(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 2, 2016

NOTICE OF 92ND ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 92ND
ordinary general meeting of shareholders will be held as follows. We would be grateful if you
could attend the meeting.
Those who will not be able to attend the meeting are kindly requested to review “4. Exercise of
Voting Rights” on page 2 and exercise their voting rights no later than 5:15 p.m., June 23(Thursday), 2016 (JST).
Yours faithfully,
Hideichi Kawasaki,
Chairman of the Board, Representative Director
Oki Electric Industry Co., Ltd.
1-7-12 Toranomon, Minato-ku, Tokyo-1-

(Translation)

1.
Date and Time:
Friday, June 24, 2016, from 10:00 a.m.
2.
Location:
Nikkei Hall, 3F Nikkei Building, 1-3-7 Otemachi, Chiyoda-ku, Tokyo
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 92nd fiscal year (from April 1, 2015 to March 31,
2016)
2. Non-consolidated Financial Statements for the 92nd fiscal year (from April 1,2015 to March 31, 2016)
Items to be resolved:
Agenda 1:
Agenda 2:
Agenda 3:
Agenda 4:
Agenda 5:

4.

Appropriation of Surplus
Share Consolidation due to Reduction in the Number of Shares Per Share
Unit
Election of Seven (7) Directors
Election of Two (2) Audit & Supervisory Board Members
Grant of Stock Option for Stock-linked Compensation (Equity Warrants)
to Directors

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

* The Company has provided the Notice of 92nd Ordinary General Meeting of Shareholders on its Internet
website (http://www.oki.com/). Any amendment to the Company’s Reference Documents for the
General Meeting of Shareholders, the Business Report, and the Consolidated and Non-consolidated
Financial Statements will be announced on the website.

-2-

(Translation)(Attachment)

Business Report(From April 1, 2015 to March 31, 2016)
1.

Status of the OKI Group(1) Operating progress and results
Looking at the global economy during fiscal 2015, economic recovery continued in
the U.S., including increases in private consumption and improvement in the employment
situation, and the European economies headed towards a gradual recovery. The Japanese
economy remained on a moderate recovery path, with improvement in the employment
conditions and corporate earnings, despite the impacts of the economic slowdown in China
and other emerging countries as well as fall in crude oil prices among other factors.
Under this business environment, OKI Group reported net sales of ¥490.3 billion, a¥49.9 billion or 9.2% decrease year-on-year, due to decrease in sales volume in Infotelecom systems business and Printers business. Operating income was ¥18.6 billion, a¥13.8 billion decrease year-on-year, reflecting reduced sales volume and the impact of
currency exchange fluctuations in Printers business, to name a few.
Ordinary income was ¥11.4 billion, a ¥26.5 billion decrease year-on-year, due torecording foreign exchange loss in the current fiscal year despite the impact of currency
exchange gain in previous fiscal year in other income and expenses. Profit attributable toowners of parent was ¥6.6 billion, a ¥26.5 billion decrease year-on-year.
Looking at non-consolidated business performance, net sales were ¥226.9 billion,
down ¥31.4 billion (12.1%) from the previous fiscal year. This was due to the decrease in
net sales of the Info-telecom systems business, mainly for telecom systems, social
infrastructure systems and mechatronics systems. Operating income was ¥9.9 billion, adecrease of ¥6.8 billion year-on-year.
Ordinary income decreased by ¥12.6 billion year-on-year to ¥11.2 billion, due toforeign exchange loss and other factors. Net income decreased by ¥17.8 billion year-onyear to ¥6.4 billion.
The Company’s top management priorities are to strengthen its financial position andensure retained earnings in order to continually improve the OKI Group’s corporate value,
as well as to increase shareholder returns so that shareholders are encouraged to hold its
shares over the medium- to long-term. The Company will reinforce its financial condition
and management foundations by applying retained earnings to investments in research &development and facilities that are critical to future growth. In addition, the Company will
attach the highest importance to maintaining stable profit distributions to shareholders anddecide dividends after taking business performance into consideration. Based on thispolicy, the Company proposes to pay ¥3 per common stock as a dividend from the surplus(year-end dividend) in the current fiscal year. An annual dividend will be ¥5 per sharecombined with an interim dividend of ¥2.

-3-

(Translation)

Net sales by segment are as provided below.
- Net Sales(Unit: billions of yen)Segment
Info-telecom
systems
Printers

Increase or
decrease

Compared to theprevious year (%)

FY2014 (reference:

FY2015 (the year

previous year)

under review)

352.5

304.8

(47.7)(13.5)

129.3

124.6

(4.7)

(3.6)

EMS

40.3

42.4

2.1

5.1

Others

18.1

18.5

0.4

2.2

540.2

490.3

(49.9)

(9.2)

Total

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

The amounts of

The following provides a summary of each segment.
Info-telecom systems
Net sales were ¥304.8 billion, down ¥47.7 billion (13.5%) from the previous fiscal
year. In the solution & services business, sales increased reflecting a stable demand as awhole with developments such as the acquisition of new projects for corporate customers.
Sales of telecom systems decreased as the sales contribution from investments of telecom
carriers concerning existing networks has ended in the first quarter of the current fiscal year.
Sales of social infrastructure systems also decreased, with the absence of the demands for
digitization of wireless communication systems for firefighting, which passed a peak in theprevious fiscal year, despite an increasing number of inquiries for flight control systems anddisaster prevention systems for municipalities, etc. Sales of mechatronics systems fell
because of sluggish sales of overseas-bound ATMs as a result of the prolonged curtailmentof investment by customers due to the continuous suspension of shipment to sales partners
in China and economic slowdown in Brazil, in spite of a robust demand of cash-handlingequipment in Japan.
Operating income decreased by ¥9.4 billion year-on-year to ¥16.5 billion, being
unable to offset the impact of decrease in sales volume by efforts such as the reduction of
fixed costs.
Printers
Net sales were ¥124.6 billion, down ¥4.7 billion (3.6%) from the previous fiscal year.
Sales of LED printers remained brisk overall, mainly for the high-value-added strategic
products, including color multifunction printers (MFP), on which the Company has focused
most with such measures as enhancement of the sales support structure. Meanwhile, theunit sales of existing products declined, because the market, especially for color single
function printers (SFP) for office use, continues to shrink as a whole, while the Company
maintained the price level relatively against the intensifying price competition in the market.
However, the decline in the unit sales has bottomed out in the middle of the second quarter-4-

(Translation)of the current fiscal year and thereafter, as a result of the selective revision of priceadjustment. In addition, the Group acquired wide format printer business of Seiko
Instruments Inc. as of October 1, 2015.
Operating income decreased by ¥5.3 billion year-on-year to ¥1.4 billion, due to thedecrease in sales volume and fluctuation of exchange rates.
Electronics manufacturing services (EMS) and others
Due to the robust performance of circuit boards business, with the contribution of
Ome Factory of Yokogawa Manufacturing Corporation, acquired from Yokogawa Electric
Corporation as of April 1, 2015, among other factors, net sales of the EMS business was¥42.4 billion, a ¥2.1 billion or 5.1% increase. Operating income increased by ¥0.3 billion
to ¥2.3 billion.
Net Sales of the Others business segment was ¥18.5 billion, a ¥0.4 billion or 2.2%
increase and Operating income increased by ¥0.7 billion to ¥4.2 billion as sales in thecomponent-related business, including reed switches, remained strong.
(2) Capital expenditure
Capital expenditures for the fiscal year equaled ¥11.7 billion.
Investment amounts by segment were as follows.
(Unit: billions of yen)Segment

Amount ofcapitalexpenditure

Info-telecom systems

6.2

Printers

2.7

EMS

0.9

Others
Total

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

1.9
11.7

(3) Financing
Funds required for the current term were obtained from our own funds and borrowed
funds.
Borrowing funds are mainly long-term debt principally from major banks.
(4) Future challenges
In November 2013, the OKI Group announced the Medium-term Business Plan 2016,
and established it as its vision to become a high-value added creation group, which
contributes to the realization of safe and comfortable society. As a result of steady efforts
aiming to make continuous investments by ensuring stable profits, thus achieving
sustainable growth, it has achieved outcomes including improvements in operating profit
margin of the largest segment, Info-telecom systems business, shareholders’ equity ratio
and debt equity ratio. However, due to various environmental changes, such as the
economic slowdown in emerging countries, expansion of currency fluctuation risk and-5-(Translation)
intensifying competition, the Group has decided to revise the numerical target of FY2016,
the final year of the Plan.
In order to achieve sustainable growth in line with such changes in the businessenvironment, the Group will endeavor to strengthen its operational foundation even more
and further secure profit in stable profit making business mainly in Japanese market, aiming
at further expanding profitability. Moreover, in an effort to create a foundation for the
new growth, it will strive to generate growth business in info-telecom business field, byintegrating solutions, telecom and social infrastructure system. In Mechatronics systems
business, efforts to further reinforce overseas expansion as an independent businesssegment will be implemented. In Printers business, shift in focus to the high-end markets
so far will be continued to improve profitability. Furthermore, in EMS business,initiatives to cultivate domestic demands steadily, including additional M&A, will be taken
to maintain the Group’s current growth. Consequently, based on these measures, theGroup will formulate the next Medium-term Business Plan that starts in FY2017.
Moreover, it will also carry out structural reforms that support these measures as wellas initiatives to enhance human resources, such as by shifting human resources to growthfields, recruiting global human resources, and encouraging women to play active roles in acontinuous and steady manner.
(5) Trends in assets and profit/loss
Trends in assets and profit/loss for the fiscal year under review and the past three
years are as follows.

Sales

455.8

billion yen

483.1

billion yen

540.2

billion yen

92nd year(the year underreview, FY2015)490.3
billion yen

Profit attributable toowners of parent

13,599million yen

27,359million yen

33,091

million yen

6,609

million yen

Basic earnings per
share

17.24

yen

36.21

yen

40.03

yen

7.61

yen

Total assets

349.3

billion yen

412.5

billion yen

439.4

billion yen

411.8

billion yen

Net assets

56.6

billion yen

91.9

billion yen

121.4

billion yen

107.4

billion yen

Net assets per share

34.40

yen

79.32

yen

137.74yen

122.91yen

89th year(FY2012)90th year(FY2013)91st year(FY2014)

Note: Basic earnings per share is computed based on the average number of shares of common stock during theyear (weighted average). Net assets per share are computed based on the number of shares of common
stock outstanding at the year-end. These figures exclude treasury stocks.

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

Oki Data Corporation

29,000 million yen

Company’s
voting rightratio (%)
100

Oki Customer Adtech Co., Ltd.

1,800 million yen

100

OKI Software Co., Ltd.

400 million yen

100

Oki Wintech Co., Ltd.

2,001 million yen

100

Name

Capital-6-

Major business
Manufacturing and sales of printers
Maintenance, construction andsales of information processing
equipment and telecommunications
equipment
Development and operation of
telecommunications system
softwareDesign and construction ofelectronic works and electronic(Translation)Name
Oki Data Americas, Inc.
Oki Data Manufacturing(Thailand) Co., Ltd.
Oki Europe Ltd.
Oki Electric Industry(Shenzhen) Co., Ltd.

CapitalCompany’s
voting rightratio (%)

Major business10 million U.S. dollars

100*

telecommunications works
Sales of printers

420 million baht

100*

Manufacturing of printers

51 million euro

100*

66 million Renminbi

100*

Sales of printers
Manufacturing of information
processing equipment and printers

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

(ii)
-

-

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

(7) Major businesses
The OKI Group offers as its core businesses manufacturing and sales of info-telecom
systems and printer-related products, system development and solutions as well as EMS(entrusted manufacturing services).
Major business items include the following.
Segment

Info-telecom systems

Printers
EMS

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

-7-

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

Classification
Head office

Head office
Head office
Head office
Head office
Head office

Location
Minato-ku, Tokyo
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)
Minato-ku (Tokyo), Warabi (Saitama), Honjo(Saitama), Takasaki (Gunma), Tomioka (Gunma)and Numazu (Shizuoka)
Warabi (Saitama), Osaka (Osaka) and Takasaki(Gunma)Minato-ku, Tokyo
Koto-ku, Tokyo
Warabi, Saitama
Shinagawa-ku, Tokyo
New Jersey, U.S.A.

Head office

Ayutthaya, Thailand

Head office

Surrey, UK

Head office

Guangdong, China

Branch offices
Oki Electric Industry Co., Ltd.
Business offices
Research institutes
Oki Data Corporation
Oki Customer Adtech Co., Ltd.
OKI Software Co., Ltd.
Oki Wintech Co., Ltd.
Oki Data Americas, Inc.
Oki Data Manufacturing(Thailand) Co., Ltd.
Oki Europe Ltd.
Oki Electric Industry (Shenzhen)Co., Ltd.

