(Translation)
This document is an English translation of the notice for the general meeting of shareholders originally
written in Japanese. This translation was made for reference purpose only and all warranties, and inparticular the accuracy of this translation, are hereby disclaimed.

(Securities Identification Code: 6703)
June 11, 2008

NOTICE OF 84TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 84th
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 consider the attached“Reference Documents for the General Meeting of Shareholders” and exercise their voting rights
in one of the following ways no later than 5:15 p.m., June 26 (Thursday), 2008.

[Exercise of voting rights by postal mail]Please indicate your approval or disapproval for each of the proposals in the space provided on
the ballot and return the ballot to the Company. (There is no need to affix your signature or
registered seal.)[Exercise of voting rights by electronic means (Internet)]
Please read the appended “Instructions for the Exercise of Voting Rights via the Internet,” andindicate your approval or disapproval online via the designated website at http://www.itsoukai.com/. There is no need to mail the ballot if you choose to vote via Internet.

Yours faithfully,
Katsumasa Shinozuka,
President and Chief Executive Officer
Oki Electric Industry Co., Ltd.
1-7-12 Toranomon, Minato-ku, Tokyo-1-

(Translation)

1.
2.

Date and Time:
Location:

Friday, June 27, 2008, from 10:00 a.m.
The Grand Hall, Shinagawa Grand Central Tower 3F, 2-16-4 Kounan,
Minato-ku, Tokyo(The location is different from last year.)

3. Meeting Agenda
Items to be reported:
1. Business Report, Consolidated Financial Statements and audit results of theConsolidated Financial Statements by the Account Auditor and the Board of
Corporate Auditors for the 84th fiscal year (from April 1, 2007 to March 31,
2008)
2. Non-consolidated Financial Statements for the 84th fiscal year (from April 1,
2007 to March 31, 2008)
Items to be resolved:
Agenda 1:
Agenda 2:
Agenda 3:

Approval of Plan of Incorporation-type Company Split
Election of Six Directors
Election of Two Corporate Auditors* If you are attending the meeting in person, please submit the enclosed ballot at the reception desk of themeeting.
* The Company has provided the Notice of 84th 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)

Business Report(From April 1, 2007 to March 31, 2008)
1.

Status of the OKI Group(1) Operating progress and results
During the fiscal year ended March 2008, the worldwide economy clearly slowed ingeneral, hurt by the subprime mortgage problem in the U.S. and high oil prices. Thisaffected the Japanese economy, which began to show signs of declining, reflecting losses
incurred by financial institutions because of the subprime mortgage problem, fears over adeterioration of earnings at exporters amid the yen’s appreciation against the dollar, pricehikes of materials and lower stock prices. Meanwhile, the economies of emerging
countries continued to expand at a high rate, and the European economy was also steady.
With respect to the Group’s major business areas, sales of ATMs to China rose and sales
in the domestic financial system business increased in the financial market. Also, telecom
carriers started to partially provide services of the next-generation network “NGN” but theircurtailment of investments in fixed-line network facilities continued in the communications
market. The semiconductor business faced increasingly tougher competition in the world.
In the printer business, the overall market continued to grow, but sales of color non-impact
printers, which had been increasing sharply, partially slowed.
As a result, consolidated sales to third parties increased 0.1% year-on-year to ¥719.7
billion in the term under review. The Group posted an operating income of ¥6.2 billion,
compared with a loss of ¥5.4 billion in the previous term, in a year-on-year improvement of¥11.6 billion. Recurring balance was ¥3.9 billion in loss, compared with a loss of ¥12.8
billion in the preceding year, despite an improvement of ¥8.9 billion. The Groupregistered a net income of ¥600 million, in stark contrast to the previous year’s ¥36.4
billion loss caused partly by disposition of deferred tax assets, seeing an improvement of¥37.0 billion.
Non-consolidated results followed a trend similar to that for consolidated results.
Sales for the term under review stood at ¥408.8 billion, up 0.5% year-on-year. Operating
loss decreased ¥3.6 billion year-on-year to ¥13.0 billion from a loss of ¥16.6 billion in theprevious year. Recurring loss improved ¥5.8 billion from a loss of ¥17.7 billion in thepreceding year to a loss of ¥11.9 billion. Net loss also dropped ¥35.7 billion to a loss of¥1.7 billion from a loss of ¥37.4 billion in the previous year.
We deeply regret to say that there will be no payment of dividends to shareholders forthe fiscal year under review.

-3-

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

FY2006 (reference:

FY2007 (the year

previous year)

under review)

Increase or
decrease

Compared to theprevious year (%)

352.7

359.0

6.3

1.8

145.5
187.1
33.5

138.2
185.8
36.7

(7.3)
(1.3)
3.2

(5.0)
(0.7)
9.9

718.8

719.7

0.9

0.1

The following provides a summary of each segment.
Info-telecom systems
Sales of the financial system business increased from the previous year, thanks to afourfold increase in shipments of ATMs to the Chinese market, a recovery in the domestic
ATM market spurred by robust replacement demand, and growth in sales to the Japan Post
(the Japan Post Group from October 1, 2007). In the information system business, sales ofvarious systems for corporate customers went up.
Meanwhile, sales at thecommunications system business decreased from the preceding year, as each telecom
carrier continuously curtailed investments in fixed-line network facilities, and as OKI
trimmed unprofitable businesses by “accelerating selection and concentration ofbusinesses.” We now forecast that full-scale operations of the “NGN” are likely tocontribute to our earnings in or after the latter half of the current fiscal year ending March
2009, which is behind the original projection.
As a result, consolidated sales to third parties increased 1.8% year-on-year to ¥359
billion. Operating loss worsened by ¥200 million to a loss of ¥1.7 billion from a ¥1.5
billion loss in the previous year, affected by a sharp decrease in profits caused by lower
sales of communications systems.
Semiconductors
In the semiconductor business, sales of logic LSIs fell. Sales of LSIs for small- andmedium-sized panels dropped because of a shortened life cycle of products and sales ofbase-band LSIs for PHS bound for China decreased owing to weakened demand. In
addition, sales of unprofitable system LSIs declined because we reduced the number of
products to develop. At the same time, sales of P2ROMs for the amusement market
remained strong as did the foundry business which employs differentiated technologies
such as high-voltage process.
As a result, consolidated sales to third parties stood at ¥138.2 billion, down 5.0%
from a year earlier. Operating income increased ¥3.1 billion from ¥700 million in theprevious year to ¥3.8 billion, thanks to a reduction in the number of unprofitable products
and cuts in fixed expenses and variable costs.
Printers-4-

(Translation)
In the printer business, shipments of unprofitable low-end models of business-use, color
non-impact printers decreased because of an aggressive shift to middle- and high-end
models, and sales of consumables increased. This substantially improved profits of thisbusiness. The yen’s depreciation against the euro pushed up sales and profits.
As a result, net sales to third parties dropped 0.7% year-on-year to ¥185.8 billion, andoperating income rose to ¥8.6 billion from ¥1.7 billion, up ¥6.9 billion from the previous
year.

-5-

(Translation)(2) Capital expenditure
Capital expenditures for the fiscal year equaled ¥25.4 billion.
Investment amounts by segment were as follows.
(Unit: billions of yen)Segment

Amount ofcapitalexpenditure

Info-telecom systems

6.0

Semiconductors

13.1

Printers

3.9

Major investments
ATM products and cash management terminals for financial anddistribution markets; investments in research, development andproduction of new products for network service and network
infrastructure businesses
Investments in expansion, research and development of new
products relating to wafer process production lines, including
logic LSIs, system LSIs and system memories, etc.
Investments in R&D, development and production activities
relating to business-use printers

Other
2.4
Total
25.4
Note: The above amount includes ¥5.4 billion of leased assets.

(3) Financing
Funds required for the term under review were obtained from our own funds andborrowed funds.
Borrowing funds are mainly long-term borrowings, which are used for the scheduled
repayment of long-term borrowings and the redemption of corporate bonds.
(4) Future challenges
Business conditions affecting the OKI Group are continuing to change more quickly
and dramatically than anticipated because of accelerated globalization, saturation of thedomestic market and increasingly common customer demand for investment efficiency.
Given this, the Group needs to reestablish strong competitiveness. To this end, we will
ensure the implementation of medium- and long-term measures for structural reform, which
we formulated in the fiscal year under review. Here, we would like to show you again thethree policies in the said measures.
(i) Acceleration in selection and concentration of businesses
The Group will clearly redefine business fields to be focused on, and accelerate theallocation of management resources to these core businesses. We will also accelerate
flexible operations by consolidating, splitting up and selling less profitable businesses,
while establishing new in-house companies for promising businesses. To this end, we
have launched four in-house companies and venture companies.
(ii)

Change to more efficient management style
To improve its managerial efficiency, the Group will consider its entire management
structure. We will implement a business reorganization including affiliated companies andaccelerate the establishment of in-house venture companies. Furthermore, we will further
accelerate the speed at which we conduct our businesses, and improve flexibility inbusiness operations, by trimming planning and clerical sections while shifting personnel tofront-line activities such as sales, SE, design/development and production.

-6-

(Translation)(iii) Strong businesses based on strong products
We will re-examine the OKI Group’s resources (personnel, products, businesses,
technologies, etc.), and combine, integrate and harmonize these resources by focusing on
their effective use, and form alliances with global partners, aiming to re-establish
differentiated competitiveness that only OKI can achieve.
(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

688.5

billion yen

680.5

billion yen

718.8

billion yen

84th year(current year,
FY2007)719.7
billion yen

Net income

11,174

million yen

5,058

million yen(36,446)

million yen

567

81st year (FY2004)

83rd year(FY2006)

82nd year (FY2005)

million yen

Net income per share

18.27

yen

8.27

yen

(56.27)

yen

0.83

yen

Total assets

608.0

billion yen

618.9

billion yen

628.4

billion yen

570.8

billion yen

Net assets

124.8

billion yen

133.9

billion yen

116.0

billion yen

101.4

billion yen

Net assets per share

204.11yen

218.96yen

160.13yen

138.55yen

Notes:
1. Parentheses indicate losses.
2. Net income per share is computed based on the average number of shares during the year
(weighted average). Net assets per share are computed based on the number of shares of common
stock outstanding during the year. These figures exclude treasury stocks.
3. Beginning in the 83rd year, the Company adopted “Accounting Standards for Presentation of Net
Assets in Balance Sheets” (Corporate Accounting Standards No. 5, December 9, 2005) and“Guidelines for the Application of Accounting Standards for Presentation of Net Assets in Balance
Sheets” (Guidelines for the Application of Corporate Accounting Standards No. 8, December 9,2005).

-7-

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

Company’s
voting rightratio

CapitalOki Wintech Co., Ltd.

2,001 million

yen

53%

Oki Data Corporation

17,000 million

yen

100

Oki Customer Adtech Co., Ltd.

800 million

yen

100

Miyagi Oki Electric Co., Ltd.

200 million

yen

100

Miyazaki Oki Electric Co., Ltd.

200 million

yen

100

Oki America, Inc.

14 million

U.S. dollars

100

Oki Europe Ltd.

33 million pound sterling100

Oki (Thailand) Co., Ltd.

700 million

100

(ii)
-

-

Thai baht

Major partners
Major technical partners:
Alcatel-Lucent (US)International Business Machines Corporation (US)Texas Instruments Incorporated (US)Canon Inc.
Major business partners:
Hewlett-Packard Company (US)Cisco Systems G.K.
United Microelectronics Corporation (Taiwan)
Peregrin Semiconductor Corporation (US)ACCESS Co., Ltd.

