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ANNUAL REPORT
2011
For the year ended March 31, 2011

Table of contents

  • Page 1
    A NNU A L RE P O RT 2011 For the year ended March 31, 2011

  • Page 2
    ...OKI and Japan's first telecommunications equipment manufacturer. Meikosha's success came from the company's "enterprising spirit" to attempt to become the first domestic manufacturer...Electronics Manufacturing Service) 13 14 15 16 17 30 31 Research and Development Corporate Governance Corporate Social...

  • Page 3
    ...World's first cash-recycling ATMs released SOCIAL ...Japan's first VoIP system released PRINTERS Business offering printers leveraged by OKI's unique LED technology. EMS Consigned manufacturing business based on manufacturing technology cultivated within the OKI Group. Annual Report 2011...

  • Page 4
    ...to OKI as of the date of publication, and therefore OKI does not guarantee the accuracy of statements are subject to changes attributable to business risks and uncertainties, which may affect OKI's performance and consequently cause actual results to differ from our forecasts. 2 Annual Report 2011

  • Page 5
    ... March 31) 2007 0 2008 2009 2010 2011 (As of March 31) 2007 0 2008 2009 2010 2011 Interest Bearing Debt (left scale) Debt/Equity Ratio (right scale) -30 (Ended March 31) 2007 2008 2009 2010 2011 Capital Expenditures Depreciation (property, plant and equipment, at cost) Annual Report 2011 3

  • Page 6
    ...industrialized nations, impacted by financial crises in Europe and other factors. The Japanese economy,.... Excluding the impact of the Great East Japan Earthquake, therefore, we posted an operating income.... July 2011 Hideichi Kawasaki President Oki Electric Industry Co., Ltd. 4 Annual Report 2011

  • Page 7
    ...year 2010, the OKI Group reorganized its ...Europe, and the impact of the Great East Japan...2011 2012 (est.) Operating Income* (Billions of yen) 18 15 12 9 6 3 0 (Ended March 31) 2008 14.0 11.0 15.0 5.6 2.4 2009 2010 2011 2012 (est.) *Excluding the semiconductor business Annual Report 2011...

  • Page 8
    ... FY2013 (Mid-term business target) ¥520.0 billion FY2015 (OKI's aim) Net sales Operating income Shareholders' equity ratio Net debt equity ratio ¥600.0 billion ¥22.0 billion More than 20% Less than 1.0 times Strategies for growth ¥30.0 billion Stable growth 1.2 times 6 Annual Report 2011

  • Page 9
    ... system for financial institutions and public offices Deploy cash recycling ATMs to overseas market Focus on MFPs; Expand MPS business; Deploy LED-applied products Produce high-end products (medical, telecommunications, industrial equipment), and multiple-layer substrates Annual Report 2011 7

  • Page 10
    ... and services capitalizing on OKI's exceptional know-how in...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 8 Annual Report 2011

  • Page 11
    ...• Increase ATM sales in China and other markets by introducing strategic products that meet worldwide needs • Leverage strengths in banknote transportation technology and develop products in Japan and overseas that address customers' needs FY2010 (ended March 2011) Results FY2013 (ending March...

  • Page 12
    ...systems for the manufacturing sector. In the services business, we offer services that draw on OKI's strengths to meet... provide top-class, uniform-quality maintenance services to all customers around Japan. In these ways, OKI addresses the information and communications technology (...Annual Report 2011

  • Page 13
    ... in May 2016. Cash Recycling ATM for the World Market, "ATM-Recycler G7" This latest ATM model offers high-performance, high-quality, and highly reliable cash recycling of banknotes in multiple currencies that vary in size and design and carry different security information. Annual Report 2011 11

  • Page 14
    ...monozukuri" (manufacturing) solutions ...OKI's data as of September 2010 High-end Type EMS Business Using advanced design and m anufacturing technologies a m assed in the info-telecom fields, OKI provides one-stop EMS solutions delivering top-quality, highly reliable products. 12 Annual Report 2011

  • Page 15
    ...Systems Technologies OKI develops new network service systems that integrate sensor networks and context awareness technology in order to customize and optimize sensor data. Adopting new..., linking technological development to product rollouts and the creation of new businesses. Annual Report 2011 13

  • Page 16
    ... A Audit President Internal Auditing Division Executive Officer Committee Corporate Marketing & Sales Section Business Section Subsidiaries and Affiliates CSR Committee Compliance Committee Information Security Committee Disclosure Committee Collaboration Audit Audit 14 Annual Report 2011

  • Page 17
    ... Awareness Social Contribution Compliance The OKI Group's Activities Stakeholders Employees Social Responsibilities in Business OKI Group's CSR For more information, please refer to the "Social and Environmental Report" at the following site: http://www.oki.com/en/csr/ Annual Report 2011 15

