(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 6, 2022

NOTICE OF 98TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 98TH
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 limit the number of seats available,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 (Tuesday), 2022 (JST).
Yours faithfully,
Shinya Kamagami,
Representative Director
Oki Electric Industry Co., Ltd.
1-7-12 Toranomon, Minato-ku, Tokyo-1-

(Translation)
1.

Date and Time:

Wednesday, June 29, 2022, from 10:00 a.m. (Reception will open at 9:30
a.m.)
2. 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 98th fiscal year (from April 1, 2021 to March 31, 2022)
2. Non-consolidated Financial Statements for the 98th fiscal year (from April 1, 2021
to March 31, 2022)
Items to be resolved:
Agenda Item 1:
Agenda Item 2:
Agenda Item 3:

Appropriation of Surplus
Amendment to the Articles of Incorporation
Election of Nine (9) 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 (Tuesday), 2022 (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 (Tuesday), 2022 (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 thevote 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 lastvote you cast to be the effective one.
* The Company has provided the Notice of 98th 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 theConsolidated and Non-consolidated Financial Statements will be announced on the website.

-2-

(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.)

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

-3-

(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 (FY2022), 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¥30 per share
Total dividends¥2,597,989,950

3.

Effective date of dividend of surplus
June 30, 2022

(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.
OKI will reinforce its management foundations by applying retained earnings to investments in research &development and facilities that are critical to future growth. OKI will determine the amount of dividends, attaching toppriority to the continuation of the stable distribution of profits to shareholders and taking its business results and future
management measures, etc. comprehensively into consideration.

-4-

(Translation)
Agenda Item 2:

Amendment to the Articles of Incorporation

1.

Reasons for the amendment
Since the revised provisions provided for in the proviso to Article 1 of the Supplementary
Provisions of the Act Partially Amending the Companies Act (Act No. 70 of 2019) are to be
enforced on September 1, 2022, the Company proposes to make the following changes to its
Articles of Incorporation in preparation for the introduction of the system for providing
informational materials for the general meeting of shareholders in electronic format.
(1)
Article 15, paragraph 1 in “Proposed amendments” below will stipulate that the Company
shall take measures for providing information that constitutes the content of reference
documents for the general meeting of shareholders, etc. in electronic format.
(2)
Article 15, paragraph 2 in “Proposed amendments” below will establish the provision tolimit the scope of the items to be stated in the paper-based documents to be delivered toshareholders who requested the delivery of paper-based documents.
(3)
Since the provisions for Internet Disclosure and Deemed Provision of Reference Documents
for the General Meeting of Shareholders, Etc. (Article 15 of the current Articles ofIncorporation) will no longer be required, they will be deleted.
(4)
Accompanying the aforementioned establishment and deletion of provisions, supplementaryprovisions regarding the effective date, etc. will be established.
2.

Details of the amendment
The details of the amendment are as follows.
(Underlined portions indicate amendments.)

Current Articles of Incorporation
Article 15 (Internet Disclosure and Deemed Provision ofReference Documents for the General Meeting of
Shareholders, Etc.)
When the Company convenes a general meeting ofshareholders, if it discloses information that is to be statedor presented in the reference documents for the general
meeting of shareholders, business report, non-consolidated
financial statements and consolidated financial statements
through the Internet in accordance with the provisions
prescribed by the Ministry of Justice Order, it may bedeemed that the Company has provided this information toshareholders.

Proposed amendments(Deleted)

Article 15 (Measures, etc. for Providing Information inElectronic Format)
1. When the Company convenes a general meeting ofshareholders, it shall take measures for providing
information that constitutes the content of reference
documents for the general meeting of shareholders, etc. inelectronic format.
2. Among items for which the measures for providing
information in electronic format will be taken, theCompany may exclude all or some of those items
stipulated by the Ministry of Justice Order from statementsin the paper-based documents to be delivered toshareholders who requested the delivery of paper-based
documents by the record date of voting rights.

(Newly established)-5-

(Translation)
Current Articles of Incorporation

Proposed amendments(Supplementary Provisions)
1. The amendment of Article 15 of the Articles ofIncorporation shall be effective from September 1, 2022,
the date of enforcement provided for in the proviso to
Article 1 of the Supplementary Provisions of the Act
Partially Amending the Companies Act (Act No. 70 of2019) (hereinafter referred to as the “Date of
Enforcement”).
2. Notwithstanding the provision of the preceding
paragraph, Article 15 (Internet Disclosure and Deemed
Provision of Reference Documents for the General
Meeting of Shareholders, Etc.) shall remain effective
regarding any general meeting of shareholders held on adate within six months from the Date of Enforcement.
3. These Supplementary Provisions shall be deleted on thedate when six months have elapsed from the Date of
Enforcement or three months have elapsed from the date of
the general meeting of shareholders in the preceding
paragraph, whichever is later.

(Newly established)-6-

(Translation)
Agenda Item 3: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 four (4) members, all of whom are Outside Directors.
CandidatenumberName

Current position/
responsibility in the
Company

Number of attendanceat meetings of theBoard of Directors

Numberof years
in office1

Shinya Kamagami

Re-election
InsideRepresentative Director
and Chief Executive
Officer100%(14 out of 14 times)

8 years

2

Takahiro Mori

Newlynominated
InsidePresident andChief Operating Officer–%(– out of – times)– years

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

6 years

Masashi Fuse

Re-election
InsideSenior Vice President andMember of the Board
Head of Corporate GroupInternal Control
Administrator
Chief Information Officer

100%(14 out of 14 times)

3 years

Masatoshi Saito

Re-election
InsideSenior Vice President andMember of the Board
Head of Components &Platforms Business Group100%(11 out of 11 times)

1 year6

Shigeru Asaba

Re-election
OutsideIndependent

Independent Outside
Director100%(14 out of 14 times)

5 years

7

Tamotsu Saito

Re-election
OutsideIndependent

Independent Outside
Director100%(14 out of 14 times)

4 years

Izumi Kawashima

Re-election
OutsideIndependent
Woman

Independent Outside
Director100%(14 out of 14 times)

4 years

Makoto Kigawa

Re-election
OutsideIndependent

Independent Outside
Director100%(14 out of 14 times)

3 years

3

4

5

8

9

Masayuki Hoshi-7-

(Translation)
CandidatenumberName(Date of birth)

ShinyaKamagami(February 9, 1959)[Re-election]
1

Number of years in
office as Director:
8 years(as of the conclusion ofthis general meeting ofshareholders)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

Apr. 2011

Executive Officer

Apr. 2012

Senior Vice President

Jun. 2014

Senior Vice President and Member of the Board

Apr. 2016

President, Representative Director

Apr. 2022

Representative Director and Chief Executive Officer(incumbent)

Reason for the selection of candidate for Director
Based on his past experience serving in business divisions and headquarters
divisions, Mr. Shinya Kamagami has the knowledge and experience to decide
important matters and supervise the business execution of Directors andExecutive Officers in an appropriate, fair, and efficient manner. Mr.
Kamagami assumed the office of Director in June 2014, and has been
Number of attendance at engaging in management of the Company as President and Representative
meetings of the Board Director since April 2016, and as Representative Director and Chief
Executive Officer since April 2022. He is nominated as a candidate forof Directors(the year under review): Director as it is expected that, as a member of the Board of Directors, he willcontinue to share information with other Directors and strengthen the
14 out of 14 times
decision-making function.
(100%)
Number of Oki shares
held:
Common stock:
15,000 shares-8-

(Translation)
CandidatenumberName(Date of birth)

Brief personal profile, position and responsibility in the Company andsignificant concurrent positions
Apr. 1988

Joined Oki Electric Industry Co., Ltd.

Nov. 2006

General Manager of Partner Business Dept, Domestic Sales
Division, Oki Data Corporation

Oct. 2017

Director, Deputy Head of Product Development and Business
Division, and Head of Office Printing Department, Oki Data
Corporation

Apr. 2019

Managing Executive Officer, Head of Product Development
and Business Division, Oki Data Corporation

Oct. 2019

Managing Executive Officer, Head of Product Development
and Business Division, and Head of Domestic Sales Division,
Oki Data Corporation

Number of years in
Apr. 2020
office as Director:–(as of the conclusion of Apr. 2021
this general meeting ofshareholders)

Representative Director and President, Oki Data Corporationand Executive Officer, Oki Electric Industry Co., Ltd.

Takahiro Mori

(August 29, 1964)[Newlynominated]
2

Executive Officer, Head of Business Collaboration Division,Components & Platforms Business Group, Oki ElectricIndustry Co., Ltd.

Apr. 2022
President and Chief Operating Officer (incumbent)
Number of attendance atmeetings of the Board Reason for the selection of candidate for Director
Mr. Takahiro Mori has knowledge and experience necessary for decidingof Directors(the year under review): important matters for the Company and supervising job execution by
Directors and Executive Officers in an appropriate, fair and efficient manner,– out of – times
based on his past experience in marketing divisions and the management of a(–%)
subsidiary, etc. Mr. Mori assumed the office of Executive Officer at the
Number of Oki shares Company and the office of President at Oki Data Corporation in April 2020.
He has taken charge of the Company’s management as President and Chief
held:
Operating Officer since April 2022. He is nominated as a candidate for
Common stock:
Director as it is expected that he will share information with other Directors
400 sharesand strengthen the decision-making function.

-9-(Translation)
CandidatenumberName(Date of birth)

Masayuki Hoshi(March 9, 1960)[Re-election]
3

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.

Apr. 2016

Chief Risk Management Officer, Head of Corporate PlanningGroup

Jun. 2016

Senior Vice President and Member of the Board

Number of years in
Apr. 2017
office as Director:
6 years(as of the conclusion of Jun. 2018
this general meeting of Apr. 2019
shareholders)

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

Number of attendance at Apr. 2021 Chief Human Resources Officer (incumbent)
meetings of the Board Reason for the selection of candidate for Directorof Directors
Mr. Masayuki Hoshi has abundant experience gained as Managing Executive(the year under review): Officer at the Mizuho Financial Group, which the candidate comes from, and14 out of 14 times
has a deep understanding of governance and perspective related to the global(100%)
business on which the Company focuses. He also has the knowledge andNumber of Oki shares
held:
Common stock:
6,900 shares

experience to decide important matters and supervise the business executionof Directors and Executive Officers in an appropriate, fair, and efficientmanner. Mr. Hoshi assumed the office of Director in June 2016, and has
been playing a core role in management by serving as Senior Executive Vice
President and Representative Director since April 2019. He is nominated asa 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 thedecision-making function.

- 10 -

(Translation)
CandidatenumberName(Date of birth)

Masashi Fuse

(February 23, 1961)

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.

Jun. 2015

Outside Director, SAXA Holdings, Inc.

Apr. 2016

Executive Officer, Oki Electric Industry Co., Ltd.

Apr. 2018

Senior Executive Officer and Head of Corporate Management
Group

Jun. 2019

Senior Executive Officer and Member of the Board

Apr. 2020
Senior Vice President and Member of the Board and Head of
Number of years in
Corporate Group (incumbent), Internal Control Administrator
officeasDirector:[Re-election](incumbent)
3
years
4
(as of the conclusion of Apr. 2022
Chief Information Officer (incumbent)
this general meeting of
Reason for the selection of candidate for Director
shareholders)
Based on his past experience serving in headquarters divisions, accounting &Number of attendance at control division, and overseas offices, Mr. Masashi Fuse has the knowledge
meetings of the Board and experience to decide important matters and supervise the businessexecution of Directors and Executive Officers in an appropriate, fair, andof Directors(the year under review): efficient manner. Mr. Fuse assumed the office of Director in June 2019, andhas been playing a core role in corporate management as Senior Vice
14 out of 14 times
President and Head of Corporate Group since April 2020. He is nominated(100%)
as a candidate for Director as it is expected that he will share information
Number of Oki shares with other Directors and strengthen the decision-making function.
held:
Common stock:
4,100 shares- 11 -

(Translation)
CandidatenumberName(Date of birth)

Masatoshi Saito(December 20, 1963)[Re-election]
5

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.

Apr. 2016

Head of Corporate Planning Division, Corporate PlanningGroup, Oki Electric Industry Co., Ltd.

Apr. 2017

Executive Officer

Apr. 2018

Senior Executive Officer, Head of Corporate Planning Groupand Chief Information Officer

Number of years in
Apr. 2020
Senior Vice President and Vice President of Components &office as Director:
Platforms Business Group
1 year(as of the conclusion of Apr. 2021
Head of Components & Platforms Business Group (incumbent)
this general meeting ofJun. 2021
Senior Vice President and Member of the Board (incumbent)
shareholders)
Reason for the selection of candidate for Director
Number of attendance at Based on his past experience serving in the Corporate Planning Division andmeetings of the Board business divisions, Mr. Masatoshi Saito has the knowledge and experience toof Directors
decide important matters and supervise the business execution of Directors(the year under review): and Executive Officers in an appropriate, fair, and efficient manner. Mr.
11 out of 11 times
Saito has been engaging in core businesses of the Company as Senior Vice
(100%)
President and Member of the Board, Head of Components & Platforms
Business Group since 2021. He is nominated as a candidate for Director as
Number of Oki shares it is expected that he will share information with other Directors andheld:strengthen the decision-making function.
Common stock:3,900 shares- 12 -

(Translation)
CandidatenumberName(Date of birth)

Shigeru Asaba(May 21, 1961)

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 OKI Group.

