(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 7, 2011

NOTICE OF 87TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders,
I would like to express my heartfelt sympathy to those who were affected by the Great East Japan
Earthquake.
Oki Electric Industry Co., Ltd. (the “Company”) would hereby like to inform you that the 87th
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 28(Tuesday), 2011 (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:

Wednesday, June 29, 2011, 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 87th fiscal year (from April 1, 2010 to March 31,
2011)
2. Non-consolidated Financial Statements for the 87th fiscal year (from April 1,2010 to March 31, 2011)
Items to be resolved:
Agenda 1:
Agenda 2:
Agenda 3:
4.

Appropriation of Surplus
Election of One (1) Director
Election of One (1) Corporate Auditor

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/jp/)
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 87th 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, 2010 to March 31, 2011)
1.

Status of the OKI Group(1) Operating progress and results
The overall world economy during the fiscal year under review (FY2010 ended
March 31, 2011) has moved slowly toward recovery, thanks in part to the continuing
economic recovery stimulated by expanded domestic demand in emerging markets,
including China and India. However, there were concerns over the impact of financial
uncertainty in some countries in Europe, a hovering unemployment rate in Europe andNorth America, and anxiety over the economic slowdown triggered by the sharp rise in
crude oil prices. Although the Japanese economy had shown a gradual tone in recovery
prompted by improvements in personal consumption, the outlook seems unclear due to theGreat East Japan Earthquake which hit the north-east of Japan on March 11, 2011.
In this business environment, the OKI Group’s net sales fell below its full-term
forecasts at the end of the third quarter, while operating income was nearly in line with theforecasts, excluding the negative impacts of the earthquake.
The Group recorded net sales of ¥432.7 billion, down ¥11.2 billion (2.5%) from theprevious fiscal year. This is attributable to large project replacements for somegovernmental offices being in the changeover period, the impact of the appreciation of theyen, the delay in the switching over to new printer products during the first half of the year,
the slow economic recovery in certain regions across Europe, as well as the impact of theearthquake. Operating income was ¥11.0 billion, down ¥3.0 billion from the previous fiscal
year. This was due to the impact of the strong yen, price declines, increases in other costs,
treatment optimization and the impact of the earthquake, despite positive factors such as
reduced procurement costs and value engineering (VE).
Ordinary income decreased by ¥2.9 billion from the previous fiscal year to ¥5.9
billion. The Group recorded a net loss of ¥27.0 billion, down ¥30.6 billion from theprevious fiscal year’s net income, due to the impact of loss upon the revising of theretirement benefit scheme and special retirement expenses following the implementation ofits brushed-up mid-term business plan.
Non-consolidated business performances were similar to consolidated performances.
Net sales were ¥189.9 billion, down ¥10.6 billion (5.3%) from the previous fiscal year, with
operating income of ¥4.6 billion, up ¥1.1 billion, and ordinary income of ¥3.9 billion, down
¥1.2 billion. Net loss was ¥29.1 billion, down ¥31.8 billion from the previous year’s net
income.
We deeply regret to say that there will be no payment of dividend to shareholders for-3-

(Translation)
the fiscal year under review since it was unable to secure the resources needed for dividend
payment.
Net sales by segment are as provided below.
- Net Sales(Unit: billions of yen)
Increase or
decrease

Compared to theprevious year (%)

FY2009 (reference:

FY2010 (the year

previous year)

under review)

267.4

260.7

(6.7)

(2.5)

140.3

125.0

(15.3)(10.9)

EMS

22.7

31.0

8.3

36.8

Others

13.5

15.9

2.4

17.8

Segment
Info-telecom
systems
Printers

Total
443.9
432.7
(11.2)(2.5)
Notes:
1.
Figures less than ¥100 million for each item are rounded to the nearest ¥100 million. The amounts of“increase or decrease” are calculated on the basis of figures in units of ¥100 million.
2.
The Company adopted the “Accounting Standard for Disclosures about Segments of an Enterprise andRelated information” (ASBJ Statement No. 17, March 27, 2009) and “Guidance on the AccountingStandard for Disclosures about Segments of an Enterprise and Related information” (ASBJ Guidance No.
20, March 21, 2008) during the fiscal year under review. The figures for the previous fiscal year are thus
recalculated into the segments for the fiscal year under review.

The following provides a summary of each segment.
Info-telecom systems
Net sales to external customers were ¥260.7 billion, down ¥6.7 billion (2.5%) fromthe previous fiscal year. Sales of solution & services increased due to the rises in sales ofmaintenance and services such as ATM-LCM (Life Cycle Management) and ATM
monitoring and of systems for governmental offices. Sales of mechatronics systems rose
thanks to robust sales of ATMs for Japan and China and the rise in bank branch terminals.
Total sales of telecom systems fell, affected by decreases in sales of core networks andexisting networks and of large projects for enterprises, despite the increase in shipment of
GE-PON for telecom carriers. Sales of social infrastructure systems declined as some of thelarge projects for governmental offices were in the changeover period.
Operating income was ¥14.7 billion, down ¥0.3 billion from the previous fiscal year,
nearly the same as the previous fiscal year. This was attributed to purchase cost reduction,
VE, better product mix, further cuts in expenses and reviews of fixed costs, which absorbed
the increased R&D expenses, the effects of treatment optimization, and the impacts of theearthquake.

-4-

(Translation)
Printers
Net sales to external customers were ¥125.0 billion, down ¥15.3 billion (10.9%) fromthe previous fiscal year.
With regard to sales by product, sales of new models of office color printers (color
NIP) and monochrome printers (monochrome NIP) were firm, contributed to by theaccelerated full-fledged deployment of new models of mainstay A4 color and monochrome
printers from the second half of the year and promotion activities concentrating on focus
models. However, sales of printers declined due to the delay in the switching to new models
in the first half of the year and sluggish economic recovery in some areas in Europe. Unitsales of dot impact printers (SIDM) increased due to special procurement following tax law
revision in China. Also, the strong yen pushed down net sales by ¥12.0 billion.
Operating income decreased by ¥5.9 billion from the previous fiscal year to ¥0.2
billion. This was attributed to price declines, changes in volume, changes in product mix inthe first half of the year, increasing sales expenses, the effects of treatment optimization as
well as the impacts of the earthquake, despite earnings factors such as reduced procurement
costs and VE.
Electronics manufacturing services (EMS) and others
Net sales to external customers were ¥31.0 billion, up ¥8.3 billion (36.8%) from theprevious fiscal year, in EMS business and ¥15.9 billion, up ¥2.4 billion (17.8%) from theprevious fiscal year, in the Others business. In the EMS business, contributing factors
included increased orders for large projects in the telecom equipment market, the earlylaunch of new projects in the medical equipment market, market recovery in the industrial
equipment and semiconductor equipment markets and recovery of the substrate markets. In
the Others business, component related business was robust with the market recovery.
Operating income improved by ¥1.5 billion from the previous fiscal year to ¥1.3
billion in EMS and by ¥2.0 billion from the previous fiscal year to ¥1.5 billion in Others.
Increases in marginal profits due to the rise in volume, improved product mix, lower
procurement costs and VE offset the effects of the earthquake and treatment optimization.

