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ANNUAL REPORT
2014 (For the year ended March 31, 2014)
OKI Annual Report 2014

Table of contents

  • Page 1
    ANN UAL R EP OR T 20 14 (For the year ended March 31, 2014)

  • Page 2
    ...vanguard of technology innovation, OKI began selling computers containing Japan's first domestically developed core memories, developed the world's first cash recycling automated teller machine (ATM) that recycles deposited bills as funds for withdrawals, developed LED printers, and introduced the...

  • Page 3
    ..., including ATMs and cash handling equipment. PRINTERS Business offering printers and multifunction printers leveraged by OKI's unique LED technology. Consigned design and manufacturing business based on design and manufacturing technologies cultivated in infotelecom systems. Annual Report 2014 1

  • 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 2014

  • Page 5
    ... 2010 March 31) (Ended 2010 March 31) 2011 2012 2013 2014 Capital Expenditures Depreciation (property, plant and equipment, at cost) (As of 2010 2011 2012 2013 March 31) Interest-bearing Debt (left scale) Debt/Equity Ratio (right scale) 2014 2011 2012 2013 2014 Annual Report 2014 3

  • Page 6
    TO OUR STAKEHOLDERS Centering on marketing and innovation as pivots for action, the OKI Group shift gears to growth with concerted efforts across the Group 4 Annual Report 2014

  • Page 7
    ..., reï¬,ecting the booking of expenses arising from structural reforms in the Printers business etc. Accordingly,... medical and new energy fields in our maintenance and EMS businesses. To maintain growth, building...2014 Hideichi Kawasaki President Oki Electric Industry Co., Ltd. Annual Report 2014 5

  • Page 8
    ... BUSINESS PLAN 2016 The OKI Group launched the Mid-term Business Plan 2016 in April 2014. Along with targeting operating...driven largely by the Info-telecom Systems business and the Printers business. In addition, the current plan targets an overseas ...than 1 times Stable dividend 6 Annual Report 2014

  • Page 9
    ... ATM business in Brazil through the company we set up in January 2014, and expand ATM sales across the Central and South America regions. Moreover, we look to expand our products into areas like cash handling equipment and maintenance services. We will also promote high-value added printers for the...

  • Page 10
    ... technologies cultivated in info-telecom systems • Design and manufacturing of electronic 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 2014

  • Page 11
    ...maintenance services for multi-vendor supporting products to the nationwide scale, fully leveraging our maintenance...Brazil... printer...2014) 37.1 Results FY2014 (ending March 2015) Plan 17.6 17.0 FY2013 (ended March 2014) Results 1.7 FY2014 (ending March 2015) Plan 2.0 2.8 2.5 40.0 Annual Report 2014...

  • Page 12
    ...government agencies, transportation, retail, and manufacturing. In the solutions business, we provide...terminals such as ATMs, PCs, printers, and smartphones from introduction planning to...nancial institutions and customer satisfaction. In the maintenance business, we fully use one of ...Annual Report 2014

  • Page 13
    ...ce Communication System This telecommunication module adds a wireless function to sensors and measurement hardware, using our wireless 920MHz band multi-hop ... LAN systems. Furthermore, it also provides intruder detection sensors and can responds to Earthquake Early Warnings. Annual Report 2014 11

  • Page 14
    ...Intelligent Transport Systems *3 DSRC: Dedicated Short Range Communication OKI's River Monitoring System is Used for Field-test at...a wireless 920 MHz band multi-hop network to collect data via sensors for tracking water levels and rainfall amounts. Towards the ... maintenance. 12 Annual Report 2014

  • Page 15
    ... in Brazil across Central and South America. We delivered our cash-recycling ATMs, "ATM-Recycler G7," to State Bank of India, the largest bank in India. Home to Asia's thirdlargest base of ATMs and CDs in operation, India is a promising market with prospects for rapid growth. Annual Report 2014 13

  • Page 16
    ... our ability to offer optimal solutions. "C941dn" is OKI Data's first five-color toner LED printer supporting paper sizes up to A3+ for the professional market. With white and clear toner options, it can print on a range of media such as cardboard and transparent film. 14 Annual Report 2014

  • Page 17
    ... products in small quantities. OKI is particularly strong in two...manufacturing technologies cultivated in the info-telecom business, we are focusing on in-house development of leading-edge technologies to offer onestop EMS solutions for high-quality and high-reliability products. Annual Report 2014...

  • Page 18
    ...offers enhanced efficiency in power consumption. This enables various sensors and equipment to be connected to networks, regardless of the... surveying the damage from earthquake, for example. Data Mining OKI is developing data mining technology to find and utilize hidden ".... 16 Annual Report 2014

  • Page 19
    ... a device sleeps is a key technology because the devices must be able to receive the relay data at any time. We are advancing the technology to improve energy efficiency by lengthening the sleep periods while also having the ability to relay data with low-latency networking. Annual Report 2014 17

  • Page 20
    ...a resolution concerning the Basic Policy for the Establishment of an Internal Control System and OKI has been developing a system to secure appropriate business operations. Pursuant to the Financial ... Committee Information Security Committee Disclosure Committee Audit 18 Annual Report 2014

  • Page 21
    ...Forum meeting held in January 1999. The OKI... recycling,...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 2014...

