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2008
For the year ended March 31, 2008
Annual Report
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Table of contents

  • Page 1
    Annual Report 2008 For the year ended March 31, 2008

  • Page 2
    ... 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 3
    ...17 - 20,960 1.3% 18.1 $(0.00) - Notes 1: The U.S. dollar amounts in this annual report are translated from yen, for convenience only, at ¥100=US$1.00, the approximate exchange rate prevailing on March 31, 2008. 2: Effective the year ended March 31, 2007, the Company adopted an accounting standard...

  • Page 4
    ...., the predecessor of Oki Electric Industry Co., Ltd., started out in 1881 as Japan's first telecommunications equipment manufacturer. Just five years... 2 Annual Report 2008 and product competitiveness, which have proven insufficient in certain domains of our business. In response, OKI is working...

  • Page 5
    ...number of subscribers to optical network services from 30 million to 20 million in the field of next-generation networks (NGNs). In addition, OKI has decided to withdraw from low-profit NGN system... support and understanding. September 2008 Goals for the Fiscal Year 2008 (Ending March 31, 2009...

  • Page 6
    ... in the medium-term business plan in October 2007 and are outlined below. In light of an agreement, OKI concluded in July 2008 to transfer 95% of the shares of its semiconductor company to Rohm Co., Ltd., the Company is currently reexamining its medium-term business plan. 4 Annual Report 2008

  • Page 7
    ... the software production system and, in Japan and abroad, the hardware production system, as well as create an efficient management style. Because the semiconductor segment was outside the scope of consolidation from the second half of fiscal 2008, we are reviewing corporate functions, streamlining...

  • Page 8
    ...Japan Post Holdings Co., Ltd. As a result, financial systems business sales grew year on year. Results in the information systems business were boosted by system sales growth to the corporate sector. Sales in the telecom system... Sales by Business Segment (%) Printers 6 Annual Report 2008 25.8 %

  • Page 9
    ... Income 400 (Billions of yen) 338.0 300 352.7 359.0 15 (Billions of yen) 10 10.9 200 5 100 0 -1.5 -1.7 0 -5 2006 2007 2008 2006 2007 2008 Net Sales 200 (Billions of yen) Operating Income 4 (Billions of yen) 3.8 150 150.7 145.5 138.2 3 3.0 100 2 50 1 0.7 0 0 2006 2007...

  • Page 10
    ...developed bill detection sensor has greatly improved the function that detects damaged bills. OKI will energetically promote sales to financial institutions and trading markets. Presentation regarding new bank branch terminals Presentation regarding joint development CX-320 8 Annual Report 2008

  • Page 11
    ... office administrative work and greater efficiency. In its service business, OKI is actively moving ahead with the building of a contact center, providing mobile banking and ATM operation outsourcing services and bank branch video surveillance services. OKI seeks to be one of the first to create...

  • Page 12
    ... the CenterStage NX5000 series, OKI will respond to telecommunications company needs for higher reliability, performance, capacity and longer service life as well as environmentally friendly specifications for NGN communications. C3 concept CenterStage NX5000 R3 CTstage 5i 10 Annual Report 2008

  • Page 13
    ... business phones with mobile functions to Europe and Asia. Yuka Miyagawa Network Systems Division Network Systems Company OKI Facing New Challenges Daily in Rapidly Changing World of Telecommunications My responsibilities include the sale of OKI products as well as system integration services for...

  • Page 14
    ... other products, OKI will continue its efforts to develop this sensing system in liaison with several partners, including those from the civil engineering and construction sectors. Award Ceremony of the Software Product of the Year 2007 ANA SKY KIOSK Strain Sensing System 12 Annual Report 2008

  • Page 15
    .... Challenge: File 3 Masahiko Tsuda New Business Development Office System Solutions Company OKI Our Goal Is to Create Reliable, Secure Services with a Human Touch At the New Business Development Office,...feedback from my surroundings and to always be aware of what the customer really wants. 13

  • Page 16
    ... million (45%) in 2007 compared with figures at older facilities in 2004. Spurred by these achievements, OKI will make further efforts to reduce CO2 emissions in each region by taking advantage of local characteristics. New-generation LED print-heads OKI (UK) MC860 series 14 Annual Report 2008

  • Page 17
    ... Development Department NIP Business Division OKI Data Attempting to Develop Products from the Customer's Point of View I am tasked with developing and maintaining software that is bundled with color non-impact printers and MFPs. What appeals to me about this job is that I am involved with...

  • Page 18
    ... is now able to reach the other side of the planet (approximately 20,000km). 16 Annual Report 2008 Capable of transmitting four movies (approximately eight hours of data) in a single second, 160Gbps data transmission uses an ultra-high-speed optical communication technology, which is expected to be...

  • Page 19
    ... 3. Users access Internet sites provided by the service Housing information domain Job search domain Portal for store outlets Highly reliable messaging protocol Energy-saving data Context Awareness Technology test successfully saves energy at convenience stores using wireless sensor network As...