-8-

Major business
Design and electronic works andelectronic telecommunications
works
Manufacturing and sales of printers
Maintenance, construction andsales of information processing
equipment and telecommunications
equipment
Manufacturing and sales ofsemiconductors
Manufacturing and sales ofsemiconductors
Sales of semiconductors andelectronic component products
Sales of printers
Manufacturing and sales ofsemiconductors(Translation)(7) Major businesses
The OKI Group offers as its core businesses info-telecom systems/devices,semiconductors, and printers as well as related solutions and services.
Major business items include the following.
Segment

Info-telecom systems

Semiconductors
Printers

Business items
Financial systems, automation equipment systems, ITS-related systems, electronic
government-related systems, ERP systems, computer network-related equipments,
informational network terminal equipments, security systems, IP telephony systems,
corporate telecommunications systems, CTI systems, image delivery systems,
electronic switching equipment, digital transmission equipment, opticalcommunication equipment, radio communication equipment, broadband accessequipment, network service, network operational support service, etc.
System LSI, logic LSI, memory LSI, optical devices for high-speed communication,foundry services, etc.
Color NIPs, mono NIPs, SIDMs, MFPs, etc.

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

Classification

Location

Head office

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), andKyushu region (Fukuoka, Fukuoka)
Minato-ku (Tokyo), Hachioji (Tokyo), Warabi(Saitama), Honjo (Saitama), Takasaki (Gunma), andNumazu (Shizuoka)

Branch offices
Oki Electric Industry Co., Ltd.

Business offices
Research institutes

Hachioji (Tokyo) and Osaka (Osaka)

Oki Wintech Co., Ltd.

Head office

Shinagawa-ku, Tokyo

Oki Data Corporation

Head office

Minato-ku, Tokyo

Oki Customer Adtech Co., Ltd.

Head officeKoto-ku, Tokyo

Miyagi Oki Electric Co., Ltd.

Head office

Oohiramura, Kurokawa-gun, Miyagi

Miyazaki Oki Electric Co., Ltd.

Head office

Kiyotake-cho, Miyazaki-gun, Miyazaki

Oki America, Inc.

Head office

California, USA

Oki Europe Ltd.

Head office

Middlesex, UK

Oki (Thailand) Co., Ltd.

Head office

Ayutthaya, Thailand-9-

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

Segment

Number of employees

Info-telecom systems

10,244

Semiconductors

4,879

Printers

5,924

Other

1,194

Company-wide (shared)

399

Total

22,640

Employees of Oki Electric Industry

Number of employees
5,313 (decreased by 266 from the end of the previous year)

Average age
40.8

Average length of service
18.1(10) Major creditors
Major creditors of the OKI Group are as follows:
Creditor

Loan balanceBillion yen

Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Mizuho Trust & Banking Co., Ltd.
Development Bank of Japan
Meiji Yasuda Life Insurance Company

37.9
27.7
13.6
13.4
13.4

(11) Other significant events of the OKI Group
There were no noteworthy events.

- 10 -

(Translation)
2.

Shareholders’ Equity
(1)
(2)
(3)
(4)
(5)

Number of shares authorized to be issued by the Company:
2,400,000 thousand shares
Number of outstanding shares:
684,256 thousand shares (including 1,136 thousand shares of treasury stock)
Number of shareholders: 112,658
Shareholders holding 10% or more of outstanding shares (excluding treasury stock):
None
Major shareholders (Top 10):
Number ofshares held
(thousand shares)

Name of shareholder
Meiji Yasuda Life Insurance Company

34,000Japan Trustee Services Bank, Ltd. (trust account)

30,080Japan Trustee Services Bank, Ltd. (trust account 4)

23,320The Master Trust Bank of Japan, Ltd. (trust account)

19,998

Oki Denki Employees’ Shareholdings Committee

14,370Mizuho Corporate Bank, Ltd.

13,000

Sompo Japan Insurance Inc.

12,986The Bank of New York GCM Client Account JPRD ISG (FEAC)

10,811

The Dai-ichi Mutual Life Insurance Company

9,380

Eagle

6,022

- 11 -

(Translation)
3. Equity Warrants(1) Equity warrants granted to the Company’s officers as consideration for theirperformance of duties(i) Number of equity warrants
1,095(ii) Type and number of shares subject to equity warrants
1,095,000 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)

AuditorsIssued Number

Exercise period

No. 2 equity warrant (354 yen)
(Issued on July 18, 2003)
No. 3 equity warrant (458 yen)
(Issued on July 20, 2004)
No. 4 equity warrant (406 yen)
(Issued on July 20, 2005)
No. 5 equity warrant (277 yen)
(Issued on July 28, 2006)
No. 6 equity warrant (277 yen)
(Issued on July 28, 2006)
No. 7 equity warrant (248 yen)
(Issued on July 27, 2007)
No. 3 equity warrant (458 yen)
(Issued on July 20, 2004)
No. 4 equity warrant (406 yen)
(Issued on July 20, 2005)

July 1, 2005
to June 26, 2013
July 1, 2006
to June 28, 2014
July 1, 2007
to June 28, 2015
July 1, 2008
to June 28, 2016
July 1, 2008
to June 28, 2016
July 1, 2009
to June 25, 2017
July 1, 2006
to June 28, 2014
July 1, 2007
to June 28, 2015

Number ofequity warrants

Number ofholders

260

7

183

9

193

9

132

7

22

2

287

9

10

1

8

1

(2) Equity warrants issued to employees in consideration of performance during the fiscal
year under review(i) Number of equity warrants issued
222 warrants(ii) Type and number of shares
Common stock: 222,000 shares (1,000 shares per right)(iii) Issue price of the rights
Granted free of charge(iv) Payment per share required to exercising the rights¥248(v) Exercise period
July 1, 2009 to June 25, 2017(vi) Status of granting equity warrants to the Company’s employees, etc.
Number of the rights
Employees of the Company (excluding officers of theCompany)
Officers of the Company’s subsidiaries(excluding officers of the Company)- 12 -

Number of
grantees

204

16

18

1

(Translation)(3) Other significant matters concerning equity warrants
Status of convertible bonds with equity warrants

Date of resolution for issuance
Number of equity warrants
Type and number of shares to beacquired by rights
Issue price of the rights

Equity warrants attached to Euro
Yen convertible bonds to beredeemed in 2008
(issued on November 26, 2004)
November 9, 2004
10,000No. 32 equity warrants attached toconvertible bonds without warranty(issued on June 7, 2006)
May 23, 2006
24

Common stock: 39,682,539 shares

Common stock: 41,237,113 shares

Granted free of charge
December 10, 2004 toNovember 12, 2008
¥504

Granted free of charge
June 8, 2006 toJune 6, 2011
¥291 (Note)

Exercise period

Exercise price
Balance of bonds with equity¥20 billion¥12 billion
warrants
Note: The conversion price will be revised after the trading day following the fourth Friday of March, June,
September and December (hereinafter the “determination date”) to an amount equivalent to 93% of theaverage closing price of our common stock in ordinary trading on the Tokyo Stock Exchange for the
successive five trading days up to the determination date. The revised conversion price shall not be
below ¥291.

4.

Corporate Officers(1) Names, etc. of Directors and corporate auditors
Note 1*X

Position
President

Name
Katsumasa Shinozuka*X

Executive Vice President

Kazuo Tanaka*X

Executive Vice President

Naoki SatoX

Senior Vice President

Harushige Sugimoto

X

Senior Vice President

Hideichi Kawasaki

X

Senior Vice President

Hironori Kitabayashi

X

Senior Vice President

Keiichi Fukumura

X

Senior Vice President

Masayoshi Matsushita

Director
DirectorStanding Auditor
Standing Auditor
Standing Auditor
Auditor

Mikihiko Maeno
Minoru Morio
Takahisa Inagawa
Yoshikatsu Shiraishi
Hiroyuki Katagiri
Ieji Yoshioka

Status or main duties
CEO
CFO & CCOManagement supervision (in charge of Human Resources
Division, Internal Auditing Division)
In charge of Financial Business Group, Systems NetworkGroup
Administration Division supervision
In charge of financial operations and General Affairs Division
CTO
Supervision of production, overseas operations, China
business, Global Business Development Division
In charge of Corporate Research & Development Center
President & CEO, Oki Data Corporation
In charge of Telecom Business Group, Systems NetworkGroup
In charge of Public Relations Division and branch operations
Division Head, Marketing Promotion Division
Chairman, Semiconductor Business GroupIn charge of Accounting & Control Division and
Administration Division
Division Head, CSR Promotion Division
CIO
Information Planning Division supervision
In charge of Ubiquitous Service Platform Company andBusiness Support Division, Systems Network Group
Overseas operations supervision assistant

CEO: Chief Executive Officer
CFO: Chief Financial Officer
CCO: Chief Compliance Officer
CTO: Chief Technology Officer
CIO: Chief Information Officer- 13 -

(Translation)

Notes:
1. Asterisk indicates Representative Director. X indicates executive officer.
2. Director Minoru Morio is an outside director.
3. Standing Auditors Hiroyuki Katagiri and Ieji Yoshioka are outside auditors.
4. Changes of Representative Directors after the fiscal year
In accordance with a resolution of the Board of Directors meeting held on March 18, 2008, Kazuo
Tanaka resigned as Representative Director and Executive Vice President on March 31,2008, andwas appointed as Director on April 1, 2008.
5. Executive officers as of March 31, 2008 are as follows (excluding those who concurrently serve as
Directors).
Position

Name

Senior Executive officer

Masataka Sase

Senior Executive officer

Masao Miyashita

Executive officer

Yutaka Asai

Executive officer

Shigeru Yamamoto

Executive officer

Hiroshi Enomoto

Executive officer
Executive officer

Kichiro Akino
Kazuhiro Iritani

Executive officer

Masasuke Kishi

Executive officer
Executive officer
Executive officer

Hideto Morizono
Sei Yano
Hidetoshi Saigo

Principal duty
In charge of the Legal & Intellectual Property Division,
Global Environment Division
In charge of Information System Business Group, Systems
Network Group
President, System Solutions Company
In charge of overseas operations
Division Head, Global Business Development Division
President, Financial Solutions Company
Division Head, Business Management and Promotion
Division
President, Network Systems Company
Head, Kansai Branch
EVP, Network Systems Company
EVP, IP Systems Company
President, Manufacturing Service Company
General Manager, Corporate Strategy Planning Office
EVP, Network Systems Company
EVP: Executive Vice President(2) Compensation paid to Directors and Corporate Auditors
Title
Directors
Corporate Auditors
Total

Number of persons
104
14

Amount of payment¥292 million¥67 million¥359 million

Notes:
1. The amounts of compensation approved by the 82nd Ordinary General Meeting of Shareholders held on
June 29, 2006 are within ¥600 million per year for Directors and ¥100 million per year for Corporate
Auditors. The amount of compensation for Directors excludes employee wages for Directors who are also
employees.
2. The amount of payment includes Directors’ compensation through stock options amounting to ¥26 million.

- 14 -

(Translation)(3) Outside Directors and Corporate Auditors(i) Major activities in the fiscal year under review(a) Attendance at meetings of the Board of Directors and Board of Corporate
Auditors
Board of Directors meeting(held 13 times in total)
Attendance
Attendance ratefrequency
Minoru Morio,
Director
Hiroyuki Katagiri,
Corporate Auditor
Ieji Yoshioka,
Corporate Auditor(ii)

Board of Corporate Auditors meeting(held 17 times in total)
Attendance
Attendance ratefrequency

13

100%

-

13

100%

17

100%

13

100%

17

100%

(b) Major activities
a. Minoru Morio, Director
Making statements mainly based on extensive experience in the electronics
industry, he provided advice and proposals for the Board of Directors tosecure the soundness and appropriateness of decision-making.
b. Hiroyuki Katagiri, Corporate Auditor
With regard to deliberations of the Board of Directors, he determined thecorrectness of Directors’ managerial decisions. As Standing Outside
Corporate Auditor, he made efforts to formulate appropriate audit opinions for
the Company by attending important meetings, inspecting important approval
documents, conducting on-site audits of major sections, and cooperating within-house audit sections.
c. Ieji Yoshioka, Corporate Auditor
With regard to deliberations of the Board of Directors, he determined thecorrectness of Directors’ managerial decisions. Using extensive experienceand knowledge as a Director and Standing Corporate Auditor at othercompanies over many years, he made efforts to formulate the Company’s
appropriate audit opinions by making proper statements and implementing,when necessary, adequate activities concerning performances of the Board of
Corporate Auditors.
Total amount of compensation, etc.
¥34 million (for the three individuals)- 15 -

(Translation)
5.

