Sony Group Corp (SONY) 6-K, filed Aug 11, 2020

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of August 2020

Commission File Number: 001-06439

SONY CORPORATION

(Translation of registrant’s name into English)

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

(Address of principal executive offices)

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

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

Form 20-F X	Form 40-F

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

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

SIGNATURE

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

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

Date: August 11, 2020

Quarterly Securities Report

For the three months ended June 30, 2020

(TRANSLATION)

SonyCorporation

CONTENTS

	Page
Note for readers<br> of this English translation		1
Cautionary<br> Statement		1
<br>I Corporate Information		3
(1) Selected Consolidated Financial Data		3
(2) Business Overview		4
<br>II State of Business		5
(1) Risk Factors		5
(2) Management’s Discussion<br> and Analysis of Financial Condition, Results of Operations and Status of Cash Flows		6
(3) Material Contracts		16
III Company Information		17
(1) Information on the Company’s<br> Shares		17
(2) Directors and Corporate Executive Officers		21
IV Financial Statements		22
(1) Consolidated Financial Statements		23
(2) Other Information		50

Note for readers of this English translation

On August 11, 2020, Sony Corporation (the “Company” or “Sony Corporation” and together with its consolidated subsidiaries, “Sony” or “Sony Group”) filed its Japanese-language Quarterly Securities Report (Shihanki Houkokusho) for the three months ended June 30, 2020 with the Director-General of the Kanto Local Finance Bureau in Japan pursuant to the Financial Instruments and Exchange Act of Japan. This document is an English translation of the Quarterly Securities Report in its entirety, except for (i) information that had been previously filed with or submitted to the U.S. Securities and Exchange Commission (the “SEC”) in a Form 20-F, Form 6-K or any other form and (ii) a description of differences between generally accepted accounting principles in the U.S. (“U.S. GAAP”) and generally accepted accounting principles in Japan (“J-GAAP”), which are required to be described in the Quarterly Securities Report under the Financial Instruments and Exchange Act of Japan if the Company prepares its financial statements in conformity with accounting principles other than J-GAAP.

Cautionary Statement

Statements made in this 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,” “intend,” “seek,” “may,” “might,” “could,” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors 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 investors should not place undue reliance on them. Investors 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)	Sony’s ability to maintain product quality and customer satisfaction with its products and services;<br>
(ii)	Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient<br>cost reductions for, its products and services, including image sensors, game and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and<br>service introductions, rapid development in technology and subjective and changing customer preferences;
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(iii)	Sony’s ability to implement successful hardware, software, and content integration strategies, and to<br>develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms;
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(iv)	the effectiveness of Sony’s strategies and their execution, including but not limited to the success<br>of Sony’s acquisitions, joint ventures, investments, capital expenditures, restructurings and other strategic initiatives;
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(v)	changes in laws, regulations and government policies in the markets in which Sony and its third-party<br>suppliers, service providers and business partners operate, including those related to taxation, as well as growing consumer focus on corporate social responsibility;
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(vi)	Sony’s continued ability to identify the products, services and market trends with significant growth<br>potential, to devote sufficient resources to research and development, to prioritize investments and capital expenditures correctly and to recoup its investments and capital expenditures, including those required for technology development and<br>product capacity;
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(vii)	Sony’s reliance on external business partners, including for the procurement of parts, components,<br>software and network services for its products or services, the manufacturing, marketing and distribution of its products, and its other business operations;
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(viii)	the global economic and political environment in which Sony operates and the economic and political<br>conditions in Sony’s markets, particularly levels of consumer spending;
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(ix)	Sony’s ability to meet operational and liquidity needs as a result of significant volatility and<br>disruption in the global financial markets or a ratings downgrade;
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(x)	Sony’s ability to forecast demands, manage timely procurement and control inventories;<br>
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(xi)	foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in<br>which Sony makes significant sales and incurs production costs, or in which Sony’s assets, liabilities and operating results are denominated;
(xii)	Sony’s ability to recruit, retain and maintain productive relations with highly skilled personnel;<br>
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(xiii)	Sony’s ability to prevent unauthorized use or theft of intellectual property rights, to obtain or<br>renew licenses relating to intellectual property rights and to defend itself against claims that its products or services infringe the intellectual property rights owned by others;
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(xiv)	the impact of changes in interest rates and unfavorable conditions or developments (including market<br>fluctuations or volatility) in the Japanese equity markets on the revenue and operating income of the Financial Services segment;
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(xv)	shifts in customer demand for financial services such as life insurance and Sony’s ability to conduct<br>successful asset liability management in the Financial Services segment;
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(xvi)	risks related to catastrophic disasters or similar events;
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(xvii)	the ability of Sony, its third-party service providers or business partners to anticipate and manage<br>cybersecurity risk, including the risk of unauthorized access to Sony’s business information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and<br>
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(xviii)	the outcome of pending and/or future legal and/or regulatory proceedings.
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Risks and uncertainties also include the impact of any future events with material adverse impact. The continued impact of the Coronavirus Disease 2019 (“COVID-19”) could heighten many of the risks and uncertainties noted above. Important information regarding risks and uncertainties is also set forth in Sony’s most recent Form 20-F, which is on file with the SEC.

I Corporate Information

(1) Selected Consolidated Financial Data

	Yen in millions, Yen per share amounts
	Three months ended <br> June 30, 2019		Three months ended <br> June 30, 2020		Fiscal year ended <br> March 31, 2020
Sales and operating revenue		1,925,724		1,968,919		8,259,885
Operating income		230,925		228,395		845,459
Income before income taxes		231,018		319,919		799,450
Net income attributable to Sony Corporation’s stockholders		152,122		233,251		582,191
Comprehensive income		153,287		202,103		666,032
Total equity		4,545,273		4,991,904		4,789,535
Total assets		21,607,483		23,626,356		23,039,343
Net income attributable to Sony Corporation’s stockholders per share of common stock, basic (yen)		121.78		191.09		471.64
Net income attributable to Sony Corporation’s stockholders per share of common stock,<br>diluted (yen)		119.22		186.94		461.23
Ratio of stockholders’ equity to total assets (%)		17.8		18.3		17.9
Net cash provided by operating activities		(823)		126,185		1,349,745
Net cash used in investing activities		(323,153)		(475,273)		(1,352,278)
Net cash provided by (used in) financing activities		86,656		290,252		65,658
Cash and cash equivalents at end of the period		1,210,507		1,448,614		1,512,357

Notes:

1.	The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP.<br>
2.	The Company reports equity in net income of affiliated companies as a component of operating income.<br>
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3.	Consumption taxes are not included in sales and operating revenue.
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4.	Total equity is presented based on U.S. GAAP.
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5.	Ratio of stockholders’ equity to total assets is calculated by using total equity attributable to the<br>stockholders of the Company.
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6.	The Company prepares consolidated financial statements. Therefore parent-only selected financial data is<br>not presented.
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(2) Business Overview

There was no significant change in the business of Sony during the three months ended June 30, 2020.

As of June 30, 2020, the Company had 1,441 subsidiaries and 155 affiliated companies, of which 1,402 companies are consolidated subsidiaries (including variable interest entities) of the Company. The Company has applied the equity accounting method for 141 affiliated companies.

II State of Business

(1) Risk Factors

Note for readers of this English translation:

Except for the revised risk factor below, there was no significant change from the information presented in the Risk Factors section of the Annual Report on Form 20-F filed with the Securities and Exchange Commission (the “SEC”) on June 26, 2020. The changes are indicated by underline below. Any forward-looking statements included in the descriptions below are based on management’s current judgment.

URL: The Annual Report on Form 20-F filed with the SEC on June 26, 2020

https://www.sec.gov/Archives/edgar/data/313838/000119312520179707/d831343d20f.htm

The coronavirus disease 2019 (COVID-19) pandemic hasadversely affected, and is expected to continue to adversely affect, Sony’s business operations, operating results and financial condition.

The COVID-19 pandemic is adversely affecting the production, development, sale and distribution of the products and services in each of Sony’s business segments, and this negative impact is expected to continue in the future. For example, in the Game & Network Services (“G&NS”) segment, there was an adverse impact on the production of hardware due to issues in the component supply chain. In the Music segment, CDs and other packaged media sales are decreasing due to restrictions on going outside, and ticket, merchandising and video revenues are decreasing as concerts and other events are being postponed and cancelled in Japan and other areas. In the Pictures segment, box office revenue has been impacted by the closure of movie theaters, and Sony generally has not been able to release its already completed titles in theaters. In the Electronics Products & Solutions (“EP&S”) segment, certain of Sony’s manufacturing sites ceased production for a period of time pursuant to local government policy, and a portion of supply was temporarily insufficient to meet demand. Additionally, some partner companies that supply components to several of Sony’s businesses have reduced their operations, causing a delay in the production of some Sony products due to component shortages. In the Imaging & Sensing Solutions (“I&SS”) segment, image sensor sales are decreasing primarily due to a slowdown in the smartphone market, which is the final outlet for Sony’s image sensors. In the Financial Services segment, pursuant to the announcement of a state of emergency by the Japanese government, all in-person sales activity of the Lifeplanner^®^ salespeople at Sony Life Insurance Co., Ltd. (“Sony Life”) was suspended from April 2020 through May 2020. The impact that these and other COVID-19-related factors have had on Sony’s ability to produce, develop, sell and distribute the products and services of each of Sony’s business segments is further discussed in “(2) Management’s Discussion and Analysis of Financial Condition, Results of Operations and Status of Cash Flows” below.

The timing and extent to which the pandemic further negatively impacts Sony’s business could vary greatly depending on future developments, such as the possible further spread of or a resurgence in COVID-19, as well as the state of lockdowns and other measures in various geographic areas around the world. For example, in the G&NS segment, hardware production and game software development could be delayed due to the impact of COVID-19. The Music segment may continue to be negatively impacted by delays in the release of new music and a global reduction in advertising licensing revenue, and the Pictures segment may continue to be negatively impacted by delays in the production and release schedules of new motion pictures and TV shows, as well as by the global reduction in advertising revenue. The EP&S segment could continue to be adversely impacted by factory shutdowns and supply chain issues, and by the closure of retail stores globally. The I&SS segment may be negatively impacted by a decline in demand in the smartphone market, and the Financial Services segment may continue to be negatively affected by the prohibition against all in-person sales activity of the Lifeplanner^®^ salespeople at Sony Life.

The continued impact of COVID-19 could heighten many of the risks and uncertainties noted below.

(2) Management’s Discussion and Analysis of FinancialCondition, Results of Operations and Status of Cash Flows

i) Results of Operations

All amounts are presented on the basis of U.S. GAAP. “Sales and operating revenue” (“sales”) in each business segment represents sales and operating revenue recorded before intersegment transactions are eliminated. “Operating income (loss)” in each business segment represents operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses. For details regarding each segment’s product categories, please refer to“IV Financial Statements – Notes to Consolidated Financial Statements – 9. Business segment information.”

Consolidated Financial Results

	(Billions of yen)
	Three months ended<br>June 30
	2019		2020
Sales and operating revenue	¥	1,925.7	¥	1,968.9
Operating income		230.9	****	228.4
Income before income taxes		231.0	****	319.9
Net income attributable to Sony Corporation’s stockholders		152.1	****	233.3

Sales for the three months ended June 30, 2020 (“the current quarter”) increased 43.2 billion yen compared to the same quarter of the previous fiscal year (“year-on-year”) to 1 trillion 968.9 billion yen. This increase was primarily due to significant increases in sales in the G&NS and Financial Services segments, partially offset by a significant decrease in sales in the EP&S segment. Sales in the same quarter of the previous fiscal year included 7.9 billion yen in patent royalty revenue resulting from the signing of a licensing agreement, recorded within Corporate and elimination.

Operating income in the current quarter was 228.4 billion yen, essentially flat year-on-year. This was primarily due to a significant deterioration in operating results in the EP&S segment and a significant decrease in operating income in the I&SS segment, as well as a significant deterioration in operating results in Corporate and elimination resulting primarily from the absence of the above-mentioned patent royalty revenue recorded in the same quarter of the previous fiscal year. These negative factors were substantially offset by significant increases in operating income in the G&NS and Pictures segments.

