Sony 1999 Annual Report Download - page 4

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Sony Corporation Annual Report 1999
Furthermore, Sony operates Digital Network Solutions (DNS) directly under the group
headquarters in order to focus on building new network-related businesses. By developing
essential technologies and charting business strategies, DNS will strive to create network
business platforms that directly link Sony with its customers. DNS aims to support the
building of network services for the distribution of not only digital content, such as music
and movies, but also insurance and financial services.
Finally, to enhance the profitability of the Electronics business, we have continued to
review our cost structure. We will set concrete goals and make aggressive efforts to improve
our supply chain, reorganize our manufacturing infrastructure, and maintain proper em-
ployment levels. With regard to manufacturing, we plan to consolidate our current 70 manufacturing
facilities into approximately 55 by the end of March 2003. With regard to human resources,
we intend to reduce the total group headcount by approximately 10% by the end of March
2003, including normal attrition.
PRIVATIZING THREE SONY GROUP SUBSIDIARIES
Sony Corporation has agreed with Sony Music Entertainment (Japan) Inc., Sony Chemicals
Corporation, and Sony Precision Technology Inc. to make each of these Sony Group compa-
nies a 100% owned subsidiary of Sony Corporation, with January 1, 2000 as a target date.
Sony believes this action will enable it to deepen cooperation among its businesses, maxi-
mize the merits of working together, and implement group-wide strategies more quickly.
We plan to carry out these transactions through a share exchange mechanism that will
be permitted if certain proposed amendments to the Commercial Code, which are to be
considered during the 1999 ordinary session of the Japanese Diet, are adopted. If these
amendments are not adopted, we plan to privatize the three companies under existing law.
We estimate that the integration of these companies will result in the issuance of approxi-
mately 33 million new shares of Sony Corporation common stock. Whichever method is
used, it will be necessary for the appropriate shareholder resolutions to be adopted both by
Sony Corporation and by each subsidiary.