Status of Accounting Auditor(1) Name: Ernst & Young ShinNihon(2) Compensation, etc.
Amount of payment
1. Compensation, to be paid to the accounting auditor for the fiscal year under review
66 million yen
2. Total sum of cash and profits on other assets that the Company and its subsidiaries
135 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 Company Law, and (ii) auditing in accordance with the Financial Instruments and Exchange Law. The
total of these amounts is recorded above.
2. Among major subsidiaries, Oki Europe Ltd. and Oki (Thailand) Co., Ltd. have undergone statutory audits byaccounting auditors other than the accounting auditor of the Company.

(3) Contents of non-audit services
The Company has also hired the accounting auditor for “internal management project
advice,” which is a service other than the audits provided in Article 2, Paragraph 1 of theCertified Public Accountants Law, and pays the auditor compensation for that service.
(4) Policy regarding decision to dismiss or not reappoint the accounting auditor
The Board of Corporate Auditors will dismiss the accounting auditor if the auditor
falls under provisions of Article 340 of the Company Law. In addition, if it is deemed
unlikely that the accounting auditor will be able to perform audits properly, the Company,
upon the consent or request of the Board of Corporate Auditors, the Board of Directors will
discuss whether to submit a proposal to the general meeting of shareholders for dismissal or
non-reappointment of the accounting auditor.
6.

Policies and procedures of the Company
System to ensure that Directors in the conduct of their business comply with applicable laws,
regulations and the Articles of Incorporation, as well as other procedures of the Company, inorder to assure the appropriateness of the Company’s operations(1) Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business(i) As the foundation for ensuring compliance, the Company has established the “OKIGroup Charter of Corporate Conduct” and “OKI Group Code of Conduct.”(ii) The Company has established a Compliance Committee chaired by the CCO (chiefcompliance officer) to decide on and examine basic policies regarding complianceprograms.
(iii) In accordance with the basic policies formulated by the Compliance Committee, thedivision responsible for compliance plans, draws up, and promotes specific measures
such as education and training for Directors and employees. In education andtraining, we aim to raise employee awareness about compliance by utilizing means
such as e-learning.

- 16 -

(Translation)(iv) The Company provides rules on public-interest disclosure and provides a contact
point for reporting and consultation, aiming to detect any misconduct at its earliest
stages.
(v) The Company stands firmly against antisocial groups that threaten the order andsafety of civil society in cooperation with the police and related organizations, andrefuses to have any relationship with them as a whole.
(2) Procedures to retain and manage information relating to Directors’ conduct ofbusiness
The Company retains and stores information relating to the conduct of business byDirectors as appropriate in accordance with applicable laws, regulations and internal rules.
(3) Rules concerning risk management and other procedures(i) Pursuant to risk management rules, each section of the Company manages risks that
may occur in relation to its main duties. At the same time, the Company has
established a supervisory section to deal with risks needing company-wide
management. This section assesses risks, draws up policies for risk countermeasuresand develops appropriate structures based on such policies.
(ii) If any risk occurs, the Company will set up an emergency countermeasure
headquarters to handle the risk.
(4) Procedures to secure efficient business performance by Directors(i) The Company holds regular meetings of the Board of Directors once a month todecide important matters and supervise the work of Directors.
(ii) The Company holds management meetings, in which executive officers, such as
managing directors and other high-ranking officers participate, to provide for flexible
decision making on fundamental and significant matters in managing the business.
(iii) The Company assigns Directors responsibilities and authority pursuant to rules on
division of duties and authorities.
(5) Procedures to secure appropriate Group (Company and subsidiaries) operations(i) To ensure that Group companies run their operations properly, the Company has
established the “OKI Group Charter of Corporate Conduct” which sets out the values
for the entire Group. In addition, the Company has established the “OKI Group
Code of Conduct” as the code of conduct which all officers and employees of Group
companies should comply with, and is striving to make the code known to all of them.
(ii) The division responsible for compliance implements various measures for promoting
compliance common to the Group through each Group company’s compliance officer.
The Division also determines, through regular monitoring, the implementation statusof such measures by each Group company and reports to the Compliance Committee
on the results.
(iii) The Company, in accordance with Group management rules, determines the status ofeach Group company’s management activities and provides advice and guidance.
(iv) To secure the reliability of financial reporting, the Company and Group companies- 17 -

(Translation)
establish an internal control system for financial reporting in accordance with related
laws and regulations, and strive to maintain and improve that system.
(6) Procedures for employees who assist Corporate Auditors; independence of employees
from Directors(i) The Company assigns employees, who are not subject to Directors’ instructions andorders, as staff to assist Corporate Auditors.
(ii) Any change in such staffing requires the prior consent of the Board of Corporate
Auditors.
(7) Procedures for Directors and employees to report to Corporate Auditors; procedures
for Corporate Auditors to receive other reports(i) If Directors discover anything that may cause significant damage to the Company,
they are required to report the matter immediately to the Corporate Auditors pursuant
to applicable laws and regulations.
(ii) Standing Corporate Auditors attend meetings of the Board of Directors andmanagement meetings in order to understand important decision-making processes
and the status of business operations, as well as to inspect important documentation.
(iii) Directors receive reports on the status of establishing internal control systems andtheir operations from Directors and employees on a regular basis, and may request
Directors and employees to report on matters deemed necessary.
(8) Other procedures to secure effective audits by Corporate Auditors(i) In conducting inspections on the Company’s operations and assets and performing
other audit duties, Corporate Auditors shall conduct audits efficiently and effectively
in close cooperation with the internal audit section.
(ii) Corporate Auditors implement efficient audits by closely cooperating with theaccounting auditor. To this end, Corporate Auditors hold meetings with theaccounting auditor on a regular basis, attend on-site audits by the accounting auditor,
and request reports from the accounting auditor on the progress of audits whennecessary.

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.

- 18 -

(Translation)

Consolidated Balance Sheet(as of March 31, 2008)(Unit: millions of yen)Account title

AmountAccount title(Assets)
I.

(Liabilities)

Current assets
1. Cash and deposits

AmountI.

Current liabilities

46,379

1. Notes and accounts payable

86,898

2. Notes and accounts receivable

166,916

2. Short-term borrowings

132,734

3

Inventories

138,853

3. Other accrued expenses

46,186

4

Deferred tax assets

7,504

4. Other current liabilities

45,361

5

Other current assets

16,265

Total current liabilities

311,180

6

Allowance for doubtful receivables(1,585)

Total current assets

374,334

II.

II.

1. Bonds

12,0002. Long-term borrowings

102,646

3. Retirement benefits

40,216

Fixed assets

1. Property, plant and equipment

Long-term liabilities(1) Buildings and structures

46,920

4. Reserve for Directors’ retirement benefits(2) Machinery, equipment and delivery equipment

40,993

5. Other long-term liabilities

2,727(3) Tool, furniture and fixtures

21,748

Total long-term liabilities

158,262(4) Land

15,788

Total liabilities

469,443(5) Construction in progress
Total property, plant and equipment
2. Intangible assets

671

337
125,788(Net Assets)

15,804I.
1.

Common stock

76,940(1) Investments in securities

33,0562.

Additional paid-in capital

46,744(2) Long-term loans

1,776

3.

Retained earnings(20,991)(3) Other investments and other assets

23,115

4.

Treasury stock(4) Allowance for doubtful receivables(3,055)

Total investments and other assets

54,892

II. Valuation, translation adjustments and others

Total fixed assets

196,4851.

Net unrealized holding gain on securities

2.

Deferral hedge profit/loss

3.

Translation adjustments

3. Investments and other assets

Shareholders’ equity

Total shareholders’ equity

Total valuation, translation adjustments and others

Total assets

570,819- 19 -(344)
102,348695(271)(8,132)(7,708)

III. Equity warrants

79

IV. Minority interests

6,656

Total Net Assets

101,376

Total liabilities and net assets

570,819

(Translation)

Consolidated Statement of Operations(From April 1, 2007 to March 31, 2008)(Unit: millions of yen)Account title

AmountI.

Net sales

719,677

II.

Cost of sales

554,343

Gross profit

165,334

III.

Selling, general and administrative expenses

159,134

Operating income
IV.

6,200

Non-operating income

1. Interest income

544

2. Dividend income

869

3. Other973

V.

1. Interest expense

6,953

2. Foreign exchange losses

2,481

3. Other

3,039

Ordinary loss
VI.

2,386

Non-operating expenses

12,474
3,887

Extraordinary profit

1. Gain on sales of property, plant and equipment

6,786

2. Gain on sales of investments in securities

4,238

3. Gain on contribution of securities to the pension
trust

3,822

4. Gain on reversal of prior year’s patent fees

401

15,249VII. Extraordinary loss
1. Loss on sale and disposition of property, plantand equipment

1,569

2. Special retirement payments

1,380

3. Loss on devaluation of inventories

3,407

Net income before taxes

6,357
5,003

Income taxes

2,784

Income taxes deferred

1,281

4,065

Minority Interest

369

Net income

567- 20 -

(Translation)

Consolidated Statement of Changes in Shareholders’ Equity(From April 1, 2007 to March 31, 2008)(Unit: Millions of yen)
Shareholders’ equity
Additional paid-in
capitalCommon stock
Balance as of March 31, 2007

76,940Retained earnings

46,744

Total shareholders’equityTreasury stock(22,375)(320)

100,989

(24)

567
(24)

Changes during the term
under review
Net Income
Acquisition of treasury stock

567

Increase due to decrease in
unfunded pension liabilities
related to pension accounting
at overseas subsidiaries

816

816

Changes in items other thanshareholders’ equity during
the term under review (net)Total changes during the term
under review

-

-

1,383

(24)

1,359

Balance as of March 31, 2008

76,94046,744(20,991)(344)

102,348

Valuation, translation adjustments and others

Balance as of March 31, 2007

Net unrealized
holding gain
on securities

Deferral hedge
profit/loss

14,377(368)

Translation
adjustments(5,595)

Total
valuation,translation
adjustments
and others
8,412

Equitywarrants

Minority
interests

32

6,538

Total Net
Assets

115,973

Changes during the term
under review
Net income
Acquisition of treasury stock
Increase due to decrease in
unfunded pension liabilities
related to pension accounting
at overseas subsidiaries

567
(24)

816

Changes in items other thanshareholders’ equity during
the term under review (net)(13,681)97(2,537)(16,121)46

117(15,956)

Total changes during the term
under review(13,681)97(2,537)(16,121)

46

117(14,597)

Balance as of March 31, 2008

695

(271)

(8,132)(7,708)79

6,656

101,376- 21 -

(Translation)

Notes to Consolidated Financial Statements
Principles for Preparing Consolidated Financial Statements
1.

Scope of consolidation(1) Number of consolidated subsidiaries: 99 companies
Names of major consolidated subsidiaries:
Oki Data Corporation; Oki Customer Adtech Co., Ltd.; Oki Wintech Co., Ltd.;Oki Software Co., Ltd.; Miyagi Oki Electric Co., Ltd.; Miyazaki Oki ElectricCo., Ltd.; Oki America, Inc.; Oki Data Americas, Inc.; Oki Data Manufacturing(Thailand) Co., Ltd.; Oki Europe Ltd.; Oki (Thailand) Co., Ltd.; Oki ElectricIndustry (Shenzhen) Co., Ltd.
(2) Names of major non-consolidated subsidiaries:
Adachi Protechno Co., Ltd. and 25 other companies
Reasons for excluding from consolidation:
Total assets, retained earnings, net sales and net income or loss are individually
and wholly immaterial and have no significant influence.
(3) Changes in scope of consolidation:
Oki-Kansai Service Co., Ltd.; Oki Kanto Service Co., Ltd.; Oki KitakantoService Co., Ltd.; Oki Kyushu Service Co., Ltd., Oki Supply Center Co., Ltd.;Oki Shikoku Service Co., Ltd.; Oki Chugoku Service Co., Ltd.; Oki Chubu
Service Co., Ltd.; Oki Development Co., Ltd.; Oki Tohoku Service Co., Ltd.;and Oki Hokkaido Service Co., Ltd. were eliminated from the scope of
application of the equity method and included within the scope of consolidation
beginning in the fiscal year under review, because of an increase in theirrelative importance.
Wipro Techno Centre (Singapore) Pte. Ltd. was excluded from the scope of
consolidation and included in the scope of application of the equity method,
beginning in the fiscal year under review, as it became an affiliate after theCompany sold of the shares it held in that company.

