(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, 2019NOTICE OF 95TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 95TH
ordinary general meeting of shareholders will be held as follows. We would be grateful if you
could attend the meeting.
Those who will not be able to attend the meeting are kindly requested to review “Instructions for
the Exercise of Voting Rights” on page 2 and exercise their voting rights no later than 5:15 p.m.,
June 20 (Thursday), 2019 (JST).
Yours faithfully,
Shinya Kamagami,
President, Representative Director
Oki Electric Industry Co., Ltd.
1-7-12 Toranomon, Minato-ku, Tokyo-1-

(Translation)
1.

Date and Time:

Friday, June 21, 2019, from 10:00 a.m. (Reception will open at 9a.m.)Nikkei Hall, 3F Nikkei Building, 1-3-7 Otemachi, Chiyoda-ku, Tokyo

2.
Location:
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 95th fiscal year (from April 1, 2018 to March 31,
2019)
2. Non-consolidated Financial Statements for the 95th fiscal year (from April 1,2018 to March 31, 2019)
Items to be resolved:
Agenda Item 1:
Agenda Item 2:
Agenda Item 3:

Appropriation of Surplus
Election of Nine (9) Directors
Election of One (1) Audit & Supervisory Board Member

Instructions for the Exercise of Voting Rights
Exercise of voting rights via attending the general meeting of shareholders:
Please bring the enclosed ballot and submit at the reception desk of the meeting.
Exercise of voting rights via postal mail:Please indicate your approval or disapproval in the space provided on the ballot and return theballot to the Company no later than 5:15 p.m., June 20 (Thursday), 2019 (JST).
Exercise of voting rights via the Internet, etc.:
Please read “Instructions for the Exercise of Voting Rights via the Internet, etc.” on page 3, andindicate your approval or disapproval no later than 5:15 p.m., June 20 (Thursday), 2019 (JST).
* If you exercise your voting rights both in writing and via the Internet, we will regard the vote cast via theInternet to be effective.
* If you exercise your voting rights more than once, we will regard the last vote you cast via the Internet tobe the effective one.
* The Company has provided the Notice of 95th Ordinary General Meeting of Shareholders on its Internet
website (https://www.oki.com/jp/). Any amendment to the Company’s Reference Documents for the
General Meeting of Shareholders, the Business Report, and the Consolidated and Non-consolidated
Financial Statements will be announced on the website.

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(Translation)

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

How to entervoting rights exercise code and password

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

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

1.

Please access the voting site.

2.

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

3.

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

4.

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

2.

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

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

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

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

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(Translation)

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

Appropriation of Surplus

The Company has determined to pay the following year-end dividend for the fiscal year
under review with the emphasis on continuing stable distribution of profits to shareholders, after
giving consideration to its business results and business developments, etc. for the period underreview.
The Company’s policy of Return of profits to shareholders is described on pages 14 to 15.
1.

Type of dividend asset
Cash

2.

Allocation of dividend assets and total amount of dividends
Common stock of the Company¥50 per share
Total dividends¥4,325,404,300

3.

Effective date of dividend of surplus
June 24, 2019-4-

(Translation)
Agenda Item 2: Election of Nine (9) Directors
The tenure of office of all seven Directors will expire at the conclusion of this general
meeting of shareholders. The Company proposes the election of nine Directors, increasing thenumber of Directors by two, in order to further strengthen its management structure. Nine
candidates for Directors are shown as follows. The candidates for Directors have been approvedby the Board of Directors after deliberation by the Personnel Affairs and Compensation Advisory
Committee, consisting of five members including four outside officers.
Candidatenumber
1

2

Name

Current position/
responsibility
in the Company

Number of attendanceat meetings ofthe Board of Directors

Numberof years
in officeHideichi Kawasaki

Re-election
InsideChairman of the
Board

100%
(13 out of 13 times)

14

Shinya Kamagami

Re-election
InsidePresident,
Representative
Director
Supervision100%(13 out of 13 times)

5100%(13 out of 13 times)

3

3

Masayuki Hoshi

Re-election
InsideSenior Executive
Vice President,
Representative
Director
Chief Compliance
Officer, Chief
Financial Officer,
Chief Information
Officer, and Head ofCorporate Planning
Group

4

Masashi Tsuboi

Newly-nominatedInsideSenior Vice President
Head of ICT Business
Group

–%
(–)

–

5

Masashi Fuse

Newly-nominatedInsideSenior Executive
Officer
Head of Corporate
Management Group

–%
(–)

–

6

Shigeru Asaba

Re-election
OutsideIndependent

Outside Director

100%(13 out of 13 times)

2

7

Tamotsu Saito

Re-election
OutsideIndependent

Outside Director

100%(10 out of 10 times)

1

8

Izumi Kawashima(female)Re-election
OutsideIndependent

Outside Director

100%(10 out of 10 times)

1

Makoto Kigawa

Newly-nominatedOutsideIndependent

–%
(–)

–

9

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(Translation)
CandidatenumberName(Date of birth)

HideichiKawasaki(January 10, 1947)

Brief personal profile, position andresponsibility in the Company and significant concurrent positions
Apr. 1970

Joined Oki Electric Industry Co., Ltd.

Apr. 2001

Executive Officer

Apr. 2004

Senior Vice President

Jun. 2005

Managing Director

Number of years in
Apr. 2009
Senior Executive Vice President, Representative Director
office as Director:
Jun. 2009
President, Representative Director
14 years(as of the conclusion of Apr. 2016
Chairman of the Board, Representative Director
this general meeting ofJun. 2018
Chairman of the Board (incumbent)
shareholders)[Re-election]
1
Number of attendance atmeetings of the Board Reason for the selection of candidate for Director
Based on his past experience as President and Representative Director, Mr.
of Directors(the year under review): Hideichi Kawasaki has the knowledge and experience to decide importantmatters and supervise the business execution of Directors and Executive Officers
13 out of 13 times
in an appropriate, fair, and efficient manner. Since fiscal 2016, Mr. Kawasaki(100%)
has been assisting and advising the management team as Representative Director
Number of Oki shares and Chairman of the Board. He has been nominated as a candidate for Director
because it is expected that, as a member of the board and the Chairman, he will
held:
continue to enhance information sharing among directors and strengthen the
Common stock
Board of Director’s decision-making functions.
17,000 shares

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

Apr. 1981

Joined Oki Electric Industry Co., Ltd.

Apr. 2001

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

Apr. 2005

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

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

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

Apr. 2016
President, Representative Director (incumbent)
Number of attendance atmeetings of the Boardof Directors
Reason for the selection of candidate for Director(the year under review): Based on his past experience serving in business divisions and headquarters
13 out of 13 times
divisions, Mr. Shinya Kamagami has the knowledge and experience to decide(100%)
important matters and supervise the business execution of Directors andExecutive Officers in an appropriate, fair, and efficient manner.
Mr.
Number of Oki shares Kamagami has been engaging in management of OKI Group as President and
held:
Representative Director since fiscal 2016. He has been nominated as aCommon stock
candidate for Director because it is expected that, as a member of the board, he
9,300 shares
will continue to enhance information sharing among directors and strengthen the
Board of Director’s decision making functions.

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CandidatenumberName(Date of birth)

Masayuki Hoshi

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

Joined The Fuji Bank, Limited

Apr. 2007

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

Apr. 2009

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

Apr. 2011

Managing Executive Officer, Head of Global Transaction Banking
Unit(March 9, 1960)
Jun. 2014
Number of years in
office as Director:
May 2015
3 years(as of the conclusion of Apr. 2016
this general meeting ofshareholders)Jun. 2016[Re-election]
Number of attendance at Apr. 20173
meetings of the Boardof Directors(the year under review): Jun. 201813 out of 13 times
Apr. 2019(100%)
Number of Oki shares
held:
Common stock
3,600 shares

Masashi Tsuboi[Newlynominated]
4

Senior Vice President, Oki Electric Industry Co., Ltd.
Chief Risk Management Officer
Head of Corporate Planning Group
Senior Vice President and Member of the Board
Executive Vice President and Member of the Board
Chief Financial Officer (incumbent)
Chief Compliance Officer (incumbent)
Senior Executive Vice President, Representative Director(incumbent), Head of Corporate Planning Group (incumbent),
Chief Information Officer (incumbent)

Reason for the selection of candidate for Director
Mr. Masayuki Hoshi has abundant experience gained as Managing Executive
Officer at Mizuho Financial Group, which the candidate comes from, and has a
deep understanding of governance and the Company’s aim to become a global
business. He is playing a core role in management by concurrently serving as
Senior Executive Vice President, Representative Director from since fiscal 2019.
He has been nominated as a candidate for Director because it is expected that, asa member of the board, he will enhance information sharing among directors andstrengthen the Board of Director’s decision-making functions.
Apr. 1983

Joined Oki Electric Industry Co., Ltd.

Apr. 2002

President, Multimedia Messaging Company

Apr. 2011

Manager, Corporate Network Systems Division, Telecom Systems
Group

Apr. 2014

Manager, Information Systems Division, Solution & Services
Group

Apr. 2015

Executive Officer(May 16, 1960)
Number of years in
office as Director:–

Managing Executive Officer

Apr. 2016
Deputy Head of ICT Business Group
Number of attendance at
Senior Vice President (incumbent), Head of ICT Business Group
meetings of the Board Apr. 2017
(incumbent)
of Directors(the year under review):–
Reason for the selection of candidate for Director
Based on his past experience serving in business divisions, Mr. Masashi Tsuboi
Number of Oki shares
has the knowledge and experience to decide important matters and supervise theheld:business execution of Directors and Executive Officers in an appropriate, fair,
Common stockand efficient manner. Mr. Tsuboi has been engaging in core businesses of the
4,800 sharesCompany as Senior Vice President and Head of ICT Business Group since fiscal
2017. He has been nominated as a candidate for Director because it is expectedthat he will enhance information sharing among directors and strengthen the
Board of Director’s decision making functions.

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CandidatenumberName(Date of birth)

Apr. 1984

Joined Oki Electric Industry Co., Ltd.

Masashi Fuse

Jun. 1994

Oki America Inc.

(February 23, 1961)

Apr. 2015

Head, Accounting & Control DivisionJun. 2015

Outside Director, SAXA Holdings, Inc. (incumbent)

Apr. 2016

Executive Officer

Apr. 2018

Senior Executive Officer (incumbent), Head of Corporate
Management Group (incumbent)

Number of years in
office as Director:–[Newlynominated]
5

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

Number of attendance atmeetings of the Boardof Directors
Reason for the selection of candidate for Director(the year under review): Based on his past experience serving in headquarters divisions, accounting &–control division, and overseas offices, Mr. Masashi Fuse has the knowledge andexperience to decide important matters and supervise the business execution of
Number of Oki shares Directors and Executive Officers in an appropriate, fair, and efficient manner.
held:
Mr. Fuse has overall responsibilities in accounting and financial matters as
Common stock
Senior Executive Officer and Head of Corporate Management Group since fiscal
2,200 shares2018. He has been nominated as a candidate for Director because it is expectedthat he will enhance information sharing among directors and strengthen the
Board of Director’s decision making functions.

Shigeru Asaba(May 21, 1961)
Number of years in
office as Director:
2 years

Apr. 1992

Associate Professor, Faculty of Economics, Gakushuin University

Mar. 1994

Ph.D., Economics, University of Tokyo

Apr. 1997

Professor, Faculty of Economics, Gakushuin University

Apr. 2013

Professor, Graduate School of Commerce, Waseda University

Apr. 2016

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

Jun. 2016

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

Sep. 2016

Dean, Waseda Business School (Graduate School of Business andFinance) (incumbent)

Jun. 2017
Outside Director, Oki Electric Co., Ltd. (incumbent)[Outside] Number of attendance at (Significant concurrent positions)[Independent] meetings of the Board
Outside Director, Nippon Beet Sugar Manufacturing Co., Ltd.
[Re-election]of Directors*The
volume of transactions between the above company and the Company
6(the year under review):
accounts for less than 1% of each company’s net sales.
13 out of 13 times(100%)
Number of Oki shares
held:
Common stock
0 shares

Reason for the selection of candidate for Outside Director
As a doctor of economics, Mr. Shigeru Asaba has academic expertise in businessin general though his specialist knowledge in the fields of industrialorganizations, corporate strategy, competitive strategy, ownership structures andstrategies, and family-run businesses as well as high ethical standards. He also
has experience as Outside Director at Nippon Beet Sugar Manufacturing Co.,
Ltd. He has been nominated as a candidate for Outside Director because it isexpected that, as a member of the board, he will enhance information sharing
among directors and strengthen the Board of Director’s decision-making
functions. Although he has never had experience of being involved in corporate
management other than as an outside officer, the Company determined that hewill be able to carry out the duties of Outside Director appropriately for the
aforementioned reason.

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(Translation)
CandidatenumberName(Date of birth)

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

Joined Ishikawajima-Harima Heavy Industries Co., Ltd.