-8-

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

Number of employees

Info-telecom systems

12,013

Printers

4,917

EMS

1,306

Others1,581

Company-wide (shared)

373

Total

(ii)

20,190

Employees of Oki Electric Industry
Number of employees

Average age

3,914 (increased by 33 from the end of the previous year)

43.3

Average years ofservice19.7(10) Major creditors
Major creditors of the OKI Group are as follows:
Creditor

Loan balanceBillion yen

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

32.1
20.5
7.9
3.8
3.4

(11) Corporate governance(i) Basic policy
Guided by the corporate philosophy of “The people of OKI, true to thecompany’s enterprising spirit, are committed to creating superior network solutions
and providing excellent information and communications services globally to meetthe diversified needs of communities worldwide in the information age,” the OKI
Group recognizes sustainable growth and increases corporate value over mid- andlong-term as its most important management priorities in earning the trust of its
various stakeholders. To this end, we are working to enhance corporate governancebased on our fundamental policies, including “enhancement of management fairness
and transparency,” “timely decision-making processes,” and “full compliance andfortification of risk management.”(ii) Structure
The Company has chosen a company with the Audit & Supervisory Board, as astructure to ensure stable realization of its fundamental policies for corporate
governance. Specifically, it establishes the Board of Directors and Audit &Supervisory Board members and an Audit & Supervisory Board in charge ofsupervision and auditing and adopts an executive officer system, aiming to promote
timely decision-making processes by separating business execution and oversight.
In addition, it endeavors to improve the fairness and transparency ofmanagement by nominating outside directors as well as setting up the “Personnel-9-(Translation)
Affairs and Compensation Advisory Committee” as a voluntary committee
concerning on appointment, compensation, etc. and Chairman of the Board, so as toensure effective supervision from an independent and objective standpoint. In
addition to objective audits by Audit & Supervisory Board members and the Audit &Supervisory Board on the premises of its strong authority for investigation, OKI seeks
to bolster risk management and ensure rigorous compliance via the Risk Management
Committee, which includes outside directors.
(iii) Board of Directors
The Company’s Board of Directors consists of eight Directors, including two
highly independent Outside Directors, with the consideration of diverse expertise andcareers for the purpose of fulfilling such duties as deliberations and decisions on
significant matters concerning the Company’s business execution and oversightthereof. To clarify management responsibility for each fiscal year, the tenure for
Directors has been set as one year.
The Company provides Directors and Audit & Supervisory Board memberswith such opportunities as seminars and trainings, which are necessary in fulfilling
their roles and responsibilities, and conducts presentation for outside officers upon
appointment aimed at deepening their understanding about the Group’s business, inaddition to visits to offices and sites.
Furthermore, a survey for Directors and Audit & Supervisory Board members
regarding the operation of the Board of Directors, etc., has been conducted in April
2016 at the Board of Directors. Based on this result, discussions has been madeaiming to materialize the enhancement of effectiveness in governance at the Board of
Directors.
(iv) Election of Board officers
The Company has established the Personnel Affairs and Compensation
Advisory Committee to secure transparency in the decision-making processes forappointments of officers as mentioned above. The Committee consists of four
members including two outside officers, and the Chairman of the Committee isappointed from among Outside Directors. The Personnel Affairs and Compensation
Advisory Committee deliberates on appointments of Director and executive officer
from an objective viewpoint, and reports the results to the Board of Directors. In
addition, the Committee delivers its opinion on appointments of candidates for Audit& Supervisory Board members to Audit & Supervisory Board members.
Upon the nomination of candidates for Directors and Audit & Supervisory
Board members and appointment of executive officers, the Company takes into
consideration that the candidate satisfies the following requirements, as well as legal
eligibility.
 Those with excellent personality, insights, high ethical standards, fairness andintegrity as well as a high-level awareness of compliance Those who can execute their duties towards the realization of the OKI Group’s
corporate philosophy and continuous improvement of the corporate value
With respect to the election of outside officers, OKI formulates its
independence criteria (See page 63), and elects person who satisfies these criteria as- 10 -

(Translation)(v)

an outside officer. All outside officers have been designated as independent officers
at the Tokyo Stock Exchange.
Compensation for the Board members and executive directors
In order to secure transparency in the decision-making processes concerningcompensation for officers, the abovementioned Personnel Affairs and Compensation
Advisory Committee deliberates on the structure and level of compensation for
Director and executive officer from an objective viewpoint, and reports the results to
the Board of Directors.
OKI’s basic policy on compensation for Director and executive officer is toserve as incentives for the performance improvement with the aim of the continuous
enhancement of the corporate value and enforcement of the corporate competitivenesswhile being the compensation structure that can attract excellent human resources.
OKI has revised its compensation system to that consists of basic compensation,
annual incentive compensation linked to the performance of each fiscal year, andmid- to long- term incentive compensation.
These changes have been implemented as part of efforts to develop an
environment for a shift to the management focused on “more aggressive goal setting”
and “growth over mid- and long-term” in order to achieve “continuous growth” of the
OKI Group. In accordance with this, OKI proposes the introduction of stock options
for stock-linked compensation as the mid- to long- term incentive compensation at the
92nd Ordinary General Meeting of Shareholders. Compensation for Outside
Directors consists only of basic compensation. In addition, the appropriateness ofthe structure and level of compensation is validated utilizing objective evaluation datafrom external organizations and others.

(12) Other significant events of the OKI GroupOn November 18 2014, the Fair Trade Commission conducted an on-site investigation
at the Company due to suspicions about antitrust law violations related to our products andservices for digitalizing wireless communication systems for firefighting and emergency
use. While the investigation of Fair Trade Commission is still ongoing, the Company
continues to fully cooperate with the investigation.
Oki Banking Systems (Shenzhen) Co., Ltd. (hereinafter “OBSZ”), a subsidiary of theCompany, has filed a request for arbitration against Shenzhen Yihua Computer IndustrialCo., Ltd. (hereinafter “Yihua Industrial”), demanding payment of RMB1,115,463 thousand(¥19.4 billion if converted to Japanese yen based on the exchange rate as of the end of the
fiscal year under review) which includes the proceeds from sale of ATM.
Yihua Industrial, has filed a request for arbitration against OBSZ, claiming thepresence of defects in products delivered by OBSZ and demanding payment of
RMB221,143 thousand (¥3.8 billion if converted to Japanese yen based on the exchange
rate as of the end of the fiscal year under review) which includes the compensation ofdamages. However, Yihua Industrial’s reason for filing is irrational and we consider thisfiling by Yihua Industrial as a measure taken in response to OBSZ’s earlier arbitration filing.
Both arbitration proceedings are currently under review by the South China
International Economic and Trade Arbitration Commission.

- 11 -

(Translation)
2.

Shareholders’ Equity(1)

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

Number of outstanding shares:
872,176 thousand shares(including 3,501 thousand shares of treasury stock)(3)

Number of shareholders:
87,089(4)Major shareholders (Top 10)
Number ofshares held
(thousand shares)

Name of shareholder

Percentage ofshares held(%)

MSIP CLIENT SECURITIES

37,782

4.35

CHASE MANHATTAN BANK GTS CLIENTSACCOUNT ESCROW

35,675

4.11

Japan Trustee Services Bank, Ltd. (trust account)

32,111

3.70

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

28,9993.34

Oki Denki Group Employees’ Shareholdings Committee

17,5542.02

Mizuho Bank LTD.

14,196

1.63

SMBC Nikko Securities Inc.

14,111

1.62

Hulic Co., Ltd.

14,076

1.62

Meiji Yasuda Life Insurance Company

14,0001.61

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

13,146

1.51

Note:

The percentages of shares held are calculated after deducting treasury stock (3,501 thousand shares).

- 12 -

(Translation)
3.

Equity Warrants(1) Equity warrants granted to the Company’s officers as consideration for theirperformance of duties(i) Number of equity warrants
83(ii) Type and number of shares subject to equity warrants
83,000 shares of the Company’s common stock (1,000 shares per equity warrant)(iii) Status of equity warrants held by the Company’s officers
Directors(excluding outside Directors)
Issued Number

No. 5 equity warrant (277 yen)
(Issued on July 28, 2006)
No. 6 equity warrant (277 yen)
(Issued on July 28, 2006)
No. 7 equity warrant (248 yen)
(Issued on July 27, 2007)
No. 8 equity warrant (248 yen)
(Issued on July 27, 2007)

Exercise period

Number ofequitywarrants

Number ofholders

July 1, 2008 to June 28, 2016

26

2

July 1, 2008 to June 28, 2016--

July 1, 2009 to June 25, 201757

2

July 1, 2009 to June 25, 2017--(2) Equity warrants issued to employees in consideration of performance during the fiscal
year under review
The Company did not issue equity warrants in the fiscal year under review.

- 13 -

(Translation)
4.

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

X

X

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

Name

Status or main duties

Hideichi Kawasaki

Naoki Sato

Takao Hiramoto

X

Senior Vice President
and Member of theBoard

Toshinao Takeuchi

X

Senior Vice President
and Member of the
Board

Shinya Kamagami

Supervision
Supervision of Corporate Administration
In charge of Systems Hardware Business Division,
Financial Systems Marketing & Sales Division,
Secretarial Office, Group Administration Division andGeneral Affairs Division
In charge of Printer Business Division
President, Oki Data Corporation
Chief Information Officer
In charge of IT Solution & Services Business Division,
Telecom Systems Business Division, Public Systems
Business Division, Carriers Systems Marketing & Sales
Division, Government & Public Systems Marketing &Sales Division and Government &External Relations Division
Chief Compliance Officer and Chief Technology
Officer
In charge of Corporate Planning Division, Human
Resources Division, Corporate Research &Development Center and Engineering Support Center
Chief Financial Officer
In charge of Accounting & Control Division and Public
Relations Division

Senior Vice President
Toshiyaand Member of the
Hatakeyama
Board
Director
Takuma Ishiyama
Director
Minoru Morio
Outside Director of the Bank of Yokohama, Ltd.
Standing Audit & Supervisory
Hisao Suzuki
Board Member
Standing Audit & Supervisory
Tsutomu Tai
Board Member
Audit & Supervisory Board Kuninori
MemberHamaguchi
Audit & Supervisory Board
Kaoru Yoshida
MemberNotes:
1. X indicates executive officer.
2. Directors Takuma Ishiyama and Minoru Morio are Outside Directors.
3. Audit & Supervisory Board Members Kuninori Hamaguchi and Kaoru Yoshida are Outside Audit &Supervisory Board Members.
4. Directors Takuma Ishiyama and Minoru Morio, Audit & Supervisory Board Members Kuninori Hamaguchi
and Kaoru Yoshida are independent officers based on the terms of the Tokyo Stock Exchange.
5. Audit & Supervisory Board Member Hisao Suzuki has served in positions such as Officer in charge of the
Accounting & Control Division and Chief Financial Officer, and has extensive knowledge in finance andaccounting.
6. Audit & Supervisory Board Member Tsutomu Tai has many years of experience working in the Company’s
accounting divisions, and has extensive knowledge of finance and accounting.
X- 14 -

(Translation)
7.

Executive officers as of March 31, 2016 are as follows (excluding those who concurrently serve as
Directors).
Position

Name

Senior Vice President

Kenichi Tamura

Senior Vice President

Masayuki Hoshi

Executive Officer

Yoshiyuki Nakano

Executive Officer
Executive Officer
Executive Officer
Executive Officer

Seiji Mouri
Toru Hatano
Tetsuya Izaki

Executive Officer
Executive Officer
Executive Officer

Hiroshi Endo
Kiyoshi Yokota

Executive Officer

Masashi Tsuboi

Executive Officer

Yuichiro Katagiri

Masaaki Hashimoto

Katsuhiko Koseki

Principal duty
In charge of Electronics Manufacturing Services Business
Division and Procurement CenterIn charge of Enterprise Systems Marketing & Sales
Division, Partner Business Marketing & Sales Division,
Overseas Marketing & Sales Division and Finance
Division
President and Representative Director, OKI Brasil
Indústria e Comércio de Produtos e Tecnologia em
Automação S.A.
Manager, Systems Hardware Business Division
Director, Vice President, Oki Data Corporation
In charge of Information Planning Division
In charge of Marketing & Sales Division
Manager, Government & Public Systems Marketing &Sales Division
Senior Managing Director, Oki Data Corporation
Manager, Telecom Systems Business Division
Manager, Mechatro OEM Division in Systems Hardware
Business Division
Assistant Manager, IT Solution & Services Business
Division and Manager, Information Systems Division
Assistant Manager, Public Systems Business Division andManager, Next Social Infrastructure Business Planning
Taskforce(2) Compensation paid to Directors and Audit & Supervisory Board Members
Title
Number of persons
Amount of payment
Directors
9¥276 million
Audit & Supervisory Board
5¥60 million
MembersTotal
14¥336 million
Notes:
1. The amounts of compensation approved by the 82nd Ordinary General Meeting of Shareholders held on June29, 2006 are within ¥600 million per year for Directors and ¥100 million per year for Audit & Supervisory
Board Members. The amount of compensation for Directors excludes employee wages for Directors who
are also employees.
2. The numbers of Directors and Audit & Supervisory Board Members as of the end of the fiscal year underreview are different from the number shown above, and the above numbers include those who resigned at theconclusion of the 91st Ordinary General Meeting of Shareholders held on June 24, 2015.

- 15 -

(Translation)(3) Outside Directors and Audit & Supervisory Board Members(i) Status of material concurrent positions at other organizations, etc. and the Company’s
relationship with the aforesaid organizations
Director Minoru Morio concurrently serves as Outside Director of the Bank of
Yokohama, Ltd. and Outside Director of Concordia Financial Group, Ltd., established
as of April 1, 2016 through the business integration of the Bank of Yokohama, Ltd.
and the Higashi-Nippon Bank, Limited. Net sales to the Bank of Yokohama, Ltd.
and Concordia Financial Group, Ltd. account for less than 1% of the OKI Group’s
total net sales.
(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

Takuma Ishiyama,
14 (14)100%––
Director
Minoru Morio,
11 (11)100%––
Director
Kuninori
Hamaguchi,
14 (14)100%
16 (16)
100%
Audit & Supervisory
Board Member
Kaoru Yoshida,
Audit & Supervisory
14 (14)100%
15 (16)
94%
Board Member
Note: The number of meetings for Director Minoru Morio represents the number of meetings held since he took
office in June 2015.

(b) Major activities
a. Takuma Ishiyama, Director
Making objective statements mainly as a specialist in corporate law, heprovided advice and made proposals for the appropriateness and propernessof decision making by the Board of Directors. He also contributes tostrengthening compliance by providing a good example to managerial
personnel through his leadership as an advisor to the Risk Management
Committee and enhancing the management fairness and transparency as a
Chairman of the Personnel Affairs and Compensation Advisory Committee.
b. Minoru Morio, Director
Making statements from a viewpoint nurtured through abundant experiences
as a corporate manager at Sony Corporation, he provided advice and madeproposals for the appropriateness and properness of decision making by the
Board of Directors. He also contributes to strengthening compliance by
providing a good example to managerial personnel through his leadership as
an advisor to the Risk Management Committee and enhancing themanagement fairness and transparency as a Chairman of the Personnel Affairs
and Compensation Advisory Committee.