2.

Application of equity method(1) Number of affiliated companies to which the equity method is applied: 3Name 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:
Adachi Protechno Co., Ltd. and 25 other companies
Affiliated companies: Alp Inc. and 20 other companies
Reason for not applying the equity method:- 22 -

(Translation)
The companies individually have little influence and have no significance as awhole on net income or loss and retained earnings.
(3) Changes in scope of application of the equity method:
Wipro Techno Centre (Singapore) Pte. Ltd. was excluded from the scope of consolidationand included in the scope of application of the equity method, beginning in the fiscal year
under review, as it became an affiliate after the Company sold of the shares it held in thatcompany.
The following firms were eliminated from the scope of application of the equity method
and included within the scope of consolidation beginning in the fiscal year under review,
because of an increase in their relative importance:
Oki-Kansai Service Co., Ltd.; Oki Kanto Service Co., Ltd.; Oki Kitakanto Service Co.,
Ltd.; Oki Kyushu Service Co., Ltd.; Oki Supply Center Co., Ltd.; Oki Shikoku Service
Co., Ltd.; Oki Chugoku Service Co., Ltd.; Oki Chubu Service Co., Ltd.; Oki Development
Co., Ltd.; Oki Tohoku Service Co., Ltd.; Oki Hokkaido Service Co., Ltd.
3.

Matters concerning account settlement dates of consolidated subsidiaries
The account settlement date of the following consolidated subsidiaries is December 31 eachyear and different from the account settlement date of the consolidated statements. In
preparing consolidated financial statements, the financial statements of these subsidiaries asof their account settlement date are used:
Changzhou Oki-GEG Telecoms Ltd.; Oki Electric Industry (Shenzhen) Co., Ltd.; Oki
Software Technology Co., Ltd.; Oki Semiconductor Shanghai Co., Ltd.; Oki ElectricTechnology (Kunshan) Co., Ltd.; Oki Semiconductor Technology Shanghai Co., Ltd.; Oki
Data Dalian Co., Ltd.; Oki Trading (Beijing) Co., Ltd.

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 market value.
Held-to-maturity securities: amortized or accumulated to face 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 market 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 apply the cost method, andoverseas consolidated subsidiaries primarily apply the lower of cost or market value.

- 23 -

(Translation)(iii) Derivatives
Stated at market value(2) Depreciation and amortization(i) Property, plant and equipment
The Company and its domestic consolidated subsidiaries primarily apply the
declining-balance method; overseas consolidated subsidiaries primarily apply thestraight-line method.
Change in accounting policies
In accordance with the revision of the Corporate Tax Law, from the fiscal year
under review, some domestic consolidated subsidiaries changed the depreciation
method for tangible fixed assets acquired on or after April 1, 2007 to the method
stipulated in the revised Corporate Tax Law.
As a result, both operating income and net income before taxes decreased by ¥127
million, while recurring loss increased by ¥127 million, compared with theconventional method.
Additional information
As for assets acquired on or before March 31, 2007, some domestic consolidated
subsidiaries, in accordance with the revision of the Corporate Tax Law, evenly
depreciate the difference between 5% of the acquisition price and the reminder priceover five years, from the next consolidated fiscal year of a consolidated fiscal year inwhich these assets reached 5% of the acquisition price, by application of thedepreciation method stipulated in the Corporate Tax Law before its revision, and such
expenses are recorded as depreciation expenses.
As a result, both operating income and net income before taxes decreased by ¥165
million, while recurring loss increased by ¥165 million, compared with theconventional method.
(ii) Intangible assets
The Company and its domestic consolidated subsidiaries apply the straight-line
method.
For software sold in the market, depreciation is based on the estimated number ofyears for sales (three years). For software for internal use, the straight-line method,
based on the estimated durable years (five years), is used.
Overseas consolidated subsidiaries primarily apply the straight-line method.
(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 specific- 24 -

(Translation)loans/receivables.
(ii) Retirement benefits
To prepare for payment of retirement benefits to employees, the Company and its
consolidated subsidiaries register the amount recognized to accrue at the end of the
fiscal year based on estimated values of retirement benefit obligations and pension
assets.
Differences caused by changes in accounting standards are amortized over 15
years except for consolidated subsidiaries that amortize the difference in the first yearof application and some overseas consolidated subsidiaries that directly deduct thedifference from retained earnings.
Prior service costs are amortized by the straight-line method over a set number ofyears (14 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 (13 to 14 years) within the average remaining years of service of
employees at the time of their accrual in each fiscal year. Amortization of such gains
and losses is deemed to be effective from the year after the one in which they arise.
(iii) Reserve for Directors’ retirement
Some domestic consolidated subsidiaries register the necessary amount at the endof the year in accordance with internal rules to prepare for the payment of Directors’
retirement allowance.
(4) Important accounting of lease transactions
The Company and its domestic consolidated subsidiaries apply the accounting method forordinary lease transactions to finance lease transactions other than those in which theownership of the leased property is considered to be transferred to the lessee.
Consolidated subsidiaries overseas primarily apply the accounting method for ordinarytransactions.
(5) Important hedge accounting methods(i) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward
exchange contracts eligible for allocation treatment. Special treatment is applied tointerest rate swaps that meet requirements for special treatment.
(ii) Means of hedging and targets of hedging
Forward exchange contracts are used to hedge fluctuations of exchange rates on
credits and debts in foreign currencies. Interest rate swaps are employed to hedge
fluctuations of market interest rates on variable-rate short-term borrowings and longterm borrowings.
(iii) Policies on hedging
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 cumulative
total of market fluctuations or cash flow fluctuations for the targets of hedging and that- 25 -

(Translation)of 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) Other important matters in preparation of consolidated financial statements(i) Accounting processing of consumption tax
The tax-exclusion method is used for accounting of consumption tax and local
consumption tax.
(ii) Application of consolidated tax payment
The consolidated tax payment is applied.
5.

Amortization of goodwill and negative goodwill
Goodwill is evenly amortized over its useful life (mainly five years).

Notes to Consolidated Balance Sheet
1. Assets pledged as collateral
Buildings and structures:
Machinery and delivery equipment:
Tools, instruments and fixtures:
Land:
Investment securities:
Total
Liabilities collateralized by the above assets:
Short-term borrowings:
2.
3.
4.

Accumulated depreciation on tangible fixed assets
Liabilities for guarantee
Guarantee for borrowings by employees and affiliated companies
Repurchase of notes receivable endorsed- 26 -¥1,142 million¥23 million¥55 million¥837 million¥5,706 million¥7,765 million¥4,858 million¥514,171 million¥1,953 million¥3 million

(Translation)
Notes to Consolidated Statement of Changes in Shareholders’ Equity
1. Type and number of outstanding shares as of the end of the fiscal year
Common stock: 684,256 thousand shares
2. Number of shares to be issued upon exercise of equity warrants
Category

Breakdown of equity warrants

The Company

No. 2 Equity Warrants(issued on July 18, 2003)
No. 3 Equity Warrants(issued on July 20, 2004)
No. 4 Equity Warrants(issued on July 20, 2005)

Type of shares to be issued
upon exercise of equity
warrants

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

Common stock

815,000

Common stock

452,000

Common stock

442,000

Notes to Per-share Information
1. Net assets per share: ¥138.55
2. Net income per share: ¥0.83- 27 -

(Translation)

Transcript of Account Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
May 22, 2008
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon
Tatsunosuke Kagaya (seal),
Engagement Partner, Certified Public Accountant
Masato Tsukahara (seal),
Engagement Partner, Certified Public Accountant
Akira Sato (seal),
Engagement Partner, Certified Public Accountant

We have audited the consolidated financial statements – the consolidated balance sheets, theconsolidated statement of operations, the consolidated statement of changes in shareholders equity andnotes to the consolidated financial statements – of Oki Electric Industry Co., Ltd. for the 84th term from
April 1, 2007 to March 31, 2008 in accordance with Article 444 Paragraph 4 of the Company Law.
Oki Electric Industry’s management is responsible for preparing these consolidated financial
statements, and our responsibility is to express our independent opinion regarding these consolidated
financial statements.
We conducted our audit in accordance with auditing standards generally accepted in Japan. These
auditing standards require that we obtain reasonable assurance as to whether the consolidated financial
statements are free of material misstatement. Audits are conducted based on a test basis, and include
reviews of accounting policies and methods that management adopts, and evaluation of management
estimates and the presentation of the consolidated financial statements as a whole. We believe wehave obtained reasonable bases for the expression of our opinion as a result of our audit.
We concluded that the consolidated financial statements fairly present in all aspects Oki ElectricIndustry’s and its subsidiaries’ assets and income or loss in accordance with corporate accounting
standards generally accepted in Japan.
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm(Ernst & Young ShinNihon) and the respective engagement partners.

- 28 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2008)(Unit: millions of yen)Account title(Assets)
I. Current assets
1. Cash and deposits
2. Notes receivable
3. Accounts receivable, trade
4. Inventories
Finished goods
Semi-finished goods
Raw materials
Work in process
Supplies
5. Short-term prepaid expense
6. Short-term loan
7. Accounts receivable, others
8. Deferred tax assets
9. Other current assets
10. Allowance for doubtful receivables
Total current assets
II. Fixed assets
1. Property, plant and equipment(1) Buildings
Accumulated depreciation(2) Structures
Accumulated depreciation(3) Machinery and equipment
Accumulated depreciation(4)

Vehicle and delivery equipment
Accumulated depreciation(5) Tools, furniture and fixtures
Accumulated depreciation(6) Land(7) Construction in progress
Total property, plant and equipment
2. Intangible assets(1) Goodwill (noren)(2) Facility rights(3) Software
Total intangible assets
3. Investments and other assets(1) Investments in securities(2) Shares of affiliated companies(3) Contribution(4) Contribution to affiliated companies(5) Long-term loans to employees(6) Long-term loans to affiliated companies(7) Long-term prepaid expenses(8) Long-term doubtful receivables(9) Deferred tax assets(10) Other investments and other assets(11) Allowance for doubtfulreceivables
Total investments and other assets
Total fixed assets
Total assets

Amount14,258
1,565
97,243
16,058
6,622
12,38240,659164

93,609(65,428)
8,501(7,254)289,413(261,815
)
125
(115)
86,626(72,337)

75,886480
14,864
15,785
3,776
1,089
(260)
224,690

Account title(Liabilities)
I. Current liabilities
1. Notes payable
2. Accounts payable, trade
3. Short-term borrowings
4. Current portion of long-term borrowings
5. Current portion of bonds
6 Accounts payable, others
7. Other accrued expenses
8. Advances
9. Deposits
10. Other current liabilities
Total current liabilities

Amount400
73,691
57,89324,86320,0008,446
21,745
2,037
2,166
522
211,765

II. Long-term liabilities
1. Bonds
2. Long-term borrowings
3. Retirement benefits
4. Other long-term liabilities
Total long-term liabilities
Total liabilities

12,00082,66324,781
1,158
120,603332,369(Net Assets)
Shareholders’ equity
1. Common stock
2. Additional paid-in capital

76,94046,74428,1801,246
27,597I.

10
3.
14,28912,967
115
84,407
315
206
9,857
10,37923,96753,248266
1,958
4
19,256
7,146
303
603
3,701
(3,862)
106,594
201,380426,071- 29 -

4.

