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November 28, 2003




Sony to Separate a Part of Its Business to Establish a Joint Venture Company
With NTT DoCoMo for FeliCa Business




Sony Corporation ("Sony") resolved at a meeting of the Executive Board held today to separate and transfer the operation of Network Application & Contents Service Sector F Project to a newly established company, FeliCa Networks, Inc. ("FeliCa Networks") on January 7, 2004.
FeliCa Networks will become a joint venture company of Sony and NTT DoCoMo, Inc. in late January 2004 through the issuance of new shares.

1. Purpose of the separation

Sony began developing FeliCa in 1988, and business use of the technology became widespread following the deployment of the technology in Hong Kong transport systems in 1997. FeliCa is now used in JR East's Suica® system, as well as in a number of transport systems around the world. Other applications include the "Edy" electronic money service, the "eLIO" online credit service and various company/organizational ID security systems. At present, 38 million cards using FeliCa chips have been issued worldwide.
This new company will develop the technology for a new IC chip, tentatively named "mobile FeliCa IC", that will integrate mobile phones with the FeliCa technology. This new company will then implement production and sales licensing agreements with chip manufacturers, and work to create a platform whereby content providers can offer mobile services that feature both flexibility and security. The mobile FeliCa IC and service platform will be developed in an open environment and provided to the widest possible range of mobile telecommunications operators and content providers.
Through the operations of this new company, Sony aims to strengthen the market and also create new technological opportunities within the mobile phone sector. At the same time, they will energetically promote the FeliCa technology service platform in order to become a pillar of the rapidly emerging world of contactless IC services.

2.Overview of the separation

(1)Schedule of the separation

November 28, 2003
Executive Board meeting to approve separation plan
January 7, 2004
Date of separation
January 7, 2004
Registration of separation

*Pursuant to the provisions of Clause 1 of Article 374-6 of the Commercial Code, Sony shall perform the separation without approval of the separation agreement by its shareholders

(2)Method of the separation

I.Method
Sony will separate a part of its business and the new company, FeliCa Networks will take over the separated part of the business.

II. Reason for adopting this method
This method was chosen because it was determined to be the most efficient means by which to transfer the relevant business.

(3)Allocation of shares
The new company will issue 85,000 shares of common stock, and will allocate all of them to Sony.

(4) Rights and obligations to be taken over by the new company

The following items (i) and (ii) are taken over by the new company.

(i) Assets (excluding intellectual property rights) relating to the business to be separated and transferred, which are considered necessary for the new company to operate.

(ii) Contracts and agreements which are considered necessary for the new company to operate, and any and all of the assets (excluding the assets specified in item (i), if any), liabilities, rights and responsibilities under such contracts and agreements.

Regarding intellectual property rights related to the business to be separated and transferred, which are owned and separately designated by Sony, Sony grants to the new company a license, subject to the terms and conditions separately agreed upon by Sony and the new company.

(5)Prospects of paying debt obligations

Based on the projected financial statement as of January 7, 2004, both Sony and the new company have significantly more assets than liabilities. Additionally, both companies are expected not to post any significant revenue declines or long term consecutive losses from their operations after the separation that are serious enough to affect their financial capability to pay their respective debt obligations. Therefore, Sony believes that both Sony and the new company can pay the debt obligations that will come due after the separation.

(6)Newly Appointed Directors of the new company
The newly appointed directors and corporate auditors of the company established by the separation are as follows:

Representative Director:
Soichi Kawachi
Director:
Yoji Tanii,
Nobuyuki Ooneda,
Masayuki Nozoe,
Naoto Terakawa
Statutory Auditor:
Hiromi Matsumoto,
Yoshiki Matsuyama


3.Summary of parties

(1) Trade name
Sony Corporation
(Separate Company)
FeliCa Networks, Inc.(New Company)
(2) Field of business
Manufacture and sale of electronic and electrical machines and equipment
Mobile FeliCa IC chip development and production/sales licensing, Operation of Mobile FeliCa service platform
(3) Date of incorporation
May 7, 1946
January 7, 2004
(4) Location of head office
7-35, Kitashinagawa 6-chome, Shinagawa-ku, Tokyo
11-1, Kitashinagawa 1-chome, Shinagawa-ku, Tokyo
(5) Representative
Nobuyuki Idei,
Representative Corporate
Executive Officer
Souichi Kawachi,
Representative Director
(6) Share capital
¥480,261 million
¥10 million
(7) Total number of shares issued and outstanding
929,488,030 shares
85,000 shares
(8) Shareholders' equity
¥1,849,256 million
¥79 million
(9) Total assets
¥3,663,008 million
¥79 million
(10) Date of settlement
March 31
March 31
(11) Number of employees
17,730
about 50
(12) Major customers
Affiliated manufacturing and sales companies inside and outside Japan
Mobile telecommunications operators and content providers
(13) Major shareholders and voting rights ratios
1 Moxley & Co. 12.8%
2 Japan Trustee Services Bank, Ltd. (Trust Account) 5.0%
3 The Chase Manhattan Bank, N. A. London 3.4%
4 The Master Trust Bank of Japan, Ltd. (Trust Account) 2.9%
5 Sumitomo Mitsui Banking Corporation 1.3%
Sony Corporation 100%
(14) Main banks
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd. and others
Sumitomo Mitsui Banking Corporation and others
(Note) The summary of Sony is as of September 30, 2003, while the summary of FeliCa Networks, Inc. is what is forecast to be the case as of January 7, 2004.

(15) Business results for the three most recent years (unit: millions of yen)
Sony Corporation (Separate Company)
Fiscal year ended on
2001/3/31
2002/3/31
2003/3/31
Net sales
3,007,584
2,644,195
2,526,264
Operating income (loss)
50,458
(52,994)
(136,644)
Ordinary income (loss)
81,502
(6,122)
(29,525)
Net income (loss)
45,002
29,635
(4,868)
Net income (loss) per share (yen)
49.18
32.22
(5.46)
Dividends per share (yen)
25
25
25
Shareholders' equity per share (yen)
2,021.33
2,024.10
1,968.62

4. Description of the business to be separated
  1. Business of the Network Application & Contents Service Sector F Project
    • Mobile FeliCa IC chip development and production/sales licensing
    • Operation of FeliCa service platform
  2. Assets and liabilities of the business to be separated (forecast for January 7, 2004)
(unit: millions of yen)
Assets Liabilities
79 0

5. Circumstances after separation
(1) Trade name
Sony Corporation
(2) Field of business
Manufacture and sale of electronic and electrical machines and equipment
(3) Location of head office
7-35, Kitashinagawa 6-chome, Shinagawa-ku, Tokyo
(4) Representative
Nobuyuki Idei, Representative Corporate Executive Officer
(5) Share capital
This separation will not effect the amount of Sony's share capital.
(6) Total assets
This separation will not have a material effect on Sony's total assets.
(7) Date of settlement
March 31
(8) Effect on business results
This separation will not have a material effect on Sony's business results.