Number of years in[Outside]
office as Director:[Re-election]
5 years[Independent]
(as
of
the
conclusion of
6
this general meeting of
Reason for the selection of candidate for Outside Director and expectedshareholders)role, etc.
Mr. Shigeru Asaba is currently a professor of Waseda Business School
Number of attendance at (Graduate School of Business and Finance). Mr. Asaba has academic
meetings of the Board expertise in business in general and high ethical standards through hisof Directors
specialist knowledge in the fields of industrial organizations, corporate(the year under review): strategy, competitive strategy, ownership structures, corporate governance14 out of 14 times
and corporate conduct. In addition, he has a high degree of independence(100%)
from the management team, experience as an outside director of othercompanies, and serves as the chairman of the Personnel Affairs andNumber of Oki shares Compensation Advisory Committee. Based on the above, and particularly
held:on his academic expertise in all aspects of business, including marketing andCommon stock:innovation, Mr. Asaba is nominated as a candidate for Outside Director as it
900 sharesis expected that he will contribute to the deepening of deliberations on thenext medium-term management plan 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 forthe aforementioned reason.

- 13 -

(Translation)
CandidatenumberName(Date of birth)Tamotsu Saito(July 13, 1952)
Number of years in[Outside]
office as Director:[Re-election]
4 years[Independent](as of the conclusion of
7
this general meeting ofshareholders)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)

Jun. 2018

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

Apr. 2020

Director, IHI Corporation

Jun. 2020

Advisor (incumbent)

Jun. 2021

Outside Director, Furukawa Electric Co., Ltd. (incumbent)(Significant concurrent positions)
Advisor, IHI Corporation, Outside Director, JAPAN POST INSURANCE
Co., Ltd., Outside Director, Furukawa Electric Co., Ltd.
He will assume the office of Outside Director of KAJIMA CORPORATION
in June 2022.
Number of attendance at *The volume of transactions between the above companies and OKI Group
meetings of the Board accounts for less than 1% of each company’s net sales.
of Directors(the year under review):
Reason for the selection of candidate for Outside Director and expected
14 out of 14 timesrole, etc.
(100%)As a long-time representative director of IHI Corporation and a business
Number of Oki shares leader not only in the industry but also in Japan, Mr. Tamotsu Saito has awealth of management experience and high ethical standards in theheld:manufacturing industry. In addition, he has a high degree of independence
Common stock:from the management team, experience as an outside director of other
3,700 sharescompanies, and serves as the member of the Personnel Affairs andCompensation Advisory Committee. Based on the above, and particularly
on his manufacturing, development and global management experience, he isnominated as a candidate for Outside Director as it is expected that he willcontribute to the deepening of deliberations on the next medium-term
management plan at the Board of Directors meetings.

- 14 -

(Translation)
CandidatenumberName(Date of birth)Izumi Kawashima

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

Sep. 2004

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

Jun. 2016

Outside Director, Oki Electric Cable Co., Ltd.

Jun. 2018

Outside Director, Oki Electric Industry Co., Ltd. (incumbent)(June 25, 1955)

Reason for the selection of candidate for Outside Director and expected
role, etc.
[Outside]
Number of years in
Ms. Izumi Kawashima is currently a professor of the Faculty of Social[Re-election]
office as Director:
Sciences at Waseda University. She specializes in commercial law (mainly[Independent]
4 years
the Companies Act) and the Financial Instruments and Exchange Act, and[Woman](as of the conclusion of particularly has academic specialist knowledge relating to the Companies Act
8
this general meeting of and corporate governance as well as high ethical standards. In addition, sheshareholders)has a high degree of independence from the management team, and has
devoted her energies to the display of the Board of Directors functions as the
Number of attendance at chairperson of the Company’s Board of Directors since June 2021. Ms.
meetings of the Board Kawashima also has experience as an outside director of other companies,
of Directors
and serves as a member of the Personnel Affairs and Compensation Advisory(the year under review): Committee. Based on the above, and particularly on her knowledge as a
14 out of 14 times
legal expert in the Companies Act and the Financial Instruments and(100%)
Exchange Act, etc., she is nominated as a candidate for Outside Director as it
is expected that she will contribute to the deepening of deliberations on the
Number of Oki shares next medium-term management plan at the Board of Directors meetings.
held:
Although she has never had experience of being involved in corporate
Common stock:
management other than as an outside officer, the Company determined that
700 shares
she will be able to carry out the duties of Outside Director appropriately forthe aforementioned reason.

- 15 -

(Translation)
CandidatenumberName(Date of birth)

Makoto Kigawa(December 31, 1949)
Number of years in[Outside]
office as Director:[Re-election]
3 years[Independent](as of the conclusion of
9this general meeting ofshareholders)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.

Nov. 2005

Representative Managing Director, Yamato Holdings, Co., Ltd.

Apr. 2011

Representative Director, Executive Officer and President

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),
retired as Director,
Special Advisor, Yamato Holdings Co., Ltd. (incumbent)

Apr. 2020

Outside Corporate Auditor, The Higo Bank, Ltd.

Jun. 2021

Outside Director, The Higo Bank, Ltd. (incumbent)(Significant concurrent positions)
Special Advisor, Yamato Holdings Co., Ltd., Outside Director, KomatsuLtd., Outside Director, Seven Bank, Ltd., Outside Director, The Higo Bank,Ltd.
*The volume of transactions between the above companies and OKI Group
Number of attendance at accounts for less than 1% of each company’s net sales.
meetings of the Boardof Directors(the year under review): Reason for the selection of candidate for Outside Director and expected
14 out of 14 timesrole, etc.
(100%)
After serving as an officer at a financial institution, Mr. Makoto Kigawa
served as Representative Director of Yamato Holdings Co., Ltd. for more
Number of Oki shares than ten years, and has extensive management experience and high ethicalheld:standards, mainly in the logistics industry, including the transformation ofCommon stock:business models using ICT. In addition, he has a high degree of
500 shares
independence from the management team, experience as an outside directorof other companies, and serves as the member of the Personnel Affairs andCompensation Advisory Committee. Based on the above, and particularly
on his supply chain management and risk management experience, he isnominated as a candidate for Outside Director as it is expected that he willcontribute to the deepening of deliberations on the next medium-term
management plan at the Board of Directors meetings.

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
compliance, and after this case came to light, he made proposals, etc. in order to protect customers and prevent- 16 -

(Translation)

4.

5.

6.

7.

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 page 33 to 34 of 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 34 in 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. Please refer to the Company’s website for its independence criteria.
(https://www.oki.com/en/ir/corporate/governance/officers.html)- 17 -

(Translation)(Reference) Table of Members of Board of Directors, Personnel Affairs and Compensation Advisory Committee,
and Audit & Supervisory Board Following the Approval of Agenda Item 3 (Plan)
Personnel Affairs
and Compensation
Advisory Committee

Audit & Supervisory
Board

Director
Audit & Supervisory Board Member

Name

Board of Directors

Shinya Kamagami〇

Representative Director
and Chief Executive
Officer

Takahiro Mori〇

President,
Representative Director
and Chief Operating
Officer

Masayuki Hoshi〇

Senior Executive Vice
President

Masashi Fuse〇

Senior Vice President
and Member of theBoard

Masatoshi Saito〇

Senior Vice President
and Member of the
Board

Shigeru Asaba〇◎
Chairperson

Independent Outside
Director

Tamotsu Saito〇〇

Independent Outside
Director

Izumi Kawashima◎
Chairperson〇

Independent Outside
Director

Makoto Kigawa〇〇

Independent Outside
Director

Toshiya Hatakeyama△◎
Chairperson

Standing Audit &Supervisory Board
MemberToshiyuki 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
Audit & Supervisory
Board Member〇 Member◎ Chairperson△ Persons who are members and have a right and obligation to attend relevant meetings- 18 -

Position(Translation)(Reference)

Skills Matrix for the Board of Directors Following the Approval of Agenda Item 3 (Plan)

The Company thinks that skills its Board of Directors needs as a whole for performing its roles and fulfilling its
responsibilities become satisfied when respective Directors display their abilities by making the most of knowledge andexperience expected from them according to the Company’s management philosophy, vision and management plans, etc.
The Company expects the display of skills in the following fields in particular.
・ “Corporate management,” such as management strategy, business management and business strategy, for increasing
the earning power of businesses and strengthening the governance structure・ “Marketing” for promoting the development of eco-systems in collaboration with customers
・ “Technology & innovation” for developing new businesses toward the goals of further business development andgrowth・ “Human resources management” for securing human resources necessary for sustainable growth, cultivating
abilities, giving employees job satisfaction, and enabling them to display abilities
・ “Global” viewpoints for globalizing operations indispensable for securing growth opportunities
・ “Finance & accounting” and “Legal affairs & risk management” that act as the basis for making decisions related to
management and business activities
・ “Manufacture & SCM” that act as important management bases in strengthening manufacturing and enhancing
competitiveness comprising the Company’s strengths

InsideCorporate
management

Human
Technology resources
Marketing& innovation management

Shinya Kamagami

●

●

●

Takahiro Mori

●

●

●

Masashi Fuse●

OutsideTamotsu Saito

●
〇

●

●

●

●

●

●

〇

〇

〇

〇

〇

〇

Izumi Kawashima
Makoto Kigawa

●

〇

〇

〇
〇

●

●
●

Shigeru Asaba

Legal affairs& riskManufacmanage- ture & SCM
ment●

Masayuki Hoshi

Masatoshi Saito

GlobalFinance &accounting

〇

〇

〇

〇
〇

〇

〇

The above list does not represent all knowledge and experience respective individuals have.
● Required skills for Directors that have been acquired as a result of business execution experience at the OKI Group(up to five skills)〇 Outside experience and specialist knowledge the Company expects in particular- 19 -

(Translation)(Attachment)

Business Report(From April 1, 2021 to March 31, 2022)
1.

Status of the OKI Group(1) Operating progress and results
Business environment
With regard to the COVID-19, there’s no end in sight to the instability where restrictions are
imposed again in some regions due to yet another wave of the pandemic although normalizationof economic activities in the Western countries continues thanks to the successful vaccination
program. The prospect remains uncertain due to the severe disruption of supply chain such as
shortage of semiconductors and other parts and soaring raw material prices, as well as increasing
geopolitical risks.
Under such circumstances, OKI aims at perfecting the foundation to achieve sustainablegrowth through the on-going structural reforms, and 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 the infectious diseases) based on the OKI Group’smateriality.
Operating results for the fiscal year under review
For the business conditions in the fiscal year, net sales were ¥352.1 billion, a year-on-year
decrease of 10.4% or ¥40.8 billion. Sales to FA/semiconductor manufacturing equipment, whichhave been on a recovery trend since the end of the previous fiscal year, sustained its healthy growthand benefited from the foreign exchange earnings. However, production delay continues, with awider range of parts becoming unavailable due to prolonging parts supply disruption. With theadditional impact from the major projects in the previous term, the overall sales fell significantly.
For the profit side, operating income was ¥5.9 billion, a year-on-year decrease of ¥3.0 billion,
primarily due to the supply chain crisis mainly of the parts shortages and sharp price rise. The
decrease in the fixed costs thanks to the structural reforms and the ¥3.2 billion reversal of theallowance for doubtful accounts on the China bound ATM claims fell short of compensating thedecrease. The production delay caused by the parts shortages is deemed to have contributed to aloss of approximately ¥30.0 billion in net sales and approximately ¥8.3 billion in the operating
income. Ordinary income decreased by ¥1.1 billion year-on-year to ¥7.7 billion due mainly tothe improvement in the foreign exchange gain or loss included in the non-operating section.
In addition to these, an extraordinary profit of ¥1.1 billion from asset sales, an extraordinary
loss of ¥2.8 billion from structural reform costs such as integrating printer factories in China andrestructuring European and US sales companies, and corporate tax of ¥2.1 billion were recorded.
As a result, profit attributable to owners of parent was ¥2.1 billion, a year-on-year increase of ¥2.9
billion.
Looking at non-consolidated business performance, net sales were ¥222.8 billion, operating
loss was ¥13.0 billion, ordinary loss was ¥3.3 billion and loss was ¥3.8 billion.

