(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 6, 2012

NOTICE OF 88TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 88th
ordinary general meeting of shareholders will be held as follows. We would be grateful if you
could attend the meeting.
Those who will not be able to attend the meeting are kindly requested to review “4. Exercise of
Voting Rights” on page 2 and exercise their voting rights no later than 5:15 p.m., June 27(Wednesday), 2012 (JST).
Yours faithfully,
Hideichi Kawasaki,
President, Representative Director
Oki Electric Industry Co., Ltd.
1-7-12 Toranomon, Minato-ku, Tokyo-1-

(Translation)

1.
2.

Date and Time:
Location:

Thursday, June 28, 2012, from 10:00 a.m.
Nippon Seinen-kan Hall, 7-1 Kasumigaoka, Shinjuku-ku, Tokyo

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 88th fiscal year (from April 1, 2011 to March 31,
2012)
2. Non-consolidated Financial Statements for the 88th fiscal year (from April 1,
2011 to March 31, 2012)
Items to be resolved:
Agenda 1:
Agenda 2:
Agenda 3:
4.

Appropriation of Surplus
Election of Four (4) Directors
Election of Two (2) Corporate Auditors

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

* Of the information provided by the Company, “Notes to Consolidated Financial Statements” and “Notes
to Non-Consolidated Financial Statements” are provided on its Internet website (http://www.oki.com)
under the provisions of applicable laws and in accordance with Article 15 of the Articles ofIncorporation, and thus are not included in the Attachments of this Notice of General Shareholders
Meeting.
* The Company has provided the Notice of 88th Ordinary General Meeting of Shareholders on its Internet
website (http://www.oki.com/). Any amendment to the Company’s Reference Documents for the
General Meeting of Shareholders, the Business Report, and the Consolidated and Non-consolidated
Financial Statements (including the “Notes to the Consolidated Financial Statements” and “Notes to
Non-consolidated Financial Statements”) will be announced on the website.

-2-

(Translation)(Attachment)

Business Report(From April 1, 2011 to March 31, 2012)
1.

Status of the OKI Group(1) Operating progress and results
During the fiscal year ended March 31, 2012, the overall world economy moved
toward gradual recovery; despite the backdrop of the stagnated economy in Europe caused
by impact of the financial crisis, rising crude oil prices and hovering unemployment rate,
personal consumption showed uptrend in the United States. Additionally, emerging
countries, such as China, continue to maintain high growth, though the pace has somewhat
slowed down. The Japanese economy is also showing signs of gradual recovery backed
by improvement in personal consumption and manufacturing, although the environment
had been severe due to the confusion in supply chain caused by the Great East Japan
Earthquake and flood disaster in Thailand as well as the impact of the appreciation of yen.
In this business environment, the OKI Group reported significant earning growth,
overcoming the impact of the damage caused by the Thai flooding in the printer business.
The OKI Group recorded overall net sales of ¥428.1 billion, a ¥4.6 billion (1.1%)
decrease year-on-year. Net sales for info-telecom systems business, mainly ATMs inmechatronics systems, EMS, and others businesses increased. Unifying accounting period
for consolidated subsidiaries in China also contributed to the increase, however, sales
decreased in the printer business due to the appreciation of the yen and the impact of flood
damage in Thailand. Operating income was ¥17.4 billion, a ¥6.4 billion improvement
year-on-year, due to the impact of reducing variable costs and fixed costs, in addition to
improvement in marginal profit caused by the increase in volume, mainly in info-telecom
business.
Recurring income was ¥14.6 billion, ¥8.7 billion increase year-on-year and net
income improved by ¥35.0 billion to ¥8.0 billion since there were no costs associated withrevamping business structure which was recorded in the fiscal year ended March 31, 2011.
Non-consolidated business performances were similar to consolidated performances.
Net sales were ¥205.1 billion, up ¥15.2 billion (8.0%) from the previous fiscal year, with
operating income of ¥6.3 billion, up ¥1.7 billion, and ordinary income of ¥6.7 billion, up¥2.8 billion. Net income was ¥5.2 billion, up ¥34.3 billion from the previous year’s net
loss.
Although the financial situation improved during the last fiscal year, establishment of
the basis to enable stable dividends continuously is not complete. For this reason, we
deeply regret to pass dividends to shareholders for the fiscal year ended March 31, 2012.
As for preferred stock, we will distribute dividends from the fiscal year under review in-3-

(Translation)accordance with the terms and conditions for Class A Preferred Stock stipulated at the timeof issuance.
Net sales by segment are as provided below.
- Net Sales(Unit: billions of yen)Segment
Info-telecom
systems
Printers

Increase or
decrease

Compared to theprevious year (%)

FY2010 (reference:

FY2011 (the year

previous year)

under review)

260.7

267.2

6.5

2.5

125.0

112.0

(13.0)(10.4)

EMS

31.0

31.3

0.3

0.7

Others

15.9

17.6

1.7

10.6

Total
432.7
428.1
(4.6)
Note: Figures less than ¥100 million for each item are rounded to the nearest ¥100 million.
“increase or decrease” are calculated on the basis of figures in units of ¥100 million.

(1.1)
The amounts of

The following provides a summary of each segment.
Info-telecom systems
Net sales to external customers were ¥267.2 billion, up ¥6.5 billion (2.5%) from theprevious fiscal year. The increase in sales includes a ¥1.1 billion decrease due to the yen
appreciation and a ¥4.2 billion increase due to the unification of accounting period for the
consolidated subsidiaries in China. Excluding these effects, the net sales increased by¥3.4 billion. Overall sales of solution & services decreased due to investment plansdeferred in the corporate markets, although sales in ATM operation and monitoring services
were strong. On the other hand, sales of mechatronics systems rose, thanks to robust salesof ATMs for Japan and China. Sales of telecom systems rose due to by robust sales of
GE-PON for telecom carriers and home gateways. Sales of social infrastructure systems
also increased as some of the large replacement projects for governmental offices wereincreased.
Operating income was ¥18.7 billion, a ¥4.0 billion increase year-on-year, owing to
product mix and reduction in variable costs in addition to improved marginal profit causedby the increase in volume.

-4-

(Translation)
Printers
Net sales to external customers were ¥112.0 billion, down ¥13.0 billion (10.4%) fromthe previous fiscal year.
The decrease in sales includes a ¥4.2 billion decrease due to the yen appreciation anda ¥0.9 billion increase due to the unification of accounting period for the consolidated
subsidiaries in China. Excluding these effects, the net sales decreased by ¥ 9.7 billion.
With regards to sales by product, although sales of new models of office color printers(color NIP) and monochrome printers (monochrome NIP) increased, overall printer sales
declined mainly due to the impact of the flood disaster in Thailand. Unit sales of dot
impact printers (SIDM) decreased as well due to the impact of the flood damage.
Operating income improved to ¥1.1 billion, a ¥0.9 billion increase year-on-year.
This was because the decline in marginal profit from falling prices and volume was offset
by a sales expense decrease due to the flood damage in Thailand in addition to lower
variable costs.
Electronics manufacturing services (EMS) and others
Net sales to external customers were ¥31.3 billion, up ¥0.3 billion (0.7%) from theprevious fiscal year, in EMS business and ¥17.6 billion, up ¥1.7 billion (10.6%) from theprevious fiscal year, in the Others businesses. The increase in sales of the EMS business
was attributable to robust markets such as those for measuring instruments and industrial
equipment. In the Others business, sales of the component related business was robust
mainly with the increased demand in the amusement market.
Operating income was ¥1.5 billion, a ¥0.2 billion increase in EMS, and ¥2.5 billion, a¥1.0 billion increase in the Others business, owing to improved marginal profit caused byvolume increase.

-5-(Translation)(2) Capital expenditure
Capital expenditures for the fiscal year equaled ¥9.3 billion.
Investment amounts by segment were as follows.
(Unit: billions of yen)Segment

Amount ofcapitalexpenditure

Info-telecom systems

4.0

Printers

3.5

EMS

0.7

Others
Total

Major investments
ATM products and cash management terminals for financial andretail store markets; investments in research, development andproduction of new products for network service and network
infrastructure businesses
Investments in R&D, development and production activities
relating to business-use printers
Investments in contract manufacturing activities of medical,
telecommunications and industrial equipment