Operating income for the current quarter included the following:

•	Gain on the sale of a portion of shares of Pledis Entertainment Co., Ltd. (“Pledis”):<br>6.5 billion yen (Music segment)
•	Expenses related to the Sony Global Relief Fund for COVID-19:<br>3.3 billion yen (Corporate and elimination)
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During the current quarter, restructuring charges, net, decreased 3.1 billion yen year-on-year to 0.5 billion yen. Restructuring charges are recorded as an operating expense and are included in operating income.

Equity in net income (loss) of affiliated companies in the current quarter, recorded within operating income, was a loss of 0.3 billion yen, compared to income of 1.3 billion yen in the same quarter of the previous fiscal year. This deterioration was mainly due to a deterioration of equity in net income (loss) in the Music segment.

The net effect of other income and expenses was income of 91.5 billion yen, an improvement of 91.4 billion yen year-on-year, mainly due to the recording of 96.9 billion yen in unrealized gains on Sony’s shares of Spotify Technology S.A. and Bilibili Inc. (“Bilibili”), both in the current quarter. For details, please refer to “IV Financial Statements – Notes to Consolidated Financial Statements – 2. Marketable securities and securities investments.”

Income before income taxes increased 88.9 billion yen year-on-year to 319.9 billion yen.

During the current quarter, Sony recorded 72.9 billion yen of income tax expense, resulting in an effective tax rate of 22.8%, which was lower than the effective tax rate of 28.1% in the same quarter of the previous fiscal year. This lower effective tax rate was primarily due to a decrease in tax expense due to Sony recording tax expense based on the assumption that it would be subject to the Base Erosion Anti-Abuse Tax, or “BEAT,” in the U.S. consolidated tax group in the same quarter of the previous fiscal year and, in the current quarter, Sony providing for its taxes assuming it is not subject to the BEAT and may offset its U.S. tax liability by tax credits against which Sony established valuation allowances. These positive factors were partially offset by an increase in deferred tax liabilities for Japan controlled foreign company taxation in the current quarter.

Net income attributable to Sony Corporation’s stockholders increased 81.1 billion yen year-on-year to 233.3 billion yen.

Conditions at Sony’s Manufacturing Plants Resulting from the Spread of COVID-19

Sony has a total of six in-house manufacturing plants located in China and Malaysia. Although these plants were shut down for a period of time between January and April 2020, they have since resumed operations and are currently operating at the levels they were before the spread of the virus. Sony shut down its manufacturing plant in the U.K. (Wales) from March 26, 2020 in accordance with a mandate from the local government. From March 31, 2020, Sony has resumed its U.K. manufacturing operations after receiving approval from local authorities, and operations are returning to the level they were before the spread of the virus. Business has been impacted by factors such as restrictions on the movement of people across national borders, making it difficult for Sony to send engineers to manufacturing hubs such as China and countries in Southeast Asia for the purpose of helping with new product launches or giving instructions on manufacturing.

Operating performance for the current quarter and the current view regarding the impact of the spread of COVID-19 by business segment are as follows:

Game & Network Services (G&NS)

Results for the Three Months ended June 30, 2020

Sales increased 148.6 billion yen year-on-year to 606.1 billion yen. This significant increase in sales was primarily due to a significant increase in game software and PlayStation^®^Plus (“PS Plus”) sales, partially offset by a decrease in PlayStation^®^4 (“PS4^™^”) hardware sales. Operating income increased 50.2 billion yen year-on-year to 124.0 billion yen, primarily due to the impact of the above-mentioned significant increase in game software and PS Plus sales. These positive factors were partially offset by the impact of an increase in costs.

Current View Regarding the Impact on the Business from the Spread of the Coronavirus Disease 2019 (“COVID-19”)

Although production of PS4 hardware was slightly impacted due to issues in the component supply chain, these issues have now been addressed. Sales of game software that is downloaded from the network, as well as PS Plus and PlayStation^TM^Now subscriber numbers, have significantly increased. Regarding the launch of PlayStation^®^5, although factors such as constraints due to employees working from home and restrictions on international travel remain, necessary measures are being taken and preparations are underway with the launch of the console scheduled for the 2020 holiday season. At this time, no major problems have arisen in the game software development pipeline for Sony’s own first-party studios or its partners’ studios.

Music

The Music segment results include the yen-based results of Sony Music Entertainment (Japan) Inc. and the yen-translated results of Sony Music Entertainment (“SME”), Sony/ATV Music Publishing LLC (“Sony/ATV”) and EMI Music Publishing Ltd. (“EMI”), which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis.

Results for the Three Months ended June 30, 2020

Despite an increase in revenue from paid subscription streaming services, sales decreased 25.1 billion yen year-on-year to 177.1 billion yen, primarily due to the impact of COVID-19. Sales for Recorded Music and Music Publishing decreased mainly due to decreases in sales for physical media and advertising-supported streaming services, as well as a decrease in music licensing revenues. Visual Media and Platform sales decreased primarily due to lower sales from the production of physical media and the impact of the postponement and cancellation of live events, both primarily in Japan. Operating income decreased 3.4 billion yen year-on-year to 34.9 billion yen, primarily due to the impact of the above-mentioned decrease in sales, partially offset by a 6.5 billion yen gain recorded on the sale of a portion of shares of Pledis.

Current View Regarding the Impact on the Business from the Spread of COVID-19

Around the world, the release of new music is being delayed primarily due to some artists being unable to record songs and music videos. The impact on profitability from the delays in new music is limited at this time in the U.S. and other countries where the proportion of music that is streamed is high. However, in countries like Japan where the proportion of music that is streamed is relatively low, CDs and other packaged media sales are decreasing due to restrictions on going outside. Ticket and merchandising revenues are also decreasing, as concerts and other events are being postponed and cancelled in Japan and other areas. Due to a global reduction in advertising spending, revenue from advertising-supported streaming services and revenue from the licensing of music in TV commercials is decreasing. Additionally, delays in the production of motion pictures and TV shows are causing a decline in music licensing revenue.

Pictures

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

Results for the Three Months ended June 30, 2020

Sales decreased 11.0 billion yen, a 6% decrease year-on-year (an approximate 4% decrease on a U.S. dollar basis), to 175.1 billion yen. The decrease in sales on a U.S. dollar basis was due to lower sales for Motion Pictures and Media Networks, partially offset by higher sales for Television Productions. The decrease in sales for Motion Pictures was primarily due to the absence of theatrical releases in the current quarter due to the impact of theater closures as a result of COVID-19. The lower sales for Media Networks were primarily due to lower advertising revenues due to the impact of COVID-19. The higher sales for Television Productions were primarily due to higher licensing revenues for U.S. television catalog product and the series The Boys. Operating income increased 24.4 billion yen year-on-year to 24.7 billion yen. The significant increase in operating income was primarily due to lower marketing costs in Motion Pictures from the absence of theatrical releases caused by COVID-19, partially offset by the above-mentioned lower sales.

Current View Regarding the Impact on the Business from the Spread of COVID-19

Although some movie theaters are reopening around the world, a large number are still closed or must limit the number of patrons, leading to box office revenue around the world being impacted. For this reason, Sony generally has not been able to release its already completed films in theaters. Due to restrictions on people’s movement, the production schedules of new motion pictures and television shows by Sony are significantly delayed around the world, especially in the U.S. As a result, in Motion Pictures, theatrical revenues and revenues generated after theatrical release, including home entertainment and television licensing sales, are expected to decrease. On the other hand, digital rental and sell-through revenues for films which Sony released theatrically prior to the spread of COVID-19 have been strong. In Television Productions, revenues are beginning to be impacted by delays in the delivery of shows to TV networks and digital distribution services. Due to a global reduction in advertising spending, advertising revenue in Media Networks is decreasing significantly, especially in India.

Electronics Products & Solutions (EP&S)

Results for the Three Months ended June 30, 2020

Sales decreased 152.1 billion yen year-on-year to 331.8 billion yen. This significant decrease in sales was mainly due to a decrease in unit sales of digital cameras, televisions and Audio and Video, resulting primarily from the impact of COVID-19. An operating loss of 9.1 billion yen was recorded, compared to operating income of 25.1 billion yen recorded in the same quarter of the previous fiscal year, primarily due to the above-mentioned impact of the decrease in sales, partially offset by reductions in operating costs in each of the businesses.

Current View Regarding the Impact on the Business from the Spread of COVID-19

The four major in-house and outsourcing manufacturing sites for Sony’s TV business, as well as the factories owned by Sony in China and Thailand that make digital cameras and smartphones, are currently operating as usual. Retail sales have decreased significantly due to the closure of retail stores globally, the impact of which is continuing to affect markets like Asia and Latin America. Conversely, in Japan, Europe, North America and China, retail stores are gradually reopening. In addition, although sales and profit from digital cameras were significantly impacted by a substantial slowdown in demand around the world, this business is beginning to show signs of recovery, albeit at a relatively slower pace compared to other product categories.

Imaging & Sensing Solutions (I&SS)

Results for the Three Months ended June 30, 2020

Sales decreased 24.5 billion yen year-on-year to 206.2 billion yen. This significant decrease in sales was mainly due to a decrease in sales of image sensors resulting from decreases in unit sales for digital cameras and for mobile products, as well as a significant decrease in sales in businesses other than image sensors, such as analog LSIs (large-scale integration systems) and display devices. These negative factors were primarily a result of the impact of COVID-19. Operating income decreased 24.1 billion yen year-on-year to 25.4 billion yen. This significant decrease was mainly due to an increase in depreciation and amortization expenses as well as research and development expenses and the impact of the above-mentioned decrease in sales.

Current View Regarding the Impact on the Business from the Spread of COVID-19

There has been no major impact on Sony’s manufacturing plants in Japan, which are operating as usual. Sony also understands that factory operations and supply chains at most of its major mobile customers, to whom it sells its image sensors, have been recovering. On the other hand, image sensor sales are decreasing primarily due to a slowdown in the smartphone market, which is the final outlet for Sony’s products, and a change in the overall composition of sales in that market resulting from a shift from high-end to mid-range and moderately priced models.

Financial Services

Results for the Three Months ended June 30, 2020

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

Financial Services revenue increased 109.8 billion yen year-on-year to 446.8 billion yen, mainly due to significant increases in revenue at Sony Life and Sony Bank. Revenue at Sony Life increased 89.6 billion yen year-on-year to 389.0 billion yen, mainly due to an increase in net gains on investments in the separate account. The significant increase in revenue at Sony Bank was due to an improvement in valuation gains and losses on securities. Operating income increased 1.1 billion yen year-on-year to 47.2 billion yen, primarily due to a significant increase in operating income at Sony Bank and an increase in operating income at Sony Assurance, partially offset by a significant decrease in operating income at Sony Life. The significant increase in operating income at Sony Bank was due to the above-mentioned improvement in valuation gains and losses on securities, and the increase in operating income at Sony Assurance was due to a decline in the loss ratio for automobile insurance. Operating income at Sony Life decreased 14.1 billion yen year-on-year to 25.3 billion yen, mainly due to an overall deterioration in the provision of policy reserves for minimum guarantees for variable life insurance, resulting from market fluctuations and other factors and net gains and losses on derivative transactions to hedge market risks, as well as expenses recorded for various provisions related to COVID-19.

Current View Regarding the Impact on the Business from the Spread of COVID-19

All in-person sales activity of the Lifeplanner^®^ sales employees at Sony Life was temporarily suspended pursuant to the announcement of a state of emergency by the Japanese government, which began in April 2020. After the state of emergency was fully lifted on May 25, 2020, Sony Life resumed these sales activities from June 1, 2020, and is also expanding its remote consulting services. Despite a gradual recovery, acquisitions of new insurance policies have decreased compared to the previous fiscal year, and the segment is being impacted by an increase in various expenses including compensation for sales employees. It is possible that fluctuations in the financial market could impact the financial results of this segment going forward.

Operating Performance by Geographic Area

For operating performance by geographic area, please refer to “sales and operating revenue attributed to countries and areas based on location of external customers” in “IV Financial Statements – Notes to Consolidated Financial Statements – 9. Business segment information.”

Foreign Exchange Fluctuations and Risk Hedging

Note for readers of this English translation:

Except for the information set forth below, there was no significant change from the information presented in the Foreign Exchange Fluctuations and Risk Hedging section of the Annual Report on Form 20-F filed with the SEC on June 26, 2020. Although foreign exchange rates have fluctuated during the three-month period ended June 30, 2020, there has been no significant change in Sony’s risk hedging policy as described in the Annual Report on Form 20-F.