  • Page 20
    ...measures. Establishment of Internal Control System Japan's new Corporation Law came into effect in May 2006. In line with this new law, OKI announced in that same month ...accurate and timely. 18 Annual Report 2008 Management Committee Internal Auditing Division Head Office Business Divisions CSR ...

  • Page 21
    ...JAPAN) held at the National Olympics Memorial Youth Center, Tokyo, on February 10, 2008. Leveraging its Visual Nexus® video conference system, OKI...review, OKI added 10 sites-including, for the first time, two Group company sites in China-completing the total consolidation of 42 sites throughout the...

  • Page 22
    ... Kawasaki Hironori Kitabayashi Keiichi Fukumura Masayoshi Matsushita Masao Miyashita Yutaka Asai Directors Kazunari Kobayashi Harushige Sugimoto Minoru Morio*2 *1 Representative Directors *2 External Director *3 External Auditors 20 Annual Report 2008

  • Page 23
    ... ฀Consolidated Statements of Operations ...30 ฀Consolidated Statements of Cash Flows ...31 ฀Consolidated Statements of Changes in Net Assets ...32 ฀Notes to Consolidated Financial Statements ...34 ฀Report of Independent Auditors ...47 21

  • Page 24
    ...: Net income (loss) per share Cash dividends per share Number of shareholders Number of employees Ratios (%): (Note 2) Return on equity Return on... in this annual report are translated from yen, for convenience only, at ¥100=US$1.00, the approximate exchange rate prevailing on March 31, 2008. Note ...

  • Page 25
    Financial Review Annual Report for Oki Electric Industry Co., Ltd. and its Consolidated Subsidiaries SCOPE OF CONSOLIDATION In the fiscal year ended March 31, 2008, 11 companies were newly included in the Group's scope of consolidation bringing the total of subsidiary companies to 99. In addition, ...

  • Page 26
    ... 2006 2007 2007 2008 (Printers) GEOGRAPHIC SEGMENT INFORMATION Japan In the domestic market, despite the downturn in telecom system business sales, ATM replacement demand growth in the finance sector and an upswing in postal services sales and sales to the corporate sector drove the OKI Group...

  • Page 27
    ...to the redemption of corporate bonds and the ...China appears anemic due to the impact of economic trends in the United States and Europe...OKI announced it has signed a basic agreement to transfer shares of its semiconductor business to Rohm on May 28, 2008. Further details can be found on our web site...

  • Page 28
    ...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...contraction in demand in the OKI Group's principal operating markets of Japan, North America, Europe and Asia and changes in ... policies. 26 Annual Report 2008

  • Page 29
    ...new graduates and mid-career employees. In an effort to foster quality human resources, the OKI Group also conducts on-the-job training, education and a variety of training activities. In the event the OKI Group is unable to secure and foster high-quality human resources or a number of key employees...

  • Page 30
    Consolidated Balance Sheets Oki Electric Industry Co., Ltd. and consolidated subsidiaries As of March 31, 2008 and 2007 Thousands of U.S. dollars (Note 2) Millions of yen ASSETS Current assets: Cash and ...890 4,801,440 3,370 6,399,590 (5,141,710) 1,257,880 370,430 $ 5,708,190 28 Annual Report 2008

  • Page 31
    ...17) Total liabilities and net assets The accompanying notes are an integral part of these statements. 2008 ¥ 98,798 53,935 3,271 91,342 - 46,186 17,645 311,180 2007 ...¥ 98,643 43,666 5,506 107,832 1,749 47,339 14,259 318,996 $ 2008 987,980 539,350 32,710 913,420 - 461,860 176,450 3,111,800 114,...

  • Page 32
    ... of Operations Oki Electric Industry Co., Ltd. and consolidated subsidiaries Years ended March 31, 2008, 2007 and 2006 Thousands of U.S. dollars (Note 2) Millions of yen 2008 Net sales ...096) (274) (75) ¥ (36,446) ¥ 5,107 (211) 161 5,058 $ 7,970 (3,690) 1,400 5,670 30 Annual Report 2008

  • Page 33
    Consolidated Statements of Cash Flows Oki Electric Industry Co., Ltd. and consolidated subsidiaries Years ended March 31, 2008, 2007 and 2006 Thousands of U.S. dollars (Note 2) Millions of yen 2008 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) ...

  • Page 34
    ... at March 31, 2008 The accompanying notes are an integral part of these statements. 684,256 $769,400 $467,440 $(223,750) 5,670 $(3,200) (240) $1,009,890 5,670 (240) 8,160 8,160 - 684,256 - $769,400 - $467,440 13,830 $(209,910) (240) $(3,440) 13,590 $1,023,480 32 Annual Report 2008

  • Page 35
    Valuation, translation adjustments and other Net Total unrealized valuation, holding gain translation on other Loss on deferred Translation adjustments and securities hedges adjustments other Warrants Minority interests in consolidated subsidiaries Total net assets Millions of yen ¥12,441 ¥(...

