(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 11, 2020

NOTICE OF 96TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 96TH
ordinary general meeting of shareholders will be held as follows.
To prevent the spread of novel coronavirus disease (COVID-19), shareholders are kindly requested
to exercise their voting rights in writing or via the Internet, etc. for this general meeting ofshareholders, and refrain from attending the meeting in person. On the meeting day, we will ensure
appropriate social distancing between seats and this will significantly reduce the number of seatsavailable, compared to the previous years. Accordingly, even if you come to the venue, you may
not be able to enter. We would appreciate your understanding in advance.
Shareholders are kindly requested to review “Reference Documents for the General Meeting of
Shareholders” provided hereunder and exercise their voting rights by no later than 5:15 p.m. on June
25 (Thursday), 2020 (JST).
Yours faithfully,
Shinya Kamagami,
President, Representative Director
Oki Electric Industry Co., Ltd.
1-7-12 Toranomon, Minato-ku, Tokyo- 1 -(Translation)
1.
2.

Date and Time: Friday, June 26, 2020, from 10:00 a.m. (Reception will open at 9:30 a.m.)
Location:
Nikkei Hall, 3F Nikkei Building, 1-3-7 Otemachi, Chiyoda-ku, Tokyo
The date and time, and location are subject to change due to the situation regarding the
COVID-19 outbreak. Any change that occurs will be announced on our website(https://www.oki.com/jp/). Should you intend to attend the meeting, please check thewebsite in advance.
3.
Meeting Agenda
Items to be reported:
1. Business Report, Consolidated Financial Statements and audit results of theConsolidated Financial Statements by the Accounting Auditor and the Audit &Supervisory Board for the 96th fiscal year (from April 1, 2019 to March 31, 2020)
2. Non-consolidated Financial Statements for the 96th fiscal year (from April 1, 2019
to March 31, 2020)

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

Appropriation of Surplus
Election of Nine (9) Directors
Election of Two (2) Audit & Supervisory Board Members

Instructions for the Exercise of Voting Rights
Exercise of voting rights via postal mail:Please indicate your approval or disapproval in the space provided on the ballot and return the ballot
to the Company no later than 5:15 p.m., June 25 (Thursday), 2020 (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 25 (Thursday), 2020 (JST).
Exercise of voting rights via attending the meeting:
Please bring and always wear a face mask. Present the enclosed ballot at the reception desk of themeeting.
* If you exercise your voting rights both in writing and via the Internet, etc., we will regard the vote cast
via the Internet, etc. to be effective.
* If you exercise your voting rights more than once via the Internet, etc., we will regard the last vote you
cast to be the effective one.
* The Company has provided the Notice of 96th 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.

- 2 -(Translation)

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

How to entervoting rights exercise code and password

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

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

1.

Please access the voting site.

2.

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

3.

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

4.

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

2.

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

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

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

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

- 3 -(Translation)

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

Appropriation of Surplus

The Company has determined to pay the following year-end dividend for the fiscal year underreview 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 under review.
The Company’s policy of return of profits to shareholders is described on pages 18 to 19.
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¥4,326,350,950

3.

Effective date of dividend of surplus
June 29, 2020

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

Current position/
responsibility
in the Company

Number of attendanceat meetings ofthe Board of Directors

Numberof years
in office1

Hideichi Kawasaki

Re-election
InsideChairman of the Board100%(14 out of 14 times)

15

2

Shinya Kamagami

Re-election
InsidePresident,
Representative Director
Supervision100%(14 out of 14 times)

6

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

4

Re-election
InsideExecutive Vice President
and Member of the
Board
Head of Solution
Systems Business Group100%(10 out of 10 times)

1

Masashi Fuse

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

100%(10 out of 10 times)

1

6

Shigeru Asaba

Re-election
OutsideIndependent

Outside Director100%(14 out of 14 times)

3

7

Tamotsu Saito

Re-election
OutsideIndependent

Outside Director100%(14 out of 14 times)2

8

Izumi Kawashima(female)Re-election
OutsideIndependent

Outside Director100%(14 out of 14 times)

2

9

Makoto Kigawa

Re-election
OutsideIndependent

Outside Director

90%(9 out of 10 times)

1

3

4

5

Masayuki Hoshi

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

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

Joined Oki Electric Industry Co., Ltd.

Apr. 2001

Executive Officer

HideichiKawasaki

Apr. 2004

Senior Vice President

Jun. 2005

Managing Director(January 10, 1947)

Apr. 2009

Senior Executive Vice President, Representative Director

Jun. 2009
President, Representative Director
Number of years in
office as Director:
Apr. 2016
Chairman of the Board, Representative Director
15 years
Chairman of the Board (incumbent)(as of the conclusion of Jun. 2018
this general meeting of(Significant concurrent positions)shareholders)[Re-election]
He will assume the office of Outside Director of Japan Petroleum
1
Number of attendance at Exploration Co., Ltd. in June 2020.
meetings of the Boardof Directors
Reason for the selection of candidate for Director(the year under review):
Based on his past experience as President and Representative Director, Mr.
14 out of 14 times
Hideichi Kawasaki has the knowledge and experience to decide important(100%)
matters and supervise the business execution of Directors and Executive
Officers in an appropriate, fair, and efficient manner. Mr. Kawasaki assumed
Number of Oki sharesthe office of Director in June 2005, and has been assisting and advising theheld:management team as Chairman of the Board since fiscal 2016. He has been
Common stock
nominated as a candidate for Director because it is expected that, as a member
17,900 sharesof the board and the Chairman, he will continue to enhance information sharing
among directors and strengthen the Board of Director’s decision-making
functions.
Apr. 1981

Joined Oki Electric Industry Co., Ltd.

ShinyaKamagami

Apr. 2001

Manager, Hardware Development Department No. 2, Terminal
Systems Division, Systems Solution Company(February 9, 1959)

Apr. 2005

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

Number of years in
Apr. 2011
Executive Officer
office as Director:
6 years
Apr. 2012
Senior Vice President(as of the conclusion ofthis general meeting of Jun. 2014
Senior Vice President and Member of the Board
shareholders)[Re-election]
Apr. 2016
President, Representative Director (incumbent)
2
Number of attendance atmeetings of the Board
Reason for the selection of candidate for Directorof Directors
Based on his past experience serving in business divisions and headquarters(the year under review):
divisions, Mr. Shinya Kamagami has the knowledge and experience to decide
14 out of 14 times
important matters and supervise the business execution of Directors and(100%)
Executive Officers in an appropriate, fair, and efficient manner. Mr.
Kamagami assumed the office of Director in June 2014, and has been engaging
Number of Oki sharesin management of OKI Group as President and Representative Director sinceheld:fiscal 2016. He has been nominated as a candidate for Director because it is
Common stock
expected that, as a member of the board, he will continue to enhance
11,900 sharesinformation sharing among directors and strengthen the Board of Director’s
decision-making functions.

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

Masayuki Hoshi(March 9, 1960)

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

Apr. 2011

Managing Executive Officer, Head of Global Transaction
Banking Unit

Jun. 2014

Managing Executive Officer, Mizuho Financial Group, Inc.

May 2015

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

Number of years in
Apr. 2016
office as Director:
4 years(as of the conclusion of Jun. 2016
this general meeting ofApr. 2017
shareholders)[Re-election]
Number of attendance at3
meetings of the Board Jun. 2018of Directors
Apr. 2019(the year under review):
14 out of 14 times(100%)
Number of Oki shares
held:
Common stock
4,500 shares

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)
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 hasa deep understanding of governance and perspective related to the global
business on which the Company focuses. He also has the knowledge andexperience to decide important matters and supervise the business execution of
Directors and Executive Officers in an appropriate, fair, and efficient manner.
Mr. Hoshi assumed the office of Director in June 2016, and has been playing
core role in management by concurrently serving as Senior Executive Vice
President, Representative Director since fiscal 2019. He has been nominatedas a candidate for Director because it is expected that, as a member of the board,
he will enhance information sharing among directors and strengthen the Boardof Director’s decision-making functions.

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

Brief personal profile, position andresponsibility in the Company and significant concurrent positions
Apr. 1983

Joined Oki Electric Industry Co., Ltd.

Apr. 2002

President, Multimedia Messaging Company

Apr. 2011

Manager, Corporate Network Systems Division, Telecom
Systems Group

Apr. 2014

Manager, Information Systems Division, Solution & Services
Group

Masashi Tsuboi(May 16, 1960)

Number of years in
office as Director:
Apr. 2015
Executive Officer
1 year
Deputy Head of ICT Business Group(as of the conclusion of Apr. 2016
this general meeting of Apr. 2017
Senior Vice President, Head of ICT Business Group
shareholders)Jun. 2019
Senior Vice President and Member of the Board[Re-election]
Numberofattendance
atApr. 2020
Executive Vice President and Member of the Board
4
meetings of the Board(incumbent)
of Directors
Head of Solution Systems Business Group (incumbent)(the year under review):
10 out of 10 times(100%)
Reason for the selection of candidate for Director
Based on his past experience serving in business divisions, Mr. Masashi Tsuboi
Number of Oki shares has the knowledge and experience to decide important matters and supervise
held:the business execution of Directors and Executive Officers in an appropriate,
Common stock
fair, and efficient manner. Mr. Tsuboi assumed the office of Director in June
5,600 shares
2019, and has been engaging in core businesses of the Company as Executive
Vice President and Head of Solution Systems Business Group since fiscal
2020. He has been nominated as a candidate for Director because it isexpected that he will enhance information sharing among directors andstrengthen the Board of Director’s decision-making functions.

Masashi Fuse
(February 23, 1961)

Apr. 1984

Joined Oki Electric Industry Co., Ltd.

Jun. 1994

Oki America Inc.

Apr. 2015

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

Jun. 2015

Outside Director, SAXA Holdings, Inc.

Apr. 2016
Executive Officer, Oki Electric Industry Co., Ltd.
Number of years in
office as Director:
Apr. 2018
Senior Executive Officer
1 yearHead of Corporate Management Group(as of the conclusion ofthis general meeting of Jun. 2019
Senior Executive Officer and Member of the Board
shareholders)
Apr. 2020
Senior Vice President and Member of the Board (incumbent)[Re-election]
Numberofattendanceat5
Head of Corporate Group (incumbent)
meetings of the Board
Internal Control Administrator (incumbent)
of Directors(the year under review):
10 out of 10 times
Reason for the selection of candidate for Director(100%)
Based on his past experience serving in headquarters divisions, accounting &control division, and overseas offices, Mr. Masashi Fuse has the knowledge
Number of Oki shares and experience to decide important matters and supervise the businessheld:execution of Directors and Executive Officers in an appropriate, fair, andCommon stock
efficient manner. Mr. Fuse assumed the office of Director in June 2019, and2,700 shares
has been playing a core role in corporate management as Senior Vice President
and Head of Corporate Group since fiscal 2020. He has been nominated as a
candidate for Director because it is expected that he will enhance information
sharing among directors and strengthen the Board of Director’s decisionmaking functions.

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

Shigeru Asaba(May 21, 1961)

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

Associate Professor, Faculty of Economics, Gakushuin
University

Mar. 1994

Ph.D., Economics, University of Tokyo

Apr. 1997

Professor, Faculty of Economics, Gakushuin University

Apr. 2013

Professor, Graduate School of Commerce, Waseda University

Apr. 2016

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

Jun. 2016
Outside Director, Nippon Beet Sugar Manufacturing Co., Ltd.
(incumbent)
Number of years in
office as Director:
Sep. 2016
Dean, Waseda Business School (Graduate School of Business3 yearsand Finance) (incumbent)(as of the conclusion ofthis general meeting of Jun. 2017
Outside Director, Oki Electric Industry Co., Ltd. (incumbent)
shareholders)[Outside](Significant concurrent positions)[Independent][Re-election] Number of attendance at Outside Director, Nippon Beet Sugar Manufacturing Co., Ltd.
meetings of the Board *The volume of transactions between the above company and the Company
6of Directors
accounts for less than 1% of each company’s net sales.
(the year under review):
14 out of 14 times
Reason for the selection of candidate for Outside Director(100%)
Mr. Shigeru Asaba is currently the Dean of Waseda Business School (Graduate
Number of Oki shares School of Business and Finance) and has academic expertise in business ingeneral though his specialist knowledge in the fields of industrial
held:organizations, corporate strategy, competitive strategy, ownership structures
Common stockand strategies, and family-run businesses as well as high ethical standards.
0 sharesHe also has experience as Outside Director at Nippon Beet Sugar
Manufacturing Co., Ltd. from June 2016. He has been nominated as a
candidate for Outside Director as the Company judges that he is able to provide
appropriate supervision over the business management and the Company isable to rely on his appropriate opinions and advice. Although he has never
had experience of being involved in corporate management other than as an
outside officer, the Company determined that he will be able to carry out theduties of Outside Director appropriately for the aforementioned reason.

- 9 -(Translation)
CandidatenumberName(Date of birth)Tamotsu Saito(July 13, 1952)

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

Apr. 2011

Executive Vice President

Apr. 2012

President

Apr. 2016
Number of years inJun. 2017
office as Director:
2 years(as of the conclusion ofJun. 2018
this general meeting ofshareholders)
Apr. 2020

Chairman of the Board
Outside Director, JAPAN POST INSURANCE Co., Ltd.
(incumbent)
Outside Director, Oki Electric Industry Co., Ltd. (incumbent)

Director, IHI Corporation (incumbent)[Outside][Independent](Significant concurrent positions)[Re-election] Number of attendance at
Director, IHI Corporation
meetings
of
the
Board
7
of Directors
Outside Director, JAPAN POST INSURANCE Co., Ltd.
(the year under review):*The volume of transactions between the above companies and the Company
14 out of 14 times
accounts
for less than 1% of each company’s net sales.
(100%)
He will retire as Director of IHI Corporation in June 2020.
Number of Oki shares
held:
Reason for the selection of candidate for Outside Director
Common stock
Mr. Tamotsu Saito served as a representative director of IHI Corporation for
1,400 shares
many years. He has extensive management experience and high ethicalstandards as a business leader, not just in the industry but for the whole ofJapan, 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 judges 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.