Jun. 2006

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

Apr. 2008

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

Tamotsu Saito

Apr. 2011

Executive Vice President(July 13, 1952)

Apr. 2012

President

Number of years in
office as Director:
1 yearApr. 2016

Chairman of the Board (incumbent)

Jun. 2017

Outside Director, JAPAN POST INSURANCE Co., Ltd.
(incumbent)[Outside] Number of attendance at Jun. 2018
Outside Director, Oki Electric Co., Ltd. (incumbent)[Independent] meetings of the Board(Significant concurrent positions)[Re-election]of Directors
7(the year under review): Chairman of the Board, IHI Corporation
10 out of 10 times
Outside Director, JAPAN POST INSURANCE Co., Ltd.
(100%)*The volume of transactions between the above companies and the Company
accounts for less than 1% of each company’s net sales.
Number of Oki shares
held:
Common stock
Reason for the selection of candidate for Outside Director
500 shares
Mr. Tamotsu Saito currently serves as Chairman of the Board of IHI Corporationand has extensive experience as a business leader, not just in the industry but for
the whole of Japan, and the Company judges that he is able to provide
appropriate supervision over the business management at the Company. He
has been nominated as a candidate for Outside Director as the Company feelsthat it is able to rely on his appropriate opinions and advice from both a business
management perspective and a compliance perspective, and judges that he is asuitable candidate for Outside Director.
Mar. 1985

Left Graduate School of Law, Waseda University after completinga doctoral course

Apr. 1989

Associate Professor, Faculty of Economics, Gifu Keizai
University(June 25, 1955)

Apr. 1996

Professor, School of Law, Senshu University

Number of years in
office as Director:
1 yearSep. 2004

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

Jun. 2016

Outside Director, Oki Electric Cable Co., Ltd.

Izumi Kawashima[Outside] Number of attendance at Jun. 2018
Outside Director, Oki Electric Co., Ltd. (incumbent)[Independent] meetings of the Board[Re-election]of Directors
8(the year under review): Reason for the selection of candidate for Outside Director
Ms. Izumi Kawashima is currently a professor of the Faculty of Social Sciences
10 out of 10 times
at Waseda University. She specializes in commercial law (particularly the(100%)
Companies Act) and the Financial Instruments and Exchange Act, and she is one
Number of Oki shares of Japan’s top-level specialists in that field. She has been nominated as a
candidate for Outside Director as the Company feels that it is able to rely on her
held:
appropriate
opinions and advice and judges that she is a suitable candidate for
Common stock
Outside Director, owing particularly to her academic specialist knowledge
100 shares
relating to corporate governance and the Companies Act. Although she has
never had experience of being involved in corporate management other than as
an outside officer, the Company determined that she will be able to carry out theduties of Outside Director appropriately for the aforementioned reason.

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(Translation)
CandidatenumberName(Date of birth)

Brief personal profile, position andresponsibility in the Company and significant concurrent positions
Apr. 1973

Joined the Fuji Bank, Ltd.

Apr. 2004

Managing Director, Mizuho Corporate Bank, Ltd.

Mar. 2005

Resigned Mizuho Corporate Bank, Ltd.

Apr. 2005

Joined Yamato Transport Co., Ltd.

Jun. 2005

Managing Director, Yamato Transport Co., Ltd.

Apr. 2011

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

(December 31, 1949)

Apr. 2016

Outside Director, Komatsu Ltd. (incumbent)

Number of years in
office as Director:–

Apr. 2018

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

Makoto Kigawa

Jun. 2018
Outside Director, Seven Bank, Ltd. (incumbent)[Outside][Independent] Number of attendance at Apr. 2019
Director, Yamato Holdings Co., Ltd. (incumbent)[Newlymeetings of the Board(Significant concurrent positions)nominated]of Directors
9(the year under review): Director, Yamato Holdings Co., Ltd.
–
Outside Director, Komatsu Ltd.
Number of Oki shares Outside Director, Seven Bank, Ltd.
*The volume of transactions between the above companies and the Company
held:accounts for less than 1% of each company’s net sales.
Common stock
0 shares
Reason for the selection of candidate for Outside Director
Based on his extensive experience as Representative Director of Yamato
Holdings Co., Ltd., after serving in the financial institution as an executive, theCompany judges that Mr. Makoto Kigawa is able to provide appropriate
supervision over the business management at the Company. He has been
nominated as a candidate for Outside Director as the Company feels that it isable to rely on his appropriate opinions and advice from both a business
management perspective and a compliance perspective, and judges that he is asuitable candidate for Outside Director.

Notes:
1. There is no special conflict of interest between each candidate and the Company.
2. Mr. Shigeru Asaba, Mr. Tamotsu Saito, Ms. Izumi Kawashima, and Mr. Makoto Kigawa are candidates for outside
directors.
3. Mr. Masashi Fuse is scheduled to retire as Outside Director of SAXA Holdings, Inc. effective June 27, 2019.
4. Mr. Makoto Kigawa is scheduled to retire as Director of Yamato Holdings Co., Ltd. on June 25, 2019.
5. When Mr. Tamotsu Saito was director of IHI Corporation, it was revealed that the maintenance of commercial
aircraft engines was performed inappropriately. In March 2019, pursuant to the Aircraft Manufacturing Industry
Act, the Ministry of Economy, Trade and Industry ordered that IHI Corporation conduct the necessary repairs in an
approved manner. In April 2019, IHI Corporation received a business improvement order from the Ministry ofLand, Infrastructure, Transport and Tourism in accordance with the Civil Aeronautics Law.
6. Mr. Makoto Kigawa has served as Director of Yamato Holdings Co., Ltd. since June 2005. Meanwhile, ecommerce businesses, etc. have expanded rapidly. However, the Yamato Group was not able to refine its corporate
structure in a satisfactory manner. Accordingly, in February 2017, it started to investigate the actual labor hours of
employees and found out various problems remained unrecognized, such as no enough breaks for many employees.
Because this situation was considered to be serious, the Yamato Group decided to put the highest priority on
implementing work-style reforms, for example, “improve and strictly conduct labor management” and “promote awork-life balance”. As a result, the Yamato Group has been implementing various structural reforms in its delivery
and other businesses.
Yamato Home Convenience Co., Ltd., a consolidated subsidiary of Yamato Holdings Co., Ltd., made payment- 10 -

(Translation)

7.

8.

requests in an inappropriate manner in violation of contract provisions when it provided relocation services to
employees of its corporate customers. In January 2019, it became subject to an administrative disposition andreceived a business improvement order from the Ministry of Land, Infrastructure, Transport and Tourism. Yamato
Holdings Co., Ltd. has striven to build the necessary structure to prevent Yamato Home Convenience Co., Ltd. fromfacing similar situations and to strengthen governance in order to enhance the soundness of group management.
The Company has entered into a liability limitation agreement with candidates for outside directors, Mr. Shigeru
Asaba, Mr. Tamotsu Saito, and Ms. Izumi Kawashima. The outline of the agreement is provided in “Outline of
Liability Limitation Agreements” (on page 31) in the Business Report. If their reappointment is approved, theCompany will continue this agreement with them. If the appointment of Mr. Makoto Kigawa, candidate for outside
director, is approved, the Company will enter into the same agreement with him.
Mr. Shigeru Asaba, Mr. Tamotsu Saito, and Ms. Izumi Kawashima are independent officers based on the terms of
the Tokyo Stock Exchange. If their reappointment is approved, they will continue to be independent officers. If
the appointment of Mr. Makoto Kigawa, candidate for outside director, is approved, he will be independent officer.

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(Translation)
Agenda Item 3: Election of One (1) Audit & Supervisory Board Member
The tenure of office of Audit & Supervisory Board Member Hisao Suzuki will expire at theend of this general meeting of shareholders. The candidate for Audit & Supervisory Board
Member is shown as follows.
This agenda has been approved by the Audit & Supervisory Board.
Name(Date of birth)[Newly-nominated]Toshiya Hatakeyama(July 6, 1957)
Number of years in office as Audit &Supervisory Board Member:–(as of the conclusion of this general
meeting of shareholders)Number of attendance at meetings ofthe Board of Directors(the year under review):–
Number of attendance at meetings of
the Audit & Supervisory Board(the year under review):–
Number of Oki shares held:
Common stock
7,600 shares

Brief personal profile, position and significant concurrent positions
Apr. 1980

Joined Oki Electric Industry Co., Ltd.

Oct. 2007

Head, Accounting & Control Division

Apr. 2008

Executive Officer

Apr. 2015

Senior Vice President

Jun. 2015

Director

Jul. 2015

Chief Financial Officer

Apr. 2016

Chief Compliance Officer, Head of Corporate Management Group

Apr. 2017

President, Representative Director, Oki Wintech Co., Ltd.

Apr. 2019

Advisor of the Company (incumbent)

Reason for the selection of candidate for Audit & Supervisory Board
MemberMr. Toshiya Hatakeyama headed the Company’s accounting, finance, andcompliance divisions, where he focused on strengthening the financial base andcompliance functions. The Company judges that he is able to provide
appropriate supervision over the business management based on his pastexperience as President and Representative Director of Oki Wintech Co., Ltd.
The Company also feels that he is able to provide appropriate opinions andadvice from a compliance perspective. He has been nominated as a candidate
for Audit & Supervisory Board Member because it is expected that, as a memberof the Audit & Supervisory Board, he will enhance information sharing among
Audit & Supervisory Board members and strengthen the Board of Director’sbusiness execution functions.

Notes:
1. There is no special conflict of interest between the candidate and the Company.
2. Mr. Toshiya Hatakeyama has served in positions such as Officer in charge of the Accounting & Control Division
and Chief Financial Officer, and has extensive knowledge in finance and accounting.
3. If the appointment of Mr. Toshiya Hatakeyama is approved, the Company will enter into a liability limitationagreement with him. The outline of this agreement is provided in “Outline of Liability Limitation Agreements” (onpage31) in the Business Report.

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(Translation)(Reference)

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

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(Translation)(Attachment)

Business Report(From April 1, 2018 to March 31, 2019)1.

Status of the OKI Group(1) Operating progress and results
Economic situation
Looking at the global situation in fiscal 2018, the economy continued to show a gradual
recovery as a whole, but economic uncertainty rose due to the effects of China’s economic
slowdown caused by US-China trade friction and problems associated with Brexit in the UK.
Japan’s economy continued its modest recovery supported by factors such as improved
employment conditions and increased capital investment, but began to show signs of aslowdown in some business areas due to the effects of the global economy.
Operating results for the fiscal year under review
In this business environment, the OKI Group reported net sales of ¥441.5 billion, a ¥3.5
billion or 0.8% increase year-on-year, despite decreases in sales in the mechatronics systems
business and the printer business, because these decreases were offset by remained stable sales in
the ICT business and the effects of the newly consolidated Oki Electric Cable Co., Ltd. on the
EMS business. Operating income was ¥17.5 billion, an increase of ¥9.8 billion year-on-year,
due to factors such as increased sales and earnings generated through differences in project mix
in the ICT business, effects of structural reforms in the mechatronics systems business, andreductions in fixed costs through reforms to business structures and the effects of the yen’s
depreciation on the printer business.
Ordinary income was ¥15.5 billion, an increase of ¥7.0 billion year-on-year, due toincreased operating income, despite the posting of a ¥1.3 billion foreign exchange loss as nonoperating expenses. Profit attributable to owners of parent was ¥8.4 billion, an increase of ¥2.5
billion year-on-year, due to factors such as the posting of a gain on sale of property, plant andequipment (¥1.4 billion) and a gain on sale of investments in securities (¥1.0 billion) as
extraordinary profit, despite the posting of business structure improvement expenses (¥3.5
billion) as an extraordinary loss and the loss on impairment of fixed assets (¥2.9 billion) in themechatronics systems business.
Looking at non-consolidated business performance, net sales were ¥216.0 billion, up ¥12.0
billion (5.9%) from the previous fiscal year. Operating loss was ¥2.5 billion, an improvementof ¥3.4 billion year-on-year. Ordinary income increased by ¥7.1 billion year-on-year to ¥9.4
billion. Profit was ¥8.5 billion, a ¥10.5 billion up year-on-year.
Return of profit to shareholders
OKI’s top management priorities are to strengthen its financial position and ensure retained
earnings in order to continually improve the OKI Group’s corporate value, as well as to increase
shareholder returns so that shareholders are encouraged to hold its shares over the medium- tolong-term. OKI will reinforce its management foundations by applying retained earnings to- 14 -

(Translation)
investments in research & development and facilities that are critical to future growth. In
addition, OKI will attach the highest importance to maintaining stable profit distributions toshareholders and decide dividends after taking business performance into consideration. Basedon this policy, OKI proposes to pay ¥50 per common stock as a dividend from the surplus (yearend dividend) in the current fiscal year.
The following provides a summary of each segment.
- Net Sales by Segments(Unit: Billions of yen)
FY2017 (reference:

FY2018 (Fiscal year

previous fiscal year)

under review)

ICT

172.7

Mechatronics
Systems

Changes (amount)

Changes (%)

184.3

11.6

6.7

93.5

82.7

(10.8)(11.6)

Printers

108.9

102.6

(6.3)

(5.8)

EMS

55.5

65.2

9.7

17.4

Others

7.4

6.7

(0.7)

(9.0)

438.0

441.5

3.5

0.8

Segment

Total

Notes:
1.
Figures less than ¥100 million for each item are rounded to the nearest ¥100 million. The amounts of“changes (amount)” are calculated on the basis of figures in units of ¥100 million. Accordingly, in somecases the sum of individual figures presented for each item may not equal the respective “total” stated.
2.
Regarding EMS and Others, the figures for fiscal 2017 are modified to reflect the latest classification.

