary.
On a U.S. dollar basis, sales for the fiscal year in the
Pictures segment decreased approximately 4 percent and
operating income decreased by approximately 61 percent.
Sales decreased primarily due to lower worldwide theatrical and
home entertainment revenues on feature films, partially offset
by an increase in television product revenues. The lower
theatrical and home entertainment revenues primarily resulted
from the strong performance of
Spider-Man 2
in the prior
fiscal year coupled with the disappointing performance of
certain films in the current fiscal year film slate,
particularly
Stealth
,
Zathura
and the
Legend of
Zorro.
Sales for the fiscal year release slate decreased
967 million U.S. dollars as compared to the previous
fiscal year. Television product revenues increased by
approximately 220 million U.S. dollars primarily due
to higher advertising and subscription sales from several of
SPE's international channels, higher sales of television
library product and the extension of a licensing agreement for
Wheel of Fortune.
Operating income for the segment decreased significantly,
primarily due to the disappointing overall performance of the
current fiscal year's film slate in both the theatrical and
home entertainment markets. Operating loss from the current
fiscal year release slate increased 623 million
U.S. dollars as compared to the prior fiscal year's
release slate due to the same factors contributing to the
decrease in film revenue noted above. Partially offsetting this
was an increase in operating income of 83 million
U.S. dollars for television product due to the same factors
noted above for revenue.
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Table of Contents
As of March 31, 2006, unrecognized license fee revenue at
SPE was approximately 1.2 billion U.S. dollars. SPE
expects to record this amount in the future having entered into
contracts with television broadcasters to provide those
broadcasters with completed motion picture and television
product. The license fee revenue will be recognized in the
fiscal year that the product is available for broadcast.
Financial Services
Please note that the revenue and operating income at Sony Life,
Sony Assurance Inc. ("Sony Assurance") and Sony Bank
Inc. ("Sony Bank") discussed below on a U.S. GAAP
basis differ from the results that Sony Life, Sony Assurance and
Sony Bank disclose on a Japanese statutory basis.
Financial Services revenue for the fiscal year ended
March 31, 2006 increased by 182.7 billion yen, or
32.6 percent, to 743.2 billion yen compared with the
previous fiscal year. Operating income increased by
132.8 billion yen, or 239.4 percent, to
188.3 billion yen and the operating income margin increased
to 25.3 percent compared with the 9.9 percent of the
previous fiscal year.
At Sony Life, revenue increased by 170.8 billion yen, or
36.0 percent, to 645.0 billion yen compared with the
previous fiscal year. The main reasons for this increase were an
improvement in gains and losses from investments at Sony Life,
primarily within the general account, as well as an increase in
revenue from insurance premiums reflecting an increase of
insurance-in
-force. The
improvement in gains and losses from investments in the general
account was principally a result of an improvement in valuation
gains from stock conversion rights in convertible bonds
resulting from the aforementioned favorable Japanese domestic
stock market conditions. Operating income at Sony Life increased
by 127.4 billion yen or 208.8 percent to
188.4 billion yen, mainly as a result of a significant
improvement in gains and losses on investments in the general
account mentioned above.
At Sony Assurance, revenue increased due to higher insurance
revenue brought about by an expansion in automobile
insurance-in
-force.
Operating income increased due to an increase in insurance
revenue and an improvement in the expense ratio (the ratio of
sales, general and administrative expenses to premiums).
At Sony Bank, which started operations in June 2001, although
foreign exchange losses were recorded as a result of the
depreciation of the yen on part of Sony Bank's foreign
currency deposits, revenue rose as there was an increase in
interest revenue associated with an increase in the balance of
assets from investing activities, in addition to revenues from
other investing activities. The amount of the operating loss
decreased compared with the previous fiscal year, as a result of
the increase in revenue.
At Sony Finance International, Inc. ("Sony Finance"),
a leasing and credit financing business subsidiary in Japan,
revenue increased due to an increase in leasing and credit card
revenue. In terms of profitability, a reduced operating loss was
recorded compared to the previous fiscal year, as a result of
improved profitability at a credit card business at Sony Finance.
Condensed Statements of Income Separating Out the
Financial Services Segment (Unaudited)
The following schedule shows unaudited condensed statements of
income for the Financial Services segment and all other segments
excluding Financial Services as well as condensed consolidated
statements of income. This presentation is not required under
U.S. GAAP, which is used in Sony's 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.
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Table of Contents
Transactions between the Financial Services segment and all
other segments excluding Financial Services are eliminated in
the consolidated figures shown below.
Condensed Statements of Income
Fiscal Year ended
March 31
2005
2006
(Yen in millions)
Financial Services
Financial service revenue
560,557
743,215
Financial service expenses
505,067
554,892
Operating income
55,490
188,323
Other income (expenses), net
10,204
24,522
Income before income taxes
65,694
212,845
Income taxes and other
25,698
80,586
Income before cumulative effect of an accounting change
39,996
132,259
Cumulative effect of an accounting change
(4,713
)
—
Net income
35,283
132,259
Fiscal Year ended
March 31
2005
2006
(Yen in millions)
Sony without Financial Services
Net sales and operating revenue
6,632,728
6,763,907
Costs and expenses
6,575,354
6,762,375
Operating income
57,374
1,532
Other income (expenses), net
40,639
71,952
Income before income taxes
98,013
73,484
Income taxes and other
(37,043
)
82,127
Income (loss) before cumulative effect of an accounting
    change
135,056
(8,643
)
Cumulative effect of an accounting change
—
—
Net income (loss)
135,056
(8,643
)
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Fiscal Year ended
March 31
2005
2006
(Yen in millions)
Consolidated
Financial service revenue
537,715
720,566
Net sales and operating revenue
6,621,901
6,754,870
7,159,616
7,475,436
Costs and expenses
7,045,697
7,284,181
Operating income
113,919
191,255
Other income (expenses), net
43,288
95,074
Income before income taxes
157,207
286,329
Income taxes and other
(11,344
)
162,713
Income before cumulative effect of an accounting change
168,551
123,616
Cumulative effect of an accounting change
(4,713
)
—
Net income
163,838
123,616
All Other
During the fiscal year ended March 31, 2006, sales within
All Other were comprised mainly of sales from SMEJ, a Japanese
domestic recorded music business; SMEI's music publishing
business; SCN, an Internet-related service business subsidiary
operating mainly in Japan; a retailer of imported general
merchandise in Japan; an in-house facilities management business
in Japan; and an advertising agency business in Japan. Results
for the first four months of the previous fiscal year in All
Other incorporated the results for SMEI's recorded music
business, which, as noted above, was combined with Bertelsmann
AG's recorded music business to form the SONY BMG joint
venture which is accounted for by the equity method.
Sales for the fiscal year ended March 31, 2006 decreased by
51.0 billion yen, or 11.1 percent, to
408.9 billion yen, compared with the previous fiscal year.
Of total segment sales, 80 percent were sales to outside
customers. In terms of profit performance, operating income for
All Other increased for the fiscal year from 4.2 billion
yen to 16.2 billion yen.
During the fiscal year, the sales decrease within All Other
reflects the fact that, as noted above, the results for the
first four months of the previous fiscal year in All Other
incorporated the results for SMEI's recorded music business.
Sales at SMEJ were relatively unchanged compared with the
previous fiscal year. Best selling albums during the fiscal year
included
Ken Hirai 10th Anniversary Complete Single
Collection
'95-'05
"Uta Baka"
by Ken Hirai,
NATURAL
by
ORANGE RANGE and
BEST
by Mika Nakashima.
Excluding sales recorded within Sony's music business,
there was an increase in sales within All Other. This increase
was mainly due to strong sales at a business engaged in the
production and marketing of animation products, favorable sales
both at SCN and its subsidiaries, as well as an increase in
sales recorded at an imported general merchandise retail
business.
Regarding profit performance within All Other, operating income
of 16.2 billion yen was recorded, an 12.0 billion yen
increase compared to the 4.2 billion yen of operating
income recorded in the previous fiscal year. This increase was
mainly the result of the fact that the results for SMEI's
recorded music business, which recorded an operating loss in the
previous fiscal year, are now recorded as part of the results of
the SONY BMG joint venture, and the continued strong performance
at SMEJ, where operating income increased approximately
40 percent compared to the previous fiscal year mainly due
to an improvement in the cost of sales ratio and the recording
of a net gain resulting from the transfer to the Japanese
government of the substitutional portion of Sony's Employee
Pension Fund.
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Excluding the operating income recorded in the music business, a
loss was recorded within All Other mainly as the result of an
asset impairment write-down associated with the sale of the
Metreon, a U.S. entertainment complex. This was offset to
some extent by cost reductions at network related businesses
within Sony Corporation.
In June 2006, Sony Corporation transferred 51 percent stock
of StylingLife Holdings Inc., a holding company covering six
retail companies within Sony previously included within All
Other, to a wholly-owned subsidiary of Nikko Principal
Investments Japan Ltd. As a result of this transaction, Sony
recognized a 18.0 billion yen gain on change in interest in
subsidiaries and equity investees during the first quarter of
the fiscal year ending March 31, 2007.
Foreign Exchange Fluctuations and Risk Hedging
During the fiscal year ended March 31, 2006, the average
value of the yen was 112.3 yen against the U.S. dollar, and
136.3 yen against the Euro, which was 5.1 percent lower
against the U.S. dollar and 2.0 percent lower against
the Euro, respectively, compared with the average of the
previous fiscal year. Operating results on a local currency
basis described in "Overview" and "Operating
Performance" show results of sales and operating revenue
and operating income obtained by applying the yen's monthly
average exchange rate in the previous fiscal year to monthly
local currency-denominated sales, cost of sales, and selling,
general and administrative expenses for the fiscal year ended
March 31, 2006, as if the value of the yen had remained
constant.
In the Pictures segment, Sony translates into yen the
U.S. dollar consolidated results of SPE (a
U.S.-based
operation
that has worldwide subsidiaries).
Therefore, analysis and discussion of certain portions of the
operating results of SPE are specified as being on "a
U.S. dollar basis." Results on a local currency basis
and results on a U.S. dollar basis are not on the same
basis as Sony's consolidated financial statements and do
not conform with U.S. GAAP. In addition, Sony does not
believe that these measures are a substitute for U.S. GAAP
measures. However, Sony believes that local currency basis
results provide additional useful information to investors
regarding operating performance.
Sony's consolidated results are subject to foreign currency
rate fluctuations mainly derived from the fact that the
countries where manufacturing takes place may be different from
those where such products are sold. In order to reduce the risk
caused by such fluctuations, Sony employs derivatives, including
foreign exchange forward contracts and foreign currency option
contracts, in accordance with a consistent risk management
strategy. Such derivatives are used primarily to mitigate the
effect of foreign currency exchange rate fluctuations on cash
flows generated by anticipated intercompany transactions and
intercompany accounts receivable and payable denominated in
foreign currencies.
Sony Global Treasury Services Plc ("SGTS") in London
provides integrated treasury services for Sony Corporation and
its subsidiaries. Sony's policy is that Sony Corporation
and all subsidiaries with foreign exchange exposures should
enter into commitments with SGTS for hedging their exposures.
Sony Corporation and most of its subsidiaries utilize SGTS for
this purpose. The concentration of foreign exchange exposures at
SGTS means that, in effect, SGTS hedges the net foreign exchange
exposure of Sony Corporation and its subsidiaries. SGTS in turn
enters into foreign exchange transactions with creditworthy
third-party financial institutions. Most of the transactions are
entered into against projected exposures before the actual
export and import transactions take place. In general, SGTS
hedges the projected exposures on average three months before
the actual transactions take place. However, in certain cases
SGTS partially hedges the projected exposures one month before
the actual transactions take place when business requirements
such as shorter production-sales cycle for certain products
arise. Sony enters into foreign exchange transactions with
financial institutions primarily for hedging purposes. Sony does
not use these derivative financial instruments for trading or
speculative purposes except for certain derivatives in the
Financial Services segment utilized for portfolio investments
and Asset Liability Management ("ALM").
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To minimize the adverse effects of foreign exchange fluctuations
on its financial results, particularly in the Electronics
segment, Sony seeks, when appropriate, to localize material and
parts procurement, design, and manufacturing operations in areas
outside of Japan.
Changes in the fair value of derivatives designated as cash flow
hedges, including foreign exchange forward contracts and foreign
currency option contracts, are initially recorded in accumulated
other comprehensive income and reclassified into earnings when
the hedged transaction affects earnings. Foreign exchange
forward contracts, foreign currency option contracts and other
derivatives that do not qualify as hedges are
marked-to
-market with
changes in value recognized in Other Income and Expenses. The
notional amounts of foreign exchange forward contracts, currency
option contracts purchased and currency option contracts written
as of March 31, 2006 were 1,489.2 billion yen,
457.4 billion yen and 163.7 billion yen, respectively.
Operating Results for the Fiscal Year Ended March 31,
    2005 compared with the Fiscal Year Ended March 31,
    2004
Overview
After translation of Sony's financial results into yen (the
currency in which Sony's financial statements are
prepared), in accordance with Generally Accepted Accounting
Principles in the U.S. ("U.S. GAAP"), Sony's
sales and operating revenue ("sales") for the fiscal
year ended March 31, 2005 decreased 4.5 percent
compared with the previous fiscal year. On a local currency
basis (regarding references to results of operations expressed
on a local currency basis, refer to
"Foreign Exchange
Fluctuations and Risk Hedging"
below), sales for the
fiscal year decreased approximately 3 percent. This
decrease is mainly due to the fact that, as of August 1,
2004, the sales of Sony's overseas recorded music business
are no longer recorded within Sony's consolidated sales as
a result of the establishment of SONY BMG, which is accounted
for by the equity method, through the merger of Sony's
overseas recorded music business with Bertelsmann AG's
recorded music business, and a change in the method of
recognizing insurance premiums received on certain products at
Sony Life, as of the third quarter beginning October 1,
2003, from being recorded as revenues to being offset against
the related provision for future insurance policy benefits.
Operating income increased 15.2 percent compared with the
previous fiscal year. On a local currency basis, operating
income increased approximately 26 percent compared with the
previous fiscal year. In addition to a decrease in restructuring
charges compared to the previous fiscal year, increased
operating income was recorded in the Pictures segment, where
Spider-Man 2
was a significant contributor, and
operating income was recorded in All Other, where several
best-selling albums and singles at SMEJ contributed to improved
profitability. On the other hand, the Electronics segment, where
the cost of sales ratio deteriorated due to pricing pressures,
and the Game segment, where there was a decrease in hardware
sales, both experienced deteriorated profitability.
Restructuring
In the fiscal year ended March 31, 2005, Sony recorded
restructuring charges of 90.0 billion yen, a decrease from
the 168.1 billion yen recorded in the previous fiscal year.
The primary restructuring activities were in the Electronics
segment and All Other.
Of the total 90.0 billion yen, Sony recorded
53.6 billion yen in personnel-related costs. This expense
was incurred because 12,000 people, mainly in Japan, the U.S.
and Western Europe, left the company primarily through early
retirement programs.
For more detailed information about restructuring, please refer
to Note 17 of Notes to the Consolidated Financial
Statements.
Electronics
Restructuring charges in the Electronics segment for the fiscal
year ended March 31, 2005 were 83.2 billion yen,
compared to 145.7 billion yen in the previous fiscal year.
Of these restructuring charges, for
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the fiscal year ended March 31, 2004 restructuring charges
of 2.1 billion yen were recorded in Sony's non-Japan
disc manufacturing and physical distribution businesses,
formerly included within the Music segment, a separate reporting
segment until the end of the previous fiscal year, have been
reclassified to the Electronics segment to recognize the new
management reporting structure whereby Sony's Electronics
segment has now assumed responsibility for these businesses. See
Note 24 of Notes to the Consolidated Financial Statements
for more information on this reclassification.
In the fiscal year ended March 31, 2004, Sony made a
decision to shut down certain CRT TV display manufacturing
operations in Japan to rationalize production facilities and
downsize its business, due to a contraction in the market as a
result of a shift in demand from CRT televisions to plasma and
LCD panel televisions. In the fiscal year ended March 31,
2005, as part of this restructuring program, Sony recorded a
non-cash impairment charge of 7.5 billion yen for the CRT
TV display manufacturing facilities located in Europe. The
impairment charge was calculated as the difference between the
carrying value of the asset group and the present value of
estimated future cash flows. The charge was recorded in loss on
sale, disposal or impairment of assets, net in the consolidated
statements of income.
In addition to the above restructuring efforts, Sony undertook
several headcount reduction programs to further reduce operating
costs in the Electronics segment. As a result of these programs,
Sony recorded restructuring charges of 51.0 billion yen for
the fiscal year ended March 31, 2005, and these charges
were included in selling, general and administrative expenses in
the consolidated statements of income. These staff reductions
were achieved worldwide mostly through the implementation of
early retirement programs. The remaining liability balance as of
March 31, 2005 was 14.0 billion yen and will be paid
through the fiscal year ended March 31, 2006.
All Other
Restructuring charges in All Other, including at SMEJ, for the
fiscal year ended March 31, 2005 were 5.3 billion yen,
compared to 13.7 billion yen in the previous fiscal year.
With regard to Sony's music business included within All
Other, due to the continued contraction of the worldwide music
market caused by slow worldwide economic growth, the saturation
of the CD market, the effects of piracy and other illegal
duplication, parallel imports, pricing pressures and the
diversification of customer preferences, Sony has been actively
repositioning its music business for the future by looking to
create a more effective and profitable business model. As a
result, Sony's music business has undertaken a worldwide
restructuring program since the fiscal year ended March 31,
2001 to reduce staffing and other costs through the
consolidation and rationalization of facilities worldwide.
During the fiscal year ended March 31, 2005, in
continuation of the worldwide restructuring program and in
connection with the merger of its recorded music business into a
joint venture with Bertelsmann AG, Sony recorded restructuring
charges totaling 3.0 billion yen within its music business.
These restructuring charges exclude restructuring charges that
were recorded in the disc manufacturing and physical
distribution businesses that were formerly included within the
Music segment, a separate reporting segment until the end of the
previous fiscal year, but have now been reclassified to the
Electronics segment. Restructuring activities included the
shutdown of certain distribution operations after the
establishment of the recorded music joint venture with
Bertelsmann AG as well as the further rationalization of
overhead functions through staff reductions. The restructuring
charges consisted of personnel-related costs of 0.9 billion
yen and other related costs of 2.1 billion yen. These
charges are included in selling, general and administrative
expenses in the consolidated statements of income. Positions
were eliminated across various employee levels, business
functions, operating units, and geographic regions during this
phase of the worldwide restructuring program.
Excluding restructuring within Sony's consolidated music
business, 2.0 billion yen of restructuring charges were
recorded within All Other during the fiscal year ended
March 31, 2005, mainly as a result of non-cash impairment
charges recorded at resulting network-related businesses within
Sony Corporation as a result of business reorganizations. The
restructuring charges consisted of personnel-related costs of
0.7 billion yen and other related costs of
1.3 billion yen.
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Operating Performance
Fiscal Year Ended
March 31
2004
2005
Percent change
(Yen in billions)
Sales and operating revenue
7,496.4
7,159.6
-4.5
%
Operating income
98.9
113.9
+15.2
Income before income taxes
144.1
157.2
+9.1
Equity in net income of affiliated companies
1.7
29.0
+1,594.2
Net income
88.5
163.8
+85.1
Sales
Sales for the fiscal year ended March 31, 2005 decreased by
336.8 billion yen, or 4.5 percent, to
7,159.6 billion yen compared with the previous fiscal year.
A further breakdown of sales figures is presented under
"Operating Performance by Business Segment"
below.
"Sales" in this analysis of the ratio of selling,
general and administrative expenses to sales refers only to the
"net sales" and "other operating revenue"
portions of consolidated sales and operating revenue, and
excludes Financial service revenue. This is because Financial
Service expenses are recorded separately from cost of sales and
selling, general and administrative expenses. Furthermore, in
the analysis of cost of sales, including research and
development costs, to sales, only "net sales" are
used. This is because cost of sales is an expense associated
only with net sales. The calculations of all ratios below that
pertain to business segments include intersegment transactions.
Cost of Sales and Selling, General and Administrative
Expenses
Cost of sales for the fiscal year ended March 31, 2005
decreased by 58.1 billion yen, or 1.1 percent, to
5,000.1 billion yen compared with the previous fiscal year,
but increased from 73.5 percent to 76.2 percent as a
percentage of sales. Year on year, the cost of sales ratio rose
from 78.9 percent to 81.8 percent in the Electronics
segment, increased from 70.1 percent to 73.0 percent
in the Game segment and decreased from 74.0 percent to
73.7 percent in All Other. On the other hand, the cost of
sales ratio improved in the Pictures segment from
60.0 percent to 58.7 percent.
In the Electronics segment, there was a deterioration in the
cost of sales ratio particularly within the CRT television,
portable audio, DVD recorder (including PSX) and video camera
businesses. In the Game segment, there was an increase in the
cost of sales ratio as a result of costs associated with both
the launch of PSP and the changeover to the new PS2 model. In
the Pictures segment, the cost of sales ratio also improved
primarily due to the substantial contribution from
Spider-Man
2
.
In All Other, there was an improvement in the cost of sales
ratio in the music business due to the establishment of SONY BMG
which is accounted for under the equity method resulting in a
higher percentage of sales being derived from SMEJ which
benefited from the contribution of greatest hits album sales.
Personnel-related costs included in cost of sales decreased by
52.5 billion yen compared with the previous fiscal year,
primarily within the Electronics segment.
Research and development costs (all research and development
costs are included within cost of sales) for the fiscal year
ended March 31, 2005 decreased by 12.5 billion yen to
502.0 billion yen compared with the previous fiscal year.
The ratio of research and development costs to sales was
7.6 percent compared to 7.5 percent in the previous
fiscal year.
Selling, general and administrative expenses for the fiscal year
ended March 31, 2005 decreased by 263.2 billion yen,
or 14.6 percent, to 1,535.0 billion yen compared with
the previous fiscal year. The ratio of selling, general and
administrative expenses to sales improved from 25.9 percent
in the previous fiscal year to 23.2 percent. Year on year,
the ratio of selling, general and administrative expenses to
sales improved from 21.2 percent to 19.0 percent in
the Electronics segment, from 21.1 percent to
21.0 percent in the Game
46
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segment, and improved from 39.5 percent to
37.3 percent in All Other, and from 35.0 percent to
32.5 percent in the Pictures segment.
Personnel-related costs in selling, general and administrative
expenses decreased by 169.3 billion yen compared with the
previous fiscal year mainly due to a decrease in severance
related expenses in the Electronics segment resulting from the
implementation of restructuring initiatives, and the fact that
personnel-related costs in Sony's recorded music business
outside Japan are no longer recorded within Sony's
consolidated selling, general and administrative expenses due to
the establishment of SONY BMG mentioned above. In addition,
advertising and publicity expenses for the fiscal year decreased
by 51.6 billion yen compared to the previous fiscal year.
This was primarily due to the fact that advertising and
publicity expenses that were recorded in All Other decreased due
to the establishment of SONY BMG and a reduction in advertising
and publicity expenses in the Pictures segment.
Loss on sale, disposal or impairment of assets, net was
28.0 billion yen, compared with 35.5 billion in the
previous fiscal year. Although losses were recorded on the sale,
disposal and impairment of CRT and CRT television production
equipment in the Electronics segment, gains were recorded mainly
from the sale of land and buildings in both the Electronics
segment and All Other.
Operating Income
Operating income for the fiscal year ended March 31, 2005
increased by 15.0 billion yen, or 15.2 percent, to
113.9 billion yen compared with the previous fiscal year.
The operating income margin increased from 1.3 percent to
1.6 percent. The business segments that contributed the
most to operating income, in descending order by amount of
financial impact, were the Pictures, Financial Services and Game
segments. On the other hand, the Electronics segment recorded an
operating loss mainly due to the appreciation of the yen against
the U.S. dollar as well as an increase in cost of sales
that exceeded the reduction in selling, general and
administrative expenses. For a further breakdown of operating
income for each segment, please refer to
"Operating
Performance by Business Segment"
below.
Other Income and Expenses
In the consolidated results for the fiscal year ended
March 31, 2005, other income decreased by 24.7 billion
yen, or 20.2 percent, to 97.6 billion yen, while other
expenses decreased by 22.8 billion yen, or
29.5 percent, to 54.3 billion yen, compared with the
previous fiscal year. The net amount of other income and other
expenses was net other income of 43.3 billion yen, a
decrease of 1.9 billion yen, or 4.2 percent, compared
with the previous fiscal year.
A net foreign exchange loss of 0.5 billion yen was recorded
in the fiscal year ended March 31, 2005, compared to a net
foreign exchange gain of 18.1 billion yen recorded in the
previous fiscal year. The net foreign exchange loss was recorded
because the value of the yen, especially during the first
quarter of the fiscal year ended March 31, 2005, was lower
than the value of the yen at the time that Sony entered into
foreign exchange forward contracts and foreign currency option
contracts. These contracts are entered into by Sony to mitigate
the foreign exchange rate risk to cash flows that arises from
settlements of foreign currency denominated accounts receivable
and accounts payable, as well as foreign currency denominated
transactions between consolidated subsidiaries.
For the fiscal year ended March 31, 2005, a loss on
devaluation of securities investments of 3.7 billion yen
was recorded, an improvement of 12.8 billion yen, or
77.5 percent, compared with the previous year. This
improvement was primarily due to the recording of valuation
losses of 10.3 billion yen in the previous fiscal year
related to securities issued by a privately held Japanese
company engaged in cable broadcasting and other businesses which
Sony accounted for under the cost method.
The gain on change in interest in subsidiaries and equity
investees increased by 11.5 billion yen, or
235.2 percent compared to the previous fiscal year to
16.3 billion yen. This was mainly the result of gains of
9.0 billion yen from a change in interest from Monex Inc.,
an equity affiliate of Sony, following its business integration
by way of share transfer with Nikko Beans, Inc and total gains
of 4.7 billion yen from the sale of
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Table of Contents
stock and a change in interest in a subsidiary resulting from
the initial public offering of
So-net
M3 Inc., a
consolidated subsidiary of SCN.
In addition, the net gain recorded on sales of securities
investments decreased 6.3 billion yen, or
53.8 percent, to 5.4 billion yen. This was primarily a
result of the recording of a deferred gain of 6.0 billion
yen in the fiscal year ended March 31, 2004, from
Sony's sale, during the fiscal year ended March 31,
2003, of its equity interest in Telemundo Communications Group,
Inc. and its subsidiaries, a
U.S.-based
Spanish
language television network and station group that was accounted
for under the equity method.
Income before Income Taxes
Income before income taxes for the fiscal year ended
March 31, 2005 increased 13.1 billion yen, or
9.1 percent, to 157.2 billion yen compared with the
previous fiscal year, as a result of the increase in operating
income and the decrease in net amount of other income and other
expenses mentioned above.
Income Taxes
Income taxes for the fiscal year ended March 31, 2005
decreased by 36.7 billion yen, or 69.6 percent, to
16.0 billion yen. Compared to an effective tax rate of
36.6 percent in the previous fiscal year, the effective tax
rate was 10.2 percent in the current fiscal year. As a
result of the recording of operating losses in the past, the
U.S. subsidiaries of Sony have had valuation allowances
against deferred tax assets for U.S. federal taxes and
certain state taxes. However, in the fiscal year ended
March 31, 2005, based on both improved operating results in
recent years and a sound outlook for the future operating
performance at Sony's U.S. subsidiaries, Sony reversed
67.9 billion yen of such valuation allowances, resulting in
a reduction to income tax expense. On the other hand, certain of
Sony's subsidiaries recorded new valuation allowances
against deferred tax assets during the fiscal year ended
March 31, 2005.
Results of Affiliated Companies Accounted for under the
Equity Method
Equity in net income of affiliated companies during the fiscal
year ended March 31, 2005 was 29.0 billion yen, an
increase of 27.3 billion yen, or 1,594.2 percent,
compared to 1.7 billion yen recorded in the previous fiscal
year. Equity in net income of Sony Ericsson, a joint venture
focused on mobile phone handsets, was 17.4 billion yen, an
increase of 11.0 billion yen, or 171.9 percent,
compared to the 6.4 billion yen recorded in the previous
fiscal year. Equity in net income of affiliated companies for
the current fiscal year includes the recording of
12.6 billion yen as equity in net income from InterTrust.
This amount reflects InterTrust's proceeds from a license
agreement with Microsoft Corporation arising from the settlement
of a patent-related lawsuit. In addition, due to significant
restructuring costs, an equity loss of 3.4 billion yen was
recorded at SONY BMG. Furthermore, equity in net loss was
recorded at affiliates such as Star Channel Inc., a Japan-based
subscription television company specializing in the broadcast of
movies, and
S-LCD,
a
joint-venture with Samsung Electronics Co., Ltd. for the
manufacture of amorphous TFT LCD panels.
Minority Interest in Income of Consolidated
Subsidiaries
In the fiscal year ended March 31, 2005, minority interest
in income of consolidated subsidiaries decreased by
0.7 billion yen, or 30.6 percent, to 1.7 billion
yen. This decrease was primarily due to the recording of
minority interest at certain television and home entertainment
subsidiaries in the Pictures segment in the previous fiscal year.
Net Income
Net income for the fiscal year ended March 31, 2005
increased by 75.3 billion yen, or 85.1 percent, to
163.8 billion yen compared with the previous fiscal year.
This increase was the result primarily of the abovementioned
increase in income before income taxes, a decrease in the
effective tax rate, as well as an increase in equity in net
income of affiliated companies. As a percentage of sales, net
income increased from 1.2 percent to 2.3 percent.
Return on stockholders' equity increased from
3.8 percent to 6.2 percent. (This
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Table of Contents
ratio is calculated by dividing net income by the simple average
of stockholders' equity at the end of the previous fiscal
year and at the end of the fiscal year ended March 31,
2005.)
Basic net income per share was 175.90 yen compared with 95.97
yen in the previous fiscal year, and diluted net income per
share was 158.07 yen compared with 87.00 yen in the previous
fiscal year. Refer to Notes 2 and 21 of Notes to
Consolidated Financial Statements.
Operating Performance by Business Segment
The following discussion is based on segment information. Sales
and operating revenue in each business segment include
intersegment transactions. Refer to Note 24 of Notes to
Consolidated Financial Statements.
Business Segment Information
Fiscal Year Ended
March 31
2004
2005
Percent change
(Yen in billions)
Sales and operating revenue
Electronics
5,087.5
5,066.8
-0.4
%
Game
780.2
729.8
-6.5
Pictures
756.4
733.7
-3.0
Financial Services
593.5
560.6
-5.6
All Other
662.8
459.9
-30.6
Elimination
(384.0
)
(391.1
)
—
Consolidated
7,496.4
7,159.6
-4.5
Fiscal Year Ended
March 31
2004
2005
Percent change
(Yen in billions)
Operating income (loss)
Electronics
(8.1
)
(34.3
)
—
Game
67.6
43.2
-36.1
%
Pictures
35.2
63.9
+81.4
Financial Services
55.2
55.5
+0.6
All Other
(16.2
)
4.2
—
Total
133.7
132.5
-0.9
Elimination and unallocated corporate expenses
(34.8
)
(18.6
)
—
Consolidated
98.9
113.9
+15.2
As of August 1, 2004, Sony and Bertelsmann AG combined
their recorded music businesses in a joint venture. The newly
formed company, SONY BMG, is 50 percent owned by each
parent company. Under U.S. GAAP, SONY BMG is accounted
for by Sony using the equity method and, since August 1,
2004, 50 percent of net profits or losses of this business
have been included under "Equity in net income (loss) of
affiliated companies."
In connection with the establishment of this joint venture,
Sony's non-Japan-based disc manufacturing and physical
distribution businesses, formerly included within All Other,
have been reclassified to the Electronics segment to recognize
the new management reporting structure whereby Sony's
Electronics segment has now assumed responsibility for these
businesses. Effective April 1, 2005, a similar change was
made with respect to Sony's Japan-based disc manufacturing
business. Results for the fiscal years ended
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March 31, 2004 and March 31, 2005 in the Electronics
segment have been restated to account for these
reclassifications.
Effective April 1, 2005, Sony no longer breaks out its
music business as a reportable segment as it no longer meets the
materiality threshold. Accordingly, the results for Sony's
music business are now included within All Other and the results
for the fiscal year ended March 31, 2004 and March 31,
2005 have been reclassified to All Other for comparative
purposes. Results for the fiscal year ended March 31, 2005
in All Other include the consolidated results for SMEI's
recorded music business for the period through August 1,
2004, as well as the results for SMEI's music publishing
business and SMEJ excluding Sony's Japan-based disc
manufacturing business. However, results for the fiscal year
ended March 31, 2004 include the consolidated results for
SMEI's recorded music business for the full twelve month
period, as well as the results for SMEI's music publishing
business and SMEJ excluding Sony's Japan-based disc
manufacturing business.
In July 2004, Sony completed the integration of its
semiconductor manufacturing business in order to establish a
more efficient and coordinated semiconductor supply structure by
transferring Sony Computer Entertainment's semiconductor
manufacturing operation from the Game segment to the Electronics
segment. As a result of this transfer, sales revenue and
expenditures associated with this operation are now recorded
within the "Semiconductor" category in the Electronics
segment. The results for the same period of the prior fiscal
years have not been restated as such comparable figures cannot
be practically obtained given that the semiconductor
manufacturing operation was not operated as a separate line of
business within the Game segment. This integration of the
semiconductor manufacturing businesses is a part of Sony's
semiconductor strategy of utilizing semiconductor technologies
and manufacturing equipment originally developed or designed for
the Game business within Sony as a whole.
Electronics
Sales for the fiscal year ended March 31, 2005 decreased
20.6 billion yen, or 0.4 percent, to
5,066.8 billion yen compared with the previous fiscal year.
An operating loss of 34.3 billion in the Electronics
segment was recorded compared to the operating loss of
8.1 billion yen in the previous fiscal year. Sales to
outside customers on a yen basis decreased 1.1 percent
compared to the previous fiscal year. Regarding sales to outside
customers by geographical area, although sales decreased in
Japan by 10 percent and in the U.S. by 4 percent,
they remained almost unchanged in Europe and increased by
9 percent in non-Japan Asia and other geographic areas
("Other Areas").
In Japan, although there was a significant increase in the sales
of LCD televisions, and an increase in the sales of DVD
recorders (including PSX), there was a decrease in the sales of
PCs, mobile phones, primarily to Sony Ericsson, broadcast- and
professional-use equipment and CRT televisions. In the U.S.,
there was an increase in sales of LCD rear projection
televisions and digital cameras, although sales mainly of CRT
televisions, PCs, computer displays and portable audio declined.
In Europe, sales increased, primarily of digital cameras, LCD
televisions and plasma televisions. However, there was a
decrease in the sales mainly of CRT televisions and portable
audio. In Other Areas, sales mainly of digital cameras, CD-R/RW
and DVD+/ -R/RW drives and PCs increased while sales of
primarily portable audio, optical pickups and home audio
decreased.
Performance by Product Category
Sales and operating revenue by product category discussed below
represent sales to outside customers, which do not include
intersegment transactions. Refer to Note 24 of Notes to
Consolidated Financial Statements.
"Audio" sales decreased by 103.6 billion yen, or
15.3 percent, to 571.9 billion yen. Sales of headphone
stereos declined as a result of a significant decrease in the
unit shipments of both CD format and MD format devices due to a
shift in demand towards hard disc- and flash-based memory
players. Worldwide shipments of CD format devices decreased by
approximately 3.68 million units to approximately
7.28 million units and worldwide shipments of MD format
devices decreased by approximately 1.44 million units to
1.92 million
50
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units. Sales of home audio declined primarily due to a
contraction of the market. On the other hand, overall sales of
car audio increased slightly due to strong sales in the European
market and Other Areas.
"Video" sales increased by 87.0 billion yen, or
9.2 percent, to 1,036.3 billion yen. There was a
growth in the sales of digital cameras outside of Japan and DVD
recorders (including PSX) recorded a significant increase in
sales worldwide. Worldwide shipments of digital cameras
increased by approximately 4.0 million units to
approximately 14.0 million units. Worldwide shipments of
DVD recorders were approximately 650,000 units in the
previous fiscal year but increased to approximately
1.7 million units in the fiscal year ended March 31,
2005. Worldwide shipments of home-use video cameras increased by
approximately 750,000 units to approximately
7.35 million units, but overall sales remained almost
unchanged, due to increased price competition. DVD-Video player
sales decreased due to pricing pressure, although unit shipments
increased by approximately 1.0 million units to
approximately 9.5 million units.
"Televisions" sales increased by 36.6 billion
yen, or 4.1 percent, to 921.2 billion yen. In addition
to a significant increase in worldwide sales of LCD televisions,
there was a significant increase in the sales of plasma
televisions outside of Japan, particularly in Europe, and of
projection televisions in the U.S. Worldwide shipments of
LCD televisions increased by approximately 570,000 units,
compared to the previous fiscal year, to approximately
1.0 million units; plasma television shipments increased by
approximately 90,000 units to approximately
300,000 units; and projection televisions shipments
increased by approximately 280,000 units to approximately
1.2 million units. On the other hand, although there was an
increase in worldwide shipments of CRT televisions by
approximately 100,000 units to approximately
9.5 million units, sales decreased significantly as a
result of a fall in unit prices due to the continued shift in
demand towards flat panel televisions. In addition, sales of
computer displays also decreased worldwide.
"Information and Communications" sales decreased by
62.7 billion yen, or 7.1 percent, to
816.2 billion yen. Despite an increase in notebook PC sales
due to strong sales outside Japan, overall sales decreased due
to a decrease in sales of desktop PCs. Worldwide unit shipments
of PCs increased approximately 100,000 units to
approximately 3.3 million units. Sales of personal digital
assistants decreased significantly due to a downsizing of the
business. Sales of broadcast- and professional-use products
decreased slightly compared to the previous fiscal year, despite
recording increased sales outside Japan, as sales in Japan
decreased as a result of the recording of higher sales, in the
previous fiscal year, from the sale of equipment to two
television stations which opened new broadcasting facilities.
"Semiconductors" sales decreased by 6.9 billion
yen, or 2.7 percent, to 246.3 billion yen. The
decrease was due to a decrease in sales of CCDs as the result of
pricing pressures. Regarding LCDs, sales of low temperature
polysilicon LCDs for mobile phones increased significantly.
"Components" sales decreased by 4.3 billion yen,
or 0.7 percent, to 619.5 billion yen. The decrease was
primarily due to a decrease in sales of
CD-R/RW
drives and
optical pickups associated mainly with significant declines in
unit prices. Sales of
DVD+/-R/RW
drives
increased due to a production and sales alliance with a third
party. Regarding lithium-ion batteries, sales for use in digital
cameras and mobile phones increased.
"Other" sales increased by 1.8 billion yen, or
0.3 percent, to 595.2 billion yen. The increase
resulted from increased sales at Sony's non-Japan-based
disc manufacturing business. However, there was a slight
decrease in sales of mobile phone handsets mainly to Sony
Ericsson.
In the Electronics segment, cost of sales for the fiscal year
ended March 31, 2005 increased by 131.5 billion yen,
or 3.3 percent to 4,117.0 billion yen compared with
the previous fiscal year. The cost of sales to sales ratio
deteriorated by 2.9 percent to 81.8 percent compared
to 78.9 percent in the previous fiscal year. Products that
contributed to the deterioration in the cost of sales to sales
ratio were CRT televisions and portable audio products, which
both experienced a decrease in sales, and DVD recorders
(including PSX) and video cameras, which were both impacted by
falling unit prices. Restructuring charges recorded in cost of
sales amounted to 9.6 billion yen, a decrease of
0.5 billion yen compared with the 10.1 billion yen
recorded in the previous fiscal year. Research and development
costs increased 2.4 billion yen, or 0.6 percent, from
431.0 billion yen in the previous fiscal year to
433.3 billion yen. Although there was an increase in
research and development costs within the segment as a result of
the transfer of semiconductor manufacturing operations
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from the Game segment to the Electronics segment in association
with the business integration of Sony's semiconductor
manufacturing operations, overall research and development costs
within the segment only increased slightly as a result of the
carrying out of a stringent process for the selection of
research and development activities.
Selling, general and administrative expenses decreased by
119.2 billion yen, or 11.0 percent to
960.2 billion yen compared with the previous fiscal year.
The primary reason for this decrease was a decrease in
restructuring charges. Of the restructuring charges recorded in
the Electronics segment, the amount recorded in selling, general
and administrative expenses decreased by 71.4 billion yen
from 125.0 billion yen in the previous fiscal year to
53.6 billion yen. Of the restructuring charges recorded in
selling, general and administrative expenses, the amount
recorded for headcount reductions, including reductions through
the early retirement program, was 51.0 billion yen, a
decrease of 63.3 billion yen compared with the previous
fiscal year. On the other hand, royalty expenses increased
17.0 billion yen. The ratio of selling, general and
administrative expenses to sales decreased 2.2 percentage
points from the 21.2 percent recorded in the previous
fiscal year to 19.0 percent.
Loss on sale, disposal or impairment of assets, net decreased
6.7 billion yen to 23.9 billion yen compared with the
previous fiscal year. This amount includes 19.2 billion yen
in restructuring charges, which includes 7.5 billion yen
related to CRT and CRT televisions manufacturing facilities in
Europe. The amount of restructuring charges included in loss on
sale, disposal or impairment, net in the previous fiscal year
was 10.6 billion yen.
An increased operating loss was recorded in the Electronics
segment for the fiscal year ended March 31, 2005 due to a
significant deterioration in the cost of sales ratio, as
mentioned above. Regarding profit performance by product,
excluding restructuring charges, semiconductors recorded an
operating loss for the fiscal year, compared to the operating
profit of the previous fiscal year. This loss was due to the
recording, within the Electronics segment, of research and
development costs related to system large scale integration
("LSI") manufacturing, in particular the next
generation processor chip, as a result of the integration of
Sony's semiconductor manufacturing business operations
within the Electronics segment mentioned above. These costs were
previously recorded within the Game segment. CRT televisions and
portable audio products recorded a loss for the fiscal year
compared to the operating income recorded in the previous fiscal
year. DVD recorders (including PSX) also experienced an
increased operating loss. The operating income for video cameras
also decreased.
On the other hand, results were positively affected by a
decreased operating loss from personal digital assistants
through the implementation of significant business downsizing,
and a significant increase in operating income recorded for PCs
and broadcast- and professional-use products.
Manufacturing by Geographic Area
Approximately 50 percent of the Electronics segment's
total annual production during the fiscal year ended
March 31, 2005 took place in Japan, including the
production of digital cameras, video cameras, flat panel
televisions, PCs, semiconductors and components such as
batteries and Memory Sticks. Approximately 60 percent of
the annual production in Japan was destined for other regions.
China accounted for approximately 10 percent of total
annual production, approximately 70 percent of which was
destined for other regions. Asia, excluding Japan and China,
accounted for slightly more than 10 percent of total annual
production, with approximately 60 percent destined for
Japan, the U.S. and Europe. The Americas and Europe together
accounted for the remaining total annual production of slightly
less than 30 percent, most of which was destined for local
distribution and sale.
Comparison of Results on a Local Currency Basis and
Results on a Yen Basis
In the Electronics segment, the negative effect of the
appreciation of the yen against the U.S. dollar exceeded
the positive effect of the appreciation of the Euro against the
yen. Sales for the fiscal year ended March 31, 2005
decreased, on a yen basis, by 1.1 percent, but increased on
a local currency basis by approximately 1 percent. In terms
of operating performance, there was a deterioration in the
operating loss
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compared to the previous fiscal year, but if calculated on a
local currency basis, this operating loss was smaller compared
to the actual results on a yen basis.
Sales to outside customers by geographic area on a yen basis
decreased in Japan by 10 percent, and in the U.S. by
4 percent: however, sales in Europe remained relatively
unchanged and sales increased in Other Areas by 9 percent.
Sales on a local currency basis for regions outside Japan
increased in the U.S. by 1 percent and in Other Areas
by 13 percent, but decreased in Europe by 2 percent.
Game
Sales for the fiscal year ended March 31, 2005 decreased by
50.5 billion yen, or 6.5 percent, to
729.8 billion yen compared with the previous fiscal year.
Operating income decreased by 24.4 billion yen, or
36.1 percent, to 43.2 billion yen compared with the
previous fiscal year, and the operating income margin decreased
from 8.7 percent to 5.9 percent.
Sales in the Game segment on a local currency basis decreased
approximately 6 percent. In addition, on a local currency
basis, operating income decreased approximately 45 percent
compared to the previous fiscal year. By region, although sales
increased in Japan, there was a decrease in sales in the U.S.
and Europe.
Hardware sales declined. Although there was an increase in sales
in Japan primarily associated with the launch of PSP in December
2004, there was a decline in hardware sales in the U.S. and
Europe associated with a decline in unit sales, and strategic
price reductions, of PS2. On the other hand, both unit sales and
overall sales of software increased in Japan, the U.S. and
Europe.
Total worldwide production shipments of hardware and software
were as follows:
Fiscal Year Ended
March 31
Cumulative as of
2004
2005
March 31, 2005
(Million units)
Total Production Shipments of Hardware*
PlayStation
®
+ PS
    one
™
3.31
2.77
102.49
PlayStation 2
20.10
16.17
87.47
PlayStation Portable
2.97
2.97
Total Production Shipments of Software*/**
PlayStation
32.00
10.00
959.00
PlayStation 2
222.00
252.00
824.00
PlayStation Portable
5.70
5.70
*
Production shipments of hardware and software are counted upon
    shipment of the products from manufacturing bases. Sales of such
    products are recognized when the products are delivered to
    customers.
**
Including those both from Sony and third parties under Sony
    licenses.
Operating income decreased compared with the previous fiscal
year. Although there was an increase in software sales, the
decrease in operating income was the result of a decrease in
hardware sales coupled primarily with start up costs for the
PSP. The cost of sales to sales ratio deteriorated as a result
of costs associated with both the launch of the PSP and with the
changeover to the new PS2 model. The ratio of selling, general
and administrative expenses to sales compared to the previous
fiscal year was relatively unchanged.
Pictures
Sales for the fiscal year ended March 31, 2005 decreased by
22.7 billion yen, or 3.0 percent, to
733.7 billion yen compared with the previous fiscal year.
Operating income increased by 28.7 billion yen, or
81.4 percent, to 63.9 billion yen and the operating
income margin increased from 4.7 percent to
8.7 percent. The results in the Pictures segment consist of
the results of SPE, a
U.S.-based
subsidiary.
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On a U.S. dollar basis, sales for the fiscal year in the
Pictures segment increased approximately 1 percent and
operating income increased by approximately 76 percent.
Sales increased primarily due to higher worldwide home
entertainment, international television syndication and
worldwide theatrical revenues on films. Worldwide home
entertainment and international television syndication revenues
were higher as a result of the performance of films from the
prior year release slate including
50 First Dates, Big Fish
and
Bad Boys 2.
For theatrical revenues, the success
of the current year film slate, particularly
Spider-Man
2
,
Hitch
and
The Grudge,
more than offset the
impact of releasing fewer films this fiscal year. Sales for the
fiscal year release slate decreased 70 million
U.S. dollars as compared to the previous fiscal year.
However, sales in the fiscal year ended March 31, 2005 from
the prior year release slate increased 304 million
U.S. dollars as compared to sales in the previous fiscal
year from the release slate for the fiscal year ended
March 31, 2003. While benefiting from higher theatrical
revenues, total fiscal year release slate revenues were lower
due to the timing of the fiscal year's film slate's
release in the home entertainment market. The higher sales from
films were partially offset by a 248 million
U.S. dollar decrease in sales resulting from the absence in
the fiscal year ended March 31, 2005 of several
transactions in the television business that occurred in the
prior fiscal year. These included syndication sales of
King
of Queens
and
Seinfeld
as well as the extension of a
licensing agreement for
Wheel of Fortune
. Television
sales in the fiscal year ended March 31, 2005 benefited
from the highly successful DVD release of
Seinfeld
.
Operating income for the segment increased significantly,
resulting in record operating income for the segment, due to the
strong overall performance of the current fiscal year's
film slate and the home entertainment and international
television syndication carryover performance of the prior fiscal
year's film slate noted above. Operating loss from the
fiscal year release slate decreased 415 million
U.S. dollars and operating income for the prior fiscal
year's release slate increased 173 million
U.S. dollars as compared to the prior fiscal year.
Spider-Man
2
's
worldwide success contributed substantially to this fiscal
year's earnings, offset somewhat by the disappointing
theatrical performance of
Spanglish
. Further improving
operating income was a 38 million U.S. dollar decrease
in restructuring charges. Partially offsetting these increases
in operating income was the impact of the absence of the
television transactions noted above, which reduced operating
income by approximately 150 million U.S. dollars due
primarily to the factors noted above for revenue.
As of March 31, 2005, unrecognized license fee revenue at
SPE was approximately 1.3 billion U.S. dollars. SPE
expects to record this amount in the future having entered into
contracts with television broadcasters to provide those
broadcasters with completed motion picture and television
product. The license fee revenue will be recognized in the
fiscal year that the product is available for broadcast.
Financial Services
Please note that the revenue and operating income at Sony Life,
Sony Assurance and Sony Bank discussed below differ
from the results that Sony Life, Sony Assurance and Sony Bank
disclose on a Japanese statutory basis.
Financial Services revenue for the fiscal year ended
March 31, 2005 decreased by 33.0 billion yen, or
5.6 percent, to 560.6 billion yen compared with
the previous fiscal year. Operating income increased by
0.3 billion yen, or 0.6 percent, to
55.5 billion yen and the operating income margin
increased to 9.9 percent compared with the 9.3 percent
of the previous fiscal year.
At Sony Life, revenue decreased by 38.7 billion yen,
or 7.5 percent, to 474.3 billion yen compared
with the previous fiscal year. The main reasons for the decrease
in revenue were a change in the method of recognizing insurance
premiums received on certain products, as of the third quarter
beginning October 1, 2003, from being recorded as revenues
to being offset against the related provision for future
insurance policy benefits, coupled with a small decrease in
valuation gains in the current fiscal year compared to the
previous fiscal year in which significant valuation gains were
recorded against stock conversion rights from convertible bonds.
Although there was a decrease in insurance premium revenue as a
result of the above mentioned change in accounting method, there
were increases in
insurance-in
-force at
the end of the fiscal year compared to the end of the previous
fiscal year. Operating income at Sony Life decreased by
2.2 billion yen or
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Table of Contents
3.4 percent to 61.0 billion yen, mainly due to a
decrease in valuation gains against stock conversion rights from
convertible bonds, although this was partially offset by an
increase in revenue from insurance premiums excluding the effect
of the change in revenue recognition method noted above. In
addition, the impact on operating income from the change in
revenue recognition method noted above was slight.
At Sony Assurance, revenue increased due to higher insurance
revenue brought about by an expansion in automobile
insurance-in
-force.
Operating income increased due to an increase in insurance
revenue, although there was a deterioration in the loss ratio
(the ratio of insurance payouts to premiums).
At Sony Bank, which started operations in June 2001, revenue
rose as there was an increase in interest revenue associated
with an increase in the balance of assets from investing
activities. Although revenue increased, an increase in operating
expenses resulted in a relatively unchanged operating loss
compared with the previous fiscal year.
