(Translation)
This document is an English translation of the notice for the general meeting of shareholders originally
written in Japanese. This translation was made for reference purpose only and all warranties, and inparticular the accuracy of this translation, are hereby disclaimed.

(Securities Identification Code: 6703)
June 2, 2017

NOTICE OF 93RD ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 93RD
ordinary general meeting of shareholders will be held as follows. We would be grateful if you
could attend the meeting.
Those who will not be able to attend the meeting are kindly requested to review “Instructions for
the Exercise of Voting Rights” on page 2 and exercise their voting rights no later than 5:15 p.m.,
June 22 (Thursday), 2017 (JST).
Yours faithfully,
Hideichi Kawasaki,
Chairman of the Board, Representative Director
Oki Electric Industry Co., Ltd.
1-7-12 Toranomon, Minato-ku, Tokyo-1-

(Translation)
1.
Date and Time:
Friday, June 23, 2017, from 10:00 a.m.
2.
Location:
Nikkei Hall, 3F Nikkei Building, 1-3-7 Otemachi, Chiyoda-ku, Tokyo
3.
Meeting Agenda
Items to be reported:
1. Business Report, Consolidated Financial Statements and audit results of theConsolidated Financial Statements by the Accounting Auditor and the Audit &Supervisory Board for the 93rd fiscal year (from April 1, 2016 to March 31,
2017)
2. Non-consolidated Financial Statements for the 93rd fiscal year (from April 1,2016 to March 31, 2017)
Items to be resolved:
Agenda 1:
Agenda 2:
Agenda 3:
Agenda 4:

Appropriation of Surplus
Election of Seven (7) Directors
Election of One (1) Audit & Supervisory Board Member
Election of Accounting Auditor

Instructions for the Exercise of Voting Rights
Exercise of voting rights via attending the general meeting of shareholders:
Please bring the enclosed ballot and submit at the reception desk of the meeting.
Exercise of voting rights via postal mail:Please indicate your approval or disapproval in the space provided on the ballot and return theballot to the Company no later than 5:15 p.m., June 22 (Thursday), 2017 (JST).
Exercise of voting rights via the Internet:
Please read “Instructions for the Exercise of Voting Rights via the Internet” on page 12, andindicate your approval or disapproval no later than 5:15 p.m., June 22 (Thursday), 2017 (JST).
* The Company has provided the Notice of 93rd Ordinary General Meeting of Shareholders on its Internet
website (http://www.oki.com/jp/). Any amendment to the Company’s Reference Documents for the
General Meeting of Shareholders, the Business Report, and the Consolidated and Non-consolidated
Financial Statements will be announced on the website.

-2-

(Translation)

Reference Documents for the General Meeting of Shareholders
Agenda and Reference Matters
Agenda 1: Appropriation of Surplus
The Company has determined to pay the following year-end dividend for the fiscal year
under review with the emphasis on continuing stable distribution of profits to shareholders bygiving consideration to its business results and business developments, etc. for the period underreview.
1.

Type of dividend asset
Cash

2.

Allocation of dividend assets and total amount of dividends
Common stock of the Company¥30 per share
Total dividends¥2,605,847,550

3.

Effective date of dividend of surplus
June 26, 2017-3-

(Translation)
Agenda 2: Election of Seven (7) Directors
The tenure of office of Directors Hideichi Kawasaki, Shinya Kamagami, Toshinao Takeuchi,
Toshiya Hatakeyama, Masayuki Hoshi, Takuma Ishiyama and Minoru Morio will expire at the endof this general meeting of shareholders.
Seven candidates for directors are shown as follows.
CandidatenumberName(Date of birth)

Brief personal profile, position andresponsibility in the Company and significant concurrent positions

HideichiKawasaki

Apr. 1970

Joined Oki Electric Industry Co., Ltd.

Apr. 2001

Executive Officer(January 10, 1947)

Apr. 2004

Senior Vice President

Jun. 2005
Managing Director
Number of years in
Apr. 2009
Senior Executive Vice President, Representative Director
office as Director:
12 yearsPresident, Representative Director(as of the conclusion of Jun. 2009
this general meeting of Apr. 2016
Chairman of the Board, Representative Director (incumbent)
shareholders)[Re-election]
1
Number of attendance at Reason for the selection of candidate for Director
meetings of the Board Based on his past experience as President and Representative Director, Mr.
Hideichi Kawasaki has the knowledge and experience to decide importantof Directors(the year under review): matters and supervise the business execution of Directors and Executive Officers
in an appropriate, fair, and efficient manner. Since 2016, Mr. Kawasaki has
15 out of 15 times
been assisting and advising the new management team as Representative(100%)
Director and Chairman of the Board. He has been nominated as a candidate for
Number of Oki shares Director because it is expected that, as a member of the board, he will continue
to enhance information sharing among directors and strengthen the Board of
held:
Director’s decision making functions.
Common stock
14,900 shares

ShinyaKamagami(February 9, 1959)[Re-election]
2

Apr. 1981

Joined Oki Electric Industry Co., Ltd.

Apr. 2001

Manager, Hardware Development Department No. 2, Terminal
Systems Division, Systems Solution Company

Apr. 2005

Manager, Systems Hardware Development Division, Systems
Hardware Company, Systems Networks Business Group

Number of years in
office as Director:
Apr. 2011
3 years(as of the conclusion of Apr. 2012
this general meeting ofJun. 2014
shareholders)

Executive Officer
Senior Vice President
Senior Vice President and Member of the Board

Apr. 2016
President, Representative Director (incumbent)
Number of attendance atmeetings of the Boardof Directors
Reason for the selection of candidate for Director(the year under review): Based on his past experience serving in business divisions and headquarters
15 out of 15 times
divisions, Mr. Shinya Kamagami has the knowledge and experience to decide(100%)
important matters and supervise the business execution of Directors andExecutive Officers in an appropriate, fair, and efficient manner.
Mr.
Number of Oki shares Kamagami has been engaging in management of OKI Group as President and
held:
Representative Director since 2016. He has been nominated as a candidate for
Common stock
Director because it is expected that, as a member of the board and the Chairman,
4,500 shares
he will continue to enhance information sharing among directors and strengthen
the Board of Director’s decision making functions.

-4-(Translation)
CandidatenumberName(Date of birth)

Brief personal profile, position andresponsibility in the Company and significant concurrent positions
Apr. 1980

Joined Oki Electric Industry Co., Ltd.

Jul. 1997

Manager, E-commerce System Engineering Department,
Financials Systems Division, System Business Group

Toshinao
TakeuchiApr. 2002

President, Net Business Solution Company

Nov. 2008

Manager, Financials Systems Division(May 20, 1957)

Apr. 2009

Executive Officer

Apr. 2012
Senior Vice President
Number of years in
office as Director:
Jun. 2014
Senior Vice President and Member of the Board
3 years(as of the conclusion of Apr. 2016
Executive Vice President and Member of the Board
this general meeting ofGeneral Manager, ICT Business Division
shareholders)[Re-election]
Apr. 2017
Senior Executive Vice President (incumbent), General Manager,
3
Number of attendance at
Corporate Management Group (incumbent), Chief Internal
meetings of the Board
Control Officer (incumbent), and Chief Compliance Officer
of Directors(incumbent)(the year under review):
15 out of 15 times
Reason for the selection of candidate for Director(100%)
Mr. Toshinao Takeuchi is well versed in the circumstances of the sales andNumber of Oki shares business of the Company through his experience in development and planning in
the ICT business, as president of venture companies, and as Manager ofheld:Marketing & Sales Division. In his position serving concurrently as Senior
Common stock
Executive Vice President and Member of the Board, and General Manager of
5,400 shares
Corporate Management Group, he has been engaging in management of theCompany from fiscal 2016. He has been nominated as a candidate for Director
because it is expected that, as a member of the board, he will continue toenhance information sharing among directors and strengthen the Board of
Director’s decision making functions.

-5-(Translation)
CandidatenumberName(Date of birth)

Masayuki Hoshi

Brief personal profile, position andresponsibility in the Company and significant concurrent positions
Apr. 1982

Joined The Fuji Bank, Limited

Apr. 2007

General Manager of Global Trade Finance Division, Mizuho
Corporate Bank, Ltd.

Apr. 2009

Executive Officer, General Manager of Corporate Banking
Division No.17, Mizuho Corporate Bank, Ltd.

(March 9, 1960)
Apr. 2011
Number of years in
office as Director:
Apr. 2014
1 year(as of the conclusion of
May 2015
this general meeting ofshareholders)
Apr. 2016

Managing Executive Officer, Head of Global Transaction Banking
Unit
Managing Executive Officer
Senior Vice President, Oki Electric Industry Co., Ltd.

Chief Risk Management Officer
General Manager, Corporate Planning Group (incumbent)[Re-election]
Number of attendance at
4
Senior Vice President and Member of the Board
meetings of the Board Jun. 2016of Directors
Apr. 2017
Executive Vice President and Member of the Board (incumbent),(the year under review):
Chief Financial Officer (incumbent)
11 out of 11 times(100%)
Reason for the selection of candidate for Director
Number of Oki shares Mr. Masayuki Hoshi has abundant experience gained as Managing Executive
held:
Officer at Mizuho Financial Group, which the candidate comes from, and has a
Common stock
deep understanding of governance and the Company’s aim to become a global
2,000 sharesbusiness. He is playing a core role in management by concurrently serving as
Executive Vice President and Member of the Board and General Manager,
Corporate Planning Group from this fiscal year. He has been nominated as a
candidate for Director because it is expected that, as a member of the board, hewill enhance information sharing among directors and strengthen the Board of
Director’s decision making functions.

-6-(Translation)
CandidatenumberName(Date of birth)

Brief personal profile, position andresponsibility in the Company and significant concurrent positions
Mar. 1975

Takuma Ishiyama Jul. 1978

Obtained scores for doctorate degrees and resigned from Graduate
School of Law, Waseda University
Assistant Professor, Faculty of Law, Aichi Gakuin University(February 17, 1947)
Dec. 1985
Number of years in
Apr. 1986
office as Director:
7 years
Apr. 1991(as of the conclusion ofthis general meeting of May 2003
shareholders)
Apr. 2004

Obtained doctorate degree
Professor, Faculty of Law, Dokkyo University
Professor, School of Commerce, Waseda University
Registered as lawyer (Dai-ichi Tokyo Bar Association)

Professor, Law School, Nihon University[Outside][Re-election] Number of attendance at Jun. 2010
Director, Oki Electric Industry Co., Ltd. (incumbent)
5meetings of the Board
Apr. 2017
Visiting Professor, Law School, Nihon University (incumbent)
of Directors(the year under review):
15 out of 15 times
Reason for the selection of candidate for Outside Director(100%)
Mr. Takuma Ishiyama possesses experience and advanced knowledge as alawyer and Doctor of Laws. Considering also his high ethical standard, theNumber of Oki sharesCompany judges that he is able to perform appropriate supervising over theheld:business management at the Company from his objective standpoint and in line
Common stockwith the trend toward strengthening governance. He has been nominated as a
0 sharescandidate for Director because it is expected that, as a member of the board, hewill continue to enhance information sharing among directors and strengthen the
Board of Director’s decision making functions.
Apr. 1963

Joined Sony Corporation

Jun. 1988

Director, Sony Corporation

Minoru MorioJun. 1993

Executive Deputy President, Sony Corporation(May 20, 1939)

Jun. 2001

Outside Director, Oki Electric Co., Ltd.

Number of years in
office as Director:
9 years(from 2001 to 2010)
2 years(from 2015)

Apr. 2006

Executive Alumnus, Sony Corporation (incumbent)

Jun. 2010

Resigned as Director, Oki Electric Co., Ltd.

Jun. 2013

Outside Director, the Bank of Yokohama, Ltd. (incumbent)

Jun. 2015

Outside Director, Oki Electric Industry Co., Ltd. (incumbent)[Outside]
Apr. 2016
Outside Director, Concordia Financial Group, Ltd. (incumbent)[Re-election] Number of attendance at(Significant concurrent positions)6
meetings of the Board
Outside Director, the Bank of Yokohama, Ltd.
of Directors(the year under review): Outside Director, Concordia Financial Group, Ltd.
15 out of 15 times(100%)
Reason for the selection of candidate for Outside Director
Number of Oki shares Mr. Minoru Morio has a wealth of experience and knowledge cultivated throughhis career at Sony Corporation and high ethical standard. Based on his trackheld:record at Oki Electric and other companies, the Company judges that he is able
Common stock
to provide appropriate supervision on management, business, and governance
1,000 sharesissues. He has been nominated as a candidate for Director because it isexpected that, as a member of the board, he will continue to enhance information
sharing among directors and strengthen the Board of Director’s decision making
functions.

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Candidatenumber[Outside][Newlynominated]
7

Name(Date of birth)

Brief personal profile, position andresponsibility in the Company and significant concurrent positions
Apr. 1992

Associate Professor, Faculty of Economics, Gakushuin University

Mar. 1994

Ph.D., Economics, University of Tokyo

Shigeru Asaba

Apr. 1997

Professor, Faculty of Economics, Gakushuin University(May 21, 1961)

Apr. 2013

Professor, Graduate School of Commerce, Waseda University

Number of years in
office as Director:–

Apr. 2016

Professor, Waseda Business School (Graduate School of Businessand Finance)

Jun. 2016

Outside Director, Nippon Beet Sugar Manufacturing Co., Ltd.
(incumbent)

Number of attendance atDean, Waseda Business School (Graduate School of Business andmeetings of the Board Sep. 2016
Finance) (incumbent)
of Directors(the year under review):–
Reason for the selection of candidate for Outside Director
As a professor of economics, Mr. Shigeru Asaba has academic expertise in
Number of Oki sharesbusiness in general though his specialist knowledge in the fields of industrial
held:organizations, corporate strategy, competitive strategy, ownership structures andCommon stock
strategies, and family-run businesses as well as high ethical standards. He also
0 shareshas experience as Outside Director at Nippon Beet Sugar Manufacturing Co.,
Ltd. He has been nominated as a candidate for Director because it is expected
that, as a member of the board, he will enhance information sharing among
directors and strengthen the Board of Director’s decision making functions.

Notes:
1. There is no special conflict of interest between each candidate and the Company.
2. Mr. Takuma Ishiyama, Mr. Minoru Morio, and Mr. Shigeru Asaba are candidates for outside directors.
3. Mr. Minoru Morio was an outside director of the Company from June, 2001 to June, 2010.
4. The Company has entered into the liability limitation agreement with candidates for outside directors Takuma
Ishiyama and Minoru Morio. The outline of the agreement is provided in “Outline of Liability Limitation
Agreements” (on page 28) in the Business Report. If their reappointment is approved, the Company will continue
this agreement with them. If the appointment of Mr. Shigeru Asaba, a candidate for outside director, is approved,
the Company will enter into the same agreement with him.
5. Mr. Takuma Ishiyama and Mr. Minoru Morio are independent officers based on the terms of the Tokyo Stock
Exchange. If their reappointment is approved, they will continue to be independent officers. If the appointmentof Mr. Shigeru Asaba, a candidate for outside director, is approved, he will be an independent officer.
The volume of transactions between Sony Corporation, the Bank of Yokohama, Ltd., Concordia Financial Group,Ltd., and the Company accounts for less than 1% of the OKI Group’s net sales, and accounts for less than 1% of theeach said company’s net sales. Accordingly, Mr. Minoru Morio meets the criteria for independent officers.
The Company has no business relations with Nippon Beet Sugar Manufacturing Co., Ltd. Accordingly, Mr.
Shigeru Asaba meets the criteria for independent officers.
6. On February 2, 2017, when Mr. Takuma Ishiyama and Mr. Minoru Morio served as Outside Director, the Company
received cease and desist orders and orders for payment of surcharge from the Japan Fair Trade Commission withrespect to antitrust law violations related to digitalizing wireless communication systems for firefighting andemergency use.
Both of Mr. Ishiyama and Mr. Morio have proactively made recommendations at the meetings of the Board of
Directors from the viewpoint of legal compliance. In addition, subsequent to the revelation of the matter, they havemade recommendations on measures to prevent reoccurrence and on securing effectiveness of the measures while
checking and confirming the status of implementation of the measures.