Capital reserve
Other additional paid-in capital
Retained earnings
Other retained earnings
Retained earnings carried forward
Treasury stock
Total shareholders’ equity

II. Valuation, translation adjustments and others
1. Net unrealized holding gains on securities

25,92820,816(30,041)(30,041)(30,041)(339)
93,304

Total valuation, translation adjustments and others

589
(271)
318

III. Equity warrants
Total net assets

79
93,702

2.

Deferral hedge profit/loss

Total liabilities and net assets

426,071(Translation)

Non-Consolidated Statement of Operations(From April 1, 2007 to March 31, 2008)(Unit: millions of yen)Account title

AmountI.

Net sales

408,840

II.

Cost of sales

351,983

Gross profitIII.

56,856

Selling, general and administrative expenses

69,837

Operating lossIV.

12,980Non-operating income

1. Interest income

690

2. Interest income on securities

1

3. Dividend income

4,206

4. Brand royalty received

1,919

5. OtherV.

586

Non-operating expenses

1. Interest expense

3,382

2. Interest expense for bonds

166

3. Foreign exchange loss

1,293

4. Other

1,452

Ordinary loss
VI.

7,405

6,294
11,869Extraordinary profit

1. Gain on sale of fixed assets

6,521

2. Gain on sales of investments in securities

4,267

3. Gain on contribution of securities to the pension trust

3,822

4. Gain on reversal of prior year’s patent fees

451

15,062

VII. Extraordinary loss
1. Loss on sale and disposition of property, plant and equipment
2. Special retirement payments

1,113
570

3. Loss on devaluation of inventories

3,407

Net loss before taxes

5,091
1,898

Income taxes(1,146)

Income taxes deferred

977

Net loss

(169)
1,729

- 30 -

(Translation)

Non-consolidated Statement of Changes in Shareholders’ Equity(From April 1, 2007 to March 31, 2008)(Unit: millions of yen)
Shareholders’ equity
Additional paid-in capital
Retained earnings
Otherretained
Total
Other
Total
earnings
Additional
additional
Capitalretained
Retainedpaid-inpaid-inreserveearnings
earnings
capitalcapitalcarriedforwardCommonstock

Balance as of March
31, 2007
Changes in thefiscal year
Net loss
Acquisition oftreasury stock(Net) changes otherthan shareholders’equity in the fiscal
year
Total changes in thefiscal year
Balance as of March
31, 2008

76,94025,92820,816

46,744(28,311)(28,311)(1,729)(1,729)Total
shareholders’equity(314)

95,058(1,729)
(24)

(24)

-

-

-

-

(1,729)(1,729)(24)(1,753)76,94025,92820,816

46,744(30,041)(30,041)(339)

93,304

Valuation, translation adjustments and others
Valuation,
Net unrealized
translation
Deferral hedge
holding gains on
adjustments andprofit/loss
securities
othersBalance as of March
31, 2007
Changes in thefiscal year
Net loss
Acquisition oftreasury stock(Net) changes otherthan shareholders’equity in the fiscal
year
Total changes in thefiscal year
Balance as of March
31, 2008

Treasurystock

13,802(369)

13,433Equity warrants

32

Total net assets

108,523(1,729)(24)(13,212)97(13,114)46(13,068)(13,212)97(13,114)46(14,821)

589

(271)

318

79

93,702- 31 -

(Translation)

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

Standards and valuation methods for negotiable securities, etc.
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 market 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, etc.
Derivatives: Stated at market value

3.

Standards and valuation methods for inventories
Finished goods and semi-finished goods:
Stated at cost based on the moving average method
Work in process: Stated at cost based on the specific identification method
Materials and supplies: Stated at cost based on the last purchase price method

4.

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

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.
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 of- 32 -

(Translation)
retirement benefit obligations and pension assets.
Differences for changes in accounting standards are amortized over 15 years.
Prior service cost is amortized by the straight-line method over a certain number of years(14 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 to 14 years) within the average remaining service period of theemployees from the fiscal year after the difference is incurred.
6.

Accounting of lease transactions
The Company and its consolidated subsidiaries at home apply the accounting method forordinary lease transactions to finance lease transactions other than those in which the ownership ofthe leased property is considered to be transferred to the lessee.
7.

Hedge accounting methods(1) Method of hedge accounting
Deferred hedging is applied. As for forward exchange contracts eligible for allocation
treatment, allocation treatment is applied. With regard to interest rate swaps that meetthe requirements for special treatment, special treatment is applied.
(2) Means of hedging and targets of hedging
Forward exchange contracts are used to hedge fluctuations of exchange rates on credits
and debts in foreign currencies. Interest rate swaps are employed to hedge fluctuationsof interest rates in the markets on variable-rate short-term borrowings and long-termborrowings.
(3) Policies on hedging
Derivative transactions are used to hedge fluctuations of market rates on credits anddebts.
(4) Assessment method of the effectiveness of hedges
To determine the effectiveness of hedges, the Company compares the cumulative total ofthe market fluctuations or the cash flow fluctuations for the targets of hedging and that of
the market 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.

8.

Other important matters in preparation of non-consolidated financial statements(1) Accounting processing of consumption tax
The tax-exclusion approach is applied for accounting of consumption tax and local
consumption tax.
(2) Application of consolidated tax payments
Consolidated tax payments are applied.

Notes to Non-consolidated Balance Sheets
1. Assets pledged as collateral
Investment securities: ¥5,706 million- 33 -

(Translation)

2.

3.

Liabilities collateralized by the above assets:
Short-term borrowings: ¥4,500 million
Guarantee liabilities:
The Company provides guarantees for bank borrowings made by employees andaffiliated companies as shown below.
Oki Hong Kong Ltd.*¥3,507 million(US$ 35,000 thousand)Employees (housing loans)¥1,713 million
Oki Electric Industry (Shenzhen) Co., Ltd.
¥1,539 million(RMB 107,732 thousand)Miyagi Oki Electric Co., Ltd.
¥900 million
Nagano Oki Electric Co., Ltd.
¥700 million
Oki Data Americas, Inc.
¥511 million(US$5,100 thousand)Oki Engineering Co., Ltd.
¥400 million
Eight other entities:¥929 million
Total:¥10,200 million* Including a re-guarantee of ¥2,805 million (US$28,000 thousand) for guarantees onbank borrowings made by Oki Hong Kong Ltd.
Monetary claims receivable from and payable to affiliates
Short-term monetary claims receivable from affiliated companies:¥55,281 million
Long-term monetary claims receivable from affiliated companies:¥20,467 million
Short-term monetary claims payable to affiliated companies:¥47,597 million
Long-term monetary claims payable to affiliated companies:¥14 million

Notes to Non-consolidated Statement of Operations
Transactions with affiliated companies
Sales:
Purchases:
Non-operating transactions:¥85,535 million¥128,890 million¥9,509 million

Notes to Non-consolidated Statement of Changes in Shareholders’ Equity
Type and number of treasury stock as of the end of the fiscal year under review
Common stock:
1,136 thousand shares- 34 -

(Translation)
Notes to Deferred Tax Accounting
Major factors giving rise to deferred tax assets and liabilities
Deferred tax assets
Loss carryforwards
Nondeductible retirement benefits
Nondeductible write-downs of inventories
Nondeductible accrued bonuses
Nondeductible doubtful accounts
Nondeductible loss on impairment of fixed assets
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 securities
OthersTotal deferred tax liabilities
Net deferred tax liabilities¥19,145 million¥12,729 million¥2,522 million¥1,939 million¥1,515 million¥1,190 million¥1,437 million¥40,481 million¥(34,126) million¥6,355 million¥(1,567) million¥(344) million¥(63) million¥(1,974) million¥4,380 million

Notes to Leased Fixed Assets
1. Amount equivalent to acquisition cost of leased assets as of the end of the term under review¥21,130 million
2. Amount equivalent to accumulated depreciation of leased assets as of the end of the term
under review¥7,728 million
3. Amount equivalent to unexpired lease payment of leased assets as of the end of the term
under review¥13,401 million- 35 -

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

Subsidiary

Subsidiary

CapitalBusiness

Warabi,
SaitamaPref.

¥400
million

Product
ion andsales ofsoftware(Direct)
100%

Minatoku, Tokyo¥50
million

Sales ofsemiconductorproducts(Direct)
100%

Company nameLocation

Oki SoftwareCo., Ltd.

Oki
Microelectronics Co., Ltd.

Oki Data
Corporation

Minatoku, Tokyo

Miyagi Oki
Electric Co.,Ltd.

Ohiramura,
Kurokawa-gun,
Miyagi
Pref.

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Votingright ratio

Account
item

Endingbalance(mil.
yen)

Accounts
payable –
trade

6,709

Accruedexpenses

311–

Sales oftheCompany’s products

Sales ofproducts

18,224

Accounts
receivable– trade6,502

Concurrent:3

Purchaseof Oki
Data
Corporation’s
products

Underwriti
ng of
capitalincrease

5,000

-

-

Concurrent:1

Processingof theCompany’s products
on acontract
basis

Purchase of
semimanufactur
ed products

21,741

Accounts
payable –
trade

6,575

Processingof theCompany’s products
on acontract
basis

Purchase of
semimanufactur
ed products

16,603

Accounts
payable –
trade

4,395

Sales ofproducts

16,080Accounts
receivable– trade4,416

Purchase of
products

9,868

Accounts
payable –
other

4,530

¥200
million

Product
ion andsales ofsemiconductorproducts

Miyazaki Oki
Electric Co.,Ltd.

Kiyotakecho,
Miyazakigun,
Miyazaki
Pref.

¥200
million

Product
ion andsales ofsemiconductors(Direct)
100%

Concurrent:1

Oki America
Inc.

USA

US$ 14
million

Sales ofsemiconductors(Direct)
100%

Concurrent:1

Baht 700
million

Product
ion andsales ofsemiconductorproducts(Direct)
100%–

ThailandTransaction
amount(mil. yen)

Purchase ofservices

Concurrent:1

Sales ofprinters(Direct)
100%

Descriptionoftransactions

Productionofsoftwareon acontractbasis, etc.

¥17,000
millionOki (Thailand)Co., Ltd.

(Direct)
100%

Relationship
Businessrelationship

Concurrent
directors

Sales oftheCompany’s products
Processingof theCompany’s products
on acontract
basis

19,847

Notes:
1. The transactions amount excludes consumption tax, while the ending balance includes consumption tax.
2. Conditions of transactions and policy in determining conditions
The Company determines conditions regarding purchase of services and purchase/sales of products and semimanufactured products based on market prices.
3. Underwriting of capital increase: The Company underwrote a capital increase carried out by Oki Data Corporation,purchasing all of the newly issued shares at ¥62,500 per share.

Notes to Per-share Information
1. Net assets per share: ¥137.05
2. Net loss per share: ¥2.53- 36 -

(Translation)

Transcript of Account Auditors’ Report

Independent Auditors’ Report
May 22, 2008
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon
Tatsunosuke Kagaya (seal),
Engagement Partner, Certified Public Accountant
Masato Tsukahara (seal),
Engagement Partner, Certified Public Accountant
Akira Sato (seal),
Engagement Partner, Certified Public Accountant

We have audited the non-consolidated financial statements – the non-consolidated balance sheets, the nonconsolidated statement of operations, the non-consolidated statement of changes in shareholders’ equity andnotes to non-consolidated financial statements – and its supporting schedules of Oki Electric Industry Co.,
Ltd.’s 84th term from April 1, 2007 to March 31, 2008 in accordance with Article 436 Paragraph 2 Item 1 of
the Company Law. The financial statements and supporting schedules are the responsibility of Oki ElectricIndustry’s management. Our responsibility is to express an opinion on the financial statements andsupporting schedules based on our audit as independent auditors.
We conducted our audit in accordance with auditing standards generally accepted in Japan. These auditing
standards require that we obtain reasonable assurance as to whether these financial statements are free ofmaterial misstatement. Audits are conducted based on a test basis, and include reviews of accounting
policies and methods that management adopts, and evaluation of management estimates and the presentationof financial statements and supporting schedules as a whole. We believe that we have obtained reasonablebases for the expression of our opinion as a result of our audit.