- 20 -

(Translation)
The following provides a summary of each segment.
- Net Sales by Segments(Unit: Billions of yen)
FY2020 (reference:previous fiscal
year)

FY2021 (Fiscal
year under review)

Changes (amount)

Changes (%)

Solution
Systems

190.8

162.6

(28.2)(14.7)

Components& Platforms

201.5

189.0

(12.5)

(6.2)

0.6

0.4

(0.2)

(33.5)

392.9

352.1

(40.8)(10.4)

Segment

Others
Total

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.
3.
Although Oki Micro Engineering Co., Ltd. and its subsidiaries used to be included in “Others,” they havebeen moved to under the “Components & Platforms” from fiscal 2021 for the purpose of improving
earnings by sharing resources and improving efficiency with subsidiaries in the Components & Platforms
business.
4.
Projects of Oki Data Corporation that provided printer products to external customers via the Company
have also been moved from the “Solution Systems” to the “Components & Platforms” from fiscal 2021 as
the Company absorbed Oki Data Corporation into its Components & Platforms business by merger.
5.
In the fiscal year under review (fiscal 2021), the Company changed its policy for accounting the cost of
configuration or the cost of customization in cloud computing contracts. Figures after their retroactive
revisions in accordance with the accounting policy change are reflected on related figures for the previous
fiscal year (fiscal 2020).
6.
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020) and related implementation guidance from the start of fiscal 2021, and the figures forfiscal 2021 are the figures after the application of the standard.

- 21 -

(Translation)
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.
We consider the promotion of “AI edge x local 5G,” a combination of 5G/local 5G that entered service in
2020, 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.
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 ¥162.6 billion, a year-on-year decrease of 14.7% or ¥28.2 billion,
and operating income came to ¥9.5 billion, a year-on-year decrease of ¥6.8 billion.
Unstable parts supply continued to cause adverse impact on production and sales of overallbusiness in addition to the negative repercussions and cut-off error of major projects in theprevious fiscal year, resulting in the fall in income mainly in the Enterprise Solutions businessand the Public Solutions business. Effects from the parts supply shortages extends to devices
such as servers and network devices as well as the network terminals and PBX in theEnterprise Solutions business and the DX Platforms business.

- 22 -

(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.
The Company announced a contactless-type hygienic touch panel (TM) in 2020 as a man-machine interfaceof new-normal social infrastructure service terminals, and launched the sale of hygienic touch panel in 2021
by mounting them on ATMs. We will continue our efforts in providing safety and security in new life styles
for our customers.
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 ¥189.0 billion, a year-on-year decrease of 6.2% or ¥12.5 billion. In
the Mono-zukuri Platform business field, while sales to FA/semiconductor manufacturing
equipment sustained the healthy growth, the business suffered the parts shortages and its
effects on production and sales, resulting in a decrease in sales. For the profit side, however,operating income was ¥3.5 billion, a year-on-year improvement of ¥4.5 billion, thanks to the
reduction of fixed costs by the restructuring of information devices and the ¥3.2 billion
reversal of the allowance for doubtful accounts on the China bound ATM claims, which offset
the decrease in sales.
Net sales of the others business segment came to ¥0.4 billion, a year-on-year decreaseof 33.5% or ¥0.2 billion and operating income came to ¥0.3 billion, a year-on-year
improvement of ¥0.4 billion.

- 23 -

(Translation)(2) Capital expenditure and research and development expenses
Capital expenditures and research and development expenses for the fiscal year underreview equaled ¥17.9 billion and ¥11.5 billion, respectively.
Investment by segment were as follows.
(Unit: Billions of yen)Segment

Solution Systems

Amount of capital expenditure(Amount of research anddevelopment expenses)
5.5

Major capital expenditure(3.3)

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 for the own
brand and business partners, and capital
expenditures on upgrading aged manufacturing
facilities and increasing production capabilities tostrengthen comprehensive manufacturing service

Components &Platforms

7.3

(6.2)

Others/Companywide (shared)

5.1

(2.1)

Total

17.9

(11.5)

Notes:
1. “Solution Systems” includes the acquisition of the H1 building at Honjo Plant (¥3.6 billion).
2. “Others/Company-wide (shared)” includes the acquisition of the land of Warabi System Center (¥4.2 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 capital investment funds necessary
for business activities without any problem. However, for more stable financing, we
renewed the commitment line agreement to prepare for contingencies such as COVID-19 andthe supply chain crisis including the parts shortages and soaring raw material costs.
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.

- 24 -

(Translation)(4) Future challenges
Guided by its 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 aims to be “the enterprisegroup that helps create a safe and convenient infrastructure for customers and society as awhole 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)” by 2031 when OKI celebrates its 150th
anniversary.
Global issues, such as climate change and spread of COVID-19, are pressing us to takeaction to achieve sustainable society without delay. Amidst this, the Company issued the key
message “Delivering OK! to your life” in the Medium-Term Business Plan 2022 and defined
the materiality (described later), and has been steadily working on building the foundation toachieve sustainable growth in addition to implementing structural reforms.
However, regrettably we had to reduce the production being under constraint imposedby parts shortages, especially semiconductors, and logistics chaos while COVID-19
pandemic weighs heavily on the economic outlook. Impact from such changes in thebusiness environment has been immense. The Company expects it will not achieve thetarget values stated in the Medium-Term Business Plan in fiscal 2022, the final year of theplan. Taking the current circumstances into consideration, the Company intends to work
company-wide to prioritize measures against supply chain crisis with utmost urgency in fiscal
2022.
Once this is achieved, the Company will continue to strengthen the manufacturing
infrastructure to reinforce OKI’s technical advantages in the areas of AI edge technology,
manufacturing, etc. and to execute structural reform including a reform of costs for thefunctions shared in the Group.
In line with this, towards formulation of the next medium-term business plan, we haveidentified the issues to be addressed as “steer towards growth,” and “respond toenvironmental changes.” We recognize that solving these issues will require the creation oforganization cross-cutting technologies, products and solutions. Specific strategies andmeasures, etc., will be formulated during fiscal 2022.
[Materiality and Sustainability]
OKI is proud of its record of supporting social infrastructure and contributing to society
based on its corporate philosophy over many years. In the Medium-Term Business Plan
2022, we identified materiality required to maintain such corporate stance for coming years
and achieve the “Delivering OK! to your life” concept. This materiality was identified byextracting tasks, based on both the goals of OKI’s business and expectation and demands ofthe stakeholders and society, and by prioritizing these tasks from the viewpoints of creatingsocial values and reinforcing the management platform.
Associated environmental, social, and governance (ESG) themes were also set on itemsin the materiality as shown in the table, and specific approaches will be taken. The activities
are promoted by the President and Chief Operating Office as the owner, and members of the- 25 -

(Translation)
Sustainability Promotion Working Group (WG) that is composed of representatives of theassociated corporate divisions, business groups, and sales groups. The objective of the WG
is to make everyone in the OKI Group recognize sustainability as “my own issue,” and the
WG held internal on-line forums, etc. in fiscal 2021. The Company intends to continue
disclosing the progress of activities accurately, having dialogue with the stakeholders, andproviding feedback on the activities.

- 26 -

(Translation)
OKI Group’s Materiality & ESG Initiatives
Materiality

Creating Social ValueE
Products and Services that
Help Solve Social Issues
Social issues: aging
infrastructure, natural
disasters, transportation
issues, environmental
issues, labor shortages,
labor productivity,
infectious diseases

S

G

Strengthening Management Infrastructure

E

Business Activities that
Meet Stakeholder
Expectations
Business activities built on
integrity (governance,internal controls,
disclosure), response to
climate change, HR
management
Strengthen the
Infrastructure that
Support Mono-zukuri

SG

ESG theme• Creating productsthat contribute tosolvingenvironmental
issues• Supporting acircular economy

Initiatives in FY2020-2022• Expansion of environmental
contribution products• Reduction of life cycle CO2• Creation of circular economy
projects• Efforts toward social issues• Creating products
indicated in growth strategy
that contribute to• Internal cultural reforms aimed
resolving social
at innovation
issues• Development and securement• Promoting valueof human resources who will
creation in corporate
support Mono-zukuri andactivities
growth area businesses• Positioning ESG at• Promotion and evaluation of
the core of
initiatives based on materiality
management• CO2 reduction at business sites,• Mitigation of andstrengthening of introduction ofadaptation to
renewable energy
climate change,• Strengthening of chemical
pollution
substance management throughprevention, andstandardization of operations
resource recycling• Improvement of recycling rate
• Promotion of Virtual One
Factory• Strengthening of quality• Strengthening of
initiatives
Mono-zukuri
infrastructure• Realization of smart work-life• Strengthening of • Promotion of diversity andhuman rights andinclusionlabor initiatives• Strengthening of occupational
health and safety, healthmanagement initiatives• Strengthening of• Steady improvements based on
corporateboard effectiveness evaluations
governance• Accuracy improvement and• Internal
entrenchment of risk
controls/Riskmanagement
management• Disclosures based on TCFD
• Accurate
framework
information• Reliable disclosures regarding
disclosure andmateriality initiatives
strengthening of• Strengthening of dialogue inengagement
IR/SR, etc.
(dialogue)- 27 -

(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.
95th year(FY2018)

96th year(FY2019)98th year(Fiscal year underreview, FY2021)

97th year(FY2020)

Net sales

441.5

billion yen

457.2

billion yen

392.9

billion yen

352.1

billion yen

Profit attributableto owners of parent

8,405

million yen

14,086 million yen(819)

million yen

2,065

million yen

Basic earnings per
share

97.16

yen

162.80yen(9.47)

yen

23.85

yen

Total assets

365.5

billion yen

372.5

billion yen

371.5

billion yen

369.2

billion yen

Net assets

100.2

billion yen

106.4

billion yen

111.6

billion yen

107.6

billion yen

Net assets per
share

1,155.28

yen

1,227.42

yen

1,286.41

yen

1,240.62

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 accounting policies have been updated for configuration and customization costs in cloud computing
agreements in the 98th fiscal year (fiscal 2021); therefore, the associated values in the 97th fiscal year (fiscal
2020) have retrospectively been applied corrections.
3. The Company has applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March
31, 2020) and related implementation guidance from the beginning of the 98th fiscal year (fiscal 2021), andfigures for the 98th fiscal year are figures after application of the accounting standard.

(6) Status of major subsidiaries(i) Status of major subsidiariesName
OKI Crosstech Co., Ltd.

CapitalCompany’s
voting rightratio (%)

Major business

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 Circuit Technology Co.,Ltd.

480 million yen

100

Development, design, manufactureand sales of printed circuit boards,
electronic equipment and electronicparts

OKI Software Co., Ltd.

400 million yen

100

Development and operation of
telecommunications system software

4,304 million yen

100

Manufacturer and sales of electricalwire, electronic equipment parts,
metal products and synthetic resinmaterial processed goods

400 million yen

100

Development, design, manufacturer,
sales and maintenance of informationand communications devices,
industrial electronic devices, medical
electronic equipment and otherelectronic devices as well as electronicparts

Oki Electric Cable Co., Ltd.

OKI Nextech Co., Ltd.

- 28 -

(Translation)

Name

CapitalCompany’s
voting rightratio (%)

Major business

Oki Data Manufacturing(Thailand) Co., Ltd.

420 million baht

100

Manufacturing of printers, etc.

Oki Europe Ltd.

141 million euro

100

Sales of printers, etc.

(ii)
-

-

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

- 29 -

(Translation)(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 Circuit Technology Co., Ltd.

Head office

Tsuruoka (Yamagata)

OKI Software Co., Ltd.

Head office

Warabi, (Saitama)

Oki Electric Cable Co., Ltd.

Head office

Kawasaki (Kanagawa)

OKI Nextech Co., Ltd.

Head office

Tokorozawa (Saitama)

Oki Data Manufacturing(Thailand) Co., Ltd.

Head office

Oki Europe Ltd.

Head office

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

Segment

OKI Group

Oki Electric Industry

Solution Systems

6,703

2,436

Components & Platforms

6,982

1,668

Others509－

Company-wide (shared)

656

656

14,850

4,760

Total

(ii)

Employees of Oki Electric Industry
Number of employees

4,760 (increased by 365 from the end of theprevious fiscal year)- 30 -

Average age

Average years ofservice

Average annual
wage (yen)

44.7

20.7

7,403,656

(Translation)(9) Major creditors
Major creditors of the OKI Group are as follows:(Unit: Billions of yen)
Creditor

Loan balance

Mizuho Bank, Ltd.

25.3

Sumitomo Mitsui Banking Corporation

18.0

Mizuho Trust & Banking Co., Ltd.

4.8

The Norinchukin Bank

3.3

The Hachijuni Bank, Ltd.

