A review of the fiscal year ended March 31, 2011 (fiscal year 2010) must first mention the Great East Japan Earthquake, which occurred near the end of the fiscal year.
  On March 11, at 2:46 p.m. local time, East Japan was struck by a 9.0-magnitude earthquake, immediately followed by a giant tsunami, which had, in addition to the tragic loss of life and property, a profound psychological and financial impact on the people of Japan. No one who works for Sony suffered major injuries or lost their lives in this disaster. However, some of our colleagues, their family members and friends sadly did suffer grievous losses. I am sure that there are shareholders who were directly affected by the quake, and I would like to begin by expressing my profound condolences to all who were affected by this disaster. You are in my prayers.

  While the scars of the disaster were still fresh, I visited Sony’s Sendai Technology Center, the first floor of which had been heavily damaged when the tsunami swept through. In the tense hours after the quake, our resourceful Sony colleagues ensured the safety of the many people who had fled and taken refuge in the facility. They made boats out of containers found in their building to rescue local residents carried aloft by the tsunami. They also ferried food and other supplies to employees and neighbors in evacuation spots.
  These were just a few of the many, many acts of bravery, generosity and ingenuity that so deeply impressed me. These acts, along with the patience and perseverance shown by those affected, have come to characterize the spirit of fukutsu no seishin (“never give up”) that has helped to guide Japan through this challenge. I am extremely proud of the courageous way Sony employees in Japan have coped with the tremendous difficulties they have faced.
  Sony Group companies and employees both in Japan and overseas generously responded to those in need. More than 70,000 Sony employees from around the world contributed hundreds of millions of yen from their own pockets, which we doubled through our matching program. Millions of dollars were generated through a charity album, Songs for Japan, produced by Sony Music Entertainment with other music majors. Between these and many other charitable activities, including corporate donations of cash and countless Sony products as well as sending volunteer employees to the affected regions, the Sony Group has contributed to the rebuilding of East Japan, and these activities will continue.
  I have no doubt that Japan will be an even more vibrant country after the rebuilding of East Japan, and the same is true for Sony. Today, we are inspired to move forward with an even-stronger sense of unity and purpose.

  On April 23, 2011, we at Sony were saddened by another loss. Norio Ohga, Senior Advisor and former President and Chairman of Sony Corporation, passed away.
  A peerless leader, Mr. Ohga pushed forward with and succeeded in achieving the integration of art and technology, and of hardware and entertainment—the vision of Sony founders Masaru Ibuka and Akio Morita. It is no exaggeration to attribute Sony’s evolution beyond audio and video products into music, movies and games, as well as its subsequent transformation into a global entertainment leader, to Mr. Ohga’s foresight and leadership. Another of Mr. Ohga’s achievements was Sony’s commercialization of the world’s first CD player in 1982, after he led the development of the optical disc format we know today as the CD. A trained vocalist before joining Sony, Mr. Ohga also remained committed to music, serving as Director of Sony Music Foundation, and was tireless in his efforts to promote greater familiarity with music worldwide.
  We will continue to value the spirit of innovation—Sony’s DNA—that we have inherited from our founders, as well as from Mr. Ohga, as we press ahead with our efforts to achieve growth over the medium term and beyond.