-5-

(Translation)(2) Capital expenditure
Capital expenditures for the fiscal year equaled ¥8.0 billion.
Investment amounts by segment were as follows.
(Unit: billions of yen)Segment

Amount ofcapitalexpenditure

Info-telecom systems

3.6

Printers

2.8

EMS

0.6

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

0.9
8.0

(3) Financing
The Company raised ¥30.0 billion in total by issuing 30,000 preferred shares (paid-in
capital of ¥1,000,000 per share) through an allocation of new shares to third parties with
December 22, 2010 as the date of payment.
(4) Future challenges
The overall world economy has moved slowly toward recovery, driven by
emerging countries such as China, which is still in the phase of strong economic
expansion, particularly in domestic demand. Although the Japanese economy had
seen a gradual tone in recovery in exports and personal consumption, the outlook
seems unclear due to reduced production activities caused by the Great East Japan
Earthquake. There remain concerns about deflation and worsening job markets.
Under such circumstances, the OKI Group brushed up its mid-term businessplan announced on February 16, 2010 and unveiled two pillars of the plan on October
8, 2010 in order to prepare for the early resumption of dividends and the constructionof a system to enable continuous and stable dividends. The two pillars include (1)Business Base Reinforcement Program to build up a business structure which allows
for the generation of consistent earnings and to complete a solid management base tosupport future business growth, and (2) Growth Program for growth in focus areas
through concentrated investment of limited resources and the promotion of strategic
alliances.
(1) In the Business Base Reinforcement Program, capital structure has been corrected by
reducing the amounts of capital and capital reserves to cover losses and eliminate
cumulative losses for the fiscal year under review as a drastic measure to improvefinancial position. In addition, recapitalization has been implemented and investment
funds for growth strategies have been raised by issuing Class A preferred stocks of theCompany through an allocation of new shares to third parties after partial
amendments to the Articles of Incorporation. Nearly 1,000 employees have also been
cut in Japan by means of the “Introduction of Voluntary Early Retirement Programs”
to reduce personnel costs.

-6-

(Translation)(2)

Furthermore, the Group took measures and prepared for “Revisions ofRetirement Benefits Schemes” to ease financial requirements in the future. From now
on, the Group will carry out further cost-savings, concentration and selection ofbusinesses, and reorganization of Group companies based on its mid-term businessplan.
In the Growth Program, the Group will focus its limited resources such as manpower
and funds on businesses such as solutions & services, mechatronics-systems, printersand electronics manufacturing services (EMS), which are positioned as future
growing strategic fields. The Group will also achieve continuing growth over the
medium- and long-term by promoting strategic alliances by building up mutuallycomplementary relationships with partners with resources and know-how that the
OKI Group needs.
Through these initiatives, the Group will establish a solid business base tosupport future operations, stabilize earnings, and strive to achieve its management
goals of net sales of ¥520.0 billion and operating income of ¥22.0 billion in the fiscal
year ending March 31, 2014 (FY2013), which are stated in the Group’s plan, as wellas the early resumption of dividends.

(5) Trends in assets and profit/loss
Trends in assets and profit/loss for the fiscal year under review and the past three
years are as follows.

Sales

719.7

billion yen

545.7

billion yen

443.9

billion yen

87th year(the year underreview, FY2010)
432.7
billion yen

Net income

567

million yen(45,011)

million yen

3,619

million yen(27,001)

84th year (FY2007)

86th year(FY2009)85th year (FY2008)

million yen

Net income per share

0.83

yen

(65.90)

yen

5.30

yen

(37.35)yen

Total assets

570.8

billion yen

397.0

billion yen

383.6

billion yen

372.2

billion yen

Net assets

101.4

billion yen

58.7

billion yen

64.8

billion yen

59.9

billion yen

Net assets per share

138.55

yen

75.64

yen

84.61

yen

40.15

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.
3. Assets and sales decreased significantly in the 85th year mainly because sales of the semiconductor businesshave not been recorded since the third quarter of the 85th year as a result of the transfer of the business.

-7-

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

Oki Data Corporation

19,000 million yen

Company’s
voting right
ratio
100

Oki Customer Adtech Co., Ltd.

3,650 million yen

100

OKI Software Co., Ltd.

400 million yen

100

Oki Wintech Co., Ltd.

2,001 million yen

100

Oki Networks Co., Ltd.

490 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
Marketing in thetelecommunications business fieldand planning, development, andsale of products
Sales of printers
Sales of printers
Manufacturing of information
processing equipment and printers

Notes:
1. Figures marked with an asterisk (*) indicate the ratio of voting rights held by subsidiaries of the Company.
2. On October 1, 2010, Oki Telecommunication Systems Co., Ltd. and Oki Infotech Co., Ltd., which wereconsolidated subsidiaries, were absorbed by another consolidated subsidiary, Oki Software Co., Ltd. Oki
Software Co., Ltd. changed its trade name to OKI Software Co., Ltd. on the date of the merger.
3. Oki Wintech Co., Ltd. became a wholly-owned subsidiary of the Company through a share exchange with
the Company on June 1, 2010.
4. On February 1, 2011, Oki Telecom Co., Ltd., which was a consolidated subsidiary, was absorbed by anotherconsolidated subsidiary, Oki Wintech Co., Ltd. and extinguished.

-8-

(Translation)
(ii)
-

-

Major partners
Major technical partners:
Alcatel-Lucent (US)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, ITS-related systems, electronic
government-related systems, ERP systems, computer network-related equipments,
informational network terminal equipments, security systems, IP telephony systems,
corporate telecommunications systems, CTI systems, image delivery systems,
electronic switching equipment, digital transmission equipment, opticalcommunication equipment, radio communication equipment, broadband accessequipment, network service, network operational support service, etc.
Color printers, monochrome printers, dot impact printers, multi-purpose printers,
etc.
Entrusted manufacturing services of electronic devices, and manufacturing and salesof printed circuit boards(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
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), and Numazu(Shizuoka)
Warabi (Saitama), Osaka (Osaka) and Takasaki(Gunma)Minato-ku, Tokyo
Koto-ku, Tokyo
Warabi, Saitama
Shinagawa-ku, Tokyo
Minato-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 Networks 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

8,889

Printers

6,085

EMS

431

Other

1,017

Company-wide (shared)

275

Total

(ii)

16,697

Employees of Oki Electric Industry
Number of employees

Average age

3,103 (decreased by 67 from the end of the previous year)

41.2

Average length ofservice19.1(10) Major creditors
Major creditors of the OKI Group are as follows:
Creditor

Loan balanceBillion yen

Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Mizuho Trust & Banking Co., Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Development Bank of Japan Inc.

32.0
22.5
10.5
7.4
6.2

(11) Other significant events of the OKI GroupThe Company transferred its head office to a new address: 1-7-12 Toranomon,
Minato-ku, Tokyo on May 6, 2011.

- 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 145 thousand shares of treasury stock)
Class A Preferred Stock:
30,000 shares(3) Number of shareholders:Common Stock:102,813Class A Preferred Stock:
14(4) Major shareholders (Top 10):
1) Common Stock
Number ofshares held
(thousand shares)

Name of shareholder

Japan Trustee Services Bank, Ltd. (trust account)

33,473

Percentage ofshares held
(%)
4.58

Oki Denki Group Employees’ Shareholdings Committee

17,2282.36

Mizuho Corporate Bank, Ltd.

14,196

1.94

14,040

1.92

Meiji Yasuda Life Insurance Company

14,000

1.91

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

12,772

1.75

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

12,331

1.69

Sompo Japan Insurance Inc.

10,057

1.38

Nomura Trust and Banking Co., Ltd. (trust account)

5,010

0.69

Dai-ichi Life Insurance Company, Limited

4,999

0.68

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

Note:

The percentages of shares held are calculated after deducting treasury stock (145 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

Supervision
Chief Financial Officer, Chief Compliance Officer
In charge of Secretarial Office, Group Administration
Division, General Affairs Division, and Human
Resources Division

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
Noriyuki Kandori
Seiji Nishi

In charge of Public Systems Business Division andMarketing & Sales Division
In charge of Government & Public Systems Marketing& Sales Division, Enterprise Systems Marketing &Sales Division and Public Relations Division
Chief Technology Officer
In charge of Systems Hardware Business Division
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
In charge of Information Planning Division
President & CEO, Oki Data Corporation

DirectorStanding Corporate Auditor
Standing 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.
6. Directors and Corporate Auditors who resigned during the fiscal year under review are as follows:- Mr. Minoru Morio resigned as Corporate Auditor at the conclusion of the 86th Ordinary General Meetingof Shareholders held on June 29, 2010.

- 14 -

(Translation)
7.