At Sony Finance, a leasing and credit financing business
subsidiary in Japan, revenue decreased due to a fall in leasing
revenue. In terms of profitability, the operating loss decreased
due to the recording of a loss, in the previous fiscal year
ended March 31, 2004, from the lease of certain fixed
assets to Crosswave Communications Inc ("Crosswave"),
which commenced reorganization proceedings under the Corporate
Reorganization Law of Japan during the same fiscal year.
Condensed Statements of Income Separating Out the
    Financial Services Segment (Unaudited)
The following schedule shows unaudited condensed statements of
income for the Financial Services segment and all other segments
excluding Financial Services as well as condensed consolidated
statements of income. This presentation is not required under
U.S. GAAP, which is used in Sony's 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 all
other segments excluding Financial Services are eliminated in
the consolidated figures shown below.
Condensed Statements of Income
Fiscal Year Ended
March 31
2004
2005
(Yen in millions)
Financial Services
Financial service revenue
593,544
560,557
Financial service expenses
538,383
505,067
Operating income
55,161
55,490
Other income (expenses), net
1,958
10,204
Income before income taxes
57,119
65,694
Income taxes and other
22,975
25,698
Income before cumulative effect of an accounting change
34,144
39,996
Cumulative effect of an accounting change
—
(4,713
)
Net income
34,144
35,283
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Table of Contents
Fiscal Year Ended
March 31
2004
2005
(Yen in millions)
Sony without Financial Services
Net sales and operating revenue
6,939,964
6,632,728
Costs and expenses
6,896,377
6,575,354
Operating income
43,587
57,374
Other income (expenses), net
52,746
40,639
Income before income taxes
96,333
98,013
Income taxes and other
30,916
(37,043
)
Income before cumulative effect of an accounting change
65,417
135,056
Cumulative effect of an accounting change
(2,117
)
—
Net income
63,300
135,056
Fiscal Year Ended
March 31
2004
2005
(Yen in millions)
Consolidated
Financial service revenue
565,752
537,715
Net sales and operating revenue
6,930,639
6,621,901
7,496,391
7,159,616
Costs and expenses
7,397,489
7,045,697
Operating income
98,902
113,919
Other income (expenses), net
45,165
43,288
Income before income taxes
144,067
157,207
Income taxes and other
53,439
(11,344
)
Income before cumulative effect of an accounting change
90,628
168,551
Cumulative effect of an accounting change
(2,117
)
(4,713
)
Net income
88,511
163,838
All Other
During the fiscal year ended March 31, 2005, sales within
All Other were comprised mainly of sales from SMEJ; SMEI's
recorded music business for the four months through
August 1, 2004 prior to the establishment of SONY BMG;
SMEI's music publishing business; SCN, an Internet-related
service business subsidiary operating mainly in Japan; a
retailer of imported general merchandise in Japan; an
in-house
facilities
management business in Japan; and an advertising agency business
in Japan. Results for the previous fiscal year in All Other
include the consolidated results for SMEI's recorded music
business for all twelve months, as well as the full year's
results for SMEI's publishing business and SMEJ.
Sales for the fiscal year ended March 31, 2005 decreased by
202.9 billion yen, or 30.6 percent, to
459.9 billion yen, compared with the previous fiscal
year. Of total segment sales, 82 percent were sales to
outside customers. In terms of profit performance, operating
income of 4.2 billion yen was recorded for All Other
compared to the operating loss of 16.2 billion yen
recorded in the previous fiscal year.
During the fiscal year, the significant sales decrease within
All Other reflects the fact that, as noted above, the results
for the twelve months of the previous fiscal year in All Other
incorporated the results for SMEI's recorded music business.
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Table of Contents
Sales at SMEJ increased 5.7 percent compared with the
previous fiscal year mainly due to an increase in album and
single sales. Best-selling albums and singles during the fiscal
year included
musiQ
by ORANGE RANGE,
SENTIMENTALovers
by Ken Hirai and
PORNO
GRAFFITTI BEST BLUE'S
by Porno Graffitti.
Excluding sales recorded in Sony's music business, there
was a decrease in sales within All Other. This was principally a
result of a decrease in intersegment sales due to contract
changes at a Japanese subsidiary involved in the advertising
agency business.
Regarding profit performance within All Other, operating income
was recorded compared to the operating loss in the previous
fiscal year as a result of significantly increased operating
income at SMEJ due mainly to the higher sales noted above and an
improvement in the cost of sales ratio associated with strong
sales of greatest hits albums, coupled with reduced fixed costs
at network related businesses within Sony Corporation, and a
gain from the sale of a retail and showroom building in Japan.
Operating income was recorded despite the absence in the fiscal
year ended March 31, 2005 of a 7.7 billion yen
one-time gain recorded at a business operated by a
U.S. subsidiary on the sale of rights related to a portion
of the Sony Credit Card portfolio in the previous fiscal year.
Foreign Exchange Fluctuations and Risk Hedging
During the fiscal year ended March 31, 2005, the average
value of the yen was 106.5 yen against the U.S. dollar, and
133.7 yen against the Euro, which was 5.2 percent higher
against the U.S. dollar and 1.9 percent lower against
the Euro, respectively, compared with the average of the
previous fiscal year. Operating results on a local currency
basis described in "Overview" and "Operating
Performance" show results of sales and operating revenue
and operating income obtained by applying the yen's monthly
average exchange rate in the previous fiscal year to monthly
local currency-denominated sales, cost of sales, and selling,
general and administrative expenses for the fiscal year ended
March 31, 2005, as if the value of the yen had remained
constant.
In the Pictures segment, Sony translates into yen the
U.S. dollar consolidated results of SPE (a
U.S.-based
operation
that has worldwide subsidiaries). Therefore, analysis and
discussion of certain portions of the operating results of SPE
are specified as being on "a U.S. dollar basis."
Results on a local currency basis and results on a
U.S. dollar basis are not on the same basis as Sony's
consolidated financial statements and do not conform with
U.S. GAAP. In addition, Sony does not believe that these
measures are a substitute for U.S. GAAP measures. However,
Sony believes that local currency basis results provide
additional useful information to investors regarding operating
performance.
In All Other, Sony consolidates the yen-translated results of
SMEI (a
U.S.-based
operation that aggregates the results of its worldwide
subsidiaries on a U.S. dollar basis) and the results of
SMEJ (a Japan-based operation that aggregates the results of its
operations in yen). In addition, in All Other, results for this
fiscal year only include the results of SMEI's recorded
music business for the months of April through July 2004, and
the twelve month results for SMEI's music publishing
business and SMEJ. However, results for the previous fiscal year
in All Other include the consolidated results for SMEI's
recorded music business for all twelve months, as well as the
full year's results for SMEI's publishing business
and SMEJ.
Sony's consolidated results are subject to foreign currency
rate fluctuations mainly derived from the fact that the
countries where manufacturing takes place may be different from
those where such products are sold. In order to reduce the risk
caused by such fluctuations, Sony employs derivatives, including
foreign exchange forward contracts and foreign currency option
contracts, in accordance with a consistent risk management
strategy. Such derivatives are used primarily to mitigate the
effect of foreign currency exchange rate fluctuations on cash
flows generated by anticipated intercompany transactions and
intercompany accounts receivable and payable denominated in
foreign currencies.
Sony Global Treasury Services Plc ("SGTS") in London
provides integrated treasury services for Sony Corporation and
its subsidiaries. Sony's policy is that Sony Corporation
and all subsidiaries with foreign exchange exposures should
enter into commitments with SGTS for hedging their exposures.
Sony Corporation and most of its subsidiaries utilize SGTS for
this purpose. The concentration of foreign exchange exposures at
57
Table of Contents
SGTS means that, in effect, SGTS hedges the net foreign exchange
exposure of Sony Corporation and its subsidiaries. SGTS in turn
enters into foreign exchange transactions with creditworthy
third-party financial institutions. Most of the transactions are
entered into against projected exposures before the actual
export and import transactions take place. In general, SGTS
hedges the projected exposures on average three months before
the actual transactions take place. However, in certain cases
SGTS partially hedges the projected exposures one month before
the actual transactions take place when business requirements
such as shorter production-sales cycle for certain products
arise. Sony enters into foreign exchange transactions with
financial institutions primarily for hedging purposes. Sony does
not use these derivative financial instruments for trading or
speculative purposes except for certain derivatives in the
Financial Services segment utilized for portfolio investments.
To minimize the adverse effects of foreign exchange fluctuations
on its financial results, particularly in the Electronics
segment, Sony seeks, when appropriate, to localize material and
parts procurement, design, and manufacturing operations in areas
outside of Japan.
Changes in the fair value of derivatives designated as cash flow
hedges, including foreign exchange forward contracts and foreign
currency option contracts, are initially recorded in other
comprehensive income and reclassified into earnings when the
hedged transaction affects earnings. Foreign exchange forward
contracts, foreign currency option contracts and other
derivatives that do not qualify as hedges are
marked-to
-market with
changes in value recognized in Other Income and Expenses. The
notional amounts of foreign exchange forward contracts, currency
option contracts purchased and currency option contracts written
as of March 31, 2005 were 1,545.8 billion yen,
428.3 billion yen and 146.5 billion yen,
respectively.
Assets, Liabilities and Stockholders' Equity
Assets
Total assets on March 31, 2006 increased by
1,108.7 billion yen, or 11.7 percent, to
10,607.8 billion yen, compared with the previous
fiscal year-end. Total assets on March 31, 2006 in all
segments excluding the Financial Services segment increased by
364.4 billion yen, or 6.0 percent, to
6,392.3 billion yen and total assets on March 31,
2006 in the Financial Services segment increased by
680.1 billion yen, or 17.5 percent, to
4,565.6 billion yen, compared with the previous fiscal
year-end. Total assets on March 31, 2006 in all segments
excluding the Financial Services segment would have increased by
approximately 2 percent compared with the previous fiscal
year-end if the value of the yen had remained the same on
March 31, 2006 as it was on March 31, 2005.
Current Assets
Current assets on March 31, 2006 increased by
213.4 billion yen, or 6.0 percent, to
3,769.5 billion yen compared with the previous fiscal
year-end.
Current
assets on March 31, 2006 in all segments excluding the
Financial Services segment increased by
363.7 billion yen, or 14.0 percent, to
2,956.5 billion yen.
Cash and cash equivalents on March 31, 2006 in all segments
excluding the Financial Services segment increased
65.7 billion yen, or 12.6 percent, to
585.5 billion yen compared with the previous fiscal
year-end. This is primarily a result of an increase in cash
equivalents in association with the issuance of straight bonds
carried out by Sony Corporation and the initial public offering
of SCN.
Notes and accounts receivable, trade (net of allowance for
doubtful accounts and sales returns) on March 31, 2006
excluding the Financial Services segment increased
21.0 billion yen, or 2.2 percent, compared with
the previous fiscal year-end to 973.7 billion yen.
Inventories on March 31, 2006 increased by
173.4 billion yen, or 27.5 percent, to
804.7 billion yen compared with the previous fiscal
year-end. This increase was primarily a result of both increased
semiconductor inventory, primarily for use in PS3, and LCD
television inventory in the Electronics segment and increased
inventory in the Game segment resulting from the world-wide
full-scale introduction of the PSP platform. The inventory to
cost of sales turnover ratio (based on the average of
inventories at the end of each
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Table of Contents
fiscal year and previous fiscal year) was 1.67 months
compared to 1.56 months at the end of the previous fiscal
year. Sony considers this level of inventory to be appropriate
in the aggregate.
Current assets on March 31, 2006 in the Financial Services
segment decreased by 138.7 billion yen, or
14.0 percent, to 851.5 billion yen, compared with
the previous fiscal year-end. This decrease was primarily
attributable to the fact that cash and cash equivalents were
utilized for investments and advances.
Investments and Advances
Investments and advances on March 31, 2006 increased by
774.2 billion yen, or 28.2 percent, to
3,519.9 billion yen, compared with the previous fiscal
year-end.
Investments and advances on March 31, 2006 in all segments
excluding the Financial Services segment increased by
31.6 billion yen, or 7.1 percent, to
477.1 billion yen. This was primarily a result of an
increase in investments and advances towards affiliated
companies such as MGM Holdings, Inc.
Investments and advances on March 31, 2006 in the Financial
Services segment increased by 749.8 billion yen, or
31.5 percent, to 3,128.7 billion yen, compared with
the previous fiscal year-end. This increase was primarily due to
investments mainly in Japanese fixed income securities resulting
from an increase in insurance premiums at Sony Life, and an
increase in mortgage loans at Sony Bank.
Also see "Investments" below.
Property, Plant and Equipment (after deduction of
    accumulated depreciation)
Property, plant and equipment on March 31, 2006 increased
by 16.1 billion yen, or 1.2 percent, to
1,388.5 billion yen, compared with the previous fiscal
year-end.
Property, plant and equipment on March 31, 2006 in all
segments excluding the Financial Services segment increased by
17.3 billion yen, or 1.3 percent, to
1,351.1 billion yen, compared with the previous fiscal
year-end.
Capital expenditures (part of the increase in property, plant
and equipment) for the fiscal year ended March 31, 2006
increased by 27.5 billion yen, or 7.7 percent, to
384.3 billion yen compared with the previous fiscal
year. Capital expenditures in the Electronics segment increased
by 17.5 billion yen, or 5.6 percent, to
328.6 billion yen but decreased in the Game segment by
10.4 billion yen, or 55.3 percent, to
8.4 billion yen. Capital expenditures in the
semiconductor business within the Electronics segment, including
capital expenditures related to the Cell microprocessor,
amounted to 140.0 billion yen. Capital expenditures in
the Pictures segment increased by 4.3 billion yen, or
73.8 percent to 10.1 billion yen. In All Other,
which includes Sony's consolidated music business,
4.2 billion yen of capital expenditures were recorded,
compared to the 9.0 billion yen of capital
expenditures recorded in the previous fiscal year.
Property, plant and equipment on March 31, 2006 in the
Financial Services segment decreased by
1.1 billion yen, or 2.9 percent, to
37.4 billion yen compared with the previous fiscal
year-end. Capital expenditures in the Financial Services segment
increased by 0.6 billion yen, or 15.9 percent, to
4.5 billion yen.
Other Assets
Other assets on March 31, 2006 increased by
23.5 billion yen, or 1.5 percent, to
1,569.4 billion yen, compared with the previous fiscal
year-end.
Other assets on March 31, 2006 in all segments excluding
the Financial Services segment decreased by
129.6 billion yen to 1,059.8 billion yen.
Deferred tax assets on March 31, 2006 decreased by
61.6 billion yen, or 25.6 percent, to
178.8 billion yen compared with the previous fiscal
year-end. This was due to the recording of additional valuation
allowances against deferred tax assets by Sony Corporation and
several of Sony's Japanese domestic and overseas
consolidated subsidiaries, mainly within the Electronics segment
due to continued losses recorded at these businesses.
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Table of Contents
Other assets in the Financial Services segment on March 31,
2006 increased by 70.2 billion yen, or
14.7 percent, to 548.0 billion yen compared with
the previous fiscal
year-end.
Liabilities
Total current and long-term liabilities on March 31, 2006
increased by 761.9 billion yen, or 11.5 percent,
to 7,366.8 billion yen compared with the previous
fiscal year-end. Total current and long-term liabilities on
March 31, 2006 in all segments excluding the Financial
Services segment increased by 185.5 billion yen, or
5.5 percent, to 3,551.9 billion yen. Total
current and long-term liabilities in the Financial Services
segment on March 31, 2006 increased by
512.3 billion yen, or 14.8 percent, to
3,977.6 billion yen, compared with the previous fiscal
year-end. Total current and long-term liabilities on
March 31, 2006 in all segments excluding the Financial
Services segment would have increased by approximately
2 percent compared with the previous fiscal
year-end
if the value
of the yen had remained the same on March 31, 2006 as it
was on March 31, 2005.
Current Liabilities
Current liabilities on March 31, 2006 increased by
390.9 billion yen, or 13.9 percent, to
3,200.2 billion yen compared with the previous fiscal
year-end. Current liabilities on March 31, 2006 in all
segments excluding the Financial Services segment increased by
191.8 billion yen, or 9.0 percent, to
2,329.3 billion yen.
Short-term borrowings and current portion of long-term debt on
March 31, 2006 in all segments excluding the Financial
Services segment increased 21.1 billion yen, or
10.3 percent, to 225.1 billion yen compared with
the previous fiscal
year-end.
This was
principally a result of an increase in the current portion of
long-term
debt.
Notes and accounts payable, trade on March 31, 2006 in all
segments excluding the Financial Services segment increased by
3.1 billion yen, or 0.4 percent, to
804.4 billion yen compared with the previous fiscal
year-end.
Current liabilities on March 31, 2006 in the Financial
Services segment increased by 209.7 billion yen, or
29.6 percent, to 918.3 billion yen, mainly due to
an increase in short-term borrowing and an increase in deposits
from customers at Sony Bank.
Long-term Liabilities
Long-term liabilities on March 31, 2006 increased by
371.0 billion yen, or 9.8 percent, to
4,166.6 billion yen compared with the previous fiscal
year-end.
Long-term liabilities on March 31, 2006 in all segments
excluding the Financial Services segment decreased by
6.3 billion yen, or 0.5 percent, to
1,222.6 billion yen. In addition, Long-term debt on
March 31, 2006 in all segments excluding the Financial
Services segment increased 74.0 billion yen, or
11.8 percent, to 701.4 billion yen.
Long-term debt increased primarily due to the issuance of
straight bonds in order to redeem bonds maturing during the
fiscal years ending March 31, 2006 and March 31, 2007.
Long-term liabilities decreased, as accrued pension and
severance costs decreased by 169.3 billion yen, or
50.1 percent, to 168.8 billion yen, principally
as a result of the transfer to the Japanese Government of the
substitutional portion of Sony's Employee Pension Fund.
Long-term liabilities on March 31, 2006 in the Financial
Services segment increased by 302.6 billion yen, or
11.0 percent, to 3,059.3 billion yen. This was
due to an increase in
insurance-in
-force in
the life insurance business which resulted in an increase in
future insurance policy benefits and other of
280.0 billion yen, or 11.4 percent, to
2,744.3 billion yen.
Total Interest-bearing Debt
Total interest-bearing debt on March 31, 2006 increased by
192.0 billion yen, or 21.1 percent, to
1,101.2 billion yen, compared with the previous fiscal
year-end. Total interest-bearing debt on March 31, 2006
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in all segments excluding the Financial Services segment
increased by 95.1 billion yen, or 11.4 percent,
to 926.5 billion yen.
Stockholders' Equity
Stockholders' equity on March 31, 2006 increased by
333.5 billion yen, or 11.6 percent, to
3,203.9 billion yen compared with the previous fiscal
year-end. Retained earnings increased 96.6 billion yen
compared with the previous fiscal year-end, and accumulated
other comprehensive income (net of tax) was
156.4 billion yen. This was primarily due to
comprehensive income of 140.5 billion yen arising from
foreign currency translation adjustments in current fiscal year
due to the depreciation of the yen against the U.S. dollar,
partially offset by the recording of a change in accumulated
other comprehensive income of 38.1 billion yen arising
from unrealized gains on securities in the current fiscal year.
The ratio of stockholders' equity to total assets remained
unchanged at 30.2 percent compared to the previous fiscal
year-end.
Condensed Balance Sheets Separating Out the Financial
    Services Segment (Unaudited)
The following schedule shows an unaudited condensed balance
sheet for the Financial Services segment and all other segments
excluding Financial Services as well as the condensed
consolidated balance sheet. This presentation is not required
under U.S. GAAP, which is used in Sony's 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
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financial statements. Transactions between the Financial
Services segment and all other segments excluding Financial
Services are eliminated in the consolidated figures shown below.
Financial Services
March 31
2005
2006
(Yen in millions)
ASSETS
Current assets:
Cash and cash equivalents
259,371
117,630
Marketable securities
456,130
532,895
Notes and accounts receivable, trade
77,023
17,236
Other
197,667
183,693
990,191
851,454
Investments and advances
2,378,966
3,128,748
Property, plant and equipment
38,551
37,422
Other assets:
Deferred insurance acquisition costs
374,805
383,156
Other
103,004
164,827
477,809
547,983
3,885,517
4,565,607
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings
45,358
136,723
Notes and accounts payable, trade
7,099
11,707
Deposits from customers in the banking business
546,718
599,952
Other
109,438
169,956
708,613
918,338
Long-term liabilities:
Long-term debt
135,750
128,097
Accrued pension and severance costs
14,362
13,479
Future insurance policy benefits and other
2,464,295
2,744,321
Other
142,272
173,354
2,756,679
3,059,251
Minority interest in consolidated subsidiaries
5,476
4,089
Stockholders' equity
414,749
583,929
3,885,517
4,565,607
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Sony without Financial Services
March 31
2005
2006
(Yen in millions)
ASSETS
Current assets:
Cash and cash equivalents
519,732
585,468
Marketable securities
4,072
4,073
Notes and accounts receivable, trade
952,692
973,675
Other
1,116,353
1,393,306
2,592,849
2,956,522
Film costs
278,961
360,372
Investments and advances
445,446
477,089
Investments in Financial Services, at cost
187,400
187,400
Property, plant and equipment
1,333,848
1,351,125
Other assets
1,189,398
1,059,786
6,027,902
6,392,294
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings
204,027
225,082
Notes and accounts payable, trade
801,252
804,394
Other
1,132,201
1,299,809
2,137,480
2,329,285
Long-term liabilities:
Long-term debt
627,367
701,372
Accrued pension and severance costs
338,040
168,768
Other
263,520
352,457
1,228,927
1,222,597
Minority interest in consolidated subsidiaries
18,471
32,623
Stockholders' equity
2,643,024
2,807,789
6,027,902
6,392,294
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Consolidated
March 31
2005
2006
(Yen in millions)
ASSETS
Current assets:
Cash and cash equivalents
779,103
703,098
Marketable securities
460,202
536,968
Notes and accounts receivable, trade
1,025,362
985,508
Other
1,291,504
1,543,950
3,556,171
3,769,524
Film costs
278,961
360,372
Investments and advances
2,745,689
3,519,907
Property, plant and equipment
1,372,399
1,388,547
Other assets:
Deferred insurance acquisition costs
374,805
383,156
Other
1,171,075
1,186,247
1,545,880
1,569,403
9,499,100
10,607,753
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings
230,266
336,321
Notes and accounts payable, trade
806,044
813,332
Deposits from customers in the banking business
546,718
599,952
Other
1,226,340
1,450,623
2,809,368
3,200,228
Long-term liabilities:
Long-term debt
678,992
764,898
Accrued pension and severance costs
352,402
182,247
Future insurance policy benefits and other
2,464,295
2,744,321
Other
299,858
475,106
3,795,547
4,166,572
Minority interest in consolidated subsidiaries
23,847
37,101
Stockholders' equity
2,870,338
3,203,852
9,499,100
10,607,753
Investments
Sony regularly evaluates its investment portfolio to identify
other-than-temporary impairments of individual securities.
Factors that are considered by Sony in determining whether an
other-than-temporary decline in value has occurred include: the
length of time and extent to which the market value of the
security has been less than its original cost, the financial
condition, operating results, business plans and estimated
future cash flows of the issuer of the security, other specific
factors affecting the market value, deterioration of
issuer's credit condition, sovereign risk, and whether or
not Sony is able to retain the investment for a period of time
sufficient to allow for the anticipated recovery in market value.
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In evaluating the factors for available-for-sale securities with
readily determinable fair values, management presumes a decline
in value to be other-than-temporary if the fair value of the
security is 20 percent or more below its original cost for
an extended period of time (generally a period of up to six to
twelve months). The presumption of an other-than-temporary
impairment in such cases may be overcome if there is evidence to
support that the decline is temporary in nature due to the
existence of other factors which overcome the duration or
magnitude of the decline. On the other hand, there may be cases
where impairment losses are recognized when the decline in the
fair value of the security is not more than 20 percent or
such decline has not existed for an extended period of time, as
a result of considering specific factors which may indicate the
decline in the fair value is other-than-temporary.
The assessment of whether a decline in the value of an
investment is other-than-temporary is often judgmental in nature
and involves certain assumptions and estimates concerning the
expected operating results, business plans and future cash flows
of the issuer of the security. Accordingly, it is possible that
investments in Sony's portfolio that have had a decline in
value that Sony currently believes to be temporary may be
determined to be other-than-temporary in the future based on
Sony's evaluation of additional information such as
continued poor operating results, future broad declines in value
of worldwide equity markets and the effect of world wide
interest rate fluctuations. As a result, unrealized losses
recorded for investments may be recognized into income in future
periods.
The following table contains available for sale and held to
maturity securities, breaking out the unrealized gains and
losses by investment category.
March 31, 2006
Cost
Unrealized gain
Unrealized Loss
Fair Market Value
(Yen in Millions)
Financial Services Business:
Available for sale
Debt securities
Sony Life
2,062,410
10,702
(15,122
)
2,057,990
Other
453,926
6,285
(7,561
)
452,650
Equity securities
Sony Life
155,878
112,230
(1,137
)
266,971
Other
9,323
4,176
(33
)
13,466
Held to maturity
Debt securities
Sony Life
—
—
—
—
Other
33,189
132
(221
)
33,100
Total Financial Services
2,714,726
133,525
(24,074
)
2,824,177
Non-Financial Services:
Available for sale securities
68,406
55,549
(546
)
123,409
Held to maturity securities
4
—
—
4
Total Non-Financial Services
68,410
55,549
(546
)
123,413
Consolidated
2,783,136
189,074
(24,620
)
2,947,590
The most significant portion of these unrealized losses relate
to investments held by Sony Life. Sony Life principally invests
in debt securities in various industries. Most securities were
rated "BBB" or better by Standard &
Poor's, Moody's or others. As of March 31, 2006,
Sony Life had debt and equity securities which had gross
unrealized losses of 15.1 billion yen and 1.1 billion
yen, respectively. Of the unrealized loss amounts recorded by
Sony Life, less than 1 percent relate to securities being
in an unrealized 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 addition, there was no individual security with unrealized
losses that met
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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
determined to be temporary in nature. The percentage of
non-investment grade securities held by Sony Life represents
approximately 1 percent of Sony Life's total
investment portfolio, while the percentage of unrealized losses
that relate to those non-investment grade securities was
approximately 2 percent of Sony Life's total
unrealized losses as of March 31, 2006.
For fixed maturity securities with unrecognized losses held by
Sony Life as of March 31, 2006 (15.1 billion yen),
maturity dates vary as follows:
• Within 1 year:
5 percent
• 1 to 5 years:
44 percent
• 5 to 10 years:
50 percent
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, 2006
was 59.6 billion yen. A non-public equity investment is
valued at cost as fair value is not readily determinable. If the
value is estimated to have declined and such decline is judged
to be other than temporary, the impairment of the investment is
recognized and the carrying value is reduced to its fair value.
For the fiscal years ended March 31, 2004, 2005 and 2006,
total impairment losses were 16.7 billion yen,
4.2 billion yen and 4.0 billion yen of which
0.2 billion yen, 0.5 billion yen and 0.2 billion
yen, respectively, were recorded by Sony Life in Financial
Services revenue (refer to "Financial Services" under
"Operating Performance by Business Segment"
for
the fiscal years ended March 31, 2006 and March 31,
2005). Impairment losses other than at Sony Life in each of the
three fiscal years were reflected in non-operating expenses and
primarily relate to the certain strategic investments in
non-financial services businesses. These investments primarily
relate to the certain strategic investments 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 fiscal
years as these companies failed to successfully develop and
market such technology, the operating performance of the
companies was more unfavorable than previously expected and the
decline in fair value of these companies was judged as
other-than-temporary. None of these impairment losses was
individually material to Sony, except for the devaluation of
securities explained in "Other Income and Expenses"
for the fiscal years ended March 31, 2004.
Upon determination that the value of an investment is impaired,
the value of the investment is written down to its fair value.
For publicly 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
determined through the use of such methodologies as discounted
cash flows, valuation of recent financings and comparable
valuations of similar companies. The impairment losses that were
recorded in each of the three years related to the unique facts
and circumstances of each individual investment and did not
significantly impact other investments.
Sony Life and Sony Bank's investments constitute the
majority of the investments in the Financial Services segment.
Sony Life and Sony Bank account for approximately
82 percent and 16 percent of the investments of the
Financial Services segment, respectively.
Sony Life's fundamental investment policy is to build an
investment portfolio capable of ensuring stable mid- to
long-term returns through the efficient investment of funds,
taking into account both expected returns and investment risks
and responding flexibly to changes in financial conditions and
the investment environment, while maintaining a sound asset
base. Moreover, as its fundamental stance towards Asset
Liability Management ("ALM"), a method of managing
interest rate fluctuation risk through the comprehensive
identification of differences in duration and cash flows between
assets and liabilities, Sony Life takes the distinct
characteristics of liability into account in order to control
price fluctuation risks and establish a portfolio that ensures a
certain level of returns. Sony Life adjusts its investing style
depending on changes in the investment environment, in the first
half of the fiscal year ended March 31, 2006, when stock
prices in Japan remained low, Sony Life invested mainly in
convertible bonds, while in the second half of the fiscal year
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ended March 31, 2006, when interest rates in Japan started
to trend upward, Sony Life invested mainly in long-term Japanese
government bonds.
Sony Bank operates using a similar basic investment policy as
Sony Life, taking expected returns and investment risks into
account in order to disperse associated risks, and structuring
its asset portfolio to ensure steady returns from investments.
In addition, Sony Bank is careful to match the duration of its
asset portfolio with the duration of liabilities resulting from
customer deposits, in order to ensure that significant
discrepancies do not occur. Government bonds and corporate bonds
in yen or other currencies constitute a majority of Sony
Bank's current portfolio. To safeguard its assets Sony Bank
does not invest in equity securities but invests in various
types of government and corporate bonds in many countries,
companies and industries, to diversify associated risks. With
respect to loans, Sony Bank mainly offers housing loans to
individuals and does not have any corporate loan exposure.
Contractual obligations, commitments, and contingent
liabilities
The following table summarizes Sony's contractual
obligations and major commitments as of March 31, 2006.
References to Note below represents a particular note within the
Notes to Consolidated Financial Statements.
Payments Due by Period
Less than
1 to
3 to
After
Total
1 Year
3 Year
5 Year
5 Year
(Yen in millions)
Contractual Obligations and Major Commitments:*
Long-term debt (Note 11)
Capital lease obligations
(Notes 8 and 11)
38,280
16,966
12,642
4,342
4,330
Other long-term debt (Note 11)
920,173
176,589
306,063
172,851
264,670
Minimum rental payments required under operating leases
    (Note 8)
195,537
47,500
61,244
27,861
58,932
Purchase commitments for property, plant and equipment and other
    assets (Note 23)
69,286
65,135
4,124
27
—
Expected cost for the production or purchase of films and
    television programming or certain rights (Note 23)
76,736
50,578
25,926
213
19
Partnership program contract with Fédération
    Internationale de Football Association (Note 23)
34,639
3,875
7,750
8,660
14,354
* The total amount of expected future pension payments is
not included in the above table or the total amount of
commitments outstanding at March 31, 2006 discussed below
as such amount is not currently determinable. Sony expects to
contribute approximately 33.0 billion yen to the Japanese
pension plans and approximately 6.0 billion yen to the
foreign pension plans during the fiscal year ending
March 31, 2007 (Note 14).
* The total unused portion of the line of credit extended
under loan agreements in the Financial Services segment is not
included in the above table or the amount of commitments
outstanding at March 31, 2006 discussed below as it is not
foreseeable how many loans will be executed. The total unused
portion of the line of credit extended under these contracts was
326.7 billion yen as of March 31, 2006 (Note 23).
* The 5 year Revolving Credit Agreement with Sony BMG,
which matures on August 5, 2009 and provides for a base
commitment of 300 million U.S. dollars and additional
incremental borrowings of up to 150 million
U.S. dollars, is not included in the above table or the
amount of commitments outstanding at March 31, 2006
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discussed below as such amount is not currently determinable.
Sony's outstanding commitment under this Credit Agreement
as of March 31, 2006 was 26.3 billion yen
(Note 23).
The total amount of commitments outstanding at March 31,
2006 was 285.8 billion yen (Note 23). The commitments
include major purchase obligations as shown above.
In the ordinary course of business, Sony makes commitments for
the purchase of property, plant and equipment. As of
March 31, 2006, such commitments outstanding were
69.3 billion yen.
A subsidiary in the Pictures segment has committed to fund a
portion of the production cost of completed films and is
responsible for all distribution and marketing expenses relating
to these films under a distribution agreement with a third
party. Further, certain subsidiaries in the Pictures segment
have entered into agreements with creative talent for the
development and production of films and television programming
as well as agreements with third parties to acquire completed
films, or certain rights therein. As of March 31, 2006, the
total amount of the expected cost for the production or purchase
of films and television programming or certain rights under the
above commitments was 76.7 billion yen.
Sony Corporation has entered into a partnership program contract
with Fédération Internationale de Football Association
("FIFA"). Through this program Sony Corporation will
be able to exercise various rights as an official sponsor of
FIFA events from 2007 to 2014. As of March 31, 2006, Sony
Corporation was committed to make payments under such contract
of 34.6 billion yen.
In order to fulfill its commitments, Sony will use cash
generated by its operating activities, intra-group loans and
borrowings from subsidiaries with excess funds to subsidiaries
that are short of funds through its finance subsidiaries, and
raise funds from the global capital markets and from banks when
necessary.
The following table summarizes Sony's contingent
liabilities as of March 31, 2006.
Total Amounts of
Contingent Liabilities
(Yen in millions)
Contingent Liabilities: (Note 23)
Loan guarantees to related parties
9,325
Other
11,747
Total contingent liabilities
21,072
Off-Balance Sheet Arrangements
Sony has several off-balance sheet arrangements to provide
liquidity, capital resources and/or credit risk support.
During the fiscal year ended March 31, 2005, Sony entered
into new accounts receivable sales programs that provide for the
accelerated receipt of up to 47.5 billion yen of eligible
trade accounts receivable of Sony Corporation. Through these
programs, Sony can sell receivables to special purpose entities
owned and operated by banks. These transactions are accounted
for as a sale in accordance with FAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", because Sony has
relinquished control of the receivables. Accordingly, accounts
receivable sold under these transactions are excluded from
receivables in the accompanying consolidated balance sheet. The
initial sale of these receivables was in March 2005, and Sony
sold a total of 10.0 billion yen for the fiscal year ended
March 31, 2005. Sony sold a total of 146.2 billion yen
of receivables during the fiscal year ended March 31, 2006.
Losses from these transactions were insignificant. Although Sony
continues servicing the sold receivables, no servicing
liabilities are recorded because costs regarding collection of
the sold receivables are insignificant.
Through May 2005, Sony had set up an accounts receivable
securitization program in the United States that provided for
the accelerated receipt of up to 500 million
U.S. dollars of cash on eligible trade accounts receivable
of Sony's U.S. electronics subsidiary. Through this
program, Sony could securitize and sell a percentage of an
undivided interest in that pool of receivables to several
multi-seller commercial paper
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conduits owned and operated by a bank. These securitization
transactions were accounted for as a sale in accordance with
FAS No. 140, because Sony had relinquished control of
the receivables. Accordingly, accounts receivable sold under
these transactions were excluded from receivables in the
accompanying consolidated balance sheet. During the period from
April 2004 to January 2005, Sony sold a total of
80.3 billion yen of accounts receivable under this program.
There were no outstanding amounts due at March 31, 2005
relating to the existing undivided interests in the pool of
receivables that had been sold. Losses from these transactions
were insignificant. This program was terminated in May 2005.
Refer to Note 6 of Notes to Consolidated Financial
Statements for more information on the accounts receivable
securitization.
In addition, a subsidiary in the Picture segment entered into a
production/co-financing agreement with a Variable Interest
Entity ("VIE") on December 30, 2005, to
co-finance 11 films scheduled to be released over the following
15 months. The subsidiary is not the primary beneficiary of
the VIE and therefore does not consolidate the results of the
VIE. Under the production/co-financing agreement, the subsidiary
will receive approximately 400 million U.S. dollars
over the term of the agreement. The subsidiary is responsible
for the marketing and distribution of the product through its
global distribution channels. The VIE shares in the net profits
of the films after the subsidiary recoups a distribution fee,
its marketing and distribution expenses, and third party
participation and residual costs. As of March 31, 2006,
only one co-financed film has been released by the subsidiary.
The subsidiary did not make any equity investment in the VIE nor
does it issue any guarantees with respect to the VIE. In April
2006, the subsidiary entered into a second
production/co-financing agreement with a VIE to co-finance an
additional 11 films scheduled to be released over the following
24 months. The subsidiary will receive approximately
330 million U.S. dollars over the term of the
agreement. Similar to the first agreement, the subsidiary is
responsible for the marketing and distribution of the product
through its global distribution channels. The VIE shares in the
net profits of the films after the subsidiary recoups a
distribution fee, its marketing and distribution expenses, and
third party participation and residual costs.
Sony has, from time to time, entered into various arrangements
with VIEs. In several of the arrangements in which Sony holds a
significant variable interest, Sony is the primary beneficiary
and therefore consolidates these VIEs. These arrangements
include facilities which provide for the leasing of certain
property, the financing of film production, the implementation
of a stock option plan for Japanese employees and the
U.S.-based
music
publishing business. The assets and liabilities associated with
certain of these arrangements previously qualified for
off-balance sheet treatment. In addition, Sony holds a
significant variable interest in VIEs in which Sony is not the
primary beneficiary and therefore does not consolidate. These
VIEs include the film production/co-financing arrangements noted
above.
Cash Flows
(The fiscal year ended March 31, 2006 compared with the
fiscal year ended March 31, 2005)
Operating Activities: During the fiscal year ended
March 31, 2006, Sony generated 399.9 billion yen of
net cash from operating activities, a decrease of
247.1 billion yen, or 38.2 percent compared with the
previous fiscal year. Of this total, all segments excluding the
Financial Services segment generated 252.0 billion yen of
net cash from operating activities, a decrease of
233.5 billion yen, or 48.1 percent, compared with the
previous fiscal year, and the Financial Services segment
generated 147.1 billion yen of net cash from operating
activities, a decrease of 20.9 billion yen, or
12.5 percent, compared with the previous fiscal year.
During the fiscal year, there was a positive impact on operating
cash flow mainly from the effect of the profit contribution from
the Financial Services segment, and after taking account of
depreciation and amortization, as well as the effect of the loss
on sale, disposal or impairment of assets, net. However,
primarily offsetting these contributions was an increase in
inventory, particularly within the Electronics and Game
segments, the effect of the non-cash net gain on the transfer to
the Japanese Government of the substitutional portion of the
employee pension fund, an increase in deferred acquisition costs
within the Financial Services segment and effect of the gain on
change in interest in subsidiaries and equity investees.
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Compared with the previous fiscal year, net cash provided by
operating activities decreased mainly as a result of taking into
account the lower net income recorded during the fiscal year as
compared to the previous fiscal year, and, as noted above, the
increase in inventory during the fiscal year compared with the
previous fiscal year, the effect of the gain on the transfer to
the Japanese Government of the substitutional portion of the
employee pension fund, and of the gain on change in interest in
subsidiaries and equity investees.
Investing Activities: During the fiscal year, Sony used
871.3 billion yen of net cash in investing activities, an
decrease of 59.9 billion yen, or 6.4 percent, compared
with the previous fiscal year. Of this total, all segments
excluding the Financial Services segment used 296.4 billion
yen of net cash in investing activities, an decrease of
175.7 billion yen, or 37.2 percent, compared with the
previous fiscal year, and the Financial Services segment used
563.8 billion yen in net cash, an increase of
142.4 billion yen, or 33.8 percent. During the fiscal
year, purchases of fixed assets (capital expenditures) were
made, primarily due to proactive capital expenditures in
semiconductors mainly within the Electronics segment, mostly
associated with image sensors.
Within the Financial Services segment, payments for investments
and advances exceeded proceeds from maturities of marketable
securities, sales of securities investments and collections of
advances primarily as a result of investments in mainly Japanese
fixed income securities resulting from an increase in insurance
premiums at Sony Life, and an increase in the outstanding
balance of mortgage loans at Sony Bank.
Compared with the previous fiscal year, net cash used in
investing activities decreased, due primarily to the fact that
in the previous fiscal year, investments were carried out
principally in relation to S-LCD and in semiconductor
fabrication equipment, particularly investments associated with
the advanced microprocessor Cell On the other hand, within the
Financial Services segment, net cash used in investing
activities increased due to an increase in investments and
advances compared to the previous fiscal year.
In all segments excluding the Financial Services segment, the
difference between cash generated from operating activities and
cash used in investing activities was a use of cash of
44.4 billion yen, as compared to the 13.3 billion yen
of cash generated in the previous fiscal year.
Financing Activities: During the fiscal year ended
March 31, 2006, 359.9 billion yen of net cash was
provided by financing activities. Of the total,
74.6 billion yen of net cash was generated from financing
activities in all segments excluding the Financial Services
segment compared to a use of net cash in the previous fiscal
year of 95.4 billion yen. This was a result of straight
bonds issued in order to redeem bonds maturing during the fiscal
years ended March 31, 2006 and March 31, 2007.
In the Financial Services segment, as a result of an increase in
policyholder accounts at Sony Life, and an increase in deposits
from customers, as well as call loan borrowings carried out at
Sony Bank, 274.9 billion yen of net cash was generated by
financing activities.
Accounting for all these factors and the effect of exchange rate
changes, the total outstanding balance of cash and cash
equivalents at the end of the fiscal year decreased by
76.0 billion yen, or 9.8 percent, to
703.1 billion yen, compared with the end of the previous
fiscal year. The total outstanding balance of cash and cash
equivalents of all segments excluding the Financial Services
segment increased by 65.7 billion yen, or
12.6 percent, to 585.5 billion yen, and for the
Financial Services segment, decreased by 141.7 billion, or
54.6 percent, to 117.6 billion yen, compared with the
end of the previous fiscal year.
Condensed Statements of Cash Flows Separating Out the
Financial Services Segment (Unaudited)
The following schedule shows unaudited condensed statements of
cash flow for the Financial Services segment and all other
segments excluding the Financial Services segment as well as
condensed consolidated statements of cash flow. These
presentations are not required under U.S. GAAP, which is
used in Sony's 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
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all other segments excluding the Financial Services segment are
eliminated in the consolidated figures shown below.
Condensed Statements of Cash Flows
Fiscal Year Ended
March 31
2005
2006
(Yen in millions)
Financial Services
Net cash provided by operating activities
168,078
147,149
Net cash used in investing activities
(421,384
)
(563,753
)
Net cash provided by financing activities
256,361
274,863
Net increase (decrease) in cash and cash equivalents
3,055
(141,741
)
Cash and cash equivalents at beginning of the fiscal year
256,316
259,371
Cash and cash equivalents at end of the fiscal year
259,371
117,630
Fiscal Year Ended
March 31
2005
2006
(Yen in millions)
Sony without Financial Services
Net cash provided by operating activities
485,439
251,975
Net cash used in investing activities
(472,119
)
(296,376
)
Net cash provided by (used in) financing activities
(95,373
)
74,600
Effect of exchange rate changes on cash and cash equivalents
8,890
35,537
Net increase (decrease) in cash and cash equivalents
(73,163
)
65,736
Cash and cash equivalents at beginning of the fiscal year
592,895
519,732
Cash and cash equivalents at end of the fiscal year
519,732
585,468
Fiscal Year Ended
March 31
2005
2006
(Yen in millions)
Consolidated
Net cash provided by operating activities
646,997
399,858
Net cash used in investing activities
(931,172
)
(871,264
)
Net cash provided by financing activities
205,177
359,864
Effect of exchange rate changes on cash and cash equivalents
8,890
35,537
Net increase (decrease) in cash and cash equivalents
(70,108
)
(76,005
)
Cash and cash equivalents at beginning of the fiscal year
849,211
779,103
Cash and cash equivalents at end of the fiscal year
779,103
703,098
Cash Flows
(The fiscal year ended March 31, 2005 compared with the
fiscal year ended March 31, 2004)
Operating Activities: During the fiscal year ended
March 31, 2005, Sony generated 647.0 billion yen of
net cash from operating activities, a increase of
14.4 billion yen, or 2.3 percent compared with the
previous fiscal year. Of this total, all segments excluding the
Financial Services segment generated 485.4 billion yen of
net cash from operating activities, a increase of
84.3 billion yen, or 21.0 percent, compared with the
previous
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fiscal year, and the Financial Services segment generated
168.1 billion yen of net cash from operating activities, a
decrease of 73.5 billion yen, or 30.4 percent,
compared with the previous fiscal year.
During the fiscal year, in addition to profit contributions from
the Pictures segment, Financial Services segment, Game segment
and All Other and depreciation expenses, operating cash flow
benefited from an increase in notes and accounts payable, trade,
primarily associated with an increase in sales and procurement
related primarily to the PSP within the Game segment during the
fourth quarter of the fiscal year, a decrease in notes and
accounts receivable, trade, associated with a sales decrease in
the Pictures segment during the fourth quarter and within All
Other associated with the decrease in sales after August 2004,
and a decrease in inventory mainly within the Game and
Electronics segments. Partially offsetting these contributions
were factors including an increase in notes and accounts
receivable, trade primarily within the Game segment. In
addition, in the Financial Services segment, an increase in
future insurance policy benefits and other, due to an increase
in
insurance-in
-force,
contributed to operating cash flow in the Financial Services
segment.
Compared with the previous fiscal year, net cash provided by
operating activities increased, due to a decrease in inventory
during the fiscal year compared to an increase in inventory in
the previous fiscal year, and there was a smaller increase in
notes and accounts receivable, trade, compared with the previous
fiscal year associated with the decrease in sales. These factors
were partially offset by factors such as a smaller increase in
notes and accounts payable, trade.
Investing Activities: During the fiscal year, Sony used
931.2 billion yen of net cash in investing activities, an
increase of 169.4 billion yen, or 22.2 percent,
compared with the previous fiscal year. Of this total, all
segments excluding the Financial Services segment used
472.1 billion yen of net cash in investing activities, an
increase of 119.6 billion yen, or 33.9 percent,
compared with the previous fiscal year, and the Financial
Services segment used 421.4 billion yen in net cash, an
increase of 19.8 billion yen, or 4.9 percent.
During the fiscal year, purchases of fixed assets (capital
expenditures) were made, primarily due to proactive capital
expenditures in semiconductors mainly within the Electronics
segment, mostly associated with system LSI including the
advanced microprocessor Cell as well as investments associated
with the establishment of the amorphous TFT LCD panel
manufacturing joint venture S-LCD. Within the Financial Services
segment, payments for investments and advances exceeded proceeds
from maturities of marketable securities, sales of securities
investments and collections of advances primarily as a result of
investments in mainly Japanese fixed income securities resulting
from an increase in insurance premiums at Sony Life, and a
mortgage loan campaign carried out at Sony Bank.
Compared with the previous fiscal year, net cash used in
investing activities increased, due primarily to investments
associated with S-LCD. In all segments excluding the Financial
Services segment, the amount of payments for investments and
advances increased by 124.8 billion yen from
33.3 billion yen to 158.2 billion yen due to the
abovementioned investments at S-LCD. On the other hand, in the
Financial Services segment, net cash used in investing
activities increased due to an increase in proceeds from
investments and advances year on year.
In all segments excluding the Financial Services segment, the
difference between cash generated from operating activities and
cash used in investing activities was 13.3 billion yen for
the fiscal year, a decrease of 35.3 billion yen, or
72.6 percent, compared with the previous fiscal year.
Financing Activities: During the fiscal year ended
March 31, 2005, 205.2 billion yen of net cash was
provided by financing activities. Of the total,
95.4 billion yen of net cash was used for financing
activities in all segments excluding the Financial Services
segment as a result of 89.7 billion yen being used for the
repayment of long term debt and 23.0 billion yen in cash
being used for the payment of dividends.
In the fiscal year ended March 31, 2005, net cash was used
for financing activities compared to 153.8 billion yen of
net cash procured in the previous fiscal year. This change was
due mainly to the issuance of 250.0 billion yen in Euro yen
convertible bonds (bonds with stock acquisition rights) within
the previous fiscal year.
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In the Financial Services segment, as a result of a
294.4 billion yen increase in customer deposits due to
factors such as an increase in
insurance-in
-force at
Sony Life and an increase in deposits from customers at Sony
Bank, 256.4 billion yen was procured by financing
activities.
Accounting for all these factors and the effect of exchange rate
changes, the total outstanding balance of cash and cash
equivalents at the end of the fiscal year decreased by
70.1 billion yen, or 8.3 percent, to
779.1 billion yen, compared with the end of the previous
fiscal year. The total outstanding balance of cash and cash
equivalents of all segments excluding the Financial Services
segment decreased by 73.2 billion yen, or
12.3 percent, to 519.7 billion yen, and for the
Financial Services segment, increased by 3.1 billion, or
1.2 percent, to 259.4 billion yen, compared with the
end of the previous fiscal year.
Condensed Statements of Cash Flows Separating Out the
    Financial Services Segment (Unaudited)
The following schedule shows unaudited condensed statements of
cash flow for the Financial Services segment and all other
segments excluding the Financial Services segment as well as
condensed consolidated statements of cash flow. These
presentations are not required under U.S. GAAP, which is
used in Sony's 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 all
other segments excluding the Financial Services segment are
eliminated in the consolidated figures shown below.
Condensed Statements of Cash Flows
Fiscal Year Ended
March 31
2004
2005
(Yen in millions)
Financial Services
Net cash provided by operating activities
241,627
168,078
Net cash used in investing activities
(401,550
)
(421,384
)
Net cash provided by financing activities
141,696
256,361
Net increase (decrease) in cash and cash equivalents
(18,227
)
3,055
Cash and cash equivalents at beginning of the fiscal year
274,543
256,316
Cash and cash equivalents at end of the fiscal year
256,316
259,371
Fiscal Year Ended
March 31
2004
2005
(Yen in millions)
Sony without Financial Services
Net cash provided by operating activities
401,090
485,439
Net cash used in investing activities
(352,496
)
(472,119
)
Net cash provided by (used in) financing activities
153,759
(95,373
)
Effect of exchange rate changes on cash and cash equivalents
(47,973
)
8,890
Net increase (decrease) in cash and cash equivalents
154,380
(73,163
)
Cash and cash equivalents at beginning of the fiscal year
438,515
592,895
Cash and cash equivalents at end of the fiscal year
592,895
519,732
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Fiscal Year Ended
March 31
2004
2005
(Yen in millions)
Consolidated
Net cash provided by operating activities
632,635
646,997
Net cash used in investing activities
(761,792
)
(931,172
)
Net cash provided by financing activities
313,283
205,177
Effect of exchange rate changes on cash and cash equivalents
(47,973
)
8,890
Net increase (decrease) in cash and cash equivalents
136,153
(70,108
)
Cash and cash equivalents at beginning of the fiscal year
713,058
849,211
Cash and cash equivalents at end of the fiscal year
849,211
779,103
LIQUIDITY AND CAPITAL RESOURCES
Sony's financial policy is to secure adequate liquidity, to
ensure the smooth financing of its operations and to maintain
the strength of its balance sheet.