URL: The Annual Report on Form 20-F filed with the SEC on June 26, 2020

https://www.sec.gov/Archives/edgar/data/313838/000119312520179707/d831343d20f.htm

During the current quarter, the average rates of the yen were 107.6 yen against the U.S. dollar and 118.5 yen against the euro, which were 2.3 yen and 5.0 yen higher year-on-year, respectively.

For the current quarter, sales were 1 trillion 968.9 billion yen, an increase of 2% year-on-year, while on a constant currency basis sales also increased approximately 4% year-on-year. For further details about the impact of foreign exchange rate fluctuations on sales and operating income, please refer to the below Note.

Consolidated operating income decreased 2.5 billion yen year-on-year to 228.4 billion yen for the current quarter. Most of the foreign exchange rate impact was attributable to the impact of foreign exchange rates in the G&NS, EP&S and I&SS segments.

The table below indicates the impact of changes in foreign exchange rates on sales and operating results of each of the above-mentioned three segments. Also, please refer to the “Results of Operations” section, which discusses the impact of foreign exchange rates within segments and categories where foreign exchange rate fluctuations had a significant impact.

		(Billions of yen)
		Three months ended June 30				Impact of<br>changes in<br>foreign<br>exchange rates
		2019		2020
G&NS	Sales		457.5	****	606.1	-14.8
	Operating income		73.8	****	124.0	-2.8
EP&S	Sales		483.9	****	331.8	-9.3
	Operating income (loss)		25.1	****	-9.1	-3.0
I&SS	Sales		230.7	****	206.2	-4.1
	Operating income		49.5	****	25.4	-1.8

In addition, sales for the Music segment decreased 12% year-on-year to 177.1 billion yen, an approximate 11% decrease on a constant currency basis. In the Pictures segment, sales decreased 6% year-on-year to 175.1 billion yen, an approximate 4% decrease on a U.S. dollar basis. As most of the operations in Sony’s Financial Services segment are based in Japan, Sony’s management analyzes the performance of the Financial Services segment on a yen basis only.

Note:

Sales on a Constant Currency Basis and the Impact of Foreign Exchange Rate Fluctuations

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

Results for the Pictures segment are described on a U.S. dollar basis as the Pictures segment reflects the operations of SPE, a U.S.-based operation that aggregates the results of its worldwide subsidiaries in U.S. dollars.

10 -

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

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

11 -

Status of Cash Flows*

Operating Activities: Net cash inflow from operating activities during the current quarter was 126.2 billion yen, compared to a net cash outflow of 0.8 billion yen in the same quarter of the previous fiscal year.

For all segments excluding the Financial Services segment, there was a net cash inflow of 124.6 billion yen, compared to a net cash outflow of 85.0 billion yen in the same quarter of the previous fiscal year. This improvement was primarily due to the positive impact of a decrease in notes and accounts receivable, trade and in contract assets compared to an increase in the same quarter of the previous fiscal year, as well as a smaller increase in film costs and a smaller decrease in accrued expenses in other current liabilities.

The Financial Services segment had a net cash inflow of 21.4 billion yen, a decrease of 80.1 billion yen year-on-year. This decrease was primarily due to a year-on-year decrease in net income after taking into account non-cash adjustments such as depreciation and amortization, including amortization of deferred insurance acquisition costs and contract costs.

Investing Activities: During the current quarter, Sony used 475.3 billion yen of net cash in investing activities, an increase of 152.1 billion yen year-on-year.

For all segments excluding the Financial Services segment, there was a 153.4 billion yen net cash outflow, an increase of 65.7 billion yen year-on-year. This increase was mainly due to an increase in payments for fixed asset purchases including semiconductor manufacturing equipment, as well as cash outflow resulting from a payment for the purchase of shares of Bilibili.

The Financial Services segment used 321.9 billion yen of net cash in investing activities, an increase of 86.5 billion yen year-on-year. This increase was mainly due to a year-on-year increase in payments for investments and advances at Sony Life.

Financing Activities: Net cash inflow by financing activities during the current quarter was 290.3 billion yen, an increase of 203.6 billion yen year-on-year.

For all segments excluding the Financial Services segment, there was a 39.8 billion yen net cash outflow, a decrease of 121.7 billion yen year-on-year. This decrease was mainly due to an absence of the redemption of straight bonds, as well as a payment related to the repurchase of shares of Sony’s own common stock in the same quarter of the previous fiscal year.

In the Financial Services segment, there was a 310.2 billion yen net cash inflow, an increase of 79.4 billion yen year-on-year. This increase was primarily due to a larger increase in deposits from customers at Sony Bank compared to the increase in the same quarter of the previous fiscal year.

Total Cash and Cash Equivalents: Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents at June 30, 2020 was 1 trillion 448.6 billion yen. Cash and cash equivalents of all segments excluding the Financial Services segment was 888.8 billion yen at June 30, 2020, a decrease of 73.5 billion yen compared with the balance as of March 31, 2020, and an increase of 284.9 billion yen compared with the balance as of June 30, 2019. Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 559.8 billion yen at June 30, 2020, an increase of 9.7 billion yen compared with the balance as of March 31, 2020, and a decrease of 46.7 billion yen compared with the balance as of June 30, 2019.

*Sony’s disclosure includes information regarding cash flow for all segments excluding the Financial Services segment. This information is derived from the following condensed statement of cash flows. The condensed statement of cash flows, which includes the above-mentioned cash flow information, is not prepared in accordance with U.S. GAAP, which Sony uses to prepare its consolidated financial statements. However, because the Financial Services segment is different in nature from Sony’s other segments, Sony believes that a comparative presentation may be useful in understanding and analyzing Sony’s consolidated financial statements. Transactions between the Financial Services segment and Sony without the Financial Services segment, including noncontrolling interests, are included in those respective presentations, but are eliminated in the consolidated figures shown below.

12 -

Condensed Statements of Cash Flows

	(Yen in millions)
	****	Three months ended June 30											****
		Financial Services				Sony without<br><br><br>Financial Services				Consolidated
		2019		2020	****	2019		2020	****	2019		2020	****
Cash flows from operating activities:					****
Net income (loss)		32,077		33,996	****	151,620		232,845	****	166,006		247,041	****
Adjustments to reconcile net income (loss) to net cash provided by (used in)<br>operating activities:
Depreciation and amortization, including amortization of deferred insurance acquisition costs and<br>contract costs		22,151		8,853	****	71,261		81,248	****	93,412		90,101	****
Amortization of film costs		-		-	****	56,546		56,858	****	56,546		56,858	****
Other operating (income) expense, net		36		54	****	(3,593	)	(11,302	)	(3,557	)	(11,248	)
(Gain) loss on marketable securities and securities investments, net		(9,172	)	(154,558	)	(329	)	(96,891	)	(9,501	)	(251,449	)
Changes in assets and liabilities:
(Increase) decrease in notes and accounts receivable, trade and contract assets		(298	)	(2,521	)	(84,822	)	15,769	****	(85,901	)	19,100	****
(Increase) decrease in inventories		-		-	****	(51,976	)	(26,318	)	(51,976	)	(26,318	)
(Increase) decrease in film costs		-		-	****	(91,680	)	(20,747	)	(91,680	)	(20,747	)
Increase (decrease) in notes and accounts payable, trade		-		-	****	55,807		10,513	****	55,807		10,513	****
Increase (decrease) in future insurance policy benefits and other		138,925		255,401	****	-		-	****	138,925		255,401	****
(Increase) decrease in deferred insurance acquisition costs		(22,185	)	(22,269	)	-		-	****	(22,185	)	(22,269	)
(Increase) decrease in marketable securities held in the life insurance business		(59,080	)	(46,580	)	-		-	****	(59,080	)	(46,580	)
Other		(891	)	(50,957	)	(187,856	)	(117,329	)	(187,639	)	(174,218	)
Net cash provided by (used in) operating activities		101,563		21,419	****	(85,022	)	124,646	****	(823	)	126,185	****
Cash flows from investing activities:
Payments for purchases of fixed assets		(5,388	)	(4,922	)	(72,875	)	(128,010	)	(78,264	)	(132,868	)
Payments for investments and advances		(302,434	)	(416,809	)	(22,969	)	(47,958	)	(325,403	)	(464,767	)
Proceeds from sales or return of investments and collections of advances		72,375		99,782	****	303		12,680	****	72,678		112,462	****
Other		22		46	****	7,814		9,854	****	7,836		9,900	****
Net cash provided by (used in) investing activities		(235,425	)	(321,903	)	(87,727	)	(153,434	)	(323,153	)	(475,273	)
Cash flows from financing activities:
Increase (decrease) in borrowings, net		200,622		194,206	****	(109,983	)	(10,697	)	90,313		183,510	****
Increase (decrease) in deposits from customers, net		57,354		146,465	****	-		-	****	57,354		146,465	****
Dividends paid		(27,189	)	(30,453	)	(25,035	)	(30,095	)	(25,035	)	(30,094	)
Other		(1	)	(3	)	(26,477	)	1,013	****	(35,976	)	(9,629	)
Net cash provided by (used in) financing activities		230,786		310,215	****	(161,495	)	(39,779	)	86,656		290,252	****
Effect of exchange rate changes on cash and cash equivalents		-		-	****	(23,451	)	(6,517	)	(23,451	)	(6,517	)
Net increase (decrease) in cash and cash equivalents including restricted		96,924		9,731	****	(357,695	)	(75,084	)	(260,771	)	(65,353	)
Cash and cash equivalents, including restricted, at beginning of the fiscal year		509,595		550,039	****	964,218		965,256	****	1,473,813		1,515,295	****
Cash and cash equivalents, including restricted, at end of the period		606,519		559,770	****	606,523		890,172	****	1,213,042		1,449,942	****
Less – restricted cash and cash equivalents, included in other current assets and other<br>assets		-		-	****	2,535		1,328	****	2,535		1,328	****
Cash and cash equivalents at end of the period		606,519		559,770	****	603,988		888,844	****	1,210,507		1,448,614	****

13 -

ii) Issues Facing Sony and Management’s Response to those Issues

Note for readers of this English translation:

There was no significant change from the information presented in the Trend Information section of the Annual Report on Form 20-F filed with the SEC on June 26, 2020. Any forward-looking statements included in the descriptions below are based on management’s current judgment.

URL: The Annual Report on Form 20-F filed with the SEC on June 26, 2020

https://www.sec.gov/Archives/edgar/data/313838/000119312520179707/d831343d20f.htm

iii) Research and Development

Note for readers of this English translation:

There was no significant change from the information presented as the Research and Development in the Annual Report on Form 20-F filed with the SEC on June 26, 2020.

URL: The Annual Report on Form 20-F filed with the SEC on June 26, 2020

https://www.sec.gov/Archives/edgar/data/313838/000119312520179707/d831343d20f.htm

Research and development costs for the three months ended June 30, 2020 totaled 121.3 billion yen. There were no significant changes in research and development activities for the period.

iv) Liquidity Management and Market Access

Note for readers of this English translation:

Except for the information related to the committed lines of credit and others set forth below, there was no significant change from the information presented in the Annual Report on Form 20-F filed with the SEC on June 26, 2020. The changes are indicated by underline below. Any forward-looking statements included in the descriptions below are based on management’s current judgment.

URL: The Annual Report on Form 20-F filed with the SEC on June 26, 2020

https://www.sec.gov/Archives/edgar/data/313838/000119312520179707/d831343d20f.htm

An important financial objective of Sony is to maintain the strength of its balance sheet, while securing adequate liquidity for business activities. Sony defines its liquidity sources as the amount of cash and cash equivalents (“cash balance”) (excluding restrictions on capital transfers mainly due to national regulations) and the unused amount of committed lines of credit.

Funding requirements that arise from maintaining liquidity are principally covered by cash flow from operating and investing activities (including asset sales) and by the available cash balance; however, Sony also raises funds as needed from financial and capital markets through means such as corporate bonds, commercial paper (“CP”) and bank loans.

Sony Corporation, Sony Global Treasury Services Plc (“SGTS”), a subsidiary in the U.K., and Sony Capital Corporation (“SCC”), a finance subsidiary in the U.S., maintain CP programs with access to the Japanese, U.S. and European CP markets. The borrowing limits under these CP programs, translated into yen, were 1,044.2 billion yen in total for Sony Corporation, SGTS and SCC as of March 31, 2020. There were no amounts outstanding under the CP programs as of March 31, 2020.

