(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 3, 2014

NOTICE OF 90TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 90th
ordinary general meeting of shareholders will be held as follows. We would be grateful if you
could attend the meeting.
Those who will not be able to attend the meeting are kindly requested to review “4. Exercise of
Voting Rights” on page 2 and exercise their voting rights no later than 5:15 p.m., June 24(Tuesday), 2014 (JST).
Yours faithfully,
Hideichi Kawasaki,
President, Representative Director
Oki Electric Industry Co., Ltd.
1-7-12 Toranomon, Minato-ku, Tokyo-1-

(Translation)

1.
2.

Date and Time:
Location:

Wednesday, June 25, 2014, from 10:00 a.m.
Nikkei Hall, 3F Nikkei Building, 1-3-7 Otemachi, Chiyoda-ku, Tokyo(The venue of this General Meeting of Shareholders differs from thatheld last year.)

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 90th fiscal year (from April 1, 2013 to March 31,
2014)
2. Non-consolidated Financial Statements for the 90th fiscal year (from April 1,2013 to March 31, 2014)
Items to be resolved:
Agenda 1:
Agenda 2:
4.

Appropriation of Surplus
Election of Five (5) Directors

Exercise of Voting Rights(1) Attendance at the meeting in person
Please submit the enclosed ballot at the reception desk of the meeting.
(2) Exercise of voting rights via postal mailPlease indicate your approval or disapproval for each of the proposals in the spaceprovided on the ballot and return the ballot to the Company.
(3) Exercise of voting rights via electronic means (Internet)
Please read the appended “Instructions for the Exercise of Voting Rights via the Internet,”
and indicate your approval or disapproval online via the designated website at
http://www.it-soukai.com/. There is no need to mail the ballot if you choose to vote via
Internet.

* The Company has provided the Notice of 90th Ordinary General Meeting of Shareholders on its Internet
website (http://www.oki.com/). Any amendment to the Company’s Reference Documents for the
General Meeting of Shareholders, the Business Report, and the Consolidated and Non-consolidated
Financial Statements (including the “Notes to the Consolidated Financial Statements” and “Notes to
Non-consolidated Financial Statements”) will be announced on the website.

-2-

(Translation)(Attachment)

Business Report(From April 1, 2013 to March 31, 2014)
1.

Status of the OKI Group(1) Operating progress and results
Looking at the global economy during fiscal year 2013, signs of economic recovery
were seen in the U.S., including a decline in the unemployment rate and an increase in
private consumption, and the economies of Europe and emerging countries also gradually
picked up. The economic situation in Japan also headed toward a mild recovery, withincreased private consumption and production, improved employment conditions, and otherpositive factors.
Under this business environment, the OKI Group’s net sales increased ¥27.3 billion,
or 6.0% year-on-year, to ¥483.1 billion, thanks to steady performance in Info-telecom
system business and other key business segments and a weaker yen. Reductions in fixedand other costs, an improved product mix resulting from structural reforms in the Printerbusiness, and a weaker yen led to operating income growth of ¥13.7 billion year-on-year to¥27.2 billion.
Foreign exchange gain and other factors led to ordinary income growth of ¥16.4
billion year-on-year to ¥36.7 billion, while various factors, including the recording of costsof revamping the Printer business structure and other businesses, led to net income growthof ¥13.8 billion year-on-year to ¥27.4 billion.
Looking at non-consolidated business performance, net sales were ¥238.8 billion, up¥12.8 billion (5.7%) from the previous fiscal year. This was due to an increase in net salesof the Info-telecom system business, mainly for social infrastructure systems andmechatronics systems. Operating income was ¥12.6 billion, a ¥0.1 billion increase yearon-year.
Ordinary income decreased ¥19.5 billion year-on-year to ¥13.3 billion, due toreductions in dividend income received from subsidiaries and affiliates. Net income
decreased ¥8.7 billion year-on-year to ¥12.1 billion, because of a reduction in the provision
for loss on business of subsidiaries and affiliates.
The Company’s top management priorities are to strengthen its financial position andensure retained earnings in order to continually improve the OKI Group’s corporate value,
as well as to increase shareholder returns so that shareholders are encouraged to hold its
shares over the medium- to long-term. The Company will reinforce its financial condition
and management foundations by applying retained earnings to investments in research &development and facilities that are critical to future growth. In addition, the Company will
attach the highest importance to maintaining stable profit distributions to shareholders and-3-

(Translation)
decide dividends after taking business performance into consideration. Based on thispolicy, the Company proposes to pay ¥3 per common stock as a dividend from the surplus(year-end dividend) in the current fiscal year. As for preferred stocks, the Company will
distribute dividends in accordance with the terms and conditions for preferred stocks
stipulated at the time of issuance.
Net sales by segment are as provided below.
- Net Sales(Unit: billions of yen)Segment
Info-telecom
systems
Printers

Increase or
decrease

Compared to theprevious year (%)

FY2012 (reference:

FY2013 (the year

previous year)

under review)

293.0

303.6

10.6

3.6

111.4

124.8

13.4

12.1

EMS

32.7

37.1

4.4

13.6

Others

18.7

17.6

(1.1)

(6.3)

455.8

483.1

27.3

6.0

Total

Note: Figures less than ¥100 million for each item are rounded to the nearest ¥100 million.
“increase or decrease” are calculated on the basis of figures in units of ¥100 million.

The amounts of

The following provides a summary of each segment.
Info-telecom systems
Net sales to external customers were ¥303.6 billion, up ¥10.6 billion (3.6%) from theprevious fiscal year. Sales of solution & services business slid due to a reduction in thenumber of large-scale services projects, although sales of financial system-related solutions
increased. Sales of telecom systems increased because sales of core networks were firm,in addition to steady sales of enterprise networks and maintenance/construction. Sales ofsocial infrastructure systems also increased because digitalization of fire radio and disasterprevention-related demand remained steady. Sales of mechatronics systems rose because
sales of ATMs for convenience stores, cash-handling equipment, and bank branch terminals
for financial institutions were favorable in Japan, and sales of China-bound ATMs werestrong as a whole, although shipments destined to some clients were postponed until thenext fiscal year. Meanwhile, the yen’s weakness pushed up sales by ¥8.1 billion.
Operating income fell ¥0.4 billion to ¥23.4 billion due to price declines, increased
costs, and other factors.
Printers
Net sales to external customers were ¥124.8 billion, up ¥13.4 billion (12.1%) from theprevious fiscal year. Sales of LED printers increased because a shift to high-value added
models proceeded with a review of the sales strategy, leading to an improvement of the
product mix in the area of office printers, as well as strong sales performance for new
products of copier professional services. The declining trend of dot impact printers
continued on a market-wide basis. Meanwhile, the yen’s weakness pushed up sales by-4-

(Translation)¥17.0 billion.
Operating income improved substantially, resulting in an increase of ¥13.9 billion
from the previous year to ¥5.1 billion, due to an improved product mix, in addition to
reduced fixed costs resulting from the implementation of structural business reforms.
Electronics manufacturing services (EMS) and others
Net sales to external customers were ¥37.1 billion, up ¥4.4 billion (13.6%) from theprevious fiscal year, in EMS business and ¥17.6 billion, down ¥1.1 billion (6.3%) from theprevious fiscal year, in the Others business. Sales of the EMS business increased becauseof the consolidation of OKI Circuit Technology Co., Ltd. (Note*), in addition to robust
sales of products for the telecom equipment market. Sales of the Others business segment
decreased because sales in the amusement market showed a decline, while parts sales werestrong.
Operating income of the EMS business increased ¥0.1 billion to ¥1.7 billion and thatof Others business decreased ¥0.2 billion to ¥2.8 billion.
(Note*) The company name was changed on April 1, 2014 (formerly OKI TANAKA
Circuits Co., Ltd.).

-5-

(Translation)(2) Capital expenditure
Capital expenditures for the fiscal year equaled ¥10.2 billion.
Investment amounts by segment were as follows.
(Unit: billions of yen)Segment

Amount ofcapitalexpenditure

Info-telecom systems

5.6

Printers

2.6

EMS

0.7

Others
Total

Major investments
Investments in R&D, development of new products andproduction activities for financial systems, automationequipment systems, systems related to fire- and disasterprevention and optical access systems, etc.
Investments in R&D, development and production activities
relating to business-use printers
Investments in contract manufacturing activities oftelecommunications and industrial equipment

1.3
10.2

(3) Financing
Funds required for the term under review were obtained from our own funds andborrowed funds.
Borrowing funds are mainly long-term borrowings principally from major banks.
(4) Future challenges
In November 2013, the OKI Group announced the Medium-term Business Plan 2016,
and established it as its vision to become a high-value added creation group, which
contributes to the realization of safe and comfortable society. Its management policy is tomake continuous investments by ensuring stable profits, thus achieving sustainable growth,with the management objectives for FY2016, the final year of the Medium-term Business
Plan, of net sales of ¥560.0 billion, operating income of ¥34.0 billion, operating profit
margin of 6%, shareholders’ equity ratio of at least 30%, debt equity ratio of 1.0 or less, andoverseas sales ratio of 40%.
To ensure stable profits, the Group will respond to demand for renewing financial,social, and telecom systems, and continue to seize opportunities in China’s ATM market aswell. In addition, it will generate stable profits through structural reforms of the Printerbusiness, following on from those during the fiscal year under review, and by making eachbusiness more efficient.
To achieve sustainable growth, the Group will carry out various measures in the
future under three main pillars: “expanding business in global markets,” “supporting
management unencumbered by assets,” and “entering the field of next-generation social
infrastructure.” It aims to tap new ATM markets including Brazil, to expand products withthe rollout of cash handling equipment and maintenance services, and promote the global
development of high-value added printers for the copier and professional services market.
Besides, it will support management unencumbered by assets, such as by strengthening
cloud services, Life Cycle Management (LCM) services, etc. Furthermore, by leveraging
its strengths in sensing and network technology, it will focus on disaster prevention,
disaster mitigation, and measures for aging social infrastructure, etc. to make inroads into
the field of next-generation social infrastructure.

-6-

(Translation)
It will also carry out a production/design revolution and reduce procurement costs,
shrink working capital, strengthen research & development, and enhance human resources,
such as by shifting human resources to growth fields, recruiting global human resources,and encouraging women to play active roles, in order to achieve the objectives above in
FY2016.