- 10 -

(Translation)
CandidatenumberName(Date of birth)Izumi Kawashima

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

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

Apr. 1989

Associate Professor, Faculty of Economics, Gifu Keizai
University(June 25, 1955)
Apr. 1996
Number of years in
Sep. 2004
office as Director:
2 years(as of the conclusion of Jun. 2016
this general meeting ofJun. 2018
shareholders)

Professor, School of Law, Senshu University
Professor, Faculty of Social Sciences, Waseda University(incumbent)
Outside Director, Oki Electric Cable Co., Ltd.

Outside Director, Oki Electric Industry Co., Ltd. (incumbent)[Outside][Independent][Re-election] Number of attendance at Reason for the selection of candidate for Outside Director
meetings of the Board Ms. Izumi Kawashima is currently a professor of the Faculty of Social Sciences
8of Directors
at Waseda University. She specializes in commercial law (mainly the(the year under review): Companies Act) and the Financial Instruments and Exchange Act, and14 out of 14 times
particularly has academic specialist knowledge relating to the Companies Act(100%)and corporate governance as well as high ethical standards. She also has
experience as Outside Director of Oki Electric Cable Co., Ltd., which was a
Number of Oki shares listed company, from June 2016. She has been nominated as a candidate forheld:
Outside Director as the Company judges that she is able to provide appropriate
Common stocksupervision over the business management and the Company is able to rely on
200 shares
her appropriate opinions and advice. Although she has never had experienceof being involved in corporate management other than as an outside officer,
the Company determined that she will be able to carry out the duties of Outside
Director appropriately for the aforementioned reason.

- 11 -

(Translation)
CandidatenumberName(Date of birth)

Makoto Kigawa(December 31, 1949)

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

Apr. 2011

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

Apr. 2016

Outside Director, Komatsu Ltd. (incumbent)

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

Chairperson of the Board of Directors, Yamato Holdings, Co.,Ltd.
Outside Director, Seven Bank, Ltd. (incumbent)

Outside Director, Oki Electric Industry Co., Ltd. (incumbent)[Outside]
Retired as Director, Yamato Holdings Co., Ltd.
[Independent]
Outside Corporate Auditor, The Higo Bank, Ltd. (incumbent)[Re-election] Number of attendance at Apr. 2020
meetings of the Board
9(Significant concurrent positions)of Directors(the year under review): Outside Director, Komatsu Ltd.
9 out of 10 times
Outside Director, Seven Bank, Ltd.
(90%)
Outside Corporate Auditor, The Higo Bank, Ltd.
Number of Oki shares *The volume of transactions between the above companies and the Company
accounts for less than 1% of each company’s net sales.
held:
Common stock
100 shares
Reason for the selection of candidate for Outside Director
Mr. Makoto Kigawa served as Representative Director of Yamato Holdings
Co., Ltd. for many years, after serving in the financial institution as an
executive, and has extensive management experience and high ethicalstandards. 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 judges 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. When Mr. Tamotsu Saito was a director of IHI Corporation, it was revealed that the maintenance of commercial
aircraft engines was performed inappropriately. In March 2019, pursuant to the Aircraft Manufacturing Industry
Act, the Ministry of Economy, Trade and Industry ordered that IHI Corporation conduct the necessary repairs in an
approved manner. In April 2019, IHI Corporation received a business improvement order from the Ministry of Land,
Infrastructure, Transport and Tourism in accordance with the Civil Aeronautics Law.
It came to light that at JAPAN POST INSURANCE Co., Ltd., where Mr. Tamotsu Saito has been an outside director
since June 2017, there was a case pertaining to contract transfers, etc. where it is possible to have caused a loss without
acting in accordance with customers’ wishes. With regard to this case, the aforementioned company received
administrative sanctions from the Financial Services Agency on December 27, 2019 based on the Insurance BusinessAct. However, Mr. Saito fulfilled his duties by continuously making proposals from the viewpoint of legal
compliance, and after this case came to light, he made proposals, etc. in order to protect customers and prevent
recurrence.
4. Mr. Makoto Kigawa served as a director of Yamato Holdings Co., Ltd. until June 2019. In February 2017, theYamato Group started to investigate the actual labor hours of employees and found out various problems remained- 12 -

(Translation)

5.

6.

unrecognized, such as no enough breaks for many employees. Because this situation was considered to be serious,
the Yamato Group has been promoting work-style reforms, for example, “improve and strictly conduct labor
management” and “promote a work-life balance,” and implementing various structural reforms.
Yamato Home Convenience Co., Ltd., a consolidated subsidiary of Yamato Holdings Co., Ltd., made payment
requests in an inappropriate manner in violation of contract provisions when it provided relocation services to
employees of its corporate customers. In January 2019, it became subject to an administrative disposition andreceived a business improvement order from the Ministry of Land, Infrastructure, Transport and Tourism. Yamato
Holdings Co., Ltd. has striven to build the necessary structure to prevent Yamato Home Convenience Co., Ltd. fromfacing similar situations and to strengthen governance in order to enhance the soundness of group management.
The Company has entered into a liability limitation agreement with Mr. Shigeru Asaba, Mr. Tamotsu Saito, Ms. Izumi
Kawashima, and Mr. Makoto Kigawa. The outline of the agreement is provided on page 28 in the Business Report.
If their reappointment is approved, the Company will continue this agreement with them.
Mr. Shigeru Asaba, Mr. Tamotsu Saito, Ms. Izumi Kawashima, and Mr. Makoto Kigawa are independent officers
based on the terms of the Tokyo Stock Exchange. If their reappointment is approved, they will continue to be
independent officers.

- 13 -

(Translation)
Agenda Item 3: Election of Two (2) Audit & Supervisory Board Members
The tenure of office of Audit & Supervisory Board Members Kuninori Hamaguchi and Yoichi
Nitta will expire at the end of this general meeting of shareholders. Accordingly, the Company
proposes the election of two Audit & Supervisory Board Members, and the candidates are shown as
follows.
This agenda has been approved by the Audit & Supervisory Board.
CandidatenumberName(Date of birth)

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

Joined Fujikura Electric Wire Corporation (currently Fujikura
Ltd.)

Apr. 2004

General Manager of Finance & Accounting Division, Fujikura
Ltd.

Apr. 2007

Executive Officer, General Manager of Electronics & Automotive
Product Planning Division

Hideo Shiwa(October 21, 1954)

Number of years in
Apr. 2011
office as Audit &Supervisory Board
Member:Jun. 2014–(as of the conclusion ofthis general meeting of Apr. 2016
shareholders)Managing Executive Officer, Deputy Chief of Electronics
Business Segment
Director, Managing Executive Officer, Chief of Real EstateBusiness Company, Deputy Chief of Corporate Staff Unit
Director, Senior Managing Executive Officer
President, Fujikura (China) Co., Ltd.

[Outside]
Apr. 2018
Full-time Advisor, Fujikura Ltd.
[Independent] Number of attendance atmeetings
of
the
Board
Mar. 2020
External Director (Audit and Supervisory Committee Member),[Newlyof Directors
OUTSOURCING Inc. (incumbent)
nominated](the year under review):
1(Significant concurrent positions)–
External Director (Audit and Supervisory Committee Member),Number of attendance at OUTSOURCING Inc.
meetings of the Audit & *The volume of transactions between the above company or Fujikura Ltd. andSupervisory Board
the Company accounts for less than 1% of each company’s net sales.
(the year under review):–
Reason for the selection of candidate for Outside Audit & Supervisory
Number of Oki shares Board Member
held:
Mr. Hideo Shiwa headed the finance & accounting and planning divisions andCommon stockpresided over a business company and unit of the head office of a manufacturing
0 sharescompany before serving as Director and Senior Managing Executive Office andcompleting overseas assignments. He has been nominated as a candidate for
Outside Audit & Supervisory Board Member because it is expected that he will
perform appropriate auditing on the Company’s management by utilizing his
extensive experience, global knowledge and high level of ethical standards.

- 14 -

(Translation)
CandidatenumberName(Date of birth)

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

Ryuichi Makino

Apr. 1980

Joined Asahi & Co. (currently KPMG AZSA LLC)

(September 6, 1957)

Feb. 1983

Registered as Certified Public Accountant

Jun. 2006

Representative Partner, KPMG AZSA LLC

Jul. 2018

Assumed the office of Member of Compliance Committee

Jun. 2019

Retired from KPMG AZSA LLC

Jul. 2019

Head of Ryuichi Makino CPA Office (incumbent)

Number of years in
office as Audit &Supervisory Board
Member:–(as of the conclusion ofthis general meeting ofshareholders)(Significant concurrent positions)
Head of Ryuichi Makino CPA Office
He will assume the office of Outside Audit & Supervisory Board Member of[Outside][Independent] Number of attendance at Synchro Food Co., Ltd. in June 2020.
meetings of the Board[Newly*The volume of transactions between the above companies and the Company
of Directors
nominated]accounts for less than 1% of each company’s net sales.
(the year under review):
2–
Reason for the selection of candidate for Outside Audit & Supervisory
Number of attendance at Board Member
meetings of the Audit & As a certified public accountant, Mr. Ryuichi Makino has been engaged inaccounting audit of manufacturers and other businesses in a wide range ofSupervisory Board(the year under review): industries for many years. He also has extensive knowledge in internal control.
He has been nominated as a candidate for Outside Audit & Supervisory Board–
Member as the Company judges that he will be able to perform auditing on the
Number of Oki shares Company’s management in an objective, neutral manner by utilizing his extensive
experience, knowledge and high level of ethical standards. Although he has
held:never had experience of being involved in corporate management, the Company
Common stock
determined that he will be able to carry out the duties of Outside Audit &0 shares
Supervisory Board Member appropriately for the aforementioned reason.
Notes:
1. There is no special conflict of interest between each candidate and the Company.
2. Mr. Hideo Shiwa and Mr. Ryuichi Makino have served in the positions described above and have extensive
knowledge in finance, accounting, and judicial affairs necessary for auditing of the Company.
3. If the appointment of Mr. Hideo Shiwa and Mr. Ryuichi Makino is approved, the Company will enter into a liability
limitation agreement with them. The outline of this agreement is provided on page 28 in the Business Report.
4. If the appointment of Mr. Hideo Shiwa and Mr. Ryuichi Makino is approved, they will be independent officer basedon the terms of the Tokyo Stock Exchange.

- 15 -

(Translation)(Reference)

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

Director
Audit & Supervisory Board Member

Name

Board of Directors

Personnel Affairs
and Compensation
Advisory Committee

Hideichi Kawasaki◎
Chairperson〇

Shinya Kamagami〇

President,
Representative Director

Masayuki Hoshi〇

Senior Executive Vice
President,
Representative Director

Masashi Tsuboi〇

Executive Vice
President and Memberof the Board

Masashi Fuse〇

Senior Vice President
and Member of the
Board

Shigeru Asaba〇◎
Chairperson

Independent Outside
Director

Tamotsu Saito〇〇

Independent Outside
Director

Izumi Kawashima〇〇

Independent Outside
Director

Makoto Kigawa〇〇

Independent Outside
Director

Sei Yano△◎
Chairperson

Standing Audit &Supervisory Board
MemberToshiya Hatakeyama△〇

Standing Audit &Supervisory Board
Member

Hideo Shiwa△〇

Independent Outside
Audit & Supervisory
Board Member

Ryuichi Makino△〇

Independent Outside
Audit & Supervisory
Board Member

Audit & Supervisory
Board

Chairman of the Board〇 Member◎ Chairperson△ Persons who are members and have a right and obligation to attend relevant meetings- 16 -

Position(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, and for“persons who belong to the accounting firm” in 7), this applies only to principal business executers thereof or
persons with professional certificates or license such as certified public accountants.)b.
Principal business executers of the OKI Groupc.
Persons who have fallen under the above b in the past 10 years*1 “Business executers” refer to persons who perform business execution such as Directors (excluding Outside
Directors), Executive Officers, employees, etc.
*2 “Principal business executers” refer to persons who perform important business execution such as Directors(excluding Outside Directors), Executive Officers, General Managers, etc.
In addition to these policies, the Company elects Outside Directors and Outside Audit & Supervisory Board Members, on
the ground of each candidate’s experience and knowledge in respective professional fields being beneficial to the Company
at present.

- 17 -

(Translation)(Attachment)

Business Report(From April 1, 2019 to March 31, 2020)
1.

