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OKI Annual Report 2010
Annual Report
2010
For the year ended March 31, 2010

Table of contents

  • Page 1
    A n n u al R e po r t 2010 For the year ended March 31, 2010

  • Page 2
    ...OKI began manufacturing computers containing Japan's first domestically developed core memories, developed the world's first automated teller machine (ATM) that recycles... Plan At a Glance Overview of Operations 12 Solutions & Services 13 Telecom Systems 14 Mechatronics Systems 15 Printers 16 Social ...

  • Page 3
    ... systems for financial, publicsector, traffic, retail, manufacturing, and other industries. >see page 12 OKI serves its customers around the world via six business units organized along product-based lines: Solutions & Services, Telecom Systems, Social Infrastructure Systems, Mechatronics Systems...

  • Page 4
    ... technology. >see page 14 Business offering printers leveraged by OKI's unique LED technology. >see page 15 EMS SOCIAL INFRASTRUCTURE SYSTEMS Consigned manufacturing business based on manufacturing technology cultivated within the OKI Group. >see page 16 Business providing customized systems for...

  • Page 5
    Annual Report 2010 1

  • Page 6
    ... This annual report contains forward-looking statements concerning the OKI Group's future plans, financial targets, technologies, products, services and performance. These forward-looking statements represent assumptions and beliefs based on data and calculation methods currently available to OKI as...

  • Page 7
    ... March 31) 2006 0 2007 2008 2009 2010 (As of March 31) 2006 0 2007 2008 2009 2010 Interest Bearing Debt (left scale) Debt/Equity Ratio (right scale) -20 (Ended March 31) 2006 2007 2008 2009 2010 Capital Expenditures Depreciation (property, plant and equipment, at cost) Annual Report 2010 3

  • Page 8
    ... growth. The OKI Group stands united in its quest to deliver products and services that contribute to the advancement of the information society, being keenly alert to changes in the markets and customer needs, and aims to become a corporate group that realizes steady growth. 4 Annual Report 2010

  • Page 9
    ... support and understanding. July 2010 Operating Income (Loss)* (Billions of yen) 15 12 9 6 3 0 -3 -6 -9 (Ended March 31) 07 14.0 12.0 5.6 2.4 (6.2) 08 09 10 11 (est.) *Excluding the semiconductor business Hideichi Kawasaki President Oki Electric Industry Co., Ltd. Annual Report 2010 5

  • Page 10
    ... development, production, and maintenance activities in order to provide products and services that contribute to the .... Second, we will enhance our "monozukuri" (manufacturing), centering on our world-leading mechatronics technologies, as well as... ¥30.0 billion 1.3 times 6 Annual Report 2010

  • Page 11
    ... strengthen our sales capabilities. NEW BUSINESS STRUCTURE Business Segments Business Units Solutions & Services New Telecom Systems Info-Telecom Systems Social Infrastructure Systems Mechatronics Systems One-stop solution Customer Printers Printers Others EMS New Annual Report 2010 7

  • Page 12
    ...new markets and expanding sales in China, where market growth has been ...services business, OKI will draw on the Group's track record in providing systems for the financial, government agencies, transportation, retail sectors, etc. to expand its maintenance and operational services...Annual Report 2010

  • Page 13
    ... Systems Mechatronics Systems Printers 7.0 billion yen EMS/Others 2.0 billion yen • Enhance profitability of software • Reorganize hardware manufacturing sites • Strengthen procurement functions • Shift to shared service • Eliminate and consolidate group companies Annual Report 2010 9

  • Page 14
    ... systems •Call center systems •Videoconferencing systems...manufacturing of electronics products requiring high-density mounting, high quality, and high-speed detection technology • Design and manufacturing of mechatronics products requiring high-precision mechanisms 10 Annual Report 2010

  • Page 15
    ...offering OKI's unique products and services as ...2010) Results FY2012 (ending March 2013) Plan 2.0 *Includes figures for businesses categorized as "Others." *Net sales and operating income represent the results of fiscal year ended March 31, 2010 categorized by new business units. Annual Report 2010...