- 16 -

(Translation)(ii)

c. Kuninori Hamaguchi, Audit & Supervisory Board Member
With regard to deliberations of the Board of Directors, he determined thecorrectness of Directors’ managerial decisions. Using his many years ofextensive experience and knowledge as a director at other companies, hemade efforts to formulate the Company’s appropriate audit opinions bymaking proper statements and carrying out, when necessary, adequate
activities concerning performances of the Audit & Supervisory Board.
d. Kaoru Yoshida, Audit & Supervisory Board Member
With regard to deliberations of the Board of Directors, he determined thecorrectness of Directors’ managerial decisions. Using his many years ofextensive experience and knowledge as a director at other companies, hemade efforts to formulate the Company’s appropriate audit opinions bymaking proper statements and carrying out, when necessary, adequate
activities concerning performances of the Audit & Supervisory Board.
Total amount of compensation, etc.
¥31 million (for the four individuals)(4) Outline of Liability Limitation Agreements
The Company concluded agreements to limit liabilities with outside officers (Takuma
Ishiyama, Minoru Morio, Kuninori Hamaguchi and Kaoru Yoshida) and Standing Audit &Supervisory Board Members (Hisao Suzuki and Tsutomu Tai) under the provisions ofArticle 427 of the Companies Act. The outline of the agreements is as follows:- In cases where outside officers and Standing Audit & Supervisory Board Members areliable for any damages arising from their negligence to the Company, they shallcompensate for such damages only to the extent of the minimum liabilities as stipulated
in Article 427, Paragraph 1 of the Companies Act.
The above limitation of liability shall be applied only when the relevant outside officers andStanding Audit & Supervisory Board Members have executed their duties that caused the liabilities
in good faith and without gross negligence.

- 17 -

(Translation)
5.

Status of Accounting Auditor(1) Name: Ernst & Young ShinNihon LLC(2) Compensation, etc.
Amount of payment
1. Compensation, to be paid to the accounting auditor for the fiscal year under review
138 million yen
2. Total sum of cash and profits on other assets that the Company and its subsidiaries
267 million yen
should pay to the accounting auditor
Notes:
1. The Company does not distinguish between auditor compensation regarding (i) auditing in accordance with
the Companies Act, and (ii) auditing in accordance with the Financial Instruments and Exchange Act. The
total of these amounts is recorded above.
2. Among major subsidiaries, Oki Data Americas, Inc., Oki Data Manufacturing (Thailand) Co., Ltd., Oki
Europe Ltd., and Oki Electric Industry (Shenzhen) Co., Ltd. have undergone statutory audits by accounting
auditors other than the accounting auditor of the Company.
3. After having performed the necessary verification as to the appropriateness of matters such as the content of
the accounting auditor’s audit plan, the status of performance of duties by the accounting auditor, and thebasis for the calculation of the estimated compensation for the accounting auditor, the Audit & Supervisory
Board has decided to consent to the amount of compensation, etc. to be paid to the accounting auditor.

(3) Content of non-auditing services
The Company has also hired the accounting auditor for “advisory services on thetransition, etc. to International Financial Reporting Standards,” which is a service other than
the audits specified in Article 2, Paragraph 1 of the Certified Public Accountants Act, andpays the auditor compensation for that service.
(4) Policy regarding decision to dismiss or not reappoint the accounting auditor
The Audit & Supervisory Board, in principle, will determine the detail of the proposal
to be submitted to the general meeting of shareholders regarding dismissal or nonreappointment of the accounting auditor if it is deemed unlikely that the accounting auditor
will be able to perform audits properly. In addition, if the accounting auditor falls underprovisions of the items in Paragraph 1, Article 340 of the Companies Act, the Audit &Supervisory Board will dismiss the accounting auditor upon the consent of all the Audit &Supervisory Board Members.
(5) Business suspension order to which the accounting auditor was subject during past
two years
The outline of the disciplinary action announced by the Financial Services Agency on
December 22, 2015(i) Subject of administrative order
Ernst & Young ShinNihon LLC(ii) Content of administrative order Order for improvement of business operations
 Suspension from accepting new engagements for three months from January 1,
2016 to March 31, 2016(iii) Reason for administrative order In regard to the audit of financial statements of TOSHIBA CORPORATION for- 18 -

(Translation)



6.

FY2009, FY2011 and FY 2012 (for fiscal years that ended March 31, 2010,2012 and 2013), the above-mentioned audit corporation’s certified public
accountants had, in negligence of due care, attested that the financial statements
contained no material misstatement, when in fact the statements containedmaterial misstatement.
The audit corporation’s operation of services was found to be grossly
inappropriate.

Policies and procedures of the Company(1) Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business and othersystems to ensure appropriate operations(i) Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business(a) As the foundation for ensuring compliance, the Company has established the“OKI Group Charter of Corporate Conduct” and “OKI Group Code of Conduct.”
In addition, officers take the initiative in compliance activities in conformancewith the “Compliance Commitment.”(b) The Company has established a Compliance Committee chaired by the Chief
Compliance Officer to decide on and examine basic policies regarding
compliance programs.
(c) In accordance with the basic policies formulated by the Compliance Committee,
the division responsible for compliance plans, draws up, and promotes specificmeasures such as education and training for Directors and employees. In
education and training, we aim to raise employee awareness about complianceby utilizing means such as e-learning.
(d) The Company establishes whistle-blowing regulations which ensure 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.
(e) The Company stands firmly against antisocial groups that threaten the order andsafety of civil society in cooperation with the police and related organizations,and refuses to have any relationship with them as a whole.
(ii)

Procedures to retain and manage information relating to Directors’ conduct ofbusiness
The Company retains and stores information relating to the conduct of business byDirectors as appropriate in accordance with applicable laws, regulations and internal rules.
(iii) Rules concerning risk management and other procedures(a) The Company has established a Risk Management Committee and promotes
measures for appropriately grasping risks that may occur in relation to businessactivities of the Company and Group companies, and preventing such risks from- 19 -

(Translation)
emerging.
(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.
(iv) Procedures to secure efficient business performance by Directors(a) The Company holds regular meetings of the Board of Directors once a month todecide important matters including basic management policies and supervise thework of Directors.
(b) The Company appoints executive officers to execute business based on basic
management policies determined by the Board of Directors so as to separate thefunctions of business execution and oversight, and promote timely decisionmaking processes. In addition, the Company holds meetings of the Board of
Executive Officers consisting of executive officers etc. to assist the President inmaking 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 Group companies run their operations properly, the Company has
established the “OKI Group Charter of Corporate Conduct” which sets out thevalues for the entire Group. In addition, the Company has established the “OKIGroup Code of Conduct” as the code of conduct which all officers andemployees of each Group company should comply with, and is striving to makethe code known to all of them.
(b) The division responsible for compliance implements various measures forpromoting compliance common to the Group through each Group company’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) Group companies establishes whistle-blowing regulations that ensure reportingto their Outside Directors and Audit & Supervisory Board Members, provides acontact point for reporting and consultation, and aims to detect any misconduct
at its earliest stages after reporting to the Company.
(d) The Company, in accordance with Group management rules, determines thestatus of each Group company’s management activities through receiving reports
regularly from Group companies and provides necessary advice and guidance
including organization designing, rules and regulations, and business plannings.
(e) To secure the reliability of financial reporting, the Company and Group
companies establish an internal control system for financial reporting in- 20 -

(Translation)accordance with related laws and regulations, and strive to maintain and improvethat system.
(vi) Procedures for employees who assist Audit & Supervisory Board Members;
independence of employees from Directors(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 anychange in such staffing and personnel evaluation requires the prior consent of the
Audit & Supervisory Board.
(vii) Procedures for Directors and employees to report to Audit & Supervisory Board
Members; procedures for Audit & Supervisory Board Members to receive otherreports(a) If Directors discover anything that may cause significant damage to theCompany, they are required to report the matter immediately to the Audit &Supervisory Board Members pursuant to applicable laws and regulations.
(b) Standing Audit & Supervisory Board Members attend meetings of the Board of
Directors and meetings of the Board of Executive Officers in order to understandimportant decision-making processes and the status of business operations, aswell as to inspect important documentation.
(c) Audit & Supervisory Board Members attend the Risk Management Committee
as advisors and receive the necessary reports.
(d) Audit & Supervisory Board Members receive whistle-blowing reports based onwhistle-blowing regulations, and receive reports biannually on the status ofoperation of the regulations from relevant divisions.
(e) Audit & Supervisory Board Members receive reports on the status ofestablishing internal control systems and their operations from Directors andemployees on a regular basis, and may request Directors and employees to reporton matters deemed necessary.
(f) The Company ensures that a person who made a whistle-blowing report to Audit& Supervisory Board Members will not be treated unfavorably on account ofmaking such report.
(viii) Other procedures to secure effective audits by Audit & Supervisory Board Members(a) In conducting inspections on the Company’s operations and assets andperforming other audit duties, Audit & Supervisory Board Members shallconduct audits efficiently and effectively in close cooperation with the internal
audit section.
(b) Audit & Supervisory Board Members implement efficient audits by closelycooperating with the accounting auditor. To this end, Audit & Supervisory
Board Members hold meetings with the accounting auditor on a regular basis,
attend on-site audits by the accounting auditor, and request reports from the- 21 -

(Translation)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 to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business(a) The Company ensures forums for training for each grade, including officers, on
the content of the “OKI Group Code of Conduct” and the “Compliance
Commitment”, which form the foundation for compliance.
(b) The Compliance Committee, chaired by the Chief Compliance Officer, meets
twice each fiscal year to establish the basic policies for activities in addition toreviewing the content of activities.
(c) In accordance with the basic policies formulated by the Compliance Committee,
OKI conducts e-learning for all Group employees in Japan and group training forthe compliance managers in each department in addition to providing training
tools such as a compilation of compliance case studies. The Company conducts
an annual compliance awareness survey in order to check on the increase inawareness resulting from these measures and any issues.
(d) The Company has established and operates the whistle-blowing regulations
which enable anonymous reporting as well as reporting to the Outside Directors
and the Outside Audit & Supervisory Board Members, and the status of these
operations is reported to the Board of Directors and the Audit & Supervisory
Board.
(e) The Company assigns members of staff with responsibility for preventing unjust
demands who have received legal training to each business office and branch
office to continuously maintain a structure for responding to anti social groups as
an entire organization.
(ii) Procedures to retain and manage information relating to Directors’ conduct ofbusiness
Important documents are retained and managed appropriately in accordance with therules and regulations. In addition, the Information Security Committee, chaired by
Chief Information Officer, meets twice each fiscal year to determine company-wide
policy and plans for information security and conduct reviews of activities. With
regard to personal information protection, the Company received PrivacyMark
certification in February 2007, which it renews every two years.
(iii) Rules concerning risk management and other procedures(a) The Company has established the Risk Management Committee chaired by the
President with the Outside Directors and the Audit & Supervisory Board
Members as advisors, and Committee meetings are held regularly and whenevernecessary. The Committee receives timely reports from executive officers anddivisions on risk information accompanying business activities and deliberates
on measures to prevent risks from actualizing.
(b) The risk management rules clarify the scope of supervisory section to deal with- 22 -

(Translation)risks and responsibilities, and as for risks that require common management
across the Group, the supervisory section delivers and promotes preventative
measures for each division and monitors the results.
(c) The Company has established and operated the rules, which stipulate that theCompany sets up an emergency countermeasure headquarters to handle the risk
when a risk occurs.
(iv) Procedures to secure efficient business performance by Directors(a) In fiscal 2015, the Company held 14 meetings of the Board of Directors, todecide important matters such as basic management policies and supervised theexecution of business operations by the Directors. The Board of Directors
consists of eight Directors including two Outside Directors.
(b) In fiscal 2015, the Company held 13 meetings of the Board of Executive Officers
to deliberate on proposals and reports concerning business execution.
(c) The Company has clarified responsibility and authority for execution of businessin the Rules on Division of Duties and Authorities.
(v) Procedures to secure appropriate Group (Company and subsidiaries) operations(a) The Board of Directors has adopted the OKI Group Code of Conduct for theGroup as a whole, and the Company continuously works to ensure awarenessthrough training, etc.
(b) With regard to compliance risks that require common management across theGroup, the division at the Company with responsibility for the relevant risk
implements systematic management shall deliver and promote preventative
measures for each Group division and monitor the results as well as report on thestatus to the Compliance Committee.
(c) The Company has established and operates whistle-blowing regulations whichenable anonymous reporting as well as reporting to the Outside Directors and theOutside Audit & Supervisory Board Members at all Group companies. The
Company provides guidance, etc. as necessary when receiving the content ofreports.
(d) Each division at the Company receives regular and timely reports on the status ofmanagement, etc. from the Group companies for which it has responsibility inaccordance with the Group Management Rules to assess the actual businesssituation in addition to providing the necessary advice and guidance.
(e) The Company and each Group company has established a specialist department
related to the internal control over financial reporting required under the
Financial Instruments and Exchange Act and endeavors to develop, maintain andimprove the internal control system related to financial reporting.
(vi) Procedures for employees who assist Audit & Supervisory Board Members;
independence of employees from Directors(a) To assist the Audit & Supervisory Board Members, the Company has assigned
one member of staff, who is not subject to Directors’ instructions and orders.
(b) In order to ensure independence and effectiveness of instructions, transfer andevaluations of the member of staff for the Audit & Supervisory Board Members
requires the prior agreement of the Audit & Supervisory Board.

- 23 -

(Translation)(vii) Procedures for Directors and employees to report to Audit & Supervisory Board
Members; procedures for Audit & Supervisory Board Members to receive otherreports(a) When Directors discover anything that may cause significant damage to theCompany, they have reported the matter immediately to the Audit & Supervisory
Board Members pursuant to applicable laws and regulations.
(b) The Standing Audit & Supervisory Board Member assesses important decisionmaking processes and the status of business operations by attending the meetingsof the Board of Directors and Executive Officer Committee in addition toreading resolution approval documents .
(c) The Audit & Supervisory Board Members have attended the Risk Management
Committee as advisors and received reports as well as stating their opinions
when it is necessary.
(d) The Audit & Supervisory Board Members have received whistle-blowing reports
based on whistle-blowing regulations, and received reports biannually on thestatus of operation.
(e) 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.
(f) The Company has established a policy that there shall be no discrimination
against a person who makes a report to the Audit & Supervisory Board Memberson the grounds of having made the relevant report and rigorously enforces thispolicy.
(viii) Other procedures to secure effective audits by Audit & Supervisory Board Members(a) 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.
(b) 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.
(c) The Company has promptly processed the expenses required for the execution of
the duties of the Audit & Supervisory Board Members.
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.