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(Translation)
Agenda 3: Election of One (1) Audit & Supervisory Board Member
The tenure of office of Audit & Supervisory Board Member Tsutomu Tai will expire at theend of this general meeting of shareholders. The candidate for Audit & Supervisory Board
Member is shown as follows.
This agenda has been approved by the Audit & Supervisory Board.
Name(Date of birth)

Brief personal profile, position and significant concurrent positions
Apr. 1978

Joined Oki Electric Industry Co., Ltd.

[Newly-nominated]

Apr. 2001

General Manager of Strategy Planning Office, Net Business
Solution Company

Sei Yano

Apr. 2007

Executive Officer and General Manager of Corporate Strategy
Planning Office

Apr. 2009

Senior Vice President and CIO

Apr. 2010

Manager, IT Solution & Services Business DivisionJun. 2010

Senior Vice President and Member of the Board

Apr. 2012

Executive Vice President and Member of the Board

Apr. 2014

President, Oki Customer Adtech Co., Ltd.

Apr. 2017

Advisor (incumbent)(April 28, 1955)
Number of years in office as Audit &Supervisory Board Member:–(as of the conclusion of this general
meeting of shareholders)Number of attendance at meetings ofthe Board of Directors(the year under review):–
Number of attendance at meetings of
the Audit & Supervisory Board(the year under review):–
Number of Oki shares held:
Common stock
6,400 shares

Reason for the selection of candidate for Audit & Supervisory Board
MemberBased on Mr. Sei Yano’s personality, insights, and wealth of businessexperience cultivated over many years at the OKI Group, the Company judgesthat he is able to provide appropriate supervision for the Company’s
management. He also has management experience as Executive Officer andMember of the Board of the Company and President of Oki Customer Adtech
Co., Ltd. He has been nominated as a candidate for Audit & Supervisory
Board Member because it is expected that, as a member of the Audit &Supervisory Board, he will enhance information sharing among Audit &Supervisory Board members and strengthen the Board of Director’s businessexecution functions.

Notes:
1. There is no special conflict of interest between the candidate and the Company.
2. If the appointment of Mr. Sei Yano is approved, the Company will enter into the liability limitation agreement withhim. The outline of the agreement is provided in “Outline of Liability Limitation Agreements” (on page 28) in theBusiness Report.

-9-(Translation)(Reference) The Company’s stance towards independence of Outside Directors and Outside Audit &Supervisory Board Members
The Company elects Outside Directors and Outside Audit & Supervisory Board Members based on the following
policies
1)
Persons who are not business executers*1 of the OKI Group2)
Parties for whom the OKI Group is not a major business partner (parties whose sales to OKI Group exceeds 2%of the total sales of the parties’ group) or business executers thereof
3)
Parties who are not major businesses partners of the OKI Group (parties to whom OKI Group’ sales exceeds 2%of the total sales of the OKI Group) or business executers thereof
4)
Parties who are not major shareholders of the Company (parties who holds 10% or more of the total voting
rights directly or indirectly) or business executers thereof
5)
Persons who are not business executers of parties of whom the OKI Group is a major shareholder
6)
Persons who are not consultants, accounting specialist such as certified public accountants, or legal experts suchas attorney-at-law receiving significant amount of money (more than ¥10 million annually) or other property(property worth more than ¥10 million annually), except for compensation paid to Directors and Audit &Supervisory Board Members, from the OKI Group (or if the entity receiving such property is an organization
including corporation and association, persons belonging to the organization)
7)
Persons who do not belong to the accounting firm conducting statutory audits of the Company
8)
Persons who have not fallen under any of items 1) through 7) in the past 10 years
9)
Persons who are not relatives within two degrees of kinship of the following personsa.
Persons who fall under any of the above 2) through 7) (however, for the “business executers” in 2) through 5),
this applies only to principal business executers*2, for the “persons belonging to the organization” in 6), thisapplies only to principal business executers thereof or persons with professional certificates or license such as
certified public accountants and attorney-at-law if the relevant organization is an audit firm or law firm, andfor “persons who belong to the accounting firm” in 7), this applies only to principal business executers thereofor persons with professional certificates or license such as certified public accountants.)b.
Principal business executers of the OKI Groupc.
Persons who have fallen under the above b in the past 10 years*1*2“Business executers” refer to persons who perform executive roles among Directors (excluding Outside
Directors), Executive Officers, and employees etc.
“Principal business executers” refer to persons who perform important business execution among Directors(excluding Outside Directors), Executive Officers, and General Managers etc.

In addition to these policies, the Company elects Outside Directors and Outside Audit & Supervisory Board Members,on the ground of each candidate’s experience and knowledge in respective professional fields being beneficial to theCompany at present.

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(Translation)
Agenda 4: Election of Accounting Auditor
The term of office for the accounting auditor of the Company, Ernst & Young ShinNihon
LLC, will expire at the conclusion of this General Meeting of Shareholders. Shareholders arekindly requested to approve the appointment of PricewaterhouseCoopers Aarata LLC as successorof the aforementioned, subject to the resolution for approval by the Audit & Supervisory Board.
The Audit & Supervisory Board selected PricewaterhouseCoopers Aarata as a candidate forthe accounting auditor of the Company, as it expected that the candidate may conduct audit from
fresh viewpoints after years of service by the incumbent accounting auditor, and it judged that thecandidate is appropriate, based on the overall evaluation of its independence as well as quality
control systems, etc.
The outline, etc. of the candidate for the accounting auditor is as follows.
(As of March, 31, 2017)
Name
OfficeHistory

ProfilePricewaterhouseCoopers Aarata LLC
Principal office: 8-21-1 Ginza, Chuo-ku, Tokyo
Other offices:
Nagoya, Osaka, and Fukuoka
June 2006
PricewaterhouseCoopers Aarata was incorporated
July 2015
Changed its corporate name in Japanese from “Aarata Kansahoujin” to “PwC Aarata Kansa-houjin”
July 2016
Renamed to PricewaterhouseCoopers Aarata LLC with thetransition to a limited liability accounting firm
Capital: ¥1,000 million
Number of members
Partners: 129
Certified public accountants: 883
Assistant-certified public accountants and passers of all subjects: 495
U.S. CPAs and other professionals: 768
Clerks: 476
Total: 2,751
Number of audit clients (as of June 30, 2016): 930- 11 -

(Translation)

Instructions for the Exercise of Voting Rights via the Internet
1.

Matters requiring your agreement concerning the exercise of voting rights via the Internet
We kindly request your consent to the following regarding exercise of voting rights via the Internet.
1) Exercise of voting rights via the Internet is only possible by accessing the voting site designated by theCompany (http://www.it-soukai.com/) via a PC or a mobile phone. When exercising the voting rightusing this site, you are requested to log in to the site using your voting rights exercise code and password
provided in the right corner of the voting rights exercise form, enclosed with the Notice, then follow theguidance on the screen. To ensure security, you are requested to enter the password when executing thefirst log-in.
2) You are requested to complete entries by 5:15 p.m., June 22 (Thursday), 2017 (JST), which is the deadline
for execution. Please exercise your voting rights at your earliest convenience.
3) If you exercise your voting rights both in writing and via the Internet, we will regard the vote cast via theInternet to be effective.
4) If you exercise your voting rights more than once, we will regard the last vote you cast via the Internet tobe the effective one.
5) You will bear all connection charges for using the Internet (service provider access fees, communication
charges, etc.).

2.

Technical specifications
1) Internet environment: an environment, where the Internet can be used, such as conclusion of a contract
with an Internet provider, is required.
2) Browser: Internet Explorer Ver. 7 or above
3) Software
Adobe Reader Ver. 9 or later4) Screen resolution
800x600 dots (SVGA) or more

3.

Notes on information security
Please rest assured that you will be able to use our systems safely as we use cryptographic technology (SHA2) in order to prevent exercise-related information from being falsified or wiretapped.
The voting rights exercise code and password provided on your voting rights exercise form are an
important means of validating you as our shareholder. Please ensure that they are not disclosed to others.
The Company’s staff will never ask you to disclose your password.

4.

Contact
1) For information concerning the operation of personal computers for the electronic exercise of voting
rights:Stock Transfer Agency Department, Mizuho Trust & Banking Co., Ltd.
Tel: 0120-768-524 (toll-free)
From 9:00 a.m. to 9:00 p.m. excluding Saturdays, Sundays and national holidays
2) For address changes and other matters other than (1) above:
Stock Transfer Agency Department, Mizuho Trust & Banking Co., Ltd.
Tel. 0120-288-324 (toll-free)
From 9:00 a.m. to 5:00 p.m. excluding Saturdays, Sundays and national holidays

Internet Explorer is registered trademarks or trademarks of Microsoft Corporation (U.S.).
Adobe Reader are registered trademarks or trademarks of Adobe Systems Incorporated.

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(Translation)(Attachment)

Business Report(From April 1, 2016 to March 31, 2017)
1.

Status of the OKI Group(1) Operating progress and results
Economic situation
Looking at the global economy during fiscal 2016, in the U.S. there were worries about
uncertainties regarding the policies of the new administration but private consumption and thenumber of employed persons increased. In Europe, recovery continued in such areas as adownward trend in the unemployment rate. Economic conditions also firmed slightly in China
and other emerging economies. The Japanese economy also continued its moderate recovery
supported by improvement in the employment situation and corporate earnings.
Operating results for the fiscal year under review
Under this business environment, OKI Group reported net sales of ¥451.6 billion, a ¥38.7
billion or 7.9% decrease year-on-year, due to decrease in overseas sales volume in Mechatronics
systems business and Printers business despite the sales for Japanese market mainly for ICT
business roughly as planned. Operating income was ¥2.5 billion, a ¥16.1 billion decrease yearon-year, due to the provisions of allowance for doubtful accounts related to the receivables in
Chinese ATM business.
Ordinary loss was ¥2.4 billion, a ¥13.8 billion worsen year-on-year, due to recording
foreign exchange loss of 4.8 billion yen in non-operating expenses. Profit attributable toowners of parent was ¥4.7 billion, a ¥1.9 billion decrease year-on-year, as the recording of ¥12.6
billion from gain on sales of shares of subsidiaries and affiliates and ¥7.8 billion from gain on
return of assets from retirement benefits trust in extraordinary profit were offset by the recordingof ¥2.4 billion from loss on sales of non-current assets and ¥2.5 billion from loss on AntiMonopoly Act in extraordinary loss.
Looking at non-consolidated business performance, net sales were ¥212.2 billion, down
¥14.7 billion (6.5%) from the previous fiscal year. Operating income was ¥5.0 billion, adecrease of ¥4.9 billion year-on-year. Ordinary income decreased by ¥9.0 billion year-on-yearto ¥10.3 billion. Loss was ¥18.7 billion, a ¥25.1 billion worsen year-on-year, mainly due to theposting of loss on valuation of shares of subsidiaries and affiliates.
Return of profit to Shareholders
OKI’s top management priorities are to strengthen its financial position and ensure retained
earnings in order to continually improve the OKI Group’s corporate value, as well as to increase
shareholder returns so that shareholders are encouraged to hold its shares over the medium- tolong-term. OKI will reinforce its financial condition and management foundations by applying
retained earnings to investments in research & development and facilities that are critical to
future growth. In addition, OKI will attach the highest importance to maintaining stable profit
distributions to shareholders and decide dividends after taking business performance into

- 13 -

(Translation)
consideration. Based on this policy, OKI proposes to pay ¥30 per common stock as a dividend
from the surplus (year-end dividend) in the current fiscal year.
The following provides a summary of each segment.
- Net Sales by Segments(Unit: Billions of yen)
FY2015 (reference:

FY2016 (the year

previous fiscal year)

under review)

ICT
Mechatronics
Systems
Printers

191.2

EMS
OthersSegment

Total

Changes (amount)

Changes (%)

177.4(13.8)

(7.2)

113.7

100.9

(12.8)(11.2)

124.6

112.4

(12.2)

(9.8)

42.4

43.2

0.8

1.9

18.5

17.8

(0.7)

(3.9)

490.3

451.6

(38.7)(7.9)

Notes:
1.
Figures less than ¥100 million for each item are rounded to the nearest ¥100 million. The amounts of“changes (amount)” are calculated on the basis of figures in units of ¥100 million. Accordingly, insome cases the sum of individual figures presented for each item may not equal the respective “total”
stated.
2.
From the fiscal year under review, the segments has been changed from “Info-telecom systems,”“Printers,” “EMS,” and “Others” to “ICT,” “Mechatronics Systems,” “Printers,” “EMS,” and “Others.”

ICT
Net sales were ¥177.4 billion, down ¥13.8 billion (7.2%) from the previous fiscal year.
The decline reflected the end of sales to telecom carriers concerning existing network
system in the previous fiscal year and a decline in demand for digitalizing wirelesscommunication systems for firefighting use.
Operating income rose by ¥2.8 billion year-on-year to ¥14.4 billion despite the impactof a decline in sales volume, thanks to profitability improvement supported by structuralreforms.
Mechatronics Systems
Net sales were ¥100.9 billion, down ¥12.8 billion (11.2%) from the previous fiscal
year. Sales declined, as although sales centering on cash handling systems were
essentially in line with projections in the Japan business and in Brazil and other overseas
businesses, sales volume of ATMs to China fell owing to the disappearance of sales to local
partners in China, which amounted to two months’ worth in the previous fiscal year, anddemand remaining subdued.
OKI incurred operating losses of ¥11.8 billion, a deterioration of ¥17.8 billion yearon-year, owing to provision of allowance for doubtful accounts relating to the Chinese ATM
business and lower sales volume and the impact of production adjustments to bringinventories to an appropriate level.