1.2
9.3

(3) Financing
Funds required for the term under review were obtained from our own funds andborrowed funds.
Borrowing funds are mainly long-term borrowings principally from major banks.
(4) Future challenges
The world economy continues to gradually move toward recovery despite uncertainty
over future prospects such as concern over the delayed economic recovery caused by the
prolonged financial crisis in Europe and a dark sign in growth in emerging countries suchas China. The Japanese economy shows signs of recover due to new demand rising after theGreat East Japan Earthquake and the impact of the flooding in Thailand returning to normal.
Under such circumstances, the OKI Group has been implementing a series of
initiatives based on the mid-term business plan announced on October 8, 2010.
The Group carried out (1) Management Base Enforcement Program, one of the twopillars of the plan, to build up a business structure which allows for the generation of
consistent earnings and to complete a solid management base to support future businessgrowth. The Group enforced “Revisions of Retirement Benefits Schemes,” which had been
prepared since the previous fiscal year, and carried out cost-savings, concentration andselection of businesses and reorganization of Group companies based on the mid-termbusiness plan. Additionally, on the supposition of an even more difficult businessenvironment, the Group will continue to maintain and enhance its business base built up
during the fiscal year under review and take measures such as reducing costs going forward.
In (2) Growth Program, the Group aims for growth of focus areas throughconcentrated investment of limited resources and promotion of strategic alliances. We havecome out with the three directions for growth as policies: “move into global markets,”“supporting management unencumbered by assets” and “new business aiming for Smart
Society.” Under these, the Group has been implementing various growth measures tobusinesses such as solutions & services, mechatronics-systems, printers and electronics
manufacturing services (EMS), which have been set up as the fields for growth under the
mid-term business plan. The Group will also achieve continuous growth from a medium--6-

(Translation)and long-term viewpoint by promoting strategic alliances. It will do this by building up
mutually complementary relationships with partners with resources and know-how that the
OKI Group needs.
Through these initiatives, the Group will work to expand sales and enhance its
profitability and strive to achieve the management goals stated in the plan and the early
resumption of dividends based on the solid business base to support future operations.
(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.
85th year(FY2008)

86th year(FY2009)

87th year(FY2010)88th year(the year underreview, FY2011)428.1
billion yen

Sales

545.7

billion yen

443.9

billion yen

432.7

billion yen

Net income(45,011)

million yen

3,619

million yen(27,001)

million yen

8,000

million yen

Net income per share(65.90)

yen

5.30

yen

(37.35)

yen

9.14

yen

Total assets

397.0

billion yen

383.6

billion yen

372.2

billion yen

374.8

billion yen

Net assets

58.7

billion yen

64.8

billion yen

59.9

billion yen

67.5

billion yen

Net assets per share

75.64

yen

84.61

yen

40.15

yen

49.36

yen

Notes:
1. Parentheses indicate losses.
2. Net income per share is computed based on the average number of shares of common stock during the year
(weighted average). Net assets per share are computed based on the number of shares of common stock
outstanding during the year. These figures exclude treasury stocks.

-7-

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

Oki Data Corporation

19,000 million yen

Company’s
voting rightratio (%)
100

Oki Customer Adtech Co., Ltd.

1,800 million yen

100

OKI Software Co., Ltd.

400 million yen

100

Oki Wintech Co., Ltd.

2,001 million yen

100

Oki Data Americas, Inc.
Oki Europe Ltd.
Oki Electric Industry(Shenzhen) Co., Ltd.

10 million U.S. dollars
33 million pound sterling

100*
100*

50 million Renminbi

100*

Name

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

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

(ii)
-

-

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

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

Info-telecom systems

Printers
EMS

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

-8-

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

Classification
Head office

Head office
Head office
Head office
Head office
Head office
Head office

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

Head office

Guangdong, China

Branch offices
Oki Electric Industry Co., Ltd.

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

Location
Minato-ku, Tokyo-9-

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

Number of employees

Info-telecom systems

8,464

Printers

6,522

EMS

419

Other

1,013

Company-wide (shared)

318

Total

(ii)

16,736

Employees of Oki Electric Industry
Number of employees

Average age

3,373 (increased by 270 from the end of the previous year)

41.8

Average length ofservice19.3(10) Major creditors
Major creditors of the OKI Group are as follows:
Creditor

Loan balanceBillion yen

Mizuho Corporate Bank, Ltd.
31.0
Sumitomo Mitsui Banking Corporation
21.5
Mizuho Trust & Banking Co., Ltd.
9.0
Sumitomo Mitsui Trust Bank, Limited (note)
5.1
The Norinchukin Bank
4.5
Note: Sumitomo Mitsui Trust Bank, Limited was established on April 1, 2012 through a merger of The
Sumitomo Trust and Banking Co., Ltd., The Chuo Mitsui Trust and Banking Company, Limited, and Chuo
Mitsui Asset Trust and Banking Company, Limited.

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

- 10 -

(Translation)
2.

Shareholders’ Equity(1)

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

Total number of classified shares authorized to be issued
Common Stock:
2,400,000 thousand sharesClass A Preferred Stock:
30,000 shares(2) Number of outstanding shares:
Common Stock:731,438 thousand shares(including 339 thousand shares of treasury stock)
Class A Preferred Stock:
30,000 shares(3) Number of shareholders:Common Stock:
95,618Class A Preferred Stock:
14(4) Major shareholders (Top 10):
1) Common Stock
Number ofshares held
(thousand shares)

Name of shareholder

Percentage ofshares held(%)

Japan Trustee Services Bank, Ltd. (trust account)

37,156

5.08

The Master Trust Bank of Japan, Ltd. (trust account)30,134

4.12

Oki Denki Group Employees’ Shareholdings Committee

18,613

2.55

Mizuho Corporate Bank, Ltd.

14,196

1.94

Meiji Yasuda Life Insurance Company

14,000

1.92

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

12,742

1.74

NOMURA ASSET MANAGEMENT U.K. LIMITEDSUB A/C EVERGREEN NOMINEES LTD

8,514

1.16

THE CHASE MANHATTAN BANK, N.A. LONDONSECS LENDING OMNIBUS ACCOUNT

7,062

0.97

Sompo Japan Insurance Inc.

7,000

0.96

STATE STREET BANK AND TRUST COMPANY
505019

6,342

0.87

Note:

The percentages of shares held are calculated after deducting treasury stock (339 thousand shares).

- 11 -

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

Number ofshares held

Name of shareholder
Mizuho Corporate Bank, Ltd.

15,000

50.00

Meiji Yasuda Life Insurance Company

3,000

10.00

NTT Data Corporation

3,000

10.00

Hulic Co., Ltd.

2,500

8.33

Kiyo Bank, Ltd.

1,000

3.33

Sompo Japan Insurance Inc.

1,000

3.33

The Chiba Kogyo Bank, Ltd.

1,000

3.33

Fujitsu Limited

1,000

3.33

Fuyo General Lease Co., Ltd.

1,000

3.33

Yasuda Real Estate Co., Ltd.

600

2.00

- 12 -

(Translation)
3.

Equity Warrants(1) Equity warrants granted to the Company’s officers as consideration for theirperformance of duties(i) Number of equity warrants
432(ii) Type and number of shares subject to equity warrants
432,000 shares of the Company’s common stock (1,000 shares per equity warrant)(iii) Status of equity warrants held by the Company’s officers

Issued Number

No. 2 equity warrant (384yen)(Issued on July 18, 2003)
No. 3 equity warrant (458yen)(Issued on July 20, 2004)
No. 4 equity warrant (406yen)(Issued on July 20, 2005)
No. 5 equity warrant (277yen)(Issued on July 28, 2006)
No. 6 equity warrant (277yen)(Issued on July 28, 2006)
No. 7 equity warrant (248yen)(Issued on July 27, 2007)
No. 8 equity warrant (248yen)(Issued on July 27, 2007)

ExerciseperiodDirectors(excluding outside Directors)

Corporate Auditors

Number ofequitywarrants

Number ofholders

Number ofequitywarrants

Number ofholders

July 1, 2005 toJune 26, 2013

50

3

20

1

July 1, 2006 toJune 28, 2014

59

4

11

1

July 1, 2007 toJune 28, 2015

62

4

11

1

July 1, 2008 toJune 28, 2016

39

3

-

-

July 1, 2008 toJune 28, 2016

18

2

11

1

July 1, 2009 toJune 25, 2017

80

3

23

1

July 1, 2009 toJune 25, 2017

48

3

-

-

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

- 13 -

(Translation)
4.

Corporate Officers(1) Names, etc. of Directors and Corporate Auditors
Note
1
X

X

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

Name

Status or main duties

Hideichi Kawasaki

Naoki SatoX

Director, andExecutive Vice
President andMember of the Board

Masao Miyashita

X

Director and SeniorVice President

Masasuke Kishi

X

Director and SeniorVice President

Sei Yano

Director

Harushige
Sugimoto
Takuma Ishiyama
Keiichi Fukumura
Shuichi Kawano
Noriyuki Kandori
Seiji Nishi

Supervision
Chief Financial Officer and Chief Compliance Officer
In charge of Marketing & Sales Division, Electronics
Manufacturing Services Division, Secretarial Office,Group Administration Division and General Affairs
Division
In charge of Public Systems Business Division
Manager, Marketing & Sales Division
In charge of Government & Public Systems Marketing& Sales Division, Enterprise Systems Marketing &Sales Division, Partner Business Marketing & Sales
Division and Public Relations Division
Chief Technology Officer
In charge of Corporate Planning Division, Government& External Relations Division and Corporate Research& Development Center
Chief Information Officer
In charge of IT Solution & Services Business Division,
Human Resources Division and Information Planning
Division

DirectorStanding Corporate Auditor
Standing Corporate Auditor
Corporate Auditor
Corporate Auditor
Notes:
1. X indicates executive officer.
2. Director Takuma Ishiyama is an Outside Director.
3. Corporate Auditors Noriyuki Kandori and Seiji Nishi are Outside Corporate Auditors.
4. Director Takuma Ishiyama and Corporate Auditor Noriyuki Kandori are independent officers based on theterms of the Tokyo Stock Exchange and the Osaka Securities Exchange.
5. Corporate Auditor Keiichi Fukumura served in positions such as Manager, Financial Division, Manager,
Accounting & Control Division and Officer in charge of the Accounting & Control Division, and has
extensive knowledge in finance and accounting.

