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May 15, 2001



Issuance of Shares of Subsidiary Tracking Stock Linked to Sony Communication Network Corporation



Sony Corporation will not register any portion of the offering of Subsidiary Tracking Stock in the United States or offer any Subsidiary Tracking Stock in the United States. The Subsidiary Tracking Stock or other securities may not be offered for sale or sold in the United States absent registration or an exemption from registration requirements under the U.S. Securities Act of 1933, as amended.
These materials do not constitute an offer for sale of securities in the United States or any other jurisdiction in which such an offer is restricted.


Sony Corporation (the "Corporation") resolved at a meeting of its Board of Directors today to issue Shares of Subsidiary Tracking Stock, the economic value of which is intended to be linked with the economic value of Sony Communication Network Corporation, a wholly-owned Japanese subsidiary engaged in the provision of internet related services. (Please see Annex attached hereto for an outline of the terms of the Shares of Subsidiary Tracking Stock.)
The following is an outline of the issuance of the Shares of Subsidiary Tracking Stock.


1. Type of New Shares: Par value shares of Subsidiary Tracking Stock (par value 50 yen per share)
2. Number of Shares to be Issued: 3,072,000 shares
3. Issue Price: To be determined at a meeting of the Board of Directors to be held hereafter.
4. Portion of the Issue Price which will not be accounted for as stated capital:
To be determined at a meeting of the Board of Directors to be held hereafter.
5. Method of Offering:
Public offering in Japan
6. Payment Date: June 19, 2001
7. Commencement Date for Dividend Accrual: April 1, 2001


Annex


-Outline of Terms of Shares of Subsidiary Tracking Stock-
1. Voting Right
One (1) vote per one (1) share (subject to the restrictions under the unit share system)
2. Name of Subsidiary to Which Subsidiary Tracking Stock Links
Sony Communication Network Corporation (hereinafter referred to as the "Subsidiary")
3. Dividends
(1) Dividends for Subsidiary Tracking Stock
The dividends in an amount obtained by multiplying the amount of dividends per share of common stock of the Subsidiary (hereinafter referred to as the "Subsidiary Shares") proposed by the Board of Directors of the Subsidiary included in the proposed appropriation of retained earnings for the most recent accounting period of the Subsidiary ending on or prior to the last day of each accounting period of the Corporation, by the Standard Ratio (initially 0.01) (hereinafter referred to as the "Dividends for Subsidiary Tracking Stock") shall be paid for such accounting period of the Corporation in priority to the payment of dividends to the holders of shares of common stock of the Corporation; provided, however, that such amount shall not exceed the amount obtained by multiplying one hundred thousand yen (100,000 yen) by the Standard Ratio as of the end of the relevant accounting period of the Corporation (hereinafter referred to as the "Maximum Dividend Amount of Subsidiary Tracking Stock") per share.

(2) Non-Participation
No dividends other than the Dividends for Subsidiary Tracking Stock shall be paid.

(3) Cumulation
If the amount of the Dividends for Subsidiary Tracking Stock paid to the Shareholders of Subsidiary Tracking Stock is less than the amount determined pursuant to Paragraph 3(1) above, such shortfall shall be cumulated as dividends for the following terms (hereinafter referred to as the "Cumulative Unpaid Dividends"). The Cumulative Unpaid Dividends shall be paid for each subsequent accounting period, subject to the limitation of the Maximum Dividend Amount of Subsidiary Tracking Stock prior to the payment of the Dividends for Subsidiary Tracking Stock for the relevant accounting period and in priority to the payment of dividends to the holders of shares of common stock of the Corporation. In the event that any Cumulative Unpaid Dividends are paid for a certain accounting period, the amount obtained by deducting such amount paid for the relevant Cumulative Unpaid Dividends from the Maximum Dividend Amount of Subsidiary Tracking Stock shall be deemed the Maximum Dividend Amount of Subsidiary Tracking Stock for the purpose of determination of the amount of the Dividends for Subsidiary Tracking Stock for such accounting period.

(4) Interim Dividends for Subsidiary Tracking Stock
The interim dividends in an amount obtained by multiplying the amount of the interim dividends per share of the Subsidiary Shares resolved by the Board of Directors of the Subsidiary to pay with respect to the most recent record date for payment of the interim dividends of the Subsidiary on or before the Record Date for Interim Dividends of the Corporation (September 30 of each year) by the Standard Ratio as of the relevant Record Date for Interim Dividends in priority to the payment of dividends to the holders of shares of common stock of the Corporation; provided, however, that such amount shall not exceed the amount obtained by multiplying one hundred thousand yen (100,000 yen) by the Standard Ratio as of the relevant Record Date for Interim Dividends per share.
 
4. Distribution of Residual Assets
In distributing the residual assets, as long as they include the Subsidiary Shares, the Corporation shall distribute, per share of the Subsidiary Tracking Stock, the number of shares of the Subsidiary Shares obtained by multiplying one (1) by the Standard Ratio as of the distribution date of the residual assets (in case there is any shortfall in the total number of the Subsidiary Shares included in the residual assets, the number of the Subsidiary Shares to be distributed shall be adjusted in proportion to the number of the shares of the Subsidiary Tracking Stock held by each holders thereof), or pay the amount obtained by way of disposition of the Subsidiary Shares, in proportion to the distribution of any residual assets to the holders of shares of common stock of the Corporation.

No distribution of residual assets other than those prescribed above shall be made with respect to the shares of the Subsidiary Tracking Stock.
 