ICT
Businessoverview
Main products
and services

Business providing solutions, products and services supporting social infrastructure based on
distinctive technologies
 Traffic infrastructure-related systems (flight control systems, ITS-related systems)
 Disaster-related systems (firefighting-related systems, disaster prevention administrative
radio systems for municipalities)
 Self-defense-related systems
 Communications equipment for telecom carriers Bank branch systems and centered-administration systems for financial institutions
 Ticket reservations and issuing systems
 IP-PBX / business telephones and contact centers 920MHz band wireless multi-hop communication systems
 Maintenance and construction services

Net sales were ¥184.3 billion, up ¥11.6 billion (6.7%) from the previous fiscal year.
The increase resulted from factors such as increases in social infrastructure-related projects,
sales to telecommunications carriers, and projects for some public agencies.
Operating income was ¥14.7 billion, an increase of ¥1.2 billion, with the effectof a sales increase and differences in project mix.

- 15 -

(Translation)
Mechatronics Systems
Businessoverview
Main products
and services

Business offering products and services based on our core mechatronics technology suchas ATMs and cash handling equipment
 ATMs Cash handling equipment
 Bank branch terminals
 Ticket reservations and issuing terminals
 Check-in terminals
 ATM monitoring and operations services

Net sales were ¥82.7 billion, down ¥10.8 billion (11.6%) from the previous fiscal year.
The decline was mainly due to the disappearance of the effects of standardizing the fiscal
periods of Brazilian subsidiaries and the impacts of reviewing business operations in theprocess of making structural reforms.
Operating income was ¥0.1 billion, an improvement of ¥5.2 billion year-on-year,
mainly due to the effects of fixed cost reductions achieved through structural reforms,
despite the effects of decreases in sales.
Printers
Businessoverview
Main products
and services

Business harnessing our LED technologies to offer printers that match customer needs formarkets ranging from offices to industrial printing
 Color LED and monochrome LED printers
 Color LED and monochrome LED multi-function printers (MFPs)
 Dot-impact printers Wide format inkjet printers Wide format multi-function printers

Net sales were ¥102.6 billion, down ¥6.3 billion (5.8%) from the previous fiscal year.
The decline was mainly due to the completion of large-scale projects in the previous fiscal
year.
Operating income was ¥5.7 billion, up ¥3.0 billion year-on-year, due to the effect of
fixed cost structure improvement and the weak yen.
Electronics manufacturing services (EMS) and others
Businessoverview
Main products
and services

Business offering consigned design & manufacturing services based on our extensive
record in social infrastructure equipment
 Consigned design & manufacturing services for communications equipment, industrial
instruments, measuring instruments, and medical equipment
 Consigned design & manufacturing services for broadcasting, electricity, and trafficrelated
 Cables, flexible printed circuits (FPC), and customized power supplies
 Reliability testing and environmental conservation-related services

Net sales of the EMS business rose ¥9.7 billion, or 17.4%, year-on-year, to ¥65.2
billion, mainly due to the effect of new consolidation of Oki Electric Cable Co., Ltd.
Operating income increased by ¥0.4 billion to ¥3.7 billion owing to higher sales volume.
Net sales of the others business segment were ¥6.7 billion, down ¥0.7 billion or 9.0%
year-on-year, and operating income declined by ¥0.1 billion to ¥0.9 billion.

- 16 -

(Translation)(2) Capital expenditure
Capital expenditures for the fiscal year equaled ¥9.9 billion.
Investment amounts by segment were as follows.
(Unit: Billions of yen)Segment

Amount ofcapitalexpenditure

Major investments

ICT

2.3

Investments focusing on strengthening facilities todesign/manufacture, and produce new products in businessareas (e.g. social infrastructure, IoT, finance, and network
systems)

Mechatronics Systems

1.4

Investments on evaluation equipment, molds, etc. fordeveloping new products related to automation equipment
systems

Printers

2.9Strategic investments on molds used to manufacture new
products, aiming for a transition toward the industrial printing
marketEMS

2.8

Investments on entrusting manufacturing service of measuring
instruments, industrial equipment, etc.

Others

0.5
Total

9.9

(3) Financing
Funds required for the current term were obtained from our own funds and borrowed
funds.
(4) Future challenges
Guided by our corporate philosophy of “The people of OKI, true to the company’s enterprising spirit, arecommitted to creating superior network solutions and providing excellent information and communications
services globally to meet the diversified needs of communities worldwide in the information age”, the OKI
Group (the Company and its consolidated subsidiaries) aims to be a company of sustained growth that“contributes to society through Mono-zukuri (the spirit and mind-set to innovate, create and improve products)
and Koto-zukuri (working together, proactively seeking opportunities that deliver value to customers)”. Also,
the Company strives to meet the expectations and maintain the trust of all its stakeholders
The OKI Group also hopes to contribute to the achievement of the important guideline of the “Sustainable
Development Goals (SDGs)” that were adopted at the September 2015 “United Nations Sustainable
Development Summit” through our business activities. We shall set our targets on priority issues andincorporate sustainable goals into the Company’s operations.
The market and economic environments surrounding the OKI Group are currently changing dramatically.
In particular, OKI Group businesses could be significantly affected by the digital transformations, the shift
toward a cashless society, the shift towards a paperless society, structural reforms in the banking industry, andthe arrival of the 5G age.
We anticipate the shift towards cashless payments will gain momentum through diversification of
payment services and revision of cash-handling costs. Structural reforms in the banking industry are also
giving rise to various unprecedented changes, including branch closures and staff cutbacks with the aim of
streamlining operations, as well as possible ATM integrations between megabanks. These changes are
occurring in tandem with the burgeoning digital transformation, which could crimp OKI’s existing products andservices.
On the other hand, these developments will also yield new business opportunities for the development ofdevices that can accept any payment service and new financial services in regions where no stores withterminals used for payment services exist.

- 17 -

(Translation)
Furthermore, the arrival of 5G and the continual IoT-driven connectivity of every device to a network will
present a chance for OKI to harness its strengths of device installations in edge regions, where we have been
involved in the telecommunications infrastructure business tailoring to the needs of our customers for many
years.
The trend towards a paperless society could also pose a threat to our printer business by declining demandfor printing (as a result of an increase of people using smartphones and mobile devices). However, by shifting
our focus from the office printing market to the industrial printing market, we will work on unearthing newmarkets and developing new products in which the features of OKI’s LED printers can shine even more.
The OKI Group has supported the social infrastructure in a broad sense over many years through thestrength of combining its manufacturing technology (Mono-zukuri) and highly reliable and durable technology
in network sensing analytics. We will contribute to the society widely as ever through the provision ofservices and the development of automation systems that solve social issues caused by the aging society with adeclining birthrate and a manpower shortage, adapting to the structural changes in society.

(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.
92nd year(FY2015)

93rd year(FY2016)

94th year(FY2017)95th year(Fiscal year underreview, FY2018)

Sales

490.3

billion yen 451.6

billion yen 438.0

billion yen 441.5

billion yen

Profit attributableto owners of parent

6,609

million yen 4,691

million yen 5,891

million yen 8,405

million yen

Basic earnings per
share

76.10

yen 54.03

yen 67.86

yen 97.16

yenTotal assets

411.8

billion yen 360.7

billion yen 366.5

billion yen 365.5

billion yen

Net assets

107.4

billion yen 97.2

billion yen 102.1

billion yen 100.2

billion yen

Net assets per
share

1,229.09

yen 1,115.68

yen 1,154.03

yen 1,155.28

yenNotes:
1.
Basic earnings per share is computed based on the average number of shares during the year (weighted
average). Net assets per share are computed based on the number of shares outstanding at the year-end.
These figures exclude treasury stocks.
2.
The Company consolidated ten shares of common stock into one share of common stock as of October 1,
2016. Basic earnings per share and net assets per share are calculated assuming that the shares wereconsolidated at the beginning of the 92nd fiscal year ended March 31, 2016.
3.
The Company has adopted Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.
(ASBJ Statement No. 28, February 16, 2018) since the beginning of the fiscal year under review, and madechanges to classifications (i.e. classified deferred tax assets into investments and other assets and deferred
tax liabilities into long-term liabilities). Amounts for fiscal 2017 are those reflecting the reclassification.

- 18 -

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

CapitalCompany’s
voting rightratio (%)

Major business

Oki Data Corporation

19,000 million yen

100

Manufacturing and sales of printers

Oki Customer Adtech Co., Ltd.

1,800 million yen

100

Maintenance, construction and sales of
information processing equipment andtelecommunications equipment

OKI Software Co., Ltd.

400 million yen

100

Development and operation of
telecommunications system software

Oki Wintech Co., Ltd.

2,001 million yen

100

Design and construction of electronic
works and electronic
telecommunications works

Oki Data Manufacturing(Thailand) Co., Ltd.

420 million baht

100*

Manufacturing of printers

Oki Europe Ltd.

141 million euro

100*

Sales of printers

8 million U.S. dollars

100*

Manufacturing of information
processing equipment and printers

Oki Electric Industry(Shenzhen) Co., Ltd.

Notes:
1.
Figures marked with an asterisk (*) indicate the ratio of voting rights held by subsidiaries of the Company.
2.
Oki Customer Adtech Co., Ltd. and Oki Wintech Co., Ltd. merged on April 1, 2019. OKI Crosstech Co.,
Ltd. is the name of the newly merged 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.

- 19 -

(Translation)(7) Major offices
Our major offices are as follows.
Name

Classification

Location

Head office

Minato-ku, Tokyo

Branch offices

Hokkaido region (Sapporo, Hokkaido), Tohoku
region (Sendai, Miyagi), Chubu region (Nagoya,
Aichi), Kansai region (Osaka, Osaka),
Chugoku region (Hiroshima, Hiroshima), Shikoku
region (Takamatsu, Kagawa), and Kyushu region(Fukuoka, Fukuoka)

Business offices

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

Research institutes

Warabi (Saitama), Osaka (Osaka) and Takasaki(Gunma)Oki Electric Industry Co., Ltd.

Oki Data Corporation

Head office

Minato-ku, Tokyo

Oki Customer Adtech Co., Ltd.

Head officeKoto-ku, Tokyo

OKI Software Co., Ltd.

Head office

Warabi, Saitama

Oki Wintech Co., Ltd.

Head office

Shinagawa-ku, Tokyo

Oki Data Manufacturing(Thailand) Co., Ltd.

Head office

ThailandOki Europe Ltd.

Head officeUK

Oki Electric Industry (Shenzhen)Co., Ltd.

Head officeChina(8) Employees(i) Employees of the OKI Group
Segment

Number of employees

ICT

7,079

Mechatronics Systems

3,180

Printers

4,222

EMS

1,971

Others1,023

Company-wide (shared)

455

Total

(ii)

17,930

Employees of Oki Electric Industry
Number of employees

Average age

Average years ofservice

4,077 (increased by 53 from the end of the previous fiscal year)

43.9

20.2

- 20 -

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

Loan balance

Mizuho Bank, Ltd.

21.2

Sumitomo Mitsui Banking Corporation

12.5

Mizuho Trust & Banking Co., Ltd.

3.7

The Norinchukin Bank

3.0

The Hachijuni Bank, Ltd.

2.8

(10) Corporate governance(i)

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

Structure
The Company has chosen to be a company with the Audit & Supervisory Board,
as a structure to ensure stable realization of its fundamental policies for corporate
governance. Specifically, it establishes the Board of Directors and Audit &Supervisory Board members and an Audit & Supervisory Board in charge ofsupervision and auditing and adopts an executive officer system, aiming to promote
timely decision-making processes by separating business execution and oversight.
In addition, it endeavors to improve the fairness and transparency of management by
nominating outside directors as well as setting up the “Personnel Affairs andCompensation Advisory Committee” as a voluntary committee concerning on
appointment and compensation, and the post of Chairman of the Board, so as toensure effective supervision from an independent and objective standpoint. The
Committee consists of five members including four outside officers, and the
Chairman of the Committee is appointed from among Outside Directors. A nonexecutive director is appointed as Chairman of the Board.
In addition to objective audits by Audit & Supervisory Board members and the
Audit & Supervisory Board on the premise of its strong authority for investigation,
OKI seeks to carry out prompt risk management and ensure rigorous compliance byinitiatives such as the establishment of the Risk Management Committee, which
includes outside directors.