- 14 -

(Translation)
6.

Executive officers as of March 31, 2012 are as follows (excluding those who concurrently serve as
Directors).
Position

Name

Senior Vice President

Hisao Suzuki

Senior Vice President

Hidetoshi Saigo

Senior Vice President

Yasunori Shibata

Senior Vice President

Takao Hiramoto

Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Toshiya Hatakeyama
Masahiko Morioka
Kazunari Kobayashi
Toshinao Takeuchi
Yoshiyuki Gondou

Executive Officer

Hirotaka Mizuno

Executive Officer

Shinya Kamagami

Principal duty
In charge of CSR Division, Accounting & Control
Division and Audit Office
In charge of Telecom Systems Business Division andCarriers Systems Marketing & Sales Division
In charge of Financial Systems Marketing & Sales
Division
In charge of Printer Business Division and System
Hardware Business Division
President& CEO, Oki Data Corporation
Manager, Accounting & Control Division
Director, Vice President, Oki Data Corporation
Director, Vice President, Oki Customer Adtech Co., Ltd.
Manager, Corporate Planning Division
Manager, Public Systems Business Division
In charge of Production & Manufacturing Safety Officeand Procurement Center
Manager, Telecommunication Systems Plant
Manager, System Hardware Business Division(2) Compensation paid to Directors and Corporate Auditors
Title

Number of persons

Amount of payment
Directors
7¥194 million
Corporate Auditors
4¥51 million
Total
11¥246 million
Note: 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 arealso employees.

- 15 -

(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(number of meetings in parenthesis)
Attendance
Attendance ratefrequency
Takuma Ishiyama,
Director
Noriyuki Kandori,Corporate Auditor
Seiji Nishi,
Corporate Auditor

Board of Corporate Auditors meeting(number of meetings in parenthesis)
Attendance
Attendance ratefrequency

13 (14)93%--

14 (14)100%

16 (16)100%

14 (14)100%

16 (16)100%(b) Major activities
a. Takuma Ishiyama, Director
Making objective statements mainly as a specialist in corporate law, heprovided advice and made proposals for the appropriateness and propernessof decision making by the Board of Directors.
b. Noriyuki Kandori, Corporate Auditor
With regard to deliberations of the Board of Directors, he determined thecorrectness of Directors’ managerial decisions. Using extensive experienceand knowledge as a standing corporate auditor of the Company and a director
at other companies, he made efforts to formulate the Company’s appropriate
audit opinions by making proper statements and implementing whennecessary, adequate activities concerning performances of the Board of
Corporate Auditors.
c. Seiji Nishi, 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 at other companies over many years, he madeefforts 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.
(ii) Outline of Liability Limitation Agreements
The Company concluded agreements to limit liabilities with outside officers(Director Takuma Ishiyama, and Corporate Auditors Noriyuki Kandori and Seiji
Nishi) under the provisions of Article 427 of the Companies Act. The outline of theagreements is as follows:- In cases where outside officers are liable for any damages arising from theirnegligence to the Company, they shall compensate for such damages only to theextent of the minimum liabilities as stipulated in Article 427, Paragraph 1 of theCompanies Act.
- The above limitation of liability shall be applied only when the relevant outside
officers have executed their duties that caused the liabilities in good faith and without- 16 -

(Translation)
gross negligence.
(iii) Total amount of compensation, etc.
¥24 million (for the three individuals)- 17 -

(Translation)
5.

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

(3) Policy regarding decision to dismiss or not reappoint the accounting auditor
The Board of Corporate Auditors will dismiss the accounting auditor if the auditor
falls under provisions of Article 340 of the Companies Act. 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.

- 18 -

(Translation)
6.

Policies and procedures of the Company
Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business, as well asother procedures of the Company, in order to assure the appropriateness of theCompany’s operations(1) Procedures to ensure that Directors and employees comply with applicable laws,
regulations and the Articles of Incorporation in conducting their business(i) As the foundation for ensuring compliance, the Company has established the “OKIGroup Charter of Corporate Conduct” and “OKI Group Code of Conduct.”(ii) The Company has established a Compliance Committee chaired by the Chief
Compliance Officer to decide on and examine basic policies regarding complianceprograms.
(iii) In accordance with the basic policies formulated by the Compliance Committee, thedivision responsible for compliance plans, draws up, and promotes specific measures
such as education and training for Directors and employees. In education andtraining, we aim to raise employee awareness about compliance by utilizing means
such as e-learning.
(iv) The Company provides rules on public-interest disclosure and provides a contact
point for reporting and consultation, aiming to detect any misconduct at its earliest
stages.
(v) The Company stands firmly against antisocial groups that threaten the order andsafety of civil society in cooperation with the police and related organizations, andrefuses to have any relationship with them as a whole.
(2) Procedures to retain and manage information relating to Directors’ conduct ofbusiness
The Company retains and stores information relating to the conduct of business byDirectors as appropriate in accordance with applicable laws, regulations and internal rules.
(3) Rules concerning risk management and other procedures(i) 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 meetings of the Board of Executive Officers consisting ofexecutive officers etc. to provide for flexible decision making on fundamental andsignificant matters in managing the business.

- 19 -

(Translation)(iii) The Company assigns Directors responsibilities and authority pursuant to rules on
division of duties and authorities.
(5) Procedures to secure appropriate Group (Company and subsidiaries) operations(i) To ensure that Group companies run their operations properly, the Company has
established the “OKI Group Charter of Corporate Conduct” which sets out the values
for the entire Group. In addition, the Company has established the “OKI Group
Code of Conduct” as the code of conduct which all officers and employees of Group
companies should comply with, and is striving to make the code known to all of them.
(ii) The division responsible for compliance implements various measures for promoting
compliance common to the Group through each Group company’s compliance officer.
The Division also determines, through regular monitoring, the implementation statusof such measures by each Group company and reports to the Compliance Committee
on the results.
(iii) The Company, in accordance with Group management rules, determines the status ofeach Group company’s management activities and provides advice and guidance.
(iv) To secure the reliability of financial reporting, the Company and Group companies
establish an internal control system for financial reporting in accordance with related
laws and regulations, and strive to maintain and improve that system.
(6) Procedures for employees who assist 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 and meetingsof the Board of Executive Officers 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.

- 20 -

(Translation)(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.

- 21 -

(Translation)

Consolidated Balance Sheet(as of March 31, 2012)(Unit: millions of yen)Account title

AmountAccount title(Assets)

Amount(Liabilities)

Current assets

Current liabilities

Cash and deposits

46,087

Notes and accounts payable

62,873

Notes and accounts receivable

111,160

Short-term borrowings

76,597

Securities

34,320

Other accrued expenses

29,758Finished goods

24,331Other current liabilities

25,618Work in process

18,424

Raw materials and supplies

25,106

Deferred tax assets

6,996

Long-term borrowings

59,843

Other current assets

15,476

Lease obligations

3,761(1,251)Retirement benefits

18,912

280,652

Provision for Directors’ retirement benefits

Allowance for doubtful receivables
Total current assets

Total current liabilities
Long-term liabilities

Long-term accounts payable-other
Other long-term liabilities
Fixed assets
Property, plant and equipment
Buildings and structures

21,989Machinery, equipment and delivery
equipment

8,001

194,847294
26,863
2,782

Total long-term liabilities

112,457

Total liabilities

307,304(Net Assets)
Shareholders’ equity

Tools, furniture and fixtures

9,368

Common stock

44,000Land

12,042

Additional paid-in capital

21,554

Construction in progress

1,189

Retained earnings

9,034

52,592

Treasury stock at cost

Total property, plant and equipment
Intangible assets

7,026

Investments and other assets
Investments in securities
Long-term loans

Total shareholders’ equity(38)
74,551

Accumulated other comprehensive income
26,418Net unrealized holding gain/loss on othersecurities

720

Loss on deferred hedges

Other investments and other assets

8,593

Translation adjustments

Allowance for doubtful receivables(1,175)

Total accumulated other comprehensive
income(1,815)(973)(4,363)(7,153)

Total investments and other assets

34,557

Equity warrants

79

Total fixed assets

94,176

Minority interests in consolidated subsidiaries

46

Total net assets

67,524

374,829

Total liabilities and net assets

374,829

Total assets- 22 -

(Translation)

Consolidated Statement of Operations(From April 1, 2011 to March 31, 2012)(Unit: millions of yen)Account title