Executive officers as of March 31, 2011 are as follows (excluding those who concurrently serve as
Directors).
Position

Name

Senior Vice President

Hisao Suzuki

Senior Vice President

Hideto Morizono

Senior Vice President

Hidetoshi Saigo

Senior Vice President

Yasunori Shibata

Executive Officer

Takao Hiramoto

Executive Officer

Shuichi Kawano

Executive Officer
Executive Officer
Executive Officer

Toshiya Hatakeyama
Masahiko Morioka
Kazunari Kobayashi

Executive Officer

Toshinao Takeuchi

Executive Officer

Yasushi Kiriku

Executive Officer

Tsutomu Tai

Principal duty
In charge of CSR Division, Accounting & Control
Division and Audit Office
In charge of Production Division and Electronics
Manufacturing Services Division
In charge of Telecom Systems Business Division andCarriers Systems Marketing & Sales Division
President of OKI Networks Co., Ltd.
In charge of the Financial Systems Marketing & Sales
DivisionManager, System Hardware Business Division
In charge of the Partner Business Marketing & Sales
DivisionManager, Government & External Relations Division andManager, CSR Division
Manager, Accounting & Control Division
Director, Vice President, Oki Data Corporation
Manager, Human Resources Division
Manager, Planning Division, IT Solution & Services
Business Division
Manager, Public Systems Business Division and Manager,
Enterprise Systems Marketing & Sales Division
Manager, Corporate Planning Division(2) Compensation paid to Directors and Corporate Auditors
Title
Directors
Corporate Auditors
Total

Number of persons
104
14

Amount of payment¥124 million¥48 million¥173 million

Notes:
1.
The amounts of compensation approved by the 82nd Ordinary General Meeting of Shareholders held on
June 29, 2006 are within ¥600 million per year for Directors and ¥100 million per year for Corporate
Auditors. The amount of compensation for Directors excludes employee wages for Directors who arealso employees.
2.
The number of Directors and Corporate Auditors as of the end of the fiscal year under review is different
from the number shown above, which includes those who resigned at the conclusion of the 86th Ordinary
General Meeting of Shareholders held on June 29, 2010.

- 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 (13)

100%

-

-

15 (15)100%

16 (16)100%

15 (15)100%

16 (16)100%

Note: The number of meetings for Director Takuma Ishiyama is equivalent to the number of meetings held since
he took office in June 2010.

(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. As Standing Outside
Corporate Auditor, he made efforts to formulate appropriate audit opinions for
the Company by attending important meetings, inspecting important approval
documents, conducting on-site audits of major sections, and cooperating within-house audit sections.
c. 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 are 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- 16 -

(Translation)
officers have executed their duties that caused the liabilities in good faith and withoutgross negligence.
(iii) Total amount of compensation, etc.
¥30 million (for the four 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
123 million yen
2. Total sum of cash and profits on other assets that the Company and its subsidiaries
201 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) Contents of non-audit services
The Company has also hired the accounting auditor for “advisory services on thetransition, etc. to International Financial Reporting Standards,” which is a service otherthan the audits specified in Article 2, Paragraph 1 of the Certified Public Accountants Law,and pays the auditor compensation for that service.
(4) Policy regarding decision to dismiss or not reappoint the accounting auditor
The Board of Corporate Auditors will dismiss the accounting auditor if the auditor
falls under provisions of Article 340 of the 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, 2011)(Unit: millions of yen)Account title

AmountAccount title(Assets)

Amount(Liabilities)

Current assets

Current liabilities

Cash and deposits

45,959Notes and accounts payable

53,923

Notes and accounts receivable

113,729

Short-term borrowings

118,063

Securities

34,720

Other accrued expenses

26,214

Finished goods

26,189Other current liabilities

24,907Work in process

16,979Raw materials and supplies

21,775

Total current liabilities

223,109

Long-term liabilities

Deferred tax assets

6,146

Long-term borrowings

Other current assets

8,716

Lease obligations

3,841

Allowance for doubtful receivables(1,150)Retirement benefits

16,350Total current assets

273,064

Fixed assets
Property, plant and equipment
Buildings and structures

22,685

Machinery, equipment and delivery
equipment

9,142

Provision for Directors’ retirement benefits

33,987514

Long-term accounts payable-other

32,478Other long-term liabilities

2,006

Total long-term liabilities

89,179Total liabilities

312,288(Net Assets)
Shareholders’ equity

Tools, furniture and fixtures

9,138

Common stock

44,000Land

12,038Additional paid-in capital

113,124130

Retained earnings(90,536)

53,134

Treasury stock

Construction in progress
Total property, plant and equipment
Intangible assets

7,791

Investments and other assets
Investments in securities

Total shareholders’ equity(23)
66,564

Accumulated other comprehensive income
28,845

Valuation difference on available-for-salesecurities(1,988)Long-term loans

1,498

Loss on deferred hedges(983)

Other investments and other assets

10,350Translation adjustments(4,238)

Total accumulated other comprehensive
income(7,210)(2,492)

Allowance for doubtful receivables
Total investments and other assets

38,201Equity warrants

79

Total fixed assets

99,127

Minority interests in consolidated subsidiaries

470

Total net assets

59,903

Total liabilities and net assets

372,192

Total assets

372,192- 22 -

(Translation)

Consolidated Statement of Operations(From April 1, 2010 to March 31, 2011)(Unit: millions of yen)Account title

AmountNet sales

432,685

Cost of sales

318,587

Gross profit

114,097

Selling, general and administrative expenses

103,048

Operating income

11,049Non-operating income
Interest income

259

Dividend income

849

Equity in earnings of affiliates

299

Corporate brand royalty income

551

Other

708

2,668

Non-operating expenses
Interest expense

4,471

Stock issuance cost

1,349

Foreign exchange loss

816

Other

1,173

Ordinary income

7,811
5,906

Extraordinary profit
Gain on sales of property, plant and equipment

10

Gain on sales of investments in securities

211

Gain on negative goodwill

2,650

Reversal of allowance for doubtful accounts

440

Gain on contribution of securities to a pension trust

7,407

Settlement received

167

10,888Extraordinary loss
Loss on sales and disposition of property, plant andequipment

387

Loss on impairment of fixed assets

260

Loss on sales of investments in securities

132

Write-downs of investments in unconsolidated
subsidiaries and other securities

2,500

Loss on natural disasters

26

Special retirement payments

11,807

Expenses for business restructuring

1,120

Relocation cost

620

Loss on change to a new retirement benefit plan

22,412

Loss on adjustment for changes of accounting
standard for asset retirement obligations

623

Provision for product warranties

503

Product warranty expense

1,712

Loss before income taxes, minority interests andequity in earnings of affiliates

42,10825,313

Income taxes

1,404

Income taxes deferred

214

Loss before minority interests

1,619
26,932

Minority interests

68

Net loss

27,001- 23 -

(Translation)

Consolidated Statement of Changes in Shareholders’ Equity(From April 1, 2010 to March 31, 2011)(Unit: Millions of yen)
Shareholders’ equity
Common stock
Balance as of March 31, 2010

76,940Changes during the term under review
Issuance of new shares

15,000Transfer to other capital surplus from capital stock(47,940)

Net changes during the term under review(32,940)

Balance as of March 31, 2011

44,000Additional paid-in capital
Balance as of March 31, 2010

46,744

Changes during the term under review
Issuance of new shares

15,000Transfer to other capital surplus from capital stock

47,940

Increase by share exchanges

3,438

Disposal of treasury stock

1

Net changes during the term under review

66,379Balance as of March 31, 2011

113,124

Retained earnings
Balance as of March 31, 2010

(63,534)

Changes during the term under review
Net loss(27,001)

Net changes during the term under review(27,001)

Balance as of March 31, 2011

(90,536)

Treasury stock
Balance as of March 31, 2010

(408)

Changes during the term under review
Disposal of treasury stock

403

Purchases of treasury stock(18)

Net changes during the term under review

385

Balance as of March 31, 2011(23)

Total shareholders’ equity
Balance as of March 31, 2010

59,741

Changes during the term under review
Issuance of new shares

30,000Transfer to other capital surplus from capital stock-

Increase by share exchanges

3,438

Disposal of treasury stock404

Net loss(27,001)