3.1

(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, the positions of Chief Executive Officer(CEO) and Chief Operating Officer (COO) have been established since April 2022.
The new system is designed to further reinforce the management force and speed up
the decision-making process, where the CEO has the ultimate responsibility for the
management strategies of the whole Group and the COO is responsible for the
execution of the operations. The Company also works on the “enhancement ofmanagement fairness and transparency” by nominating Outside Directors as well as
setting up a voluntary committee concerned with personnel affairs and compensation,
so as to ensure 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.
During the fiscal year under review, as stated on pages 40 to 41, the Company
was operated by nine Directors, including four Outside Directors (including one female- 31 -

(Translation)
Director); five Audit & Supervisory Board Members, including three Outside Audit &Supervisory Board Members; and 13 Executive Officers not serving concurrently as
Directors. 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 and presidents, 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 theshareholders holding one-third or more of votes of the shareholders entitled to vote atsuch shareholders meeting are present.

- 32 -

(Translation)(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, basedon the skills matrix on page 19, and includes four Independent Outside Directors(including one female Director) to improve the fairness and transparency ofmanagement, thinking that the roughly equal numbers of internal Executive Directors
and highly independent Outside Directors create an appropriate balance.
The Board of Directors is chaired by a Director who is mutually appointed, but
was chaired by an Outside Director 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 46. 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.

- 33 -

(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 four members, all of whom are Outside
Directors. The Chairperson of the Committee is appointed through a resolution at a
meeting of the Board of Directors and the post was held by an Outside Director in thefiscal year under review. The Committee held 13 meetings in the fiscal year underreview.
Deliberations in fiscal 2021 have been mainly on skill matrix of the Board of
Directors, the system implementation with Chief Executive Officer (CEO) and Chief
Operating Officer (COO), and appointment criteria and assessment process of the
President and COO, and nomination of the new President and COO.

- 34 -

(Translation)(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
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
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, 2022)(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-takeover- 35 -

(Translation)measures, M&A or third-party allocation of shares.
(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 ofstocks(Stock)Total amountrecorded in
the balance
sheet(Unit: Billionsof yen)98th year(Fiscal year
under
review,
FY2021)94th year(FY2017)95th year(FY2018)

96th year(FY2019)

Unlisted stock

76

75

66

59

52

Stocks other than unlisted
stock

46

38

27

25

26

Total

122

113

93

84

78

Unlisted stock

5.4

6.3

6.3

6.3

6.2

Stocks other than unlisted
stock

37.2

33.8

25.4

29.2

25.3

Total

42.5

40.2

31.7

35.5

31.5

42.5

40.2
31.7

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

96th year(FY2019)

Total amount recorded in the balance sheet(Unit: Billions of yen)

35.5

97th year(FY2020)97th year(FY2020)

31.5

98th year(Fiscal year under review, FY2021)

Number of stocks (Stock)(11) Other significant events of the OKI GroupOki Banking Systems (Shenzhen) Co., Ltd. (hereinafter referred to as “OBSZ”), a
subsidiary of the Company, has demanded Shenzhen Yihua Computer Industrial Co., Ltd.
(hereinafter referred to as “Yihua Industrial”) to pay RMB1, 115,463 thousand (approx. ¥21.5
billion if converted to Japanese yen based on the exchange rate as of the end of the fiscal year
under review), which includes the proceeds from sale of ATM, and damages. On December
16, 2020, the South China International Economic and Trade Arbitration Commission
ordered Yihua Industrial to pay OBSZ RMB1,096,866 thousand (approx. ¥21.1 billion if
converted to Japanese yen based on the exchange rate as of the end of the fiscal year underreview) for the unpaid proceeds from product sale, interest for arrears, legal fees, etc. With
the order, arbitration for the case requested by OBSZ became final and conclusive.
In parallel with the arbitration request, OBSZ has filed a lawsuit against Shenzhen
Yihua Computer Co., Ltd. (hereinafter referred to as “Yihua Computer”), the parent companyof Yihua Industrial, and other parties, seeking joint and collective liability, and made anapplication for asset protection in the Guangzhou Higher People’s Court. The High
People’s Court of Guangdong Province sentenced Yihua Computer and affiliates to take the- 36 -

(Translation)collective liability for the payment on December 23, 2021; however, Yihua Computer andaffiliates lodged an appeal to the Supreme People’s Court on January 5, 2022. The case iscurrently being tried. The OKI Group is making every effort to collect the full amountawarded.

- 37 -

(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 617,937 shares of treasury stock)(3)

Number of shareholders:
67,841(4)

Major shareholders (Top 10)
Number of shares
held (shares)

Percentage of shares
held (%)

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

14,871,700

17.17

Custody Bank of Japan, Ltd. (trust account)

5,125,500

5.92

Oki Denki Group Employees’ Shareholdings Committee

2,103,461

2.43

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

1,772,000

2.05

Mizuho Bank, Ltd.

1,419,648

1.64

Meiji Yasuda Life Insurance Company

1,400,097

1.62

BNYMSANV AS AGENT/CLIENTS LUX UCITS NON
TREATY 1

1,283,400

1.48State Street Bank West Client-Treaty 505234

1,220,393

1.41

JP Morgan Chase Bank 385781

1,041,048

1.20

JUNIPER

1,022,790

1.18

Name of shareholder

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

- 38 -

(Translation)
3.

Equity Warrants(1) Equity warrants granted to the Company’s officers as consideration for theirperformance of duties(i) Number of equity warrants
1,047(ii) Type and number of shares subject to equity warrants
104,700 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

207

5

August 15, 2018 to August 14, 2043

217

5

August 15, 2019 to August 14, 2044

229

5

August 19, 2020 to August 18, 20452425(2) Equity warrants issued to employees in consideration of performance during the fiscal
year under review
No notes since no equity warrant was issued in this fiscal year.

- 39 -

(Translation)
4.

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

Position
President,
Representative
Director

Shinya Kamagami

Supervision

X

Senior Executive
Vice President,
Representative
Director

Masayuki Hoshi

X

Chief Compliance Officer
Chief Financial Officer
Chief Human Resource Officer

Executive Vice
President andMember of the Board

Masashi Tsuboi

Head of Solution Systems Business GroupX

Senior Vice President
and Member of the
Board

Masashi FuseX

Head of Corporate GroupInternal Control Administrator

Senior Vice President
and Member of theBoard

Masatoshi Saito

Head of Components & Platforms Business GroupX

Director

Shigeru Asaba

Outside Director, Nippon Beet Sugar ManufacturingCo., Ltd.

Director

Tamotsu Saito

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

Director

Izumi Kawashima

Director

Name

Status or main duties

Makoto Kigawa

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

Standing Audit & Supervisory
Board Member

Toshiya
Hatakeyama

Standing Audit & Supervisory
Board Member

Toshiyuki Yokota

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.

Audit & Supervisory Board
MemberYoshihiro Tsuda

Outside Standing Audit & Supervisory Board
Member, Tribeck Inc.
Outside Audit & Supervisory Board Member,
PRONEXUS Inc.

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, Ryuichi Makino, and Yoshihiro Tsuda are Outside Audit& Supervisory Board Members.
4. Directors Shigeru Asaba, Tamotsu Saito, Izumi Kawashima, and Makoto Kigawa and Audit & Supervisory
Board Members Hideo Shiwa, Ryuichi Makino, and Yoshihiro Tsuda have been reported as independent- 40 -

(Translation)

5.

6.

7.
8.

officers to Tokyo Stock Exchange.
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.
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 Members Ryuichi Makino and Yoshihiro Tsuda are certified public accountants,
and have extensive knowledge in finance and accounting.
Executive officers as of March 31, 2022 are as follows (excluding those who concurrently serve as Directors).
Mr. Takahiro Mori assumed the President and COO on April 1, 2022.
Position

Name

Principal duty

Senior Vice President

Toru Miyazawa

Head of Marketing & Sales Group

Senior Vice President

Teiji Teramoto

In charge of Special Missions, Deputy Head ofComponents & Platforms Business Group and Deputy
Head of Marketing & Sales 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

Senior Executive Officer

Hiroshi Tomizawa

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

Executive Officer

Hajime Maruo

Deputy Head of Marketing & Sales Group and Head ofMarketing & Sales Division-2, Marketing & Sales 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

Head of Business Collaboration Division, Components &Platforms Business Group

Executive Officer

Hiroshi Nishimura

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

Executive Officer

Tetsuya Takimoto

Deputy Head of Marketing & Sales Group and Head ofMarketing & Sales Division-1, Marketing & Sales Group

Executive Officer

Yoichi Kato

Head of TOKKI Systems Division, Solution Systems
Business Group

Executive Officer

Yuhiko Fujiwara

Chief Innovation Officer, Chief Technology Officer- 41 -

(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 next page. 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 ¥400.0 billion for net sales, ¥12.0
billion for operating income, and ¥92.7 billion for working capital. In the actual
results, ¥352.1 billion was recorded for net sales, ¥5.9 billion for operating income, and¥87.3 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 1.9%.
As for how to determine the policy on determining individual compensation, etc.
for Directors, as described on page 34* 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- 42 -

(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 13 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.
Type
Basic
compensation

Content of compensation

Fixed
compensation

Monetary
compensation

Annualincentivecompensation
Performancelinked
compensation

Medium- tolong-term
incentivecompensation(ii)

Nonmonetarycompensation

When serving as Executive Officer concurrently,
monetary compensation shall be determined andpaid monthly while being individually tailored tothe position, followed by duties.
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 theordinary general meeting of shareholders was eleven (including one outside director).

- 43 -

(Translation)
Separately from the monetary compensation, at the 92nd ordinary general
meeting of shareholders held on June 24, 2016 and the 97th ordinary general meetingof shareholders held on June 29, 2021, it was resolved that the compensation-type stock
option for Directors excluding outside directors would be ¥100 million or less per year.
The number of Directors at the end of the ordinary general meetings of shareholders
was five (excluding outside director), respectively.
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

Commissioned person

Reason for thecommission of theauthority

Members of the Personnel
Affairs and Compensation
Qualitative evaluation To secure transparency
Advisory Committee
for 30% of annualof the process and(Directors Shigeru Asaba,
incentive
objectivity of
Tamotsu Saito, Izumi
compensation
evaluation
Kawashima, and Makoto
Kigawa)Director concurrently
Qualitative evaluation To focus on aggressive
Executive
serving as the President and for 30% of annual
goal-setting for each
Director other
Executive Officer (Director
incentive
task assigned to thethan the above
Shinya Kamagami)
compensation
personThe posts of Director concurrently serving as the Chief Executive Officer (CEO) and the Chief
Operating Officer (COO) have newly been established from fiscal 2022. The same conditions forcommissioned person and commissioned authorities as the Director concurrently serving as the
President and Executive Officer are set for these posts. The reason for the authority commission to the
Directors is to secure the transparency of the process and the objectivity of decision-making.
Director
concurrently
serving as the
President andExecutive Officer

Note:Content of thecommissioned
authority- 44 -

(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¥234 million¥198 million¥36 million
6－(excluding Outside
Directors)
Audit &
Supervisory Board
Members¥46 million¥46 million－－
3(excluding Outside
Audit &
Supervisory Board
Members)
Outside officers
Outside Directors¥53 million¥53 million––
4
Outside Audit &Supervisory¥24 million¥24 million––
3
Board Members
Notes:
1.
The medium- to long-term incentive compensation is non-monetary compensation, etc. Its
content is stated on page 43.
2.
The numbers of Directors (excluding Outside Directors) and Audit & Supervisory Board Members(excluding Outside Audit & Supervisory Board Members) as of the end of the fiscal year underreview are different from the number shown above, and the above numbers include those who
retired at the conclusion of the 97th Ordinary General Meeting of Shareholders held on June 29,2021.

(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,
Outside Director of JAPAN POST INSURANCE Co., Ltd. and Outside Director of
Furukawa Electric Co., Ltd. He will also assume the office of Outside Director of
KAJIMA CORPORATION in June 2022. The volume of transactions between thecompanies and the Company accounts for less than 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, The Higo Bank, Ltd. The volume of transactions between thecompanies and the Company accounts for less than 1% of the OKI Group’s net sales
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 Director of Seven Bank,
Ltd., there are no business relationships between the companies and the Company.

- 45 -

(Translation)
Audit & Supervisory Board Member Hideo Shiwa serves as External Director(Audit and Supervisory Committee Member) of OUTSOURCING Inc. The volumeof transactions between that company and the Company accounts for less than 1% of
the OKI Group’s net sales and accounts for less than 1% of that company’s net sales.
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.
Audit & Supervisory Board Member Yoshihiro Tsuda serves as Outside Audit &Supervisory Board Member of PRONEXUS Inc. The volume of transactions between
that company and the Company accounts for less than 1% of the OKI Group’s net sales
and accounts for less than 1% of that company’s net sales. Although he serves as
Outside Standing Audit & Supervisory Board Member of Tribeck Inc., there are nobusiness relationships between the company and the OKI Group.
(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
Member14 (14)100%

17 (17)100%

Ryuichi Makino,
Audit &
Supervisory Board
Member14 (14)100%

17 (17)

100%

Yoshihiro Tsuda
Audit &
Supervisory Board
Member11 (11)100%

11 (11)

100%

Note:

The number of meetings for Audit & Supervisory Board Member Yoshihiro Tsuda represents the numberof meetings held since he took office in June 2021.

