(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 7, 2021

NOTICE OF 97TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 97TH
ordinary general meeting of shareholders will be held as follows.
To prevent the spread of novel coronavirus disease (COVID-19), shareholders are kindly requested
to exercise their voting rights in writing or via the Internet, etc. for this general meeting ofshareholders, and refrain from attending the meeting in person. On the meeting day, we will ensure
appropriate social distancing between seats and this will significantly reduce the number of seatsavailable, compared to the previous years. Accordingly, even if you come to the venue, you may
not be able to enter. We would appreciate your understanding in advance.
Shareholders are kindly requested to review “Reference Documents for the General Meeting of
Shareholders” provided hereunder and exercise their voting rights by no later than 5:15 p.m. on June
28 (Monday), 2021 (JST).
Yours faithfully,
Shinya Kamagami,
President, Representative Director
Oki Electric Industry Co., Ltd.
1-7-12 Toranomon, Minato-ku, Tokyo-1-

(Translation)
1.
2.

Date and Time:
Tuesday, June 29, 2021, from 10:00 a.m. (Reception will open at 9:30 a.m.)
Location:
Nikkei Hall, 3F Nikkei Building, 1-3-7 Otemachi, Chiyoda-ku, Tokyo
The date and time, and location are subject to change due to the situation regarding the
COVID-19 outbreak. Any change that occurs will be announced on our website(https://www.oki.com/jp/). Should you intend to attend the meeting, please check thewebsite in advance.
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 97th fiscal year (from April 1, 2020 to March 31, 2021)
2. Non-consolidated Financial Statements for the 97th fiscal year (from April 1, 2020
to March 31, 2021)

Items to be resolved:
Agenda Item 1:
Agenda Item 2:
Agenda Item 3:
Agenda Item 4:

Appropriation of Surplus
Election of Nine (9) Directors
Election of Two (2) Audit & Supervisory Board Members
Grant of Stock Option for Stock-linked Compensation (Equity Warrants)
to Directors

Instructions for the Exercise of Voting Rights
Exercise of voting rights via postal mail:Please indicate your approval or disapproval in the space provided on the ballot and return the ballot
to the Company no later than 5:15 p.m., June 28 (Monday), 2021 (JST).
Exercise of voting rights via the Internet, etc.:
Please read “Instructions for the Exercise of Voting Rights via the Internet, etc.” on page 3, andindicate your approval or disapproval no later than 5:15 p.m., June 28 (Monday), 2021 (JST).
Exercise of voting rights via attending the meeting:
Please bring and always wear a face mask. Present the enclosed ballot at the reception desk of themeeting.
* If you exercise your voting rights both in writing and via the Internet, etc., we will regard the vote cast
via the Internet, etc. to be effective.
* If you exercise your voting rights more than once via the Internet, etc., we will regard the last vote you
cast to be the effective one.
* The Company has provided the Notice of 97th Ordinary General Meeting of Shareholders on its Internet
website (https://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.

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(Translation)

Instructions for the Exercise of Voting Rights via the Internet
How to scan QR code
“Smart Exercise”

How to entervoting rights exercise code and password

You can simply login to the voting site without
entering your voting rights exercise code andpassword.

Voting site:
https://soukai.mizuho-tb.co.jp/1.

1.

Please access the voting site.

2.

Please enter the “voting rights exercise code”
printed on the voting rights exercise form.

3.

Please enter the “password” printed on thevoting rights exercise form.

4.

Please input approval or disapproval to each
proposal in accordance with the instructions on
the screen.

2.

Please scan the QR code provided at thebottom right of the voting rights exercise form.
* “QR code” is a registered trademark of
Denso Wave Incorporated.
Please input approval or disapproval to each
proposal in accordance with the instructions on
the screen.
Exercising voting rights by “Smart Exercise” isavailable only once.
If you need to change your votes after excising
your voting rights, please log in the voting site fora personal computer by using your “voting rights
exercise code” and “password” provided on thevoting rights exercise form and exercise yourvoting rights again.
* If you rescan the QR code, you can access the
Exercise of Voting Rights Website for a
personal computer.

If you have any inquiries about the operation of apersonal computer, a smartphone or a cellular phone
regarding the exercise of voting rights via theInternet, please contact on the right-hand side:

Internet Help Dial, Stock Transfer Agency Department,
Mizuho Trust & Banking Co., Ltd.
Tel: 0120-768-524 (toll free, only in Japan)(Operating hours: 9:00 a.m. to 9:00 p.m.
excluding Saturdays, Sundays and national holidays)

Institutional investors can utilize the electronic voting platform operated by ICJ, Inc.

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(Translation)

Reference Documents for the General Meeting of Shareholders
Agenda Items and Reference Matters
Agenda Item 1:

Appropriation of Surplus

The Company has given consideration to matters including the business performance of the
fiscal year under review, business earnings projections for the next fiscal year (FY2021), theCompany’s financial position, etc., and it proposes to pay year-end dividends for the fiscal year
under review as follows.
1.

Type of dividend asset
Cash

2.

Allocation of dividend assets and total amount of dividends
Common stock of the Company¥20 per share
Total dividends¥1,731,276,020

3.

Effective date of dividend of surplus
June 30, 2021

(Reference) Shareholder Return Policy
OKI’s top management priorities are to strengthen its financial position and ensure retained earnings in order tocontinually improve the OKI Group’s corporate value, as well as to increase shareholder returns so that shareholders areencouraged to hold its shares over the medium- to long-term. While, in principle, providing stable and continuous
shareholder returns, OKI decides on its dividends amounts, giving comprehensive consideration to business performance,
the investment required for research & development and facilities that are critical to future growth, and reinforcing its
management foundations.

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Agenda Item 2: Election of Nine (9) Directors
The tenure of office of all nine (9) Directors will expire at the conclusion of this general
meeting of shareholders. Accordingly, the Company proposes the election of nine (9) Directors,
and the candidates are shown as follows. The candidates for Directors have been approved by the
Board of Directors after deliberation by the Personnel Affairs and Compensation Advisory
Committee, consisting of five (5) members including four (4) outside officers.
Current position/
responsibility in the
Company

Number of attendanceat meetings of theBoard of Directors

Numberof years
in officeRe-election
InsidePresident,
Representative Director
Supervision100%(14 out of 14 times)

7 years

Masayuki Hoshi

Re-election
InsideSenior Executive Vice
President,
Representative Director
Chief Compliance
Officer
Chief Financial Officer
Chief Information
Officer,
Chief Human Resource
Officer100%(14 out of 14 times)

5 years

Masashi Tsuboi

Re-election
InsideExecutive Vice President
and Member of the
Board
Head of Solution
Systems Business Group100%(14 out of 14 times)

2 years

Masashi Fuse

Re-election
InsideSenior Vice President
and Member of the
Board
Head of Corporate
Group
Internal Control
Administrator

100%(14 out of 14 times)

2 years5

Masatoshi Saito

Newlynominated
InsideSenior Vice President
Head of Components &Platforms Business
Group

–%
(- out of - times)–

6

Shigeru Asaba

Re-election
OutsideIndependent

Outside Director100%(14 out of 14 times)

4 years

7

Tamotsu Saito

Re-election
OutsideIndependent

Outside Director100%(14 out of 14 times)

3 years

Izumi Kawashima

Re-election
OutsideIndependent
Woman

Outside Director100%(14 out of 14 times)

3 years

Candidatenumber
1

2

3

4

8

Name

Shinya Kamagami-5-

(Translation)
Candidatenumber9

Current position/
responsibility in the
Company

Name

Makoto Kigawa

Re-election
OutsideIndependent

Outside Director-6-

Number of attendanceat meetings of theBoard of Directors

Numberof years
in office100%(14 out of 14 times)

2 years(Translation)
CandidatenumberName(Date of birth)

ShinyaKamagami(February 9, 1959)

Brief personal profile, position and responsibility in the Company andsignificant concurrent positions
Apr. 1981

Joined Oki Electric Industry Co., Ltd.

Apr. 2001

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

Apr. 2005

Head of Systems Hardware Development Division, Systems
Hardware Company, Systems Networks Business Group

Number of years in
office as Director:
Apr. 2011
Executive Officer
7 years
Senior Vice President(as of the conclusion of Apr. 2012
this general meeting of Jun. 2014
Senior Vice President and Member of the Board
shareholders)[Re-election]
Apr. 2016
President, Representative Director (incumbent)
1
Number of attendance atmeetings of the Board
Reason for the selection of candidate for Directorof Directors(the year under review): Based on his past experience serving in business divisions and headquarters
divisions, Mr. Shinya Kamagami has the knowledge and experience to decide
14 out of 14 times
important matters and supervise the business execution of Directors and(100%)
Executive Officers in an appropriate, fair, and efficient manner. Mr.
Number of Oki shares Kamagami assumed the office of Director in June 2014, and has been engaging
in management of the Company as President and Representative Director sinceheld:fiscal 2016. He is nominated as a candidate for Director as it is expected that,
Common stock:
as a member of the Board of Directors, he will continue to share information
13,800 shareswith other Directors and strengthen the decision-making function.

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(Translation)
CandidatenumberName(Date of birth)

Masayuki Hoshi(March 9, 1960)

Brief personal profile, position and responsibility in the Company andsignificant 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

Apr. 2011

Managing Executive Officer, Head of Global Transaction
Banking Unit

Jun. 2014

Managing Executive Officer, Mizuho Financial Group, Inc.

May 2015

Senior Vice President, Oki Electric Industry Co., Ltd.

Number of years in
Apr. 2016
office as Director:
5 years(as of the conclusion of Jun. 2016
this general meeting ofApr. 2017
shareholders)[Re-election]
Number of attendance at Jun. 20182
meetings of the Board
Apr. 2019of Directors(the year under review):
14 out of 14 times
Apr. 2021(100%)
Number of Oki shares
held:
Common stock:5,600 shares

Chief Risk Management Officer, Head of Corporate PlanningGroup
Senior Vice President and Member of the Board
Executive Vice President and Member of the Board, Chief
Financial Officer (incumbent)
Chief Compliance Officer (incumbent)
Senior Executive Vice President, Representative Director(incumbent), Chief Information Officer (incumbent)
Chief Human Resources Officer (incumbent)

Reason for the selection of candidate for Director
Mr. Masayuki Hoshi has abundant experience gained as Managing Executive
Officer at the Mizuho Financial Group, which the candidate comes from, andhas a deep understanding of governance and perspective related to the global
business on which the Company focuses. He also has the knowledge andexperience to decide important matters and supervise the business execution of
Directors and Executive Officers in an appropriate, fair, and efficient manner.
Mr. Hoshi assumed the office of Director in June 2016, and has been playing acore role in management by serving as Senior Executive Vice President andRepresentative Director since fiscal 2019. He is nominated as a candidate for
Director as it is expected that, as a member of the Board of Directors, he will
share information with other Directors and strengthen the decision-making
function.

-8-

(Translation)
CandidatenumberName(Date of birth)

Masashi Tsuboi(May 16, 1960)

Brief personal profile, position and responsibility in the Company andsignificant concurrent positions
Apr. 1983

Joined Oki Electric Industry Co., Ltd.

Apr. 2002

President, Multimedia Messaging Company

Apr. 2011

Manager, Corporate Network Systems Division, Telecom
Systems Group

Jul. 2014
Manager, Information Systems Division, Solution & Services
Group
Number of years in
office as Director:
Apr. 2015
Executive Officer
2 years
Deputy Head of ICT Business Group(as of the conclusion of Apr. 2016
this general meeting ofApr. 2017
Senior Vice President and Head of ICT Business Group
shareholders)Jun. 2019
Senior Vice President, Head of ICT Business Group and[Re-election]
Number of attendance at
Member of the Board
3
meetings of the Board
Apr. 2020
Executive Vice President and Member of the Board and Headof DirectorsofSolution Systems Business Group (incumbent)(the year under review):
14 out of 14 times(100%)
Reason for the selection of candidate for Director
Based on his past experience serving in business divisions, Mr. Masashi Tsuboi
Number of Oki shares has the knowledge and experience to decide important matters and supervise
held:the business execution of Directors and Executive Officers in an appropriate,
Common stock:fair, and efficient manner. Mr. Tsuboi assumed the office of Director in June
6,700 shares
2019, and has been engaging in core businesses of the Company as Executive
Vice President and Head of Solution Systems Business Group since fiscal
2020. He is nominated as a candidate for Director as it is expected that hewill share information with other Directors and strengthen the decision-making
function.

-9-

(Translation)
CandidatenumberName(Date of birth)

Masashi Fuse

Brief personal profile, position and responsibility in the Company andsignificant concurrent positions
Apr. 1984

Joined Oki Electric Industry Co., Ltd.

Jun. 1994

Oki America Inc.

Apr. 2015

Head of Accounting & Control Division, Oki Electric Industry
Co., Ltd.

(February 23, 1961)
Jun. 2015
Number of years in
Apr. 2016
office as Director:
2 years
Apr. 2018(as of the conclusion ofthis general meeting ofJun. 2019
shareholders)Outside Director, SAXA Holdings, Inc.
Executive Officer, Oki Electric Industry Co., Ltd.
Senior Executive Officer and Head of Corporate Management
Group

Senior Executive Officer and Member of the Board[Re-election]
Apr. 2020
Senior Vice President and Member of the Board and Head of
Number of attendance at
4Corporate Group (incumbent), Internal Control Administrator
meetings of the Board(incumbent)
of Directors(the year under review):
14 out of 14 times
Reason for the selection of candidate for Director(100%)
Based on his past experience serving in headquarters divisions, accounting &control division, and overseas offices, Mr. Masashi Fuse has the knowledge
Number of Oki shares and experience to decide important matters and supervise the businessheld:execution of Directors and Executive Officers in an appropriate, fair, andCommon stock:efficient manner. Mr. Fuse assumed the office of Director in June 2019, and3,400 shares
has been playing a core role in corporate management as Senior Vice President
and Head of Corporate Group since fiscal 2020. He is nominated as a
candidate for Director as it is expected that he will share information with other
Directors and strengthen the decision-making function.

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(Translation)
CandidatenumberName(Date of birth)

Masatoshi Saito(December 20, 1963)

Brief personal profile, position and responsibility in the Company andsignificant concurrent positions
Apr. 1986

Joined Oki Electric Industry Co., Ltd.

Oct. 2002

Head of Strategy Planning Office, IP Solution Company

Apr. 2007

President, Security & Mobility Company, IP System Company,
Systems Networks Business Group

Oct. 2008

Director, Oki Networks Co., Ltd.

Number of years in
Apr. 2016
office as Director:–(as of the conclusion of Apr. 2017
this general meeting of Apr. 2018
shareholders)

Head of Corporate Planning Division, Corporate PlanningGroup, Oki Electric Industry Co., Ltd.
Executive Officer
Senior Executive Officer, Head of Corporate Planning Groupand Chief Information Officer[Newlynominated] Number of attendance at Apr. 2020
Senior Vice President (incumbent) and Vice President of
5
Components & Platforms Business Group
meetings of the Boardof Directors
Apr. 2021
Head of Components & Platforms Business Group (incumbent)(the year under review):- out of - times
Reason for the selection of candidate for Director(–%)
Based on his past experience serving in the Corporate Planning Division andNumber of Oki shares business divisions, Mr. Masatoshi Saito has the knowledge and experience todecide important matters and supervise the business execution of Directors andheld:
Executive Officers in an appropriate, fair, and efficient manner. Mr. Saito
Common stock:
assumed the office of Senior Vice President in fiscal 2021, and has been
3,200 sharesengaging in core businesses of the Company as Head of Components &Platforms Business Group. He is nominated as a candidate for Director as it isexpected that he will share information with other Directors and strengthen thedecision-making function.

- 11 -

(Translation)
CandidatenumberName(Date of birth)

Shigeru Asaba(May 21, 1961)
Number of years in
office as Director:
4 years(as of the conclusion ofthis general meeting ofshareholders)Brief personal profile, position and responsibility in the Company andsignificant concurrent positions
Apr. 1992

Associate Professor, Faculty of Economics, Gakushuin
University

Mar. 1994

Ph.D., Economics, University of Tokyo

Apr. 1997

Professor, Faculty of Economics, Gakushuin University

Apr. 2013

Professor, Graduate School of Commerce, Waseda University

Apr. 2016

Professor, Waseda Business School (Graduate School ofBusiness and Finance) (incumbent)

Jun. 2016

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

Sep. 2016

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

Jun. 2017

Outside Director, Oki Electric Industry Co., Ltd. (incumbent)(Significant concurrent positions)
Outside Director, Nippon Beet Sugar Manufacturing Co., Ltd.
*There are no business relationships between Nippon Beet Sugar
Manufacturing Co., Ltd. and the Company.

[Outside][Re-election][Independent] Number of attendance atmeetings of the Board
6
Reason for the selection of candidate for Outside Director and expectedof Directors(the year under review): role, etc.
Mr. Shigeru Asaba is currently a professor of Waseda Business School
14 out of 14 times(Graduate School of Business and Finance) and has academic expertise in(100%)
business in general though his specialist knowledge in the fields of industrial
Number of Oki shares organizations, corporate strategy, competitive strategy, ownership structuresand strategies, and family-run businesses as well as high ethical standards. In
held:addition, he has a high degree of independence from the management team,Common stock:experience as an outside director of other companies, and serves as the
300 shareschairman of the Personnel Affairs and Compensation Advisory Committee.
Based on the above, and particularly on his academic expertise in all aspectsof business, he is nominated as a candidate for Outside Director as it is expectedthat he will contribute to the strengthening of the management supervisionfunction and the function to supervise conflicts of interest, including thesupervision of the progress of medium- to long-term management plans, thesupervision of succession planning for the President, etc., and the deepening ofdeliberations at the Board of Directors meetings. Although he has never had
experience of being involved in corporate management other than as an outside
officer, the Company determined that he will be able to carry out the duties of
Outside Director appropriately for the aforementioned reason.

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(Translation)
CandidatenumberName(Date of birth)

Brief personal profile, position and responsibility in the Company andsignificant concurrent positions
Apr. 1975

Joined Ishikawajima-Harima Heavy Industries Co., Ltd.

Jun. 2006

Executive Officer, Vice President of Aero-Engine & Space
Operations

Apr. 2008

Director, Executive Officer, President of Aero-Engine & Space
Operations, IHI Corporation

Apr. 2011

Executive Vice President

Apr. 2012

President

Apr. 2016

Chairman of the Board

Jun. 2017

Outside Director, JAPAN POST INSURANCE Co., Ltd.
(incumbent)

Number of years in
office as Director:
3 years(as of the conclusion ofthis general meeting ofshareholders)Jun. 2018

Outside Director, Oki Electric Industry Co., Ltd. (incumbent)

Apr. 2020

Director, IHI Corporation

Jun. 2020

Advisor, IHI Corporation (incumbent)

Number of Oki shares
held:
Common stock:
2,500 shares

Reason for the selection of candidate for Outside Director and expected
role, etc.
As a long-time representative director of IHI Corporation and a business leader
not only in the industry but also in Japan, Mr. Tamotsu Saito has a wealth ofmanagement experience and high ethical standards in the manufacturingindustry. In addition, he has a high degree of independence from the
management team, experience as an outside director of other companies, andserves as the member of the Personnel Affairs and Compensation Advisory
Committee. Based on the above, and particularly on his abundant management
experience, he is nominated as a candidate for Outside Director as it is expectedthat he will contribute to the strengthening of the management supervisionfunction and the function to supervise conflicts of interest, including thesupervision of the progress of medium- to long-term management plans, thesupervision of succession planning for the President, etc., and the improvementof risk and crisis response.

