CONFIDENTIAL -- Sony Pictures Entertainment Work Product FY10 Budget Overview February 2009.

CONFIDENTIAL -- Sony Pictures Entertainment Work Product

FY10 Budget Overview

February 2009


Agenda

Page

FY09 Q4 Forecast

FY09 Budget Highlights

Strategic Objectives

FY10 Budget Overview

Appendices


Q4 Forecast Q4 Variance FY09 Budget Variance

3

FY09 Q4 Revenue, EBIT Summary & Net Cash Flow (FINANCE TO ADD)

Commentary on Variances•

Risks & Opportunities•

CONFIDENTIAL -- Sony Pictures Entertainment Work Product 4

FY09 Budget Highlights (TO WORDSMITH, BOUNCE)

• Cost reduction initiatives– Headcount reductions– Hiring policy changes (production-based model)– OT policy changes– Reduce average salary levels by redesigning the workforce in favor of younger, more energetic, les expensive talent,

leveraging the IPAX program– Reduce non-contractual salary increases– Redesign employee benefits (both mix and eligibility) to reduce fringe rate– Redesign bonus plan– New Mexico production rebate– Improve utilization of billable employees (Production Portal)– Redesign organization structure and management team– Reduce employees under contract and/or make it easier to terminate contractual employees– Implement better systems for performance tracking– Increased density of existing office space and resize facility to new headcount levels– Eliminate underutilized equipment, licenses, and office space– Reduce maintenance expenses

• Timing on Hotel T

• Open Season 2

• Surf’s Up

CONFIDENTIAL -- Sony Pictures Entertainment Work Product page 5

SPDP’s Strategic Objectives

• Prioritize Imageworks around needs of SPA & Columbia, using excess capacity to service third parties

• Reduce facility size and execute on cost reduction initiatives at Imageworks

• Manage visual effects business on a break-even basis, only charging internal productions “at cost” (no profit)

• Increase SPE’s participation and success in family features market

– CG animated films at the high end ($100MM+) and mid-tier ($25-50MM)

– Animation/live action hybrids– DTV sequels

• Shepard Aardman relationship for SPE

• Expand digital marketing services beyond SPE to third parties via Imageworks Interactive

Focus on High Margin, Growth

Businesses


FY10 Financial Summary (FINANCE TO ADD)

Commentary •


FY10 Revenue & EBIT (FINANCE TO ADD)

Commentary •


FY10 Net Cash Flow (FINANCE TO ADD)

Commentary •


FY10 Risks & Opportunities (FINANCE TO ADD)

Commentary •


Appendix


CLO STRIP (FINANCE)


Cost Reduction (FINANCE)


Revenue to Net Income (FINANCE)

CONFIDENTIAL -- Sony Pictures Entertainment Work Product FY10 Budget Overview February 2009.

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