- 21 -

(Translation)
Furthermore, there is no system to receive consulting and advice, etc., fromformer representative directors and presidents, etc.
(iii) Board of Directors
The Company’s Board of Directors consists of seven Directors, including four
highly independent Outside Directors, with the consideration of diverse expertise andcareers for the purpose of fulfilling such duties as deliberations and decisions on
significant matters concerning the Company’s business execution and oversightthereof. To clarify management responsibility for each fiscal year, the tenure for
Directors has been set as one year.
The Company provides Directors and Audit & Supervisory Board memberswith such opportunities as seminars and trainings, which are necessary in fulfilling
their roles and responsibilities, and conducts presentation for outside officers upon
appointment aimed at deepening their understanding about the OKI Group’s business,in addition to visits to business offices and other sites.
(iv) Election of company officers
The Company has established the Personnel Affairs and Compensation
Advisory Committee to secure transparency in the decision-making processes forappointments of officers. The Personnel Affairs and Compensation Advisory
Committee deliberates on appointments of Director and executive officer from an
objective viewpoint, and reports the results to the Board of Directors. In addition,
the Committee delivers its opinion on appointments of candidates for Audit &Supervisory Board members to Audit & Supervisory Board members.
Upon the nomination of candidates for Directors and Audit & Supervisory
Board members and appointment of executive officers, the Company takes into
consideration that the candidate satisfies the following requirements, as well as legal
eligibility.
 Those with excellent personality, insights, high ethical standards, fairness andintegrity as well as a high-level awareness of compliance Those who can execute their duties towards the realization of the OKI Group’s
corporate philosophy and continuous improvement of the corporate value
 Those who have had a long term of office Audit and Supervisory Board Members who have the necessary knowledge offinance, accounting and legal affairs
With respect to the appointment of candidates for outside officers, OKI
formulates its independence criteria (See page 13), and elects person who satisfies
these criteria as an outside officer. All outside officers have been reported as
independent officers to the Tokyo Stock Exchange.
(11) Other significant events of the OKI GroupOki Banking Systems (Shenzhen) Co., Ltd., a subsidiary of the Company, filed arequest for arbitration against Shenzhen Yihua Computer Industrial Co., Ltd. in October
2015, demanding payment of RMB1,115,463 thousand (¥18.4 billion if converted toJapanese yen based on the exchange rate as of the end of the fiscal year under review)- 22 -

(Translation)
which includes the proceeds from sale of ATM. The arbitration proceeding is currently
under review by the South China International Economic and Trade Arbitration
Commission. Although the Company has recorded a provision of allowance for doubtfulreceivables regarding this case, there is no change in the Company’s policy of collecting thetotal amount of receivables.

- 23 -

(Translation)
2.

Shareholders’ Equity(1)

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

Number of outstanding shares:
87,217,602 shares(including 709,516 shares of treasury stock)(3)

Number of shareholders:
69,734(4)Major shareholders (Top 10)
Number ofshares held
(shares)Name of shareholder

Percentage ofshares held(%)

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

7,215,300

8.34

Japan Trustee Services Bank, Ltd. (trust account)

5,884,000

6.80Japan Trustee Services Bank, Ltd. (trust account 9)3,670,900

4.24

Oki Denki Group Employees’ Shareholdings Committee

1,883,961

2.18

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

1,696,000

1.96

Mizuho Bank, LTD.

1,419,648

1.64

Hulic Co., Ltd.

1,407,659

1.63

Meiji Yasuda Life Insurance Company

1,400,097

1.62

Trust & Custody Services Bank, Ltd. (securities
investment trust account)

1,380,700

1.60

JP Morgan Chase Bank 385151

1,310,960

1.52

Note:

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

- 24 -

(Translation)
3.

Equity Warrants(1) Equity warrants granted to the Company’s officers as consideration for theirperformance of duties(i) Number of equity warrants
336(ii) Type and number of shares subject to equity warrants
33,600 shares of the Company’s common stock (100 shares per equity warrant)(iii) Status of equity warrants held by the Company’s officers
Issued Number(Exercise Price)
FY2016 equity warrant (1 yen)
(Issued on August 16, 2016)
FY2017 equity warrant (1 yen)
(Issued on August 15, 2017)
FY2018 equity warrant (1 yen)
(Issued on August 14, 2018)

Directors(excluding outside Directors)
Exercise period

Number ofequitywarrants

Number ofholders

August 17, 2016 to August 16, 2041

98

2

August 16, 2017 to August 15, 2042

119

2

August 15, 2018 to August 14, 2043

1192(2) Equity warrants issued to employees in consideration of performance during the fiscal
year under review
Directors(excluding outside Directors)
Issued Number

FY2018 equity warrant (1 yen)
(Issued on August 14, 2018)

Exercise period

August 15, 2018 to August 14, 2043

- 25 -

Number ofequitywarrants

Number ofholders

485

16

(Translation)
4.

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

Position

Name

Status or main duties

Director andChairman of the
Board

Hideichi Kawasaki

Chairman of the Board

X

President,
Representative
Director

Shinya Kamagami

SupervisionX

Executive Vice
President andMember of the Board

Masayuki Hoshi

Chief Financial Officer
Chief Compliance Officer
Chief Internal Control Officer
Supervision of Corporate Administration

Director

Minoru Morio

Outside Director of Concordia Financial Group, Ltd.,

Director

Shigeru Asaba

Outside Director, Nippon Beet Sugar ManufacturingCo., Ltd.

Director

Tamotsu Saito

Chairman of the Board, IHI Corporation
Outside Director, JAPAN POST INSURANCE Co.,Ltd.

Director

Izumi Kawashima

Standing Audit & Supervisory
Board Member

Hisao Suzuki

Standing Audit & Supervisory
Board Member

Sei Yano

Audit & Supervisory Board
MemberKuninori
Hamaguchi

Audit & Supervisory Board
MemberYoichi Nitta

Notes:
1. X indicates executive officer.
2. Directors Minoru Morio, Shigeru Asaba, Tamotsu Saito, and Izumi Kawashima are Outside Directors.
3. Audit & Supervisory Board Members Kuninori Hamaguchi and Yoichi Nitta are Outside Audit &Supervisory Board Members.
4. Directors Minoru Morio and Shigeru Asaba, Tamotsu Saito, and Izumi Kawashima, Audit & Supervisory
Board Members Kuninori Hamaguchi and Yoichi Nitta has been reported as independent officers to Tokyo
Stock Exchange.
5. Audit & Supervisory Board Member Hisao Suzuki has served in positions such as Officer in charge of the
Accounting & Control Division and Chief Financial Officer, and has extensive knowledge in finance andaccounting.
6. Executive officers as of March 31, 2019 are as follows (excluding those who concurrently serve as
Directors).

- 26 -

(Translation)
Position

Name

Principal duty

Executive Vice President

Masasuke Kishi

Head of Electronics Manufacturing Services BusinessGroup

Senior Vice President

Kenichi Tamura

Head of Mechatronics Systems Business Division

Senior Vice President

Toru Hatano

In charge of Printers Business Division (President, Oki
Data Corporation)

Senior Vice President

Masaaki Hashimoto

Head of Marketing & Sales Group and General Manager,
IoT Business Development Division

Senior Vice President

Masashi Tsuboi

Head of ICT Business Group

Senior Executive Officer

Masashi Fuse

Head of Corporate Management Group

Senior Executive Officer

Masatoshi Saito

Chief Information Officer, Head of Corporate PlanningGroup

Executive Officer

Kiyoshi Yokota

Chief Technology Officer, Deputy Head of Corporate
Infrastructure Group and Head of Corporate Research andDevelopment Center

Executive Officer

Yuichiro Katagiri

Deputy Head of ICT Business Group

Executive Officer

Toru Miyazawa

Head of Marketing & Sales Division-3, Marketing & SalesGroup

Executive Officer

Hiroshi Tsuchiya

Head of Internal Control Division

Executive Officer

Yuka Miyagawa

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

Executive Officer

Akiko Horiguchi

Head of Human Resources Division, Corporate PlanningGroup

Executive Officer

Hiroshi Tomizawa

Deputy Head of Mechatronics Systems Business Group

Executive Officer

Toshiyuki Yokota

Chief Quality Officer, Chief Innovation Officer, Head ofCorporate Infrastructure Group, and Head of Government& External Relations Division

Executive Officer

Hajime Maruo

Head of Corporate Planning Division, Corporate PlanningGroup(2) Compensation paid to Directors and Audit & Supervisory Board Members(i)

Policy on determining remuneration, etc.
In order to secure transparency and objectiveness in the decision-making
processes concerning compensation for officers, the Personnel Affairs andCompensation Advisory Committee deliberates on the structure and level ofcompensation for Director and executive officer from an objective viewpoint, andreports the results to the Board of Directors. The Committee consists of five members
including four outside officers, and the Chairman of the Committee is appointed fromamong Outside Directors.
OKI’s basic policy on compensation for Director and executive officer is toserve as incentives for the performance improvement with the aim of the continuous
enhancement of the corporate value and enforcement of the corporate competitivenesswhile being the compensation structure that can attract excellent human resources.
The compensation system consists of basic compensation, annual incentive
compensation linked to the performance of each fiscal year, and compensation-type- 27 -

(Translation)
stock option as medium- to long-term incentive compensation. These changes havebeen implemented as part of efforts to develop an environment for a shift to the
management focused on “more aggressive goal setting” and “growth over medium- tolong-term” in order to achieve “continuous growth” of the OKI Group.
Type

Content of compensation

Basic compensation

When serving as Executive Officer concurrently,
monetary compensation shall be paid, determined
individually tailored to position, followed by duties.

Annual incentive
compensation

Monetary compensation shall be paid, determined
individually with a linkage with the past year’s
consolidated business performance of the OKI Group andthat of the division each Director is responsible for. The
amount of payments is 35% of the basic compensation incase that the rate of payments is 100%. The rate ofpayments is determined within the scope of 0% to 200%,
according to a linkage with business performance and thePresident’s qualitative assessment.

Medium- to long-term
incentive compensation

Stock option for stock-linked compensation shall be
granted, around 13% of basic compensation amount, inthe view of value sharing with shareholders and theenhancement of corporate value as well as shareholders’value over the medium- to long-term.

Compensation for Outside Directors consists only of basic compensation. In
addition, the appropriateness of the structure and level of compensation is validated
utilizing objective evaluation data from external organizations and others.
(ii)

Compensation paid to Directors and Audit & Supervisory Board Members

Title

Directors(excluding Outside
Directors)
Audit &
Supervisory Board
Members(excluding Outside
Audit &
Supervisory Board
Members)
Outside officers
Outside Directors
Outside Audit &Supervisory
Board Members

Amount of payment

Amount of payment by type ofcompensation
Number of
Mediumapplicable
Basic
Annualto longofficers
compensation incentive
termincentive¥198 million ¥156 million ¥31 million ¥10 million

4¥46 million¥46 million

－

－

2

¥38 million¥14 million¥38 million¥14 million

－

－

－

－

5
2

- 28 -

(Translation)
Notes:
1. The amounts of compensation approved by the 82nd Ordinary General Meeting of Shareholders held on June29, 2006 are within ¥600 million per year for Directors and within ¥100 million per year for Audit &Supervisory Board Members. The amount of compensation for Directors excludes employee wages for
Directors who are also employees. The amounts of compensation related to equity warrants allotted ascompensation-type stock option, approved by the 92nd Ordinary General Meeting of Shareholders held on
June 24, 2016, are within ¥100 million per year for Directors (excluding Outside Directors), separately fromthe above compensations.
2. The numbers of Directors and Audit & Supervisory Board Members as of the end of the fiscal year underreview are different from the number shown above, because the above numbers include those who resigned
at the conclusion of the 94th Ordinary General Meeting of Shareholders held on June 22, 2018.

(3) Outside Directors and Audit & Supervisory Board Members(i)Status of material concurrent positions at other organizations, etc. and the Company’s
relationship with the aforesaid organizations
Director Minoru Morio concurrently serves as Outside Director of Concordia
Financial Group, Ltd. The volume of transactions between the company and theCompany accounts for less than 1% of the OKI Group’s net sales and accounts forless than 1% of the said company’s net sales.
Director Shigeru Asaba serves as an Outside Director of Nippon Beet Sugar
Manufacturing Co., Ltd. There are no business relationships between Nippon Beet
Sugar Manufacturing Co., Ltd. and the Company.
Director Tamotsu Saito concurrently serves as Chairman of the Board of IHI
Corporation and Outside Director of JAPAN POST INSURANCE Co., Ltd. The
volume of transactions between the companies and the Company accounts for lessthan 1% of the OKI Group’s net sales and accounts for less than 1% of the each said
company’s net sales.

- 29 -

(Translation)(ii)

Major activities in the fiscal year under review(a) Attendance at meetings of the Board of Directors and the Audit & Supervisory
Board
Board of Directors meeting(number of meetings in parenthesis)
Attendance
Attendance ratefrequency

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

Minoru Morio,
Director

13 (13)

100%

–

–

Shigeru Asaba,
Director

13 (13)

100%

–

–

Tamotsu Saito,
Director

10 (10)

100%

–

–

Izumi Kawashima,
Director

10 (10)

100%

–

–

Kuninori
Hamaguchi,
Audit &
Supervisory Board
Member13 (13)100%

16 (17)

94%

Yoichi Nitta,
Audit &
Supervisory Board
Member13 (13)100%

17 (17)100%

Note: The number of meetings for Director Tamotsu Saito and Izumi Kawashima represents the number of
meetings held since they took office in June 2018.

- 30 -

(Translation)(b) Major activities
Minoru Morio,
Director

Principal comments
Making statements from a viewpoint nurtured through abundant experiencein corporate management, he provided advice and made proposals for theappropriateness and properness of decision making by the Board of
Directors. He also contributed to strengthening compliance by providing agood example to managerial personnel through his leadership and enhancing
the management fairness and transparency as a chairman of the Personnel
Affairs and Compensation Advisory Committee.

Shigeru Asaba,
Director

Making statements from the dual perspectives of industry and academia in
his position as a professor of a university business school, he provided
advice and made proposals for the appropriateness and properness ofdecision making by the Board of Directors. He also contributed tostrengthening compliance by providing a good example to managerial
personnel through his leadership and enhancing the management fairness
and transparency as a member of the Personnel Affairs and Compensation
Advisory Committee.