We concluded that the non-consolidated financial statements fairly present in all aspects Oki ElectricIndustry’s assets and income or loss in accordance with corporate accounting standards generally
accepted in Japan.
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry Co., Ltd., ourfirm (Ernst & Young ShinNihon) and the respective engagement partners.

- 37 -

(Translation)

Transcript of Corporate Auditors’ Report

Corporate Auditors’ Report
We, the Board of Corporate Auditors, have prepared upon consultation this Audit Report based on reports compiled by each
Corporate Auditor with respect to Directors’ performance of their duties during the 84th fiscal year from April 1, 2007 to
March 31, 2008, as follows:
1. Auditing methods used by Corporate Auditors and the Board of Corporate Auditors, and details of audit
The Board of Corporate Auditors specified an audit policy, compiled audit plans and received reports from each Corporate
Auditor on the status of implementation and results of audits and also received reports from Directors and accounting auditorson the status of the execution of their duties and asked them for explanations as needed.
Each Corporate Auditor, according to the audit standards, policy and plans set up by the Board of Corporate Auditors, has
maintained good communications with Directors, the internal audit division and other employees and strived to collectinformation and improve the audit environment as well as attending 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 asnecessary, perused the documents whereby the important decisions were made, and examined business and financial
conditions at the head office and principal operating offices. In addition, we have monitored and verified the details of theresolution made by the Board of Directors concerning the establishment of systems defined in Article 100, Paragraph 1 andParagraph 3 of the Regulations for Enforcement of the Company Law as necessary for ensuring compliance with laws and theCompany’s Articles of Incorporation in the performance of duties by Directors and for ensuring appropriateness of duties of a
joint stock company. We have also monitored and verified the status of the systems established based on the said resolution(internal control systems). Also, we have maintained good communications and exchanged information with directors,
corporate auditors and others of the subsidiaries of the Company, and received from the subsidiaries reports on their businessconditions as needed. Based on the methods mentioned above, we have reviewed the financial statements for the said fiscal
year and their supplementary schedules.
We have also monitored and verified whether the auditors maintained their independence and properly implemented
audits, received from the auditors reports on the performance of their duties and asked them for explanations as necessary.
The accounting auditors reported to us that “systems for ensuring proper execution of duties” (listed in each item of Article
159 of the Corporate Calculation Regulations) have been established in accordance with the quality control standards
concerning audits (Business Accounting Council, October 28, 2005), and asked them for explanations as necessary. Based on
the methods mentioned above, we have reviewed financial statements for the said fiscal year (balance sheet, statement ofoperations, statement of changes in shareholders’ equity, and notes to non-consolidated financial statements), their
supplementary schedules and consolidated financial statements (consolidated balance sheet, consolidated statement ofoperations, consolidated statement of changes in shareholders’ equity, and notes to consolidated financial statements).
2. Results of Audit(1) Results of audit of the business report
1) We consider that the business report and its supplementary schedules fairly present the situation of the Company
in accordance with relevant laws and regulations and the Company’s Articles of Incorporation.
2) With respect to the Directors’ performance of their duties, we have found neither undue transactions nor material
facts that violate relevant laws and regulations or the Company’s Articles of Incorporation.
3) We consider that the details of the resolution made by the Board of Directors concerning internal control
procedures are proper. With respect to the Directors’ performance of their internal control duties regarding, wehave found no issues to be pointed out.
(2) Results of audit of financial statements and their supplementary schedules
We consider that the auditing methods and results of the Company’s Accounting Auditors, Ernst & Young ShinNihon,
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,
are proper.
May 23, 2008
The Board of Corporate Auditors, Oki Electric Industry Co., Ltd.
Takahisa Inagawa, Standing Auditor (seal)
Yoshikatsu Shiraishi, Standing Auditor (seal)
Hiroyuki Katagiri, Outside Standing Auditor (seal)
Ieji Yoshioka, Auditor (seal)- 38 -

(Translation)

Reference Documents for the General Meeting of Shareholders
Agenda and Reference Matters
Agenda 1: Approval of Plan of Incorporation-type Company Split
1.

Purpose of Incorporation-type Company Split

In the accelerated development of the market economy, by causing the 100%-owned
subsidiary of the Company to succeed to the Company’s semiconductor business, the Company
will implement an incorporation-type company split whereby OKI Semiconductor Company,
Limited, to be newly incorporated, will succeed to the Company’s semiconductor business for the
purpose of ensuring the possibility of forming an expeditious alliance with a third party involved
in semiconductor business (including transfer of the shares of such 100%-owned subsidiary of theCompany to such a third party as is not included in OKI group).
2.

Outline of Plan of Incorporation-type Company Split (shinsetsubunkatsu)
Plan of Incorporation-type Company Split (copy)

For the implementation of the incorporation-type company split (hereafter the“Incorporation-type Split”) whereby the stock company to be newly incorporated will succeed to apart of the rights and obligations which Oki Electric Industry Co., Ltd. (hereafter the “Company”)
owns concerning the Business (as defined in Article 2), the Company will prepare a Plan of
Incorporation-type Company Split (hereafter the “Plan”) as follows.
Article 1

Company to be Incorporated

1.1 The corporate name and the location of the head office of the stock company to be
newly incorporated in the Incorporation-type Split (the “Company to be Incorporated”) shall be as
follows:(1) Corporate name: OKI Semiconductor Company, Limited(2) Location of Head Office: Hachioji-shi, Tokyo
1.2 In addition to the provision of the immediately preceding paragraph, the purpose ofand the total number of shares authorized to be issued by the Company to be Incorporated, andother matters to be set forth in the articles of incorporation, shall be as prescribed in Exhibit 1“Articles of Incorporation of Company to be Incorporated.”- 39 -

(Translation)
Article 2Business

The “Business” referred to in the Plan shall mean all of the business attributable to thesemiconductor business group of the Company as of the date of the preparation of the Plan;
provided, however, that the Business will not include any business conducted for SOS RF
Solutions Venture Unit, e-Functional Module Business Management Department of Business
Management and Promotion Division, and Network Devices Laboratories of Corporate Researchand Development Center, of the Company, and Oki Printed Circuits Co., Ltd. and Oki Sensor
Device Corporation, but will include business conducted for Oki Environment Technologies
Inc.
Article 3

Names of Directors and Other Officers and Accounting Auditor at Time ofIncorporation of Company to be Incorporated

The Directors, Corporate Auditor, and Accounting Auditor at the time of the incorporationof the Company to be Incorporated shall be as follows:(1) Directors:
Hironori Kitabayashi, Hiroshi Enomoto, Shinya Takahashi, and Noriaki Okada(2) Corporate Auditor:
Toshiya Hatakeyama(3) Accounting Auditor:
Ernst & Young ShinNihon
Article 4

Rights and Obligations to be Succeeded to through Incorporation-type Split

4.1 The assets, liabilities, agreements, and other rights and obligations to be succeeded tofrom the Company by the Company to be Incorporated through the Incorporation-type Split shallbe the assets, liabilities, agreements, and other rights and obligations set forth in Exhibit 2“Schedule of Rights and Obligations Subject to Succession” which are attributable to the Businessas of the date of incorporation of the Company to be Incorporated (hereafter the “Date ofIncorporation”). The valuation of the assets and liabilities to be succeeded to from the Company
by the Company to be Incorporated shall be conducted based on the Company’s balance sheet andother calculations as of March 31, 2008, and shall be determined by adding or subtracting to/fromthe amount so calculated the amount accruing by the day immediately preceding the Date ofIncorporation.
4.2 The obligations succeeded to from the Company by the Company to be Incorporated
through the Incorporation-type Split shall be assumed by the Company to be Incorporated bydischarging the Company of all of the liabilities.
4.3 In the case that any registry, registration, notice, or other procedure is required for thetransfer of the rights to the assets to be succeeded to from the Company by the Company to be- 40 -

(Translation)
Incorporated through the Incorporation-type Split, any registration costs and other expenses
incurred for such procedures shall be borne by the Company to be Incorporated; provided,
however, that such costs and expenses shall not include any costs and expenses incurred for
obtaining (i) approvals or licenses that must be obtained from the competent authorities by the
Date of Incorporation for the Incorporation-type Split, or (ii) the consent or approval of the otherparty to each of the agreements to be succeeded to from the Company by the Company to be
Incorporated.
Article 5

Shares to be Issued at Time of Incorporation-type Split and Allotment
ThereofAt the time of the Incorporation-type Split, the Company to be Incorporated shall issue ten
thousand (10,000) shares of common stock, and shall allot and deliver to the Company all of suchshares to be issued at the time of the incorporation in place of the rights and obligations to be
succeeded to from the Company through the Incorporation-type Split.
Article 6Matters Concerning Capital Stock and Capital Reserves of Company to be
Incorporated

The amounts of the initial capital stock, the initial capital reserves, the initial additional
paid-in capital, the initial revenue reserves, and the initial retained earnings of the Company to be
Incorporated shall be as set forth in each of the following items:(1) Initial capital stock:
20 billion yen(2) Initial capital reserves: 20 billion yen(3) Initial additional paid-in capital:
Amount of the capital stock paid-in by the shareholders minus the total
amounts set forth in Items (1) and (2)(4) Initial revenue reserves: 0 yen(5) Initial retained earnings: 0 yen
Article 7

Date Designated for Incorporation-type Split

The date designated as that on which the Company to be Incorporated is to be incorporated
through the Incorporation-type Split (hereafter the “Date Designated for Incorporation-type Split”)
shall be October 1, 2008, on which date the procedures shall be taken at the place of the head
office of the Company to be Incorporated for the application of registration of the incorporation of
the Company to be Incorporated; provided, however, that if it is necessary for taking theprocedures for the Incorporation-type Split, such Date Designated for Incorporation-type Split
may be changed by a resolution of the Board of Directors of the Company.
Article 8

Effectiveness of Plan

Should either of the following events occur, the Plan shall become null and void:- 41 -

(Translation)

(1)

(2)

Article 9In the case that the Company cannot obtain the approval for the Plan by the Date
Designated for Incorporation-type Split due to a resolution of the general meetingof shareholders of the Company; orIn the case that approvals necessary for the Incorporation-type Split cannot be
obtained from the competent authorities by the Date Designated for Incorporationtype Split.
Duty Not to Compete

The Company shall not assume with respect to the Company to be Incorporated any duty
not to compete concerning the Business, even after the Incorporation-type Split becomes effective.
Article 10

Change of Plan and Suspension of Incorporation-type Split

During the period from the completion of the preparation of the Plan to the Date Designatedfor Incorporation-type Split, (i) in the case that any material change is made to the assets or the
management status of the Company, (ii) in the case that any such event occurs as would materiallyinterfere with the implementation of the Incorporation-type Split, or (iii) in the case that any such
event occurs as may make it impossible to cause the Company to be Incorporated to succeed tofrom the Company the important agreements concerning the Business, or as may make it
impossible for the Company to be Incorporated to newly enter into similar agreements, the terms
and conditions of the Incorporation-type Split set forth in the Plan may be changed or the
Incorporation-type Split may be suspended by a resolution of the Board of Directors of theCompany.
May 28, 2008
Katsumasa Shinozuka
President and Chief-Executive Officer
Oki Electric Industry Co., Ltd.
7-12, Toranomon 1-chome, Minato-ku,Tokyo- 42 -

(Translation)
Exhibit 1
Articles of Incorporation of Company to be Incorporated

CHAPTER IGENERAL PROVISIONS

Article 1

Corporate Name

The Company shall be called “Kabushiki Kaisha OKI Semiconductor,” which shall be
expressed in English as “OKI Semiconductor Company, Limited.”
Article 2

Objects

The objects of the Company shall be to engage in the following business:
1.
2.
3.
4.
Article 3

Development, manufacture, sales and import/export of semiconductors andvarious electronic components;
Development, manufacture, sales and import/export of software relating to theforegoing;
Designing, construction work, and provision of maintenance services andtechnical guidance relating to the foregoing; andAny and all other business incidental/relating to the foregoing.
Location of Head Office

The Company shall have its head office in Hachioji-shi, Tokyo.
Article 4

OrgansThe Company shall have the following organs besides the general meeting of shareholders
and Directors:(1) Board of Directors;(2) Corporate Auditors; and(3) Accounting Auditors.
Article 5

Method of Public Notice

Public notices of the Company shall be given in the official gazette (kampo).