AmountNet sales

428,104

Cost of sales

316,991

Gross profit

111,113

Selling, general and administrative expenses

93,697

Operating income

17,415Non-operating income
Interest income

260

Dividend income

786

Royalty income from corporate brand

244

Other

848

2,140

Non-operating expenses
Interest expense

3,987

Other

1,018

Ordinary income

5,005
14,550Extraordinary profit
Reversal of allowance for doubtful receivables

398

Insurance income

3,852

Gain on settlement of asset retirement obligations

96

4,346

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

663

Loss on impairment of fixed assets

97

Loss on sales of investments in securities

210

Write-downs of investments in unconsolidated
subsidiaries and other securities

184

Loss on valuation of contribution

129

Loss on natural disasters

5,201

Special retirement expense

372

Income before income taxes and minority interests

6,858
12,038

Income taxes

2,590

Income taxes deferred

820

Income before minority interests

3,411
8,627
627

Minority interests in earnings of consolidated
subsidiaries
Net income

8,000- 23 -

(Translation)

Consolidated Statement of Changes in Net Assets(Year ended March 31, 2012)(Unit: Millions of yen)
Shareholders’ equity
Common stock
Balance at April 1, 2011

44,000Changes during the term under review
Net changes during the term under review-

Balance at March 31, 2012

44,000Additional paid-in capital
Balance at April 1, 2011

113,124

Changes during the term under review
Deficit disposition(91,569)

Net changes during the term under review(91,569)

Balance at March 31, 2012

21,554Retained earnings
Balance at April 1, 2011

(90,536)

Changes during the term under review
Deficit disposition

91,569Net income

8,000

Change of scope of consolidation0

Net changes during the term under review

99,570

Balance at March 31, 2012

9,034

Treasury stock at cost
Balance at April 1, 2011

(23)

Changes during the term under review
Purchases of treasury stock(14)

Net changes during the term under review(14)

Balance at March 31, 2012(38)

Total shareholders’ equity
Balance at April 1, 2011

66,564

Changes during the term under review
Deficit disposition-

Net income

8,000

Purchases of treasury stock(14)

Change of scope of consolidation0

Net changes during the term under review

7,986

Balance at March 31, 2012

74,551- 24 -

(Translation)
Accumulated other comprehensive income
Net unrealized holding gain/loss on other securities
Balance at April 1, 2011

(1,988)Changes during the term under review
Net changes in items other than shareholders’ equity during the term under review

172

Net changes during the term under review

172

Balance at March 31, 2012

(1,815)

Loss on deferred hedges
Balance at April 1, 2011

(983)

Changes during the term under review
Net changes in items other than shareholders’ equity during the term under review
Net changes during the term under review

10
10Balance at March 31, 2012

(973)

Translation adjustments
Balance at April 1, 2011

(4,238)Changes during the term under review
Net changes in items other than shareholders’ equity during the term under review(125)

Net changes during the term under review(125)

Balance at March 31, 2012

(4,363)

Total accumulated other comprehensive income
Balance at April 1, 2011

(7,210)Changes during the term under review
Net changes in items other than shareholders’ equity during the term under review
Net changes during the term under review

57
57

Balance at March 31, 2012

(7,153)Equity warrants
Balance at April 1, 2011

79

Changes during the term under review
Net changes during the term under review-

Balance at March 31, 201279

Minority interests in consolidated subsidiaries
Balance at April 1, 2011

470

Changes during the term under review
Net changes in items other than shareholders’ equity during the term under review(424)

Net changes during the term under review(424)

Balance at March 31, 201246

Total net assets
Balance at April 1, 2011

59,903

Changes during the term under review
Deficit disposition-

Net income

8,000

Purchases of treasury stock(14)

Changes of scope of consolidation0

Net changes in items other than shareholders’ equity during the term under review
Net changes during the term under review

(366)
7,620

Balance at March 31, 2012

67,524- 25 -

(Translation)

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

Scope of consolidation(1) Number of consolidated subsidiaries: 67 companies
Names of major consolidated subsidiaries:
Oki Data Corporation; Oki Customer Adtech Co., Ltd.; Oki Wintech Co., Ltd.;OKI Software Co., Ltd.; Japan Business Operations Co., Ltd.; Nagano Oki Co.,
Ltd.; Oki Proserve Co., Ltd.; Oki Data Americas, Inc.; Oki Data Manufacturing(Thailand) Co., Ltd.; Oki Europe Ltd.; Oki Electric Industry (Shenzhen) Co.,
Ltd.; and Oki Banking Systems (Shenzhen) Co., Ltd.
(2) Names of major non-consolidated subsidiaries:
Adachi Protechno Co., Ltd. and 22 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:
OF Networks Co., Ltd., OKI Techno Power Systems Co., Ltd. and OKI
Metaltech Co., Ltd. are newly included in the scope of consolidation in thefiscal year under review as their businesses have increased relative importanceto the consolidated financial statements. OKI Erfolg Co., Ltd. and OKI Power
Tech Co., Ltd. have been excluded from the scope of consolidation due to theirliquidation.
Mobile Techno Corp. has been excluded from the scope of consolidation as theCompany sold off the shares of Mobile Techno Corp. OKI Network
Integration Co., Ltd. has been excluded from the scope of consolidation and isincluded in the scope of equity method application. This was because it
became an affiliated company of the Company since the Company held fewerof its shares as a result of allocating new shares to a third party. OKI Network
Integration Co., Ltd. has changed its name to Marubeni OKI Net Solutions Inc.

2.

Application of equity method(1) Number of affiliated companies to which the equity method is applied: 4Name 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 22 other companies
Affiliated companies: Alp Inc. and 5 other companies- 26 -

(Translation)
Reason for not applying the equity method:
The companies individually have little influence and have no significance as awhole on net income or loss and retained earnings.
(3) Changes in scope of equity method application:
Marubeni OKI Net Solutions Inc. is included in the scope of equity method application
since it became an affiliated company of the Company. This is because the Company
holds fewer of its shares as a result of allocating new shares to a third party.
3.

Matters concerning account settlement dates of consolidated subsidiaries
The account settlement date of the following consolidated subsidiaries is December 31 eachyear. For the purpose of more appropriate disclosure of consolidated financial information,
the Company has changed the consolidation method to consolidate financial information of
the said subsidiaries based on the results of their provisional settlement of accounts performedon the consolidated closing date:Oki Banking Systems (Shenzhen) Co., Ltd.; Oki Electric Industry (Shenzhen) Co., Ltd.; Oki
Telecommunications Technology (Changzhou) Co., Ltd.; Oki Software Technology Co., Ltd.;Oki Electric Technology (Kunshan) 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 fair value.
Held-to-maturity debt securities: Amortized cost method
Other negotiable securities:
Marketable securities:
Stated at fair value based on the market price at the end of the
fiscal year
(Any difference between book value and fair value is included in
net assets; sales costs are calculated by the moving averagemethod.)Non-marketable securities:
Stated at cost based on the moving average method(ii) Inventories
The Company and its domestic consolidated subsidiaries evaluate inventories asfollows, and overseas consolidated subsidiaries primarily apply the lower of cost or fairvalue.
Finished goods:
Principally stated at cost based on the moving average method(Balance sheet values are measured by the method of devaluing
the book price to reflect declines in profitability.)Work in process:- 27 -

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

- 28 -

(Translation)(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 (11 to 13 years) within the average remaining years of service of employees.
Actuarial gains and losses are amortized by the straight line method over a set
number of years (11 to 13 years) within the average remaining years of 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) Provision for Directors’ retirement benefits
Some consolidated subsidiaries register the necessary amount at the end of theyear in accordance with internal rules to prepare for the payment of Directors’
retirement allowance.
(4) Basis for provision of income and expense
Basis for provision of income relating to contract work and software development
contracts
a. Income from those with certain results in progress before the end of the fiscal year
Percentage-of-completion method (The progress ratio of construction is estimatedby the cost proportion method.)b. Other income
Inspection basis (completed-contract method for some domestic consolidated
subsidiaries)(5) Important hedge accounting methods(i) Method of hedge accounting
Deferred hedging is applied. Allocation treatment is applied for forward
exchange contracts eligible for allocation treatment. Special treatment is applied tointerest rate swaps that meet requirements for special treatment.
(ii) Means of hedging and coverage
Forward exchange contracts are used to hedge fluctuations of exchange rates on
credits and debts in foreign currencies. Interest rate swaps are employed to hedge
fluctuations of market interest rates on variable-rate short-term borrowings and longterm borrowings.
(iii) Hedging policy
Derivative transactions are used to hedge fluctuations of market rates on credits
and debts.

- 29 -

(Translation)(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 thatof the market fluctuations or the cash flow fluctuations for the means of hedging,
during the period from the start of hedging to the assessment. The Company thenmakes a decision based on the changes of the two.
(6) Amortization of goodwill and amortization period
Goodwill is evenly amortized over its useful life (mainly five years).
(7) Other important matters in preparation of consolidated financial statements(i) 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.
Additional Information
The Company adopted “Accounting Standard for Accounting Changes and Error Corrections”(ASBJ Statement No. 24, December 4, 2009) and “Guidance on Accounting Standard for
Accounting Changes and Error Corrections” (ASBJ Guidance No. 24, December 4, 2009) for
accounting changes and past corrections of errors made since the beginning of the fiscal year
under review.
Notes to Consolidated Balance Sheet
1. Assets pledged as collateral
Buildings and structures
Land
Investments in securities
Total
Liabilities collateralized by the above assets:
Short-term borrowings
Long-term borrowings
Total
2.