Fiscal year 2010 was a watershed year, during which we realized substantial benefits from the decisive transformation process initiated in fiscal year 2008, undertaken with the aim of improving our operations and creating a foundation for future growth.
  Notwithstanding the adverse influence of foreign exchange rates and the earthquake, our operating results in fiscal year 2010 were, on the whole, very encouraging. Consolidated sales and operating revenue remained at the same level as the previous year, reflecting the sharp appreciation of the yen during the period, but increased 6% year-on-year on a local currency basis.
  Consolidated operating income reached 199.8 billion yen for the fiscal year, more than 6 times that of the previous year, despite the negative impact of foreign exchange rates. In contrast to the previous fiscal year, when robust results in the financial services and entertainment businesses drove our recovery from the recent global recession, the noteworthy factors behind the increase in consolidated operating income in fiscal year 2010 were the improved results in the electronics and game businesses, while we also enjoyed continued profit contribution from the financial services and entertainment businesses.^*1
  We recorded a loss attributable to Sony Corporation’s stockholders, due principally to recording approximately 360 billion yen in valuation allowances against deferred tax assets at Sony Corporation—on an unconsolidated stand-alone basis—and its national tax filing group of subsidiaries in Japan. However, this valuation allowance was a non-cash charge and had no impact on consolidated operating income or cash flow.
  We continued to implement transformation initiatives to reform our operational structure with a priority on profitability and speed. These transformation initiatives included continuing headcount reduction programs, advancing the rationalization of manufacturing operations, shifting and aggregating manufacturing to lowercost countries, and, especially in our LCD television business, utilizing the services of third party original equipment manufacturing (OEMs) and original design manufacturing (ODMs). Our fiscal year 2010 operating performance confirms that Sony’s transformation initiatives have contributed positively to our operating performance. Furthermore, we will now be in a position to apply the cash flow generated by our improved cost base to the following focus areas, to spur future growth.
  Sony’s focus areas can be distilled into four key themes, “Networked Products and Services,” “3D World,” “Competitive advantages through differentiated technologies” and “Emerging markets,” and they will drive our growth going forward. We look forward to reaching milestones in all four in fiscal year 2011 and beyond.
*1 The electronics and game businesses are included in the Consumer, Professional & Devices (CPD) segment and the Networked Products & Services (NPS) segment.

Networked products and services is the first area I’d like to touch upon.
  One of our goals is to deliver, through our wide range of appealing products, the most compelling and exciting content and entertainment experiences to our customers around the world. The integration of hardware, content and services through the network is essential to making this happen.
  One initiative to achieve this integration on the networked products front is the Sony Tablet^*2. Based on Android™^*3 3.0 and featuring innovative new designs, Sony Tablet will target the rapidly growing market for mobile devices. We announced two models of the Sony Tablet in April 2011, and we plan to launch them in the global market starting in fall 2011.
  As for networked services, in fiscal year 2010 we launched two services under the Qriocity™^*4 brand name. The two new services are “Video On Demand service powered by Qriocity™”^*5 and “Music Unlimited powered by Qriocity™,”^*6 and they are available in nine countries and across Sony’s many network-enabled products including certain BRAVIA™ LCD televisions, Blu-ray Disc™ (BD) players and home theater systems, as well as PlayStation^®3 (PS3^®), PSP® (PlayStation^®Portable) and VAIO^® PCs. Additionally, in countries where Music Unlimited powered by Qriocity is available, the service is now available on Xperia™ smartphones from Sony Ericsson, as well as Android-based third party devices.

  However, in April 2011 Sony faced a serious challenge in the form of a cyber attack launched against the PlayStation^®Network, Qriocity and the network systems of Sony Online Entertainment LLC, which forced us to temporarily shut down all of these services. We regret any concern and inconvenience that the incidents may have caused our shareholders, customers and stakeholders. Sophisticated criminal intrusions into network systems like the ones we experienced pose a threat not only to our customers, but also to the entire business world. We have engaged some of the most respected names in cyber security, and together we have worked around the clock to strengthen our information security systems and restore our services, placing our highest priority on ensuring the security of our customers’ personal information as well as regaining their trust. As of today (July 6, 2011), PlayStation^®Network services and Qriocity services in all serviced territories have been restored.
  Having learned from this experience, we continue to act quickly to further reinforce our security, while looking ahead, we will continue to integrate our networked hardware, content and services to deliver new and rich user experiences.
*2 “Sony Tablet” is a trademark of Sony Corporation.
*3 “Android” is a trademark of Google Inc.
*4 Qriocity is an online entertainment network service platform which connects many of our network-enabled devices and allows consumers to enjoy high-quality entertainment experiences across multiple devices.
*5 A premium streaming video service that allows users to choose from the latest Hollywood movies and popular movies and animation titles.
*6 A new cloud-based digital music service, through which songs are offered from all of the major music labels as well as from leading independent labels and major publishers worldwide.

