Oki 2010 Annual Report Download - page 32
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Please find page 32 of the 2010 Oki annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.28 Annual Report 2010
BUSINESS AND OTHER RISKS
The forecasts and projected operating results contained in this
report are based on information available and assumptions
deemed rational at the time of preparation, and thus entail inher-
ent uncertainties. Accordingly, investors are cautioned that actual
results may differ materially from those projected as a result of a
variety of factors. The following items are business and other risks
that the OKI Group considers may significantly influence investors’
judgments. The following are also major factors that could possi-
bly affect the Group’s actual performance.
It should be noted, however, that factors that may affect the
Group’s performance are not limited to these items. The OKI Group
is aware of the potential impact these risks may have if any were to
occur and is implementing measures to avoid such occurrence, as
well as to minimize the weight of their impact should they occur.
(1) Political and Economic Trends
Demand for the OKI Group’s products is subject to political and
economic trends in the individual countries and regions in which
they are sold. Accordingly, economic recession, the resulting con-
traction in demand in the OKI Group’s principal operating markets
of Japan, North America, Europe and Asia and changes in the
import-export policy for foreign products may impact its business
performance and financial position.
(2) Sudden Technological Innovation
The OKI Group’s principal business segments, comprising Info-
Telecom Systems and Printers, are subject to rapid technological
innovation. Accordingly, the OKI Group strives to preserve its com-
petitive advantage through new technology and product research
and development. In the event, however, that the OKI Group is
unable to keep pace with technological innovations, is burdened
with obsolete products, and is unable to deliver products and serv-
ices that appeal to customers, its performance and financial
position may be affected.
(3) Market Trends
1. The product and geographical markets in which the OKI Group
operates are subject to frequent entry by new participants and
persistent competition. In an effort to secure competitive
advantage, the OKI Group strives to enhance product develop-
ment and reduce costs. In the event the OKI Group is unable
to implement effective product development and cost rational-
ization measures and fails to maintain and secure sufficient
market share, its business performance and financial position
may be affected.
2. The performance of Info-Telecom Systems segment is sub-
ject to a variety of factors including: (1) changes in investment
trends by financial institutions due to revisions of financial
regulation, poor performance and other factors; (2) changes in
investment trends by telecommunication carriers owing to
amendments to telecommunication regulations, shifts in busi-
ness strategy and other factors, and; (3) a significant decline
in public-sector investment due to national and local govern-
ment policies.
3. The printer market is experiencing intense price competition,
particularly in color printers. In an effort to secure a strong
market position and profitability, the OKI Group is endeavoring
to develop new products and reduce costs. Despite these
efforts, continued downward revisions to product prices may
impact the Printers segment’s performance.
(4) Raw Materials and Component Procurement
The OKI Group procures a variety of raw materials and components
in support of its manufacturing activities. The ability to ensure time-
ly product shipment, avoid delays in product delivery and minimize
opportunity loss is dependent upon the stable supply of raw materi-
als, components, specialized parts and alternative components.
The OKI Group’s performance and financial position may therefore
be affected in the event stable supply cannot be maintained.
The OKI Group is reliant upon the direct and indirect supply of
crude oil and materials, such as metals, as a part of its manufacturing
activities. A sharp rise in the price of these and other key materials
may impact the OKI Group’s performance and financial position.
(5) Product Defects and Delays in Delivery
Despite every effort to maintain quality assurance, the OKI Group
is unable to eliminate all possibility of product and service defects.
In the event of a product or service defect, the OKI Group may be
liable for damages. In addition, any incidence of defect may
impact the OKI Group’s reputation and standing and contribute to
a drop in demand. In either case, the OKI Group’s performance
and financial position may be affected.
While the OKI Group adopts complete and thorough measures
to ensure the timely delivery of its products and services, unfore-
seen incidents in design, material procurement and production
control may lead to a delay in shipment. In this case, the OKI
Group may become liable for the payment of damages.
(6) Success or Failure of Strategic Alliances
The OKI Group is aggressively engaged with other companies in
strategic alliances in research and development, manufacturing,
sales and other activities. While the OKI Group only enters into and
maintains such alliances with the utmost caution, there may in the-
ory be instances where the OKI Group is not able to obtain the
desired cooperation from the strategic partner in business strate-
gy, production and technical development, fund procurement or
other activity, or where the alliance does not yield satisfactory
results. The OKI Group’s performance and financial condition may
be adversely affected by such an event.
(7) Overseas Business Activities
The OKI Group is engaged in manufacturing and sales activities
across a variety of countries and regions. Accordingly, it is subject
to a number of risks specific to overseas business activities,
including country risk and foreign currency fluctuation risk. The
OKI Group operates production sites in Thailand and China. The
OKI Group’s performance and financial position may therefore be
affected in the event of economic recession, political turmoil,
movements in local currency exchange rates and unforeseen cir-
cumstances in either of these countries.
To minimize foreign currency fluctuation risk, the OKI Group
enters into forward currency and currency swap contracts to address
fluctuations of the yen against the U.S. dollar and euro. However, the
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.