- 24 -

(Translation)

Consolidated Balance Sheet(as of March 31, 2016)(Unit: millions of yen)Account title

AmountAccount title(Assets)

Amount(Liabilities)

Current assets

Current liabilities

Cash and deposits

47,829Notes and accounts payable

65,477

Notes and accounts receivable

135,910

Short-term borrowings

72,692

Lease investment assets

4,904

Other accrued expenses

33,265

Finished goods

36,599Other current liabilities

27,726Work in process

19,496

Total current liabilities

199,162

Raw materials and supplies

23,373Long-term liabilities

Deferred tax assets

6,750

Long-term debt

49,391Other current assets

11,079Lease obligations

5,727

Allowance for doubtful receivables(8,314)

Deferred tax liabilities

13,742

Total current assets

277,630

Provision for Directors’ retirement benefits
Liability for retirement benefits

Non-current assets

Other long-term liabilities

11,061

Total long-term liabilities

105,228

Property, plant and equipment

Total liabilities

Buildings and structures

23,565

Machinery, equipment and vehicle

9,142

462
24,841

304,391(Net Assets)
Shareholders’ equity

Tools, furniture and fixtures

10,326

Capital stock

44,000Land

13,079Additional paid-in capital

21,673Retained earnings

44,255Construction in progress

576

Total property, plant and equipment

56,691

Treasury stock, at cost

Intangible assets

9,637

Total shareholders’ equity

Investments and other assets(468)
109,460

Accumulated other comprehensive income

Investments in securities

32,604

Net unrealized holding gain/loss on othersecurities

4,642

Asset for retirement benefits

27,286

Loss on deferred hedges(562)

Other investments and other assets

8,743

Translation adjustments(12,835)

Allowance for doubtful receivables(818)

Retirement benefits liability adjustments

6,028

Total investments and other assets

67,816

Total accumulated other comprehensive
income(2,726)

Total non-current assets

134,145

Total assets

411,776- 25 -

Subscription rights to shares

79

Non-controlling interests

572

Total net assets

107,384

Total liabilities and net assets

411,776(Translation)

Consolidated Statement of Operations(From April 1, 2015 to March 31, 2016)(Unit: millions of yen)Account title

AmountNet sales

490,314

Cost of sales

361,250

Gross profit

129,064

Selling, general and administrative expenses

110,469

Operating income

18,594Non-operating income
Interest income

309

Dividend income

871

Share of profit of entities accounted for using equity
method423

Dividend income of insurance

335

Other

674

2,613

Non-operating expenses
Interest expense

1,990

Foreign exchange loss, net

6,374

Litigation expenses

376

Other

1,099

Ordinary income

9,841
11,366Extraordinary profit
Gain on sale of property, plant and equipment

198

Gain on sale of investments in securities

1,935

2,134

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

503

Loss on impairment of fixed assets

1,059

Provision for environmental measures

247

Profit before income taxes

1,811
11,689

Income taxes

1,916

Income taxes deferred

4,495

6,412

Profit5,277

Loss attributable to non-controlling interests(1,332)

Profit attributable to owners of parent

6,609- 26 -

(Translation)

Consolidated Statement of Changes in Net Assets(Year ended March 31, 2016)(Unit: Millions of yen)
Shareholders’ equity
Capital stock

Additional paid-in
capitalRetained earnings

21,554

41,98944,000

Balance at April 1, 2015

Treasury stock,at costTotal shareholders’equity(453)

107,090

Changes during the term underreviewDividends from surplus(4,343)(4,343)

Profit attributable to ownersof parent

6,609

6,609
(14)

Purchases of treasury stock
Capital increase of
consolidated subsidiaries

(14)

118

118

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

–

118

2,265

(14)

2,369

Balance at March 31, 2016

44,00021,67344,255(468)

109,460

Accumulated other comprehensive income

Balance at April 1, 2015

Net unrealized
holding
gain/loss onother securities

Loss / Gainon deferredhedgesTranslation
adjustments

Retirement
benefits
liability
adjustments

8,291

(72)

(10,433)

14,750

Total
Subscription
accumulated
rights toothersharescomprehensive
income12,53679

Noncontrollinginterests

Total
net assets

1,708

121,414

Changes during the term
under review
Dividends from surplus(4,343)

Profit attributable toowners of parent

6,609

Purchases of treasury
stock

(14)

Capital increase of
consolidated
subsidiaries

118

Net changes in items
other thanshareholders’ equity
during the term underreview(3,649)(489)(2,402)(8,722)(15,262)–(1,136)(16,399)

Net changes during theterm under review(3,649)(489)(2,402)(8,722)(15,262)–(1,136)(14,030)

Balance at March 31,
2016

4,642

(562)

(12,835)

6,028(2,726)

79572

107,384- 27 -

(Translation)

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

Scope of consolidation(1) Number of consolidated subsidiaries: 89 companies
Names of major consolidated subsidiaries:
Oki Data Corporation; Oki Customer Adtech Co., Ltd.; Oki Wintech Co., Ltd.;OKI Software Co., Ltd.; Oki Proserve Co., Ltd.; Nagano Oki Electric Co., Ltd.;Oki Data Americas, Inc.; Oki Data Manufacturing (Thailand) Co., Ltd.; Oki
Europe Ltd.; Oki Electric Industry (Shenzhen) Co., Ltd.; and OKI Brasil
Indústria e Comércio de Produtos e Tecnologia em Automação S.A.
(2) Names of major non-consolidated subsidiaries:
OKI BR Argentina S.A. and 6 other companies
Reasons for excluding from consolidation:
Total assets, retained earnings, net sales and profit or loss are individually andwholly immaterial and have no significant influence.
(3) Changes in scope of consolidation:
OKI Data Infotech Corporation was included within the scope of consolidation
because they became subsidiaries following new acquisition of shares by theCompany; and OF Networks Co., Ltd. was excluded from the scope of
consolidation because it merged with the Company.

- 28 -

(Translation)
2.

Application of equity method(1) Number of affiliated companies to which the equity method is applied: 4 companies
Name of major company to which the equity method is applied:Oki Electric Cable Co., Ltd.
(2) Names of major non-consolidated subsidiaries and affiliated companies to which theequity method is not applied:
Non-consolidated subsidiaries:
Oki BR Argentina S.A. and 6 other companies
Affiliated company: TOWN NETWORK SERVICE Corporation
Reason for not applying the equity method:
The companies individually have little influence and have no significance as awhole on profit or loss and retained earnings.

3.

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

4.

Accounting standards(1) Valuation standards and methods for significant assets(i) Negotiable securities
The Company and its domestic consolidated subsidiaries value securities inaccordance with how they are held as indicated below. Overseas consolidated
subsidiaries apply the lower of cost or fair value.
Other negotiable securities:
Marketable securities:
Stated at fair value based on the market price at the end of the
fiscal year
(Any difference between book value and fair value is included in
net assets; sales costs are calculated by the moving averagemethod.)Non-marketable securities:
Stated at cost based on the moving average method(ii) Inventories
The Company and its domestic consolidated subsidiaries evaluate inventories asfollows, and overseas consolidated subsidiaries primarily apply the lower of cost or fairvalue.
Finished goods:
Principally stated at cost based on the moving average method.
(Balance sheet values are measured by the method of devaluing
the book price to reflect declines in profitability.)- 29 -

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

- 30 -

(Translation)(ii) Provision for Directors’ retirement benefits
Some consolidated subsidiaries register the necessary amount at the end of theyear in accordance with internal rules to prepare for the payment of Directors’
retirement allowance.
(4) Basis for provision of income and expense
Basis for provision of income relating to contract work and software development
contracts
a. Income from those with certain results in progress before the end of the fiscal year
Percentage-of-completion method (The progress ratio of construction is estimatedby the cost proportion method.)b. Other income
Inspection basis (completed-contract method for some domestic consolidated
subsidiaries)(5) Important hedge accounting methods(i) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward
exchange contracts and currency swap contracts eligible for allocation treatment.
Special treatment is applied to interest rate swaps that meet requirements for special
treatment.
(ii) Means of hedging and coverage
Forward exchange contracts and currency swap contracts are used to hedge
fluctuations of exchange rates on credits and debts in foreign currencies. Interest rate
swaps are employed to hedge fluctuations of market interest rates on variable-rate longterm debt.
(iii) Hedging policy
Derivative transactions are used to hedge fluctuations of market rates on credits
and debts.
(iv) Assessment method of the effectiveness of hedges
To determine the effectiveness of hedges, the Company compares the accumulated
total of market fluctuations or cash flow fluctuations for the targets of hedging and thatof the market fluctuations or the cash flow fluctuations for the means of hedging,
during the period from the start of hedging to the assessment. The Company thenmakes a decision based on the changes of the two.
(6) Amortization of goodwill and amortization period
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- 31 -

(Translation)
the end of the fiscal year under review.
b. Accounting for actuarial gains and losses, and prior service costs
Prior service costs are amortized by the straight-line method over a set
number of years (11 to 13 years) within the average remaining years of service of
employees.
Actuarial gains and losses are amortized by the straight line method over a
set number of years (11 to 13 years) within the average remaining years of serviceof employees at the time of their accrual in each fiscal year. Amortization ofsuch gains and losses is deemed to be effective from the year after the one inwhich they arise.
(ii) Accounting processing of consumption tax
The tax-exclusion method is used for accounting of consumption tax and local
consumption tax.
(iii) Application of consolidated tax payment
The consolidated tax payment is applied.
Changes in Accounting Policies
The “Revised Accounting Standard for Business Combinations (ASBJ Statement No. 21,
September 13, 2013, hereinafter the “Business Combinations Accounting Standard”), the“Revised Accounting Standard for Consolidated Financial Statements (ASBJ Statement No.
22, September 13, 2013, hereinafter the “Consolidated Financial Statements AccountingStandard”), and the “Revised Accounting Standard for Business Divestitures” (ASBJ
Statement No. 7, September 13, 2013, hereinafter the “Business Divestitures AccountingStandard”) have been applied from the fiscal year ended March 31, 2016. As a result, forsubsidiaries the Company continues to control, differences arising due to changes in theequity share are entered in additional paid-in capital and costs associated with the acquisitionof shares are now treated as expenses in the fiscal year in which they are incurred. In
addition, for business combinations that are implemented on and after the beginning of the
fiscal year ended March 31, 2016, when revisions to the allocations of the cost of acquisitions
as determined by provisional accounting treatment are carried out in the fiscal year following
the fiscal year of the business combination, the impact is presented in the beginning balance
for the fiscal year when the relevant revision was carried out and the opening balance isreported reflecting the relevant impact. The Company has also changed the method ofpresenting net income and changed minority interests to non-controlling interests.
Regarding the application of the Business Combinations Accounting Standards, theCompany has applied the provisional accounting treatment contained in Business
Combinations Accounting Standard Paragraph 58-2 (4), Consolidated Financial Statements
Accounting Standard Paragraph 44-5 (4), and Business Divestitures Accounting Standard 574 (4) and will continue to apply these standards from the beginning of the fiscal year ended
March 31, 2016 into the future.
The impact of these changes on the consolidated financial statements is immaterial.
Additional Information
Oki Banking Systems (Shenzhen) Co., Ltd., an OKI Group consolidated subsidiary, has- 32 -

(Translation)
filed a request for arbitration against Shenzhen Yihua Computer Industrial Co., Ltd. on
October 10, 2015, demanding payment of uncollected receivables of RMB1,115,463 thousand(¥19,397 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.

- 33 -

(Translation)
Notes to Consolidated Balance Sheet
1. Assets pledged as collateral
Investments in securities
Liabilities collateralized by the above assets:
Short-term borrowings¥14,112 million

2.

Accumulated depreciation on property, plant and equipment¥155,885 million

3.

Liabilities for guarantee
Guarantee for borrowings by employees¥10,000 million¥309 million

Notes to Consolidated Statement of Changes in Net Assets
1. Matters concerning class and total number of shares outstanding as of the end of FY2015
Common Stock872,176 thousand shares
2.

Matters concerning appropriation of surplus(1) Dividends paid
Resolution
Ordinary General
Meeting of
Shareholders
on June 24, 2015
Board of Directors
Meeting on
November 5, 2015

Class ofshares

Source ofdividends

Total
dividends(millions ofyen)

Dividends
per share(yen)

Recorddate

Effective
date

CommonStockRetainedearnings

2,606

3.00

March 31,2015

June 25,
2015

CommonStockRetainedearnings

1,737

2.00

September
30, 2015

December 7,
2015(2) Dividends for which the record date falls in the fiscal year under review and the effective
date falls in the following fiscal year.
Proposal

Class ofshares

Source ofdividends

Total
dividends(millions ofyen)

Dividends
per share(yen)

Recorddate

Effective
date

Ordinary General
Meeting of
Shareholders
on June 24, 2016

CommonStockRetainedearnings

2,606

3.00

March 31,2016

June 27,2016- 34 -

(Translation)
3.

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

Breakdown of equity warrants

The Company

No. 5 Equity Warrants(issued on July 28, 2006)
No. 6 Equity Warrants(issued on July 28, 2006)
No. 7 Equity Warrants(issued on July 27, 2007)
No. 8 Equity Warrants(issued on July 27, 2007)

Type of shares to be issued
upon exercise of equity
warrants

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

Common stock

185,000

Common stock

157,000

Common stock

287,000

Common stock

222,000- 35 -

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

Disclosure concerning fair value of financial instruments
As of March 31, 2016 (consolidated balance sheet date), the amount recorded in the
consolidated balance sheet, fair value, and the amount of differences are as shown in the tablebelow. Any item whose fair value is deemed extremely difficult to assess is excluded from thetable. (See Note 2.)(Unit: millions of yen)Amount recorded inconsolidated balance
sheet(1) Cash and deposits

47,829(2) Notes and accounts receivable

135,910

Allowance for doubtful receivables (*1)

Fair value
47,829Difference–(8,314)
127,596

127,596–(3) Investments in securities

22,992

22,481(510)(4) Notes and accounts payable(65,477)(65,477)–(5) Short-term borrowings (*2)(50,597)(50,597)–(6) Other accrued expenses(33,265)(33,265)–(7) Long-term debt (*2)

(71,487)(72,265)

777(8) Derivative transactions33–(*1) Allowance for doubtful receivables specifically provided for notes and accounts receivable is deducted.
(*2) Long-term debt (¥22,095 million) that will be reimbursed within one year are classified as “short-termborrowings” in the consolidated balance sheet.
Notes:
1.
Disclosure concerning methods of calculation of fair value of financial instruments, securities and derivativetransactions(1) Cash and deposits and (2) Notes and accounts receivable
These items are settled over a short period of time and their fair value is virtually equal to their book value.
Hence, their fair value is based on the relevant book value.
(3) 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) Notes and accounts payable, (5) Short-term borrowings, and (6) Other accrued expenses
These items are settled over a short period of time and their fair value is virtually equal to their book value.