  • Page 16
    ... service facilities in more than 250 locations nationwide, enabling us to provide top-class, uniform-quality maintenance services to all customers around Japan. In these ways, OKI addresses the IT-related needs of customers, from both the solution and service perspectives. 12 Annual Report 2010

  • Page 17
    ..., call center systems, ...services covering a system's overall life cycle from development and equipment sales to system planning, maintenance through to operation. *1 IMS: IP Multimedia Subsystem *2 SBC: Session Border Controller *3 GE-PON: Gigabit Ethernet-Passive Optical Network Annual Report 2010...

  • Page 18
    ...stores. Meanwhile, we will seek to expand our presence in overseas markets, centering on China. To this end, we developed the ATM-Recycler G7, a banknote recycling... global mechatronics manufacturer by offering products that match the needs of customers in Japan and overseas. 14 Annual Report 2010

  • Page 19
    ...*1 of its type in the world, the B431dn is a high...OKI's data as of April 2010) *2 With respect to the height of a color LED/laser printer (protrusion of the operation panel excluded. Source: OKI's data as of April 2010) *3 SMB: Small & Medium Business *4 MPS: Managed Print Service Annual Report 2010...

  • Page 20
    ...fields of communications equipment, measuring instruments, industrial instruments, and medical equipment. *EMS: Electronics Manufacturing Service OKI offers consigned manufacturing services, ranging from development to mass production, according to customers' specifications. 16 Annual Report 2010

  • Page 21
    ...data collection system, originally designed for the OKI Group, to unaffiliated customers. Our offerings extend beyond provision of systems to include consulting services... using our technological strengths in high-frequency insulation type and DSP full digital control. In the LED...Annual Report 2010 17

  • Page 22
    ... actually somewhere else. To this end, OKI conducts research on the transmission of information that creates such "atmosphere" by combining the separation of specific sources of sound, video, and other contextual information, as well as research on ergonomic evaluation of it. 18 Annual Report 2010

  • Page 23
    ... printhead technology. *1 NEDO: New Energy and Industrial Technology Development Organization *2 DLC: Diamond Like Carbon MANUFACTURING PROCESS Nanoscale planing Formation of DLC thin film Intermolecular forces bonding Single-crystal thin film LED Substrate Peel off Base substrate Annual Report...

  • Page 24
    ...reinforce corporate governance, OKI established the Compensation Committee, which ensures transparency in the criteria and mechanisms used to... is accurate and timely. Internal Control In accordance with Japan's Companies Act and the Ordinance for Enforcement of the ...Affiliates 20 Annual Report 2010

  • Page 25
    ..., namely the manufacturing and distribution of products and services that can serve...OKI Group's Activities Employees Social Responsibilities in Business For more information, please refer to the "Social and Environmental Report" at the following site: http://www.oki.com/en/csr/ Annual Report 2010...

  • Page 26
    MANAGEMENT (As of June 29, 2010) President, Representative Director Hideichi Kawasaki Senior Executive Vice President and Member of the Board, ... Hidetoshi Saigo Senior Vice President Tsutomu Tai Yasunori Shibata *1 Outside Director *2 Outside Company Auditors 22 Annual Report 2010

  • Page 27
    ... Review Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Cash Flows Consolidated Statements of Changes in Net Assets Notes to Consolidated Financial Statements Report of Independent Auditors Annual Report 2010 23

  • Page 28
    ... 8.27 3.00 111,379 21,175 $ 0.05 - Note 1: The U.S. dollar amounts in this annual report are translated from yen, for convenience only, at ¥93 = U.S.$1.00, the approximate exchange rate prevailing on March 31, 2010. Note 2: Effective the year ended March 31, 2007, the Company adopted an accounting...

  • Page 29
    ... OKI reduced the number of unprofitable models, causing overall sales in the telecom systems business to remain mostly unchanged. In the information systems business, overall sales 150 145.2 8 100 4 50 2 0 (Ended March 31) 2008 0 2009 2010 (Ended March 31) 2008 2009 2010 Annual Report 2010...