- 46 -

(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 led discussions by the Board of Directors as its chairperson, andprovided advice and made proposals for the appropriateness and propernessof decision making by the Board of Directors. She also contributed tostrengthening compliance by providing a good example to managerial
personnel through her leadership and enhancing the management fairness
and transparency as a member of the Personnel Affairs and Compensation
Advisory Committee. She also contributes to the improvement of theCompany’s corporate value by actively giving advice and making proposals
to supervise improvements to the efficiency of operations of the Board of
Directors and the development plan of successors such as the President, forwhich she is expected to play an active role, based on her knowledge as alegal expert in the Companies Act, the Financial Instruments and ExchangeAct, 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 concerning accounting audit on companies
centered on manufacturers as a certified public accountant to make statements
aimed at achieving sustainable growth and establishing high-quality corporate
governance systems for the Company.

Yoshihiro Tsuda
Audit & Supervisory Board

He audited the business execution of Directors, and leveraged his extensive
experience and knowledge concerning accounting audit on companies- 47 -

(Translation)
Memberoperating globally 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

200

47

253

–

Consolidated
subsidiaries

110

–

82

–

Total

310

47

335

–

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. and Oki Europe Ltd. haveundergone 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)Not applicable.
(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 the Management
Committee and meetings of the Board of Directors in order to understand important
decision-making processes and the status of business operations, as well as toinspect 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 has issued a video message via the intranet tostress the importance of compliance to all companies in the OKI Group.
(c) The Company held group training such as training sessions for compliancemanagers, in which some 310 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.
(d) In the fiscal year under review, the Compliance Committee held meetings, where
it summarized activities in the previous fiscal year, formulated education plans, andreviewed the status of implementation of various measures in individual 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 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 two meetings to deliberate on basic policies
for FY2021, individual measures, and the rebuilding of risk management systems.
(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 implementation- 54 -

(Translation)of 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 Directors ofsubsidiaries.
(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 & supervisoryboard members of subsidiaries. Seminar topics include responsibilities andobligations 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.
(b) The Audit & Supervisory Board Members have received whistle-blowing reports
based on whistle-blowing regulations, and received reports on the status ofoperation biannually or as needed.
(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 the- 55 -

(Translation)
process.
(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, 2022)(Millions of yen)Account title

AmountAccount title(Assets)
Current assets

211,837

Cash and deposits

36,691

Notes and accounts receivable, and contract
assets

94,469Lease receivables and lease investment
assetsAmount(Liabilities)

10,355Current liabilities

157,958

Notes and accounts payable
Short-term borrowings

56,691
43,337

Lease obligations

3,912

Other accrued expenses

19,138Finished goods:

17,425Work in process:

14,713Long-term liabilities

103,576

Raw materials and supplies:

26,023Long-term debt

43,838Others12,216

Lease obligations

9,740

Deferred tax liabilities

12,961

Allowance for doubtful receivables
Non-current assets(57)

Others34,878157,333

Provision for Directors’ retirement benefits

Property, plant and equipment

57,653Liability for retirement benefits

Buildings and structures

19,793

Others

Machinery, equipment and vehicles

8,801

Total liabilities

Tools, furniture and fixtures

6,914(Net Assets)

Land

15,996

Construction in progress

6,147

Capital stock

44,00014,027

Additional paid-in capital

19,006

Investments and other assets

85,652Retained earnings

55,103

Investments in securities

34,495

Treasury stock, at cost

Asset for retirement benefits

30,447

Other accumulated comprehensive income(9,804)Long-term trade receivables

25,047

Others13,909Net unrealized holding gain/loss on othersecurities

1,030

Allowance for doubtful receivables(18,246)

Loss on deferred hedges

22

Translation adjustments(9,069)

Accumulated retirement benefits liability
adjustments(1,788)Intangible assets

5,520

Shareholders’ equity

Subscription rights to shares
Non-controlling interests
Total assets

369,170- 57 -

195
31,320261,535
117,241

(869)

138
60

Total net assets

107,635

Total liabilities and net assets

369,170

(Translation)

Consolidated Statement of Operations(From April 1, 2021 to March 31, 2022)(Millions of yen)Account title

AmountNet sales

352,064

Cost of sales

261,948

Gross profit

90,116

Selling, general and administrative expenses

84,252

Operating income

5,864

Non-operating income
Interest income

118

Dividend income

1,177

Foreign exchange gain

1,897

Other

1,472

4,665

Non-operating expenses
Interest expense

1,340

Other

1,496

Ordinary income

2,837
7,691

Extraordinary profit
Gain on sale of property, plant and equipment

550

Gain on sale of investments in securities

502

1,053

Extraordinary loss
629

Loss on sale and disposition of property, plant andequipment
Loss on impairment of fixed assets

1,144

Business structure improvement expenses

2,798

Profit before income taxes

4,571
4,173

Income taxes

2,398

Income taxes deferred(303)

Profit

2,094
2,078

Loss attributable to non-controlling interests

12

Profit attributable to owners of parent

2,065- 58 -

(Translation)

Consolidated Statement of Changes in Net Assets(From April 1, 2021 to March 31, 2022)(Millions of yen)
Shareholders’ equity
Capital stock

Additional paid-in
capitalRetained earnings

Treasury stock, at
cost

Total shareholders’equity19,02956,315(919)

118,425

44,000

Balance at April 1, 2021
Cumulative effects ofchanges in accounting
policies(1,546)44,000

Restated balance

19,029(1,546)54,769(919)

116,878

Changes during the term
under review
Dividends from surplus(1,731)(1,731)

Profit attributable to ownersof parent

2,065

2,065

Purchases of treasury stock
Disposition of treasury
stock

(22)

(1)

(1)

52

29

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

–

(22)

334

50

362

Balance at March 31, 2022

44,00019,00655,103(869)

117,241

Net unrealized
holding
gain/loss onother securities
Balance at April 1, 2021

3,570

Accumulated other comprehensive income
Accumulated
retirement
Loss onTranslation
benefits
deferredadjustments
hedgesliability
adjustments
82

Cumulative effects ofchanges in accounting
policies
Restated balance(8,655)

(399)

(119)
3,570

82

(8,774)

Total
accumulated
othercomprehensiv
e income

Subscription
rights toshares

Noncontrollinginterests

Total net
assets(5,401)

168

74

113,265

(119)
(399)

(5,520)(1,665)
168

74

111,600

Changes during the term
under review
Dividends fromsurplus(1,731)

Profit attributable toowners of parent

2,065

Purchases of treasury
stock

(1)

Disposition oftreasury stock29

Net changes in items
other thanshareholders’ equity
during the term underreview(2,540)

(59)

(294)

(1,388)(4,283)

(29)

(13)

(4,327)

Net changes during theterm under review(2,540)

(59)

(294)

(1,388)(4,283)

(29)

(13)

(3,964)

Balance at March 31,
2022

1,030

22

(9,069)(1,788)(9,804)

138

60

107,635- 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: 62
Names of major consolidated subsidiaries:
OKI Crosstech Co., Ltd.; OKI Circuit Technology Co., Ltd.; OKI Software Co.,
Ltd.; OKI Electric Cable Co., Ltd.; OKI Nextech Co., Ltd.; Oki Data
Manufacturing (Thailand) Co., Ltd.; Oki Europe Ltd.
(2) Changes in scope of consolidation:
The newly established OKI Trading (Kunshan) Co., Ltd. is included in the
consolidated account from this fiscal year. OKI Data Corporation is not included in
the consolidated account since it has been absorbed by the Company. Likewise,
Nagano Oki Electric Co., Ltd. is not included because of its merger with aconsolidated subsidiary Oki Communication Systems Co., Ltd., Oki Printed Circuits
Co., Ltd. is not included due to its merger with a consolidated subsidiary OKI Circuit
Technology Co., Ltd., and JNO Co., Ltd. is not included because of its merger witha consolidated subsidiary OKI Crosstech Co., Ltd., while OKI BR Argentina S.A. is
not included due to its liquidation. Note that Oki Communication Systems Co., Ltd.
changed its name to OKI Nextech 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:
Those other than shares without market value:
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.)
Shares without market value:
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(i) Sales of products
Revenue from product sales in the Solution Systems business and the Components& Platforms business is recognized when the customer’s acceptance inspection iscomplete if the acceptance inspection is carried out, or when the delivery is made in thecase where the acceptance inspection is not carried out, depending on the agreement, etc.
with the given customer.
(ii) Provision of services
Revenue from provision of services in the Solution Systems business and theComponents & Platforms business is recognized accordance to the provision of services.
In the case that the provision of services is made over the agreed duration, such as regular
maintenance contracts, revenue is recognized based on the elapsed time period.
For contract productions and engineering work of social infrastructure mainly in the
Solution Systems business, revenue is recognized based on the progress of theperformance obligation, on the assumption that the obligation is satisfied over a certain
period. In such a case, the progress is measured by the ratio of the costs incurred by theend of the term to the estimated total costs.
(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

- 62 -

(Translation)
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.
(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
The Company and consolidated subsidiaries in Japan will make the transition fromthe consolidated taxation system to the group tax sharing system from the next fiscal year.
However, as for items regarding the transition to the group tax sharing system introducedin 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 thegroup tax sharing system, the Company has not applied the provisions of Paragraph 44of 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 “TaxEffect Accounting for the Transition from the Consolidated Taxation System to the Group- 63 -

(Translation)Tax Sharing System” (ASBJ PITF No. 39, March 31, 2020). Accordingly, amounts ofdeferred tax assets and deferred tax liabilities are determined in accordance with theprovisions of the tax law before revision.
The Company plans to apply the “Practical Solution on the Accounting andDisclosure Under the Group Tax Sharing System” (ASBJ PITF No. 42, August 12, 2021),
which prescribes handling of the accounting process and disclosure of the corporate tax,
local corporate tax and the tax effect accounting for the group tax sharing system, fromthe beginning of the next fiscal year.
Changes in Accounting Policies
1. Application of Accounting Standard for Revenue Recognition, Etc.
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the beginning of the
fiscal year ended March 31, 2022, and it has recognized revenue at the time the control ofpromised goods or services is transferred to the customer at the amount expected to be received
upon exchange of said goods or services.
This means that the Company now recognizes revenue over a period as it satisfies theperformance obligation for the agreed work for contract production or engineering work except
for very short-term projects, whereas the Company previously applied the percentage-ofcompletion method for such work when the effects of progress can be assured, or the completed
contract method for other projects. As for the method of estimating progress towards
satisfaction of performance obligations, the degree of progress is calculated at the proportion of
actual cost to estimated total costs (input method). Furthermore, revenue is recognized only forthe scope of actual costs incurred when it is not possible to reasonably estimate progress towards
satisfaction of performance obligations, but it is probable that the costs incurred will be recovered.
With regard to buy-sell transactions, where the Company purchases the raw materials fromthe customer and sells the processed products back to the customer, revenue is now recognizedon the net processing fee only excluding the raw material purchase costs, whereas previously
revenue was recognized with the total sales price including the raw material purchase costs.
The application of the Accounting Standard for Revenue Recognition and relevant ASBJ
regulations is subject to the transitional treatment provided for in the proviso to paragraph 84 of
the Accounting Standard for Revenue Recognition. The cumulative effect of the retrospective
application, assuming the new accounting policy had been applied to periods prior to thebeginning of the fiscal year under review was added to or deducted from the opening balance ofretained earnings of the fiscal year under review, and thus the new accounting policy was applied
from such opening balance; provided, however, that the new accounting policy was not
retrospectively applied to contracts for which nearly all the revenue amounts had been recognizedaccording to the previous treatment in periods prior to the beginning of the fiscal year underreview, by applying the method provided for in paragraph 86 of the Accounting Standard for
Revenue Recognition. Furthermore, by applying the method set forth in item (1) of the
supplementary provisions of paragraph 86 of the Accounting Standard for Revenue Recognition,
modifications to contracts carried out prior to the beginning of the fiscal year under review were
accounted for based on the contractual terms after all contract modifications were reflected.
Consequently, this cumulative effect was added to or deducted from the opening balance of- 64 -

(Translation)
retained earnings of the fiscal year under review.
As a result, operating income increased by ¥406 million for this fiscal year due to decreasesof ¥598 million in net sales, ¥269 million in cost of sales, and ¥735 million in selling, generaland administrative expenses. Also, with a decrease of ¥18 million in non-operating expenses,
both the ordinary income and profit before income taxes increased by ¥424 million. The effects
on the retained earnings at the beginning of this fiscal year was negligible.
Due to the application of the Accounting Standard for Revenue Recognition and relevant
ASBJ regulations, “Notes and accounts receivable” under current assets of the consolidatedbalance sheet as of the end of the previous fiscal year has been included in “Notes and accounts
receivable, and contract assets” under current assets from the consolidated balance sheet as ofthe end of the fiscal year under review.
2.