- 36 -

(Translation)
Hence, their fair value is based on the relevant book value.
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 (8) 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.
(8) Derivative transactions
Derivative transactions subject to allocation treatment applicable to currency swaps, and to special
accounting treatment applicable to interest rate swaps are treated in combination with long-term debt ashedged items. Hence, their fair value is included in that of long-term debt.
Financial instruments whose fair value is considered extremely difficult to assess
Unlisted equity securities (¥9,612 million on the consolidated balance sheet) are not included in (3) Investments insecurities because they have no market price and it is deemed extremely difficult to assess their fair values.
(7)2.

Notes to Per-share Information
1. Net assets per share:¥122.91
2. Earnings per share:¥7.61

Other Notes (Notes on Impairment Loss)
In the fiscal year ended March 31, 2016, OKI recorded loss on impairment of fixed assets on theasset groups below.
1. Overview of Assets and Asset Groups with Recognized Loss on Impairment of Fixed Assets
Location

BrazilPurpose of use

TypeBusiness assets

Buildings and structures, machinery,equipment and vehicle, tools,
furniture and fixtures, constructionin progress, intangible assets

2.

Loss on impairmentof fixed assets¥1,032 million

Background to Recognition of Loss on Impairment of Fixed Assets
As a result of revising the earning projections for OKI BRASIL INDÚSTRIA E COMÉRCIODE PRODUTOS E TECNOLOGIA EM AUTOMAÇÃO S.A., which is a consolidated subsidiary,accompanying the deterioration in the Brazilian economy, the earnings in the initial forecasts are
no longer anticipated. Therefore, the book value of assets was written down to the recoverable
amount, and the amount of the write-down was recorded in extraordinary loss as loss on
impairment of fixed assets.

- 37 -

(Translation)
3.

Breakdown of loss on impairment of fixed assets
Buildings and structures
Machinery, equipment and vehicle
Tools, furniture and fixtures
Construction in progress
Intangible assets
Total¥12 million¥634 million¥115 million¥21 million¥248 million¥1,032 million

4.

Asset Grouping Method
Asset grouping is based on business segment for business assets, and assets that recognized as
generating independent cash flows such as lease assets and idle assets are grouped as individual
properties.
5.

Method Calculation for Recoverable AmountThe recoverable amount is measured by value in use which is calculated by discounting future
cash flows at 15.7%.

- 38 -

(Translation)

Transcript of Accounting Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
May 17, 2016
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yoshimi Kimura,Engagement Partner, Certified Public Accountant
Akira Sato,Engagement Partner, Certified Public Accountant
We have audited the consolidated financial statements – the consolidated balance sheets, the consolidated statementof operations, the consolidated statement of changes in net assets equity and notes to the consolidated financial
statements – of Oki Electric Industry Co., Ltd. for the 92nd term from April 1, 2015 to March 31, 2016 inaccordance with Article 444 Paragraph 4 of the Companies Act.
Responsibility of management for preparing consolidated financial statements
Oki Electric Industry’s management is responsible for preparing and presenting fairly these consolidated financial
statements in accordance with corporate accounting standards generally accepted in Japan. This includes
designing and operating internal control that the management determines necessary to prepare and fairly present
these consolidated financial statements that are without material misstatement due to fraud or errors.
Responsibility of auditors
Our responsibility is to express our independent opinion regarding these consolidated financial statements based on
audits by Ernst & Young ShinNihon LLC. We conducted our audit in accordance with auditing standards
generally accepted in Japan. These auditing standards require that we prepare audit plans and implement audit
based on them to obtain reasonable assurance as to whether the consolidated financial statements are withoutmaterial misstatement.
The audit requires procedures to obtain audit evidence about amounts and disclosure of these consolidated financial
statements. The audit procedures are selected and applied based on evaluation of risks about material
misstatement of these consolidated financial statements due to fraud or errors. Although the purpose of the audit
is not to express our opinion about the effectiveness of internal control, we consider the internal control associatedwith preparation and fair presentation of these consolidated financial statements, in order to plan appropriate audit
procedures in line with actual situations at the time of risk evaluation. Also, our audit includes reviews ofaccounting policies, and methods that management adopts, and an evaluation of management estimates and thepresentation of the consolidated financial statements as a whole.
We believe we have obtained enough and appropriate audit evidence as the basis for our opinion.
Audit opinion
We concluded that the consolidated financial statements fairly present in all aspects Oki Electric Industry’s and its
subsidiaries’ assets and income or loss in accordance with corporate accounting standards generally accepted inJapan.
Conflict of interest
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm (Ernst &Young ShinNihon LLC) and the respective engagement partners.

- 39 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2016)
Account title(Assets)
Current assets
Cash and deposits
Notes receivable
Accounts receivable, trade
Lease investment assets
Finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Short-term loans
Accounts receivable-other
Deferred tax assets
Other current assets
Allowance for doubtful receivables
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
VehicleAccumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Land
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Right of using facilities
SoftwareTotal intangible assets
Investments and other assets
Investments in securities
Investments in and advances tosubsidiaries and affiliates
Contribution
Contribution in subsidiaries andaffiliates
Long-term loans receivable fromsubsidiaries and affiliates
Claims provable in bankruptcy,
rehabilitation and other
Long-term prepaid expenses
Lease and guarantee deposits
Other investments and other assets
Allowance for doubtful receivables
Total investments and other assets
Total non-current assets
Total assets

Amount
24,855
911
63,112
4,859
5,466
13,726
6,165
361
59,954
6,162
2,297
969
(23)
188,819

38,281(27,277)
2,514(2,192)
13,641(11,490)70(52)
35,725(29,338)

11,004
321
2,150
18
6,386
8,397
481
28,760
13
114
5,503
5,631
24,78166,643

Account title(Liabilities)
Current liabilities
Notes payable
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
Provision for directors’ bonuses
Provision for environmental
measures
Other current liabilities
Total current liabilities
Long-term liabilities
Long-term debt
Lease obligations
Deferred tax liabilities
Retirement benefits
Provision for loss on business of
subsidiaries and affiliates
Asset retirement obligations
Long-term accounts payable-other
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 carriedforwardTreasury stock, at cost
Total shareholders’ equity

Valuation, translation adjustments andothers617
Net unrealized holding gain/loss onother securities
3,114
Total valuation, translation
adjustments and others
45 Subscription rights to shares(Unit: millions of yen)Amount1,800
37,962
32,976
21,054
1,181
8,730
16,199
162
1,020
4,393
44
299
115
125,940
44,754
4,530
4,315
4,579
27,341830
4,929
68
91,350217,290

44,00021,55315,0006,553
35,93535,93535,935(454)
101,034

88

556
3,183
283
(236)
99,076
133,468
322,288- 40 -

3,884
3,884
79

Total net assets

104,997

Total liabilities and net assets

322,288

(Translation)

Non-Consolidated Statement of Operations(From April 1, 2015 to March 31, 2016)(Unit: millions of yen)Account title

AmountNet sales

226,936

Cost of sales

176,153

Gross profit

50,782

Selling, general and administrative expenses

40,928Operating income

9,853

Non-operating income
Interest income

1,378Interest income on securities

3

Dividend income

3,972Royalty income from corporate brand

761

Other

530

6,645

Non-operating expenses
Interest expenses

1,441

Foreign exchange loss, net

3,130Compensation expenses

265

Other

446

Ordinary income

5,284
11,214Extraordinary profit
Gain on sale of investments in securities

1,933

Gain on extinguishment of tie-in shares

217

2,151

Extraordinary loss
Loss on sale and disposition of property, plant and equipment
Write-downs of shares of subsidiaries and affiliates

294
6,525

Provision for environmental measures

247

Profit before income taxes

7,067
6,298

Income taxes(1,166)

Income taxes deferred

1,015

Profit

(150)
6,448

- 41 -

(Translation)

Non-Consolidated Statement of Changes in Net Assets(Year ended March 31, 2016)(Unit: millions of yen)
Shareholders’ equity
Additional paid-in capital
Capitalstock

Balance at April 1,
2015

Capitalreserve

44,00015,000Retained earnings

Other
additional
paid-in
capitalTotal
additional
paid-in capital

6,553

21,553

Other retained
earnings
Retained earnings
carried forward

Total
retainedearnings

Treasurystock,
at costTotal
shareholders’equity(440)

98,943

33,83033,830

Dividends fromsurplus(4,343)(4,343)(4,343)

Profit

6,448

6,448

6,448

Changes during theterm under review

Purchases oftreasury stock

(14)

(14)

Net changes in
items other thanshareholders’equity during theterm under review
Net changes during
the term underreview
Balance at March
31, 2016

–

–

–

–

2,105

2,105

(14)

2,090

44,00015,0006,553

21,55335,93535,935(454)

101,034

Subscription
rights tosharesTotal net
assets79

106,251

Valuation, translation adjustments and others

Balance at April 1, 2015

Net unrealized holding
gain/loss on othersecurities

Loss / Gain on deferredhedgesTotal valuation,translation adjustments
and others

7,301

(72)

7,228

Changes during the term
under review
Dividends from surplus(4,343)

Profit6,448

Purchases of treasury stock(14)

Net changes in items otherthan shareholders’ equity
during the term under review(3,416)72(3,344)–(3,344)

Net changes during the term
under review(3,416)72(3,344)–(1,253)

Balance at March 31, 2016

3,884

–

3,884

79

104,997- 42 -

(Translation)

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

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

2.

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

3.

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

4.

Depreciation and amortization
Property, plant and equipment (excluding lease assets): Declining-balance method
The straight-line method is applied to buildings, excluding annexed structures,acquired on or after April 1, 1998.
Intangible assets (excluding lease assets)
Software for sale in the market:
Amortization method based on the estimated amounts of sales in the estimatednumber of years for sales (3 years)
Software for internal use:
Straight-line method based on the estimated durable years (5 years)
Others:Straight-line method
Lease assets(Lease assets relating to finance lease transactions without transfer of ownership):
They are depreciated over the lease contract’s lifetime by the straight-line- 43 -

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

Basis for provision of reserves
Allowance for doubtful receivables
To prepare for any losses on accounts receivable and loans, the Company calculates theamount of potential loss by using the historical loss ratio in the case of non-classified
loans/receivables and by individual assessment in the case of classified loans/receivables.
Provision for loss on construction contracts
To prepare for any losses on construction contracts, the estimated amount of losses forthe following fiscal years are calculated for some of the orders backlog as of the end of the
fiscal year under review, which are likely to incur losses and for which the amounts thereof
can be reasonably estimated.
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 environmental measures
To prepare for any losses directed at environmental measures, the Company records theamount expected to be incurred in the future.
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
To prepare for any losses on business of subsidiaries and affiliates, the estimated amountof loss on business is calculated in consideration of the financial position and operating
results of the relevant subsidiaries and affiliates.

6.

Hedge accounting methods(1) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for currency swap
contracts eligible for allocation treatment. Special treatment is applied to interest rate
swaps that meet the requirements for special treatment.
(2) Means of hedging and hedged item
Currency swap contracts are used to hedge fluctuations of exchange rates on credits and- 44 -

(Translation)
debts in foreign currencies. Interest rate swaps are employed to hedge fluctuations ofmarket interest rates on variable-rate and long-term debt.
(3) Hedging policy
Derivative instruments are used to hedge fluctuations of market rates on credits and debts.
(4) Assessment method of hedging effectivenessTo determine the effectiveness, the Company compares the accumulated total of themarket fluctuations or the cash flow fluctuations for the hedged item and that of themarket fluctuations or the cash flow fluctuations for the means of hedging, during theperiod from the start of hedging to the assessment. The Company then makes adecision based on the changes of the two.
7.

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

Changes in Accounting Policies
The “Revised Accounting Standard for Business Combinations (ASBJ Statement No. 21,
September 13, 2013, hereinafter the “Business Combinations Accounting Standard”) and the“Revised Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September
13, 2013, hereinafter the “Business Divestitures Accounting Standard”) have been applied
from the fiscal year ended March 31, 2016. As a result, costs associated with the acquisitionof shares are now treated as expenses in the fiscal year in which they are incurred. In
addition, for business combinations that are implemented on and after the beginning of the
fiscal year ended March 31, 2016, when revisions to the allocations of the cost of acquisitions
as determined by provisional accounting treatment are carried out in the fiscal year following
the fiscal year of the business combination, the impact is presented in the beginning balance
for the fiscal year when the relevant revision was carried out and the beginning balance isreported reflecting the relevant impact.
Regarding the application of the Business Combinations Accounting Standards, theCompany has applied the provisional accounting treatment contained in Business
Combinations Accounting Standard Paragraph 58-2 (4) and Business Divestitures AccountingStandard 57-4 (4) and will continue to apply these standards from the beginning of the fiscal
year ended March 31, 2016 into the future.
There is no impact of these changes on the financial statements for the fiscal year ended
March 31, 2016.

- 45 -

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

¥10,000 million

Guarantee liabilities:
The Company provides guarantees for bank borrowings made by employees, andsubsidiaries and affiliates as shown below.
Oki Data Americas, Inc.
Oki Data Corporation
Oki Data Manufacturing (Thailand) Co., Ltd.
Oki Printed Circuits Co., Ltd.
Oki Wintech Co., Ltd.
Shizuoka Oki Electric Co., Ltd.
Five other entities:
Total:

3.