-7-

(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.

Sales

432.7

billion yen

428.1

billion yen

455.8

billion yen

90th year(the year underreview, FY2013)
483.1
billion yen

Net income(27,001)

million yen

8,000

million yen

13,599million yen

27,359Net income per share(37.35)

yen

9.14

yen

17.24

yen

36.21

yen

Total assets

372.2

billion yen

374.8

billion yen

349.3

billion yen

412.5

billion yen

Net assets

59.9

billion yen

67.5

billion yen

56.6

billion yen

91.9

billion yen

Net assets per share

40.15

yen

49.36

yen

34.40

yen

79.32

yen

87th year(FY2010)88th year(FY2011)89th year(FY2012)

million yen

Notes:
1. Parentheses indicate losses.
2. Net income per share is computed based on the average number of shares of common stock during the year
(weighted average). Net assets per share are computed based on the number of shares of common stock
outstanding at the year-end. These figures exclude treasury stocks.
3. Trends in business performances after amendments were made to past financial results based on the
Financial Instrument and Exchange Act are as follows.

Sales

87th year(FY2010)432.7
billion yen

88th year(FY2011)423.5
billion yen

Net income(31,809)

million yen

1,555

Net income per share(44.00)

yen

0.32

yen

Total assets

368.8

billion yen

368.1

billion yen

Net assets

38.9

billion yen

41.3

billion yen

Net assets per share

11.37

yen

13.42

yen

-8-

million yen

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

Oki Data Corporation

29,000 million yen

Company’s
voting rightratio (%)
100

Oki Customer Adtech Co., Ltd.

1,800 million yen

100

OKI Software Co., Ltd.

400 million yen

100

Oki Wintech Co., Ltd.

2,001 million yen

100

Oki Data Americas, Inc.
Oki Data Manufacturing(Thailand) Co., Ltd.
Oki Europe Ltd.
OKI Brasil Indústria e Comércio
de Produtos e Tecnologia em
Automação S.A.
Oki Electric Industry(Shenzhen) Co., Ltd.

10 million U.S. dollars

100*

Manufacturing and sales of printers
Maintenance, construction andsales of information processing
equipment and telecommunications
equipment
Development and operation of
telecommunications system
softwareDesign and construction ofelectronic works and electronic
telecommunications works
Sales of printers

420 million baht

100*

Manufacturing of printers

33 million pound sterling

100*

Sales of printers

251 million real

70

66 million Renminbi

100*

Name

CapitalMajor business

Design, development, manufacture,and sales and maintenance ofautomation equipment
Manufacturing of information
processing equipment and printers

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

(ii)
-

-

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

(7) Major businesses
The OKI Group offers as its core businesses info-telecom systems/equipment, andprinters as well as related solutions, services and EMS.
Major business items include the following.
Segment

Info-telecom systems

Printers
EMS

Business items
Financial systems, automation equipment systems (ATM, cash handling equipment,
ticket reservations and issuing terminals, etc.), systems for government agencies(aviation, transportation, disaster prevention, firefighting, various info-telecom
systems, etc.), telecom carrier systems (switching, transmission, optical access, etc.),
IP telecommunication systems (PBX, call center, videoconferencing, etc.), various
information systems (travel, logistics, manufacturing, etc.), and IT services for thesaid business items (cloud computing service, system integration, support,
maintenance, etc.), etc.
Color LED printers, monochrome LED printers, dot impact printers, multi-purpose
printers, etc.
Designing & manufacturing services, printed circuit boards, etc.

-9-(Translation)(8) Major offices
Our major offices are as follows.
Name

Classification
Head office

Minato-ku, Tokyo

Branch offices

Kitanihon region (Sendai, Miyagi), Chubu region(Nagoya, Aichi),Kansai region (Osaka, Osaka),
Chushikoku region (Hiroshima, Hiroshima),
and Kyushu region (Fukuoka, Fukuoka)

Oki Electric Industry Co., Ltd.

Head office
Head office
Head office
Head office
Head office

Minato-ku (Tokyo), Warabi (Saitama), Honjo(Saitama), Takasaki (Gunma), Tomioka (Gunma)and Numazu (Shizuoka)
Warabi (Saitama), Osaka (Osaka) and Takasaki(Gunma)Minato-ku, Tokyo
Koto-ku, Tokyo
Warabi, Saitama
Shinagawa-ku, Tokyo
New Jersey, USA

Head office

Ayutthaya, Thailand

Head office

Surrey, UK

Head office

Sao Paulo, Brazil

Head office

Guangdong, China

Business offices
Research institutes
Oki Data Corporation
Oki Customer Adtech Co., Ltd.
OKI Software Co., Ltd.
Oki Wintech Co., Ltd.
Oki Data Americas, Inc.
Oki Data Manufacturing(Thailand) Co., Ltd.
Oki Europe Ltd.
OKI Brasil Indústria e Comércio
de Produtos e Tecnologia em
Automação S.A.
Oki Electric Industry (Shenzhen)Co., Ltd.

Location- 10 -

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

Number of employees

Info-telecom systems

12,729Printers

5,059

EMS

1,244

Others1,705Company-wide (shared)

353

Total

(ii)

21,090

Employees of Oki Electric Industry
Number of employees

Average age

3,788 (increased by 110 from the end of the previous year)

42.5

Average years ofservice19.8(10) Major creditors
Major creditors of the OKI Group are as follows:
Creditor

Loan balanceBillion yen

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

30.1
20.0
8.5
3.9
3.7

(11) Other significant events of the OKI Group
There are no relevant items.

- 11 -

(Translation)
2.

Shareholders’ Equity(1)

Number of shares authorized to be issued by the Company:
2,400,000 thousand shares

Total number of classified shares authorized to be issued
Common Stock:
2,400,000 thousand sharesClass A Preferred Stock:
30,000 shares(2) Number of outstanding shares:
Common Stock:731,438 thousand shares(including 3,341 thousand shares of treasury stock)
Class A Preferred Stock:
30,000 shares(3) Number of shareholders:Common Stock:85,073
Class A Preferred Stock:15(4) Major shareholders (Top 10):
1) Common Stock
Number ofshares held
(thousand shares)

Name of shareholder

Percentage ofshares held(%)

Japan Trustee Services Bank, Ltd. (trust account)

56,475

7.76

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

29,272

4.02

Oki Denki Group Employees’ Shareholdings Committee

17,7802.44

Mizuho Bank, Ltd.

14,196

1.95

Meiji Yasuda Life Insurance Company

14,000

1.92

Japan Trustee Services Bank, Ltd. (trust account 4)

11,877

1.63

Japan Trustee Services Bank, Ltd. (trust account 6)

8,050

1.11

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

8,036

1.10

Japan Trustee Services Bank, Ltd. (trust account 3)

7,929

1.09

Japan Trustee Services Bank, Ltd. (trust account 2)

7,905

1.09

Note:

The percentages of shares held are calculated after deducting treasury stock (3,341 thousand shares).

- 12 -

(Translation)2) Class A Preferred Stock
Percentage ofshares held(%)

Number ofshares held

Name of shareholder
Trust & Custody Service Bank, Ltd.
Money trust tax account (Mizuho Bank)

15,000

50.00

NTT Data Corporation
Trust & Custody Service Bank, Ltd.
Money trust tax account (Meiji Yasuda Life Insurance)
Hulic Co., Ltd.

3,000

10.00

3,000

10.00

2,500

8.33

Fujitsu Limited

1,000

3.33

Kiyo Bank, Ltd.
Trust & Custody Service Bank, Ltd.
Money trust tax account (Sompo Japan Insurance)
Trust & Custody Service Bank, Ltd.
Money trust tax account (The Chiba Kogyo Bank)
Trust & Custody Service Bank, Ltd.
Money trust tax account (Yasuda Real Estate)
Fuyo General Lease Co., Ltd.

1,000

3.33

1,000

3.33

1,000

3.33

600

2.00

500

1.67

- 13 -

(Translation)
3.

Equity Warrants(1) Equity warrants granted to the Company’s officers as consideration for theirperformance of duties(i) Number of equity warrants
163(ii) Type and number of shares subject to equity warrants
163,000 shares of the Company’s common stock (1,000 shares per equity warrant)(iii) Status of equity warrants held by the Company’s officers
Directors(excluding outside Directors)
Issued Number

No. 3 equity warrant (458 yen)
(Issued on July 20, 2004)
No. 4 equity warrant (406 yen)
(Issued on July 20, 2005)
No. 5 equity warrant (277 yen)
(Issued on July 28, 2006)
No. 6 equity warrant (277 yen)
(Issued on July 28, 2006)
No. 7 equity warrant (248 yen)
(Issued on July 27, 2007)
No. 8 equity warrant (248 yen)
(Issued on July 27, 2007)

Exercise period

Number ofequitywarrants

Number ofholders

July 1, 2006 to June 28, 201431

2

July 1, 2007 to June 28, 2015

34

2

July 1, 2008 to June 28, 2016

26

2

July 1, 2008 to June 28, 2016--

July 1, 2009 to June 25, 201757

2

July 1, 2009 to June 25, 201715

1(2) Equity warrants issued to employees in consideration of performance during the fiscal
year under review
The Company did not issue equity warrants in the fiscal year under review.

- 14 -

(Translation)
4.

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

X

X

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

Name

Status or main duties

Hideichi Kawasaki

Supervision
Chief Compliance Officer
In charge of Marketing & Sales Division, Secretarial
Office, Group Administration Division, CSR Division
and General Affairs Division

Naoki Sato

Chief Information Officer and Chief Technology
Officer
In charge of IT Solution & Services Business Division,
Government & External Relations Division, Human
Resources Division and Information Planning Division
Chief Financial Officer
In charge of Accounting & Control Division, Public
Relations Division and Audit Office
In charge of Printer Business Division
President, Oki Data Corporation

Sei Yano

Executive Vice
President andHisao Suzuki
Member of the Board
Senior Vice President
Xand Member of the
Takao Hiramoto
Board
Director
Takuma Ishiyama
Standing Audit & Supervisory
Shuichi Kawano
Board Member
Standing Audit & Supervisory
Tsutomu Tai
Board Member
Audit & Supervisory Board Kuninori
MemberHamaguchi
Audit & Supervisory Board
Kaoru Yoshida
MemberNotes:
1. X indicates executive officer.
2. Director Takuma Ishiyama is an Outside Director.
3. Audit & Supervisory Board Members Kuninori Hamaguchi and Kaoru Yoshida are Outside Audit &Supervisory Board Members.
4. Director Takuma Ishiyama, Audit & Supervisory Board Members Kuninori Hamaguchi and Kaoru Yoshidaare independent officers based on the terms of the Tokyo Stock Exchange.
5. Audit & Supervisory Board Member Tsutomu Tai has many years of experience working in the Company’s
accounting divisions, and has extensive knowledge of finance and accounting.
X- 15 -

(Translation)
6.