Purchases of treasury stock(18)

Net changes during the term under review

6,822

Balance as of March 31, 2011

66,564- 24 -

(Translation)
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance as of March 31, 2010

2,095

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(4,084)(4,084)

Balance as of March 31, 2011

(1,988)Loss on deferred hedges
Balance as of March 31, 2010

(660)

Changes during the term under review
Net changes in items other than shareholders’ equity during the term under review(323)

Net changes during the term under review(323)

Balance as of March 31, 2011

(983)

Translation adjustments
Balance as of March 31, 2010

(3,440)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

(797)
(797)

Balance as of March 31, 2011

(4,238)

Total accumulated other comprehensive income
Balance as of March 31, 2010

(2,005)

Changes during the term under review
Net changes in items other than shareholders’ equity during the term under review(5,205)

Net changes during the term under review(5,205)

Balance as of March 31, 2011

(7,210)Equity warrants
Balance as of March 31, 2010

79

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

Balance as of March 31, 2011

79

Minority interests in consolidated subsidiaries
Balance as of March 31, 2010

6,994

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(6,523)(6,523)

Balance as of March 31, 2011470

- 25 -

(Translation)
Total net assets
Balance as of March 31, 2010

64,810Changes during the term under review
Issuance of new shares

30,000Transfer to other capital surplus from capital stock-

Increase by share exchanges

3,438

Disposal of treasury stock404

Net loss(27,001)

Purchases of treasury stock(18)

Net changes in items other than shareholders’ equity during the term under review(11,729)

Net changes during the term under review(4,906)

Balance as of March 31, 2011

59,903- 26 -

(Translation)

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

Scope of consolidation(1) Number of consolidated subsidiaries: 68 companies
Names of major consolidated subsidiaries:
Oki Data Corporation; Oki Customer Adtech Co., Ltd.; Oki Wintech Co., Ltd.;OKI Software Co., Ltd.; Oki Networks 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 25 other companies
Reasons for excluding from consolidation:
Total assets, retained earnings, net sales and net income or loss are individually
and wholly immaterial and have no significant influence.
(3) Changes in scope of consolidation:
LLC “OKI SYSTEMS RUS” was included in the scope of consolidation as it
was newly established. Excluded from the scope of consolidation were Oki
Systems Taiwan Co., Ltd. due to liquidation; Oki Alpha Create Co., Ltd. andOki Human Networks Co., Ltd. due to a merger with a consolidated subsidiary,
Oki Development Co., Ltd.; Oki Telecommunication Systems Co., Ltd. and Oki
Infotec Co., Ltd. due to a merger with a consolidated subsidiary, Oki SoftwareCo., Ltd.; Oki Data Systems Co., Ltd. due to a merger with a consolidated
subsidiary, Oki Data Corporation; Oki Logistics Co., Ltd. due to a merger witha consolidated subsidiary, OKI Proserve Co., Ltd.; and Oki Telecom Co., Ltd.
due to a merger with a consolidated subsidiary, Oki Wintech Co., Ltd. Oki
Development Co., Ltd. and Oki Software Co., Ltd. changed their names to OKI
Proserve Co., Ltd. and OKI Software Co., Ltd., respectively.

2.

Application of equity method(1) Number of affiliated companies to which the equity method is applied: 3Name of major company to which the equity method is applied:Oki Electric Cable Co., Ltd.
(2) Names of major non-consolidated subsidiaries and affiliated companies to which theequity method is not applied:
Non-consolidated subsidiaries:
Adachi Protechno Co., Ltd. and 25 other companies
Affiliated companies: Alp Inc. and 7 other companies- 27 -

(Translation)

3.

4.

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.
Matters concerning account settlement dates of consolidated subsidiaries
The account settlement date of the following consolidated subsidiaries is December 31 eachyear and different from the account settlement date of the consolidated statements. In
preparing consolidated financial statements, the financial statements of these subsidiaries asof their account settlement date are used:
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.
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: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 averagemethod.(Balance sheet values are measured by the method of- 28 -

(Translation)
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.

- 29 -

(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 (12 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 (12 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.
(Additional information)
The Company adopted “Guidance on Accounting for Transfers between
Retirement Benefit Plans” (ASBJ Guidance No.1), as the Company and some of its
consolidated subsidiaries in Japan will shift part of their lump-sum retirement payment
plans to defined contribution plans in June 2011. As a result, “Loss on change to a newretirement benefit plan” was recorded at ¥19,589 million in extraordinary loss for the
fiscal year under review.
(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- 30 -

(Translation)
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.
(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.
Changes in important matters in preparation for Consolidated Financial Statements
1. Application of accounting standards for asset retirement obligation
Effective the fiscal year under review, the Company adopted “Accounting Standard for
Asset Retirement Obligations” (ASBJ Statement No.18, March 31, 2008) and “Guidance on
Accounting Standard for Asset Retirement Obligations” (ASBJ Guidance No.21, March 31,2008).
As a result, operating income declined by ¥142 million and ordinary income fell by ¥138
million, while loss before income taxes, minority interests and equity in earnings of affiliates
increased ¥883 million for the fiscal year under review. Changes in asset retirement obligation
due to the adoption of the relevant accounting standard are ¥1,583 million.
2. Application of Accounting Standards for Business Combinations
Effective the fiscal year under review, the Company adopted “Accounting Standard forBusiness Combinations” (ASBJ Statement No.21, December 26, 2008), “Accounting Standard
for Consolidated Financial Statements” (ASBJ Statement No.22, December 26, 2008), “Partial
Amendments to Accounting Standard for Research and Development Costs” (ASBJ Statement
No.23, December 26, 2008), “Revised Accounting Standard for Business Divestitures” (ASBJ
Statement No. 7, December 26, 2008), “Revised Accounting Standard for Equity Method of
Accounting for Investments” (ASBJ Statement No. 16, announced on December 26, 2008) and“Revised Guidance on Accounting Standard for Business Combinations and Accounting- 31 -

(Translation)
Standard for Business Divestitures” (ASBJ Guidance No.10, December 26, 2008).
Changes in presentation methods
Consolidated Statement of Operations
Effective the fiscal year under review, the Company adopted “Ministerial Ordinance forPartial Revision of the Ordinance for Enforcement of the Companies Act, the Corporate
Accounting Rules, etc.” (Ordinance of the Ministry of Justice No. 7 of 2009) based on“Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No.22,
December 26, 2008) and presented an account title of “Net Loss before minority interests”.
Additional Information
Application of Accounting Standards for Presentation of Comprehensive Income
Effective the fiscal year under review, the Company adopted “Accounting Standard for
Presentation of Comprehensive Income” (ASBJ Statement No. 25, June 30, 2010).

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
2. Accumulated depreciation on property, plant and equipment
3. Liabilities for guarantee
Guarantee for borrowings by employees- 32 -¥458 million¥138 million¥7,026 million¥7,622 million¥5,000 million¥670 million¥148,576 million¥820 million

(Translation)

Notes to Consolidated Statement of Changes in Shareholders’ Equity
1. Matters concerning class and total number of shares outstanding
Class of Stock

Common StockClass A Preferred Stock

End of FY2009
Number of shares(thousand shares)

FY2010
Increase in numberof shares (thousand
shares)

FY2010Decrease in numberof shares (thousand
shares)End of FY2010
Number of shares(thousand shares)

684,256

47,181-

731,438

-

30

-

30

Total
684,256
47,211
731,468
Notes:
1. The increase of 47,181 thousand shares in the number of common stock outstanding was attributed to the shareexchange (exchange ratio of 1 to 8.7) with the Company as a wholly owing parent company for share exchange
and Oki Wintech Co., Ltd. as a wholly-owned subsidiary for share exchange.
2.
The increase of 30 thousand shares in total number of Class A preferred stock outstanding is attributed to theissuance of preferred shares through an allocation of new shares to third parties.

2.