Accumulated depreciation on property, plant and equipment

3.

Liabilities for guarantee
Guarantee for borrowings by employees- 30 -¥396 million¥138 million¥6,104 million¥6,639 million¥5,095 million¥558 million¥5,654 million¥146,342 million¥681 million

(Translation)
Notes to Consolidated Statement of Changes in Net Assets
1. Matters concerning class and total number of shares outstanding as of the end of FY2011
Common Stock731,438 thousand sharesClass A Preferred Stock
30 thousand shares
2.

3.

Matters concerning appropriation of surplus
Dividends for which the record date falls in the fiscal year under review and the effective datefalls in the following fiscal year.
Resolution

Class ofshares

Source ofdividends

Total
dividends(millions ofyen)

Ordinary General
Meeting of
Shareholders
on June 28, 2012

Class A
Preferred
Stock

Retainedearnings

1,321

Dividends
per share(yen)

Recorddate

Effectivedate

44,047

March 31,2012

June 29,
2012

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

Type of shares to be issued
upon exercise of equity
warrants

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

Common stock

815,000

Common stock

452,000

Common stock

442,000

Common stock

185,000

Common stock

157,000

Common stock

287,000

Common stock

222,000

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

- 31 -

(Translation)
The Group executes and manages derivative transactions in accordance with Oki Group’s
policy.
2.

Disclosure concerning fair value of financial instruments
As of March 31, 2012 (consolidated balance sheet date), the amount recorded in the
consolidated balance sheet, fair value, and the amount of differences are as shown in the tablebelow. Any item whose fair value is deemed extremely difficult to assess is excluded from thetable. (See Note 2.)(Unit: millions of yen)Amount recorded inconsolidated balance
sheet(1) Cash and deposits

46,087(2) Notes and accounts receivable

111,160

Allowance for doubtful receivables (*1)(3) Securities and investments in securities

Fair value

Difference

46,087-110,034

110,034-

52,73851,825(913)(1,125)(4) Notes and accounts payable(62,873)(62,873)-(5) Short-term borrowings (*2)(53,799)(53,799)-(6) Other accrued expenses(29,758)(29,758)-(7) Long-term borrowings (*2)(82,641)(82,940)299(8) Long-term accounts payable-other(26,863)(26,455)(407)(9) Derivative transactions(1,101)(1,101)(*1) Allowance for doubtful receivables specifically provided for notes and accounts receivable is deducted.
(*2) Long-term borrowings (¥22,797 million) that will be reimbursed within one year are classified as “short-termborrowings” in the consolidated balance sheet.
Notes:
1.
Disclosure concerning methods of calculation of fair value of financial instruments, securities and derivativetransactions(1) Cash and deposits and (2) Notes and accounts receivable
These items are settled over a short period of time and their fair value is virtually equally to their book value.
Hence, their fair value is based on the relevant book value.
(3) Securities and investments in securities
The fair value of equity securities is based on their prices determined at the financial instruments exchanges,
and the fair value of bonds is based on the quotations offered by the correspondent financial institution.
(4) Notes and accounts payable, (5) Short-term borrowings, and (6) Other accrued expenses
These items are settled over a short period of time and their fair value is virtually equally to their book value.
Hence, their fair value is based on the relevant book value.
(7) Long-term borrowings
The fair value of these items is based primarily on the method of calculation whereby the sum of principal
and interest is discounted by an assumed interest rate on the assumption that the said sum is freshly
borrowed in a similar manner. Some long-term borrowings with floating interest rates are prescribed to be
subject to special accounting treatment applicable to interest rate swaps (see (9) below). Hence, the fairvalue of a long-term borrowing is based on the method of calculation whereby the sum of principal andinterest, treated in combination with the said interest rate swap, is discounted by a reasonably estimableinterest rate on the assumption that the said amount is freshly borrowed in a similar manner.
(8) Long-term accounts payable-other
Fair values of long-term accounts payable are calculated by dividing into a specific period of time todiscount at a reasonable rate.
(9) Derivative transactions
Derivative transactions subject to special accounting treatment applicable to interest rate swaps are treated in
combination with long-term borrowings as hedged items. Hence their fair value is included in that of longterm borrowings.
2.
Financial instruments whose fair value is considered extremely difficult to assess- 32 -

(Translation)
Unlisted equity securities (¥7,921 million on the consolidated balance sheet) and investments in a limited liability
joint business partnership (¥77 million on the consolidated balance sheet) are not included in (3) Securities andinvestments in securities because they have no market price and it is deemed extremely difficult to assess their fairvalues.

Notes to Securities
1. Held-to-maturity debt securities (as of March 31, 2012)(Unit: millions of yen)Amount recorded inconsolidated balance sheet

Market value

Difference(Hold-maturity securities
whose market value exceeds
their fair value recorded inbalance sheet)
Bonds

3,998

3,998

(0)

Certificates of deposit

1,000

1,000

-

4,998

4,998

(0)

Total

2.

Other securities (as of March 31, 2012)(Unit: millions of yen)Amount recorded inconsolidated balance
sheet(Securities whose amounts recorded inconsolidated balance sheet exceed theiracquisition costs)
Equity Securities
Bonds
Other
Subtotal(Securities whose amounts recorded inconsolidated balance sheet are not morethan their acquisition costs)
Equity Securities

3.

Acquisition cost

Difference

2,411
1,621

1,583
1,604

827
16

221

221

0

4,254

3,409

844

8,873

11,396(2,523)

Bonds
Certificates of deposit

3,491
25,0003,506
25,000

(15)
-

Other

2,914

2,919

(4)

Subtotal

40,27842,822(2,543)

Total

44,533

46,232(1,699)Other securities sold during the consolidated fiscal year under review(From April 1, 2011 to March 31, 2012)
Type

Sales amount(Unit: millions of yen)
Total loss on sales

Total gain on sales

Equity Securities

41

0

14

Other

79

0

-

120

0

14

Total

- 33 -

(Translation)

4.

Impaired securities
Impairment loss of ¥179 million was applied to securities (other securities) for the year
ended March 31, 2012.
Impairment was applied to amounts for which impairment was considered necessary basedon a comprehensive judgment on whether values would rise or not, and the amounts wereimpaired if their market values at the end of the year under review were remarkably lower
than their acquisition costs.

Notes to Per-share Information
1. Net assets per share:¥49.36
2. Net income per share:¥9.14- 34 -

(Translation)

Transcript of Account Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
May 17, 2012
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yasutoyo Imai (seal),
Engagement Partner, Certified Public Accountant
Yasuhiro Tamura (seal),
Engagement Partner, Certified Public Accountant
Yukiyasu Yamakawa (seal),
Engagement Partner, Certified Public Accountant
We have audited the consolidated financial statements – the consolidated balance sheets, the consolidated statementof operations, the consolidated statement of changes in shareholders equity and notes to the consolidated financial
statements – of Oki Electric Industry Co., Ltd. for the 88th term from April 1, 2011 to March 31, 2012 inaccordance with Article 444 Paragraph 4 of the Companies Act.
Responsibility of management for preparing consolidated financial statements
Oki Electric Industry’s management is responsible for preparing and presenting fairly these consolidated financial
statements in accordance with corporate accounting standards generally accepted in Japan. This includes
designing and operating internal control that the management determines necessary to prepare and fairly present
these consolidated financial statements that are without material misstatement due to fraud or errors.
Responsibility of auditors
Our responsibility is to express our independent opinion regarding these consolidated financial statements based on
audits by Ernst & Young ShinNihon LLC. We conducted our audit in accordance with auditing standards generally
accepted in Japan. These auditing standards require that we prepare audit plans and implement audit based onthem to obtain reasonable assurance as to whether the consolidated financial statements are without material
misstatement.
The audit requires procedures to obtain audit evidence about amounts and disclosure of these consolidated financial
statements. The audit procedures are selected and applied based on evaluation of risks about material
misstatement of these consolidated financial statements due to fraud or errors. Although the purpose of the audit is
not to express our opinion about the effectiveness of internal control, we consider the internal control associatedwith preparation and fair presentation of these consolidated financial statements, in order to plan appropriate audit
procedures in line with actual situations at the time of risk evaluation. Also, our audit includes reviews ofaccounting policies, and methods that management adopts, and an evaluation of management estimates and thepresentation of the consolidated financial statements as a whole.
We believe we have obtained enough and appropriate audit evidence as the basis for our opinion.
Audit opinion
We concluded that the consolidated financial statements fairly present in all aspects Oki Electric Industry’s and its
subsidiaries’ assets and income or loss in accordance with corporate accounting standards generally accepted inJapan.
Conflict of interest
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm (Ernst &Young ShinNihon LLC) and the respective engagement partners.