- 43 -

(Translation)
CHAPTER II

Article 6

SHARES

Total Number of Shares Authorized to be Issued

The total number of shares authorized to be issued by the Company shall be forty thousand(40,000) shares.
Article 7

No Issuance of Share Certificates

The Company shall not issue any share certificates representing shares.
Article 8

Restriction on Transfer of Shares

8.1 All of the shares issued by the Company shall be shares with restrictions on transfer,and any acquisition of such shares of the Company by transfer shall require the approval of theCompany.
8.2 The organ to give such approval as is set forth in the immediately preceding
paragraph shall be the Board of Directors.
Article 9

Determination of Rights to Receive Allotment of Shares and Other Matters

If a shareholder is granted any right to receive an allotment of shares solicited or shareoption for subscription, matters concerning whether the granting of such right may be approved,
subscription requirements, and the day for the application for subscription shall be determined by aresolution of the Board of Directors.
Article 10

Matters Concerning Handling of Shares and Other Matters

Except as otherwise prescribed by law or regulation, or in these Articles of Incorporation,
any matters concerning the handling of shares and share option, and charges therefor, shall be
determined by a resolution of the Board of Directors.

CHAPTER III

Article 11

GENERAL MEETINGS OF SHAREHOLDERS

Convocation

Ordinary general meetings of shareholders shall be convened within three (3) months fromthe closing of each fiscal year, and extraordinary general meetings of shareholders shall be
convened whenever necessary.

- 44 -

(Translation)
Article 12

Record Date for Ordinary General Meeting of Shareholders

The record date for the entitlement to voting rights at the ordinary general meeting ofshareholders shall be March 31 of each year.
Article 13

Convener

13.1 Except as otherwise prescribed by law or regulation, general meetings of shareholders
shall be convened by the Representative Director based on a resolution of the Board of Directors.
13.2 If the Representative Director is unable or refuses to act as prescribed in theimmediately preceding paragraph, another Director shall convene a general meeting ofshareholders according to the order predetermined by the Board of Directors.
Article 14

Notice of Convocation

A notice of convocation of a general meeting of shareholders shall be dispatched to eachshareholder entitled to exercise his/her voting rights at least one (1) week prior to the date of themeeting; provided, however, that a general meeting of shareholders may be held without following
the procedures for convocation, or with a shortened notice period, upon the unanimous consent of
all of the shareholders entitled to exercise their voting rights at the general meeting.
Article 15

Chairperson

15.1 General meetings of shareholders shall be chaired by the Representative Director.
15.2 If the Representative Director is unable or refuses to act as prescribed in theimmediately preceding paragraph, another Director shall chair a general meeting of shareholders
according to the order predetermined by the Board of Directors.
Article 16

Method of Resolutions

Except as otherwise prescribed by law or regulation or in these Articles of Incorporation,
resolutions of a general meeting of shareholders shall be adopted by a majority of the voting rights
held by the shareholders present at the general meeting of shareholders at which a majority of theshareholders entitled to exercise voting rights are present.
Article 17

Proxy Voting

A shareholder may exercise his/her voting rights through a proxy. Either the shareholder
or the proxy shall submit to the Company a document evidencing his/her authority as a proxy foreach general meeting of shareholders.

- 45 -

(Translation)
Article 18

Minutes of Meetings

With respect to the proceedings of a general meeting of shareholders, minutes shall be
prepared, and the Company shall keep such minutes, as prescribed by law and regulation.

CHAPTER IV

Article 19

DIRECTORS AND BOARD OF DIRECTORS

Number of Directors

The Company shall have not less than three (3) Directors.
Article 20

Election of Directors

20.1 Directors shall be elected by a resolution of a general meeting of shareholders.
20.2 No cumulative voting shall be used for the election of Directors.
Article 21

Term of Office of Directors

21.1 The term of office of Directors shall expire at the closing of the ordinary general
meeting of shareholders held for the last of the fiscal years which end within two (2) years fromtheir election.
21.2 The term of office of a Director elected to fill a vacancy for a Director who retired
before the expiration of his/her term of office, or to satisfy the sufficient number of Directors soincreased, shall expire when the term of office of the other incumbent Directors would expire.
Article 22

Representative Directors and Directors with Special Titles

22.1 The Company shall, by a resolution of the Board of Directors, elect Representative
Directors.
22.2 The Company shall, by a resolution of the Board of Directors, appoint a PresidentDirector and other Directors with special titles.
Article 23

Authority of Board of Directors

23.1 The Board of Directors shall, by its resolution, determine all of the important mattersconcerning business and affairs of the Company, as well as those prescribed by law and regulationand in these Articles of Incorporation.
23.2 Representative Directors and Directors who engage in the business and affairs of the- 46 -

(Translation)
Company shall make a report to the Board of Directors at least every three (3) months concerning
the status of the execution of their responsibilities.
Article 24

Convener of Meetings of Board of Directors

24.1 Except as otherwise prescribed by law or regulation, meetings of the Board of
Directors shall be convened by the Representative Director.
24.2 If the Representative Director is unable or refuses to act as prescribed in theimmediately preceding paragraph, another Director shall convene a meeting of the Board of
Directors according to the order predetermined by the Board of Directors.
Article 25

Convocation Notice for Meetings of Board of Directors

25.1 A notice of convocation of a meeting of the Board of Directors shall be dispatched toeach Director and each Corporate Auditor at least three (3) days prior to the date of the meeting.
However, in cases of emergency, this period may be shortened.
25.2 A meeting of the Board of Directors may be held without following the proceduresfor convocation upon the unanimous consent of all Directors and Corporate Auditors.
Article 26

Chairperson

26.1 Meetings of the Board of Directors shall be chaired by the Representative Director.
26.2 If the Representative Director is unable or refuses to act as prescribed in theimmediately preceding paragraph, another Director shall chair a meeting of the Board of Directors
according to the order predetermined by the Board of Directors.
Article 27

Method of Resolutions of Board of Directors

Resolutions of the Board of Directors shall be adopted by a majority of the votes of
Directors present at a meeting of the Board of Directors at which a majority of Directors who may
participate in voting are present.
Article 28

Omission of Resolutions of Board of Directors

If any Director makes a proposal on any matter subject to a resolution of the Board of
Directors, and if all of the Directors who may participate in voting for such proposal declare theirintentions to consent thereto in writing or electromagnetically, a resolution shall be deemed tohave been adopted by the Board of Directors to pass the proposal, unless an objection has been
expressed by Corporate Auditor(s).

- 47 -

(Translation)
Article 29

Minutes of Meetings of Board of Directors

As prescribed by law and regulation, with respect to the proceedings of a meeting of theBoard of Directors, minutes shall be prepared. Directors and Corporate Auditor(s) present at themeeting shall affix their signatures or names and seals, or affix their electronic signatures to suchminutes, and the Company shall keep the minutes.
Article 30

Remuneration, etc. for Directors

Remuneration, bonuses, and other benefits of a proprietary nature received by Directors
from the Company as compensation for the execution of their responsibilities shall be determinedby resolutions of general meetings of shareholders.

CHAPTER V

Article 31

CORPORATE AUDITOR(S)

Number of Corporate Auditors

The Company shall have not less than one (1) Corporate Auditor.
Article 32

Election of Corporate Auditor(s)Corporate Auditor(s) shall be elected by a resolution of a general meeting of shareholders.
Article 33

Term of Office of Corporate Auditor(s)33.1 The term of office of Corporate Auditor(s) shall expire at the closing of the ordinary
general meeting of shareholders held for the last of the fiscal years which end within four (4) years
from his/her (their) election.
33.2 The term of office of a Corporate Auditor elected to fill a vacancy for a Corporate
Auditor who retired before the expiration of his/her term of office shall expire when the term ofoffice of the retired Corporate Auditor would otherwise have expired.
Article 34

Remuneration, etc. for Corporate Auditor(s)Remuneration, bonuses, and other benefits of a proprietary nature received by Corporate
Auditor(s) from the Company as compensation for the execution of his/her (their) responsibilities
shall be determined by resolutions of general meetings of shareholders.

- 48 -

(Translation)
CHAPTER VI

Article 35

ACCOUNTS

Fiscal YearThe fiscal year of the Company shall be from April 1 of each year to March 31 of theimmediately following year.
Article 36

Distribution of Retained Earnings

36.1 The Company shall distribute the retained earnings by a resolution of a general
meeting of shareholders.
36.2 The record date for the year-end dividends of the Company shall be March 31 of eachyear.
36.3 In addition to the immediately preceding paragraph, the Company may distribute theretained earnings by setting a record date.
Article 37

Interim Dividends

The Company may, by a resolution of the Board of Directors, distribute interim dividends
by designating September 30 of each year as the record date.
Article 38

Period of Limitation of Right to Demand Payment of Dividends

38.1 The Company shall be released from the obligation to pay dividends if the assets for
dividends are in cash and are not received after the lapse of a full three (3) year period from thedate on which payment thereof is commenced.
38.2 No interest shall accrue on unpaid distributions.

CHAPTER VII

Article 39

SUPPLEMENTARY PROVISIONS

Total Number of Shares Issued at Time of Incorporation

The total number of shares issued at the time of incorporation of the Company shall be ten
thousand (10,000) shares of common stock.
Article 40

Initial Fiscal Year

The initial fiscal year of the Company shall be from the date of incorporation of the- 49 -

(Translation)
Company to March 31, 2009.

- 50 -

(Translation)
Exhibit 2
Schedule of Rights and Obligations Subject to Succession
1.

AssetsAny and all assets attributable to the Business. The details of the stock and otherproprietary equity shall be as set forth in Exhibit 2-1.
However, any assets set forth in each of the following shall be excluded.
(1) Land set forth in the following (hereafter the “Excluded Land”):
Address

Lot No.

Aza Jobusako, Oaza Kano, Kiyotake-cho,Miyazaki-gun, Miyazaki
Aza Nyuryo, Oaza Kano, Kiyotake-cho,Miyazaki-gun, MiyazakiHei 754-2

Classification
Land
OthersHei 789-1
Hei 790-6
Hei 881-8

OthersOthersOthersAza Sudaki, Oaza Kano, Kiyotake-cho,Miyazaki-gun, Miyazaki

ofAcreagemeters)(square406
27,266
3,191
13,912(2) Intellectual Property Rights set forth in the following:
(i)

(ii)

2.

Trademark rights, patent rights, design rights, utility model rights, circuit
placement usage rights also attributable to the business of the Company
which is not the Business, or rights to receive such rights; andTrademark rights concerning any trademark, including the name or theletters of “OKI,” or rights to receive such rights.

Liabilities
Liabilities attributable to the Business set forth in each of the following:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)

(10)

Notes payable;
Accounts payable, trade;
Accounts payable, others;
Other accrued expenses;
Advances;
Deposits;
Guarantee deposits;
Retirement benefits;
Guarantee obligations borne by the Company for the housing loan obligations
borne by the employees, to be succeeded to from the Company by the Company to
be Incorporated, for the benefit of the creditors in respect thereof; andGuarantee obligations borne by the Company, for the obligations borne by thefollowing companies, for the benefit of the creditors in respect thereof:- 51 -

(Translation)

(i)
(ii)
(iii)
3.

Oki Micro Design Co., Ltd.
Miyagi Oki Electric Co., Ltd.; andOki Semiconductor Taiwan Inc.

Contractual Status
The status under the real estate lease agreements, license agreements, and sales
agreements attributable to the Business, and any other agreement attributable to theBusiness; provided, however, that any agreement set forth in each of the following shall be
excluded:
(1)
(2)

(3)

Any agreement also attributable to the business of the Company which is not theBusiness;
Any agreement for the succession of the status under which, through the
Incorporation-type Split, the consent of the other party to the agreement isrequired, which consent has not been obtained by the day immediately preceding
the Date of Incorporation;
In addition to each of the preceding items, the following agreements:
(i)

(ii)

4.

