February 18, 2002 - In October last year the Dutch authorities determined that some peripherals supplied for use with the PS one game console contained cadmium levels above the limit allowed under Dutch regulations. Although Sony Computer Entertainment Europe (SCEE) has reservations regarding the interpretation of the applicable regulations, SCEE has initiated a plan to rectify the situation. The Dutch authorities have given the company until the end of March 2002 to fully complete the compliance process. Through a series of aggressive remedial steps taken by SCEE, the company was able to resume shipments within Europe in mid-December after securing appropriate peripherals.
Because of the potential wider ramifications of the causes behind the PS one incident, and despite the same reservations described above, Sony initiated its own inspection of other peripherals and products throughout its entire supply chain in parallel with the PS one compliance program.
Given the wide range of products and peripherals Sony offers, the inspection program is ongoing. As part of this program, Sony has suspended shipments of a limited number of products to retail within Europe, and has also begun the rework of some models in the existing inventory in order to replace certain peripherals, cables and accessories. Sony is now able to confirm that all current production of consumer products for the European market is compliant.
Although this is an inconvenience to Sony's retail partners, shipments of current production and reworked models will become available shortly. The identified models account for approximately 7% of the current Sony models available in Europe. Sony Corporation estimates an impact on sales of approximately EUR 110 million and on operating profit of approximately EUR 52 million including costs of rework, on a consolidated basis for the fiscal which ends March 31, 2002.
There are no health risks associated with the use of plastics containing cadmium. However, in order to prevent long-term environmental effects resulting from the incorrect disposal of the plastics after use, company standards as well as regulations limit the amount of cadmium which is used as a stabilizer or coloring agent in plastics.