Executive officers as of March 31, 2014 are as follows (excluding those who concurrently serve as
Directors).
Position

Name

Senior Vice President

Hidetoshi Saigo

Senior Vice President

Toshinao Takeuchi

Senior Vice President

Shinya Kamagami

Senior Vice President

Kouichirou Shimizu

Executive Officer

Toshiya Hatakeyama

Executive Officer

Kazunari Kobayashi

Executive Officer
Executive Officer
Executive Officer

Kenichi Tamura
Akira Komatsu
Yoshikazu Matsuoka

Executive Officer

Yoshiyuki Nakano

Executive Officer

Seiji Mouri

Executive Officer

Makoto Nagaiwa

Executive Officer

Shinya Andou

Principal duty
In charge of Telecom Systems Business Division andCarriers Systems Marketing & Sales Division
In charge of Corporate Planning Division and Corporate
Research & Development CenterIn charge of Systems Hardware Business Division
In charge of Electronics Manufacturing Services Business
DivisionManager, Group Administration Division and Accounting& Control Division
Manager, General Affairs Division
President, Representative Director, Oki Proserve Co., Ltd.
Manager, Marketing & Sales Division
In charge of Public Systems Business Division
Manager, Carriers Systems Marketing & Sales Division
In charge of Procurement Center
Manager, Mechatronics Systems Plant in Systems
Hardware Business Division
Manager, IT Solution & Services Business Division
Manager, Government & Public Systems Marketing &Sales Division
Assistant Manager, Systems Hardware Business Division(2) Compensation paid to Directors and Audit & Supervisory Board Members
Title
Number of persons
Amount of payment
Directors
6¥199 million
Audit & Supervisory Board
5¥56 million
Members
Total
11¥255 million
Notes:
1.
The amounts of compensation approved by the 82nd Ordinary General Meeting of Shareholders held on
June 29, 2006 are within ¥600 million per year for Directors and ¥100 million per year for Audit &Supervisory Board Members. The amount of compensation for Directors excludes employee wages for
Directors who are also employees.
2.
The number of Audit & Supervisory Board Members as of the end of the fiscal year under review isdifferent from the number shown above, and the above number includes those who resigned at theconclusion of the 89th Ordinary General Meeting of Shareholders held on June 26, 2013.

- 16 -

(Translation)(3) Outside Directors and Audit & Supervisory Board Members(i) 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
Takuma Ishiyama,
Director
Kuninori
Hamaguchi,
Audit & Supervisory
Board Member
Kaoru Yoshida,
Audit & Supervisory
Board Member

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

14 (14)

100%

-

-

14 (14)100%

16 (16)100%

12 (14)85.7%

16 (16)100%(b) Major activities
a. Takuma Ishiyama, Director
Making objective statements mainly as a specialist in corporate law, heprovided advice and made proposals for the appropriateness and propernessof decision making by the Board of Directors. He also served as an advisor
to the Risk Management Committee and contributes to strengthening
compliance by providing a good example to managerial personnel through hisleadership.
b. Kuninori Hamaguchi, Audit & Supervisory Board Member
With regard to deliberations of the Board of Directors, he determined thecorrectness of Directors’ managerial decisions. Using his many years ofextensive experience and knowledge as a director at other companies, hemade efforts to formulate the Company’s appropriate audit opinions bymaking proper statements and carrying out, when necessary, adequate
activities concerning performances of the Audit & Supervisory Board.
c. Kaoru Yoshida, Audit & Supervisory Board Member
With regard to deliberations of the Board of Directors, he determined thecorrectness of Directors’ managerial decisions. Using his many years ofextensive experience and knowledge as a director at other companies, hemade efforts to formulate the Company’s appropriate audit opinions bymaking proper statements and carrying out, when necessary, adequate
activities concerning performances of the Audit & Supervisory Board.
(ii) Outline of Liability Limitation Agreements
The Company concluded agreements to limit liabilities with outside officers(Director Takuma Ishiyama, and Audit & Supervisory Board Members Kuninori
Hamaguchi and Kaoru Yoshida) under the provisions of Article 427 of the Companies
Act. The outline of the agreements is as follows:- In cases where outside officers are liable for any damages arising from their- 17 -

(Translation)
negligence to the Company, they shall compensate for such damages only to theextent of the minimum liabilities as stipulated in Article 427, Paragraph 1 of theCompanies Act.
- The above limitation of liability shall be applied only when the relevant outside
officers have executed their duties that caused the liabilities in good faith and withoutgross negligence.
(iii) Total amount of compensation, etc.
¥24 million (for the three individuals)- 18 -

(Translation)
5.

Status of Accounting Auditor(1) Name: Ernst & Young ShinNihon LLC(2) Compensation, etc.
Amount of payment
1. Compensation, to be paid to the accounting auditor for the fiscal year under review
135 million yen
2. Total sum of cash and profits on other assets that the Company and its subsidiaries
208 million yen
should pay to the accounting auditor
Notes:
1. The Company does not distinguish between auditor compensation regarding (i) auditing in accordance with
the Companies Act, and (ii) auditing in accordance with the Financial Instruments and Exchange Act. The
total of these amounts is recorded above.
2. Among major subsidiaries, Oki Data Americas, Inc., Oki Data Manufacturing (Thailand) Co., Ltd., Oki
Europe Ltd. and Oki Electric Industry (Shenzhen) Co., Ltd. have undergone statutory audits by accounting
auditors other than the accounting auditor of the Company.

(3) Policy regarding decision to dismiss or not reappoint the accounting auditor
The Audit & Supervisory Board will dismiss the accounting auditor if the auditor falls
under provisions of Article 340 of the Companies Act. In addition, if it is deemed unlikelythat the accounting auditor will be able to perform audits properly, upon the consent orrequest of the Audit & Supervisory Board, the Board of Directors will discuss whether tosubmit a proposal to the general meeting of shareholders for dismissal or nonreappointment of the accounting auditor.

- 19 -

(Translation)
6.

Policies and procedures of the Company
Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business, as well asother procedures of the Company, in order to assure the appropriateness of theCompany’s operations(1) Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business(i) 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 with the“Compliance Commitment.”(ii) The Company has established a Compliance Committee chaired by the Chief
Compliance Officer to decide on and examine basic policies regarding complianceprograms.
(iii) In accordance with the basic policies formulated by the Compliance Committee, thedivision responsible for compliance plans, draws up, and promotes specific measures
such as education and training for Directors and employees. In education andtraining, we aim to raise employee awareness about compliance by utilizing means
such as e-learning.
(iv) The Company provides rules on public-interest disclosure and provides a contact
point for reporting and consultation, aiming to detect any misconduct at its earliest
stages.
(v) 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.
(2) Procedures to retain and manage information relating to Directors’ conduct ofbusiness
The Company retains and stores information relating to the conduct of business byDirectors as appropriate in accordance with applicable laws, regulations and internal rules.
(3) Rules concerning risk management and other procedures(i) The Company has established a Risk Management Committee and promotes
measures for appropriately grasping risks that may occur in relation to its businessactivities and preventing such risks from emerging.
(ii) 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 countermeasuresand develops appropriate structures based on such policies.
(iii) If any risk occurs, the Company will set up an emergency countermeasure
headquarters to handle the risk.

- 20 -

(Translation)(4) Procedures to secure efficient business performance by Directors(i) The Company holds regular meetings of the Board of Directors once a month todecide important matters and supervise the work of Directors.
(ii) The Company holds meetings of the Board of Executive Officers consisting ofexecutive officers etc. to provide for flexible decision making on fundamental andsignificant matters in managing the business.
(iii) The Company assigns Directors responsibilities and authority pursuant to rules on
division of duties and authorities.
(5) Procedures to secure appropriate Group (Company and subsidiaries) operations(i) To ensure that Group companies run their operations properly, the Company has
established the “OKI Group Charter of Corporate Conduct” which sets out the values
for the entire Group. In addition, the Company has established the “OKI Group
Code of Conduct” as the code of conduct which all officers and employees of Group
companies should comply with, and is striving to make the code known to all of them.
(ii) The division responsible for compliance implements various measures for promoting
compliance common to the Group through each Group company’s compliance officer.
The Division also determines, through regular monitoring, the implementation statusof such measures by each Group company and reports to the Compliance Committee
on the results.
(iii) The Company, in accordance with Group management rules, determines the status ofeach Group company’s management activities and provides advice and guidance.
(iv) To secure the reliability of financial reporting, the Company and Group companies
establish an internal control system for financial reporting in accordance with related
laws and regulations, and strive to maintain and improve that system.
(6) Procedures for employees who assist Audit & Supervisory Board Members;
independence of employees from Directors(i) The Company assigns employees, who are not subject to Directors’ instructions andorders, as staff to assist Audit & Supervisory Board Members.
(ii) Any change in such staffing requires the prior consent of the Audit & Supervisory
Board.

- 21 -

(Translation)(7) Procedures for Directors and employees to report to Audit & Supervisory Board
Members; procedures for Audit & Supervisory Board Members to receive otherreports(i) 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.
(ii) Standing Audit & Supervisory Board Members attend meetings of the Board of
Directors and meetings of the Board of Executive Officers in order to understandimportant decision-making processes and the status of business operations, as well as
to inspect important documentation.
(iii) 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 matters deemednecessary.
(8) Other procedures to secure effective audits by Audit & Supervisory Board Members(i) 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.
(ii) 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 on-site
audits by the accounting auditor, and request reports from the accounting auditor on
the progress of audits when necessary.