¥14,112 million¥3,380 million($30,000 thousand)¥3,202 million¥1,120 million(350,000 thousand baht)¥973 million¥507 million¥394 million¥877 million¥10,456 million

Monetary claims receivable from and payable to subsidiaries and affiliates
Short-term monetary claims receivable from subsidiaries and affiliates: ¥70,567 million
Long-term monetary claims receivable from subsidiaries and affiliates: ¥1,161 million
Short-term monetary claims payable to subsidiaries and affiliates:¥22,689 million
Long-term monetary claims payable to subsidiaries and affiliates:¥67 million

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: 3,501 thousand shares- 46 -¥28,015 million¥52,678 million¥13,129 million

(Translation)
Notes to Deferred Tax Accounting
Major factors giving rise to deferred tax assets and liabilities
Deferred tax assets
Nondeductible provision for loss on business of subsidiaries andaffiliates
Nondeductible write-downs of shares of subsidiaries and affiliates
Loss carry forwards
Nondeductible retirement benefits
Adjustments of losses on transfers among consolidated subsidiaries
Nondeductible accounts payable-other due to changes in retirement
benefit plans
Nondeductible accrued bonuses
Nondeductible foreign tax credit
Nondeductible loss on impairment of fixed assets
Nondeductible write-downs of inventories
OthersSubtotal deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Nondeductible unrealized gain on contribution of securities to thepension trust
Net unrealized holding gain/loss on other securities
OthersTotal deferred tax liabilities
Net deferred tax assets¥8,475 million¥7,405 million¥5,428 million¥5,422 million¥3,452 million¥1,971 million¥1,381 million¥1,007 million¥801 million¥755 million¥1,794 million¥37,897 million¥(34,851) million¥3,045 million¥(3,298) million¥(1,664) million¥(99) million¥(5,063) million¥(2,017) million

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

Amount equivalent to acquisition cost of leased assets as of the end of the term under review¥28 million
Amount equivalent to accumulated depreciation of leased assets as of the end of the term
under review¥23 million
Amount equivalent to unexpired lease payment of leased assets as of the end of the term
under review¥5 million- 47 -

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

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Company name

OKI Software Co.,Ltd.

Location

Warabi,
Saitama Pref.

Voting rightratio

CapitalBusiness¥400 million

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

Relationship withrelated party

Description oftransactions

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

Purchase ofservices

Transaction
amount(mil. yen)Account item

Endingbalance(mil. yen)Accounts
payable,
trade

5,336

Other
accruedexpenses632

18,913

Oki Hong Kong, Ltd.

Hong Kong

HK$80,000
thousandHoldings company,
material procurement(Direct)
100%

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

Lending offunds

23,626

Short-term
loans
receivable

23,045

Oki Data Corporation

Minato-ku,
Tokyo¥29,000
millionDevelopment,
manufacture and salesof printing equipment
and related solutions(Direct)
100%

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

Lending offunds

21,384

Short-term
loans
receivable

22,000

Short-term
loans
receivable

700

Long-term
loans
receivable
from

2,300

Oki Proserve Co., Ltd.

Subsidiary

Oki Data Americas,
Inc.

Subsidiary

OKI Brasil Indústria eComércio de Produtos
e Tecnologia em
Automação S.A.

Minato-ku,
Tokyo

U.S.A.

Brazil¥321 million

Facility business,
human resource
management, designbusiness, logistics
business

US$10,000
thousand

Sales and services ofprinters and multipurpose printers

BRL399,999
thousand

Design, manufacture,sales and maintenanceand services ofautomation equipment(Direct)
100%

Purchase of services,
lease and brokerageof real estate, lendingof funds(Indirect)
100%

Guarantee forborrowings(Direct)
84%

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

Lending of
funds

3,276

Debt guarantee

3,380

-

-

Lending of
funds

4,655

Short-term
loans
receivable

5,343

Underwritingof capitalincrease

3,918

–

–

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.
(2) The Company determines the interest rate for the lending of funds by taking the market rate of interest into
consideration. Transaction amount shows the average balance during the fiscal year because the transactions
are repetitive.
(3) The Company provided a debt guarantee for bank borrowings of OKI DATA AMERICAS, INC. and received aguarantee commission of 0.1% p.a.
3. Underwriting of capital increase: The Company underwrote a capital increase carried out by OKI Brasil Indústria eComércio de Produtos e Tecnologia em Automação S.A., purchasing new shares at BRL 12 per share.
4. For the loans to one subsidiary, the Company recorded an allowance for doubtful receivables of ¥130 million. In
addition, the Company recorded a provision of allowance for doubtful receivables of ¥41 million.

- 48 -

(Translation)
Notes to Per-share Information
1. Net assets per share: ¥120.78
2. Earnings per share:¥7.42- 49 -

(Translation)

Transcript of Accounting Auditors’ Report

Independent Auditors’ Report
May 17, 2016
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yoshimi Kimura,Engagement Partner, Certified Public Accountant
Akira Sato,Engagement Partner, Certified Public Accountant
We have audited the non-consolidated financial statements – the non-consolidated balance sheets, the nonconsolidated statement of operations, the non-consolidated statement of changes in net assets and notes to the nonconsolidated financial statements – and its supporting schedules of Oki Electric Industry Co., Ltd. for the 92nd termfrom April 1, 2015 to March 31, 2016 in accordance with Article 436 Paragraph 2 Item 1 of the Companies Act.
Responsibility of management for preparing non-consolidated financial statements and its supporting schedules
Oki Electric Industry’s management is responsible for preparing and presenting fairly these non-consolidated
financial statements and its supporting schedules in accordance with corporate accounting standards generally
accepted in Japan. This includes designing and operating internal control that the management determines
necessary to prepare and fairly present these non-consolidated financial statements and its supporting schedules thatare without material misstatement due to fraud or errors.
Responsibility of auditors
Our responsibility is to express our independent opinion regarding these non-consolidated financial statements andits supporting schedules based on audits by Ernst & Young ShinNihon LLC. We conducted our audit inaccordance with auditing standards generally accepted in Japan. These auditing standards require that we prepare
audit plans and implement audit based on them to obtain reasonable assurance as to whether the non-consolidated
financial statements and its supporting schedules are without material misstatement.
The audit requires procedures to obtain audit evidence about amounts and disclosure of these non-consolidated
financial statements and its supporting schedules. The audit procedures are selected and applied based on
evaluation of risks about material misstatement of these non-consolidated financial statements and its supporting
schedules due to fraud or errors. Although the purpose of the audit is not to express our opinion about theeffectiveness of internal control, we consider the internal control associated with preparation and fair presentation ofthese non-consolidated financial statements and its supporting schedules, in order to plan appropriate audit
procedures in line with actual situations at the time of risk evaluation. Also, our audit includes reviews ofaccounting policies, and methods that the management adopts, and an evaluation of management estimates and thepresentation of the non-consolidated financial statements and its supporting schedules as a whole.
We believe we have obtained enough and appropriate audit evidence as the basis for our opinion.
Audit opinion
We concluded that the non-consolidated financial statements and its supporting schedules fairly present in all
aspects Oki Electric Industry’s assets and income or loss in accordance with corporate accounting standards
generally accepted in Japan.
Conflict of interest
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm (Ernst &Young ShinNihon LLC) and the respective engagement partners.

- 50 -

(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 92nd fiscal year from
April 1, 2015 to March 31, 2016, as follows:
1. Auditing methods used by Audit & Supervisory Board Members and the Audit & Supervisory Board, and details of
audit(1) The Audit & Supervisory Board specified an audit policy, compiled audit plans and received reports from each Audit &Supervisory Board Member on the status of implementation and results of audits and also received reports from
Directors and accounting auditors on the status of the execution of their duties and asked them for explanations asneeded.
(2) Each Audit & Supervisory Board Member, according to the audit standards, policy and plans set up by the Audit &Supervisory Board, has maintained good communications with Directors, the internal audit division and other
employees and strived to collect information and improve the audit environment and conducted an audit by following
the methods described below:(a) We attended the meetings of the Board of Directors and other meetings as deemed important, received from Directors
and employees reports on the execution of their duties, asked for explanations as necessary, perused the documents
whereby the important decisions were made, and examined business and financial conditions at the head office andprincipal operating offices. With respect to the subsidiaries of the Company, we have maintained goodcommunications and exchanged information with Directors, Audit & Supervisory Board Members and others andreceived reports on business conditions from the subsidiaries as needed.
(b) In addition, we have periodically received reports from Directors and employees, among others, required explanation
when necessary, and made opinions with regard to the status of operations and the systems established thereon(internal control systems) made by the Board of Directors concerning the establishment of systems defined in Article
100, Paragraph 1 and Paragraph 3 of the Regulations for Enforcement of the Companies Act as necessary forensuring compliance with laws and the Company’s Articles of Incorporation in the performance of duties byDirectors, described in the Business Report, and for ensuring appropriateness of duties of corporate group consistingof joint stock company and its subsidiaries.
(c) We have monitored and verified whether the accounting auditors maintained their independence and properly
implemented audits, received from the auditors reports on the performance of their duties and asked them for
explanations as necessary. The accounting auditors reported to us that “systems for ensuring proper execution ofduties” (listed in each item of Article 131 of the Corporate Calculation Regulations) have been established inaccordance with the quality control standards concerning audits (Business Accounting Council, October 28, 2005),
and asked them for explanations as necessary.
Based on the methods mentioned above, we have reviewed the business report for the said fiscal year and their
supplementary schedules, financial statements for the said fiscal year (balance sheet, statement of operations, statement ofchanges in shareholders’ equity, and notes to non-consolidated financial statements), their supplementary schedules andconsolidated financial statements (consolidated balance sheet, consolidated statement of operations, consolidated statement ofchanges in shareholders’ equity, and notes to consolidated financial statements).
2. Results of Audit(1) Results of audit of the business report(a) We consider that the business report and its supplementary schedules fairly present the situation of the Company inaccordance with relevant laws and regulations and the Company’s Articles of Incorporation.
(b) With respect to the Directors’ performance of their duties, we have found neither undue transactions nor material
facts that violate relevant laws and regulations or the Company’s Articles of Incorporation.
(c) We consider that the details of the resolution made by the Board of Directors concerning internal control proceduresare proper. With respect to the details described in the Business Report and the Directors’ performance of theirinternal control duties, we have found no issues to be pointed out. As stated in the Business Report, the Company
underwent an on-site inspection by the Japan Fair Trade Commission on suspicion of violating the Antimonopoly
Act. As the Audit & Supervisory Board, we will continue to check the OKI Group’s overall efforts to thoroughly
comply with laws and regulations and to strengthen internal control.
(2) Results of audit of financial statements and their supplementary schedules
We consider that the auditing methods and results of the Company’s Accounting Auditors, Ernst & Young ShinNihon
LLC, are proper.
(3) Results of audit of consolidated financial statements
We consider that the auditing methods and results of the Company’s Accounting Auditors, Ernst & Young ShinNihon
LLC, are proper.
May 19, 2016
The Audit & Supervisory Board, Oki Electric Industry Co., Ltd.
Hisao Suzuki, Standing Audit & Supervisory Board Member
Tsutomu Tai, Standing Audit & Supervisory Board Member
Kuninori Hamaguchi, Outside Audit & Supervisory Board Member
Kaoru Yoshida, Outside Audit & Supervisory Board Member- 51 -

(Translation)

Reference Documents for the General Meeting of Shareholders
Agenda and Reference Matters
Agenda 1: Appropriation of Surplus
The Company has determined to pay the following year-end dividend for the fiscal year
under review with the emphasis on continuing stable distribution of profits to shareholders bygiving consideration to its business results and business developments, etc. for the period underreview.
1.

Type of dividend asset
Cash

2.

Allocation of dividend assets and total amount of dividends
Common stock of the Company¥3 per share
Total dividends¥2,606,024,925

3.

Effective date of dividend of surplus
June 27, 2016

- 52 -

(Translation)
Agenda 2: Share Consolidation due to Reduction in the Number of Shares Per Share Unit
1.

Reasons for the Proposal
For the greater convenience of investors, Japanese stock exchanges are promoting an“Action Plan for Consolidating Trading Units,” under which trading units of common stocks(number of shares constituting one unit) for domestic listed companies are uniformly set at 100
shares by its due date, October 1, 2018. In light of the intent of this action plan as a listedcompany, the Company resolved at the meeting of Board of Directors on May 20, 2016, to change
the number of shares constituting one unit of shares from 1,000 shares to 100 shares in accordancewith the provisions of Article 195 of the Companies Act.
In order to maintain price level per trading unit of common stocks of the Company and thenumber of voting rights after the change of the number of shares constituting one unit into 100
shares, the Company intends to carry out a share consolidation of common stock of the Company
as follows.
In line with this, total number of authorized shares will also change from 2,400,000,000
shares to 240,000,000 shares by applying the same consolidation ratio.
The change of the number of shares constituting one unit of shares described above issubject to the approval of this agenda as proposed and therefore the changes shall become effective
on October 1, 2016.
2.

Ratio of share consolation
The Company would like to consolidate ten (10) shares of common stock into one (1) shareof common stock.
For the shareholders who hold the fractional shares less than one (1) share of common stock
which were created as a result of the consolidation of share, such shares will be sold together by
the Company, pursuant to the provisions of the Companies Act. The proceeds from the sale will
be distributed to the shareholders of the fractional shares in proportion to the numbers of theirfractional shares.
3.

The Date when the Consolidation of Shares shall Take Effect (Effective Date)
October 1, 20164.

Total Number of Authorized Shares as of the Effective Date
240,000,000 shares

By implementing the consolidation of shares, it will be deemed that the Articles ofIncorporation is amended with respect to the change of total number of authorized shares on theeffective date, pursuant to Article 182, Paragraph 2 of the Companies Act.

- 53 -

(Translation)
Reference1.
Amendment of the Articles of Incorporation
On the condition that Agenda 2 is approved as proposed, part of the Company’s Articles ofIncorporation will be amended on October 1, 2016 as follows:(Underlined portions indicate the proposed changes)
Current Articles of Incorporation
Article 6 (Total Number of Authorized Shares)
The total number of shares authorized to be issued
by the Company shall be 2,400,000,000 shares.
Article 8 (Number of Shares Constituting One Unit)
The number of shares constituting one unit of sharesof the Company shall be 1,000 shares.

After amendments
Article 6 (Total Number of Authorized Shares)
The total number of shares authorized to be issued
by the Company shall be 240,000,000 shares.
Article 8 (Number of Shares Constituting One Unit)
The number of shares constituting one unit of sharesof the Company shall be 100 shares.

2.

Q&A regarding the Consolidation of Shares

Q1.

What is the purpose of the proposal in “Agenda 2: Share Consolidation due to Reduction in
the Number of Shares Per Share Unit”?

A1.

Japanese stock exchanges intend to standardize the trading unit of common stocks (numberof shares constituting one unit) at 100 shares and set its due date on October 1, 2018. In
order to respond to this action, the Company resolved at the meeting of Board of Directors
on May 20, 2016, to change the number of shares constituting one unit of shares from 1,000
shares to 100 shares as of October 1, 2016. In order to maintain price level per trading unitof common stocks of the Company and the number of voting rights of shareholders after thechange of the number of shares constituting one unit into 100 shares, the Company intends
to consolidate ten (10) shares of the Company’s common stock into one (1) share.