Tamotsu Saito(July 13, 1952)[Outside][Re-election][Independent] Number of attendance atmeetings of the Board
7
of Directors(the year under review):
14 out of 14 times(100%)(Significant concurrent positions)
Advisor, IHI Corporation, Outside Director, JAPAN POST INSURANCE
Co., Ltd.
He will assume the office of Outside Director of Furukawa Electric Co., Ltd.
in June 2021.
*The volume of transactions between the above companies and the Company
accounts for less than 1% of each company’s net sales.

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(Translation)
CandidatenumberName(Date of birth)

Brief personal profile, position and responsibility in the Company andsignificant concurrent positions
Mar. 1985

Left Graduate School of Law, Waseda University after
completing a doctoral course

Apr. 1989

Associate Professor, Faculty of Economics, Gifu Keizai
University

Apr. 1996

Professor, School of Law, Senshu University

Izumi Kawashima Sep. 2004
(June 25, 1955)

Professor, Faculty of Social Sciences, Waseda University(incumbent)

Jun. 2016
Outside Director, Oki Electric Cable Co., Ltd.
Number of years inJun. 2018
Outside Director, Oki Electric Industry Co., Ltd. (incumbent)
office as Director:
3 years(as of the conclusion ofthis general meeting of Reason for the selection of candidate for Outside Director and expected
role, etc.
[Outside]shareholders)
Ms. Izumi Kawashima is currently a professor of the Faculty of Social Sciences[Re-election][Independent] Number of attendance at at Waseda University. She specializes in commercial law (mainly the[Woman]meetings of the Board Companies Act) and the Financial Instruments and Exchange Act, andparticularly has academic specialist knowledge relating to the Companies Act
8of Directors(the year under review): and corporate governance as well as high ethical standards. In addition, she
has a high degree of independence from the management team, experience as
14 out of 14 times
an outside director of other companies, and serves as the member of the(100%)
Personnel Affairs and Compensation Advisory Committee. Based on the
Number of Oki shares above, and particularly on her knowledge as a legal expert in the Companies
Act, Financial Instruments and Exchange Act, etc., she is nominated as aheld:candidate for Outside Director as it is expected that she will contribute to the
Common stock:strengthening of the management supervision function and the supervisory
500 shares
function for conflicts of interest, including the deepening of deliberations at theBoard of Directors meetings, supervision of succession planning by the
President, etc., and improvement of risk and crisis response. Although she
has never had experience of being involved in corporate management otherthan as an outside officer, the Company determined that she will be able tocarry out the duties of Outside Director appropriately for the aforementioned
reason.

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(Translation)
CandidatenumberName(Date of birth)

Makoto Kigawa(December 31, 1949)

Brief personal profile, position and responsibility in the Company andsignificant concurrent positions
Apr. 1973

Joined The Fuji Bank, Ltd.

Apr. 2004

Managing Director, Mizuho Corporate Bank, Ltd.

Mar. 2005

Resigned Mizuho Corporate Bank, Ltd.

Jun. 2005

Managing Director, Yamato Transport Co., Ltd.

Apr. 2011

Representative Director, Executive Officer and President,
Yamato Holdings Co., Ltd.

Jun. 2016

Outside Director, Komatsu Ltd. (incumbent)

Apr. 2018

Chairperson of the Board of Directors, Yamato Holdings, Co.,
Ltd.

Jun. 2018

Outside Director, Seven Bank, Ltd. (incumbent)

Jun. 2019
Outside Director, Oki Electric Industry Co., Ltd. (incumbent),
Number of years inretired as Director,
office as Director:
2 years
Special Advisor, Yamato Holdings Co., Ltd. (incumbent)(as of the conclusion of
Outside Corporate Auditor, The Higo Bank, Ltd. (incumbent)
this general meeting of Apr. 2020
shareholders)[Outside](Significant concurrent positions)[Re-election]
Outside Director, Komatsu Ltd., Outside Director, Seven Bank, Ltd., Special[Independent] Number of attendance atmeetings of the Board Advisor, Yamato Holdings Co., Ltd., and Outside Corporate Auditor, The
9Higo Bank, Ltd.
of Directors(the year under review): *The volume of transactions between the above companies and the Company
accounts for less than 1% of each company’s net sales.
14 out of 14 times(100%)
Number of Oki shares
held:
Common stock:
300 shares

Reason for the selection of candidate for Outside Director and expected
role, etc.
After serving as an officer at a financial institution, Mr. Makoto Kigawa served
as Representative Director of Yamato Holdings Co., Ltd. for more than ten
years, and has extensive management experience and high ethical standards,
mainly in the logistics industry, including the transformation of businessmodels using ICT. In addition, he has a high degree of independence fromthe management team, experience as an outside director of other companies,
and serves as the member of the Personnel Affairs and Compensation Advisory
Committee.
Based on the above, and particularly on his abundant
management experience, he is nominated as a candidate for Outside Director
as it is expected that he will contribute to the strengthening of the management
supervision function and the function to supervise conflicts of interest,
including the supervision of the progress of medium- to long-term management
plans, the supervision of succession planning for the President, etc., and theimprovement of risk and crisis response.

Notes:
1. There is no special conflict of interest between each candidate and the Company.
2. Mr. Shigeru Asaba, Mr. Tamotsu Saito, Ms. Izumi Kawashima, and Mr. Makoto Kigawa are candidates for outside
directors.
3. When Mr. Tamotsu Saito was a director of IHI Corporation, it was revealed that the maintenance of commercial
aircraft engines was performed inappropriately. In March 2019, pursuant to the Aircraft Manufacturing Industry Act,
the Ministry of Economy, Trade and Industry ordered that IHI Corporation conduct the necessary repairs in an
approved manner. In April 2019, IHI Corporation received a business improvement order from the Ministry of Land,
Infrastructure, Transport and Tourism in accordance with the Civil Aeronautics Law.
It came to light that at JAPAN POST INSURANCE Co., Ltd., where Mr. Tamotsu Saito has been an outside director
since June 2017, there was a case pertaining to contract transfers, etc. where it is possible to have caused a loss without
acting in accordance with customers’ wishes. With regard to this case, the aforementioned company received
administrative sanctions from the Financial Services Agency on December 27, 2019 based on the Insurance BusinessAct. However, Mr. Saito fulfilled his duties by continuously making proposals from the viewpoint of legal- 15 -

(Translation)

4.

5.

6.

7.

compliance, and after this case came to light, he made proposals, etc. in order to protect customers and prevent
recurrence.
Mr. Makoto Kigawa served as a director of Yamato Holdings Co., Ltd. until June 2019. In February 2017, the YamatoGroup started to investigate the actual labor hours of employees and found out various problems remained
unrecognized, such as no enough breaks for many employees. Because this situation was considered to be serious,
the Yamato Group has been promoting work-style reforms, for example, “improve and strictly conduct labor
management” and “promote a work-life balance,” and implementing various structural reforms.
Yamato Home Convenience Co., Ltd., a consolidated subsidiary of Yamato Holdings Co., Ltd., made payment
requests in an inappropriate manner in violation of contract provisions when it provided relocation services to
employees of its corporate customers. In January 2019, it became subject to an administrative disposition andreceived a business improvement order from the Ministry of Land, Infrastructure, Transport and Tourism. Yamato
Holdings Co., Ltd. has striven to build the necessary structure to prevent Yamato Home Convenience Co., Ltd. fromfacing similar situations and to strengthen governance in order to enhance the soundness of group management.
The Company has entered into a liability limitation agreement with Mr. Shigeru Asaba, Mr. Tamotsu Saito, Ms. Izumi
Kawashima, and Mr. Makoto Kigawa. The outline of the agreement is provided on pages 34 to 35 in the Business
Report. If their reappointment is approved, the Company will continue this agreement with them.
The Company has entered into a directors and officers liability insurance policy, naming all Directors as insured, anda summary of it is shown on page 35 of the Business Report. The Company plans to continue and renew this policy,
and if the appointment of each candidate is approved and they are appointed as Directors, each candidate will be
insured under the policy.
Mr. Shigeru Asaba, Mr. Tamotsu Saito, Ms. Izumi Kawashima, and Mr. Makoto Kigawa are independent officers
based on the terms of the Tokyo Stock Exchange. If their reappointment is approved, they will continue to be
independent officers.

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(Translation)
Agenda Item 3: Election of Two (2) Audit & Supervisory Board Members
The tenure of office of Audit & Supervisory Board Member Sei Yano will expire at theconclusion of this general meeting of shareholders. In this regard, OKI proposes the election of
two Audit & Supervisory Board Members, including one Outside Audit & Supervisory Board
Member, to strengthen and enhance the Company’s audit system. The details of the proposed
candidates are provided below.
CandidatenumberName(Date of birth)

Brief personal profile, position in the Company
and significant concurrent positions
Jul. 2008

Counselor, Small and Medium Enterprise Agency, the Ministry of
Economy, Trade and Industry

Jul. 2009

Head of General Coordination Department, Japan Oil, Gas andMetals National Corporation

Toshiyuki Yokota Jul. 2010
(April 14, 1960)

Number of years in
office as Audit &Supervisory Board
Member:–(as of the conclusion ofthis general meeting ofshareholders)[Newlynominated]
1

Deputy Director-General of Global ICT Strategy Bureau, Ministryof Internal Affairs and Communications

Aug. 2012

Deputy Director-General for Policy Coordination, the Ministry of
Economy, Trade and Industry

Jul. 2013

Deputy Director-General of Small and Medium Enterprise
Agency, the Ministry of Economy, Trade and Industry

Jul. 2014

Head of JETRO New York, Japan External Trade Organization

Nov. 2016

Advisor, Oki Electric Industry Co., Ltd.

Apr. 2017
Senior General Manager
Number of attendance at
Executive Officer
meetings of the Board Apr. 2018of Directors
Jun. 2019
Outside Director, JECC Corporation (incumbent)(the year under review):
Apr. 2021
Advisor, Oki Electric Industry Co., Ltd. (incumbent)- out of - times(–%)(Significant concurrent positions)
Number of attendance at Outside Director, JECC Corporation
meetings of the Audit & *The volume of transactions between the above companies and the Company
Supervisory Board
accounts for less than 1% of each company’s net sales.
(the year under review): He will retire as Outside Director of JECC Corporation in June 2021.
- out of - times(－%)
Reason for the selection of candidate for Audit & Supervisory Board
Number of Oki shares Member
Mr. Toshiyuki Yokota held important positions in the Ministry of Economy, Trade
held:
and Industry, etc., and has extensive experience and knowledge of trade andCommon stock:industrial policy and laws and regulations. As Executive Officer of the
1,300 sharesCompany, Mr. Yokota has led the Company's innovation activities, is familiar
with the Company's business, and has high ethical standards. He is nominatedas a candidate for Audit & Supervisory Board Member as it is expected that hewill provide appropriate auditing of the Company's management by taking
advantage of these qualities.

- 17 -

(Translation)
CandidatenumberName(Date of birth)

Brief personal profile, position in the Company
and significant concurrent positions
Mar. 1985

Joined Tohmatsu Awoki & Co. (currently Deloitte Touche
Tohmatsu LLC)

Mar. 1988

Registered as Certified Public Accountant

Yoshihiro Tsuda

Jul. 1993

Detroit Office, Deloitte & Touche (US)(July 25, 1962)

Jun. 1998

Appointed as Employee (currently Partner) of Deloitte Touche
Tohmatsu

Sep. 2002

London Office, Deloitte & Touche (UK)Jun. 2007

Representative Partner of Deloitte Touche Tohmatsu

Jul. 2019

Resigned from Deloitte Touche Tohmatsu LLC

Aug. 2019

Head of Yoshihiro Tsuda CPA Office (incumbent)

Sep. 2019

Audit & Supervisory Board Member, Oki Data Corporation

Number of years in
office as Audit &Supervisory Board
Member:–(as of the conclusion ofthis general meeting ofshareholders)Feb. 2020
Standing Audit & Supervisory Board Member, Tribeck Strategies[Outside] Number of attendance atInc. (currently Tribeck Inc.) (incumbent)
meetings
of
the
Board
[Newlyof Directors(Significant concurrent positions)nominated][Independent] (the year under review): Outside Standing Audit & Supervisory Board Member, Tribeck Inc.
- out of - times
2
He will assume the office of Corporate Auditor of PRONEXUS Inc. in June
(–%)
2021.
Number of attendance at *The volume of transactions between the above companies and the Company
meetings of the Audit & accounts for less than 1% of each company’s net sales.
Supervisory Board(the year under review):
Reason for the selection of candidate for Outside Audit & Supervisory- out of - times
Board Member(－%)
As a certified public accountant, Mr. Yoshihiro Tsuda has been engaged in
Number of Oki shares accounting audits of various industries, including global, for many years. He is
nominated as a candidate for Audit & Supervisory Board Member as theheld:Company judges that he will be able to perform auditing on the Company’s
Common stock:
management from a global perspective in an objective, neutral manner by
0 sharesutilizing his extensive experience, knowledge and high level of ethical standards.
Although Mr. Yoshihiro Tsuda has never had experience of being involved incorporate management, the Company determined that he will be able to carry out
the duties of Outside Audit & Supervisory Board Member appropriately for the
aforementioned reason.
Notes:
1. There is no special conflict of interest between each candidate and the Company.
2. Mr. Toshiyuki Yokota and Mr. Yoshihiro Tsuda have served in the positions described above and have extensive
knowledge in finance, accounting, and judicial affairs necessary for auditing of the Company.
3. If the appointment of Mr. Toshiyuki Yokota and Mr. Yoshihiro Tsuda is approved, the Company will enter into aliability limitation agreement with them. The outline of this agreement is provided on pages 34 to 35 in the Business
Report.
4. The Company has entered into a directors and officers liability insurance policy, naming all Audit & Supervisory
Board Members as insured, and a summary of it is shown on page 35 of the Business Report. The Company plans
to continue and renew this policy, and if the appointment of each candidate is approved and they are appointed as
Audit & Supervisory Board Members, each candidate will be insured under the policy.
5. If the appointment of Mr. Yoshihiro Tsuda is approved, he will be an independent officer based on the terms of theTokyo Stock Exchange.

- 18 -

(Translation)(Reference)

Table of Members of Board of Directors, Personnel Affairs and Compensation Advisory Committee,
and Audit & Supervisory Board
If Agenda Items 2 and 3 are approved, the Board of Directors and Audit & Supervisory Board will appoint andselect the following persons at their meeting to be held after the conclusion of this general meeting of shareholders, andthe structure comprising these personnel will engage in management of the OKI Group.
Personnel Affairs
and Compensation
Advisory Committee

Audit & Supervisory
Board

Director

Name

Board of Directors

Shinya Kamagami〇

President,
Representative Director

Masayuki Hoshi〇

Senior Executive Vice
President,
Representative Director

Masashi Tsuboi〇

Executive Vice
President and Memberof the Board

Masashi Fuse〇

Senior Vice President
and Member of theBoard

Masatoshi Saito〇

Senior Vice President
and Member of the
Board

Shigeru Asaba〇

Tamotsu Saito〇

Izumi Kawashima◎

Chairperson◎

PositionIndependent Outside
Director

Chairperson〇

Independent Outside
Director〇

Independent Outside
Director〇

Independent Outside
Director

Audit & Supervisory Board Member

Makoto Kigawa〇

Toshiya Hatakeyama△

Toshiyuki Yokota△〇

Standing Audit &Supervisory Board
Member

Hideo Shiwa△〇

Independent Outside
Audit & Supervisory
Board Member

Ryuichi Makino△〇

Independent Outside
Audit & Supervisory
Board Member

Yoshihiro Tsuda△〇

Independent Outside
Director◎

Chairperson〇 Member◎ Chairperson△ Persons who are members and have a right and obligation to attend relevant meetings- 19 -

Standing Audit &Supervisory Board
Member(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 persons:a.
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, and for“persons who belong to the accounting firm” in 7), this applies only to principal business executers thereof or
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 “Business executers” refer to persons who perform business execution such as Directors (excluding Outside
Directors), Executive Officers, employees, etc.
*2 “Principal business executers” refer to persons who perform important business execution such as Directors(excluding Outside Directors), Executive Officers, 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 the Company
at present.

- 20 -

(Translation)
Agenda Item 4:

Grant of Stock Option for Stock-linked Compensation (Equity Warrants)
to Directors

1.

Purpose and reason for the proposal
In accordance with the resolution passed at the 92nd Ordinary General Meeting of
Shareholders of the Company held on June 24, 2016, the Company grants stock acquisitionrights of stock options as compensation to Directors excluding Outside Directors. This wasestablished as part of the compensation, etc. for Directors excluding Outside Directors, withan annual maximum of ¥100 million for compensation, etc. related to stock acquisition rights,
which are so-called stock options as compensation, separately from the amount ofcompensation, etc. for Directors previously approved.
In accordance with the "Act for Partial Revision of the Companies Act (Act No. 70 of 2019)"
enacted on March 1, 2021, the granting of stock acquisition rights as compensation to
Directors is required to be approved at a general meeting of shareholders with regard to thespecific details thereof. OKI seeks approval to continue the current Stock Option Plan but
with newly added “(8) Matters concerning acquisition of equity warrants” (underlined
portion) as details on the equity warrants mentioned in 2. below. The stock options referred
to in this proposal are for the purpose of further raising a willingness and culture ofcontributing to medium- to long-term improvement in business performance andimprovement in corporate value in accordance with the Company’s “Policy for Determining
the Details of Remuneration Amounts for Individual Directors,” which has been decided byresolution at a meeting of the Board of Directors, and the number of equity warrants awarded
is calculated based on the Director’s position, an amount that is decided in accordance withindicators of the Medium-Term Business Plan, and the share price level at the time such rights
are awarded. In addition to the aforementioned, as share remuneration type stock options, theyalso have the aspect of having the Directors share in the merits and risks of share pricefluctuation with shareholders, and are accordingly deemed to be appropriate as remuneration,etc. for Directors.
Currently there are five (5) Directors, excluding Outside Directors, who are eligible to beawarded equity warrants, and if Proposal 2 is approved, the number of such Directors will befive (5).

2.