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.

- 22 -

(Translation)

Consolidated Balance Sheet(as of March 31, 2014)(Unit: millions of yen)Account title

AmountAccount title(Assets)

Amount(Liabilities)

Current assets

Current liabilities

Cash and deposits

46,901

Notes and accounts payable

73,312

Notes and accounts receivable

133,383

Short-term borrowings

104,478

Securities

4,000

Other accrued expenses

34,956

Finished goods

34,203

Other current liabilities

29,525Work in process

22,652

Raw materials and supplies

28,429Deferred tax assets

6,503

Long-term borrowings

14,526

Other current assets

11,133

Lease obligations

4,912(8,684)

Deferred tax liabilities

18,307

278,522

Provision for Directors’ retirement benefits

Allowance for doubtful receivables
Total current assets

Total current liabilities
Long-term liabilities

Net defined benefit liability
Other long-term liabilities
Fixed assets

242,272368
20,22519,982

Total long-term liabilities

78,322

Total liabilities

320,595

Property, plant and equipment
Buildings and structures

22,471

Machinery, equipment and delivery
equipment

10,808Tools, furniture and fixtures

10,110Common stock

44,000Land

12,201

Additional paid-in capital

21,554Retained earnings

18,382

Treasury stock at cost

(432)

Construction in progress
Total property, plant and equipment
Intangible assets(Net Assets)
Shareholders’ equity

601
56,1939,600

Investments and other assets

Total shareholders’ equity

83,504

Accumulated other comprehensive income
4,333

Investments in securities

32,634

Net unrealized holding gain/loss on othersecurities

Net defined benefit asset

27,507

Loss on deferred hedges(389)

Other investments and other assets

8,882

Translation adjustments(10,358)

Allowance for doubtful receivables(828)

Remeasurements of defined benefit plans

11,644

Total investments and other assets

68,196

Total fixed assets

133,991

Total assets

412,514- 23 -

Total accumulated other comprehensive
incomeEquity warrants

5,230
79

Minority interests in consolidated subsidiaries

3,104

Total net assets

91,918

Total liabilities and net assets

412,514

(Translation)

Consolidated Statement of Operations(From April 1, 2013 to March 31, 2014)(Unit: millions of yen)Account title

AmountNet sales

483,112

Cost of sales

354,635

Gross profit

128,477

Selling, general and administrative expenses

101,281

Operating income

27,196

Non-operating income
Interest income

103

Dividend income

796

Share of profit of entities accounted for using equity
method339

Foreign exchange gain

11,277

Other

1,350

13,867

Non-operating expenses
Interest expense

2,522

Taxes and dues

448

Commission for syndicate loan

446

Other

991

Ordinary income

4,409
36,655Extraordinary profit
Gain on sale of investments in securities

553

Gain on negative goodwill

102

Insurance income

322

Gain on transfer of business

123

1,102

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

659

Loss on impairment of fixed assets

184

Business structure improvement expenses

4,311

Loss on liquidation of subsidiaries

841

Income before income taxes and minority interests

5,995
31,761

Income taxes

3,820

Income taxes deferred

394

Income before minority interests

4,214
27,546
187

Minority interests in earnings of consolidated
subsidiaries
Net income

27,359- 24 -

(Translation)

Consolidated Statement of Changes in Net Assets(Year ended March 31, 2014)(Unit: Millions of yen)
Shareholders’ equity
Common stock
44,000

Balance at April 1, 2013

Additional paidin capital
21,554Retainedearnings(7,788)Treasury stock at
cost
(399)

Total shareholders’equity57,366

Changes during the term
under review
Dividends from surplus(1,032)(1,032)

Net income

27,35927,359Purchases of treasury
stock
Increase by merger(32)

Change of scope of
consolidation

(32)

157

157

(313)

(313)

Net changes in items
other than shareholders’equity during the term
under review
Net changes during theterm under review
Balance at March 31, 2014--

26,171(32)

26,13844,00021,554

18,382(432)

83,504

Accumulated other comprehensive income

Balance at April 1,
2013

Net
unrealized
holding
gain/loss
on othersecurities

Loss ondeferredhedges

2,192

(656)

Minority
Total
Remeasureinterests in
Equityaccumulated
mentsofTranslation
warrants consolidated
otherdefinedadjustments
subsidiaries
comprehensive
benefit plansincome(2,829)-(1,293)

79

473

Total
net assets

56,625

Changes during theterm under review
Dividends fromsurplus(1,032)

Net income

27,359Purchases oftreasury stock
Increase bymerger(32)

Change of scopeof consolidation

(313)

157

Net changes in
items other thanshareholders’equity during theterm underreview

2,140

266(7,528)

11,644

6,523

-

2,631

9,155

Net changes during
the term underreview

2,140

266(7,528)

11,644

6,523

-

2,631

35,293

Balance at March
31, 2014

4,333

(389)

(10,358)

11,644

5,230

79

3,104

91,918- 25 -

(Translation)

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

Scope of consolidation(1) Number of consolidated subsidiaries: 90 companies
Names of major consolidated subsidiaries:
Oki Data Corporation; Oki Customer Adtech Co., Ltd.; Oki Wintech Co., Ltd.;OKI Software Co., Ltd.; Oki Proserve Co., Ltd.; Oki Data Americas, Inc.; OKI
Oki Data Manufacturing (Thailand) Co., Ltd.; Oki Europe Ltd.; Oki ElectricIndustry (Shenzhen) Co., Ltd.; Oki Banking Systems (Shenzhen) Co., Ltd.; andOKI Brasil Indústria e Comércio de Produtos e Tecnologia em Automação S.A.
(2) Names of major non-consolidated subsidiaries:
Oki India Private Limited and 8 other companies
Reasons for excluding from consolidation:
Total assets, retained earnings, net sales and net income or loss are individually
and wholly immaterial and have no significant influence.
(3) Changes in scope of consolidation:
Beginning from the fiscal year under review, Oki IDS Co., Ltd. was included
within the scope of consolidation as it was newly established; Oki Jainet
Supply Co., Ltd., Hatsucoh Support Service Co., Ltd., Oki Data MES Co., Ltd.
and OKI Brasil Indústria e Comércio de Produtos e Tecnologia em Automação
S.A. were included within the scope of consolidation because they became
subsidiaries following new acquisition of shares by the Company; Takasaki
Seimitsu Kogyosha K.K. was included within the scope of consolidation
because it became a subsidiary following additional acquisition of shares by theCompany; and, Toho Electronics Inc. was included within the scope of
consolidation because of an increase in its relative importance of this subsidiary.
The following three companies are excluded from the scope of consolidation
for the reasons given below:- Oki Systems Iberica, S.A.U. (due to merger with Oki Europe Ltd., which is a
consolidated subsidiary)- Oki Telecommunications Technology (Changzhou) Co., Ltd. (due to sale ofequity shares held)- Oki Electric America, Inc. (due to its liquidation)- 26 -

(Translation)
2.

Application of equity method(1) Number of affiliated companies to which the equity method is applied: 4 companies
Name of major company to which the equity method is applied:Oki Electric Cable Co., Ltd.
(2) Names of major non-consolidated subsidiaries and affiliated companies to which theequity method is not applied:
Non-consolidated subsidiaries:
Oki India Private Limited and 8 other companies
Affiliated companies: Oki Denki Bohsai Co., Ltd. and 1 other company
Reason for not applying the equity method:
The companies individually have little influence and have no significance as awhole on net income or loss and retained earnings.

3.

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

4.

Accounting standards(1) Valuation standards and methods for significant assets(i) Negotiable securities
The Company and its domestic consolidated subsidiaries value securities inaccordance with how they are held as indicated below. Overseas consolidated
subsidiaries apply the lower of cost or fair value.
Other negotiable securities:
Marketable securities:
Stated at fair value based on the market price at the end of the
fiscal year
(Any difference between book value and fair value is included in
net assets; sales costs are calculated by the moving averagemethod.)Non-marketable securities:
Stated at cost based on the moving average method(ii) Inventories
The Company and its domestic consolidated subsidiaries evaluate inventories asfollows, and overseas consolidated subsidiaries primarily apply the lower of cost or fairvalue.
Finished goods:
Principally stated at cost based on the moving average method.
(Balance sheet values are measured by the method of devaluing
the book price to reflect declines in profitability.)- 27 -

(Translation)Work in process:Principally stated at cost based on the specific identification
method. (Balance sheet values are measured by the method ofdevaluing the book price to reflect declines in profitability.)
Raw materials and supplies:
Principally stated at cost based on the moving average method.
(Balance sheet values are measured by the method of devaluing
the book price to reflect declines in profitability.)(iii) Derivatives
Stated at fair value(2) Depreciation and amortization(i) Property, plant and equipment (excluding lease assets)
The Company and its domestic consolidated subsidiaries primarily apply the
declining-balance method; overseas consolidated subsidiaries primarily apply thestraight-line method.
(ii) Intangible assets (excluding lease assets)
The Company and its domestic consolidated subsidiaries apply the straight-line
method.
For software sold in the market, amortization is based on the estimated amounts ofsales in the estimated number of years for sales (3 years). For software for internaluse, the straight-line method, based on the estimated durable years (5 years), is used.
Overseas consolidated subsidiaries primarily apply the straight-line method.
(iii) Lease assets
Lease assets relating to finance lease transactions that do not transfer ownershipare depreciated over the lease contract’s lifetime by the straight-line method, assuming
the residual value is zero.
In addition, out of the finance lease transactions that do not transfer ownership,lease transactions whose lease transaction commencement date was on or prior to
March 31, 2008 are accounted for on a basis similar to ordinary rental transactions.
(3) Basis for provision of reserves(i) Allowance for doubtful receivables
To prepare for any losses of accounts receivable and loans, the Company and its
domestic consolidated subsidiaries calculate the amount of potential loss by using thehistorical loss ratio for non-classified loans/receivables and individual assessment forclassified loans/receivables. Overseas consolidated subsidiaries calculate the amountof potential losses by individually assessing the possibility of collection for specificloans/receivables.
(ii) Provision for Directors’ retirement benefits
Some consolidated subsidiaries register the necessary amount at the end of the- 28 -