Application of Accounting Standard for Fair Value Measurement, Etc.
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30, July 4, 2019) and relevant ASBJ regulations from the beginning of the fiscal
year ended March 31, 2022, and it has applied the new accounting policy provided for by the
Accounting Standard for Fair Value Measurement, etc. prospectively in accordance with thetransitional measures provided for in paragraph 19 of the Accounting Standard For Fair Value
Measurement, and paragraph 44-2 of the “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10, July 4, 2019).
These changes have no impact on the consolidated financial statements.
Matters concerning components of fair value of financial instruments by appropriate
category, etc. are described under “Notes on Financial Instruments.”

3.

Cloud Computing Agreement-related Implementation Costs
Some overseas consolidated subsidiaries have adopted the International Financial ReportingStandards (IFRS) and recognized the configuration and customization costs in the cloudcomputing agreements as intangible assets by applying “intangible assets” (IAS No.38); however,starting from the fiscal year under review, these costs are recognized as expenses when
configuration and customization services are received, based on the agenda decision of the IFRSInterpretations Committee released in April 2021.
This change of accounting policies has been retrospectively applied, and accumulated
amount is reflected on the net assets at the beginning of this fiscal year. As a result, thebeginning balance of retained earnings in the Consolidated Statement of Changes in Net Assets
decreased by ¥1,548 million, and translation adjustments after retrospective application
decreased by ¥119 million.

- 65 -

(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: ¥9,408 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 (¥21,483 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 arequest for arbitration with the South China International Economic and Trade
Arbitration Commission, on October 10, 2015, demanding payment of such accounts
receivable and compensation of damages (Case A). Further, OBSZ filed litigation tocommingle property beyond legal personality with the High People’s Court ofGuangdong 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 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(¥21,125 million if converted to Japanese yen based on the exchange rate as of the endof the fiscal year under review) as well as interest for arrears, legal costs, and others, andthis is being settled by arbitration. Regarding Case B, on December 23, 2021, the High
People’s Court of Guangdong Province sentenced Yihua Computer and affiliates to takethe collective liability for the payment to be made by Yihua Industrial to OBSZ. In
response to this, Yihua Computer and affiliates lodged an appeal to the Supreme People’s
Court on January 5, 2022. The case is currently being tried.
Given that it is expected to take a considerable amount of time before Yihua
Industrial fulfills the arbitration result of Case A, OBSZ has allowance for doubtfulreceivables recorded from the 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 the ruling being upheld and the law suit being settled in Case B
is taken into account for a period that is considered to be required for recovery,
RMB488.507 million (¥9,408 million if converted to Japanese yen based on theexchange rate as of the end of the fiscal year under review) is estimated to be
irrecoverable and added to allowance for doubtful receivables, and a reversal of doubtfulreceivables of ¥3,198 million was accounted for as a reversal of selling, general andadministrative expenses.
(iii) Impact on the consolidated financial statements for the next fiscal year
There is a possibility that the amount estimated to be irrecoverable will vary

- 66 -

(Translation)
significantly depending on the outcome of the lawsuit of Case B.
2.

Estimate of total costs used to measure the progress of the performance obligation in therecognition of revenue(1) Amount recognized on the consolidated financial statements for the fiscal year
Among the revenue associated with the performance obligation satisfied over a certain
period, revenue recorded based on the progress calculated by the ratio of the incurred costs
to the estimated total costs was ¥49,520 million (including revenue for projects completed
before the end of the fiscal year). 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¥22,108 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
As for the method of estimating progress towards satisfaction of performanceobligations, the degree of progress is calculated at the proportion of actual cost to
estimated total costs (input method).
In addition, when estimating total cost, a reliably estimate of the amount is madebased on judgment of construction supervisors and the management. For example, we
review the execution budget in a timely and appropriate way and it has been developedby collecting sufficient and detailed information relating to changes in the work scope
based on 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 the estimated total cost changes due to those impacts and other factors, net sales
may change in conjunction with a change in the degree of progress.

3.

Estimate of recoverability of deferred tax assets(1) Amount recognized on the consolidated financial statements for the fiscal year
Deferred tax assets: ¥8,265 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- 67 -

(Translation)deferred tax assets is based on the future business plans. In developing the businessplans, the assumption that the disruption of supply chain, such as parts shortages,
especially the semiconductors, raw material price surge, and distribution cost surge, willcontinue beyond the next fiscal year.
(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 ofsignificant changes in the management environment and other factors, the recoverabilityof deferred tax assets may be evaluated differently.
Notes to Consolidated Balance Sheet
1. Assets pledged as collateral for borrowings
Investments in securities
Liabilities collateralized by the abovementioned assets:
Short-term borrowings¥5,449 million

2.

Accumulated depreciation on property, plant and equipment¥160,268 million

3.

Liabilities for guarantee
Guarantee for borrowings by employees

4.

¥100 million¥60 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(¥2,309 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.

- 68 -

(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 FY20201
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 29, 2021

Commonstock

Retainedearnings

1,731

20.00

March 31,2021

June 30,2021(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, 2022

Commonstock

Retainedearnings

2,597

30.00

March 31,2022

June 30,
2022

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

Breakdown of stockacquisition rights

The 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 be issued
upon exercise of stockacquisition rights

Number of shares to beissued upon exercise ofstock acquisition rights(shares)Common stock

20,600Common stock

28,800Common stock

32,500Common stock

39,800Common stock

47,500- 69 -

(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.

- 70 -

(Translation)2.

Disclosure concerning fair value of financial instruments
As of March 31, 2022 (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.
(Unit: Millions of yen)Amount recorded inconsolidated balance
sheet (*1)

(1) Investments in securities (*3)

26,166(2) Long-term trade receivables

25,047

Allowance for doubtful receivables (*4)(3) Long-term debt (*5)

Fair value (*1)
26,184

Difference
17(12,957)
12,08912,089-(64,888)(65,334)

446

98
98
(4) Derivative transactions (*6)(*1) Those recorded as liabilities are shown in brackets.
(*2) Notes are omitted on cash and deposits; notes and accounts receivable, and contract assets; notes and accounts
payable; short-term borrowings; and other accrued expenses, because they are settled within a short period and thus
the fair values are close to the book values.
(*3) Shares without market value (unlisted shares, ¥8,328 million in the consolidated balance sheet) are not included in“(1) Investments in securities.”(*4) Allowance for doubtful receivables specifically provided for long-term trade receivables is deducted.
(*5) Long-term debt that will be reimbursed within one year (¥21,050 million) is classified as “short-term” borrowings
in the consolidated balance sheet.
(*6) Net claims receivable and payable incurred from derivative transactions are shown in net amount, and items whose
totals are net liabilities are shown in brackets.

- 71 -

(Translation)
3.

Matters concerning components of fair value of financial instruments by appropriate category,etc.
The fair value of financial instruments is categorized into the following three levels,
depending on the observability and significance of the inputs used to calculate the fair value.
Level 1: The fair value that is calculated from the market price associated with the asset or
liability subject to the calculation of given fair value in the active market, among
inputs used to calculate an observable fair value
Level 2: The fair value that is calculated using inputs other than the inputs applicable toLevel 1, among inputs used to calculate an observable fair value
Level 3: The fair value that is calculated using inputs that are used for calculation ofunobservable fair value
In the case where more than one input is used, among inputs that have a significant impact
on the calculation of the fair value, the fair value is categorized into the level with the lowest
priority for calculation of the fair value, among the levels to which those inputs belong.
(1) Financial instruments listed in the consolidated balance sheet with their fair value
Category
Investments in securities
Other negotiable securities
Equity Securities
Derivative transactions*

Fair value (Millions of yen)
Level 2
Level 3

Level 1

26,156
–

–
98

Total

–
–

26,15698* Net claims receivable and payable incurred from derivative transactions are shown in net
amount, and items whose totals are net liabilities are shown in brackets.
(2) Financial instruments other than those listed in the consolidated balance sheet with their fairvalue
Category
Investments in securities
Other negotiable securities
Golf club memberships
Long-term trade receivables
Long-term debt

Fair value (Millions of yen)
Level 2
Level 3

Level 1

–
–
–

27
–
65,334–12,089–Total

27
12,08965,334(Note) Fair value evaluation technique and inputs for fair value calculation
Investments in securities
Listed shares and golf club memberships are evaluated using the market price. Since
listed shares are traded in the active market, the fair value is categorized in Level 1. On
the other hand, golf club memberships are traded in the inactive market at the market
value of the same asset; therefore, the fair value is categorized in Level 2.
Long-term trade receivables
The fair value of the long-term trade receivables is the amount calculated by deducting
the present estimated doubtful receivables from the book value. The estimated doubtfulreceivables are calculated based on the present value of loans/receivables by discounting
estimated cash flows, which are considered recoverable when taking into account the- 72 -

(Translation)
probability related to lawsuits, for a period that is considered to be required for recovery.
Based on this, the fair value is categorized in Level 3.
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 theassumption that the said sum is freshly borrowed in a similar manner. Some long-term
debt with floating interest rates is prescribed to be subject to special accounting treatment
applicable to interest rate swaps. Hence, the fair value of a long-term debt is based on
the method of calculation whereby the sum of principal and interest, treated in
combination with the said interest rate swap, is discounted by a reasonably estimableinterest rate on the assumption that the said amount is freshly borrowed in a similarmanner. The fair value of the long-term debt is categorized in Level 2.
Derivative transactions
The fair value is calculated based on the price presented by the partner financial
institutions, and is categorized in Level 2. Derivative transactions subject to special
accounting treatment applicable to interest rate swaps are treated in combination withlong-term debt as hedged items. Hence, their fair value is included in that of long-term
debt.

- 73 -

(Translation)
Notes on Revenue Recognition
1. Information on disaggregation of revenue from contracts with customers
Reportable segment
Components& Platforms

Solution
Systems<Breakdown of net sales>
Revenue from contracts
with customers
Other revenue
Total net sales<Geographical market>
Revenue from contracts
with customers
Japan
North America
Central and SouthAmerica
EuropeChina
OthersOther revenue
Japan<Timing of revenue
recognition>
Revenue from contracts
with customers
Revenue recognized at one
point
Revenue recognized over
time

Total

Other
(Note)

Total

162,624

186,041

348,666

423

349,09020
162,645

2,954
188,995

2,974
351,641423

2,974
352,064

162,610-131,175
8,144

293,785
8,144

423
-

294,209
8,144

-

2,093

2,093

-

2,093

8
6
-

24,377
5,393
14,85524,3865,400
14,855-24,3865,400
14,855

20

2,954

2,974

-

2,974

45,747

145,443

191,190396

191,587

116,877

40,598

157,47527

157,502(Note)“Other” includes businesses that are not under the reporting segment, such as service
provision, manufacture and sales of other devices or products.

PublicSolutions
Revenue from contracts withcustomers
Other revenue
Total net sales(Note)(Unit: Millions of yen)
By business areas (Solution Systems) (Note)Engineering
Enterprise
work andDX Platform
Total
Solutionsmaintenanceservices

49,27051,671

13,66248,019162,624

49,27051,67120
13,68348,01920
162,645

The following describes the main products and services in each business area.
Business area

Public Solutions
Enterprise Solutions

Main products and services
Road (ETC/VICS), aviation control, disaster preparedness, fire fighting,central government agencies systems, government statics systems, defense
systems (underwater acoustics/information), infrastructure monitoring, etc.
Carrier network, video distribution, 5G and local 5G, financial store
systems, concentrated operation systems, railway ticket systems, airport- 74 -

(Translation)
check-in systems, manufacturing systems (ERP/IoT), etc.
AI edge computers, censors, IoT network, PBX, business phones, contact
centers, cloud services, etc.

DX Platform
Engineering work and maintenanceservices

Engineering work, maintenance services, etc.

(Unit: Millions of yen)
By business areas (Components & Platforms) (Note)
Components
Mono-zukuri Platform
Total
Revenue from contracts withcustomers
Other revenue
Total net sales(Note)

119,579

66,462

186,041

2,954
122,533

66,462

2,954
188,995

The following describes the main products and services in each business area.
Business area

Components

Mono-zukuri Platform

Main products and services
ATM, cash processors, store terminals, reservation ticket terminals, checkin terminals, currency exchange machines, ATM monitoring and operation
services, color and monochrome LED printers, color and monochrome LED
multifunction machines, large format inkjet printers, dot impact printers,
etc.
Contract design and production services, printed circuit boards, etc.