One of the focus areas of Sony’s growth going forward will be to lead expansion of the 3D World. To expand our 3D businesses, we will continue to broaden the availability of both 3D-compatible hardware and high-quality 3D content.
  The 2010 FIFA World Cup South Africa™ is fresh in everyone’s memory. Sony, as an Official FIFA Partner, facilitated 3D live broadcasts of soccer matches that dazzled the world. Powerful and lively 3D images, produced by utilizing Sony’s professional 3D broadcast equipment and 3D content production know-how, were broadcast live to homes around the world for the first time.
  3D has proven to be a driver for the theatrical motion pictures business. Sony, uniquely, both creates and distributes movies in theaters, and also makes and sells the equipment used to capture, project and display them. In order to make 3D movies more widely available in theaters, we are continuing to bring digital cinema systems to theaters around the world. We have also introduced the spellbinding 3D experience that people associate with movie theaters in the home by enhancing 3D BD for 3D BD players/recorders and PS3, by popularizing 3D content distribution via network platforms such as Qriocity and PlayStation^®Network, and by launching, with partners, round-the-clock 3D broadcasting in the United States, thereby expanding opportunities for people to enjoy 3D at home.
  In addition to creating a broad range of 3D content, including movies, TV programs, music videos and games, we are making 3D personal by expanding our lineup of compact digital cameras, video cameras and other hardware that facilitate the production of user-generated content. These efforts are helping us make 3D a part of everyday life for our customers, underscoring our ongoing leadership in the 3D World.

We will also strengthen and advance our differentiated technologies and core devices—sources of our competitive advantages in electronics—as another focus area of growth going forward.
  The HDR-XR520V and HDR-XR500V Handycam^® camcorders introduced in 2009 succeeded in setting Sony further apart from other video camera brands. These models were the world’s first consumer models mounted with the “Exmor R™” back-illuminated complementary metal oxide semiconductor (CMOS) image sensor, which achieves increased sensitivity and reduced picture noise. Subsequent Handycam^® video cameras and Cyber-shot™ compact digital cameras also used this image sensor. Sony’s digital imaging business contributes

substantially to Sony’s results and its products, including the NEX-5 and NEX-3 interchangeable lens digital cameras, earned considerable acclaim—including the Nihon Keizai Shimbun Awards top prize in the Nikkei Superior Products and Services Awards for the past two consecutive years.
  We also supply image sensors to other digital camera and cell phone manufacturers around the world. Our quick responses to feedback from these companies allow us to maintain a high level of competitiveness, and help to ensure that we keep our top market share in image sensors. Looking ahead, we are responding to the rapid growth in the market for smartphones by investing decisively in CMOS image sensors to expand our production capacity and revolutionize our technologies, with the aim of further bolstering profits.
  Sony is also accelerating the growth and differentiation of our professional-use camera business by developing content creation products and security cameras that integrate our latest proprietary technologies into our image sensor and component businesses.
  In addition, Sony’s digital cinema projectors, which I mentioned earlier, display 3D images in high quality through the use of SXRD™ (Silicon X-tal Reflective Display), Sony’s proprietary high-resolution and high-speed response display technology.
  We also intend to leverage these and other technologies to foster new businesses within the growing energy and medical fields.