(Translation)
year in accordance with internal rules to prepare for the payment of Directors’
retirement allowance.
(4) Basis for provision of income and expense
Basis for provision of income relating to contract work and software development
contracts
a. Income from those with certain results in progress before the end of the fiscal year
Percentage-of-completion method (The progress ratio of construction is estimatedby the cost proportion method.)b. Other income
Inspection basis (completed-contract method for some domestic consolidated
subsidiaries)(5) Important hedge accounting methods(i) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward
exchange contracts and currency swap contracts eligible for allocation treatment.
Special treatment is applied to interest rate swaps that meet requirements for special
treatment.
(ii) Means of hedging and coverage
Forward exchange contracts and currency swap contracts are used to hedge
fluctuations of exchange rates on credits and debts in foreign currencies. Interest rate
swaps are employed to hedge fluctuations of market interest rates on variable-rate
short-term borrowings and long-term borrowings.
(iii) Hedging policy
Derivative transactions are used to hedge fluctuations of market rates on credits
and debts.
(iv) Assessment method of the effectiveness of hedges
To determine the effectiveness of hedges, the Company compares the accumulated
total of market fluctuations or cash flow fluctuations for the targets of hedging and thatof the market fluctuations or the cash flow fluctuations for the means of hedging,
during the period from the start of hedging to the assessment. The Company thenmakes a decision based on the changes of the two.
(6) Amortization of goodwill and amortization period
Goodwill is evenly amortized over its useful life (mainly five years).
(7) Other important matters in preparation of consolidated financial statements(i) Method of accounting for retirement benefitsa. Attributing expected retirement benefits to a period
When calculating retirement benefit obligations, the Company applies thepoint system or the straight-line attribution to attribute expected retirement
benefits to the period until the end of the fiscal year under review.

- 29 -

(Translation)b.

Accounting for actuarial gains and losses, prior service costs, and differences
caused by changes in accounting standards
Differences caused by changes in accounting standards are amortized over 15
years except for consolidated subsidiaries that amortize the difference in the firstyear of application and some overseas consolidated subsidiaries that directlydeduct the difference from retained earnings.
Prior service costs are amortized by the straight-line method over a set
number of years (11 to 13 years) within the average remaining years of service of
employees.
Actuarial gains and losses are amortized by the straight line method over a
set number of years (11 to 13 years) within the average remaining years of serviceof employees at the time of their accrual in each fiscal year. Amortization ofsuch gains and losses is deemed to be effective from the year after the one inwhich they arise.
(ii) Accounting processing of consumption tax
The tax-exclusion method is used for accounting of consumption tax and local
consumption tax.
(iii) Application of consolidated tax payment
The consolidated tax payment is applied.
Changes in Accounting Policies
From the fiscal year under review, the Company has applied the “Accounting Standard
for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012; the “Retirement Benefits
Accounting Standard”) and the “Guidance on Accounting Standard for Retirement Benefits”(ASBJ Guidance No.25, May 17, 2012; the “Guidelines for Retirement Benefits”) (excluding,however, provisions provided for in the main text of Paragraph 35 of the Retirement Benefits
Accounting Standard and that of Paragraph 67 of the Guidelines for Retirement Benefits).
The Company changed to the method of posting the amount after deducting pension
assets from retirement benefit obligations as net defined benefit liability, and books
unrecognized differences caused by changes in accounting standards, unrecognized priorservice cost, and unrecognized actuarial gains and losses as such liability. In case theamount of pension assets exceeds retirement benefit obligations, they are posted as net
defined benefit asset.
Regarding application of the Retirement Benefits Accounting Standard, the Company
abides by the transitional handling provided for in Paragraph 37 of the Retirement Benefits
Accounting Standard, and makes an addition/reduction of the effect from such change inremeasurements of defined benefit plans in accumulated other comprehensive income at theend of the fiscal year under review.
As a result, at the end of the fiscal year under review, the Company posted ¥27,507
million as net defined benefit asset and ¥20,225 million as net defined benefit liability.
Accumulated other comprehensive income increased by ¥11,644 million.
Meanwhile, net assets per share increased by ¥16.00.

- 30 -

(Translation)
Notes to Consolidated Balance Sheet
1. Assets pledged as collateral
Buildings and structures
Land
Investments in securities
Total
Liabilities collateralized by the above assets:
Short-term borrowings
Long-term borrowings
Total
2.

Accumulated depreciation on property, plant and equipment

3.

Liabilities for guarantee
Guarantee for borrowings by employees- 31 -¥326 million¥138 million¥14,765 million¥15,230 million¥6,795 million¥359 million¥7,154 million¥151,723 million¥460 million

(Translation)
Notes to Consolidated Statement of Changes in Net Assets
1. Matters concerning class and total number of shares outstanding as of the end of FY2013
Common Stock731,438 thousand sharesClass A Preferred Stock
30 thousand shares
2.

Matters concerning appropriation of surplus(1) Dividends paid
Resolution

Class ofshares

Source ofdividends

Total
dividends(millions ofyen)

Dividends
per share(yen)

Recorddate

Effective
date

Ordinary General
Meeting of
Shareholders
on June 26, 2013

Class A
Preferred
Stock

Retainedearnings

1,032

34,410.00

March 31,2013

June 27,2013(2) Dividends for which the record date falls in the fiscal year under review and the effective
date falls in the following fiscal year.
ProposalOrdinary General
Meeting of
Shareholders
on June 25, 2014

3.

Class ofsharesCommonstock
Class A
Preferred
Stock

Source ofdividends

Total
dividends(millions ofyen)

Dividends
per share
(yen)

2,184

3.00

Retainedearnings
1,004

Recorddate

Effective
date

March 31,2014

June 26,
2014

33,490.00

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

Breakdown of equity warrants

The Company

No. 3 Equity Warrants(issued on July 20, 2004)
No. 4 Equity Warrants(issued on July 20, 2005)
No. 5 Equity Warrants(issued on July 28, 2006)
No. 6 Equity Warrants(issued on July 28, 2006)
No. 7 Equity Warrants(issued on July 27, 2007)
No. 8 Equity Warrants(issued on July 27, 2007)

Type of shares to be issued
upon exercise of equity
warrants

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

Common stock

452,000

Common stock

442,000

Common stock

185,000

Common stock

157,000

Common stock

287,000

Common stock

222,000- 32 -

(Translation)

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

Disclosure concerning fair value of financial instruments
As of March 31, 2014 (consolidated balance sheet date), the amount recorded in the
consolidated balance sheet, fair value, and the amount of differences are as shown in the tablebelow. Any item whose fair value is deemed extremely difficult to assess is excluded from thetable. (See Note 2.)(Unit: millions of yen)Amount recorded inconsolidated balance
sheet(1) Cash and deposits

46,901(2) Notes and accounts receivable

133,383

Allowance for doubtful receivables (*1)

Fair value

Difference

46,901-

125,205-(8,177)125,205(3) Securities and investments in securities

27,017

26,274(742)(4) Notes and accounts payable(73,312)(73,312)-(5) Short-term borrowings (*2)(55,410)(55,410)-(6) Other accrued expenses(34,956)(34,956)-(7) Long-term borrowings (*2)

(63,594)(63,664)70(8) Derivative transactions
(524)
(524)
(*1) Allowance for doubtful receivables specifically provided for notes and accounts receivable is deducted.
(*2) Long-term borrowings (¥49,067 million) that will be reimbursed within one year are classified as “short-termborrowings” in the consolidated balance sheet.
Notes:
1.
Disclosure concerning methods of calculation of fair value of financial instruments, securities and derivativetransactions(1) Cash and deposits and (2) Notes and accounts receivable
These items are settled over a short period of time and their fair value is virtually equal to their book value.
Hence, their fair value is based on the relevant book value.
(3) Securities and investments in securities
The fair value of equity securities is based on their prices determined at the financial instruments exchanges,
and the fair value of bonds is based on the quotations offered by the correspondent financial institution.
(4) Notes and accounts payable, (5) Short-term borrowings, and (6) Other accrued expenses
These items are settled over a short period of time and their fair value is virtually equal to their book value.

- 33 -

(Translation)
Hence, their fair value is based on the relevant book value.
Long-term borrowings
The fair value of these items is based primarily on the method of calculation whereby the sum of principal
and interest is discounted by an assumed interest rate on the assumption that the said sum is freshly
borrowed in a similar manner. Some long-term borrowings with floating interest rates are prescribed to be
subject to special accounting treatment applicable to interest rate swaps (see (8) below). Hence, the fairvalue of a long-term borrowing is based on the method of calculation whereby the sum of principal andinterest, 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 similar manner.
(8) Derivative transactions
Derivative transactions subject to allocation treatment applicable to currency swaps, and to special
accounting treatment applicable to interest rate swaps are treated in combination with long-term borrowings
as hedged items. Hence, their fair value is included in that of long-term borrowings.
Financial instruments whose fair value is considered extremely difficult to assess
Unlisted equity securities (¥9,598 million on the consolidated balance sheet) and investments in a limited liability
joint business partnership (¥18 million on the consolidated balance sheet) are not included in (3) Securities andinvestments in securities because they have no market price and it is deemed extremely difficult to assess their fairvalues.
(7)2.

Notes to Per-share Information
1. Net assets per share:¥79.32
2. Net income per share:¥36.21

Notes to Business Combination
Business combination through acquisition
1.
Outline of business combination(1) Name of acquired firm and description of business
Name of acquired firm: BR Indústria e Comércio de Produtos e Tecnologia em
Automação S.A.
Description of business: Design, manufacturing, sale, and maintenance/services
business of automation equipment(2) Main reason for business combination
The Company set business expansion in global markets as one of its management
strategies in the Mid-term Business Plan 2016 announced on November 12, 2013.
While the Company has a track record of introducing cash-recycling ATMs in themarkets of China, Russia, and Indonesia, to expand its ATM business in the Latin
American region, the Company decided to acquire shares of a company succeeding astrong customer base and maintenance network of Itautec S.A. –Grupo Itautec.
(3) Date of business combination
January 10, 2014
(4) Legal form of business combination
Acquisition of shares in consideration for cash(5) Name of the firm after business combination
OKI Brasil Indústria e Comércio de Produtos e Tecnologia em Automação S.A.
(6) Ratio of voting rights acquired70%(7) Main reason Company selected the company acquired
The Company aimed to acquire shares in consideration for cash.