Sony intends to continue both structural reform and various
investments for future growth. Sony believes that it can
maintain sufficient liquidity and financial flexibility to
satisfy its various capital needs, including funding
requirements that arise from its business strategy, working
capital needs, repayment of existing debt, payment of dividends
and all its other capital needs, through cash flows and cash and
cash equivalents, its ability to procure necessary funds from
the financial and capital markets, its commitment lines with
banks, and other means.
Market Access
Sony Corporation and SGTS, a finance subsidiary in the U.K.,
procure funds from the financial and capital markets.
In order to meet long-term funding requirements, Sony
Corporation utilizes its access to global equity and bond
markets. During the fiscal year ended March 31, 2006, based
on a bond shelf registration filed in Japan, Sony issued three
series of straight bonds totaling 120 billion yen in
September 2005 for the purpose of debt redemption, and another
three series of straight bonds totaling 100 billion yen in
February 2006 for the redemption bonds maturing during the
fiscal year ending March 31, 2007, respectively. As the
total amount of shelf registrations outstanding decreased after
these bond issues, Sony filed a new shelf registration of
300 billion yen in April 2006, which is effective for two
years.
In order to meet the working capital requirements of Sony, SGTS
maintains commercial paper ("CP") programs and a
medium-term note ("MTN") program. SGTS maintains CP
programs for the U.S., Euro and Japanese CP markets. As of
March 31, 2006, the total amount of these CP programs was
1,321.9 billion yen. During the fiscal year ended
March 31, 2006, the largest month-end outstanding balance
of CP was 111.4 billion yen in September 2005. There was no
outstanding balance of CP as of March 31, 2006.
SGTS maintains a Euro MTN program of whose amount as of
March 31, 2006 was 587.1 billion yen. There was no
outstanding balance as of March 31, 2006. Sony Capital
Corporation ("SCC"), a Sony finance subsidiary in the
U.S., had an outstanding MTN balance of approximately
58.7 billion yen as of March 31, 2006. However, Sony
does not intend to utilize SCC's program for future
financing requirements as SCC's financing function was
integrated into that of SGTS.
Liquidity Management
Sony's working capital needs grow significantly in the
third quarter (from October to December) as a result of the
general seasonality to Sony's business. Sony's basic
liquidity management policy is to secure sufficient liquidity
throughout the relevant fiscal year, covering such factors as
short-term cash flow volatility
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mentioned above, repayments for debts whose due date fall within
a year, and possible downward earnings risk due to changes in
the business environment.
Sony defines its liquidity sources as the amount of cash, cash
equivalents ("cash balance"), and committed lines of
credit contracted with financial institutions. Regarding its
cash balance, Sony's policy is to maintain more than a
certain level of cash balance to absorb any working capital
needs daily and monthly. The balance of cash and marketable
securities on March 31, 2006, was 589.5 billion yen. A
short-term shortage in the cash balance is financed by the
issuance of CP. However, Sony controls the outstanding CP amount
through internal limits as part of its short-term debt risk
management strategy. In the fiscal year ended March 31,
2006, there was no outstanding CP amount.
As part of its additional liquidity sources, Sony has a total of
683.4 billion yen in committed lines of credit with various
financial institutions, of which the unused amount was
676.4 billion yen as of March 31, 2006. Major
committed lines of credit include a total of 502.6 billion
yen of Global Commitment Facilities contracted with a syndicate
of global banks, and a 150 billion yen of committed line of
credit contracted with Japanese financial institutions. During
the fiscal year ended March 31, 2006, Sony reorganized the
total amount and composition of terms to maturity of both
facilities. With regards to the Global Commitment Facilities, as
of March 31, 2005, Sony had two facilities consisting of a
5-year
contract (amount
as of March 31, 2005 is 459.4 billion yen, maturity
March 2009) and a
364-day
contract
(amount as of March 31, 2005 is 114.9 billion yen)
totaling 574.3 billion yen. During the fiscal year ended
March 31, 2006, the
364-day
portion was
terminated. With regards to the committed line with Japanese
financial institutions, as of March 31, 2005, Sony had two
facilities consisting of a 100 billion yen
3-year
contract and a
150 billion yen
364-day
contract,
totaling 250 billion yen. During the fiscal year ended
March 31, 2006, upon expiry of the
3-year
contract, Sony
newly entered into a 150 billion yen
3-year
contract
(maturing in July 2008) while the
364-day
contract was
terminated. As a result, although the total amount of the
facilities has been reduced by 185.3 billion yen compared
with the fiscal year ended March 31, 2005, Sony believes it
maintains long-term secured and sufficient liquidity. Sony uses
these lines for general corporate purposes, including the
support of CP programs and for emergency purposes. There are no
financial covenants in any of Sony's material financial
agreements that would cause an acceleration of the obligation in
the event of a downgrade in Sony's credit ratings. However,
a downgrade in Sony's credit ratings could increase the
cost of borrowings. There are no restrictions on how Sony's
borrowings can be used except that some borrowings may not be
used to acquire securities listed on a U.S. exchange or
traded
over-the
-counter
in U.S., and use of such borrowings must comply with the rules
and regulations issued by authorities such as the Board of
Governors of the Federal Reserve Board.
Ratings
Sony considers it to be one of management's top priorities
to maintain a stable and appropriate credit rating in order to
ensure financial flexibility for liquidity and capital
management, and to continue to maintain adequate access to
sufficient funding resources in the financial and capital
markets.
In order to facilitate access to global capital markets, Sony
obtains credit ratings from two rating agencies, Moody's
Investors Service ("Moody's") and Standard and
Poor's Rating Services ("S&P"). In addition,
Sony maintains a rating from Rating and Investment Information,
Inc. ("R&I"), a rating agency in Japan, for access
to the Japanese capital market.
Sony's current debt ratings from each agency are noted
below:
Moody's
S&P
R&I
Long-term debt
A2 (Outlook: Stable)
A- Outlook: Stable)
AA- (Outlook: Stable)
Short-term debt
P-1
A-2
a-1+
S&P downgraded Sony's long-term debt rating from A to
A- and short-term debt rating from A-1 to A-2 in October 2005,
R&I downgraded Sony's long-term debt rating from AA to
AA- in November 2005 and Moody's downgraded Sony's
long-term debt rating from A1 to A2 in December 2005,
respectively. Sony's short-term debt rating from
Moody's and R&I have been unaffected. These downgrades
of debt ratings
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reflected rating agencies' concern mainly of low
profitability in the Electronics segment and the low level of
Sony's cash flows. The outlook after the downgrades of
long-term debt ratings from the three agencies is stable.
Despite these downgrades of debt ratings, Sony believes its
access to the global capital markets and ability to issue CP for
its working capital needs have not been restricted.
Cash Management
Sony is centralizing and working to make more efficient its
global cash management activities through SGTS. The excess or
shortage of cash at most of Sony's subsidiaries is invested
or funded by SGTS after having been netted out, although Sony
recognizes that fund transfers are limited in certain countries
and geographical areas due to restrictions on capital
transactions. In order to pursue more efficient cash management,
Sony manages uneven cash distribution among its subsidiaries
directly or indirectly through SGTS so that Sony can reduce
unnecessary cash and cash equivalents as well as borrowings as
much as possible.
The above description covers liquidity and capital resources for
consolidated Sony excluding the Financial Services segment which
secure liquidity on their own.
Financial Services segment
In the Financial Services segment, the management of SFH, Sony
Life, Sony Assurance and Sony Bank recognize the importance of
securing sufficient liquidity to cover the payment obligations
that they take on as a result of their ordinary course of
business, and these companies abide by the regulations imposed
by regulatory authorities and establish and operate under
company guidelines that comply with these regulations. Their
purpose in doing so is to maintain sufficient cash and cash
equivalents and secure sufficient means to pay their
obligations. For instance, Sony Life's cash inflows come
mainly from policyholders' insurance premiums and Sony Life
keeps sufficient liquidity in the form of investments primarily
in various securities. Sony Bank, on the other hand, uses its
cash inflows, which come mainly from customers' deposits in
local or foreign currencies, in order to offer mortgage loans to
individuals or to make bond investments, and establish a
necessary level of liquidity for the smooth settlement of
transactions.
Sony Life currently obtains ratings from five rating agencies:
A+ by S&P for long-term counterparty and insurer financial
strength rating, Aa3 by Moody's for insurance financial
strength rating, A+ by AM Best Company Inc. for financial
strength rating, and AA by R&I for insurance claims paying
ability and AA by the Japan Credit Rating Agency Ltd for ability
to pay insurance claims. Sony Bank obtained an A-/ A-2 rating
from S&P for its long-term/short-term local/foreign currency
issuer ratings.
RESEARCH AND DEVELOPMENT
In its mid-term corporate strategy announced on
September 22, 2005, Sony stressed that the most pressing
issue confronting the company today is the revitalization of its
electronics business. The strengthening of the competitiveness
of Sony's technologies and its products is an important
element of both the revitalization of the Electronics business
and the company's growth strategy, and Sony considers
research and development activities that support this
competitiveness will remain pivotal to its mid- to long term
strategy.
Research and Development is focused in three key domains: a
common development platform technology for home and mobile
electronics; semiconductor and device technology essential for
product differentiation and for creating added-value to
products; and software technology.
Reflecting Sony's mid-term corporate strategy, in October
2005, the company established the Display Device Development
Group, to accelerate the development of organic light-emitting
diode (OLED) displays, and the Technology Development
Group, to strengthen software development.
Moreover, Sony continues to strengthen the fundamental research
and development structure at three of its corporate
laboratories, Information Technology Laboratories (communication
and security technologies), Material Laboratories (material and
device technologies) and A3 Laboratories (signal processing
technologies).
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Research and development costs for the fiscal year ended
March 31, 2006 increased 29.8 billion yen, or
5.9 percent, to 531.8 billion yen, compared with
the previous fiscal year. The ratio of research and development
costs to net sales (which excludes Financial service revenue and
other operating revenue) increased from 7.6 percent to
7.9 percent. The bulk of research and development costs
were incurred in the Electronics and Game segments. Expenses in
the Electronics segment decreased 15.2 billion yen, or
3.5 percent, to 418.1 billion yen, whereas
expenses in the Game segment increased
40.2 billion yen, or 58.7 percent, to
108.7 billion yen. In the Electronics segment,
approximately 64 percent of expenses were for the
development of new product prototypes while the remaining
36 percent were for the development of mid- to long-term
new technologies in such areas as semiconductors,
communications, displays and next generation optical discs. In
addition, within the Game segment, there was an increase
primarily of hardware-related research and development costs
associated with PS3.
Research and development costs for the fiscal year ended
March 31, 2005 decreased 12.5 billion yen, or
2.4 percent, to 502.0 billion yen, compared with
the previous fiscal year. The ratio of research and development
costs to net sales increased from 7.5 percent to
7.6 percent. The bulk of research and development costs
were incurred in the Electronics and Game segments. Expenses in
the Electronics segment increased 2.4 billion yen, or
0.6 percent, to 433.3 billion yen, and expenses
in the Game segment decreased 14.9 billion yen, or
17.9 percent, to 68.5 billion yen. In the
Electronics segment, approximately 62 percent of expenses
were for the development of new product prototypes while the
remaining 38 percent were for the development of mid- to
long-term new technologies in such areas as semiconductors,
communications, displays and next generation optical discs.
There was an increase in research and development costs related
to semiconductor process technology associated with the transfer
of Sony Computer Entertainment's semiconductor
manufacturing operations from the Game segment to the
Electronics segment. However, the stringent selection of
research and development activities resulted in a small increase
in research and development expenses within the Electronics
segment. Research and development expenses in the Game segment
remained high due to the research and development associated
with PSP and PS3.
Research and development costs for the fiscal year ended
March 31, 2004 were 514.5 billion yen. The bulk
of research and development costs were incurred in the
Electronics and Game segments; expenses in the Electronics
segment were 431.0 billion yen, and expenses in the
Game segment were 83.4 billion yen. In the Electronics
segment, approximately 62 percent of expenses were for the
development of new product prototypes while the remaining
approximately 38 percent were for the development of mid-
to long-term new technologies in such areas as semiconductors,
communications, displays and next generation optical discs.
TREND INFORMATION
This section contains forward-looking statements about the
possible future performance of Sony and should be read in light
of the cautionary statement on that subject, which appears on
the inside front cover page and which applies to this entire
document.
Issues Facing Sony and Management's Response to those
    Issues
Competition in many of Sony's business segments continues
to intensify and price erosion, especially in the Electronics
segment, remains persistent. Competition has intensified due to
the penetration of broadband, which has led to an augmentation
of network infrastructure, making it easier for companies in
other sectors to enter the markets in which Sony competes.
In response to these challenges, Sony has been undertaking
initiatives to improve its competitiveness and strengthen the
quality of its management, such as a reduction in the number of
business categories and the number of models, a rationalization
of manufacturing sites and the creation of a more efficient
administrative structure, as well as the sale of non-core assets
(See "Restructuring" in "Item 5.
Operating and Financial Review and Prospects
" for
more detailed information about restructuring). This plan,
developed in consultation with Sony's stakeholders both
inside and outside the company, moved to strengthen Sony's
competitiveness in three core sectors — Electronics,
Game and Entertainment — through a balanced mix of
restructuring and growth initiatives combined with a new
organizational structure. In particular, it is the
revitalization of
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Electronics that management regards as the most pressing issue
confronting Sony today. As well as reorganizing its Electronics
business to place centralized decision-making authority over key
areas under the Electronics CEO, Sony is implementing
reorganization initiatives to strengthen horizontal coordination
in the key areas of product planning, technology, procurement,
manufacturing, and sales and marketing. For Sony's growth
strategy in Electronics, resources will be focused on the
development and commercialization of high-definition products,
mobile products and advanced semiconductors and other key
devices that can further differentiate these products, targeting
enhanced competitiveness and improved profitability.
In addition to this cost-cutting and investment for growth, each
of Sony's business segments grappled with issues specific
to that segment. Below is a description of the issues management
believes each segment continues to face and an explanation as to
how each segment is approaching those issues.
Electronics
Although the Electronics segment continues to hold a very strong
position in the worldwide consumer audio visual products market,
that position has become increasingly threatened as a result of
the entrance of new manufacturers and distributors. These new
entrants are threatening Sony's position due to the
industry shift from analog to digital technology. In the analog
era, complicated functionality of electronics products was made
possible through the combination of several complex parts, and
Sony held a competitive advantage in the design and manufacture
of those parts as a result of its accumulated expertise. In the
digital era, however, complicated functionality has become
concentrated on semiconductors and other key digital devices.
Since these semiconductors and key devices are able to be mass
produced, they have become readily available to new market
entrants, and the functionality that once commanded a high
premium has become more affordable. This has led to intense
price erosion in the consumer audio visual products market. To
respond to these challenges, Sony is striving to keep pace with
price erosion by reducing its manufacturing and other costs. It
is seeking to maintain the premium pricing it enjoys on many of
its
end-user
products
by adding functionality to those products and developing new
applications and ways of use that appeal to the consumer. In
addition, it is taking steps to increase its competitive edge by
developing high value-added semiconductors and other digital key
devices
in-house.
By
enhancing the
in-house
production of key devices, Sony aims to incorporate added-value
into these key devices.
In the area of semiconductors, in the fiscal years ended
March 31, 2005 and 2006, Sony carried out
150 billion yen and 140 billion yen,
respectively, of capital expenditure mainly on system large
scale integrations ("LSI") and CCDs. These totals also
include Sony's investment in semiconductor fabrication
equipment built at the 65 nanometer process technology
level. Chips that will be manufactured using this equipment will
be some of the most highly advanced on the market, and will
include system LSI, in particular the Cell microprocessor, for
anticipated use in the next generation computer entertainment
system, PS3, as well as digital consumer electronics products
for the broadband era. Over the last five years, Sony, Sony
Computer Entertainment, IBM Corporation ("IBM")
and Toshiba Corporation ("Toshiba") have carried out
joint development focused on 90 and 65 nanometer process
technology for utilization in the design and manufacturing of
the Cell microprocessor. Moreover, in 2006 Sony Corporation,
IBM, and Toshiba concluded a new joint development agreement to
begin a new
5-year
alliance for the research and development of advanced
semiconductor technology.
In the area of other key devices,
S-LCD,
Sony's
joint venture with Samsung Electronics Co., Ltd. based in South
Korea, started production of 7th generation amorphous
TFT LCD panel (glass panel size: approximately
1,870mm × 2,200mm) in April 2005 and since
October 2005 has been producing 60,000 sheets a month. In July
2006,
S-LCD
increased
its production capacity to 75,000 panels a month, and
further investment has been committed that will raise its
production capacity to 90,000 panels at the start of
calendar 2007. The total amount of these new investments, to be
self-financed by
S-LCD,
is approximately 10 billion yen and approximately
28 billion yen, respectively.
In July 2006, Sony and Samsung signed the final contract
regarding the manufacturing of 8th generation
TFT LCD panels (glass panel size: approximately
2,200mm × 2,500mm) at the
S-LCD
joint venture.
The total amount of the investment is expected to be
approximately 1.9 billion U.S. dollars (approximately
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50 percent of which will be borne by Sony), targeting a
production capacity of 50,000 panels a month from
fall, 2007.
Game
In the Game segment, although it is anticipated that the size of
the PS2 business, six years into its business cycle after its
domestic launch in Japan in March 2000, will begin to contract,
SCE will endeavor to maintain a continued high share of the
global game console market for both PS2 hardware and software.
Furthermore, through the addition of software and hardware
system upgrades and new peripherals, which will work in tandem
with PSP software to propose new ways of enjoying the handheld,
SCE will promote further penetration of the platform. In
addition, the new PS3 computer entertainment platform is
scheduled to launch in November 2006. Through the provision of
an appealing software
line-up,
SCE will
promote the launch of the PS3 platform (See "Game" in
"Operating Results for the Fiscal Year Ended
March 31, 2006 compared with the Fiscal Year Ended
March 31, 2005"
within "Item 5.
Operating and Financial Review and Prospects
" for
more detailed information regarding the impact of the PS3
launch).
Pictures
In the Pictures segment, Sony faces intense competition, rising
advertising and promotion expenses and a growing trend toward
digital piracy. In addition, the DVD format is nine years old
and is showing signs of maturation. To meet these challenges,
Sony is working to distribute a diversified portfolio of motion
pictures with broad worldwide appeal on existing and new home
entertainment formats, including Blu-ray, and on other emerging
platforms, including digital download.
Financial Services
In the Financial Services segment, the value of assets
accumulated by the businesses in the segment has grown
continuously over the past several years, resulting in a large
portion (approximately 43 percent) of Sony's total
assets being accounted for by the Financial Services segment. To
strengthen asset management and risk management in parallel with
this growing asset value, enhance disclosure of business
details, and offer customers integrated financial services
tailored to their individual needs, in April 2004 Sony
established Sony Financial Holdings Inc., a holding company
overseeing Sony Life, Sony Assurance and Sony Bank, with the aim
of both increasing the synergies between these businesses and
targeting an initial public offering at some point in the fiscal
year ending March 31, 2008 or subsequent fiscal year
thereafter, as deemed appropriate by Sony after taking into
account equity market conditions.
CRITICAL ACCOUNTING POLICIES
The preparation of the consolidated financial statements in
conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. On an ongoing basis, Sony evaluates its estimates which
are based on historical experience and on various other
assumptions that are believed to be reasonable under the
circumstances. The results of these evaluations form the basis
for making judgments about the carrying values of assets and
liabilities and the reported amounts of expenses that are not
readily apparent from other sources. Actual results may differ
from these estimates under different assumptions. Sony considers
an accounting policy to be critical if it is important to its
financial condition and results, and requires significant
judgments and estimates on the part of management in its
application. Sony believes that the following represent the
critical accounting policies of the company.
Investments
Sony's investments are comprised of debt and equity
securities accounted for under both the cost and equity method
of accounting. If it has been determined that an investment has
sustained an other-than-temporary decline in its value, the
investment is written down to its fair value by a charge to
earnings. Sony
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regularly evaluates its investment portfolio to identify
other-than-temporary impairments of individual securities.
Factors that are considered by Sony in determining whether an
other-than-temporary decline in value has occurred include: the
length of time and extent to which the market value of the
security has been less than its original cost, the financial
condition, operating results, business plans and estimated
future cash flows of the issuer of the security, other specific
factors affecting the market value, deterioration of credit
condition of the issuers, sovereign risk, and ability to retain
the investment for a period of time sufficient to allow for the
anticipated recovery in market value.
In evaluating the factors for available-for-sale securities
whose fair values are readily determinable, management presumes
a decline in value to be other-than-temporary if the fair value
of the security is 20 percent or more below its original
cost for an extended period of time (generally a period of up to
six to twelve months). This criteria is employed as a threshold
to identify securities which may have a decline in value that is
other-than-temporary. The presumption of an other-than-temporary
impairment in such cases may be overcome if there is evidence to
support that the decline is temporary in nature due to the
existence of other factors which overcome the duration or
magnitude of the decline. On the other hand, there may be cases
where impairment losses are recognized when the decline in the
fair value of the security is not more than 20 percent or
such decline has not existed for an extended period of time, as
a result of considering specific factors which may indicate the
decline in the fair value is other-than-temporary.
The assessment of whether a decline in the value of an
investment is other-than-temporary often requires management
judgment based on evaluation of relevant factors. Those factors
include business plans and future cash flows of the issuer of
the security, the regulatory, economic or technological
environment of the investee, and the general market condition of
either the geographic area or the industry in which the investee
operates. Accordingly, it is possible that investments in
Sony's portfolio that have had a decline in value that are
currently believed to be temporary may determine to be
other-than-temporary in the future based on Sony's
evaluation of additional information such as continued poor
operating results, future broad declines in value of worldwide
equity markets or circumstances in market interest rate
fluctuations. As a result, unrealized losses recorded for
investments may be recognized into income in future periods.
Impairment of long-lived assets
Sony reviews the carrying value of its long-lived assets held
and used and long-lived assets to be disposed of whenever events
or changes in circumstances indicate that the carrying value of
the assets may not be recoverable. This review is performed
using estimates of future cash flows by product category
(e.g. CRT TV displays) or entity
(e.g. semiconductor manufacturing division in
the U.S.). If the carrying value of the asset is considered
impaired, an impairment charge is recorded for the amount by
which the carrying value of the asset exceeds its fair value.
Fair value is determined using the present value of estimated
net cash flows or comparable market values.
Management believes that the estimates of future cash flows and
fair value are reasonable; however, changes in estimates
resulting in lower future cash flows and fair value due to
unforeseen changes in business assumptions could negatively
affect the valuations of those long-lived assets.
In the fiscal year ended March 31, 2004, Sony recorded
impairment charges for long-lived assets totaling
16.1 billion yen. It included
5.3 billion yen for the impairment of long-lived
assets such as semiconductor and CRT TV display
manufacturing equipment to be abandoned or sold in connection
with certain restructuring activities in the Electronics
segment. It also included 3.0 billion yen for the
impairment of long-lived assets in the Music business such as a
certain CD manufacturing facility to be abandoned or sold
and a recording studio and equipment to be held and used in
Japan. Fair value of these assets was determined using estimated
future discounted cash flows which were based on the best
information available.
In the fiscal year ended March 31, 2005, Sony recorded
impairment charges for long-lived assets totaling
19.2 billion yen. It included
7.5 billion yen for the impairment of long-lived
assets of CRT TV display manufacturing facilities to
be held and used in Europe in connection with certain
restructuring activities in the Electronics segment. Fair value
of these assets was determined using estimated future discounted
cash flows which were based on the best information available.
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In the fiscal year ended March 31, 2006, Sony recorded
impairment charges for long-lived assets totaling
59.8 billion yen. It included
25.5 billion yen for the impairment of long-lived
assets of CRT TV display manufacturing facilities to
be held and used in the U.S. in connection with certain
restructuring activities in the Electronics segment. Fair value
of these assets was determined using estimated future discounted
cash flows which were based on the best information available.
The impairment charge also included 8.5 billion yen
for the impairment of long-lived assets of the Metreon, an
entertainment complex to be held for sale in the U.S. in
connection with restructuring activities of
non-core
businesses in
All Other. The impairment charge was based on the negotiated
sales price of the complex.
Goodwill and other intangible assets
Goodwill and other intangible assets that are determined to have
an indefinite life are not amortized, but are tested for
impairment in accordance with FAS No. 142 during the fourth
quarter of fiscal year on an annual basis and between annual
tests if an event occurs or circumstances change that would more
likely than not reduce the fair value of these assets below
their carrying amount. Such an event would include unfavorable
variances from established business plans, significant changes
in forecasted results or volatility inherent to external markets
and industries, which are periodically reviewed by management.
Specifically, goodwill impairment is determined using a two-step
process. The first step of the goodwill impairment test is used
to identify potential impairment by comparing the fair value of
a reporting unit (Sony's operating segments or one level
below the operating segments) with its carrying amount,
including goodwill. If the fair value of a reporting unit
exceeds its carrying amount, goodwill of the reporting unit is
considered not impaired and the second step of the impairment
test is unnecessary. If the carrying amount of a reporting unit
exceeds its fair value, the second step of the goodwill
impairment test is performed to measure the amount of impairment
loss, if any. The second step of the goodwill impairment test
compares the implied fair value of the reporting unit's
goodwill with the carrying amount of that goodwill. If the
carrying amount of the reporting unit's goodwill exceeds
the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to that excess. The implied fair
value of goodwill is determined in the same manner as the amount
of goodwill recognized in a business combination. That is, the
fair value of the reporting unit is allocated to all of the
assets and liabilities of that unit (including any unrecognized
intangible assets) as if the reporting unit had been acquired in
a business combination and the fair value of the reporting unit
was the purchase price paid to acquire the reporting unit. Other
intangible assets are tested for impairment by comparing the
fair value of the intangible asset with its carrying value. If
the carrying value of the intangible asset exceeds its fair
value, an impairment loss is recognized in an amount equal to
that excess.
Determining the fair value of a reporting unit under the first
step of the goodwill impairment test and determining the fair
value of individual assets and liabilities of a reporting unit
(including unrecognized intangible assets) under the second step
of the goodwill impairment test is judgmental in nature and
often involves the use of significant estimates and assumptions.
Similarly, estimates and assumptions are used in determining the
fair value of other intangible assets. These estimates and
assumptions could significantly impact whether or not an
impairment charge is recognized as well as the magnitude of any
such charge. In its impairment review, Sony performs internal
valuation analyses or utilizes third-party valuations when
management believes it to be appropriate, and considers other
market information that is publicly available. Estimates of fair
value are primarily determined using discounted cash flow
analysis. This approach uses significant estimates and
assumptions including projected future cash flows, the timing of
such cash flows, discount rates reflecting the risk inherent in
future cash flows, perpetual growth rates, determination of
appropriate market comparables and the determination of whether
a premium or discount should be applied to comparables. During
the fourth quarter of the year ended March 31, 2006, Sony
performed the annual impairment test for goodwill and recorded
an impairment loss of 0.5 billion yen in a reporting
unit in All Other. This impairment charge reflected the overall
decline in the fair value of a subsidiary. The fair value of the
subsidiary was estimated principally using the expected present
value of future cash flows.
Management believes that the estimates of future cash flows and
fair value are reasonable; however, changes in estimates
resulting in lower future cash flows and fair value due to
unforeseen changes in business assumptions could negatively
affect the valuations, which may result in Sony recognizing
impairment charges
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for goodwill and other intangible assets in the future. In order
to evaluate the sensitivity of the fair value calculations on
the impairment analysis, Sony applied a hypothetical
10 percent decrease to the fair value of each reporting
unit. As of March 31, 2006, a 10 percent hypothetical
decrease to the fair value of each reporting units would not
have resulted in a material impairment loss.
Pension benefits costs
Employee pension benefit costs and obligations are dependent on
certain assumptions including discount rates, retirement rates
and mortality rates, which are based upon current statistical
data, as well as expected long-term rates of return on plan
assets and other factors. Specifically, the discount rate and
expected long-term rate of return on assets are two critical
assumptions in the determination of periodic pension costs and
pension liabilities. Assumptions are evaluated at least
annually, or at the time when events occur or circumstances
change and these events or changes could have a significant
effect on these critical assumptions. In accordance with
U.S. GAAP, actual results that differ from the assumptions
are accumulated and amortized over future periods. Therefore,
actual results generally affect recognized costs and the
recorded obligations for pensions in future periods. While
management believes that the assumptions used are appropriate,
differences in actual experience or changes in assumptions may
affect Sony's pension obligations and future costs.
Sony's principal pension plans are its Japanese pension
plans. Foreign pension plans are not significant individually
with total assets and pension obligations amounting to less than
10 percent of those of the aggregate of the Japanese
pension plans.
To determine the benefit obligation of the Japanese pension
plans, Sony used a discount rate of 2.2 percent for its
Japanese pension plans as of March 31, 2006. The discount
rate was determined by using currently available information
about rates of return on high-quality fixed-income investments
available and expected to be available during the period to
maturity of the pension benefit obligation in consideration of
amounts and timing of cash outflows for expected benefit
payments. Such available information about rates of returns is
collected from Bloomberg and credit rating agencies. The
2.2 percent discount rate represents a 10 basis point
decrease from the 2.3 percent discount rate used for fiscal
year ended March 31, 2005. The reduction of the average
duration of benefit payments in consideration of amounts and
timing of cash outflows for expected benefit payments is mainly
due to the fact that more retiring employees selected
lump-sum
amounts
instead of monthly pension payments. For Japanese pension plans,
a 10 basis point decrease in the discount rate would
increase pension costs by approximately
0.8 billion yen for the fiscal year ending
March 31, 2007.
To determine the expected long-term rate of return on pension
plan assets, Sony considers the current and expected asset
allocations, as well as historical and expected long-term rates
of return on various categories of plan assets. For Japanese
pension plans, the expected long-term rate of return on pension
plan assets was 3.2 percent and 3.5 percent as of
March 31, 2005 and 2006 respectively. The actual gain on
pension plan assets for the fiscal year ended March 31,
2006 was 10.6 percent. Actual results that differ from the
expected return on plan assets are accumulated and amortized as
a component of pension costs over the average future service
period, thereby reducing the year-to-year volatility in pension
costs. As of March 31, 2005 and 2006, Sony had unrecognized
actuarial losses of 322.2 billion yen and
169.9 billion yen, respectively, including losses
related to plan assets. As a result of the transfer to the
Japanese government of the substitutional portion, unrecognized
actuarial losses related to the substitutional portion was
recognized as a settlement loss. Therefore unrecognized
actuarial losses were reduced. The unrecognized actuarial losses
reflect the overall unfavorable return on investment over the
past several years and will result in an increase in pension
costs as they are recognized.
Sony recorded a liability for the unfunded accumulated benefit
obligation for Japanese pension plans of
128.6 billion yen and 35.8 billion yen as of
March 31, 2005 and 2006, respectively. This liability
represents the excess of the accumulated benefit obligation
under Sony's qualified defined benefit pension plans over
the fair value of the plans' assets. This liability was
established by a charge to stockholders' equity, resulting
in no impact to the accompanying consolidated statements of
income.
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The following table illustrates the sensitivity to a change in
the discount rate and the expected return on pension plan
assets, while holding all other assumptions constant, for
Japanese pension plans as of March 31, 2006. As benefit
obligation and plan assets decreased due to the transfer to the
government of the substitutional portion, the sensitivity also
decreased.
Pre-Tax
Pension
Equity
Change in Assumption
PBO
Costs
(Net of Tax)
(Yen in billions)
25 basis point increase/decrease in discount rate
-/+24.7
-/+2.0
+/-1.2
25 basis point increase/decrease in expected return on assets
—
-/+1.2
+/-0.7
Deferred tax asset valuation
Sony records a valuation allowance to reduce the deferred tax
assets to an amount that management believes is more likely than
not to be realized. In establishing the appropriate valuation
allowance for deferred tax assets (including deferred tax assets
on tax loss carry-forwards), all available evidence, both
positive and negative, is considered. Information on historical
results is supplemented by all currently available information
on future years, because realization of deferred tax assets is
dependent on whether each tax-filing unit generates sufficient
taxable income. The estimates and assumptions used in
determining future taxable income are consistent with those used
in Sony's approved forecasts of future operations. Although
realization is not assured, management believes it is more
likely than not that all of the deferred tax assets, less
valuation allowance, will be realized.
Film accounting
An aspect of film accounting that requires the exercise of
judgment relates to the process of estimating the total revenues
to be received throughout a film's life cycle. Such
estimate of a film's ultimate revenue is important for two
reasons. First, while a film is being produced and the related
costs are being capitalized, it is necessary for management to
estimate the ultimate revenue, less additional costs to be
incurred, including exploitation costs which are expensed as
incurred, in order to determine whether the value of a film has
been impaired and thus requires an immediate write off of
unrecoverable film costs. Second, the amount of film costs
recognized as cost of sales for a given film as it is exhibited
in various markets throughout its life cycle is based upon the
proportion that current period actual revenues bear to the
estimated ultimate total revenues.
Management bases its estimates of ultimate revenue for each film
on several factors including the historical performance of
similar genre films, the star power of the lead actors and
actresses, the expected number of theaters at which the film
will be released, anticipated performance in the home
entertainment, television and other ancillary markets, and
agreements for future sales. Management updates such estimates
based on the actual results to date of each film. For example, a
film that has resulted in lower than expected theatrical
revenues in its initial weeks of release would generally have
its theatrical, home entertainment and television distribution
ultimate revenues adjusted downward; a failure to do so would
result in the understatement of amortized film costs for the
period. Since the total film cost to be amortized for a given
film is fixed, the estimate of ultimate revenues impacts only
the timing of film cost amortization.
Future insurance policy benefits
Liabilities for future insurance policy benefits are established
in amounts adequate to meet the estimated future obligations of
policies in force. These liabilities are computed by the net
level premium method based upon estimates as to future
investment yield, mortality, morbidity, withdrawals and other
factors. Future policy benefits are computed using interest
rates ranging from approximately 0.90 percent to
5.10 percent. Mortality, morbidity and withdrawal
assumptions for all policies are based on either the life
insurance subsidiary's own experience or various actuarial
tables. Generally these assumptions are
"locked-in"
upon the issuance of new insurance. While management believes
that the assumptions used are appropriate, differences in actual
experience or changes in assumptions may affect Sony's
future insurance policy benefits.
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RECENTLY ADOPTED ACCOUNTING STANDARDS
Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate
Accounts
In July 2003, the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 03-1, "Accounting
and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate
Accounts." SOP 03-1 requires insurance enterprises to
record additional reserves for long-duration life insurance
contracts with minimum guarantee or annuity receivable options.
Additionally, SOP 03-1 provides guidance for the presentation of
separate accounts. This statement is effective for fiscal years
beginning after December 15, 2003. Sony adopted SOP 03-1 on
April 1, 2004. As a result of the adoption of SOP 03-1,
Sony's operating income decreased by 5.2 billion yen
for the fiscal year ended March 31, 2005. Additionally, on
April 1, 2004, Sony recorded a 4.7 billion yen charge
(net of income taxes of 2.7 billion yen) as a cumulative
effect of an accounting change.
The Effect of Contingently Convertible Instruments on
Diluted Earnings per Share
In July 2004, the Emerging Issues Task Force ("EITF")
issued EITF Issue No. 04-8, "The Effect of
Contingently Convertible Instruments on Diluted Earnings per
Share." In accordance with Statement of Financial
Accounting Standards ("FAS") No. 128,
"Earnings per Share", Sony had not previously included
in the computation of diluted earnings per share
("EPS") the number of potential common stock issuable
upon the conversion of contingently convertible debt instruments
("Co-Cos") that had not met the conditions to exercise
the stock acquisition rights. EITF Issue No. 04-8 requires
that the maximum number of common stock that could be issued
upon the conversion of Co-Cos be included in diluted EPS
computations from the date of issuance regardless of whether the
conditions to exercise the stock acquisition rights have been
met. EITF Issue No. 04-8 is effective for reporting periods
ending after December 15, 2004. Sony adopted EITF Issue
No. 04-8 during the quarter ended December 31, 2004.
As a result of the adoption of EITF Issue No. 04-8,
Sony's diluted EPS of income before cumulative effect of an
accounting change and net income for the fiscal year ended
March 31, 2004 were restated. Sony's diluted EPS of
income before cumulative effect of an accounting change and net
income for the fiscal year ended March 31, 2005 decreased
by 7.26 yen and 7.06 yen, respectively, as a result of adopting
EITF Issue No. 04-8.
Consolidation of Variable Interest Entities
In January 2003, the Financial Accounting Standards Board
("FASB") issued FASB Interpretation ("FIN")
No. 46, "Consolidation of Variable Interest
Entities — an Interpretation of Accounting Research
Bulletin ("ARB") No. 51".
FIN No. 46 addresses consolidation by a primary
beneficiary of a variable interest entity ("VIE").
Sony early adopted the provisions of FIN No. 46 on
July 1, 2003. As a result of adopting the original
FIN No. 46, Sony recognized a one-time charge with no
tax effect of 2.1 billion yen as a cumulative effect of
accounting change in the consolidated statement of income, and
Sony's assets and liabilities increased by
95.3 billion yen and 98.0 billion yen, respectively.
These increases were treated as non-cash transactions in the
consolidated statement of cash flows. In addition, cash and cash
equivalents increased by 1.5 billion yen.
Sony subsequently early adopted the provisions of
FIN No. 46 R, which replaced FIN No. 46,
upon issuance in December 2003. The adoption of
FIN No. 46R did not have an impact on Sony's
results of operations and financial position or impact the way
Sony had previously accounted for VIEs.
Exchanges of Nonmonetary Assets
In December 2004, the FASB issued FAS No. 153,
"Exchanges of Nonmonetary Assets, an amendment of
Accounting Principle Board Opinion ("APB")
No. 29". This statement requires that exchanges of
productive assets be accounted for at fair value unless fair
value cannot be reasonably determined or the transaction lacks
commercial substance. This statement is effective for
nonmonetary asset exchanges that have occurred in the fiscal
periods beginning after June 15, 2005. Sony adopted FAS
No. 153 on July 1, 2005. The adoption of FAS
No. 153 did not have a material impact on Sony's
results of operations and financial position.
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Accounting for Conditional Asset Retirement
Obligations
In March 2005, the FASB issued FIN No. 47,
"Accounting for Conditional Asset Retirement
Obligations — an Interpretation of FAS
No. 143". FIN No. 47 clarifies that an
entity is required to recognize a liability for the fair value
of a conditional retirement obligation when incurred if the
liability's fair value can be reasonably estimated.
FIN No. 47 also clarifies when an entity would have
sufficient information to reasonably estimate the fair value of
an asset retirement obligation. This interpretation is effective
no later than the end of fiscal years ending after
December 15, 2005. Sony adopted FIN No. 47 on
March 31, 2006. The adoption of FIN No. 47 did
not have a material impact on Sony's results of operations
and financial position.
Determining Whether to Aggregate Operating Segments That
Do Not Meet the Quantitative Thresholds
In September 2004, the EITF issued EITF Issue No. 04-10,
"Applying Paragraph 19 of FASB Statement No. 131,
Disclosures about Segments of an Enterprise and Related
Information, in Determining Whether to Aggregate Operating
Segments That Do Not Meet the Quantitative Thresholds."
EITF Issue No. 04-10 clarifies how an enterprise should
evaluate the aggregation criteria in paragraph 17 of FAS
No. 131 when determining whether operating segments that do
not meet the quantitative thresholds may be aggregated in
accordance with paragraph 19 of FAS No. 131. EITF
Issue No. 04-10 is effective for fiscal years ending after
September 15, 2005. Sony adopted EITF Issue No. 04-10
during the fiscal year ended March 31, 2006. The adoption
of EITF Issue No. 04-10 did not have an impact on
Sony's results of operation and financial position.
RECENT PRONOUNCEMENTS
Accounting for Stock-Based Compensation
In December 2004, the FASB issued FAS No. 123 (revised
2004), "Share-Based Payment" ("FAS
No. 123(R)"). This statement requires the use of the
fair value based method of accounting for employee stock-based
compensation and eliminates the alternative use of the intrinsic
value method prescribed by APB No. 25. With limited
exceptions, FAS No. 123(R) requires that the grant-date
fair value of share-based payments to employees be expensed over
the period the service is received. Sony has accounted for its
employee stock-based compensation in accordance with the
provisions prescribed by APB No. 25 and its related
interpretations and has disclosed the net effect on net income
and net income per share allocated to the common stock if Sony
had applied the fair value recognition provisions of FAS
No. 123 to stock-based compensation as described in
Note 2 of Notes to the Consolidated Financial Statements
(2) Significant accounting policies — Stock-based
compensation. Sony adopted FAS No. 123(R) on April 1,
2006. Sony has elected the modified prospective method of
transition prescribed in FAS No. 123(R), which requires
that compensation expense be recorded for all unvested stock
acquisition rights as the requisite service is rendered
beginning with the first period of adoption. As of
March 31, 2006, the aggregate value of the unvested stock
acquisition rights was 4.4 billion yen. Sony expects the
total expenses to be recorded in the future periods will be
consistent with the pro forma information shown in Note 2
of Notes to the Consolidated Financial Statements
(2) Significant accounting policies — Stock-based
compensation.
Inventory Costs
In November 2004, the FASB issued FAS No. 151,
"Inventory Costs, an amendment of ARB No. 43,
Chapter 4." This statement requires certain abnormal
expenditures to be recognized as expenses in the current period.
It also requires that the amount of fixed production overhead
allocated to the costs of conversion be based on the normal
capacity of the production facilities. This statement shall be
effective for fiscal years beginning after June 15, 2005,
with early adoption during the fiscal years beginning after the
date this statement is issued encouraged. The adoption of FAS
No. 151 is not expected to have a material impact on
Sony's results of operations and financial position.
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Derivative instruments and hedging activities
In February 2006, the FASB issued FAS No. 155,
"Accounting for Certain Hybrid Financial Instruments,"
an amendment of FAS No. 133 and FAS No. 140. This
statement permits an entity to elect fair value remeasurement
for any hybrid financial instrument (with changes in fair value
recognized in earnings) if the hybrid instrument contains an
embedded derivative that would otherwise be required to be
bifurcated and accounted for separately under FAS No. 133.
The election to measure the hybrid instrument at fair value is
made on an instrument-by-instrument basis and is irreversible.
The statement will be effective for all financial instruments
acquired, issued, or subject to a remeasurement event occurring
after the beginning of an entity's fiscal years beginning
after September 15, 2006, with earlier adoption permitted
as of the beginning of fiscal year, provided that financial
statements for any interim period of that fiscal year have not
been issued. The adoption of FAS No. 155 is not expected to
have a material impact on Sony's results of operations and
financial position.
Accounting for Servicing of Financial Assets
In March 2006, the FASB issued FAS No. 156,
"Accounting for Servicing of Financial Assets —
an amendment of FASB Statement No. 140". This
statement amends FASB Statement No. 140, "Accounting
for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" with respect to the
accounting for separately recognized servicing assets and
servicing liabilities. This statement shall be effective for
fiscal years beginning after September 15, 2006. Sony is
currently evaluating the impact of adopting this new
pronouncement.
Accounting for Uncertainty in Income Taxes
In June 2006, the FASB issued FIN No. 48,
"Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109."
FIN No. 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial
statements in accordance with FAS No. 109,
"Accounting for Income Taxes." FIN No. 48
prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return.
FIN No. 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim
periods, disclosure, and transition. FIN No. 48 is
effective for fiscal years beginning after December 15,
2006. Early application of the provisions of this Interpretation
is encouraged if financial statements have not been issued,
including interim financial statements, in the period this
Interpretation is adopted. Sony is currently evaluating the
impact of adopting this Interpretation.
Item 6.
Directors, Senior Management and Employees
Directors and Senior Management
Set forth below are the current members of the Board of
Directors and Corporate Executive Officers of Sony Corporation,
their date of birth, the year in which they were first elected,
their current position at Sony, prior positions, and other
principal business activities outside Sony as of July 31,
2006.
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Board of Directors
Sir Howard Stringer
Date of Birth: February 19, 1942
Director (Member of the Board) Since: 1999
Corporate Executive Officer Since: 2003
Current Positions within Sony:
Chairman and Chief Executive Officer, Representative Corporate
    Executive Officer Chairman and Chief Executive Officer, Sony
    Corporation of America
Member of the Nominating Committee
Prior Positions:
2003
Vice Chairman, Chief Operating Officer in charge of
    Entertainment Business Group, Sony Corporation
1999
Director, Sony Corporation
1997
President, Sony Corporation of America
1995
Chairman and Chief Executive Officer, TELE-TV
1988
President, CBS Broadcast Group, CBS Inc.
1986
President, CBS News
Principal Business Activities Outside Sony: Director of
    InterContinental Hotels Group
Ryoji Chubachi
Date of Birth: September 4, 1947
Director (Member of the Board) Since: 2005
Corporate Executive Officer Since: 2004
Current Positions within Sony:
President, Representative Corporate Executive Officer,
    Electronics Chief Executive Officer
Member of the Nominating Committee
Prior Positions:
2004
Chief Operating Officer in charge of Micro Systems Network
    Company ("MSNC") and Engineering, Manufacturing and
    Customer Services ("EMCS"), President, Production
    Strategy Group, Sony Corporation Executive Deputy President,
    Corporate Executive Officer, Sony Corporation
2003
Executive Vice President, Executive Officer, NC President, MSNC,
    Sony Corporation
2002
NC President, Core Technology & Network Company
    ("CNC"), Sony Corporation
2002
Corporate Senior Vice President, Sony Corporation
1999
Corporate Vice President, President, Recording Media Company,
    CNC, Senior Vice President, CNC, Sony Corporation
1977
Entered Sony Corporation
Principal Business Activities Outside Sony: None
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Katsumi Ihara
Date of Birth: September 24, 1950
Director (Member of the Board) Since: 2005
Corporate Executive Officer Since: 2004
Current Positions within Sony: Executive Deputy President,
    Representative Corporate Executive Officer Officer in charge of
    Procurement Strategies and TV & Video Business
Prior Positions:
2005
NC President of Home Electronics Network Company, Sony
    Corporation
2004
Executive Deputy President and Group Chief Strategy
    Officer & Group Chief Financial Officer, Sony
    Corporation
2001
Group Executive Officer, Sony Corporation President, Sony
    Ericsson Mobile Communications AB
2000
Corporate Senior Vice President, NC President, Personal IT
    Network Company, Sony Corporation
1997
Corporate Vice President, Sony Corporation
1996
President, Home A&V Products Company, Sony Corporation
1981
Entered Sony Corporation
1973
Entered Mitsui Knowledge Industry Co., Ltd.
Principal Business Activities Outside Sony: None
Akishige Okada
Date of Birth: April 9, 1938
Outside Director (Member of the Board) Since: 2002
Current Position within Sony: Chairman of the Compensation
    Committee
Principal Business Activities Outside Sony:
Advisor, Sumitomo Mitsui Banking Corporation
Director, Daicel Chemical Industries, Ltd.
Director, Mitsui & Co., Ltd.
Auditor, Toyota Motor Corporation
Auditor, Mitsui Fudosan Co., Ltd.
Prior Positions:
2002
Chairman of the Board (Representative Director), Sumitomo Mitsui
    Financial Group, Inc.
2001
Chairman of the Board (Representative Director), Sumitomo Mitsui
    Banking Corporation
Hirobumi Kawano
Date of Birth: January 1, 1946
Outside Director (Member of the Board) Since: 2003
Current Position within Sony: Vice Chairman of the Board
Member of the Nominating Committee
Principal Business Activities Outside Sony: Senior Vice
    President, JFE Steel Corporation
Prior Positions:
1999
Director-General, Agency for Natural Resources and Energy,
    Ministry of International Trade and Industry ("MITI")
    (later renamed the Ministry of Economy, Trade and Industry)
1998
Director-General, Basic Industries Bureau, MITI
1996
Director-General, Machinery and Information Industries Policy,
    Machinery and Information Industries Bureau, MITI
1995
Director-General, Petroleum Department, Agency of Natural
    Resources and Energy, MITI
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Yotaro Kobayashi
Date of Birth: April 25, 1933
Outside Director (Member of the Board) Since: 2003
Current Position within Sony: Chairman of the Board and Chairman
    of the Nominating Committee
Principal Business Activities Outside Sony:
Chief Corporate Advisor, Fuji Xerox Co., Ltd.
Director, Callaway Golf Company
Director, Nippon Telegraph and Telephone Corporation
Prior Positions:
1999
Chairman of the Board, Fuji Xerox Co., Ltd.
1992
Chairman and Chief Executive Officer, Fuji Xerox Co., Ltd.
1987
Director, Xerox Corporation
1978
President and Chief Executive Officer, Fuji Xerox Co., Ltd.
Sakie T. Fukushima
Date of Birth: September 10, 1949
Outside Director (Member of the Board) Since: 2003
Current Position within Sony: Member of the Audit Committee
Principal Business Activities Outside Sony:
Representative Director & Regional Managing
    Director — Japan, Korn/ Ferry International
Member, Board of Directors, Korn/ Ferry International, U.S.A.
Director, Benesse Corporation
Prior Position:
2000
Managing Director, Korn/ Ferry International — Japan
Yoshihiko Miyauchi
Date of Birth: September 13, 1935
Outside Director (Member of the Board) Since: 2003
Current Position within Sony: Member of the Compensation
    Committee
Principal Business Activities Outside Sony:
Director, Representative Executive Officer,
Chairman and Chief Executive Officer, ORIX Corporation Director,
    Showa Shell Sekiyu K.K
Director, Daikyo Incorporated Director, Sojitz Corporation
Director, Access Co., Ltd.
Prior Positions:
2000
Representative Director, Chairman and Chief Executive Officer,
    ORIX Corporation
1980
Representative Director, President, ORIX Corporation
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Yoshiaki Yamauchi
Date of Birth: June 30, 1937
Outside Director (Member of the Board) Since: 2003
Current Position within Sony: Chairman of the Audit Committee
Principal Business Activities Outside Sony:
Director, Sumitomo Mitsui Financial Group, Inc.
Director, Sumitomo Mitsui Banking Corporation
Director, Amana Inc.
Statutory Auditor, Stanley Electric Co., Ltd.
Deputy President, ARI Research Institute
Prior Positions:
1999
Director, Sumitomo Banking Corporation
1993
Executive Director, Asahi & Co.
1991
President, Inoue Saito Eiwa Audit Corporation
1986
President, Eiwa Audit Corporation
Country Managing Partner — Japan, Arthur
    Andersen & Co.
Sir Peter Bonfield
Date of Birth: June 3, 1944
Outside Director (Member of the Board) Since: 2005
Current Position within Sony: Member of the Nominating Committee
Principal Business Activities Outside Sony:
Member of the Board, AstraZeneca plc, U.K.
Member of Audit Committee and the Board, Telefonaktiebolaget LM
    Ericsson, Sweden
Member of the Board, Mentor Graphics, Inc.
Member of the Board and Chairman of Audit Committee, Taiwan
    Semiconductor Manufacturing Company Ltd.
Prior Positions:
1996
Chief Executive Officer, British Telecom plc
1986
Chairman, ICL plc, U.K.
1984
Managing Director, ICL plc, U.K.