Status of the OKI Group(1) Operating progress and results
Economic situation
The digital transformation in society is accelerating, and business environment in OKI
continues to change dramatically. On the other hand, these changes are also creating new
business opportunities.
In this business environment, OKI has developed its business based on the highly reliable
manufacturing technologies that are a strength of the Group. Also, using an installed base andcustomer base OKI has built up over its history of more than 130 years as the source for creating
corporate value, OKI has been working to integrate network, sensing, data processing and analysis
technologies to match new needs and expand its business.
Operating results for the fiscal year under review
For the business conditions in the fiscal year under review, the ICT business showed strong
progress, and the net sales were ¥457.2 billion, a ¥15.7 billion or 3.6% increase year-on-year. In
terms of profits, it was steady partly due to the effects of business structure reforms implemented
in the previous fiscal year besides the increased sales. However, besides the forex impact, toward
the end of the fiscal year, the COVID-19 spread world-widely, and caused a decline in operation
at our Shenzhen-plant. As a result, operating income was ¥16.8 billion, a decrease of ¥0.7 billion
year-on-year, and ordinary income was ¥13.8 billion, a decrease of ¥1.7 billion year-on-year.
Profit attributable to owners of parent was ¥14.1 billion, an increase of ¥5.7 billion year-onyear. A gain on sale of property, plant and equipment of ¥4.8 billion along with the reviewing
the offices and etc., and a gain on sale of investments in securities of ¥4.7 billion, resulting fromreducing cross-shareholdings were recorded for extraordinary profit, while the business structure
improvement expenses of ¥2.4 billion related to mainly the business transfer of the Brazilian
subsidiary were recorded for the extraordinary loss.
Starting from this fiscal year, the application scope of using the percentage-of-completion
method was expanded mainly in the ICT business, resulting in an increase in net sales of ¥10.5
billion, and decreases in operating income of ¥0.1 billion and ordinary income of ¥0.1 billion.
Looking at non-consolidated business performance, net sales were ¥249.2 billion, up ¥33.2
billion (15.4%) from the previous fiscal year. Operating income was ¥4.2 billion, up ¥1.7 billion
year-on-year. Ordinary income increased by ¥4.8 billion year-on-year to ¥14.2 billion. Profit
was ¥16.9 billion, a ¥8.4 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- to- 18 -

(Translation)
long-term. OKI will reinforce its management foundations by applying retained earnings toinvestments 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)
FY2018 (reference:

FY2019 (Fiscal year

previous fiscal year)

under review)

ICT

184.3

Mechatronics
Systems

Segment

Changes (amount)

Changes (%)

229.1

44.8

24.3

82.7

70.7

(12.0)(14.5)

Printers

102.6

92.3

(10.3)(10.0)

EMS

66.2

59.8

(6.4)

(9.7)

Others

5.6

5.4

(0.2)

(4.9)

441.5

457.2

15.7

3.6

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 2018 are modified to reflect the latest classification.

ICT
Businessoverview
Main products
and services

Business providing solutions, products and services supporting social infrastructure basedon 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 came to ¥229.1 billion (a year-on-year increase of 24.3% or ¥44.8 billion).
In this fiscal year, in addition to the impact of sales standards and a large-scale project forbuilding networks for telecom carriers, there were also many needs related to social
infrastructure, which led to a significant increase.
Operating income came to ¥20.8 billion, a year-on-year increase of ¥6.1 billion due to
steady growth in net sales.

- 19 -

(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 came to ¥70.7 billion (a year-on-year decrease of 14.5% or ¥12.0 billion).
Besides the completion of a large-scale project for cash handling equipment in the previous
fiscal year, the suspension of operations at the Shenzhen Plant, our main plant, due to the
COVID-19, net sales decreased.
Operating loss was ¥0.3 billion, a deterioration of ¥0.4 billion year-on-year. Although
the decrease in sales was offset by the effects of business restructuring in the previous fiscal
year, a decrease in plant operations affected production and 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)
 Color LED Label Printers Dot-impact printers Wide format inkjet printers Wide format multi-function printers

Net sales came to ¥92.3 billion (a year-on-year decrease of 10.0% or ¥10.3 billion).
Other than the decrease in sales of office-use printers in the European market, the yen
appreciation also had negative impact on revenue.
Operating income was ¥2.8 billion (a year-on-year decrease of ¥2.9 billion) due to a
decline in sales and the impact of yen appreciation against the Euro.
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 were ¥59.8 billion (a year-on-year decrease of 9.7% or¥6.4 billion) due to a decrease in sales to FA-related products and semiconductor-related
customers and a delay in material procurement. Operating income was ¥2.1 billion (a yearon-year decrease of ¥1.6 billion).

- 20 -

(Translation)
Net sales of the others business segment came to ¥5.4 billion (a year-on-year decreaseof 4.9% or ¥0.2 billion) and operating income came to ¥0.4 billion (a year-on-year decreaseof ¥0.5 billion).
(2) Capital expenditure and research and development expenses
Capital expenditures and research and development expenses for the fiscal year underreview equaled ¥14.9 billion and ¥10.6 billion, respectively.
Investment by segment were as follows.
(Unit: Billions of yen)Segment

Amount of capital
expenditure(Amount of research anddevelopment expenses)

Major capital expenditure

ICT

3.6

(3.4)

Upgrading, etc. of facilities to design/manufacture new
products and incidental facilities of plants in business areas(e.g. social infrastructure, IoT, finance, and network systems)

Mechatronics
Systems

3.4

(1.2)

Capital expenditures on evaluation equipment, molds, etc. fordeveloping new products related to automation equipment

Printers

4.7

(3.5)

Strategic investments on molds, etc. used to manufacture new
products utilizing characteristics of the LED method, andupgrading, etc. of aged manufacturing facilities

EMS

2.9

(0.3)

Capital expenditures on energy saving, aiming to strengthen
capacity and improve productivity

Others0.2(2.2)* 14.9(10.6)

Total* The figure includes the expenditure of ¥4.0 billion on acquisition of lease assets due to application of IFRS 16
by overseas subsidiaries other than those in the U.S.

(3) Financing
Operating funds and funds for capital expenditures necessary for business activities
will be obtained from our own funds, borrowed funds, or other sources. Among these,
operating funds are raised through short-term and long-term borrowings. In addition, longterm funds for production facilities, etc. are raised through long-term borrowings. Longterm funds are raised chiefly on fixed interest rates in the forms of separate borrowings fromfinancial and other institutions and syndicated loans.
Some short-term borrowings were refinanced with long-term borrowings for morestable financing during the fiscal year under review. The Company adopted a domestic cash
management system, whereby the Company will integrate cash in hand of consolidated
subsidiaries into the Company itself to improve the cash efficiency and reduce borrowings.
The Company maintains good business relationships with major partner financial
institutions, so recognizes that it will be able to raise necessary operating and investment
funds with no problem.
The OKI Group places emphasis on the financial discipline and intends to use free cash
flow generated through business activities as basic financial resources and efficiently raise
the necessary funds.

- 21 -

(Translation)(4) Future challenges
Guided by our corporate philosophy of “The people of OKI, true to the company’s“enterprising spirit,” are committed to creating superior network solutions and providing
excellent information and communications services globally to meet the diversified needs ofcommunities worldwide in the information age,” the OKI Group aims to resolve social issues
through critical 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).” The OKI Group also hopes to contribute to the achievement of theimportant guideline of the “Sustainable Development Goals (SDGs)” that were adopted at
the September 2015 “United Nations Sustainable Development Summit” through ourbusiness activities. We shall set our goals on various management issues in order of priority
and incorporate them into the Company’s operations.
The market and economic environments surrounding the OKI Group are currently
changing dramatically. Globally, such changes include uncertainty including economic
fluctuations and conflicts, environmental problems, a spate of natural calamities, andtechnology innovation including 5G and artificial intelligent. In Japan, noticeable changes
are labor shortage, a declining birth rate and a rapidly aging population, and ageing
infrastructure. On top of these, the novel coronavirus is likely to cause a paradigm shift,which marks heightened nationalism, changes in individuals’ behavior, and growing demandfor contactless services.
It is true that these changes in the settings are seen as a threat to some businesses, but
we believe that they also create new needs and bring new business opportunities. For
example, a rise in remote work could increase the risk of declining demand for printing
services at the office but, at the same time, further increase demand for higher speed andlarger capacity of network infrastructure. There is also a demand for the contactless service,
which is positioned as one of the equipment and services that companies have been working
to develop for automation and manpower saving. As a result, the digital transformation, amegatrend of nowadays, is likely to be accelerated.
In these circumstances, one of our top priorities is to further advance reorganization of
our business portfolio currently in progress. More precisely, in the solution business, wewill expand our business in growing domains such as the AI Edge Strategy by harnessing the
OKI Group’s strengths of device installations in edge regions, where we have been involvedin the telecommunications infrastructure business tailoring to the needs of our customers formany years. In the hardware business, developing automated and manpower-saving
equipment matching the new needs is key. To this end, we will narrow down existingproduct-lineups, reallocate development resources, and rebuild the organizational structure
itself.
The OKI Group is strong in manufacturing technology (Mono-zukuri) in the real worldand network technology that enables to link to cloud services in real time. Based on thesetechnological capabilities, we have the install base of terminals and services supporting our
excellent customer base and social infrastructure of various kinds as sources of our corporate
value. We will continue to offer solutions to social issues with manufacturing technology(Mono-zukuri) for edge terminals tailored for the customer needs chiefly in the field of social
infrastructure on one hand and, on the other, with network technology (Koto-zukuri) for- 22 -

(Translation)
solutions and services that link the real world to the cloud in real time.
(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.
93rd year(FY2016)

94th year(FY2017)96th year(Fiscal year underreview, FY2019)95th year(FY2018)

Sales

451.6

billion yen

438.0

billion yen

441.5

billion yen

457.2

Profit attributableto owners of parent

4,691

million yen

5,891

million yen

8,405

million yen

14,086 million yen

Basic earnings per
share

54.03

yen

67.86

yen

97.16

yen

162.80yen

Total assets

360.7

billion yen

366.5

billion yen

365.5

billion yen

372.5

billion yen

Net assets

97.2

billion yen

102.1

billion yen

100.2

billion yen

106.4

billion yen

Net assets per
share

1,115.68

yen

1,154.03

yen

1,155.28

yen

1,227.42

billion yen

yen

Notes:
1. Basic earnings per share is computed based on the average number of shares during the year (weighted
average). Net assets per share are computed based on the number of shares outstanding at the year-end.
These figures exclude treasury stocks.
2. The Company consolidated ten shares of common stock into one share of common stock as of October 1,
2016. Basic earnings per share and net assets per share are calculated assuming that the shares wereconsolidated at the beginning of the 93rd fiscal year ended March 31, 2017.
3. The Company has adopted Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.
(ASBJ Statement No. 28, February 16, 2018) since the fiscal year ended March 31, 2019, and made changes
to classifications (i.e. classified deferred tax assets into investments and other assets and deferred tax
liabilities into long-term liabilities). Amounts for fiscal 2017 are those reflecting the reclassification.

- 23 -

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

CapitalCompany’s
voting rightratio (%)

Major business

OKI Crosstech Co., Ltd.

2,001 million yen

100

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

OKI Software Co., Ltd.

400 million yen

100

Development and operation of
telecommunications system software

Oki Data Corporation

19,000 million yen

100

Manufacturing and sales of printers

Oki Proserve Co., Ltd.

321 million yen

100

Facility business, human support
business, ad communication business,and logistics business

Oki Data Americas, Inc.

10 million U.S. dollars

100*

Sales of printers, etc.

Oki Data Manufacturing(Thailand) Co., Ltd.

420 million baht

100*

Manufacturing of printers, etc.

8 million U.S. dollars

100*

Manufacturing of information
processing equipment and printers

141 million euro

100*

Sales of printers, etc.

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

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

(ii)
-

-

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

- 24 -

(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 Crosstech Co., Ltd.

Head officeChuo-ku, Tokyo

OKI Software Co., Ltd.

Head office

Warabi, Saitama

Oki Data Corporation

Head office

Minato-ku, Tokyo

Oki Proserve Co., Ltd.

Head office

Minato-ku, Tokyo

Oki Data Americas, Inc.

Head officeUS

Oki Data Manufacturing(Thailand) Co., Ltd.

Head office

ThailandOki Electric Industry (Shenzhen)Co., Ltd.

Head office

China

Oki Europe Ltd.

Head officeUK(8) Employees(i) Employees by segment
Number of employees
Segment
OKI Group

Oki Electric Industry

ICT

7,033

2,578

Mechatronics Systems

3,277

1,023

Printers

3,931

–

EMS

2,112

121

Others917–

Company-wide (shared)

481

481

17,751

4,203

Total

(ii)

Employees of Oki Electric Industry
Number of employees

Average age

Average years ofservice

Average annual
wage (yen)

44.1

20.0

7,159,732

4,203 (increased by 126 from the end of theprevious fiscal year)- 25 -

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

Loan balance

Mizuho Bank, Ltd.

21.3

Sumitomo Mitsui Banking Corporation

17.0

Mizuho Trust & Banking Co., Ltd.

3.9

The Norinchukin Bank

2.9

The Hyakugo Bank, Ltd.

2.6

(10) Corporate governance(i)

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

Corporate governance structure(a) Outline of the structure
As a company with the Audit & Supervisory Board, the Company establishes theBoard of Directors and Audit & Supervisory Board and adopts an executive officer
system, aiming to promote “timely decision-making processes” by separating businessexecution and supervision. In addition, it works on the “enhancement of management
fairness and transparency” by nominating outside directors as well as setting up a
voluntary committee concerned with personnel affairs and compensation, so as toensure effective supervision from an independent and objective standpoint. In
addition to audits by the Audit & Supervisory Board and its members, OKI seeks toensure “full compliance and fortification of risk management,” such as by establishing
the Risk Management Committee, which includes outside directors.
During the fiscal year under review, as stated on page 33, the Company was
operated by nine Directors, including four Outside Directors (including one female
Director); four Audit & Supervisory Board Members, including two Outside Audit &Supervisory Board Members; and 14 Executive Officers, including four Executive
Officers with Titles (including one female Executive Officer). All the Outside
Directors and Outside Audit & Supervisory Board Members are independent officers
who are neutral and independent of the management. Furthermore, there is no system- 26 -

