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.

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.

Overview of the separation

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

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.

Allocation of shares

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

Rights and obligations to be taken over by the new company

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

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

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.

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
  

Summary of parties

(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.

Business results for the three most recent years (unit: millions of yen)

Description of the business to be separated

Business of the Network Application & Contents Service Sector F Project

• Mobile FeliCa IC chip development and production/sales licensing
• Operation of FeliCa service platform

Assets and liabilities of the business to be separated (forecast for January 7, 2004)

5. Circumstances after separation

• Trade name
  Sony Corporation
• Field of business
  Manufacture and sale of electronic and
• Location of head office
  7-35, Kitashinagawa 6-chome, Shinagawa-ku, Tokyo
• Representative
  Nobuyuki Idei, Representative Corporate Executive Officer
• Share capital
  This separation will not effect the amount of Sony's share capital.
• otal assets
  This separation will not have a material effect on Sony's total assets.
• Date of settlement
  March 31
• Effect on business results
  This separation will not have a material effect on Sony's business results.