Details of stock acquisition rights
The details of stock acquisition rights issued to Directors (excluding Outside Directors) as
compensation are as follows:(1) Type and number of shares to be issued for the purpose of stock acquisition rights
The type of shares to be issued for the purpose of stock acquisition rights shall be common
stock of the Company, and the number of shares (hereinafter "Number of Shares Granted")shall be 100.
In addition, if it is appropriate for the Company to adjust the Number of Shares Granted in
the event of a stock split, gratis allotment of shares or reverse stock split, etc., the Numberof Shares Granted shall be adjusted in accordance with the following formula. However,such adjustment shall be made only for those stock acquisition rights that have not been
exercised at the time of adjustment, and any fraction of less than one share resulting from- 21 -

(Translation)
the adjustment shall be rounded down.
Number of Shares Granted after adjustment = Number of Shares Granted before adjustment
× Ratio of stock split, gratis allotment of shares or reverse stock split, etc.
In addition, if the Company undergoes an absorption-type merger or incorporation-typemerger and the stock acquisition rights are succeeded to, or if the Company undergoes ashare exchange or share transfer to become a wholly owned subsidiary and the stockacquisition rights are succeeded to, the Company may adjust the Number of Shares Granted
as deemed necessary in accordance with the merger ratio and other factors.
(2) Total number of equity warrants
The maximum number of stock acquisition rights to be issued within one year from the dateof the Ordinary General Meeting of Shareholders for each fiscal year shall be 1,000, andthey shall be allocated annually.
Even if the Company continues to issue 1,000 stock acquisition rights, which is the
maximum number of stock acquisition rights to be issued annually for ten (10) years, we
believe that the level is appropriate, as the dilution rate of shares due to the exercise of all
the stock acquisition rights, including those already issued, will be only about 1.2%.
(3) Amount to be paid for the stock acquisition rights
The amount to be paid in shall be a fair value calculated by the Black-Scholes model, etc.
on the allotment date of the stock acquisition rights. The amount to be paid in shall be
offset against the same amount of compensation claims against the Company.
(4) Value of assets to be contributed upon exercise of stock acquisition rights
The value of assets to be contributed upon the exercise of each stock acquisition right shallbe the amount obtained by multiplying the Number of Shares Granted by the paid-in amountof one ¥(1) per share to be delivered upon the exercise of each stock acquisition right.
(5) Period during which the stock acquisition rights may be exercised
The term will be a period prescribed by the Company’s Board of Directors that is no morethan 25 years and begins from the day following the allotment date for the equity warrants(6) Conditions for the exercise of stock acquisition rights
Those who have received an allotment of stock acquisition rights (hereinafter "Stock
Acquisition Right Holders") may exercise their stock acquisition rights only within ten (10)days from the day following the day on which they lose any of their positions as Directors
or Executive Officers of the Company.
(7) Restriction on transfer of stock acquisition rights
The acquisition of stock acquisition rights by transfer shall require approval of the Board of
Directors of the Company.
(8) Matters related to the acquisition of stock acquisition rights(i)

If the following proposals are approved at a general meeting of shareholders of theCompany (or if a resolution of a general meeting of shareholders is not required, theBoard of Directors of the Company), the Company may acquire the stock acquisitionrights without consideration on a date separately determined by the Board of Directors.
(a) Proposal for approval of a merger agreement in which the Company becomes an- 22 -

(Translation)

(b)
(c)
(d)
(e)

extinct company
Proposal for approval of the split agreement or incorporation-type split plan inwhich the Company becomes a split company
Proposal for approval of a share exchange agreement or share transfer plan underwhich the Company becomes a wholly owned subsidiary
In the event of the death of the equity warrant holder, cases where there is no heiror the heir has died
Proposal for approval of amendment to the Articles of Incorporation to provide thedetails of shares for the purpose of stock acquisition rights, whereby theacquisition of such shares by transfer shall require approval of the Company, andthe Company may acquire all shares of the relevant class by a resolution of thegeneral meeting of shareholders.

(ii) If a Stock Acquisition Right Holder or its successor comes to fall under any of thefollowing items, the stock acquisition rights may no longer be exercised and the entire
unexercised stock acquisition rights shall be transferred to the Company without
consideration.
(a) In the event of a violation of the provisions of the agreement on stock acquisitionrights concluded with the Company(b) In the event of dismissal as Director or Executive Officer of the Company(c) If the Board of Directors recognizes that an event has occurred that makes it
inappropriate to continue to hold the stock acquisition rights, such as an act thathas or is likely to have a significant negative impact on the social credibility or
adverse effect on the Company(d) If there is no successor or if the successor dies(e) When the commencement of guardianship, curatorship or assistance is ordered(f) In the event that a decision to commence bankruptcy proceedings or civil
rehabilitation proceedings is received(iii) In cases where an equity warrant holder loses their position as either a Director or an
executive officer of the Company mid-way through a fiscal year, they shall be deemed
to have continuously held the number of equity warrants calculated as their length ofservice in months divided by 12, and any remainder equity warrants from the allocatednumber shall be transferred to the Company without compensation.
(9) Treatment of fractions less than one share arising from the exercise of stock acquisitionrightsAny fraction of less than one (1) share in the number of shares to be issued to the Stock
Acquisition Right Holder who exercised the stock acquisition rights shall be rounded down.
(10) Other details of stock acquisition rights
The details of (1) through (9) above and other matters concerning stock acquisition rights
shall be determined by the Board of Directors of the Company.
(Reference)
When the share remuneration type stock options (equity warrants) are awarded to the Company’s Directors(excluding Outside Directors) as determined by a resolution at the Board of Director’s meeting, equity warrants- 23 -

(Translation)
as stock options with the same details as above will be issued to the Company’s executive officers as well.

- 24 -

(Translation)(Attachment)

Business Report(From April 1, 2020 to March 31, 2021)
1.

Status of the OKI Group(1) Operating progress and results
Business environment
Today, both individuals and companies are required to address many urgent social issues.
These include resolving global environmental problems, moving toward a sustainable society,overcoming the spread of COVID-19, and establishing a new normal lifestyle.
In this business environment, OKI has been promoting measures in line with its new
medium-term business plan, which was launched in 2020, with the aim of becoming a responsible
company that will be demanded even more by society in the future. Taking advantage of OKI’s
strengths in network technology, installed base of terminals, and customer relations, OKI is
working to realize products and services that resolve seven social issues (aging problems, natural
disasters, traffic issues, environmental issues, labor shortages, labor productivity, and theinfectious diseases) based on its newly established materiality (material issue).
Operating results for the fiscal year under review
For the business conditions in the fiscal year ended March 31, 2021, the net sales were¥392.9 billion, a ¥64.3 billion or 14.1% decrease year-on-year. Several factors, including thebusiness transfer of a Brazilian subsidiary and the spread of COVID-19, had an impact on the
results, in addition to the impact of temporary factors in the previous fiscal year, such as largescale projects and the expansion of the scope of application of the percentage-of-completion
method. In terms of profits, despite some contributions from structural reforms, the impact of
COVID-19 on sales was significant, resulting in operating income of ¥9.5 billion, a decrease of¥7.3 billion year-on-year, and ordinary income of ¥9.4 billion, a decrease of ¥4.4 billion year-onyear.
Net loss attributable to owners of parent was ¥0.2 billion, a deterioration of ¥14.3 billion
year-on-year. This was mainly due to the recording of ¥4.6 billion in business restructuring
expenses associated with the review of the business portfolio and the reversal of a portion ofdeferred tax assets.
For the fiscal year ended March 31, 2021, the impact of COVID-19 was a decrease of
approximately ¥27.0 billion in net sales and a decrease of approximately ¥6.5 billion in operating
income.
Looking at non-consolidated business performance, net sales were ¥216.4 billion, down
¥32.8 billion (13.2%) from the previous fiscal year. Operating loss was ¥0.9 billion, adeterioration of ¥5.1 billion year-on-year. Ordinary income decreased by ¥10.7 billion year-onyear to ¥3.5 billion. Profit was ¥1.3 billion, a ¥15.6 billion down year-on-year.
The following provides a summary of each segment.

- 25 -

(Translation)- Net Sales by Segments(Unit: Billions of yen)
FY2019 (reference:

FY2020 (Fiscal year

previous fiscal year)

under review)

Solution
Systems

229.1

Components& Platforms
OthersSegment

Total

Changes (amount)

Changes (%)

192.5(36.6)(16.0)

216.3

196.5

(19.8)

(9.1)

11.9

3.8

(8.1)

(67.6)

457.2

392.9

(64.3)(14.1)

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, in somecases the sum of individual figures presented for each item may not equal the respective “total” stated.
2.
From the fiscal year ended March 31, 2021, aiming at strengthening manufacturing required in the IoT/5Gera, OKI reorganized the Mechatronics Systems business, Printers business, and EMS business, and newly
established the Components & Platforms Business Group. The ICT Business Group was renamed the
Solution Systems Business Group.

Solution Systems
Solution Systems business provides various solutions, products and services to support the infrastructure ofsociety in the areas focused on including transport, construction/infrastructure, disaster prevention, financeand retail, manufacturing and marine. It does so by utilizing OKI’s unique device, sensing technologies
utilized in acoustic and optical sensors, and technologies and know-how of networks, data processing andoperation. In addition, expecting that AI processes which have been executed on the cloud will be shifted tothe edge (terminal) domain, we are promoting the social implementation of DX with customers by combining
various use cases and AI edge computing (AI edge) technology based on the AI edge strategy announced in2019.
We consider the promotion of “AI edge x local 5G,” a combination of 5G/local 5G that has newly enteredservice, and AI edge, as a chance to accelerate the social implementation of DX. We are promoting theapplication to a variety of use cases to resolve apparent social issues such as smart factories, local mobility
service and river/infrastructure monitoring. Since the introduction of local 5G requires specialized
knowledge and know-how related to private wireless communication systems, we also provide a service tosupport this.
While establishing an ecosystem* through the cooperation with partners, Solution Systems business isdeveloping new markets. We aim to create new businesses for our growth by establishing an ecosystem withAI edge partners, partners with which we create a DX solution and open innovation partners that develop
innovative solutions and having mutual collaboration with them.
*The relationship to realize coexistence and co-prosperity by sharing jobs and working together with partners
such as companies and customers

Net sales came to ¥192.5 billion, a year-on-year decrease of 16.0% or ¥36.6 billion,
and operating income came to ¥16.3 billion, a year-on-year decrease of ¥3.9 billion.
Although there was a reactionary decrease due to temporary factors in the previous fiscal
year, such as large-scale projects and a partial review of sales standards, and the impact of
COVID-19, the results were largely as expected, partly due to the fact that network-related
businesses performed well throughout the year.

- 26 -

(Translation)
Components & Platforms
The Components & Platforms business helps to resolve social issues by developing and providing various
components utilizing technologies accumulated over our long history and offering services having
manufacturing, which is our strength, as a platform. In particular, we focus on unmanned systems,
automation and the improvement of efficiency which lead to the solution of labor shortages and the realizationof work-style reform. At the same time, they lead to contactless services, which will be required in the newnormal society that is being paid attention to for preventing infectious diseases.
The Components business innovates and offers a variety of products that help resolve social issues. The
business develops and provides a home delivery receipt machine and self-checkout for the distribution andretail service domain and a medication reconciliation method that can safely improve the work efficiency ofpeople who handle medication for the medical domain.
In 2020, we introduced a contactless-type hygienic touch panel that makes it possible to operate a device
without touching it with a finger, as a man-machine interface of a social infrastructure service terminal in the
new normal.
The Platforms business expanded the scope of manufacturing-related services from electronics tomechatronics for proprietary technologies, from a circuit board to an entire piece of equipment for products,
and from manufacturing to design, manufacturing, evaluation and maintenance for the order receiving process.
Under a business environment with significant changes that require us to move fast, we provide acomprehensive manufacturing service to support customers and resolve their various manufacturing-related
issues.
To deliver these types of products and services to as many customers as possible, we will develop businesses
by not only dealing with our own brand but also cooperating with domestic and foreign partners, and work on
the resolution of global social issues.

Net sales came to ¥196.5 billion, a year-on-year decrease of 9.1% or ¥19.8 billion.
The impact of COVID-19 was strong in overseas markets, particularly in printers. In
addition, due to the prolonged COVID-19 pandemic, the markets in Asian countries where
the automation system market is growing have stagnated more than expected, and somedomestic EMS business has been affected. The structural reform of printers has progressed
as planned, and its effects are beginning to contribute. However, the impact of lower
overseas sales was significant, resulting in an operating loss of ¥0.1 billion, a year-on-year
deterioration of ¥5.3 billion.
Net sales of the others business segment came to ¥3.8 billion, a year-on-year decreaseof 67.6% or ¥8.1 billion, and operating loss came to ¥0.3 billion, a year-on-year improvementof ¥0.2 billion. Sales decreased due to the transfer of the business of a Brazilian subsidiary.

- 27 -

(Translation)(2) Capital expenditure and research and development expenses
Capital expenditures and research and development expenses for the fiscal year underreview equaled ¥22.4 billion and ¥11.2 billion, respectively.
Investment by segment were as follows.
(Unit: Billions of yen)Segment

Solution Systems

Amount of capital expenditure(Amount of research anddevelopment expenses)
1.8

Major capital expenditure(3.1)

Upgrading, etc. of facilities to design/manufacture
new products and incidental facilities of plants inbusiness areas (e.g. social infrastructure, IoT,
finance, and network systems)
Investment in mold and production line used to
manufacture new automation products and capital
expenditures on upgrading aged manufacturing
facilities and increasing production capabilities tostrengthen comprehensive manufacturing service.

Components &Platforms

5.2

(5.9)

Others/Companywide (shared)

15.4

(2.2)

Total

22.4

(11.2)

Note: “Others and company-wide (shared)” includes the acquisition of the building and land of Shibaura
Business Center (¥12.0 billion) and the acquisition of the land of Warabi System Center (¥2.9 billion).

(3) Financing
Operating funds and funds for capital expenditures necessary for business activities
will be obtained from our own funds, borrowed funds, or other sources. Among these,
operating funds are raised through short-term and long-term borrowings. In addition, longterm funds for production facilities, etc. are raised through long-term borrowings. Longterm funds are raised on fixed interest rates in the forms of separate borrowings from financial
and other institutions and syndicated loans.
As for financing, the Company utilizes a domestic cash management system, whereby
the Company integrates the funds of consolidated subsidiaries into the Company itself toimprove the cash efficiency and reduce borrowings.
Cash in hand and deposits that the Company owns has been kept at a sufficient level.
The Company maintains good business relationships with major partner financial
institutions, so recognizes that it will be able to raise operating and investment funds
necessary for business activities without any problem. However, for more stable financing,
we entered into a commitment line agreement to prepare for contingencies such as COVID19.
The OKI Group places emphasis on the financial discipline and intends to use free cash
flow generated through business activities as basic financial resources and efficiently raise
the necessary funds.

- 28 -

(Translation)(4) Future challenges
Guided by our corporate philosophy of “The people of OKI, true to the company’s“enterprising spirit,” are committed to creating superior network solutions and providing
excellent information and communications services globally to meet the diversified needs ofcommunities worldwide in the information age,” the OKI Group (the Company and its
consolidated subsidiaries) has been conducting business activities aiming to “help create asafe and convenient infrastructure for customers and society as a whole through the key
Japanese concepts of Mono-zukuri (the spirit and mind-set to innovate, create and improve
products) and Koto-zukuri (working together, proactively seeking opportunities that deliver
value to customers).”
Today, both individuals and companies are required to address many urgent social
issues.
These include resolving global environmental problems, moving toward asustainable society, overcoming the spread of COVID-19, and establishing a new normal
lifestyle.
In this business environment, OKI will promote measures in line with its new mediumterm business plan, which was launched in 2020, with the aim of becoming a responsible
company that will be demanded even more by society in the future. Namely, OKI will work
to realize products and services that resolve seven social issues (aging problems, natural
disasters, traffic issues, environmental issues, labor shortages, labor productivity, and theinfectious diseases) based on its newly established materiality (material issue).
Under our key message, “Delivering OK! to your life,” we will steadily establish thefoundation to achieve sustainable growth through the resolution of social issues during the
Medium-Term Business Plan period. As for the figure of the management targets for theterm ending in March 2023, we set out the targets of ¥20.0 billion in operating income and
30% as shareholders’ equity ratio; however, what is more important is to establish a businessfoundation that realizes sustainable growth after achieving the targets.
To be more specific, we will review the existing business portfolio and create products
and services that match social needs such as contactless services. To realize these targets,
we reviewed the business structure in April 2020. In addition, we implemented a largescale reallocation of development resources including human resources accordingly.
We will utilize assets such as our network technologies and customers who haveinstalled our terminals developed over the course of our history—we mark our 140th
anniversary in 2021—as well as the relationship with customers. In this way, we will
strengthen the manufacturing infrastructure to reinforce OKI’s technical advantages in theareas of AI edge technology, manufacturing, etc. Furthermore, we will execute structuralreform including a reform of costs for the functions shared in the Group.
In addition to the measures above, we will reinvigorate the Group based on co-creation
with partners and innovation activities in which everyone participates.

- 29 -

(Translation)(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.
94th year(FY2017)95th year(FY2018)

97th year(Fiscal year underreview, FY2020)

96th year(FY2019)

Sales

438.0

billion yen

441.5

billion yen

457.2

billion yen

392.9

billion yen

Profit attributableto owners of parent

5,891

million yen

8,405

million yen

14,086 million yen(205)

million yen

Basic earnings per
share

67.86

yen

97.16

yen

162.80yen(2.38)

yen

Total assets

366.5

billion yen

365.5

billion yen

372.5

billion yen

373.2

billion yen

Net assets

102.1

billion yen

100.2

billion yen

106.4

billion yen

113.3

billion yen

Net assets per
share

1,154.03

yen

1,155.28

yen

1,227.42

yen

1,305.67

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 has adopted Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.
(ASBJ Statement No. 28, February 16, 2018) since the fiscal year ended March 31, 2019, and made changes
to classifications (i.e. classified deferred tax assets into investments and other assets and deferred tax
liabilities into long-term liabilities). Amounts for fiscal 2017 are those reflecting the reclassification.

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

CapitalCompany’s
voting rightratio (%)

Major business

OKI Crosstech Co., Ltd.

2,001 million yen

100

Maintenance, construction and sales of
information processing equipment andtelecommunications equipment
Design and construction of electronic
works and electronic
telecommunications works

OKI Software Co., Ltd.

400 million yen

100

Development and operation of
telecommunications system software

Oki Data Corporation

19,000 million yen

100

Manufacturing and sales of printers

Oki Data Manufacturing(Thailand) Co., Ltd.

420 million baht

100*

Manufacturing of printers, etc.

8 million U.S. dollars

100*

Manufacturing of information
processing equipment and printers

141 million euro

100*

Sales of printers, etc.

Oki Electric Industry(Shenzhen) Co., Ltd.
Oki Europe Ltd.

Notes:
1. Figures marked with an asterisk (*) indicate the ratio of voting rights held by subsidiaries of the Company.
2. Oki Data Corporation was dissolved due to the absorption-type merger that assigned the Company as thesurviving company as of April 1, 2021.

- 30 -

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

Classification

Location

Head office

Minato-ku, Tokyo

Branch offices

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)

Business offices

Minato-ku (Tokyo), Warabi (Saitama), Honjo(Saitama), Takasaki (Gunma), Tomioka (Gunma)and Numazu (Shizuoka)

Research institutes

Warabi (Saitama) and Osaka (Osaka)

Oki Electric Industry Co., Ltd.

OKI Crosstech Co., Ltd.

Head officeChuo-ku, Tokyo

OKI Software Co., Ltd.

Head office

Warabi, Saitama

Oki Data Corporation

Head office

Minato-ku, Tokyo

Oki Data Manufacturing(Thailand) Co., Ltd.

Head office

ThailandOki Electric Industry (Shenzhen)Co., Ltd.

Head office

China

Oki Europe Ltd.

Head officeUK

Note: Oki Data Corporation was dissolved due to the absorption-type merger that assigned the Company as thesurviving company as of April 1, 2021.

(8) Employees(i) Employees by segment
Number of employees

Segment

OKI Group

Oki Electric Industry

Solution Systems

6,873

2,492

Components & Platforms

7,246

1,213

Others830–

Company-wide (shared)

690

690

15,639

4,395

Total

- 31 -

(Translation)(ii)

Employees of Oki Electric Industry
Number of employees

4,395 (increased by 192 from the end of theprevious fiscal year)

Average age

Average years ofservice

Average annual
wage (yen)

44.6

19.5

7,346,563(9) Major creditors
Major creditors of the OKI Group are as follows:(Unit: Billions of yen)
Creditor

Loan balance

Mizuho Bank, Ltd.