- 14 -

(Translation)
Printers
Net sales were ¥112.4 billion, down ¥12.2 billion (9.8%) from the previous fiscal year.
There was a contribution from the consolidation of the wide format printer businesscompany established in October 2015, but color and monochrome LED printers wereaffected by exchange rate movements as well as ongoing contraction in office printing
demand.
The business managed to generate operating income of ¥1.0 billion, a decline of ¥0.4
billion year-on-year, despite the decrease in sales volume, thanks to benefits from productmix improvements and a review of fixed costs.
Electronics manufacturing services (EMS) and others
Net sales of the EMS business rose ¥0.8 billion, or 1.9%, year-on-year, to ¥43.2
billion, a result that reflected partly delays in consignment from an existing major customer.
Operating income declined by ¥0.2 billion to ¥2.1 billion.
Net sales of the Others business segment were ¥17.8 billion, a ¥0.7 billion or 3.9%
year-on-year decrease. Operating income declined by ¥0.8 billion to ¥3.4 billion owing tolower sales volume.
(2) Capital expenditure
Capital expenditures for the fiscal year equaled ¥8.7 billion.
Investment amounts by segment were as follows.
(Unit: Billions of yen)Segment

Amount ofcapitalexpenditure

ICT

1.7

Mechatronics Systems

3.1

Printers

1.9

EMS

0.7

Others
Total

Major investments
Investments in R&D, development of new products andproduction activities for financial systems, systems related totraffic and disaster-prevention, network, etc.
Investments in R&D, development of new products andproduction activities related to automation equipment systems
Investments in R&D, development and production activities
relating to business-use printers
Investments in electronic manufacturing services fortelecommunications and industrial equipment

1.3
8.7

(3) Financing
Funds required for the current term were obtained from our own funds and borrowed
funds.
(4) Future challenges
The information communication market in which the OKI group operates isconstantly evolving, and at an ever-faster rate. To respond to such changes in the businessenvironment, we recognize that we face major challenges to develop new products,
accelerate advances into growth fields, and improve profitability.
Faced with these challenges, the OKI Group aims to secure stable earnings andsustained improvement in corporate value. In existing businesses, we will strive to maintain- 15 -

(Translation)and improve profitability through efforts centering on strengthening cost competitiveness.
In addition, we intend to expand our business by actively promoting strategic investmentsin the development of new products and businesses. Besides developing business making
use of the OKI Group’s key strengths in networks and sensing and our highly reliable
manufacturing technologies, we aim also actively to use business alliances and M&A
investments to support growth. While enhancing products and services that respond todiversifying market needs, we intend to expand sales by improving quality and productivity,
strengthening collaboration between production and sales bases in Japan and overseas, andbolstering our service structure. At the same time, we will strive to raise capital efficiency
by improving asset efficiency and realize stable shareholder returns.
From the perspective of corporate social responsibility, we regard environmental
issues as a vital management issue. We are actively pressing forward with initiatives onenergy-saving, resource conservation, reducing and recycling waste, and reducing theenvironmental load.
To meet the expectations from all stakeholders, we are also striving to ensure reliablebusiness continuity by strengthening internal control systems through reinforcing corporate
governance, compliance systems, and risk management systems.
(5) Trends in assets and profit/loss
Trends in assets and profit/loss for the fiscal year under review and the past three
years are as follows.

Sales

483.1

billion yen

540.2

billion yen

490.3

billion yen

93rd year(the year underreview, FY2016)451.6
billion yen

Profit attributable toowners of parent

27,359million yen

33,091

million yen

6,609

million yen

4,691

million yen

Basic earnings per
share

362.07yen

400.34

yen

76.10

yen

54.03

yen

90th year(FY2013)91st year(FY2014)92nd year(FY2015)

Total assets

412.5

billion yen

439.4

billion yen

411.8

billion yen

360.7

billion yen

Net assets

91.9

billion yen

121.4

billion yen

107.4

billion yen

97.2

billion yen

Net assets per share

793.19yen

1,377.44

yen1,229.09

yen

1,115.68

yen

Notes:
1.
Basic earnings per share is computed based on the average number of shares during the year (weighted
average). Net assets per share are computed based on the number of shares outstanding at the year-end.
These figures exclude treasury stocks.
2.
The Company consolidated ten shares of common stock into one share of common stock as of October 1,
2016. Basic earnings per share and net assets per share are calculated assuming that the shares wereconsolidated at the beginning of the 90th fiscal year ended March 31, 2014.

- 16 -

(Translation)(6) Status of major subsidiaries(i) Status of major subsidiaries

Oki Data Corporation

19,000 million yen

Company’s
voting rightratio (%)
100

Oki Customer Adtech Co., Ltd.

1,800 million yen

100

OKI Software Co., Ltd.

400 million yen

100

Oki Wintech Co., Ltd.

2,001 million yen

100

Name

Oki Data Americas, Inc.
Oki Data Manufacturing(Thailand) Co., Ltd.
Oki Europe Ltd.
Oki Electric Industry(Shenzhen) Co., Ltd.

CapitalMajor business10 million U.S. dollars

100*

Manufacturing and sales of printers
Maintenance, construction and sales of
information processing equipment andtelecommunications equipment
Development and operation of
telecommunications system software
Design and construction of electronic
works and electronic
telecommunications works
Sales of printers

420 million baht

100*

Manufacturing of printers

141 million euro

100*

66 million Renminbi

100*

Sales of printers
Manufacturing of information
processing equipment and printers

Note: Figures marked with an asterisk (*) indicate the ratio of voting rights held by subsidiaries of the Company.

(ii)
-

-

Major partners
Major technical partners:
International Business Machines Corporation (US)Canon Inc.
Major business partners:
Hewlett-Packard Company (US)Cisco Systems G.K.

(7) Major businesses
The OKI Group develops its core businesses in the fields of ICT, Mechatronics
Systems, Printers and EMS (entrusted manufacturing services).
Major business items in each business include the following.
Segment

ICT

Mechatronics Systems
Printers
EMS

Business items
Traffic infrastructure-related systems, Disaster-related systems, Self-defenserelated systems, communications equipment for telecom carriers, bank branchsystems, centered-administration systems, ticket reservations and issuing systems,
IP-PBX, business telephones, contact centers, 920MHz band wireless multi-hop
communication systems, and support and maintenance services for themATMs, cash handling equipment, bank branch terminals, ticket reservations andissuing terminals, check-in terminals, currency exchange machines, and ATM
monitoring and operations services
Color and monochrome LED printers, color and monochrome LED multifunction
printers, wide format ink jet printer, and dot impact printers.
Designing & manufacturing services, printed circuit boards, etc.

- 17 -

(Translation)(8) Major offices
Our major offices are as follows.
Name

Classification
Head office

Head office
Head office
Head office
Head office
Head office

Location
Minato-ku, Tokyo
Hokkaido region (Sapporo, Hokkaido), Tohoku
region (Sendai, Miyagi), Chubu region (Nagoya,
Aichi), Kansai region (Osaka, Osaka),
Chugoku region (Hiroshima, Hiroshima), Shikoku
region (Takamatsu, Kagawa), and Kyushu region(Fukuoka, Fukuoka)
Minato-ku (Tokyo), Warabi (Saitama), Honjo(Saitama), Takasaki (Gunma), Tomioka (Gunma)and Numazu (Shizuoka)
Warabi (Saitama), Osaka (Osaka) and Takasaki(Gunma)Minato-ku, Tokyo
Koto-ku, Tokyo
Warabi, Saitama
Shinagawa-ku, Tokyo
New Jersey, U.S.A.

Head office

Ayutthaya, Thailand

Head office

Surrey, UK

Head office

Guangdong, China

Branch offices
Oki Electric Industry Co., Ltd.
Business offices
Research institutes
Oki Data Corporation
Oki Customer Adtech Co., Ltd.
OKI Software Co., Ltd.
Oki Wintech Co., Ltd.
Oki Data Americas, Inc.
Oki Data Manufacturing(Thailand) Co., Ltd.
Oki Europe Ltd.
Oki Electric Industry (Shenzhen)Co., Ltd.

- 18 -

(Translation)(9) Employees(i) Employees of the OKI Group
Segment

Number of employees

ICT

6,838

Mechatronics Systems

4,767

Printers

4,875

EMS

1,309

Others1,219

Company-wide (shared)

456

Total

(ii)

19,464

Employees of Oki Electric Industry
Number of employees

Average age

Average years ofservice

4,063 (increased by 149 from the end of the previous fiscal
year)

43.5

19.0

(10) Major creditors
Major creditors of the OKI Group are as follows:(Unit: Billions of yen)
Creditor

Loan balance

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Mizuho Trust & Banking Co., Ltd.
The Norinchukin Bank
Aozora Bank, Ltd.

24.7
14.8
4.2
3.2
2.3

(11) Corporate governance(i) Basic policy
Guided by the corporate philosophy of “The people of OKI, true to thecompany’s enterprising spirit, are committed to creating superior network solutions
and providing excellent information and communications services globally to meetthe diversified needs of communities worldwide in the information age,” the OKI
Group recognizes sustainable growth and increases corporate value over mid- andlong-term as its most important management priorities in earning the trust of its
various stakeholders. To this end, we are working to enhance corporate governancebased on our fundamental policies, including “enhancement of management fairness
and transparency,” “timely decision-making processes,” and “full compliance andfortification of risk management.”(ii) Structure
The Company has chosen a company with the Audit & Supervisory Board, as astructure to ensure stable realization of its fundamental policies for corporate
governance. Specifically, it establishes the Board of Directors and Audit &Supervisory Board members and an Audit & Supervisory Board in charge ofsupervision and auditing and adopts an executive officer system, aiming to promote- 19 -

(Translation)
timely decision-making processes by separating business execution and oversight.
In addition, it endeavors to improve the fairness and transparency ofmanagement by nominating outside directors as well as setting up the “Personnel
Affairs and Compensation Advisory Committee” as a voluntary committee
concerning on appointment, compensation, etc. and Chairman of the Board, so as toensure effective supervision from an independent and objective standpoint. In
addition to objective audits by Audit & Supervisory Board members and the Audit &Supervisory Board on the premises of its strong authority for investigation, OKI seeks
to bolster risk management and ensure rigorous compliance via the Risk Management
Committee, which includes outside directors.
(iii) Board of Directors
The Company’s Board of Directors consists of seven Directors, including two
highly independent Outside Directors, with the consideration of diverse expertise andcareers for the purpose of fulfilling such duties as deliberations and decisions on
significant matters concerning the Company’s business execution and oversightthereof. To clarify management responsibility for each fiscal year, the tenure for
Directors has been set as one year.
The Company provides Directors and Audit & Supervisory Board memberswith such opportunities as seminars and trainings, which are necessary in fulfilling
their roles and responsibilities, and conducts presentation for outside officers upon
appointment aimed at deepening their understanding about the OKI Group’s business,in addition to visits to offices and sites.
(iv) Election of Board officers
The Company has established the Personnel Affairs and Compensation
Advisory Committee to secure transparency in the decision-making processes forappointments of officers as mentioned above. The Committee consists of four
members including two outside officers, and the Chairman of the Committee isappointed from among Outside Directors. The Personnel Affairs and Compensation
Advisory Committee deliberates on appointments of Director and executive officer
from an objective viewpoint, and reports the results to the Board of Directors. In
addition, the Committee delivers its opinion on appointments of candidates for Audit& Supervisory Board members to Audit & Supervisory Board members.
Upon the nomination of candidates for Directors and Audit & Supervisory
Board members and appointment of executive officers, the Company takes into
consideration that the candidate satisfies the following requirements, as well as legal
eligibility.
 Those with excellent personality, insights, high ethical standards, fairness andintegrity as well as a high-level awareness of compliance Those who can execute their duties towards the realization of the OKI Group’s
corporate philosophy and continuous improvement of the corporate value
With respect to the election of outside officers, OKI formulates its
independence criteria (See page 10), and elects person who satisfies these criteria asan outside officer. All outside officers have been designated as independent officers
at the Tokyo Stock Exchange.

- 20 -

(Translation)(v)

Compensation for the Board members and executive directors
In order to secure transparency in the decision-making processes concerningcompensation for officers, the abovementioned Personnel Affairs and Compensation
Advisory Committee deliberates on the structure and level of compensation for
Director and executive officer from an objective viewpoint, and reports the results to
the Board of Directors.
OKI’s basic policy on compensation for Director and executive officer is toserve as incentives for the performance improvement with the aim of the continuous
enhancement of the corporate value and enforcement of the corporate competitivenesswhile being the compensation structure that can attract excellent human resources.
The compensation system consists of basic compensation, annual incentive
compensation linked to the performance of each fiscal year, and mid- to long- term
incentive compensation.
These changes have been implemented as part of efforts to develop an
environment for a shift to the management focused on “more aggressive goal setting”
and “growth over mid- and long-term” in order to achieve “continuous growth” of the
OKI Group.
Type

Content of compensation

When serving as Executive Officer concurrently,
Basic compensation
monetary compensation shall be paid, determined
individually tailored to position, followed by duties.
Monetary compensation shall be paid, determined
Annual incentive
individually with a linkage with the past year’scompensation
consolidated business performance of the OKI Group andthat of the division each Director is responsible for.
Stock option for stock-liked compensation shall be
granted, at certain ratio of basic compensation amount, inMid- to long- term
the view of value sharing with shareholders and the
incentive compensation
enhancement of corporate value as well as shareholders’value over the mid-to long-term.
Compensation for Outside Directors consists only of basic compensation. In
addition, the appropriateness of the structure and level of compensation is validated
utilizing objective evaluation data from external organizations and others.
(12) Other significant events of the OKI Group(i) On February 2, 2017, the Company received cease and desist orders and orders forpayment of surcharge from the Japan Fair Trade Commission with respect to antitrust law
violations related to digitalizing wireless communication systems for firefighting andemergency use.
The Company takes this incident extremely seriously, and the President has given
strict orders to the entire OKI Group to reassure compliance. The “Basic Regulations forCompliance with Competition Act” has also been developed and training based on theregulation is being conducted. The Company will continue to conduct training and audit on- 21 -

(Translation)a regular basis, and ensure thorough compliance awareness in a top-down approach.
(ii) Oki Banking Systems (Shenzhen) Co., Ltd., a subsidiary of the Company, filed arequest for arbitration against Shenzhen Yihua Computer Industrial Co., Ltd. in October
2015, demanding payment of RMB1,115,463 thousand (¥18.2 billion if converted toJapanese yen based on the exchange rate as of the end of the fiscal year under review)which includes the proceeds from sale of ATM. The arbitration proceeding is currently
under review by the South China International Economic and Trade Arbitration
Commission. Although the Company has recorded a provision of allowance for doubtfulreceivables regarding this case, there is no change in the Company’s policy of collecting thetotal amount of receivables.

- 22 -

(Translation)
2.

Shareholders’ Equity(1)

Number of shares authorized to be issued by the Company:
240,000,000 shares(2)

Number of outstanding shares:
87,217,602 shares(including 356,017 shares of treasury stock)(3)

Number of shareholders:
76,771(4)

Major shareholders (Top 10)
Number ofshares held
(thousand shares)

Name of shareholder

Percentage ofshares held(%)

The Master Trust Bank of Japan, Ltd. (trust account)

3,982

4.58

MSIP Client Securities

3,781

4.35

Japan Trustee Services Bank, Ltd. (trust account)

3,436

3.96

Macquarie Bank Limited – MBL London Branch

2,959

3.41

Chase Manhattan Bank GTS Clients Account Escrow

2,345

2.70

Oki Denki Group Employees’ Shareholdings Committee

1,830

2.11

Japan Trustee Services Bank, Ltd. (trust account 9)

1,601

1.84

Japan Trustee Services Bank, Ltd. (trust account 5)

1,591

1.83

Mizuho Bank LTD.

1,419

1.63

1,407
The percentages of shares held are calculated after deducting treasury stock.

1.62

Hulic Co., Ltd.
Note:

(5)

Other important matters relating to sharesWith an effective date of October 1, 2016, the number of shares constituting one unitof shares was changed from 1,000 to 100, and a 10:1 share consolidation of common stock
was implemented. Based on this, the “Number of shares authorized to be issued by theCompany” is 240,000,000 shares and the “Number of outstanding shares” is 87,217,602
shares.

- 23 -

(Translation)
3.

Equity Warrants(1) Equity warrants granted to the Company’s officers as consideration for theirperformance of duties(i) Number of equity warrants
205(ii) Type and number of shares subject to equity warrants
20,500 shares of the Company’s common stock (100 shares per equity warrant)(iii) Status of equity warrants held by the Company’s officers
Issued Number(Exercise Price)
No. 7 equity warrant (2,480 yen)
(Issued on July 27, 2007)
No. 8 equity warrant (2,480 yen)
(Issued on July 27, 2007)
FY2016 equity warrant (1 yen)
(Issued on August 16, 2016)

Directors(excluding outside Directors)
Exercise period

Number ofequitywarrants

Number ofholders

July 1, 2009 to June 25, 201723

1

July 1, 2009 to June 25, 201781

August 17, 2016 to August 16, 2041

174

4

Note: With an effective date of October 1, 2016, the number of shares constituting one unit of shares waschanged from 1,000 to 100, and a 10:1 share consolidation of common stock was implemented. Basedon this, “Type and number of shares subject to equity warrants” and “Exercise Price” were adjusted.