Q2.

Will the consolidation of shares have any impact on asset value?

A2.

There will be no change in the Company’s assets or capital after the consolidation of shares.
Accordingly, although there is a possibility of being influenced by the stock market trends
and other factors, in theory, there will be no change to the asset value of the stocks held byshareholders. After the consolidation, although the number of stocks held by a shareholder
will be one-tenth of the original number, there will be a tenfold increase in the amount of net
assets per share.
Example of number of shares/asset value before and after the share consolidation (aside from sharemarket trends and other factors)
Before the consolidation
After the consolidation
Number of shares
1,000 shares
100 shares
Net assets per share¥120¥1,200Asset value¥120,000¥120,000
Q3.

How will the number of shares and voting rights be affected?

A3.
(Number of shares held)- 54 -

(Translation)
The number of shares held by each shareholder after the consolidation of shares will be thenumber of shares obtained by multiplying the number of shares recorded in the latest
register of shareholders as of September 30, 2016 by one-tenth (rounded down to the nearest
whole share). The number of shares recorded in accounts opened with securities
companies and other financial institutions by shareholders will be changed to the number
corresponding to the consolidation of shares on October 1, 2016.
If any fractional shares less than one (1) share arise as a result of the consolidation of shares,
the Company will sell them in a lump, and distribute the proceeds to shareholders whose
shares become fractions of shares in proportion to their respective fractions.
(Number of voting rights)
Through the consolidation of shares, the number of shares held will be reduced to one-tenthof the original number, but because the number of shares constituting one unit will also bechanged (from 1,000 shares to 100 shares), there will be no change to the number ofshareholders’ voting rights.
Specifically, the number of shares held and number of voting rights before and after the
consolidation of shares and change of the number of shares constituting one unit are as
follows:
Before the consolidation

Example 1
Example 2
Example 3
Example 4

After the consolidation

Number ofshares held

Number of
voting rights

Number ofshares held

Number of
voting rights

3,000 shares
1,800 shares
404 shares
5 shares

3 votes
1 voteNone
None

300 shares
180 shares
40 sharesNone

3 votes
1 vote
None
None

Resultingfractional
sharesNone
None
0.4 share
0.5 share- After the consolidation of shares come into effect, 80 shares in Example 2 and 40 shares in
Example 3 become fractional shares less than one unit. Shareholders may, at its request, use
the system for selling or purchasing fractional shares in the same way as before.
- Fractional shares equivalent to 0.4 share in Example 3 and 0.5 share in Example 4 arise. The
Company will sell these fractional share equivalents collectively and deliver the proceeds fromthe sales to shareholders where these fractions arise in proportion to the fraction.
- In Example 4, shareholder status is lost as the number of shares owned after the consolidationof shares is none.
- It should be noted that where a shareholder has opened accounts across multiple securities
companies, as a general rule, the procedure for the consolidation of shares will be applied to thebalance of the Company’s shares recorded in the transfer account book of each securities
company. Please contact securities companies you deal with for details.
Q4.

If the consolidation of shares is approved at the General Meeting of Shareholders, are there
any procedures that shareholders will need to undertake following that?

A4.

No special procedures will be required.

- 55 -

(Translation)
Q5. If the consolidation of shares is approved at the General Meeting of Shareholders, what will
the future schedule be specifically?
A5.

If the General Meeting of Shareholders approves it, the main schedule for the change to thenumber of shares constituting one unit and the share consolidation is planned to proceed asfollows.
September 28, 2016:
Trading unit for the Company’s shares changes to 100 shares*
October 1, 2016:
Effective date for change to number of shares constituting one unit
and the consolidation of shares
Early November 2016:
Notifications of consolidation of shares allotments sent toshareholders
Beginning December 2016: Commencement of payment of fractional selling price* The effective date for the change to the number of shares constituting one unit and theconsolidation of shares is scheduled to be October 1, 2016. However, due to share transfer
procedures, trading in the Company’s shares by shareholders on the Tokyo Stock Exchange will be
conducted on and after September 28, 2016 based on the assumption that the trading unit (100shares after the consolidation) is effective.

- 56 -

(Translation)
Agenda 3: Election of Seven (7) Directors
The tenure of office of Directors Hideichi Kawasaki, Naoki Sato, Takao Hiramoto, Shinya
Kamagami, Toshiya Hatakeyama. Takuma Ishiyama and Minoru Morio will expire at the end of
this general meeting of shareholders.
Seven candidates for directors are shown as follows.
Candidates for Directors (Seven):
CandidatenumberName(Date of birth)

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

HideichiKawasaki

Apr. 1970

Joined Oki Electric Industry Co., Ltd.

Apr. 2001

Executive Officer(January 10, 1947)

Apr. 2004

Senior Vice President

Jun. 2005
Managing Director
Number of years in
office as Director:
Apr. 2009
Senior Executive Vice President and Member of the Board
11 yearsPresident, Representative Director(as of the conclusion of Jun. 2009
this general meeting ofApr. 2016
Representative Director, Chairman of the Board (incumbent)
shareholders)[Re-election]
Reason for the selection of candidate for Director
1
Number of attendance at Based on his experience as he was President and Representative Director until
meetings of the Board fiscal 2015, Mr. Hideichi Kawasaki has been assisting and advising the new
management team as Representative Director and Chairman of the Board fromof Directors(the year under review): April 2016. Therefore, the Company judges that he is a proper candidate forthe position to continuously strengthen the supervising function of the Board of
14 out of 14 times
Directors.
(100%)
Number of Oki shares
held:
Common stock
137,000 shares

ShinyaKamagami(February 9, 1959)

Apr. 1981

Joined Oki Electric Industry Co., Ltd.

Apr. 2001

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

Apr. 2005
Manager, Systems Hardware Development Division, Systems
Number of years in
Hardware Company, Systems Networks Business Group
office as Director:
2 years
Apr. 2011
Executive Officer(as of the conclusion ofthis general meeting of Apr. 2012
Senior Vice President
shareholders)[Re-election]
June. 2014 Senior Vice President and Member of the Board
2
Number of attendance at Apr. 2016
President, Representative Director (incumbent)
meetings of the Board
Reasonfortheselection of candidate for Directorof DirectorsAsheassumedtheoffice of President and Representative Director in April 2016,(the year under review):
Mr. Shinya Kamagami has been engaging in management of OKI Group with
14 out of 14 times
the goals of “consolidating a financial foothold” and “realizing a sustainable(100%)
growth” while he is also working on establishing new Mid-term Business Plan.
Number of Oki shares Therefore, the Company judges that he is a proper candidate for the position of
Director.
held:
Common stock
24,000 shares- 57 -

(Translation)
CandidatenumberName(Date of birth)

Toshinao
TakeuchiBrief personal profile, position andresponsibility in the Company and significant concurrent positions
Apr. 1980

Joined Oki Electric Industry Co., Ltd.

Jul. 1997

Manager, E-commerce System Engineering Department,
Financials Systems Division, System Business Group

Apr. 2002

President, Net Business Solution Company

Nov. 2008

Manager, Financials Systems Division

Apr. 2009

Executive Officer(May 20, 1957)
Number of years in
office as Director:
2 years(as of the conclusion ofthis general meeting ofshareholders)

Apr. 2012
Senior Vice President[Re-election]
Apr 2014
Senior Vice President and Member of the Board
3
Number of attendance at
Executive Vice President and Member of the Board (incumbent)
meetings of the Board Apr. 2016of Directors
General Manager, ICT Business Division (incumbent)(the year under review): Reason for the selection of candidate for Director
14 out of 14 times
Mr. Toshinao Takeuchi has been supervising overall management of the Group(100%)
as a Member of the Board since 2014. In addition, as an Executive Vice
Number of Oki shares
held:
Common stock
50,000 shares

Toshiya
Hatakeyama(July 6, 1957)
Number of years in
office as Director:
1 year(as of the conclusion ofthis general meeting ofshareholders)President, he is engaging in management of ICT Business Division, the biggest
business organization in the Company, since April 2016. Therefore, theCompany judges that he is a proper candidate for the position of Director.

Apr. 1980

Joined Oki Electric Industry Co., Ltd.

Oct. 2007

Manager, Accounting & Control Division

Apr. 2008

Executive Officer

Jan. 2013

Manager, Group Administration Division

Apr. 2015

Senior Vice President

June. 2015

Senior Vice President and Member of the Board (incumbent)

July. 2015
[Re-election]
Apr. 2016
4
Number of attendance at

Chief Financial Officer (incumbent)
General Manager, Corporate Management Group (incumbent)
Chief Compliance Officer (incumbent)

meetings of the Board
Reason for the selection of candidate for Directorof Directors(the year under review): Mr. Toshiya Hatakeyama has been supervising overall management of the Group
as a Member of the Board and serving concurrently as Chief Financial Officer
10 out of 11 times
since 2015. In addition, he is also serving as General Manager of Corporate(91%)
Management Group and Chief Compliance Officer for engaging in management
Number of Oki shares of the Company from April 2016. Therefore, the Company judges that he is aproper candidate for the position of Director.
held:
Common stock
30,000 shares- 58 -

(Translation)
CandidatenumberName(Date of birth)

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

Joined The Fuji Bank, Limited

Apr. 2007

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

Apr. 2009

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

Masayuki Hoshi(March 9, 1960)[Newlynominated]
5

Number of years in
Apr. 2011
office as Director:–(as of the conclusion ofthis general meeting ofJun. 2014
shareholders)Managing Executive Officer, Head of Global Transaction Banking
Unit and Head of Global Asset Management Unit, Mizuho
Corporate Bank, Ltd.
Managing Executive Officer, Head of Financial Institutions &Public Sector Business Unit and Head of Transaction Banking
Unit, Mizuho Financial Group, Inc.

Number of attendance atmeetings of the Board May 2015
Senior Vice President, Oki Electric Industry Co., Ltd. (incumbent)
of Directors
Chief Risk Management Officer (incumbent)(the year under review): Apr. 2016
General Manager, Corporate Planning Group (incumbent)–
Reason for the selection of candidate for Director
Number of Oki shares Mr. Masayuki Hoshi has gained experience in corporate management at Mizuho
held:
Financial Group and he has been engaging in operation centered on marketing
Common stockand sales as well as finance of the Company as Senior Vice President since he
10,000 sharesjoined the Company in May 2015. In addition, he is playing a core role inmanagement by concurrently serving as Chief Risk Management Officer andGeneral Manager of Corporate Planning Group from April 2016. Therefore,
the Company judges that he is a proper candidate for the position of Director.

Takuma Ishiyama Mar. 1975
(February 17, 1947)

Obtained scores for doctorate degrees and resigned from Graduate
School of Law, Waseda University

Jul. 1978
Assistant Professor, Faculty of Law, Aichi Gakuin University
Number of years in
office as Director:
Dec. 1985
Obtained doctorate degree
6 years
Professor, Faculty of Law, Dokkyo University(as of the conclusion of Apr. 1986
this general meeting of Apr. 1991
Professor, School of Commerce, Waseda University
shareholders)[Outside]
May 2003
Registered as lawyer (Dai-ichi Tokyo Bar Association)[Re-election] Number of attendance at
Professor, Law School, Nihon University (incumbent)
6meetings of the Board Apr. 2004
of Directors
Jun. 2010
Director, Oki Electric Industry Co., Ltd. (incumbent)(the year under review):
Reason for the selection of candidate for Outside Director
14 out of 14 times
Although Mr. Takuma Ishiyama has not been directly involved in corporate(100%)
management, he possesses experience and advanced knowledge as lawyer andNumber of Oki shares doctor of laws. Considering his specialty in the Companies Act, the Company
judges that he is able to perform appropriate supervising over the business
held:management at the Company from his objective standpoint and based on his
Common stockhigh ethical standard.
0 shares- 59 -

(Translation)
CandidatenumberName(Date of birth)

Minoru Morio(May 20, 1939)
Number of years in
office as Director:
9 years(from 2001 to 2010)
1 year(from 2015)

Brief personal profile, position andresponsibility in the Company and significant concurrent positions
Apr. 1963

Joined Sony Corporation

Jun. 1988

Director, Sony Corporation

Jun. 1993

Executive Deputy President, Sony Corporation

Jun. 2000

Director and Vice Chairman, Sony Corporation

Jun. 2001

Outside Director, Oki Electric Co., Ltd.

Jun. 2004

Advisor, Sony Corporation

Apr. 2006

Executive Alumnus, Sony Corporation (incumbent)

Jun. 2010

Resigned as Director, Oki Electric Co., Ltd.

Jun. 2013
Outside Director, the Bank of Yokohama, Ltd. (incumbent)[Outside]
Outside Audit & Supervisory Board Member, ZUKEN ELMIC,[Re-election] Number of attendance at Jun. 2014Inc.
7
meetings of the Boardof Directors
Jun. 2015
Director, Oki Electric Industry Co., Ltd. (incumbent)(the year under review):
Apr. 2016
Outside Director, Concordia Financial Group, Ltd. (incumbent)
11 out of 11 times(100%)(Significant concurrent positions)
Number of Oki shares Outside Director, the Bank of Yokohama, Ltd.
held:
Outside Director, Concordia Financial Group, Ltd.
Common stock
Reason for the selection of candidate for Outside Director
10,000 sharesWith a wealth of experience and knowledge cultivated through his career in theelectronics industry, in addition to high ethical standard, the Company judgesthat he is able to strengthen the supervising function of the Board of Directors on
management by providing appropriate advice on managerial environment andmanagerial issues.
Notes:
1.
There is no special conflict of interest between each candidate and the Company.
2.
Mr. Takuma Ishiyama and Mr. Minoru Morio are candidates for outside directors.
3.
Mr. Minoru Morio was an outside director of the Company from June, 2001 to June, 2010.
4.
The Company has entered into the liability limitation agreement with candidates for outside directors
Takuma Ishiyama and Minoru Morio. The outline of the agreement is provided in “Outline of Liability
Limitation Agreements” (on page 16) in the Business Report. If their reappointment is approved, theCompany will continue this agreement with them.
5.
Mr. Takuma Ishiyama and Mr. Minoru Morio are independent officers based on the terms of the Tokyo Stock
Exchange. If their reappointment is approved, they will continue to be independent officers. In addition,
net sales to Sony Corporation, the Bank of Yokohama, Ltd. and Concordia Financial Group, Ltd. account forless than 1% of the OKI Group’s total net sales and Mr. Takuma Ishiyama and Mr. Minoru Morio meet thecriteria for independent officers.