22.7

Sumitomo Mitsui Banking Corporation

15.7

Mizuho Trust & Banking Co., Ltd.

4.2

The Norinchukin Bank

2.8

The Hachijuni Bank, Ltd.

2.8

(10) Corporate governance(i)

Basic policy
Guided by the corporate philosophy of “The people of OKI, true to the company’s“enterprising spirit,” are committed to creating superior network solutions andproviding excellent information and communications services globally to meet thediversified needs of communities worldwide in the information age,” the OKI Group
recognizes sustainable growth and increases corporate value over medium- to longterm as its most important management priorities in earning the trust of its various
stakeholders. To this end, we are working to enhance corporate governance based on
our fundamental policies of “enhancement of management fairness and transparency,”“timely decision-making processes,” and “full compliance and fortification of risk
management.”(ii)

Corporate governance structure(a) Outline of the structure
As a company with the Audit & Supervisory Board, the Company establishes theBoard of Directors and Audit & Supervisory Board and adopts an executive officer
system, aiming to promote “timely decision-making processes” by separating businessexecution and supervision. In addition, it works on the “enhancement of management
fairness and transparency” by nominating outside directors as well as setting up a
voluntary committee concerned with personnel affairs and compensation, so as toensure effective supervision from an independent and objective standpoint. In
addition to audits by the Audit & Supervisory Board and its members, OKI seeks toensure “full compliance and fortification of risk management,” such as by establishing
the Risk Management Committee, which includes outside directors.
During the fiscal year under review, as stated on pages 41 to 42, the Company- 32 -

(Translation)
was operated by nine Directors, including four Outside Directors (including one female
Director); four Audit & Supervisory Board Members, including two Outside Audit &Supervisory Board Members; and 13 Executive Officers, including four Executive
Officers with Titles (including one female Executive Officer). All the Outside
Directors and Outside Audit & Supervisory Board Members are independent officers
who are neutral and independent of the management. Furthermore, there is no system
to receive consulting and advice, etc., from former representative directors andpresidents, etc.
(b) Reason for selecting the current structure
The Company judges that it can stably achieve “enhancement of management
fairness and transparency,” “timely decision-making processes,” and “full complianceand fortification of risk management” by conducting various measures including (i)enhancing the supervisory function of the Board of Directors by separating businessexecution and supervision and promoting active involvement of outside directors; (ii)having objective auditing by Audit & Supervisory Board members who are independentof management and have a strong authority for investigation; and (iii) establishingvoluntary Personnel Affairs and Compensation Advisory Committee. The Company
will continue to seek sustainable growth and increase corporate value from a mediumto long-term viewpoint while recognizing its responsibility to its stakeholders andcomplying with the aims of the Corporate Governance Code.
(iii) General Meeting of Shareholders
The General Meeting of Shareholders of the Company, a company with the Boardof Directors, resolves items set forth in laws and regulations, and the Articles ofIncorporation. The Board of Directors is authorized to resolve the following mattersin accordance with relevant laws and regulations. It is stipulated that the amount ofdividends, other than interim dividends, is determined at general meetings ofshareholders.
(a) Organization to determine the acquisition of treasury stock
The Articles of Incorporation stipulate that the Company may acquire treasury
stock through market transactions, etc. upon a resolution of the Board of Directors
pursuant to Article 165, paragraph (2) of the Companies Act to swiftly implement
capital policies.
(b) Organization to determine interim dividend
The Articles of Incorporation stipulate that the Company may pay interim
dividends upon a resolution of the Board of Directors to distribute profits swiftly toshareholders.
(c) Requirements for special resolutions of a general meeting of shareholders
The Articles of Incorporation stipulate that, for smooth operations of general
meetings of shareholders, special resolutions at a general meeting of shareholders set
forth in Article 309, paragraph (2) of the Companies Act are passed by a majority of
two-thirds or more of the votes of the shareholders present at the meeting where the- 33 -

(Translation)
shareholders holding one-third or more of votes of the shareholders entitled to vote atsuch shareholders meeting are present.
(iv) Board of Directors(a) Duties, Composition, Operations, etc.
During the fiscal year under review, the Board of Directors consisted of nine
Directors, held a meeting once a month in principle as well as special meetings whennecessary, decided on significant matters including basic management policy, andsupervised business execution based on laws and regulations, and the Articles inIncorporation.
To secure the functions of the Board of Directors, the Company selects candidates
for Directors in consideration of diversities such as expertise, career and gender, andincludes four highly independent Outside Directors (including one female Director) to
improve the fairness and transparency of management.
The Board of Directors is chaired by a Director who is mutually appointed, but
was chaired by a non-executive Chairman during the fiscal year under review.
The Board of Directors held a total of 14 meetings including special meetings
during the fiscal year under review, and the attendance rates of the Outside Directors
and Outside Audit & Supervisory Board Members are shown on page 47. To
contribute to in-depth discussions at the Board of Directors meetings, outside officers
are given materials and explanations in advance by the secretariat of the Board of
Directors, etc.
(b) Matters concerning Directors
i. Number of Directors
The Articles of Incorporation stipulate that the number of Directors of theCompany shall be no more than 15.
ii. Requirements for resolution of election of Directors
The Articles of Incorporation stipulate that resolutions for election of Directors
shall be passed by more than half of the votes of the shareholders present at themeeting where the shareholders holding one-third or more of votes of the shareholders
entitled to vote at such shareholders meeting are present, and that no cumulative voteis adopted in the election of Directors.
iii. Tenure of office
The Articles of Incorporation stipulate that the tenure of office of Directors shallbe set as one year to clarify management responsibility for each fiscal year.
(c) Outline of liability limitation agreements
The Company concluded agreements to limit liabilities with all Outside Directors
and Audit & Supervisory Board Members under the provisions of Article 427,
paragraph (1) of the Companies Act. The outline of the agreements is as follows: In cases where Outside Directors and Audit & Supervisory Board Members
are liable for any damages arising from their negligence to the Company, theyshall compensate for such damages only to the extent of the minimum
liabilities as stipulated in laws and regulations.

- 34 -

(Translation) The above limitation of liability shall be applied only when the relevant
Outside Directors and Audit & Supervisory Board Members have executed
their duties that caused the liabilities in good faith and without grossnegligence.
(d) Outline of liability insurance agreement for Directors
The Company concluded liability insurance agreements as defined in theprovisions of Article 430-3, paragraph (1) of the Companies Act covering Directors,
Audit & Supervisory Board Members and Executive Officers of the Company;
Directors, Executive Officers, Audit & Supervisory Board Members and Corporate
Officers of all of the domestic subsidiaries; and Directors, Executive Officers, Audit &Supervisory Board Members, Corporate Officers and employees who hold executive
positions at some foreign subsidiaries in the U.S., China, Thailand, etc. as the insured.
The Company or a subsidiary bears the full amount of premium including riders, andthe insured has no burden to pay the premium. The insurance agreement compensatesfor damage which may be incurred when the insured has responsibility to execute duties
or receives a claim related to the pursuit of responsibility. However, it determines
certain reasons for exceptions such as damage that arises due to an act conducted while
realizing it breaches laws and regulations. In addition, the insurance agreement
defines the scope of deductibles, and the damage up to the deductibles will not becompensated for by the insurance. In this way, by defining the provisions on thereasons for exceptions and deductibles, the Company intends not to impair theadequacy of the duties of Directors, etc.
(v)

Voluntary committee
The Company has established the Personnel Affairs and Compensation Advisory
Committee as a voluntary committee to secure transparency and objectiveness in thedecision-making processes concerning appointment and dismissal of Directors anddetermination of compensation for officers. The Committee is consulted prior toresolutions at a Board of Directors meeting on appointment and dismissal of Directors,
Executive Officers, etc. and the structure and level of their compensation, deliberates
on these issues from an objective viewpoint, and reports the results to the Board of
Directors. In addition, the Committee delivers its opinion on nomination ofcandidates for Audit & Supervisory Board Members to Audit & Supervisory Board
Members. The Committee consists of five members; that is, all the four Outside
Directors and the non-executive Chairman. The Chairperson of the Committee isappointed through a resolution at a meeting of the Board of Directors and the post washeld by an Outside Director in the fiscal year under review. The Committee held 9meetings in the fiscal year under review.

(vi) Election and dismissal of company officers
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- 35 -

(Translation)
eligibility.
 Those with excellent personality, insights, high ethical standards, fairness
and integrity 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 corporatevalue
 Those who have had a long term of office Audit and Supervisory Board Members who have the necessary knowledgeof finance, accounting and legal affairs
 Outside officers who satisfy the independence criteria (See page 20)
A dismissal of a director, Audit & Supervisory Board member, or executive
officer is proposed in cases where the said person engages, or is likely to engage, in an
act in violation of laws and regulations or the Articles of Incorporation, or where acertain event occurs, which makes it difficult for the said person to fulfill the duties
appropriately, and the Personnel Affairs and Compensation Advisory Committee is
promptly consulted and deliberates on such an event, and reports the results andproposes a dismissal to the Board of Directors.
(vii) Matters related to stocks owned by the Company (As of March 31, 2021)(a) Policy on cross-shareholdings
The Company will reduce cross-shareholdings phase by phase as a result ofcomprehensive consideration of conditions such as the medium- and long-term
improvement of the corporate value of the Company and a share certificate-issuing
company.
(b) Outline of consideration-related cross-shareholdings
Every year, the Board of Directors validates cross-shareholdings. The decisionon the suitability of holding is made for each stock based on a comprehensive
consideration of quantitative and qualitative factors.
(c) Standards for the exercise of voting rights regarding cross-shareholdings
For the exercise of voting rights regarding cross-shareholdings, we classify
proposals as follows, establish standards for exercise to make a decision and exercise
the rights.
 In case of a proposal to elect an officer, the total number, ratio of independent
officers, etc.
 In case of a proposal related to remuneration for officers, performance, asset
status, etc.
 In case of a proposal for appropriation of surplus, performance, condition ofretained earnings, etc.
 We shall pay extra attention to the deliberation of a proposal for anti-takeovermeasures, M&A or third-party allocation of shares.

- 36 -

(Translation)(d) Number of brands of the stocks that the Company owns for purposes other thanpure investment and the total amount recorded in the balance sheet

Number of stocks(Stock)Total amount recordedin the balance sheet(Unit: Billions of yen)

42.5

95th year(FY2018)

96th year(FY2019)

Unlisted stock

76

75

66

59

Stocks other thanunlisted stock

46

38

27

25

Total

122

113

93

84

Unlisted stock

5.4

6.3

6.3

6.3

Stocks other thanunlisted stock

37.2

33.8

25.4

29.2

Total

42.5

40.2

31.7

35.5

40.2
31.7

94th year(FY2017)97th year(Fiscal year
under review,
FY2020)94th year(FY2017)95th year(FY2018)
Total amount recorded in the balance
sheet (Unit: Billions of yen)

35.5

97th year
96th year(Fiscal year under review, FY2020)(FY2019)
Number of stocks (Stock)(viii) The OKI Group’s effort to promote women’s advancement
Establishing a policy to promote human resource measures for sustainable growth,such as the creation of new innovations and the improvement of employees’
engagement, the OKI Group is promoting diversity aiming to create a workplace where
all employees can work comfortably and perform at their full potential. We aim toestablish a workplace that accepts and respects various differences and personalities,
and utilize them as valuable elements. In fiscal 2020, as part of diversity education,
we provided all employees of the OKI Group with “Unconscious bias” training andexecuted measures.
Furthermore, regarding the Act on the Promotion of Female Participation andCareer Advancement in the Workplace, the Company established the following two
goals, and is implementing measures such as leadership development training:
Goal 1: To keep monthly average overtime hours of full-time employees to lessthan that of fiscal 2019 (24 hours)
Goal 2: Increase the ratio of female executives from 3% at present to 5%
The current status as of March 31, 2021 is as follows:
Average overtime hours of full-time employees in fiscal 2020: 27 hours (theCompany)- 37 -

(Translation)
Number of female officers: Two at the Company, four* at OKI Group companies
in Japan
Ratio of female executives: 3.3% at the Company, 2.6% at OKI Group companies
in Japan
Ratio of female employees: 13.1% at the Company, 13.9% at OKI Group
companies in Japan

Number of female
officers (persons)Ratio of female
executives to all
executives
Ratio of female
employees

End of fiscal
year underreview,
FY2020End of
FY2018End of
FY2019The Company

3

2

2

OKI Groupcompanies in Japan

2

2

4

The Company

3.3%

3.4%

3.3%

OKI Groupcompanies in Japan

2.1%

2.5%

2.6%

The Company

12.3%

12.8%

13.1%

OKI Groupcompanies in Japan

13.0%

13.5%

13.9%

*The “Company” is not included within the “domestic OKI group.”(11) Other significant events of the OKI GroupOki Banking Systems (Shenzhen) Co., Ltd. (hereinafter referred to as “OBSZ”), a
subsidiary of the Company, filed a request for arbitration against Shenzhen Yihua Computer
Industrial Co., Ltd. (hereinafter referred to as “Yihua Industrial”) in October 2015,
demanding payment of RMB1,115,463 thousand (approx. ¥18.8 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.
Regarding the arbitration proceedings, in December 2020, the South China
International Economic and Trade Arbitration Commission ordered Yihua Industrial to pay
OBSZ RMB1,096,866 thousand (approx. ¥18.5 billion if converted to Japanese yen based on
the exchange rate as of the end of the fiscal year under review) for the unpaid products,
interest for arrears, legal fees, etc.
To collect the amount awarded, OBSZ has filed a lawsuit against Shenzhen Yihua
Computer Co., Ltd., the parent company of Yihua Industrial seeking joint and collective
liability in the Guangzhou Higher People’s Court. Currently, the lawsuit for the collection
is on trial. Although the Company has recorded a provision of allowance for doubtfulreceivables regarding this case, it is striving to collect the amount awarded fully.

- 38 -

(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 653,801 shares of treasury stock)(3)

Number of shareholders:
66,032(4)

Major shareholders (Top 10)
Number ofshares held
(shares)Name of shareholder

Percentage ofshares held(%)

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

9,265,300

10.70

Custody Bank of Japan, Ltd. (trust account)

5,087,200

5.88

Oki Denki Group Employees’ Shareholdings Committee

2,084,561

2.41

Custody Bank of Japan, Ltd. (trust account 4)

1,773,200

2.05

Custody Bank of Japan, Ltd. (trust account 9)

1,569,900

1.81

Mizuho Bank, LTD.

1,419,648

1.64

Meiji Yasuda Life Insurance Company

1,400,097

1.62

Custody Bank of Japan, Ltd. (trust account 5)

1,248,900

1.44State Street Bank West Client-Treaty 505234

1,211,193

1.40

JP Morgan Chase Bank 385781

1,134,592

1.31

Note: The percentages of shares held are calculated after deducting treasury stock.

- 39 -

(Translation)
3.

Equity Warrants(1) Equity warrants granted to the Company’s officers as consideration for theirperformance of duties(i) Number of equity warrants
922(ii) Type and number of shares subject to equity warrants
92,200 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)
FY2016 equity warrant (1 yen)
(Issued on August 16, 2016)
FY2017 equity warrant (1 yen)
(Issued on August 15, 2017)
FY2018 equity warrant (1 yen)
(Issued on August 14, 2018)
FY2019 equity warrant (1 yen)
(Issued on August 14, 2019)
FY2020 equity warrant (1 yen)
(Issued on August 18, 2020)

Directors(excluding outside Directors)
Exercise period

Number ofequitywarrants

Number ofholders

August 17, 2016 to August 16, 2041

152

4August 16, 2017 to August 15, 2042

180

4August 15, 2018 to August 14, 2043

185

4

August 15, 2019 to August 14, 2044

197

4

August 19, 2020 to August 18, 2045

2084(2) Equity warrants issued to employees in consideration of performance during the fiscal
year under review
Directors(excluding outside Directors)
Issued Number

Exercise period

FY2020 equity warrant (1 yen)
(Issued on August 18, 2020)

August 19, 2020 to August 18, 2045

- 40 -

Number ofequitywarrants

Number ofholders397

13

(Translation)
4.

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

Position

Name

Status or main duties

Director andChairman of the
Board

Hideichi Kawasaki

Chairman of the Board

X

President,
Representative
Director

Shinya Kamagami

Supervision

X

Senior Executive Vice
President,
Representative
Director

Masayuki Hoshi

Chief Compliance Officer
Chief Financial Officer
Chief Information Officer

X

Executive Vice
President andMember of the Board

Masashi Tsuboi

Head of Solution Systems Business GroupX

Senior Vice President
and Member of the
Board

Masashi Fuse

Head of Corporate GroupInternal Control Administrator

Director

Shigeru Asaba

Outside Director, Nippon Beet Sugar ManufacturingCo., Ltd.

Director

Tamotsu Saito

Advisor, IHI Corporation
Outside Director, JAPAN POST INSURANCE Co.,Ltd.

Director

Izumi Kawashima

Director

Makoto Kigawa

Outside Director, Komatsu Ltd.
Outside Director, Seven Bank, Ltd.
Special Adviser, Yamato Holdings, Co., Ltd.
Outside Corporate Auditor, The Higo Bank, Ltd.

Standing Audit & Supervisory
Board Member

Sei YanoStanding Audit & Supervisory
Board Member

Toshiya
Hatakeyama

Audit & Supervisory Board
Member

Hideo Shiwa

External Director (Audit and Supervisory Committee
Member), OUTSOURCING Inc.

Audit & Supervisory Board
MemberRyuichi Makino

Outside Audit & Supervisory Board Member,
Synchro Food Co., Ltd.

Notes:
1. X indicates Executive Officer.
2. Directors Shigeru Asaba, Tamotsu Saito, Izumi Kawashima, and Makoto Kigawa are Outside Directors.
3. Audit & Supervisory Board Members Hideo Shiwa and Ryuichi Makino are Outside Audit & Supervisory
Board Members.
4. Directors Shigeru Asaba, Tamotsu Saito, Izumi Kawashima, and Makoto Kigawa and Audit & Supervisory
Board Members Hideo Shiwa and Ryuichi Makino have been reported as independent officers to Tokyo
Stock Exchange.
5. Audit & Supervisory Board Member Toshiya Hatakeyama has served in positions such as Officer in chargeof the Accounting & Control Division and Chief Financial Officer, and has extensive knowledge in financeand accounting.

- 41 -

(Translation)
6.

7.
8.