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

Breakdown of equity warrants

The Company

No. 2 Equity Warrants(issued on July 18, 2003)
No. 3 Equity Warrants(issued on July 20, 2004)
No. 4 Equity Warrants(issued on July 20, 2005)
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 mainly for capital investment. For borrowings exposed to the interest rate risk, the Groupapplies derivative instruments (interest rate swap transactions) to hedge its risk.

- 33 -

(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, 2011 (consolidated balance sheet date), the amount recorded in the
consolidated balance sheet, fair value, and the amount of differences are as shown in the tablebelow. Any item whose fair value is deemed extremely difficult to assess is excluded from thetable. (See Note 2.)(Unit: millions of yen)Amount recorded inconsolidated balance
sheet

Fair value

Difference(1) Cash and deposits

45,95945,959-(2) Notes and accounts receivable

113,729

113,729-(3) Securities and investments insecurities

51,14050,353(786)(4) Notes and accounts payable(53,923)(53,923)-(5) Short-term borrowings (*1)(73,938)(73,938)-(6) Other accrued expenses(26,214)(26,214)-(7) Long-term borrowings (*1)

(78,112)(78,198)

86(8) Long-term accounts payable-other(32,478)(31,562)(916)(9) Derivative transactions(1,428)(1,428)(*1) Long-term borrowings (¥44,125 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
Unlisted equity securities (¥12,338 million on the consolidated balance sheet) and investments in a limited
liability joint business partnership (¥86 million on the consolidated balance sheet) are not included in (3)- 34 -

(Translation)
Securities and investments in securities because they have no market price and it is deemed extremely difficult toassess their fair values.

Notes to Securities
1. Held-to-maturity debt securities (as of March 31, 2011)(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

1,502

1,502

-

500

500

-

2,002

2,002

-

Certificates of deposit
Total

2.

Other securities (as of March 31, 2011)(Unit: millions of yen)Amount recorded inconsolidated balance
sheet

Acquisition cost

Difference(Securities whose amounts recorded inconsolidated balance sheet exceed theiracquisition costs)
Equity Securities
Bonds
Other

2,929
1,624
302

2,152
1,604
299

777
19
2

Subtotal

4,856

4,057

799

(Securities whose amounts recorded inconsolidated balance sheet are not morethan their acquisition costs)
Equity Securities
Bonds
Certificates of deposit
Other

8,279
500
28,9003,415

10,909500
28,9003,420(2,630)(0)(5)

Subtotal

41,09443,730(2,635)

Total

45,95147,787(1,836)

3.

Other securities sold during the consolidated fiscal year under review(From April 1, 2010 to March 31, 2011)Type
Equity Securities

4.

Sales amount

Total gain on sales
754

181

(Unit: millions of yen)
Total loss on sales
132

Impaired securities
Impairment loss of ¥2,445 million was applied to securities (other securities) for the year

- 35 -

(Translation)
ended March 31, 2011.
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 Business Combinations
Transactions, etc. under Common Control
1. Acquisition of 100% ownership of a consolidated subsidiary (Oki Wintech Co., Ltd.)through share exchange(1) Names of companies involved in combinations or target businesses and their businesslines, legal forms of business combinations, name of a company after combinations andoutline of transactions including purposes of share exchange(i) Companies involved in combinations and their business lines
Wholly owning parent company
for share exchange
Companies involvedin combinations

Business lines(ii)

Oki Electric Industry Co., Ltd.
Telecom, information processing,
manufacture & sales of software andbuilding of their systems, solution
provision, construction, maintenance andother services

Wholly-owned subsidiaryfor share exchange
Oki Wintech Co., Ltd.
Design, construction and maintenanceservices of info-telecom systems,
electrical facilities and other construction
works

Legal forms of business combinations
Share exchange with the Company as a wholly owning parent company and Oki
Wintech Co., Ltd. as a Wholly-owned subsidiary(iii) Name of a company after combinations
No change in name(iv) Purposes of the share exchange
The Company resolved at the Board of Directors held on February 3, 2010 toconduct a share exchange with the Company as a wholly owning parent company forshare exchange (hereinafter referred to as “Share Exchange”) and Oki Wintech Co., Ltd.
(hereinafter referred to as “Oki Wintech”) as a Wholly-owned subsidiary for shareexchange, and concluded a share exchange agreement with Oki Wintech on the sameday. The Company then carried out the share exchange effective June 1, 2010.
The Company is currently pursuing reforms within its own business structure andthose of its group companies to maximize corporate value as a consolidated group bybusiness segment.
As part of these structural reforms, the Company made Oki Wintech a whollyowned subsidiary through the Share Exchange, in order to strengthen group- 36 -

(Translation)
management and increase the agility of its communication business.
The Company implemented the Share Exchange without obtaining approval at theGeneral Meeting of Shareholders in accordance with “simplified share exchange”
procedures pursuant to Article 796, Paragraph 3 of the Companies Act.
(2)

Outline of accounting procedures applied
The Company accounted for Share Exchange as Transactions, etc. under Common
Control based on “Accounting Standard for Business Combinations” (ASBJ Statement
No. 21, December 26, 2008) and “Revised Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business Divestures” (ASBJ
Guidance No.10, December 26, 2008).

(3) Matters on acquisition of additional shares of subsidiaries(i) Acquisition costs and the breakdown
Consideration for acquisition (common stock of the Company)
Expenditures directly required for acquisition
Acquisition cost

¥3,842 million¥60 million¥3,902 million(ii) Exchange ratio by class of shares and its calculation methods, and number of sharesdelivered and their valuations
a. Class of shares and exchange ratio
The Company allotted and delivered 8.7 common shares of the Company for 1
common share of Oki Wintech. In the Share Exchange, however, no shares wereallotted for Oki Wintech’s common shares owned by the Company.
The Company appropriated 1,791,017 treasury shares (common stock) it held
and issued new common shares to cover the shortage.
b. Calculation method of share exchange ratio
For the ratio of the Share Exchange, the Company and Oki Wintech decided torespectively request third-party institutions that were independent of both companies
to calculate the share exchange ratio, in order to make the calculation fair andappropriate. The Company appointed Mizuho Securities Co., Ltd. and Oki Wintech
appointed Sumitomo Mitsui Banking Corporation as third-party institutions,
respectively. Both companies negotiated in good faith and consulted with each otherbased on the calculation results and, in the end, agreed that the abovementioned shareexchange ratio was appropriate.
c. Number of shares delivered and their valuations
Number of shares
48,972,909 shares
Valuations¥3,902 million
(iii)
a.
b.

Amount of negative goodwill generated and causes of generation
Amount of negative goodwill¥2,650 million
Causes of generation
Negative goodwill was attributable to the amount of minority interests which- 37 -

(Translation)
decreased by Share Exchange exceeding the acquisition costs of Oki Wintech’scommon shares additionally acquired.
2.

Merger of three consolidated subsidiaries(1)
Names of companies involved in combinations and their business lines, legal forms ofbusiness combinations, name of a company after combinations and outline oftransactions including purposes of merger(i)Companies involved in combinations and their business lines
Absorbing/acquiring/surviving
company
Companies
involved in
combinations

Business lines

Oki Software Co., Ltd.
Development, design andmanufacture of software

Absorbed/acquired/extinguished Absorbed/acquired/extinguishedcompany
company
Oki Telecommunication
Systems Co., Ltd.
Development and sales ofsoftware and systems fortelecommunication andinformation processing

Oki Infortech Co., Ltd.
Design, development,
maintenance, operations andconsulting of IT systems(ii)

Legal forms of business combinations
Merger with Oki Software Co., Ltd. as an absorbing/acquiring/surviving company
and Oki Telecommunication Systems Co., Ltd. and Oki Infortech Co., Ltd. as
absorbed/acquired/extinguished companies(iii)

Name of a company after combinations
OKI Software Co., Ltd.