Tamotsu Saito,
Director

Making statements from a viewpoint nurtured through abundant experience
as one of business leaders in Japan, he provided advice and made proposals
for the appropriateness and properness of decision making by the Board of
Directors. He also contributed to strengthening compliance by providing agood example to managerial personnel through his leadership and enhancing
the management fairness and transparency as a member of the Personnel
Affairs and Compensation Advisory Committee.

Izumi Kawashima,
Director

Making statements on the background of academic expertise in theCommercial Code and the Financial Instruments and Exchange Act as aprofessor of a university, she provided advice and made proposals for theappropriateness and properness of decision making by the Board of
Directors. She also contributed to strengthening compliance by providing agood example to managerial personnel through her leadership and enhancing
the management fairness and transparency as a member of the Personnel
Affairs and Compensation Advisory Committee.

Kuninori Hamaguchi,
Audit & Supervisory Board
Member

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

Yoichi Nitta,
Audit & Supervisory Board
Member

He audited the business execution of Directors and leveraged his extensive
experience and knowledge as an executive and a Director at financial
institutions to make statements aimed at achieving sustainable growth andestablishing high-quality corporate governance systems for the Company.

(4) Outline of Liability Limitation Agreements
The Company concluded agreements to limit liabilities with outside officers (Minoru Morio,
Shigeru Asaba, Tamotsu Saito, Izumi Kawashima, Kuninori Hamaguchi and Yoichi Nitta)
and Standing Audit & Supervisory Board Members (Hisao Suzuki and Sei Yano) under theprovisions of Article 427 of the Companies Act. The outline of the agreements is asfollows:- In cases where outside officers and Standing Audit & Supervisory Board Members areliable for any damages arising from their negligence to the Company, they shallcompensate for such damages only to the extent of the minimum liabilities as stipulated
in Article 427, Paragraph 1 of the Companies Act.
- The above limitation of liability shall be applied only when the relevant outside officers
and Standing Audit & Supervisory Board Members have executed their duties thatcaused the liabilities in good faith and without gross negligence.

- 31 -

(Translation)
5.

Status of Accounting Auditor(1) Name: PricewaterhouseCoopers Aarata LLC(2) Compensation, etc.
Amount of payment
1. Compensation, to be paid to the accounting auditor for the fiscal year under review

161 million yen

2. Total sum of cash and profits on other assets that the Company and its subsidiaries
should pay to the accounting auditor

288 million yen

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 Manufacturing (Thailand) Co., Ltd., Oki Europe Ltd., and Oki ElectricIndustry (Shenzhen) Co., Ltd. have undergone statutory audits by accounting auditors other than theaccounting auditor of the Company.
3. After having performed the necessary verification as to the appropriateness of matters such as the content of
the accounting auditor’s audit plan, the status of performance of duties by the accounting auditor, and thebasis for the calculation of the estimated compensation for the accounting auditor, the Audit & Supervisory
Board has decided to consent to the amount of compensation, etc. to be paid to the accounting auditor.

(3) Content of non-auditing services
The Company has also entrusted the accounting auditor with “advisory services
relating to the new revenue recognition standard” and other services, which are services
other than the audits specified in Article 2, Paragraph 1 of the Certified Public Accountants
Act, and pays the auditor compensation for the services.
(4) Policy regarding decision to dismiss or not reappoint the accounting auditor
The Audit & Supervisory Board, in principle, will determine the detail of the proposal
to be submitted to the general meeting of shareholders regarding dismissal or nonreappointment of the accounting auditor if it is deemed unlikely that the accounting auditor
will be able to perform audits properly. In addition, if the accounting auditor falls underprovisions of the items in Article 427, Paragraph 1 of the Companies Act, the Audit &Supervisory Board will dismiss the accounting auditor upon the consent of all the Audit &Supervisory Board Members.

- 32 -

(Translation)
6.

Policies and procedures of the Company(1) Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business and othersystems to ensure appropriate operations(i)

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

(ii)

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

(iii) Rules concerning risk management and other procedures(a) The Company has established a Risk Management Committee and promotes
measures for appropriately grasping risks that may occur in relation to businessactivities of the Company and Group companies, and preventing such risks fromemerging.
(b) Pursuant to risk management rules, each section of the Company manages risks
that may occur in relation to its main duties. At the same time, the Company
has established a supervisory section to deal with risks needing company-wide
management.
This section assesses risks, draws up policies for risk
countermeasures and develops appropriate structures based on such policies.
(c) If any risk occurs, the Company will set up an emergency countermeasure- 33 -

(Translation)
headquarters to handle the risk.
(iv) Procedures to secure efficient business performance by Directors(a) The Company holds regular meetings of the Board of Directors once a month inprinciple to decide important matters including basic management policies andsupervise the business execution of Directors.
(b) The Company appoints executive officers to execute business based on basic
management policies determined by the Board of Directors so as to separate thefunctions of business execution and oversight, and promote timely decisionmaking processes.
In addition, the Company holds meetings of theManagement Committee consisting of executive officers, etc. to assist the
President in making decisions.
(c) The Company assigns Directors responsibilities and authority pursuant to rules
on division of duties and authorities.
(v)

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

(vi) Procedures for employees who assist Audit & Supervisory Board Members(a) The Company assigns employees as staff to assist Audit & Supervisory Board
Members.
(b) The Company assigns employees, who are not subject to Directors’ instructions
and orders, as staff to assist Audit & Supervisory Board Members, and any- 34 -

(Translation)
reassignment and evaluation of such employees requires the prior consent of the
Audit & Supervisory Board.
(vii) Procedures for Directors and employees to report to Audit & Supervisory Board
Members; procedures for Audit & Supervisory Board Members to receive otherreports(a) If Directors discover anything that may cause significant damage to theCompany, they are required to report the matter immediately to the Audit &Supervisory Board Members pursuant to applicable laws and regulations.
(b) Standing Audit & Supervisory Board Members attend meetings of theManagement Committee and meetings of the Board of Directors in order tounderstand important decision-making processes and the status of business
operations, as well as to inspect important documentation.
(c) Audit & Supervisory Board Members attend the Risk Management Committee
as advisors and receive necessary reports.
(d) Audit & Supervisory Board Members receive whistle-blowing reports based onwhistle-blowing regulations, and receive reports biannually on the status ofoperation of the regulations from relevant divisions.
(e) Audit & Supervisory Board Members receive reports on the status ofestablishing internal control systems and their operations from Directors andemployees on a regular basis, and may request Directors and employees to reporton matters deemed necessary.
(f) The Company ensures that a person who made a whistle-blowing report to Audit& Supervisory Board Members will not be treated unfavorably on account ofmaking such report.
(viii) Other procedures to secure effective audits by Audit & Supervisory Board Members(a) In conducting inspections on the Company’s operations and assets andperforming other audit duties, Audit & Supervisory Board Members shallconduct audits efficiently and effectively in close cooperation with the internal
audit section.
(b) Audit & Supervisory Board Members implement efficient audits by closelycooperating with the accounting auditor. To this end, Audit & Supervisory
Board Members hold meetings with the accounting auditor on a regular basis,
attend on-site audits by the accounting auditor, and request reports from theaccounting auditor on the progress of audits when necessary.
(c) The Company pays all the expenses necessary for the execution of the duties of
Audit & Supervisory Board Members.
(2) Overview of Status of Operations(i) Procedures relating to compliance(a) The Board of Directors has stipulated a basic policy for internal control systems,
and the Company has provided “Behavioral Guidelines,” the “OKI Group
Charter of Corporate Conduct,” and the “OKI Group Code of Conduct,” as a

- 35 -

(Translation)foundation to ensure compliance. The Directors of the Company and eachGroup Company take the initiative in compliance activities in conformance withthe “Compliance Commitment.”(b) The Company has established the Compliance Committee chaired by the Chief
Compliance Officer, to deliberate and decide on basic policies regarding
compliance programs. In accordance with the basic policies formulated by theCompliance Committee, the division responsible for compliance, plans, draws up,
and promotes specific measures such as education and training for Directors andemployees. In education and training, we aim to improve each employee’s
awareness about compliance through means such as group training and e-learning.
(c) To ensure compliance with the Antimonopoly Act, the Company invited outside
lecturers and offered training on this Act for officers and employees in Market &Sales Section during the fiscal year under review.
(d) The Company clearly has defined that in case of non-compliance, the Company
takes disciplinary action in accordance with the workplace regulations, etc., andhas the Group Disciplinary Action Committee, which is chaired by the President
and Executive Officer, to consider said action.
(e) The Company has a Group whistle-blower hotline, which provides access toexternal lawyers, to ensure quick discovery and effective correction of improper
conduct, and disseminates information about the whistle-blower system to
employees as well.
(ii) Procedures relating to risk management(a) The Company has established a Risk Management Committee chaired by the
President and Executive Director and advised by the Outside Directors and Audit& Supervisory Board Members, to stipulate fundamental matters relating tomeasures to prevent risks from emerging, and preparation in case risks arise.
(b) In relation to business activities, the Company has established a Business Risk
Management Division and a Group Common Risk Management Division, which
deals with risks that are common to the Group, and each of these management
divisions assesses risks and draws up policies for risk countermeasures.
(c) If any risk materializes, the department in which it arises takes the necessary
steps for the risk, and promptly reports the details of the event to the Risk
Management Committee according to the OKI Group Emergency Response
System. This Committee manages crisis information in a unified manner,
determines a response system and manager promptly, giving consideration to theseverity and urgency of the said crisis, implements necessary measures, andgives support to the said department.
(iii) Procedures relating to subsidiary management(a) In the Subsidiaries and Affiliates Management Rules, an administrative division
is designated for each subsidiary, and the head of said administrative division
manages it with the authority and responsibilities stipulated by the authority
regulations. Appointment and dismissal of chief officers of subsidiaries isdetermined by the President of the Company, and appointment and dismissal ofother officers is determined by the head of the administrative division.

- 36 -

(Translation)(b) Heads of administrative divisions clearly state the missions of subsidiaries which
they supervise, and when developing business plans, they provide support,
instruction, and periodic monitoring, and evaluate the performance of officers.
Heads of administrative divisions also monitor the operational status of thegeneral meeting of shareholders and the Board of Directors and compliance of
Directors of subsidiaries.
(c) At the accounting division of each subsidiary, the Company has appointed staff
with the necessary knowledge and experience. The Company works to conduct
the maintenance and improvement of an internal control system for financial
reporting conducted in accordance with related laws and regulations.
(d) To prevent losses from violations, malconduct, scandals, or accidents related to
any laws, rules or ethics, or loss from failing to appropriately perform risk
management, the Company holds regular training seminars for directors andaudit & supervisory board members of subsidiaries. Seminar topics include
responsibilities and obligations as a subsidiaries’ officer, compliance, andinternal controls.
(iv) Procedures relating to audits by Audit & Supervisory Board Members(a) The Standing Audit & Supervisory Board Member assesses important decision
making processes and the status of business operations by attending meetings ofthe Board of Directors and the Management Committee in addition to reading
resolution approval documents.
(b) The Audit & Supervisory Board Members have received whistle-blowing reports
based on whistle-blowing regulations, and received reports biannually on thestatus of operation.
(c) In addition to receiving reports on the development and operational status of theinternal control system at the meetings of the Board of Directors, the Audit &Supervisory Board Members exchange opinions with the President, executive
officers, general managers of divisions and representatives of the subsidiaries,
confirming the development and operation of the internal control system in theprocess.
(d) The Audit & Supervisory Board Members hold discussions and exchanges of
opinion with the Internal Auditing Division by taking part in site visits andmeetings to report on the results of audits held by the Internal Auditing Division,and utilize the results of audits in audits by Audit & Supervisory Board Members.
(e) The Audit & Supervisory Board Members have maintained close cooperation
with the Accounting Auditor including meeting and exchanging opinions with
the Accounting Auditor and attending site visits by the Accounting Auditor, toimplement effective audits.
Note: indication of amounts
Figures in this business report are indicated as follows.
1. Units of ¥1 million: Figures less than one unit are disregarded.
2. Units of ¥100 million: Figures less than one unit are rounded to the nearest unit.