Audit & Supervisory Board Member Hideo Shiwa headed the finance & accounting and planning divisions
and presided over a business company and unit of the head office of a manufacturing company, and has
extensive knowledge in finance and accounting.
Audit & Supervisory Board Member Ryuichi Makino is a certified public accountant, and has extensive
knowledge in finance and accounting.
Executive officers as of March 31, 2021 are as follows (excluding those who concurrently serve as Directors).
Position

Name

Principal duty

Executive Vice President

Masasuke Kishi

Head of Components & Platforms Business Group andHead of Development Division

Senior Vice President

Toru Miyazawa

Head of Marketing & Sales Group

Senior Vice President

Masatoshi Saito

Deputy Head of Components & Platforms Business Group

Senior Vice President

Yuka Miyagawa

Head of Business Collaboration Division, Components &Platforms Business Group

Senior Executive Officer

Yuichiro Katagiri

Deputy Head of Solution Systems Business Group

Senior Executive Officer

Keizou Ikeda

General Manager of Automation Systems Division,Components & Platforms Business Group

Executive Officer

Hiroshi Tomizawa

Deputy Head of Corporate Group and General Manager ofLegal Affairs & Intellectual Property Division, Chief
Quality Officer

Executive Officer

Toshiyuki Yokota

In charge of Special Missions, Chief Innovation Officer

Executive Officer

Hajime Maruo

Head of Marketing & Sales Division-2, Marketing & SalesGroup

Executive Officer

Masahito Nozue

Head of Electronics Manufacturing Services Division,Components & Platforms Business Group

Executive Officer

Shinichi Tanaka

Deputy Head of Solution Systems Business Group andGeneral Manager of Financial & Enterprise Solutions
Division

Executive Officer

Shutaro Otahara

General Manager of Corporate Planning Division,
Corporate Group

Executive Officer

Takahiro Mori

Officer of Components & Platforms Business Group andPresident of Oki Data Corporation- 42 -

(Translation)(2) Compensation, etc. paid to Directors and Audit & Supervisory Board Members in thefiscal year under review(i)

Policy on determining the content of individual compensation, etc. for Directors
The Company established the policy on determining the content of individualcompensation, etc. for Directors, and a summary is as follows. OKI’s basic policy oncompensation for directors and executive officers is to serve as incentives for the
performance improvement with the aim of the continuous enhancement of the corporate
value and enforcement of the corporate competitiveness while being the compensation
structure that can attract excellent human resources. The compensation structure isdivided into performance-linked compensation and compensation other thanperformance-linked compensation, and consists of basic compensation, annual
incentive compensation linked to the performance of each fiscal year, andcompensation-type stock option as medium- to long-term incentive compensation asshown in the table below. These compensations have been provided as part of efforts
to develop an environment for a shift to the management focused on “more aggressive
goal setting” and “growth over medium- to long-term” in order to achieve “continuous
growth” of the OKI Group. The compensation for outside directors consists only ofbasic compensation.
The calculation method of performance-linked compensation is stated below.
The business performance indexes selected as the basis of calculating the amountof annual incentive compensation are sales, operating income and working capital.
These business performance indexes were selected because the Company judged thatthese indexes were appropriate to achieve the OKI Group’s sustainable growth. As
for the calculation method, 70% of the total amount is the standard compensation
amount which has been set for each position in advance multiplied by a performance
evaluation factor, and 30% of the total amount is determined by the qualitativeevaluation stated in (2) (c). The target amounts related to performance-linked
compensation for the fiscal year under review were ¥405.0 billion for net sales, ¥8.5
billion for operating income, and ¥93.8 billion for working capital. In the actual
results, ¥392.9 billion was recorded for net sales, ¥9.5 billion for operating income, and¥89.6 billion for working capital.
The business performance index selected as the basis of calculating the amount(or quantity) of the medium- to long-term incentive compensation is ROE. Thisbusiness performance index was chosen because the Company evaluated that this index
was adequate to aim for improving corporate and shareholders’ value over the medium
and long term and share value with shareholders. To calculate the amount, theCompany sets the standard compensation amount for each position in advance, thenmultiplies it by a performance evaluation factor. The target related to performancelinked compensation for the fiscal year under review was to achieve ROE of 10%. In
the actual results, ROE was -0.2%.
As for how to determine the policy on determining individual compensation, etc.
for Directors, as described on page 35* in order to secure transparency andobjectiveness in the decision-making processes concerning compensation for officers,
the Company has established the Personnel Affairs and Compensation Advisory- 43 -

(Translation)
Committee. It deliberates, prior to resolutions at a Board of Directors meeting, on the
structure and level of compensation for directors and executive officers, and reports theresults to the Board of Directors. In addition, the appropriateness of the structure andlevel of compensation is validated mainly utilizing objective evaluation data fromexternal organizations.
The Personnel Affairs and Compensation Advisory
Committee held a total of nine meetings during the fiscal year under review, discussed
the compensation structure for officers in three of these meetings, and reported theresults three times (concerning annual incentive compensation, medium- to long-term
incentive compensation, and the policy on determining individual compensation, etc.).
Since the Board of Directors decided the content of individual compensation, etc.
for Directors for the fiscal year under review after confirming the content of the report,
it was evaluated that the content of the individual compensation, etc. for Directors forthe fiscal year under review complied with the policy above.

Basic
compensation

Type

Content of compensation

Fixed
compensation

When serving as Executive Officer concurrently,
monetary compensation shall be determined andpaid monthly while being individually tailored tothe position, followed by duties.

Monetary
compensation

Annualincentivecompensation

Performancelinked
compensation

Medium- tolong-term
incentivecompensation(ii)

Nonmonetarycompensation

Once a year, monetary compensation shall be paid
and determined individually with a linkage withthe past year’s consolidated business performanceof the OKI Group and that of the division each
Director is responsible for. The rate of payment
is determined within a scope of 0% to 200%,
according to linkage with the quantitative
assessment by business performance andqualitative assessment by the President or the
Personnel Affairs and Compensation Advisory
Committee. It is set that the degree of linkage
with business performance is higher for a person ina higher position. The amount of payment is 35%
to 45% of the basic compensation when the rate ofpayment is 100%.
The amount of payment linked to the MediumTerm Business Plan is determined and paid ascompensation-type stock option once a year. The
rate of payment is determined within the scope of
0% to 200% depending on business performance.
It is set that the degree of linkage with businessperformance is higher for a person in a higher
position. The amount of payment is 15% to 20%of the basic compensation when the rate ofpayment is 100%.

Matters related to the resolution for the compensation, etc. for Directors and Audit &Supervisory Board Members of the ordinary general meeting of shareholders
As for the amount of monetary compensation for Directors, at the 82nd ordinary
general meeting of shareholders held on June 29, 2006, it was resolved that the annual
amount for Directors would be ¥600 million or less (not including employee salary foran employee who is serving as Director). The number of Directors at the end of the- 44 -

(Translation)
ordinary general meeting of shareholders was eleven (including one outside director).
Separately from the monetary compensation, at the 92nd ordinary general
meeting of shareholders held on June 29, 2016, it was resolved that the compensationtype stock option for Directors excluding outside directors would be ¥100 million orless per year. The number of Audit & Supervisory Board Members at the end of theordinary general meeting of shareholders was five (excluding outside director).
As for the amount of monetary compensation for Audit & Supervisory Board
Members, at the 82nd ordinary general meeting of shareholders held on June 29, 2006,
it was resolved that it would be ¥100 million or less per year. The number of Audit &Supervisory Board Members at the end of the ordinary general meeting of shareholders
was four.
(iii) Matters related to the commission of the decision on the content of individualcompensation, etc. for Directors
The Company commissions the decision on the specific content of individual
remuneration related to annual incentive compensation for Directors based on a
resolution for the commission of the Board of Directors as below. As for the part
commissioned to a Director who is concurrently serving as President and Executive
Officer, the Company has taken measures such as deliberating the validation at the
Personnel Affairs and Compensation Advisory Committee to ensure that the Director
adequately executes his/her authority.

Applicable
Directors

Director
concurrently
serving as the
President andExecutive Officer
Executive
Director otherthan the above

Commissioned person
Members of the Personnel
Affairs and Compensation
Advisory Committee(Directors Shigeru Asaba,
Tamotsu Saito, Izumi
Kawashima, Makoto
Kigawa, and Hideichi
Kawasaki)Director concurrently
serving as the President andExecutive Officer (Director
Shinya Kamagami)- 45 -

Content of thecommissioned
authority

Reason for thecommission of theauthority

Qualitative evaluationfor 30% of annual
incentivecompensation

To secure transparencyof the process andobjectivity ofevaluation

Qualitative evaluationfor 30% of annual
incentivecompensation

To focus on aggressive
goal-setting for eachtask assigned to theperson(Translation)(iv) Compensation paid to Directors and Audit & Supervisory Board Members, etc.

Officer Title

Amount ofpayment

Amount of payment by type of compensation
Fixed
Performance-linked compensationcompensation
Non-monetary
Monetary compensationcompensation
Basic
AnnualMedium- to longcompensation
incentive
term incentive

Number ofapplicableofficers

Directors¥265 million¥217 million¥36 million¥10 million
5(excluding Outside
Directors)
Audit &
Supervisory Board
Members¥46 million¥46 million––
2(excluding Outside
Audit &
Supervisory Board
Members)
Outside officers
Outside Directors¥46 million¥46 million––
4
Outside Audit &Supervisory¥17 million¥17 million––
4
Board Members
Notes:
1.
The application of the medium- to long-term incentive compensation starts in fiscal 2021. The
payment for the fiscal year under review remains as fixed compensation, which is 13% of basic
compensation.
2.
The medium- to long-term incentive compensation is non-monetary compensation, etc. The
content and provision status are stated in Agenda Item 4: Grant of Stock Option for Stock-linked
Compensation (Equity Warrants) to Directors on page 21 and “Matters related to the Company’s
share option, etc.” (which is listed on the Company website in accordance with laws, regulations andArticle 15 of the Articles of Incorporation).
3.
The number of Outside Directors as of the end of the fiscal year under review is different from thenumber shown above, because the number above includes the Outside Directors who retired at theconclusion of the 96th Ordinary General Meeting of Shareholders held on June 26, 2020.

(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 Shigeru Asaba serves as an Outside Director of Nippon Beet Sugar
Manufacturing Co., Ltd. There are no business relationships between Nippon Beet
Sugar Manufacturing Co., Ltd. and the Company.
Director Tamotsu Saito concurrently serves as Advisor of IHI Corporation andOutside Director of JAPAN POST INSURANCE Co., Ltd. In addition, he willassume the office of Outside Director of Furukawa Electric Co., Ltd. in June 2021.
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 each company’s
net sales.
Director Makoto Kigawa concurrently serves as Outside Director of Komatsu Ltd.
and Outside Director of Seven Bank, Ltd. The volume of transactions between thecompanies and the Company accounts for less than 1% of the OKI Group’s net sales- 46 -

(Translation)
and accounts for less than 1% of each company’s net sales. Although he serves as
Special Adviser of Yamato Holdings, Co., Ltd. and Outside Corporate Auditor of The
Higo Bank, Ltd., there are no business relationships between the companies and theCompany.
Audit & Supervisory Board Member Hideo Shiwa serves as External Director(Audit and Supervisory Committee Member) of OUTSOURCING Inc. There are nobusiness relationships between OUTSOURCING Inc. and the Company.
Audit & Supervisory Board Member Ryuichi Makino serves as Outside Audit &Supervisory Board Member of Synchro Food Co., Ltd. There are no business
relationships between Synchro Food Co., Ltd. and the Company.
(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

Shigeru Asaba,
Director

14 (14)

100%

–

–

Tamotsu Saito,
Director

14 (14)

100%

–

–

Izumi Kawashima,
Director

14 (14)

100%

–

–

Makoto Kigawa,Director

14 (14)

100%

–

–

Hideo Shiwa,
Audit &
Supervisory Board
Member9 (10)90%

10 (10)100%

Ryuichi Makino,
Audit &
Supervisory Board
Member10 (10)100%

10 (10)

100%

Note:

The number of meetings for Audit & Supervisory Board Members Hideo Shiwa and Ryuichi Makino
represents the number of meetings held since they took office in June 2020.

- 47 -

(Translation)(b) Major activities
Principal comments at the Board of the Directors and summary of the duties
executed for the role expected of outside director
Shigeru Asaba,
Director

He provided advice and made proposals for the appropriateness andproperness of decision making by the Board of Directors.
He also
contributed to strengthening compliance by providing a good example tomanagerial personnel through his leadership and enhancing the management
fairness and transparency as the Chairperson of the Personnel Affairs andCompensation Advisory Committee.
He also contributes to theimprovement of the Company’s corporate value by actively giving advice andmaking proposals for supervision of the medium- and long-term businessplans including Medium-Term Business Plan 2022 and oversight of thedevelopment plan of successors such as the President, for which he is expected
to play an active role, based on his academic expertise in overall business.

Tamotsu Saito,
Director

He provided advice and made proposals for the appropriateness andproperness of decision making by the Board of Directors.
He also
contributed to strengthening compliance by providing a good example tomanagerial personnel through his leadership and enhancing the management
fairness and transparency as a member of the Personnel Affairs andCompensation Advisory Committee.
He also contributes to theimprovement of the Company’s corporate value by actively giving advice andmaking proposals for supervision of the medium- and long-term businessplans including Medium-Term Business Plan 2022 and oversight of thedevelopment plan of successors such as the President, for which he is expected
to play an active role, based on his academic expertise in overall business.

Izumi Kawashima,
Director

She provided advice and made proposals for the appropriateness andproperness of decision making by the Board of Directors. She also
contributed to strengthening compliance by providing a good example tomanagerial personnel through her leadership and enhancing the management
fairness and transparency as a member of the Personnel Affairs andCompensation Advisory Committee.
She also contributes to theimprovement of the Company’s corporate value by actively giving advice andmaking proposals to supervise improvements to the efficiency of operationsof the Board of Directors and the development plan of successors such as the
President, for which she is expected to play an active role, based on her
knowledge as a legal expert in the Companies Act, the Financial Instruments
and Exchange Act, etc.

Makoto Kigawa,Director

He provided advice and made proposals for the appropriateness andproperness of decision making by the Board of Directors.
He also
contributed to strengthening compliance by providing a good example tomanagerial personnel through his leadership and enhancing the management
fairness and transparency as a member of the Personnel Affairs andCompensation Advisory Committee.
He also contributes to theimprovement of the Company’s corporate value by actively giving advice andmaking proposals for supervision of the medium- and long-term businessplans including Medium-Term Business Plan 2022 and oversight of thedevelopment plan of successors such as the President, for which he is expected
to play an active role, based on his academic expertise in overall business.

Hideo Shiwa,
Audit & Supervisory Board
Member

He audited the business execution of Directors and leveraged his extensive
experience and knowledge as an executive and a Director at a manufacturing
company to make statements aimed at achieving sustainable growth andproducing medium- to long-term corporate value for the Company.

Ryuichi Makino,
Audit & Supervisory Board
Member

He audited the business execution of Directors and leveraged his extensive
experience and knowledge as a certified public accountant to make statements
aimed at achieving sustainable growth and establishing high-quality corporate
governance systems for the Company.

- 48 -

(Translation)
5.

Status of Accounting Auditor(1) Name: PricewaterhouseCoopers Aarata LLC(2) Policy and reason for the appointment
The Company has appointed the accounting auditor with comprehensive consideration
by assessing indicators, such as the quality control scheme, independence, auditing scheme,
and estimated compensation for auditing services.
(3) Policy regarding decision to dismiss or not reappoint
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 Article 340, paragraph (1) of the Companies Act, the Audit &Supervisory Board will dismiss the accounting auditor upon the consent of all the Audit &Supervisory Board Members.
(4) Assessment of the audit corporation by Audit & Supervisory Board members and the
Audit & Supervisory Board
The Audit & Supervisory Board members and the Audit & Supervisory Board of theCompany assess the audit corporation. The assessment is comprehensive based on
indicators, such as the audit corporation’s quality control scheme, independence, auditing
scheme, group auditing scheme, and estimated compensation for auditing services.
(5) Contents, etc. of compensation for auditing services(i) Compensation, etc.
Category

Previous fiscal year
Compensation forCompensation foraudit attestation
non-auditing
services
services(millions of yen)(millions of yen)

Fiscal year under review
Compensation forCompensation foraudit attestation
non-auditing
services
services(millions of yen)(millions of yen)

Oki ElectricIndustry

159

43

200

47

Consolidated
subsidiaries

86

–

110

–

Total

245

43

310

47

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 our major subsidiaries, Oki Data Manufacturing (Thailand) Co., Ltd., Oki Electric Industry(Shenzhen) Co., Ltd., and Oki Europe Ltd. have undergone statutory audits by accounting auditors other than
the accounting auditor of the Company.

- 49 -

(Translation)(ii) Content of non-auditing services(Previous fiscal year)
The Company has entrusted the accounting auditor with “advisory services relating to
the new revenue recognition standard” and other services, which are services other than theaudits specified in Article 2, paragraph (1) of the Certified Public Accountants Act, and pays
the auditor compensation for the services.
(Fiscal year under review)
The Company has entrusted the accounting auditor with “advisory services relating to
the new revenue recognition standard” and other services, which are services other than theaudits specified in Article 2, paragraph (1) of the Certified Public Accountants Act, and pays
the auditor compensation for the services.
(iii) Policy regarding determination of compensation for auditing services
The Company has no particular rules or regulations regarding decisions oncompensation for auditing services to the audit corporation but has determined thecompensation after having fully considered the audit plan, etc. of the audit corporation andverified the validity of the time, contents, etc. of the auditing services(iv) Reason for the Audit & Supervisory Board to consent to compensation foraccounting auditor
The Audit & Supervisory Board has decided to consent to the compensation to be paid
to the accounting auditor proposed by the Board of Directors in accordance with Article 399,
paragraph (1) of the Companies Act. This is because it has performed 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 the basis for calculating
the estimated compensation for the accounting auditor, and has found them appropriate.

- 50 -

(Translation)
6.

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 “OKIGroup Charter of Corporate Conduct” and “OKI Group Code of Conduct.” In
addition, officers take the initiative in compliance activities in conformance withthe “Compliance Commitment.”(b) The Company has established a Compliance Committee chaired by the Chief
Compliance Officer to decide on and examine basic policies regarding complianceprograms.
(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 compliance byutilizing means such as e-learning.
(d) The Company establishes whistle-blowing regulations which enable 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 and make improvements.
(e) The Company stands firmly against antisocial groups that threaten the order andsafety of civil society in cooperation with the police and related organizations, andrefuses to have any relationship with them as a whole.

(ii)

Procedures to retain and manage information relating to Directors’ conduct of business
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 businessactivities 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.