Sony Corporation borrowed 322.5 billion yen from a Japanese private bank in July 2020, in order to procure the funds necessary to acquire the common shares of SFH, a consolidated subsidiary of Sony Corporation, and the related stock acquisition rights through a tender offer, with the aim of making SFH a wholly-owned subsidiary of Sony Corporation.

In July 2020, in order to enhance liquidity, Sony Corporation executed an approximate 2 billion U.S. dollar bank loan from a group of lenders with eight- to ten-year maturity terms in connection with Sony’s acquisition of the remaining approximately 60% equity interest in DH Publishing, L.P., which owns EMI Music Publishing, in November 2018. This bank loan utilizes the Japan Bank for International Cooperation (“JBIC”) Facility, which was established to facilitate overseas mergers and acquisitions by Japanese companies. Approximately 60%, or 1.2 billion U.S. dollars, is from the JBIC Facility and borrowed in U.S. dollars and approximately 40%, or 86 billion yen (approximately 0.8 billion U.S. dollars), is from Japanese private banks and borrowed in yen.

14 -

If disruption and volatility occur in financial and capital markets and Sony becomes unable to raise sufficient funds from these sources, Sony may also draw down funds from contractually committed lines of credit from various financial institutions. Sony has a total, translated into yen, of 571.3 billion yen in unused committed lines of credit, as of June 30, 2020. Details of those committed lines of credit are: a 275.0 billion yen committed line of credit contracted with a syndicate of Japanese banks, a 1.7 billion U.S. dollar multicurrency committed line of credit also contracted with a syndicate of Japanese banks and a 1.05 billion U.S. dollar multicurrency committed line of credit contracted with a syndicate of foreign banks. Sony believes that it can sustain sufficient liquidity through access to committed lines of credit with financial institutions, together with its available cash balance, even in the event that financial and capital markets become illiquid.

In the event of a downgrade in Sony’s credit ratings, there are no financial covenants in any of Sony’s material financial agreements with financial institutions that would cause an acceleration of the obligation. Even though the cost of borrowing for some committed lines of credit could change according to Sony’s credit ratings, there are no financial covenants that would cause any impairment on the ability to draw down on unused facilities.

v) Plan of Capital Investments and Asset Retirement

Note for readers of this English translation:

The Japanese-language Quarterly Securities Report includes a plan of capital investments and asset retirement described below. Any forward-looking statements included in the descriptions below are based on management’s current judgment.

Sony’s plan of capital expenditures and asset retirement during the fiscal year ending March 31, 2021, which were not decided due to the spread of COVID-19 when the Securities Report (Yukashoken Houkokusho) of the previous fiscal year was filed, are shown below.

Sony operates various businesses in Japan and foreign countries. Sony discloses its plan of capital expenditures by segment.

Sony’s plan of capital expenditures during the fiscal year ending March 31, 2021 is shown below.

	Fiscal year ending March 31, 2021
	Amounts<br>(Yen in millions)		Main purposes of capital expenditures
G&NS, EP&S and I&SS		415,000	Investments in manufacturing facilities primarily related to semiconductors
Music		16,000	Investments in facilities related to information technology
Pictures		18,000	Investments in facilities related to film production and information technology
Financial Services		20,000	Investments in facilities related to information technology
All Other and Corporate		31,000	Investments in facilities related to information technology
Total		500,000
*1.	The amounts show the expected additions to property, plant and equipment, and intangible assets.<br>
---	---
*2.	The amounts do not include the expected additions by business combinations.
---	---
*3.	The funding requirements of the capital expenditures are expected to be financed mainly by the existing<br>balance of cash and cash equivalents.
---	---

The capital expenditures are expected to be approximately 500 billion yen during the fiscal year ending March 31, 2021, which is almost the same amount as the fiscal year ended March 31, 2020. The capital expenditures consist mainly of investments in manufacturing facilities, primarily related to semiconductors. In addition, Sony plans to retire and sell some of its facilities in the normal course of business.

15 -

(3) Material Contracts

There were no material contracts executed or determined to be executed during the three months ended June 30, 2020.

Note for readers of this English translation:

There was no significant change from the information presented in the Annual Report on Form 20-F (“Patents and Licenses” in Item 4) filed with the SEC on June 26, 2020.

URL: The Annual Report on Form 20-F filed with the SEC on June 26, 2020

https://www.sec.gov/Archives/edgar/data/313838/000119312520179707/d831343d20f.htm

16 -

III Company Information

(1) Information on the Company’s Shares

i) Total Number of Shares

1) Total Number of Shares

Class	Total number of shares authorized to be issued
Common stock	3,600,000,000
Total	3,600,000,000

2) Number of Shares Issued

Class	Number of shares issued		Name of Securities Exchanges<br>where the shares are listed or<br>authorized<br>Financial<br>Instruments Firms Association<br>where the shares are registered	Description
	As of the end of<br>the<br> <br>first quarterly period<br><br><br>(June 30, 2020)	As of the filing date<br>of<br> <br>the Quarterly<br><br><br>Securities Report<br><br><br>(August 11, 2020)
Common stock	1,261,058,781	1,261,058,781	Tokyo Stock Exchange<br><br><br>New York Stock Exchange	The number of shares constituting one full unit is one hundred (100).
Total	1,261,058,781	1,261,058,781	—	—
Note:	The Company’s shares of common stock are listed on the First Section of the Tokyo Stock<br>Exchange in Japan.
---	---

ii) Stock Acquisition Rights

Note for readers of this English translation:

The Japanese-language Quarterly Securities Report includes a summary of the main terms and conditions of the SARs listed below, which were issued during the three months ended June 30, 2020. A summary of these terms and conditions has previously been filed with or submitted to the SEC under Form 6-K or Form S-8. There has been no change to these terms and conditions since the applicable date of the applicable filings or submissions.

URL: The list of documents previously filed or submitted by the Company

https://www.sec.gov/Archives/edgar/data/313838/000115752320000424/a52194292.htm

https://www.sec.gov/Archives/edgar/data/313838/000138713120003890/sne-s8_041520.htm

Stock acquisition rights issued during the three months ended June 30, 2020

Name<br><br><br>(Allotment date of stock acquisition rights)	Number of<br><br><br>SARs issued	Number of shares of <br><br> common stock to be issued <br> or transferred
The forty-second series of Common Stock Acquisition Rights<br><br><br>(April 17, 2020)	200	20,000

iii) Status of the Exercise of Moving Strike Convertible Bonds

Not applicable.

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iv) Changes in the Total Number of Shares Issued and the Amount of Common Stock, etc.

Period	Change in<br>the <br>total number<br> <br>of shares<br><br><br>issued <br>(Thousands)	Balance of<br>the <br>total number<br> <br>of shares<br><br><br>issued <br>(Thousands)	Change in<br> <br>the<br>amount of<br> <br>common stock <br>(Yen in Millions)	Balance of<br><br><br>the amount of<br><br><br>common stock <br>(Yen in Millions)	Change in the <br>legal capital <br>surplus<br><br><br>(Yen in Millions)	Balance of the <br>legal capital <br>surplus<br><br><br>(Yen in Millions)
From April 1 to June 30, 2020	—	1,261,059	—	880,214	—	1,093,907

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v) Status of Major Shareholders

(As of June 30, 2020)

Name	Address	Number of<br>shares held<br><br><br>(Thousands)	Percentage<br><br><br>of shares held<br>to total shares<br>(Excluding<br>treasury<br>shares) issued<br>(%)
Citibank as Depositary Bank for Depositary<br><br><br>Receipt Holders *1<br><br><br>(Local Custodian: MUFG Bank, Ltd.)	New York, U.S.A.<br><br><br>(2-7-1, Marunouchi,<br>Chiyoda-ku, Tokyo)	113,661	9.31
The Master Trust Bank of Japan, Ltd.<br><br><br>(Trust account)^^*2	2-11-3, Hamamatsu-cho, Minato-ku, Tokyo	97,630	7.99
Japan Trustee Services Bank, Ltd.<br><br><br>(Trust account) *2	1-8-11, Harumi, Chuo-ku, Tokyo	67,947	5.56
JP Morgan Chase Bank 385632 *3<br><br><br>(Local Custodian: Mizuho Bank, Ltd.)	25 Bank Street, Canary Wharf, London, E14 5JP, United<br>Kingdom<br> <br>(Shinagawa Intercity Tower A, 2-15-1, Konan, Minato-ku, Tokyo)	41,294	3.38
Japan Trustee Services Bank, Ltd.<br><br><br>(Trust account 7) *2	1-8-11, Harumi, Chuo-ku, Tokyo	30,515	2.50
Japan Trustee Services Bank, Ltd.<br><br><br>(Trust account 5) *2	1-8-11, Harumi, Chuo-ku, Tokyo	25,810	2.11
Ssbtc Client Omnibus Account *3<br><br><br>(Local Custodian: The Hongkong and Shanghai<br><br><br>Banking Corporation Limited, Tokyo Branch)	One Lincoln Street, Boston MA USA 02111<br><br><br>(3-11-1, Nihonbashi, Chuo-ku,<br>Tokyo)	22,667	1.86
JP Morgan Chase Bank 385781 *3<br><br><br>(Local Custodian: Mizuho Bank, Ltd.)	25 Bank Street, Canary Wharf, London, E14 5JP, United<br>Kingdom<br> <br>(Shinagawa Intercity Tower A,<br> <br>2-15-1, Konan, Minato-ku, Tokyo)	20,872	1.71
State Street Bank West Client – Treaty 505234 *3<br><br><br>(Local Custodian: Mizuho Bank, Ltd.)	1776 Heritage Drive, North Quincy, MA 02171, U.S.A.<br><br><br>(Shinagawa Intercity Tower A,<br><br><br>2-15-1, Konan, Minato-ku,<br>Tokyo)	20,169	1.65
Government of Norway<br><br><br>(Local Custodian: Citibank, N.A., Tokyo Branch)	Bankplassen 2, 0107 Oslo 1 Oslo 0107 No<br><br><br>(6-27-30 Shinjuku, Shinjuku-ku,<br>Tokyo)	18,183	1.49
Total		458,747	37.56

Notes:

*1.	Citibank as Depositary Bank for Depositary Receipt Holders is the nominee of Citibank, N.A.<br>
*2.	The shares held by each shareholder are held in trust for investors, including shares in securities<br>investment trusts.
---	---
*3.	Each shareholder provides depositary services for shares owned by institutional investors, mainly in<br>Europe and North America. They are also the nominees for these investors.
---	---

19 -

4.	Sumitomo Mitsui Trust Bank, Limited filed its “Amendment to the Bulk Shareholding Report” with<br>the Kanto Financial Bureau in Japan as of September 20, 2019 and reported that Sumitomo Mitsui Trust Asset Management Co., Ltd. and one joint holder held shares of the Company as of September 13, 2019 as provided in the below table. As of<br>June 30, 2020, the Company has not been able to confirm the entry of such parties in the register of shareholders.
Name	Number of shares, etc. held<br><br><br>(Thousands)	Percentage of shares, etc. held<br><br><br>to total shares issued (%)
---	---	---
Sumitomo Mitsui Trust Asset Management Co., Ltd. and 1 Joint<br>Holder	72,546	5.70
5.	BlackRock Japan Co., Ltd. filed its “Amendment to the Bulk Shareholding Report” with the Kanto<br>Financial Bureau in Japan as of March 22, 2017 and reported that BlackRock Japan Co., Ltd. and eight Joint Holders held shares of the Company as of March 15, 2017 as provided in the below table. As of June 30, 2020, the Company has not<br>been able to confirm the entry of such parties in the register of shareholders.
---	---
Name	Number of shares, etc. held<br><br><br>(Thousands)	Percentage of shares, etc. held<br><br><br>to total shares issued (%)
---	---	---
BlackRock Japan Co., Ltd. and 8 Joint<br>Holders	79,185	6.27

vi) Status of Voting Rights

1) Shares Issued

(As of June 30, 2020)

Classification	Number of shares of <br> common stock	Number of voting rights<br><br><br>(Units)	Description
Shares without voting rights	—	—	—
Shares with restricted voting rights<br><br><br>(Treasury stock, etc.)	—	—	—
Shares with restricted voting rights (Others)	—	—	—
Shares with full voting rights<br><br><br>(Treasury stock, etc.)	39,628,400	—	—
Shares with full voting rights (Others)	1,219,542,800	12,195,428	—
Shares constituting less than one full unit	1,887,581	—	Shares constituting <br><br>less than one full unit <br>(100 shares)
Total number of shares issued	1,261,058,781	—	—
Total voting rights held by all shareholders	—	12,195,428	—
Note:	Included in “Shares with full voting rights (Others)” under “Number of shares of<br>common stock” are 19,000 shares of common stock held under the name of Japan Securities Depository Center, Incorporated. Also included in “Shares with full voting rights (Others)” under “Number of voting rights (Units)” are<br>190 units of voting rights relating to the shares of common stock with full voting rights held under the name of Japan Securities Depository Center, Incorporated.
---	---

20 -

2) Treasury Stock, etc.