(2) Equity warrants issued to employees in consideration of performance during the fiscal
year under review
Directors(excluding outside Directors)
Issued Number

FY2016 equity warrant (1 yen)
(Issued on August 16, 2016)

Exercise period

August 17, 2016 to August 16, 2041

- 24 -

Number ofequitywarrants

Number ofholders383

13

(Translation)
4.

Corporate Officers(1) Names, etc. of Directors and Audit & Supervisory Board Members
Note
1

X

X

X

X

Position
Representative
Director andChairman of the
Board
President,
Representative
Director
Executive Vice
President andMember of the Board
Senior Vice President
and Member of the
Board
Senior Vice President
and Member of the
Board
Director
Director

Name

Status or main duties

Hideichi Kawasaki

Chairman of the Board

Shinya Kamagami

Supervision

Toshinao Takeuchi

General Manager, ICT Business Division

Toshiya
Hatakeyama

Chief Compliance Officer
Chief Financial Officer
General Manager, Corporate Management Group

Masayuki Hoshi

Chief Risk Management Officer
General Manager, Corporate Planning Group

Takuma Ishiyama
Outside Director of Concordia Financial Group, Ltd.,
Outside Director of the Bank of Yokohama, Ltd.

Minoru MorioStanding Audit & Supervisory
Hisao Suzuki
Board Member
Standing Audit & Supervisory
Tsutomu Tai
Board Member
Audit & Supervisory Board Kuninori
MemberHamaguchi
Audit & Supervisory Board
Yoichi Nitta
MemberNotes:
1. X indicates executive officer.
2. Directors Takuma Ishiyama and Minoru Morio are Outside Directors.
3. Audit & Supervisory Board Members Kuninori Hamaguchi and Yoichi Nitta are Outside Audit &Supervisory Board Members.
4. Directors Takuma Ishiyama and Minoru Morio, Audit & Supervisory Board Members Kuninori Hamaguchi
and Yoichi Nitta are independent officers based on the terms of the Tokyo Stock Exchange.
5. Audit & Supervisory Board Member Hisao Suzuki has served in positions such as Officer in charge of the
Accounting & Control Division and Chief Financial Officer, and has extensive knowledge in finance andaccounting.
6. Audit & Supervisory Board Member Tsutomu Tai has many years of experience working in the Company’s
accounting divisions, and has extensive knowledge of finance and accounting.

- 25 -

(Translation)
7.

Executive officers as of March 31, 2017 are as follows (excluding those who concurrently serve as
Directors).
Position

Name

Senior Vice President

Kenichi Tamura

Senior Vice President

Seiji Mouri

Senior Vice President

Toru Hatano

Senior Vice President

Tetsuya Izaki

Executive Officer

Yoshiyuki Nakano

Executive Officer

Masaaki Hashimoto

Executive Officer

Hiroshi Endo

Executive Officer

Kiyoshi Yokota

Executive Officer

Katsuhiko Koseki

Executive Officer

Masashi Tsuboi

Executive Officer

Yuichiro Katagiri

Executive Officer

Toru Miyazawa

Executive Officer

Hiroshi Tsuchiya

Executive Officer

Masatsugu Fuse

Principal dutyManager, Marketing & Sales Headquarters and Manager,
Business Development Division
Manager, Mechatronics Systems Business Division
In charge of Printers Business Division (Director, Vice
President, Oki Data Corporation)
Chief Information Officer
Manager, Information & Technologies Planning GroupManager, EMS Business Division
Manager, Government & Public Systems Marketing &Sales Division, Marketing & Sales Headquarters
In charge of Printers Business Division (Senior Managing
Director, Oki Data Corporation)
Chief Technology Officer, Chief Quality Officer
Assistant Manager, Information & Technologies PlanningGroup and Manager, Engineering Support CenterIn charge of Mechatronics Systems Business (Chairman,
Oki Electric Industry (Shenzhen) Co., Ltd.)
Assistant Manager, ICT Business Division and Manager,
Enterprise Solutions Division
Assistant Manager, ICT Business Division
Manager, Enterprise Systems Marketing & Sales Division
and Manager, Partner Business Marketing & Sales
Division, Marketing & Sales Headquarters
Assistant Manager, ICT Business Division and Manager,
Planning & Management Division
Manager, Accounting & Control Division, Corporate
Management Group(2) Compensation paid to Directors and Audit & Supervisory Board Members
Title
Number of persons
Amount of payment
Directors
9¥265 million
Audit & Supervisory Board Members
5¥61 million
Notes:
1. The amounts of compensation approved by the 82nd Ordinary General Meeting of Shareholders held on June29, 2006 are within ¥600 million per year for Directors and ¥100 million per year for Audit & Supervisory
Board Members. The amount of compensation for Directors excludes employee wages for Directors who
are also employees. The amounts of compensation related to equity warrants allotted as compensation-type
stock option, approved by the 92nd Ordinary General Meeting of Shareholders held on June 24, 2016, arewithin ¥100 million per year for Directors (excluding Outside Directors), separately from the above
compensation.
2. The amounts paid include the remuneration of ¥14 million in the form of stock options for Directors
3. The numbers of Directors and Audit & Supervisory Board Members as of the end of the fiscal year underreview are different from the number shown above, and the above numbers include those who resigned at theconclusion of the 92nd Ordinary General Meeting of Shareholders held on June 24, 2016.

- 26 -

(Translation)(3) Outside Directors and Audit & Supervisory Board Members(i) Status of material concurrent positions at other organizations, etc. and the Company’s
relationship with the aforesaid organizations
Director Minoru Morio concurrently serves as Outside Director of Concordia
Financial Group, Ltd. and Outside Director of the Bank of Yokohama, Ltd. The
volume of transactions between the companies and the Company accounts for lessthan 1% of the OKI Group’s net sales and accounts for less than 1% of the each said
company’s net sales.
(ii) Major activities in the fiscal year under review(a) Attendance at meetings of the Board of Directors and the Audit & Supervisory
Board
Board of Directors meeting(number of meetings in parenthesis)
Attendance
Attendance ratefrequency

Audit & Supervisory Board meeting(number of meetings in parenthesis)
Attendance
Attendance ratefrequency

Takuma Ishiyama,
15 (15)100%––
Director
Minoru Morio,
15 (15)100%––
Director
Kuninori
Hamaguchi,
15 (15)100%
16 (16)
100%
Audit & Supervisory
Board Member
Yoichi Nitta,
Audit & Supervisory
11 (11)100%
10 (10)100%
Board Member
Note: The number of meetings for Director Yoichi Nitta represents the number of meetings held since he took
office in June 2016.

(b) Major activities
a. Takuma Ishiyama, Director
Making objective statements mainly as a specialist in corporate law, heprovided advice and made proposals for the appropriateness and propernessof decision making by the Board of Directors. He also contributes tostrengthening compliance by providing a good example to managerial
personnel through his leadership as an advisor to the Risk Management
Committee and enhancing the management fairness and transparency as a
Chairman of the Personnel Affairs and Compensation Advisory Committee.
b. Minoru Morio, Director
Making statements from a viewpoint nurtured through abundant experience ina corporate management, he provided advice and made proposals for theappropriateness and properness of decision making by the Board of Directors.
He also contributes to strengthening compliance by providing a good example
to managerial personnel through his leadership as an advisor to the Risk
Management Committee and enhancing the management fairness andtransparency as a Chairman of the Personnel Affairs and Compensation
Advisory Committee.

- 27 -

(Translation)c. Kuninori Hamaguchi, Audit & Supervisory Board Member
With regard to deliberations of the Board of Directors, he determined thecorrectness of Directors’ managerial decisions.
Using his extensive
experience and knowledge as a director at other companies, he made efforts
to formulate the Company’s appropriate audit opinions by making properstatements and carrying out, when necessary, adequate activities concerning
performances of the Audit & Supervisory Board.
d. Yoichi Nitta, Audit & Supervisory Board Member
With regard to deliberations of the Board of Directors, he determined thecorrectness of Directors’ managerial decisions. Using his execution ofbusiness, and extensive experience and knowledge as a director at othercompanies, he made efforts to formulate the Company’s appropriate audit
opinions by making proper statements and carrying out, when necessary,adequate activities concerning performances of the Audit & Supervisory
Board.
(iii) Outline of measures relating to inappropriate and illegal business execution of theCompany during the fiscal year under review
On February 2, 2017, the Company received cease and desist orders and orders
for payment of surcharge from the Japan Fair Trade Commission with respect toantitrust law violations related to digitalizing wireless communication systems for
firefighting and emergency use.
Outside Directors Mr. Takuma Ishiyama and Mr. Minoru Morio, and Outside Audit &Supervisory Board Member Mr. Kuninori Hamaguchi have proactively maderecommendations at the meetings of the Board of Directors from the viewpoint oflegal compliance. In addition, subsequent to the revelation of the matter, they havemade recommendations on measures to prevent reoccurrence and on securing
effectiveness of the measures while checking and confirming the status of
implementation of the measures. Furthermore, Outside Audit & Supervisory Board
Member Mr. Yoichi Nitta was appointed subsequent to the revelation of the matter,and has requested thorough legal compliance at the meetings of Board of Directors.
He has proactively made recommendations on measures to prevent reoccurrence andon securing its effectiveness while checking and confirming the implementation
status of the measures.
(iv) Total amount of compensation, etc.
¥34 million (for the five individuals)(4) Outline of Liability Limitation Agreements
The Company concluded agreements to limit liabilities with outside officers (Takuma
Ishiyama, Minoru Morio, Kuninori Hamaguchi and Yoichi Nitta) and Standing Audit &Supervisory Board Members (Hisao Suzuki and Tsutomu Tai) under the provisions ofArticle 427 of the Companies Act. The outline of the agreements is as follows:- In cases where outside officers and Standing Audit & Supervisory Board Members are- 28 -

(Translation)
liable for any damages arising from their negligence to the Company, they shallcompensate for such damages only to the extent of the minimum liabilities as stipulated
in Article 427, Paragraph 1 of the Companies Act.
- The above limitation of liability shall be applied only when the relevant outside officers
and Standing Audit & Supervisory Board Members have executed their duties thatcaused the liabilities in good faith and without gross negligence.

- 29 -

(Translation)
5.

Status of Accounting Auditor(1) Name: Ernst & Young ShinNihon LLC(2) Compensation, etc.
Amount of payment
1. Compensation, to be paid to the accounting auditor for the fiscal year under review
135 million yen
2. Total sum of cash and profits on other assets that the Company and its subsidiaries
246 million yen
should pay to the accounting auditor
Notes:
1. The Company does not distinguish between auditor compensation regarding (i) auditing in accordance with
the Companies Act, and (ii) auditing in accordance with the Financial Instruments and Exchange Act. The
total of these amounts is recorded above.
2. Among major subsidiaries, Oki Data Americas, Inc., Oki Data Manufacturing (Thailand) Co., Ltd., Oki
Europe Ltd., and Oki Electric Industry (Shenzhen) Co., Ltd. have undergone statutory audits by accounting
auditors other than the accounting auditor of the Company.
3. After having performed the necessary verification as to the appropriateness of matters such as the content of
the accounting auditor’s audit plan, the status of performance of duties by the accounting auditor, and thebasis for the calculation of the estimated compensation for the accounting auditor, the Audit & Supervisory
Board has decided to consent to the amount of compensation, etc. to be paid to the accounting auditor.

(3) Content of non-auditing services
The Company has also hired the accounting auditor for “advisory services on thetransition, etc. to International Financial Reporting Standards,” which is a service otherthan the audits specified in Article 2, Paragraph 1 of the Certified Public Accountants Act,and pays the auditor compensation for that service.
(4) Policy regarding decision to dismiss or not reappoint the accounting auditor
The Audit & Supervisory Board, in principle, will determine the detail of the proposal
to be submitted to the general meeting of shareholders regarding dismissal or nonreappointment of the accounting auditor if it is deemed unlikely that the accounting auditor
will be able to perform audits properly. In addition, if the accounting auditor falls underprovisions of the items in Paragraph 1, Article 340 of the Companies Act, the Audit &Supervisory Board will dismiss the accounting auditor upon the consent of all the Audit &Supervisory Board Members.
(5) Business suspension order to which the accounting auditor was subject during past
two years
The outline of the disciplinary action announced by the Financial Services Agency on
December 22, 2015(i) Subject of administrative order
Ernst & Young ShinNihon LLC(ii) Content of administrative order Suspension from accepting new engagements for three months from January 1,
2016 to March 31, 2016
 Order for improvement of business operations(iii) Reason for administrative order In regard to the audit of financial statements of TOSHIBA CORPORATION for- 30 -

(Translation)



6.

FY2009, FY2011 and FY 2012 (for fiscal years that ended March 31, 2010,2012 and 2013), the above-mentioned audit corporation’s certified public
accountants had, in negligence of due care, attested that the financial statements
contained no material misstatement, when in fact the statements containedmaterial misstatement.
The audit corporation’s operation of services was found to be grossly
inappropriate.

Policies and procedures of the Company(1) Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business and othersystems to ensure appropriate operations(i) Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business(a) As the foundation for ensuring compliance, the Company has established the“OKI Group Charter of Corporate Conduct” and “OKI Group Code of Conduct.”
In addition, officers take the initiative in compliance activities in conformancewith the “Compliance Commitment.”(b) The Company has established a Compliance Committee chaired by the Chief
Compliance Officer to decide on and examine basic policies regarding
compliance programs.
(c) In accordance with the basic policies formulated by the Compliance Committee,
the division responsible for compliance plans, draws up, and promotes specificmeasures such as education and training for Directors and employees. In
education and training, we aim to raise employee awareness about complianceby utilizing means such as e-learning.
(d) The Company establishes whistle-blowing regulations which ensure reporting to
Outside Directors and Audit & Supervisory Board Members and provides acontact point for reporting and consultation, aiming to detect any misconduct at
its earliest stages.
(e) The Company stands firmly against antisocial groups that threaten the order andsafety of civil society in cooperation with the police and related organizations,and refuses to have any relationship with them as a whole.
(ii)

Procedures to retain and manage information relating to Directors’ conduct ofbusiness
The Company retains and stores information relating to the conduct of business byDirectors as appropriate in accordance with applicable laws, regulations and internal
rules.

(iii) Rules concerning risk management and other procedures(a) The Company has established a Risk Management Committee and promotes
measures for appropriately grasping risks that may occur in relation to business- 31 -

(Translation)
activities of the Company and Group companies, and preventing such risks fromemerging.
(b) Pursuant to risk management rules, each section of the Company manages risks
that may occur in relation to its main duties. At the same time, the Company
has established a supervisory section to deal with risks needing company-wide
management.
This section assesses risks, draws up policies for risk
countermeasures and develops appropriate structures based on such policies.
(c) If any risk occurs, the Company will set up an emergency countermeasure
headquarters to handle the risk.
(iv) Procedures to secure efficient business performance by Directors(a) The Company holds regular meetings of the Board of Directors once a month todecide important matters including basic management policies and supervise thework of Directors.
(b) The Company appoints executive officers to execute business based on basic
management policies determined by the Board of Directors so as to separate thefunctions of business execution and oversight, and promote timely decisionmaking processes.
In addition, the Company holds meetings of theManagement Committee consisting of executive officers, etc. to assist the
President in making decisions.
(c) The Company assigns Directors responsibilities and authority pursuant to rules
on division of duties and authorities.
(v)

Procedures to secure appropriate Group (Company and subsidiaries) operations(a) To ensure that the Company and each subsidiary run their operations properly,
the Company has established the “OKI Group Charter of Corporate Conduct”
which sets out the values for the entire Group. In addition, the Company has
established the “OKI Group Code of Conduct” as the code of conduct which all
officers and employees should comply with, and is striving to make the code
known to all of them.
(b) The division responsible for compliance implements various measures forpromoting compliance common to the Group through each subsidiary’s
compliance officer. The Division also determines, through regular monitoring,the implementation status of such measures by each Group company and reports
to the Compliance Committee on the results.
(c) Each subsidiary establishes whistle-blowing regulations that ensure reporting totheir Outside Directors and Audit & Supervisory Board Members, provides acontact point for reporting and consultation, and aims to detect any misconduct
at its earliest stages after reporting to the Company.
(d) The Company, in accordance with Subsidiaries and Affiliates Management Rules,
determines the status of each subsidiary’s management activities throughreceiving reports regularly from each subsidiary and provides necessary advice
and guidance including organization designing, rules and regulations, andbusiness plannings.