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(Translation)
Agenda 4: Election of Two (2) Audit & Supervisory Board Members
The tenure of office of Audit & Supervisory Board Member Kuninori Hamaguchi and
Kaoru Yoshida will expire at the end of this general meeting of shareholders. Two candidates for
Audit & Supervisory Board Members are shown as follows.
This agenda has been approved by the Audit & Supervisory Board.
Candidate for Audit & Supervisory Board Members (Two):
CandidatenumberName(Date of birth)

Brief personal profile, position and significant concurrent positions

Kuninori
Hamaguchi

Apr. 1970

Joined Tateisi Electric Manufacturing Co.
(currently OMRON Corporation)(November 21, 1946)

Sep. 2000

Manager, Semiconductor Division, OMRON Corporation

Number of years in
office as Audit &Supervisory Board
Member:4 years(as of the conclusion ofthis general meeting ofshareholders)Jun. 2001

Senior Vice President, OMRON Corporation

Oct. 2007

Executive Vice President, ADM Inc. (currently KAGA DEVICES
CO., LTD.)

Jan. 2008

Senior Vice President, ADM Inc. (currently KAGA DEVICES
CO., LTD.)

Jun. 2009

Advisor, ADM Inc.

Audit & Supervisory Board Member, Oki Electric Industry Co.,
Number of attendance Jun. 2012
[Outside]Ltd. (incumbent)
at meetings of the[Re-election]
Board of Directors
Reason for the selection of candidate for Outside Audit & Supervisory1(the year under review): Board Member
14 out of 14 times
With a wealth of experience in corporate management cultivated through his(100%)
career at OMRON Corporation and KAGA DEVICES CO., LTD., the Company
judges that he is able to audit the management of the Company appropriately by
Number of attendance utilizing his wealth of experience, insights and high ethical standard.
at meetings of Audit &Supervisory Board(the year under review):
16 out of 16 times(100%)
Number of Oki shares
held:
Common stock
9,000 shares- 61 -

(Translation)
CandidatenumberName(Date of birth)

Yoichi Nitta(June 20, 1955)[Outside][Newlynominated]
2

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

Joined Yasuda Life Insurance Company (currently Meiji Yasuda
Life Insurance Company)

Apr. 2002

Deputy General Manager, Marketing Promotion, Yasuda Life
Insurance Company (currently Meiji Yasuda Life Insurance
Company)

Number of years in
office as Director:
Apr. 2005–(as of the conclusion ofthis general meeting ofApr. 2008
shareholders)

General Manager, Public Sector Marketing, Chubu, Yasuda Life
Insurance Company (currently Meiji Yasuda Life Insurance
Company)

Number of attendanceat meetings of theApr. 2011
Board of Directors(the year under review):–
Apr. 2012

General Manger, Marketing Management, Meiji Yasuda General
Insurance Co., Ltd.

General Manager, Public Sector Marketing 4, Yasuda Life
Insurance Company (currently Meiji Yasuda Life Insurance
Company)

Director & General Manger, Marketing Promotion, Meiji Yasuda
General Insurance Co., Ltd.

Number of attendanceManaging Executive Director, Meiji Yasuda General Insurance
at meetings of Audit & Apr. 2013
Co., Ltd.
Supervisory Board(the year under review): Reason for the selection of candidate for Outside Audit & Supervisory–
Board Member
Mr. Yoichi Nitta has an experience of executing operation centered on marketing
Number of Oki shares and sales at Meiji Yasuda Life Insurance Company, as well as the experience inheld:in corporate management as Managing Executive Director at Meiji Yasuda
Common stock
General Insurance Co., Ltd. Therefore, the Company judges that he is able to
0 sharesaudit the management of the Company appropriately by utilizing his wealth ofexperience and insights as well as his high ethical standard.
Notes:
1.
Mr. Kuninori Hamaguchi is a candidate for Outside Audit & Supervisory Board Member and he is also an
independent officer based on the terms of the Tokyo Stock Exchange. If his reappointment is approved, hewill continue to be an independent officer. In addition, net sales to OMRON Corporation and KAGADEVICES CO., LTD. account for less than 1% of the OKI Group’s total net sales and Mr. Kuninori
Hamaguchi meets the criteria for an independent officer.
2.
Mr. Yoichi Nitta is a candidate for Outside Audit & Supervisory Board Member. If his appointment isapproved, he will be an independent officer. In addition, net sales to Meiji Yasuda Life Insurance Company
and Meiji Yasuda General Insurance Co., Ltd. account for less than 1% of the OKI Group’s total net sales
and Mr. Yoichi Nitta meets the criteria for an independent officer.
3.
The Company has entered into the liability limitation agreement with Mr. Kuninori Hamaguchi. The
outline of the agreement is provided in “Outline of Liability Limitation Agreements” (on page 18) in theBusiness Report. If his reappointment is approved, the Company will continue this agreement with him.
4.
If the appointment of Mr. Yoichi Nitta is approved, the Company will enter into the liability limitationagreement with him. The outline of the agreement is provided in “Outline of Liability Limitation
Agreements” (on page 18) in the Business Report.
5.
Mr. Kuninori Hamaguchi was not aware beforehand of the improper accounting at an OKI Group overseas
consolidated subsidiary discovered in 2012 during his term of office. However, since the fact was
discovered, he has been appropriately fulfilling his duties presenting his proposals on matters including
measures to prevent reoccurrences of similar incidents in an active manner, as well as monitoring the
progress of implementation.

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

In addition to these policies, the Company elects Outside Directors and Outside Audit & Supervisory Board Members,on the ground of each candidate’s experience and knowledge in respective professional fields being beneficial to theCompany at present.
The Company judged that two Outside Directors and two Outside Audit & Supervisory Board Members elected by the
aforementioned policies have no potential conflict of interest with ordinary shareholders, and designated them as
independent officers to stock exchange.

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(Translation)
Agenda 5: Grant of Stock Option for Stock-linked Compensation (Equity Warrants) to
Directors
1.
Reasons for the Proposal
Compensation paid to Directors in the amount of no more than ¥600 million (Not including
the amount of compensation paid as employee wages for Directors who are also employees)
was approved at the 82nd Ordinary General Meeting of Shareholders held on June 29, 2006,
and has remained at that amount to the present.
However, in line with the revising Executive compensation system, the Company proposes
to provide compensation to Directors (excluding Outside Directors) in the form of equity
warrants allotted as compensation-type stock option, in addition to the above-mentioned
compensation, with the aim of raising Directors’ morale and motivations towards
contribution to the enhancement of business performance and corporate value over mediumto-long term by sharing with shareholders not only the benefits from the rise in stock prices,
but also risks due to the fall of stock prices through clear correlation between compensation
and business performance of the Company and stock prices. The amount of compensation
related to such equity warrants shall be no more than ¥100 million. Outlines of therelevant equity warrants are stated in 2 below and the maximum units shall be 1,000 per
year.
The Company currently has six (6) Directors (excluding Outside Directors), and if theAgenda 3 is approved as proposed, the number of Directors excluding Outside Directors
will be five (5). Allotment time of equity warrants to each Director and allocation etc.
shall be left to the Board of Directors.
2.

Details of the Proposed Changes
Outlines of equity warrants to be allotted to Directors (excluding Outside Directors) as
compensation are as follows.
(1) The number and type of shares to be issued upon exercise of equity warrants
The type of shares to be issued upon exercise of equity warrants shall be common stock of
the Company, and the number of shares to be issued upon exercise of equity warrants(hereinafter “the number of shares issued”) shall be 1,000. If Agenda 2 is approved as
proposed, provided that the share consolation comes into effect, the number of sharesissued will be 100 beginning October 1, 2016.
Moreover, in the event of share splitting, free allotment of shares, or share consolation, thenumber of shares issued will be adjusted as appropriate using the following formula.
However, this adjustment will be made only with respect to equity warrants not yet
exercised at that time. In this calculation, any fractional shares less than one share will
be disregarded.

Adjusted number of shares issued＝Number of shares issued before adjustment×Ratio applicableto the splitting, free allotment, or consolation of shares
Furthermore, upon merger or demerger, or when the Company becomes a wholly owned
subsidiary through share exchange or share transfer, the Company can adjust the numberof shares issued appropriately in consideration of circumstances such as merger ratio if theequity warrants are successional.

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(Translation)(2) Total number of equity warrants
The maximum number of equity warrants to be allotted within one year after the date of an
Ordinary General Meeting of Shareholders in each fiscal year shall be 1,000, and theCompany plans to allot such equity warrants every year.
Even if the annual maximum amount to be allotted of 1,000 units were continuously
allotted for ten years, dilution rate of the Company’s shares will remain at approximately
1.2% when all of the equity warrants, including the amount already being issued, were
exercised, and thereby it is considered to be remained within appropriate level.
(3) Amount to be paid for equity warrants
Amount to be paid for equity warrants shall be the fair value calculated based on theBlack-Scholes Model or any other reasonable method as of the allotment date of equity
warrants. Such amount shall be off set against an equivalent amount of compensation to
be paid by the Company(4) Value of assets to be contributed upon the exercise of equity warrants
The value of assets to be contributed upon the exercise of each equity warrants shall be ¥1
per share to be issued upon the exercise of such equity warrants, multiplied by the numberof shares issued.
(5) Exercise period of equity warrants
The exercise period shall be set by the Board of Directors within 25 years from thefollowing date of the allotment date of equity warrants.
(6) Conditions of exercising equity warrants
A person who has received allotment of equity warrants (hereinafter the “holder of equity
warrants”) may exercise the equity warrants only within 10 days from the day following
the day he/she loses both of his/her position as Director or Executive Officer of theCompany. Other conditions of exercising equity warrants shall be set by the Board of
Directors of the Company.
(7) Restriction on transfer of equity warrants
The acquisition of equity warrants by transfer shall require approval by a resolution of theBoard of Directors of the Company(8) Treatment of fractional shares less than one (1) share upon exercise of equity warrants
Any fractional shares less than one (1) share to be issued to the holders of equity warrants
upon the exercise of equity warrants shall be disregarded.
(9) Other matters regarding equity warrants
Details of the above (1) through (8) and other matters regarding equity warrants shall beestablished by the Board of Directors of the Company.

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(Translation)(Reference)
If the introduction of stock option for stock-linked compensation (equity warrants) to Directors(excluding Outside Directors) is approved, the Company intends to establish the same scheme,
equity warrants as stock option, for Executive Officers of the Company following a separate
resolution at the Board of Directors.

- 66 -

(Translation)(Reference) The Company’s stance towards Directors’ compensation, etc.
In order to achieve “continuous growth” of the OKI Group, a shift to the management
focused on “more aggressive goal setting” and “growth over mid- and long-term” is essential, andtherefore OKI has revised its compensation system as part of efforts to develop an environment forsuch a shift. The Company has established the Personnel Affairs and Compensation Advisory
Committee, chaired by Outside Director, and determined compensation for Directors at the Boardof Directors following the deliberation and discussion at the said Committee.
Compensation etc. for Directors, excluding Outside Directors, was mainly comprised of basic
compensation in the past. However, it now has been changed to that consists of basic
compensation, annual incentive compensation, and mid- to long- term incentive compensation.
The content of compensation is provided as follows, in the stance of clarifying correlation between
compensation and business performance, with the consideration of levels at other companies,
among other factors. In addition, OKI has adopted the executive officer system, and for
Directors who concurrently serve as Executive Officers, such elements as their position andevaluation of the execution of duties by them will be taken into consideration as important factors
in the determination of the compensation for Directors. Compensation etc. for Outside Directors
consists only of basic compensation.
Type
Basic compensation
Annual incentive
compensation
Mid- to long-term incentive
compensation

Content of compensation
When serving as Executive Officer concurrently, monetarycompensation shall be paid, determined individually tailored toposition, followed by duties.
Monetary compensation shall be paid, determined individuallywith a linkage with the past year’s consolidated businessperformance of the OKI Group and that of the division each
Director is responsible for.
Stock option for stock-liked compensation shall be granted, atcertain ratio of basic compensation amount, in the view of value
sharing with shareholders and the enhancement of corporate
value as well as shareholders’ value over the mid-to long-term.

Agenda 5 is a proposal of the maximum amount of the abovementioned mid-to long-term
incentive (stock option for stock-liked compensation with the annual maximum amount to be ¥100
million and the annual maximum units to be allotted of 1,000). With regard to basic
compensation and annual incentive compensation, the Board of Directors will determine and pay
within ¥600 million per year, as resolved at the 82nd Ordinary General Meeting of Shareholders
held on June 29, 2006, following the deliberation and discussion at the Personnel Affairs andCompensation Advisory Committee.
Monetary Compensation: No more than ¥600 million

Basic Compensation

Annual Incentive
Compensation- 67 -

Stock Option: No morethan ¥100 million

Mid- to Long-Term
Incentive Compensation

(Translation)
Appendix

Instructions for the Exercise of Voting Rights via the Internet

1.

Matters requiring your agreement concerning the exercise of voting rights via the Internet
We kindly request your consent to the following regarding exercise of voting rights via the Internet.
1) Exercise of voting rights via the Internet is only possible by accessing the voting site designated by theCompany (http://www.it-soukai.com/) via a PC or a mobile phone. When exercising the voting rightusing this site, you are requested to log in to the site using your voting rights exercise code and password
provided in the right corner of the voting rights exercise form, enclosed with the Notice, then follow theguidance on the screen. To ensure security, you are requested to enter the password when executing thefirst log-in.
2) You are requested to complete entries by 5:15 p.m., June 23 (Tuesday), 2016 (JST), which is the deadline
for execution. Please exercise your voting rights at your earliest convenience.
3) If you exercise your voting rights both in writing and via the Internet, we will regard the vote cast via theInternet to be effective.
4) If you exercise your voting rights more than once, we will regard the last vote you cast via the Internet tobe the effective one.
5) You will bear all connection charges for using the Internet (service provider access fees, communication
charges, etc.).

2.

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

3.

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

4.

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

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

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