(As of June 30, 2020)

Name of shareholder	Address of shareholder	Number of<br><br><br>shares held <br>under own <br>name	Number of<br>shares held<br>under the names <br>of others	Total number <br>of shares <br>held	Percentage of <br>shares held to<br><br><br>total shares <br>issued (%)
Sony<br>Corporation<br> <br>(Treasury stock)	1-7-1, Konan, Minato-ku, <br>Tokyo	39,628,400	—	39,628,400	3.15
Total	—	39,628,400	—	39,628,400	3.15

Notes:

1.	In addition to the 39,628,400 shares listed above, there are 300 shares of common stock held in the name<br>of the Company in the register of shareholders that the Company does not beneficially own. These shares are included in “Shares with full voting rights (Others)” in Table 1) “Shares Issued” above.
2.	Upon the disposal of treasury shares mainly due to the exercise of SARs (including the exercise of<br>unsecured convertible bonds with SARs (6th series)) from July 1, 2020 to July 31, 2020, the number of shares held decreased by 1,950 thousand shares.
---	---
3.	Upon the disposal of treasury shares as restricted stock compensation on July 21, 2020, the number of<br>shares held decreased by 197 thousand shares.
---	---

Outline of the restricted stock disposed as compensation on July 21, 2020 is as follows:

•	Disposal Price: 7,384 yen per share
•	Allotees: 6 Corporate Executive Officers of the Company,
---	---

10 Non-Executive Directors of the Company,

10 Executives of the Company.

(2) Directors and Corporate Executive Officers

There was no change in directors or corporate executive officers in the period from the filing date of the Securities Report (Yukashoken Houkokusho) for the fiscal year ended March 31, 2020 to the filing date of this Quarterly Securities Report (Shihanki Houkokusho).

21 -

IV Financial Statements

	Page
(1) Consolidated Financial Statements		23
(i) <br> Consolidated Balance Sheets		23
(ii) <br> Consolidated Statements of Income		25
(iii) <br> Consolidated Statements of Comprehensive Income		26
(iv) <br> Consolidated Statements of Cash Flows		27
(2) Other Information		50

22 -

(1) Consolidated Financial Statements

(i) Consolidated Balance Sheets (Unaudited)

Sony Corporation and Consolidated Subsidiaries

	Yen in<br>millions
	At March 31,<br> 2020			At<br>June 30,<br> 2020
ASSETS
Current assets:
Cash and cash equivalents		1,512,357			1,448,614
Marketable securities (including assets pledged that secured parties are permitted to sell or repledge of<br>17,521 million yen and 16,480 million yen at March 31, 2020 and June 30, 2020)		1,847,772			2,105,977
Notes and accounts receivable, trade and contract assets		1,028,793			1,005,429
Allowance for credit losses		(25,873	)		(26,060	)
Inventories		589,969			588,797
Other receivables		188,106			179,568
Prepaid expenses and other current assets		594,021			608,271
Total current assets		5,735,145			5,910,596
Film costs		427,336			417,646
Investments and advances:
Affiliated companies		207,922			210,800
Securities investments and other (including assets pledged that secured parties are permitted to sell or repledge of<br>930,882 million yen and 1,055,192 million yen at March 31, 2020 and June 30, 2020)		12,526,210			12,937,934
Allowance for credit losses		-			(7,677	)
		12,734,132			13,141,057
Property, plant and equipment:
Land		81,482			79,860
Buildings		659,556			658,911
Machinery and equipment		1,725,720			1,792,832
Construction in progress		76,391			71,599
		2,543,149			2,603,202
Less – Accumulated depreciation		1,634,505			1,677,282
		908,644			925,920
Other assets:
Operating lease right-of-use<br>assets		359,510			351,828
Finance lease right-of-use<br>assets		33,100			31,778
Intangibles, net		906,310			902,575
Goodwill		783,888			783,453
Deferred insurance acquisition costs		600,901			617,899
Deferred income taxes		210,372			202,880
Other		340,005			340,724
		3,234,086			3,231,137
Total assets		23,039,343			23,626,356

(Continued on following page.)

23 -

Consolidated Balance Sheets(Unaudited)

	Yen in<br>millions
	At March 31,<br> 2020			At<br>June 30,<br> 2020
LIABILITIES
Current liabilities:
Short-term borrowings		810,176			977,414
Current portion of long-term debt		29,807			28,516
Current portion of long-term operating lease liabilities		68,942			72,275
Notes and accounts payable, trade		380,810			391,223
Accounts payable, other and accrued expenses		1,630,197			1,461,252
Accrued income and other taxes		145,996			148,208
Deposits from customers in the banking business		2,440,783			2,558,346
Other		733,732			692,863
Total current liabilities		6,240,443			6,330,097
Long-term debt		634,966			654,145
Long-term operating lease liabilities		314,836			304,647
Accrued pension and severance costs		324,655			320,439
Deferred income taxes		549,538			556,206
Future insurance policy benefits and other		6,246,047			6,331,757
Policyholders’ account in the life insurance business		3,642,271			3,843,393
Other		289,285			283,852
Total liabilities		18,242,041			18,624,536
Redeemable noncontrolling interest		7,767			9,916
Commitments and contingent liabilities
EQUITY
Sony Corporation’s stockholders’ equity:
Common stock, no par value –
At March 31, 2020–Shares authorized: 3,600,000,000, shares issued:<br>1,261,058,781		880,214
At June 30, 2020–Shares authorized: 3,600,000,000, shares issued:<br>1,261,058,781					880,214
Additional paid-in capital		1,289,719			1,290,992
Retained earnings		2,768,856			2,997,579
Accumulated other comprehensive income –
Unrealized gains on securities, net		161,191			140,359
Unrealized gains on derivative instruments, net		1,248			988
Pension liability adjustment		(235,520	)		(234,956	)
Foreign currency translation adjustments		(509,872	)		(519,938	)
Debt valuation adjustments		1,973			899
		(580,980	)		(612,648	)
Treasury stock, at cost
Common stock
At March 31, 2020–40,898,841 shares		(232,503	)
At June 30, 2020–39,628,411 shares					(225,287	)
		4,125,306			4,330,850
Noncontrolling interests		664,229			661,054
Total equity		4,789,535			4,991,904
Total liabilities and equity		23,039,343			23,626,356

The accompanying notes are an integral part of these statements.

24 -

(ii) ConsolidatedStatements of Income (Unaudited)

Sony Corporation and Consolidated Subsidiaries

	Yen in millions
	Three months ended<br>June 30
	2019			2020
Sales and operating revenue:
Net sales		1,558,646			1,504,870
Financial services revenue		334,820			444,916
Other operating revenue		32,258			19,133
		1,925,724			1,968,919
Costs and expenses:
Cost of sales		1,061,038			1,052,673
Selling, general and administrative		350,167			301,166
Financial services expenses		288,493			397,659
Other operating income, net		(3,557	)		(11,248	)
		1,696,141			1,740,250
Equity in net income (loss) of affiliated companies		1,342			(274	)
Operating income		230,925			228,395
Other income:
Interest and dividends		5,805			2,836
Gain on equity securities, net		323			96,900
Other		1,119			1,273
		7,247			101,009
Other expenses:
Interest expenses		4,880			1,805
Foreign exchange loss, net		1,696			5,054
Other		578			2,626
		7,154			9,485
Income before income taxes		231,018			319,919
Income taxes		65,012			72,878
Net income		166,006			247,041
Less - Net income attributable to noncontrolling interests		13,884			13,790
Net income attributable to Sony Corporation’sstockholders		152,122			233,251
	Yen
	Three months ended<br>June 30
	2019			2020
Per share data:
Net income attributable to Sony Corporation’s stockholders
– Basic		121.78			191.09
– Diluted		119.22			186.94

The accompanying notes are an integral part of these statements. ****

25 -

(iii) ConsolidatedStatements of Comprehensive Income (Unaudited)

Sony Corporation and Consolidated Subsidiaries

	Yen in millions
	Three months ended June<br>30
	2019			2020
Net income		166,006			247,041
Other comprehensive income, net of tax —
Unrealized gains (losses) on securities		26,301			(32,111	)
Unrealized gains (losses) on derivative instruments		764			(260	)
Pension liability adjustment		2,914			566
Foreign currency translation adjustments		(42,698	)		(11,483	)
Debt valuation adjustments		-			(1,650	)
Total comprehensive income		153,287			202,103
Less – Comprehensive income attributable to noncontrolling<br>interests		22,622			520
Comprehensive income attributable to Sony Corporation’sstockholders		130,665			201,583

The accompanying notes are an integral part of these statements.

26 -

(iv) ConsolidatedStatements of Cash Flows (Unaudited)

Sony Corporation and Consolidated Subsidiaries

	Yen in millions
	Three months ended June 30
	2019			2020
Cash flows from operating activities:
Net income		166,006			247,041
Adjustments to reconcile net income to net cash provided by (used in) operating<br>activities–
Depreciation and amortization, including amortization of deferred insurance acquisition costs and<br>contract costs		93,412			90,101
Amortization of film costs		56,546			56,858
Accrual for pension and severance costs, less payments		5			355
Other operating income, net		(3,557	)		(11,248	)
Gain on securities investments, net (other than financial services business)		(329	)		(96,891	)
Gain on marketable securities and securities investments held in the financial<br>services<br>business, net		(9,172	)		(154,558	)
Deferred income taxes		(1,352	)		26,114
Equity in net loss of affiliated companies, net of dividends		1,196			3,518
Changes in assets and liabilities:
(Increase) decrease in notes, accounts receivable, trade and contract assets		(85,901	)		19,100
Increase in inventories		(51,976	)		(26,318	)
Increase in film costs		(91,680	)		(20,747	)
Increase in notes and accounts payable, trade		55,807			10,513
Increase in accrued income and other taxes		6,836			15,501
Increase in future insurance policy benefits and other		138,925			255,401
Increase in deferred insurance acquisition costs		(22,185	)		(22,269	)
Increase in marketable securities held in the life insurance business		(59,080	)		(46,580	)
Increase in other current assets		(39,226	)		(25,561	)
Decrease in other current liabilities		(205,943	)		(173,983	)
Other		50,845			(20,162	)
Net cash provided by (used in) operating activities		(823	)		126,185

(Continued on following page.)

27 -

Consolidated Statements of CashFlows (Unaudited)

	Yen in millions
	Three months ended June 30
	2019			2020
Cash flows from investing activities:
Payments for purchases of fixed assets		(78,264	)		(132,868	)
Proceeds from sales of fixed assets		7,409			3,945
Payments for investments and advances by financial services business		(302,434	)		(416,809	)
Payments for investments and advances (other than financial services business)		(22,969	)		(47,958	)
Proceeds from sales or return of investments and collections of advances by financial services<br>business		72,375			99,782
Proceeds from sales or return of investments and collections of advances (other than financial<br>services business)		303			12,680
Proceeds from sales of businesses		-			1,313
Other		427			4,642
Net cash used in investing activities		(323,153	)		(475,273	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		5,775			44,214
Payments of long-term debt		(114,297	)		(25,615	)
Increase in short-term borrowings, net		198,835			164,911
Increase in deposits from customers in the financial services business, net		57,354			146,465
Dividends paid		(25,035	)		(30,094	)
Payments for purchase of treasury stock		(25,354	)		(29	)
Other		(10,622	)		(9,600	)
Net cash provided by financing activities		86,656			290,252
Effect of exchange rate changes on cash and cash equivalents,<br><br><br>including restricted		(23,451	)		(6,517	)
Net decrease in cash and cash equivalents, including restricted		(260,771	)		(65,353	)
Cash and cash equivalents, including restricted, at beginning of the fiscal<br>year		1,473,813			1,515,295
Cash and cash equivalents, including restricted, at end of the period		1,213,042			1,449,942
Less - restricted cash and cash equivalents, included in other current assets<br>and other assets		2,535			1,328
Cash and cash equivalents at end of the period		1,210,507			1,448,614

The accompanying notes are an integral part of these statements.