(Translation)
to receive consulting and advice, etc., from former representative directors andpresidents, etc.
(b) Reason for selecting the current structure
The Company judges that it can stably achieve “enhancement of management
fairness and transparency,” “timely decision-making processes,” and “full complianceand fortification of risk management” by conducting various measures including (i)enhancing the supervisory function of the Board of Directors by separating businessexecution and supervision and promoting active involvement of outside directors; (ii)having objective auditing by Audit & Supervisory Board members who are independentof management and have a strong authority for investigation; and (iii) establishingvoluntary Personnel Affairs and Compensation Advisory Committee. The Company
will continue to seek sustainable growth and increase corporate value from a mediumto long-term viewpoint while recognizing its responsibility to its stakeholders andcomplying with the aims of the Corporate Governance Code.
(iii) General Meeting of Shareholders
The General Meeting of Shareholders of the Company, a company with the Boardof Directors, resolves items set forth in laws and regulations, and the Articles ofIncorporation. The Board of Directors is authorized to resolve the following mattersin accordance with relevant laws and regulations. It is stipulated that the amount ofdividends, other than interim dividends, is determined at general meetings ofshareholders.
(a) Organization to determine the acquisition of treasury stock
The Articles of Incorporation stipulate that the Company may acquire treasury
stock through market transactions, etc. upon a resolution of the Board of Directors
pursuant to Article 165, paragraph (2) of the Companies Act to swiftly implement
capital policies.
(b) Organization to determine interim dividend
The Articles of Incorporation stipulate that the Company may pay interim
dividends upon a resolution of the Board of Directors to distribute profits swiftly toshareholders.
(c) Requirements for special resolutions of a general meeting of shareholders
The Articles of Incorporation stipulate that, for smooth operations of general
meetings of shareholders, special resolutions at a general meeting of shareholders set
forth in Article 309, paragraph (2) of the Companies Act are passed by a majority of
two-thirds or more of the votes of the shareholders present at the meeting where theshareholders holding one-third or more of votes of the shareholders entitled to vote atsuch shareholders meeting are present.
(iv) Board of Directors(a) Duties, Composition, Operations, etc.
During the fiscal year under review, the Board of Directors consisted of nine

- 27 -

(Translation)
Directors, held a meeting once a month in principle as well as special meetings whennecessary, decided on significant matters including basic management policy, andsupervised business execution based on laws and regulations, and the Articles inIncorporation.
To secure the functions of the Board of Directors, the Company selects candidates
for Directors in consideration of diversities such as expertise, career and gender, andincludes four highly independent Outside Directors (including one female Director) to
improve the fairness and transparency of management.
The Board of Directors is chaired by a Director who is mutually appointed, but
was chaired by a non-executive Chairman during the fiscal year under review.
The Board of Directors held a total of 14 meetings including special meetings
during the fiscal year under review, and the attendance rates of the Outside Directors
and Outside Audit & Supervisory Board Members are shown on page 37. To
contribute to in-depth discussions at the Board of Directors meetings, outside officers
are given materials and explanations in advance by the secretariat of the Board of
Directors, etc.
(b) Matters concerning Directors
i. Number of Directors
The Articles of Incorporation stipulate that the number of Directors of theCompany shall be no more than 15.
ii. Requirements for resolution of election of Directors
The Articles of Incorporation stipulate that resolutions for election of Directors
shall be passed by more than half of the votes of the shareholders present at themeeting where the shareholders holding one-third or more of votes of the shareholders
entitled to vote at such shareholders meeting are present, and that no cumulative voteis adopted in the election of Directors.
iii. Tenure of office
The Articles of Incorporation stipulate that the tenure of office of Directors shallbe set as one year to clarify management responsibility for each fiscal year.
(c) Outline of liability limitation agreements
The Company concluded agreements to limit liabilities with all Outside Directors
and Audit & Supervisory Board Members under the provisions of Article 427,
paragraph (1) of the Companies Act. The outline of the agreements is as follows: In cases where Outside Directors and Audit & Supervisory Board Members
are liable for any damages arising from their negligence to the Company, theyshall compensate for such damages only to the extent of the minimum
liabilities as stipulated in laws and regulations.
 The above limitation of liability shall be applied only when the relevant
Outside Directors and Audit & Supervisory Board Members have executed
their duties that caused the liabilities in good faith and without grossnegligence.

- 28 -

(Translation)(v)

Voluntary committee
The Company has established the Personnel Affairs and Compensation Advisory
Committee as a voluntary committee to secure transparency and objectiveness in thedecision-making processes concerning appointment and dismissal of Directors anddetermination of compensation for officers. The Committee is consulted prior toresolutions at a Board of Directors meeting on appointment and dismissal of Directors,
Executive Officers, etc. and the structure and level of their compensation, deliberates
on these issues from an objective viewpoint, and reports the results to the Board of
Directors. In addition, the Committee delivers its opinion on nomination ofcandidates for Audit & Supervisory Board Members to Audit & Supervisory Board
Members. The Committee consists of five members; that is, all the four Outside
Directors and the non-executive Chairman. The Chairperson of the Committee isappointed through a resolution at a meeting of the Board of Directors and the post washeld by an Outside Director in the fiscal year under review. The Committee held 13
meetings in the fiscal year under review.

(vi) Election and dismissal of company officers
Upon the nomination of candidates for Directors and Audit & Supervisory Board
Members and appointment of Executive Officers, the Company takes into
consideration that the candidate satisfies the following requirements, as well as legal
eligibility.
 Those with excellent personality, insights, high ethical standards, fairness
and integrity as well as a high-level awareness of compliance Those who can execute their duties towards the realization of the OKI
Group’s corporate philosophy and continuous improvement of the corporatevalue
 Those who have had a long term of office Audit and Supervisory Board Members who have the necessary knowledgeof finance, accounting and legal affairs
 Outside officers who satisfy the independence criteria (See page 17)
A dismissal of a director, Audit & Supervisory Board member, or executive
officer is proposed in cases where the said person engages, or is likely to engage, in an
act in violation of laws and regulations or the Articles of Incorporation, or where acertain event occurs, which makes it difficult for the said person to fulfill the duties
appropriately, and the Personnel Affairs and Compensation Advisory Committee is
promptly consulted and deliberates on such an event, and reports the results andproposes a dismissal to the Board of Directors.

- 29 -

(Translation)(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 (approx. ¥17.1 billion if converted toJapanese yen based on the exchange rate as of the end of the fiscal year under review) which
includes the proceeds from sale of ATM. The arbitration proceeding is currently underreview by the South China International Economic and Trade Arbitration Commission.
Although the Company has recorded a provision of allowance for doubtful receivables
regarding this case, there is no change in the Company’s policy of collecting the total amountof receivables.

- 30 -

(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 690,583 shares of treasury stock)(3)

Number of shareholders:
66,981(4)

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

Percentage ofshares held(%)

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

7,460,100

8.62

Japan Trustee Services Bank, Ltd. (trust account)

5,984,600

6.92

Japan Trustee Services Bank, Ltd. (trust account 9)2,070,800

2.39

Oki Denki Group Employees’ Shareholdings Committee

1,959,361

2.26

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

1,658,700

1.92

JP Morgan Chase Bank 385151

1,610,732

1.86

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)

1,333,000

1.54

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

- 31 -

(Translation)
3.

Equity Warrants(1) Equity warrants granted to the Company’s officers as consideration for theirperformance of duties(i) Number of equity warrants
714(ii) Type and number of shares subject to equity warrants
71,400 shares of the Company’s common stock (100 shares per equity warrant)(iii) Status of equity warrants held by the Company’s officers
Issued Number(Exercise Price)
FY2016 equity warrant (1 yen)
(Issued on August 16, 2016)
FY2017 equity warrant (1 yen)
(Issued on August 15, 2017)
FY2018 equity warrant (1 yen)
(Issued on August 14, 2018)
FY2019 equity warrant (1 yen)
(Issued on August 14, 2019)

Directors(excluding outside Directors)
Exercise period

Number ofequitywarrants

Number ofholders

August 17, 2016 to August 16, 2041

152

4August 16, 2017 to August 15, 2042

180

4August 15, 2018 to August 14, 2043

185

4

August 15, 2019 to August 14, 2044

1974(2) Equity warrants issued to employees in consideration of performance during the fiscal
year under review
Directors(excluding outside Directors)
Issued Number

FY2019 equity warrant (1 yen)
(Issued on August 14, 2019)

Exercise period

August 15, 2019 to August 14, 2044

- 32 -

Number ofequitywarrants

Number ofholders419

14

(Translation)
4.

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

Position

Name

Status or main duties

Director andChairman of the
Board

Hideichi Kawasaki

Chairman of the Board

X

President,
Representative
Director

Shinya Kamagami

Supervision

X

Senior Executive Vice
President,
Representative
Director

Masayuki Hoshi

Chief Financial Officer
Chief Compliance Officer
Chief Information Officer
Head of Corporate Planning GroupX

Senior Vice President
and Member of the
Board

Masashi Tsuboi

Head of ICT Business GroupX

Senior Executive
Officer and Memberof the Board

Masashi Fuse

Head of Corporate Management Group

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

Director

Makoto Kigawa

Standing Audit & Supervisory
Board Member

Sei YanoStanding Audit & Supervisory
Board Member

Toshiya
Hatakeyama

Audit & Supervisory Board
MemberKuninori
Hamaguchi

Audit & Supervisory Board
MemberYoichi Nitta

Outside Director, Komatsu Ltd.
Outside Director, Seven Bank, Ltd.

Notes:
1. X indicates Executive Officer.
2. Directors Shigeru Asaba, Tamotsu Saito, Izumi Kawashima, and Makoto Kigawa are Outside Directors.
3. Audit & Supervisory Board Members Kuninori Hamaguchi and Yoichi Nitta are Outside Audit &Supervisory Board Members.
4. Directors Shigeru Asaba, Tamotsu Saito, Izumi Kawashima, and Makoto Kigawa and Audit & Supervisory
Board Members Kuninori Hamaguchi and Yoichi Nitta have been reported as independent officers to Tokyo
Stock Exchange.
5. Audit & Supervisory Board Member Toshiya Hatakeyama has served in positions such as Officer in chargeof the Accounting & Control Division and Chief Financial Officer, and has extensive knowledge in financeand accounting.
6. Executive officers as of March 31, 2020 are as follows (excluding those who concurrently serve as Directors).

- 33 -

(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

Toru Miyazawa

Head of Marketing & Sales Group

Senior Executive Officer

Masatoshi Saito

Deputy Head of Mechatronics Systems Business Divisionand Head of Automation Systems Division

Executive Officer

Yuichiro Katagiri

Deputy Head of ICT Business Group and Head of IoT
Application Promotion Division

Executive Officer

Hiroshi Tsuchiya

Internal Control Administrator and Head of Risk
Management Division

Executive Officer

Yuka Miyagawa

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

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

Executive Officer

Masahito Nozue

Deputy Head of Electronics Manufacturing Services
Business Group and Head of Planning & Management
Division

Executive Officer

Shinichi Tanaka

Deputy Head of ICT Business Group and Head ofFinancial & Enterprise Solutions Division

Executive Officer

Keizou Ikeda

Head of Planning & Management Division and Global
Mechatronics Systems Division, Mechatronics Systems
Business Division(2) Compensation paid to Directors and Audit & Supervisory Board Members(i)

Policy on determining remuneration, etc.
As described on page 29, in order to secure transparency and objectiveness in thedecision-making processes concerning compensation for officers, the Company has
established the Personnel Affairs and Compensation Advisory Committee, which
deliberates, prior to resolutions at a Board of Directors meeting, on the structure andlevel of compensation for directors and executive officers, and reports the results to theBoard of Directors. In addition, the appropriateness of the structure and level ofcompensation is validated mainly utilizing objective evaluation data from externalorganizations. The Personnel Affairs and Compensation Advisory Committee held atotal of 13 meetings during the fiscal year under review, discussed the compensation
structure for officers in five meetings, and reported the results three times (concerning
annual incentive compensation, medium- to long-term incentive compensation, andrevisions to the structure).
OKI’s basic policy on compensation for directors and executive officers 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.

- 34 -

(Translation)
The compensation structure is divided into performance-linked compensationand compensation other than performance-linked compensation, and consists of basic
compensation, annual incentive compensation linked to the performance of each fiscal
year, and compensation-type stock option as medium- to long-term incentive
compensation as shown in the table below. These compensations have been provided
as part of efforts to develop an environment for a shift to the management focused on“more aggressive goal setting” and “growth over medium- to long-term” in order toachieve “continuous growth” of the OKI Group. The compensation for outside
directors consists only of basic compensation.
The amounts of compensation approved by the 82nd Ordinary General Meetingof Shareholders held on June 29, 2006 are within ¥600 million (which do not include
employee wages for Directors who are also employees) per year for Directors. The
amounts of compensation related to compensation-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 other than Outside Directors, separately from the above
compensation.
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 Groupand that of the division each Director is responsible for.
The target amounts related to performance-linked
compensation for the fiscal year under review were ¥450
billion for net sales, ¥18.5 billion for operating income,and ¥98.5 billion for working capital. In the actual
results, ¥457.2 billion was recorded for net sales, ¥16.8
billion for operating income, and ¥95.6 billion forworking capital.
The rate of payments is determined within the scope of
0% to 200%, according to a linkage with businessperformance and the President’s qualitative assessment.
The amount of payments is 35% of the basic
compensation in case that the rate of payments is 100%.

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.

In response to the deliberations and reports of the Personnel Affairs andCompensation Advisory Committee in December 2019, the Board of Directors revised
the medium- to long-term incentive compensation to link the performance at a meeting- 35 -

(Translation)
held in March 2020. The revision will become effective in FY2021.
(ii)

Compensation paid to Directors and Audit & Supervisory Board Members

Title

Amount ofpayment

Amount of payment by type of compensation
Performance-linked Number of
Fixed compensationcompensation
applicableofficers
Basic
AnnualMedium- to longcompensation
incentive
term incentive

Directors¥262 million¥196 million¥47 million¥18 million
5(excluding Outside
Directors)
Audit &
Supervisory Board
Members－－¥46 million¥46 million
3(excluding Outside
Audit &
Supervisory Board
Members)
Outside officers
Outside Directors－－¥40 million¥40 million
5Outside Audit &Supervisory¥14 million¥14 million
2－－
Board Members
Note: The number of Outside Directors as of the end of the fiscal year under review is different from thenumber shown above, because the above number includes the Outside Directors and Audit &Supervisory Board Members who retired at the conclusion of the 95th Ordinary General Meetingof Shareholders held on June 21, 2019.