  • Page 30
    ... 2010 2009 2010 Net Income (Loss) (left scale) Return on Equity (ROE) (right scale) Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities Capital Expenditures Depreciation (property, plant and equipment, at cost) 26 Annual Report 2010

  • Page 31
    ...-current assets, centering on property, plant... economic conditions in Japan and overseas are ...and services businesses, and increased sales of ATMs in China,...negative goodwill in Oki Wintech Co., Ltd...2009 2010 R&D Expenses (left scale) R&D Expenses to Net Sales (right scale) Annual Report 2010 27

  • Page 32
    .... The OKI Group operates production sites in Thailand and China. The OKI Group's ...OKI Group cannot guarantee the complete removal of risk, and abrupt fluctuations in foreign currency exchange rates in particular may affect the OKI Group's performance and financial position. 28 Annual Report 2010

  • Page 33
    ...Fluctuations The OKI Group holds shares in listed companies as part of its investment securities portfolio. Falling share prices may lead to valuation losses or declines in unrealized gains on such holdings, which may impact the OKI Group's performance and financial position. Annual Report 2010 29

  • Page 34
    CONSOLIDATED BALANCE SHEETS Oki Electric Industry Co., Ltd. and consolidated subsidiaries As of March 31, 2010 and 2009 Millions of yen Thousands of U.S. dollars (Note 2) ASSETS Current assets: Cash and...786,451 1,425,215 602 2,342,215 (1,738,387) 603,817 232,634 $ 4,125,161 30 Annual Report 2010

  • Page 35
    ... liabilities (Note 20) Total liabilities and net assets The accompanying notes are an integral part of these statements. 2010 2009 2010 ¥ 66,122 61,307 3,088 58,856 23,213 17,176 229,765 ¥ 83,541 25,619 ... 22,526 (7,096) (36,989) (21,559) 849 75,204 696,881 $ 4,125,161 Annual Report 2010 31

  • Page 36
    ... Oki Electric Industry Co., Ltd. and consolidated subsidiaries Years ended March 31, 2010, 2009 and 2008 Millions of yen Thousands of U.S. dollars (Note 2) 2010 2009 2008 2010 Net... - (2,387) - - (4,849) (93,537) 56,537 19,989 (4,849) 15,129 41,397 (1,107) (1,365) 38,913 32 Annual Report 2010

  • Page 37
    ... CASH FLOWS Oki Electric Industry Co., Ltd. and consolidated subsidiaries Years ended March 31, 2010, 2009 and 2008 Millions of yen Thousands of U.S. dollars (Note 2) 2010 Cash flows ...,846 430 $ 765,118 ¥ 4,957 1,599 ¥ 6,137 1,713 ¥ 7,084 3,245 $ 53,301 17,193 33 Annual Report 2010

  • Page 38
    ... Balance at March 31, 2010 684,256 $ 827,311 $ 502,623 $(722,075) 38,913 $ (3,892) (494) $ 603,956 38,913 (494) 38,419 $ 642,376 - 684,256 - $ 827,311 - $ 502,623 38,913 $(683,161) (494) $ (4,387) The accompanying notes are an integral part of these statements. 34 Annual Report 2010

  • Page 39
    ...,526 (2,064) (2,064) $ (7,096) 107 107 $ (36,989) 26,946 26,946 $ (21,559) - $ 849 494 494 $ 75,204 27,451 65,870 $ 696,881 Annual Report 2010 35

  • Page 40
    ...Oki Electric Industry Co., Ltd. (the "Company") and consolidated subsidiaries (the "Group") have been prepared in accordance with accounting principles generally accepted in Japan... from forward foreign exchange 36 Annual Report 2010 contracts pertaining to long-term...cost. Maintenance and repairs are ...