2.

Information to understand the revenue from contracts with customers
Information forming the basis for understanding revenue is as stated in “Principles for
Preparing Consolidated Financial Statements and Notes to Changes in Scope of Consolidationand Scope of Equity Method Application 3. Accounting standards (4) Basis for provision ofincome and expense.”

3.

Information to understand the revenue in this fiscal year and onwards(1) Balances of receivables from contracts with customers, contract assets and contract
liabilities(Unit: Millions of yen)
As of March 31, 2022

As of April 1, 2021
Receivables from contracts withcustomers
Of which, notes receivable
Of which, accounts receivable
Contract assets
Contract liabilities

95,796

77,693

7,144
88,651
10,392
5,857

8,400
69,293
16,298
8,548(Note 1) Contract assets are recognized as right to consideration recorded by recognition ofrevenue in accordance with the degree of progress mainly on contracted manufacturing
and various types of construction work. When the right to consideration becomes
unconditional, they are transferred into receivables. Contract liabilities are related mainly
to deposits received from customers based on service provision contracts that recognize
revenue over a certain period, and are revised upon recognition of revenue.
(Note 2) Among the revenue recognized in this fiscal year, the amount included in the contract
liabilities at the beginning of the year was ¥3,222 million. The amount of revenue
recognized from the performance obligation that was satisfied (or partly satisfied) in the- 75 -

(Translation)
past period has no significance.
(Note 3) The increase in contract assets is mainly due to progress on contracted manufacturing
and various types of construction work. The increase in contract liabilities is mainly due
to receipt of deposits.
(Note 4) Contract liabilities are included in “Others” under the current liabilities in the
consolidated financial statements.
(2) Trading amount of unsatisfied performance obligation
The Group applies practical expedient to the notes on the trading amount allocated to theunsatisfied performance obligation. Notes are omitted for unsatisfied performance obligation
based on the agreements initially expected to last for a year or shorter.
The total trading amount allocated to the unsatisfied performance obligation at the end of
this fiscal year and the duration within which the revenue may be recognized are as follows.

Within one year
One year to three years
Over three years
Unsatisfied performanceobligation total(Unit: Millions of yen)
Fiscal year under review
19,1538,704
434
28,292- 76 -

(Translation)
Notes to Per-share Information
1. Net assets per share:¥1,240.62
2. Earnings per share:¥23.85
Other Notes (Notes on loss on impairment of fixed assets)
The Group posted impairment losses of ¥1,144 million and major impairment losses aredescribed below.
Business
Components & Platforms
business (Automation
Systems Business)

Purpose of use

Business assets

Type of assets
Buildings and structures
Tools, furniture and fixtures
Intangible assets
OthersAmount(millions of yen)
60
749
109
51

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.
Other Notes (Notes on Business Combination, etc.)
Transactions, etc. under Common Control
The Company resolved to absorb its wholly-owned specified subsidiary Oki Data Corporation(hereinafter “ODC”) at the Board of Directors meeting held on October 29, 2020. The merger
agreement was concluded on the same day, and the merger was completed on April 1, 2021.
1.

Overview of business separation(1) Name and content of business of the company involved in the merger
Name of the company
Oki Data Corporation
Content of business
Development, manufacture and sales of printer equipment
and other related solutions(2) Date of business combination
April 1, 2021
(3) Legal forms of business combination
A merger in which the Company is the surviving company and ODC is the dissolving
company(4) Name of the company after combination
Oki Electric Industry Co., Ltd.
(5) Other items regarding outline of transaction
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 longterm.
The “Medium-Term Business Plan 2022” is positioned as building thefoundations for growth, through which we plan to restructure the business portfolio andstrengthen the foundation for “Mono-zukuri (manufacturing).” Meanwhile, the market
for the Printers business operated by ODC has been on a shrinking trend with a shift to- 77 -

(Translation)
paperless operations and other developments, and the trend is accelerating due to theglobal spread of COVID-19.
The merger of ODC 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 Printersbusiness and utilizing the global sales bases held by ODC, production bases andproduction control functions as the Group.
2.

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 andAccounting Standard for Business Divestitures (ASBJ Guidance No. 10, January 16, 2019).

- 78 -

(Translation)

Transcript of Accounting Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
May 19, 2022
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 98th term from April 1, 2021 to March 31, 2022 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.
Other Information
The other information refers to the business report and its supplementary schedules. Management is responsible
for preparing and disclosing the other information. In addition, the Audit & Supervisory Board Members and the
Audit & Supervisory Board are responsible for overseeing the Directors’ performance of duties within themaintenance and operation of the reporting process for the other information.
The scope of our audit opinion on the consolidated financial statements does not include the content of the otherinformation, and we do not express an opinion regarding the other information.
Our responsibility in auditing the consolidated financial statements is to read through the other information, and in
the process of reading it, we examine whether there are material differences between the other information and theconsolidated financial statements or the knowledge we have gained in the auditing process, and we also pay
attention as to whether there are any indications in the other information of material errors besides such material
differences.
If we determine there to be material errors in the other information based on the work we have performed, we are
required to report those facts.
There are no matters to report regarding the other information.
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.

- 79 -

(Translation)
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.
• 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.

- 80 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2022)
Account title(Assets)
Current assets
Cash and deposits

Amount1,545

Retained earnings carried forward

2,361
51,55912,284
10,317
8,974
9,423
12,702
3,017
13,101
10,0871,154(9)
157,867
37,495

Accumulated depreciation

27,905Structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Vessels
Accumulated depreciation
VehiclesAccumulated depreciation
Tools, furniture and fixtures

2,283
1,847
14,617
12,563
192
72
90
81
42,464

Accumulated depreciation

36,777Land
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

59

22,891

Notes receivable
Accounts receivable, trade
Contract assets
Lease investment assets
Finished goods:
Work in process:Raw materials and supplies:
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
Contract liabilities
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

9,589
435
2,054
119
8
5,686
9,010
5,533
32,438112
13,004
13,116
31,535
31,107(Millions of yen)Amount1
3,032
39,732
20,907
21,0503,509
13,023
7,504
445
6,206
24,444
3
1,165
88
1,372
20
292
52
35
142,888
43,8388,929
8,774
10,196
316
409
1,107
1,611
75,183218,071
44,00021,48815,000
6,488
16,334
16,334
16,334Long-term loans receivable fromsubsidiaries and affiliates

22,881Claims provable in bankruptcy,
rehabilitation and other29

Long-term prepaid expenses

1,484

Prepaid pension cost

15,124

Lease and guarantee deposits

2,619

Loss/gain on deferred hedges

22

229

Total valuation, translation
adjustments and others

785

Subscription rights to shares

138

Total net assets
Total liabilities and net assets

81,886299,957

OthersAllowance for doubtful receivables
Total investments and other assets
Total non-current assets
Total assets(10,082)
96,534142,089
299,957- 81 -

Treasury stock, at cost

(861)

Total shareholders’ equity

80,962

Valuation, translation adjustments andothersNet unrealized holding gain/loss onother securities763

(Translation)

Non-Consolidated Statement of Operations(From April 1, 2021 to March 31, 2022)(Millions of yen)Account title

AmountNet sales

222,848

Cost of sales

178,774

Gross profit

44,073

Selling, general and administrative expenses

57,076

Operating loss

(13,002)

Non-operating income
Interest income

346

Dividend income

7,614

Foreign exchange gain

1,022

Other

783

9,767

Non-operating expenses
Interest expense

1,255

Provision of allowance for doubtful receivables(2,128)Commission for syndicated loan

274

Other

652

Ordinary loss

55
(3,290)Extraordinary profit
Gain on sale of investments in securities

495

Gain on extinguishment of debts

323

819

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

424
1,083

Write-downs of investments in unconsolidated subsidiaries and othersecurities

11

Nondeductible write-downs of shares of subsidiaries and affiliates

546

Loss on extinguishment of tie-in shares

1,990

Loss before income taxes

4,056(6,526)

Income taxes(3,539)

Income taxes deferred

800

Loss

(2,739)(3,787)- 82 -

(Translation)

Non-Consolidated Statement of Changes in Net Assets(From April 1, 2021 to March 31, 2022)(Millions of yen)
Shareholders’ equity
Additional paid-in capital
Capitalstock

Balance at April 1,
2021

44,000Retained earnings

Capitalreserve

OthersAdditional
paid-in
capitalAdditional
paid-in capital
Total

15,0006,511

21,511Other retained
earnings
Retained earnings
carried forward

Retainedearnings
Total

Treasurystock, atcost

Shareholders’ equity
Total

(912)

86,53021,93021,930(76)(76)

21,853

21,853

Dividends fromsurplus(1,731)(1,731)(1,731)Loss(3,787)(3,787)(3,787)

Cumulative
effects of changes
in accounting
policies
Restated balance

44,00015,0006,511

21,511(76)(912)

86,453

Changes during theterm under review

Purchases oftreasury stock
Disposition oftreasury stock

(22)

(22)

(1)

(1)

52

29

Net changes in
items other thanshareholders’equity during theterm under review
Net changes during
the term underreview
Balance at March
31, 2022

–

–

(22)

(22)

(5,518)(5,518)50(5,490)44,00015,0006,488

21,48816,334

16,334(861)

80,962

Subscription
rights tosharesTotal net
assets

168

89,898Valuation, translation adjustments and others
Unrealized holding
gain/loss on othersecurities
Balance at April 1, 2021

Loss/gain on deferredhedgesTotal valuation,translation adjustments
and others

–

3,200

3,200

Cumulative effects ofchanges in accounting
policies
Restated balance

–
3,200

–

3,200

(76)
168

89,821

Changes during the term underreviewDividends from surplus(1,731)Loss(3,787)Purchases of treasury stock(1)

Disposition of treasury stock29

Net changes in items otherthan shareholders’ equity
during the term under review(2,437)22(2,414)(29)(2,444)

Net changes during the term
under review(2,437)22(2,414)(29)(7,935)

Balance at March 31, 2022

763

22

785

138

81,886- 83 -

(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:
Those other than shares without market value:
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.)
Shares without market value: 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
method, assuming the residual value is zero.

- 84 -

(Translation)

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.

- 85 -

(Translation)
6.

Basis for provision of income and expense(1) Sales of products
Revenue from product sales is recognized when the customer’s acceptance inspection
is complete if the acceptance inspection is carried out, or when the delivery is made in thecase where the acceptance inspection is not carried out, depending on the agreement, etc.
with the given customer.
(2) Provision of services
Revenue from provision of services is recognized according to the provision ofservices. In the case that the provision of services is made over the agreed duration, suchas regular maintenance contracts, revenue is recognized based on the elapsed time period.
For contract productions and engineering work of social infrastructure, revenue isrecognized based on the progress of the performance obligation, on the assumption thatthe obligation is satisfied over a certain period. In such a case, the progress is measured
by the ratio of the costs incurred by the end of the term to the estimated total costs.

7.

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.

8.

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.