(3) Outside Directors and Audit & Supervisory Board Members(i)Status of material concurrent positions at other organizations, etc. and the Company’s
relationship with the aforesaid organizations
Director Shigeru Asaba serves as an Outside Director of Nippon Beet Sugar
Manufacturing Co., Ltd. There are no business relationships between Nippon Beet
Sugar Manufacturing Co., Ltd. and the Company.
Director Tamotsu Saito concurrently serves as 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 less than
1% of the OKI Group’s net sales and accounts for less than 1% of each company’s net
sales.
Director Makoto Kigawa concurrently serves as Outside Director of Komatsu Ltd.
and Outside Director of Seven Bank, Ltd. The volume of transactions between thecompanies and the Company accounts for less than 1% of the OKI Group’s net sales
and accounts for less than 1% of each company’s net sales.

- 36 -

(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

Shigeru Asaba,
Director

14 (14)

100%

–

–

Tamotsu Saito,
Director

14 (14)

100%

–

–

Izumi Kawashima,
Director

14 (14)

100%

–

–

Makoto Kigawa,Director

9 (10)

90%––

Kuninori
Hamaguchi,
Audit &
Supervisory Board
Member14 (14)100%

19 (19)100%

Yoichi Nitta,
Audit &
Supervisory Board
Member14 (14)100%

19 (19)

100%

Note:

The number of meetings for Director Makoto Kigawa represents the number of meetings held since hetook office in June 2019.

- 37 -

(Translation)(b) Major activities
Principal comments
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 andmade proposals for the appropriateness and properness of decision making by
the Board of Directors. He also contributed to strengthening compliance by
providing a good example to managerial personnel through his leadership andenhancing 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 a good
example to managerial personnel through her leadership and enhancing themanagement fairness and transparency as a member of the Personnel Affairs
and Compensation Advisory Committee.

Makoto Kigawa,Director

Making statements from a viewpoint nurtured through abundant experience incorporate 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 a good example
to managerial personnel through his leadership and enhancing themanagement 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.

- 38 -

(Translation)
5.

Status of Accounting Auditor(1) Name: PricewaterhouseCoopers Aarata LLC(2) Policy and reason for the appointment
The Company has appointed the accounting auditor with comprehensive consideration
by assessing indicators, such as the quality control scheme, independence, auditing scheme,
and estimated compensation for auditing services.
(3) Policy regarding decision to dismiss or not reappoint
The Audit & Supervisory Board, in principle, will determine the detail of the proposal
to be submitted to the general meeting of shareholders regarding dismissal or nonreappointment of the accounting auditor if it is deemed unlikely that the accounting auditor
will be able to perform audits properly. In addition, if the accounting auditor falls underprovisions of the items in Article 340, paragraph (1) of the Companies Act, the Audit &Supervisory Board will dismiss the accounting auditor upon the consent of all the Audit &Supervisory Board Members.
(4) Assessment of the audit corporation by Audit & Supervisory Board members and the
Audit & Supervisory Board
The Audit & Supervisory Board members and the Audit & Supervisory Board of theCompany assess the audit corporation. The assessment is comprehensive based on
indicators, such as the audit corporation’s quality control scheme, independence, auditing
scheme, group auditing scheme, and estimated compensation for auditing services.
(5) Contents, etc. of compensation for auditing services(i) Compensation, etc.

Category

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

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

Oki ElectricIndustry

161

48

159

43

Consolidated
subsidiaries

79

–

86

–

Total

240

48

245

43

Notes:
1. The Company does not distinguish between auditor compensation regarding (i) auditing in accordance with
the Companies Act, and (ii) auditing in accordance with the Financial Instruments and Exchange Act. The
total of these amounts is recorded above.
2. Among major subsidiaries, Oki Data Americas, Inc., Oki Data Manufacturing (Thailand) Co., Ltd., Oki
Europe Ltd., and Oki Electric Industry (Shenzhen) Co., Ltd. have undergone statutory audits by accounting
auditors other than the accounting auditor of the Company.

- 39 -

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

- 40 -

(Translation)
6.

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

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

(ii)

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

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

- 41 -

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

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

(vi) Procedures for employees who assist Audit & Supervisory Board Members(a) The Company assigns employees as staff to assist Audit & Supervisory Board
Members.
(b) The Company assigns employees, who are not subject to Directors’ instructions
and orders, as staff to assist Audit & Supervisory Board Members, and any
reassignment and evaluation of such employees requires the prior consent of the- 42 -

(Translation)
Audit & Supervisory Board.
(vii) Procedures for Directors and employees to report to Audit & Supervisory Board
Members; procedures for Audit & Supervisory Board Members to receive other reports(a) If Directors discover anything that may cause significant damage to the Company,
they are required to report the matter immediately to the Audit & Supervisory
Board Members pursuant to applicable laws and regulations.
(b) Standing Audit & Supervisory Board Members attend meetings of theManagement Committee and meetings of the Board of Directors in order tounderstand important decision-making processes and the status of business
operations, as well as to inspect important documentation.
(c) Audit & Supervisory Board Members attend the Risk Management Committee asadvisors and receive necessary reports.
(d) Audit & Supervisory Board Members receive whistle-blowing reports based onwhistle-blowing regulations, and receive reports biannually on the status ofoperation of the regulations from relevant divisions.
(e) Audit & Supervisory Board Members receive reports on the status of establishinginternal control systems and their operations from Directors and employees on aregular basis, and may request Directors and employees to report on mattersdeemed necessary.
(f) The Company ensures that a person who made a whistle-blowing report to Audit& Supervisory Board Members will not be treated unfavorably on account ofmaking such report.
(viii) Other procedures to secure effective audits by Audit & Supervisory Board Members(a) In conducting inspections on the Company’s operations and assets and performing
other audit duties, Audit & Supervisory Board Members shall conduct audits
efficiently and effectively in close cooperation with the internal audit section.
(b) Audit & Supervisory Board Members implement efficient audits by closelycooperating with the accounting auditor. To this end, Audit & Supervisory Board
Members hold meetings with the accounting auditor on a regular basis, attend onsite audits by the accounting auditor, and request reports from the accounting
auditor on the progress of audits when necessary.
(c) The Company pays all the expenses necessary for the execution of the duties of
Audit & Supervisory Board Members.
(2) Overview of Status of Operations(i) Procedures relating to compliance(a) The Board of Directors has stipulated a basic policy for internal control systems.
As for the foundation for ensuring compliance, the Company has established the“OKI Group Charter of Corporate Conduct” which states social responsibility
assumed by the OKI Group and “OKI Group Code of Conduct” to be observed by
all OKI officers and employees to assume social responsibility. This charter andcode are based on the corporate philosophy of “The people of OKI, true to the- 43 -

(Translation)company’s “enterprising spirit,” are committed to creating superior network
solutions and providing excellent information and communications services
globally to meet the diversified needs of communities worldwide in the informationage.”
In addition, the management team, having re-affirmed the importance ofcompliance, takes the initiative in compliance activities, and officers of theCompany and Group companies are working on compliance activities inconformance with the “Compliance Commitment.”
The Company has
established this commitment to reassure shareholders, customers, employees andall other stakeholders within and outside the Company that it strives to foster
awareness of compliance and makes a thorough commitment to compliancethroughout the OKI Group.
(b) The President and Executive Officer once again raised awareness of the importanceof compliance to all OKI Group companies at the FY2019 IR meeting for
management strategy (held on April 1, 2019).
(c) The Company held group training such as training sessions for compliancemanagers, in which some 300 compliance managers and promoters of the OKI
Group participated, and training sessions on the Anti-Monopoly Act for officers
and employees chiefly in Market & Sales Section, and conducted e-learning on
personal information protection, information security, internal control and othertopics for all employees in Japan. The Company also regularly presents casestudies on compliance on the intranet and internal publications.
In the fiscal year under review, the Company started compliance education sessions
on an e-learning platform for subsidiaries in China and India.
(d) In the fiscal year under review, the Compliance Committee held meetings fourtimes, where it summarized activities in the previous fiscal year, formulated
education plans, and reviewed the status of implementation of various measures inindividual sections.
(e) The Company clearly has defined that in case of non-compliance, the Company
takes disciplinary action in accordance with the workplace regulations, etc., andhas the Group Disciplinary Action Committee, which is chaired by the President
and Executive Officer, to consider said action.
(f) The Company has a Group whistle-blower hotline, which provides access toexternal lawyers, to ensure quick discovery and effective correction of improper
conduct, and disseminates information about the whistle-blower system to
employees as well.
(ii) Procedures relating to risk management(a) The Company has established a Risk Management Committee chaired by the
President and Executive Officer and advised by the Outside Directors and Audit &Supervisory Board Members, to stipulate fundamental matters relating to measures
to prevent risks from emerging, and preparation in case risks arise. In the fiscal
year under review, the Risk Management Committee held meetings twice, where it
deliberated on basic policies for FY2019, risks to be controlled, policies to prevent
risks from emerging, policies on emergency response scenarios, and “risks of- 44 -

(Translation)business, etc.,” which is required to be disclosed by law.
(b) The Company has established risk management departments, which deal withgroup-wide risks that are common to the Group, and each of these management
departments assist individual departments and subsidiaries to manage their risks,
instruct them to take necessary measures, and confirm the status of implementationof these measures.
(c) If any risk materializes, the department in which it arises takes the necessary steps
for the risk, and promptly reports the details of the event to the Risk Management
Committee according to the OKI Group Emergency Response System. This
Committee manages crisis information in a unified manner, determines a response
system and manager promptly, giving consideration to the severity and urgency ofthe said crisis, implements necessary measures, and gives support to the said
department.
(iii) Procedures relating to subsidiary management(a) In the Subsidiaries and Affiliates Management Rules, an administrative division isdesignated for each subsidiary, and the head of said administrative division
manages it with the authority and responsibilities stipulated by the authority
regulations. Appointment and dismissal of chief officers of subsidiaries isdetermined by the President and Executive Officer of the Company, andappointment and dismissal of other officers is determined by the head of theadministrative division.
(b) Heads of administrative divisions clearly state the missions of subsidiaries which
they supervise, and when developing business plans, they provide support,
instruction, and periodic monitoring, and evaluate the performance of officers.
Heads of administrative divisions also monitor the operational status of the general
meeting of shareholders and the Board of Directors and compliance of Directorsof subsidiaries.
(c) At the accounting division of each subsidiary, the Company has appointed staff
with the necessary knowledge and experience. The Company works to conduct themaintenance 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 and audit& supervisory board members of subsidiaries.
Seminar topics include
responsibilities and obligations as a subsidiaries’ officer, compliance, and internal
controls.
(iv) Procedures relating to audits by Audit & Supervisory Board Members(a) The Standing Audit & Supervisory Board Members assess important decisionmaking processes and the status of business operations by attending meetings ofthe Board of Directors and the Management Committee in addition to reading
resolution approval documents.
(b) The Audit & Supervisory Board Members have received whistle-blowing reports
based on whistle-blowing regulations, and received reports biannually on the- 45 -

(Translation)
status 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.

- 46 -

(Translation)

Consolidated Balance Sheet(as of March 31, 2020)(Unit: Millions of yen)Account title

AmountAccount title(Assets)
Current assets

Amount(Liabilities)
236,726

Current liabilities

159,940

Cash and deposits

49,227

Notes and accounts payable

61,714

Notes and accounts receivable

111,314

Short-term borrowings

35,415

Lease receivables and lease investment
assets14,150Finished goods

15,901

Lease obligations

4,539

Other accrued expenses

21,590

Other current liabilities

36,681Work in process

14,332Long-term liabilities

106,090

Raw materials and supplies

21,978Long-term debt

42,310

Other current assets

10,202

Lease obligations

15,417

Deferred tax liabilities

9,784

Allowance for doubtful receivables
Non-current assets(382)
135,744

Provision for Directors’ retirement benefits

Property, plant and equipment

51,428

Liability for retirement benefits

32,129Buildings and structures

21,357

Other long-term liabilities

6,075

Machinery, equipment and vehicle

9,421

Total liabilities

Tools, furniture and fixtures

8,719(Net Assets)

Land

11,611

Construction in progress

318

Shareholders’ equity
Capital stock372

266,030
122,923
44,000Intangible assets

11,288Additional paid-in capital

19,047

Investments and other assets

73,027Retained earnings

60,847

Investments in securities

34,694

Treasury stock, at cost

Asset for retirement benefits

20,007

Accumulated other comprehensive income(16,718)

Long-term trade receivables

20,549Other investments and other assets

15,765Net unrealized holding gain/loss on othersecurities(218)

Allowance for doubtful receivables(17,989)

Loss on deferred hedges

112

Translation adjustments(9,029)Retirement benefits liability adjustments(7,583)

Total assets

372,471- 47 -(971)

Subscription rights to shares

171

Non-controlling interests

64

Total net assets

106,440

Total liabilities and net assets

372,471(Translation)

Consolidated Statement of Operations(From April 1, 2019 to March 31, 2020)(Unit: Millions of yen)Account title

AmountNet sales

457,223

Cost of sales

339,415Gross profit

117,807

Selling, general and administrative expenses

100,978

Operating income

16,829Non-operating income
Interest income

87

Dividend income

1,430

Dividend income of insurance

363

Receipt on litigation

438

Other

790

3,109

Non-operating expenses
Interest expense

1,721

Foreign exchange loss

3,274

Other

1,138

Ordinary income

6,135
13,804Extraordinary profit
Gain on sale of property, plant and equipment

4,842

Gain on sale of investments in securities

4,682

Gain on sale of shares of subsidiaries and affiliates

165

Insurance claim income

617

Compensation for damage income

202

10,510Extraordinary loss
Loss on sale and disposition of property, plant andequipment

560

Loss on impairment of fixed assets

846

Loss on sale of shares of subsidiaries and affiliates

192

Write-downs of investments in unconsolidated
subsidiaries and other securities

234

Loss on disaster

411

Business structure improvement expenses

2,418

Profit before income taxes

4,663
19,651

Income taxes

4,267

Income taxes deferred

1,262

Profit5,529
14,122

Loss attributable to non-controlling interests

35

Profit attributable to owners of parent

14,086- 48 -

(Translation)