  • Page 18
    MANAGEMENT (As of June 29, 2011) President, Representative Director Hideichi Kawasaki Senior Executive Vice President and Member of the Board, ...President Shinya Kamagami Yasunori Shibata Senior Vice President Takao Hiramoto *1 Outside Director *2 Outside Company Auditors 16 Annual Report 2011

  • Page 19
    ... Statements of Operations Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Net Assets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Auditors Annual Report 2011 17

  • Page 20
    ...Oki Electric Industry Co., Ltd. and consolidated subsidiaries Years ended March 31 Millions of yen Thousands of U.S. dollars (Note) 2011 2010 2009 2008 2007 2011...The U.S. dollar amounts in this annual report are translated from yen, for convenience only, at ¥83 = U.S.$1.00, the...

  • Page 21
    ...internal demand in emerging nations, such as China and India. However, the outlook for the Japanese economy became blurred in the aftermath of the Great East Japan Earthquake of March 11, 2011...recovery in some parts of Europe, as well as the ...reported an increase in sales due to a rise in maintenance...

  • Page 22
    ... the OKI Group ...2011 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) 20 Annual Report 2011

  • Page 23
    ..., driven by such emerging nations as China and India, where steady economic expansion is anticipated.... systems, increased sales of ATMs in Japan and China, and growth in our EMS business....2009 0 2010 2011 R&D Expenses (left scale) R&D Expenses to Net Sales (right scale) Annual Report 2011 21

  • Page 24
    ... new patents with the aim of differentiating the OKI Group from its competitors. Failure to do so may impact the performance of relevant businesses. The OKI Group is also active in securing the necessary approvals and authorization from third parties for the use of exter- 22 Annual Report 2011

  • Page 25
    ... mid-career employees. In an effort to foster exceptional 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...existing common stocks will become diluted, which may impact the stock price. Annual Report 2011 23

  • Page 26
    CONSOLIDATED BALANCE SHEETS Oki Electric Industry Co., Ltd. and consolidated subsidiaries As of March 31, 2011 and 2010 Millions of yen Thousands of U.S. dollars (Note 2) ASSETS Current assets: Cash and cash equivalents...566 2,430,240 (1,790,072) 640,168 202,771 $ 4,484,240 24 Annual Report 2011

  • Page 27
    ... liabilities (Note 24) Total liabilities and net assets The accompanying notes are an integral part of these statements. 2011 2010 2011 ¥ 73,938 44,125 2,565 64,626 28,449 9,403 223,109 ¥ 66,122 61,307 ... (23,951) (11,843) (51,060) (86,867) 951 5,662 721,722 $ 4,484,240 Annual Report 2011 25

  • Page 28
    ...2011 2010 2009 2011 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Other income (expenses): Interest expense Interest and dividend income Equity in earnings (losses) of affiliates Royalty income from corporate...,313) ¥ 26 Annual Report 2011

  • Page 29
    ...INCOME Oki Electric Industry Co., Ltd. and consolidated subsidiaries Years ended March 31, 2011 and 2010 Millions of yen Thousands of U.S. dollars (Note 2) 2011 2010 2011 ... 6,126 $ (324,481) (48,795) (3,891) (9,746) (409) (62,855) (387,349) (388,036) $ 686 ¥ 124 Annual Report 2011 27

  • Page 30
    ... STATEMENTS OF CHANGES IN NET ASSETS Oki Electric Industry Co., Ltd. and consolidated subsidiaries Years ended March 31, 2011, 2010 and 2009 Shareholders' equity Accumulated...843) $ (51,060) $ (86,867) $ 951 The accompanying notes are an integral part of these statements. 28 Annual Report 2011

  • Page 31
    ... OF CASH FLOWS Oki Electric Industry Co., Ltd. and consolidated subsidiaries Years ended March 31, 2011, 2010 and 2009 Millions of yen Thousands of U.S. dollars (Note 2) 2011 Cash flows from ... 40 ¥ 71,156 ¥ 4,636 1,594 ¥ 4,957 1,599 ¥ 6,137 1,713 $ 55,855 19,204 29 Annual Report 2011

  • Page 32
    ... exchange contracts pertaining to long-term debt which are deferred and amortized over the periods of the respective contracts. 30 Annual Report 2011 (d) Cash equivalents All highly liquid investments, generally with a maturity of three months or less when purchased, which are readily convertible...