- 34 -

(Translation)

2.

Period for business performance of acquired firm included in the consolidated financial
statements
Because December 31, 2013 is a deemed acquisition date and the Company usedfinancial statements as of December 31, which was the account settlement date of theacquired firm, the financial results of the acquired firm are not included in the fiscal year
under review.

3.

Acquisition cost of acquired firm and breakdown
Consideration for the acquisition
Cash
Costs directly incurred for acquisition
Advisory expenses
Acquisition cost

¥6,070 million¥609 million¥6,680 million

4.

Amount of goodwill, reasons, amortization method, and amortization period(1) Amount of goodwill¥626 million
It should be noted, however, that this amount is calculated on a tentative basis
based on reasonable information available at this point in time, because acquisition
cost has yet to be finalized at the end of the fiscal year under review and the Company
is in the process of allocating acquisition costs.
(2) Reason
Goodwill arises from future potential profits of business operations.
(3) Amortization method and amortization period
Amortization by the straight-line method is carried out over the effective period.
The amortization period is to be determined from the results of allocating acquisition
costs.

5.

Assets received and liabilities assumed on date of business combination and theirbreakdown of major items
Current assets¥12,526 million
Fixed assets¥2,576 million
Total assets¥15,102 million
Current liabilities¥5,597 million
Long-term liabilities¥346 million
Total liabilities¥5,944 million
The figures above are tentative amounts at the end of the fiscal year under review
because allocation of acquisition costs is underway.

6.

Approximate effects that will be reflected in the consolidated statement of operations for the
fiscal year under review on the assumption that the business combination is completed on
the first day of the fiscal year under review and its calculation method
Because it is difficult to calculate the approximate amount in a reasonable manner, theCompany does not make an estimation.

- 35 -

(Translation)

Transcript of Accounting Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
May 16, 2014
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yoshimi Kimura,Engagement Partner, Certified Public Accountant
Akira Sato,Engagement Partner, Certified Public Accountant
Makoto Usui,
Engagement Partner, Certified Public Accountant
Yukiyasu Yamakawa,Engagement Partner, Certified Public Accountant
We have audited the consolidated financial statements – the consolidated balance sheets, the consolidated statementof operations, the consolidated statement of changes in shareholders equity and notes to the consolidated financial
statements – of Oki Electric Industry Co., Ltd. for the 90th term from April 1, 2013 to March 31, 2014 inaccordance with Article 444 Paragraph 4 of the Companies Act.
Responsibility of management for preparing consolidated financial statements
Oki Electric Industry’s management is responsible for preparing and presenting fairly these consolidated financial
statements in accordance with corporate accounting standards generally accepted in Japan. This includes
designing and operating internal control that the management determines necessary to prepare and fairly present
these consolidated financial statements that are without material misstatement due to fraud or errors.
Responsibility of auditors
Our responsibility is to express our independent opinion regarding these consolidated financial statements based on
audits by Ernst & Young ShinNihon LLC. We conducted our audit in accordance with auditing standards
generally accepted in Japan. These auditing standards require that we prepare audit plans and implement audit
based on them to obtain reasonable assurance as to whether the consolidated financial statements are withoutmaterial misstatement.
The audit requires procedures to obtain audit evidence about amounts and disclosure of these consolidated financial
statements. The audit procedures are selected and applied based on evaluation of risks about material
misstatement of these consolidated financial statements due to fraud or errors. Although the purpose of the audit
is not to express our opinion about the effectiveness of internal control, we consider the internal control associatedwith preparation and fair presentation of these consolidated financial statements, in order to plan appropriate audit
procedures in line with actual situations at the time of risk evaluation. Also, our audit includes reviews ofaccounting policies, and methods that management adopts, and an evaluation of management estimates and thepresentation of the consolidated financial statements as a whole.
We believe we have obtained enough and appropriate audit evidence as the basis for our opinion.
Audit opinion
We concluded that the consolidated financial statements fairly present in all aspects Oki Electric Industry’s and its
subsidiaries’ assets and income or loss in accordance with corporate accounting standards generally accepted inJapan.
Conflict of interest
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm (Ernst &Young ShinNihon LLC) and the respective engagement partners.

- 36 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2014)(Unit: millions of yen)Account title(Assets)

AmountCurrent assets
Cash and deposits
Notes receivable
Accounts receivable, trade
Lease investment assets
Securities
Finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Short-term loans
Accounts receivable-other
Deferred tax assets
Other current assets
Allowance for doubtful receivables
Total current assets

22,755783
66,703
3,298
4,000
4,645
14,445
6,950
578
51,866
6,959
2,697
451
(46)
186,089

Fixed assets
Property, plant and equipment
Buildings
Accumulated depreciation
Structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Vehicle and delivery equipment
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Land
Construction in progress
Total property, plant and equipment
Intangible assets
Facility rights
SoftwareTotal intangible assets

37,229(26,634)
2,475(2,165)
13,872(11,869)
72(60)
33,381(27,281)

10,595
309
2,002
11
6,100
8,397
179
27,597
116
5,482
5,598

Investments and other assets
Investments in securities
Shares of subsidiaries and affiliates

24,99068,587

Contribution
Contribution in subsidiaries andaffiliates
Long-term loans to subsidiaries andaffiliates
Long-term prepaid expenses
Claims provable in bankruptcy,
rehabilitation and other
Lease and guarantee deposits
Other investments and other assets
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

89
617
4,109

Account title(Liabilities)
Current liabilities
Notes payable
Accounts payable, trade
Short-term borrowings
Current portion of long-term borrowings
Lease obligations
Accounts payable, others
Other accrued expenses
Income taxes payable
Advances received
Deposits received
Asset retirement obligations
Other current liabilities
Total current liabilities

Amount339
45,981
36,17648,755851
11,01015,383
650
1,069
2,591
11
417
163,238

Long-term liabilities
Long-term borrowings
Lease obligations
Deferred tax liabilities
Retirement benefits
Provision for loss on business of
subsidiaries and affiliates
Asset retirement obligations
Long-term accounts payable-otherTotal long-term liabilities
Total liabilities

861
9,588
72,097
235,336(Net Assets)
Shareholders’ equity
Common stock
Additional paid-in capital
Capital reserve
Other additional paid-in capital
Retained earnings
Other retained earnings
Retained earnings carried forward
Treasury stock at cost
Total shareholders’ equity

44,00021,55315,0006,553
17,475
17,475
17,475(419)
82,609Valuation, translation adjustments and others
Net unrealized holding gain/loss on othersecurities
Loss on deferred hedges
Total valuation, translation adjustments
and others
Equity warrants

13,027
3,082
5,164
11,51628,855

3,486
(411)
3,074

79
Total net assets

85,763

Total liabilities and net assets

321,099

999
33
3,164
328
(1,105)
101,814135,010321,099- 37 -

(Translation)

Non-Consolidated Statement of Operations(From April 1, 2013 to March 31, 2014)(Unit: millions of yen)Account title

AmountNet sales

238,786

Cost of sales

183,624

Gross profit

55,161

Selling, general and administrative expenses

42,535

Operating income

12,626

Non-operating income
Interest income

705

Interest income on securities

6

Dividend income

770

Royalty income from corporate brand

1,353

Foreign exchange gain

392

Other

444

3,672

Non-operating expenses
Interest expenses

1,935

Commission for syndicate loan

446

Other

657

Ordinary income

3,039
13,259Extraordinary profit
Gain on sale of property, plant and equipment

17

Gain on sale of investments in securities

406

Gain on sale of contribution in subsidiaries and affiliates

31

456

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

423

Loss on impairment of fixed assets

163

Write-downs of investments in unconsolidated subsidiaries and othersecurities

33

Loss on valuation of contribution in subsidiaries and affiliates

277

Provision for loss on business of subsidiaries and affiliates

1,143

Income before income taxes

2,040
11,675

Income taxes(513)

Income taxes deferred

130

Net income(382)
12,057- 38 -

(Translation)

Non-Consolidated Statement of Changes in Net Assets(Year ended March 31, 2014)(Unit: millions of yen)
Shareholders’ equity
Additional paid-in capital

Commonstock

Balance at April
1, 2013

Other
additional
paid-in
capitalCapitalreserve

44,00015,000Retained earnings

Total
additional
paid-in
capital

6,553

Other
retainedearnings
Retainedearnings
carriedforward21,553Total
retainedearnings

Treasurystock at
cost

Total
shareholders’equity(386)

71,616

6,450

6,450

Dividends
from surplus(1,032)(1,032)(1,032)

Net income

12,057

12,057

12,057

Changes during
the term underreview

Purchases oftreasury stock

(32)

(32)

Net changes
in items otherthanshareholders’equity during
the term
under review
Net changes
during theterm underreview----

11,025

11,025(32)

10,992

Balance at
March 31, 2014

44,00015,0006,553

21,553

17,475

17,475(419)

82,609Valuation, translation adjustments and others

Balance at April 1,
2013

Net unrealized
holding gain/loss onother securities

Loss on deferredhedges

1,718

(670)

Total valuation,translation
adjustments andothers
1,048

Equity warrants

Total net assets

79

72,744

Changes during
the term underreviewDividends fromsurplus(1,032)

Net income

12,057Purchases oftreasury stock(32)

Net changes in
items other thanshareholders’equity during theterm under review

1,767

258

2,026

-

2,026

Net changes during
the term underreview

1,767

258

2,026

-

13,019Balance at March 31,
2014

3,486

(411)

3,074

79

85,763- 39 -

(Translation)

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

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

2.

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

3.

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

4.