Consolidated Statement of Changes in Net Assets(From April 1, 2019 to March 31, 2020)(Unit: Millions of yen)
Shareholders’ equity
Capital stock

Additional paid-in
capitalRetained earnings

19,05751,78544,000

Balance at April 1, 2019
Cumulative effects ofchanges in accounting
policies

Treasury stock,at costTotal shareholders’equity(997)

113,845(698)
44,000

Restated balance

19,057(698)

51,086(997)

113,146

Changes during the term
under review
Dividends from surplus(4,325)(4,325)

Profit attributable to ownersof parent

14,086

14,086

Purchases of treasury stock
Disposition of treasury
stock

(10)

(5)

(5)

32

21

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

–

(10)

9,761

26

9,776

Balance at March 31, 2020

44,00019,04760,847(971)

122,923

Accumulated other comprehensive income

Balance at April 1, 2019

Net unrealized
holding
gain/loss onother securities

Loss / Gainon deferredhedgesTranslation
adjustments

Retirement
benefits
liability
adjustments

Total
accumulated
othercomprehensiv
e income

Subscription
rights toshares

2,816

169(10,884)(6,006)(13,904)

133

Cumulative effects ofchanges in accounting
policies
Restated balance

Noncontrollinginterests

126

–
2,816

169

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

Total
net assets

100,200
(698)

133

126

99,502

Changes during the term
under review
Dividends fromsurplus(4,325)

Profit attributable toowners of parent

14,086

Purchases of treasury
stock

(5)

Disposition oftreasury stock21

Net changes in items
other thanshareholders’ equity
during the term underreview(3,035)

(56)

1,855

(1,576)(2,813)38(62)(2,838)Net changes during theterm under review(3,035)

(56)

1,855

(1,576)(2,813)

38

(62)

6,938

Balance at March 31,
2020

(218)

112

(9,029)(7,583)(16,718)17164

106,440- 49 -

(Translation)

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

Scope of consolidation(1) Number of consolidated subsidiaries: 73 companies
Names of major consolidated subsidiaries:
OKI Crosstech Co., Ltd.; OKI Software Co., Ltd.; Oki Data Corporation; Oki
Proserve Co., Ltd.; Oki Data Americas, Inc.; Oki Data Manufacturing (Thailand)Co., Ltd.; Oki Electric Industry (Shenzhen) Co., Ltd.; Oki Europe Ltd.
(2) Changes in scope of consolidation:
The following companies have been newly established and included in the scope of
consolidation from the fiscal year under review: OKI VIET NAM COMPANY
LIMITED; OKI DATA EUROPE B.V.; ORIGAMI BRASIL TECNOLOGIA ESERVIÇOS EM AUTOMAÇÃO LTDA.
The following companies have been excluded from the scope of consolidation: Oki
Customer Adtech Co., Ltd., which merged with Oki Wintech Co., Ltd., aconsolidated subsidiary; TIE Co., Ltd. and Takasaki Precision Products Co., Ltd.,
which merged with TOMIOKA ELECTRONICS CO., LTD., a consolidated
subsidiary; ML Supply Co., Ltd., which merged with OKI Data Manufacturing andEngineering Service Corporation, a consolidated subsidiary; Oki Electric Cable
Service Co., Ltd., which merged with Oki Electric Cable Co., Ltd., a consolidated
subsidiary; BIOLOGICA SISTEMAS S.A., OKI BR PORTUGAL S.A., and OKI
BR PARAGUAY S.A., due to transfer of all shares; OKI DATA SERVICE(AUSTRALIA) PTY. LTD., due to liquidation. In addition, Oki Wintech Co., Ltd.
has changed its company name to OKI Crosstech Co., Ltd., and TOMIOKAELECTRONICS CO., LTD. has changed its company name to OKI TOMIOKA
Manufacturing Co., Ltd.

2.

Application of equity method(1) Name of affiliated company to which the equity method is not applied:
BANKING CHANNEL SOLUTIONS LIMITED and other one company(2) Name of affiliated company to which the equity method is not applied:
TOWN NETWORK SERVICE Corporation
Reason for not applying the equity method:
The company has little influence and have no significance on profit or loss andretained earnings.
(3) Changes in scope of application of the equity method
Marubeni OKI Network Solutions Inc. has been excluded from the scope of
application of the equity method due to transfer of all shares.

- 50 -

(Translation)
3.

Accounting standards(1) Valuation standards and methods for significant assets(i) Negotiable securities
The Company and its domestic consolidated subsidiaries value securities inaccordance with how they are held as indicated below. Overseas consolidated
subsidiaries apply the lower of cost or fair value.
Other negotiable securities:
Marketable securities:
Stated at fair value based on the market price at the end of the fiscal year
(Any difference between book value and fair value is included in net
assets; sales costs are calculated by mainly the moving average method.)
Non-marketable securities:
Mainly stated at cost based on the moving average method(ii) Inventories
The Company and its domestic consolidated subsidiaries evaluate inventories asfollows, and overseas consolidated subsidiaries primarily apply the lower of cost or fairvalue.
Finished goods:
Principally stated at cost based on the moving average method. (Balance
sheet values are measured by the method of devaluing the book price toreflect 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 book price toreflect 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 internal use,
the straight-line method, based on the estimated durable years (mainly 5 years), is used.

- 51 -

(Translation)
Overseas consolidated subsidiaries primarily apply the straight-line method.
(iii) Lease assets
Lease assets relating to finance lease transactions that do not transfer ownership are
depreciated over the lease contract’s lifetime by the straight-line method, assuming theresidual value is zero.
(3) Basis for provision of reserves(i) Allowance for doubtful receivables
To prepare for any losses of accounts receivable and loans, the Company and its
domestic consolidated subsidiaries calculate the amount of potential loss by using thehistorical loss ratio for non-classified loans/receivables and individual assessment forclassified loans/receivables. Overseas consolidated subsidiaries calculate the amountof potential losses by individually assessing the possibility of collection for specificloans/receivables.
(ii) Provision for Directors’ retirement benefits
Some consolidated subsidiaries register the necessary amount at the end of the yearin accordance with internal rules to prepare for the payment of Directors’ retirement
allowance.
(4) Basis for provision of income and expense
Basis for provision of income relating to contract work and software development contracts
a. Income from those with certain results in progress before the end of the fiscal year
Percentage-of-completion method (The progress ratio of construction is estimatedby the cost proportion method.)b. Other income
Inspection basis (completed-contract method for some domestic consolidated
subsidiaries)(5) Important hedge accounting methods(i) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward exchange
contracts eligible for allocation treatment. Special treatment is applied to interest rate
swaps that meet requirements for special treatment.
(ii) Means of hedging and coverage
Forward exchange contracts are used to hedge fluctuations of exchange rates on
credits and debts in foreign currencies. Interest rate swaps are employed to hedge
fluctuations of market interest rates on variable-rate long-term debt.
(iii) Hedging policy
Derivative transactions are used to hedge fluctuations of market rates on credits anddebts.

- 52 -

(Translation)(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 then makes adecision based on the changes of the two.
(6) Amortization of goodwill and amortization period
Goodwill is evenly amortized over its useful life (mainly five years).
(7) Other important matters in preparation of consolidated financial statements(i) Method of accounting for retirement benefitsa. Attributing expected retirement benefits to a period
When calculating retirement benefit obligations, the Company applies thebenefit formula basis to attribute expected retirement benefits to the period until theend of the fiscal year under review.
b. Accounting for actuarial gains and losses, and prior service costs
Prior service costs are amortized by the straight-line method over a set numberof years (10 to 13 years) within the average remaining years of service of employees.
Actuarial gains and losses are amortized by the straight line method over a set
number of years (10 to 13 years) within the average remaining years of service of
employees at the time of their accrual in each fiscal year. Amortization of suchgains and losses is deemed to be effective from the year after the one in which theyarise.
(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.
(iv) Application of deferred tax accounting for the transition from the consolidated taxation
system to the group tax sharing system
As for items regarding the transition to the group tax sharing system introduced in
the “Act Partially Amending the Income Tax Act” (Act No. 8 of 2020) and items revised
on non-consolidated taxation system in connection with the transition to the group tax
sharing system, the Company and consolidated subsidiaries in Japan have not applied
the provisions of Paragraph 44 of the “Guidance on Accounting Standard for Tax EffectAccounting” (ASBJ Guidance No. 28, February 16, 2018) as allowed by the provisionsof Paragraph 3 of the “Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, March 31,2020). Accordingly, amounts of deferred tax assets and deferred tax liabilities are
determined in accordance with the provisions of the tax law before revision.

- 53 -

(Translation)
Notes on Changes in Accounting Policies
Overseas consolidated subsidiaries, excluding those in the U.S., began applying IFRS 16
Leases effective from the beginning of the fiscal year under review. As a result of applying
these accounting standards, property, plant and equipment increased ¥2,285 million, leaseobligations under current liabilities increased ¥1,010 million, lease obligations under long-term
liabilities increased ¥1,635 million and retained earnings decreased ¥533 million in the
consolidated balance sheet for the fiscal year under review.
The impact of this change on profit and loss for the fiscal year under review is immaterial.
Additional Information
1. Request for arbitration by a consolidated subsidiary
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 (¥17,066
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 ¥10,279 million was recordedat the end of the fiscal year under review.
2. Expanded application of the percentage-of-completion method
Previously, the percentage-of-completion method was applied for the work whose
outcome from the completed portion was deemed definite and the completed-contract method
was applied for other work. In conjunction with the measures to develop and enhance the costmanagement system, since the fiscal year under review, the percentage-of-completion method
has also been applied to some of this other work because it became possible to reliably estimate
the work.
As a result, for the fiscal year under review, net sales increased ¥10,487 million, andoperating income, ordinary income and profit before income taxes decreased ¥85 million each.

- 54 -

(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¥7,654 million

2.

Accumulated depreciation on property, plant and equipment¥158,259 million

3.

Liabilities for guarantee
Guarantee for borrowings by employees

4.

¥1,000 million¥110 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 theamount of a loss at present.

- 55 -

(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 FY2019
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 21, 2019

CommonStockRetainedearnings

4,325

50.00

March 31,2019

June 24,2019(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 26, 2020

CommonStockRetainedearnings

4,326

50.00

March 31,2020

June 29,
2020

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)
FY2019 Equity Warrants(issued on August 14, 2019)

Type of shares to be issued
upon exercise of equity
warrants

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

Common stock

30,100Common stock

41,000Common stock

51,600Common stock

61,600- 56 -

(Translation)
Notes on Financial Instruments
1. Matters concerning the status of financial instruments(1) Policy on financial instruments
The OKI Group mainly uses short-term deposits and highly safe marketable securities
for fund management, 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 andaccounts receivable, which are operating receivables, by carrying out customer credit
investigations in accordance with regulations for the management of accounts receivable ofindividual companies.
For borrowings, the Group raises short-term funds mainly for working capital and longterm funds for working capital and capital investment. For borrowings exposed to theinterest rate risk, the Group applies derivative instruments (interest rate swap transactions)to hedge its risk.
Derivative transactions consist of forward foreign exchange contracts, which aim tohedge exchange rate fluctuation risks related to foreign currency-denominated receivables
and payables, and interest rate swap transactions, which aim to hedge interest rate fluctuation
risks related to the payment of borrowings. The assessment of hedge effectiveness forinterest rate swap transactions that satisfy the requirements for special treatment is omitted.
The Group executes and manages derivative transactions in accordance with OKI
Group’s policy.
(3) Supplemental explanation regarding the disclosure concerning fair value of financial
instruments
The fair value of financial instruments is based on market prices, but if no market prices
are available, their fair value reflects the value reasonably calculated. Because fluctuation
factors are incorporated into the calculation of the said value, it may change if different
prerequisites, etc. are used.

- 57 -

(Translation)2.

Disclosure concerning fair value of financial instruments
As of March 31, 2020 (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 fromthe table. (See Note 2.)(Unit: Millions of yen)Amount recorded inconsolidated balance
sheet (*1)

Fair value (*1)

Difference( 1 ) Cash and deposits

49,22749,227–( 2 ) Notes and accounts receivable

111,314111,314–( 3 ) Investments in securities

26,40926,4177( 4 ) Long-term trade receivables

20,549
7,260

7,260

–

( 5 ) Notes and accounts payable(61,714)(61,714)–( 6 ) Short-term borrowings (*3)

(21,400)(21,400)–( 7 ) Other accrued expenses(21,590)(21,590)–( 8 ) Long-term debt (*3)

(56,324)(56,634)

310

Allowance for doubtful receivables (*2)

(13,289)375
375( 9 ) Derivative transactions–(*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 (¥14,014 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 bookvalue. Hence, their fair value is based on the relevant book value.
(3) Investments in securities
The fair value of investments in securities is based on their prices determined at the financial instruments
exchanges, and the fair value of bonds is based on the quotations offered by the correspondent financial
institution.
(4) Long-term trade receivables
Fair value of long-term trade receivables is based on the amount after deducting the present estimateddoubtful receivables from the book value as estimated doubtful receivables are calculated based on the present
value of loans / receivables.
(5) Notes and accounts payable, (6) Short-term borrowings, and (7) Other accrued expenses
These items are settled over a short period of time and their fair value is virtually equal to their bookvalue. Hence, their fair value is based on the relevant book value.
(8) Long-term debt
The fair value of these items is based primarily on the method of calculation whereby the sum of
principal and interest is discounted by an assumed interest rate on the assumption that the said sum is freshly
borrowed in a similar manner. Some long-term debt with floating interest rates 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 special accounting treatment applicable to interest rate swaps aretreated in combination with long-term debt as hedged items. Hence, their fair value is included in that oflong-term debt.

- 58 -

(Translation)
2.

Financial instruments whose fair value is considered extremely difficult to assess
Unlisted equity securities (¥8,284 million on the consolidated balance sheet) are not included in (3)Investments in securities because they have no market price and it is deemed extremely difficult to assess their fairvalues.