28 -

Index to Notes to Consolidated Financial Statements

Sony Corporation and Consolidated Subsidiaries

Notes to Consolidated Financial Statements	Page
1. Summary of significant accounting policies		30
2. Marketable securities and securities investments		33
3. Fair value measurements		35
4. Supplemental equity and comprehensive<br> income information		37
5. Reconciliation of the differences between<br> basic and diluted EPS		39
6. Revenue		40
7. Unconsolidated variable interest entities		41
8. Commitments, contingent liabilities and<br>other		42
9. Business segment information		43
10. Subsequent events		49

29 -

Notes to Consolidated Financial Statements (Unaudited)

Sony Corporation and Consolidated Subsidiaries

1.	Summary of significant accounting policies

The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), except for certain disclosures which have been omitted. Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform with U.S. GAAP. These adjustments were not recorded in the statutory books and records as Sony Corporation and its subsidiaries in Japan maintain their records and prepare their statutory 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.

(1)	Recently adopted accounting pronouncements:

Measurement of credit losses on financial instruments -

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, which amends the accounting guidance for credit losses on financial instruments. The ASU requires the consideration of all available relevant information when estimating expected credit losses, including past events, current conditions and forecasts and their implications for expected credit losses. This ASU was effective for Sony as of April 1, 2020. The adoption of this ASU did not have a material impact on Sony’s results of operations and financial position.

Improvements to Accounting for Costs of Films and License Agreements for ProgramMaterials -

In March 2019, the FASB issued ASU 2019-02, which updates the guidance for the capitalization of film costs associated with episodic television series, requires the use of fair value rather than net realizable value when determining potential impairments of broadcasting rights, and modifies the presentation and disclosure requirements for films and broadcasting rights. In addition, upon capitalization of film costs entities are required to determine qualitatively whether the predominant monetization strategy is on a title-by-title basis or together with other films and/or broadcast rights as part of a film group, such as in the case of a release of a film as part of a library of content on a streaming service. In the case of a film group, impairments are evaluated at the overall film group level rather than the individual title level. This ASU was effective for Sony as of April 1, 2020 and was applied on a prospective basis. Upon adoption, Sony reclassified broadcasting rights in the Pictures segment and animation film production costs in the Music segment included in inventories to film costs.

30 -

Changes to the opening balances resulting from the adoption of the above ASUs were as follows:

	Yen in millions
	March 31,<br><br><br>2020			Impact of Adoption							April 1,<br><br><br>2020
		ASU<br>2016-13			ASU<br>2019-02		Total
ASSETS
Current assets:
Notes and accounts receivable, trade and contract assets		1,028,793			-		-		-			1,028,793
Allowance for credit losses *		(25,873	)		(280	)	-		(280	)		(26,153	)
Inventories		589,969			-		(31,517	)	(31,517	)		558,452
Other receivables		188,106			(30	)	-		(30	)		188,076
Prepaid expenses and other current assets		594,021			(12	)	-		(12	)		594,009
Total current assets		5,735,145			(322	)	(31,517	)	(31,839	)		5,703,306
Film costs		427,336			-		31,517		31,517			458,853
Investments and advances:
Securities investments and other		12,526,210			780		-		780			12,526,990
Allowance for credit losses		-			(6,341	)	-		(6,341	)		(6,341	)
Total investments and advances		12,734,132			(5,561	)	-		(5,561	)		12,728,571
Other assets:
Deferred income taxes		210,372			45		-		45			210,417
Other		340,005			(721	)	-		(721	)		339,284
Total other assets		3,234,086			(676	)	-		(676	)		3,233,410
Total assets		23,039,343			(6,559	)	-		(6,559	)		23,032,784
LIABILITIES
Deferred income taxes		549,538			(1,504	)	-		(1,504	)		548,034
Total liabilities		18,242,041			(1,504	)	-		(1,504	)		18,240,537
EQUITY
Sony Corporation’s stockholders’ equity:
Retained earnings		2,768,856			(3,669	)	-		(3,669	)		2,765,187
Total Sony Corporation’s stockholders’ equity		4,125,306			(3,669	)	-		(3,669	)		4,121,637
Noncontrolling interests		664,229			(1,386	)	-		(1,386	)		662,843
Total equity		4,789,535			(5,055	)	-		(5,055	)		4,784,480
Total liabilities and equity		23,039,343			(6,559	)	-		(6,559	)		23,032,784
*	Under ASU 2016-13, Sony changed the presentation from<br>“Allowance for doubtful accounts” to “Allowance for credit losses” on the consolidated balance sheets.
---	---

Disclosures for Fair Value Measurement -

In August 2018, the FASB issued ASU 2018-13, which amends disclosure requirements related to fair value measurement. This ASU was effective for Sony as of April 1, 2020. Since this ASU only impacts disclosures, the adoption had no impact on Sony’s results of operations and financial position.

Disclosures for Defined Benefit Plans -

In August 2018, the FASB issued ASU 2018-14, which amends disclosure requirements related to defined benefit pension and other postretirement plans. This ASU was effective for Sony as of April 1, 2020. Since this ASU only impacts disclosures, the adoption had no impact on Sony’s results of operations and financial position.

(2)	Accounting methods used specifically for interim consolidated financial statements:

Income Taxes -

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

31 -

(3)	Reclassifications:

Certain reclassifications of the financial statements and accompanying footnotes for the three months ended June 30, 2019 have been made to conform to the presentation for the three months ended June 30, 2020.

32 -

2.	Marketable securities and securities investments

Marketable securities and securities investments, primarily held in the Financial Services segment, include debt securities for 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.

	Yen in millions
	March 31, 2020								June 30, 2020
	Cost		Gross<br>unrealized<br>gains		Gross<br>unrealized<br>losses		Fair value		Cost		Gross<br>unrealized<br>gains		Gross<br>unrealized<br>losses		Fair value
Debt securities:
Available-for-sale securities:
Japanese national government bonds		1,552,036		210,459		(566)		1,761,929		1,658,271		183,650		(10,948)		1,830,973
Japanese local government bonds		69,132		73		(33)		69,172		65,549		77		(21)		65,605
Japanese corporate bonds		202,164		19,112		(567)		220,709		207,147		15,127		(799)		221,475
Foreign government bonds		198,777		81,014		(14)		279,777		217,682		73,732		(26)		291,388
Foreign corporate bonds		361,422		507		(2,179)		359,750		393,781		1,149		(611)		394,319
Securitized products		205,223		0		-		205,223		224,685		-		(0)		224,685
Other		14,398		1,867		(12)		16,253		14,470		2,351		(3)		16,818
		2,603,152		313,032		(3,371)		2,912,813		2,781,585		276,086		(12,408)		3,045,263
Held-to-maturity securities:
Japanese national government bonds *1		6,204,505		2,098,885		(1,397)		8,301,993		6,204,146		1,816,227		(9,718)		8,010,655
Japanese local government bonds		2,504		331		-		2,835		2,404		320		-		2,724
Japanese corporate bonds		482,050		61,176		(4,754)		538,472		513,812		44,552		(11,311)		547,053
Foreign government bonds *2		723,937		302,297		-		1,026,234		720,735		281,532		-		1,002,267
Foreign corporate bonds		98		7		-		105		24,417		596		(5)		25,008
Securitized products		5,418		-		(421)		4,997		11,851		-		(117)		11,734
		7,418,512		2,462,696		(6,572)		9,874,636		7,477,365		2,143,227		(21,151)		9,599,441
Total		10,021,664		2,775,728		(9,943)		12,787,449		10,258,950		2,419,313		(33,559)		12,644,704
*1	As of June 30, 2020,<br>held-to-maturity securities include 322,714 million yen of pledged Japanese national government bonds as collateral for short-term lending transactions.<br>
---	---
*2	As of June 30, 2020,<br>held-to-maturity securities include 160,913 million yen of pledged Foreign government bonds as collateral for short-term repurchase agreements.<br>
---	---

33 -

During the three months ended June 30, 2019 and 2020, respectively, with respect to equity securities included in marketable securities and securities investments, Sony recorded net realized gains of 287 million yen and 7,386 million yen due to the sale of equity securities and net unrealized gains of 8,408 million yen and 244,932 million yen due to revaluation of equity securities held at the end of the period for the first quarter of the fiscal years ended March 31, 2020 and ending March 31, 2021, respectively. Gains or losses arising from equity securities held in the Financial Services segment are recorded in financial services revenue, and gains or losses arising from equity securities held in all segments other than the Financial Services segment are recorded in gain (loss) on equity securities, net in the consolidated statement of income. Included in the gains and (losses) noted above were gains and (losses) recorded by Sony with respect to the equity securities held by Sony in Spotify Technology S.A. (“Spotify”).

During the three months ended June 30, 2019, the revaluation of the Spotify shares owned as of June 30, 2019 resulted in a pre-tax unrealized gain, net of costs to be paid to Sony’s artists and distributed labels, of 2,752 million yen (25 million U.S. dollars) recorded in gain on equity securities, net in the consolidated statements of income.

During the three months ended June 30, 2020, the revaluation of the Spotify shares owned as of June 30, 2020 resulted in a pre-tax unrealized gain, net of costs to be paid to Sony’s artists and distributed labels, of 49,022 million yen (456 million U.S. dollars) recorded in gain on equity securities, net in the consolidated statements of income.

34 -

3.	Fair value measurements

The fair value of Sony’s assets and liabilities that are measured at fair value on a recurring basis are as follows.

	Yen in millions
	March 31, 2020
									Presentation in the consolidated balance sheets
	Level 1		Level 2		Level 3		Total		Marketablesecurities		Securitiesinvestmentsand other		Othercurrentassets		Othernoncurrentassets
Assets:
Debt securities
Trading securities		24,330		245,790		-		270,120		270,120		-		-		-
Available-for-sale securities
Japanese national government bonds		-		1,761,929		-		1,761,929		10,011		1,751,918		-		-
Japanese local government bonds		-		69,172		-		69,172		15,334		53,838		-		-
Japanese corporate bonds		-		220,679		30		220,709		14,774		205,935		-		-
Foreign government bonds		-		279,777		-		279,777		2,690		277,087		-		-
Foreign corporate bonds		-		343,980		15,770		359,750		94,156		265,594		-		-
Securitized products		-		33,383		171,840		205,223		-		205,223		-		-
Other		-		4,152		12,101		16,253		-		16,253		-		-
Equity securities		950,744		581,642		-		1,532,386		1,434,612		97,774		-		-
Other investments *1		7,162		816		9,242		17,220		-		17,220		-		-
Derivative assets 2,3		1,310		41,073		-		42,383		-		-		40,784		1,599
Total assets		983,546		3,582,393		208,983		4,774,922		1,841,697		2,890,842		40,784		1,599
									Presentation in the consolidated balance sheets
	Level 1		Level 2		Level 3		Total		Futureinsurancepolicybenefits		Policyholders’account		Othercurrentliabilities		Othernoncurrentliabilities
Liabilities:
Future insurance policy benefits and policyholders’ account in the life insurance business<br>*4		-		-		532,191		532,191		64,045		468,146		-		-
Derivative liabilities 2,3		2,077		33,789		-		35,866		-		-		16,814		19,052
Total liabilities		2,077		33,789		532,191		568,057		64,045		468,146		16,814		19,052