Depreciation and amortization
Property, plant and equipment (excluding lease assets): Declining-balance method
The straight-line method is applied to buildings, excluding annexed structures,acquired on or after April 1, 1998.
Intangible assets (excluding lease assets)
Software for sale in the market:
Amortization method based on the estimated amounts of sales in the estimatednumber of years for sales (3 years)
Software for internal use:
Straight-line method based on the estimated durable years (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- 40 -

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

Basis for provision of reserves
Allowance for doubtful receivables
To prepare for any losses on accounts receivable and loans, the Company calculates theamount of potential loss by using the historical loss ratio in the case of non-classified
loans/receivables and by individual assessment in the case of classified loans/receivables.
Provision for loss on construction contracts
To prepare for any losses on construction contracts, the estimated amount of losses forthe following fiscal years are calculated for some of the orders backlog as of the end of the
fiscal year under review, which are likely to incur losses and for which the amounts thereof
can be reasonably estimated.
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.
Differences for changes in accounting standards are amortized over 15 years.
Prior service cost is amortized by the straight-line method over a certain number of years(13 years) within the average remaining years of service of employees.
The actuarial difference is amortized proportionately using the straight-line method overa certain number of years (13 years) within the average remaining service period of theemployees from the fiscal year after the one in which it arises.
Provision for loss on business of subsidiaries and affiliates
To prepare for any losses on business of subsidiaries and affiliates, the estimated amountof loss on business is calculated in consideration of the financial position and operating
results of the relevant subsidiaries and affiliates.

6.

Hedge accounting methods(1) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward exchange
contracts and currency swap contracts eligible for allocation treatment. Special
treatment is applied to interest rate swaps that meet the requirements for special
treatment.
(2) Means of hedging and hedged item
Forward exchange contracts and currency swap contracts are used to hedge fluctuationsof exchange rates on credits and debts in foreign currencies. Interest rate swaps are
employed to hedge fluctuations of market interest rates on variable-rate short-termborrowings and long-term borrowings.
(3) Hedging policy
Derivative instruments are used to hedge fluctuations of market rates on credits and debts.

- 41 -

(Translation)(4) Assessment method of hedging effectivenessTo determine the effectiveness, the Company compares the accumulated total of themarket fluctuations or the cash flow fluctuations for the hedged item and that of themarket fluctuations or the cash flow fluctuations for the means of hedging, during theperiod from the start of hedging to the assessment. The Company then makes adecision based on the changes of the two.
7.

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

- 42 -

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

¥14,765 million¥6,700 million

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

¥3,529 million¥3,087 million($30,000 thousand)Oki Europe Ltd. and its subsidiaries¥2,891 million(16,390 thousand pounds sterling, 596 thousand euro)Oki Hong Kong Ltd.
¥2,052 million($18,962 thousand, HK$7,590 thousand)Oki Data Manufacturing (Thailand) Co., Ltd.
¥1,106 million(350,000 thousand baht)
Six other entities:¥1,139 million
Total:¥13,806 million
3.

Monetary claims receivable from and payable to subsidiaries and affiliates
Short-term monetary claims receivable from subsidiaries and affiliates: ¥69,741 million
Long-term monetary claims receivable from subsidiaries and affiliates: ¥5,270 million
Short-term monetary claims payable to subsidiaries and affiliates:¥23,604 million
Long-term monetary claims payable to subsidiaries and affiliates:¥11 million- 43 -

(Translation)
Notes to Non-consolidated Statement of Operations
Transactions with subsidiaries and affiliates
Sales:
Purchases:
Non-operating transactions:¥34,893 million¥60,409 million¥5,050 million

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: 3,341 thousand shares

Notes to Deferred Tax Accounting
Major factors giving rise to deferred tax assets and liabilities
Deferred tax assets
Loss carry forwards
Nondeductible provision for loss on business of subsidiaries andaffiliates
Nondeductible retirement benefits
Nondeductible write-downs of shares of subsidiaries and affiliates
Nondeductible accounts payable-other due to changes in retirement
benefit plans
Adjustments of losses on transfers among consolidated subsidiaries
Nondeductible accrued bonuses
Nondeductible loss on impairment of fixed assets
Nondeductible write-downs of inventories
Nondeductible bad debts expenses
OthersSubtotal deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Nondeductible unrealized gain on contribution of securities to thepension trust
Net unrealized holding gain/loss on other securities
OthersTotal deferred tax liabilities
Net deferred tax assets- 44 -¥12,705 million¥10,388 million¥8,748 million¥6,287 million¥4,026 million¥4,009 million¥1,547 million¥1,043 million¥927 million¥416 million¥2,254 million¥52,355 million¥(48,948) million¥3,406 million¥(3,830) million¥(1,904) million¥(139) million¥(5,874) million¥(2,467) million

(Translation)

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

Amount equivalent to acquisition cost of leased assets as of the end of the term under review¥34 million
Amount equivalent to accumulated depreciation of leased assets as of the end of the term
under review¥23 million
Amount equivalent to unexpired lease payment of leased assets as of the end of the term
under review¥12 million- 45 -

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

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Company name

OKI Software Co., Ltd.

Oki Hong Kong, Ltd.

Oki Data Corporation

Oki Proserve Co., Ltd.

Location

Warabi,
Saitama Pref.

Hong Kong

Minato-ku,
Tokyo

Minato-ku,
Tokyo

CapitalBusiness¥400
millionDevelopment, design,
manufacture andmaintenance ofsoftware, systembuilding services,
SI/solution services,
consulting outsourcing
and sales of
information equipment

HK$80,000
thousand¥29,000
millionHoldings company,
material procurement

Development,
manufacture and saleof printing equipment
and related solutions¥321
millionFacility business,
human resource
management, designbusiness, logistics
business

Voting right
ratio(Direct)
100%(Direct)
100%(Direct)
100%(Direct)
100%

Relationship withrelated party

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

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

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

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

Description oftransactions

Purchase ofservices

Transaction
amount(mil. yen)Account item

Endingbalance(mil. yen)Accounts
payable,
trade

6,117

Other
accruedexpenses

775

20,762

Sales ofproducts

15,788

Accounts
receivable,
trade

5,778

Lending offunds

12,853

Short-term
loans

13,482

Lending offunds

25,729
Short-term
loans

26,000

Short-term
loans

700

Long-termloans tosubsidiaries
and affiliates

2,600

Debt
guarantee

Lending of
funds

3,529

3,484

Notes:
1. The transactions amount excludes consumption tax, while the ending balance includes consumption tax.
2. Conditions of transactions and policy in determining conditions(1) The Company determines conditions regarding purchase of services and sale of products based on market
prices.
(2) The Company determines the interest rate for the lending of funds by taking the market rate of interest into
consideration. Transaction amount shows the average balance during the fiscal year because the transactions
are repetitive.
(3) The Company provided a debt guarantee for bank borrowings of Oki Data Corporation and received aguarantee commission of 0.2% p.a.
3. For the loans to three subsidiaries, the Company recorded an allowance for doubtful receivables of ¥1,005 million in
total. The Company also recorded a provision of allowance for doubtful receivables of ¥160 million in the fiscal
year under review.

Notes to Per-share Information
1. Net assets per share:¥75.102. Net income per share: ¥15.18- 46 -

(Translation)

Transcript of Accounting Auditors’ Report

Independent Auditors’ Report
May 16, 2014
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yoshimi Kimura,Engagement Partner, Certified Public Accountant
Akira Sato,Engagement Partner, Certified Public Accountant
Makoto Usui,
Engagement Partner, Certified Public Accountant
Yukiyasu Yamakawa,Engagement Partner, Certified Public Accountant
We have audited the non-consolidated financial statements – the non-consolidated balance sheets, the nonconsolidated statement of operations, the non-consolidated statement of changes in shareholders equity and notes tothe non-consolidated financial statements – and its supporting schedules of Oki Electric Industry Co., Ltd. for the90th term from April 1, 2013 to March 31, 2014 in accordance with Article 436 Paragraph 2 Item 1 of theCompanies Act.
Responsibility of management for preparing non-consolidated financial statements and its supporting schedules
Oki Electric Industry’s management is responsible for preparing and presenting fairly these non-consolidated
financial statements and its supporting schedules in accordance with corporate accounting standards generally
accepted in Japan. This includes designing and operating internal control that the management determines
necessary to prepare and fairly present these non-consolidated financial statements and its supporting schedules thatare without material misstatement due to fraud or errors.
Responsibility of auditors
Our responsibility is to express our independent opinion regarding these non-consolidated financial statements andits supporting schedules based on audits by Ernst & Young ShinNihon LLC. We conducted our audit inaccordance with auditing standards generally accepted in Japan. These auditing standards require that we prepare
audit plans and implement audit based on them to obtain reasonable assurance as to whether the non-consolidated
financial statements and its supporting schedules are without material misstatement.
The audit requires procedures to obtain audit evidence about amounts and disclosure of these non-consolidated
financial statements and its supporting schedules. The audit procedures are selected and applied based on
evaluation of risks about material misstatement of these non-consolidated financial statements and its supporting
schedules due to fraud or errors. Although the purpose of the audit is not to express our opinion about theeffectiveness of internal control, we consider the internal control associated with preparation and fair presentation ofthese non-consolidated financial statements and its supporting schedules, in order to plan appropriate audit
procedures in line with actual situations at the time of risk evaluation. Also, our audit includes reviews ofaccounting policies, and methods that the management adopts, and an evaluation of management estimates and thepresentation of the non-consolidated financial statements and its supporting schedules as a whole.
We believe we have obtained enough and appropriate audit evidence as the basis for our opinion.
Audit opinion
We concluded that the non-consolidated financial statements and its supporting schedules fairly present in all
aspects Oki Electric Industry’s assets and income or loss in accordance with corporate accounting standards
generally accepted in Japan.
Conflict of interest
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm (Ernst &Young ShinNihon LLC) and the respective engagement partners.