(iv)

Outline of transactions including purposes of merger
The Company resolved at the Board of Directors on July 2, 2010 to conduct amerger with Oki Software Co., Ltd., a consolidated subsidiary of the Company, as anabsorbing/acquiring/surviving company and Oki Telecommunication Systems Co.,
Ltd. and Oki Infotech Co., Ltd., consolidated subsidiaries of the Company, asabsorbed/acquired/extinguished companies, and concluded a merger agreement
among the three consolidated subsidiaries effective July 5, 2010. The Company thenconducted the merger of the three consolidated subsidiaries on October 1, 2010.
The Company is currently pursuing reforms within its own business structure
and those of its group companies to maximize corporate value as a consolidated
group by business segment.
As part of these business structural reforms, the Company integrated resources
which had been diversified by markets into a business division in April 2010 toexpand the IT Solution & Services business.
The Company has decided to merge three subsidiaries to enhance the softwaredevelopment and system operation management in the informationtelecommunication field which is a core of the IT Solution & Services business. The
three subsidiaries include Oki Software Co., Ltd. whose main business was software- 38 -

(Translation)
development in the information field, Oki Telecommunication Systems Co., Ltd. thatwas mainly involved in software development in the field of telecommunications,and Oki Infotech Co., Ltd., that was engaged in IT system development andoperations of the OKI Group.
(ii)

Outline of accounting procedures applied
The Company accounted for the merger as Transactions, etc. under Common
Control based on “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, December 26, 2008) and “Revised Guidance on AccountingStandard for Business Combinations and Accounting Standard for Business
Divestures” (ASBJ Guidance No. 10, December 26, 2008).

Notes to Per-share Information
1. Net assets per share:¥40.15
2. Net income per share:(¥37.35)- 39 -

(Translation)

Transcript of Account Auditors’ Report on Consolidated Financial Statements

Independent Auditors’ Report
May 17, 2011
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yasutoyo Imai (seal),
Engagement Partner, Certified Public Accountant
Akira Sato (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, theconsolidated statement of operations, the consolidated statement of changes in shareholders equity andnotes to the consolidated financial statements – of Oki Electric Industry Co., Ltd. for the 87th term from
April 1, 2010 to March 31, 2011 in accordance with Article 444 Paragraph 4 of the Companies Act. Oki
Electric Industry’s management is responsible for preparing these consolidated financial statements,and our responsibility is to express our independent opinion regarding these consolidated financial
statements.
We conducted our audit in accordance with auditing standards generally accepted in Japan. These
auditing standards require that we obtain reasonable assurance as to whether the consolidated financial
statements are free of material misstatement. Audits are conducted based on a test basis, and include
reviews of accounting policies and methods that management adopts, and evaluation of management
estimates and the presentation of the consolidated financial statements as a whole. We believe wehave obtained reasonable bases for the expression of our opinion as a result of our audit.
We concluded that the consolidated financial statements fairly present in all aspects Oki ElectricIndustry’s and its subsidiaries’ assets and income or loss in accordance with corporate accounting
standards generally accepted in Japan.
No conflict of interest as defined by the Accounting Law exists between Oki Electric Industry, our firm(Ernst & Young ShinNihon LLC) and the respective engagement partners.

- 40 -

(Translation)

Non-Consolidated Balance Sheet(as of March 31, 2011)(Unit: millions of yen)Account title(Assets)

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

22,291
1,147
48,938
1,731
29,8994,195
13,2405,683
218
20,762
12,200

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
Investments in securities
Shares of affiliated companies
Contribution
Contribution to affiliated companies
Long-term loans to employees
Long-term loans of subsidiaries & affiliates

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

2,747
2,498
(256)
165,299

36,376(26,698)
2,490(2,204)
14,963(12,959)
81(77)
32,024(27,365)

9,678
286
2,003
4
4,658
9,635
0
26,266
7
127
3,724
3,859

22,08742,61993
1,764
0
14,944
4,135
152
2,822
499
(7,593)
81,525
111,650
276,950- 41 -

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
Deposits
Provision for product warranties
Asset retirement obligations
Other current liabilities
Total current liabilities
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(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
Total shareholders’ equity

Amount213
41,30846,046
38,764311
6,169
12,448
2,202
1,522
503
139
920
150,550

27,9801,571
1,749
13,624835
17,88363,645
214,196

44,000113,123
15,00098,123(91,569)(91,569)(91,569)(10)
65,542

Valuation, translation adjustments and others
Valuation difference on available-for-salesecurities(1,950)Loss on deferred hedges(917)(2,868)

Total valuation, translation adjustments and others

Equity warrants
Total net assets

79
62,754

Total liabilities and net assets

276,950

(Translation)

Non-Consolidated Statement of Operations(From April 1, 2010 to March 31, 2011)(Unit: millions of yen)Account title

AmountNet sales

189,929

Cost of sales

148,430

Gross profit

41,498Selling, general and administrative expenses

36,896

Operating income

4,602

Non-operating income
Interest income

405Interest income on securities

39

Dividend income

1,915

Corporate brand royalty income

1,953

Other

379

4,693

Non-operating expenses
Interest expense

2,636

Stock issuance cost

1,349

Foreign exchange loss

637

Other

791

Ordinary income

5,413
3,883

Extraordinary profit
Gain on sales of investments in securities

211

Gain on extinguishment of tie-in shares

11

Gain on contribution of securities to a pension trust

7,407

7,630

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

220

Loss on impairment of fixed assets

243

Loss on sales of investments in securities

132

Loss on sales of investments in subsidiaries and affiliates

5,330

Write-downs of investments in unconsolidated subsidiaries and othersecurities

2,479

Write-downs of investments in shares of subsidiaries and affiliates

9,636

Provision of allowance for doubtful receivables

1,034

Special retirement payments

3,768

Business structure improvement expenses

77

Relocation cost

620

Loss on change to a new retirement benefit plan

13,704

Loss on adjustment for changes of accounting standard for asset
retirement obligations
Provision for product warranties

287
503

Product warranty expense

1,712

Loss before taxes

39,75328,240

Income taxes(74)

Income taxes deferred894

Net loss

820
29,060- 42 -

(Translation)

Non-Consolidated Statement of Changes in Shareholders’ Equity(From April 1, 2010 to March 31, 2011)(Unit: millions of yen)
Shareholders’ equity
Common stock
Balance as of March 31, 2010

76,940Changes during the term under review
Issuance of new shares

15,000Transfer to other capital surplus from capital stock(47,940)

Net changes during the term under review(32,940)

Balance as of March 31, 2011

44,000Additional paid-in capital
Capital reserve
Balance as of March 31, 2010

25,928Changes during the term under review
Issuance of new shares

15,000

Increase by share exchanges

3,438Transfer to other capital surplus from legal capital surplus
Net changes during the term under review(29,366)(10,928)

Balance as of March 31, 2011

15,000

Other additional paid-in capital
Balance as of March 31, 2010

20,816

Changes during the term under review
Transfer to other capital surplus from capital stock

47,940Transfer to other capital surplus from legal capital surplus
Net changes during the term under review

29,36677,307

Balance as of March 31, 2011

98,123

Total additional paid-in capital
Balance as of March 31, 2010

46,744

Changes during the term under review
Issuance of new shares

15,000Transfer to other capital surplus from capital stock

47,940

Increase by share exchanges

3,438Transfer to other capital surplus from legal capital surplus
Net changes during the term under review

66,378

Balance as of March 31, 2011

113,123

Retained earnings
Other retained earnings
Retained earnings carried forward
Balance as of March 31, 2010

(62,509)

Changes during the term under review
Net loss(29,060)

Net changes during the term under review(29,060)

Balance as of March 31, 2011

(91,569)- 43 -

(Translation)
Total retained earnings
Balance as of March 31, 2010

(62,509)

Changes during the term under review
Net loss(29,060)

Net changes during the term under review(29,060)

Balance as of March 31, 2011

(91,569)

Treasury stock
Balance as of March 31, 2010

(403)

Changes during the term under review
Purchases of treasury stock(11)

Disposal of treasury stock403

Net changes during the term under review

392

Balance as of March 31, 2011(10)