Fueo Sumita
Date of Birth: May 24, 1938
Outside Director (Member of the Board) Since: 2005
Current Position within Sony: Member of the Audit Committee
Principal Business Activities Outside Sony: Chief of Sumita
    Accounting Office
Prior Positions:
2002
Executive Vice President, Kawada Corporation
2001
Vice Chairman, Ernst & Young ShinNihon
2000
Deputy Director, Ohta-Showa Century Audit Corporation
1999
Chairman, Century Audit Corporation
1985
Deputy General Manager, Corporate Accounting Dept., Hitachi, Ltd.
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Fujio Cho
Date of Birth: February 2, 1937
Outside Director (Member of the Board) Since: 2006
Current Position within Sony: Member of the Compensation
    Committee
Principal Business Activities Outside Sony:
Chairman, Toyota Motor Corporation
Director, Central Japan Railway Company
Auditor, Denso Corporation
Prior Positions:
1999
President, Toyota Motor Corporation
Ned Lautenbach
Date of Birth: February 2, 1944
Outside Director (Member of the Board) Since: 2006
Principal Business Activities Outside Sony:
Operating Partner, Clayton, Dubilier & Rice, Inc.
Member of the Board, Fidelity Investments
Member of the Board, Eaton Corporation
Prior Positions:
1998
Senior Vice President & Group Executive, IBM Worldwide
    Sales & Services, International Business Machines
    Corporation
Göran Lindahl
Date of Birth: April 28, 1945
Director (Member of the Board) Since: 2001
Current Position within Sony: Member of the Compensation
    Committee
Prior Positions:
2003
Corporate Executive Officer, Sony Group Europe Representative,
    Chairman of Sony Group in Europe
2001
Director, Sony Corporation
1999
Director, Telefonaktiebolaget LM Ericsson, Sweden
1997
President and Chief Executive Officer, Asea Brown Boveri Ltd.,
    Switzerland
1985
President, ASEA Transmission AB, Sweden
1983
President, ASEA Transformers AB, Sweden
Principal Business Activities Outside Sony:
Chairman and Chief Executive Officer, LivSafe AB, Sweden
Chairman and Chief Executive Officer, LivSafe, Inc., U.S.A.
Director, iGATE Corporation, U.S.A.
Director, INGKA Holding B.V., Netherlands
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Corporate Executive Officers
In addition to Messrs. Stringer, Chubachi and Ihara, the
four individuals set forth below are the current Corporate
Executive Officers of Sony Corporation as of July 31, 2006.
Refer to "Board Practices" below.
Nobuyuki Oneda
Date of Birth: May 6, 1945
Corporate Executive Officer Since: 2004
Current Positions within Sony: Executive Vice President and
    Chief Financial Officer
Prior Positions:
2004
Senior Vice President, Officer in charge of Corporate
    Planning & Control, Accounting and Information Systems,
    Sony Corporation
2003
Senior Vice President, Executive Officer, Sony Corporation
2002
Officer and Chief Financial Officer, Network
    Application & Content Service Sector, Sony Corporation
Corporate Senior Vice President, Sony Corporation
2000
Deputy President and Chief Financial Officer, Sony Electronics
    Inc.
Group Executive Officer, Sony Corporation
1999
Executive Vice President and Chief Financial Officer, Sony
    Electronics Inc. (a U.S. subsidiary of Sony Corporation)
1996
General Manager, Corporate Planning & Control
    Department, Sony Corporation
1969
Entered Sony Corporation
Principal Business Activities Outside Sony: None
Keiji Kimura
Date of Birth: April 4, 1952
Corporate Executive Officer Since: 2004
Current Positions within Sony:
Executive Vice President, Officer in charge of Technology
    Strategies and Intellectual Property
Prior Positions:
2005
NC President, Information Technology & Communications
    Network Company, Sony Corporation
2004
Senior Executive Vice President, Corporate Executive Officer,
    Sony Corporation
2003
Senior Vice President, Executive Officer, Sony Corporation
2002
Corporate Senior Vice President, Sony Corporation
2001
NC President, Mobile Network Company, Sony Corporation
2000
Corporate Vice President, Sony Corporation
NC President, Information Technology Company, Personal Network
    Company, Sony Corporation
1977
Entered Sony Corporation
Principal Business Activities Outside Sony: None
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Nicole Seligman
Date of Birth: October 25, 1956
Corporate Executive Officer Since: 2003
Current Positions within Sony:
Executive Vice President and General Counsel
Executive Vice President and General Counsel, Sony Corporation
    of America
Prior Positions:
2003
Group Deputy General Counsel, Sony Corporation
2000
Entered Sony Corporation of America as Executive Vice President
    and General Counsel
1992
Partner, Williams & Connolly LLP
1985
Entered Williams & Connolly LLP
1978
Associate Editorial Page Editor for The Asian Wall Street
    Journal, Hong Kong
Principal Business Activities Outside Sony: None
Yutaka Nakagawa
Date of Birth: December 4, 1945
Current Positions within Sony:
Executive Vice President, Officer in charge of Products
    Strategies, Digital Imaging Business and Audio Business
Prior Positions:
2005
NC President, Personal Audio Visual Network Company, Sony
    Corporation
2003
Deputy President, Micro Systems Network Company, President,
    Energy Company, MSNC, Sony Corporation
1999
Corporate Senior Vice President, Sony Corporation
1998
President, Personal and Mobile Communication Company, Sony
    Corporation
1997
Corporate Vice President, Sony Corporation
1992
General Manager, Camcorder Products Division, Personal Video
    Group, Sony Corporation
1968
Entered Sony Corporation
Principal Business Activities Outside Sony: None
All of the aforementioned persons, with the exception of
Messrs. Okada, Kawano, Kobayashi, Miyauchi, Yamauchi,
Bonfield, Sumita, Lindahl, Cho, Lautenbach and
Ms. Fukushima, are engaged on a full-time basis by Sony.
There is no family relationship between any of the persons named
above. There is no arrangement or understanding with major
shareholders, customers, suppliers, or others pursuant to which
any person named above was selected as a Director or a Corporate
Executive Officer.
Compensation
The aggregate amount of remuneration, including bonuses paid and
benefits in kind granted by Sony during the fiscal year ended
March 31, 2006 to all Directors and Corporate Executive
Officers (refer to "Board Practices" below) of Sony
Corporation who served during the fiscal year ended
March 31, 2006, as a group (29 people), totaled
2,666 million yen. Also, as a part of Sony's incentive
compensation arrangements, Sony Corporation issued stock
acquisition rights during the fiscal year ended March 31,
2006. The stock acquisition rights, which represent rights to
subscribe for shares of common stock of Sony Corporation, have
been granted to the Directors, Corporate Executive Officers,
Corporate Executives, Group Executives, and selected employees.
The stock acquisition rights generally vest ratably up to three
years from the date of grant and are generally exercisable up to
ten years from the date of grant. The portion of those stock
acquisition rights which was granted by Sony during the fiscal
year ended March 31, 2006 to the Directors and
Corporate Executive Officers confers rights to purchase a total
number of 605,200 shares of Sony Corporation's Common
Stock. The exercise price for these yen-denominated stock
acquisition rights issued as of November 17, 2005 was
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4,060 yen per share, and the exercise price for these
U.S. dollar-denominated stock acquisition rights issued as
of November 17, 2005 was 34.14 U.S. dollars.
Regarding the above compensation plans, refer to Note 16 of
Notes to Consolidated Financial Statements.
In the fiscal year ended March 31, 2006, the retirement
allowance scheme was terminated and a new stock-based retirement
remuneration (phantom restricted stock plan) was introduced.
With the introduction of this plan, there was no amount accrued
for
lump-sum
severance
indemnities by Sony during the fiscal year ended March 31,
2006 for Directors and Corporate Executive Officers of Sony
Corporation as of March 31, 2006, as a group
(14 people).
Under this new plan, points fixed every year by the Compensation
Committee shall be granted to Directors and Corporate Executive
Officers every year during his/her tenure in office, and at the
time of resignation, the remuneration amount shall be calculated
by multiplying Sony's common stock price by accumulated
points. The resigning Directors and Corporate Executive Officers
shall purchase Sony's common stock with this remuneration.
The aggregate number of points granted to Directors and
Corporate Executive Officers of Sony Corporation as of
March 31, 2006, as a group (14 people) totaled 27,900
points.
Board Practices
Sony has adopted a "Company with Committees" corporate
governance system under the Japanese Company Law (Kaishaho) and
related legislation (collectively the "Company Law").
Under this system, Sony Corporation has three committees: the
Nominating Committee, the Audit Committee and the Compensation
Committee. Under the Company Law, each committee is required to
consist of not less than three Directors, the majority of whom
must be outside Directors. Under the committee system, Directors
as such have no power to execute the business of Sony
Corporation except for limited circumstances as permitted by
law. The Board of Directors must elect Corporate Executive
Officers (Shikko-yaku), who are responsible for the execution of
the business of Sony Corporation. A summary of the governance
system adopted by Sony Corporation is set forth below.
The Board of Directors determines fundamental management policy
and other important matters related to the management of Sony
and oversees the performance of the duties of Directors and
Corporate Executive Officers. Under the Company Law, all
Directors must be elected at the General Meeting of Shareholders
from the candidates determined by the Nominating Committee.
Under the Company Law, the terms of office of Directors expire
at the conclusion of the General Meeting of Shareholders held
with respect to the last business year ending within one year
after their election. Directors may serve any number of
consecutive terms although, under the Charter of the Board of
Directors of Sony Corporation, outside Directors may not be
reelected more than five times without the consent of all
Directors.
The Nominating Committee, which pursuant to the Charter of the
Board of Directors of Sony Corporation consists of five or more
Directors, determines the content of proposals to be submitted
for approval at the General Meeting of Shareholders regarding
the appointment and dismissal of Directors. As stated above,
under the Company Law, a majority of the members of the
Nominating Committee must be outside Directors. In order to
qualify as an outside Director under the Company Law, a Director
must be a person (i) who is not a director of Sony
Corporation or any of its subsidiaries engaged in the business
operations of Sony Corporation or such subsidiary, as the case
may be, or a corporate executive officer or general manager or
other employee of Sony Corporation or any of its subsidiaries,
and (ii) who has never been a director of Sony Corporation
or any of its subsidiaries engaged in the business operations of
Sony Corporation or such subsidiary, as the case may be, or a
corporate executive officer or general manager or other employee
of Sony Corporation or any of its subsidiaries. Under the
Charter of the Board of Directors of Sony Corporation, two or
more members of the Nominating Committee must concurrently be
Corporate Executive Officers. The Nominating Committee is
composed of the following members as of July 31, 2006:
Yotaro Kobayashi, who is the Chairman of the Nominating
Committee and an outside Director; Hirobumi Kawano and Peter
Bonfield who are outside Directors; and Howard Stringer and
Ryoji Chubachi, who are Corporate Executive Officers.
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Under the Charter of the Board of Directors of Sony Corporation,
the Audit Committee must consist of three or more Directors, a
majority of whom, as stated above, must be outside Directors. In
addition, under the Company Law, a member of the Audit Committee
may not concurrently be a director of Sony Corporation or any of
its subsidiaries who is engaged in the business operations of
Sony Corporation or such subsidiary, as the case may be, or a
corporate executive officer of Sony Corporation or any of its
subsidiaries, or an accounting counselor, general manager or
other employee of any of such subsidiaries. Further, under the
Charter of the Board of Directors of Sony Corporation, members
of the Audit Committee must meet the independence and other
equivalent requirements of U.S. securities laws and
regulations to the extent applicable to Sony Corporation. The
Audit Committee's primary responsibility is to audit the
consolidated and non-consolidated financial statements and
business reports to be submitted by the Board of Directors at
the General Meeting of Shareholders; to audit the performance of
duties by Directors and Corporate Executive Officers (with
regard to preparation process of financial statements,
disclosure controls and procedures, internal controls,
compliance structure, risk management structure, internal audit
structure, internal hotline system and other matters), in each
case pursuant to the Company Law; and to propose
appointment/dismissal or non-reappointment of, approve the
compensation of, and oversee and evaluate the work of
Sony's independent auditors. Under the Company Law, the
Audit Committee has a statutory duty to prepare and submit its
audit report to the Corporate Executive Officer designated by
the Board of Directors each year. A member of the Audit
Committee may note his or her opinion in the audit report if it
is different from the opinion of the Audit Committee that is
expressed in the audit report.
The Audit Committee discusses with Sony Corporation's
independent auditor, ChuoAoyama PricewaterhouseCoopers, the
scope and results of audits by the independent auditor including
their evaluation of Sony Corporation's internal controls,
compatibility with Generally Accepted Accounting Principles in
the U.S., and the overall quality of financial reporting. The
Audit Committee makes an assessment of the independence of
ChuoAoyama PricewaterhouseCoopers by overseeing their activities
through regular communications and discussions with ChuoAoyama
PricewaterhouseCoopers, and shall pre-approve audit and
non-audit services to be provided. The Audit Committee is
composed of the following members as of July 31, 2006:
Yoshiaki Yamauchi, who is the Chairman of the Audit Committee
and an outside Director; and Sakie T. Fukushima and Fueo Sumita,
who are also outside Directors. Both Yoshiaki Yamauchi and Fueo
Sumita are "audit committee financial experts" within
the meaning of Item 16A of this report.
As required by the Company Law, the Compensation Committee
determines the compensation, bonus and any other benefits
(including equity-related rights or options given for the
purpose of stock incentive options) to be received by each
Director and Corporate Executive Officer in consideration of the
execution of their duties. In addition to such statutory duties,
the Compensation Committee sets policy on the composition of
individual compensation to be received by other senior
management of Sony Group (Directors or other officers of Sony
Group companies whose appointment is subject to approval by the
CEO of Sony Corporation), and also submits proposals to the
Board of Directors regarding the issuance of stock acquisition
rights for the purpose of granting stock options and other forms
of stock price-based compensation utilizing shares etc. of Sony
Group, as individual compensation to the aforementioned senior
management. Under the Charter of the Board of Directors, the
Compensation Committee shall consist of three or more Directors,
and as a general rule, at least one member shall concurrently
serve as Corporate Executive Officer; provided, however, that a
Director who is the CEO (Chief Executive Officer), or the COO
(Chief Operating Officer) of Sony Group or in any equivalent
position shall not be a member of the Compensation Committee. As
stated above, a majority of the members of the Compensation
Committee must be outside Directors. The Compensation Committee
is composed of the following members as of July 31, 2006:
Akishige Okada, who is the Chairman of the Compensation
Committee and an outside Director; and Yoshihiko Miyauchi and
Fujio Cho, who are also outside Directors, and Göran
Lindahl, who was a Corporate Executive Officer of Sony Group.
During the fiscal year ended March 31, 2006, the Board of
Directors met 8 times. The Nominating Committee met 5 times, the
Audit Committee 11 times and the Compensation Committee 7 times.
In the fiscal year ended March 31, 2006, each incumbent
Director attended at least 75 percent of the aggregate
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number of meetings of the Board and Committees on which he/she
served (during the period that he/she served).
No Directors have service contracts with Sony providing for
benefits upon termination of service as a Director.
Under the Company Law and the Articles of Incorporation of Sony
Corporation, Sony Corporation may, by a resolution of the Board
of Directors, exempt Directors from liabilities to Sony
Corporation to the extent permitted by law arising in connection
with their failure to execute their duties. Accordingly, Sony
Corporation has entered into a liability limitation agreement
with each outside Director that limits the maximum amount of
their liabilities owed to Sony Corporation arising in connection
with their failure to execute their duties to the greater of
either 30 million yen or an amount equal to the aggregate
sum of the amounts prescribed in each item of Article 425,
Paragraph 1 of the Company Law.
The Board of Directors must appoint one or more Corporate
Executive Officers who are authorized to determine matters
delegated to them by the Board of Directors. The Corporate
Executive Officers are responsible for conducting all the
business operations of Sony within the scope of authority
delegated by the Board of Directors. As of July 31, 2006,
there are 7 Corporate Executive Officers, some of whom are also
Directors. Significant decision-making authority has been
delegated to the CEO and also to each Corporate Executive
Officer with regard to investments, strategic alliances and
other actions related to the execution of business operations.
Sony Corporation believes that this significant delegation
enables Sony to be managed in a more dynamic and responsive
manner. The terms of office of Corporate Executive Officers must
expire at the conclusion of the first meeting of the Board of
Directors held immediately after the conclusion of the General
Meeting of Shareholders held with respect to the last business
year ending within one year after their election. From among the
Corporate Executive Officers who as a general rule are also
Directors, the Board of Directors shall elect Representative
Corporate Executive Officers. Each Representative Corporate
Executive Officer has the statutory authority to represent Sony
Corporation in the conduct of its affairs.
(Reference)
At a Board meeting held on April 26, 2006, the Board of
Directors reaffirmed the existing internal control and
governance framework and determined to continue to evaluate and
improve such framework going forward, as appropriate. This
determination met the requirements of the Japanese Company Law.
Detail of the determination is posted on the following website:
http://www.sony.net/ SonyInfo/ IR/library/control.html
For an explanation as to the significant differences between the
New York Stock Exchange's corporate governance standards
and Sony's corporate governance practices, please visit us
on the Internet at:
http://www.sony.net/ SonyInfo/ IR/ NYSEGovernance.html
Employees
As of March 31, 2006, Sony had approximately 158,500
employees, an increase of approximately 7,000 employees from the
end of March 2005. Although there was a reduction in employees
associated with the implementation of restructuring activities
in Japan, the U.S., Europe and Southeast Asia, the total number
of employees increased as a result of a significant increase in
employees at manufacturing facilities in East Asia excluding
Japan. As of March 31, 2005, Sony had approximately 151,400
employees, a decrease of approximately 10,600 from
March 31, 2004. As of March 31, 2005, approximately
62,300 employees were located in Japan and approximately 89,100
outside Japan, and approximately 16 percent were members of
labor unions.
The fiscal year-end totals for the fiscal years ended
March 31, 2006 and 2005 include approximately 1,200
employees in Japan who left Sony mainly through the early
retirement program as of March 31, 2006 and 2,000 employees
in Japan who left Sony mainly through the program as of
March 31, 2005. As of March 31, 2006, approximately
61,600 employees were located in Japan and approximately 96,900
outside Japan, and approximately 19 percent were members of
labor unions.
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The following table shows the number of employees by segment as
of March 31, 2004, 2005 and 2006.
Number of Employees by Segment
March 31
2004
2005
2006
Electronics
128,000
124,500
130,800
Game
4,800
4,300
4,700
Pictures
6,200
5,900
6,900
Financial Services
6,700
6,800
6,500
All Other
14,000
8,000
7,400
Unallocated — Corporate employees
2,300
1,900
2,200
Total
162,000
151,400
158,500
In addition, the average number of employees for the fiscal
years ended March 31, 2004, 2005 and 2006 calculated by
averaging the total number of employees at the end of each
quarter, was 165,300, 154,200 and 156,200 respectively.
Sony generally considers its labor relations to be good. Only a
few manufacturing facilities have labor unions and, of these,
only a few have union contracts.
Regarding labor relations in the Electronics segment by area, in
Asia, where Sony operates many manufacturing facilities, a few
manufacturing facilities have labor unions that have union
contracts. In the U.S., no manufacturing facilities have labor
unions. In Mexico, one manufacturing facility has a labor union
that has a union contract, but labor relations are good and
there have been no significant problems in renegotiating the
contract. In Europe, Sony maintains good labor relations with
the Work Councils in each country, and, while some employees
belong to unions, they are not eligible for union contracts.
In the Pictures segment, Sony also generally considers its labor
relations to be good. A number of Pictures' subsidiaries
are signatories to union contracts. During the fiscal year ended
March 31, 2006, renegotiations for new three-year
agreements were successfully concluded with the International
Alliance of Theatrical Stage Employees and Moving Picture
Technicians, Artists and Allied Crafts for the West Coast Studio
Local Agreements and the New York Local 52 and 161 Agreements,
the British Columbia (Canada) Council of Unions and the Teamster
Casting Directors and the American Federation of Musicians
Agreement negotiated last fiscal year was ratified by the its
membership. Negotiations were also successfully concluded with
the Screen Actors Guild ("SAG") for a two and a half
year agreement covering made-for-basic cable animation
performers. Negotiations with SAG for made-for-basic cable live
action performers commenced in January 2006 and are continuing.
It is not anticipated that SAG negotiations will interrupt
television production.
Sony continuously strives to provide competitive wages and
benefits and good working conditions for all of its employees.
Share Ownership
The following is the total number of shares of Sony
Corporation's Common Stock beneficially owned by Directors
and Corporate Executive Officers as of July 31, 2006 (18
people). Refer to "Board Practices" above.
Number of shares
Percentage
Title of class
Identity of person or group
beneficially owned
of class
(In thousands)
Common Stock
Directors and Corporate Executive Officers
47
0.005
Regarding compensation plans, following the amendments to the
Commercial Code of Japan effective May 2002, Sony integrated
different equity-related securities it had previously issued for
the purpose of giving stock incentives into one unified stock
option right. During the fiscal year ended March 31, 2006,
Sony granted
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stock acquisition rights, which represent rights to subscribe
for shares of Common Stock of Sony Corporation, to Directors,
Corporate Executive Officers, Corporate Executives, Group
Executives, and selected employees. The stock acquisition rights
generally vest ratably up to three years from the date of grant
and are generally exercisable up to ten years from the date of
grant. The following table shows the portion of those stock
acquisition rights which were granted by Sony to Directors and
Corporate Executive Officers as of July 31, 2006 and which
were outstanding as of the same date.
Total number of
Year granted
shares subject to stock
(Fiscal Year ended March 31)
acquisition rights
Exercise price per share
(In thousands)
2006
430
34.14 U.S. dollars
2006
175
4,060 yen
2005
230
40.34 U.S. dollars
2005
113
3,782 yen
2004
225
40.90 U.S. dollars
2004
52
4,101 yen
2003
215
36.57 U.S. dollars
2003
16
5,396 yen
Prior to the introduction of stock acquisition rights, Sony had
granted warrants, which represent rights to subscribe for Sony
Corporation's Common Stock, to Directors, Executive
Officers, Group Executive Officers, and selected employees. The
warrants generally vest ratably up to three years from the date
of grant and are generally exercisable up to six years from the
date of grant. The following table shows the portion of those
warrants which were granted by Sony to current Directors and
Corporate Executive Officers as of July 31, 2006 and which
were outstanding as of the same date. The exercise price per
share has been adjusted for the two-for-one stock split
effective on May 19, 2000 and is subject to anti-dilution
adjustment.
Year granted
Total number of shares
(Fiscal Year ended March 31)
subject to warrants
Exercise price per share
(In thousands)
(yen)
2001
17
12,457
2002
19
6,039
In addition, in order to provide equity-based compensation to
selected executives at Sony's U.S. subsidiaries, Sony
Corporation has issued U.S. dollar-denominated Convertible
Bonds ("CBs") to a holding company in the U.S. and the
holding company has sold the CBs to those executives. For the
purpose of carrying out this plan, the holding company lent an
amount equal to the principal amount of CBs to such executives
for their purchase of the CBs until the date of conversion. The
CBs generally vest ratably up to three years from the date of
sale and are generally exercisable up to ten years from the date
of sale. The following table shows the portion of those CBs
which were held by current Directors and Corporate Executive
Officers as of July 31, 2006 and which were outstanding as
of the same date.
Year issued
Total number of shares
(Fiscal Year ended March 31)
subject to CBs
Exercise price per share
(In thousands)
(U.S. dollars)
2001
60
122.98
2002
106
71.28
2003
115
52.29
Furthermore, Sony has granted stock appreciation rights
("SARs") in Japan, Europe, and the U.S. to
selected employees. Under the terms of these plans, employees
receive upon exercise cash equal to the amount by which the
market price of Sony Corporation's Common Stock exceeds the
strike price of the SARs. The SARs generally vest ratably up to
three years from the date of grant and are generally exercisable
up to ten years from the date of grant. The following table
shows the portion of those SARs which were granted by Sony
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to selected employees who are Directors and Corporate Executive
Officers as of July 31, 2006 and which were outstanding as
of the same date.
Year granted
Total number of shares
(Fiscal Year ended March 31)
subject to SARs
Exercise price per share
(In thousands)
(U.S. dollars)
The U.S. plan
2002
10
44.00
Regarding the above compensation plans, refer to Note 16 of
Notes to Consolidated Financial Statements.
Item 7.
Major Shareholders and Related Party Transactions
Major Shareholders
Dodge & Cox, an institutional investor based in
San Francisco, California, filed a Schedule 13-F with
the SEC on August 9, 2006. According to this filing,
Dodge & Cox owned 66,112,621 ADRs of Sony Corporation
as of June 30, 2006. In addition, while Sony assumes no
responsibility for the accuracy of this supplemental
information, according to the website of Dodge & Cox,
as of June 30, 2006, Dodge & Cox owned
10,837,600 shares of outstanding Sony Corporation Common
Stock. As a result, it appears that in total, Dodge &
Cox beneficially owned 76,950,221 shares of outstanding
Sony Corporation Common Stock representing 7.7 percent of
the total. To the knowledge of Sony Corporation, there is no
other significant change in the percentage ownership held by any
major beneficial shareholders during the past three years. Major
shareholders of Sony Corporation do not have different voting
rights.
As of March 31, 2006, there were 1,000,938,776 shares
of Common Stock outstanding, of which 145,074,404 shares
were in the form of ADRs and 120,852,878 shares were held
of record in the form of Common Stock by residents in the
U.S. The number of registered ADR holders was 7,134, and
the number of registered holders of shares of Common Stock in
the U.S. was 257.
To the knowledge of Sony Corporation, it is not directly or
indirectly owned or controlled by any other corporation, by any
foreign government or by any other natural or legal person
severally or jointly. As far as is known to Sony Corporation,
there are no arrangements the operation of which may, at a
subsequent date, result in a change in control of Sony
Corporation.
Related Party Transactions
In the ordinary course of business, Sony purchases materials,
supplies, and services from numerous suppliers throughout the
world, including firms with which certain members of the Board
of Directors are affiliated. In addition, in the fiscal year
ended March 31, 2006, Sony entered into the following
sales/purchase transactions with equity affiliates accounted for
under the equity method: sales to Sony Ericsson Mobile
Communications, AB ("Sony Ericsson"), a joint venture
focused on mobile phone handsets, totaling 143.2 billion
yen; sales to Kyoshin Technosonic Co., Ltd.
("Kyoshin"), a joint venture focused on marketing
semiconductors and other electronic components, totaling
48.6 billion yen; sales to SONY BMG MUSIC ENTERTAINMENT
("SONY BMG"), a recorded music business joint venture,
totaling 33.1 billion yen; purchases from S-LCD Corporation
("S-LCD"), a joint venture with Samsung Electronics
Co., Ltd. for the manufacture of amorphous TFT LCD panels,
totaling 159.4 billion yen; purchases from Oita TS
Semiconductor Corporation ("OTSS"), a semiconductor
manufacturing joint venture in Japan, totaling 58.8 billion
yen and purchases from S.T. Liquid Crystal Display Corp., a
liquid crystal display ("LCD") joint venture in Japan,
totaling 52.5 billion yen. As of March 31, 2006, Sony
held notes and accounts receivable, trade due from Sony
Ericsson, SONY BMG, and Kyoshin worth 27.4 billion yen,
6.5 billion yen, and 6.2 billion yen, respectively, in
addition to notes and accounts payable, trade due to S-LCD and
OTSS totaling 16.3 billion yen and 9.9 billion yen,
respectively. Sony held advances to SONY BMG worth
15.8 billion yen. Because of the size of these
transactions, Sony does not consider the amounts involved to be
material to its business. Refer to Note 5 of Notes to
Consolidated Financial Statements for additional information
regarding Sony's investments in and transactions with
equity affiliates.
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Sumitomo Mitsui Financial Group, Inc. and Sumitomo Mitsui
Banking Corporation have performed and continue to perform
commercial banking services for Sony. Akishige Okada, who has
served as a Sony Corporation Director since June 20, 2002,
had been a Representative Director of Sumitomo Mitsui Financial
Group, Inc. and Sumitomo Mitsui Banking Corporation until
June 28, 2005. Yoshiaki Yamauchi, who has served as a Sony
Corporation Director since June 20, 2003, is a Director of
Sumitomo Mitsui Financial Group, Inc. and Sumitomo Mitsui
Banking Corporation.
Interests of Experts and Counsel
Not Applicable
Item 8.
Financial Information
Consolidated Statements and Other Financial Information
Refer to Consolidated Financial Statements and Notes to
Consolidated Financial Statements.
Legal Proceedings
Sony Corporation and certain of its subsidiaries are defendants
in several pending legal proceedings. However, based upon the
information currently available to Sony, management of Sony
believes that damages from such legal proceedings, if any, would
not have a material effect on Sony's consolidated financial
results and condition.
Dividend Policy
Sony believes that continuously increasing corporate value and
providing dividends are essential to rewarding shareholders. It
is Sony's policy to utilize retained earnings, after
ensuring the perpetuation of stable dividends, to carry out
various investments that contribute to an increase in corporate
value such as those investments that ensure future growth and
strengthen competitiveness.
A fiscal year-end cash dividend of 12.5 yen per share of Sony
Corporation Common Stock was approved at the Board of Directors
meeting held on May 17, 2006 and was paid on June 1,
2006. Sony Corporation has already paid an interim dividend for
Common Stock of 12.5 yen per share to each shareholder;
accordingly, the total annual cash dividend per share of Common
Stock is 25.0 yen.
All shares of shares of Subsidiary Tracking Stock, the economic
value of which was intended to be linked with Sony Communication
Network Corporation's economic value, were converted to
shares of Sony Corporation Common Stock on December 1, 2005.
Significant Changes
No significant change has occurred since the date of the annual
financial statements included in this annual report.
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Item 9.
The Offer and Listing
Offer and Listing Details
Not Applicable
Plan of Distribution
Not Applicable
Markets
Trading Markets
The principal trading markets for Sony Corporation's
ordinary shares are the Tokyo Stock Exchange (the
"TSE") in the form of Common Stock and the New York
Stock Exchange (the "NYSE") in the form of American
Depositary Shares ("ADSs") evidenced by American
Depositary Receipts ("ADRs"). Each ADS represents one
share of Common Stock.
Sony Corporation's Common Stock, with no par value per
share, has been listed on the TSE since 1958, and is also listed
on the London Stock Exchange in the United Kingdom and the Osaka
Securities Exchange in Japan. In October 2005, due to the
prevalence of borderless stock trading, and the fact that the
trading volume of Sony's shares on the following exchanges
has been extremely low, the Board of Directors of Sony
Corporation resolved to apply for delisting from the following
exchanges: Pacific, Chicago, Toronto, Paris, Frankfurt,
Düsseldorf, Brussels, Vienna, and Swiss. The delisting
procedures of these stock exchanges was completed as of
March 31, 2006.
Sony Corporation's ADRs have been traded in the
U.S. since 1961 and have been listed on the NYSE since 1970
under the symbol "SNE." Sony Corporation's ADRs
are issued and exchanged by JPMorgan Chase Bank, as Depositary.
In June 2001, Sony Corporation issued shares of subsidiary
tracking stock in Japan, the economic value of which was
intended to be linked to the economic value of Sony
Communication Network Corporation, a consolidated subsidiary of
Sony Corporation which is engaged in Internet-related services.
The subsidiary tracking stock, totaling 3,072,000 shares,
was issued at 3,300 yen per share and listed on the TSE. The
shares were not offered or sold in the U.S. In October
2005, the Board of Directors of Sony Corporation decided to
terminate all shares of subsidiary tracking stock with the
method of compulsory conversion to shares of Sony's common
stock. All shares of subsidiary tracking stock were converted to
shares of Sony's common stock on December 1, 2005.
Refer to "History and Development of the Company" in
"Item 4.
Information on the Company.
"
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Trading on the TSE and NYSE
The following table sets forth for the periods indicated the
reported high and low sales prices per share of Sony
Corporation's Common Stock on the TSE and the reported high
and low sales prices per share of Sony Corporation's ADS on
the NYSE.
Tokyo Stock
New York Stock
Exchange Price
Exchange Price
Per Share of
Per Share of
Common Stock
ADS
High
Low
High
Low
(Yen)
(U.S. dollars)
Annual highs and lows*
The fiscal year ended March 31, 2002
10,340
3,960
85.75
32.80
The fiscal year ended March 31, 2003
7,460
4,070
59.95
34.85
The fiscal year ended March 31, 2004
4,670
2,720
42.81
23.16
Quarterly highs and lows*
The fiscal year ended March 31, 2005
1st quarter
4,710
3,880
43.67
33.95
2nd quarter
4,200
3,550
38.50
32.35
3rd quarter
3,990
3,620
39.20
33.77
4th quarter
4,420
3,750
41.81
36.26
The fiscal year ended March 31, 2006
1st quarter
4,410
3,770
40.79
34.38
2nd quarter
4,100
3,660
36.74
32.38
3rd quarter
5,020
3,710
41.30
31.80
4th quarter
6,040
4,700
51.16
40.90
Monthly highs and lows*
2006
January
6,040
4,700
51.16
40.90
February
5,970
5,240
49.95
45.57
March
5,660
5,220
48.01
44.39
April
6,200
5,420
52.29
45.70
May
5,750
5,000
50.88
44.75
June
5,240
4,660
46.90
40.67
July
5,320
4,610
46.40
39.30
August (through August 30)
5,360
4,940
46.17
42.26
*
Stock price data are based on prices throughout the sessions for
    each corresponding period at each stock exchange.
On August 30, 2006, the closing sales price per share of
Sony Corporation's Common Stock on the TSE was 4,990 yen.
On August 30, 2006, the closing sales price per share of
Sony Corporation's ADS on the NYSE was 42.72
U.S. dollars.
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Selling Shareholders
Not Applicable
Dilution
Not Applicable
Expenses of the Issue
Not Applicable
Item 10.
Additional Information
Share Capital
Not applicable
Memorandum and Articles of Association
Organization
Sony Corporation is a joint stock corporation
(Kabushiki
Kaisha)
incorporated in Japan under the Company Law
(Kaishaho)
of Japan. It is registered in the Commercial
Register
(Shogyo Tokibo)
maintained by the Shinagawa
Branch Office of the Tokyo Bureau of Legal Affairs.
Objects and purposes
The Articles of Incorporation of Sony Corporation provide that
its purpose is to engage in the following business activities:
(i)
manufacture and sale of electronic and electrical machines and
    equipment, medical instruments, optical instruments and other
    equipment, machines and instruments;
(ii)
planning, production and sale of audio-visual software and
    computer software programs;
(iii)
manufacture and sale of metal industrial products, chemical
    industrial products and ceramic industrial products, textile
    products, paper products and wood-crafted articles, daily
    necessities, foodstuffs and toys, transportation machines,
    equipment, petroleum and coal products;
(iv)
real estate activities, construction business, transportation
    business and warehousing business;
(v)
publishing business and printing business;
(vi)
advertising agency business, insurance agency business,
    broadcasting enterprise, recreation business such as travel,
    management of sporting facilities, etc. and other service
    enterprises;
(vii)
financial business;
(viii)
Type I and Type II telecommunications business under the
    Telecommunications Business Law;
(ix)
investing in stocks and bonds, etc.;
(x)
manufacture, sale, export and import of products which are
    incidental to or related to those mentioned above;
(xi)
rendering of services related to those mentioned above;
(xii)
investment in businesses mentioned above operated by other
    companies or persons; and
(xiii)
all businesses which are incidental to or related to those
    mentioned above.
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Directors
Under the Company Law, Directors have no power to execute the
business of Sony Corporation except in limited circumstances as
permitted by law. If a Director also serves concurrently as a
Corporate Executive Officer, then he or she can execute the
business of Sony Corporation in the capacity of Corporate
Executive Officer. Under the Company Law, Directors must refrain
from engaging in any business competing with Sony Corporation
unless approved by the Board of Directors, and any Director who
has a material interest in the subject matter of a resolution to
be taken by the Board of Directors cannot vote on such
resolution. The amount of remuneration to each Director is
determined by the Compensation Committee, which consists of
Directors, the majority of whom are outside Directors (Refer to
"Board Practices" in "Item 6.
Directors,
Senior Management and Employees
"). No member of the
Compensation Committee may vote on a resolution with respect to
his or her own compensation as a Director or a Corporate
Executive Officer.
Neither the Company Law nor Sony Corporation's Articles of
Incorporation make a special provision as to the borrowing
powers exercisable by Directors (subject to requisite internal
authorizations as required by the Company Law), their retirement
age, or a requirement to hold any shares of capital stock of
Sony Corporation.
For more information on Directors, see "Board
Practices" in "Item 6.
Directors, Senior
Management and Employees.
"
Capital stock
(General)
Unless indicated otherwise, set forth below is information
relating to Sony Corporation's capital stock, including
brief summaries of the relevant provisions of Sony
Corporation's Articles of Incorporation and Share Handling
Regulations, as currently in effect, and of the Company Law,
which came into effect on May 1, 2006, and related
legislation.
All issued shares are fully-paid and non-assessable, and are in
registered form. Transfer of shares is effected by delivery of
share certificates, but in order to assert shareholders'
rights against Sony Corporation, a shareholder must, except as
set forth below, have its name and address registered on Sony
Corporation's register of shareholders, in accordance with
Sony Corporation's Share Handling Regulations. The
registered beneficial holder of deposited shares underlying the
American Depositary Shares ("ADSs") is the Depositary
for the ADSs. Accordingly, holders of ADSs will not be able to
directly assert shareholders' rights against Sony
Corporation.
Mitsubishi UFJ Trust and Banking Corporation is the transfer
agent for Sony Corporation's capital stock. As such, it
keeps Sony Corporation's registers of shareholders and
beneficial shareholders in its office at 4-5, Marunouchi
1-chome, Chiyoda-ku, Tokyo and records transfers of shares upon
presentation of the certificates representing the transferred
shares.
A holder of shares may choose, at its discretion, to participate
in the central clearing system for share certificates under the
Law Concerning Central Clearing of Share Certificates and Other
Securities of Japan. Participating shareholders must deposit
certificates representing all of the shares to be included in
this clearing system with Japan Securities Depository Center,
Inc., or JASDEC. If a holder is not a participating institution
in JASDEC, it must participate through a participating
institution, such as a securities company or bank having a
clearing account with JASDEC. All shares deposited with JASDEC
will be registered in the name of JASDEC on Sony
Corporation's register of shareholders. Each participating
shareholder will in turn be registered on Sony
Corporation's register of beneficial shareholders and be
treated in the same way as shareholders registered on Sony
Corporation's register of shareholders. Entry of the share
transfer in the book maintained by JASDEC for participating
institutions, or in the book maintained by a participating
institution for its customers, has the same effect as delivery
of share certificates. The registered beneficial shareholders
may exercise the rights attached to the shares, such as voting
rights, and will receive dividends (if any) and notices to
shareholders directly from Sony Corporation. The shares held by
a person as a registered
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shareholder and those held by the same person as a registered
beneficial shareholder are aggregated for these purposes.
Beneficial owners may at any time withdraw their shares from
deposit and receive share certificates.
A law to establish a new central clearing system for shares of
listed companies and to eliminate the issuance and use of
certificates for such shares was promulgated in June 2004 and
the relevant part of the law will come into effect within five
years of the date of the promulgation. On the effective date, a
new central clearing system will be established and the shares
of all Japanese companies listed on any Japanese stock exchange,
including the shares of Common Stock of Sony Corporation, will
be subject to the new central clearing system. On the same day,
all existing share certificates will become null and void. The
transfer of such shares will be effected through entry in the
books maintained under the new central clearing system.
(Authorized capital)
Under the Articles of Incorporation of Sony Corporation, Sony
Corporation may only issue shares of Common Stock. Sony
Corporation's Articles of Incorporation provide that the
total number of shares authorized to be issued by Sony
Corporation is 3.6 billion shares.
All shares of capital stock of Sony Corporation have no par
value.
(Distribution of Surplus)
Distribution of Surplus — General
Under the Company Law, distributions of cash or other assets by
joint stock corporations to their shareholders, so called
"dividends", are referred to as "distributions of
Surplus" ("Surplus" is defined in
"— Restriction on distributions of
Surplus"). Sony Corporation may make distributions of
Surplus to shareholders any number of times per business year,
subject to certain limitations described in "—
Restriction on distributions of Surplus." Distributions of
Surplus are required in principle to be authorized by a
resolution of a General Meeting of Shareholders, but Sony
Corporation shall authorize distributions of Surplus by a
resolution of the Board of Directors as long as its
non-consolidated annual financial statements and certain
documents for the last business year present fairly its assets
and profit or loss, as required by ordinances of the Ministry of
Justice.
Distributions of Surplus may be made in cash or in kind in
proportion to the number of shares of Common Stock held by each
shareholder. A resolution of a General Meeting of Shareholders
or the Board of Directors authorizing a distribution of Surplus
must specify the kind and aggregate book value of the assets to
be distributed, the manner of allocation of such assets to
shareholders, and the effective date of the distribution. If a
distribution of Surplus is to be made in kind, Sony Corporation
may, pursuant to a resolution of a General Meeting of
Shareholders or (as the case may be) the Board of Directors,
grant a right to the shareholders to require Sony Corporation to
make such distribution in cash instead of in kind. If no such
right is granted to shareholders, the relevant distribution of
Surplus must be approved by a special resolution of a General
Meeting of Shareholders (see "— Voting
Rights" with respect to a "special resolution").
Under the Articles of Incorporation of Sony Corporation,
year-end dividends and interim dividends may be distributed to
shareholders of record as of March 31 and September 30
each year, respectively, in proportion to the number of shares
of Common Stock held by each shareholder following approval by
the General Meeting of Shareholders or the Board of Directors.
Sony Corporation is not obliged to pay any dividends unclaimed
for a period of five years after the date on which they first
became payable.
In Japan, the ex-dividend date and the record date for dividends
precede the date of determination of the amount of the dividends
to be paid. The price of the shares of Common Stock generally
goes ex-dividend on the third business day prior to the record
date.
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Distribution of Surplus — Restriction on
distribution of Surplus
In making a distribution of Surplus, Sony Corporation must,
until the sum of its additional paid-in capital and legal
reserve reaches one quarter of its stated capital, set aside in
its additional paid-in capital and/or legal reserve an amount
equal to one-tenth of the amount of Surplus so distributed.
The amount of Surplus at any given time must be calculated in
accordance with the following formula:
A + B + C + D - (E + F + G)
In the above formula:
"A"
the total amount of other capital surplus and other retained
    earnings, each such amount being that appearing on the
    non-consolidated balance sheet as of the end of the last
    business year
"B"
(if Sony Corporation has disposed of its treasury stock after
    the end of the last business year) the amount of the
    consideration for such treasury stock received by Sony
    Corporation less the book value thereof
"C"
(if Sony Corporation has reduced its stated capital after the
    end of the last business year) the amount of such reduction less
    the portion thereof that has been transferred to additional
    paid-in capital or legal reserve (if any)
"D"
(if Sony Corporation has reduced its additional paid-in capital
    or legal reserve after the end of the last business year) the
    amount of such reduction less the portion thereof that has been
    transferred to stated capital (if any)
"E"
(if Sony Corporation has cancelled its treasury stock after the
    end of the last business year) the book value of such treasury
    stock
"F"
(if Sony Corporation has distributed Surplus to its shareholders
    after the end of the last business year) the total book value of
    the Surplus so distributed
"G"
certain other amounts set forth in ordinances of the Ministry of
    Justice, including (if Sony Corporation has reduced Surplus and
    increased its stated capital, additional paid-in capital or
    legal reserve after the end of the last business year) the
    amount of such reduction and (if Sony Corporation has
    distributed Surplus to the shareholders after the end of the
    last business year) the amount set aside in additional paid-in
    capital or legal reserve (if any) as required by ordinances of
    the Ministry of Justice.
The aggregate book value of Surplus distributed by Sony
Corporation may not exceed a prescribed distributable amount
(the "Distributable Amount"), as calculated on the
effective date of such distribution. The Distributable Amount at
any given time shall be equal to the amount of Surplus less the
aggregate of the followings:
(a)
the book value of its treasury stock;
(b)
the amount of consideration for any of treasury stock disposed
    of by Sony Corporation after the end of the last business
    year; and
(c)
certain other amounts set forth in ordinances of the Ministry of
    Justice, including (if the sum of one-half of goodwill and the
    deferred assets exceeds the total of stated capital, additional
    paid-in capital and legal reserve, each such amount being that
    appearing on the non-consolidated balance sheet as of the end of
    the last business year) all or certain part of such exceeding
    amount as calculated in accordance with the ordinances of the
    Ministry of Justice.
If Sony Corporation has become at its option a company with
respect to which consolidated balance sheets should also be
considered in the calculation of the Distributable Amount
(
renketsu haito kisei tekiyo kaisha
), Sony Corporation
shall further deduct from the amount of Surplus the excess
amount, if any, of (x) the total amount of
stockholders' equity appearing on the non-consolidated
balance sheet as of the end of the last business year and
certain other amounts set forth by an ordinance of the Ministry
of Justice over (y) the total amount of stockholders'
equity and certain other amounts set forth by an ordinance of
the Ministry of Justice appearing on the consolidated balance
sheet as of the end of the last business year.
If Sony Corporation has prepared interim financial statements as
described below, and if such interim financial statements have
been approved by the Board of Directors or (if so required by
the Company Law) by
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a General Meeting of Shareholders, then the Distributable Amount
must be adjusted to take into account the amount of profit or
loss, and the amount of consideration for any of the treasury
stock disposed of by Sony Corporation, during the period in
respect of which such interim financial statements have been
prepared. Sony Corporation may prepare non-consolidated interim
financial statements consisting of a balance sheet as of any
date subsequent to the end of the last business year and an
income statement for the period from the first day of the
current business year to the date of such balance sheet. Interim
financial statements so prepared by Sony Corporation must be
audited by the Audit Committee and the independent auditor, as
required by ordinances of the Ministry of Justice.
(Stock splits)
Sony Corporation may at any time split shares in issue into a
greater number of shares at the determination of the CEO.
In the event of a stock split, generally, shareholders will not
be required to exchange share certificates for new share
certificates, but certificates representing the additional
shares resulting from the stock split will be issued to
shareholders. When a stock split is to be made Sony Corporation
must give public notice of the stock split, specifying the
record date thereof, at least two weeks prior to such record
date.
(Consolidation of shares)
Sony Corporation may at any time consolidate issued shares into
a smaller number of shares by a special shareholders resolution
(as defined in "
(Voting Rights)
"). When a
consolidation of shares is to be made, Sony Corporation must
give public notice and notice to each shareholder that, within a
period of not less than one month specified in the notice, share
certificates must be submitted to Sony Corporation for exchange.
Sony Corporation must disclose the reason for the consolidation
of shares at the general meeting of shareholders.
(General Meeting of Shareholders)
The Ordinary General Meeting of Shareholders of Sony Corporation
for each business year is normally held in June of each year in
Tokyo, Japan. In addition, Sony Corporation may hold an
Extraordinary General Meeting of Shareholders whenever necessary
by giving notice thereof at least two weeks prior to the date
set for the meeting.
Notice of a shareholders' meeting setting forth the place,
time and purpose thereof must be mailed to each shareholder
having voting rights (or, in the case of a non-resident
shareholder, to such shareholder's resident proxy or
mailing address in Japan) at least two weeks prior to the date
set for the meeting. Under the Company Law, such notice may be
given to shareholders by electronic means, subject to obtaining
consent by the relevant shareholders. The record date for an
Ordinary General Meeting of Shareholders is March 31 of
each year.
Any shareholder or group of shareholders holding at least three
percent of the total number of voting rights for a period of six
months or more may require the convocation of a General Meeting
of Shareholders for a particular purpose. Unless such a
shareholders' meeting is convened promptly or a convocation
notice of a meeting which is to be held not later than eight
weeks from the day of such demand is dispatched, the requiring
shareholder may, upon obtaining a court approval, convene such a
shareholders' meeting.
Any shareholder or group of shareholders holding at least 300
voting rights or one percent of the total number of voting
rights for a period of six months or more may propose a matter
to be considered at a General Meeting of Shareholders by
submitting a written request to Sony Corporation at least eight
weeks prior to the date set for such meeting.
If the Articles of Incorporation so provide, any of the minimum
voting rights or percentages, time periods and number of voting
rights necessary for exercising the minority shareholder rights
described above may be decreased or shortened.
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(Voting rights)
So long as Sony Corporation maintains the unit share system, a
holder of shares constituting one or more units is entitled to
one vote for each such unit of stock (Refer to "
(Unit
share system)
" below, currently 100 shares
constitute one unit), except that no voting rights with respect
to shares of capital stock of Sony Corporation are afforded to
Sony Corporation or any corporate or certain other entity more
than one-quarter of the total voting rights of which are
directly or indirectly held by Sony Corporation. If Sony
Corporation eliminates from its Articles of Incorporation the
provisions relating to units of stock, holders of capital stock
will have one vote for each share they hold. Except as otherwise
provided by law or by the Articles of Incorporation of Sony
Corporation, a resolution can be adopted at a General Meeting of
Shareholders by a majority of the number of voting rights of all
the shareholders represented at the meeting. The Company Law and
Sony Corporation's Articles of Incorporation provide,
however, that the quorum for the election of Directors shall not
be less than one-third of the total number of voting rights of
all the shareholders. Sony Corporation's shareholders are
not entitled to cumulative voting in the election of Directors.
Shareholders may cast their votes in writing and may also
exercise their voting rights through proxies, provided that the
proxies are also shareholders holding voting rights.
Shareholders may also exercise their voting rights by electronic
means pursuant to the method designated by Sony Corporation.
The Company Law and the Articles of Incorporation of Sony
Corporation provide that in order to amend the Articles of
Incorporation and in certain other instances, including:
(1)
acquisition of its own shares from a specific party other than
    its subsidiaries;
(2)
consolidation of shares;
(3)
any offering of new shares at a "specially favorable"
    price (or any offering of stock acquisition rights to acquire
    shares of capital stock, or bonds with stock acquisition rights
    at "specially favorable" conditions) to any persons
    other than shareholders;
(4)
the exemption of liability of a Director, Corporate Executive
    Officer or independent auditor with certain exceptions;
(5)
a reduction of stated capital with certain exceptions;
(6)
a distribution of in-kind dividends which meets certain
    requirements;
(7)
dissolution, merger, consolidation, or corporate split with
    certain exceptions;
(8)
the transfer of the whole or a material part of the business;
(9)
the taking over of the whole of the business of any other
    corporation with certain exceptions; or
(10)
share exchange or share transfer for the purpose of establishing
    100 percent parent-subsidiary relationships with certain
    exceptions,
the quorum shall be one-third of the total number of voting
rights of all the shareholders, and the approval by at least
two-thirds of the number of voting rights of all the
shareholders represented at the meeting is required (the
"special shareholders resolutions").
(Issue of additional shares and pre-emptive rights)
Holders of Sony Corporation's shares of capital stock have
no pre-emptive rights under its Articles of Incorporation.
Authorized but unissued shares may be issued at such times and
upon such terms as the Board of Directors or the CEO determines,
subject to the limitations as to the offering of new shares at a
"specially favorable" price mentioned under
"
(Voting rights)
" above. The Board of Directors
or the CEO may, however, determine that shareholders of a
particular class of stock shall be given subscription rights
regarding a particular issue of new shares of that class, in
which case such rights must be given on uniform terms to all
shareholders of that class of stock as at a record date of which
not less than two weeks' prior public notice must be given.