  • Page 33
    ...based on the Group's internal regulations. (k) Income ... meet the required criteria are accounted for ... Accounting Standards Board of Japan (ASBJ) on March... price less additional estimated manufacturing costs and direct selling ... the revision to the Corporation Tax Law which went...Annual Report 2011 31

  • Page 34
    ... 31, 2011 and 2010...2011 and 2010 were as follows: Millions of yen Thousands of U.S. dollars 2011 Finished goods Work in process Raw materials and supplies Total ¥ 26,189 16,979 21,775 ¥ 64,944 2010 ¥ 21,751 16,436 24,638 ¥ 62,826 2011 $ 315,530 204,566 262,349 $ 782,457 32 Annual Report 2011

  • Page 35
    ...March 31, 2011, ¥5,670 million ($68,313 thousand) of long-term debt and short-term borrowings were collateralized by assets amounting to ¥7,622 million ($91,831 thousand). As is customary in Japan, both ... the Group at March 31, 2011 was ¥31,861 million ($383,867 thousand). Annual Report 2011 33

  • Page 36
    ... through borrowings from financial institutions and issuance of corporate bonds. The Group strives to mitigate credit risks...with Oki Group's policy. (b) Disclosure about fair value of financial instruments The fair values of financial instruments at March 31, 2011 ... Note 22. 34 Annual Report 2011

  • Page 37
    ... joined the OKI Pension Fund ...2011, a loss of ¥20,333 million ($244,975 thousand) was caused by the transfer to defined contribution plans, and a change in method of accounting in certain domestic subsidiaries, and it is included in "Loss on revision of retirement benefit plan." Annual Report 2011...

  • Page 38
    ...112 64,531 (54,432) 10,098 (1,567) (1,515) (47) (3,130) ¥ 6,968 2011 $ 450,036 180,240 140,710 37,542 36,915 22,240 12,734 12,325 87,... dollars 2011 Other current assets Other assets Other current liabilities Net deferred tax assets 36 Annual Report 2011 2010 ¥ 4,008 2,960 - ¥ 6,968 2011 $ 74...

  • Page 39
    ...internal transaction among the consolidated group Other, net Effective tax rates 10. SHAREHOLDERS' EQUITY Corporation Law of Japan... their book value ...Oki Electric Industry Co., Ltd. were suspended and the subsidiary recognized the related loss for the year ended March 31, 2009. Annual Report 2011 37

  • Page 40
    ...October 1, 2008, the Company transferred to Rohm Co., Ltd. 95% of issued shares of Oki Semiconductor Co., Ltd., which was newly established to succeed to its semiconductor business. As the ...(204) Note: Fair value is based on the quotes presented by the financial institutions. 38 Annual Report 2011

  • Page 41
    ...rate swaps Millions of yen Thousands of U.S. dollars 2011 Hedged item Contract amount Contract amount over 1 year Fair value Contract amount 2011 Contract amount over 1 year Fair value Pay fixed...: Fair value is based on the quotes presented by the financial institutions. Annual Report 2011 39

  • Page 42
    ... been presented for the years ended March 31, 2011 and 2009 because a net loss was recorded. Diluted...2011 Net income (loss) : Basic Diluted ¥ (37.35) - 2010 ¥ 5.30 - Yen 2009 ¥ (65.90) - 2011 $ (0.45) - U.S. dollars 2011 Net assets ¥ 40.15 2010 ¥ 84.61 2011 $ 0.48 40 Annual Report 2011

  • Page 43
    ... segment presentation is not disclosed as it would be impracticable. Millions of yen 2011 Segments Year ended March 31, Sales to third parties Inter-segment sales and ...¥ 13,879 ¥ ¥ ¥ 134 4,124 9,564 ¥ (6,543) ¥ 75,853 ¥ 1,836 ¥ (0) ¥ 107,110 ¥ 3,033 ¥ 643 Annual Report 2011 41

  • Page 44
    ...894 million ($83,060 thousand) and ¥6,623 million for the years ended March 31, 2011 and 2010, respectively. (2) Adjustment of total assets consist principally of the Company's surplus funds...($2,000,602 thousand) and ¥142,589 million at March 31, 2011 and 2010, respectively. 42 Annual Report 2011

  • Page 45
    REPORT OF INDEPENDENT AUDITORS Annual Report 2011 43

  • Page 46
    ... Technology (Kunshan) OKI Telecommunications Technology (Changzhou) OKI Software Technology OKI Trading (Beijing) OKI Data Dalian OKI Systems Korea OKI Data (Singapore) OKI Data Manufacturing (Thailand) OKI Precision (Thailand) OKI Systems (Thailand) OKI Data (Australia) 44 Annual Report 2011

  • Page 47
    ... Type (As of March 31, 2011) Japanese corporations and others Foreign corporation and others 7.9% 11.0% Japanese individual investors Japanese financial institutes 23.9% 57.2% • All company and product names included in this annual report are trademarks or registered trademarks of...

  • Page 48
    This report is printed with VOC (volatile organic compounds) free vegetable based ink, using "waterless printing" on FSCTM certified paper.