- 35 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2012)(Unit: millions of yen)Account title(Assets)

AmountCurrent assets
Cash and deposits
Notes receivable
Accounts receivable, trade
Lease investment assets
Securities
Finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Short-term loans
Accounts receivable-other

22,5691,143
56,111
2,350
28,9985,049
14,2996,108356
39,312
6,338

Deferred tax assets
Other current assets
Allowance for doubtful receivables
Total current assets
Fixed assets
Property, plant and equipment
Buildings
Accumulated depreciation
Structures
Accumulated depreciation
Machinery and equipment
Accumulated depreciation
Vehicle and delivery equipment
Accumulated depreciation
Tools, furniture and fixtures
Accumulated depreciation
Land
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Facility rights
SoftwareTotal intangible assets
Investments and other assets

3,286
250
(198)
185,978

36,839(26,941)2,446(2,173)
14,058(12,136)
77(71)
32,403(27,198)

9,898
273
1,922
5
5,205
9,635
21
26,961
0
123
3,716
3,839

Investments in securities
Shares of subsidiaries and affiliates

19,71340,408Contribution
Contribution in subsidiaries andaffiliates
Long-term loans to subsidiaries andaffiliates
Long-term prepaid expenses
Claims provable in bankruptcy,
rehabilitation and other
Lease and guarantee deposits
Other investments and other assets
Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

94
1,764
8,791

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

Amount173
41,671
33,84622,178479
11,735
14,132
2,016
2,847
3
813
129,897

Long-term liabilities
Long-term borrowings
Lease obligations
Deferred tax liabilities
Retirement benefits
Asset retirement obligations
Long-term accounts payable-otherTotal long-term liabilities
Total liabilities

58,8592,129
3,307
14,520806
14,89094,513
224,411(Net Assets)
Shareholders’ equity
Common stock
Additional paid-in capital
Capital reserve
Other additional paid-in capital
Retained earnings
Other retained earnings
Retained earnings carried forward
Treasury stock at cost
Total shareholders’ equity

44,00021,55315,000
6,553
5,159
5,159
5,159
(25)
70,687

Valuation, translation adjustments and others
Net unrealized holding gain/loss on othersecurities
Loss on deferred hedges
Total valuation, translation adjustments
and others
Equity warrants(1,908)(810)(2,718)79
Total net assets

68,048

Total liabilities and net assets

292,460

3,127
141
3,051
423
(1,835)75,679106,481292,460- 36 -

(Translation)

Non-Consolidated Statement of Operations(From April 1, 2011 to March 31, 2012)(Unit: millions of yen)Account title

AmountNet sales

205,078

Cost of sales

159,242

Gross profit

45,836

Selling, general and administrative expenses

39,490Operating income

6,346

Non-operating income
Interest income

386

Interest income on securities

48

Dividend income

875Royalty income from corporate brand

1,474

Other

549

3,333

Non-operating expenses
Interest expenses

2,348

Other

640

Ordinary income

2,988
6,691

Extraordinary profit
Gain on sales of investments in securities

94

Reversal of allowance for doubtful receivables

968

Gain on settlement of asset retirement obligations

96

1,158

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

494

Loss on impairment of fixed assets

84

Loss on sales of shares of subsidiaries and affiliates

76

Write-downs of investments in unconsolidated subsidiaries and othersecurities

146

Write-downs of shares of subsidiaries and affiliates

115

Bad debts expenses

65

Special retirement payments

167

Business structure improvement expenses

31

Income before income taxes

1,181
6,667

Income taxes

490

Income taxes deferred

1,018

Net income

1,508
5,159

- 37 -

(Translation)

Non-Consolidated Statement of Changes in Net Assets(Year ended March 31, 2012)(Unit: millions of yen)
Shareholders’ equity
Common stock
Balance at April 1, 2011

44,000Changes during the term under review
Net changes during the term under review-

Balance at March 31, 2012

44,000Additional paid-in capital
Capital reserve
Balance at April 1, 2011

15,000Changes during the term under review
Net changes during the term under review-

Balance at March 31, 2012

15,000

Other additional paid-in capital
Balance at April 1, 2011

98,123

Changes during the term under review
Deficit disposition(91,569)

Net changes during the term under review(91,569)

Balance at March 31, 2012

6,553

Total additional paid-in capital
Balance at April 1, 2011

113,123

Changes during the term under review
Deficit disposition(91,569)

Net changes during the term under review(91,569)

Balance at March 31, 2012

21,553Retained earnings
Other retained earnings
Retained earnings carried forward
Balance at April 1, 2011

(91,569)

Changes during the term under review
Deficit disposition

91,569Net income

5,159

Net changes during the term under review

96,728

Balance at March 31, 2012

5,159

Total retained earnings
Balance at April 1, 2011

(91,569)

Changes during the term under review
Deficit disposition

91,569Net income

5,159

Net changes during the term under review

96,728

Balance at March 31, 2012

5,159

- 38 -

(Translation)
Treasury stock at cost
Balance at April 1, 2011

(10)

Changes during the term under review
Purchases of treasury stock(14)

Net changes during the term under review(14)

Balance at March 31, 2012(25)

Total shareholders’ equity
Balance at April 1, 2011

65,542

Changes during the term under review
Deficit disposition-

Net income

5,159

Purchases of treasury stock(14)

Net changes during the term under review

5,144

Balance at March 31, 2012

70,687

Valuation, translation adjustments and others
Net unrealized holding gain/loss on other securities
Balance at April 1, 2011

(1,950)Changes during the term under review
Net changes in items other than shareholders’ equity during the term
under review

42

Net changes during the term under review

42

Balance at March 31, 2012

(1,908)Loss on deferred hedges
Balance at April 1, 2011

(917)

Changes during the term under review
Net changes in items other than shareholders’ equity during the term
under review

107

Net changes during the term under review

107

Balance at March 31, 2012

(810)

Total valuation, translation adjustments and others
Balance at April 1, 2011

(2,868)Changes during the term under review
Net changes in items other than shareholders’ equity during the term
under review

149

Net changes during the term under review

149

Balance at March 31, 2012

(2,718)Equity warrants
Balance at April 1, 2011

79

Changes during the term under review
Net changes during the term under review-

Balance at March 31, 201279

- 39 -

(Translation)
Total net assets
Balance at April 1, 2011

62,754

Changes during the term under review
Deficit disposition-

Net income

5,159

Purchases of treasury stock(14)

Net changes in items other than shareholders’ equity during the term
under review
Net changes during the term under review

149
5,294

Balance at March 31, 2012

68,048- 40 -

(Translation)

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

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

2.

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

3.

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

4.

Depreciation and amortization
Property, plant and equipment (excluding lease assets): Declining-balance method
The straight-line method is applied to buildings, excluding annexed structures,acquired on or after April 1, 1998.
Intangible assets (excluding lease assets)
Software for sale in the market:
Amortization method based on the estimated amounts of sales in the estimatednumber of years for sales (3 years)
Software for internal use:
Straight-line method based on the estimated durable years (5 years)
Others:Straight-line method
Lease assets(Lease assets relating to finance lease transactions without transfer of ownership):- 41 -

(Translation)
They are depreciated over the lease contract’s lifetime by the straight-line
method, assuming the residual value is zero.
In addition, out of the finance lease transactions that do not transfer ownership,lease transactions whose lease transaction commencement date was on or prior
to March 31, 2008 are accounted for on a basis similar to ordinary rental
transactions.
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 ofretirement benefit obligations and pension assets.
Differences for changes in accounting standards are amortized over 15 years.
Prior service cost is amortized by the straight-line method over a certain number of years(13 years) within the average remaining years of service of employees.
The actuarial difference is amortized proportionately using the straight-line method overa certain number of years (13 years) within the average remaining service period of theemployees from the fiscal year after the difference is incurred.

6.

Hedge accounting methods(1) Method of hedge accounting
Deferred hedging is applied. With regard to interest rate swaps that meet therequirements for special treatment, special treatment is applied.
(2) Means of hedging and hedged item
Interest rate swaps are employed to hedge fluctuations of interest rates on short-termborrowings and long-term borrowings.
(3) Hedging policy
Derivative instruments are used to hedge fluctuations of market rates on credits and debts.
(4) Assessment method of hedging effectivenessTo determine the effectiveness, the Company compares the cumulative total of themarket fluctuations or the cash flow fluctuations for the hedged item and that of themarket fluctuations or the cash flow fluctuations for the means of hedging, during theperiod from the start of hedging to the assessment. The Company then makes adecision based on the changes of the two.

7.

Other important matters in preparation of non-consolidated financial statements(1) Accounting 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- 42 -

(Translation)
Consolidated tax payments are applied.
Additional Information
The Company adopted “Accounting Standard for Accounting Changes and Error Corrections”(ASBJ Statement No. 24, December 4, 2009) and “Guidance on Accounting Standard for
Accounting Changes and Error Corrections” (ASBJ Guidance No. 24, December 4, 2009) for
accounting changes and past corrections of errors made since the beginning of the fiscal year
under review.