Total shareholders’ equity
Balance as of March 31, 2010

60,772

Changes during the term under review
Issuance of new shares

30,000Transfer to other capital surplus from capital stock-

Increase by share exchanges

3,438Transfer to other capital surplus from legal capital surplus
Net loss(29,060)

Purchases of treasury stock(11)

Disposal of treasury stock403

Net changes during the term under review

4,770

Balance as of March 31, 2011

65,542

Valuation, translation adjustments and others
Valuation difference on available-for-sale securities
Balance as of March 31, 2010

2,092

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(4,043)(4,043)

Balance as of March 31, 2011

(1,950)Loss on deferred hedges
Balance as of March 31, 2010

(659)

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

(258)
(258)

Balance as of March 31, 2011

(917)

Total valuation, translation adjustments and others
Balance as of March 31, 2010

1,433

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(4,301)(4,301)

Balance as of March 31, 2011

(2,868)- 44 -

(Translation)
Equity warrants
Balance as of March 31, 2010

79

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

Balance as of March 31, 2011

79

Total net assets
Balance as of March 31, 2010

62,284

Changes during the term under review
Issuance of new shares

30,000Transfer to other capital surplus from capital stock-

Increase by share exchanges

3,438Transfer to other capital surplus from legal capital surplus
Net loss(29,060)

Purchases of treasury stock(11)

Disposal of treasury stock403

Net changes in items other than shareholders’ equity during the term
under review
Net changes during the term under review(4,301)
469

Balance as of March 31, 2011

62,754- 45 -

(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.

- 46 -

(Translation)
Intangible assets (excluding lease assets)
Software for sale in the market:
Amortization method based on the estimated amounts of sales in the estimatednumber of years for sales (3 years)
Software for internal use:
Straight-line method based on the estimated durable years (5 years)
Others:Straight-line method
Lease assets(Lease assets relating to finance lease transactions without transfer of ownership):
They are depreciated over the lease contract’s lifetime by the straight-line
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 wason 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.
(Additional information)
The Company adopted “Guidance on Accounting for Transfers between Retirement
Benefit Plans” (ASBJ Guidance No.1), as the Company will shift part of their lump-sum
retirement payment plans to defined contribution plans in June 2011. As a result, “Loss onchange to a new retirement benefit plan” was recorded at ¥11,625 million in extraordinary
loss for the fiscal year under review.
Provision for product warranties
Expected expenses for preventive maintenance measures against failures of products
sold, which occurred during the fiscal year under review, are accounted for in the amountestimated and calculated on a case by case basis.

6.

Hedge accounting methods- 47 -

(Translation)(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
Consolidated tax payments are applied.

Changes in accounting policies
Accounting Standard for Asset Retirement Obligations
Effective the fiscal year under review, the Company adopted “Accounting Standard for
Asset Retirement Obligations” (ASBJ Statement No. 18, March 31, 2008) and “Guidance on
Accounting Standard for Asset Retirement Obligations” (ASBJ Guidance No. 21, March 31,2008).
As a result, operating income and ordinary income decreased by ¥65 million each andnet loss before taxes increased by ¥474 million.

Notes to Non-consolidated Balance Sheets
1. Guarantee liabilities:
The Company provides guarantees for bank borrowings made by employees andaffiliated companies as shown below.
Oki Electric Industry (Shenzhen) Co., Ltd.
Oki Data Americas, Inc.
Employees (housing loans, etc.)
Oki Hong Kong Ltd.

- 48 -¥919 million(72,503 thousand yuan)¥831 million($10,000 thousand)¥673 million¥482 million

(Translation)($5,800 thousand)¥400 million¥246 million(1,840 thousand Sterling Pound)¥172 million¥282 million¥4,008 million

Nagano Oki Electric Co., Ltd.
Oki (UK) Ltd.
Oki Sensor Device Corporation
Three other entities:
Total:
2.

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

Notes to Non-consolidated Statement of Operations
Transactions with affiliated companies
Sales:
Purchases:
Non-operating transactions:- 49 -¥43,898 million¥16,109 million¥25,082 million¥4 million¥26,028 million¥60,028 million¥10,408 million

(Translation)
Notes to Non-consolidated Statement of Changes in Shareholders’ Equity
Type and number of treasury stock as of the end of the fiscal year
Common stock:
145 thousand shares
Notes to Deferred Tax Accounting
Major factors giving rise to deferred tax assets and liabilities
Deferred tax assets
Loss carryforwards
Nondeductible retirement benefits
Nondeductible accounts payable-other due to changes in retirement
benefit plans
Nondeductible loss on evaluation of affiliates’ stocks
Nondeductible doubtful accounts
Adjustments of losses on transfers among consolidated subsidiaries
Nondeductible loss on impairment of fixed assets
Nondeductible accrued bonuses
Nondeductible write-downs of inventories
Valuation difference on available-for-sale securities
Nondeductible write-downs of investments in securities
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¥24,429 million¥9,288 million¥8,187 million¥6,994 million¥3,152 million¥2,188 million¥1,258 million¥908 million¥907 million¥799 million¥793 million¥2,989 million¥61,897 million¥(56,276) million¥5,621 million¥(4,362) million¥(260) million¥(4,623) million¥997 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¥518 million
Amount equivalent to accumulated depreciation of leased assets as of the end of the term
under review¥364 million
Amount equivalent to unexpired lease payment of leased assets as of the end of the term
under review¥162 million- 50 -

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

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Company name

OKI Software Co., Ltd.

Oki Data Corporation

Oki Networks Co., Ltd.

Oki Customer Adtech Co.,Ltd.

Oki Hong Kong, Ltd.

Location

Warabi,
Saitama Pref.

Minato-ku,
Tokyo

Minato-ku,
TokyoKoto-ku,Tokyo

Hong Kong

Capital¥400
million¥19,000
million¥490
millionVoting rightratio

Business

Development, design,
manufacture andmaintenance ofsoftware, systembuilding services,
SI/solution services,
consulting outsourcing
and sales of
information equipment(Direct)
100%(Direct)
100%

Sales of printers

Marketing in the fieldof telecommunications
business and planning,development, and saleof products(Direct)
100%

Relationship withrelated party

Production ofsoftware on a contract
basis, etc.
lending of funds,
concurrent
assumption of officeof officer

Purchase of products,
concurrent
assumption of officeof officer

Purchase of products
and services, lendingof funds

Description oftransactions

Transaction
amountAccount item

(mil. yen)Endingbalance(mil. yen)Accounts
payable, trade

6,518

Other
accruedexpenses

507

Purchase ofservices

14,409Lending offunds

10,790

Short-term
loans

2,500

Underwritingof capitalincrease

2,800

-

-

Lending of
funds

5,200

Short-term
loans

5,200

Consideration
for use of thecorporate
brand

981

-

-

Sales ofshares of
subsidiary

5,742

Accounts
receivable,
others

6,322

Purchase of
products andservices

3,910

Accounts
payable trade

3,516

Lending of
funds

5,980

Short-term
loans

1,330

Lending of
funds

39,120

Short-term
loans

1,870

Underwritingof capitalincrease

3,200

-

-

Maintenance,
construction,
monitoring, operation,
manufacture and saleof equipment andsystems(Direct)
100%

60,000thou-sandHong
Kongdollars

Holdings company,
material procurement(Direct)
57%(Indirect)
43%

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

Lending of
funds

4,121

Short-term
loans

3,326

(Direct)
100%

Purchase of products
and services, lendingof funds

Lending of
funds

6,320

Long-termloans ofsubsidiaries& affiliates

2,110¥3,650
millionPurchase of services,lending of funds,
concurrent
assumption of officeof officer

Subsidiary

Oki Communication
Systems Co., Ltd.

Tokorozawa,
Saitama Pref.

¥300
millionDesign, manufacture,development and saleof electronic,
information andtelecommunications
device and relatedparts

Subsidiary

Oki Power Tech Co., Ltd.

Fukushima,
Fukushima
Pref.