Each of the shareholders to whom such rights are given must also
be given notice of the expiry thereof at least two weeks prior
to the date on which such rights expire.
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Subject to certain conditions, Sony Corporation may issue stock
acquisition rights by a resolution of the Board of Directors or
a determination by the CEO. Holders of stock acquisition rights
may exercise their rights to acquire a certain number of shares
within the exercise period as prescribed in the terms of their
stock acquisition rights. Upon exercise of stock acquisition
rights, Sony Corporation will be obliged to issue the relevant
number of new shares or alternatively to transfer the necessary
number of treasury stock held by it.
In cases where a particular issue of new shares or stock
acquisition rights (i) violates laws and regulations or
Sony Corporation's Articles of Incorporation, or
(ii) will be performed in a manner materially unfair, and
shareholders may suffer disadvantages therefrom, such
shareholder may file an injunction to enjoin such issue with a
court.
(Liquidation rights)
In the event of a liquidation of Sony Corporation, the assets
remaining after payment of all debts, liquidation expenses and
taxes will be distributed among the holders of shares of Common
Stock in proportion to the respective numbers of shares of
Common Stock held.
(Record date)
As mentioned above, March 31 is the record date for Sony
Corporation's year-end dividends, if declared. So long as
Sony Corporation maintains the unit share system, the
shareholders and beneficial shareholders who are registered as
the holders of one or more unit of stock in Sony
Corporation's register of shareholders and/or beneficial
shareholders at the end of each March 31 are also entitled
to exercise shareholders' rights at the Ordinary General
Meeting of Shareholders with respect to the business year ending
on such March 31. September 30 is the record date for
interim dividends. In addition, Sony Corporation may set a
record date for determining the shareholders and/or beneficial
shareholders entitled to other rights and for other purposes by
giving at least two weeks prior public notice.
(Acquisition by Sony Corporation of its capital stock)
Under the Company Law and the Articles of Incorporation of Sony
Corporation, Sony Corporation may acquire shares of Common Stock
(i) by soliciting all the shareholders to offer to sell
shares held by them (in this case, the certain terms of such
acquisition, such as the total number of shares to be purchased
and the total amount of consideration, shall be set by (as long
as its non-consolidated annual financial statements and certain
documents for the last business year present fairly its assets
and profit or loss, as required by ordinances of the Ministry of
Justice) a resolution of Board of Directors or an ordinary
resolution of a General Meeting of Shareholders in advance, and
acquisition shall be effected pursuant to a resolution of the
Board of Directors), (ii) from a specific shareholder other
than any of its subsidiaries (pursuant to a special resolution
of a General Meeting of Shareholders), (iii) from any of
its subsidiaries (pursuant to a determination by the CEO), or
(iv) by way of purchase on any Japanese stock exchange on
which Sony Corporation's shares of common stock are listed
or by way of tender offer (in either case pursuant to an
ordinary resolution of a General Meeting of Shareholders or a
resolution of the Board of Directors). In the case of
(ii) above, any other shareholder may make a request to
Sony Corporation that such other shareholder be included as a
seller in the proposed purchase, provided that no such right
will be available if the purchase price or any other
consideration to be received by the relevant specific
shareholder will not exceed the last trading price of the shares
on the relevant stock exchange on the day immediately preceding
the date on which the resolution mentioned in (ii) above
was adopted (or, if there is no trading in the shares on the
stock exchange or if the stock exchange is not open on such day,
the price at which the shares are first traded on such stock
exchange thereafter).
The total amount of the purchase price of shares of Common Stock
may not exceed the Distributable Amount, as described in
"— Distributions of Surplus —
Restriction on distributions of Surplus."
Shares acquired by Sony Corporation may be held for any period
or may be retired at the determination of the CEO. Sony
Corporation may also transfer (by public or private sale or
otherwise) to any person the shares held by it, subject to a
determination by the CEO, and subject also to other requirements
similar to
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those applicable to the issuance of new shares, as described in
"
(Issue of additional shares and pre-emptive
rights)
" above. Sony Corporation may also utilize its
treasury stock for the purpose of transfer to any person upon
exercise of stock acquisition rights or for the purpose of
acquiring another company by way of merger, share exchange or
corporate split through exchange of treasury stock for shares or
assets of the acquired company.
(Unit share system)
The Articles of Incorporation of Sony Corporation provide that
100 shares constitute one "unit" of shares of
stock. The Board of Directors or the Corporate Executive Officer
to whom the authority to make such a determination has been
delegated by a resolution of the Board of Directors is permitted
to amend the Articles of Incorporation to reduce the number of
shares that constitute a unit or to abolish the unit share
system entirely. The number of shares constituting one unit
cannot exceed 1,000 shares.
Under the unit share system, shareholders have one voting right
for each unit of stock that they hold. Any number of shares less
than one full unit have neither voting rights nor rights related
to voting rights. The Articles of Incorporation and Share
Handling Regulations of Sony Corporation provide that no share
certificates shall be issued with respect to any number of
shares constituting less than one full unit, unless Sony
Corporation deems the issue of such share certificates to be
necessary for any shareholder(s). As the transfer of shares
normally requires delivery of the certificates, fractions of a
unit for which no share certificate has been issued are not
transferable. Moreover, holders of shares constituting less than
one unit will have no other shareholder rights if Sony
Corporation's Articles of Incorporation so provide, except
that such holders may not be deprived of certain rights
specified in the Company Law or an ordinance of the Ministry of
Justice, including the right to receive distribution of Surplus.
A holder of shares constituting less than one full unit may
require Sony Corporation to purchase such Shares at their market
value in accordance with the provisions of the Share Handling
Regulations of Sony Corporation.
The Articles of Incorporation of Sony Corporation provide that a
holder of shares constituting less than one full unit may
request Sony Corporation to sell to such holder such amount of
shares which will, when added together with the shares
constituting less than one full unit, constitute one full unit
of stock. Such request by a holder and the sale by Sony
Corporation must be made in accordance with the provisions of
the Share Handling Regulations of Sony Corporation.
A holder who owns ADRs evidencing less than 100 ADSs will
indirectly own less than one full unit. Although, as discussed
above, under the unit share system holders of less than one full
unit have the right to require Sony Corporation to purchase
their shares or sell shares held by Sony Corporation to such
holders, holders of ADRs evidencing ADSs that represent other
than integral multiples of whole units are unable to withdraw
the underlying shares of capital stock representing less than
one full unit and, therefore, are unable, as a practical matter,
to exercise the rights to require Sony Corporation to purchase
such underlying shares or sell shares held by Sony Corporation
to such holders. As a result, access to the Japanese markets by
holders of ADRs through the withdrawal mechanism will not be
available for dispositions of shares in lots less than one full
unit. The unit share system does not affect the transferability
of ADSs, which may be transferred in lots of any size.
(Sale by Sony Corporation of shares held by shareholders
    whose location is unknown)
Sony Corporation is not required to send a notice to a
shareholder if a notice to such shareholder fails to arrive at
the registered address of the shareholder in Sony
Corporation's register of shareholders or at the address
otherwise notified to Sony Corporation continuously for five
years or more.
In addition, Sony Corporation may sell or otherwise dispose of
shares of capital stock for which the location of the
shareholder is unknown. Generally, if (i) notices to a
shareholder fail to arrive continuously for five years or more
at the shareholder's registered address in Sony
Corporation's register of shareholders or at the address
otherwise notified to Sony Corporation, and (ii) the
shareholder fails to receive distributions of
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Surplus on the shares continuously for five years or more at the
address registered in Sony Corporation's register of
shareholders or at the address otherwise notified to Sony
Corporation, Sony Corporation may sell or otherwise dispose of
the shareholder's shares at the then market price of the
shares by a determination of a Corporate Executive Officer and
after giving at least three months' prior public and
individual notice, and hold or deposit the proceeds of such sale
or disposal of shares for such shareholder.
Reporting of substantial shareholdings
The Securities and Exchange Law of Japan and its related
regulations require any person, regardless of residence, who has
become, beneficially and solely or jointly, a holder of more
than five percent of the total issued shares of capital stock of
a company listed on any Japanese stock exchange or whose shares
are traded on the
over-the
-counter market
in Japan to file with the Director General of the competent
Regional Finance Bureau of the Ministry of Finance within five
business days a report concerning such shareholdings.
A similar report must also be filed in respect of any subsequent
change of one percent or more in any such holding, with certain
exceptions. For this purpose, shares issuable to such persons
upon conversion of convertible securities or exercise of share
subscription warrants or stock acquisition rights are taken into
account in determining both the number of shares held by such
holders and the issuer's total issued share capital. Copies
of such report must also be furnished to the issuer of such
shares and all Japanese stock exchanges on which the shares are
listed.
Except for the general limitation under Japanese anti-trust and
anti-monopoly regulations against holding of shares of capital
stock of a Japanese corporation which leads or may lead to a
restraint of trade or monopoly, and except for general
limitations under the Company Law or Sony Corporation's
Articles of Incorporation on the rights of shareholders
applicable regardless of residence or nationality, there is no
limitation under Japanese laws and regulations applicable to
Sony Corporation or under its Articles of Incorporation on the
rights of non-resident or foreign shareholders to hold or
exercise voting rights on the shares of capital stock of Sony
Corporation.
There is no provision in Sony Corporation's Articles of
Incorporation or
by-laws
that would have
an effect of delaying, deferring or preventing a change in
control of Sony Corporation and that would operate only with
respect to merger, acquisition or corporate restructuring
involving Sony Corporation.
Material Contracts
None
Exchange Controls
The Foreign Exchange and Foreign Trade Law of Japan and its
related cabinet orders and ministerial ordinances (the
"Foreign Exchange Regulations") govern the acquisition
and holding of shares of capital stock of Sony Corporation by
"exchange non-residents" and by "foreign
investors." The Foreign Exchange Regulations currently in
effect do not, however, affect transactions between exchange
non-residents to purchase or sell shares outside Japan using
currencies other than Japanese yen.
Exchange non-residents are:
•
individuals who do not reside in Japan; and
•
corporations whose principal offices are located outside Japan.
Generally, branches and other offices of non-resident
corporations that are located within Japan are regarded as
residents of Japan. Conversely, branches and other offices of
Japanese corporations located outside Japan are regarded as
exchange non-residents.
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Foreign investors are:
•
individuals who are exchange non-residents;
•
corporations that are organized under the laws of foreign
    countries or whose principal offices are located outside of
    Japan; and
•
corporations (1) of which 50 percent or more of their
    shares are held by individuals who are exchange non-residents
    and/or corporations (a) that are organized under the laws
    of foreign countries or (b) whose principal offices are
    located outside of Japan or (2) a majority of whose
    officers, or officers having the power of representation, are
    individuals who are exchange non- residents.
In general, the acquisition of shares of a Japanese company
(such as the shares of capital stock of Sony Corporation) by an
exchange non-resident from a resident of Japan is not subject to
any prior filing requirements. In certain limited circumstances,
however, the Minister of Finance may require prior approval of
an acquisition of this type. While prior approval, as described
above, is not required, in the case where a resident of Japan
transfers shares of a Japanese company (such as the shares of
capital stock of Sony Corporation) for consideration exceeding
100 million yen to an exchange non-resident, the resident
of Japan who transfers the shares is required to report the
transfer to the Minister of Finance within 20 days from the
date of the transfer, unless the transfer was made through a
bank, securities company or financial futures trader licensed
under Japanese law.
If a foreign investor acquires shares of a Japanese company that
is listed on a Japanese stock exchange (such as the shares of
capital stock of Sony Corporation) or that is traded on an
over-the
-counter market
in Japan and, as a result of the acquisition, the foreign
investor, in combination with any existing holdings, directly or
indirectly holds 10 percent or more of the issued shares of
the relevant company, the foreign investor must file a report of
the acquisition with the Minister of Finance and any other
competent Ministers having jurisdiction over that Japanese
company within 15 days from and including the date of the
acquisition, except where the offering of the company's
shares was made overseas. In limited circumstances, such as
where the foreign investor is in a country that is not listed on
an exemption schedule in the Foreign Exchange Regulations, a
prior notification of the acquisition must be filed with the
Minister of Finance and any other competent Ministers, who may
then modify or prohibit the proposed acquisition.
Under the Foreign Exchange Regulations, dividends paid on and
the proceeds from sales in Japan of shares of capital stock of
Sony Corporation held by non-residents of Japan may generally be
converted into any foreign currency and repatriated abroad.
Taxation
The following is a summary of the major Japanese national tax
and U.S. federal income tax consequences of the ownership,
acquisition and disposition of shares of Common Stock of Sony
Corporation and of ADRs evidencing ADSs representing shares of
Common Stock of Sony Corporation by a non-resident of Japan or a
non-Japanese corporation without a permanent establishment in
Japan. The summary does not purport to be a comprehensive
description of all of the tax considerations that may be
relevant to any particular investor, and does not take into
account any specific individual circumstances of any particular
investor. Accordingly, holders of shares of Common Stock or ADSs
of Sony Corporation are encouraged to consult their tax advisors
regarding the application of the considerations discussed below
to their particular circumstances.
This summary is based upon the representations of the Depositary
and the assumption that each obligation in the deposit agreement
in relation to the ADSs dated as of June 1, 1961, as
amended and restated as of October 31, 1991, as further
amended and restated as of March 17, 1995, and in any
related agreement, will be performed in accordance with its
terms.
For purposes of the income tax convention between Japan and the
United States (the "Treaty") and the
U.S. Internal Revenue Code of 1986, as amended (the
"Code"), U.S. holders of ADSs generally will be
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treated as owning shares of Common Stock of Sony Corporation
underlying the ADSs evidenced by the ADRs. For the purposes of
the following discussion, a "U.S. holder" is a
holder that:
(i)
is a resident of the U.S. for purposes of the Treaty;
(ii)
does not maintain a permanent establishment in Japan
    (a) with which shares of Common Stock or ADSs of Sony
    Corporation are effectively connected and through which the
    U.S. holder carries on or has carried on business or
    (b) of which shares of Common Stock or ADSs of Sony
    Corporation form part of the business property; and
(iii)
is eligible for benefits under the Treaty with respect to income
    and gain derived in connection with shares of Common Stock or
    ADSs of Sony Corporation.
Japanese Taxation
The following is a summary of the principal Japanese tax
consequences (limited to national taxes) to holders of shares of
Common Stock of Sony Corporation and of ADRs evidencing ADSs
representing shares of Common Stock of Sony Corporation who are
non-residents of Japan or non-Japanese corporations, without a
permanent establishment in Japan ("non-resident
Holders").
Generally, a non-resident of Japan or a non-Japanese corporation
is subject to Japanese withholding tax on dividends paid by
Japanese corporations. Sony Corporation withholds taxes from
dividends it pays as required by Japanese law. Stock splits are,
in general, not a taxable event.
In the absence of an applicable tax treaty, convention or
agreement reducing the maximum rate of Japanese withholding tax
or allowing exemption from Japanese withholding tax, the rate of
Japanese withholding tax applicable to dividends paid by
Japanese corporations to non-residents of Japan or non-Japanese
corporations is generally 20 percent, provided, with
respect to dividends paid on listed shares issued by a Japanese
corporation (such as the shares of Common Stock of Sony
Corporation) to any non-resident corporate or individual
shareholders (including non-resident Holders) other than any
individual shareholder who holds 5 percent or more of the
total shares issued by the relevant Japanese corporation, the
aforementioned 20 percent withholding tax rate is reduced
to (i) 7 percent for dividends due and payable on or
before March 31, 2008, and (ii) 15 percent for
dividends due and payable on or after April 1, 2008. As of
the date of this document, Japan has income tax treaties,
conventions or agreements whereby the above-mentioned
withholding tax rate is reduced, in most cases to
15 percent for portfolio investors with, among other
countries, Australia, Belgium, Canada, Denmark, Finland, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, New
Zealand, Norway, Singapore, Spain, Sweden, Switzerland and
the U.K.
Under the Treaty, the maximum rate of Japanese withholding tax
that may be imposed on dividends paid by a Japanese corporation
to a U.S. holder that does not own directly or indirectly
at least 10 percent of the voting stock of the Japanese
corporation is generally reduced to 10 percent of the gross
amount actually distributed, and Japanese withholding tax with
respect to dividends paid by a Japanese corporation to a
U.S. holder that is a pension fund is exempt from Japanese
taxation by way of withholding or otherwise unless such
dividends are derived from the carrying on of a business,
directly or indirectly, by such pension fund.
If the maximum tax rate provided for in the income tax treaty
applicable to dividends paid by Sony Corporation to any
particular non-resident Holder is lower than the withholding tax
rate otherwise applicable under Japanese tax law or any
particular non-resident Holder is exempt from Japanese income
tax with respect to such dividends under the income tax treaty
applicable to such particular non-resident Holder, such
non-resident Holder is required to submit an Application Form
for Income Tax Convention Regarding Relief from Japanese Income
Tax on Dividends (together with any other required forms and
documents) in advance through Sony Corporation to the relevant
tax authority before the payment of dividends. A standing proxy
for non-resident Holders of a Japanese corporation may provide
this application service. With respect to ADSs, this reduced
rate or exemption is applicable if the Depositary or its agent
submits two Application Forms (one before payment of dividends
and the other within eight months after Sony Corporation's
fiscal year-end or semi-fiscal year-end). To claim this reduced
rate or exemption, a non-resident Holder of ADSs will be
required to file a proof of taxpayer status, residence and
beneficial ownership (as applicable) and to provide
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other information or documents as may be required by the
Depositary. A non-resident Holder who is entitled, under an
applicable income tax treaty, to a reduced rate which is lower
than the withholding tax rate otherwise applicable under
Japanese tax law or an exemption from the withholding tax, but
failed to submit the required application in advance will be
entitled to claim the refund of taxes withheld in excess of the
rate under an applicable tax treaty (if such non-resident Holder
is entitled to a reduced treaty rate under the applicable income
tax treaty) or the full amount of tax withheld (if such
non-resident Holder is entitled to an exemption under the
applicable income tax treaty) from the relevant Japanese tax
authority. Sony Corporation does not assume any responsibility
to ensure withholding at the reduced treaty rate or to ensure
not withholding for shareholders who would be eligible under any
applicable income tax treaty but do not follow the required
procedures as stated above.
Gains derived from the sale of shares of Common Stock or ADSs of
Sony Corporation outside Japan by a non-resident Holder holding
such shares or ADSs as portfolio investors are, in general, not
subject to Japanese income tax or corporation tax.
U.S. holders are not subject to Japanese income or
corporation tax with respect to such gains under the Treaty.
Japanese inheritance and gift taxes at progressive rates may be
payable by an individual who has acquired shares of Common Stock
or ADSs of Sony Corporation as a legatee, heir or donee even
though neither the individual nor the deceased nor donor is a
Japanese resident.
Holders of shares of Common Stock or ADSs of Sony Corporation
should consult their tax advisors regarding the effect of these
taxes and, in the case of U.S. holders, the possible
application of the Estate and Gift Tax Treaty between the
U.S. and Japan.
United States Taxation with respect to shares of Common
Stock and ADSs
The U.S. dollar amount of dividends received (prior to
deduction of Japanese taxes) by a U.S. holder of ADSs or
Common Stock will be includable in income as ordinary income for
U.S. federal income tax purposes to the extent paid out of
current or accumulated earnings and profits of Sony Corporation
as determined for U.S. federal income tax purposes. Subject
to certain exceptions for short-term and hedged positions, the
U.S. dollar amount of dividends received by an individual
prior to January 1, 2011 with respect to the ADSs or Common
Stock will be subject to taxation at a maximum rate of
15 percent if the dividends are "qualified
dividends." Dividends paid on the Common Stock or ADSs will
be treated as qualified dividends if Sony Corporation was not,
in the year prior to the year in which the dividend was paid,
and is not, in the year in which the dividend is paid a passive
foreign investment company ("PFIC"). Based on Sony
Corporation's audited financial statements and relevant
market and shareholder data, Sony Corporation believes that it
was not treated as a PFIC for U.S. federal income tax
purposes with respect to its 2005 taxable year. In addition,
based on Sony Corporation's audited financial statements
and Sony Corporation's current expectations regarding the
value and nature of its assets, the sources and nature of its
income, and relevant market and shareholder data, Sony
Corporation does not anticipate becoming a PFIC for the 2006
taxable year. The U.S. Treasury has announced its intention
to promulgate rules pursuant to which holders of ADSs or Common
Stock and intermediaries through whom such securities are held
will be permitted to rely on certifications from issuers to
treat dividends as qualified for tax reporting purposes. Because
such procedures have not yet been issued, it is not clear
whether Sony Corporation will be able to comply with them.
Holders of ADSs and Common Stock should consult their own tax
advisors regarding the availability of the reduced dividend tax
rate in light of the considerations discussed above and their
own particular circumstances.
Subject to applicable limitations and special considerations
discussed below, a U.S. holder of ADSs or Common Stock of
Sony Corporation will be entitled to a credit for Japanese tax
withheld in accordance with the Tax Convention from dividends
paid by Sony Corporation. For purposes of the foreign tax credit
limitation, dividends will be foreign source income, and will
constitute "passive" or "financial services"
income. Foreign tax credits will not be allowed for withholding
taxes imposed in respect of certain short-term of hedged
positions and may not be allowed in respect of arrangements in
which economic profit, after
non-U.S.
taxes, is
insubstantial. Holders of Ads and Common Stock should consult
their own tax advisors regarding the implications of these rules
in light of their particular circumstances.
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Dividends paid by Sony Corporation to U.S. corporate
holders of ADSs or Common Stock will not be eligible for the
dividends-received deduction.
In general, a U.S. holder will recognize capital gain or
loss upon the sale or other disposition of ADSs or Common Stock
equal to the difference between the amount realized on the sale
or disposition and the U.S. holder's tax basis in the
ADSs or Common Stock. Such capital gain or loss will be
long-term capital gain or loss if the ADSs or Common Stock have
been held for more than one year on the date of the sale or
disposition. The net amount of long-term capital gain recognized
by an individual holder after May 5, 2003 and before
January 1, 2011 generally is subject to taxation at a
maximum rate of 15 percent. The net long-term capital gain
recognized by an individual holder before May 6, 2003 or
after December 31, 2010 generally is subject to taxation at
a maximum rate of 20 percent.
Dividends and Paying Agent
Not Applicable
Statement by Experts
Not Applicable
Documents on Display
It is possible to read and copy documents referred to in this
annual report on
Form
20-F
that
have been filed with the SEC at the SEC's public reference
room located at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for
further information on the public reference rooms and their copy
charges. You can also access the documents at the SEC's
home page (http://www.sec.gov/index.html).
Subsidiary Information
Not Applicable
Item 11.
Quantitative and Qualitative Disclosures about Market
    Risk
Sony's normal course of business is continuously exposed to
market fluctuation, such as fluctuations in currency exchange
rates, interest rates or stock prices. Sony utilizes several
derivative instruments, such as foreign exchange forward
contracts, foreign currency option contracts, interest rate swap
agreements and currency swap agreements in order to hedge the
potential downside risk on the cash flow from the normal course
of business caused by market fluctuation. Sony uses foreign
exchange forward contracts and foreign currency option contracts
primarily to reduce the foreign exchange volatility risk that
accounts receivable or accounts payable denominated in yen,
U.S. dollars, Euros or other currencies have through the
normal course of Sony's worldwide business. Interest rate
swap agreements and currency swap agreements are utilized to
diversify funding conditions or to reduce funding costs, and in
Financial Services segment, these transactions are used for
asset liability management. Sony uses these derivative financial
instruments mainly for risk-hedging purposes as described above,
and few derivative transactions, such as bond futures and bond
options are held or utilized for trading purposes in Financial
Services segment. If hedge accounting cannot be applied because
the accounts receivable or accounts payable to be hedged are not
yet booked, or because cash flows from derivative transactions
do not coincide with the underlying exposures recorded on
Sony's balance sheet, then Sony understands that such
derivatives agreements should be subject to a
mark-to
-market
evaluation and their unrealized gains or losses are recognized
in earnings. In addition, Sony holds marketable securities such
as straight bonds, convertible bonds, and stocks in yen or other
currencies in the Financial Services segment in order to obtain
interest income or capital gain on the financial assets under
management. Sony understands that such investment in marketable
securities is also subjected to market fluctuation.
Sony measures the economic impact of market fluctuations on the
value of derivatives agreements and marketable securities by
using Value-at-Risk ("VaR") analysis in order to
comply with Item 11 disclosure
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requirements. VaR in this context indicates the potential
maximum amount of loss in fair value resulting from adverse
market fluctuations for a selected period of time and at a
selected level of confidence.
The following table shows the results of VaR. These analyses for
the fiscal year ended March 31, 2006 indicate the potential
maximum loss in fair value as predicted by the VaR analysis
resulting from market fluctuations in one day at a
95 percent confidence level. The VaR of currency exchange
rate risk principally consists of risks arising from the
volatility of the exchange rates between the yen and
U.S. dollar and between the yen and the Euro, the
currencies in which a significant amount of financial assets and
liabilities and derivative transactions are maintained on a
consolidated basis. The VaR of interest rate risk and stock
price risk consists of risks arising from the volatility of the
interest rates and stock prices against invested securities and
derivatives transactions in the Financial Services segment.
The net VaR for Sony's entire portfolio is smaller than the
simple aggregate of VaR for each component of market risk. This
is due to the fact that market risk factors such as currency
exchange rates, interest rates, and stock prices are not
completely independent, and potential profits and losses arising
from each market risk may to some degree be mutually offsetting.
The disclosed VaR amounts simply represent the calculated
potential maximum loss on the specified date and does not
necessarily indicate an estimate of actual or future loss.
Consolidated
June 30,
September 30,
December 31,
March 31,
2005
2005
2005
2006
(Yen in billions)
Net VaR
1.9
3.4
5.8
4.5
VaR of currency exchange rate risk
0.8
1.0
1.0
1.2
VaR of interest rate risk
0.1
0.1
0.4
0.1
VaR of stock price risk
1.9
3.1
6.3
4.3
Financial Services
June 30,
September 30,
December 31,
March 31,
2005
2005
2005
2006
(Yen in billions)
Net VaR
1.9
3.2
5.9
4.4
VaR of currency exchange rate risk
0.4
0.5
0.7
0.6
VaR of interest rate risk
0.1
0.1
0.4
0.1
VaR of stock price risk
1.9
3.1
6.3
4.3
All other segments excluding Financial Services
June 30,
September 30,
December 31,
March 31,
2005
2005
2005
2006
(Yen in billions)
Net VaR
0.5
0.9
0.6
0.6
VaR of currency exchange rate risk
0.5
0.9
0.6
0.6
VaR of interest rate risk
0.0
0.0
0.0
0.0
VaR of stock price risk
0.0
0.0
0.0
0.0
116
Table of Contents
Item 12.
Description of Securities Other Than Equity
    Securities
Not Applicable
Item 13.
Defaults, Dividend Arrearages and Delinquencies
None
Item 14.
Material Modifications to the Rights of Security Holders
    and Use of Proceeds
None
Item 15.
Controls and Procedures
Sony has carried out an evaluation under the supervision and
with the participation of Sony's management, including the
Chief Executive Officer, President, and Chief Financial Officer,
of the effectiveness of the design and operation of Sony's
disclosure controls and procedures as of March 31, 2006.
There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures, including the
possibility of human error and the circumvention or overriding
of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives. Based upon
Sony's evaluation, the Chief Executive Officer, President
and Chief Financial Officer have concluded that, as of
March 31, 2006, the disclosure controls and procedures were
effective to provide reasonable assurance that information
required to be disclosed in the reports Sony files and submits
under the Securities and Exchange Act of 1934 is recorded,
processed, summarized and reported as and when required, within
the time periods specified in the applicable rules and forms,
and that it is accumulated and communicated to Sony's
management, including the Chief Executive Officer, President,
and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.
There has been no change in Sony's internal control over
financial reporting during the fiscal year ended March 31,
2006 that has materially affected, or is reasonably likely to
materially affect, Sony's internal control over financial
reporting.
Item 16.
[Reserved]
Item 16A.
Audit Committee Financial Expert
Sony's Board of Directors has determined that
Mr. Yoshiaki Yamauchi and Mr. Fueo Sumita both qualify
as an "audit committee financial expert" as defined in
this Item 16A. In addition, both are independent as defined
under the New York Stock Exchange Corporate Governance Standards.
Item 16B.
Code of Ethics
Sony has adopted a code of ethics, as defined in Item 16B
of Form
20-F
under
the Securities Exchange Act of 1934, as amended. The code of
ethics applies to Sony's chief executive officer, chief
financial officer, chief accounting officer and persons
performing similar functions, as well as to directors and all
other officers and employees of Sony, as defined in the code of
ethics. The code of ethics is available at
http://www.sony.net/SonyInfo/Environment/management/compliance/qfhh7c000006e52h-att/
code
of
conduct.pdf
117
Table of Contents
Item 16C.
Principal Accountant Fees and Services
Audit and Non-Audit Fees
ChuoAoyama PricewaterhouseCoopers is a network firm of
PricewaterhouseCoopers in Japan. The following table presents
fees for audit and other services rendered by
PricewaterhouseCoopers for the fiscal years ended March 31,
2005 and 2006.
March 31
2005
2006
(Yen in millions)
Audit Fees
1,939
2,180
Audit-Related Fees(1)
570
206
Tax Fees(2)
737
486
All Other Fees(3)
68
12
3,314
2,884
(1)
Audit-Related Fees consist primarily of services related to the
    implementation of Sarbanes-Oxley Act Section 404 and
    employee benefit plan audits.
(2)
Tax Fees primarily include tax compliance, tax advice and
    expatriate tax services.
(3)
All Other Fees comprise fees for all other services not included
    in any of the other categories noted above.
Audit Committee's Pre-Approval Policies and
Procedures
Consistent with U.S. Securities and Exchange Commission
rules regarding auditor independence, Sony's Audit
Committee is responsible for appointing, reviewing and setting
compensation, retaining, and overseeing the work of Sony's
independent auditor, so that the auditor's independence
will not be impaired, including overseeing any separate firm
that audits the financial statements of any subsidiary if
Sony's independent auditor expressly relies on the audit
report of such firm. The Audit Committee has established a
formal policy requiring pre-approval of all audit and
permissible non-audit services provided by the independent
auditor to Sony or any of its subsidiaries. The Audit Committee
shall periodically review this policy with due regard for
compliance with laws and regulations of host countries where
Sony is listed.
Prior to the engagement of the independent auditor for the
following fiscal year's audit, management shall submit an
application form to the Audit Committee for comprehensive
pre-approval of all recurring services expected to be rendered
during that year. In order to obtain comprehensive pre-approval,
management shall provide sufficient information regarding each
service so that each service can be classified into one of four
categories (Audit, Audit-related, Tax, or All Other) as well as
information regarding the fees expected to be budgeted for each
service. Management shall describe each service in detail and
indicate precisely and unambiguously the nature and scope of
each particular service. Any additional services not
contemplated in the application form shall require the Audit
Committee's separate pre-approval on an individual basis.
The Audit Committee will approve, if necessary, any changes in
terms, conditions and fees, resulting from changes in the scope
of services to be provided or from other circumstances. The
Audit Committee Chairman retains pre-approval authority and
evaluates items for approval on a weekly basis. The Audit
Committee or its designee shall establish procedures to assure
that the independent auditor is aware in a timely manner of the
services that have been pre-approved.
During the fiscal year ended March 31, 2006, in order to
further enhance auditor independence, individual tax services,
recruiting services and corporate tax services were added, at
Sony's initiative, to the list of prohibited services
stipulated by U.S. Securities and Exchange Commission rules
and related regulations. The Audit Committee has withheld
approval regarding the rendering of these services except for
instances where the services had already been pre-approved prior
to the effective date June 23, 2005 and instances in
118
Table of Contents
which difficulties were encountered in finding an alternative
service provider immediately or a brief transitional period has
been needed.
Item 16D.
Exemptions From Listing Standards for Audit
    Committees
Not applicable.
Item 16E.
Purchases of Equity Securities by the Issuer and
    Affiliated Purchasers
The following table sets out information concerning purchases
made by Sony during the fiscal year ended March 31, 2006.
(c) Total Number
(d) Maximum
of Shares
Number of Shares
(a) Total
Purchased as Part
that May Yet Be
Number of
(b) Average
of Publicly
Purchased Under
Shares
Price Paid
Announced Plans
the Plans or
Period
Purchased
per Share
or Programs
Programs
April 1st — 30th, 2005
7,133
4,262.23
N/A
N/A
May 1st — 31st, 2005
3,540
4,008.09
N/A
N/A
June 1st — 30th, 2005
7,844
3,923.01
N/A
N/A
July 1st — 31st, 2005
7,451
3,885.16
N/A
N/A
August 1st — 31st, 2005
6,770
3,728.61
N/A
N/A
September 1st — 30th, 2005
5,240
3,906.85
N/A
N/A
October 1st — 31st, 2005
5,921
3,784.80
N/A
N/A
November 1st — 30th, 2005
6,505
4,022.68
N/A
N/A
December 1st — 31st, 2005
15,143
4,450.79
N/A
N/A
January 1st — 31st, 2006
8,171
4,914.34
N/A
N/A
February 1st — 28th, 2006
9,242
5,669.85
N/A
N/A
March 1st — 31st, 2006
6,489
5,466.27
N/A
N/A
Total
89,449
4,405.06
N/A
N/A
Under the Company Law of Japan, a holder of shares constituting
less than one full unit may require Sony Corporation to purchase
such shares at their market value (See "Memorandum and
Articles of Association — Capital stock —
(Unit share system)
" in "Item 10.
Additional Information"
). During the fiscal year
ended March 31, 2006, Sony Corporation purchased
89,449 shares for a total purchase price of 394,028,170 yen
upon such requests from holders of shares constituting less than
one full unit.
119
Table of Contents
Item 17.
Financial Statements
Not applicable
Item 18.
Financial Statements
Refer to Consolidated Financial Statements.
Item 19.
Exhibits
Documents filed as exhibits to this annual report:
1.1
Articles of Incorporation, as amended (English Translation)
1.2
Share Handling Regulations, as amended (English Translation)
1.3
Charter of the Board of Directors, as amended (English
    Translation)
8.1
Significant subsidiaries (as defined in §210.1-02(w) of
    Regulation S-X) of Sony Corporation, including additional
    subsidiaries that management has deemed to be significant, as of
    March 31, 2006: Incorporated by reference to "Business
    Overview and Organizational Structure" in
    "Item 4. Information on the Company"
12.1
Principal Executive Officer Certification Pursuant to
    17 C.F.R. 240.13a-14(a)
12.2
Principal Financial Officer Certification Pursuant to
    17 C.F.R. 240.13a-14(a)
13.1
Certification Pursuant to 18 U.S.C. Section 1350
15.1
Consent of ChuoAoyama PricewaterhouseCoopers
120
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant hereby certifies
that it meets all of the requirements for filing on
Form
20-F
and that
it has duly caused and authorized the undersigned to sign this
annual report on its behalf.
Sony Corporation
(Registrant)
By:
/s/
Nobuyuki Oneda
(Signature)
Nobuyuki Oneda
Executive Vice President
Chief Financial Officer
Date: August 31, 2006
121
Table of Contents
Consolidated Financial Statements
Sony Corporation and Consolidated Subsidiaries
March 31, 2006
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Page
Report of Independent Registered Public
    Accounting Firm
F-2
Consolidated Balance Sheets at
    March 31, 2005 and 2006
F-4
Consolidated Statements of Income for the
    years ended March 31, 2004, 2005 and 2006
F-6
Consolidated Statements of Cash Flows for
    the years ended March 31, 2004, 2005 and 2006
F-8
Consolidated Statements of Changes in
    Stockholders' Equity for the years ended March 31,
    2004, 2005 and 2006
F-10
Index to Notes to Consolidated Financial
    Statements
F-13
Notes to Consolidated Financial
    Statements
F-14
Financial Statement Schedule II for
    the years ended March 31, 2004, 2005 and 2006 —
    Valuation and Qualifying Accounts
F-78
All other schedules are omitted because they are not applicable
or the required information is shown in the financial statements
or the notes thereto.
Financial statements of majority-owned subsidiaries of the
registrant not consolidated and of 50% or less owned persons
accounted for by the equity method have been omitted because the
registrant's proportionate share of the income from
continuing operations before income taxes, and total assets of
each such company is less than 20% of the respective
consolidated amounts, and the investment in and advances to each
company is less than 20% of consolidated total assets.
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Sony Corporation (Sony Kabushiki Kaisha)
In our opinion, the consolidated financial statements listed in
the accompanying index present fairly, in all material respects,
the financial position of Sony Corporation and its subsidiaries
("the Company") at March 31, 2005 and 2006, and
the results of their operations and their cash flows for each of
the three years in the period ended March 31, 2006, in
conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related
consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
/s/
ChuoAoyama
    PricewaterhouseCoopers
Tokyo, Japan
May 26, 2006
F-2
Table of Contents
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-3
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31
2005
2006
(Yen in millions)
ASSETS
Current assets:
Cash and cash equivalents
779,103
703,098
Marketable securities
460,202
536,968
Notes and accounts receivable, trade
1,113,071
1,075,071
Allowance for doubtful accounts and sales returns
(87,709
)
(89,563
)
Inventories
631,349
804,724
Deferred income taxes
141,154
221,311
Prepaid expenses and other current assets
519,001
517,915
Total current assets
3,556,171
3,769,524
Film costs
278,961
360,372
Investments and advances:
Affiliated companies
252,905
285,870
Securities investments and other
2,492,784
3,234,037
2,745,689
3,519,907
Property, plant and equipment
Land
182,900
178,844
Buildings
925,796
926,783
Machinery and equipment
2,192,038
2,327,676
Construction in progress
92,611
116,149
3,393,345
3,549,452
Less — Accumulated depreciation
2,020,946
2,160,905
1,372,399
1,388,547
Other assets:
Intangibles, net
187,024
207,034
Goodwill
283,923
299,024
Deferred insurance acquisition costs
374,805
383,156
Deferred income taxes
240,396
178,751
Other
459,732
501,438
1,545,880
1,569,403
Total assets:
9,499,100
10,607,753
(Continued on following page.)
F-4
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS — (Continued)
2005
2006
(Yen in millions)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings
63,396
142,766
Current portion of long-term debt
166,870
193,555
Notes and accounts payable, trade
806,044
813,332
Accounts payable, other and accrued expenses
746,466
854,886
Accrued income and other taxes
55,651
87,295
Deposits from customers in the banking business
546,718
599,952
Other
424,223
508,442
Total current liabilities
2,809,368
3,200,228
Long-term debt
678,992
764,898
Accrued pension and severance costs
352,402
182,247
Deferred income taxes
72,227
216,497
Future insurance policy benefits and other
2,464,295
2,744,321
Other
227,631
258,609
Total liabilities:
6,604,915
Minority interest in consolidated subsidiaries
23,847
37,101
Stockholders' equity:
Subsidiary tracking stock, no par value —
2005 — Authorized 100,000,000 shares, outstanding
    3,072,000 shares
3,917
—
Common stock, no par value —
2005 — Authorized 3,500,000,000 shares,
    outstanding 997,211,213 shares
617,792
2006 — Authorized 3,500,000,000 shares,
    outstanding 1,001,679,664 shares
624,124
Additional paid-in capital
1,134,222
1,136,638
Retained earnings
1,506,082
1,602,654
Accumulated other comprehensive income —
Unrealized gains on securities
62,669
100,804
Unrealized losses on derivative instruments
(2,490
)
(2,049
)
Minimum pension liability adjustment
(90,030
)
(39,824
)
Foreign currency translation adjustments
(355,824
)
(215,368
)
(385,675
)
(156,437
)
Treasury stock, at cost
Subsidiary tracking stock
2005 — 32 shares
(0
)
—
Common stock
2005 — 1,118,984 shares
(6,000
)
2006 — 740,888 shares
(3,127
)
2,870,338
3,203,852
Commitments and contingent liabilities
Total liabilities and stockholders' equity:
9,499,100
10,607,753
The accompanying notes are an integral part of these
statements.
F-5
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Sales and operating revenue:
Net sales
6,883,478
6,565,010
6,692,776
Financial service revenue
565,752
537,715
720,566
Other operating revenue
47,161
56,891
62,094
7,496,391
7,159,616
7,475,436
Costs and expenses:
Cost of sales
5,058,205
5,000,112
5,151,397
Selling, general and administrative
1,798,239
1,535,015
1,527,036
Financial service expenses
505,550
482,576
531,809
Loss on sale, disposal or impairment of assets, net
35,495
27,994
73,939
7,397,489
7,045,697
7,284,181
Operating income
98,902
113,919
191,255
Other income:
Interest and dividends
18,756
14,708
24,937
Royalty income
34,244
31,709
35,161
Foreign exchange gain, net
18,059
—
—
Gain on sale of securities investments, net
11,774
5,437
9,645
Gain on change in interest in subsidiaries and equity investees
4,870
16,322
60,834
Other
34,587
29,447
23,039
122,290
97,623
153,616
Other expenses:
Interest
27,849
24,578
28,996
Loss on devaluation of securities investments
16,481
3,715
3,878
Foreign exchange loss, net
—
524
3,065
Other
32,795
25,518
22,603
77,125
54,335
58,542
Income before income taxes
144,067
157,207
286,329
Income taxes:
Current
87,219
85,510
96,400
Deferred
(34,445
)
(69,466
)
80,115
52,774
16,044
176,515
(Continued on following page.)
F-6
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME — (Continued)
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Income before minority interest, equity in net income of
    affiliated companies and cumulative effect of an accounting
    change
91,293
141,163
109,814
Minority interest in income (loss) of consolidated Subsidiaries
2,379
1,651
(626
)
Equity in net income of affiliated companies
1,714
29,039
13,176
Income before cumulative effect of an accounting change
90,628
168,551
123,616
Cumulative effect of an accounting change
(2004: Net of income taxes of 0 million
2005: Net of income taxes of 2,675 million)
(2,117
)
(4,713
)
—
Net income
88,511
163,838
123,616
Per share data:
Common stock
Income before cumulative effect of an accounting change
— Basic
98.26
180.96
122.58
— Diluted
89.03
162.59
116.88
Cumulative effect of an accounting change
— Basic
(2.29
)
(5.06
)
—
— Diluted
(2.03
)
(4.52
)
—
Net income
— Basic
95.97
175.90
122.58
— Diluted
87.00
158.07
116.88
Cash dividends
25.00
25.00
25.00
Subsidiary tracking stock
Net income (loss)
— Basic
(41.80
)
17.21
—
The accompanying notes are an integral part of these
statements.
F-7
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Cash flows from operating activities:
Net income
88,511
163,838
123,616
Adjustments to reconcile net income to net cash provided by
    operating activities —
Depreciation and amortization, including amortization of
    deferred insurance acquisition costs
366,269
372,865
381,843
Amortization of film costs
305,786
276,320
286,655
Accrual for pension and severance costs, less payments
35,562
22,837
(7,563
)
Gain on the transfer to the Japanese Government of the
    substitutional portion of employee pension fund, net
—
—
(73,472
)
Loss on sale, disposal or impairment of assets, net
35,495
27,994
73,939
Gain on sale or loss on devaluation of securities investments,
    net
4,707
(1,722
)
(5,767
)
Gain on evaluation of marketable securities held in the
    financial service business for trading purpose, net
(4,988
)
(5,246
)
(44,986
)
Gain on change in interest in subsidiaries and equity investees
(4,870
)
(16,322
)
(60,834
)
Deferred income taxes
(34,445
)
(69,466
)
80,115
Equity in net (income) losses of affiliated companies, net of
    dividends
1,732
(15,648
)
9,794
Cumulative effect of an accounting change
2,117
4,713
—
Changes in assets and liabilities:
(Increase) decrease in notes and accounts receivable, trade
(63,010
)
(22,056
)
17,464
(Increase) decrease in inventories
(78,656
)
34,128
(164,772
)
Increase in film costs
(299,843
)
(294,272
)
(339,697
)
Increase (decrease) in notes and accounts payable, trade
93,950
31,473
(9,078
)
Increase (decrease) in accrued income and other taxes
(46,067
)
3
29,009
Increase in future insurance policy benefits and other
264,216
144,143
143,122
Increase in deferred insurance acquisition costs
(71,219
)
(65,051
)
(51,520
)
(Increase) decrease in marketable securities held in the
    financial service business for trading purpose
369
(26,096
)
(35,346
)
Increase in other current assets
(34,991
)
(29,699
)
(8,792
)
Increase in other current liabilities
44,772
46,545
105,865
Other
27,238
67,716
(49,737
)
Net cash provided by operating activities
632,635
646,997
399,858
(Continued on following page.)
F-8
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS —
(Continued)
2004
2005
2006
(Yen in millions)
Cash flows from investing activities:
Payments for purchases of fixed assets
(427,344
)
(453,445
)
(462,473
)
Proceeds from sales of fixed assets
33,987
34,184
38,168
Payments for investments and advances by financial service
    Business
(1,167,945
)
(1,309,092
)
(1,368,158
)
Payments for investments and advances (other than Financial
    service business)
(33,329
)
(158,151
)
(36,947
)
Proceeds from maturities of marketable securities, sales of
    securities investments and collections of advances by financial
    service business
791,188
923,593
857,376
Proceeds from maturities of marketable securities, sales of
    securities investments and collections of advances (other than
    financial service business)
35,521
25,849
24,527
Proceeds from sales of subsidiaries' and equity
    investees' stocks
—
3,162
75,897
Other
6,130
2,728
346
Net cash used in investing activities
(761,792
)
(931,172
)
(871,264
)
Cash flows from financing activities:
Proceeds from issuance of long-term debt
267,864
57,232
246,326
Payments of long-term debt
(32,042
)
(94,862
)
(138,773
)
Increase (decrease) in short-term borrowings
(57,708
)
11,397
(11,045
)
Increase in deposits from customers in the financial service
    business
129,874
294,352
190,320
Increase (decrease) in call money and bills sold in the banking
    business
30,300
(40,400
)
86,100
Dividends paid
(23,106
)
(22,978
)
(24,810
)
Proceeds from issuance of stocks by subsidiaries
5,252
4,023
6,937
Other
(7,151
)
(3,587
)
4,809
Net cash provided by financing activities
313,283
205,177
359,864
Effect of exchange rate changes on cash and cash equivalents
(47,973
)
8,890
35,537
Net increase (decrease) in cash and cash equivalents
136,153
(70,108
)
(76,005
)
Cash and cash equivalents at beginning of the fiscal year
713,058
849,211
779,103
Cash and cash equivalents at end of the fiscal year
849,211
779,103
703,098
Supplemental data:
Cash paid during the fiscal year for —
Income taxes
114,781
65,477
70,019
Interest
22,571
18,187
24,651
Non-cash investing and financing activities —
Conversion of convertible bonds
7,977
282,744
—
Obtaining assets by entering into capital lease
18,298
19,049
19,682
Contribution of net assets into the joint venture with
    Bertelsmann AG
—
9,402
—
The accompanying notes are an integral part of these
statements.
F-9
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY
Fiscal Year Ended March 31
Accumulated
Subsidiary
Additional
other
Treasury
tracking
Common
paid-in
Retained
comprehensive
stock, at
stock
stock
capital
earnings
income
cost
Total
(Yen in millions)
Balance at March 31, 2003
3,917
472,361
984,196
1,301,740
(471,978
)
(9,341
)
2,280,895
Conversion of convertible bonds
3,989
3,988
7,977
Stock issued under exchange offering
5,409
5,409
Comprehensive income:
Net income
88,511
88,511
Other comprehensive income, net of tax —
Unrealized gains on securities:
Unrealized holding gains (losses) arising during the period
57,971
57,971
Less: Reclassification adjustment included in net income
(5,679
)
(5,679
)
Unrealized losses on derivative instruments:
Unrealized holding gains (losses) arising during the period
7,537
7,537
Less: Reclassification adjustment included in net income
(3,344
)
(3,344
)
Minimum pension liability adjustment
93,415
93,415
Foreign currency translation adjustments:
Translation adjustments arising during the period
(129,113
)
(129,113
)
Less: Reclassification adjustment included in net income
1,232
1,232
Total comprehensive income
110,530
Stock issue costs, net of tax
(53
)
(53
)
Dividends declared
(23,138
)
(23,138
)
Purchase of treasury stock
(8,523
)
(8,523
)
Reissuance of treasury stock
(776
)
5,681
4,905
Balance at March 31, 2004
3,917
476,350
992,817
1,367,060
(449,959
)
(12,183
)
2,378,002
(Continued on following page.)
F-10
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY — (Continued)
Fiscal Year Ended March 31
Accumulated
Subsidiary
Additional
other
Treasury
tracking
Common
paid-in
Retained
comprehensive
stock, at
stock
stock
capital
earnings
income
cost
Total
(Yen in millions)
Balance at March 31, 2004
3,917
476,350
992,817
1,367,060
(449,959
)
(12,183
)
2,378,002
Exercise of stock acquisition rights
52
53
105
Conversion of convertible bonds
141,390
141,354
282,744
Stock based compensation
340
340
Comprehensive income:
Net income
163,838
163,838
Other comprehensive income, net of tax —
Unrealized gains on securities:
Unrealized holding gains (losses) arising during the period
5,643
5,643
Less: Reclassification adjustment included in net income
(12,924
)
(12,924
)
Unrealized losses on derivative instruments:
Unrealized holding gains (losses) arising during the period
(209
)
(209
)
Less: Reclassification adjustment included in net income
(1,681
)
(1,681
)
Minimum pension liability adjustment
(769
)
(769
)
Foreign currency translation adjustments:
Translation adjustments arising during the period
74,224
74,224
Total comprehensive income
228,122
Stock issue costs, net of tax
(541
)
(541
)
Dividends declared
(24,030
)
(24,030
)
Purchase of treasury stock
(416
)
(416
)
Reissuance of treasury stock
(342
)
(245
)
6,599
6,012
Balance at March 31, 2005
3,917
617,792
1,134,222
1,506,082
(385,675
)
(6,000
)
2,870,338
(Continued on following page.)
F-11
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY — (Continued)
Fiscal Year Ended March 31
Accumulated
Subsidiary
Additional
other
Treasury
tracking
Common
paid-in
Retained
comprehensive
stock, at
stock
stock
capital
earnings
income
cost
Total
(Yen in millions)
Balance at March 31, 2005
3,917
617,792
1,134,222
1,506,082
(385,675
)
(6,000
)
2,870,338
Exercise of stock acquisition rights
931
932
1,863
Conversion of convertible bonds
1,484
1,484
2,968
Conversion of subsidiary tracking stock
(3,917
)
3,917
—
Comprehensive income:
Net income
123,616
123,616
Other comprehensive income, net of tax
Unrealized gains on securities:
Unrealized holding gains (losses) arising during the period
79,630
79,630
Less: Reclassification adjustment included in net income
(41,495
)
(41,495
)
Unrealized losses on derivative instruments:
Unrealized holding gains (losses) arising during the period
7,865
7,865
Less: Reclassification adjustment included in net income
(7,424
)
(7,424
)
Minimum pension liability adjustment
50,206
50,206
Foreign currency translation adjustments:
Translation adjustments arising during the period
140,473
140,473
Less: Reclassification adjustment included in net income
(17
)
(17
)
Total comprehensive income
352,854
Stock issue costs, net of tax
(780
)
(780
)
Dividends declared
(24,968
)
(24,968
)
Purchase of treasury stock
(394
)
(394
)
Reissuance of treasury stock
(1,296
)
3,267
1,971
Balance at March 31, 2006
—
624,124
1,136,638
1,602,654
(156,437
)
(3,127
)
3,203,852
F-12
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
Page
1.
