Sony to Separate a Part of Its Business to Establish a Joint Venture Company With NTT DoCoMo for FeliCa Business
November 28 2003 - 4:48AM
UK Regulatory
Sony Corporation
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(R) 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
1. Method
Sony will separate a part of its business and the new company, FeliCa Networks
will take over the separated part of the business.
2. 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, Masayuki Nozoe, Nobuyuki Ooneda, Naoto Terakawa
Statutory Auditor : Hiromi Matsumoto, Yoshiki Matsuyama
3. Summary of parties
(1) Trade name Sony Corporation FeliCa Networks, Inc.
(Separate Company) (New Company)
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(2) Field of Manufacture and sale of Mobile FeliCa IC chip development
business electronic and electrical and production/sales licensing,
machines and equipment Operation of Mobile FeliCa
service platform
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(3) Date of May 7, 1946 January 7, 2004
incorporation
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(4) Location of 7-35, Kitashinagawa 6-chome, 11-1, Kitashinagawa 1-chome,
head office Shinagawa-ku, Tokyo Shinagawa-ku, Tokyo
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(5) Representative Nobuyuki Idei, Souichi Kawachi,
Representative Corporate Representative Director
Executive Officer
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(6) Share capital YEN480,261 million YEN10 million
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(7) Total number of
shares issued and 929,488,030 shares 85,000 shares
outstanding
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(8) Shareholders' YEN1,849,256 million YEN79 million
equity
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(9) Total assets YEN3,663,008 million YEN79 million
----------------------------------------------------------------------------------------
(10) Date of March 31 March 31
settlement
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(11) Number of about 50
employees 17,730
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(12) Major Affiliated manufacturing and Mobile telecommunications
customers sales companies inside and operators and content providers
outside Japan
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(13) Major 1 Moxley & Sony Corporation 100%
shareholders and Co. 12.8%
voting rights ratios 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%
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(14) Main banks Sumitomo Mitsui Banking Sumitomo Mitsui Banking
Corporation, The Bank of Tokyo- Corporation and others
Mitsubishi, Ltd. and others
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(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
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Operating income (loss) 50,458 (52,994) (136,644)
-----------------------------------------------------------------------------------------
Ordinary income (loss) 81,502 (6,122) (29,525)
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Net income (loss) 45,002 29,635 (4,868)
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Net income (loss) per share (yen) 49.18 32.22 (5.46)
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Dividends per share (yen) 25 25 25
-----------------------------------------------------------------------------------------
Shareholders' equity per share
(yen) 2,021.33 2,024.10 1,968.62
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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
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79 0
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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.
Contact:
Sony Corporation
Corporate Communications
TEL: 03-5448-2200