  • Page 36
    ...Oki Electric Industry Co., Ltd. (the "Company") and its domestic consolidated subsidiaries (collectively and including its overseas subsidiaries, the "Group") maintain their books of account in accordance with accounting standards generally accepted in Japan...as finance leases. 34 Annual Report 2008

  • Page 37
    ... average remaining years of service of the participants in ...difference between financial reporting and the tax...the required criteria are accounted...reflect the revision to the Corporation Tax Law which went into... ended March 31, 2008 from the corresponding amounts...of Japan ... and if the book value of the fixed...

  • Page 38
    ... at ¥100 = U.S.$1.00, the approximate exchange rate prevailing on March 31, 2008. This translation should not be construed as a representation that yen have been, ...2008 0 0 100 1,410 904 7,398 1,200 369 0 100 2,803 900 8,686 - 460 0 1,000 14,100 9,040 73,980 12,000 3,690 36 Annual Report 2008

  • Page 39
    ...as follows: Millions of yen Thousands of U.S. dollars Finished goods Work in process Raw materials and supplies 2008 ¥ 47,336 53,320 38,196 ¥138,853 2007 ¥ 52,419 67,257 47,835 ¥167,513 2008 $ 473,360 533,200 381,960 $1,388,530 5. INVESTMENT S IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES...

  • Page 40
    ...bonds: Zero coupon convertible bonds with stock acquisition rights due 2008(*1) Zero coupon convertible bonds ...765 million ($77,650 thousand). As is customary in Japan, both short-term and long-term bank loans are made...OKI Pension Fund which was established on January 1, 2005. 38 Annual Report 2008

  • Page 41
    ..., it differs from the retirement benefits reported in the accompanying consolidated balance sheets. Components of net periodic pension cost for the years ended March 31, 2008, 2007 and 2006 were as follows: Millions of yen Thousands of U.S. dollars Service cost during the year Interest cost on...

  • Page 42
    ...5,977 153 (21) (2,304) ¥ 3,804 2008 $ 75,040 49,220 (290) - $123,980 Income taxes applicable to the Company and its domestic consolidated subsidiaries comprised corporation tax, inhabitants' taxes and enterprise tax, which,...effective tax rates Other, net Effective tax rates 40 Annual Report 2008

  • Page 43
    ...years ended March 31, 2008, 2007 and 2006 were as follows: Millions of yen Thousands of U.S. dollars 2008 ¥18,231 2007 ¥21,305 2006 ¥19,614 2008 $182,310 12....on August 16, 2005, certain production lines of Miyagi Oki Electric Industry Co., Ltd. were suspended and the subsidiary recognized the related loss ...

  • Page 44
    ... Systems ...2008 required under operating leases with noncancelable lease terms in excess of one year are summarized as follows: Thousands of U.S. dollars Year ending March 31, Millions of yen 2009 2010 and thereafter ¥ 1,585 10,192 ¥11,778 $ 15,850 101,920 $117,780 42 Annual Report 2008

  • Page 45
    ... stock 342,000 shares Â¥277 July 1, 2008âˆ' June 28, 2016 9 directors, 10 executive officers, 6 management officials and 1 director of a subsidiary Common stock 509,000 shares Â¥248 July 1, 2009- June 25, 2017 Type of shares with warrants granted Number of shares with warrants granted Option price...

  • Page 46
    ...819 ¥ 34,743 ¥ 26,034 Year ended March 31, Info-Telecom Systems Semiconductors Printers 2007 Corporate and Other Subtotal eliminations Consolidated Sales to third parties Inter-segment sales and ...680,526 - 680,526 669,933 ¥ 10,593 ¥618,655 ¥ 34,691 ¥ 2,973 ¥ 40,461 44 Annual Report 2008

  • Page 47
    ... the nature of the products or services rendered and similarities in sales methodology... million ($370 thousand) in Info-Telecom Systems segment, and operating income decreased by ...2008, 2007 and 2006 is outlined as follows: Millions of yen Year ended March 31, Japan North America Europe 2008 Corporate...

  • Page 48
    ...March 31, Japan North America Europe 2008 Corporate and Asia ...Oki Semiconductor Co., Ltd.'s issued shares to Rohm Co., Ltd. The effect of this resolution has been estimated and reflected in the accompanying consolidated financial statements for the year ended March 31, 2008. 46 Annual Report 2008

  • Page 49
    Report of Independent Auditors 47

  • Page 50
    ... (Changzhou)* OKI Software Technology OKI Trading (Beijing) OKI Data Dalian OKI Systems Taiwan OKI Systems Korea OKI Data (Singapore) OKI Data Manufacturing (Thailand) OKI Precision (Thailand) * In April 2008, the company name changed from Changzhou OKI-GEG Telecoms Ltd. 48 Annual Report 2008

  • Page 51
    ... I II III IV 2008 Breakdown of Shares Held by Shareholder Type (As of March 31, 2008) Japanese corporations and others Foreign corporation and others 7.6% Annual Report 11.2% Economy Society Social Responsibility Report Environment Environmental Report Japanese individual investors Japanese...

  • Page 52
    This report is printed with 100% VOC (volatile organic compounds) free soy ink, using "waterless printing" on FSC certified paper.