¥100
millionDevelopment, design,
manufacture and saleof power supply units
for electric devices(Direct)
100%

Purchase of products
and services, lendingof funds

Lending of
funds

5,550

Long-termloans ofsubsidiaries& affiliates

5,450

Subsidiary

Nagano Oki Electric Co.,Ltd.

Komoro,Nagano Pref.

¥400
million

Manufacture,inspection and repair
for boards and devices(Direct)
100%

Purchase of products
and services, lendingof funds

Lending of
funds

3,470

Long-termloans ofsubsidiaries& affiliates

1,790

Subsidiary

Oki Network Integration
Co., Ltd.

Koto-ku,
Tokyo

¥100
millionNetwork integration
service business(Direct)
100%

Purchase of products
and services, lendingof funds, concurrent
assumption of officeof officer

Lending of
funds

3,000

Short-term
loans

600

Oki Proserve Co., Ltd.

Minato-ku,
Tokyo

¥321
millionFacility business,
human resource
management, designbusiness, logistics
business(Direct)
100%

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

Lending of
funds

1,300

Short-term
loans

3,985

Subsidiary- 51 -

(Translation)
Notes:
1. On October 1, 2010, the Company conducted a merger with Oki Software Co., Ltd., a subsidiary of the Company, as
an absorbing/acquiring/surviving company and Oki Telecommunication Systems Co., Ltd. and Oki Infotech Co.,
Ltd., subsidiaries of the Company, as absorbed/acquired/extinguished companies. After the merger, Oki SoftwareCo., Ltd. changed its trade name to OKI Software Co., Ltd. The transaction amount of OKI Software Co., Ltd. ispresented in amount combined with transactions of Oki Software Co., Ltd., Oki Telecommunication Systems Co.,
Ltd. and Oki Infotech Co., Ltd.
2. The transactions amount excludes consumption tax, while the ending balance includes consumption tax.
3. 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
general model.
(4) The Company determines selling prices of subsidiaries’ shares in consideration of their enterprise values.
4. Underwriting of capital increase: The Company underwrote a capital increase carried out by OKI Software Co., Ltd.
purchasing new shares at ¥2,800 per share, and a capital increase carried out by Oki Customer Adtech Co., Ltd.
purchasing new shares of ¥50,000 per share.
5. For the loans to ten subsidiaries, the Company recorded an allowance for doubtful receivables of ¥7,258 million in
total. The Company also recorded a provision for an allowance for doubtful receivables of ¥1,055 million in thefiscal year.

Notes to Per-share Information
1. Net assets per share:¥44.682. Net loss per share:¥40.18- 52 -

(Translation)

Transcript of Account Auditors’ Report

Independent Auditors’ Report
May 17, 2011
To: Board of Directors
Oki Electric Industry Co., Ltd.
Ernst & Young ShinNihon LLC
Yasutoyo Imai (seal),
Engagement Partner, Certified Public Accountant
Akira Sato (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 andnotes to non-consolidated financial statements – and its supporting schedules of Oki Electric Industry Co.,
Ltd.’s 87th term from April 1, 2010 to March 31, 2011 in accordance with Article 436 Paragraph 2 Item 1 of
the Companies Act. The financial statements and supporting schedules are the responsibility of Oki ElectricIndustry’s management. Our responsibility is to express an opinion on the financial statements andsupporting schedules based on our audit as independent auditors.
We conducted our audit in accordance with auditing standards generally accepted in Japan. These auditing
standards require that we obtain reasonable assurance as to whether these financial statements are free ofmaterial misstatement. Audits are conducted based on a test basis, and include reviews of accounting
policies and methods that management adopts, and evaluation of management estimates and the presentationof financial statements and supporting schedules as a whole. We believe that we have obtained reasonablebases for the expression of our opinion as a result of our audit.

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

- 53 -

(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 87th fiscal year from April 1, 2010 toMarch 31, 2011, as follows:
1. Auditing methods used by Corporate Auditors and the Board of Corporate Auditors, and details of audit
The Board of Corporate Auditors specified an audit policy, compiled audit plans and received reports from each Corporate
Auditor on the status of implementation and results of audits and also received reports from Directors and accounting auditorson the status of the execution of their duties and asked them for explanations as needed.
Each Corporate Auditor, according to the audit standards, policy and plans set up by the Board of Corporate Auditors, has
maintained good communications with Directors, the internal audit division and other employees and strived to collectinformation and improve the audit environment as well as attending meetings of the Board of Directors and other meetings as
deemed important, received from Directors and employees reports on the execution of their duties, asked for explanations asnecessary, perused the documents whereby the important decisions were made, and examined business and financial
conditions at the head office and principal operating offices. In addition, we have 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 19, 2011
The Board of Corporate Auditors, Oki Electric Industry Co., Ltd.
Keiichi Fukumura, Standing Auditor (seal)
Noriyuki Kandori, Outside Standing Auditor (seal)
Seiji Nishi, Outside Auditor (seal)- 54 -

(Translation)

Reference Documents for the General Meeting of Shareholders
Agenda and Reference Matters
Agenda 1: Appropriation of Surplus
1.

Reasons for Appropriation of Surplus
We would like to cover losses by reducing the amount of other additional paid-in
capital and by increasing the amount of retained earnings carried forward under theprovisions of Article 452 of the Companies Act so as to achieve the drastic improvement ofbalance sheets and the early resumption of dividends.

2.

Items and amounts of surplus to be reduced
Other additional paid-in capital

3.

¥91,569,722,385

Items and amounts of surplus to be increased
Retained earnings carried forward¥91,569,722,385- 55 -

(Translation)

Agenda 2:

Election of One (1) Director

The tenure of office of Director Hideichi Kawasaki will expire at the end of thisgeneral meeting of shareholders.
A candidate for director is shown as follows.
Candidate for Director (One):
Name(Date of birth)

Hideichi Kawasaki(January 10, 1947)

Brief personal profile, position andresponsibility in the Company and significant concurrent
positions
Joined Oki Electric
Apr. 1970
Director, Sales 3 Team, Financial Systems Sales
Nov. 1990
Division
Executive Officer
Apr. 2001
Managing Executive Officer
Apr.2004
Senior Vice President
Jun. 2005
Director and Vice President
Apr. 2009
Senior Executive President and Member of theJun. 2009
Board (incumbent)- 56 -

Number of Oki
shares held

67,000 shares

(Translation)
Agenda 3:

Election of One (1) Corporate Auditor

We have decided to add one more corporate auditor so as to reinforce the auditing
system and request that you elect a corporate auditor.
This agenda has been approved by the Board of Corporate Auditors.
A candidate for corporate auditor is shown as follows.
Candidate for Corporate Auditor (One):
Brief personal profile, position andNumber of Oki
responsibility in the Company and significant concurrent
shares held
positions
Joined the Ministry of International Trade andApr. 1976
Industry
General Manager, Energy and New Energy,Jul. 2001
Agency for Natural Resources and Energy
Executive Director, Energy Conservation
CenterAug. 2002
Shuichi Kawano
24,000 shares
Executive Officer, Oki Electric Industry, Co.,(April 15, 1952)
Ltd. (incumbent)
Jul. 2008
General Manager, Global Environment Division
General Manager, CSR Division (incumbent)
Jul. 2008
General Manager, Government & External
Nov. 2008
Relations Division (incumbent)
Apr. 2010
Note: The candidate Shuichi Kawano is scheduled to resign as Executive Officer, General Manager of CSR Division
and General Manager of Government & External Relations Division of the Company as of June 28, 2011.
Name(Date of birth)- 57 -

(Translation)
Appendix

Instructions for the Exercise of Voting Rights via the Internet

1.

Matters requiring your agreement concerning the exercise of voting rights via the Internet
We kindly request your consent to the following regarding exercise of voting rights via the Internet.
1) Exercise of voting rights via Internet is only possible by accessing the voting site designated by theCompany (please refer to the following URL). It is also possible to access this site with a mobile phone.
You will need to enter your voting rights exercise code and password (valid only for purposes of thisgeneral meeting) provided in the 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.

- 58 -