- 37 -

(Translation)

Consolidated Balance Sheet(as of March 31, 2019)(Unit: Millions of yen)Account title

AmountAccount title(Assets)
Current assets

Amount(Liabilities)
223,206

Current liabilities

176,194

Cash and deposits

29,730Notes and accounts payable

67,465

Notes and accounts receivable

106,672

Short-term borrowings

48,880

Lease investment assets

11,513

Other accrued expenses

21,764

Finished goods

18,823

Other current liabilities

Work in process

25,007Long-term liabilities

89,108Raw materials and supplies

20,777Long-term debt

29,673

Other current assets

10,940

Lease obligations

11,926

Allowance for doubtful receivables(257)

Deferred tax liabilities

9,945

Non-current assets

142,296

Provision for Directors’ retirement benefits

Property, plant and equipment

49,393Liability for retirement benefits

Buildings and structures

19,656

Other long-term liabilities

Machinery, equipment and vehicle

8,166

Tools, furniture and fixtures

8,464

Land

12,829Construction in progress

277

Total liabilities

38,084463
30,158
6,941
265,302(Net Assets)
Shareholders’ equity

113,845

Capital stock

44,000Intangible assets

10,457

Additional paid-in capital

19,057

Investments and other assets

82,446

Retained earnings

51,785Investments in securities

43,621

Treasury stock, at cost

(997)

Asset for retirement benefits

18,339

Accumulated other comprehensive income(13,904)

Long-term trade receivables

21,940

Other investments and other assets

17,921

Net unrealized holding gain/loss on othersecurities

2,816

Allowance for doubtful receivables(19,376)

Loss on deferred hedges

169

Translation adjustments(10,884)

Retirement benefits liability adjustments(6,006)

Total assets

365,503- 38 -

Subscription rights to shares

133

Non-controlling interests

126

Total net assets

100,200

Total liabilities and net assets

365,503(Translation)

Consolidated Statement of Operations(From April 1, 2018 to March 31, 2019)(Unit: Millions of yen)Account title

AmountNet sales

441,452

Cost of sales

322,624

Gross profit

118,827

Selling, general and administrative expenses

101,305

Operating income

17,522Non-operating income
Interest income

97

Dividend income

1,302

Dividend income of insurance

391

Other

627

2,419

Non-operating expenses
Interest expense

1,633

Foreign exchange loss

1,280

Penalty

425

Other

1,125

Ordinary income

4,464
15,477Extraordinary profit
Gain on sale of property, plant and equipment

1,426

Gain on sale of investments in securities

969

2,396

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

475

Loss on impairment of fixed assets

2,890

Business structure improvement expenses

3,489

Profit before income taxes

6,855
11,018

Income taxes

2,476

Income taxes deferred

108

Profit

2,585
8,432

Loss attributable to non-controlling interests

27

Profit attributable to owners of parent

8,405- 39 -

(Translation)

Consolidated Statement of Changes in Net Assets(Year ended March 31, 2019)(Unit: Millions of yen)
Shareholders’ equity
Capital stock

Additional paid-in
capitalRetained earnings

19,79545,98344,000

Balance at April 1, 2018

Treasury stock,at costTotal shareholders’equity(563)

109,215

Changes during the term underreviewDividends from surplus(2,603)(2,603)

Profit attributable to ownersof parent

8,405

8,405
(448)

(448)

(9)

30

21

(728)

(15)

(744)

Purchases of treasury stock
Disposition of treasury
stock
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in items otherthan shareholders’ equity
during the term underreview
Net changes during the term
under review

–

(737)

5,801

(433)

4,630

Balance at March 31, 201944,00019,05751,785(997)

113,845

Accumulated other comprehensive income

Balance at April 1, 2018

Net unrealized
holding
gain/loss onother securities

Loss / Gainon deferredhedgesTranslation
adjustments

Retirement
benefits
liability
adjustments

6,578

34

(12,203)(3,455)

Total
Subscription
accumulated
rights toothersharescomprehensive
income(9,045)

101

Noncontrollinginterests

Total
net assets

1,873

102,144

Changes during the term
under review
Dividends from surplus(2,603)

Profit attributable toowners of parent

8,405

Purchases of treasury
stock

(448)

Disposition of treasury
stock

21

Change in ownershipinterest of parent due
to transactions with
non-controllinginterests(744)

Net changes in items
other thanshareholders’ equity
during the term underreview(3,761)

134

1,318

(2,551)(4,858)31(1,746)(6,574)

Net changes during theterm under review(3,761)

134

1,318

(2,551)(4,858)31(1,746)(1,943)

Balance at March 31,
2019

2,816

169

(10,884)(6,006)(13,904)133

126

100,200- 40 -

(Translation)

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

Scope of consolidation(1) Number of consolidated subsidiaries: 79 companies
Names of major consolidated subsidiaries:
Oki Data Corporation; Oki Customer Adtech Co., Ltd.; Oki Wintech Co., Ltd.;OKI Software Co., Ltd.; Oki Proserve Co., Ltd.; Nagano Oki Electric Co., Ltd.;Oki Electric Cable Co., Ltd.; Oki Data Americas, Inc.; Oki Data Manufacturing(Thailand) Co., Ltd.; Oki Europe Ltd.; Oki Electric Industry (Shenzhen) Co.,Ltd.

(2) Changes in scope of consolidation:
The following companies have been excluded from the scope of consolidation: OK
Enterprise, Co., Ltd., which merged with Oki Wintech Co., Ltd., a consolidated
subsidiary; OKI Data Infotech Corporation, which merged with Oki Data
Corporation, a consolidated subsidiary; Oki Advanced Communications Co., Ltd.
which merged with OKI Software Co., Ltd., a consolidated subsidiary; OBC WorksCo., Ltd. which merged with OKI Proassist Co., Ltd., a consolidated subsidiary;
Oki Jainet Supply Co., Ltd., which merged with. Oki Customer Adtech Co., Ltd., aconsolidated subsidiary.
2.

Application of equity method(1) Name of affiliated company to which the equity method is not applied:
Marubeni OKI Network Solutions Inc. and other two companies(2) Name of affiliated company to which the equity method is not applied:
TOWN NETWORK SERVICE Corporation
Reason for not applying the equity method:
The company has little influence and have no significance on profit or loss andretained earnings.

3.

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- 41 -

(Translation)assets; sales costs are calculated by mainly the moving average method.)
Non-marketable securities:
Mainly stated at cost based on the moving average method(ii) Inventories
The Company and its domestic consolidated subsidiaries 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 bookprice to reflect declines in profitability.)Work in process:Principally stated at cost based on the specific identification method.
(Balance sheet values are measured by the method of devaluing the bookprice 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 bookprice 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 (mainly 5 years), is
used.
Overseas consolidated subsidiaries primarily apply the straight-line method.
(iii) Lease assets
Lease assets relating to finance lease transactions that do not transfer ownershipare depreciated over the lease contract’s lifetime by the straight-line method, assuming
the residual value is zero.
(3) Basis for provision of reserves(i) Allowance for doubtful receivables- 42 -

(Translation)
To prepare for any losses of accounts receivable and loans, the Company and its
domestic consolidated subsidiaries calculate the amount of potential loss by using thehistorical loss ratio for non-classified loans/receivables and individual assessment forclassified loans/receivables. Overseas consolidated subsidiaries calculate the amountof potential losses by individually assessing the possibility of collection for specificloans/receivables.
(ii) Provision for Directors’ retirement benefits
Some consolidated subsidiaries register the necessary amount at the end of theyear in accordance with internal rules to prepare for the payment of Directors’
retirement allowance.
(4) Basis for provision of income and expense
Basis for provision of income relating to contract work and software development
contracts
a. Income from those with certain results in progress before the end of the fiscal year
Percentage-of-completion method (The progress ratio of construction is estimatedby the cost proportion method.)b. Other income
Inspection basis (completed-contract method for some domestic consolidated
subsidiaries)(5) Important hedge accounting methods(i) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward
exchange contracts and currency swap contracts eligible for allocation treatment.
Special treatment is applied to interest rate swaps that meet requirements for special
treatment.
(ii) Means of hedging and coverage
Forward exchange contracts and currency swap contracts are used to hedge
fluctuations of exchange rates on credits and debts in foreign currencies. Interest rate
swaps are employed to hedge fluctuations of market interest rates on variable-rate longterm debt.
(iii) Hedging policy
Derivative transactions are used to hedge fluctuations of market rates on credits
and debts.
(iv) Assessment method of the effectiveness of hedges
To determine the effectiveness of hedges, the Company compares the accumulated
total of market fluctuations or cash flow fluctuations for the targets of hedging and thatof the market fluctuations or the cash flow fluctuations for the means of hedging,
during the period from the start of hedging to the assessment. The Company thenmakes a decision based on the changes of the two.
(6) Amortization of goodwill and amortization period- 43 -

(Translation)
Goodwill is evenly amortized over its useful life (mainly five years).
(7) Other important matters in preparation of consolidated financial statements(i) Method of accounting for retirement benefitsa. Attributing expected retirement benefits to a period
When calculating retirement benefit obligations, the Company applies thebenefit formula basis to attribute expected retirement benefits to the period until
the end of the fiscal year under review.
b. Accounting for actuarial gains and losses, and prior service costs
Prior service costs are amortized by the straight-line method over a set
number of years (10 to 13 years) within the average remaining years of service of
employees.
Actuarial gains and losses are amortized by the straight line method over a
set number of years (10 to 13 years) within the average remaining years of 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.
Notes on Changes in Presentation(Change made to reflect adoption of Partial Amendments to Accounting Standard for Tax EffectAccounting, etc.)
The Company has adopted Partial Amendments to Accounting Standard for Tax EffectAccounting, etc. (ASBJ Statement No. 28, February 16, 2018) since the beginning of the
fiscal year under review, and made changes to classifications (i.e. classified deferred tax
assets into investments and other assets and deferred tax liabilities into long-term liabilities).
Additional Information
Oki Banking Systems (Shenzhen) Co., Ltd., an OKI Group consolidated subsidiary, hasfiled a request for arbitration against Shenzhen Yihua Computer Industrial Co., Ltd. on
October 10, 2015, demanding payment of accounts receivable of RMB1,115,463 thousand(¥18,382 million if converted to Japanese yen based on the exchange rate as of the end of the
fiscal year under review) and compensation of damages. Currently, the South China
International Economic and Trade Arbitration Commission continues to review the matter.
In consideration of the status of litigation, since the period for collecting the receivables
is expected to lengthen, an allowance for doubtful receivables of ¥11,208 million wasrecorded at the end of the fiscal year under review.

- 44 -

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

¥14,609 million¥4,500 million

Assets pledged as collateral for bank guarantees
Investments and other assets¥2,606 million

3.

Accumulated depreciation on property, plant and equipment¥157,470 million

4.

Liabilities for guarantee
Guarantee for borrowings by employees

5.

¥141 million

Contingent liabilities
OKI Brasil Indústria e Comércio de Produtos e Tecnologia em Automação S.A(hereinafter “OKI Brasil”), a consolidated subsidiary of the Company, received an additional
tax assessment notice from the tax authorities of Sao Paulo State on August 20, 2018.
According to this notice, OKI Brasil was ordered to pay 90 million BRL as ICMS (tax on
distribution of goods and services). However, OKI Brasil refuses to accept this order, and it
has filed a lawsuit.
The Company cannot reasonably estimate the probability of the occurrence of a loss or
the amount of a loss at present.

- 45 -

(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 FY2018
Common Stock87,217 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 22, 2018

CommonStockRetainedearnings

2,605

30.00

March 31,2018

June 25,2018(2) Dividends for which the record date falls in the fiscal year under review and the effective
date falls in the following fiscal year.

3.

Proposal

Class ofshares

Source ofdividends

Total
dividends(millions ofyen)

Dividends
per share(yen)

Recorddate

Effective
date

Ordinary General
Meeting of
Shareholders
on June 21, 2019

CommonStockRetainedearnings

4,325

50.00

March 31,2019

June 24,
2019

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

Breakdown of equity warrants

The Company

FY2016 Equity Warrants(issued on August 16, 2016)
FY2017 Equity Warrants(issued on August 15, 2017)
FY2018 Equity Warrants(issued on August 14, 2018)

Type of shares to be issued
upon exercise of equity
warrants

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

Common stock

35,500Common stock

49,800Common stock

60,400- 46 -

(Translation)
Notes on Financial Instruments
1. Matters concerning the status of financial instruments(1) Policy on financial instruments
The OKI Group mainly uses short-term deposits and highly safe marketable securities forfund management, and raises its funds primarily through borrowings from financial institutions
and issuance of corporate bonds. The Group uses derivatives to hedge risk as described below,
and does not engage in speculative transactions.
(2) Description of financial instruments, related risks, and risk management system
The Group strives to mitigate its customers’ credit risks associated with notes 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,
the Group applies derivative instruments (interest rate swap transactions) to hedge its risk.
Derivative transactions consist of forward foreign exchange contracts which aim to hedge
exchange rate fluctuation risks related to foreign currency-denominated receivables and payables,
currency swap transactions, and interest rate swap transactions, which aim to hedge interest rate
fluctuation risks related to the payment of borrowings. The Company assesses the validity ofhedges with interest rate swaps by comparing the accumulated fair value changes of hedged items
and those of hedging instruments, but does not perform such assessment if they are subject tospecial treatment.
The Group executes and manages derivative transactions in accordance with OKI Group’s
policy.
(3) Supplemental explanation regarding the disclosure concerning fair value of financial
instruments
The fair value of financial instruments is based on market prices, but if no market prices areavailable, their fair value reflects the value reasonably calculated. Because fluctuation factors areincorporated into the calculation of the said value, it may change if different prerequisites, etc. areused. Contract amounts, etc. related to derivative transactions described in “2. Disclosure
concerning fair value of financial instruments” do not indicate market risks related to thesetransactions.

- 47 -

(Translation)2.