35 -

	Yen in millions
	June 30, 2020
									Presentation in the consolidated balance sheets
	Level 1		Level 2		Level 3		Total		Marketablesecurities		Securitiesinvestmentsand other		Othercurrentassets		Othernoncurrentassets
Assets:
Debt securities
Trading securities		24,821		269,232		-		294,053		294,053		-		-		-
Available-for-sale securities
Japanese national government bonds		-		1,830,973		-		1,830,973		16,048		1,814,925		-		-
Japanese local government bonds		-		65,605		-		65,605		13,294		52,311		-		-
Japanese corporate bonds		-		221,445		30		221,475		8,758		212,717		-		-
Foreign government bonds		-		291,388		-		291,388		540		290,848		-		-
Foreign corporate bonds		-		371,452		22,867		394,319		136,799		257,520		-		-
Securitized products		-		45,611		179,074		224,685		-		224,685		-		-
Other		-		4,616		12,202		16,818		-		16,818		-		-
Equity securities		1,275,299		617,647		-		1,892,946		1,632,137		260,809		-		-
Other investments *1		6,221		2,884		8,306		17,411		-		17,411		-		-
Derivative assets 2, 3		1,577		13,431		-		15,008		-		-		13,229		1,779
Total assets		1,307,918		3,734,284		222,479		5,264,681		2,101,629		3,148,044		13,229		1,779
									Presentation in the consolidated balance sheets
	Level 1		Level 2		Level 3		Total		Futureinsurancepolicybenefits		Policyholders’account		Othercurrentliabilities		Othernoncurrentliabilities
Liabilities:
Future insurance policy benefits and policyholders’ account in the life insurance business<br>*4		-		-		541,283		541,283		60,205		481,078		-		-
Derivative liabilities 2, 3		154		38,517		-		38,671		-		-		21,171		17,500
Total liabilities		154		38,517		541,283		579,954		60,205		481,078		21,171		17,500
*1	Other investments include certain hybrid financial instruments and certain private equity investments.<br>
---	---
*2	Derivative assets and liabilities are recognized and disclosed on a gross basis.
---	---
*3	The potential effect of offsetting on assets and liabilities, which primarily consists of derivatives<br>subject to master netting agreements and/or collateral, is insignificant.
---	---
*4	Future insurance policy benefits and policyholders’ account in the life insurance business are those<br>for which the fair value option has been elected.
---	---

36 -

4.	Supplemental equity and comprehensive income information
(1)	Stockholders’ Equity
---	---

A reconciliation of the beginning and ending carrying amounts of Sony Corporation’s stockholders’ equity, noncontrolling interests and the total equity for the three months ended June 30, 2019 and 2020 are as follows:

	Yen in millions
	Sony Corporation’s<br> stockholders’ equity			Noncontrolling<br>interests			Total equity
Balance at March 31, 2019		3,746,377			690,313			4,436,690
Cumulative effect of ASU 2016-02		(7,472	)		-			(7,472)
Exercise of stock acquisition rights		1,191			-			1,191
Conversion of convertible bonds		2			-			2
Stock-based compensation		1,018			-			1,018
Comprehensive income:
Net income		152,122			13,884			166,006
Other comprehensive income, net of tax —
Unrealized gains on securities		17,113			9,188			26,301
Unrealized gains on derivative instruments		764			-			764
Pension liability adjustment		2,907			7			2,914
Foreign currency translation adjustments		(42,241	)		(457	)		(42,698)
Total comprehensive income		130,665			22,622			153,287
Dividends declared		-			(11,438	)		(11,438)
Transactions with noncontrolling interests shareholders and other		(25,274	)		(2,731	)		(28,005)
Balance at June 30, 2019		3,846,507			698,766			4,545,273
	Yen in millions
	Sony Corporation’s<br>stockholders’ equity			Noncontrolling<br>interests			Total equity
Balance at March 31, 2020		4,125,306			664,229			4,789,535
Cumulative effect of ASU 2016-13		(3,669	)		(1,386	)		(5,055)
Exercise of stock acquisition rights		4,257			-			4,257
Conversion of convertible bonds		2,125			-			2,125
Stock-based compensation		(26	)		-			(26)
Comprehensive income:
Net income		233,251			13,790			247,041
Other comprehensive income, net of tax —
Unrealized losses on securities		(20,832	)		(11,279	)		(32,111)
Unrealized losses on derivative instruments		(260	)		-			(260)
Pension liability adjustment		564			2			566
Foreign currency translation adjustments		(10,066	)		(1,417	)		(11,483)
Debt valuation adjustments		(1,074	)		(576	)		(1,650)
Total comprehensive income		201,583			520			202,103
Dividends declared		-			(12,467	)		(12,467)
Purchase of treasury stock		(29	)		-			(29)
Reissuance of treasury stock		0			-			0
Transactions with noncontrolling interests shareholders and other		1,303			10,158			11,461
Balance at June 30, 2020		4,330,850			661,054			4,991,904

There was no material effect of changes in Sony Corporation’s ownership interest in its subsidiaries on Sony Corporation’s stockholders’ equity for the three months ended June 30, 2019 and 2020.

37 -

(2)	Other Comprehensive Income

Changes in accumulated other comprehensive income, net of tax by component for the three months ended June 30, 2019 and 2020 are as follows:

		Yen in millions
		Unrealized<br> gains (losses) <br>on securities			Unrealized<br>gains (losses)<br>on derivative<br>instruments			Pension<br>liability<br>adjustment			Foreign<br>currency<br>translation<br>adjustments			Total
Balance at March 31, 2019			135,035			(19	)		(310,457	)		(435,229	)		(610,670)
Other comprehensive income before reclassifications			26,375			884			(194	)		(42,698	)		(15,633)
Amounts reclassified out of accumulated other comprehensive income			(74	)		(120	)		3,108			-			2,914
Net current-period other comprehensive income			26,301			764			2,914			(42,698	)		(12,719)
Less: Other comprehensive income attributable to noncontrolling interests			9,188			-			7			(457	)		8,738
Balance at June 30, 2019			152,148			745			(307,550	)		(477,470	)		(632,127)
	Yen in millions
	Unrealized<br> gains (losses) <br>on securities	Unrealized<br>gains (losses)<br><br><br>on derivative<br>instruments			Pension<br>liability<br>adjustment			Foreign<br>currency<br>translation<br>adjustments			Debt<br>valuation<br>adjustments			Total
Balance at March 31, 2020	161,191		1,248			(235,520	)		(509,872	)		1,973			(580,980)
Other comprehensive income before reclassifications	(32,111)		600			(3,924	)		(11,596	)		(1,644	)		(48,675)
Amounts reclassified out of accumulated other comprehensive income	-		(860	)		4,490			113			(6	)		3,737
Net current-period other comprehensive income	(32,111)		(260	)		566			(11,483	)		(1,650	)		(44,938)
Less: Other comprehensive income attributable to noncontrolling interests	(11,279)		-			2			(1,417	)		(576	)		(13,270)
Balance at June 30, 2020	140,359		988			(234,956	)		(519,938	)		899			(612,648)

38 -

5.	Reconciliation of the differences between basic and diluted EPS

Reconciliation of the differences between basic and diluted net income attributable to Sony Corporation’s stockholders per share (“EPS”) for the three months ended June 30, 2019 and 2020 is as follows:

	Yen in millions
	Three months ended<br>June 30
	2019	2020
Net income attributable to Sony Corporation’s stockholders for basic and diluted EPS computation	152,122	233,251
	Thousands of shares
Weighted-average shares outstanding	1,249,160	1,220,629
Effect of dilutive securities:
Stock acquisition rights	2,843	3,269
Zero coupon convertible bonds	24,011	23,820
Weighted-average shares for diluted EPS computation	1,276,014	1,247,718
	Yen
Basic EPS	121.78	191.09
Diluted EPS	119.22	186.94

Potential shares of common stock that were excluded from the computation of diluted EPS for the three months ended June 30, 2019 and 2020 were 5,724 thousand shares and 3,232 thousand shares, respectively. The potential shares related to stock acquisition rights were excluded as anti-dilutive for the three months ended June 30, 2019 and 2020 when the exercise price for those shares was in excess of the average market value of Sony’s common stock for the period. The zero coupon convertible bonds issued in July 2015 were included in the diluted EPS calculation under the if-converted method beginning upon issuance.

39 -

6.	Revenue
(1)	Contract balances
---	---

Receivables from contracts with customers, contract assets and contract liabilities are comprised of the following:

	Yen in millions
	March 31, 2020		June 30, 2020
Receivables from contracts with customers *1		1,126,597		1,101,146
Contract assets *1		13,985		15,290
Contract liabilities *2		271,286		284,478
*1	Receivables from contracts with customers and contract assets are included in the consolidated balance<br>sheets as “Notes and accounts receivable, trade and contract assets” and “Other”, non-current.
---	---
*2	Contract liabilities are included in the consolidated balance sheets as “Other”, both current<br>and non-current.
---	---

Contract liabilities principally relate to customer advances received prior to performance. Revenues of 102,587 million yen were recognized during the three months ended June 30, 2020, which were included in the balance of contract liabilities at March 31, 2020.

(2)	Performance obligations

Remaining (unsatisfied or partially unsatisfied) performance obligations represent future revenues not yet recorded for firm orders that have not yet been performed. Sony applies practical expedients to exclude certain information about the remaining performance obligations, primarily related to contracts with an expected original duration of less than one year, and sales-based or usage-based royalty revenue on licenses of intellectual property. After applying practical expedients, revenue from contracts with remaining performance obligations, which primarily relate to licensing of theatrical and television content in the Pictures segment, is expected to be recognized primarily within three years.

(3)	Disaggregation of revenue

For the breakdown of sales and operating revenue by segments, product categories and geographies, refer to Note 9.

40 -

7.	Unconsolidated variable interest entities

Certain accounts receivable sales programs also involve variable interest entities (“VIEs”). These VIEs are all special purpose entities associated with the sponsor banks. Based on a qualitative assessment, Sony is not the primary beneficiary and therefore does not consolidate these entities as Sony does not have the power to direct the activities, an obligation to absorb losses, or the right to receive the residual returns of these VIEs. Sony’s maximum exposure to losses from these VIEs is considered insignificant.

In the Financial Services segment, Sony has variable interests in VIEs where Sony is not the primary beneficiary. Sony’s variable interests in such VIEs include equity securities, securitized products, foreign corporate bonds and other investments. The following tables present the carrying value of the variable interests of unconsolidated VIEs, the presentation in the consolidated balance sheet, and the maximum exposure to loss associated with these variable interests as of March 31, 2020 and June 30, 2020. Maximum exposure to loss does not reflect Sony’s estimate of the actual losses that could result from adverse changes, nor does it reflect the economic hedges Sony enters into to reduce its exposure. The risks associated with VIEs in which Sony is involved are limited to the amount recorded in the consolidated balance sheets and the amount of commitments.

	Yen in millions
	March 31, 2020
	Presentation in the consolidated balance sheets						Maximum exposureto loss
	Marketable<br>securities		Securities<br>investments<br>and other		Prepaid expensesand other currentassets
Equity securities *1		579,773		6,229		-		587,602
Securitized products		-		210,641		-		210,641
Foreign corporate bonds *2		41,452		41,036		-		82,488
Other investments		-		16,253		21,000		43,719
Total		621,225		274,159		21,000		924,450
	Yen in millions
---	---	---	---	---	---	---	---	---
	June 30, 2020
	Presentation in the consolidated balance sheets						Maximum exposureto loss
	Marketable<br>securities		Securities<br>investments<br>and other		Prepaid expensesand other currentassets
Equity securities *1		615,719		5,219		-		622,077
Securitized products		-		236,536		-		236,536
Foreign corporate bonds *2		34,215		39,031		-		73,246
Other investments		-		16,818		21,000		44,258
Total		649,934		297,604		21,000		976,117
*1	Equity securities primarily include investment funds.
---	---
*2	Foreign corporate bonds primarily include repackaged bonds.
---	---

41 -

8. Commitments, contingent liabilities and other

(1)	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 June 30, 2020, the total unused portion of the lines of credit extended under these contracts was 31,066 million yen. Based upon the information currently available, it is not possible to estimate the aggregate amounts of future year-by-year payments for these loan commitments.

(2)	Purchase commitments and other

Purchase commitments and other outstanding as of June 30, 2020 amounted to 653,775 million yen. The major components of these commitments are as follows:

Certain subsidiaries in the Pictures segment have entered into agreements with creative talent for the development and production of motion pictures and television programming as well as agreements with third parties to acquire completed motion pictures, or certain rights therein, and to acquire the rights to broadcast certain live action sporting events. These agreements cover various periods mainly within three years. As of June 30, 2020, these subsidiaries were committed to make payments under such contracts of 123,912 million yen.

Certain subsidiaries in the Music segment have entered into contracts with recording artists, songwriters and companies for the future production, distribution and/or licensing of music product. These contracts cover various periods mainly within five years. As of June 30, 2020, these subsidiaries were committed to make payments of 121,619 million yen under such contracts.

Certain subsidiaries in the Game & Network Services (“G&NS”) segment have entered into long-term contracts for the development, distribution and publishing of game software. These contracts cover various periods mainly within eight years. As of June 30, 2020, these subsidiaries were committed to make payments of 28,287 million yen under such contracts.

Sony has entered into purchase contracts for fixed assets. As of June 30, 2020, Sony has committed to make payments of 187,817 million yen under such contracts.

Sony has entered into purchase contracts for materials. As of June 30, 2020, Sony has committed to make payments of 108,920 million yen under such contracts.