  • Page 41
    ... the estimated average remaining years of service of the participants in the plans....which meet the required criteria are accounted for by... Accounting Standards Board of Japan (ASBJ) on December...selling price less additional estimated manufacturing costs and direct selling expenses...Annual Report 2010 37

  • Page 42
    ... 31, 2010 and 2009...2010 and 2009 were as follows: Millions of yen Thousands of U.S. dollars 2010 Finished goods Work in process Raw materials and supplies Total ¥ 21,751 16,436 24,638 ¥ 62,826 2009 ¥ 28,110 26,930 25,213 ¥ 80,254 2010 $ 233,881 176,731 264,924 $ 675,548 38 Annual Report 2010

  • Page 43
    ... and valid after December 25, 2006. *2 The Company redeemed the "Zero coupon convertible bonds with stock acquisition rights due 2011" before maturity as resolved by... ¥673 million ($7,236 thousand). As is customary in Japan, both short-term and long-term bank loans are made.... Annual Report 2010 39

  • Page 44
    ... under the plans. The Company and 30 domestic consolidated subsidiaries joined the OKI Pension Fund which was established on January 1, 2005. The following is a ... Therefore, it differs from the retirement benefits reported in the accompanying consolidated balance sheets. 40 Annual Report 2010

  • Page 45
    ... (amortized by the straight-line method over a period which falls within the average remaining years of service of the participants in the plans, commencing the year subsequent to the year in which the cost ... overseas subsidiaries which charge it directly to retained earnings. Annual Report 2010 41

  • Page 46
    ...,531 (54,432) 10,098 2009 ¥ 30,344 16,656 3,495 2,410 1,742 1,466 4,219 60,334 (51,015) 9,319 2010 $ 331,903 199,129 32,989 26,344 20,946 16,354 66,193 693,881 (585,290) 108,580 (1,567) (31) ...of internal transaction among the consolidated group Other, net Effective tax rates 42 Annual Report 2010

  • Page 47
    ...Japan..., and idle assets since their book value exceeded their future return...., 2008, certain production lines of Miyagi Oki Electric Industry Co., Ltd. were suspended and ...of their logistic center for the year ... loss of disposed inventories, advisory service fee and other, and loss ...Annual Report 2010 43

  • Page 48
    ...March 31, 2010 required under operating leases with noncancelable lease terms in excess of one year are summarized as follows: Year ending March 31, 2011 2012 and thereafter Total Millions of yen Thousands of U.S. dollars ¥ 2,563 11,423 ¥ 13,986 $ 27,559 122,827 $ 150,387 44 Annual Report 2010

  • Page 49
    ... net loss was recorded, and for the year ended March 31, 2010, since the Company had no dilutive potential share. Net assets per...Type of shares to be issued Number of shares reserved Exercise price Exercisable period Common stock 815,000 shares ¥ 384 July 1, 2005 - June 26, 2013 Annual Report 2010...

  • Page 50
    ... Operating expenses Operating income (loss) Total assets Depreciation and amortization Loss on impairment of fixed assets Capital expenditures 46 Annual Report 2010 Info - Telecom Systems Printers Other Subtotal Corporate and eliminations Consolidated $ 2,956,010 41,139 2,997,150 2,840,365 $ 156...

  • Page 51
    ...services rendered and similarities in sales methodology. On October 1, 2008, the Company transferred to Rohm Co., Ltd. 95% of issued shares of Oki...expenses Operating income (loss) Total assets ¥ Japan North America Europe Asia Subtotal Corporate and eliminations...676 ¥ 38,287 Annual Report 2010 47

  • Page 52
    ...loss) Total assets Japan North America Europe Asia...2010, to carry out a share exchange (the "share exchange") to make OKI Wintech a wholly-owned subsidiary and share exchange agreement was entered into on that day. Subsequently, on June 1, 2010, share exchange was carried out. 48 Annual Report 2010

  • Page 53
    REPORT OF INDEPENDENT AUDITORS Annual Report 2010 49

  • Page 54
    ... (Changzhou) OKI Software Technology OKI Trading (Beijing) OKI Data Dalian OKI Systems Korea OKI Data (Singapore) OKI Data Manufacturing (Thailand) OKI Precision (Thailand) OKI Data (Australia) OKI Data Service (Australia) * In July 2010, two companies-OKI Human Network and OKI Alpha Create...

  • Page 55
    ... Held by Shareholder Type (As of March 31, 2010) Japanese corporations and others Foreign corporation and others 7.8% 6.4% Japanese individual investors Japanese financial institutes 26.3% 59.5% • All company and product names included in this annual report are trademarks or registered...

  • Page 56
    This report is printed with 100% VOC (volatile organic compounds) free soy ink, using "waterless printing" on FSC certified paper.