Disclosure concerning fair value of financial instruments
As of March 31, 2019 (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

Fair value

Difference( 1 ) Cash and deposits

29,73029,730–( 2 ) Notes and accounts receivable

106,672

106,672–( 3 ) Investments in securities

34,89534,903

8

7,450

7,450

–

( 5 ) Notes and accounts payable(67,465)(67,465)–( 6 ) Short-term borrowings (*3)(30,570)(30,570)–( 7 ) Other accrued expenses(21,764)(21,764)–( 8 ) Long-term debt (*3)(47,983)(48,377)394( 4 ) Long-term trade receivables
Allowance for doubtful receivables (*2)

21,940(14,490)( 9 ) Derivative transactions
559
559
–
(*1) Those recorded as liabilities are shown within brackets.
(*2) Allowance for doubtful receivables specifically provided for long-term trade receivables is deducted.
(*3) Long-term debt (¥18,310 million) that will be reimbursed within one year are classified as “short-term”
borrowings in the consolidated balance sheet.
Notes:
1.
Disclosure concerning methods of calculation of fair value of financial instruments, securities and derivativetransactions(1) Cash and deposits and (2) Notes and accounts receivable
These items are settled over a short period of time and their fair value is virtually equal to their book value.
Hence, their fair value is based on the relevant book value.
(3) Investments in securities
The fair value of investments in securities is based on their prices determined at the financial instruments
exchanges, and the fair value of bonds is based on the quotations offered by the correspondent financial
institution.
(4) Long-term trade receivables
Fair value of long-term trade receivables is based on the amount after deducting the present estimateddoubtful receivables from the book value as estimated doubtful receivables are calculated based on thepresent value of loans / receivables.
(5) Notes and accounts payable, (6) Short-term borrowings, and (7) Other accrued expenses
These items are settled over a short period of time and their fair value is virtually equal to their book value.
Hence, their fair value is based on the relevant book value.
(8) Long-term debt
The fair value of these items is based primarily on the method of calculation whereby the sum of principal
and interest is discounted by an assumed interest rate on the assumption that the said sum is freshly
borrowed in a similar manner. Some long-term debt with floating interest rates are prescribed to be subject
to special accounting treatment applicable to interest rate swaps (see (9) below). Hence, the fair value of along-term debt is based on the method of calculation whereby the sum of principal and interest, treated in
combination with the said interest rate swap, is discounted by a reasonably estimable interest rate on theassumption that the said amount is freshly borrowed in a similar manner.
(9) Derivative transactions
Derivative transactions subject to allocation treatment applicable to currency swaps, and to special
accounting treatment applicable to interest rate swaps are treated in combination with long-term debt ashedged items. Hence, their fair value is included in that of long-term debt.

- 48 -

(Translation)
2.

Financial instruments whose fair value is considered extremely difficult to assess
Unlisted equity securities (¥8,725 million on the consolidated balance sheet) are not included in (3) Investments insecurities because they have no market price and it is deemed extremely difficult to assess their fair values.

Notes to Per-share Information
1. Net assets per share: ¥1,155.28
2. Earnings per share:¥97.16

Other Notes (Notes on Loss on impairment of fixed assets)
The Group posted impairment losses of ¥3,127 million for the fiscal year under review, of
which ¥2,890 million were presented as impairment losses in the extraordinary loss category and¥237 million were included in business structure improvement expenses in the same category.
Major impairment losses are described below.
Business

Purpose of use

Japan

Mechatronics
Systems

Type ofassetsLocation

Buildings and structures

1,102

Machinery, equipment
and vehicle

397

Tools, furniture andfixtures627

Intangible assets

86

Other assets

30

Machinery, equipment
and vehicle

43

Tools, furniture andfixtures112

Intangible assets

448

Other assets

3

Business assets

China, andothercountries

Amount(millions of yen)

Regarding business assets, the Group basically sets up asset groups based on businesssegments. However, if certain business assets (e.g. assets to be disposed of) are considered toindependently create cash flows, they are grouped by asset.
Because the Group could not expect to receive the initially anticipated earnings from
Mechatronics Systems business assets, it reduced their book values to recoverable amounts, whichwere calculated using net realizable value based on real estate appraisals, etc.

- 49 -

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

Acquisition cost

14,271

9,217

5,054

14,271

9,217

5,054

20,623

21,480(856)

Subtotal

20,623

21,480

(856)

Total

34,89530,698

4,197(Securities whose amounts recorded inconsolidated balance sheet exceed theiracquisition costs)

Difference

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

2.

Other securities sold during the consolidated fiscal year under review(From April 1, 2018 to March 31, 2019)(Unit: Millions of yen)Type
Equity Securities
Total

Sales amount

Total gain on sales

Total loss on sales

1,466

717

44

1,466

717

44

3.

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

- 50 -

(Translation)
Other Notes (Notes on Business Combination)
1. Transactions, etc. under Common Control
The Company resolved to additionally acquire shares of OKI Brasil Indústria e Comércio deProdutos e Tecnologia em Automação S.A., a consolidated subsidiary, at a Board of Directors
Meeting on October 31, 2018, and acquired these shares on December 21, 2018.
(1) Outline of transactions(i) Name and content of business of the Company involved in the merger
Name of the company involved in the merger:
OKI Brasil Indústria e Comércio de Produtos e Tecnologia em Automação S.A.
Content of business:
Design, manufacture, sales and maintenance and services of automation equipment(ii) Date of business combination
December 21, 2018(iii) Legal forms of business combination
Purchases of stock(iv) Name of the company after combination
No change in name(v) Other items regarding outline of transaction
The Company acquired 10.31% of the shares of OKI Brasil Indústria e Comércio deProdutos e Tecnologia em Automação S.A, which became a wholly-owned subsidiaryof the Company.
(2) Outline of accounting procedures applied
The transaction was accounted for as transactions with non-controlling shareholders in the
category of transactions under common control, etc. in accordance with the AccountingStandard for Business Combinations (ASBJ Statement No. 21, September 13, 2013) and the
Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures (ASBJ Guidance No. 10, September 13, 2013).
(3) Matters listed in the case of acquisition of additional shares of a subsidiary
Acquisition cost of acquired company and breakdown
Consideration for the acquisition
Cash and deposits¥762 million
Acquisition cost
¥762 million(4) Matters concerning change in the Company’s ownership interest of subsidiaries due totransactions with non-controlling shareholders(i) Major factor of change in additional paid-in capital
Acquisition of additional shares of a subsidiary(ii) Amount of additional paid-in capital decreased by transactions with non-controllingshareholders¥762 million- 51 -

(Translation)

Transcript of Accounting Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
May 20, 2019
To: Board of Directors
Oki Electric Industry Co., Ltd.
PricewaterhouseCoopers Aarata LLC
Kensuke Koda,
Engagement Partner, Certified Public Accountant
Hiroyuki Sawayama,
Engagement Partner, Certified Public Accountant
Masataka Kubota,
Engagement Partner, Certified Public Accountant

We have audited the consolidated financial statements – the consolidated balance sheets, the consolidated statementof operations, the consolidated statement of changes in net assets equity and notes to the consolidated financial
statements – of Oki Electric Industry Co., Ltd. for the 95th term from April 1, 2018 to March 31, 2019 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 PricewaterhouseCoopers Aarata 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
(PricewaterhouseCoopers Aarata LLC) and the respective engagement partners.

- 52 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2019)

Account title(Assets)
Current assets
Cash and deposits

Amount14,971

Notes receivable
Accounts receivable, trade
Lease investment assets
Finished goods
Work in process
Raw materials and supplies
Advance payments - trade
Prepaid expenses
Short-term loans
Accounts receivable-other
Other current assets
Allowance for doubtful receivables
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
VehicleAccumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Land
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Right of using facilities
SoftwareTotal intangible assets
Investments and other assets
Investments in securities
Investments in and advances tosubsidiaries and affiliates
Contribution
Contribution in subsidiaries andaffiliates
Long-term loans receivable fromsubsidiaries and affiliates

2,442
60,228
11,4884,433
18,064
6,327
95
1,641
6,790
6,986
389
(24)
133,834
30,95323,716
2,190
1,710
11,712
10,10668
59
36,49530,491

7,237
479
1,605
9
6,004
1,805
55
17,197
1
110
7,124
7,237
40,157(Net Assets)
Shareholders’ equity
Capital stock
Additional paid-in capital

98
21,785Long-term prepaid expenses

174

Total assets

Provision for loss on Anti-Monopoly
Act
Asset retirement obligations
Other long-term liabilities
Total long-term liabilities
Total liabilities

88

31

Lease and guarantee deposits
Other investments and other assets
Allowance for doubtful receivables
Total investments and other assets
Total non-current assets

Provision for contingent loss

55,244Claims provable in bankruptcy,
rehabilitation and otherPrepaid pension cost

(Unit: Millions of yen)Account title
Amount(Liabilities)
Current liabilities
Notes payable
6
Electronically recorded obligations 3,863
operatingAccounts payable, trade44,644
Short-term borrowings
25,525Current portion of long-term debt
17,422
Lease obligations
2,730
Accounts payable, others
10,709Other accrued expenses
7,309
Income taxes payable
549
Advances received
1,424
Deposits received
12,804
Unearned revenue
2
Provision for product warranties
323
Provision for directors’ bonuses
149
Provision for loss on construction
2,319
contracts
Provision for contingent loss
251
Provision for loss on Anti-Monopoly
60
Act
Other current liabilities
5
Total current liabilities
130,102
Long-term liabilities
Long-term debt
29,229Lease obligations
11,701
Deferred tax liabilities
6,155
Retirement benefits
6,335
Provision for product warranties
213
Provision for loss on construction
151
contracts

4,415
3,247
231
(17,800)
107,674
132,109265,944- 53 -

Capital reserve

42
322
1,072
896
56,118186,22144,00021,54015,000

Other additional paid-in capital

6,540

Retained earnings

12,433

Other retained earnings

12,433Retained earnings carried forward

12,433

Treasury stock, at cost
Total shareholders’ equity
Valuation, translation adjustments andothersNet unrealized holding gain/loss onother securities
Total valuation, translation
adjustments and others
Subscription rights to shares
Total net assets
Total liabilities and net assets(989)
76,983

2,605
2,605
133
79,722
265,944(Translation)

Non-Consolidated Statement of Operations(From April 1, 2018 to March 31, 2019)(Unit: Millions of yen)Account title

AmountNet sales

215,960

Cost of sales

173,907

Gross profit

42,053

Selling, general and administrative expenses

39,527

Operating income

2,525

Non-operating income
Interest income

694

Dividend income

9,044

Other

1,464

11,204Non-operating expenses
Interest expense

1,369

Provision of allowance for doubtful receivables

1,883

Other

1,059

Ordinary income

4,312
9,417

Extraordinary profit
Gain on sale of investments in securities

380

Provision for loss on business of subsidiaries and affiliates

1,114

1,494

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

289
1,902

Write-downs of investments in unconsolidated subsidiaries and othersecurities

10

Loss on valuation of shares of subsidiaries and affiliates

765

Profit before income taxes

2,968
7,942

Income taxes(648)

Income taxes deferred

132

Profit

(515)
8,457

- 54 -

(Translation)

Non-Consolidated Statement of Changes in Net Assets(Year ended March 31, 2019)(Unit: Millions of yen)
Shareholders’ equity
Additional paid-in capital
Capitalstock

Balance at April 1,
2018

44,000Retained earnings

Capitalreserve

Other
additional
paid-in
capitalTotal
additional
paid-in capital

15,0006,549

21,549Other retained
earnings
Retained earnings
carried forward

Total
retainedearnings

Treasurystock,
at costTotal
shareholders’equity(460)

71,670

6,581

6,581

Dividends fromsurplus(2,605)(2,605)(2,605)

Profit

8,457

8,457

8,457

Changes during theterm under review

Purchases oftreasury stock
Disposition oftreasury stock

(9)

(9)

(560)

(560)

30

21

Net changes in
items other thanshareholders’equity during theterm under review
Net changes during
the term underreview
Balance at March
31, 2019

–

–

(9)

(9)

5,851

5,851

(529)

5,312

44,00015,0006,540

21,54012,433

12,433(989)

76,983

Subscription
rights tosharesTotal net assets

101

77,505

Valuation, translation adjustments and others

Balance at April 1, 2018

Net unrealized holding
gain/loss on othersecurities

Loss / Gain on deferredhedgesTotal valuation,translation adjustments
and others

5,733

–

5,733

Changes during the term underreviewDividends from surplus(2,605)

Profit8,457

Purchases of treasury stock(560)

Disposition of treasury stock21

Net changes in items otherthan shareholders’ equity
during the term under review(3,127)–(3,127)31(3,095)

Net changes during the term
under review(3,127)–(3,127)31

2,217

Balance at March 31, 2019

2,605

–

2,605

133

79,722- 55 -

(Translation)

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

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

2.

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

3.

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

4.

Depreciation and amortization
Property, plant and equipment (excluding lease assets): Declining-balance method
The straight-line method is applied to buildings, excluding annexed structures,acquired on or after April 1, 1998.
Intangible assets (excluding lease assets)
Software for sale in the market:
Amortization method based on the estimated amounts of sales in the estimatednumber of years for sales (3 years)
Software for internal use:
Straight-line method based on the estimated durable years (mainly 5 years)
Others:Straight-line method- 56 -

(Translation)
Lease assets(Lease assets relating to finance lease transactions without transfer of ownership):
They are depreciated over the lease contract’s lifetime by the straight-line
method, assuming the residual value is zero.

5.