Nature of operations
F-14
2.
Summary of significant accounting
    policies
F-14
3.
Inventories
F-25
4.
Film costs
F-25
5.
Related party transactions
F-26
6.
Accounts receivable securitization
    programs
F-28
7.
Marketable securities and securities
    investments and other
F-29
8.
Leased assets
F-30
9.
Goodwill and intangible assets
F-31
10.
Insurance-related accounts
F-33
11.
Short-term borrowings and long-term debt
F-35
12.
Deposits from customers in the banking
    business
F-37
13.
Financial instruments
F-37
14.
Pension and severance plans
F-41
15.
Stockholders' equity
F-47
16.
Stock-based compensation plans
F-51
17.
Restructuring charges and asset
    impairments
F-56
18.
Research and development costs, advertising
    costs and shipping and handling costs
F-60
19.
Gain on change in interest in subsidiaries
    and equity investees
F-61
20.
Income taxes
F-62
21.
Reconciliation of the differences between
    basic and diluted net income per share ("EPS")
F-66
22.
Variable interest entities
F-68
23.
Commitments and contingent liabilities
F-69
24.
Business segment information
F-72
F-13
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
Nature of operations
Sony Corporation and its consolidated subsidiaries (hereinafter
collectively referred to as "Sony") are engaged in the
development, design, manufacture, and sale of various kinds of
electronic equipment, instruments, and devices for consumer and
industrial markets. Sony also develops, produces, manufactures,
and markets home-use game consoles and software. Sony's
principal manufacturing facilities are located in Japan, the
United States of America, Europe, and Asia. Its electronic
products are marketed throughout the world and game products are
marketed mainly in Japan, the United States of America and
Europe by sales subsidiaries and unaffiliated local distributors
as well as direct sales via the Internet. Sony is engaged in the
development, production, manufacture, marketing, distribution
and broadcasting of image-based software, including film, video
and television product. Sony is also engaged in various
financial service businesses including insurance operations
through a Japanese life insurance subsidiary and a non-life
insurance subsidiary, banking operations through a Japanese
internet-based banking subsidiary and leasing and credit
financing operations in Japan. In addition to the above, Sony is
engaged in the development, production, manufacture, and
distribution of recorded music, network service business
including Internet-related businesses, an animation production
and marketing business, an imported general merchandise retail
business and an advertising agency business in Japan.
2.
Summary of significant accounting policies
Sony Corporation and its subsidiaries in Japan maintain their
records and prepare their financial statements in accordance
with accounting principles generally accepted in Japan while its
foreign subsidiaries maintain their records and prepare their
financial statements in conformity with accounting principles
generally accepted in the countries of their domiciles. Certain
adjustments and reclassifications have been incorporated in the
accompanying consolidated financial statements to conform with
accounting principles generally accepted in the United States of
America ("U.S. GAAP"). These adjustments were not
recorded in the statutory books of account.
(1)
Newly adopted accounting pronouncements:
Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate
Accounts -
In July 2003, the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants issued
Statement of Position ("SOP")
03-1,
"Accounting
and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate
Accounts".
SOP
03-1
requires
insurance enterprises to record additional reserves for
long-duration life insurance contracts with minimum guarantee or
annuity receivable options. Additionally, SOP
03-1
provides guidance
for the presentation of separate accounts. This statement is
effective for fiscal years beginning after December 15,
2003. Sony adopted SOP
03-1
on April 1,
2004. As a result of the adoption of SOP
03-1,
Sony's
operating income decreased by 5,156 million yen for the
fiscal year ended March 31, 2005. Additionally, on
April 1, 2004, Sony recorded a 4,713 million yen
charge (net of income taxes of 2,675 million yen) as a
cumulative effect of an accounting change.
The Effect of Contingently Convertible Instruments on
Diluted Earnings per Share -
In July 2004, the Emerging Issues Task Force ("EITF")
issued EITF Issue
No.
04-8,
"The Effect of Contingently Convertible Instruments on
Diluted Earnings per Share". In accordance with Statement
of Financial Accounting Standards ("FAS")
No. 128, "Earnings per Share", Sony had not
previously included in the computation of diluted earnings per
share ("EPS") the number of potential common stock
issuable upon the conversion of contingently convertible debt
instruments ("Co-Cos") that had not met the conditions
F-14
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
to exercise the stock acquisition rights. EITF Issue
No. 04-8 requires that the maximum number of common stock
that could be issued upon the conversion of Co-Cos be included
in diluted EPS computations from the date of issuance regardless
of whether the conditions to exercise the stock acquisition
rights have been met. EITF Issue No. 04-8 is effective for
reporting periods ending after December 15, 2004. Sony
adopted EITF Issue No. 04-8 during the quarter ended
December 31, 2004. As a result of the adoption of EITF
Issue No. 04-8, Sony's diluted EPS of income before
cumulative effect of an accounting change and net income for the
fiscal year ended March 31, 2004 were restated. Sony's
diluted EPS of income before cumulative effect of an accounting
change and net income for the fiscal year ended March 31,
2005 decreased by 7.26 yen and 7.06 yen, respectively,
as a result of adopting EITF Issue
No.
04-8.
Consolidation of Variable Interest Entities -
In January 2003, the Financial Accounting Standards Board
("FASB") issued FASB Interpretation ("FIN")
No. 46, "Consolidation of Variable Interest
Entities — an Interpretation of Accounting Research
Bulletin ("ARB") No. 51".
FIN No. 46 addresses consolidation by a primary
beneficiary of a variable interest entity ("VIE").
Sony early adopted the provisions of FIN No. 46 on
July 1, 2003. As a result of adopting the original
FIN No. 46, Sony recognized a one-time charge with no
tax effect of 2,117 million yen as a cumulative effect of
accounting change in the consolidated statement of income, and
Sony's assets and liabilities increased by
95,255 million yen and 97,950 million yen,
respectively. These increases were treated as non-cash
transactions in the consolidated statement of cash flows. In
addition, cash and cash equivalents increased by
1,521 million yen.
Sony subsequently early adopted the provisions of
FIN No. 46R, which replaced FIN No. 46, upon
issuance in December 2003. The adoption of FIN No. 46R did
not have an impact on Sony's results of operations and
financial position or impact the way Sony had previously
accounted for VIEs.
Exchanges of Nonmonetary Assets -
In December 2004, the FASB issued FAS No. 153,
"Exchanges of Nonmonetary Assets, an amendment of
Accounting Principle Board Opinion ("APB")
No. 29". This statement requires that exchanges of
productive assets be accounted for at fair value unless fair
value cannot be reasonably determined or the transaction lacks
commercial substance. This statement is effective for
nonmonetary asset exchanges that have occurred in the fiscal
periods beginning after June 15, 2005. Sony adopted
FAS No. 153 on July 1, 2005. The adoption of
FAS No. 153 did not have a material impact on
Sony's results of operations and financial position.
Accounting for Conditional Asset Retirement Obligations
-
In March 2005, the FASB issued FIN No. 47,
"Accounting for Conditional Asset Retirement
Obligations — an Interpretation of
FAS No. 143". FIN No. 47 clarifies that
an entity is required to recognize a liability for the fair
value of a conditional retirement obligation when incurred if
the liability's fair value can be reasonably estimated.
FIN No. 47 also clarifies when an entity would have
sufficient information to reasonably estimate the fair value of
an asset retirement obligation. This interpretation is effective
no later than the end of fiscal years ending after
December 15, 2005. Sony adopted FIN No. 47 on
March 31, 2006. The adoption of FIN No. 47 did
not have a material impact on Sony's results of operations
and financial position.
Determining Whether to Aggregate Operating Segments That
Do Not Meet the Quantitative Thresholds -
In September 2004, the EITF issued EITF Issue No. 04-10,
"Applying Paragraph 19 of FASB Statement No. 131,
Disclosures about Segments of an Enterprise and Related
Information, in Determining Whether to Aggregate Operating
Segments That Do Not Meet the Quantitative Thresholds".
EITF Issue
F-15
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
No.
04-10
clarifies how an enterprise should evaluate the aggregation
criteria in paragraph 17 of FAS No. 131 when
determining whether operating segments that do not meet the
quantitative thresholds may be aggregated in accordance with
paragraph 19 of FAS No. 131. EITF Issue
No.
04-10
is
effective for fiscal years ending after September 15, 2005.
Sony adopted EITF Issue
No.
04-10
during
the fiscal year ended March 31, 2006. The adoption of EITF
Issue No.
04-10
did not have an impact on Sony's results of operation and
financial position.
(2)
Significant accounting policies:
Basis of consolidation and accounting for investments in
affiliated companies -
The consolidated financial statements include the accounts of
Sony Corporation and its majority-owned subsidiary companies,
general partnerships in which Sony has a controlling interest,
and variable interest entities for which Sony is the primary
beneficiary. All intercompany transactions and accounts are
eliminated. Investments in business entities in which Sony does
not have control, but has the ability to exercise significant
influence over operating and financial policies generally
through 20-50% ownership, are accounted for under the equity
method. In addition, investments in general partnerships in
which Sony does not have a controlling interest and limited
partnerships are also accounted for under the equity method.
Under the equity method, investments are stated at cost
plus/minus Sony's equity in undistributed earnings or
losses. Consolidated net income includes Sony's equity in
current earnings or losses of such companies, after elimination
of unrealized intercompany profits. If the value of an
investment has declined and is judged to be other than
temporary, the investment is written down to its fair value.
On occasion, a consolidated subsidiary or an affiliated company
accounted for by the equity method may issue its shares to third
parties in either a public or private offering or upon
conversion of convertible debt to common stock at amounts per
share in excess of or less than Sony's average per share
carrying value. With respect to such transactions, where the
sale of such shares is not part of a broader corporate
reorganization and the reacquisition of such shares is not
contemplated at the time of issuance, the resulting gains or
losses arising from the change in interest are recorded in
income for the year the change in interest transaction occurs.
If the sale of such shares is part of a broader corporate
reorganization, the reacquisition of such shares is contemplated
at the time of issuance or realization of such gain is not
reasonably assured (i.e., the entity is newly formed,
non-operating, a research and development or
start-up/development
stage entity, or where the entity's ability to continue in
existence is in question), the transaction is accounted for as a
capital transaction.
The excess of the cost over the underlying net equity of
investments in consolidated subsidiaries and affiliated
companies accounted for on an equity basis is allocated to
identifiable assets and liabilities based on fair values at the
date of acquisition. The unassigned residual value of the excess
of the cost over the underlying net equity is recognized as
goodwill.
Use of estimates -
The preparation of the consolidated financial statements in
conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Translation of foreign currencies -
All asset and liability accounts of foreign subsidiaries and
affiliates are translated into Japanese yen at appropriate
year-end current rates and all income and expense accounts are
translated at rates that approximate those rates prevailing at
the time of the transactions. The resulting translation
adjustments are accumulated as a component of accumulated other
comprehensive income.
F-16
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Foreign currency receivables and payables are translated at
appropriate year-end current rates and the resulting translation
gains or losses are taken into income.
Cash and cash equivalents -
Cash and cash equivalents include all highly liquid investments,
generally with original maturities of three months or less, that
are readily convertible to known amounts of cash and are so near
maturity that they present insignificant risk of changes in
value because of changes in interest rates.
Marketable debt and equity securities -
Debt and equity securities designated as available-for-sale,
whose fair values are readily determinable, are carried at fair
value with unrealized gains or losses included as a component of
accumulated other comprehensive income, net of applicable taxes.
Debt and equity securities classified as trading securities are
carried at fair value with unrealized gains or losses included
in income. Debt securities that are expected to be
held-to
-maturity are
carried at amortized cost. Individual securities classified as
either available-for-sale or
held-to
-maturity are
reduced to net realizable value by a charge to income for other
than temporary declines in fair value. Realized gains and losses
are determined on the average cost method and are reflected in
income.
Equity securities in non-public companies -
Equity securities in non-public companies are carried at cost as
fair value is not readily determinable. If the value of a
non-public equity investment is estimated to have declined and
such decline is judged to be other than temporary, Sony
recognizes the impairment of the investment and the carrying
value is reduced to its fair value. Determination of impairment
is based on the consideration of such factors as operating
results, business plans and estimated future cash flows. Fair
value is determined through the use of such methodologies as
discounted cash flows, valuation of recent financings and
comparable valuations of similar companies.
Inventories -
Inventories in electronics and game as well as non-film
inventories for pictures are valued at cost, not in excess of
market, cost being determined on the "average cost"
basis except for the cost of finished products carried by
certain subsidiary companies in electronics which is determined
on the
"first-in,
first-out" basis.
Film costs -
Film costs related to theatrical and television product (which
includes direct production costs, production overhead and
acquisition costs) are stated at the lower of unamortized cost
or estimated fair value and classified as non-current assets.
Film costs are amortized, and the estimated liabilities for
residuals and participations are accrued, for an individual
product based on the proportion that current period actual
revenues bear to the estimated remaining total lifetime
revenues. These estimates are reviewed on a periodic basis.
Property, plant and equipment and depreciation -
Property, plant and equipment are stated at cost. Depreciation
of property, plant and equipment is primarily computed on the
declining-balance method for Sony Corporation and its Japanese
subsidiaries, except for certain semiconductor manufacturing
facilities whose depreciation is computed on the straight-line
method, and on the straight-line method for its foreign
subsidiaries at rates based on estimated useful lives of the
assets, principally, ranging from 15 years up to
50 years for buildings and from 2 years up to
10 years for machinery and equipment. Significant renewals
and additions are capitalized at cost. Maintenance and repairs,
and minor renewals and betterments are charged to income as
incurred.
F-17
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Goodwill and other intangible assets -
Goodwill and certain other intangible assets that are determined
to have an indefinite life are not amortized and are tested for
impairment during the fourth quarter of fiscal year on an annual
basis and between annual tests if an event occurs or
circumstances change that would more likely than not reduce the
fair value below its carrying amount. Fair value for those
assets is generally determined using a discounted cash flow
analysis.
Intangible assets with finite lives that are determined not to
have an indefinite life mainly consist of artist contracts,
music catalogs, acquired patent rights and software to be sold,
leased or otherwise marketed. Artist contracts and music
catalogs are amortized on a straight-line basis over 10 to
40 years. Acquired patent rights and software to be sold,
leased or otherwise marketed are amortized on a straight-line
basis over 3 to 10 years.
Accounting for computer software to be sold -
Sony accounts for software development costs in accordance with
FAS No. 86, "Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed".
In the Electronics segment, costs related to establishing the
technological feasibility of a software product are expensed as
incurred as a part of research and development in cost of sales.
Costs that are incurred to produce the finished product after
technological feasibility is established are capitalized and
amortized over the estimated economic life of the product, which
is generally three years. Sony performs periodic reviews to
ensure that unamortized program costs remain recoverable from
future revenue.
In the Game segment, technological feasibility of the underlying
software is reached shortly before the products are released to
manufacturing. Costs incurred after technological feasibility is
established are not material, and accordingly, Sony expenses
software development costs for the Game segment as incurred as a
part of research and development in cost of sales.
Deferred insurance acquisition costs -
Costs that vary with and are primarily related to acquiring new
insurance policies are deferred as long as they are recoverable.
The deferred insurance acquisition costs include such items as
commission, medical examination and inspection report fees. The
deferred insurance acquisition costs for traditional life
insurance contracts are amortized over the premium-paying period
of the related insurance policies using assumptions consistent
with those used in computing policy reserves. The deferred
insurance acquisition costs for non-traditional life insurance
contracts are amortized over the expected life in proportion to
the estimated gross profits.
Product warranty -
Sony provides for the estimated cost of product warranties at
the time revenue is recognized by either product category group
or individual product. The product warranty is calculated based
upon product sales, estimated probability of failure and
estimated cost per claim. The variables used in the calculation
of the provision are reviewed on a periodic basis. Certain
subsidiaries in the Electronics segment offer extended warranty
programs. The consideration received through extended warranty
service is deferred and amortized on a straight-line basis over
the term of the extended warranty.
Future insurance policy benefits -
Liabilities for future insurance policy benefits are primarily
comprised of the present value of estimated future payments to
policyholders. These liabilities are computed by the net level
premium method based upon the assumptions such as future
investment yield, morbidity, mortality and withdrawals. These
assumptions are
F-18
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
reviewed on a periodic basis. Liabilities for future insurance
policy benefits also include liabilities for guaranteed benefits
related to certain non-traditional long-duration life and
annuity contracts.
Accounting for the impairment of long-lived assets
    -
Sony periodically reviews the carrying value of its long-lived
assets held and used, other than goodwill and intangible assets
with indefinite lives, and assets to be disposed of, whenever
events or changes in circumstances indicated that the carrying
amount may not be recoverable. Long-lived assets to be held and
used are reviewed for impairment by comparing the carrying value
of the assets with their estimated undiscounted future cash
flows. If it is determined that an impairment loss has occurred,
the loss would be recognized during the period. The impairment
loss would be calculated as the difference between asset
carrying value and the present value of estimated net cash flows
or comparable market values, giving consideration to recent
operating performance. Long-lived assets that are to be disposed
of other than by sale are considered held and used until they
are disposed of. Long-lived assets that are to be disposed of by
sale are reported at the lower of their carrying value or fair
value less cost to sell. Reductions in carrying value are
recognized in the period in which the long-lived assets are
classified as held for sale.
Derivative financial instruments -
All derivatives, including certain derivative financial
instruments embedded in other contracts, are recognized as
either assets or liabilities in the balance sheet at fair value.
Changes in the fair value of derivative financial instruments
are either recognized periodically in income or
stockholders' equity (as a component of accumulated other
comprehensive income), depending on whether the derivative
financial instrument qualifies as a hedge and the derivative is
being used to hedge changes in fair value or cash flows.
In accordance with FAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", the
derivative financial instruments held by Sony are classified and
accounted as below.
Fair value hedges
Changes in the fair value of derivatives designated and
effective as fair value hedges for recognized assets or
liabilities or unrecognized firm commitments are recognized in
earnings as offsets to changes in the fair value of the related
hedged assets or liabilities.
Cash flow hedges
Changes in the fair value of derivatives designated and
effective as cash flow hedges for forecasted transactions or
exposures associated with recognized assets or liabilities are
initially recorded in other comprehensive income and
reclassified into earnings when the hedged transaction affects
earnings. Changes in the fair value of the ineffective portion
are recognized in current period earnings.
Derivatives not designated as hedges
Changes in the fair value of derivatives that are not designated
as hedges under FAS No. 133 are recognized in current
period earnings.
Sony formally documents all hedging relationships between the
derivatives designated as hedges and hedged items, as well as
its risk management objectives and strategies for undertaking
various hedging activities. Sony links all hedges that are
designated as fair value or cash flow hedges to specific assets
or liabilities on the balance sheet or to the specific
forecasted transaction. Sony also assesses, both at the
inception of the hedge and on an on-going basis, whether the
derivatives that are designated as hedges are
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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
highly effective in offsetting changes in fair value or cash
flows of hedged items. When it is determined that a derivative
is not highly effective as a hedge, Sony discontinues hedge
accounting.
Stock-based compensation -
Sony applies APB No. 25, "Accounting for Stock Issued
to Employees", and its related interpretations in
accounting for its stock-based compensation plans and follows
the disclosure-only provisions of FAS No. 148,
"Accounting for Stock-Based Compensation —
Transition and Disclosure — an Amendment of FASB
Statement No. 123". In accordance with APB
No. 25, stock-based compensation cost is recognized in
income based on the excess, if any, of the quoted market price
of the common stock of Sony Corporation at the grant date of the
award or other measurement date over the stated exercise price
of the award. As the exercise prices for Sony's stock-based
compensation plans are generally determined based on the
prevailing market price shortly before the date of grant, the
compensation expense for these plans is not significant. For
awards that generate compensation expense as defined under APB
No. 25, Sony calculates the amount of compensation expense
and recognizes the expense over the vesting period of the award.
The following table reflects the net effect on net income and
net income per share allocated to the common stock if Sony had
applied the fair value recognition provisions of
FAS No. 123, "Accounting for Stock-Based
Compensation", to its stock-based compensation. See
Note 16 for detailed assumptions.
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Income before cumulative effect of an accounting change
    allocated to common stock:
As reported
90,756
168,498
122,308
Deduct: Total stock-based compensation expense determined under
    the fair value based method, net of related tax effects
(6,334
)
(4,690
)
(4,182
)
Pro forma
84,422
163,808
118,126
Net income allocated to common stock:
As reported
88,639
163,785
122,308
Deduct: Total stock-based compensation expense determined under
    the fair value based method, net of related tax effects
(6,334
)
(4,690
)
(4,182
)
Pro forma
82,305
159,095
118,126
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Fiscal Year Ended March 31
2004
2005
2006
(Yen)
Income before cumulative effect of an accounting change
    allocated to common stock:
— Basic EPS:
As reported
98.26
180.96
122.58
Pro forma
91.40
175.92
118.39
— Diluted EPS:
As reported
89.03
162.59
116.88
Pro forma
82.96
158.10
112.91
Net income allocated to common stock:
— Basic EPS:
As reported
95.97
175.90
122.58
Pro forma
89.11
170.86
118.39
— Diluted EPS:
As reported
87.00
158.07
116.88
Pro forma
80.94
153.58
112.91
Free distribution of common stock -
On occasion, Sony Corporation may make a free distribution of
common stock which is accounted for either by a transfer from
additional paid-in capital to the common stock account or with
no entry if free shares are distributed from the portion of
previously issued shares in the common stock account.
Under the Japanese Commercial Code, a stock dividend can be
effected by an appropriation of retained earnings to the common
stock account, followed by a free share distribution with
respect to the amount appropriated by resolution of the Board of
Directors' meeting.
Free distribution of common stock is recorded in the
consolidated financial statements only when it becomes
effective, except for the calculation and presentation of per
share amounts.
Stock issue costs -
Stock issue costs are directly charged to retained earnings, net
of tax, in the accompanying consolidated financial statements as
the Japanese Commercial Code prohibits charging such stock issue
costs to capital accounts which is the prevailing practice in
the United States of America.
Revenue recognition -
Revenues from electronics and game sales are recognized upon
delivery which is considered to have occurred when the customer
has taken title to the product and the risk and rewards of
ownership have been substantively transferred. If the sales
contract contains a customer acceptance provision, then sales
are recognized after customer acceptance occurs or the
acceptance provisions lapse.
Revenues from the theatrical exhibition of motion pictures are
recognized as the customer exhibits the film. Revenues from the
licensing of feature films and television programming are
recorded when the material is available for telecast by the
licensee and when any restrictions regarding the exhibition or
exploitation of the
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
product lapse. Revenues from the sale of home videocassettes and
DVDs are recognized upon availability of sale to the public.
Traditional life insurance policies that the life insurance
subsidiary writes, most of which are categorized as
long-duration contracts, mainly consist of whole life, term life
and accident and health insurance contracts. Premiums from these
policies are reported as revenue when due from policyholders.
Amounts received as payment for non-traditional contracts such
as interest sensitive whole life contracts, single payment
endowment contracts, single payment juvenile contracts and other
contracts without life contingencies are recognized as deposits
to policyholder account balances and included in future
insurance policy benefits and other. Revenues from these
contracts are comprised of fees earned for administrative and
contract-holder services, which are recognized over the period
of the contracts, and included in financial service revenue.
Property and casualty insurance policies that the non-life
insurance subsidiary writes are primarily automotive insurance
contracts which are categorized as short-duration contracts.
Premiums from these policies are reported as revenue over the
period of the contract in proportion to the amount of insurance
protection provided.
Accounting for consideration given to a customer or a
    reseller -
In accordance with EITF Issue No. 01-9, "Accounting
for Consideration Given by a Vendor to a Customer or Reseller of
the Vendor's Products", cash consideration given to a
customer or a reseller including payments for buydowns, slotting
fees and cooperative advertising programs, is accounted for as a
reduction of revenue unless Sony receives an identifiable
benefit (goods or services) in exchange for the consideration,
can reasonably estimate the fair value of this benefit and
receives documentation from the reseller to support the amounts
spent. Any payments meeting these criteria are treated as
selling, general and administrative expenses. For the fiscal
years ended March 31, 2004, 2005 and 2006, consideration
given to a reseller, primarily for free promotional shipping and
cooperative advertising programs included in selling, general
and administrative expense totaled 30,338 million yen,
27,946 million yen and 29,489 million yen,
respectively.
Cost of sales -
Costs classified as cost of sales relate to the producing and
manufacturing of products and include such items as material
cost, subcontractor cost, depreciation of fixed assets,
amortization of intangible assets, personnel expenses, research
and development costs, and amortization of film cost related to
theatrical and television products.
Research and development costs -
Research and development costs are expensed as incurred.
Selling, general and administrative -
Costs classified as selling expense relate to the promoting and
selling of products and include such items as advertising,
promotion, shipping, and warranty expenses.
General and administrative expenses include operating items such
as officer's salaries, personnel expenses, depreciation of
fixed assets, office rental for sales, marketing and
administrative divisions, a provision for doubtful accounts and
amortization of intangible assets.
Selling, general and administrative expenses are expensed as
incurred.
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Financial service expenses -
Financial service expenses include a provision for policy
reserves and amortization of deferred insurance acquisition
cost, and all other operating costs such as personnel expenses,
depreciation of fixed assets, and office rental of subsidiaries
in the Financial Services segment.
Advertising costs -
Advertising costs are expensed when the advertisement or
commercial appears in the selected media, except for advertising
costs for acquiring new insurance policies which are deferred
and amortized as part of insurance acquisition costs.
Shipping and handling costs -
The majority of shipping and handling, warehousing and internal
transfer costs for finished goods are included in selling,
general and administrative expenses. An exception to this is in
the Pictures segment where such costs are charged to cost of
sales as they are integral part of producing and distributing
the film under SOP 00-2, "Accounting by Producers or
Distributors of Films". All other costs related to
Sony's distribution network are included in cost of sales,
including inbound freight charges, purchasing and receiving
costs, inspection costs and warehousing costs for raw materials
and in-process inventory. Amounts paid by customers for shipping
and handling costs are included in net sales.
Income taxes -
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of income. The
asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences
of temporary differences between the carrying amounts and the
tax bases of assets and liabilities. Sony records valuation
allowances to reduce deferred tax assets to the amount that
management believes is more likely than not to be realized. In
assessing the likelihood of realization, Sony considers all
currently available evidence for future years, both positive and
negative, supplemented by information of historical results for
each tax jurisdiction.
Net income per share -
Prior to December 1, 2005, Sony calculated and presented
per share data separately for Sony's common stock and for
the subsidiary tracking stock by the "two-class"
method based on FAS No. 128. As the holders of the
subsidiary tracking stock had the right to participate in
earnings, together with common stockholders, under this method,
basic net income per share ("EPS") for each class of
stock was calculated based on the earnings allocated to each
class of stock for the applicable period, divided by the
weighted-average number of outstanding shares in each class
during the applicable period.
The earnings allocated to the subsidiary tracking stock were
determined based on the subsidiary tracking stock holders'
economic interest in the targeted subsidiary's earnings
available for dividends. As defined by Sony Corporation's
articles of incorporation, the amount distributable to the
subsidiary tracking stock holders was based on the declared
dividends of the targeted subsidiary, which might only be
declared from the amounts available for dividends of the
targeted subsidiary. The targeted subsidiary's earnings
available for dividends were, as stipulated by the Japanese
Commercial Code, not including those of the targeted
subsidiary's subsidiaries. If the targeted subsidiary had
accumulated losses, a change in accumulated losses was also
allocated to the subsidiary tracking stock. The subsidiary
tracking stock holders' economic interest was calculated as
the number of the subsidiary tracking stock outstanding divided
by the number of the targeted subsidiary's common stock
outstanding subject to multiplying by the Standard Ratio
(tracking stock: subsidiary's common stock
= 1: 100, as defined in the articles of
incorporation). The earnings allocated to the
F-23
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
common stock were calculated by subtracting the earnings
allocated to the subsidiary tracking stock from Sony's net
income for the period.
On October 26, 2005, the Board of Directors of Sony
Corporation decided to terminate all shares of subsidiary
tracking stock and convert such shares to shares of Sony common
stock at a conversion rate of 1.114 share of Sony common
stock per share of subsidiary tracking stock. All shares of
subsidiary tracking stock were converted to shares of Sony
common stock on December 1, 2005. As a result of the
conversion, for the fiscal year ended March 31, 2006, Sony
calculated per share data separately for Sony's common
stock and for the subsidiary tracking stock by the
"two-class" method based on FAS No. 128, but
did not present per share data for the subsidiary tracking
stock. The earnings allocated to common stock for the fiscal
year ended March 31, 2006 were calculated by subtracting
the earnings allocated to the subsidiary tracking stock for the
eight months ended November 30, 2005.
The computation of diluted net income per common stock reflects
the maximum possible dilution from conversion, exercise, or
contingent issuance of securities including the conversion of
Co-Cos regardless of whether the conditions to exercise the
conversion rights have been met.
(3)
Recent Pronouncements:
Accounting for Stock-Based Compensation -
In December 2004, the FASB issued FAS No. 123 (revised
2004), "Share-Based Payment"
("FAS No. 123(R)"). This statement requires
the use of the fair value based method of accounting for
employee stock-based compensation and eliminates the alternative
to use of the intrinsic value method prescribed by APB
No. 25. With limited exceptions, FAS No. 123(R)
requires that the grant-date fair value of share-based payments
to employees be expensed over the period the service is
received. Sony has accounted for its employee stock-based
compensation in accordance with the provisions prescribed by APB
No. 25 and its related interpretations and has disclosed
the net effect on net income and net income per share allocated
to the common stock if Sony had applied the fair value
recognition provisions of FAS No. 123 to stock-based
compensation as described above in (2) Significant
accounting policies — Stock-based compensation. Sony
adopted FAS No. 123(R) on April 1, 2006. Sony has
elected the modified prospective method of transition prescribed
in FAS No. 123(R), which requires that compensation
expense be recorded for all unvested stock acquisition rights as
the requisite service is rendered beginning with the first
period of adoption. As of March 31, 2006, the aggregate
value of the unvested stock acquisition rights was
4,402 million yen. Sony expects the total expenses to be
recorded in the future periods will be consistent with the pro
forma information shown above in (2) Significant accounting
policies — Stock-based compensation.
Inventory Costs -
In November 2004, the FASB issued FAS No. 151,
"Inventory Costs, an amendment of ARB No. 43,
Chapter 4". This statement requires certain abnormal
expenditures to be recognized as expenses in the current period.
It also requires that the amount of fixed production overhead
allocated to the costs of conversion be based on the normal
capacity of the production facilities. This statement shall be
effective for fiscal years beginning after June 15, 2005,
with early adoption during the fiscal years beginning after the
date this statement is issued encouraged. The adoption of
FAS No. 151 is not expected to have a material impact
on Sony's results of operations and financial position.
Derivative instruments and hedging activities -
In February 2006, the FASB issued FAS No. 155,
"Accounting for Certain Hybrid Financial Instruments",
an amendment of FAS No. 133 and FAS No. 140.
This statement permits an entity to elect fair value
remeasurement for any hybrid financial instrument if the hybrid
instrument contains an embedded
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
derivative that would otherwise be required to be bifurcated and
accounted for separately under FAS No. 133. The
election to measure the hybrid instrument at fair value is made
on an instrument-by-instrument basis and is irreversible. The
statement will be effective for all financial instruments
acquired, issued, or subject to a remeasurement event occurring
after the beginning of an entity's fiscal years beginning
after September 15, 2006, with earlier adoption permitted
as of the beginning of fiscal year, provided that financial
statements for any interim period of that fiscal year have not
been issued. The adoption of FAS No. 155 is not
expected to have material impact on Sony's results of
operations and financial position.
Accounting for Servicing of Financial Assets -
In March 2006, the FASB issued FAS No. 156,
"Accounting for Servicing of Financial Assets —
an amendment of FASB Statement No. 140". This
statement amends FASB Statement No. 140, "Accounting
for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" with respect to the
accounting for separately recognized servicing assets and
servicing liabilities. This statement shall be effective for
fiscal years beginning after September 15, 2006. Sony is
currently evaluating the impact of adopting this new
pronouncement.
(4)
Reclassifications:
Certain reclassifications of the financial statements for the
fiscal years ended March 31, 2004 and 2005 have been made
to conform to the presentation for the fiscal year ended
March 31, 2006.
3.
Inventories
Inventories comprise the following:
March 31
2005
2006
(Yen in millions)
Finished products
405,616
534,766
Work in process
93,181
123,381
Raw materials, purchased components and supplies
132,552
146,577
631,349
804,724
4.
Film costs
Film costs comprise the following:
March 31
2005
2006
(Yen in millions)
Theatrical:
Released (including acquired film libraries)
119,438
153,992
Completed not released
11,358
13,377
In production and development
118,271
156,019
Television licensing:
Released (including acquired film libraries)
29,894
36,918
In production and development
—
66
278,961
360,372
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Sony estimates that approximately 88% of unamortized costs of
released films (excluding amounts allocated to acquired film
libraries) at March 31, 2006 will be amortized within the
next three years. Approximately 102,207 million yen of
released film costs are expected to be amortized during the next
twelve months. As of March 31, 2006, unamortized acquired
film libraries of approximately 10,820 million yen remained
to be amortized on a straight-line basis over an average of the
remaining life of 4 years. Approximately
137,400 million yen of accrued participation liabilities
included in accounts payable, other and accrued expenses are
expected to be paid during the next twelve months.
5.
Related party transactions
Sony accounts for its investments in affiliated companies over
which Sony has significant influence or ownership of 20% or more
but less than or equal to 50% under the equity method. In
addition, investments in general partnerships in which Sony does
not have a controlling interest and limited partnerships are
also accounted for under the equity method. Such investments
include but are not limited to Sony's interest in Sony
Ericsson Mobile Communications, AB (50%), SONY BMG MUSIC
ENTERTAINMENT ("SONY BMG") (50%), S-LCD Corporation
("S-LCD") (50% minus 1 share), ST Liquid Crystal
Display Corporation (50%), InterTrust Technologies Corporation
(49.5%), MGM Holdings, Inc. ("MGM Holdings") (20%),
bit Wallet, Inc (34.6%), and STAR CHANNEL, INC. (17.8%).
Summarized combined financial information that is based on
information provided by equity investees is shown below:
March 31
2005
2006
(Yen in millions)
Current assets
942,328
991,440
Property, plant and equipment
361,406
376,155
Other assets
250,245
903,873
Total assets
1,553,979
2,271,468
Current liabilities
876,430
1,009,895
Long-term liabilities
115,999
660,504
Stockholders' equity
561,550
601,069
Total liabilities and stockholders' equity
1,553,979
2,271,468
Number of companies at end of the fiscal year
56
58
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Sales and revenue
1,009,005
1,473,273
2,357,172
Gross profit
231,083
477,796
668,226
Net income
11,323
63,404
32,982
S-LCD, a joint venture with Samsung Electronics Co., LTD focused
on manufacturing amorphous TFT panel, was established in April
2004 as a joint venture in which Sony has an ownership interest
of 50% minus 1 share. Sony invested 100,073 million
yen in S-LCD during the fiscal year ended March 31, 2005.
As of August 1, 2004, Sony combined its recorded music
business, except for the operations of its recorded music
business in Japan, with the recorded music business of
Bertelsmann AG in a joint venture. The newly formed company,
known as SONY BMG, is 50% owned by each parent company. As a
result, the
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
results of the recorded music business, except for the recorded
music business in Japan, are no longer consolidated but are
accounted for under the equity method.
On April 8, 2005, a consortium led by Sony Corporation of
America ("SCA") and its equity partners, Providence
Equity Partners, Texas Pacific Group, Comcast Corporation and
DLJ Merchant Banking Partners, completed the acquisition of
Metro-Goldwyn-Mayer Inc. ("MGM"). Under the terms of
the acquisition agreement, the aforementioned investor group
acquired MGM for 12.00 U.S. dollars in cash per MGM share,
for a total purchase price of approximately 5.0 billion
U.S. dollars. In conjunction with the acquisition, Sony
Pictures Entertainment ("SPE") entered into agreements
to co-finance and produce new motion pictures with MGM, and to
distribute MGM's existing film and television content
through SPE's global distribution channels. MGM continues
to operate under the Metro-Goldwyn-Mayer name as a private
company, headquartered in Los Angeles, focused on new film
production and distribution activities. As part of the
acquisition, SCA invested 257 million U.S. dollars for
20% of the total equity capital, which includes both common
stock and a significant amount of non-voting preferred stock
with detachable common stock warrants. Though Sony owns 20% of
MGM Holdings' total equity on a fully diluted basis as a
result of the warrants dilution, Sony owns 45% of the total
outstanding common stock and therefore, records 45% of MGM
Holdings' net income (loss) as equity in net income of
affiliated companies.
In September 2005, Sony sold 230,000 shares of Monex Beans
Holdings, Inc. As a result of this sale, Sony's ownership
interest has been reduced from 20.1% to 10.3%. Therefore, Monex
Beans Holdings, Inc. is no longer accounted for under the equity
method. The financial position and operating results of Monex
Beans Holdings, Inc. as of and for the fiscal year ended
March 31, 2006 are not included in the above summarized
combined financial information. See Note 19 for more
information on this transaction.
The proportionate share in the underlying net assets of the
investee exceeded the carrying value of investments in
affiliated companies by 42,731 million yen and
36,875 million yen at March 31, 2005 and 2006,
respectively. These differences primarily relate to the
differences in the carrying value of the net assets contributed
by Sony and Bertelsmann AG upon the formation of SONY BMG in
August 2004. The contribution of assets to SONY BMG was
accounted for at book value. Acquisitions by Bertelsmann
AG's recorded music business shortly prior to the formation
of SONY BMG resulted in goodwill comprising a significant
portion of the assets contributed to SONY BMG by Bertelsmann AG,
whereas Sony's contributed assets had a lower historical
basis. As a result, Sony's carrying value of the investment
in SONY BMG is below its 50% share of the underlying assets of
SONY BMG. As the contributions for both Sony and Bertelsmann AG
were recorded at historical book value by SONY BMG, there is a
basis difference attributable to a non-depreciable asset which
is not being amortized. Differences in the carrying value of
Sony's other equity investments and the proportionate share
of the fair value of underlying net assets primarily relates to
unamortizable goodwill.
Affiliated companies accounted for under the equity method with
an aggregate carrying amount of 17,676 million yen and
4,588 million yen at March 31, 2005 and 2006, were
quoted on established markets at an aggregate value of
95,246 million yen and 34,462 million yen,
respectively.
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Account balances and transactions with affiliated companies
accounted for under the equity method are presented below:
March 31
2005
2006
(Yen in millions)
Accounts receivable, trade
50,062
44,837
Advances
16,756
15,985
Accounts payable, trade
15,225
40,507
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Sales
258,454
256,799
234,636
Purchases
106,100
101,976
282,071
As of April 1, 2004, Sony Corporation made Sony Computer
Entertainment Inc. ("SCE") a wholly-owned subsidiary
through a stock for stock exchange pursuant to the provision of
Article 358 of the Japanese Commercial Code which does not
require the approval of the General Meeting of Shareholders. The
stock for stock exchange ratio was determined based on the
estimated equity values of SCE and Sony on a consolidated basis.
Through the stock for stock exchange, Sony Corporation provided
1,000,000 shares of its common stock to the then Executive
Deputy President, Corporate Executive Officer of Sony
Corporation who had owned 100 shares of SCE's common
stock. This transaction did not have a material impact on
Sony's results of operations and financial position for the
fiscal year ended March 31, 2005.
Dividends from affiliated companies accounted for under the
equity method for the fiscal years ended March 31, 2004,
2005 and 2006 were 3,446 million yen, 13,391 million
yen and 22,970 million yen, respectively.
6.
Accounts receivable securitization programs
In Japan, Sony set up several accounts receivable sales programs
whereby Sony can sell up to 47,500 million yen of eligible
trade accounts receivable. Through these programs, Sony can sell
receivables to special purpose entities owned and operated by
banks. Sony can sell receivables in which the agreed upon
original due dates are no more than 190 days after the
sales of receivables. These transactions are accounted for as
sales in accordance with FAS No. 140, "Accounting
for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities", because Sony has
relinquished control of the receivables. The initial sale of
these receivables was in March 2005 in which Sony sold a total
of 10,041 million yen. Sony sold a total of
146,193 million yen of receivables during the fiscal year
ended March 31, 2006. Losses from these transactions were
insignificant. Although Sony continues servicing the sold
receivables, no servicing liabilities are recorded because costs
for collection of the sold receivables are insignificant.
Through May 2005, Sony had set up an accounts receivable
securitization program in the United States of America whereby
Sony could sell interests in up to 500 million
U.S. dollars of eligible trade accounts receivable, as
defined. Through this program, Sony could securitize and sell a
percentage of an undivided interest in that pool of receivables
to several multi-seller commercial paper conduits owned and
operated by a bank. Sony could sell receivables in which the
agreed upon original due dates were no more than 90 days
after the invoice dates. The value assigned to undivided
interests retained in securitized trade receivables was based on
the relative fair values of the interest retained and sold in
the securitization. Sony had assumed that the fair value of the
retained interest was equivalent to its carrying value as the
receivables were short-term in nature,
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
high quality and had appropriate reserves for bad debt
incidence. These securitization transactions were accounted for
as a sale in accordance with FAS No. 140, because Sony
had relinquished control of the receivables. During the period
from April 2004 to January 2005, Sony sold a total of
80,250 million yen of accounts receivable under this
program. There were no outstanding amounts due at March 31,
2005 relating to the existing undivided interests in the pool of
receivables that had been sold. Losses from these transactions
were insignificant. This program was terminated in May 2005.
7.
Marketable securities and securities investments and
    other
Marketable securities and securities investments and other
include debt and equity securities of which the aggregate cost,
gross unrealized gains and losses and fair value pertaining to
available-for-sale securities and
held-to
-maturity
securities are as follows:
March 31, 2005
March 31, 2006
Gross
Gross
Gross
Gross
unrealized
unrealized
unrealized
unrealized
Cost
gains
losses
Fair value
Cost
gains
losses
Fair value
(Yen in millions)
Available-for-sale:
Debt securities
2,090,605
58,161
(2,464
)
2,146,302
2,522,864
17,021
(22,810
)
2,517,075
Equity securities
107,126
49,350
(814
)
155,662
227,079
171,921
(1,589
)
397,411
Held-to-maturity Securities
27,431
530
(13
)
27,948
33,193
132
(221
)
33,104
Total
2,225,162
108,041
(3,291
)
2,329,912
2,783,136
189,074
(24,620
)
2,947,590
At March 31, 2006, debt securities classified as
available-for-sale securities and
held-to
-maturity
securities mainly consist of Japanese government and municipal
bonds and corporate debt securities with maturities of one to
ten years.
Proceeds from sales of available-for-sale securities were
397,817 million yen, 613,035 million yen and
524,268 million yen for the fiscal years ended
March 31, 2004, 2005 and 2006, respectively. On those
sales, gross realized gains computed on the average cost basis
were 9,525 million yen, 24,080 million yen and
68,096 million yen and gross realized losses were
1,906 million yen, 5,940 million yen and
3,143 million yen, respectively.
Marketable securities classified as trading securities at
March 31, 2005 and 2006 were 315,946 million yen and
401,561 million yen, respectively, which consist of debt
and equity securities including short-term investments in money
market funds.
In the ordinary course of business, Sony maintains long-term
investment securities, included in securities investments and
other, issued by a number of non-public companies. The aggregate
carrying amounts of the investments in non-public companies at
March 31, 2005 and 2006, were 48,877 million yen and
59,575 million yen, respectively. Non-public equity
investments are valued at cost as fair value is not readily
determinable. If the value is estimated to have declined and
such decline is judged to be other than temporary, the
impairment of the investment is recognized and the carrying
value is reduced to its fair value.
For the fiscal years ended March 31, 2004, 2005 and 2006,
Sony booked 4,988 million yen, 5,696 million yen and
45,092 million yen of net unrealized gain on trading
securities primarily in the life insurance business.
F-29
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table presents the gross unrealized losses on, and
fair value of, Sony's investment securities with unrealized
losses, aggregated by investment category and the length of time
that individual investment securities have been in a continuous
unrealized loss position, at March 31, 2006.
Less than 12 Months
12 months or More
Total
Unrealized
Unrealized
Unrealized
Fair value
losses
Fair value
losses
Fair value
losses
(Yen in millions)
Available-for-sale:
Debt securities
1,860,204
(22,590
)
21,250
(220
)
1,881,454
(22,810
)
Equity securities
266,946
(1,108
)
17,495
(481
)
284,441
(1,589
)
Held-to-maturity Securities
20,278
(208
)
629
(13
)
20,907
(221
)
Total
2,147,428
(23,906
)
39,374
(714
)
2,186,802
(24,620
)
In evaluating the factors for available-for-sale securities
whose fair values are readily determinable, Sony presumes a
decline in value to be other-than-temporary if the fair value of
the security is 20 percent or more below its original cost
for an extended period of time (generally a period of up to six
to twelve months). This criteria is employed as a threshold to
identify securities which may have a decline in value that is
other-than-temporary. The presumption of an other-than-temporary
impairment in such cases may be overcome if there is evidence to
support that the decline is temporary in nature due to the
existence of other factors which overcome the duration or
magnitude of the decline. On the other hand, there may be cases
where impairment losses are recognized when the decline in the
fair value of the security is not more than 20 percent or
such decline has not existed for an extended period of time, as
a result of considering specific factors which may indicate the
decline in the fair value is other-than-temporary.
At March 31, 2006, Sony determined that the decline in
value for securities with unrealized losses shown in the above
table is not other-than-temporary in nature.
8.
Leased assets
Sony leases certain communication and commercial equipment,
plant, office space, warehouses, employees' residential
facilities and other assets. Certain of these leases have
renewal and purchase options.
An analysis of leased assets under capital leases is as follows:
March 31
Class of property
2005
2006
(Yen in millions)
Land
181
193
Buildings
11,089
7,437
Machinery, equipment and others
33,747
28,870
Accumulated depreciation
(18,509
)
(14,820
)
26,508
21,680
F-30
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following is a schedule by year of the future minimum lease
payments under capital leases together with the present value of
the net minimum lease payments as of March 31, 2006:
Yen in
millions
Fiscal Year Ending March 31:
2007
18,322
2008
9,650
2009
5,325
2010
3,081
2011
2,149
Later years
4,725
Total minimum lease payments
43,252
Less  — Amount representing interest
4,972
Present value of net minimum lease payments
38,280
Less  — Current obligations
16,966
Long-term capital lease obligations
21,314
Minimum lease payments have not been reduced by minimum sublease
income of 10,022 million yen due in the future under
noncancelable subleases.
Minimum rental expenses under operating leases for the fiscal
years ended March 31, 2004, 2005 and 2006 were
92,649 million yen, 81,391 million yen and
80,014 million yen, respectively. Sublease rentals received
under operating leases for the fiscal years ended March 31,
2004, 2005 and 2006 were 2,923 million yen,
1,933 million yen and 1,350 million yen, respectively.
The total minimum rentals to be received in the future under
noncancelable subleases as of March 31, 2006 were
21,843 million yen.
The minimum rental payments required under operating leases that
have initial or remaining noncancelable lease terms in excess of
one year at March 31, 2006 are as follows:
Yen in
millions
Fiscal Year Ending March 31:
2007
47,500
2008
34,715
2009
26,529
2010
16,320
2011
11,541
Later years
58,932
Total minimum future rentals
195,537
9.
Goodwill and intangible assets
Intangible assets acquired during the fiscal year ended
March 31, 2006 totaled 36,237 million yen, which are
subject to amortization and primarily consist of acquired patent
rights of 9,922 million yen and software to be sold, leased
or otherwise marketed of 17,653 million yen. The weighted
average amortization period for
F-31
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
acquired patent rights and software to be sold, leased or
otherwise marketed is 8 years and 3 years,
respectively.
Intangible assets subject to amortization comprise the following:
March 31
2005
2006
Gross
Gross
carrying
Accumulated
carrying
Accumulated
amount
amortization
amount
amortization
(Yen in millions)
Artist contracts
15,218
(11,094
)
15,218
(12,218
)
Music catalog
65,674
(19,641
)
71,921
(24,012
)
Acquired patent rights
55,173
(26,139
)
67,467
(30,200
)
Software to be sold, leased or otherwise marketed
31,907
(16,181
)
40,007
(24,194
)
Other
27,648
(11,625
)
40,978
(15,133
)
Total
195,620
(84,680
)
235,591
(105,757
)
The aggregate amortization expenses for intangible assets for
the fiscal years ended March 31, 2004, 2005 and 2006 was
28,866 million yen, 24,993 million yen and
28,390 million yen, respectively. The estimated aggregate
amortization expense for intangible assets for the next five
years is as follows:
(Yen in
millions)
Year Ending March 31,
2007
31,636
2008
24,862
2009
18,857
2010
15,593
2011
9,125
Total carrying amount of intangible assets having an indefinite
life comprise the following:
March 31
2005
2006
(Yen in millions)
Trademarks
57,195
58,195
Distribution agreement
18,848
18,848
76,043
77,043
F-32
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The changes in the carrying amount of goodwill by operating
segment for the fiscal years ended March 31, 2005 and 2006
are as follows:
Financial
All
Electronics
Game
Pictures
Services
Other
Total
(Yen in millions)
Balance at March 31, 2004
52,236
110,362
70,789
—
44,483
277,870
Reallocated from Music business to Electronics segment
12,329
—
—
—
(12,329
)
—
Goodwill acquired during year
5,872
4,349
5,868
441
2,121
18,651
Goodwill contributed to the Joint Venture with Bertelsmann AG
—
—
—
—
(15,626
)
(15,626
)
Other *
378
29
1,277
—
1,344
3,028
Balance at March 31, 2005
70,815
114,740
77,934
441
19,993
283,923
Goodwill acquired during year
3,337
1,317
947
536
382
6,519
Reallocated from Music business to Electronics segment
634
—
—
—
(634
)
—
Impairment losses
—
—
—
—
(534
)
(534
)
Other *
1,577
207
7,031
—
301
9,116
Balance at March 31, 2006
76,363
116,264
85,912
977
19,508
299,024
*
Other consists of translation adjustments and reclassification
    to/from other accounts.
As discussed in Notes 5 and 24, as of August 1,
2004, Sony and Bertelsmann AG combined their recorded music
business in a joint venture. In connection with the
establishment of the joint venture, assets contributed by Sony
included 15,626 million yen of goodwill. In addition, the
non-Japan based disc manufacturing and physical distribution
businesses, formerly included within the Music segment, have
been reclassified to the Electronics segment and accordingly,
Sony reallocated 12,329 million yen of goodwill relating to
the non-Japan based disc manufacturing and physical distribution
business from the Music segment to the Electronics segment.