- 51 -

(Translation)(iv) Procedures to secure efficient business performance by Directors(a) The Company holds regular meetings of the Board of Directors once a month inprinciple to decide important matters including basic management policies andsupervise the business execution 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 supervision, and promote timely decisionmaking processes. In addition, the Company holds meetings of the Management
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 subsidiaries run their operations properly, theCompany has established the “OKI Group Charter of Corporate Conduct” whichsets out the values for the entire Group. In addition, the Company has establishedthe “OKI Group Code of Conduct” as the code of conduct which all officers andemployees should comply with, and is striving to make the code known to all ofthem.
(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 enable 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 and make improvements 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, and businessplannings.
(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(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 any
reassignment and evaluation of such employees requires the prior consent of the- 52 -

(Translation)
Audit & Supervisory Board.
(vii) Procedures for Directors and employees to report to Audit & Supervisory Board
Members; procedures for Audit & Supervisory Board Members to receive other reports(a) If Directors discover anything that may cause significant damage to the Company,
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 and meetings of the Board of Directors in order tounderstand 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 asadvisors and receive 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 of establishinginternal control systems and their operations from Directors and employees on aregular basis, and may request Directors and employees to report on mattersdeemed 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 and performing
other audit duties, Audit & Supervisory Board Members shall conduct 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, attend onsite audits by the accounting auditor, and request reports from the accounting
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 relating to compliance(a) The Board of Directors has stipulated a basic policy for internal control systems.
As for the foundation for ensuring compliance, the Company has established the“OKI Group Charter of Corporate Conduct” which states social responsibility
assumed by the OKI Group and “OKI Group Code of Conduct” to be observed by
all OKI officers and employees to assume social responsibility. This charter andcode are based on the corporate philosophy of “The people of OKI, true to the- 53 -

(Translation)company’s “enterprising spirit,” are committed to creating superior network
solutions and providing excellent information and communications services
globally to meet the diversified needs of communities worldwide in the informationage.”
In addition, the management team, having re-affirmed the importance ofcompliance, takes the initiative in compliance activities, and officers of theCompany and Group companies are working on compliance activities inconformance with the “Compliance Commitment.”
The Company has
established this commitment to reassure shareholders, customers, employees andall other stakeholders within and outside the Company that it strives to foster
awareness of compliance and makes a thorough commitment to compliancethroughout the OKI Group.
(b) The President and Executive Officer once again raised awareness of the importanceof compliance to all OKI Group companies at the FY2020 IR meeting for
management strategy (the script was published on the intranet on April 1, 2020).
(c) The Company held group training such as training sessions for compliancemanagers, in which some 350 compliance managers and promoters of the OKI
Group participated, and training sessions on the Anti-Monopoly Act for officers
and employees chiefly in the Market & Sales Section. It also conducted elearning on personal information protection, information security, internal control
and general compliance-related topics for all employees in Japan. The Company
also regularly presents case studies on compliance on the intranet and internal
publications.
As for compliance education which is implemented in the form of e-learning foroverseas subsidiaries, additional training has been provided to a subsidiary in
Vietnam, which newly joined the Group.
(d) In the fiscal year under review, the Compliance Committee held meetings fourtimes, where it summarized activities in the previous fiscal year, formulated
education plans, and reviewed the status of implementation of various measures inindividual sections.
(e) The Company clearly has defined that in case of non-compliance, the Company
takes disciplinary action in accordance with the workplace regulations, etc., andhas the Group Disciplinary Action Committee, which is chaired by the President
and Executive Officer, to consider said action.
(f) The Company has a Group whistle-blower hotline, which provides access toexternal lawyers, to ensure quick discovery and effective correction of improper
conduct, and disseminates information about the whistle-blower system to
employees as well.
(ii) Procedures relating to risk management(a) The Company has established a Risk Management Committee chaired by the
President and Executive Officer and advised by the Outside Directors and Audit &Supervisory Board Members, to stipulate fundamental matters relating to measures
to prevent risks from emerging, and preparation in case risks arise. In the fiscal
year under review, the Risk Management Committee held meetings twice, where it- 54 -

(Translation)
deliberated on basic policies for FY2020, risks to be controlled, policies to prevent
risks from emerging, policies on emergency response scenarios, and ways toimprove the management and reporting system.
(b) The Company has established risk management departments, which deal withgroup-wide risks that are common to the Group, and each of these management
departments assist individual departments and subsidiaries to manage their risks,
instruct them to take necessary measures, and confirm the status of implementationof these measures.
(c) If any risk materializes, the department in which it arises takes the necessary steps
for the risk, and promptly reports the details of the event to the Risk Management
Committee according to the OKI Group Emergency Response System. This
Committee manages crisis information in a unified manner, determines a response
system and manager promptly, giving consideration to the severity and urgency ofthe said crisis, implements necessary measures, and gives support to the said
department.
(iii) Procedures relating to subsidiary management(a) In the Subsidiaries and Affiliates Management Rules, an administrative division isdesignated for each subsidiary, and the head of said administrative division
manages it with the authority and responsibilities stipulated by the authority
regulations. Appointment and dismissal of chief officers of subsidiaries isdetermined by the President and Executive Officer of the Company, andappointment and dismissal of other officers is determined by the head of theadministrative division.
(b) Heads of administrative divisions clearly state the missions of subsidiaries which
they supervise, and when developing business plans, they provide support,
instruction, and periodic monitoring, and evaluate the performance of officers.
Heads of administrative divisions also monitor the operational status of the general
meeting of shareholders and the Board of Directors and compliance of Directorsof subsidiaries.
(c) At the accounting division of each subsidiary, the Company has appointed staff
with the necessary knowledge and experience. The Company works to conduct
the maintenance and improvement of an internal control system for financial
reporting conducted in accordance with related laws and regulations.
(d) To prevent losses from violations, misconduct, scandals, or accidents related to
any laws, rules or ethics, or loss from failing to appropriately perform risk
management, the Company holds regular training seminars for directors and audit& supervisory board members of subsidiaries.
Seminar topics include
responsibilities and obligations as a subsidiaries’ officer, compliance, and internal
controls.
(iv) Procedures relating to audits by Audit & Supervisory Board Members(a) The Standing Audit & Supervisory Board Members assess important decisionmaking processes and the status of business operations by attending meetings ofthe Board of Directors and the Management Committee in addition to reading
resolution approval documents.

- 55 -

(Translation)(b) The Audit & Supervisory Board Members have received whistle-blowing reports
based on whistle-blowing regulations, and received reports biannually on thestatus of operation.
(c) 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.
(d) 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.
(e) 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, toimplement effective audits.
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.

- 56 -

(Translation)

Consolidated Balance Sheet(as of March 31, 2021)(Millions of yen)Account title

AmountAccount title(Assets)
Current assets

Amount(Liabilities)
222,170

Current liabilities

154,151

Cash and deposits

44,845

Notes and accounts payable

56,706

Notes and accounts receivable

105,371

Short-term borrowings

38,123

Lease receivables and lease investment
assets12,732Finished goods:

14,889Lease obligations

4,202

Other accrued expenses

21,028Others34,091Work in process:

14,558Long-term liabilities

Raw materials and supplies:

17,937Long-term debt

39,848Others11,999Lease obligations

12,670Allowance for doubtful receivables(165)

Deferred tax liabilities

15,880Non-current assets

105,795

151,043

Provision for Directors’ retirement benefits

Property, plant and equipment

51,314

Liability for retirement benefits

31,419Buildings and structures

20,239Others5,691

Machinery, equipment and vehicles

8,550

Total liabilities

Tools, furniture and fixtures

7,862(Net Assets)

Land

14,272

Construction in progress

390

286

259,947

Shareholders’ equity

118,425

Capital stock

44,000Intangible assets

13,637

Additional paid-in capital

19,029Investments and other assets

86,091Retained earnings

56,315Investments in securities

38,632

Treasury stock, at cost

Asset for retirement benefits

30,635

Other accumulated comprehensive income(5,401)Long-term trade receivables

22,245

Others

14,181

Net unrealized holding gain/loss on othersecurities

3,570

Allowance for doubtful receivables(19,604)

Loss on deferred hedges

82

Translation adjustments(8,655)

Accumulated retirement benefits liability
adjustments

Total assets

373,213- 57 -

(919)

(399)

Subscription rights to shares

168

Non-controlling interests

74

Total net assets

113,265

Total liabilities and net assets

373,213(Translation)

Consolidated Statement of Operations(From April 1, 2020 to March 31, 2021)(Millions of yen)Account title

AmountNet sales

392,868

Cost of sales

293,444

Gross profit

99,423

Selling, general and administrative expenses

89,914

Operating income

9,509

Non-operating income
Interest income

40

Dividend income

1,141

Foreign exchange gain

447

Dividend income of insurance

408

Other

1,247

3,285

Non-operating expenses
Interest expense

1,411

Loss on liquidation of subsidiaries

424

Other

1,579

Ordinary income

3,415
9,380

Extraordinary profit
Gain on sale of businesses

512

512

Extraordinary loss
Loss on sale and disposition of property, plant andequipment

920

Loss on impairment of fixed assets

465

Business structure improvement expenses

4,566

Profit before income taxes

5,952
3,940

Income taxes

519

Income taxes deferred

3,593

Loss

4,113
(172)

Loss attributable to non-controlling interests

33

Loss attributable to owners of parent(205)- 58 -

(Translation)

Consolidated Statement of Changes in Net Assets(From April 1, 2020 to March 31, 2021)(Millions of yen)
Shareholders’ equity
Capital stock

Additional paid-in
capitalRetained earnings

Treasury stock, at
cost

Total shareholders’equity19,04760,847(971)

122,923

44,000

Balance at April 1, 2020
Changes during the term
under review
Dividends from surplus(4,326)(4,326)

(205)

(205)

Loss attributable to ownersof parent
Purchases of treasury stock
Disposition of treasury
stock

(17)

(1)

(1)

53

35

Net changes in items otherthan shareholders’ equity
during the term underreview
Net changes during the term
under review

–

(17)

(4,532)51(4,498)

Balance at March 31, 2021

44,00019,02956,315(919)

118,425

Net unrealized
holding
gain/loss onother securities
Balance at April 1, 2020

(218)

Accumulated other comprehensive income
Accumulated
retirement
Loss onTranslation
benefits
deferredadjustments
hedgesliability
adjustments
112(9,029)(7,583)

Total
accumulated
othercomprehensiv
e income

Subscription
rights toshares

Noncontrollinginterests

Total
net assets(16,718)17164

106,440

Changes during the term
under review
Dividends fromsurplus(4,326)

Loss attributable toowners of parent(205)

Purchases of treasury
stock

(1)

Disposition oftreasury stock35

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

3,789

(29)

373

7,183

11,316(3)

10

11,323

Net changes during theterm under review

3,789

(29)

373

7,183

11,316

(3)

10

6,825

Balance at March 31,
2021

3,570

82

(8,655)(399)(5,401)

168

74

113,265- 59 -

(Translation)

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

Scope of consolidation(1) Number of consolidated subsidiaries: 66
Names of major consolidated subsidiaries:
OKI Crosstech Co., Ltd.; OKI Software Co., Ltd.; Oki Data Corporation; OKI
DATA MANUFACTURING (THAILAND) CO., LTD.; Oki Electric Industry(Shenzhen) Co., Ltd.; OKI EUROPE LTD.
(2) Changes in scope of consolidation:
The following companies have been excluded from the scope of consolidation: OKI
Techno-Power Systems Co., Ltd., which merged with Oki Metal-Tech Co., Ltd., aconsolidated subsidiary; ORIGAMI BRASIL TECNOLOGIA E SERVIÇOS EM
AUTOMAÇÃO LTDA., due to transfer of all shares; OKI SYSTEMS (UK) LTD.,
Advanced Wave Systems Co., Ltd., OKI (UK) LTD., OKI ProServe (Thailand) Co.,
Ltd, and A.C.N. 006 075 216 PTY LTD, due to liquidation.
In addition, Oki Metal-Tech Co., Ltd. has changed its company name to OKI
Sympho-Tech Co., Ltd.

2.

Application of equity method(1) Names of affiliated companies to which the equity method is applied:
BANKING CHANNEL SOLUTIONS LIMITED and one other company(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 has no significance on profit or loss andretained earnings.

- 60 -

(Translation)
3.

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 mainly the moving average method.)
Non-marketable securities:
Mainly stated at cost based on the moving average method(ii) Inventories
The Company and its domestic consolidated subsidiaries value inventories as below.
Overseas consolidated subsidiaries primarily apply the lower of cost or fair value.
Products:
Primarily 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:Primarily stated at cost based on the specific identification method.
(Balance sheet values are measured by the method of devaluing the bookprice to reflect declines in profitability.)
Raw materials and supplies:
Primarily 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.)(iii) Derivatives:
Stated at fair value(2) Depreciation and amortization of important assets(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 ofsales in the estimated number of years for sales (3 years). For software for internal use,
the straight-line method, based on the estimated durable years (mainly 5 years), is used.
Overseas consolidated subsidiaries primarily apply the straight-line method.

- 61 -

(Translation)(iii) Lease assets
Lease assets relating to finance lease transactions that do not transfer ownership are
depreciated over the lease contract’s lifetime by the straight-line method, assuming theresidual value is zero.
(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 loss 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 the yearin 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) Hedge accounting methods
Deferred hedging is applied. Allocation treatment is applied for forward exchange
contracts eligible for allocation treatment. Special treatment is applied to interest rate
swaps that meet the requirements for special treatment.
(ii) Means of hedging and hedged item
Forward exchange 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 and long-term debt.
(iii) Hedging policy
Derivative instruments are used to hedge fluctuations of market rates on credits anddebts.

- 62 -

(Translation)(iv) Assessment method of the effectiveness of hedges
To 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 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 theend 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 numberof years (10 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 (10 to 13 years) within the average remaining years of service of
employees.
(ii) Accounting processing of consumption tax, etc.
The tax-exclusion approach is applied for accounting of consumption tax and local
consumption tax.
(iii) Application of consolidated tax payments
Consolidated tax payments are applied.
(iv) Application of deferred tax accounting for the transition from the consolidated taxation
system to the group tax sharing system
As for items regarding the transition to the group tax sharing system introduced in
the “Act Partially Amending the Income Tax Act” (Act No. 8 of 2020) and items revised
on non-consolidated taxation system in connection with the transition to the group tax
sharing system, the Company and consolidated subsidiaries in Japan have not applied
the provisions of Paragraph 44 of the “Guidance on Accounting Standard for Tax EffectAccounting” (ASBJ Guidance No. 28, February 16, 2018) as allowed by the provisionsof Paragraph 3 of the “Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, March 31,2020).
Notes to Changes in Presentation
Application of “Accounting Standard for Disclosure of Accounting Estimates”
The Company has applied the “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, March 31, 2020) to the consolidated financial statements forthe fiscal year under review, and presents note to accounting estimates.

- 63 -

(Translation)
Notes on Accounting Estimates
1. Estimate of recoverability of claims for which litigation is currently pending(1) Amount recognized on the consolidated financial statements for the fiscal year
Allowance for doubtful receivables: ¥11,271 million(2) Information regarding important accounting estimates for the item identified(i) Overview
Oki Banking Systems (Shenzhen) Co., Ltd. (hereinafter “OBSZ”), a consolidated
subsidiary of the Company in China, includes accounts receivable of RMB1,115.463
million (¥18,806 million if converted to Japanese yen based on the exchange rate as ofthe end of the fiscal year under review) from Shenzhen Yihua Computer Industrial Co.,
Ltd. (hereinafter “Yihua Industrial”) in long-term trade receivables. OBSZ filed a request
for arbitration with the South China International Economic and Trade Arbitration
Commission, on October 10, 2015, demanding payment of such accounts receivable andcompensation of damages (Case A). Further, OBSZ filed litigation to commingle
property beyond legal personality with the High People's Court of Guangdong Province
against Shenzhen Yihua Computer Co., Ltd. (“Yihua Computer”), the parent of Yihua
Industrial, and others as defendants, claiming that they are jointly and severally
responsible for payment of the above claims against Yihua Industrial which had been
unpaid, to request protection of property (Case B).
Subsequently, Case A which had been under review was adjudicated by the South
China International Economic and Trade Arbitration Commission on December 16, 2020,
and it ruled that Yihua Industrial pay OBSZ the unpaid amount for merchandise of
RMB1,096.866 million (¥18,493 million if converted to Japanese yen based on theexchange rate as of the end of the fiscal year under review) as well as interest for arrears,
legal costs, and others.
However, Yihua Industrial does not have an ability to pay and, in order for OBSZ
to recover the claims finalized as a result of the arbitration of Case A, it needs to be
recovered from the property of Yihua Computer. It is thus essential for the appeal of
OBSZ to be recognized in Case B. Case B is currently under review and, given that it isexpected to take a considerable amount of time before Yihua Industrial fulfills thearbitration result of Case A, OBSZ has allowance for doubtful receivables recorded fromthe past year.
(ii) Calculation method for the amount recognized on the consolidated financial statements
for the fiscal year and major assumptions to the calculation
For OBSZ, as a result of discounting cash flows that are considered recoverable
when the probability of OBSZ’s appeal being recognized in Case B is taken into accountfor a period that is considered to be required for recovery, RMB668.545 million (¥11,271
million if converted to Japanese yen based on the exchange rate as of the end of the fiscal
year under review) is estimated to be irrecoverable and added to allowance for doubtfulreceivables.
(iii) Impact on the consolidated financial statements for the next fiscal year
There is a possibility that the amount estimated to be irrecoverable will varysignificantly depending on the outcome of the lawsuit of Case B.

- 64 -

(Translation)
2.

Estimate of total cost of construction when the percentage-of-completion method isapplied(1) Amount recognized on the consolidated financial statements for the fiscal year
The aggregate construction revenue to which the percentage-of-completion method isapplied for the fiscal year is ¥48,720 million. Of which, an amount recognized for the
fiscal year in relation to construction projects that were work-in-progress at the end of the
fiscal year is ¥21,223 million.
(2) Information regarding important accounting estimates for the item identified(i) Calculation method for the amount recognized on the consolidated financial statements
for the fiscal year and major assumptions to the calculation
The percentage-of-completion method was applied for work whose outcome fromthe completed portion was deemed definite, based on the reliably estimated aggregate
construction revenue, total cost of construction and an estimate of the degree of progressof construction at the end of the fiscal year. The degree of progress of construction isestimated by the cost proportion method which determines a ratio of construction cost
incurred before the end of the fiscal year to total construction cost as the degree ofprogress of construction.
In addition, a reliably estimated amount for total construction cost is obtained basedon judgment of construction supervisors and the management. For example, we review
the execution budget in a timely and appropriate way and it has been developed bycollecting sufficient and detailed information relating to changes in the work scope basedon customers’ requests.
(ii) Impact on the consolidated financial statements for the next fiscal year
Contract manufacturing and construction for social infrastructure performed by theGroup are highly individualized in nature given they are designed based on instructionsof customers. Accordingly, changes in work scope at the request of a customer,
unexpected defects during the manufacturing process of software, and other factors may
result in a considerable increase in work-hours required for manufacturing. On theother hand, cost to be incurred in the future may be reduced as a result of our own efforts.
If total construction cost changes due to those impacts and other factors, net sales
may change in conjunction with a change in the degree of progress of construction.

3.

Estimate of recoverability of deferred tax assets(1) Amount recognized on the consolidated financial statements for the fiscal year
Deferred tax assets: ¥7,796 million(2) Information regarding important accounting estimates for the item identified(i) Calculation method for the amount recognized on the consolidated financial statements
for the fiscal year and major assumptions to the calculation
The Group evaluates the recoverability of deferred tax assets by taking into accountthe possibility of being able to use deductible temporary difference and part of loss carryforwards in the estimation of future taxable income. We believe deferred tax assets
recognized for the fiscal year are highly recoverable based on the projection of futuretaxable income over a period during which deferred tax assets are deductible.
An estimate of future taxable income used in evaluating the recoverability of- 65 -

(Translation)deferred tax assets is based on the future business plans. In developing the business plans,
we have estimated growth in sales revenue under an assumption that the impact of
COVID-19 will last for a certain period of time in the future. Other major assumptions
include an estimated improvement in operating income margin through cost reforms.
Moreover, the other major assumptions are an expected improvement in the operating
profit margin as a result of cost related reforms, which are expected to reduce
procurement costs, personnel costs, and miscellaneous expenses.
(ii) Impact on the consolidated financial statements for the next fiscal year
The management judges the abovementioned major assumptions reasonable.
However, if actual future taxable income differs from the estimate as a result of
deterioration in the management environment due to the future spread of COVID-19 andother factors, the recoverability of deferred tax assets may be evaluated differently.
Additional Information
Impact of COVID-19
The Group has revised its accounting estimates based on the expectation that the recovery
from the impact of the spread of COVID-19 will be slower than what was assumed in theprevious fiscal year. Therefore, accounting estimates (recoverability of deferred tax assets,
determination of indications of impairment of fixed assets, etc.) are reflected in the accounting
treatment based on the assumption that the impact of COVID-19 will continue for a certain
period of time in the next consolidated fiscal year as in the previous consolidated fiscal year.
However, the impact of the spread of COVID-19 is subject to many uncertain factors.
Accordingly, future results may differ from those assumptions and estimates.
Notes to Consolidated Balance Sheet
1. Assets pledged as collateral for borrowings
Investments in securities
Liabilities collateralized by the abovementioned assets:
Short-term borrowings¥5,660 million

2.