Significant Subsequent Event
Business Separation
In June 2019, in order to transfer its financial and retail services businesses to NCR Brasil Ltda.
(NCR Brasil), a Brazilian subsidiary of NCR Corporation (NCR), OKI BRASIL INDÚSTRIA ECOMÉRCIO DE PRODUTOSE E TECNOLOGIA EM AUTOMAÇÃO S.A. (OKI Brasil), a
consolidated subsidiary of the Company, and NCR reached an agreement on a company split of OKI
Brasil and transfer of the shares of the newly established company. All shares of the new company
were transferred on April 9, 2020.
1.

Reason for the share transfer
OKI Brasil has implemented fundamental structural reforms aimed at improving profitability,
but the Company has concluded that it will be difficult for OKI Brasil to independently expand its
business in the future in order to improve profitability, given changes in the business environment.
In addition, since the previous fiscal year, the Company has been reviewing its strategies fordeveloping its overseas Mechatronics Systems business in order to focus on supplying modules to
its partners.
Based on the above, the Company considered further development of OKI Brasil in the futureand determined that it would be most appropriate to transfer the business to the NCR Group, which
has many years of experience in the field and is expected to generate synergies.
Upon completion of the transaction, the Company will supply NCR Brasil with modules for theBrazilian market.
2

Name of the transferee of the shares
NCR Brasil Ltda.

3.

Share transfer date
April 9, 2020

4.

Outline of the subsidiary company
Name:
ORIGAMI BRASIL TECNOLOGIA E SERVIÇOS EM AUTOMAÇÃO LTDA.
Business: Design, development, manufacture, sale and maintenance of automated machines

5.

Number of shares transferred, transfer value, transfer gain/loss and share ratio after transfer
Number of shares transferred:
109,560,331 shares (Share Ratio after Transfer: 0%)
Transfer value:
24 million reals (¥522 million, at the exchange rate as of March 31, 2020)
Transfer gain/loss: (69) million reals (¥(1,458) million, at the exchange rate as of March 31,
2020)
In which, a loss of 52 million reals was recorded as “Business structure
improvement expenses” in the consolidated statement of operations forthe fiscal year under review.

- 59 -

(Translation)
Notes to Per-share Information
1. Net assets per share: ¥1,227.42
2. Earnings per share:¥162.80
Other Notes (Notes on Loss on impairment of fixed assets)
The Group posted impairment losses of ¥846 million for the fiscal year under review. Major
impairment losses are described below.
Purpose of use

Location

Company-owned
house

Saitama,
Saitama Pref.

Type of assets

Amount(millions of yen)

Land

730

Other assets

93

Regarding business assets, the Group basically sets up asset groups based on business segments.
However, if certain business assets (e.g. assets to be disposed of) are considered to independently
create cash flows, they are grouped by asset.
As the Company decided to sell the company-owned house subject to an impairment loss, its
book value was reduced to the recoverable value in the fiscal year under review. The recoverable
value of the said asset was measured at net sales value.
Other Notes (Notes on Business Combination)
Transactions, etc. under Common Control
Oki Wintech Co., Ltd. and Oki Customer Adtech Co., Ltd., both of which were consolidated
subsidiaries of the Company, resolved to conduct an absorption-type merger at the Board of
Directors meetings of the companies held on October 31, 2018, whereby the former would become
the surviving entity and the latter the extinguished entity by absorption. The companies signed amerger agreement on the same day.
(1) Outline of transactions(i) Name and content of business of the company involved in the merger
Surviving company
Extinguished company
Name of the company

Oki Wintech Co., Ltd.

Oki Customer Adtech Co., Ltd.

Content of businessEngineering work forelectrical and energy
facilities, sales of ICT
systems for businesses,
and sales of trafficrelayed systems

Repair, maintenance,engineering work, remotesupervision, operations
management, manufacturing
and sales of information
processing,telecommunications, control,
measurement, broadcasting,and medical equipment andsystems; and development andsales of related software- 60 -

(Translation)(ii) Date of business combination
April 1, 2019(iii) Legal forms of business combination
Absorption-type merger, whereby Oki Wintech Co., Ltd. becomes the surviving entity
and Oki Customer Adtech Co., Ltd. becomes the extinguished entity(iv) Name of the company after combination
OKI Crosstech Co., Ltd. (the company name changed from Oki Wintech Co., Ltd. on
April 1, 2019)(v) Other items regarding outline of transaction
Oki Wintech Co., Ltd. with a long, good track record as an engineering company inthe fields of construction and maintenance of voice networks, electrical works, and social
infrastructure works has been merged with Oki Customer Adtech Co., Ltd. with anexcellent track record in maintenance and operations of high-availability equipment suchas ATMs, financial systems and servers. A new company capable of providing strong
service solutions has been established, and it will enhance the recurring business platformand ensure sustainable growth of the Group.
(2) Outline of accounting procedures applied
The transaction was accounted for as transactions under common control in accordancewith the Accounting Standard for Business Combinations (ASBJ Statement No. 21, January
16, 2019) and the Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures (ASBJ Guidance No. 10, January 16, 2019).

- 61 -

(Translation)

Transcript of Accounting Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
June 8, 2020
To: Board of Directors
Oki Electric Industry Co., Ltd.
PricewaterhouseCoopers Aarata LLC
Tokyo OfficeKensuke Koda,
Engagement Partner, Certified Public Accountant
Hiroyuki Sawayama,
Engagement Partner, Certified Public Accountant
Yoshihiro Shiribiki,
Engagement Partner, Certified Public Accountant
Audit opinion
We have audited the consolidated financial statements – the consolidated balance sheet, the consolidated statementof operations, the consolidated statement of changes in net assets equity and notes to the consolidated financial
statements – of Oki Electric Industry Co., Ltd. for the 96th term from April 1, 2019 to March 31, 2020 in accordancewith Article 444 paragraph (4) of the Companies Act.
We concluded that the consolidated financial statements fairly present in all aspects of Oki Electric Industry’s andits subsidiaries’ assets and income or loss in accordance with corporate accounting standards generally accepted inJapan.
Basis for audit opinion
We have conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the “Responsibility of auditors for the audit of theconsolidated financial statements” section of our report. We are independent of the Company and its consolidated
subsidiaries in accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of management, Audit & Supervisory Board Members and the Audit & Supervisory Board for
preparing consolidated financial statements
Oki Electric Industry’s management is responsible for preparing and presenting fairly these consolidated financial
statements in accordance with corporate accounting standards generally accepted in Japan. This includes
designing and operating internal control that the management determines necessary to prepare and fairly present
these consolidated financial statements that are without material misstatement due to fraud or errors.
In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements with the assumption of a going concern, and inaccordance with corporate accounting standards generally accepted in Japan, for disclosing, as necessary, mattersrelated to going concern.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the
Directors’ performance of duties within the maintenance and operation of the financial reporting process.
Responsibility of auditors for the audit of the consolidated financial statements
Our responsibilities are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
expresses our opinion on the consolidated financial statements based on our audit from an independent point ofview. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the decisions of users of these consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit process to perform the following:• Identify and assess the risks of material misstatement, whether due to fraud or error, and design and perform
audit procedures responsive to those risks. Selecting audit procedures to be applied is at the discretion of theauditor. Obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• When auditing the consolidated financial statements, obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances in making risk assessments,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

- 62 -

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

- 63 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2020)

Account title(Assets)
Current assets
Cash and deposits

Amount33,843

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

1,972
69,128
14,114
5,420
8,127
8,477
277
1,934
6,600
5,984
703
(18)
156,567
31,181
24,1182,151
1,711
11,751
10,170192
16
70
63
38,041
31,626

7,062
439
1,580
175
6
6,415
1,074
155
16,909
110
7,700
7,811
31,71055,19087
501
22,081
30
542
7,495
3,278
256
(16,400)
104,775
129,495
286,063

Account title(Liabilities)
Current liabilities
Notes payable
Electronically recorded obligations operating
Accounts payable, trade
Short-term borrowings
Current portion of long-term debt
Lease obligations
Accounts payable, others
Other accrued expenses
Income taxes payable
Advances received
Deposits received
Unearned revenue
Provision for product warranties
Provision for directors’ bonuses
Provision for loss on construction
contracts
Provision for contingent loss
Provision for loss on Anti-Monopoly
Act
Other current liabilities
Total current liabilities
Long-term liabilities
Long-term debt
Lease obligations
Deferred tax liabilities
Retirement benefits
Provision for product warranties
Provision for loss on business of
subsidiaries and affiliates
Provision for loss on Anti-Monopoly
Act
Asset retirement obligations
Other long-term liabilities
Total long-term liabilities
Total liabilities(Net Assets)
Shareholders’ equity
Capital stock
Additional paid-in capital
Capital reserve
Other additional paid-in capital
Retained earnings
Other retained earnings
Retained earnings carried forward
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- 64 -

Total net assets
Total liabilities and net assets(Unit: Millions of yen)Amount23
3,048
41,25815,193
13,5793,464
11,373
7,235
1,367
1,618
22,189
2
1,499
149
2,822
881
126
3
125,838
42,31013,694
5,152
7,130
141
155
292
1,125
958
70,960196,798
44,00021,52915,0006,529
24,99824,99824,998(963)
89,563

(471)
(471)
171
89,264
286,063

(Translation)

Non-Consolidated Statement of Operations(From April 1, 2019 to March 31, 2020)(Unit: Millions of yen)Account title

AmountNet sales

249,231

Cost of sales

202,020Gross profit

47,210

Selling, general and administrative expenses

43,007

Operating income

4,202

Non-operating income
Interest income

626

Dividend income

10,127

Other

1,966

12,720Non-operating expenses
Interest expense

1,368

Foreign exchange loss

1,674

Provision of allowance for doubtful receivables(1,400)Penalty

247

Other

803

Ordinary income

2,694
14,228Extraordinary profit
Gain on sale of investments in securities

4,683

Gain on sale of shares of subsidiaries and affiliates

193

Gain on cancellation of lease obligations

64

4,941

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

288

Loss on impairment of fixed assets

824

Loss on sale of investments in securities

37

Write-downs of investments in unconsolidated subsidiaries and othersecurities

90

Provision for loss on business of subsidiaries and affiliates

155

Profit before income taxes

1,395
17,774

Income taxes

828

Income taxes deferred

55

Profit884
16,890- 65 -

(Translation)

Non-Consolidated Statement of Changes in Net Assets(From April 1, 2019 to March 31, 2020)(Unit: Millions of yen)
Shareholders’ equity
Additional paid-in capital
Capitalstock

Balance at April 1,
2019

44,000Retained earnings

Capitalreserve

Other
additional
paid-in
capitalTotal
additional
paid-in capital

15,0006,540

21,540

Other retained
earnings
Retained earnings
carried forward

Total
retainedearnings

Treasurystock,
at costTotal
shareholders’equity(989)

76,983

12,433

12,433

Dividends fromsurplus(4,325)(4,325)(4,325)

Profit16,89016,89016,890Changes during theterm under review

Purchases oftreasury stock
Disposition oftreasury stock

(10)

(10)

(5)

(5)

32

21

Net changes in
items other thanshareholders’equity during theterm under review
Net changes during
the term underreview
Balance at March
31, 2020

–

–

(10)

(10)

12,565

12,56526

12,58044,00015,0006,529

21,52924,99824,998(963)

89,563

Subscription
rights tosharesTotal net
assets133

79,722

Valuation, translation adjustments and others

Balance at April 1, 2019

Net unrealized holding
gain/loss on othersecurities

Loss / Gain on deferredhedgesTotal valuation,translation adjustments
and others

2,605

–

2,605

Changes during the term underreviewDividends from surplus(4,325)

Profit16,890Purchases of treasury stock(5)

Disposition of treasury stock21

Net changes in items otherthan shareholders’ equity
during the term under review(3,076)–(3,076)38(3,038)Net changes during the term
under review(3,076)–(3,076)38

9,541

Balance at March 31, 2020

(471)

–

(471)

171

89,264- 66 -

(Translation)

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

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

2.

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

3.

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

4.

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

- 67 -

(Translation)

5.

Basis for provision of reserves
Allowance for doubtful receivables
To prepare for any losses on accounts receivable and loans, the Company calculates theamount of potential loss by using the historical loss ratio in the case of non-classified
loans/receivables and by individual assessment in the case of classified loans/receivables.
Provision for product warranties
To prepare for the expenses caused by free repairs that occur after product sales, theCompany includes a provision for product warranties based on past performance or individual
estimates.
Provision for directors’ bonuses
To prepare for the payment of bonuses to officers (includes Executive Officers, the same
applies below), the Company records the amount attributable to the current fiscal year out of
the amount of bonuses expected to be paid to officers.
Provision for loss on construction contracts
To prepare for any losses on construction contracts, the estimated amount of losses for thefollowing 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 bereasonably estimated.
Provision for contingent loss
To prepare for losses that may occur in the future, the Company includes a provision forcontingency losses rationally calculated based on individual risks, etc.
Provision for loss on Anti-Monopoly Act

To prepare for any losses relating to the Anti-Monopoly Act, the estimated amount for thecurrent fiscal year end is recorded.
Retirement benefits
To prepare for payment of retirement benefits to employees, the Company records theamount recognized to accrue at the end of the fiscal year based on the estimated values ofretirement benefit obligations and pension assets.
Prior service cost is amortized by the straight-line method over a certain number of years(13 years) within the average remaining years of service of employees.
The actuarial difference is amortized proportionately using the straight-line method overa certain number of years (13 years) within the average remaining service period of theemployees from the fiscal year after the one in which it arises.
Provision for loss on business of subsidiaries and affiliates
In order to prepare for a loss on business of subsidiaries and affiliates, the Company
records the amount of expected loss to bear in consideration of the financial position, operating
results, etc. of these companies.

- 68 -

(Translation)
6.