Effective April 1, 2005, a similar change was made with
respect to the Japan based disc manufacturing businesses and
accordingly, Sony reallocated 634 million yen of goodwill
from the Music segment to the Electronics segment. Consistent
with the presentation of business segment information in
Note 24, the Music segment is included within All Other.
During the year ended March 31, 2006, Sony performed the
annual impairment test for goodwill and recorded an impairment
loss of 534 million yen in a reporting unit included in All
Other. This impairment charge reflected the overall decline in
the fair value of a subsidiary. The fair value of the subsidiary
was estimated principally using the expected present value of
future cash flows.
10.
Insurance-related accounts
Sony's life and non-life insurance subsidiaries in Japan
maintain their accounting records as described in Note 2 in
accordance with the accounting principles and practices
generally accepted in Japan, which vary in some respects from
U.S. GAAP.
Those differences are mainly that insurance acquisition costs
for life and non-life insurance are charged to income when
incurred in Japan whereas in the United States of America those
costs are deferred and amortized generally over the
premium-paying period of the related insurance policies, and
that future policy benefits for life insurance calculated
locally under the authorization of the supervisory
administrative agencies are comprehensively adjusted to a net
level premium method with certain adjustments of actuarial
F-33
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
assumptions for U.S. GAAP purposes. For purposes of
preparing the consolidated financial statements, appropriate
adjustments have been made to reflect such items in accordance
with U.S. GAAP.
The amounts of statutory net equity of the subsidiaries as of
March 31, 2005 and 2006 were 153,228 million yen and
229,543 million yen, respectively.
(1)
Insurance policies:
Life insurance policies that the life insurance subsidiary
writes, most of which are categorized as long-duration
contracts, mainly consist of whole life, term life and accident
and health insurance contracts. The life insurance revenues for
the fiscal years ended March 31, 2004, 2005 and 2006 were
437,835 million yen, 426,774 million yen and
453,496 million yen, respectively. Property and casualty
insurance policies that the non-life insurance subsidiary writes
are primarily automotive insurance contracts which are
categorized as short-duration contracts. The non-life insurance
revenues for the fiscal years ended March 31, 2004, 2005
and 2006 were 28,371 million yen, 35,454 million yen
and 42,743 million yen, respectively.
(2)
Deferred insurance acquisition costs:
Insurance acquisition costs, including such items as commission,
medical examination and inspection report fees, that vary with
and are primarily related to acquiring new insurance policies
are deferred as long as they are recoverable. The deferred
insurance acquisition costs for traditional life insurance
contracts are amortized over the premium-paying period of the
related insurance policies using assumptions consistent with
those used in computing policy reserves. The deferred insurance
acquisition costs for non-traditional life insurance contracts
are amortized over the expected life in proportion to the
estimated gross profits. Amortization charged to income for the
fiscal years ended March 31, 2004, 2005 and 2006 amounted
to 50,492 million yen, 47,120 million yen and
42,933 million yen, respectively.
(3)
Future insurance policy benefits:
Liabilities for future policy benefits are established in
amounts adequate to meet the estimated future obligations of
policies in force. These liabilities are computed by the net
level premium method based upon estimates as to future
investment yield, mortality, morbidity and withdrawals. Future
policy benefits are computed using interest rates ranging from
approximately 0.90% to 5.10%. Mortality, morbidity and
withdrawal assumptions for all policies are based on either the
subsidiary's own experience or various actuarial tables. At
March 31, 2005 and 2006, future insurance policy benefits
amounted to 1,782,850 million yen and
1,901,716 million yen, respectively.
F-34
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
11.
Short-term borrowings and long-term debt
Short-term borrowings comprise the following:
March 31
2005
2006
(Yen in millions)
Unsecured loans, principally from banks:
with weighted-average interest rate of 2.79%
38,796
with weighted-average interest rate of 3.63%
32,066
Secured call money:
with weighted-average interest rate of 0.01%
—
40,000
Secured bills sold:
with weighted-average interest rate of 0.00%
24,600
with weighted-average interest rate of 0.01%
70,700
63,396
142,766
At March 31, 2006, marketable securities and securities
investments with a book value of 119,598 million yen were
pledged as collateral for call money and bills sold by a
Japanese bank subsidiary.
F-35
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Long-term debt comprises the following:
March 31
2005
2006
(Yen in millions)
Secured loans, representing obligations to banks:
Due 2005 to 2008 with interest of 2.20% per annum
1,122
—
Unsecured loans, representing obligations principally to banks:
Due 2005 to 2017 with interest ranging from 0.23% to
    5.89% per annum
113,436
Due 2006 to 2015 with interest ranging from 0.13% to
    5.89% per annum
128,148
Medium-term notes of consolidated subsidiaries:
Due 2006 with interest ranging from 2.78% to 4.95% per annum
58,755
Due 2006 with interest of 4.95% per annum
58,698
Unsecured zero coupon convertible bonds, due 2008, convertible
    currently at 5,605 yen for one common share, redeemable
    before due date
250,000
250,000
Unsecured 0.1% bonds, due 2005 with detachable warrants, net of
    unamortized discount
3,981
—
Unsecured 1.55% bonds, due 2006 with detachable warrants
12,000
12,000
Unsecured 0.9% bonds, due 2007 with detachable warrants
7,300
7,300
Unsecured 0.9% bonds, due 2007 with detachable warrants
150
150
Unsecured 1.42% bonds, due 2005, net of unamortized discount
99,998
—
Unsecured 0.64% bonds, due 2006, net of unamortized discount
99,996
99,999
Unsecured 1.01% bonds, due 2010, net of unamortized discount
—
39,996
Unsecured 2.04% bonds, due 2010, net of unamortized discount
49,984
49,987
Unsecured 0.80% bonds, due 2010, net of unamortized discount
—
49,991
Unsecured 1.52% bonds, due 2011, net of unamortized discount
49,997
49,997
Unsecured 1.16% bonds, due 2012, net of unamortized discount
—
39,981
Unsecured 1.52% bonds, due 2013, net of unamortized discount
—
34,997
Unsecured 1.57% bonds, due 2015, net of unamortized discount
—
29,980
Unsecured 1.75% bonds, due 2015, net of unamortized discount
—
24,993
Unsecured 2.0% bonds, due 2005
15,000
—
Unsecured 1.99% bonds, due 2007
15,000
15,000
Unsecured 2.35% bonds, due 2010
4,900
4,900
Capital lease obligations:
Due 2005 to 2019 with interest ranging from 1.55% to
    30.00% per annum
40,301
Due 2006 to 2019 with interest ranging from 1.45% to
    16.00% per annum
38,280
Guarantee deposits received
23,942
24,056
845,862
958,453
Less — Portion due within one year
166,870
193,555
678,992
764,898
There are no adverse debt covenants or cross-default provisions
relating to Sony's borrowings.
F-36
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
A summary of the exercise rights of the detachable warrants as
of March 31, 2006 is as follows:
Exercise price
Number of shares per
Issued on
Exercisable during
Yen
Dollars
warrant
Status of exercise
October 19, 2000
November 1, 2001 through October 18, 2006
12,457
106
100 shares of common stock of Sony Corporation
9,224 warrants outstanding
December 21, 2001
January 6, 2003 through December 20, 2007
6,039
52
100 shares of common stock of Sony Corporation
11,459 warrants outstanding
Aggregate amounts of annual maturities of long-term debt during
the next five years are as follows:
(Yen in
Fiscal Year Ending March 31
millions)
2007
193,555
2008
32,781
2009
285,924
2010
66,431
2011
110,762
At March 31, 2006, Sony had unused committed lines of
credit amounting to 676,449 million yen and can generally
borrow up to 90 days from the banks with whom Sony has
committed line contracts. Furthermore, Sony has Commercial Paper
Programs, the size of which was 1,321,940 million yen.
There was no commercial paper outstanding at March 31,
2006. Under those programs, Sony can issue commercial paper for
the period generally not in excess of 270 days up to the
size of the programs. In addition, Sony has Medium Term Notes
programs, the size of which was 587,100 million yen. At
March 31, 2006, the total outstanding balance of Medium
Term Notes was 58,698 million yen.
12.
Deposits from customers in the banking business
All deposits from customers in the banking business are interest
bearing deposits, and are owned by a Japanese bank subsidiary
which was established as an Online Internet bank for
individuals. At March 31, 2005 and 2006, the balance of
time deposits issued in amounts of 10 million yen or more
were 67,387 million yen and 75,459 million yen,
respectively. At March 31, 2006, aggregate amounts of
annual maturities of time deposits with a remaining term of more
than one year are as follows:
(Yen in
Fiscal Year Ending March 31
millions)
2008
30,568
2009
20,657
2010
200
2011
6,637
2012
38
13.
Financial instruments
(1)
Derivative instruments and hedging activities:
Sony has certain financial instruments including financial
assets and liabilities incurred in the normal course of
business. Such financial instruments are exposed to market risk
arising from the changes of foreign currency exchange rates and
interest rates. In applying a consistent risk management
strategy for the purpose
F-37
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
of reducing such risk, Sony uses derivative financial
instruments, which include foreign exchange forward contracts,
foreign currency option contracts, and interest rate and
currency swap agreements. Foreign exchange forward contracts and
foreign currency option contracts are utilized primarily to
limit the exposure affected by changes in foreign currency
exchange rates on cash flows generated by anticipated
intercompany transactions and intercompany accounts receivable
and payable denominated in foreign currencies. Interest rate and
currency swap agreements are utilized primarily to lower funding
costs, to diversify sources of funding and to limit Sony's
exposure associated with underlying debt instruments and
available-for-sale debt securities resulting from adverse
fluctuations in interest rates, foreign currency exchange rates
and changes in the fair value. These instruments are executed
with creditworthy financial institutions, and virtually all
foreign currency contracts are denominated in U.S. dollars,
euros and other currencies of major countries. Although Sony may
be exposed to losses in the event of nonperformance by
counterparties or unfavorable interest and currency rate
movements, it does not anticipate significant losses due to the
nature of Sony's counterparties or the hedging
arrangements. These derivatives generally mature or expire
within 6 months after the balance sheet date. Sony does not
use these derivative financial instruments for trading or
speculative purposes except for certain derivatives utilized for
portfolio investments such as interest rate swap agreements and
bond future contracts in the Financial Services segment. These
derivative transactions utilized for portfolio investments in
the Financial Services segment are executed within a certain
limit in accordance with an internal risk management policy.
Derivative financial instruments held by Sony are classified and
accounted for as described below pursuant to
FAS No. 133.
Fair value hedges
The derivatives designated as fair value hedges include interest
rate and currency swap agreements.
Both the derivatives designated as fair value hedges and the
hedged items are reflected at fair value in the consolidated
balance sheet. Changes in the fair value of the derivatives
designated as fair value hedges as well as offsetting changes in
the carrying value of the underlying hedged items are recognized
in income.
For the fiscal years ended March 31, 2004 and 2005, the
amount of ineffectiveness of these fair value hedges, that was
reflected in earnings, was not material. For the fiscal year
ended March 31, 2006, these fair value hedges were fully
effective. In addition, there were no amounts excluded from the
assessment of hedge effectiveness of fair value hedges.
Cash flow hedges
The derivatives designated as cash flow hedges include foreign
exchange forward contracts, foreign currency option contracts
and interest rate and currency swap agreements.
Changes in the fair value of derivatives designated as cash flow
hedges are initially recorded in other comprehensive income and
reclassified into earnings when the hedged transaction affects
earnings. For the fiscal years ended March 31, 2004 and
2006, these cash flow hedges were fully effective. For the
fiscal year ended March 31, 2005, the amount of
ineffectiveness of these cash flow hedges that was reflected in
earnings was not material. In addition, there were no amounts
excluded from the assessment of hedge effectiveness of cash flow
hedges. At March 31, 2006, amounts related to derivatives
qualifying as cash flow hedges amounted to a net reduction of
equity of 2,049 million yen. Within the next twelve months,
1,453 million yen is expected to be reclassified from
equity into earnings as loss. For the fiscal year ended
March 31, 2006, there were no forecasted transactions that
failed to occur which resulted in the discontinuance of cash
flow hedges.
F-38
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Derivatives not designated as hedges
The derivatives not designated as hedges under
FAS No. 133 include foreign exchange forward
contracts, foreign currency option contracts, interest rate and
currency swap agreements, interest rate and bond future
contracts, stock price index option contracts, convertible
rights included in convertible bonds and other derivatives.
Changes in the fair value of derivatives not designated as
hedges are recognized in income.
A description of the purpose and classification of the
derivative financial instruments held by Sony is as follows:
Foreign exchange forward contracts and foreign currency
option contracts
Sony enters into foreign exchange forward contracts and
purchased and written foreign currency option contracts
primarily to fix the cash flows from intercompany accounts
receivable and payable and forecasted transactions denominated
in functional currencies (Japanese yen, U.S. dollars and
euros) of Sony's major operating units. The majority of
written foreign currency option contracts are a part of range
forward contract arrangements and expire in the same month with
the corresponding purchased foreign currency option contracts.
Sony also enters into foreign exchange forward contracts, which
effectively fix the cash flows from foreign currency denominated
debt. Accordingly, these derivatives have been designated as
cash flow hedges in accordance with FAS No. 133.
Foreign exchange forward contracts and foreign currency option
contracts that do not qualify as hedges are
marked-to
-market with
changes in value recognized in other income and expenses.
Foreign exchange forward contracts and foreign currency option
contracts held by certain subsidiaries in the Financial Services
segment are
marked-to
-market with
changes in value recognized in financial service revenue.
Interest rate and currency swap agreements
Sony enters into interest rate and currency swap agreements,
which are used for reducing the risk arising from the changes in
the fair value of fixed rate debt and available-for-sale debt
securities. For example, Sony enters into interest rate and
currency swap agreements, which effectively swap foreign
currency denominated fixed rate debt for functional currency
denominated variable rate debt. These derivatives are considered
to be a hedge against changes in the fair value of Sony's
foreign denominated fixed-rate obligations. Accordingly, these
derivatives have been designated as fair value hedges in
accordance with FAS No. 133.
Sony also enters into interest rate and currency swap agreements
that are used for reducing the risk arising from the changes in
anticipated cash flow of variable rate debt and foreign currency
denominated debt. For example, Sony enters into interest rate
and currency swap agreements, which effectively swap foreign
currency denominated variable rate debt for functional currency
denominated fixed rate debt. These derivatives are considered to
be a hedge against changes in the anticipated cash flow of
Sony's foreign denominated variable rate obligations.
Accordingly, these derivatives have been designated as cash flow
hedges in accordance with FAS No. 133.
Certain subsidiaries in the Financial Services segment have
interest rate swap agreements as part of their portfolio
investments, which are
marked-to
-market with
changes in value recognized in financial service revenue.
Interest rate and currency swap agreements held by certain
subsidiaries in the Financial Services segment are also
marked-to
-market with
changes in value recognized in financial service revenue.
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Any other interest rate and currency swap agreements that do not
qualify as hedges, which are used for reducing the risk arising
from changes of variable rate debt, are
marked-to
-market with
changes in value recognized in other income and expenses.
Interest rate and bond future contracts
Certain subsidiaries in the Financial Services segment have
interest rate and bond future contracts as part of their
portfolio investments, which are
marked-to
-market with
changes in value recognized in financial service revenue.
Stock price index option contracts
Certain subsidiaries in the Financial Services segment have
stock price index option contracts as part of their portfolio
investments, which are
marked-to
-market with
changes in value recognized in financial service revenue.
Embedded derivatives
Changes in the fair value of embedded derivatives that must be
separated from the host contracts and accounted for as
derivative instruments under FAS No. 133 are
recognized in income. For example, the convertible rights
included in convertible bonds held by Sony's life insurance
subsidiary, which are classified as available-for-sale debt
securities, are considered embedded derivatives and are
marked-to
-market with
changes in value recognized in financial service revenue.
(2)
Fair value of financial instruments:
The estimated fair values of Sony's financial instruments
are summarized as follows. The following summary excludes cash
and cash equivalents, time deposits, notes and accounts
receivable, trade, short-term borrowings, notes and accounts
payable, trade and deposits from customers in the banking
business that are
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
carried at amounts which approximate fair value. The summary
also excludes debt and equity securities which are disclosed in
Note 7.
March 31
2005
2006
Notional
Carrying
Estimated
Notional
Carrying
Estimated
amount
amount
fair value
amount
amount
fair value
(Yen in millions)
Long-term debt including the current portion
—
(845,862
)
(856,321
)
—
(958,453
)
(981,006
)
Foreign exchange forward contracts
1,545,814
(55
)
(55
)
1,489,213
1,184
1,184
Currency option contracts purchased
428,261
1,646
1,646
457,380
2,540
2,540
Currency option contracts written
146,506
(3,390
)
(3,390
)
163,746
(2,576
)
(2,576
)
Interest rate swap agreements
147,024
(2,968
)
(2,968
)
172,430
(165
)
(165
)
Interest rate and currency swap agreements
29,843
(1,318
)
(1,318
)
14,518
(488
)
(488
)
Interest rate future contracts
136,470
(92
)
(92
)
—
—
—
Bond future contracts
7,225
45
45
13,934
111
111
Stock price index option purchased
—
—
—
26,650
40
40
Embedded derivatives
405,756
11,894
11,894
411,252
70,712
70,712
The following are explanatory notes regarding the estimation
method of fair values in the above table.
Long-term debt including the current portion
The fair values of long-term debt, including the current
portion, were estimated based on either the market value or the
discounted amounts of future cash flows using Sony's
current incremental debt rates for similar liabilities.
Derivative financial instruments
The fair values of foreign exchange forward contracts and
foreign currency option contracts were estimated based on market
quotations. The fair values of interest rate and currency swap
agreements were estimated based on the discounted amounts of
future net cash flows. The fair values of convertible rights,
which were a majority of embedded derivatives, were estimated
based on the market price of stock which will be acquired by the
exercise of these rights.
14.
Pension and severance plans
Upon terminating employment, employees of Sony Corporation and
its subsidiaries in Japan are entitled, under most
circumstances, to lump-sum indemnities or pension payments as
described below. For employees voluntarily retiring, payments
are determined based on current rates of pay and lengths of
service. In calculating the payments for employees involuntarily
retiring, including employees retiring due to meeting mandatory
retirement age requirements, Sony may grant additional benefits.
In July, 2004, Sony Corporation and certain of its subsidiaries
amended their pension plans and introduced a point-based plan
under which a point is added every year reflecting the
individual employee's
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
performance over that year. Under the point-based plan the
amount of payment is determined based on sum of cumulative
points from past services and interest points earned on the
cumulative points regardless of whether or not the employee is
voluntarily retiring. As a result of the plan amendment, the
projected benefit obligation was decreased by
120,873 million yen.
Sony Corporation and most of its subsidiaries in Japan had
contributory funded defined benefit pension plans pursuant to
the Japanese Welfare Pension Insurance Law, which consisted of a
substitutional portion of the governmental welfare pension
program and an additional portion which was established at the
discretion of each employer. In June, 2001, the Japanese
Government issued the Defined Benefit Corporate Pension Plan
Act, which permits each employer and employees' pension
fund plan to separate the substitutional portion from its
employees' pension fund and transfer the obligation and
related assets to the government. In July, 2004, in accordance
with the law, the Japanese Government approved applications
submitted by Sony Corporation and most of its subsidiaries in
Japan for an exemption from the obligation to pay benefits for
future employee services related to the substitutional portion
of the governmental welfare pension program. In January 2005,
the government also approved applications for an exemption from
the obligation to pay benefits for past employee services
related to the substitutional portion. On September 20,
2005, the benefit obligation for past employee services related
to the substitutional portion and the related
government-specified portion of the plan assets were transferred
to the government. As a result of the transfer to the government
of the substitutional portion, as of March 31, 2006, Sony
Corporation and most of its subsidiaries in Japan maintain
contributory funded defined benefit plans, which were
established by succeeding the additional portion established at
the discretion of each employer, pursuant to the Corporate
Defined Benefit Pension Plan Law.
Under the contributory pension plans, in general, the defined
benefits cover 65% of the indemnities under existing regulations
to employees. The remaining indemnities are covered by severance
payments by the companies. The pension benefits are payable at
the option of the retiring employee either in a lump-sum amount
or monthly pension payments. Contributions to the plans are
funded through several financial institutions in accordance with
the applicable laws and regulations.
EITF Issue No. 03-2, "Accounting for the Transfer to
the Japanese Government of the Substitutional Portion of
Employee Pension Fund Liabilities", requires employers
to account for the entire separation process of a substitutional
portion from an entire plan upon completion of the transfer of
the substitutional portion of the benefit obligation and related
plan assets to the government as the culmination of a series of
steps in a single settlement transaction. For the fiscal year
ended March 31, 2006, in accordance with EITF Issue
No. 03-2, Sony recognized a government subsidy of
133,322 million yen which is the net of the amount of the
accumulated benefit obligation settled and the plan assets
transferred to the government. Sony also recognized a settlement
loss of 59,850 million yen, the amount of which is the net
of 100,253 million yen of unrecognized losses related to
the substitutional portion and 40,403 million yen for the
derecognition of previously accrued salary progression. The net
gain of 73,472 million yen is included in selling, general
and administrative expenses.
Many foreign subsidiaries have defined benefit pension plans or
severance indemnity plans, which substantially cover all of
their employees. Under such plans, the related cost of benefits
is currently funded or accrued. Benefits awarded under these
plans are based primarily on the current rate of pay and length
of service.
Sony uses a measurement date of March 31 for substantially
all of its pension and severance plans.
F-42
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The components of net pension and severance costs, which exclude
employee termination benefits paid in restructuring activities,
for the fiscal years ended March 31, 2004, 2005 and 2006
were as follows:
Japanese plans:
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Service cost
54,501
31,971
26,561
Interest cost
19,489
21,364
16,504
Expected return on plan assets
(22,812
)
(16,120
)
(17,290
)
Amortization of net transition asset
(375
)
(375
)
(104
)
Recognized actuarial loss
31,019
20,236
14,393
Amortization of prior service cost
(939
)
(7,216
)
(10,229
)
Gains on curtailments and settlements
—
(876
)
—
Settlement loss resulting from the transfer of the
    substitutional portion
—
—
59,850
Net periodic benefit cost
80,883
48,984
89,685
Foreign plans:
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Service cost
11,252
6,419
6,852
Interest cost
8,566
8,091
8,318
Expected return on plan assets
(6,812
)
(6,712
)
(7,112
)
Amortization of net transition asset
(27
)
(18
)
21
Recognized actuarial loss
1,569
1,637
1,674
Amortization of prior service cost
(117
)
(114
)
(240
)
Losses on curtailments and settlements
5,574
1,713
915
Net periodic benefit cost
20,005
11,016
10,428
F-43
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The changes in benefit obligation and plan assets, funded status
and composition of amounts recognized in the consolidated
balance sheets were as follows:
Japanese plans
Foreign plans
March 31
March 31
2005
2006
2005
2006
(Yen in millions)
(Yen in millions)
Change in benefit obligation:
Benefit obligation at beginning of the fiscal year
993,542
901,726
155,838
153,598
Service cost
31,971
26,561
6,419
6,852
Interest cost
21,364
16,504
8,091
8,318
Plan participants' contributions
2,111
—
873
609
Amendments
(120,873
)
(11,522
)
286
238
Actuarial (gain) loss
1,641
(3,200
)
12,210
20,183
Foreign currency exchange rate changes
—
—
14,288
17,506
Curtailments and settlements
(2,988
)
—
(628
)
(4,465
)
Benefits paid
(25,042
)
(18,630
)
(11,639
)
(8,670
)
Divestiture
—
—
(32,140
)
—
Transfer of the substitutional portion to the government
—
(291,570
)
—
—
Benefit obligation at end of the fiscal year
901,726
619,869
153,598
194,169
Change in plan assets:
Fair value of plan assets at beginning of the fiscal year
513,095
534,451
85,662
92,025
Actual return (loss) on plan assets
(354
)
51,766
7,513
11,209
Foreign currency exchange rate changes
—
—
3,517
5,059
Employer contribution
34,581
32,867
18,406
5,493
Plan participants' contributions
2,111
—
873
609
Curtailments and settlements
—
—
(112
)
(4,006
)
Benefits paid
(14,982
)
(11,911
)
(11,168
)
(5,995
)
Divestiture
—
—
(12,666
)
—
Transfer of the substitutional portion to the government
—
(117,845
)
—
—
Fair value of plan assets at end of the fiscal year
534,451
489,328
92,025
104,394
In connection with the establishment of the SONY BMG joint
venture with Bertelsmann AG as discussed in Note 5, Sony
transferred 32,140 million yen of its benefit obligation
and 12,666 million yen of its plan assets which were
included in Sony's foreign plans to the joint venture as of
August 1, 2004.
F-44
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Japanese plans
Foreign plans
March 31
March 31
2005
2006
2005
2006
(Yen in millions)
(Yen in millions)
Funded status
(367,275
)
(130,541
)
(61,573
)
(89,775
)
Unrecognized actuarial loss
322,237
169,915
37,383
41,587
Unrecognized net transition asset
(104
)
—
7
153
Unrecognized prior service cost
(134,440
)
(135,733
)
(501
)
(911
)
Net amount recognized
(179,582
)
(96,359
)
(24,684
)
(48,946
)
Amounts recognized in the consolidated balance sheet consist of:
Prepaid benefit cost
1,795
2,650
1,351
1,226
Accrued pension and severance costs, including current portion
(309,957
)
(134,849
)
(42,934
)
(70,986
)
Intangibles
—
—
41
157
Accumulated other comprehensive income
128,580
35,840
16,858
20,657
Net amount recognized
(179,582
)
(96,359
)
(24,684
)
(48,946
)
The accumulated benefit obligation for all defined benefit
pension plan as follows:
Japanese plans
Foreign plans
March 31
March 31
2005
2006
2005
2006
(Yen in millions)
(Yen in millions)
Accumulated benefit obligation
835,420
613,055
121,176
143,031
The projected benefit obligations, the accumulated benefit
obligations and fair value of plan assets for the pension plans
with accumulated benefit obligations in excess of plan assets
were as follows:
Japanese plans
Foreign plans
March 31
March 31
2005
2006
2005
2006
(Yen in millions)
(Yen in millions)
Projected benefit obligations
898,985
617,883
132,556
158,353
Accumulated benefit obligations
835,420
612,410
115,147
139,431
Fair value of plan assets
533,926
488,588
86,070
99,798
Weighted-average assumptions used to determine benefit
obligations as of March 31, 2004, 2005 and 2006 were as
follows:
Japanese plans:
March 31
2004
2005
2006
Discount rate
2.4
%
2.3
%
2.2
%
Rate of compensation increase
3.0
3.3
3.4
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Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Foreign plans:
March 31
2004
2005
2006
Discount rate
5.8
%
5.5
%
5.1
%
Rate of compensation increase
4.0
3.3
3.7
Weighted-average assumptions used to determine net pension and
severance costs for the fiscal years ended March 31, 2004,
2005 and 2006 were as follows:
Japanese plans:
Fiscal Year Ended
March 31
2004
2005
2006
Discount rate
1.9
%
2.4
%
2.3
%
Expected return on plan assets
4.0
3.2
3.5
Rate of compensation increase
3.0
3.3
3.4
Foreign plans:
Fiscal Year Ended
March 31
2004
2005
2006
Discount rate
6.3
%
5.8
%
5.4
%
Expected return on plan assets
8.3
7.8
7.8
Rate of compensation increase
4.1
4.0
3.7
As required under FAS No. 87, "Employers'
Accounting for Pensions", the assumptions are reviewed in
accordance with changes in circumstances.
To determine the expected long-term rate of return on pension
plan assets, Sony considers the current and expected asset
allocations, as well as historical and expected long-term rate
of returns on various categories of plan assets.
Following
FAS No. 132
®
,
"Employers' Disclosure about Pensions and Other
Postretirement Benefits", the weighted-average rate of
compensation increase is calculated based on the pay-related
plans only. The point-based plan discussed above is excluded
from the calculation because payments made under the plan are
not based on employee compensation.
Weighted-average pension plan asset allocations based on the
fair value of such assets as of March 31, 2005 and 2006
were as follows:
Japanese plans:
March 31,
2005
2006
Equity securities
28.0
%
38.1
%
Debt securities
34.7
47.7
Cash
33.7
6.0
Other
3.6
8.2
Total
100
%
100
%
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Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Foreign plans:
March 31,
2005
2006
Equity securities
68.3
%
69.1
%
Debt securities
23.4
20.8
Real estate
4.0
6.8
Other
4.3
3.3
Total
100
%
100
%
For the pension plans of Sony Corporation and most of its
subsidiaries in Japan, the target allocation as of
March 31, 2006, is, as a result of our Asset Liability
management, 34% of public equity, 56% of fixed income securities
and 10% of other. When determining an appropriate asset
allocation, diversification among assets is duly considered.
The actual asset allocation as of March 31, 2005 for
Sony's principal pension plans did not meet the
aforementioned target allocation as the Sony Employees'
Pension Fund tentatively held cash to be paid to the Japanese
government in relation to the transfer of the substitutional
portion of the benefit obligation.
As a result from the transfer of the Japanese Government of the
substitution portion of Sony's Employee Pension Fund in
September 2005, pension plan assets of the Japanese plans as of
March 31, 2006 decreased as compared to March 31, 2005.
Sony makes contributions to its contributory funded defined
benefit pension plans as required by government regulation or as
deemed appropriate by management after considering the fair
value of plan assets, expected return on plan assets and the
present value of benefit obligations. Sony expects to contribute
approximately 33 billion yen to the Japanese plans and
approximately 6 billion yen to the foreign plans during the
fiscal year ending March 31, 2007.
The future benefit payments are expected as follows:
Japanese plans
Foreign plans
(Yen in millions)
(Yen in millions)
Fiscal Year Ending March 31,
2007
17,336
7,262
2008
19,081
6,764
2009
21,002
7,532
2010
25,400
8,326
2011
29,102
8,994
2012 — 2016
162,183
56,418
15.
Stockholders' equity
(1)
Subsidiary tracking stock:
On June 20, 2001, Sony Corporation issued shares of
subsidiary tracking stock in Japan, the economic value of which
is intended to be linked to the economic value of Sony
Communication Network Corporation ("SCN"), a directly
and indirectly wholly owned subsidiary of Sony Corporation which
is engaged in Internet-related services. The subsidiary tracking
stock holders had no direct rights in the equity or assets of
SCN or the assets of Sony Corporation.
F-47
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
On October 26, 2005, the Board of Directors of Sony
Corporation decided to terminate all shares of subsidiary
tracking stock and convert such shares to shares of Sony common
stock. All shares of subsidiary tracking stock were converted to
shares of Sony common stock on December 1, 2005. As a
result of the conversion, the number of shares of Sony common
stock to be issued upon conversion was calculated by multiplying
the number of shares of subsidiary tracking stock as of
November 30, 2005, by 1.114, and the number of shares of
Sony common stock to be issued upon conversion was 3,452,808.
(2)
Common stock:
Changes in the number of shares of common stock issued and
outstanding during the fiscal years ended March 31, 2004,
2005 and 2006 have resulted from the following:
Number of
shares
Balance at March 31, 2003
922,385,176
Conversion of convertible bonds
2,944,800
Stock issued under exchange offering
1,088,304
Balance at March 31, 2004
926,418,280
Conversion of convertible bonds
70,765,533
Exercise of stock acquisition rights
27,400
Balance at March 31, 2005
997,211,213
Conversion of convertible bonds
484,200
Conversion of subsidiary tracking stock
3,452,808
Exercise of stock acquisition rights
531,443
Balance at March 31, 2006
1,001,679,664
At March 31, 2006, 58,976,132 shares of common stock
would be issued upon conversion or exercise of all convertible
bonds, warrants and stock acquisition rights outstanding.
On May 1, 2003, Sony Corporation implemented a share
exchange as a result of which CIS Corporation became a
wholly-owned subsidiary. As a result of this share exchange,
Sony Corporation issued 1,088,304 new shares, and additional
paid-in capital increased 5,409 million yen.
On November 20, 1991, Sony Corporation made a free share
distribution of 33,908,621 shares in ratios of one share
for each ten shares held for which no accounting entry was
required in Japan. Had the distribution been accounted for in
the manner adopted by companies in the United States of America,
201,078 million yen would have been transferred from
retained earnings to the appropriate capital accounts. This has
been the only free distribution of common stock where no
accounting entry was required in Japan.
Conversions of convertible bonds into common stock are accounted
for in accordance with the provisions of the Japanese Commercial
Code by crediting approximately one-half of the conversion
proceeds to the common stock account and the remainder to the
additional paid-in capital account.
The Ordinary General Meeting of Shareholders held on
June 20, 2003 approved that Sony Corporation acquire up to
a total not exceeding 90 million outstanding shares of its
common stock at an amount in total not exceeding
400 billion yen and a total not exceeding 300 thousand
outstanding shares of the subsidiary tracking stock at an amount
in total not exceeding 1 billion yen. As a result, Sony
Corporation had acquired 2 million outstanding shares of
its common stock at an amount in 8,200 million yen.
F-48
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Ordinary General Meeting of Shareholders held on
June 22, 2004 approved to amend the articles of
incorporation that Sony Corporation may purchase its own shares
by a resolution of the Board of Directors, in accordance with
the amendments to the Japanese Commercial Code enacted on
September 25, 2003. With the amendment of the articles of
incorporation, Sony Corporation may purchase its own shares at
any time by a resolution of the Board of Directors up to the
retained earnings available for dividends to shareholders. No
common stock and subsidiary tracking stock had been acquired by
the resolution of the Board of Directors during the fiscal year
ended March 31, 2005 and 2006.
(3)
Retained earnings:
The amount of statutory retained earnings of Sony Corporation
available for dividends to shareholders as of March 31,
2006 was 565,936 million yen. The appropriation of retained
earnings for the fiscal year ended March 31, 2006 including
cash dividends for the six-month period ended March 31,
2006 has been incorporated in the accompanying consolidated
financial statements. This appropriation of retained earnings
was approved at the meeting of the Board of Directors of Sony
Corporation held on May 17, 2006 and was then recorded in
the statutory books of account, in accordance with the Japanese
Commercial Code.
Retained earnings include Sony's equity in undistributed
earnings of affiliated companies accounted for by the equity
method in the amount of 2,724 million yen and
13,557 million yen at March 31, 2005 and 2006,
respectively.
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(4)
Other comprehensive income:
Other comprehensive income for the fiscal years ended
March 31, 2004, 2005 and 2006 were as follows:
Pre-tax
Tax
Net-of-tax
amount
expense
amount
(Yen in millions)
For the fiscal year ended March 31, 2004:
Unrealized gains on securities —
Unrealized holding gains (losses) arising during the period
89,861
(31,890
)
57,971
Less: Reclassification adjustment included in net income
(7,371
)
1,692
(5,679
)
Unrealized losses on derivative instruments —
Unrealized holding gains (losses) arising during the period
11,586
(4,049
)
7,537
Less: Reclassification adjustment included in net income
(5,961
)
2,617
(3,344
)
Minimum pension liability adjustment
162,408
(68,993
)
93,415
Foreign currency translation adjustments —
Translation adjustments arising during the period
(134,312
)
5,199
(129,113
)
Less: Reclassification adjustment included in net income
1,232
—
1,232
Other comprehensive income
117,443
(95,424
)
22,019
For the fiscal year ended March 31, 2005:
Unrealized gains on securities —
Unrealized holding gains (losses) arising during the period
7,184
(1,541
)
5,643
Less: Reclassification adjustment included in net income
(18,140
)
5,216
(12,924
)
Unrealized losses on derivative instruments —
Unrealized holding gains (losses) arising during the period
(2,015
)
1,806
(209
)
Less: Reclassification adjustment included in net income
(2,848
)
1,167
(1,681
)
Minimum pension liability adjustment
(1,700
)
931
(769
)
Foreign currency translation adjustments — Translation
    adjustments arising during the period
76,585
(2,361
)
74,224
Other comprehensive income
59,066
5,218
64,284
F-50
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Pre-tax
Tax
Net-of-tax
amount
expense
amount
(Yen in millions)
For the fiscal year ended March 31, 2006:
Unrealized gains on securities —
Unrealized holding gains (losses) arising during the period
125,263
(45,633
)
79,630
Less: Reclassification adjustment included in net income
(64,953
)
23,458
(41,495
)
Unrealized losses on derivative instruments —
Unrealized holding gains (losses) arising during the period
14,888
(7,023
)
7,865
Less: Reclassification adjustment included in net income
(12,597
)
5,173
(7,424
)
Minimum pension liability adjustment
88,941
(38,735
)
50,206
Foreign currency translation adjustments —
Translation adjustments arising during the period
143,888
(3,415
)
140,473
Less: Reclassification adjustment included in net income
(17
)
—
(17
)
Other comprehensive income
295,413
(66,175
)
229,238
During the fiscal years ended March 31, 2004 and 2006,
losses of 1,232 million yen and gains of 17 million
yen of foreign currency translation adjustments were transferred
respectively from other comprehensive income to net income as a
result of the liquidation of certain foreign subsidiaries.
As discussed in Note 5, as of August 1, 2004, Sony and
Bertelsmann AG combined their recorded music businesses in a
joint venture. In connection with the establishment of the joint
venture, the minimum pension liability attributable to employees
who were transferred to SONY BMG totaling 6,053 million yen
was transferred from other comprehensive income to the carrying
value of Sony's investment in SONY BMG.
16.
Stock-based compensation plans
Sony has four types of stock-based compensation plans as
incentive plans for selected directors, corporate executive
officers and employees.
(1)
Warrant plan:
Upon issuance of unsecured bonds with detachable warrants which
are described in Note 11, Sony Corporation has purchased
all of the detachable warrants and distributed them to selected
directors, corporate executive officers and employees of Sony.
By exercising a warrant, directors, corporate executive officers
and employees can purchase the common stock of Sony Corporation,
the number of which is designated by each plan. The warrants
generally vest ratably over a period of three years, and are
exercisable up to six years from the date of grant.
F-51
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Presented below is a summary of the activities regarding common
stock warrants for the fiscal years shown:
Fiscal Year Ended March 31
2004
2005
2006
Weighted-
Weighted-
Weighted-
Weighted-
average
average
average
average
Number of
exercise
Number of
exercise
Number of
exercise
exercise
Shares
price
Shares
price
Shares
price
price
(Yen)
(Yen)
(Yen)
(Dollars)
Outstanding at beginning of the fiscal year
3,190,292
8,132
3,190,292
8,132
2,626,300
8,533
72.93
Expired
—
—
(563,992
)
6,264
(558,000
)
7,167
61.26
Outstanding at end of the fiscal year
3,190,292
8,132
2,626,300
8,533
2,068,300
8,901
76.08
Exercisable at end of the fiscal year
2,808,292
8,416
2,626,300
8,533
2,068,300
8,901
76.08
There were no warrants granted or exercised during the fiscal
years ended March 31, 2004, 2005 and 2006. At
March 31, 2006, there were 1,145,900 and
922,400 shares outstanding under warrants with exercise
prices of 6,039 yen and 12,457 yen and average remaining lives
of 1.75 years and 0.58 years, respectively. The
weighted average exercise price and remaining life of
outstanding warrants was 8,901 yen and 1.23 years,
respectively. All outstanding warrants were exercisable at
March 31, 2006.
(2)
Convertible Bond plan:
Sony has an equity-based compensation plan for selected
executives of Sony's United States of America subsidiaries
using U.S. dollar-denominated non-interest bearing
convertible bonds which have characteristics similar to that of
an option plan. Each convertible bond can be converted into
100 shares of the common stock of Sony Corporation at an
exercise price based on the prevailing market rate shortly
before the date of grant. The convertible bonds vest ratably
over a three-year period and are exercisable up to ten years
from the date of grant. As the convertible bonds were issued in
exchange for a non-interest bearing employee loan and a right of
offset exists between the convertible bonds and the employee
loans, no accounting recognition was given to either the
convertible bonds or the employee loans in Sony's
consolidated balance sheet.
F-52
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Presented below is a summary of the activities regarding
convertible bond plan for the fiscal years shown:
Fiscal Year Ended March 31
2004
2005
2006
Weighted-
Weighted-
Weighted-
Weighted-
average
average
average
average
Number of
exercise
Number of
exercise
Number of
exercise
exercise
Shares
price
Shares
price
Shares
price
price
(Yen)
(Yen)
(Yen)
(Dollars)
Outstanding at beginning of the fiscal year
3,802,700
6,870
3,341,700
6,852
3,136,400
6,861
58.64
Exercised
—
—
—
—
(484,200
)
5,952
50.87
Forfeited
(461,000
)
6,943
(205,300
)
6,668
(158,700
)
7,989
68.28
Outstanding at end of the fiscal year
3,341,700
6,852
3,136,400
6,861
2,493,500
8,133
69.51
Exercisable at end of the fiscal year
2,614,700
7,042
2,923,300
6,952
2,493,500
8,133
69.51
There were no shares granted under the convertible bond plan
during the fiscal years ended March 31, 2004, 2005 and
2006. All shares under the convertible bond plan were
exercisable as of March 31, 2006.
A summary of convertible bond options outstanding and
exercisable at March 31, 2006 is as follows:
Outstanding and Exercisable
Weighted-
Weighted-
Weighted-
Exercise price
Number of
average
average
average
range
Shares
exercise price
exercise price
remaining life
(Yen)
(Yen)
(Dollars)
(Years)
5,952~10,000
2,117,200
7,229
61.79
3.96
10,001~13,220
376,300
13,220
112.99
4.08
5,952~13,220
2,493,500
8,133
69.51
3.98
(3)
Stock Acquisition Rights:
During the fiscal year ended March 31, 2003, Sony adopted
an equity-based compensation plan that issues common stock
acquisition rights for the purpose of granting stock options to
selected directors, corporate executive officers and employees
of Sony, pursuant to the Commercial Code of Japan. The stock
acquisition rights generally vest ratably over a period of three
years and are exercisable up to ten years from the date of grant.
F-53
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Presented below is a summary of the activities regarding stock
acquisition rights plan for the fiscal years shown:
Fiscal Year Ended March 31
2004
2005
2006
Weighted-
Weighted-
Weighted-
Weighted-
average
average
average
average
Number of
exercise
Number of
exercise
Number of
exercise
exercise
Shares
price
Shares
price
Shares
price
price
(Yen)
(Yen)
(Yen)
(Dollars)
Outstanding at beginning of the fiscal year
2,647,900
4,845
5,173,600
4,424
7,350,500
4,288
36.65
Granted
2,621,400
4,220
2,433,600
3,996
2,491,600
3,936
33.64
Exercised
—
—
(27,400
)
3,896
(364,800
)
4,216
36.06
Forfeited
(95,700
)
3,896
(229,300
)
4,419
(376,600
)
4,441
37.96
Outstanding at end of the fiscal year
5,173,600
4,424
7,350,500
4,288
9,100,700
4,351
37.19
Exercisable at end of the fiscal year
430,900
5,291
1,674,000
4,652
3,136,200
4,629
39.56
A summary of stock acquisition rights outstanding and
exercisable at March 31, 2006 is as follows:
Outstanding
Exercisable
Weighted-
Weighted-
Weighted-
Weighted-
Weighted-
Exercise price
Number of
average
average
average
Number of
average
average
range
Shares
exercise price
exercise price
remaining life
Shares
exercise price
exercise price
(Yen)
(Yen)
(Dollars)
(Years)
(Yen)
(Dollars)
3,782~5,396
9,100,700
4,351
37.19
8.38
3,136,200
4,629
39.56
As the exercise prices for the warrant, convertible bond and
stock acquisition rights plans were determined based on the
prevailing market price shortly before the date of grant, the
compensation expense for these plans was not significant for the
fiscal years ended March 31, 2004, 2005 and 2006.
As discussed in Notes 2 and 15, all shares of
subsidiary tracking stock were converted to shares of Sony
common stock on December 1, 2005. As a result of the
conversion, all subsidiary tracking stock warrants and
acquisition rights were converted to Sony common stock warrants
and acquisition rights. In addition to the above tables,
166,643 shares were issued by the exercise of those
warrants and acquisition rights. At March 31, 2006, there
were no common stock warrants and acquisition rights outstanding
which were granted by the conversion.
As a result of the establishment of the joint venture between
Sony's recorded music business with the recorded music
business of Bertelsmann AG (Note 5), employees of
Sony's recorded music business who were granted options
under the convertible bond and stock acquisition rights plans
prior to the establishment of the joint venture are no longer
considered employees of Sony under FAS No. 123 as
these individual are now employees of SONY BMG which is
accounted for under the equity method. As a result, a
compensation charge of 340 million yen was recorded in the
fiscal year ended March 31, 2005 based on the fair value
method of accounting for stock-based compensation using the
Black-Scholes option-pricing model.
The weighted-average fair value per share at the date of grant
of stock acquisition rights granted during the fiscal years
ended March 31, 2004, 2005 and 2006 were 1,413 yen, 1,085
yen and 1,585 yen, respectively. The fair value of stock
acquisition rights granted on the date of grant, which is
amortized to expense over the
F-54
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
vesting period in determining the pro forma impact, is estimated
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
Fiscal Year Ended March 31
Weighted-average assumptions
2004
2005
2006
Risk-free interest rate
2.18%
2.04%
2.90%
Expected lives
3.67 years
3.54 years
6.14 years
Expected volatility
42.83%
35.56%
39.50%
Expected dividend
0.57%
0.62%
0.61%
(4)
SAR plan:
Sony granted stock appreciation rights ("SARs") in
Japan, Europe and the United States of America for selected
employees. Under the terms of these plans, employees on exercise
receive cash equal to the amount that the market price of Sony
Corporation's common stock exceeds the strike price of the
SARs. The SARs generally vest ratably over a period of three
years, and are generally exercisable up to six to ten years from
the date of grant. Sony uses various strategies to minimize the
compensation expense associated with the SAR plans in the United
States of America and Europe.
The status of the SAR plans is summarized as follows:
Fiscal Year Ended March 31
2004
2005
2006
Weighted-
Weighted-
Weighted-
Weighted-
Number of
average
Number of
average
Number of
average
average
SARs
exercise price
SARs
exercise price
SARs
exercise price
exercise price
(Yen)
(Yen)
(Yen)
(Dollars)
Outstanding at beginning of the fiscal year
2,343,028
6,341
1,526,568
6,424
865,084
7,436
63.56
Exercised
—
—
(241,134
)
3,955
(50,000
)
5,020
42.91
Expired or forfeited
(816,460
)
5,494
(420,350
)
5,855
(628,584
)
7,338
62.72
Outstanding at end of the fiscal year
1,526,568
6,424
865,084
7,436
186,500
9,211
78.73
Exercisable at end of the fiscal year
1,462,391
6,421
856,156
7,455
186,500
9,211
78.73
There were no SARs granted during the fiscal years ended
March 31, 2004, 2005 and 2006. All SARs were exercisable as
of March 31, 2006.
A summary of SARs outstanding and exercisable at March 31,
2006 is as follows:
Outstanding and Exercisable
Weighted-
Weighted-
Weighted-
Exercise price
Number of
average
average
average
range
SARs
exercise price
exercise price
remaining life
(Yen)
(Yen)
(Dollars)
(Years)
4,345~7,000
39,650
5,819
49.74
5.91
7,001~10,000
100,525
9,143
78.15
1.73
10,001~14,440
46,325
12,260
104.79
4.19
4,345~14,440
186,500
9,211
78.73
3.23
F-55
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
In accordance with APB No. 25 and its related
interpretations, the SARs compensation expense is measured as
the excess of the quoted market price of Sony Corporation's
common stock over the SARs strike price, which is consistent
with the accounting treatment prescribed for SAR plans in
FAS No. 123. For the fiscal year ended March 31,
2004, Sony recognized 105 million yen of SARs compensation
expense. For the fiscal year ended March 31, 2005, Sony
recognized a reduction in SARs compensation expense of
74 million yen. For the fiscal year ended March 31,
2006, Sony recognized 70 million yen of SARs compensation
expense.
17.
Restructuring charges and asset impairments
As part of its effort to improve the performance of the various
businesses, Sony has undertaken a number of restructuring
initiatives within its Electronics segment, Pictures segment and
All Other. For the fiscal years ended March 31, 2004, 2005
and 2006, Sony recorded total restructuring charges of
168,091 million yen, 89,963 million yen and
138,692 million yen, respectively. Significant
restructuring charges and asset impairments include the
following:
Electronics Segment
In an effort to improve the performance of the Electronics
segment, Sony has undergone a number of restructuring efforts to
reduce its operating costs. For the fiscal years ended
March 31, 2004, 2005 and 2006, Sony recorded total
restructuring charges of 143,589 million yen,
83,227 million yen and 125,802 million yen,
respectively, within the Electronics segment. In addition to the
above charges, the Electronics segment also reflects
restructuring costs of 2,122 million yen for the fiscal
year ended March 31, 2004, that relate to the non-Japan
based disc manufacturing and physical distribution businesses
that were part of the restructuring charges of the Music
business which is discussed below. These restructuring charges
were formerly included within the Music segment but were
reclassified to the Electronics segment. See Note 24 for
more information on this reclassification. Significant
restructuring activities are as follows:
Downsizing of CRT TV display operations -
Due to the worldwide market shrinkage and demand shift from CRT
displays to plasma and LCD panel displays, Sony has begun to
implement a worldwide plan to rationalize production facilities
of CRT TV display and has been downsizing its business over
several years.
As part of its worldwide plan, Sony made a decision in the
fiscal year ended March 31, 2004 to discontinue certain CRT
TV display manufacturing operations in Japan. Restructuring
charges totaling 8,478 million yen consisted of personnel
related costs of 3,139 million yen and non-cash equipment
impairment, disposal and other costs of 5,339 million yen.
Of the total restructuring charges, 158 million yen was
recorded in cost of sales, 3,139 million yen was included
in selling, general and administrative expenses, and
5,181 million yen was included in loss on sale, disposal or
impairment of assets, net in the consolidated statements of
income. This phase of the restructuring program was completed in
the fiscal year ended March 31, 2004 and no liability
existed as of March 31, 2006.
In the fiscal year ended March 31, 2005, as part of this
restructuring program, Sony recorded a non-cash impairment
charge of 7,479 million yen for CRT TV display
manufacturing facilities located in Europe. The impairment
charge was calculated as the difference between the carrying
value of the asset group and the present value of estimated
future cash flows. The charge was recorded in loss on sale,
disposal or impairment of assets, net in the consolidated
statements of income. This phase of the restructuring program
was completed in the fiscal year ended March 31, 2005 and
no liability existed as of March 31, 2006.
In the fiscal year ended March 31, 2006, Sony made a
decision to discontinue certain CRT TV display manufacturing
operations in the U.S. Restructuring charges totaling
32,488 million yen consisted of personnel
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
related costs of 1,962 million yen and non-cash equipment
impairment, disposal and other costs of 30,526 million yen.
Of the total restructuring charges, 6,982 million yen was
recorded in cost of sales, and 25,506 million yen was
included in loss on sale, disposal or impairment of assets, net
in the consolidated statements of income. The impairment charge
was calculated as the difference between the carrying value of
the asset group and the present value of estimated future cash
flows. This phase of the restructuring program was completed in
the fiscal year ended March 31, 2006. The remaining
liability balance as of March 31, 2006 was
3,852 million yen with a large portion of the liabilities
to be paid during the fiscal year ending March 31, 2007.