Lastly, we have the promising emerging markets.
  Global gross domestic product (GDP) is expected to grow by 3.5% annually through calendar year 2013, and GDP in emerging markets is expected to substantially outpace the global average. For example, it is said that the BRIC markets—Brazil, Russia, India and China—will account for more than 20% of global GDP in three years. Consumer electronics sales in the emerging markets are expected to grow sharply—18% annual growth is forecast for the BRIC markets—and Sony views the emerging markets as vital to our growth strategy. We grew our sales (local currency basis) in the BRIC markets by approximately 40% in fiscal year 2010 compared to the previous year, and we expect our sales growth in the emerging markets to continue to greatly exceed that of the market.
  There are considerable regional differences within the emerging markets, and therefore to capture market growth, we must ensure our operations are rooted firmly in each local community. Looking ahead, we will grow by capitalizing on our accrued brand strength, and on our extensive and carefully tailored local sales networks, as well as by taking advantage of our unique position as a company with operations that also encompass the B2B and entertainment fields.
  In March 2011, I visited India’s entertainment capital, Mumbai, to take part in a ceremony to inaugurate the Sony Media Technology Centre. There I had the opportunity to speak with people involved in the production of movies, television and other content both from inside and outside Sony, and I could feel just how vital the entertainment industry is in India. I also experienced firsthand the energy of this fastgrowing nation, and was particularly pleased to see bold “Sony BRAVIA” billboards along roads abuzz with speeding cars and auto rickshaws.

Sony is constantly evolving to meet the demands and opportunities of the fast-changing global business environment by creating innovative hardware, content and services.
  We realigned our electronics, game and networked service operations into two key business groups. Following the realignment, which became effective April 1, 2011, all of Sony’s consumer electronics and networked services reside in one group, the Consumer Products & Services Group, while the growing B2B, semiconductor and component businesses form the second group, the Professional, Device & Solutions Group.
  Executive Deputy President Kazuo Hirai is responsible for the Consumer Products & Services Group. He successfully led the turnaround of the game business, expanded the PlayStation^®Network and directed the launch of the Qriocity networked services platform. In his expanded role, he will continue to press for speed and efficiency while extending his focus to develop a new generation of compelling products, through which Sony will deliver seamless, exciting entertainment experiences to consumers, both at home and on the go, in order to be a company that inspires and fulfills people’s curiosity.   The Professional, Device & Solutions Group is led by Executive Deputy President Hiroshi Yoshioka, who will utilize his engineering expertise alongside his management experience to further leverage Sony’s competitive advantages in cutting-edge technologies and core devices to identify and pursue new business opportunities, including those in the energy and medical fields.
  In finally, Doug Morris, one of the most respected and influential executives in the global music industry, will join the Sony familly as the CEO of Sony Music Entertainment, effective July 1.

As you read this, millions of people around the world are experiencing Sony’s innovative and differentiated technologies on their Sony BRAVIA LCD televisions, digital cameras, VAIO^® PCs, PS3, BD players, WALKMAN^® digital music players, Reader™ digital books and Sony Ericsson smartphones, and using these and other Sony products to connect to their content, and to one another. They are using our hardware to play Sony-made games like GRAN TURISMO® 5, Motorstorm 2 or LittleBigPlanet™2, listen to Sony artists like Michael Jackson, Shakira and Adele, and to watch Sony-made films like Men in Black or The Social Network.
  Only Sony makes everything you need to bring movies, music, games, photos and books to our eyes, ears, fingertips, hearts and minds. That’s why the shortest distance between content and consumers is Sony. And that’s why I believe that Sony will be in everyone’s future, because Sony is where entertainment meets technology.
  As strongly as I believe that Japan, through the spirit of fukutsu no seishin, will overcome the terrible disaster it has suffered, I also believe that Sony, through its spirit of innovation, will realize ever-greater advances in technology and entertainment. Under the spirit of “make.believe,” I have faith in the people of Sony and in their commitment to work tirelessly to realize our dreams, because I know that anything we can imagine, we can make real. To me, our dedication and innovation are the true sources of Sony’s corporate value.
  On behalf of the management team and all of the employees of Sony, I thank you for your ongoing support.


July 6, 2011

Howard Stringer
Chairman, CEO and President
Representative Corporate Executive Officer