- 32 -

(Translation)(e) To secure the reliability of financial reporting, the Company and each subsidiaryestablish an internal control system for financial reporting in accordance withrelated laws and regulations, and strive to maintain and improve that system.
(vi) Procedures for employees who assist Audit & Supervisory Board Members;
independence of employees from Directors(a) The Company assigns employees as staff to assist Audit & Supervisory Board
Members.
(b) The Company assigns employees, who are not subject to Directors’ instructions
and orders, as staff to assist Audit & Supervisory Board Members, and anychange in such staffing and personnel evaluation requires the prior consent of the
Audit & Supervisory Board.
(vii) Procedures for Directors and employees to report to Audit & Supervisory Board
Members; procedures for Audit & Supervisory Board Members to receive otherreports(a) If Directors discover anything that may cause significant damage to theCompany, they are required to report the matter immediately to the Audit &Supervisory Board Members pursuant to applicable laws and regulations.
(b) Standing Audit & Supervisory Board Members attend meetings of theManagement Committee in order to understand important decision-making
processes and the status of business operations, as well as to inspect important
documentation.
(c) Audit & Supervisory Board Members attend the Risk Management Committee
as advisors and receive the necessary reports.
(d) Audit & Supervisory Board Members receive whistle-blowing reports based onwhistle-blowing regulations, and receive reports biannually on the status ofoperation of the regulations from relevant divisions.
(e) Audit & Supervisory Board Members receive reports on the status ofestablishing internal control systems and their operations from Directors andemployees on a regular basis, and may request Directors and employees to reporton matters deemed necessary.
(f) The Company ensures that a person who made a whistle-blowing report to Audit& Supervisory Board Members will not be treated unfavorably on account ofmaking such report.
(viii) Other procedures to secure effective audits by Audit & Supervisory Board Members(a) In conducting inspections on the Company’s operations and assets andperforming other audit duties, Audit & Supervisory Board Members shallconduct audits efficiently and effectively in close cooperation with the internal
audit section.
(b) Audit & Supervisory Board Members implement efficient audits by closelycooperating with the accounting auditor. To this end, Audit & Supervisory
Board Members hold meetings with the accounting auditor on a regular basis,- 33 -

(Translation)
attend on-site audits by the accounting auditor, and request reports from theaccounting auditor on the progress of audits when necessary.
(c) The Company pays all the expenses necessary for the execution of the duties of
Audit & Supervisory Board Members.
(2) Overview of Status of Operations(i) Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business(a) The Company ensures forums for training for each grade, including officers, on
the content of the “OKI Group Code of Conduct” and the “Compliance
Commitment,” which form the foundation for compliance.
(b) The Compliance Committee, chaired by the Chief Compliance Officer, meets
twice each fiscal year to establish the basic policies for activities in addition toreviewing the content of activities.
(c) In accordance with the basic policies formulated by the Compliance Committee,
OKI conducts e-learning for all OKI Group employees in Japan and grouptraining for the compliance managers in each department in addition to providing
training tools such as a compilation of compliance case studies. The Company
conducts an annual compliance awareness survey in order to check on theincrease in awareness resulting from these measures and any issues.
(d) The Company has established and operates the whistle-blowing regulations
which enable anonymous reporting as well as reporting to the Outside Directors
and the Outside Audit & Supervisory Board Members, and the status of these
operations is reported to the Board of Directors and the Audit & Supervisory
Board.
(e) The Company assigns members of staff with responsibility for preventing unjust
demands who have received legal training to each business office and branch
office to continuously maintain a structure for responding to anti social groups as
an entire organization.
(f) The Company takes the orders from the Japan Fair Trade Commission extremely
seriously, and the President has given strict orders to the entire OKI Group toreassure compliance.
The “Basic Regulations for Compliance with
Competition Act” has also been developed and training based on the regulation is
being conducted.
(ii)

Procedures to retain and manage information relating to Directors’ conduct ofbusiness
Important documents are retained and managed appropriately in accordance with therules and regulations. In addition, the Information Security Committee, chaired by
Chief Information Officer, meets twice each fiscal year to determine company-wide
policy and plans for information security and conduct reviews of activities. With
regard to personal information protection, the Company received PrivacyMark
certification in February 2007, which it renews every two years.

- 34 -

(Translation)(iii) Rules concerning risk management and other procedures(a) The Company has established the Risk Management Committee chaired by the
President with the Outside Directors and the Audit & Supervisory Board
Members as advisors, and Committee meetings are held regularly and whenevernecessary. The Committee receives timely reports from executive officers anddivisions on risk information accompanying business activities and deliberates
on measures to prevent risks from actualizing.
(b) The risk management rules clarify the scope of supervisory section to deal withrisks and responsibilities, and as for risks that require common management
across the Group, the supervisory section delivers and promotes preventative
measures for each division and monitors the results.
(c) The Company has established and operated the rules, which stipulate that theCompany sets up an emergency countermeasure headquarters to handle the risk
when a risk occurs.
(iv) Procedures to secure efficient business performance by Directors(a) In fiscal 2016, the Company held 15 meetings of the Board of Directors, todecide important matters such as basic management policies and supervised theexecution of business operations by the Directors. The Board of Directors
consists of seven Directors including two Outside Directors.
(b) In fiscal 2016, the Company held 43 meetings of the Board of Executive Officers
and the Management Committee to deliberate on proposals and reports
concerning business execution.
(c) The Company has clarified responsibility and authority for execution of businessin the Rules on Division of Duties and Authorities.
(v) Procedures to secure appropriate Group (Company and subsidiaries) operations(a) The Board of Directors has adopted the OKI Group Code of Conduct for the
OKI Group as a whole, and the Company continuously works to ensure
awareness through training, etc.
(b) With regard to compliance risks that require common management across theGroup, the division at the Company with responsibility for the relevant risk
implements systematic management shall deliver and promote preventative
measures for each Group division and monitor the results as well as report on thestatus to the Compliance Committee.
(c) The Company has established and operates whistle-blowing regulations whichenable anonymous reporting as well as reporting to the Outside Directors and theOutside Audit & Supervisory Board Members at all OKI Group companies.
The Company provides guidance, etc. as necessary when receiving the content ofreports.
(d) Each division at the Company receives regular and timely reports on the status ofmanagement, etc. from the subsidiaries for which it has responsibility inaccordance with the Subsidiaries and Affiliates Management Rules to assess theactual business situation in addition to providing the necessary advice andguidance.
(e) The OKI Group has established a specialist department related to the internal- 35 -

(Translation)
control over financial reporting required under the Financial Instruments andExchange Act, and endeavors to develop, maintain and improve the internal
control system related to financial reporting.
(vi) Procedures for employees who assist Audit & Supervisory Board Members;
independence of employees from Directors(a) To assist the Audit & Supervisory Board Members, the Company has assigned
one member of staff, who is not subject to Directors’ instructions and orders.
(b) In order to ensure independence and effectiveness of instructions, transfer andevaluations of the member of staff for the Audit & Supervisory Board Members
requires the prior agreement of the Audit & Supervisory Board.
(vii) Procedures for Directors and employees to report to Audit & Supervisory Board
Members; procedures for Audit & Supervisory Board Members to receive otherreports(a) When Directors discover anything that may cause significant damage to theCompany, they have reported the matter immediately to the Audit & Supervisory
Board Members pursuant to applicable laws and regulations.
(b) The Standing Audit & Supervisory Board Member assesses important decisionmaking processes and the status of business operations by attending meetings ofthe Board of Directors, the Board of Executive Officers and the Management
Committee in addition to reading resolution approval documents.
(c) The Audit & Supervisory Board Members have attended the Risk Management
Committee as advisors and received reports as well as stating their opinions
when it is necessary.
(d) The Audit & Supervisory Board Members have received whistle-blowing reports
based on whistle-blowing regulations, and received reports biannually on thestatus of operation.
(e) In addition to receiving reports on the development and operational status of theinternal control system at the meetings of the Board of Directors, the Audit &Supervisory Board Members exchange opinions with the President, executive
officers, general managers of divisions and representatives of the subsidiaries,
confirming the development and operation of the internal control system in theprocess.
(f) The Company has established a policy that there shall be no discrimination
against a person who makes a report to the Audit & Supervisory Board Memberson the grounds of having made the relevant report and rigorously enforces thispolicy.
(viii) Other procedures to secure effective audits by Audit & Supervisory Board Members(a) The Audit & Supervisory Board Members hold discussions and exchanges of
opinion with the Internal Auditing Division by taking part in site visits andmeetings to report on the results of audits held by the Internal Auditing Division,and utilize the results of audits in audits by Audit & Supervisory Board Members.
(b) The Audit & Supervisory Board Members have maintained close cooperation
with the Accounting Auditor including meeting and exchanging opinions with
the Accounting Auditor and attending site visits by the Accounting Auditor, to- 36 -

(Translation)
implement effective audits.
(c) The Company has promptly processed the expenses required for the execution of
the duties of the Audit & Supervisory Board Members.

Note: indication of amounts
Figures in this business report are indicated as follows.
1. Units of ¥1 million: Figures less than one unit are disregarded.
2. Units of ¥100 million: Figures less than one unit are rounded to the nearest unit.

- 37 -

(Translation)

Consolidated Balance Sheet(as of March 31, 2017)(Unit: Millions of yen)Account title

AmountAccount title(Assets)
Current assets

Amount(Liabilities)
231,506

Current liabilities

176,559

Cash and deposits

54,164

Notes and accounts payable

58,685

Notes and accounts receivable

101,572

Short-term borrowings

56,882

Lease investment assets

5,430

Other accrued expenses

29,499Finished goods

20,423

Other current liabilities

Work in process

19,656

Raw materials and supplies
Deferred tax assets

31,492Long-term liabilities

86,94922,502Long-term debt

30,1295,454

Lease obligations

7,135

Other current assets

9,679

Deferred tax liabilities

14,683

Allowance for doubtful receivables(7,377)

Provision for Directors’ retirement benefits

Non-current assets

129,218

Liability for retirement benefits

Property, plant and equipment

44,783

Other long-term liabilities

Buildings and structures

20,449Machinery, equipment and vehicle

7,337

Tools, furniture and fixtures

10,004

Land

6,780

Construction in progress

26,1998,310
263,509(Net Assets)
Shareholders’ equity

107,757

Capital stock

44,000Additional paid-in capital

19,799Intangible assets

10,891Retained earnings

44,434

Investments and other assets

73,544

Treasury stock, at cost

(477)

Investments in securities

49,576

Accumulated other comprehensive income(10,878)

Asset for retirement benefits

9,511

Long-term trade receivables

18,659Net unrealized holding gain/loss on othersecurities

5,337

Other investments and other assets

7,768

Loss on deferred hedges(2)

Allowance for doubtful receivables(11,971)

Translation adjustments(11,702)

Retirement benefits liability adjustments(4,511)

Total assets

211

Total liabilities

490

360,724- 38 -

Subscription rights to shares

94

Non-controlling interests

242

Total net assets

97,215

Total liabilities and net assets

360,724

(Translation)

Consolidated Statement of Operations(From April 1, 2016 to March 31, 2017)(Unit: Millions of yen)Account title

AmountNet sales

451,627

Cost of sales

337,393

Gross profit

114,233

Selling, general and administrative expenses

111,688

Operating income

2,545

Non-operating income
Interest income

354

Dividend income

827

Share of profit of entities accounted for using equity
method473

Dividend income of insurance

355

Other

503

2,514

Non-operating expenses
Interest expense

1,794

Foreign exchange loss, net

4,764

Other

868

Ordinary loss

7,426
(2,366)Extraordinary profit
Gain on sale of property, plant and equipment

178

Gain on sale of investments in securities

1,034

Gain on sales of subsidiaries and affiliates’ stock

12,567

Gain on return of assets from retirement benefits
trust

7,822

21,602Extraordinary loss
Loss on sales of non-current assets

2,405

Loss on abandonment of non-current assets

680

Loss on Anti-Monopoly Act

2,477

Profit before income taxes

5,563
13,672

Income taxes

2,704

Income taxes deferred

6,530

Profit

9,235
4,437

Loss attributable to non-controlling interests(254)

Profit attributable to owners of parent

4,691- 39 -

(Translation)

Consolidated Statement of Changes in Net Assets(Year ended March 31, 2017)(Unit: Millions of yen)
Shareholders’ equity
Capital stock

Additional paid-in
capitalRetained earnings

21,67344,25544,000

Balance at April 1, 2016

Treasury stock,at costTotal shareholders’equity(468)

109,460

Changes during the term underreviewDividends from surplus(4,343)(4,343)

Profit attributable to ownersof parent

4,691

4,691
(8)

Purchases of treasury stock
Change of scope of
consolidation

(8)

(168)

Change in ownershipinterest of parent due totransactions with noncontrolling interests(168)(1,873)(1,873)

Net changes in items otherthan shareholders’ equity
during the term underreview
Net changes during the term
under review–(1,873)179(8)(1,702)

Balance at March 31, 2017

44,00019,79944,434(477)

107,757

Accumulated other comprehensive income

Balance at April 1, 2016

Net unrealized
holding
gain/loss onother securities

Loss / Gainon deferredhedgesTranslation
adjustments

Retirement
benefits
liability
adjustments

4,642

(562)

(12,835)

6,028

Total
Subscription
accumulated
rights toothersharescomprehensive
income(2,726)79

Noncontrollinginterests

Total
net assets

572

107,384

Changes during the term
under review
Dividends from surplus(4,343)

Profit attributable toowners of parent

4,691

Purchases of treasury
stock

(8)

Change of scope of
consolidation(168)

Change in ownershipinterest of parent due
to transactions with
non-controllinginterests(1,873)

Net changes in items
other thanshareholders’ equity
during the term underreview

695

559

1,133

(10,540)(8,151)15(329)(8,466)

Net changes during theterm under review

695

559

1,133

(10,540)(8,151)

15(329)(10,168)

Balance at March 31,
2017

5,337

(2)

(11,702)(4,511)(10,878)

94

242

97,215- 40 -

(Translation)

Notes to Consolidated Financial Statements
Principles for Preparing Consolidated Financial Statements and Notes to Changes in Scopeof Consolidation and Scope of Equity Method Application
1.

Scope of consolidation(1) Number of consolidated subsidiaries: 94 companies
Names of major consolidated subsidiaries:
Oki Data Corporation; Oki Customer Adtech Co., Ltd.; Oki Wintech Co., Ltd.;OKI Software Co., Ltd.; Oki Proserve Co., Ltd.; Nagano Oki Electric Co., Ltd.;Oki Data Americas, Inc.; Oki Data Manufacturing (Thailand) Co., Ltd.; Oki
Europe Ltd.; Oki Electric Industry (Shenzhen) Co., Ltd.; and OKI Brasil
Indústria e Comércio de Produtos e Tecnologia em Automação S.A.
(2) Changes in scope of consolidation:
Oki BR Argentina S.A. and 6 other companies were included within the scope of
consolidation because of an increase in its relative importance of these subsidiaries.
Oki Sensor Device Corporation and Oki Sensor Device (Shanghai) Co., Ltd. were
excluded from the scope of consolidation as a result of the transfers of all theshares of Oki Sensor Device Corporation as of March 31, 2017.