Hedge accounting methods(1) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward exchange
contracts eligible for allocation treatment. Special treatment is applied to interest rate
swaps that meet the requirements for special treatment.
(2) Means of hedging and hedged item
Forward exchange contracts are used to hedge fluctuations of exchange rates on
credits and debts in foreign currencies. Interest rate swaps are employed to hedge
fluctuations of market interest rates on variable-rate and long-term debt.
(3) Hedging policy
Derivative instruments are used to hedge fluctuations of market rates on credits anddebts.
(4) Assessment method of hedging effectivenessTo determine the effectiveness, the Company compares the accumulated total of themarket fluctuations or the cash flow fluctuations for the hedged item and that of the market
fluctuations or the cash flow fluctuations for the means of hedging, during the period fromthe start of hedging to the assessment. The Company then makes a decision based on thechanges of the two.

7.

Other important matters in preparation of non-consolidated financial statements(1) Accounting for retirement benefits
The methods of accounting for unappropriated amounts of unrecognized prior service
costs and unrecognized actuarial gains and losses for retirement benefits differ from thosein the consolidated financial statements.
(2) Accounting processing of consumption tax
The tax-exclusion approach is applied for accounting of consumption tax and local
consumption tax.
(3) Application of consolidated tax payments
Consolidated tax payments are applied.
(4) Application of deferred tax accounting for the transition from the consolidated taxation
system to the group tax sharing system
As for items regarding the transition to the group tax sharing system introduced in the“Act Partially Amending the Income Tax Act” (Act No. 8 of 2020) and items revised on
non-consolidated taxation system in connection with the transition to the group tax sharing
system, the Company has not applied the provisions of Paragraph 44 of the “Guidance on
Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, February 16,2018) as allowed by the provisions of Paragraph 3 of the “Tax Effect Accounting for theTransition from the Consolidated Taxation System to the Group Tax Sharing System”(ASBJ PITF No. 39, March 31, 2020). Accordingly, amounts of deferred tax assets anddeferred tax liabilities are determined in accordance with the provisions of the tax law
before revision.

- 69 -

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

¥7,654 million¥1,000 million

Guarantee liabilities:
The Company provides guarantees for bank borrowings made by employees, andsubsidiaries and affiliates as shown below.
Oki HONG KONG LTD.
¥4,000 million($4,000 thousand, HK$18,000 thousand, RMB216,500 thousand)
OKI EUROPE LTD.
¥2,694 million(GBP18,000 thousand, EUR2,443 thousand)
OKI Brasil Indústria e Comércio de Produtos e Tecnologia¥2,546 million
em Automação S.A.
(121,557 thousand real)
OKI DATA AMERICAS, INC.
¥1,632 million($15,000 thousand)
OKI India Private Limited¥967 million(INR666,987 thousand)Oki Printed Circuits Co., Ltd.
¥929 million
Oki Data Manufacturing (Thailand) Co., Ltd.
¥598 million($5,500 thousand)Four other entities:¥1,276 million
Total:¥14,646 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:- 70 -¥17,420 million¥1,161 million¥37,060 million¥67 million¥20,220 million¥58,109 million¥12,849 million

690 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
Nondeductible retirement benefits
Adjustments of losses on transfers among consolidated subsidiaries
Loss carry forwards
Nondeductible accrued bonuses
Nondeductible write-downs of inventories
Provision for loss on construction contracts
Balance of trust property with retirement benefits
Loss on impairment of fixed assets
Provision for product warranties
Liability reserve
Bad debts expenses
Asset retirement obligations
OthersSubtotal deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Gain on valuation of investment securities
Nondeductible unrealized gain on contribution of securities to thepension trust
Prepaid pension cost
OthersTotal deferred tax liabilities
Net deferred tax assets- 71 -¥16,679 million¥5,028 million¥3,804 million¥3,411 million¥1,830 million¥1,171 million¥935 million¥864 million¥640 million¥602 million¥502 million¥398 million¥354 million¥344 million¥2,040 million¥38,602 million¥(34,562) million¥4,039 million¥(5,723) million¥(1,957) million¥(1,308) million¥(203) million¥(9,191) million¥(5,152) million

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

Subsidiary

Name of company, etc.

OKI Crosstech Co.,Ltd.

Location

Chuo-ku,Tokyo

CapitalVotingright ratio

Business

Purchase ofservices

21,385

Accounts
payable,
trade

2,926

Borrowings of
funds

–

Deposits
received

7,359(Direct)
100%

Purchase of products,
etc., concurrent
assumption of office

Borrowings of
funds

–

Deposits
received

6,178

short-term
loans
receivable

2,586

Long-term
loans
receivable
fromsubsidiaries
and affiliate

380

Long-term
loans
receivable
fromsubsidiaries
and affiliates

5,812

Long-term
loans
receivable
fromsubsidiaries
and affiliates

15,889Subsidiary

Development,
manufacture and salesof printer equipment
and related othersolutions

Hong Kong

2,895

4,496

¥19,000
millionOki Hong Kong,
Ltd.

Accounts
receivable,
trade

Accounts
payable,trade

Minato-ku,
TokyoSubsidiary

9,331

15,294

Oki Data
Corporation

BrazilSales ofproducts

Purchase ofservices¥400 million

SubsidiaryEndingbalance(mil. yen)

Production ofsoftware on a contract
basis, etc.

Warabi,
Saitama Pref.

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

Account item

(Direct)
100%

OKI Software Co.,
Ltd.

Joetsu,Niigata Pref.

Transaction
amount(mil. yen)

(Direct)
100%

Subsidiary

Oki Printed Circuits
Co., Ltd.

Description oftransactions

Equipment work,
designing, construction
and maintenance of
telecommunication,
firefighting and otherfacilities, maintenance,¥2,001 million
operations andtechnical support for
ICT equipment andsystems, and sales ofrelated equipment andsupplies
Development, design,
manufacture andmaintenance ofsoftware andembedded software,system building
services, SI/solution
services, consulting,outsourcing and salesof informationequipment

Subsidiary

Relationship withrelated party¥480 million

BRL415,999
thousand

US$10,292
thousand

Manufacture and salesof printed circuitboards and electronicequipment

Design, manufacture,sales and maintenanceof automationequipment

Holdings company,
material procurement(Direct)
100%

Supply products etc.,
purchase of services

Purchase of products
and services,lending of funds(Direct)
100%

Supply products etc.,
lending of funds(Direct)
100%

Supply products etc.,
lending of funds,
guarantee forborrowings

Lending of
funds

2,377

Lending of
funds

5,585

Lending offunds

14,857

Debt guarantee

4,000

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 the Company receives
an annual premium of 0.1%.
3. An allowance for doubtful accounts of ¥16,333 million has been recorded for loans to two overseas subsidiaries.
Furthermore, an allowance for doubtful accounts of ¥(1,400) million has been provisioned this fiscal year.

- 72 -

(Translation)
Notes to Per-share Information
1. Net assets per share: ¥1,029.65
2. Earnings per share:¥195.20
Explanatory notes on Company to Which Consolidated Dividend Regulations Apply
The Company will be a company to which consolidated dividend regulations apply after
the final day of the fiscal year under review becomes the final day of the final fiscal year.
Additional Information
Previously, the percentage-of-completion method was applied for work whose outcome
from the completed portion was deemed definite and the completed-contract method wasapplied for other work. In conjunction with the measures to develop and enhance the costmanagement system, since the fiscal year under review, the percentage-of-completion method
has also been applied to some of this other work because it became possible to reliably estimate
the work.
As a result, for the fiscal year under review, net sales increased ¥10,397 million, andoperating income, ordinary income and profit before income taxes decreased ¥50 million each.

- 73 -

(Translation)

Transcript of Accounting Auditors’ Report

Independent Auditors’ Report
June 8, 2020
To: Board of Directors
Oki Electric Industry Co., Ltd.
PricewaterhouseCoopers Aarata LLC
Tokyo OfficeKensuke Koda,
Engagement Partner, Certified Public Accountant
Hiroyuki Sawayama,
Engagement Partner, Certified Public Accountant
Yoshihiro Shiribiki,
Engagement Partner, Certified Public Accountant
Audit opinion
We have audited the non-consolidated financial statements—the non-consolidated balance sheet, the nonconsolidated statement of operations, the non-consolidated statement of changes in net assets and notes to the nonconsolidated financial statements—and its supporting schedules (“Financial Statements, etc.”) of Oki ElectricIndustry Co., Ltd. for the 96th term from April 1, 2019 to March 31, 2020 in accordance with Article 436, paragraph(2), item (i) of the Companies Act.
We concluded that the Financial Statements, etc. fairly present in all aspects of Oki Electric Industry’s assets andincome or loss in accordance with corporate accounting standards generally accepted in Japan.
Basis for audit opinion
We have conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the “Responsibility of auditor for the audit of the
Financial Statements, etc.” section of our report. We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Responsibility of management, Audit & Supervisory Board Members and the Audit & Supervisory Board for
preparing Financial Statements, etc.
Oki Electric Industry’s management is responsible for preparing and presenting fairly the Financial Statements,
etc. in accordance with corporate accounting standards generally accepted in Japan. This includes designing andoperating internal control that the management determines necessary to prepare and fairly present the Financial
Statements, etc. that are without material misstatement due to fraud or errors.
In preparing the Financial Statements, etc., management is responsible for assessing whether it is appropriate toprepare the Financial Statements, etc. with the assumption of a going concern, and in accordance with corporate
accounting standards generally accepted in Japan, for disclosing, as necessary, matters related to going concern.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the
Directors’ performance of duties within the maintenance and operation of the financial reporting process.
Responsibility of auditors for the audit of the Financial Statements, etc.
Our responsibilities are to obtain reasonable assurance about whether the Financial Statements, etc. as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that expresses ouropinion on the Financial Statements, etc. based on our audit from an independent point of view. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the decisions of users of the Financial Statements, etc.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit process to perform the following:• Identify and assess the risks of material misstatement, whether due to fraud or error, and design and perform
audit procedures responsive to those risks. Selecting audit procedures to be applied is at the discretion of theauditor. Obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• When auditing the Financial Statements, etc., obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances in making risk assessments, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
• Evaluate the appropriateness of accounting policies used by management and their method of application, as
well as the reasonableness of accounting estimates made by management and the appropriateness of related
notes thereto.
• Conclude on the appropriateness of preparing the Financial Statements, etc. with the assumption of a going
concern by management, and based on the audit evidence obtained, whether a material uncertainty exists related- 74 -

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

- 75 -

(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 96th fiscal year from April 1,
2019 to March 31, 2020, as follows:
1. Auditing methods used by Audit & Supervisory Board Members and the Audit & Supervisory Board, and details of
audit(1) The Audit & Supervisory Board specified an audit policy, compiled audit plans and received reports from each Audit &Supervisory Board Member on the status of implementation and results of audits and also received reports from Directors
and accounting auditors on the status of the execution of their duties and asked them for explanations as needed.
(2) Each Audit & Supervisory Board Member, according to the audit standards, policy and plans set up by the Audit &Supervisory Board, has maintained good communications with Directors, the internal audit division and other employees
and strived to collect information and improve the audit environment and conducted an audit by following the methods
described below:(a) We attended the meetings of the Board of Directors and other meetings as deemed important, received from Directors
and employees reports on the execution of their duties, asked for explanations as necessary, perused the documents
whereby the important decisions were made, and examined business and financial conditions at the head office andprincipal operating offices. With respect to the subsidiaries of the Company, we have maintained good communications
and exchanged information with Directors, Audit & Supervisory Board Members and others and received reports on
business conditions from the subsidiaries as needed.
(b) In addition, we have periodically received reports from Directors and employees, among others, required explanation
when necessary, and made opinions with regard to the status of operations and the systems established thereon (internal
control systems) made by the Board of Directors concerning the establishment of systems defined in Article 100,
paragraph (1) and paragraph (3) of the Regulations for Enforcement of the Companies Act as necessary for ensuring
compliance with laws and the Company’s Articles of Incorporation in the performance of duties by Directors, describedin the Business Report, and for ensuring appropriateness of duties of corporate group consisting of joint stock company
and its subsidiaries. With respect to the internal controls over financial reporting, we have received reports on theinternal control evaluation and status of the audits from the Directors, etc. and the PricewaterhouseCoopers Aarata LLC,
and asked them for explanations as necessary.
(c) We have monitored and verified whether the accounting auditors maintained their independence and properly
implemented audits, received from the auditors reports on the performance of their duties and asked them for explanations
as necessary. The accounting auditors reported to us that “systems for ensuring proper execution of duties” (listed ineach item of Article 131 of the Corporate Calculation Regulations) have been established in accordance with the quality
control standards concerning audits (Business Accounting Council, October 28, 2005), and asked them for explanations
as necessary.
Based on the methods mentioned above, we have reviewed the business report for the said fiscal year and their supplementaryschedules, financial statements for the said fiscal year (balance sheet, statement of operations, statement of changes inshareholders’ equity, and notes to non-consolidated financial statements), their supplementary schedules and consolidated
financial statements (consolidated balance sheet, consolidated statement of operations, consolidated statement of changes inshareholders’ equity, and notes to consolidated financial statements).
2. Results of Audit(1) Results of audit of the business report(a) We consider that the business report and its supplementary schedules fairly present the situation of the Company inaccordance with relevant laws and regulations and the Company’s Articles of Incorporation.
(b) With respect to the Directors’ performance of their duties, we have found neither undue transactions nor material facts
that violate relevant laws and regulations or the Company’s Articles of Incorporation.
(c) We consider that the details of the resolution made by the Board of Directors concerning internal control procedures areproper. With respect to the details described in the Business Report and the Directors’ performance of their internal
control duties, we have found no issues to be pointed out.
(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.
June 9, 2020
The Audit & Supervisory Board, Oki Electric Industry Co., Ltd.
Sei Yano, Standing Audit & Supervisory Board Member
Toshiya Hatakeyama, Standing Audit & Supervisory Board Member
Kuninori Hamaguchi, Outside Audit & Supervisory Board Member
Yoichi Nitta, Outside Audit & Supervisory Board Member- 76 -