In the fiscal year ended March 31, 2006, as part of this
restructuring program, Sony recorded a non-cash impairment
charge of 2,856 million yen for CRT TV display
manufacturing facilities located in Southeast Asia. The
impairment charge was calculated as the difference between the
carrying value of the asset group and the present value of
estimated future cash flows. The charge was recorded in loss on
sale, disposal or impairment of assets, net in the consolidated
statements of income. This phase of the restructuring program
was completed in the fiscal year ended March 31, 2006 and
no liability existed as of March 31, 2006.
The worldwide plan to rationalize production facilities of CRT
TV display was substantially completed during the fiscal year
ended March 31, 2006.
Closing of a semiconductor plant in the U.S. -
Due to a significant decline in the business conditions of the
U.S. semiconductor industry, Sony made a decision in the
fourth quarter of the fiscal year ended March 31, 2003, to
close a semiconductor plant in the U.S. This restructuring
activity was completed in the fiscal year ended March 31,
2005 and total restructuring charges of 4,936 million yen
have been incurred through March 31, 2005. The remaining
liability balance as of March 31, 2006 was 152 million
yen and will be substantially paid through the fiscal year
ending March 31, 2007.
During the fiscal year ended March 31, 2004, Sony recorded
net restructuring charges totaling 874 million yen which
consisted of the accelerated depreciation and write-down of
equipment of 1,982 million yen, gain on disposal of assets
of 1,962 million yen, and 854 million yen of other
costs including lease contract termination costs. Among these
charges 1,760 million yen was recorded in cost of
sales, while asset write-down and disposal costs of
1,076 million yen and the gain on asset disposals of
1,962 million yen were included in loss on sale, disposal
or impairment of assets, net in the consolidated statements of
income.
During the fiscal year ended March 31, 2005, Sony sold the
facilities and recorded a gain on disposal of 1,794 million
yen. The gain was included in loss on sale, disposal or
impairment of assets, net in the consolidated statements of
income.
Retirement Programs -
In addition to the restructuring efforts disclosed above, Sony
has undergone several headcount reduction programs to further
reduce operating costs in its Electronics segment. As a result
of these programs, Sony recorded restructuring charges totaling
115,149 million yen, 50,960 million yen and
45,116 million yen for the fiscal years ended
March 31, 2004, 2005 and 2006, respectively, and these
charges were included in selling, general and administrative
expenses in the consolidated statements of income. These staff
reductions were achieved worldwide mostly through the
implementation of early retirement programs. The remaining
liability balance as of March 31, 2006 was
19,424 million yen and will be paid through the fiscal year
ending March 31, 2007. Sony will continue to implement
programs to reduce headcount by streamlining business
operations, including closure and consolidation of manufacturing
sites, as well as headquarters and administrative functions.
F-57
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Pictures Segment
In an effort to improve the performance of the Pictures segment,
Sony has undergone a number of restructuring efforts to reduce
its operating costs. For the fiscal years ended March 31,
2004 and 2005, Sony recorded total restructuring charges of
4,611 million yen and 385 million yen, respectively,
within the Pictures segment. There were no restructuring charges
incurred for the fiscal year ended March 31, 2006.
Significant restructuring activities are the following:
Consolidation of Television Operations -
Due to changes within the television production and distribution
business, the competition between network owned production
companies and other production and distribution companies to
license product to the major televisions networks has become
more intense. This competitive environment has resulted in fewer
opportunities to produce shows for the networks and a shorter
lifespan for ordered shows that do not immediately achieve
favorable ratings. This trend has resulted in an increase in the
number of new programs being distributed yet canceled in their
first or second season, which are generally less profitable, and
a decrease in the number of network programs that are able to
achieve syndication, which are generally more profitable. As a
result, in the fiscal year ended March 31, 2002, Sony
decided to consolidate its television operations and downsize
the network television production business in the Pictures
segment. This restructuring program was completed in the fiscal
year ending March 31, 2005, and the total cost of the
program from the inception was 8,932 million yen. No
liability existed as of March 31, 2006.
Fixed Cost Reduction Program -
During the fiscal year ended March 31, 2004, the Pictures
segment implemented a fixed cost reduction program to further
reduce its operating costs. This restructuring program primarily
related to the reduction of staffing levels and the disposal of
certain long-lived assets. This restructuring program was
completed during the fiscal year ended March 31, 2005 and
the total cost of this restructuring program was
4,996 million yen.
The Pictures segment recorded 4,611 million yen of these
costs during the fiscal year ended March 31, 2004. These
restructuring charges consisted of personnel related costs of
993 million yen, non-cash asset impairment and disposal
costs of 1,746 million yen, and other costs of
1,872 million yen including those relating to the buy-out
of term deal commitments. Of the restructuring costs incurred,
1,525 million yen was included in cost of sales,
1,340 million yen was included in selling, general and
administrative expenses, and 1,746 million yen was included
in loss on sale, disposal or impairment of assets, net in the
consolidated statements of income.
During the fiscal year ended March 31, 2005, the Pictures
segment completed the fixed cost reduction program and recorded
385 million yen of additional restructuring costs. These
restructuring charges consisted primarily of personnel related
costs of 292 million yen which were included in selling,
general and administrative expenses in the consolidated
statements of income. No liability existed as of March 31,
2006.
All Other (Music Business)
Due to the continued contraction of the worldwide music market
due to slow worldwide economic growth, the saturation of the CD
market, the effects of piracy and other illegal duplication,
parallel imports, pricing pressures and the diversification of
customer preferences, Sony has been actively repositioning the
Music business for the future by looking to create a more
effective and profitable business model. As a result, the Music
business has undergone a worldwide restructuring program since
the fiscal year ended March 31, 2001 to reduce staffing and
other costs through the consolidation and rationalization of
facilities worldwide excluding Japan. As part of this
restructuring program, Sony combined its recorded music business
with the recorded music business of Bertelsmann AG to
form SONY BMG, a joint venture that is accounted for under
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
the equity method. See Note 5 for more information on this
transaction. For the fiscal years ended March 31, 2004,
2005 and 2006, Sony recorded total restructuring charges of
10,691 million yen, 3,025 million yen and
129 million yen, respectively, related to the restructuring
of the Music business excluding Japan. Of these restructuring
charges, 2,122 million yen for the fiscal year ended
March 31, 2004, was recorded in the non-Japan based disc
manufacturing and physical distribution businesses, formerly
included within the Music segment but reclassified to the
Electronics segment. See Note 24 for more information on
this reclassification. This worldwide restructuring of the Music
business was completed during the fiscal year ended
March 31, 2006, and the total cost of the program was
52,702 million yen, which was incurred from the inception
of the program through the fiscal year ended March 31,
2006. The restructuring costs within the Music business do not
include the restructuring costs of SONY BMG since the
establishment of the joint venture. At March 31, 2006, the
liability balance was 1,193 million yen which is expected
to be settled during the fiscal year ending March 31, 2007.
In addition to the above, Sony also recorded restructuring
charges of 1,291 million yen, 803 million yen and
346 million yen for the fiscal years ended March 31,
2004, 2005 and 2006, respectively, in Japan, which were
primarily personnel related costs included in selling, general
and administrative expenses in the consolidated statements of
income.
Significant restructuring activities included the following:
During the fiscal year ended March 31, 2004, Sony broadened
the scope of its worldwide restructuring of the Music business,
which resulted in restructuring charges totaling
10,691 million yen. Restructuring activities included the
continuation of the shutdown of the CD manufacturing facility in
the U.S. as well as the restructuring of music label
operations and the further rationalization of overhead functions
through staff reductions. The restructuring charges consisted of
personnel related costs of 5,137 million yen, lease
abandonment costs of 1,323 million yen and other related
costs of 4,231 million yen including non-cash asset
impairment and disposal costs. Most of these charges are
included in selling, general and administrative expenses in the
consolidated statements of income. Employees were eliminated
across various employee levels, business functions, operating
units, and geographic regions during this phase of the worldwide
restructuring program.
During the fiscal year ended March 31, 2005, in
continuation of the worldwide restructuring program and in
connection with the establishment of the joint venture with
Bertelsmann AG (Note 5), Sony recorded restructuring
charges totaling 3,025 million yen within the Music
business. Restructuring activities included the shutdown of
certain distribution operations that were no longer required as
a result of the recorded music joint venture with Bertelsmann AG
as well as the further rationalization of overhead functions
through staff reductions. The restructuring charges consisted of
personnel related costs of 883 million yen and other
related costs of 2,142 million yen. These charges are
included in selling, general and administrative expenses in the
consolidated statements of income. Employees were eliminated
across various employee levels, business functions, operating
units, and geographic regions during this phase of the worldwide
restructuring program.
During the fiscal year ended March 31, 2006, the worldwide
restructuring program was completed and Sony recorded additional
restructuring charges totaling 129 million yen, primarily
consisting of other associated restructuring costs.
Restructuring activities included the further shutdown of
certain distribution operations that were no longer required as
a result of the recorded music joint venture with Bertelsmann
AG. These charges are included in selling, general and
administrative expenses in the consolidated statements of income.
All Other (U.S. Entertainment Complex)
As part of its efforts to restructure and eliminate certain
non-core businesses, Sony reached an agreement to sell a
U.S. entertainment complex in March 2006. As a result, Sony
recorded an impairment charge of
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
8,522 million yen. The impairment charge was based on the
negotiated sales price of the complex, and is recorded in loss
on sale, disposal or impairment of assets, net in the
consolidated statements of income.
The changes in the accrued restructuring charges for the fiscal
years ended March 31, 2004, 2005 and 2006 are as follows:
Employee
Non-cash
termination
write-downs
Other associated
benefits
and disposals
costs
Total
(Yen in millions)
Balance at March 31, 2003
14,784
—
5,787
20,571
Restructuring costs
133,367
19,170
15,554
168,091
Non-cash charges
—
(19,170
)
—
(19,170
)
Cash payments
(124,674
)
—
(13,686
)
(138,360
)
Adjustments
1,173
—
333
1,506
Balance at March 31, 2004
24,650
—
7,988
32,638
Restructuring costs
53,563
25,564
10,836
89,963
Non-cash charges
—
(25,564
)
—
(25,564
)
Cash payments
(61,523
)
—
(10,427
)
(71,950
)
Adjustments*
(1,705
)
—
(3,096
)
(4,801
)
Balance at March 31, 2005
14,985
—
5,301
20,286
Restructuring costs
48,255
76,999
13,438
138,692
Non-cash charges
—
(76,999
)
—
(76,999
)
Cash payments
(42,152
)
—
(7,929
)
(50,081
)
Adjustments
(1,227
)
—
3
(1,224
)
Balance at March 31, 2006
19,861
—
10,813
30,674
*
Adjustments primarily consist of the transfer of the accrued
    restructuring charges to SONY BMG, a joint venture with
    Bertelsmann AG (Note 5).
18.
Research and development costs, advertising costs and
    shipping and handling costs
(1)
Research and development costs:
Research and development costs charged to cost of sales for the
fiscal years ended March 31, 2004, 2005 and 2006 were
514,483 million yen, 502,008 million yen and
531,795 million yen, respectively.
(2)
Advertising costs:
Advertising costs included in selling, general and
administrative expenses for the fiscal years ended
March 31, 2004, 2005 and 2006 were 421,433 million
yen, 359,661 million yen and 419,508 million yen,
respectively.
(3)
Shipping and handling costs:
Shipping and handling costs for finished goods included in
selling, general and administrative expenses for the fiscal
years ended March 31, 2004, 2005 and 2006 were
106,590 million yen, 107,983 million yen and
114,500 million yen, respectively, which included the
internal transportation costs of finished goods.
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
19.
Gain on change in interest in subsidiaries and equity
    investees
In January 2004, FeliCa Networks, Inc., whose field of business
is Mobile FeliCa IC chip development and production/sales
licensing and operation of the Mobile FeliCa service platform,
issued 115,000 shares at 100,000 yen per share with a total
value of 11,500 million yen in connection with its private
offering. As a result of this issuance, Sony recorded a gain of
3,364 million yen and provided deferred taxes on this gain.
This issuance reduced Sony's ownership interest from 100%
to 60%.
In addition to the above transaction, for the fiscal year ended
March 31, 2004, Sony recognized 1,506 million yen of
other gains on change in interest in subsidiaries and equity
investees resulting in total gains of 4,870 million yen.
In August 2, 2004, Monex Inc., which provided on-line
security trading services in Japan, and Nikko Beans, Inc.
established Monex Beans Holdings, Inc. by way of share
transfer of the then existing shares of Monex Inc. and Nikko
Beans, Inc.. At this establishment, 1 share of Monex
Beans Holdings, Inc. was allotted to each share of Monex
Inc. and 3.4 shares of Monex Beans Holdings, Inc. were
allotted to each share of Nikko Beans, Inc.. As a result of
this share transfer, Monex Beans Holdings, Inc. issued
2,344,687 shares and Sony recorded a gain of
8,951 million yen and provided deferred taxes on this gain.
This issuance reduced Sony's ownership interest from 29.9%
to 20.1%.
In September 2004, So-net M3 Inc., which provides medical
services via the Internet in Japan, issued 2,800 shares at
850,000 yen per share with a total value of 2,380 million
yen in connection with its initial public offering. SCN, a
parent company of So-net M3 Inc., sold 3,260 shares of
So-net M3 Inc., at 790,500 yen per share with a total value
of 2,577 million yen. In October 2004, SCN sold
740 shares of So-net M3 Inc., at 790,500 yen per share with
a total value of 585 million yen. As a result of these
transactions, Sony recorded a 1,823 million yen gain on
issuance of stock by So-net M3 Inc. and provided deferred
taxes on this gain. In addition, Sony recorded a
2,876 million yen gain on the sale of its shares of So-net
M3 Inc. These transactions reduced Sony's ownership
interest from 90.0% to 74.8%.
In January 2005, DeNA Co., Ltd., whose field of business is the
operation of on-line auction websites in Japan, issued
14,000 shares at 204,600 yen per share with a total
value of 2,864 million yen in connection with its initial
public offering. In March 2005, SCN, which had owned a 27.7%
interest in DeNA Co., Ltd., sold 2,000 shares of DeNA
Co., Ltd. at 204,600 yen per share with a total value of
409 million yen. As a result of these transactions, Sony
recorded a 686 million yen gain on issuance of stock by
DeNA Co., Ltd. and provided deferred taxes on this gain. In
addition, Sony recorded a 76 million yen gain on the sale
of its shares of DeNA Co., Ltd.. These transactions reduced
Sony's ownership interest from 27.7% to 24.8%.
In addition to the above transactions, for the fiscal year ended
March 31, 2005, Sony recognized 1,911 million yen of
other gains on change in interest in subsidiaries and equity
investees resulting in total gains of 16,322 million yen.
In June 2005, SCN sold 17,935 shares of So-net
M3 Inc., at 694,600 yen per share with a total value of
12,458 million yen. As a result of this sale, Sony recorded
a 11,979 million yen gain and provided deferred taxes on
this gain. This sale reduced Sony's ownership interest from
74.8% to 60.8%.
In June 2005, SCN sold 7,000 shares of DeNA Co., Ltd.
at 863,040 yen per share with a total value of
6,041 million yen. In March 2006, DeNA Co., Ltd. issued
14,300 shares at 314,138 yen per share with a total value
of 4,492 million yen in connection with its private
offering. As a result of these transactions, Sony recorded an
821 million yen gain on issuance of stock by DeNA Co., Ltd.
and provided deferred taxes on this gain. In addition, Sony
recorded a 5,817 million yen gain on the sale of its shares
of DeNA Co., Ltd.. These transactions reduced Sony's
ownership interest from 24.8% to 19.1%.
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
In September 2005, Sony Corporation sold 230,000 shares of
Monex Beans Holdings, Inc. at 119,040 yen per share with a total
value of 27,379 million yen. As a result of this sale, Sony
recorded a 20,590 million yen gain and provided deferred
taxes on this gain. This sale reduced Sony's ownership
interest from 20.1% to 10.3%. See Note 5 for more
information on this transaction.
In December 2005, SCN issued 20,000 shares at 320,960 yen
per share with a total value of 6,419 million yen in
connection with its initial public offering. Sony Corporation
and Sony Finance International Inc., which had owned 82.6% and
17.4% interests in SCN, respectively, sold 66,000 shares
and 4,000 shares of SCN, respectively, at 320,960 yen per
share with a total value of 22,467 million yen. In January
2006, Sony Corporation sold 12,000 shares of SCN at 320,960
yen per share with a total value of 3,852 million yen. As a
result of these transactions, Sony recorded a 4,226 million
yen gain on issuance of stock by SCN and provided deferred taxes
on this gain. In addition, Sony recorded a 17,321 million
yen gain on the sale of its shares of SCN. These transactions
reduced Sony's ownership interest from 100% to 60.1%.
In addition to the above transactions, for the fiscal year ended
March 31, 2006, Sony recognized 80 million yen of
other gains on change in interest in subsidiaries and equity
investees resulting in total gains of 60,834 million yen.
These transactions were not part of a broader corporate
reorganization and the reacquisition of such shares was not
contemplated at the time of issuance.
20.
Income taxes
Income before income taxes and income tax expense comprise the
following:
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Income (loss) before income taxes:
Sony Corporation and subsidiaries in Japan
(84,571
)
5,005
243,927
Foreign subsidiaries
228,638
152,202
42,402
144,067
157,207
286,329
Income taxes — Current:
Sony Corporation and subsidiaries in Japan
22,286
23,497
55,154
Foreign subsidiaries
64,933
62,013
41,246
87,219
85,510
96,400
Income taxes — Deferred:
Sony Corporation and subsidiaries in Japan
(32,845
)
4,976
105,938
Foreign subsidiaries
(1,600
)
(74,442
)
(25,823
)
(34,445
)
(69,466
)
80,115
Sony is subjected to a number of different income taxes. Due to
changes in Japanese income tax regulations, a consolidated tax
filing system was introduced on April 1, 2002. Sony applied
to file its return under the consolidated tax filing system
beginning with the fiscal year ended March 31, 2004. Under
the Japanese consolidated tax filing system, a 2% surtax was
imposed only for the fiscal year ended March 31, 2004. As a
result, the statutory tax rate was 43.9% for the fiscal year
ended March 31, 2004.
During the fiscal year ended March 31, 2005, a corporation
size-based enterprise tax was introduced in Japan and the
portion of enterprise tax subject to income was reduced. As a
result, the statutory tax rate for
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
the fiscal year ended March 31, 2005 was approximately 41%
effective April 1, 2004. The effect of the change in the
tax rate on the balance of deferred tax assets and liabilities
was insignificant.
Reconciliation of the differences between the statutory tax rate
and the effective income tax rate is as follows:
Fiscal Year Ended
March 31
2004
2005
2006
Statutory tax rate
43.9
%
41.0
%
41.0
%
Increase (reduction) in taxes resulting from:
Income tax credits
(2.4
)
(0.1
)
(1.3
)
Change in valuation allowances
6.5
(22.7
)
21.6
Increase (decrease) in deferred tax liabilities on undistributed
    earnings of foreign subsidiaries
(9.2
)
(4.0
)
4.5
Lower tax rate applied to life and non-life insurance business
    in Japan
(2.6
)
(1.9
)
(3.2
)
Other
0.4
(2.1
)
(1.0
)
Effective income tax rate
36.6
%
10.2
%
61.6
%
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The significant components of deferred tax assets and
liabilities are as follows:
March 31
2005
2006
(Yen in millions)
Deferred tax assets:
Operating loss carryforwards for tax purposes
193,212
146,206
Accrued pension and severance costs
159,610
95,226
Film costs
56,746
51,937
Warranty reserve and accrued expenses
56,551
52,008
Future insurance policy benefits
36,654
24,785
Accrued bonus
34,536
27,353
Inventory — intercompany profits and write-down
30,270
47,578
Depreciation
15,320
34,052
Tax credit carryforwards
8,552
39,443
Reserve for doubtful accounts
6,574
7,479
Impairment of investments
52,501
52,658
Deferred revenue in the Pictures segment
12,947
16,713
Other
88,077
144,337
Gross deferred tax assets
751,550
739,775
Less: Valuation allowance
(89,110
)
(150,899
)
Total deferred tax assets
662,440
588,876
Deferred tax liabilities:
Insurance acquisition costs
(135,083
)
(136,919
)
Unbilled accounts receivable in the Pictures segment
(57,314
)
(49,953
)
Unrealized gains on securities
(41,564
)
(63,739
)
Intangible assets acquired through stock exchange offerings
(35,418
)
(34,627
)
Undistributed earnings of foreign subsidiaries
(30,865
)
(66,719
)
Gain on securities contribution to employee retirement benefit
    trust
(6,184
)
(3,992
)
Other
(58,714
)
(65,151
)
Gross deferred tax liabilities
(365,142
)
(421,100
)
Net deferred tax assets
297,298
167,776
The valuation allowance mainly relates to deferred tax assets of
Sony Corporation and certain consolidated subsidiaries with
operating loss carryforwards and tax credit carryforwards for
tax purposes that are not expected to be realized. The net
changes in the total valuation allowance were an increase of
11,509 million yen for the fiscal year ended March 31,
2004, a decrease of 38,467 million yen for the fiscal year
ended March 31, 2005 and an increase of 61,789 million
yen for the fiscal year ended March 31, 2006. The increase
during the fiscal year ended March 31,2006 resulted from a
provision for additional valuation allowances due to continued
losses recorded by Sony Corporation and certain subsidiaries
mainly in the electronics business.
As a result of operating losses in the past, certain
consolidated subsidiaries in the U.S. had recognized
valuation allowances against deferred tax assets for
U.S. federal and certain state taxes. However, because of
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
improved operating results in recent years and a sound outlook
for the future operating performance of certain consolidated
subsidiaries in the U.S., Sony reversed 67,892 million yen
of valuation allowance, resulting in a reduction of income tax
expenses for the fiscal year ended March 31, 2005.
Tax benefits which have been realized through utilization of
operating loss carryforwards for the fiscal years ended
March 31, 2004, 2005 and 2006 were approximately
12,000 million yen, 30,000 million yen and
42,000 million yen, respectively.
Net deferred tax assets are included in the consolidated balance
sheets as follows:
March 31
2005
2006
(Yen in millions)
Current assets — Deferred income taxes
141,154
221,311
Other assets — Deferred income taxes
240,396
178,751
Current liabilities — Other
(12,025
)
(15,789
)
Long-term liabilities — Deferred income taxes
(72,227
)
(216,497
)
Net deferred tax assets
297,298
167,776
At March 31, 2006, no deferred income taxes have been
provided on undistributed earnings of foreign subsidiaries not
expected to be remitted in the foreseeable future totaling
1,065,809 million yen, and on the gain of
61,544 million yen on a subsidiary's sale of stock
arising from the issuance of common stock of Sony Music
Entertainment (Japan) Inc. in a public offering to third parties
in November 1991, as Sony does not anticipate any significant
tax consequences on possible future disposition of its
investment based on its tax planning strategies. The
unrecognized deferred tax liabilities as of March 31, 2006
for such temporary differences amounted to 228,546 million
yen.
Operating loss carryforwards for corporate income tax and local
income tax purposes of Sony Corporation and certain consolidated
subsidiaries in Japan at March 31, 2006 amounted to
121,530 million yen and 484,397 million yen,
respectively, which are available as an offset against future
taxable income. Deferred tax asset on the operating loss
carryforwards for corporate income tax and local income tax in
Japan are calculated by multiplying approximately 28% and 13%,
respectively.
Operating loss carryforwards for tax purposes of certain foreign
consolidated subsidiaries at March 31, 2006 amounted to
173,624 million yen.
With the exception of 111,265 million yen with no
expiration period, total available operating loss carryforwards
expire at various dates primarily up to 7 years.
Tax credit carryforwards for tax purposes at March 31, 2006
amounted to 39,443 million yen. With the exception of
9,116 million yen with no expiration period, total
available tax credit carryforwards expire at various dates
primarily up to 9 years.
Realization of deferred tax assets related to loss carryforwards
and tax credit carryforwards is dependent on whether sufficient
taxable income will be generated prior to expiration period.
Although realization is not assured, management believes it is
more likely than not that all of the deferred tax assets, less
valuation allowance, will be realized. The amount of such net
deferred tax assets considered realizable, however, could be
changed in the near term if estimates of future taxable income
during the carryforward period are changed.
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
21.
Reconciliation of the differences between basic and
    diluted net income per share ("EPS")
(1)
Income before cumulative effect of accounting changes and net
    income allocated to each class of stock:
Fiscal Year Ended March 31,
2004
2005
2006
(Yen in millions)
Income before cumulative effect of an accounting change
    allocated to common stock
90,756
168,498
122,308
Income allocated to subsidiary tracking stock
(128
)
53
1,308
Income before cumulative effect of an accounting change
90,628
168,551
123,616
Net income allocated to common stock
88,639
163,785
122,308
Net income allocated to subsidiary tracking stock
(128
)
53
1,308
Net income
88,511
163,838
123,616
As discussed in Note 2, the earnings allocated to
subsidiary tracking stock were determined based on the
subsidiary tracking stockholders' economic interest. The
accumulated losses of SCN (the subsidiary tracking stock entity
as discussed in Note 15) used for computation of earnings
per share attributable to subsidiary tracking stock were
1,764 million yen and 1,358 million yen as of
March 31, 2004 and 2005, respectively.
As discussed in Notes 2 and 15, on October 26,
2005, the Board of Directors of Sony Corporation decided to
terminate all shares of subsidiary tracking stock and convert
such shares to shares of Sony common stock at a conversion rate
of 1.114 share of Sony common stock per share of subsidiary
tracking stock. All shares of subsidiary tracking stock were
converted to shares of Sony common stock on December 1,
2005. As a result of the conversion, the earnings allocated to
common stock for the fiscal year ended March 31, 2006 are
calculated by subtracting the earnings allocated to the
subsidiary tracking stock for the eight months ended
November 30, 2005. The accumulated gains of SCN used for
computation of earnings per share attributable to subsidiary
tracking stock were 8,578 million yen as of
November 30, 2005.
(2)
EPS attributable to common stock:
Reconciliation of the differences between basic and diluted EPS
for the fiscal years ended March 31, 2004, 2005 and 2006 is
as follows:
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Income before cumulative effect of an accounting change
    allocated to common stock
90,756
168,498
122,308
Effect of dilutive securities:
Convertible bonds
2,260
1,209
—
Subsidiary tracking stock
—
(0
)
(29
)
Income before cumulative effect of an accounting change
    allocated to common stock for diluted EPS computation
93,016
169,707
122,279
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Thousands of shares
Weighted-average shares
923,650
931,125
997,781
Effect of dilutive securities:
Warrants and stock acquisition rights
48
61
915
Convertible bonds
121,120
112,589
47,468
Weighted-average shares for diluted EPS computation
1,044,818
1,043,775
1,046,164
Yen
Basic EPS
98.26
180.96
122.58
Diluted EPS
89.03
162.59
116.88
Potential common stock upon the exercise of warrants and stock
acquisition rights, which were excluded from the computation of
diluted EPS since they have an exercise price in excess of the
average market value of Sony's common stock during the
fiscal year, were 6,796 thousand shares,
7,987 thousand shares and 10,483 thousand shares for
the fiscal years ended March 31, 2004, 2005 and 2006,
respectively.
Warrants and stock acquisition rights of subsidiary tracking
stock for the fiscal year ended March 31, 2004 which have a
potentially dilutive effect by decreasing net income allocated
to common stock, were excluded from the computation of diluted
EPS since they did not have a dilutive effect.
Stock options issued by affiliated companies accounted for under
the equity method for the fiscal years ended March 31,
2004, 2005 and 2006, which have a potentially dilutive effect by
decreasing net income allocated to common stock, were excluded
from the computation of diluted EPS since such stock options did
not have a dilutive effect.
On May 1, 2003, Sony implemented a share exchange as a
result of which CIS Corporation became a wholly-owned
subsidiary. As a result of this share exchange, Sony issued
1,088 thousand shares. The shares were included in the
computation of basic and diluted EPS.
As a result of the adoption of EITF Issue No. 04-8,
Sony's diluted EPS of income before cumulative effect of an
accounting change for the fiscal year ended March 31, 2004
was restated in the above table (Note 2).
(3)
EPS attributable to subsidiary tracking stock:
Weighted-average shares used for computation of EPS attributable
to subsidiary tracking stock for the fiscal years ended
March 31, 2004 and 2005 were 3,072 thousand shares. At
March 31, 2004 and 2005, there were no potentially dilutive
securities for net income per subsidiary tracking stock, as
tracking stock shares outstanding were increased upon potential
subsidiary tracking stocks' being exercised, which resulted
in a proportionate increase in earnings allocated to the
subsidiary tracking stock. However, they could have a dilutive
effect on net income per common stock, as earnings allocated to
the common stock would be decreased.
As discussed, all shares of subsidiary tracking stock were
converted to shares of Sony common stock on December 1,
2005. As a result of the conversion, earnings per share of the
subsidiary tracking stock for the fiscal year ended
March 31, 2006 are not presented.
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
22.
Variable interest entities
Sony has, from time to time, entered into various arrangements
with VIEs. These arrangements consist of facilities which
provide for the leasing of certain property, the financing of
film production, the implementation of a stock option plan for
Japanese employees and the U.S. based music publishing
business. As described in Note 2, the FASB issued
FIN No. 46, which requires the consolidation or
disclosure of VIEs. The VIEs that have been consolidated by Sony
are described as follows:
Sony leases the headquarters of its U.S. subsidiary from a
VIE, which has been consolidated by Sony since July 1,
2003. Upon consolidation of the VIE, assets and liabilities
increased by 25,277 million yen and 27,035 million
yen, respectively, and a cumulative effect of accounting change
of 1,729 million yen was charged to net income with no tax
effect. Sony has the option to purchase the building at any time
during the lease term which expires in December 2008 for
29,942 million yen. The debt held by the VIE is unsecured.
At the end of the lease term, Sony has agreed to either renew
the lease, purchase the building or remarket it to a third party
on behalf of the owner. If the sales price is less than
29,942 million yen, Sony is obligated to make up the lesser
of the shortfall or 25,128 million yen.
A subsidiary in the Pictures segment entered into a joint
venture agreement with a VIE for the purpose of funding the
acquisition of certain international film rights. The subsidiary
is required to distribute the product internationally, for
contractually defined fees determined as percentages of gross
receipts, as defined, and is responsible for all distribution
and marketing expenses, which are recouped from such
distribution fees. The VIE was capitalized with total financing
of 47,673 million yen. Of this amount, 1,292 million
yen was contributed by the subsidiary, 11,155 million yen
was provided by unrelated third party investors and the
remaining funding is provided through a 35,226 million yen
bank credit facility. On July 1, 2003, Sony consolidated
this entity. Upon consolidation of the VIE, assets and
liabilities increased by 10,179 million yen and
10,586 million yen, respectively, and a cumulative effect
of accounting change of 388 million yen was charged to net
income with no tax effect. As of March 31, 2006, there were
no amounts outstanding under the bank credit facility. Under the
agreement, the subsidiary's 1,292 million yen equity
investment is the last equity to be repaid. Additionally, it
must pay to the third party investors up to 2,231 million
yen of any losses out of a portion of its distribution fees. Any
losses incurred by the VIE over and above 3,523 million yen
will be shared by the other investors. The subsidiary acquired
the international distribution rights, as defined, to twelve
pictures meeting certain minimum requirements within the time
period provided in the agreement.
Sony utilized a VIE to implement a SAR plan (Note 16) for
selected Japanese employees. The VIE has been consolidated by
Sony since its establishment. With respect to this entity, there
was no impact to Sony's results of operations and financial
position upon the adoption of FIN No. 46. Under the
terms of the SAR plan, upon exercise, Japanese employees receive
cash equal to the amount that the market price of Sony
Corporation's common stock exceeds the strike price of the
plan. In order to minimize cash flow exposure associated with
the plan, Sony held treasury stock through the VIE. The VIE
purchased the common stock with funding provided by the
employee's cash contribution and a bank loan. The SAR plan
was terminated during the fiscal year ended March 31, 2006
and there were no amounts outstanding under the bank loan at
March 31, 2006.
Sony's U.S. based music publishing subsidiary is a
joint venture with a third party investor that was determined to
be a VIE. The subsidiary owns and acquires rights to musical
compositions, exploits and markets these compositions and
receives royalties or fees for their use. Under the terms of the
joint venture, Sony has the obligation to fund any working
capital deficits. In addition, the third party investor receives
a guaranteed annual dividend of up to 7 million
U.S. dollars and has the option to put its 50% ownership
interest to Sony in exchange for a payment of 200 million
U.S. dollars. At March 31, 2006, the fair value of the
third party's 50% interest exceeded 200 million
U.S. dollars.
F-68
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
VIEs in which Sony holds a significant variable interest but is
not the primary beneficiary are described as follows:
As described in Note 5, on April 8, 2005, a consortium
led by SCA and its equity partners completed the acquisition of
MGM. Sony has reviewed the investment and determined that MGM
Holdings is a VIE. However, MGM Holdings is not consolidated but
accounted for under the equity method as Sony is not the primary
beneficiary of this VIE as Sony absorbs less than 50% of
expected losses and does not have the right to receive greater
than 50% of expected residual returns. MGM continues to operate
as a private company and continues to engage in the production
and distribution of film content. Through its current ownership
of MGM Holdings' common stock, Sony records 45% of MGM
Holdings' net income (loss) as equity in net income of
affiliated companies.
On December 30, 2005, a subsidiary in the Pictures segment
entered into a production/
co-financing
agreement
with a VIE to co-finance 11 films scheduled to be released over
the following 15 months. The subsidiary will receive
approximately 400 million U.S. dollars over the term
of the agreement. The subsidiary is responsible for marketing
and distribution of the product through its global distribution
channels. The VIE shares in the net profits of the films after
the subsidiary recoups a distribution fee, its marketing and
distribution expenses, and third party participation and
residual costs. As of March 31, 2006, only one co-financed
film has been released by the company. The subsidiary did not
make any equity investment in the VIE nor issue any guarantees
with respect to the VIE. In April 2006, the subsidiary entered
into a second production/co-financing agreement with a VIE to
co-finance an additional 11 films scheduled to be released over
the following 24 months. The subsidiary will receive
approximately 330 million U.S. dollars over the term
of the agreement. Similar to the first agreement, the subsidiary
is responsible for marketing and distribution of the product
through its global distribution channels. The VIE shares in the
net profits of the films after the subsidiary recoups a
distribution fee, its marketing and distribution expenses, and
third party participation and residual costs.
23.
Commitments and contingent liabilities
(1)
Commitments:
A.
Purchase Commitments
Commitments outstanding at March 31, 2006 amounted to
    285,774 million yen. The major components of these
    commitments are as follows:
In the ordinary course of business, Sony makes commitments for
    the purchase of property, plant and equipment. As of
    March 31, 2006, such commitments outstanding were
    69,286 million yen.
Certain subsidiaries in the Pictures segment have entered into
    agreements with creative talent for the development and
    production of films and television programming as well as
    agreements with third parties to acquire completed films, or
    certain rights therein. These agreements cover various periods
    through March 31, 2008. As of March 31, 2006, these
    subsidiaries were committed to make payments under such
    contracts of 43,659 million yen.
A subsidiary in the Pictures segment has also entered into a
    distribution agreement with a third party to distribute, in
    certain markets and territories, all feature length films
    produced or acquired by the third party during the term of the
    agreement. The distribution agreement expires on
    December 31, 2006 if a minimum of 36 films have been
    delivered as of that date. If 36 films have not been delivered
    by December 31, 2006, the distribution agreement expires on
    the earlier of the delivery of the 36th film or
    May 25, 2007. It is estimated that the third party will
    produce or acquire a total of 43 films under the distribution
    agreement. The subsidiary has the right to distribute the films
    for 15 years from the initial theatrical release of the
    film. Under the terms of the distribution agreement,
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
the subsidiary must fund a portion of the production cost and is
    responsible for all distribution and marketing expenses. As of
    March 31, 2006, 34 films have been released or funded by
    the subsidiary. The subsidiary's estimated commitment to
    fund the production of the remaining films under this agreement
    is 33,077 million yen.
In April 2005, Sony Corporation has entered into a partnership
    program contract with Fédération Internationale de
    Football Association ("FIFA"). Through this program
    Sony Corporation will be able to exercise various rights as an
    official sponsor of FIFA events including the FIFA World
    Cup
tm*
from 2007 to 2014. As of March 31, 2006, Sony Corporation
    was committed to make payments under such contract of
    34,639 million yen.
The schedule of the aggregate amounts of year-by-year payment of
    purchase commitments during the next five years and thereafter
    is as follows:
(Yen in
Fiscal Year Ending March 31,
millions)
2007
139,130
2008
44,538
2009
46,966
2010
6,003
2011
6,553
Thereafter
42,584
Total
285,774
B.
Loan Commitments
Subsidiaries in the Financial Services segment have entered into
    loan agreements with their customers in accordance with the
    condition of the contracts. As of March 31, 2006, the total
    unused portion of the line of credit extended under these
    contracts was 326,691 million yen.
In August 2004, Sony and Bertelsmann AG combined their recorded
    music businesses in a joint venture. In connection with the
    establishment of the SONY BMG joint venture, Sony and
    Bertelsmann AG have entered into a 5 year Revolving Credit
    Agreement with the joint venture. Under the terms of the Credit
    Agreement, Sony and Bertelsmann have each agreed to provide
    one-half of the funding. The Credit Agreement, which matures on
    August 5, 2009, provides for a base commitment of
    300 million U.S. dollars and additional incremental
    borrowings of up to 150 million U.S. dollars.
As of March 31, 2006, the joint venture had no borrowings
    outstanding under the Credit Agreement. Accordingly, Sony's
    outstanding commitment under the Credit Agreement as of
    March 31, 2006 was 26,325 million yen.
The aggregate amounts of future year-by-year payments for these
    loan commitments cannot be determined.
*
FIFA World
    Cup
tm
is a registered trademark of FIFA.
F-70
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(2)
Contingent liabilities:
Sony had contingent liabilities including guarantees given in
the ordinary course of business, which amounted to
21,072 million yen at March 31, 2006. The major
components of the contingent liabilities are as follows:
Sony has issued loan guarantees to related parties comprised of
affiliated companies accounted for under the equity method and
unconsolidated subsidiaries. The terms of these guarantees are
mainly within 1 year. Sony would be required to perform
under these guarantees upon non-performance of the primary
borrowers. The contingent liability related to these guarantees
was 9,325 million yen and was not recorded on the
consolidated balance sheet as of March 31, 2006.
The European Commission ("EC") has issued the Waste
Electrical and Electronic Equipment ("WEEE") directive
in February 2003. The WEEE directive generally requires
electronics producers after August 2005 to be responsible for
financing the cost for collection, treatment, recovery and safe
disposal of waste products. In some member states of the
European Union ("EU") the directive has been
transposed into national legislation subject to which Sony
recognizes the liability for obligations associated with WEEE.
During the fiscal year ended March 31, 2006, the cost that
has been accrued in respect to the above mentioned WEEE
responsibilities was not material to Sony's results of
operations and financial position. While the cost of this WEEE
directive to Sony cannot be determined before the regulation is
finally adopted in all individual member states that have to
transpose the directive into national legislation, Sony
continues to evaluate the impact of this regulation.
Sony has agreed to indemnify certain third parties against tax
losses resulting from transactions entered into in the normal
course of business. The maximum amount of potential future
payments under these guarantees cannot be estimated at this
time. These guarantees were not recorded on the consolidated
balance sheet as of March 31, 2006.
Sony Corporation and certain of its subsidiaries are defendants
in several pending lawsuits. However, based upon the information
currently available to both Sony and its legal counsel,
management of Sony believes that damages from such lawsuits, if
any, would not have a material effect on Sony's
consolidated financial statements.
The changes in product warranty liability for the fiscal years
ended March 31, 2005 and 2006 are as follows:
Fiscal Year Ended
March 31,
2005
2006
(Yen in millions)
Balance at beginning of the fiscal year
50,670
44,919
Additional liabilities for warranties
33,493
48,471
Settlements (in cash or in kind)
(40,358
)
(45,162
)
Changes in estimate for pre-existing warranty reserve
(751
)
70
Translation adjustment
1,865
1,172
Balance at end of the fiscal year
44,919
49,470
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Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
24.
Business segment information
Effective for the fiscal year ended March 31, 2006, Sony
has partly changed its business segment configuration as
described below.
As of August 1, 2004, Sony and Bertelsmann AG combined
their recorded music businesses in a joint venture. In
connection with the establishment of this joint venture, the
non-Japan based disc manufacturing and physical distribution
businesses, formerly included within the Music segment, have
been reclassified to the "Other" category in the
Electronics segment. In addition, effective April 1, 2005,
a similar change was made with respect to the Japan based disc
manufacturing businesses. Results for the fiscal year ended
March 31, 2004 and 2005 in the Electronics segment have
been restated to account for these reclassifications. As a
result of these changes in the Music segment, Sony no longer
breaks out the Music segment as a reportable segment as it no
longer meets the materiality threshold. Effective April 1,
2005, results for the Music segment are included within All
Other. Accordingly, results for the fiscal year ended
March 31, 2004 and 2005 in the Electronics segment and All
Other have been restated to conform to the presentation for the
fiscal year ended March 31, 2006.
In July 2004, in order to establish a more efficient and
coordinated semiconductor supply structure, the Sony group has
integrated its semiconductor manufacturing business by
transferring Sony Computer Entertainment's semiconductor
manufacturing operation from the Game segment to the Electronics
segment. As a result of this transfer, sales revenue and
expenditures associated with this operation are now recorded
within the "Semiconductor" category in the Electronics
segment. The results for the fiscal year ended March 31,
2004 and the three months ended June 30, 2004 have not been
restated as such comparable figures cannot be practically
obtained given that it was not operated as a separate line
business within the Game segment. This integration of the
semiconductor manufacturing businesses is a part of Sony's
semiconductor strategy of utilizing semiconductor technologies
and manufacturing equipment originally developed or designed for
the Game businesses within the Sony group as a whole.
The Electronics segment designs, develops, manufactures and
distributes audio-visual, informational and communicative
equipment, instruments and devices throughout the world. The
Game segment designs, develops and sells PlayStation,
PlayStation 2 and PlayStation Portable game consoles and related
software mainly in Japan, the United States of America and
Europe, and licenses to third party software developers. The
Pictures segment develops, produces and manufactures image-based
software, including film, video, and television mainly in the
United States of America, and markets, distributes and
broadcasts in the worldwide market. The Financial Services
segment represents primarily individual life insurance and
non-life insurance businesses in the Japanese market, leasing
and credit financing businesses and bank business in Japan. All
Other consists of various operating activities, primarily
including a business focused on network service business
including Internet-related services, an animation production and
marketing business, an imported general merchandise retail
business, an advertising agency business in Japan, and the Music
business which were formerly reported as a reportable segment,
described above. Sony's products and services are generally
unique to a single operating segment.
The operating segments reported below are the segments of Sony
for which separate financial information is available and for
which operating profit or loss amounts are evaluated regularly
by executive management in deciding how to allocate resources
and in assessing performance.
F-72
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SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Business segments -
Sales and operating revenue:
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Sales and operating revenue:
Electronics —
Customers
4,858,631
4,806,494
4,763,555
Intersegment
228,834
260,339
386,922
Total
5,087,465
5,066,833
5,150,477
Game —
Customers
753,732
702,524
918,251
Intersegment
26,488
27,230
40,368
Total
780,220
729,754
958,619
Pictures —
Customers
756,370
733,677
745,859
Intersegment
—
—
—
Total
756,370
733,677
745,859
Financial Services —
Customers
565,752
537,715
720,566
Intersegment
27,792
22,842
22,649
Total
593,544
560,557
743,215
All Other —
Customers
561,906
379,206
327,205
Intersegment
100,903
80,688
81,676
Total
662,809
459,894
408,881
Elimination
(384,017
)
(391,099
)
(531,615
)
Consolidated total
7,496,391
7,159,616
7,475,436
Electronics intersegment amounts primarily consist of
transactions with the Game segment, Pictures segment and All
Other. All Other intersegment amounts primarily consist of
transactions with the Electronics and Game segments.
F-73
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Segment profit or loss:
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Operating income (loss):
Electronics
(8,082
)
(34,273
)
(30,930
)
Game
67,578
43,170
8,747
Pictures
35,230
63,899
27,436
Financial Services
55,161
55,490
188,323
All Other
(16,225
)
4,188
16,183
Total
133,662
132,474
209,759
Elimination
12,658
14,016
13,786
Unallocated amounts:
Corporate expenses
(47,418
)
(32,571
)
(32,290
)
Consolidated operating income
98,902
113,919
191,255
Other income
122,290
97,623
153,616
Other expenses
(77,125
)
(54,335
)
(58,542
)
Consolidated income before income taxes
144,067
157,207
286,329
Operating income is sales and operating revenue less costs and
operating expenses.
Assets:
March 31
2004
2005
2006
(Yen in millions)
Total assets:
Electronics
3,036,404
3,476,465
3,548,720
Game
684,226
482,037
520,394
Pictures
856,517
863,056
1,029,907
Financial Services
3,475,039
3,885,517
4,565,607
All Other
763,911
577,733
617,868
Total
8,816,097
9,284,808
10,282,496
Elimination
(282,057
)
(398,074
)
(361,392
)
Corporate assets
556,622
612,366
686,649
Consolidated total
9,090,662
9,499,100
10,607,753
Unallocated corporate assets consist primarily of cash and cash
equivalents, securities investments and property, plant and
equipment maintained for general corporate purposes.
F-74
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Other significant items:
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Depreciation and amortization:
Electronics
214,400
276,704
304,561
Game
57,256
16,504
5,087
Pictures
7,844
5,598
7,401
Financial Services, including deferred insurance acquisition
    costs
56,586
52,788
47,736
All Other
26,066
17,012
12,755
Total
362,152
368,606
377,540
Corporate
4,117
4,259
4,303
Consolidated total
366,269
372,865
381,843
Capital expenditures for segment assets:
Electronics
253,621
312,216
328,625
Game
100,360
18,824
8,405
Pictures
6,013
5,808
10,097
Financial Services
4,618
3,845
4,456
All Other
12,134
7,928
4,186
Total
376,746
348,621
355,769
Corporate
1,518
8,197
28,578
Consolidated total
378,264
356,818
384,347
The capital expenditures in the above table represent the
additions to fixed assets of each segment.
F-75
Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table is a breakdown of Electronics sales and
operating revenue to external customers by product category. The
Electronics segment is managed as a single operating segment by
Sony's management. Effective for the fiscal year ended
March 31, 2006, Sony has partly changed its product
category configuration. The main change is that the
professional-use projector product group has been moved from
"Televisions" to "Information and
Communications". Accordingly, sales and operating revenue
for the fiscal years ended March 31, 2004 and 2005 have
been restated to conform to the presentation for the fiscal year
ended March 31, 2006.
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Audio
675,496
571,864
536,187
Video
949,320
1,036,328
1,021,325
Televisions
884,600
921,195
927,769
Information and Communications
878,855
816,150
842,537
Semiconductors
253,237
246,314
240,771
Components
623,799
619,477
656,768
Other
593,324
595,166
538,198
Total
4,858,631
4,806,494
4,763,555
Geographic information -
Sales and operating revenue which are attributed to countries
based on location of customers for the fiscal years ended
March 31, 2004, 2005 and 2006 and long-lived assets as of
March 31, 2004, 2005 and 2006 are as follows:
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Sales and operating revenue:
Japan
2,220,747
2,100,793
2,168,723
U.S.A.
2,121,110
1,977,310
1,957,644
Europe
1,765,053
1,612,536
1,715,704
Other
1,389,481
1,468,977
1,633,365
Total
7,496,391
7,159,616
7,475,436
March 31
2004
2005
2006
(Yen in millions)
Long-lived assets:
Japan
1,430,443
1,414,632
1,449,997
U.S.A.
671,534
662,120
757,055
Europe
211,147
183,620
165,352
Other
133,640
144,896
159,647
Total
2,446,764
2,405,268
2,532,051
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Table of Contents
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
There are not any individually material countries with respect
to the sales and operating revenue and long-lived assets
included in Europe and Other areas.
Transfers between reportable business or geographic segments are
made at arms-length prices.
There are no sales and operating revenue with a single major
external customer for the fiscal years ended March 31,
2004, 2005 and 2006.
The following information shows sales and operating revenue and
operating income by geographic origin for the fiscal years ended
March 31, 2004, 2005 and 2006. In addition to the
disclosure requirements under FAS No. 131, Sony
discloses this supplemental information in accordance with
disclosure requirements of the Japanese Securities and Exchange
Law, to which Sony, as a Japanese public company, is subject.
Fiscal Year Ended March 31
2004
2005
2006
(Yen in millions)
Sales and operating revenue:
Japan —
Customers
2,352,923
2,249,548
2,253,275
Intersegment
2,514,698
2,575,093
3,264,281
Total
4,867,621
4,824,641
5,517,556
U.S.A. —
Customers
2,341,304
2,166,323
2,197,304
Intersegment
198,450
235,362
279,203
Total
2,539,754
2,401,685
2,476,507
Europe —
Customers
1,647,694
1,524,182
1,575,779
Intersegment
66,950
52,417
50,400
Total
1,714,644
1,576,599
1,626,179
Other —
Customers
1,154,470
1,219,563
1,449,078
Intersegment
813,798
804,721
1,038,827
Total
1,968,268
2,024,284
2,487,905
Elimination
(3,593,896
)
(3,667,593
)
(4,632,711
)
Consolidated total
7,496,391
7,159,616
7,475,436
Operating income:
Japan
(69,875
)
(765
)
199,491
U.S.A.
85,290
72,414
11,291
Europe
78,822
12,186
(25,171
)
Other
70,543
58,554
41,953
Corporate and elimination
(65,878
)
(28,470
)
(36,309
)
Consolidated total
98,902
113,919
191,255
F-77
Table of Contents
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Additions
Balance at
charged to
Balance
Beginning
costs and
Deductions
Other
at End
of Period
expenses
(Note 1)
(Note 2)
of Period
(Yen in millions)
Fiscal Year Ended March 31, 2004:
Allowance for doubtful accounts and sales returns
110,494
78,323
(65,281
)
(10,862
)
112,674
Fiscal Year Ended March 31, 2005:
Allowance for doubtful accounts and sales returns
112,674
56,863
(84,507
)
2,679
87,709
Fiscal Year Ended March 31, 2006:
Allowance for doubtful accounts and sales returns
87,709
52,422
(56,772
)
6,204
89,563
Notes:
1.
Amounts written off.
2.
Translation adjustment.
Balance at
Balance
Beginning
Other
at End
of Period
Additions
Deductions
(Note 1)
of Period
Fiscal Year Ended March 31, 2004:
Valuation allowance - Deferred tax assets
116,068
63,936
(39,199
)
(13,228
)
127,577
Fiscal Year Ended March 31, 2005:
Valuation allowance - Deferred tax assets
127,577
67,889
(104,670
)
(1,686
)
89,110
Fiscal Year Ended March 31, 2006:
Valuation allowance - Deferred tax assets
89,110
72,340
(11,234
)
683
150,899
Note:
1.
Translation adjustment.
F-78