Notes to Non-consolidated Balance Sheets
1. Guarantee liabilities:
The Company provides guarantees for bank borrowings made by employees, andsubsidiaries and affiliates as shown below.
Oki Data Americas, Inc.
Oki Electric Industry (Shenzhen) Co., Ltd.
Employees (housing loans)
Oki Hong Kong Ltd.
Oki Europe Ltd.
Five other entities:
Total:
2.

¥2,464 million($30,000 thousand)¥786 million(60,299 thousand yuan)¥556 million¥476 million($5,800 thousand)¥270 million(2,060 thousand Sterling Pound)¥447 million¥5,002 million

Monetary claims receivable from and payable to subsidiaries and affiliates
Short-term monetary claims receivable from subsidiaries and affiliates: ¥56,502 million
Long-term monetary claims receivable from subsidiaries and affiliates: ¥9,956 million
Short-term monetary claims payable to subsidiaries and affiliates:¥26,077 million
Long-term monetary claims payable to subsidiaries and affiliates:¥7 million

Notes to Non-consolidated Statement of Operations
Transactions with subsidiaries and affiliates
Sales:
Purchases:
Non-operating transactions:- 43 -¥30,844 million¥61,042 million¥3,188 million

(Translation)
Notes to Non-consolidated Statement of Changes in Net Assets
Type and number of treasury stock as of the end of the fiscal year
Common stock:
339 thousand shares
Notes to Deferred Tax Accounting
Major factors giving rise to deferred tax assets and liabilities
Deferred tax assets
Loss carry forwards
Nondeductible retirement benefits
Nondeductible accounts payable-other due to changes in retirement
benefit plans
Nondeductible write-downs of shares of subsidiaries and affiliates
Adjustments of losses on transfers among consolidated subsidiaries
Nondeductible accrued bonuses
Nondeductible loss on impairment of fixed assets
Nondeductible write-downs of inventories
Net unrealized holding gain/loss on other securities
Nondeductible doubtful accounts
OthersSubtotal deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Nondeductible unrealized gain on contribution of securities to thepension trust
OthersTotal deferred tax liabilities
Net deferred tax assets¥21,571 million¥9,130 million¥6,284 million¥6,187 million¥1,886 million¥1,246 million¥1,010 million¥912 million¥686 million¥659 million¥2,036 million¥51,612 million¥(47,590) million¥4,021 million¥(3,830) million¥(211) million¥(4,042) million¥(20) million

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

Amount equivalent to acquisition cost of leased assets as of the end of the term under review¥394 million
Amount equivalent to accumulated depreciation of leased assets as of the end of the term
under review¥324 million
Amount equivalent to unexpired lease payment of leased assets as of the end of the term
under review¥74 million- 44 -

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

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Company name

OKI Software Co., Ltd.

Oki Hong Kong, Ltd.

Oki Data Corporation

Oki Customer Adtech Co.,Ltd.

Location

Warabi,
Saitama Pref.

Hong Kong

Minato-ku,
TokyoKoto-ku,Tokyo

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

60,000thousandHong
Kongdollars

Holdings company,
material procurement¥19,000
million

Sales of printers(Direct)
57%(Indirect)
43%

Supply products etc.,
lending of funds,
concurrent
assumption of officeof officer(Direct)
100%

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

Purchase ofservices

Transaction
amount(mil. yen)Account item

Endingbalance(mil. yen)Accounts
payable,
trade

6,557

Other
accruedexpenses

737

18,093

Sales ofproducts

8,854

Accounts
receivabletrade

3,443

Lending of
funds

1,974

Short-term
loans

3,532

Lending offunds

69,990

Short-term
loans

28,812

Consideration
for use of thecorporate
brand

871

-

-

(Direct)
100%

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

Lending offunds

30,400

Short-term
loans

1,100

(Direct)
100%

Purchase of products
and services, lendingof funds

Lending of
funds

5,250

Short-term
loans

1,530

(Direct)
100%

Purchase of products
and services, lendingof funds

Lending of
funds

3,690

Long-termloans tosubsidiaries
and affiliates

2,920

Short-term
loans

700

(Direct)
100%

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

Long-termloans tosubsidiaries
and affiliates

2,800

Oki Communication
Systems Co., Ltd.

Tokorozawa,
Saitama Pref.

¥300
millionSubsidiary

Nagano Oki Electric Co.,Ltd.

Komoro,Nagano Pref.

¥400
million

Manufacture,inspection and repair
for boards and devices¥321
millionFacility business,
human resource
management, designbusiness, logistics
business

Minato-ku,
TokyoProduction ofsoftware on a contract
basis, etc.,
lending of funds

Description oftransactions¥1,800
millionSubsidiary

Oki Proserve Co., Ltd.

(Direct)
100%

Relationship withrelated party

Maintenance,
construction,
monitoring, operation,
manufacture and saleof equipment andsystems
Design, manufacture,development and saleof electronic,
information andtelecommunications
device and relatedparts

Subsidiary

Voting rightratio

CapitalLending of
funds

3,500

Notes:
1. The transactions amount excludes consumption tax, while the ending balance includes consumption tax.
2. Conditions of transactions and policy in determining conditions(1) The Company determines conditions regarding purchase of services and products based on market prices.
(2) The Company determines the interest rate for the lending of funds by taking the market rate of interest into
consideration.
(3) The Company determines the amount of consideration for the corporate brand royalty by reference to a generalmodel.
3. For the loans to four subsidiaries, the Company recorded an allowance for doubtful receivables of ¥1,551 million in
total. For the fiscal year under review, ¥968 million of reversal of allowance for doubtful receivables was recorded,and ¥4,739 million of allowance for doubtful receivables was reversed due to liquidation of subsidiaries.

Notes to Per-share Information
1. Net assets per share:¥50.13
2. Net income per share: ¥5.25- 45 -

(Translation)

Transcript of Account Auditors’ Report

Independent Auditors’ Report
May 17, 2012
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yasutoyo Imai (seal),
Engagement Partner, Certified Public Accountant
Yasuhiro Tamura (seal),
Engagement Partner, Certified Public Accountant
Yukiyasu Yamakawa (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 and notes tothe non-consolidated financial statements – and its supporting schedules of Oki Electric Industry Co., Ltd. for the88th term from April 1, 2011 to March 31, 2012 in accordance with Article 436 Paragraph 2 Item 1 of theCompanies Act.
Responsibility of management for preparing non-consolidated financial statements and its supporting schedules
Oki Electric Industry’s management is responsible for preparing and presenting fairly these non-consolidated
financial statements and its supporting schedules in accordance with corporate accounting standards generally
accepted in Japan. This includes designing and operating internal control that the management determines
necessary to prepare and fairly present these non-consolidated financial statements and its supporting schedules thatare without material misstatement due to fraud or errors.
Responsibility of auditors
Our responsibility is to express our independent opinion regarding these non-consolidated financial statements andits supporting schedules based on audits by Ernst & Young ShinNihon LLC. We conducted our audit inaccordance with auditing standards generally accepted in Japan. These auditing standards require that we prepare
audit plans and implement audit based on them to obtain reasonable assurance as to whether the non-consolidated
financial statements and its supporting schedules are without material misstatement.
The audit requires procedures to obtain audit evidence about amounts and disclosure of these non-consolidated
financial statements and its supporting schedules. The audit procedures are selected and applied based on
evaluation of risks about material misstatement of these non-consolidated financial statements and its supporting
schedules due to fraud or errors. Although the purpose of the audit is not to express our opinion about theeffectiveness of internal control, we consider the internal control associated with preparation and fair presentation ofthese non-consolidated financial statements and its supporting schedules, in order to plan appropriate audit
procedures in line with actual situations at the time of risk evaluation. Also, our audit includes reviews ofaccounting policies, and methods that the management adopts, and an evaluation of management estimates and thepresentation of the non-consolidated financial statements and its supporting schedules as a whole.
We believe we have obtained enough and appropriate audit evidence as the basis for our opinion.
Audit opinion
We concluded that the non-consolidated financial statements and its supporting schedules fairly present in all
aspects Oki Electric Industry’s assets and income or loss in accordance with corporate accounting standards
generally accepted in Japan.
Conflict of interest
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm (Ernst &Young ShinNihon LLC) and the respective engagement partners.