2.

Application of equity method(1) Number of affiliated companies to which the equity method is applied: 4 companies
Name of major company to which the equity method is applied:Oki Electric Cable Co., Ltd.
(2) Name of affiliated company to which the equity method is not applied:
TOWN NETWORK SERVICE Corporation
Reason for not applying the equity method:
The company has little influence and have no significance on profit or loss andretained earnings.

3.

Matters concerning account settlement dates of consolidated subsidiaries
Although the account settlement date of a consolidated subsidiary OKI Brasil
Indústria e Comércio de Produtos e Tecnologia em Automação S.A. and other sevencompanies is December 31 each year, which differs from the consolidated account settlement
date, financial statements as of the company’s settlement date are used. However, necessary
adjustments for consolidated accounting are made to reflect material transactions that
occurred between the respective settlement dates.

- 41 -

(Translation)
4.

Accounting standards(1) Valuation standards and methods for significant assets(i) Negotiable securities
The Company and its domestic consolidated subsidiaries value securities inaccordance with how they are held as indicated below. Overseas consolidated
subsidiaries apply the lower of cost or fair value.
Other negotiable securities:
Marketable securities:
Stated at fair value based on the market price at the end of the
fiscal year
(Any difference between book value and fair value is included in
net assets; sales costs are calculated by the moving averagemethod.)Non-marketable securities:
Stated at cost based on the moving average method(ii) Inventories
The Company and its domestic consolidated subsidiaries evaluate inventories asfollows, and overseas consolidated subsidiaries primarily apply the lower of cost or fairvalue.
Finished goods:
Principally stated at cost based on the moving average method.
(Balance sheet values are measured by the method of devaluing
the book price to reflect declines in profitability.)Work in process:Principally stated at cost based on the specific identification
method. (Balance sheet values are measured by the method ofdevaluing the book price to reflect declines in profitability.)
Raw materials and supplies:
Principally stated at cost based on the moving average method.
(Balance sheet values are measured by the method of devaluing
the book price to reflect declines in profitability.)(iii) Derivatives
Stated at fair value(2) Depreciation and amortization(i) Property, plant and equipment (excluding lease assets)
The Company and its domestic consolidated subsidiaries primarily apply the
declining-balance method; overseas consolidated subsidiaries primarily apply thestraight-line method.
(ii) Intangible assets (excluding lease assets)
The Company and its domestic consolidated subsidiaries apply the straight-line
method.
For software sold in the market, amortization is based on the estimated amounts of- 42 -

(Translation)
sales in the estimated number of years for sales (3 years). For software for internaluse, the straight-line method, based on the estimated durable years (mainly 5 years), is
used.
Overseas consolidated subsidiaries primarily apply the straight-line method.
(iii) Lease assets
Lease assets relating to finance lease transactions that do not transfer ownershipare depreciated over the lease contract’s lifetime by the straight-line method, assuming
the residual value is zero.
In addition, out of the finance lease transactions that do not transfer ownership,lease transactions whose lease transaction commencement date was on or prior to
March 31, 2008 are accounted for on a basis similar to ordinary rental transactions.
(3) Basis for provision of reserves(i) Allowance for doubtful receivables
To prepare for any losses of accounts receivable and loans, the Company and its
domestic consolidated subsidiaries calculate the amount of potential loss by using thehistorical loss ratio for non-classified loans/receivables and individual assessment forclassified loans/receivables. Overseas consolidated subsidiaries calculate the amountof potential losses by individually assessing the possibility of collection for specificloans/receivables.
(ii) Provision for Directors’ retirement benefits
Some consolidated subsidiaries register the necessary amount at the end of theyear in accordance with internal rules to prepare for the payment of Directors’
retirement allowance.
(4) Basis for provision of income and expense
Basis for provision of income relating to contract work and software development
contracts
a. Income from those with certain results in progress before the end of the fiscal year
Percentage-of-completion method (The progress ratio of construction is estimatedby the cost proportion method.)b. Other income
Inspection basis (completed-contract method for some domestic consolidated
subsidiaries)(5) Important hedge accounting methods(i) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward
exchange contracts and currency swap contracts eligible for allocation treatment.
Special treatment is applied to interest rate swaps that meet requirements for special
treatment.
(ii) Means of hedging and coverage- 43 -

(Translation)
Forward exchange contracts and currency swap contracts are used to hedge
fluctuations of exchange rates on credits and debts in foreign currencies. Interest rate
swaps are employed to hedge fluctuations of market interest rates on variable-rate longterm debt.
(iii) Hedging policy
Derivative transactions are used to hedge fluctuations of market rates on credits
and debts.
(iv) Assessment method of the effectiveness of hedges
To determine the effectiveness of hedges, the Company compares the accumulated
total of market fluctuations or cash flow fluctuations for the targets of hedging and thatof the market fluctuations or the cash flow fluctuations for the means of hedging,
during the period from the start of hedging to the assessment. The Company thenmakes a decision based on the changes of the two.
(6) Amortization of goodwill and amortization period
Goodwill is evenly amortized over its useful life (mainly five years).
(7) Other important matters in preparation of consolidated financial statements(i) Method of accounting for retirement benefitsa. Attributing expected retirement benefits to a period
When calculating retirement benefit obligations, the Company applies thebenefit formula basis to attribute expected retirement benefits to the period until
the end of the fiscal year under review.
b. Accounting for actuarial gains and losses, and prior service costs
Prior service costs are amortized by the straight-line method over a set
number of years (11 to 13 years) within the average remaining years of service of
employees.
Actuarial gains and losses are amortized by the straight line method over a
set number of years (11 to 13 years) within the average remaining years of serviceof employees at the time of their accrual in each fiscal year. Amortization ofsuch gains and losses is deemed to be effective from the year after the one inwhich they arise.
(ii) Accounting processing of consumption tax
The tax-exclusion method is used for accounting of consumption tax and local
consumption tax.
(iii) Application of consolidated tax payment
The consolidated tax payment is applied.

- 44 -

(Translation)
Changes in Accounting Policies
Following the revision to the Corporation Tax Act, some subsidiaries in Japan have appliedthe “Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016” (ASBJ
PITF No. 32, June 17, 2016) from the fiscal year under review, and changed the depreciation
method for facilities attached to buildings and structures acquired on or after April 1, 2016 fromthe declining-balance method to the straight-line method.
The impact of these changes on the consolidated financial statements is immaterial.
Additional Information(Filing a request by the consolidated company)
Oki Banking Systems (Shenzhen) Co., Ltd., an OKI Group consolidated subsidiary, hasfiled a request for arbitration against Shenzhen Yihua Computer Industrial Co., Ltd. on
October 10, 2015, demanding payment of accounts receivable of RMB1,115,463 thousand(¥18,170 million if converted to Japanese yen based on the exchange rate as of the end of the
fiscal year under review) and compensation of damages.
Currently, the South China International Economic and Trade Arbitration Commission
continues to review the matter.
(Application of ASBJ Guidance on Recoverability of Deferred Tax Assets)
Effective from the fiscal year under review, the Guidance on Recoverability of Deferred
Tax Assets (ASBJ Guidance No. 26, March 28, 2016) has been applied.
Notes to Consolidated Balance Sheet
1. Assets pledged as collateral
Investments in securities
Liabilities collateralized by the above assets:
Short-term borrowings¥14,957 million

2.

Accumulated depreciation on property, plant and equipment¥145,631 million

3.

Liabilities for guarantee
Guarantee for borrowings by employees- 45 -¥3,500 million¥229 million

(Translation)
Notes to Consolidated Statement of Changes in Net Assets
1. Matters concerning class and total number of shares outstanding as of the end of FY2016
Common Stock87,217 thousand shares
Note: The Company consolidated ten shares of common stock into one share of common stock as of October 1,
2016.

2.

Matters concerning appropriation of surplus(1) Dividends paid
Resolution

Class ofsharesTotal
dividends(millions ofyen)

Source ofdividends

Dividends
per share(yen)

Recorddate

Effective
date

Ordinary General
Meeting ofCommonRetained
March 31,
June 27,
2,606
3.00
Shareholders
Stockearnings
2016
2016
on June 24, 2016
Board of Directors
CommonRetained
September
December 5,
Meeting on
1,737
2.00
Stock
earnings
30, 2016
2016
October 28, 2016
Note: The Record date for dividends per share resolved at the Board of Directors Meeting on October 28, 2016 is
September 30, 2016. Therefore, the amount before the share consolidation made on October 1, 2016 ispresented.

(2) Dividends for which the record date falls in the fiscal year under review and the effective
date falls in the following fiscal year.

3.

Proposal

Class ofshares

Source ofdividends

Total
dividends(millions ofyen)

Dividends
per share(yen)

Recorddate

Effective
date

Ordinary General
Meeting of
Shareholders
on June 23, 2017

CommonStockRetainedearnings

2,605

30.00

March 31,2017

June 26,
2017

Number of shares to be issued upon exercise of equity warrants
Category

Breakdown of equity warrants

The Company

No. 7 Equity Warrants(issued on July 27, 2007)
No. 8 Equity Warrants(issued on July 27, 2007)
FY2016 Equity Warrants(issued on August 16, 2016)

Type of shares to be issued
upon exercise of equity
warrants

Number of shares to beissued upon exercise of
equity warrants (shares)

Common stock

28,700Common stock

22,200Common stock

55,700- 46 -

(Translation)
Notes on Financial Instruments
1. Matters concerning the status of financial instruments
The OKI Group mainly uses short-term deposits and highly safe marketable securities forfund management, and raises its funds primarily through borrowings from financial institutions
and issuance of corporate bonds.
The Group strives to mitigate its customers’ credit risks associated with notes and accounts
receivable, which are operating receivables, by carrying out customer credit investigations inaccordance with regulations for the management of accounts receivable of individual companies.
For borrowings, the Group raises short-term funds mainly for working capital and long-term
funds for working capital and capital investment. For borrowings exposed to the interest rate risk
and foreign currency risk, the Group applies derivative instruments (interest rate swap transactions
and currency swap transactions) to hedge its risk.
The Group executes and manages derivative transactions in accordance with OKI Group’s
policy.
2.

Disclosure concerning fair value of financial instruments
As of March 31, 2017 (consolidated balance sheet date), the amount recorded in the
consolidated balance sheet, fair value, and the amount of differences are as shown in the tablebelow. Any item whose fair value is deemed extremely difficult to assess is excluded from thetable. (See Note 2.)(Unit: Millions of yen)Amount recorded inconsolidated balance
sheet(1) Cash and deposits

54,164(2) Notes and accounts receivable

101,572

Allowance for doubtful receivables (*1)

Fair value
54,164

Difference–(6,580)94,992

94,992–(3) Investments in securities

42,302

41,829(472)(4) Long-term trade receivables

18,659Allowance for doubtful receivables (*1)

(11,747)
6,911

6,911

(5) Notes and accounts payable(58,685)(58,685)–(6) Short-term borrowings (*2)(37,986)(37,986)–(7) Other accrued expenses(29,499)(29,499)–(8) Long-term debt (*2)(49,025)(49,454)428(9) Derivative transactions
(90)
(90)
–
(*1) Allowance for doubtful receivables specifically provided for notes and accounts receivable and long-term tradereceivables is deducted.
(*2) Long-term debt (¥18,895 million) that will be reimbursed within one year are classified as “short-term borrowings”
in the consolidated balance sheet.
Notes:
1.
Disclosure concerning methods of calculation of fair value of financial instruments, securities and derivativetransactions(1) Cash and deposits and (2) Notes and accounts receivable
These items are settled over a short period of time and their fair value is virtually equal to their book value.
Hence, their fair value is based on the relevant book value.

- 47 -

(Translation)(3)

2.

Investments in securities
The fair value of investments in securities is based on their prices determined at the financial instruments
exchanges, and the fair value of bonds is based on the quotations offered by the correspondent financial
institution.
(4) Long-term trade receivables
Fair value of long-term trade receivables is based on the amount after deducting the present estimateddoubtful receivables from the balance sheet values on the consolidated account settlement date, as estimateddoubtful receivables are calculated based on the present value of loans / receivables.
(5) Notes and accounts payable, (6) Short-term borrowings, and (7) Other accrued expenses
These items are settled over a short period of time and their fair value is virtually equal to their book value.
Hence, their fair value is based on the relevant book value.
(8) Long-term debt
The fair value of these items is based primarily on the method of calculation whereby the sum of principal
and interest is discounted by an assumed interest rate on the assumption that the said sum is freshly
borrowed in a similar manner. Some long-term debt with floating interest rates are prescribed to be subject
to special accounting treatment applicable to interest rate swaps (see (9) below). Hence, the fair value of along-term debt is based on the method of calculation whereby the sum of principal and interest, treated in
combination with the said interest rate swap, is discounted by a reasonably estimable interest rate on theassumption that the said amount is freshly borrowed in a similar manner.
(9) Derivative transactions
Derivative transactions subject to allocation treatment applicable to currency swaps, and to special
accounting treatment applicable to interest rate swaps are treated in combination with long-term debt ashedged items. Hence, their fair value is included in that of long-term debt.
Financial instruments whose fair value is considered extremely difficult to assess
Unlisted equity securities (¥7,274 million on the consolidated balance sheet) are not included in (3) Investments insecurities because they have no market price and it is deemed extremely difficult to assess their fair values.

Notes to Per-share Information
1. Net assets per share: ¥1,115.68
2. Earnings per share:¥54.03
Note: The Company consolidated ten shares of common stock into one share of common stock as of October 1, 2016.
Net assets per share and earnings per share are calculated as if the consolidation of shares was conducted at the
beginning of the fiscal year under review.

- 48 -

(Translation)
Other Notes (Notes on Securities)
1. Other negotiable securities(Unit: Millions of yen)Amount recorded inconsolidated balance
sheet

Acquisition cost

19,867

11,165

8,702

19,867

11,165

8,702

18,816

19,962(1,145)

Subtotal

18,816

19,962(1,145)

Total

38,684

31,128

7,556(Securities whose amounts recorded inconsolidated balance sheet exceed theiracquisition costs)

Difference

Equity Securities
Subtotal(Securities whose amounts recorded inconsolidated balance sheet are not more thantheir acquisition costs)
Equity Securities

2.

Other securities sold during the consolidated fiscal year under review(From April 1, 2016 to March 31, 2017)(Unit: Millions of yen)Type
Equity Securities
Total

Sales amount

Total gain on sales

Total loss on sales

1,409

908

0

1,409

908

0

3.

Impaired securities
Impairment has not been applied to securities for the fiscal year under review.
Impairment was applied to amounts for which impairment was considered necessary based on
a comprehensive judgment on whether values would rise or not, and the amounts were impaired if
their market values at the end of the year under review were remarkably lower than theiracquisition costs.