Basis for provision of reserves
Allowance for doubtful receivables
To prepare for any losses on accounts receivable and loans, the Company calculates theamount of potential loss by using the historical loss ratio in the case of non-classified
loans/receivables and by individual assessment in the case of classified loans/receivables.
Provision for product warranties
To prepare for the expenses caused by free repairs that occur after product sales, theCompany includes a provision for product warranties based on past performance or individual
estimates.
Provision for directors’ bonuses
To prepare for the payment of bonuses to officers (includes executive officers, the same
applies below), the Company records the amount attributable to the current fiscal year out of
the amount of bonuses expected to be paid to officers.
Provision for loss on construction contracts
To prepare for any losses on construction contracts, the estimated amount of losses forthe following fiscal years are calculated for some of the orders backlog as of the end of the
fiscal year under review, which are likely to incur losses and for which the amounts thereof
can be reasonably estimated.
Provision for contingent loss
To prepare for losses that may occur in the future, the Company includes a provision forcontingency losses rationally calculated based on individual risks, etc.
Provision for loss on Anti-Monopoly Act

To prepare for any losses relating to the Anti-Monopoly Act, the estimated amount forthe current fiscal year end is recorded.
Retirement benefits
To prepare for payment of retirement benefits to employees, the Company records theamount recognized to accrue at the end of the fiscal year based on the estimated values ofretirement benefit obligations and pension assets.
Prior service cost is amortized by the straight-line method over a certain number of years(13 years) within the average remaining years of service of employees.
The actuarial difference is amortized proportionately using the straight-line method overa certain number of years (13 years) within the average remaining service period of theemployees from the fiscal year after the one in which it arises.

- 57 -

(Translation)
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 and long-term
debt.
(3) Hedging policy
Derivative instruments are used to hedge fluctuations of market rates on credits and debts.
(4) Assessment method of hedging effectivenessTo determine the effectiveness, the Company compares the accumulated total of themarket fluctuations or the cash flow fluctuations for the hedged item and that of themarket fluctuations or the cash flow fluctuations for the means of hedging, during theperiod from the start of hedging to the assessment. The Company then makes adecision based on the changes of the two.

7.

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

(Change made to reflect adoption of Partial Amendments to Accounting Standard for Tax EffectAccounting, etc.)
The Company has adopted Partial Amendments to Accounting Standard for Tax EffectAccounting, etc. (ASBJ Statement No. 28, February 16, 2018) since the beginning of the
fiscal year under review, and made changes to classifications (i.e. classified deferred tax
assets into investments and other assets and deferred tax liabilities into long-term liabilities).

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(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.

¥14,609 million¥4,500 million

Guarantee liabilities:
The Company provides guarantees for bank borrowings made by employees, andsubsidiaries and affiliates as shown below.
Oki HONG KONG LTD.
¥4,067 million($14,000 thousand, HK$21,600 thousand, RMB134,000 thousand)
OKI Brasil Indústria e Comércio de Produtos e Tecnologia¥3,240 million
em Automação S.A.
(113,885 thousand real)
Oki Data Americas, Inc.
¥1,665 million($15,000 thousand)Oki Printed Circuits Co., Ltd.
¥1,012 million
Oki Wintech Co., Ltd.
¥772 million
Oki Data Manufacturing (Thailand) Co., Ltd.
¥610 million($5,500 thousand)Oki Data Corporation¥443 million
Five other entities:¥947 million
Total:¥12,760 million

3.

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

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

Notes to Non-consolidated Statement of Changes in Net Assets
Type and number of treasury stock as of the end of the fiscal year
Common stock:- 59 -¥16,964 million¥1,161 million¥28,304 million¥67 million¥17,230 million¥52,415 million¥12,776 million

709 thousand shares

(Translation)
Notes to Deferred Tax Accounting
Major factors giving rise to deferred tax assets and liabilities
Deferred tax assets
Nondeductible write-downs of shares of subsidiaries and affiliates
Allowance for doubtful receivables
Loss carry forwards
Nondeductible retirement benefits
Adjustments of losses on transfers among consolidated subsidiaries
Nondeductible accrued bonuses
Provision for loss on construction contracts
Nondeductible write-downs of inventories
Loss on impairment of fixed assets
Balance of trust property with retirement benefits
Bad debts expenses
Asset retirement obligations
OthersSubtotal deferred tax assets
Valuation allowance
Total deferred tax assets¥16,741 million¥5,458 million¥3,879 million¥3,576 million¥3,411 million¥1,194 million¥757 million¥710 million¥571 million¥516 million¥354 million¥328 million¥1,770 million¥39,265 million¥(36,121) million¥3,144 million

Deferred tax liabilities
Gain on valuation of investment securities
Nondeductible unrealized gain on contribution of securities to thepension trust
Net unrealized holding gain/loss on other securities
Prepaid pension cost
OthersTotal deferred tax liabilities¥(1,058) million¥(378) million¥(183) million¥(9,299) million

Net deferred tax assets¥(6,155) million- 60 -¥(5,723) million¥(1,957) million

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

Name of company, etc.

Location

Subsidiary

Oki Wintech Co.,Ltd.

Shinagawaku, Tokyo

Votingright ratio

Relationship withrelated party

Description oftransactions

Transaction
amount(mil. yen)Account item

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

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

Sales ofproducts

5,472

Accounts
receivable,
trade

3,303

(Direct)100%

Production ofsoftware on a contract
basis, etc.

Purchase ofservices

13,784

Accounts
payable,
trade

4,531

(Direct)
100%

Purchase of products,
etc., concurrent
assumption of office

Borrowings of
funds

–

Deposits
received

2,927

Lending of
funds

5,153

(Direct)
100%

Supply products etc.,
lending of funds,
guarantee forborrowings

5,787

Debt guarantee

3,240Long-term
loans
receivable
fromsubsidiaries
and affiliates

Lending offunds

16,11015,541

Debt guarantee

4,067

Long-term
loans
receivable
fromsubsidiaries
and affiliates

CapitalBusiness

Subsidiary

OKI Software Co.,Ltd.

Warabi,
Saitama Pref.

¥400 million

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

Subsidiary

Oki Data
Corporation

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

Subsidiary

OKI Brasil Indústriae Comércio deProdutos e
Tecnologia em
Automação S.A.

BRL415,999
thousand

Design, development,
manufacture, sales andmaintenance ofautomation equipment

Subsidiary

Oki Hong Kong,
Ltd.

BrazilHong Kong

US$10,292
thousandHoldings company,
material procurement(Direct)
100%

Supply products etc.,
lending of funds,
guarantee forborrowings

Notes:
1. The transactions amount excludes consumption tax, while the ending balance includes consumption tax.
2. Conditions of transactions and policy in determining conditions(1) The Company determines conditions regarding purchase of services and sales of products based on market
prices and conducting negotiation.
(2) The Company determines the interest rate for the lending of funds by taking the market rate of interest into
consideration. However, for some subsidiaries, the Company determines the said interest rate by taking thefinancial position of the subsidiaries. Transaction amount shows the average balance during the fiscal year
because the transactions are repetitive.
(3) Guarantee of obligation is performed with bank loans of OKI HONG KONG LTD. and OKI BRASIL
INDÚSTRIA E COMÉRCIO DE PRODUTOS E TECNOLOGIA EM AUTOMAÇÃO S.A. and the Company
receives an annual premium of 0.1%.
3. An allowance for doubtful accounts of ¥17,733 million has been recorded for loans to two subsidiaries. Furthermore,an allowance for doubtful accounts of ¥1,882 million has been provisioned this fiscal year.

Notes to Per-share Information
1. Net assets per share:¥920.02
2. Earnings per share:¥97.77- 61 -

(Translation)

Transcript of Accounting Auditors’ Report

Independent Auditors’ Report
May 20, 2019
To: Board of Directors
Oki Electric Industry Co., Ltd.
PricewaterhouseCoopers Aarata LLC
Kensuke Koda,
Engagement Partner, Certified Public Accountant
Hiroyuki Sawayama,
Engagement Partner, Certified Public Accountant
Masataka Kubota,
Engagement Partner, Certified Public Accountant

We have audited the non-consolidated financial statements—the non-consolidated balance sheets, the nonconsolidated statement of operations, the non-consolidated statement of changes in net assets and notes to the nonconsolidated financial statements—and its supporting schedules of Oki Electric Industry Co., Ltd. for the 95th termfrom April 1, 2018 to March 31, 2019 in accordance with Article 436 Paragraph 2 Item 1 of the Companies Act.
Responsibility of management for preparing non-consolidated financial statements and its supporting schedules
Oki Electric Industry’s management is responsible for preparing and presenting fairly these non-consolidated
financial statements and its supporting schedules in accordance with corporate accounting standards generally
accepted in Japan. This includes designing and operating internal control that the management determines
necessary to prepare and fairly present these non-consolidated financial statements and its supporting schedules thatare without material misstatement due to fraud or errors.
Responsibility of auditors
Our responsibility is to express our independent opinion regarding these non-consolidated financial statements andits supporting schedules based on audits by PricewaterhouseCoopers Aarata 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
(PricewaterhouseCoopers Aarata LLC) and the respective engagement partners.

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(Translation)

Transcript of Audit & Supervisory Board’s Report

Audit & Supervisory Board’s Report
We, the Audit & Supervisory Board, have prepared upon consultation this Audit Report based on reports compiled by each
Audit & Supervisory Board Member with respect to Directors’ performance of their duties during the 95th fiscal year from
April 1, 2018 to March 31, 2019, as follows:
1. Auditing methods used by Audit & Supervisory Board Members and the Audit & Supervisory Board, and details of
audit(1) The Audit & Supervisory Board specified an audit policy, compiled audit plans and received reports from each Audit &Supervisory Board Member on the status of implementation and results of audits and also received reports from
Directors and accounting auditors on the status of the execution of their duties and asked them for explanations asneeded.
(2) Each Audit & Supervisory Board Member, according to the audit standards, policy and plans set up by the Audit &Supervisory Board, has maintained good communications with Directors, the internal audit division and other
employees and strived to collect information and improve the audit environment and conducted an audit by following
the methods described below:(a) We attended the meetings of the Board of Directors and other meetings as deemed important, received from Directors
and employees reports on the execution of their duties, asked for explanations as necessary, perused the documents
whereby the important decisions were made, and examined business and financial conditions at the head office andprincipal operating offices. With respect to the subsidiaries of the Company, we have maintained goodcommunications and exchanged information with Directors, Audit & Supervisory Board Members and others andreceived reports on business conditions from the subsidiaries as needed.
(b) In addition, we have periodically received reports from Directors and employees, among others, required explanation
when necessary, and made opinions with regard to the status of operations and the systems established thereon(internal control systems) made by the Board of Directors concerning the establishment of systems defined in Article
100, Paragraph 1 and Paragraph 3 of the Regulations for Enforcement of the Companies Act as necessary forensuring compliance with laws and the Company’s Articles of Incorporation in the performance of duties byDirectors, described in the Business Report, and for ensuring appropriateness of duties of corporate group consistingof joint stock company and its subsidiaries. With respect to the internal controls over financial reporting, we havereceived reports on the internal control evaluation and status of the audits from the Directors, etc. and thePricewaterhouseCoopers Aarata LLC, and asked them for explanations as necessary.
(c) We have monitored and verified whether the accounting auditors maintained their independence and properly
implemented audits, received from the auditors reports on the performance of their duties and asked them for
explanations as necessary. The accounting auditors reported to us that “systems for ensuring proper execution ofduties” (listed in each item of Article 131 of the Corporate Calculation Regulations) have been established inaccordance with the quality control standards concerning audits (Business Accounting Council, October 28, 2005),
and asked them for explanations as necessary.
Based on the methods mentioned above, we have reviewed the business report for the said fiscal year and their
supplementary schedules, financial statements for the said fiscal year (balance sheet, statement of operations, statement ofchanges in shareholders’ equity, and notes to non-consolidated financial statements), their supplementary schedules andconsolidated financial statements (consolidated balance sheet, consolidated statement of operations, consolidated statement ofchanges in shareholders’ equity, and notes to consolidated financial statements).
2. Results of Audit(1) Results of audit of the business report(a) We consider that the business report and its supplementary schedules fairly present the situation of the Company inaccordance with relevant laws and regulations and the Company’s Articles of Incorporation.
(b) With respect to the Directors’ performance of their duties, we have found neither undue transactions nor material
facts that violate relevant laws and regulations or the Company’s Articles of Incorporation.
(c) We consider that the details of the resolution made by the Board of Directors concerning internal control proceduresare proper. With respect to the details described in the Business Report and the Directors’ performance of theirinternal control duties, we have found no issues to be pointed out. With respect to the internal controls overfinancial reporting, we received reports from Directors and PricewaterhouseCoopers Aarata LLC stating that there
were no significant deficiencies warranting disclosure as of the date on which this report was prepared.
(2) Results of audit of financial statements and their supplementary schedules
We consider that the auditing methods and results of the Company’s Accounting Auditors, PricewaterhouseCoopers
Aarata LLC, are proper.
(3) Results of audit of consolidated financial statements
We consider that the auditing methods and results of the Company’s Accounting Auditors, PricewaterhouseCoopers
Aarata LLC, are proper.
May 20, 2019
The Audit & Supervisory Board, Oki Electric Industry Co., Ltd.
Hisao Suzuki, Standing Audit & Supervisory Board Member
Sei Yano, Standing Audit & Supervisory Board Member
Kuninori Hamaguchi, Outside Audit & Supervisory Board Member
Yoichi Nitta, Outside Audit & Supervisory Board Member- 63 -