- 47 -

(Translation)

Transcript of Audit & Supervisory Board’s Report

Audit & Supervisory Board’s Report
We, the Audit & Supervisory Board, have prepared upon consultation this Audit Report based on reports compiled by each
Audit & Supervisory Board Member with respect to Directors’ performance of their duties during the 90th fiscal year from
April 1, 2013 to March 31, 2014, as follows:
1. Auditing methods used by Audit & Supervisory Board Members and the Audit & Supervisory Board, and details ofaudit
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 andaccounting auditors on the status of the execution of their duties and asked them for explanations as needed.
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 andstrived to collect information and improve the audit environment as well as attending meetings of the Board of Directors andother 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 businessand financial conditions at the head office and principal operating offices. In addition, we have periodically received reports
from Directors and employees, among others, required explanation when necessary, and made opinions with regard to thestatus 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 theCompanies Act as necessary for ensuring compliance with laws and the Company’s Articles of Incorporation in theperformance of duties by Directors, described in the Business Report, and for ensuring appropriateness of duties of a joint
stock company. Also, we have maintained good communications and exchanged information with directors, audit &supervisory board members and others of the subsidiaries of the Company, and received from the subsidiaries reports on theirbusiness conditions as needed. Based on the methods mentioned above, we have reviewed the business report for the said
fiscal year and their supplementary schedules.
We have also 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 asnecessary. The accounting auditors reported to us that “systems for ensuring proper execution of duties” (listed in each itemof 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 financial statements for the said fiscal year (balance sheet,statement of operations, statement of changes in shareholders’ equity, and notes to non-consolidated financial statements),
their supplementary schedules and consolidated financial statements (consolidated balance sheet, consolidated statement ofoperations, consolidated statement of changes in shareholders’ equity, and notes to consolidated financial statements).
2. Results of Audit(1) Results of audit of the business report
1) We consider that the business report and its supplementary schedules fairly present the situation of the Company
in accordance with relevant laws and regulations and the Company’s Articles of Incorporation.
2) 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.
3) We consider that the details of the resolution made by the Board of Directors concerning internal control
procedures are proper. 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.
(2) Results of audit of financial statements and their supplementary schedules
We consider that the auditing methods and results of the Company’s Accounting Auditors, Ernst & Young ShinNihon
LLC, are proper.
(3) Results of audit of consolidated financial statements
We consider that the auditing methods and results of the Company’s Accounting Auditors, Ernst & Young ShinNihon
LLC, are proper.
May 19, 2014
The Audit & Supervisory Board, Oki Electric Industry Co., Ltd.
Shuichi Kawano, Standing Audit & Supervisory Board Member
Tsutomu Tai, Standing Audit & Supervisory Board Member
Kuninori Hamaguchi, Outside Audit & Supervisory Board Member
Kaoru Yoshida, Outside Audit & Supervisory Board Member- 48 -

(Translation)

Reference Documents for the General Meeting of Shareholders
Agenda and Reference Matters
Agenda 1: Appropriation of Surplus
The Company places returning profits stably and continuously to our shareholders as themost paramount task and determines the dividend amount for common stock based on the
Company’s performance. In view of the improvement to its business performance during the
fiscal year under review, it proposes to resume dividend payments as follows.
As for Class A Preferred Stock dividends, the Company proposes the following inaccordance with the terms and conditions for Class A Preferred Stock stipulated at the time ofissuance.
1.

Type of dividend asset
Cash

2.

Allocation of dividend assets and total amount of dividends
Dividends on the Company’s common stock and Class A Preferred Stock at the end of the
fiscal year under review are as follows:
Dividends per share
Total dividends
Common stock¥3¥2,184,291,981
Class A Preferred Stock¥33,490¥1,004,700,000
Total¥3,188,991,981

3.

Effective date of dividend of surplus
June 26, 2014

- 49 -

(Translation)

Agenda 2: Election of Five (5) Directors
The tenure of office of Directors Naoki Sato, Sei Yano, Takao Hiramoto, and Takuma
Ishiyama, will expire at the end of this general meeting of shareholders.
Five candidates for directors are shown as follows.
Candidates for Directors (Five):
CandidatenumberName(Date of birth)

1

Naoki Sato
(October 27, 1948)

2

3

Takao Hiramoto(July 31, 1952)*Toshinao Takeuchi(May 20, 1957)

Brief personal profile, position andresponsibility in the Company and significant concurrent
positionsApr. 1972
Joined The Fuji Bank, Limited
May 1999
Senior Manager, Sales Division No. 5, The Fuji
Bank, Limited
Jun. 2001
Executive Officer, Senior Manager, Sales
Division No. 5, The Fuji Bank Limited
Apr. 2002
Senior Executive Officer, Mizuho Corporate
Bank, Ltd.
Apr. 2004
Senior Vice President of Oki Electric Industry
Co., Ltd.
Jun. 2004
Managing Director
Apr. 2007
Senior Managing Director
Jun. 2008
Vice President and Director
Jun. 2009
Senior Executive Vice President and Member ofthe Board (incumbent)
Apr. 1975
Joined Nihon Denshikiki Kabushiki Kaisha
Sep. 1977
Joined Sony Corporation
Jun. 2003
Executive Officer, Sony Corporation
Jun. 2006
President and CEO, Sony Facility Management
Corporation
Sep. 2007
Vice President, Systems Hardware Company,
Systems Networks Business Group of Oki
Electric Industry Co., Ltd.
Apr. 2008
Executive Officer
Apr. 2011
Senior Vice President
Jun. 2012
Senior Vice President and Member of the Board
Apr. 2014
Executive Vice President and Member of theBoard (incumbent)(Significant concurrent position)
President & CEO, Oki Data Corporation
Apr. 1980
Joined Oki Electric Industry Co., Ltd.
Mar. 1996
Manager, Electronic Commerce Systems
Group, Open Systems Development Center,
Systems Networks Business Division
Apr. 2002
President, Net Business Solution Company
Nov. 2008
Manager, Financials Systems Division
Apr. 2009
Executive Officer
Jul. 2011
Manager, Corporate Planning Division
Apr. 2012
Senior Vice President (incumbent)
Apr. 2014
Manager, Marketing & Sales Division(incumbent)
Apr. 2014
Chief Information Officer (incumbent)- 50 -

Number of Oki
shares held

Common stock
105,000 shares

Common stock
27,000 shares

Common stock
43,000 shares

(Translation)
CandidatenumberName(Date of birth)

4*Shinya Kamagami(February 9, 1959)

5

Takuma Ishiyama(February 17, 1947)

Brief personal profile, position andresponsibility in the Company and significant concurrent
positionsApr. 1981
Joined Oki Electric Industry Co., Ltd.
Apr. 2001
Manager, Hardware Development Department
No. 2, Terminal Systems Division, Systems
Solution Company
Apr. 2005
Manager, Systems Hardware Development
Division, Systems Hardware Company,
Systems Networks Business Group
Apr. 2010
Manager, Mechatro Terminal Systems Division,
Systems Hardware Business Division
Apr. 2011
Executive Officer
Manager, Systems Hardware Business Division
Apr. 2011
Senior Vice President (incumbent)
Apr. 2012
Chief Technology Officer (incumbent)
Apr. 2014
Mar. 1975
Obtained scores for doctorate degrees andresigned from Graduate School of Law, Waseda
University
Jul. 1978
Assistant Professor, Faculty of Law, Aichi
Gakuin University
Dec. 1985
Obtained doctorate degree
Apr. 1986
Professor, Faculty of Law, Dokkyo University
Apr. 1991
Professor, School of Commerce, Waseda
University
May 2003
Registered as lawyer (Dai-ichi Tokyo Bar
Association)
Apr. 2004
Professor, Law School, Nihon University(incumbent)
Jun. 2010
Director of Oki Electric Industry Co., Ltd.
(incumbent)

Number of Oki
shares held

Common stock
13,000 shares-

Notes:
1.
* indicates a new candidate for a director.
2.
Mr. Takuma Ishiyama is a candidate for outside director. He is also an incumbent outside director of theCompany and will have served as an outside director for a period of four years at the conclusion of this
General Meeting of Shareholders.
3.
The reason Mr. Takuma Ishiyama is being put forward as a candidate for outside director is as follows:
Although he has no experience of being directly engaged in corporate management, he has experience andprofessional knowledge as a lawyer and Doctor of Laws, and the Company judges that he would be able toappropriately provide supervision of the Company’s corporate management, especially from the objective
standpoint as a professional in the area of the Companies Act.
4.
Concerning improper accounting at an overseas consolidated subsidiary that came to light in fiscal year
ended March 31, 2013, while Mr. Takuma Ishiyama was serving as Outside Director of the Company,
although he had not recognized the fact in advance, he proactively provided advice and guidance on
investigation by the internal investigative committee and formulation of preventive measures from an
independent viewpoint, and helped to enhance compliance by using his initiative in management.
5.
The Company has entered into a liability limitation agreement with Mr. Takuma Ishiyama, the details of
which are stated in “Outline of Liability Limitation Agreements” (pages 17 to 18). If the reappointment of
Takuma Ishiyama is approved, the Company will continue this agreement with him.
6.
Mr. Takuma Ishiyama is an independent officer pursuant to the requirements set by the Tokyo Stock
Exchange. If his reappointment is approved, he will continue to be an independent officer.

- 51 -

(Translation)
Appendix

Instructions for the Exercise of Voting Rights via the Internet

1.

Matters requiring your agreement concerning the exercise of voting rights via the Internet
We kindly request your consent to the following regarding exercise of voting rights via the Internet.
1) Exercise of voting rights via the Internet is only possible by accessing the voting site designated by theCompany (http://www.it-soukai.com/) via a PC or a mobile phone. When exercising the voting rightusing this site, you are requested to log in to the site using your voting rights exercise code and password
provided in the right corner of the voting rights exercise form, enclosed with the Notice, then follow theguidance on the screen. To ensure security, you are requested to enter the password when executing thefirst log-in.
2) You are requested to complete entries by 5:15 p.m., June 24 (Tuesday), 2014 (JST), which is the deadline
for execution. Please exercise your voting rights at your earliest convenience.
3) If you exercise your voting rights both in writing and via the Internet, we will regard the vote cast via theInternet to be effective.
4) If you exercise your voting rights more than once, we will regard the last vote you cast via the Internet tobe the effective one.
5) You will bear all connection charges for using the Internet (service provider access fees, communication
charges, etc.).

2.

Technical specifications
1) Internet environment: an environment, where the Internet can be used, such as conclusion of a contract
with an Internet provider, is required.
2) Browser: Internet Explorer 5.01 SP2 or above
3) Software
Adobe Acrobat Reader Ver. 4.0 or later, or Adobe Reader Ver. 6.0 or later4) Screen resolution
800x600 dots (SVGA) or more

3.

Notes on information security
Please rest assured that you will be able to use our systems safely as we use cryptographic technology (128-bitSSL) in order to prevent exercise-related information from being falsified or wiretapped.
The voting rights exercise code and password provided on your voting rights exercise form are an
important means of validating you as our shareholder. Please ensure that they are not disclosed to others.
The Company’s staff will never ask you to disclose your password.

4.

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

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

- 52 -