Accumulated depreciation on property, plant and equipment¥161,079 million

3.

Liabilities for guarantee
Guarantee for borrowings by employees

4.

¥500 million¥85 million

Contingent liabilities
OKI Brasil Indústria e Comércio de Produtos e Tecnologia em Automação S.A.
(hereinafter “OKI Brasil”), a consolidated subsidiary of the Company, received an additional
tax assessment notice of ICMS (tax on circulation of goods and services) of BRL90 million(¥1,726 million if converted to Japanese yen based on the exchange rate as of the end of the
fiscal year under review) from the tax authorities of Sao Paulo State on August 20, 2018.
However, OKI Brasil refuses to accept this order, and it has filed a lawsuit.
The Company cannot reasonably estimate the probability of the occurrence of a loss or theamount of a loss at present.

- 66 -

(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 FY2020
Common stock:
87.217 million shares
2.

Matters concerning appropriation of surplus(1) Dividends paid
Resolution

Class ofshares

Source ofdividends

Total
dividends(millions ofyen)

Dividends
per share(yen)

Record date

Effective
date

Ordinary General
Meeting of
Shareholders on
June 26, 2020

Commonstock

Retainedearnings

4,326

50.00

March 31,2020

June 29,2020(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)

Record date

Effective
date

Ordinary General
Meeting of
Shareholders on
June 29, 2021

Commonstock

Retainedearnings

1,731

20.00

March 31,2021

June 30,
2021

Number of shares to be issued upon exercise of stock acquisition rights
Category

Breakdown of stock acquisitionrightsThe Company

FY2016 Stock Acquisition Rights(issued on August 16, 2016)
FY2017 Stock Acquisition Rights(issued on August 15, 2017)
FY2018 Stock Acquisition Rights(issued on August 14, 2018)
FY2019 Stock Acquisition Rights(issued on August 14, 2019)
FY2020 Stock Acquisition Rights(issued on August 18, 2020)

Type of shares to beissued upon exercise ofstock acquisition rights

Number of shares to beissued upon exercise of stockacquisition rights (shares)

Common stock

20,600Common stock

31,500Common stock

42,100Common stock

52,100Common stock

60,500- 67 -

(Translation)
Notes on Financial Instruments
1. Matters concerning the status of financial instruments(1) Policy on financial instruments
The OKI Group mainly uses short-term deposits and highly safe marketable securities
for fund management. Also, it raises its funds primarily through borrowings from financial
institutions and issuance of corporate bonds. The Group uses derivatives to hedge risk as
described below, and does not engage in speculative transactions.
(2) Description of financial instruments, related risks, and risk management system
The Group strives to mitigate its customers’ credit risks associated with notes andaccounts receivable, which are operating receivables, by carrying out customer credit
investigations in accordance with regulations for the management of accounts receivable ofindividual companies.
For borrowings, the Group raises short-term funds mainly for working capital and longterm funds for working capital and capital investment. For borrowings exposed to theinterest rate risk, the Group applies derivative instruments (interest rate swap transactions)to hedge its risk.
Derivative transactions consist of forward foreign exchange contracts, which aim tohedge exchange rate fluctuation risks related to foreign currency-denominated receivables
and payables, and interest rate swap transactions, which aim to hedge interest rate fluctuation
risks related to the payment of borrowings. The assessment of hedge effectiveness forinterest rate swap transactions that satisfy the requirements for special treatment is omitted.
The Group executes and manages derivative transactions in accordance with the OKI
Group’s policy.
(3) Supplemental explanation regarding the disclosure concerning fair value of financial
instruments
The fair value of financial instruments is based on market prices, but if no market prices
are available, their fair value reflects the value reasonably calculated. Because fluctuation
factors are incorporated into the calculation of the said value, it may change if different
prerequisites, etc. are used.

- 68 -

(Translation)2.

Disclosure concerning fair value of financial instruments
As of March 31, 2021 (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)

Fair value(*1)

Difference(1) Cash and deposits

44,84544,845–(2) Notes and accounts receivable

105,371

105,371–(3) Investments in securities

30,27530,2848(4) Long-term trade receivables

22,245
7,696

7,696

–

(5) Notes and accounts payable(56,706)(56,706)–(6) Short-term borrowings (*3)(22,081)(22,081)–(7) Other accrued expenses(21,028)(21,028)–(8) Long-term debt (*3)

(55,890)(56,293)

403

Allowance for doubtful receivables (*2)

(14,549)(40)(40)(9) Derivative transactions–(*1) Those recorded as liabilities are shown in brackets.
(*2) Allowance for doubtful receivables specifically provided for long-term trade receivables is deducted.
(*3) Long-term debt that will be reimbursed within one year (¥16,042 million) is 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 bookvalue. Hence, their fair value is based on the relevant book value.
(3) 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 book value as estimated doubtful 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 bookvalue. 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 is prescribed to be subject tospecial accounting treatment applicable to interest rate swaps (see (9) below). Hence, the fair value of a longterm 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 special accounting treatment applicable to interest rate swaps aretreated in combination with long-term debt as hedged items. Hence, their fair value is included in that of longterm debt.

- 69 -

(Translation)
2.

Financial instruments whose fair value is considered extremely difficult to assess
Unlisted equity securities (¥8,356 million on the consolidated balance sheet) are not included in (3)Investments in securities because they have no market prices and it is deemed extremely difficult to assess their fairvalues.

Notes to Per-share Information
1. Net assets per share:¥1,305.67
2. Loss per share:¥2.38
Other Notes (Notes on Business Combination, etc.)
Business Separation
In June 2019, in order to transfer its financial and retail services businesses to NCR Brasil Ltda.
(hereinafter “NCR Brasil”), a Brazilian subsidiary of NCR Corporation (NCR), OKI BRASIL
INDÚSTRIA E COMÉRCIO DE PRODUTOSE E TECNOLOGIA EM AUTOMAÇÃO S.A. (“OKI
Brasil”), a consolidated subsidiary of the Company, and NCR reached an agreement on a company
split of OKI Brasil and transfer of the shares of the newly established company (ORIGAMI BRASILTECNOLOGIA E SERVIÇOS EM AUTOMAÇÃO LTDA.). All shares of the new company weretransferred on April 9, 2020.
(1) Overview of business separation(i) Name of the company separated to
NCR Brasil Ltda.
(ii) Business separated
Design, development, manufacture, sale and maintenance of automated machines(iii) Major reason for the business separation
OKI Brasil has been implementing fundamental structural reforms aimed at
improving profitability, but the Company has concluded that it will be difficult for OKI
Brasil to independently expand its business in the future in order to improve profitability,
given changes in the business environment.
In addition, the Company has been reviewing its strategies for developing its
overseas Automation Systems business in order to focus on supplying modules to its
partners.
Based on the above, the Company considered further development of OKI Brasil in
the future and determined that it would be most appropriate to transfer the business to
the NCR Group, which has many years of experience in the field and is expected togenerate synergies.
(iv) Business separation date
April 9, 2020(v) Other items regarding outline of transaction including legal formalities
Transfer of shares the proceeds for which are limited to assets including cash(2) Outline of accounting procedures applied(i) Amount of transferred gain/loss(69) million reals
Of which, a loss of 52 million reals was recorded as “Business structure improvement- 70 -

(Translation)
expenses” in the consolidated statement of operations for the previous fiscal year.
(ii) Appropriate book values of assets and liabilities in relation to the business transferred
and their major components
Current assets
120 million reals
Non-current assets
36 million reals
Total assets
157 million reals
Current liabilities(49) million reals
Long-term liabilities(14) million reals
Total liabilities(63) million reals(iii) Accounting processing
A difference between the fair value of assets received as a result of the transfer and an
amount corresponding to shareholders’ equity in relation to the business transferred isrecognized as transferred gain/loss, assuming that investment in each of its financial andretail services businesses transferred were liquidated.
(3) Name of reporting segment in which the business separated was included
It is not included in reporting segments but is classified into ‘Other.’(4) Approximate amount of profit/loss in relation to the business separated that was recorded in
the consolidated statement of operations for the fiscal year
Not applicable.
Other Notes (Notes on loss on impairment of fixed assets)
For the fiscal year under review, the Group recorded an impairment loss of ¥612 million, of
which ¥465 million is presented as "Impairment loss" under extraordinary losses, and ¥146 million
yen is presented included in "Business structure improvement expenses" under extraordinary losses.
Major impairment losses are described below.
Business
Components &Platforms BusinessGroup (Automation
Systems Business)

Purpose of use

Business assets

Type of assets

Amount(millions of yen)

Buildings and structures

265

Machinery, equipment and vehicles

66

Tools, furniture and fixtures

74

Others58

Regarding business assets, the Group basically sets up asset groups based on business segments.
However, if certain business assets (e.g. assets to be disposed of) are considered to independently
create cash flows, they are grouped by asset.
As the business assets of the Automation Systems Business have ceased to be likely to generate
income originally expected, their book values have been reduced to the recoverable values. The
recoverable values have been measured at net sales values based on real estate appraisal and others.

- 71 -

(Translation)

Transcript of Accounting Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
May 18, 2021
To: Board of Directors
Oki Electric Industry Co., Ltd.
PricewaterhouseCoopers Aarata LLC
Tokyo OfficeKensuke Koda,
Engagement Partner, Certified Public Accountant
Takeaki Ishibashi,
Engagement Partner, Certified Public Accountant
Yoshihiro Shiribiki,
Engagement Partner, Certified Public Accountant
Audit opinion
We have audited the consolidated financial statements – the consolidated balance sheet, 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 97th term from April 1, 2020 to March 31, 2021 in accordancewith Article 444 paragraph (4) of the Companies Act.
We concluded that the consolidated financial statements fairly present in all aspects of Oki Electric Industry’s andits subsidiaries’ assets and income or loss in accordance with corporate accounting standards generally accepted inJapan.
Basis for audit opinion
We have conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the “Responsibility of auditors for the audit of theconsolidated financial statements” section of our report. We are independent of the Company and its consolidated
subsidiaries in accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of management, Audit & Supervisory Board Members and the Audit & Supervisory Board 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.
In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements with the assumption of a going concern, and inaccordance with corporate accounting standards generally accepted in Japan, for disclosing, as necessary, mattersrelated to going concern.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the
Directors’ performance of duties within the maintenance and operation of the financial reporting process.
Responsibility of auditors for the audit of the consolidated financial statements
Our responsibilities are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
expresses our opinion on the consolidated financial statements based on our audit from an independent point ofview. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the decisions of users of these consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit process to perform the following:• Identify and assess the risks of material misstatement, whether due to fraud or error, and design and perform
audit procedures responsive to those risks. Selecting audit procedures to be applied is at the discretion of theauditor. Obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• When auditing the consolidated financial statements, obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances in making risk assessments,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

- 72 -

(Translation)• Evaluate the appropriateness of accounting policies used by management and their method of application, as
well as the reasonableness of accounting estimates made by management and the appropriateness of related
notes thereto.
• Conclude on the appropriateness of preparing the consolidated financial statements with the assumption of agoing concern by management, and based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the notes to the consolidated financial statements or, if the notes to the consolidated financial
statements on material uncertainty are inadequate, to express a qualified opinion with exceptions on the
consolidated financial statements. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to continue as agoing concern.
• Evaluate whether the presentation of the consolidated financial statements and notes to the consolidated
financial statements are in accordance with corporate accounting standards generally accepted in Japan, as well
as evaluate the presentation, structure, and content of the consolidated financial statements, including the related
notes thereto, and whether the consolidated financial statements fairly present the underlying transactions andaccounting events.
• Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its
consolidated subsidiaries to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the audit of the consolidated financial statements. We
remain solely responsible for our audit opinion.
We report to the Audit & Supervisory Board Members and the Audit & Supervisory Board regarding, among othermatters, the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit process, and other matters required by auditing
standards.
We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with a statementthat we have complied with relevant ethical requirements in Japan regarding independence, and communicate withthem all relationships and other matters that may reasonably be deemed to bear on our independence, and whereapplicable, related safeguards in order to eliminate or reduce obstruction factors.
Conflict of interest
We or engagement partners have no interests in the Company and its consolidated subsidiaries, which should bestated in compliance with the Certified Public Accountants Act.

- 73 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2021)
Account title(Assets)
Current assets
Cash and deposits

Amount501

Retained earnings carried forward

1,975
63,161
12,690
4,441
9,264
7,242
4
2,323
7,449
7,147
1,185
(9)
145,354
30,809

Accumulated depreciation

23,493Structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Vessels
Accumulated depreciation
VehiclesAccumulated depreciation
Tools, furniture and fixtures

2,121
1,715
11,62010,162
192
47
73
66
38,493

Accumulated depreciation

32,432Land
Construction in progress
Total property, plant and equipment
Intangible assets
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

66

28,478Notes receivable
Accounts receivable, trade
Lease investment assets
Finished goods:
Work in process:Raw materials and supplies:
Advance payments - trade
Prepaid expenses
Short-term loans receivable
Accounts receivable, others
OthersAllowance for doubtful receivables
Total current assets
Non-current assets
Property, plant and equipment
Buildings

Account title(Liabilities)
Current liabilities
Notes payable
Electronically recorded obligations operating
Accounts payable, trade
Short-term borrowings
Current portion of long-term debt
Lease obligations
Accounts payable, others
Other accrued expenses
Income taxes payable
Advances received
Deposits received
Unearned revenue
Provision for product warranties
Provision for directors’ bonuses
Provision for loss on construction
contracts
Provision for contingent loss
Provision for loss on the AntiMonopoly Act
Asset retirement obligations
OthersTotal current liabilities
Long-term liabilities
Long-term debt
Lease obligations
Deferred tax liabilities
Retirement benefits
Provision for product warranties
Provision for loss on business of
subsidiaries and affiliates
Asset retirement obligations
OthersTotal long-term liabilities
Total liabilities(Net Assets)
Shareholders’ equity
Capital stock
Additional paid-in capital
Capital reserve
Other additional paid-in capital
Retained earnings
Other retained earnings

7,316
406
1,457
144
6
6,061
3,864
271
19,530110
10,072
10,18335,51854,955Long-term loans receivable fromsubsidiaries and affiliates

20,230Claims provable in bankruptcy,
rehabilitation and other28

Long-term prepaid expenses

678

Prepaid pension cost
Lease and guarantee deposits
OthersAllowance for doubtful receivables
Total investments and other assets
Total non-current assets
Total assets

10,1162,611
240(11,345)
113,603
143,316
288,671- 74 -(Millions of yen)Amount3
3,188
36,13920,675
16,042
3,489
12,302
7,052
497
3,274
21,309
3
1,128
152
945
79
292
138
3
126,718
39,848
11,825
8,917
7,837
424
326
1,004
1,869
72,053
198,772
44,00021,511
15,0006,511
21,93021,93021,930Treasury stock, at cost

(912)

Total shareholders’ equity

86,530

Valuation, translation adjustments andothersNet unrealized holding gain/loss onother securities
Total valuation, translation
adjustments and others

3,200
3,200

Subscription rights to shares

168

Total net assets
Total liabilities and net assets

89,898288,671(Translation)

Non-Consolidated Statement of Operations(From April 1, 2020 to March 31, 2021)(Millions of yen)Account title

AmountNet sales

216,445

Cost of sales

174,557

Gross profit

41,888Selling, general and administrative expenses

42,836

Operating loss

(948)

Non-operating income
Interest income

272

Dividend income

6,505

Other

705

7,483

Non-operating expenses
Interest expense

1,168

Foreign exchange loss

509

Provision of allowance for doubtful receivables

910

Penalty

(306)

Other

712

Ordinary income

2,995
3,539

Extraordinary profit
Gain on sale of investments in securities

150

Gain on cancellation of lease obligations

48

199

Extraordinary loss
Loss on sale and disposition of property, plant and equipment

699

Loss on impairment of fixed assets

89

Loss on sale of investments in securities

80

Nondeductible write-downs of shares of subsidiaries and affiliates

647

Special retirement benefits

659

Profit before income taxes

2,176
1,561

Income taxes(2,133)

Income taxes deferred

2,436

Profit302
1,258- 75 -

(Translation)

Non-Consolidated Statement of Changes in Net Assets(From April 1, 2020 to March 31, 2021)(Millions of yen)
Shareholders’ equity
Additional paid-in capital
Capitalstock

Balance at April 1,
2020

44,000Retained earnings

Capitalreserve

OthersAdditional
paid-in
capitalAdditional
paid-in capital
Total

15,0006,529

21,529Other retained
earnings
Retained earnings
carried forward

Retainedearnings
Total

Treasurystock, atcost

Shareholders’ equity
Total

(963)

89,56324,99824,998Dividends fromsurplus(4,326)(4,326)(4,326)

Profit

1,258

1,258

1,258

Changes during theterm under review

Purchases oftreasury stock
Disposition oftreasury stock

(17)

(17)

(1)

(1)

53

35

Net changes in
items other thanshareholders’equity during theterm under review
Net changes during
the term underreview
Balance at March
31, 2021

–

–

(17)

(17)

(3,067)(3,067)51(3,033)44,00015,0006,511

21,511

21,93021,930(912)

86,530

Subscription
rights tosharesTotal net
assets171

89,264

Valuation, translation adjustments and others
Unrealized holding
gain/loss on othersecurities
Balance at April 1, 2020

Loss/gain on deferredhedgesTotal valuation,translation adjustments
and others

–

(471)

(471)

Changes during the term underreviewDividends from surplus(4,326)

Profit

1,258

Purchases of treasury stock(1)

Disposition of treasury stock35

Net changes in items otherthan shareholders’ equity
during the term under review

3,671

–

3,671

(3)

3,668

Net changes during the term
under review

3,671

–

3,671

(3)

634

Balance at March 31, 2021

3,200

–

3,200

168

89,898- 76 -

(Translation)

Notes 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, etc.
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 of non-current assets
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- 77 -

(Translation)
method, assuming the residual value is zero.
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 product warranties
To prepare for the expenses caused by free repairs that occur after product sales, theCompany includes a provision for product warranties based on past performance or individual
estimates.
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 amounts of losses forthe following fiscal years are calculated for some of the order backlog as of the end of the fiscal
year under review, which are likely to incur losses and for which the amounts thereof can bereasonably estimated.
Provision for contingent loss
To prepare for losses that may occur in the future, the Company includes a provision forcontingency losses rationally calculated based on individual risks, etc.
Provision for loss on the Anti-Monopoly Act
To prepare for any losses relating to the Anti-Monopoly Act, the estimated amount for thecurrent 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
In order to prepare for a loss on business of subsidiaries and affiliates, the Company
records the amount of expected loss to bear in consideration of the financial position, operating
results, etc. of these companies.

- 78 -

(Translation)
6.