- 86 -

(Translation)(4) Application of deferred tax accounting for the transition from the consolidated taxation
system to the group tax sharing system
The Company will make transition from the consolidated taxation system to the grouptax sharing system from the next fiscal year. However, as for items regarding thetransition to the group tax sharing system introduced in the “Act Partially Amending theIncome 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 forTax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018) as allowed by theprovisions of Paragraph 3 of the “Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39,
March 31, 2020). Accordingly, amounts of deferred tax assets and deferred tax liabilities
are determined in accordance with the provisions of the tax law before revision.
The Company plans to apply the “Practical Solution on the Accounting and Disclosure
Under the Group Tax Sharing System” (PITF No. 42, August 12, 2021), which prescribes
handling of the tax effect accounting process and disclosure, the corporate tax, and local
corporate tax for the group tax sharing system, from the beginning of the next fiscal year.
Changes in Accounting Policies
1. Application of Accounting Standard for Revenue Recognition, Etc.
The Company has applied the “Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the
beginning of the fiscal year ended March 31, 2022, and it has recognized revenue at thetime the control of promised goods or services is transferred to the customer at theamount expected to be received upon exchange of said goods or services.
This means that the Company now recognizes revenue over a period as it satisfies
the performance obligation for the agreed work for contract production or engineering
work except for short-term projects, whereas the Company previously applied thepercentage-of-completion method for such work when the effects of progress can beassured, or the completed contract method for other projects. As for the method of
estimating progress towards satisfaction of performance obligations, the degree ofprogress is calculated at the proportion of actual cost to estimated total costs (input
method). Furthermore, revenue is recognized only for the scope of actual costs incurred
when it is not possible to reasonably estimate progress towards satisfaction of
performance obligations, but it is probable that the costs incurred will be recovered.
With regard to buy-sell transactions, where the Company purchases the raw
materials from the customer and sells the processed products back to the customer,
revenue is now recognized on the net processing fee only excluding the raw materialpurchase costs, whereas previously revenue was recognized with the total sales priceincluding the raw material purchase costs.
The application of the Accounting Standard for Revenue Recognition and relevant
ASBJ regulations is subject to the transitional treatment provided for in the proviso toparagraph 84 of the Accounting Standard for Revenue Recognition. The cumulative
effect of the retrospective application, assuming the new accounting policy had been

- 87 -

(Translation)
applied to periods prior to the beginning of the fiscal year under review was added to or
deducted from the opening balance of retained earnings of the fiscal year under review,and thus the new accounting policy was applied from such opening balance; provided,
however, that the new accounting policy was not retrospectively applied to contracts forwhich nearly all the revenue amounts had been recognized according to the previous
treatment in periods prior to the beginning of the fiscal year under review, by applying
the method provided for in paragraph 86 of the Accounting Standard for Revenue
Recognition. Furthermore, by applying the method set forth in item (1) of the
supplementary provisions of paragraph 86 of the Accounting Standard for Revenue
Recognition, modifications to contracts carried out prior to the beginning of the fiscal
year under review were accounted for based on the contractual terms after all contract
modifications were reflected. Consequently, this cumulative effect was added to or
deducted from the opening balance of retained earnings of the fiscal year under review.
This resulted in a decrease of ¥672 million in net sales, ¥418 million in cost of sales,and ¥350 million in selling, general and administrative expenses, and an improvementof ¥97 million in operating income/loss for this fiscal year. Also, with a decrease of ¥1
million in non-operating expenses, both the ordinary income/loss and profit/loss before
income taxes improved by ¥98 million.
Accordingly, compared with the case where the previous accounting standards
would be applied, retained earnings carried forward decreased by ¥76 million at the
beginning of the fiscal year ended March 31, 2022 in the statement of changes in net
assets.
As a result of application of the Accounting Standard for Revenue Recognition, etc.,from this fiscal year, accounts receivable, trade, which was used to be under current
assets, is included in accounts receivable, trade and contract assets, and advance received,
which was used to be under current liabilities, is included in contract liabilities in thebalance sheet.
2.

Application of Accounting Standard for Fair Value Measurement, Etc.
The Company has applied the “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019) and relevant ASBJ regulations from the beginningof the fiscal year ended March 31, 2022, and it has applied the new accounting policy
provided for by the Accounting Standard for Fair Value Measurement, etc. prospectively
in accordance with the transitional measures provided for in paragraph 19 of the
Accounting Standard For Fair Value Measurement, and paragraph 44-2 of the“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019).
This will not have any effects on financial statements.

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¥10,023 million(2) Information regarding important accounting estimates for the item identified(i) Overview- 88 -

(Translation)
The Company provides Oki Hong Kong, Ltd. (hereinafter “OHL”), a consolidated
subsidiary which primarily engages in the material procurement and logistics
management businesses in China, with loans in the amounts of US$151 million and
RMB216.5 million (¥22,653 million if converted to Japanese yen based on the exchange
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$81.882 million (¥10,023 million if converted to Japanese yen based on the exchange
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.
2.

Estimate of total costs used to measure the progress of the performance obligation in therecognition of revenue(1) Amount recognized on the non-consolidated financial statements for the fiscal year
Among the revenue associated with the performance obligation satisfied over acertain period, revenue recorded based on the progress calculated by the ratio of theincurred costs to the estimated total costs was ¥29,508 million (including revenue forprojects completed before the end of the fiscal year). Of which, an amount recognized
for the fiscal year in relation to construction projects that were work-in-progress at theend of the fiscal year is ¥12,490 million.
(2) Information regarding important accounting estimates for the item identified- 89 -

(Translation)
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. Estimateof total costs used to measure the progress of the performance obligation in therecognition of revenue.
3.

Future cash flows estimated based on the determination to recognize the impairment loss
(1) Amount recognized on the non-consolidated financial statements for the fiscal year
Property, plant and equipment¥32,438 million
Intangible assets¥13,116 million(2) Information regarding important accounting estimates for the item identified(i) Calculation method for the amount recognized on the non-consolidated financial
statements for the fiscal year and major assumptions to the calculation
The Company determines whether to recognize the impairment loss of the given
asset or asset group, when there is an indication that the asset or asset group may be
impaired (hereinafter “indication of impairment”) at the end of a fiscal year. An
indication of impairment is recognized when a loss or negative cash flow caused bymarketing activities in which the asset or asset group is used is ongoing or likely to beongoing, or when a significant downturn of the business is identified. Whether torecognize the impairment loss of the asset or asset group with indication of impairment
is determined by comparing the total cash flow obtained from the asset or asset group(future cash flow before discount or net sales value, whichever is the greater) and thebook value, and if the former is smaller than the latter, the Company recognizes theimpairment loss.
The Company determines that indication of impairment is found company-wide,
including common assets. However, impairment loss has not been recognized because
the company-wide total cash flow, which was calculated based on the projected profit
and loss in the next fiscal year and onwards, is greater than the book value of theCompany’s assets. This cash flow was calculated by adding the expected futurebusiness environment around the Company to the past results and the business plan for
the next fiscal year. This expectation includes the assumption that the disruption of
supply chain, such as parts shortages, especially the semiconductors, raw material pricesurge, and distribution cost surge, will continue beyond the next fiscal year. The
Company believes, however, that it will be able to limit the impact caused by parts
shortages and raw material price surge in the fiscal year and onwards by taking various
measures.
(ii) Impact on the non-consolidated financial statements for the next fiscal year
It is possible that impairment loss may be reported in the next fiscal year if asignificant change occurs in the business environment, which necessitates a downward
revision of the above assumption, resulting in the company-wide total cash flow
calculated based on the projected future profit and loss becoming smaller than the bookvalue of the Company’s assets.

- 90 -

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

¥5,449 million¥100 million

Guarantee liabilities:
The Company provides guarantees for bank borrowings made by employees, andsubsidiaries and affiliates as shown below.
OKI BRASIL INDÚSTRIA E COMÉRCIO DE PRODUTOS
E TECNOLOGIA EM AUTOMAÇÃO LTDA.
Oki Europe Ltd.

OKI Circuit Technology Co., Ltd.
OKI INDIA PRIVATE LIMITEDOki Data Manufacturing (Thailand) Co., Ltd.
OKI Crosstech Co., Ltd.
Three other entities:
Total:
3.

¥3,330 million(BRL129.811 million)¥2,914 million(GBP18 million, EUR132 thousand)¥1,641 million¥1,068 million(INR659.337 million)¥673 million($5.5 million)¥466 million¥629 million¥10,724 million

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:- 91 -¥30,982 million¥1,161 million¥42,497 million¥67 million¥33,500 million¥73,396 million¥10,943 million

617 thousand shares

(Translation)
Notes to Deferred Tax Accounting
Major factors giving rise to deferred tax assets and liabilities
Deferred tax assets
Loss carry forwards
Nondeductible write-downs of shares of subsidiaries and affiliates
Nondeductible retirement benefits
Adjustments of losses on transfers among consolidated subsidiaries
Allowance for doubtful receivables
Nondeductible accrued bonuses
Nondeductible write-downs of inventories
Balance of trust property with retirement benefits
OthersSubtotal deferred tax assets
Valuation allowance
Total deferred tax assets¥12,825 million¥10,823 million¥4,714 million¥3,418 million¥3,090 million¥1,341 million¥969 million¥893 million¥4,099 million¥42,172 million¥(39,297) million¥2,874 million

Deferred tax liabilities
Gain on valuation of investment securities
Prepaid pension cost
Nondeductible unrealized gain on contribution of securities to thepension trust
OthersTotal deferred tax liabilities¥(371) million¥(11,648) million

Net deferred tax assets¥(8,774) million- 92 -¥(5,723) million¥(3,610) million¥(1,944) million

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

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Name of company, etc.

OKI Crosstech Co.,Ltd.

OKI Circuit
Technology Co.,Ltd.

OKI Software Co.,Ltd.

Oki Electric Cable
Co., Ltd.

Location

CapitalBusiness

Votingright ratio

Relationship withrelated party

Description oftransactions

Transaction
amount(mil. yen)Account item

Endingbalance(mil. yen)

(Direct)
100%

Supply products, etc.,
purchase of services

Borrowings of
funds

–

Deposits
received

11,096

Short-term
loans
receivable

2,610

Long-term
loans
receivable
fromsubsidiaries
and affiliates

228

Chuo-ku,Tokyo

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

Tsuruoka(Yamagata)

Development, design,
manufacture and salesof printed circuitboards, electronicequipment andelectronic parts(Direct)
100%¥400 million

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

Production ofsoftware on a contract
basis, etc.

Purchase ofservices

13,852

Accounts
payable,
trade

3,435

¥4,304 million

Manufacture and salesof electrical wire,
electronic equipment
parts, metal products
and synthetic resinmaterial processed
goods(Direct)
100%

Purchase of products

Borrowings of
funds

–

Deposits
received

5,671(Direct)
100%

Purchase of products
and services, lendingof funds

Lending of
funds

3,125

Short-term
loans
receivable

4,239

Warabi,
Saitama Pref.

Kawasaki(Kanagawa)¥480 million

Purchase of products
and services, lendingof funds

Lending of
funds

3,600

Subsidiary

OKI Nextech Co.,
Ltd.

Tokorozawa(Saitama)¥400 million

Development, design,
manufacture, sales andmaintenance of
information andcommunications
devices, industrial
electronic devices,
medical electronicequipment and otherelectronic devices aswell as electronic parts

Subsidiary

Oki Data
Manufacturing(Thailand) Co., Ltd.

Thailand420 million
Thai baht

Manufacture of
information processing
equipment(Direct)
100%

Purchase of products

Purchase of
products

16,432

Accounts
payable,
trade

5,248

Subsidiary

Oki Europe Ltd.

UK

141.366
million euro

Sale of information
processing equipment(Direct)
100%

Supply products, etc.

Sales ofproducts

10,755

Accounts
receivable,
trade

3,138

21,024Long-term
loans
receivable
fromsubsidiaries
and affiliates

22,653

Subsidiary

Oki Hong Kong,
Ltd.

Hong Kong

US$10.292
thousandHoldings company,
material procurement(Direct)
100%

Supply products, etc.,
lending of funds

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- 93 -

(Translation)and conducting negotiation.
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 ¥10,023 million has been recorded for loans to Oki Hong Kong, Ltd.
Furthermore, an allowance for doubtful accounts of ¥1,266 million has been provisioned this fiscal year.
(2)

Notes to Per-share Information
1. Net assets per share:¥943.98
2. Loss per share:¥43.74
Notes on Business Combination, Etc.
Transactions, etc. under Common Control
Notes are omitted since the same contents are described in “Other Notes (Notes on
Business Combination, etc.)” in the Notes to Consolidated Financial Statements.
Notes on Revenue Recognition
Notes on the information to understand the revenue from contracts with customers areomitted since the same contents are described in “Notes on Revenue Recognition” in the Notes
to Consolidated Financial Statements.
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.

- 94 -

Transcript of Accounting Auditors’ Report

Independent Auditors’ Report
May 19, 2022
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 98th term from April 1, 2021 to March 31, 2022 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.
Other Information
The other information refers to the business report and its supplementary schedules. Management is responsible
for preparing and disclosing the other information. In addition, the Audit & Supervisory Board Members and the
Audit & Supervisory Board are responsible for overseeing the Directors’ performance of duties within themaintenance and operation of the reporting process for the other information.
The scope of our audit opinion on the non-consolidated financial statements does not include the content of theother information, and we do not express an opinion regarding the other information.
Our responsibility in auditing the non-consolidated financial statements is to read through the other information,and in the process of reading it, we examine whether there are material differences between the other informationand the non-consolidated financial statements or the knowledge we have gained in the auditing process, and we
also pay attention as to whether there are any indications in the other information of material errors besides suchmaterial differences.
If we determine there to be material errors in the other information based on the work we have performed, we are
required to report those facts.
There are no matters to report regarding the other information.
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- 95 -

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
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.
• Obtain sufficient and appropriate audit evidence regarding the financial information of the units constituting
included in the Financial Statements, etc. We are responsible for the direction, supervision and performanceof the audit of the financial information of the units constituting. 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, which should be stated in compliance with theCertified Public Accountants Act.

- 96 -

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 98th fiscal year from April 1,
2021 to March 31, 2022, 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 20, 2022
The Audit & Supervisory Board, Oki Electric Industry Co., Ltd.
Toshiya Hatakeyama, Standing Audit & Supervisory Board Member
Toshiyuki Yokota, Standing Audit & Supervisory Board Member
Hideo Shiwa, Outside Audit & Supervisory Board Member
Ryuichi Makino, Outside Audit & Supervisory Board Member
Yoshihiro Tsuda, Outside Audit & Supervisory Board Member- 97 -