Sony has entered into sponsorship contracts related to advertising and promotional rights. These contracts cover various periods mainly within one year. As of June 30, 2020, Sony has committed to make payments of 5,126 million yen under such contracts.

(3)	Litigation

Sony Corporation and certain of its subsidiaries are defendants or otherwise involved in pending legal and regulatory proceedings. However, based upon the information currently available, Sony believes that the outcome from such legal and regulatory proceedings would not have a material impact on Sony’s results of operations and financial position.

(4)	Guarantees

Sony has issued guarantees that contingently require payments to guaranteed parties if certain specified events or conditions occur. The maximum potential amount of future payments under these guarantees as of June 30, 2020 amounted to 2,208 million yen.

42 -

9.	Business segment information

The reportable segments presented 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 the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM does not evaluate segments using discrete asset information. Sony’s CODM is its Chairman, President and Chief Executive Officer.

The G&NS segment includes network services businesses, the manufacture and sales of home gaming products and production and sales of software. The Music segment includes the Recorded Music, Music Publishing and Visual Media and Platform businesses. The Pictures segment includes the Motion Pictures, Television Productions and Media Networks businesses. The Electronics Products & Solutions (“EP&S”) segment includes the Televisions business, the Audio and Video business, the Still and Video Cameras business, the smartphone business and Internet-related service business. The Imaging & Sensing Solutions (“I&SS”) segment includes the image sensors business. The Financial Services segment primarily represents individual life insurance and non-life insurance businesses in the Japanese market and a bank business in Japan. All Other consists of various operating activities, including the disc manufacturing and recording media businesses. Sony’s products and services are generally unique to a single operating segment.

43 -

Business segments -

Sales and operating revenue:

	Yen in millions
	Three months ended June 30
	2019			2020
Sales and operating revenue:
Game & Network Services -
Customers		441,750			599,049
Intersegment		15,711			7,060
Total		457,461			606,109
Music -
Customers		200,038			173,735
Intersegment		2,215			3,380
Total		202,253			177,115
Pictures -
Customers		185,759			174,441
Intersegment		329			648
Total		186,088			175,089
Electronics Products & Solutions -
Customers		480,656			327,393
Intersegment		3,259			4,453
Total		483,915			331,846
Imaging & Sensing Solutions -
Customers		211,175			198,371
Intersegment		19,503			7,815
Total		230,678			206,186
Financial Services -
Customers		334,820			444,916
Intersegment		2,115			1,844
Total		336,935			446,760
All Other -
Customers		60,632			46,097
Intersegment		8,959			7,998
Total		69,591			54,095
Corporate and elimination		(41,197	)		(28,281	)
Consolidated total		1,925,724			1,968,919

G&NS intersegment amounts primarily consist of transactions with All Other.

I&SS intersegment amounts primarily consist of transactions with the G&NS segment and the EP&S segment.

All Other intersegment amounts primarily consist of transactions with the G&NS segment, the Music segment and the Pictures segment.

Corporate and elimination includes certain brand and patent royalty income.

44 -

Segment profit or loss:

	Yen in millions
	Three months ended June 30
	2019			2020
Operating income (loss):
Game & Network Services		73,804			124,037
Music		38,277			34,892
Pictures		376			24,742
Electronics Products & Solutions		25,066			(9,121	)
Imaging & Sensing Solutions		49,528			25,426
Financial Services		46,105			47,203
All Other		(2,602	)		3,532
Total		230,554			250,711
Corporate and elimination		371			(22,316	)
Consolidated operating income		230,925			228,395

Operating income (loss) is sales and operating revenue less costs and expenses, and includes equity in net income (loss) of affiliated companies.

45 -

Sales to Customers by Product Category :

The following table is a breakdown of sales and operating revenue to external customers by product category for each segment. Sony management views each segment as a single operating segment.

	Yen in millions
	Three months ended June 30
Sales and operating revenue:	2019		2020
Game & Network Services
Digital Software and Add-on Content		215,964		394,637
Network Services		83,606		93,295
Hardware and Others		142,180		111,117
Total		441,750		599,049
Music
Recorded Music – Streaming		66,482		68,900
Recorded Music – Others		45,480		29,186
Music Publishing		39,290		31,096
Visual Media and Platform		48,786		44,553
Total		200,038		173,735
Pictures
Motion Pictures		80,870		65,077
Television Productions		46,486		64,303
Media Networks		58,403		45,061
Total		185,759		174,441
Electronics Products & Solutions
Televisions		147,761		106,568
Audio and Video		78,743		47,081
Still and Video Cameras		100,254		46,405
Mobile Communications		100,550		94,229
Other		53,348		33,110
Total		480,656		327,393
Imaging & Sensing Solutions		211,175		198,371
Financial Services		334,820		444,916
All Other		60,632		46,097
Corporate		10,894		4,917
Consolidated total		1,925,724		1,968,919

Sony has realigned its product category configuration in the Music segment with a more detailed breakdown in Recorded Music from the fourth quarter of the fiscal year ended March 31, 2020. In connection with the realignment, all prior period sales amounts by product category in the table above have been reclassified to conform to the current presentation.

In the G&NS segment, Digital Software and Add-on Content includes distribution of software titles and add-on content through network by Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; Hardware and Others includes home gaming consoles, packaged software and peripheral devices. In the Music segment, Recorded Music – Streaming includes the distribution of digital recorded music by streaming; Recorded Music – Others includes the distribution of recorded music by physical media and digital download as well as revenue derived from artists’ live performances; Music Publishing includes the management and licensing of the words and music of songs; Visual Media and Platform includes the production and distribution of animation titles, including game applications based on the animation titles, and various service offerings for music and visual products. In the Pictures segment, Motion Pictures includes the worldwide production, acquisition and distribution of live-action and animated motion pictures; Television Productions includes the production, acquisition and distribution of television programming; Media Networks includes the operation of television and digital networks worldwide. In the EP&S segment, Televisions includes LCD and OLED televisions; Audio and Video includes Blu-ray disc players and recorders, home audio, headphones and memory-based portable audio devices; Still and Video Cameras includes interchangeable lens cameras, compact digital cameras, consumer video cameras and video cameras for broadcast; Mobile Communications includes smartphones and an internet-related service business; Other includes display products such as projectors and medical equipment.

46 -

Within the EP&S segment, the operating income of Mobile Communications for the first quarter of the fiscal years ended March 31, 2020 and 2021 was 1,039 million yen and 11,036 million yen, respectively.

	Yen in millions
	Three months ended June 30
	2019		2020
Depreciation and amortization:
Game & Network Services		6,812		8,475
Music		6,779		7,402
Pictures		5,753		4,343
Electronics Products & Solutions, including contract costs		15,081		14,808
Imaging & Sensing Solutions		29,439		39,210
Financial Services, including deferred insurance acquisition costs		22,151		8,853
All Other		1,396		917
Total		87,411		84,008
Corporate		6,001		6,093
Consolidated total		93,412		90,101
	Yen in millions
	Three months ended June 30, 2019
	Total net<br> restructuring <br>charges		Depreciation<br>associated with<br> restructured assets		Total
Restructuring charges and associated depreciation:
Game & Network Services		-		-		-
Music		-		-		-
Pictures		-		-		-
Electronics Products & Solutions		1,892		-		1,892
Imaging & Sensing Solutions		-		-		-
Financial Services		-		-		-
All Other and Corporate		1,461		245		1,706
Consolidated total		3,353		245		3,598
	Yen in millions
	Three months ended June 30, 2020
	Total net<br> restructuring <br>charges		Depreciation<br>associated with<br> restructured assets		Total
Restructuring charges and associated depreciation:
Game & Network Services		-		-		-
Music		-		-		-
Pictures		2		-		2
Electronics Products & Solutions		213		-		213
Imaging & Sensing Solutions		-		-		-
Financial Services		-		-		-
All Other and Corporate		282		-		282
Consolidated total		497		-		497

Depreciation associated with restructured assets as used in the context of the disclosures regarding restructuring activities refers to the increase in depreciation expense caused by revising the useful life and the salvage value of depreciable fixed assets under an approved restructuring plan. Any impairment of the assets is recognized immediately in the period it is identified.

47 -

Geographic Information –

Sales and operating revenue attributed to countries and areas based on location of external customers are as follows:

	Yen in millions
	Three months ended<br>June 30
Sales and operating revenue:	2019		2020
Japan		627,522		730,551
United States		435,028		464,616
Europe		362,947		361,001
China		201,088		179,579
Asia-Pacific		183,103		142,729
Other Areas		116,036		90,443
Total		1,925,724		1,968,919

Major countries and areas in each geographic segment excluding Japan, United States and China are as follows:

(1) Europe:	United Kingdom, France, Germany, Russia, Spain and Sweden
(2) Asia-Pacific:	India, South Korea and Oceania
(3) Other Areas:	The Middle East/Africa, Brazil, Mexico and Canada

There are no individually material countries with respect to sales and operating revenue included in Europe, Asia-Pacific and Other Areas.

Transfers between reportable business segments or geographic areas are made at individually negotiated prices that are intended to reflect a market-based transfer price.

There were no sales and operating revenue with any single major external customer for the three months ended June 30, 2019 and 2020.

48 -

10.	Subsequent events
(1)	Tender Offer for Common Shares and Stock Acquisition Rights of Sony Financial Holdings Inc.
---	---

Sony Corporation resolved, at the meeting of its Board of Directors held on May 19, 2020, to offer to acquire the common shares of Sony Financial Holdings Inc. (“SFH”), a consolidated subsidiary of Sony Corporation, not held by Sony Corporation and the related stock acquisition rights through a tender offer (“Tender Offer”), with the aim of making SFH a wholly-owned subsidiary of Sony Corporation, and Sony Corporation undertook the Tender Offer from May 20, 2020 through July 13, 2020. Because the aggregate number of shares (including shares subject to stock acquisition rights) tendered through the Tender Offer (the “Tendered Share Certificates, Etc.”) was equal to or greater than the minimum number of shares to be purchased through the Tender Offer, all of the Tendered Share Certificates, Etc. have been purchased by Sony Corporation. In order to procure the funds necessary to acquire the target shares and the related stock acquisition rights for the Tender Offer, Sony Corporation borrowed 322.5 billion yen from a Japanese private bank.

As a result of the Tender Offer, Sony Corporation has commenced the procedures pursuant to the provisions of Article 179 of the Companies Act of Japan, for the mandatory purchase of all of SFH’s remaining common shares not held by Sony Corporation.

Shares and Stock Acquisition Rights to be purchased: Common shares (excluding SFH’s common shares owned by Sony Corporation and the treasury shares owned by SFH) and the related stock acquisition rights
Period: From May 20, 2020 through July 13, 2020
Price: 2,600 yen per common share

259,900 yen per unit of stock acquisition right

Number of Shares purchased (including the number of shares subject to stock acquisition rights): 123,655,138 shares
Percentage of Ownership of Share Certificates, Etc. After Purchase, Etc.: 93.46%

(2)	Borrowing Funds for Acquisition of EMI Music Publishing

(3)	Setting of parameters for repurchase of shares of its own common stock

Sony Corporation approved on August 4, 2020 by resolution of the Board of Directors the setting of the following parameters for repurchase of its own common stock pursuant to the Companies Act and Sony Corporation’s Articles of Incorporation:

Total number of shares for repurchase: 20 million shares (maximum)
Total purchase price for repurchase of shares: 100 billion yen (maximum)
Period of repurchase: August 5, 2020 to March 31, 2021

49 -

(2) Other Information

(i) Dividends declared

A year-end cash dividend for Sony Corporation’s common stock was approved by a written resolution of the Board of Directors dated as of May 13, 2020 as below:

Total amount of year-end cash dividends:

30,504 million yen

Amount of year-end cash dividends per share:

25.00 yen

Payment date:

June 5, 2020

Year-end cash dividends for the fiscal year ended March 31, 2020 have been incorporated in the consolidated financial statements for the fiscal year ended March 31, 2020.

Note: Year-end cash dividends were distributed to the shareholders recorded or registered as the holders or pledgees of shares in Sony Corporation’s register of shareholders at the end of March 31, 2020.

(ii) Litigation

For the legal proceedings, please refer to “IV Financial Statements – Notes to Consolidated Financial Statements – 8. Commitments, contingent liabilities and other”.

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Sony Group Corp 6-K, filed Aug 11, 2020

About this 6-K

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