- 49 -

(Translation)
Other Notes (Notes on Business Combination)
1. Transactions, etc. under Common Control
The Company resolved to additionally acquire shares of OKI Brasil Indústria e Comércio deProdutos e Tecnologia em Automação S.A., a consolidated subsidiary, at the Board of Directors
Meeting on December 27, 2016, and acquired the shares on January 11, 2017.
(1) Outline of transactions(i) Name and content of business of the company involved in the merger
Name of the company involved in the merger:
OKI Brasil Indústria e Comércio de Produtos e Tecnologia em Automação S.A.
Content of business:
Design, manufacture, sales and maintenance and services of automation equipment(ii) Date of business combination
January 11, 2017(iii) Legal forms of business combination
Purchases of stock(iv) Name of the company after combination
No change in name(v) Other items regarding outline of transaction
The Company additionally acquired 4.99% shares of OKI Brasil Indústria e Comércio
de Produtos e Tecnologia em Automação S.A., and the ownership ratio of the Company
is 88.77%.
(2) Outline of accounting procedures applied
The transaction was accounted for as transactions with non-controlling shareholders in the
category of transactions under common control, etc. in accordance with the AccountingStandard for Business Combinations (ASBJ Statement No. 21, September 13, 2013) and the
Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures (ASBJ Guidance No. 10, September 13, 2013).
(3) Matters listed in the case of acquisition of additional shares of a subsidiary
Acquisition cost of acquired company and breakdown
Consideration for the acquisition
Cash and deposits¥1,930 million
Acquisition cost
¥1,930 million(4) Matters concerning change in the Company’s ownership interest of subsidiaries due totransactions with non-controlling shareholders(i) Major factor of change in additional paid-in capital
Acquisition of additional shares of a subsidiary(ii) Amount of additional paid-in capital decreased by transactions with non-controllingshareholders¥1,866 million
2. Business Divestitures
The Company resolved to transfer all shares of Oki Sensor Device Corporation (“Oki Sensor
Device” hereafter) to Mold-Tech Singapore Pte., Ltd. which is under the control of Standex- 50 -

(Translation)
International Corporation (“Standex” hereafter) at the Board of Directors Meeting on February 2,
2017, and transferred the shares on March 31, 2017.
(1) Outline of business divestitures(i) Name of the buyer
Mold-Tech Singapore Pte., Ltd.
(ii) Content of business of the divested subsidiary
Development, manufacture and sales of reed switches and its applied products(iii) Main reason for business divestiture
The OKI Group is reviewing its business portfolio as part of its growth strategy toenhance its resources for focus areas.
Reed switch business of Oki Sensor Device holds top share in the automobile andhome electronics market worldwide, and has contributed to the Group in the past. As
a result of reviewing the position of the reed switch business in the future Oki Group as
well as its further business enhancement, the Company judged that it is mostappropriate to transfer the shares to Standex Group where synergy effect can be
expected.
(iv) Date of business divestiture
March 31, 2017(v) Other matters including legal form of business divestiture
Share transfer with the consideration in cash only
(2) Summary of accounting procedures applied(i) Amount of gain on the share transfer
Gain on sale of subsidiaries and affiliates’ stocks: ¥12,567 million(ii) Book values and breakdown of the assets and liabilities of the business transferred
Current assets
Non-current assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities(Unit: Millions of yen)
3,110
1,419
4,529
(1,784)(152)(1,936)(iii) Accounting procedures
The transaction was accounted for in accordance with the “Accounting Standard forBusiness Divestitures” (ASBJ Statement No. 7, September 13, 2013) and the“Guidance on Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures” (ASBJ Guidance No. 10, September 13, 2013).
(3) Approximate amounts of profit or loss of the transferred business included in the
consolidated statement of operations for the fiscal year under review
Net sales: ¥5,983 million
Operating income: ¥1,567 million- 51 -

(Translation)

Transcript of Accounting Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
May 17, 2017
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yoshimi Kimura,Engagement Partner, Certified Public Accountant
Akira Sato,Engagement Partner, Certified Public Accountant

We have audited the consolidated financial statements – the consolidated balance sheets, the consolidated statementof operations, the consolidated statement of changes in net assets equity and notes to the consolidated financial
statements – of Oki Electric Industry Co., Ltd. for the 93rd term from April 1, 2016 to March 31, 2017 inaccordance with Article 444 Paragraph 4 of the Companies Act.
Responsibility of management for preparing consolidated financial statements
Oki Electric Industry’s management is responsible for preparing and presenting fairly these consolidated financial
statements in accordance with corporate accounting standards generally accepted in Japan. This includes
designing and operating internal control that the management determines necessary to prepare and fairly present
these consolidated financial statements that are without material misstatement due to fraud or errors.
Responsibility of auditors
Our responsibility is to express our independent opinion regarding these consolidated financial statements based on
audits by Ernst & Young ShinNihon LLC. We conducted our audit in accordance with auditing standards
generally accepted in Japan. These auditing standards require that we prepare audit plans and implement audit
based on them to obtain reasonable assurance as to whether the consolidated financial statements are withoutmaterial misstatement.
The audit requires procedures to obtain audit evidence about amounts and disclosure of these consolidated financial
statements. The audit procedures are selected and applied based on evaluation of risks about material
misstatement of these consolidated financial statements due to fraud or errors. Although the purpose of the audit
is not to express our opinion about the effectiveness of internal control, we consider the internal control associatedwith preparation and fair presentation of these consolidated financial statements, in order to plan appropriate audit
procedures in line with actual situations at the time of risk evaluation. Also, our audit includes reviews ofaccounting policies, and methods that management adopts, and an evaluation of management estimates and thepresentation of the consolidated financial statements as a whole.
We believe we have obtained enough and appropriate audit evidence as the basis for our opinion.
Audit opinion
We concluded that the consolidated financial statements fairly present in all aspects Oki Electric Industry’s and its
subsidiaries’ assets and income or loss in accordance with corporate accounting standards generally accepted inJapan.
Conflict of interest
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm (Ernst &Young ShinNihon LLC) and the respective engagement partners.

- 52 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2017)

Account title(Assets)
Current assets
Cash and deposits
Notes receivable
Accounts receivable, trade
Lease investment assets
Finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Short-term loans
Accounts receivable-other
Deferred tax assets
Other current assets

Amount32,2801,333
49,525
5,378
3,256
13,924
5,484
510
9,992
6,517
2,011
252

Allowance for doubtful receivables(7)

Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
VehicleAccumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Land
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Right of using facilities
SoftwareTotal intangible assets
Investments and other assets
Investments in securities
Investments in and advances tosubsidiaries and affiliates
Contribution
Contribution in subsidiaries andaffiliates
Long-term loans receivable fromsubsidiaries and affiliates
Claims provable in bankruptcy,
rehabilitation and other
Long-term prepaid expenses
Lease and guarantee deposits
Other investments and other assets
Allowance for doubtful receivables
Total investments and other assets
Total non-current assets
Total assets

130,462
34,230(24,701)
2,243(1,863)
11,662(9,913)70(52)
35,783(28,992)

9,529
380
1,748
17
6,790
2,302
60
20,828
9
114
7,012
7,136
42,367
48,21288
98
23,135
39
561
3,182
262
(11,761)
106,185
134,150
264,613- 53 -(Unit: Millions of yen)Account title
Amount(Liabilities)
Current liabilities
Notes payable
2,299
Accounts payable, trade
34,774
Short-term borrowings
29,089Current portion of long-term debt
17,991
Lease obligations
1,576
Accounts payable, others
9,984
Other accrued expenses
15,283
Income taxes payable
916
Advances received
2,041
Deposits received
8,285
Provision for directors’ bonuses
75
Provision for loss on construction
45
contracts
Provision for loss on Anti-Monopoly
2,086
Act
Asset retirement obligations
2
Other current liabilities
3
Total current liabilities
124,455
Long-term liabilities
Long-term debt
26,762
Lease obligations
6,186
Deferred tax liabilities
9,161
Retirement benefits
9,785
Provision for loss on business of
1,776
subsidiaries and affiliates
Asset retirement obligations
983
Long-term accounts payable-other
2,810
Other long-term liabilities
67
Total long-term liabilities
57,533
Total liabilities
181,989(Net Assets)
Shareholders’ equity
Capital stock
44,000Additional paid-in capital
21,553
Capital reserve
15,000
Other additional paid-in capital
6,553
Retained earnings
12,900
Other retained earnings
12,900Retained earnings carried
12,900
forwardTreasury stock, at cost
(463)
Total shareholders’ equity
77,990
Valuation, translation adjustments andothersNet unrealized holding gain/loss onother securities
Total valuation, translation
adjustments and others
Subscription rights to shares
Total net assets

94
82,623

Total liabilities and net assets

264,613

4,538
4,538

(Translation)

Non-Consolidated Statement of Operations(From April 1, 2016 to March 31, 2017)(Unit: Millions of yen)Account title

AmountNet sales

212,198

Cost of sales

168,057

Gross profit

44,140

Selling, general and administrative expenses

39,115

Operating income

5,025

Non-operating income
Interest income

970

Interest income on securities

0

Dividend income

5,033

Royalty income from corporate brand

772

Other

486

7,262

Non-operating expenses
Interest expense

1,293

Foreign exchange loss, net

350

Share-related expenses

238

Other

89

Ordinary income

1,973
10,314Extraordinary profit
Gain on sale of investments in securities

1,002

Gain on sale of subsidiaries and affiliates’ stocks

14,804

Reversal of provision for loss on business of subsidiaries and affiliates

26,571Gain on return of assets from retirement benefits trust

7,822

Gain on reversal of subscription rights to shares

32

50,232Extraordinary loss
Loss on sales of non-current assets

2,404

Loss on abandonment of non-current assets

517

Write-downs of investments in unconsolidated subsidiaries and othersecurities.

30

Loss on valuation of shares of subsidiaries and affiliates
Write-downs of shares of subsidiaries and affiliates

28,367
518

Loss on abandonment of claims of subsidiaries and affiliates

25,500

Provision for loss on business of subsidiaries and affiliates

1,062

provision of allowance for doubtful receivables

11,550Loss on Anti-Monopoly Act

2,477

Loss before income taxes

72,428
11,881

Income taxes

1,949

Income taxes deferred

4,860

Loss

6,809
18,691- 54 -

(Translation)

Non-Consolidated Statement of Changes in Net Assets(Year ended March 31, 2017)(Unit: Millions of yen)
Shareholders’ equity
Additional paid-in capital
Capitalstock

Balance at April 1,
2016

Capitalreserve

44,00015,000Retained earnings

Other
additional
paid-in
capitalTotal
additional
paid-in capital

6,553

21,553

Other retained
earnings
Retained earnings
carried forward

Total
retainedearnings

Treasurystock,
at costTotal
shareholders’equity(454)

101,034

35,93535,935

Dividends fromsurplus(4,343)(4,343)(4,343)Loss(18,691)(18,691)(18,691)

Changes during theterm under review

Purchases oftreasury stock

(8)

(8)

Net changes in
items other thanshareholders’equity during theterm under review
Net changes during
the term underreview
Balance at March
31, 2017

–

–

–

–

(23,034)(23,034)(8)(23,043)

44,00015,0006,553

21,553

12,90012,900(463)

77,990

Subscription
rights tosharesTotal net assets

79

104,997

Valuation, translation adjustments and others

Balance at April 1, 2016

Net unrealized holding
gain/loss on othersecurities

Loss / Gain on deferredhedgesTotal valuation,translation adjustments
and others

3,884

–

3,884

Changes during the term
under review
Dividends from surplus(4,343)Loss(18,691)(8)

Purchases of treasury stock
Net changes in items otherthan shareholders’ equity
during the term under review

653

–

653

15

669

Net changes during the term
under review

653

–

653

15

(22,374)

Balance at March 31, 2017

4,538

–

4,538

94

82,623- 55 -

(Translation)

Note to Non-consolidated Financial Statements
Significant Accounting Policies
1.

Standards and valuation methods for negotiable securities
Shares of subsidiaries and affiliated companies:
Stated at cost based on the moving average method
Other negotiable securities:
Marketable securities:
Stated at fair value based on the market price at the end of the fiscal year
(The difference between book value and fair value is included in net assets.
The sale cost is calculated by using the moving average method.)
Non-marketable securities: Stated at cost based on the moving average method

2.

Standards and valuation methods for derivatives
Derivatives: Stated at fair value

3.

Standards and valuation methods for inventories
Finished goods:
Stated at cost based on the moving average method (Balance sheet
values are measured by the method of devaluing the book price toreflect declines in profitability.)Work in process:Stated at cost based on the specific identification method (Balance
sheet values are measured by the method of devaluing the book priceto reflect declines in profitability.)
Raw materials and supplies:
Stated at cost based on the moving average method (Balance sheet
values are measured by the method of devaluing the book price toreflect declines in profitability.)

4.

Depreciation and amortization
Property, plant and equipment (excluding lease assets): Declining-balance method
The straight-line method is applied to buildings, excluding annexed structures,acquired on or after April 1, 1998.
Intangible assets (excluding lease assets)
Software for sale in the market:
Amortization method based on the estimated amounts of sales in the estimatednumber of years for sales (3 years)
Software for internal use:
Straight-line method based on the estimated durable years (mainly 5 years)
Others:Straight-line method
Lease assets(Lease assets relating to finance lease transactions without transfer of ownership):
They are depreciated over the lease contract’s lifetime by the straight-line- 56 -

(Translation)
method, assuming the residual value is zero.
In addition, out of the finance lease transactions that do not transfer ownership,lease transactions whose lease transaction commencement date was on or prior
to March 31, 2008 are accounted for on a basis similar to ordinary rental
transactions.
5.

Basis for provision of reserves
Allowance for doubtful receivables
To prepare for any losses on accounts receivable and loans, the Company calculates theamount of potential loss by using the historical loss ratio in the case of non-classified
loans/receivables and by individual assessment in the case of classified loans/receivables.
Provision for directors’ bonuses
To prepare for the payment of bonuses to officers (includes executive officers, the same
applies below), the Company records the amount attributable to the current fiscal year out of
the amount of bonuses expected to be paid to officers.
Provision for loss on construction contracts
To prepare for any losses on construction contracts, the estimated amount of losses forthe following fiscal years are calculated for some of the orders backlog as of the end of the
fiscal year under review, which are likely to incur losses and for which the amounts thereof
can be reasonably estimated.
Provision for loss on Anti-Monopoly Act
To prepare for any losses relating to the Anti-Monopoly Act, the estimated amount forthe current fiscal year end is recorded.
Retirement benefits
To prepare for payment of retirement benefits to employees, the Company records theamount recognized to accrue at the end of the fiscal year based on the estimated values ofretirement benefit obligations and pension assets.
Prior service cost is amortized by the straight-line method over a certain number of years(13 years) within the average remaining years of service of employees.
The actuarial difference is amortized proportionately using the straight-line method overa certain number of years (13 years) within the average remaining service period of theemployees from the fiscal year after the one in which it arises.
Provision for loss on business of subsidiaries and affiliates
To prepare for any losses on business of subsidiaries and affiliates, the estimated amountof loss on business is calculated in consideration of the financial position and operating
results of the relevant subsidiaries and affiliates.

6.

Hedge accounting methods(1) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward exchange
contracts and currency swap contracts eligible for allocation treatment. Special
treatment is applied to interest rate swaps that meet the requirements for special
treatment.
(2) Means of hedging and hedged item

- 57 -

(Translation)
Forward exchange contracts and currency swap contracts are used to hedge fluctuationsof exchange rates on credits and debts in foreign currencies. Interest rate swaps are
employed to hedge fluctuations of market interest rates on variable-rate and long-term
debt.
(3) Hedging policy
Derivative instruments are used to hedge fluctuations of market rates on credits and debts.
(4) Assessment method of hedging effectivenessTo determine the effectiveness, the Company compares the accumulated total of themarket fluctuations or the cash flow fluctuations for the hedged item and that of themarket fluctuations or the cash flow fluctuations for the means of hedging, during theperiod from the start of hedging to the assessment. The Company then makes adecision based on the changes of the two.
7.