- 46 -

(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 88th fiscal year from April 1, 2011 toMarch 31, 2012, 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
auditors on 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 periodically received reports from Directors
and employees, among others, required explanation when necessary, and made opinions with regard to the status ofoperations and the systems established thereon (internal control systems) made by the Board of Directors concerning theestablishment of systems defined in Article 100, Paragraph 1 and Paragraph 3 of the Regulations for Enforcement of theCompanies Act as necessary for ensuring compliance with laws and the Company’s Articles of Incorporation in theperformance of duties by Directors, described in the Business Report, and for ensuring appropriateness of duties of a joint
stock company. Also, we have maintained good communications and exchanged information with directors, 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
131 of the Corporate Calculation Regulations) have been established in accordance with the quality control standards
concerning audits (Business Accounting Council, October 28, 2005), and asked them for explanations as necessary. Based on
the methods mentioned above, we have reviewed financial statements for the said fiscal year (balance sheet, statement 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 details described in the Business Report and the Directors’
performance of their internal control duties, we have found no issues to be pointed out.
(2) Results of audit of financial statements and their supplementary schedules
We consider that the auditing methods and results of the Company’s Accounting Auditors, Ernst & Young ShinNihon
LLC, are proper.
(3) Results of audit of consolidated financial statements
We consider that the auditing methods and results of the Company’s Accounting Auditors, Ernst & Young ShinNihon
LLC, are proper.
May 21, 2012
The Board of Corporate Auditors, Oki Electric Industry Co., Ltd.
Keiichi Fukumura, Standing Auditor (seal)
Shuichi Kawano, Standing Auditor (seal)
Noriyuki Kandori, Outside Auditor (seal)
Seiji Nishi, Outside Auditor (seal)- 47 -

(Translation)

Reference Documents for the General Meeting of Shareholders
Agenda and Reference Matters
Agenda 1: Appropriation of Surplus
The Company places returning profits stably and continuously to our shareholders as themost paramount task and determines the dividend amount for common stock based on the
Company’s performance. Although our financial situation has improved, we have not completed
establishing a financial base that enables us to stably and continuously pay dividends. For thisreason, we deeply regret to say that there will be no payment of dividends for the fiscal year underreview.
As for Class A Preferred Stock dividends, the Company proposes the following inaccordance with the terms and conditions for Class A Preferred Stock stipulated at the time ofissuance.
1.

Type of dividend asset
Cash

2.

Allocation of dividend assets and total amount of dividends¥44,047 per Class A Preferred Stock
Total amount of dividends is ¥1,321,410,000.

3.

Effective date of dividend of surplus
June 29, 2012

- 48 -

(Translation)

Agenda 2:
Election of Four (4) Directors
The tenure of office for six Directors Naoki Sato, Masao Miyashita, Masasuke Kishi,
Sei Yano, Harushige Sugimoto and Takuma Ishiyama will expire at the end of this general
meeting of shareholders.
Four candidates for directors are shown as follows.
Candidates for Directors (Four):CandidatenumberName(Date of birth)

1

Naoki Sato
(October 27, 1948)

2

Sei Yano(April 28, 1955)

3

Takao Hiramoto(July 31, 1952)

Brief personal profile, position andresponsibility in the Company and significant concurrent
positionsApr. 1972
Joined The Fuji Bank, Limited
May 1999
Senior Manager, Sales Division No.5, Fuji
Bank, Limited
Jun. 2001
Executive Officer, Senior Manager, Sales
Division No.5, Fuji Bank Limited
Apr. 2002
Senior Executive Officer, Mizuho Corporate
Bank, Ltd.
Apr. 2004
Managing Executive Officer, Oki Electric
Jun. 2004
Industry Co., Ltd.
Apr. 2007
Senior Vice President
Jun. 2008
Executive Vice President
Jun. 2009
Director and Vice President
Senior Executive Vice President and Memberof the Board (incumbent)
Apr. 1978
Joined Oki Electric Industry Co., Ltd.
Jul. 1997
Manager, Business Promotion Department,
Open System Integration Center, System
Business Group
Apr. 2007
Executive Officer
Apr. 2009
Senior Vice President
Jun. 2009
Chief Information Officer (incumbent)
Jun. 2010
Senior Vice President and Member of the Board
Apr. 2012
Executive Vice President and Member of theBoard (incumbent)
Apr. 1975
Joined Nihon Denshikiki Kabushiki Kaisha
Sep. 1977
Joined Sony Corporation
Jun. 2003
Executive Officer; President of Storage
Company, Sony Corporation
Jun. 2006
President and CEO, Sony Facility Management
Corporation
Sep. 2007
Vice President, Systems Hardware Company,
Info-telecom Business Group, Oki Electric
Apr. 2008
Industry Co., Ltd.
Apr. 2011
Executive Officer
Senior Vice President (incumbent)(Significant concurrent position)
President & CEO, Oki Data Corporation- 49 -

Number of Oki
shares held

94,000 shares

42,000 shares

24,000 shares

(Translation)
CandidatenumberName(Date of birth)

4

Takuma Ishiyama(February 17, 1947)

Brief personal profile, position andresponsibility in the Company and significant concurrent
positionsMar. 1975
Obtained scores for doctorate degrees andresigned from Graduate School of Law, Waseda
University
Jul. 1978
Assistant Professor, Faculty of Law, Aichi
Gakuin University
Dec. 1985
Obtained doctorate degree
Apr. 1986
Professor, Faculty of Law, Dokkyo University
Apr. 1991
Professor, School of Commerce, Waseda
University
May 2003
Registered as lawyer (Dai-ichi Tokyo Bar
Association)
Apr. 2004
Professor, Law School, Nihon University(incumbent)
Jun. 2010
Director, Oki Electric Industry Co., Ltd.
(incumbent)

Number of Oki
shares held-

Notes:
1.
Mr. Takuma Ishiyama is currently an outside director of the Company and will have served as an outside
director for a period of two years at the conclusion of this General Meeting of Shareholders.
2.
The reason Mr. Takuma Ishiyama is being put forward as a candidate for director is as follows:
Although he has no experience of being directly engaged in corporate management, he has experience andprofessional knowledge as a lawyer and Doctor of Laws, and the Company judges that he would be able toappropriately provide supervision of the Company’s corporate management, especially from the objective
standpoint as a professional in the area of the Companies Act.
3.
The Company has entered into a liability limitation agreement with Mr. Takuma Ishiyama, the details of
which are stated in “Outline of Liability Limitation Agreements” (page 16). If the reappointment of Takuma
Ishiyama is approved, the Company will continue this agreement with him.
4.
Mr. Takuma Ishiyama is an independent officer pursuant to the requirements set by the Tokyo Stock
Exchange and Osaka Stock Exchange. If his reappointment is approved, he will continue to be an
independent officer.

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(Translation)
Agenda 3:
Election of Two (2) Corporate Auditors
The tenure of office of Corporate Auditors Noriyuki Kandori and Seiji Nishi will
expire at the end of this general meeting of shareholders. Two candidates for corporate
auditors are shown as follows.
This agenda has been approved by the Board of Corporate Auditors.
Candidates for Corporate Auditors (Two):
CandidatenumberName(Date of birth)

1

Kuninori Hamaguchi(November 21, 1946)

2

Kaoru Yoshida(February. 16, 1951)

Brief personal profile, position andresponsibility in the Company and significant concurrent
positionsApr. 1970
Joined Tateisi Electric Manufacturing Co.
(currently OMRON Corporation)
Sep. 2000
Manager, Semiconductor Division, OMRONCorporation
Jun. 2001
Senior Vice President, OMRON Corporation
Oct. 2007
Executive Vice President, ADM Inc.
Jan. 2008
Senior Vice President, ADM Inc.
Jun. 2009
Advisor, ADM Inc. (incumbent)
Apr. 1974
Joined Yasuda Mutual Life Insurance Company(currently Meiji Yasuda Life Insurance
Company)
Apr. 2000
Branch Manager, Tokyo Office, Yasuda MutualLife Insurance Company
Apr. 2005
Senior General Manager, Branch Manager,
Ginza Office, Meiji Yasuda Life Insurance
Company,
Apr. 2008
Senior Managing Director, MY Sougou Kikaku
Co., Ltd.
Apr. 2011
Representative Director, President, MY Sougou
Kikaku Co., Ltd.
Apr. 2012
Director, MY Sougou Kikaku Co., Ltd.
(incumbent)

Number of Oki
shares held--

Notes:
1.
Mr. Kuninori Hamaguchi and Kaoru Yoshida are both candidates for outside corporate auditors. If their
appointment is approved, they will be independent officers pursuant to the requirements provided for by the
Tokyo Stock Exchange and Osaka Stock Exchange.
2.
Mr. Kuninori Hamaguchi has been engaged in the management of OMRON Corporation and ADM Inc. for many
years. The Company is requesting his appointment as outside auditor based on the judgment that he would be
able to appropriately provide audits on the execution of duties by directors of the Company based on his
extensive experience and knowledge.
3.
Mr. Kaoru Yoshida has been engaged in the management of Meiji Yasuda Life Insurance Company and MY
Sougou Kikaku Co., Ltd. for many years. The Company is requesting his appointment as outside auditor basedon the judgment that he would be able to appropriately provide audits on the execution of duties by directors of
the Company based on his extensive experience and knowledge. He is scheduled to resign from the position of
director of MY Sougou Kikaku Co., Ltd. on June 21, 2012.
4.
If the appointment of Mr. Kuninori Hamaguchi and Mr. Kaoru Yoshida is approved, the Company will enter intoa liability limitation agreement with each of them. The details of the agreement are as stated in “Outline of
Liability Limitation Agreements” (page 16).

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(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 lower 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.

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