Hedge accounting methods(1) Hedge accounting methods
Deferred hedging is applied. Allocation treatment is applied for forward exchange
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
Forward exchange 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 and long-term debt.
(3) Hedging policy
Derivative instruments are used to hedge fluctuations of market rates on credits anddebts.
(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 the market
fluctuations or the cash flow fluctuations for the means of hedging, during the period fromthe start of hedging to the assessment. The Company then makes a decision based on thechanges 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 from thosein the consolidated financial statements.
(2) Accounting processing of consumption tax, etc.
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.
(4) Application of deferred tax accounting for the transition from the consolidated taxation
system to the group tax sharing system
As for items regarding the transition to the group tax sharing system introduced in the“Act Partially Amending the Income Tax Act” (Act No. 8 of 2020) and items revised on
non-consolidated taxation system in connection with the transition to the group tax sharing
system, the Company has not applied the provisions of Paragraph 44 of the “Guidance on
Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, February 16,2018) as allowed by the provisions of Paragraph 3 of the “Tax Effect Accounting for theTransition from the Consolidated Taxation System to the Group Tax Sharing System”(ASBJ PITF No. 39, March 31, 2020). Accordingly, amounts of deferred tax assets anddeferred tax liabilities are determined in accordance with the provisions of the tax law
before revision.

Notes to Changes in Presentation
Application of “Accounting Standard for Disclosure of Accounting Estimates”- 79 -

(Translation)
The Company has applied the “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, March 31, 2020) to the consolidated financial statements for the
fiscal year under review, and presents note to accounting estimates.
Notes on Accounting Estimates
1. Estimate of recoverability of receivables from consolidated subsidiaries(1) Amount recognized on the non-consolidated financial statements for the fiscal year
Allowance for doubtful receivables¥11,289 million(2) Information regarding important accounting estimates for the item identified(i) Overview
The Company provides OKI HONG KONG LTD. (hereinafter “OHL”), a
consolidated subsidiary which primarily engages in the material procurement andlogistics management businesses in China, with loans in the amounts of US$147 million
and RMB216.5 million (¥19,926 million if converted to Japanese yen based on theexchange rate as of the end of the fiscal year under review) as of the end of the fiscal
year, and they are included in long-term loans receivable from subsidiaries and affiliates.
In addition, OHL has accounts receivable from Oki Electric Industry (Shenzhen) Co.,
Ltd. (hereinafter “OSZ”), which has accounts receivable from Oki Banking Systems(Shenzhen) Co., Ltd. (hereinafter “OBSZ”).
As described in the “Notes to Consolidated Financial Statements, Notes on
Accounting Estimates, 1. Estimate of recoverability of claims for which litigation iscurrently pending”, accounts receivable from Shenzhen Yihua Computer Industrial Co.,
Ltd. (hereinafter “Yihua Industrial”) have been outstanding at OBSZ and, as a result, thepayment of a similar amount from OBSZ to OSZ, and from OSZ to OHL remains unpaid.
In light of such retention status, OHL recorded an allowance for doubtful receivables
against accounts receivable from OSZ in conjunction with an allowance for doubtfulreceivables recorded by OBSZ for accounts receivable from Yihua Industrial. This
resulted in negative net worth at OHL at the end of the fiscal year, giving rise to a serious
issue regarding repayment of the loans provided by the Company.
(ii) Calculation method for the amount recognized on the non-consolidated financial
statements for the fiscal year and major assumptions to the calculation
The Company classifies the loans to OHL into doubtful accounts and recorded anallowance for doubtful receivables for an estimated amount of loss up to an amount bywhich OHL’s liabilities exceed its assets from the previous year, as a result of making
judgment of OHL’s activities in the material procurement and logistics managementbusinesses, management status, and ability to pay comprehensively. The amount of
US$101.968 million (¥11,289 million if converted to Japanese yen based on theexchange rate as of the end of the fiscal year) was recognized at the end of the fiscal year.
(iii) Impact on the non-consolidated financial statements for the next fiscal year
As the amount by which OHL’s liabilities exceed its assets changes in tandem withthe allowance for doubtful receivables recorded by OBSZ for accounts receivable from
Yihua Industrial, the estimated amount of loss may vary significantly subject to the statusof the appeal by OBSZ.

- 80 -

(Translation)
2.

Estimate of total cost of construction when the percentage-of-completion method is applied(1) Amount recognized on the non-consolidated financial statements for the fiscal year
The aggregate construction revenue to which the percentage-of-completion method
was applied for the fiscal year amounted to ¥39,070 million, of which ¥14,584 million
was recognized in relation to construction projects in progress at the end of the fiscal
year.
(2) Information regarding important accounting estimates for the item identified
The calculation method for the amount in (1) is the same as the one described in theNotes to Consolidated Financial Statements, “Notes on Accounting Estimates, 2.
Estimate of total cost of construction when the percentage-of-completion method isapplied.”3.

Estimate of recoverability of deferred tax assets(1) Amount recognized on the non-consolidated financial statements for the fiscal year
Deferred tax assets¥2,363 million(2) Information regarding important accounting estimates for the item identified
The calculation method for the amount in (1) is the same as the one described in theNotes to Consolidated Financial Statements, “Notes on Accounting Estimates, 3.
Estimate of recoverability of deferred tax assets.”

Notes to Non-consolidated Balance Sheet
1. Assets provided as collateral
Investments in securities
Liabilities collateralized by the abovementioned assets
Short-term borrowings
2.

¥5,660 million¥500 million

Guarantee liabilities:
The Company provides guarantees for bank borrowings made by employees, andsubsidiaries and affiliates as shown below.
OKI EUROPE LTD.

¥2,756 million(GBP18 million, EUR132 thousand)
OKI BRASIL INDÚSTRIA E COMÉRCIO DE PRODUTOS¥2,340 million
E TECNOLOGIA EM AUTOMAÇÃO LTDA.
(BRL122.036 million)
OKI INDIA PRIVATE LIMITED¥1,118 million(INR740.837 million)¥999 million
Oki Printed Circuits Co., Ltd.
Oki Data Manufacturing (Thailand) Co., Ltd.
¥608 million($5.5 million)
OKI Crosstech Co., Ltd.
¥577 million
Four other entities:¥868 million
Total:¥9,270 million- 81 -

(Translation)
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
Net 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:- 82 -¥16,727 million¥1,161 million¥34,401 million¥67 million¥14,462 million¥50,054 million¥8,848 million

653 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
Loss carry forwards
Nondeductible retirement benefits
Allowance for doubtful receivables
Adjustments of losses on transfers among consolidated subsidiaries
Nondeductible accrued bonuses
Nondeductible write-downs of inventories
Balance of trust property with retirement benefits
Provision for product warranties
Bad debts expenses
Asset retirement obligations
OthersSubtotal deferred tax assets
Valuation allowance
Total deferred tax assets¥12,553 million¥8,899 million¥4,017 million¥3,477 million¥3,411 million¥1,195 million¥786 million¥770 million¥469 million¥354 million¥350 million¥2,293 million¥38,574 million¥(36,211) million¥2,363 million

Deferred tax liabilities
Gain on valuation of investment securities
Prepaid pension cost
Nondeductible unrealized gain on contribution of securities to thepension trust
Net unrealized holding gain/loss on other securities
OthersTotal deferred tax liabilities¥(1,328) million¥(164) million¥(11,280) million

Net deferred tax assets¥(8,917) million- 83 -¥(5,723) million¥(2,108) million¥(1,957) million

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

Subsidiary

Name of company, etc.

OKI Crosstech Co.,Ltd.

Location

Chuo-ku,Tokyo

Votingright ratio

Relationship withrelated party

Description oftransactions

Transaction
amount(mil. yen)Account item

Endingbalance(mil. yen)Equipment work,
designing, construction
and maintenance of
telecommunication,
firefighting and otherfacilities, maintenance,¥2,001 million
operations andtechnical support for
ICT equipment andsystems, and sales ofrelated equipment andsupplies(Direct)
100%

Supply products, etc.,
purchase of services

Borrowings of
funds

–

Deposits
received

8,202(Direct)100%

Production ofsoftware on a contract
basis, etc.

Purchase ofservices

14,520Accounts
payable,
trade

4,214

(Direct)
100%

Purchase of products,
etc., concurrent
assumption of office

Borrowings of
funds

–

Deposits
received

5,916

Short-term
loans
receivable

2,811

Long-term
loans
receivable
fromsubsidiaries
and affiliates

304

6,553

Investments
in andadvances tosubsidiaries
and affiliates

–

5,830

Long-term
loans
receivable
fromsubsidiaries
and affiliates–

15,784Long-term
loans
receivable
fromsubsidiaries
and affiliates

19,926

CapitalBusiness

Subsidiary

OKI Software Co.,Ltd.

Warabi,
Saitama Pref.

¥400 million

Development, design,
manufacture andmaintenance ofsoftware andembedded software,system building
services, SI/solution
services, consulting,outsourcing and salesof informationequipment

Subsidiary

Oki Data
Corporation

Minato-ku,
Tokyo¥19,000
millionDevelopment,
manufacture and salesof printer equipment
and other related
solutions

Subsidiary

Subsidiary

Subsidiary

Oki Printed Circuits
Co., Ltd.

OKI
BRASILINDÚSTRIA E COMÉRCIODE PRODUTOS ETECNOLOGIA EM
AUTOMAÇÃOLTDA.

Oki Hong Kong,
Ltd.

Joetsu,Niigata Pref.

BrazilHong Kong¥480 million

BRL744.622
thousand

US$10.292
thousand

Manufacture and salesof printed circuitboards and electronicequipment

Design, manufacture,sales and maintenanceof automationequipment

Holdings company,
material procurement(Direct)
100%

Purchase of products
and services, lendingof funds

Lending offunds

Underwritingof capitalincrease(Direct)
100%

Lending of funds tosupply products, etc.
Repayment ofloans
receivable(Direct)
100%

3,231

Supply products, etc.,
lending of funds,
guarantee forborrowings

Lending offunds

Notes:
1. The transaction amount excludes consumption tax, etc., while the ending balance includes consumption tax, etc.
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
and conducting negotiation.
(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. An allowance for doubtful accounts of ¥11,289 million has been recorded for loans to OKI HONG KONG LTD.
Furthermore, an allowance for doubtful accounts of ¥768 million has been provisioned this fiscal year.
4. The Company increased the capital of OKI BRASIL INDÚSTRIA E COMÉRCIO DE PRODUTOS E TECNOLOGIAEM AUTOMAÇÃO LTDA. which repaid the loans to us by using the proceeds from the capital increase.
Nondeductible write-downs of shares of subsidiaries and affiliates were recorded for the portion of the capital increase- 84 -

(Translation)
which was not used to repay the loans, ¥647 million. It caused the balance of shares of subsidiaries and affiliates tobe zero. In addition, when looking at the portion which was used to repay the loans, ¥5,830 million (BRL298.423
million), as individual transactions, nondeductible write-downs of shares of subsidiaries and affiliates were recorded
for shares of subsidiaries and affiliates acquired through the capital increase, and reversal of allowance for doubtfulreceivables which had been recognized was recorded to long-term loans receivable from subsidiaries and affiliates
which decreased as a result of the repayment. However, when looking at it as a package of transactions, it isconsidered similar to a debt-equity swap in nature. A debt-equity swap is accounted for as the acquisition cost ofshares of subsidiaries and affiliates acquired through the capital increase being equal to the assessed value ofcorresponding long-term loans receivable from subsidiaries and affiliates (an amount as obtained by subtracting
allowance for doubtful receivables from the book values of the claims), which is zero. Given that the transaction
extinguished the loans to OKI Brasil, the Company reduced both long-term loans receivable from subsidiaries andaffiliates and allowance for doubtful receivables by ¥5,947 million (BRL298.423 million). There is no impact on
profit except for foreign exchange loss due to foreign currency conversions at the time of the capital increase andrepayment.

Notes to Per-share Information
1. Net assets per share:¥1,036.59
2. Earnings per share:¥14.54
Notes to Significant Subsequent Event
Absorption-type Merger of Consolidated Subsidiary
The Company resolved at its Board of Directors’ meeting held on October 29, 2020 tomerge with Oki Data Corporation with the Company as the surviving company and Oki Data
Corporation as the absorbed company, and merged Oki Data Corporation on April 1, 2021.
An outline of the merger is as follows:1.

Outline of the transaction(1) Purpose of the merger
The Group aims to resolve social issues through the key Japanese concepts of “Monozukuri” and “Koto-zukuri (creation of solutions and services)” over the medium to long term.
The “Medium-Term Business Plan 2022” is positioned as building the foundations for growth,through which we plan to restructure the business portfolio and strengthen the foundation for“Mono-zukuri (manufacturing).” Meanwhile, the market for the Printers business operated
by Oki Data Corporation has been on a shrinking trend with a shift to paperless operations
and other developments, and the trend is accelerating due to the global spread of COVID-19.
The merger of Oki Data Corporation into the Company is meant to respond to changes
in the market environment, as part of the measures under the Group’s Medium-Term Business
Plan. We aim to grow our Components & Platforms business by strengthening our productdevelopment capabilities through a shift in development resources of the Printers businessand utilizing the global sales bases held by Oki Data Corporation, production bases andproduction control functions as the Group.
(2) Method of the merger
The Company merged Oki Data Corporation with the Company as the surviving
company.
(3) Date of the merger
April 1, 2021

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(Translation)(4) Shares issued upon merger and their allotment
There will be no allotment of shares or other properties as a result of the merger.
(5) Details of assets and liabilities assumed
The Company assumed the assets and liabilities, as well as contractual status and otherrights and obligations (including joint and several guarantees in relation to the Company’s
borrowings and corporate debts) of Oki Data Corporation pursuant to the merger agreement.
(6) Outline of the surviving company

2.

Corporate nameOki Electric Industry Co., Ltd.

Amount of capital stock¥44,000 million

Business

There will be no changes in the business as a result of the merger.

Outline of accounting procedures applied
The transaction was accounted for as transactions under common control in accordancewith the Accounting Standard for Business Combinations (ASBJ Statement No. 21, January 16,2019) and the Guidance on Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures (ASBJ Guidance No. 10, January 16, 2019).

Explanatory notes on Company to Which Consolidated Dividend Regulations Apply
The Company will be a company to which consolidated dividend regulations apply after
the final day of the fiscal year under review becomes the final day of the final fiscal year.

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(Translation)

Transcript of Accounting Auditors’ Report

Independent Auditors’ Report
May 18, 2021
To: Board of Directors
Oki Electric Industry Co., Ltd.
PricewaterhouseCoopers Aarata LLC
Tokyo OfficeKensuke Koda,
Engagement Partner, Certified Public Accountant
Takeaki Ishibashi,
Engagement Partner, Certified Public Accountant
Yoshihiro Shiribiki,
Engagement Partner, Certified Public Accountant
Audit opinion
We have audited the non-consolidated financial statements—the non-consolidated balance sheet, 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 (“Financial Statements, etc.”) of Oki ElectricIndustry Co., Ltd. for the 97th term from April 1, 2020 to March 31, 2021 in accordance with Article 436, paragraph(2), item (i) of the Companies Act.
We concluded that the Financial Statements, etc. fairly present in all aspects of Oki Electric Industry’s assets andincome or loss in accordance with corporate accounting standards generally accepted in Japan.
Basis for audit opinion
We have conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the “Responsibility of auditor for the audit of the
Financial Statements, etc.” section of our report. We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Responsibility of management, Audit & Supervisory Board Members and the Audit & Supervisory Board for
preparing Financial Statements, etc.
Oki Electric Industry’s management is responsible for preparing and presenting fairly the Financial Statements,
etc. in accordance with corporate accounting standards generally accepted in Japan. This includes designing andoperating internal control that the management determines necessary to prepare and fairly present the Financial
Statements, etc. that are without material misstatement due to fraud or errors.
In preparing the Financial Statements, etc., management is responsible for assessing whether it is appropriate toprepare the Financial Statements, etc. with the assumption of a going concern, and in accordance with corporate
accounting standards generally accepted in Japan, for disclosing, as necessary, matters related to going concern.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the
Directors’ performance of duties within the maintenance and operation of the financial reporting process.
Responsibility of auditors for the audit of the Financial Statements, etc.
Our responsibilities are to obtain reasonable assurance about whether the Financial Statements, etc. as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that expresses ouropinion on the Financial Statements, etc. based on our audit from an independent point of view. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the decisions of users of the Financial Statements, etc.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit process to perform the following:• Identify and assess the risks of material misstatement, whether due to fraud or error, and design and perform
audit procedures responsive to those risks. Selecting audit procedures to be applied is at the discretion of theauditor. Obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• When auditing the Financial Statements, etc., obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances in making risk assessments, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
• Evaluate the appropriateness of accounting policies used by management and their method of application, as
well as the reasonableness of accounting estimates made by management and the appropriateness of related
notes thereto.
• Conclude on the appropriateness of preparing the Financial Statements, etc. with the assumption of a going
concern by management, and based on the audit evidence obtained, whether a material uncertainty exists related- 87 -

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to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to thenotes to the Financial Statements, etc. or, if the notes to the Financial Statements, etc. on material uncertainty
are inadequate, to express a qualified opinion with exceptions on the Financial Statements, etc. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate whether the presentation of the Financial Statements, etc. and notes thereto are in accordance withcorporate accounting standards generally accepted in Japan, as well as evaluate the presentation, structure, andcontent of the Financial Statements, etc., including the related notes thereto, and whether the Financial
Statements, etc. fairly present the underlying transactions and accounting events.
We report to the Audit & Supervisory Board Members and the Audit & Supervisory Board regarding, among othermatters, the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit process, and other matters required by auditing
standards.
We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with a statementthat we have complied with relevant ethical requirements in Japan regarding independence, and communicate withthem all relationships and other matters that may reasonably be deemed to bear on our independence, and whereapplicable, related safeguards in order to eliminate or reduce obstruction factors.
Conflict of interest
We or engagement partners have no interests in the Company, which should be stated in compliance with theCertified Public Accountants Act.

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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 97th fiscal year from April 1,2020 to March 31, 2021, 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 as needed.
(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 good communications
and exchanged information with Directors, Audit & Supervisory Board Members and others and received 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 for ensuring
compliance with laws and the Company’s Articles of Incorporation in the performance of duties by Directors, describedin the Business Report, and for ensuring appropriateness of duties of corporate group consisting of joint stock company
and its subsidiaries. With respect to the internal controls over financial reporting, we have received reports on theinternal control evaluation and status of the audits from the Directors, etc. and the PricewaterhouseCoopers Aarata LLC,
and asked them for explanations as necessary.
(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 of duties” (listed ineach item of Article 131 of the Corporate Calculation Regulations) have been established in accordance 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 supplementaryschedules, financial statements for the said fiscal year (balance sheet, statement of operations, statement of changes inshareholders’ equity, and notes to non-consolidated financial statements), their supplementary schedules and consolidated
financial statements (consolidated balance sheet, consolidated statement of operations, consolidated statement of changes inshareholders’ 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 procedures areproper. With respect to the details described in the Business Report and the Directors’ performance of their internal
control duties, we have found no issues to be pointed out. Furthermore, regarding internal controls over financial
reporting, as of the creation of this audit report, we have received reports from Directors, etc. andPricewaterhouseCoopers Aarata LLC to the effect that there are no significant deficiencies that should be disclosed.
(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, PricewaterhouseCoopers
Aarata 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, PricewaterhouseCoopers
Aarata LLC, are proper.
May 21, 2021
The Audit & Supervisory Board, Oki Electric Industry Co., Ltd.
Sei Yano, Standing Audit & Supervisory Board Member
Toshiya Hatakeyama, Standing Audit & Supervisory Board Member
Hideo Shiwa, Outside Audit & Supervisory Board Member
Ryuichi Makino, Outside Audit & Supervisory Board Member- 89 -