5. Retirement of Stock
(1) Voluntary Retirement
The Corporation may, at any time, purchase the shares of the Subsidiary Tracking Stock and retire them at the purchase price of such shares with the profit distributable as dividends to shareholders.

(2) Compulsory Retirement - Part 1
After a lapse of three (3) years from the initial issuance date of the shares of the Subsidiary Tracking Stock, the Corporation may, by a resolution of the Board of Directors, compulsorily retire all (but not part of) the shares of the Subsidiary Tracking Stock with its profit distributable as dividends to shareholders, by paying to the holders of the shares of Subsidiary Tracking Stock (hereinafter referred to as the "Shareholders of Subsidiary Tracking Stock") the amount equivalent to the market price of the shares of the Subsidiary Tracking Stock to be determined in accordance with the method prescribed in the Articles of Incorporation of the Corporation.

(3) Compulsory Retirement-Part 2
After a lapse of three (3) years from the initial issuance date of the shares of the Subsidiary Tracking Stock, the Corporation may compulsorily retire all (but not part of) the shares of the Subsidiary Tracking Stock through the procedures prescribed for capital reduction, by paying to the Shareholders of Subsidiary Tracking Stock the amount equivalent to the market price of the shares of the Subsidiary Tracking Stock to be determined in accordance with the method prescribed in the Articles of Incorporation of the Corporation.

6. Compulsory Conversion
After a lapse of three (3) years from the initial issuance date of the shares of the Subsidiary Tracking Stock, the Corporation may cause the compulsory conversion of each share of the Subsidiary Tracking Stock into shares of common stock of the Corporation in the number obtained by dividing the number obtained by multiplying the market price of the shares of the Subsidiary Tracking Stock to be determined in accordance with the method prescribed in the Articles of Incorporation of the Corporation by 1.1 by the market price of the shares of common stock of the Corporation to be determined in accordance with the method prescribed in the Articles of Incorporation of the Corporation; provided, however, that such conversion shall be implemented only in the case where the common stock of the Corporation is listed on or registered at any Stock Exchange.

7. Compulsory Termination
(1) Compulsory Termination - Part 1
The Corporation shall, without delay, compulsorily retire all (but not part of) the shares of the Subsidiary Tracking Stock or compulsorily convert them into the shares of common stock of the Corporation if any of the events described in Items (i) through (vi) below shall occur:

(i) If the Subsidiary disposes of, by way of transfer, succession under the provisions of corporate split under the Commercial Code or other methods, assets having a value not less than eighty percent (80%) of the consolidated total assets in the Subsidiary's consolidated balance sheet as of the last day of the most recent accounting period or businesses the disposition of which is anticipated to reduce not less than eighty percent (80%) of the consolidated net sales appearing on the Subsidiary's consolidated statement of income for the most recent accounting period;

(ii) If the Subsidiary ceases to be a subsidiary of the Corporation;

(iii) If a situation continues for at least three (3) months in which the total number of the shares of the Subsidiary directly owned by the Corporation is less than the number obtained by multiplying the total number of the shares of the Subsidiary Tracking Stock held by the Shareholders of Subsidiary Tracking Stock by the Standard Ratio;

(iv) If the Subsidiary adopts a resolution to dissolve;

(v) If the Subsidiary files a petition for bankruptcy or for commencement of a corporate reorganization procedure, rehabilitation procedure or corporate arrangement procedure, or if a declaration of bankruptcy, a court decision to commence a reorganization procedure or rehabilitation procedure or a court order to commence a corporate arrangement is made with respect to the Subsidiary; or

(vi) If an event that falls within the requirements for the de-listing or de-registration of the shares of the Subsidiary Tracking Stock occurs at all the Stock Exchanges where the shares of the Subsidiary Tracking Stock are listed or registered.

(2) Compulsory Termination - Part 2
The Corporation shall, without delay, compulsorily retire all the shares of the Subsidiary Tracking Stock or compulsorily convert them into the shares of common stock of the Corporation if the listing of the Subsidiary Shares on, or the registration of the Subsidiary Shares at, a Stock Exchange is approved by the competent authorities of such Stock Exchange. In this case, the Corporation may retire all the shares of the Subsidiary Tracking Stock by means of delivering for each share of the Subsidiary Tracking Stock the Subsidiary Shares in the number obtained by multiplying one (1) by the Standard Ratio to the Shareholders of Subsidiary Tracking Stock.

8. Adjustment of Standard Ratio
If it is necessary to adjust the Standard Ratio due to the issuance of shares of Subsidiary Tracking Stock or Subsidiary Shares at a price less than the respective market price thereof (including the issuance of convertible bonds, bonds with warrants, etc.), the split or consolidation of shares of Subsidiary Tracking Stock or Subsidiary Shares, or the reduction of capital of the Corporation or the Subsidiary or a merger, consolidation, corporate split, share exchange or share transfer by the Corporation or the Subsidiary, the Standard Ratio shall be adjusted in accordance with the method prescribed for in the Articles of Incorporation of the Corporation and as determined by the Board of Directors of the Corporation.

9. Stock Split, Stock Consolidation and Granting of Share Subscription Rights
The Corporation may split or consolidate the shares of common stock and/or the shares of the Subsidiary Tracking Stock. In addition, the Corporation may grant, in respect of the shares of common stock and/or the shares of the Subsidiary Tracking Stock, the right to subscribe for the relevant shares.

The Corporation may make stock splits in respect of the shares of common stock and the shares of the Subsidiary Tracking Stock at the same time in different split ratios. In addition, the Corporation may grant the right to subscribe for the respective shares of common stock and the Subsidiary Tracking Stock at the same time on different terms.