Other important matters in preparation of non-consolidated financial statements(1) Accounting for retirement benefits
The methods of accounting for unappropriated amounts of unrecognized prior service
costs and unrecognized actuarial gains and losses for retirement benefits differ fromthose in the consolidated financial statements.
(2) Accounting processing of consumption tax
The tax-exclusion approach is applied for accounting of consumption tax and local
consumption tax.
(3) Application of consolidated tax payments
Consolidated tax payments are applied.

- 58 -

(Translation)
Notes to Non-consolidated Balance Sheets
1. Assets provided as collateral
Investments in securities
Liabilities collateralized by the above assets
Short-term borrowings
2.

¥14,957 million¥3,500 million

Guarantee liabilities:
The Company provides guarantees for bank borrowings made by employees, andsubsidiaries and affiliates as shown below.
Oki Data Americas, Inc.

¥3,366 million($30,000 thousand)Oki Europe Ltd. and its subsidiaries¥1,444 million(10,000 thousand pounds sterling, 375 thousand euro)
Oki Data Manufacturing (Thailand) Co., Ltd.
¥1,141 million(350,000 thousand baht)
Oki Printed Circuits Co., Ltd.
¥975 million
Oki Wintech Co., Ltd.
¥726 million
Oki Data Corporation¥541 million
Five other entities:¥744 million
Total:¥8,940 million
3.

Monetary claims receivable from and payable to subsidiaries and affiliates
Short-term monetary claims receivable from subsidiaries and affiliates:
Long-term monetary claims receivable from subsidiaries and affiliates:
Short-term monetary claims payable to subsidiaries and affiliates:
Long-term monetary claims payable to subsidiaries and affiliates:

Notes to Non-consolidated Statement of Operations
Transactions with subsidiaries and affiliates
Sales:
Purchases:
Non-operating transactions:

Notes to Non-consolidated Statement of Changes in Net Assets
Type and number of treasury stock as of the end of the fiscal year
Common stock:- 59 -¥19,507 million¥1,161 million¥25,983 million¥67 million¥18,677 million¥49,531 million¥15,815 million

356 thousand shares

(Translation)
Notes to Deferred Tax Accounting
Major factors giving rise to deferred tax assets and liabilities
Deferred tax assets
Nondeductible write-downs of shares of subsidiaries and affiliates
Nondeductible retirement benefits
Loss carry forwards
Allowance for doubtful receivables
Adjustments of losses on transfers among consolidated subsidiaries
Nondeductible accounts payable-other due to changes in retirement
benefit plans
Nondeductible accrued bonuses
Nondeductible foreign tax credit
Nondeductible loss on impairment of fixed assets
Nondeductible write-downs of inventories
Provision for loss on Anti-Monopoly Act
Nondeductible provision for loss on business of subsidiaries andaffiliates
Bad debts expenses
OthersSubtotal deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Gain on valuation of investment securities
Nondeductible unrealized gain on contribution of securities to thepension trust
Net unrealized holding gain/loss on other securities
OthersTotal deferred tax liabilities
Net deferred tax assets¥16,167 million¥5,765 million¥3,882 million¥3,647 million¥3,452 million¥1,271 million¥1,250 million¥1,057 million¥791 million¥663 million¥646 million¥550 million¥358 million¥1,886 million¥41,394 million¥(38,706) million¥2,688 million¥(5,793) million¥(1,981) million¥(1,936) million¥(127) million¥(9,838) million¥(7,149) million

Notes to Leased Fixed Assets
Finance lease transactions that do not transfer ownership whose lease transaction commencement
date was on or prior to March 31, 2008 are accounted for on a basis similar to ordinary rental
transactions.
1.
2.
3.

Amount equivalent to acquisition cost of leased assets as of the end of the term under review¥28 million
Amount equivalent to accumulated depreciation of leased assets as of the end of the term
under review¥25 million
Amount equivalent to unexpired lease payment of leased assets as of the end of the term
under review¥2 million- 60 -

(Translation)
Notes to Related Party Transactions
1. Subsidiaries, etc.
Attribute

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Name of company, etc.

OKI Software Co.,Ltd.

Oki Hong Kong, Ltd.

Oki Data Corporation

Oki Wintech Co., Ltd.

Oki Proserve Co., Ltd.

Location

Warabi,
Saitama Pref.

Hong Kong

Minato-ku,
TokyoShinagawaku, Tokyo

Minato-ku,
TokyoVotingright ratio

CapitalBusiness¥400 million

Development, design,
manufacture andmaintenance ofsoftware andembedded software,system building
services, SI/solution
services, consulting
outsourcing and salesof informationequipment(Direct)
100%

Holdings company,
material procurement(Direct)100%

HK$80,000
thousand¥19,000
millionDevelopment,
manufacture and salesof printing equipment
and related solutions(Direct)
100%

Equipment work,
designing, construction
and maintenance of¥2,001 million
telecommunication,
firefighting and otherfacilities¥321 million(Direct)
100%

Facility business,
human resource
management,
advancedcommunication
business, logistics
business(Direct)
100%

Relationship withrelated party

Description oftransactions

Transaction
amount(mil. yen)Account item

Endingbalance(mil. yen)Accounts
payable,
trade

4,621

Other
accruedexpenses703

Production ofsoftware on a contract
basis, etc.,
lending of funds

Purchase ofservices

Supply products etc.,
lending of funds,
concurrent
assumption of officeof officer

Lending offunds

22,475Long-term
loans
receivable

20,296

Abandonmentof claims

25,500––Lending offunds

15,653––

Underwritingof capitalincrease

8,000

–

–

Borrowing of
funds

–

Deposits
received

5,000

Sales ofproducts

5,097

Accounts
receivable,
trade

2,702

Short-term
loans
receivable

700

Long-term
loans
receivable
fromsubsidiaries
and affiliates

2,100

Purchase of products,
lending of funds,
concurrent
assumption of officeof officer

Supply products etc.,
purchase of services,concurrent
assumption of office

Purchase of services,
lease and brokerageof real estate, lendingof funds

Lending offunds

17,553

2,984

Subsidiary

Oki Data Americas,
Inc.

U.S.A.

US$10,000
thousand

Sales and services ofprinters and multipurpose printers(Indirect)
100%

Guarantee forborrowings

Debt guarantee

3,366

-

-

Subsidiary

OKI Brasil Indústria eComércio de Produtos
e Tecnologia em
Automação S.A.

BrazilBRL399,999
thousand

Design, development,
manufacture, sales andmaintenance andservices of automationequipment(Direct)
89%

Supply products etc.,
lending of funds,
concurrent
assumption of officeof officer

Lending of
funds

3,521

Short-term
loans
receivable

3,206

Notes:
1. The transactions amount excludes consumption tax, while the ending balance includes consumption tax.
2. Conditions of transactions and policy in determining conditions(1) The Company determines conditions regarding purchase of services and sales of products based on market
prices.
(2) The Company determines the interest rate for the lending of funds by taking the market rate of interest into
consideration. However, for some subsidiaries, the Company determines the said interest rate by taking thefinancial position of the subsidiaries. Transaction amount shows the average balance during the fiscal year
because the transactions are repetitive.
(3) The Company provided a debt guarantee for bank borrowings of OKI DATA AMERICAS, INC. and received
a guarantee commission of 0.1% p.a.

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(Translation)
3.
4.
5.
6.

Abandonment of claims was made against short-term loans of ¥25,500 million to Oki Data Corporation.
Underwriting of capital increase: The Company underwrote a capital increase carried out by Oki Data Corporation,purchasing new shares at ¥32,000 per share.
Borrowing of funds is a transaction with an objective of capital efficiency within the Group.
For the loans to two subsidiaries, the Company recorded an allowance for doubtful receivables of ¥11,680 million.
In addition, the Company recorded a provision of allowance for doubtful receivables of ¥11,549 million.

2. Corporate pension, etc. for employees
Attribute

Name of company, etc.

Location

CapitalBusiness

Votingright ratio

Relationship withrelated party

Description oftransactions

Transaction
amount(mil. yen)Account item

Endingbalance(mil. yen)

Corporate
pensionRetirement benefits
trust

–

–

–

–

Pension asset inaccounting for
retirement benefits

Partial returnof property

18,717––

Notes to Per-share Information
1. Net assets per share: ¥950.12
2. Earnings per share:¥215.18
Note: The Company consolidated ten shares of common stock into one share of common stock as of October 1, 2016.
Net assets per share and earnings per share are calculated as if the consolidation of shares was conducted at the
beginning of the fiscal year under review.

Additional Information
Effective from the fiscal year under review, the Guidance on Recoverability of Deferred Tax
Assets (ASBJ Guidance No. 26, March 28, 2016) has been applied.

- 62 -

(Translation)

Transcript of Accounting Auditors’ Report

Independent Auditors’ Report
May 17, 2017
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yoshimi Kimura,Engagement Partner, Certified Public Accountant
Akira Sato,Engagement Partner, Certified Public Accountant

We have audited the non-consolidated financial statements – the non-consolidated balance sheets, the nonconsolidated statement of operations, the non-consolidated statement of changes in net assets and notes to the nonconsolidated financial statements – and its supporting schedules of Oki Electric Industry Co., Ltd. for the 93rd termfrom April 1, 2016 to March 31, 2017 in accordance with Article 436 Paragraph 2 Item 1 of the Companies Act.
Responsibility of management for preparing non-consolidated financial statements and its supporting schedules
Oki Electric Industry’s management is responsible for preparing and presenting fairly these non-consolidated
financial statements and its supporting schedules in accordance with corporate accounting standards generally
accepted in Japan. This includes designing and operating internal control that the management determines
necessary to prepare and fairly present these non-consolidated financial statements and its supporting schedules thatare without material misstatement due to fraud or errors.
Responsibility of auditors
Our responsibility is to express our independent opinion regarding these non-consolidated financial statements andits supporting schedules based on audits by Ernst & Young ShinNihon LLC. We conducted our audit inaccordance with auditing standards generally accepted in Japan. These auditing standards require that we prepare
audit plans and implement audit based on them to obtain reasonable assurance as to whether the non-consolidated
financial statements and its supporting schedules are without material misstatement.
The audit requires procedures to obtain audit evidence about amounts and disclosure of these non-consolidated
financial statements and its supporting schedules. The audit procedures are selected and applied based on
evaluation of risks about material misstatement of these non-consolidated financial statements and its supporting
schedules due to fraud or errors. Although the purpose of the audit is not to express our opinion about theeffectiveness of internal control, we consider the internal control associated with preparation and fair presentation ofthese non-consolidated financial statements and its supporting schedules, in order to plan appropriate audit
procedures in line with actual situations at the time of risk evaluation. Also, our audit includes reviews ofaccounting policies, and methods that the management adopts, and an evaluation of management estimates and thepresentation of the non-consolidated financial statements and its supporting schedules as a whole.
We believe we have obtained enough and appropriate audit evidence as the basis for our opinion.
Audit opinion
We concluded that the non-consolidated financial statements and its supporting schedules fairly present in all
aspects Oki Electric Industry’s assets and income or loss in accordance with corporate accounting standards
generally accepted in Japan.
Conflict of interest
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm (Ernst &Young ShinNihon LLC) and the respective engagement partners.

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(Translation)

Transcript of Audit & Supervisory Board’s Report

Audit & Supervisory Board’s Report
We, the Audit & Supervisory Board, have prepared upon consultation this Audit Report based on reports compiled by each
Audit & Supervisory Board Member with respect to Directors’ performance of their duties during the 93rd fiscal year from
April 1, 2016 to March 31, 2017, as follows:
1. Auditing methods used by Audit & Supervisory Board Members and the Audit & Supervisory Board, and details of
audit(1) The Audit & Supervisory Board specified an audit policy, compiled audit plans and received reports from each Audit &Supervisory Board Member on the status of implementation and results of audits and also received reports from
Directors and accounting auditors on the status of the execution of their duties and asked them for explanations asneeded.
(2) Each Audit & Supervisory Board Member, according to the audit standards, policy and plans set up by the Audit &Supervisory Board, has maintained good communications with Directors, the internal audit division and other
employees and strived to collect information and improve the audit environment and conducted an audit by following
the methods described below:(a) We attended the meetings of the Board of Directors and other meetings as deemed important, received from Directors
and employees reports on the execution of their duties, asked for explanations as necessary, perused the documents
whereby the important decisions were made, and examined business and financial conditions at the head office andprincipal operating offices. With respect to the subsidiaries of the Company, we have maintained goodcommunications and exchanged information with Directors, Audit & Supervisory Board Members and others andreceived reports on business conditions from the subsidiaries as needed.
(b) In addition, we have periodically received reports from Directors and employees, among others, required explanation
when necessary, and made opinions with regard to the status of operations and the systems established thereon(internal control systems) made by the Board of Directors concerning the establishment of systems defined in Article
100, Paragraph 1 and Paragraph 3 of the Regulations for Enforcement of the Companies Act as necessary forensuring compliance with laws and the Company’s Articles of Incorporation in the performance of duties byDirectors, described in the Business Report, and for ensuring appropriateness of duties of corporate group consistingof joint stock company and its subsidiaries.
(c) We have monitored and verified whether the accounting auditors maintained their independence and properly
implemented audits, received from the auditors reports on the performance of their duties and asked them for
explanations as necessary. The accounting auditors reported to us that “systems for ensuring proper execution ofduties” (listed in each item of Article 131 of the Corporate Calculation Regulations) have been established inaccordance with the quality control standards concerning audits (Business Accounting Council, October 28, 2005),
and asked them for explanations as necessary.
Based on the methods mentioned above, we have reviewed the business report for the said fiscal year and their
supplementary schedules, financial statements for the said fiscal year (balance sheet, statement of operations, statement ofchanges in shareholders’ equity, and notes to non-consolidated financial statements), their supplementary schedules andconsolidated financial statements (consolidated balance sheet, consolidated statement of operations, consolidated statement ofchanges in shareholders’ equity, and notes to consolidated financial statements).
2. Results of Audit(1) Results of audit of the business report(a) We consider that the business report and its supplementary schedules fairly present the situation of the Company inaccordance with relevant laws and regulations and the Company’s Articles of Incorporation.
(b) With respect to the Directors’ performance of their duties, we have found neither undue transactions nor material
facts that violate relevant laws and regulations or the Company’s Articles of Incorporation.
(c) We consider that the details of the resolution made by the Board of Directors concerning internal control proceduresare proper. With respect to the details described in the Business Report and the Directors’ performance of theirinternal control duties, we have found no issues to be pointed out. As described in the Business Report, theCompany received cease and desist orders and orders for payment of surcharge from the Japan Fair Trade
Commission with respect to antitrust law violations on February 2, 2017. The Audit & Supervisory Board took thematter with utmost seriousness and confirmed that the entire Group has been working to ensure legal complianceeven more thoroughly aiming to prevent reoccurrence. Furthermore, the Audit & Supervisory Board will monitor
the status of efforts for strengthening compliance made by the Group aimed at the prevention of reoccurrence.
(2) Results of audit of financial statements and their supplementary schedules
We consider that the auditing methods and results of the Company’s Accounting Auditors, Ernst & Young
ShinNihon LLC, are proper.
(3) Results of audit of consolidated financial statements
We consider that the auditing methods and results of the Company’s Accounting Auditors, Ernst & Young
ShinNihon LLC, are proper.
May 18, 2017
The Audit & Supervisory Board, Oki Electric Industry Co., Ltd.
Hisao Suzuki, Standing Audit & Supervisory Board Member
Tsutomu Tai, Standing Audit & Supervisory Board Member
Kuninori Hamaguchi, Outside Audit & Supervisory Board Member
Yoichi Nitta, Outside Audit & Supervisory Board Member- 64 -