The Letter of Understanding dated October 1, 2007, and the Real Estate
Sales Agreement dated November 28, 2007, made and entered into by andbetween the Company and Showa Shell Solar Co., Ltd. with respect to the
Excluded Land; andThe Patent Portfolio Cross-License Agreement dated April 7, 2006 madeand entered into by and between the Company and Texas Instruments
Incorporated with respect to the patent license relating to memories,
microcomputers, and LCDs.

Status under Employment Agreement
The status of an employer under the employment agreement made and entered intowith the employees of the Company who are primarily engaged in the Business, and whoare employed by the Company as of the day immediately preceding the Date ofIncorporation. The length of their service in the Company shall be added to the length oftheir service in the Company to be Incorporated.

- 52 -

(Translation)
Exhibit 2-1
Stock and Other Proprietary Equity Attributable to Business
The stock and other proprietary equity which is included in the assets attributable to
the Business shall be the stock and other proprietary equity of the following companies:
Jeco Co., Ltd.;TOKAI BUSSAN Co., Ltd.;MACNICA, Inc.;
Rikei Corporation;
Tomato LSI Inc.;ELISNET Co., Ltd.;
Grace Semiconductor Manufacturing Corporation;
Key Stream Corporation;
Semiconductor Leading Edge Technologies, Inc.;
Semiconductor Technology Academic Research Center;Oki Semiconductor Taiwan Inc.;MITSUMINE ELECTRIC Co., Ltd.;Oki Micro Design Co., Ltd.;Oki Microelectronics Co., Ltd.;Oki Technocollage, Inc.;
Oki Network LSI Co., Ltd.;Oki America, Inc.;Oki Electronics (Hong Kong) Ltd.;
Wipro Techno Centre (Singapore) Pte. Ltd.;Oki Semiconductor Singapore Pte. Ltd.;TOKI COMMERCIAL CO., LTD.;NIPPON DENSO INDUSTRY Co., Ltd.;
Miyazaki Oki Electric Co., Ltd.;
Miyagi Oki Electric Co., Ltd.;Tama Oki Electric Co., Ltd.;Oki Environment Technologies Inc.;
Oki (Thailand) Co., Ltd.;
Lusem Co., Ltd.;Oki Semiconductor Shanghai Co., Ltd.;Oki Electric Europe GmbH; andOki Semiconductor Technology (Shanghai) Co., Ltd.

- 53 -

(Translation)
3.

Outline of Matters Set Forth in Each Provision of Article 205 of Regulations for
Enforcement of Company Law(1)

Relevancy of the matters set forth in Article 763, Item 6 of the Company Law(i)

Matters concerning the number of the shares of the Company to be
Incorporated which are to be delivered at the time of this company split
The shares to be delivered by OKI Semiconductor Company, Limited(hereafter the “Company to be Incorporated”) to Oki Electric Industry Co.,
Ltd. (hereafter the “Splitting Company”) through this company split will
be ten thousand (10,000) shares of common stock of the Company to be
Incorporated.
Because all of the shares issued by the Company to be Incorporated will
be delivered to the Splitting Company, the amount of the net assets of theSplitting Company will not be affected regardless of the number of theshares to be allotted, and the number of shares to be delivered by theCompany to be Incorporated to the Splitting Company has accordingly
been determined in light of the effective management of the Company to
be Incorporated, which will become a wholly owned subsidiary of theCompany.

(ii)

Matters concerning the capital stock and the capital reserves of theCompany to be Incorporated
In light of the circumstances such as the assets and other rights andobligations to be succeeded to by the Company to be Incorporated, and thefuture business activities of the Company to be Incorporated and othersimilar factors, the amount of each of the capital stock and the capitalreserves of the Company to be Incorporated has been determined asfollows from the perspective of the realization of expeditious and flexible
capital policies:
a.
b.
c.

Capital stock:
20 billion yen
Capital reserves: 20 billion yen
Revenue reserves: 0 yen- 54 -

(Translation)

Agenda 2: Election of Six Directors
The tenure of Directors Katsumasa Shinozuka, Naoki Sato, Hironori Kitabayashi,Kazuo Tanaka, Harushige Sugimoto and Mikihiko Maeno will expire at the end of thisgeneral meeting of shareholders.
We accordingly request that you elect six Directors from among the following
candidates.
Candidates for Directors (Six):
CandidatenumberName(Date of birth)

1

Katsumasa Shinozuka(November 28, 1940)

2

Naoki Sato
(October 27, 1948)

3

Hironori Kitabayashi(August 4, 1947)

Brief personal profile, position andrepresentation of other companies
Joined Oki Electric
Apr. 1963
General Manager, Computer System
Oct. 1988
Development Division
Director
Jun. 1990
Senior Vice President
Oct. 1992
Executive Vice President
Jun. 1997
President (incumbent)
Jun. 1998
CEO (incumbent)
Apr. 2000
Joined The Fuji Bank, Limited
Apr. 1972
Senior Manager, Sales Division No. 5,
May 1999
Fuji Bank
Executive Officer,
Jun. 2001
Senior Manager, Sales Division No. 5,
Fuji Bank
Senior Executive Officer, Mizuho
Apr. 2002
Corporate Bank, Ltd.
Senior Executive Officer, Oki Electric
Apr. 2004
Senior Vice President
Jun. 2004
Executive Vice President (incumbent)
Apr. 2007
Joined Oki Electric
Apr. 1970
Superintendent, Process Technology
Jun. 1996
Center, Electronic Device Business
Division
Executive Officer
Apr. 2000
Senior Executive Officer (incumbent)
Apr. 2005
Chairman, Semiconductor Business
Apr. 2006
Group (incumbent)
Senior Vice President (incumbent)
Jun. 2006

Apr. 1973
Mar. 1993
Apr. 2004
Apr. 2007
4

Masao Miyashita(December 23, 1949)
Apr. 2008

Executive positions at other companies:
President of Oki Engineering Co., Ltd.
Joined Oki ElectricManager, Sales Department No. 1,
Government Sales Division
Executive Officer
Senior Executive Officer (incumbent)
President of System Solutions Company(incumbent)
Head, Information System BusinessGroup, Systems Network Group(incumbent)
General Manager, Marketing Promotion
Division (incumbent)- 55 -

Number of Oki
shares held

94,000 shares

26,000 shares

19,000 shares

17,000 shares

(Translation)
Apr. 1973
Jun. 1994

5

Yutaka Asai
(September 10, 1949)
Apr. 2002
Apr. 2008
Apr. 1970
Jun. 1990

6

Harushige Sugimoto(February 22, 1948)

Apr. 2000
Apr. 2004
Jun. 2004
Apr. 2008

Joined Oki ElectricManager, Hardware Development
Department, Multimedia
Communications System Development
Center, Telecommunications Network
Business Division
Executive Officer
Senior Executive Officer (incumbent)
CTO (incumbent)
Joined Oki Electric
General Manager, Technology
Department No.1, Composite
Telecommunications Systems
Department, Electronic
Telecommunications Business Division
Executive Officer
CTO
Senior Executive Officer
Senior Vice President
Director (incumbent)

22,000 shares

23,000 shares

Executive positions at other companies:
President of Oki Data Corporation
CEO: Chief Executive Officer
CTO: Chief Technology Officer- 56 -

(Translation)
Agenda 3: Election of Two Corporate Auditors
Mr. Hiroyuki Katagiri and Mr. Ieji Yoshioka, Corporate Auditors, will retire effectiveat the end of this general meeting of shareholders.
We accordingly request that you elect two new Corporate Auditors. Particulars of
the proposed candidate are provided below.
The Board of Auditors has already approved this agenda.
Candidate for Corporate Auditor (2):CandidatenumberName(Date of birth)1

Noriyuki Kandori(August 27, 1945)

2

Seiji Nishi(January 4, 1947)

Brief personal profile, position andrepresentation of other companies
Joined Ministry of Posts andApr. 1970
Telecommunications
Senior Planning Officer, Policy Division,
Apr. 1985
Communications Policy Bureau
Chief, Funds Investment Planning
Jul. 1990
Section, Postal Life Insurance Bureau
Executive Officer of KDD Corporation
Aug. 1999
Director of KDDI Corporation
Apr. 2001
Managing Director of KDDI Corporation
Apr. 2003
Adviser of Sompo Japan Insurance Inc.
Jul. 2006(incumbent)
Joined Yasuda Mutual Life Insurance Co.
Apr. 1969
Manager, Contracts Management
Jul. 2000
DivisionManaging Director
Managing Director of Meiji Yasuda Life
Apr. 2001
Insurance Co.
Jan. 2004
President of Meiji Yasuda General
Insurance Co., Ltd.
Apr. 2005
Part-time Director of Meiji Yasuda
General Insurance Co., Ltd. (incumbent)
Apr. 2008

Number of Oki
shares held02,000 shares

Notes:
1. Noriyuki Kandori and Seiji Nishi are candidates for Outside Corporate Auditor.
2. Noriyuki Kandori has been engaged in public postal services for many years and management of KDDI Corporation.
Given his extensive experience and insight about the telecommunications business, we judge that he is capable ofauditing appropriately the execution of duties by Directors of the Company, and propose that he is appointed as
Outside Corporate Auditor. He is expected to resign as Adviser of Sompo Japan Insurance Inc. in June 2008.
3. Seiji Nishi has been engaged in management of Meiji Yasuda Life Insurance Co. for many years. Given his
extensive experience and insight, we judge that he is capable of auditing appropriately the execution of duties byDirectors of the Company, and propose that he is appointed as Outside Corporate Auditor. He is expected to resign
as Part-time Director of Meiji Yasuda General Insurance Co., Ltd. in June 2008.
4. Meiji Yasuda Life Insurance Co., for which Seiji Nishi has served as Director, received from the Financial Services
Agency an order for suspension of business under Article 133 of the Insurance Business Law on February 25, 2005
for inappropriate management over insurance payouts during his term of office.
5. Seiji Nishi had been a managing director of Meiji Yasuda Life Insurance Co., a specified affiliated entity (a main
customer) of the Company, until March 2005.

- 57 -

(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 Internet is only possible by accessing the voting site designated by theCompany (please refer to the following URL). It is also possible to access this site with a mobile phone.
You will need to enter your voting rights exercise code and password (valid only for purposes of thisgeneral meeting) provided in the upper right corner of the voting rights exercise form, enclosed with the
Notice.
2) If you exercise your voting rights both in writing and via the Internet, we will regard the vote cast via theInternet to be effective.
3) If you exercise your voting rights more than once, we will regard the last vote you cast via the Internet tobe the effective one.
4) You will bear all connection charges for using the Internet (service provider access fees, communication
charges, etc.)

2.

Instructions for voting via the Internet
1) Access http://www.it-soukai.com/ or https://daiko.mizuho-tb.co.jp/.
(Please note that the above URLs cannot be accessed from 3:00 a.m. to 5:00 a.m. during the voting
period.)2) Enter the voting rights exercise code and the password and click “log-in.”
3) Proceed to vote in accordance with the onscreen instructions.

3.

Technical specifications
1) Operating system: Windows operating systems
2) Browser: Internet Explorer 5.5 or above
3) Internet connection: Any service providing Internet access4) Mobile phones: Services should be available from any of i-mode, EZweb or Yahoo! Keitai (certain models
cannot be used.) If you are using a cellular phone with bar-code scanner features we request that you use
the QR Code provided in the margin.

4.

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.

5.

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

Windows and Internet Explorer are registered trademarks of Microsoft Corporation (U.S.)
i-mode is the registered trademark of NTT Mobile Communications Network, Inc. (NTT DoCoMo).
EZweb is the registered trademark of KDDI Corporation.
Yahoo! is the trademark of Yahoo! Inc. of the U.S.
QR Code is the registered trademark of Denso Wave Incorporated.

- 58 -