  • Page 22
    ... Executive Officer Shuichi Kawano Standing Audit & Supervisory Board Member Tetsuya Izaki Tsutomu Tai Audit & Supervisory Board Member Kuninori Hamaguchi*2 Kaoru Yoshida*2 20 Annual Report 2014 Audit & Supervisory Board Member *1 Outside Director *2 Outside Audit & Supervisory Board Members

  • Page 23
    ... Statement of Income Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Net Assets Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements Report of Independent Auditors Annual Report 2014 21

  • Page 24
    ...8, 2012, the Company announced that improper accounting had been conducted at an overseas consolidated subsidiary. Based on the investigation reports by outside experts, the Company restated the consolidated financial statements and related notes for 2012 and previous years. 22 Annual Report 2014

  • Page 25
    ...2013 2014 0 (Ended March 31) 2012 2013 2014 Printers (Billions of yen) Net Sales (Billions of yen) 150 124.8 120 107.4 111.4 10 Operating Income (Loss) 5 5.1 90 0 60 -5 (4.3) (8.8) 30 0 (Ended March 31) 2012 2013 2014 -10 (Ended March 31) 2012 2013 2014 Annual Report 2014 23

  • Page 26
    ... 2014 2012 2013 2014 Net Income (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) 24 Annual Report 2014

  • Page 27
    ... and financial position may be affected. (Billions of yen) R&D Expenses/ R&D Expenses to Net Sales 14.0 13.1 3.1 3.1 13.0 3.0 2.7 3.5 15 12 9 2.5 6 2.0 3 1.5 0 (Ended March 31) 2012 2013 2014 0 R&D Expenses (left scale) R&D Expenses to Net Sales (right scale) Annual Report 2014 25

  • Page 28
    ...risk and foreign currency fluctuation risk. The OKI Group operates production sites in Thailand, China, and Brazil. The OKI Group's performance and financial position may... statutory and regulatory requirements may impact the OKI Group's performance and financial position. 26 Annual Report 2014

  • Page 29
    ... 1, 2014-March 31, 2024) and a purchase provision (lump purchase on April 1, 2024). In the event that, in the future, common stocks are issued as a result of such purchase request or purchase provision, existing common stocks will become diluted, which may impact the stock price. Annual Report 2014...

  • Page 30
    CONSOLIDATED BALANCE SHEET Oki Electric Industry Co., Ltd. and consolidated subsidiaries As of March 31, 2014 Millions of yen Thousands of U.S. dollars (Note 2) ASSETS Current assets: Cash and cash equivalents (Notes 3...5,892 2,038,401 (1,487,480) 550,911 171,627 $ 4,044,254 28 Annual Report 2014

  • Page 31
    ... liabilities (Note 19) Total liabilities and net assets The accompanying notes are an integral part of these statements. 2014 2013 2014 ¥ 55,410 49,067 859 88,067 37,447 11,420 242,272 ¥ 56,371 18,821 897...(3,813) (101,549) 114,156 51,274 774 30,431 901,156 $ 4,044,254 Annual Report 2014 29

  • Page 32
    ... STATEMENT OF INCOME Oki Electric Industry Co., Ltd. and consolidated subsidiaries Year ended March 31, 2014 Millions of yen Thousands of U.S. dollars (Note 2) 2014 2013 2014 Net sales Cost ...,264) (8,245) 3,519 44,745 311,382 37,450 3,862 41,313 270,058 (1,833) $ 268,225 30 Annual Report 2014

  • Page 33
    ... COMPREHENSIVE INCOME Oki Electric Industry Co., Ltd. and consolidated subsidiaries Year ended March 31, 2014 Millions of yen Thousands of U.S. dollars (Note 2) 2014 2013 2014 Income before... ¥ 305 $ 270,058 20,578 2,607 (73,637) 392 (50,039) $ 220,019 $ 218,009 $ 2,009 Annual Report 2014 31

  • Page 34
    CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS Oki Electric Industry Co., Ltd. and consolidated subsidiaries Year ended March 31, 2014 Shareholders' equity (Accumulated deficit) Additional retained ... restated. The accompanying notes are an integral part of these statements. 32 Annual Report 2014

  • Page 35
    ... OF CASH FLOWS Oki Electric Industry Co., Ltd. and consolidated subsidiaries Year ended March 31, 2014 Millions of yen Thousands of U.S. dollars (Note 2) 2014 2013 2014 Cash ï¬,ows from... 351,901 313 2,303 $ 498,686 Â¥ 2,546 Â¥ 1,396 Â¥ 3,040 Â¥ 5,626 $ $ 24,960 13,686 Annual Report 2014 33

  • Page 36
    ... debt at Oki Systems Iberica S.A.U. which is an overseas consolidated subsidiary of OKI Data Corporation in printer business. As...cant renewals and betterments are capitalized at cost. Maintenance and repairs are charged to income. (h) Intangible assets and...as operating leases. 34 Annual Report 2014

  • Page 37
    ... for retirement benefits, and books unrecognized differences arising from the initial...2014. This translation should not be construed as a representation that yen have been, could have been, or could in the future be, converted into U.S. dollars at the above or any other rate. Annual Report 2014...

  • Page 38
    ... and affiliates at March 31, 2014 and 2013 were as follows: Millions of yen Thousands of U.S. dollars 2014 Investments stated: By the equity method At cost or less Advances Total ¥ 4,698 997 34 ¥ 5,730 2013 ¥ 4,591 287 - ¥ 4,878 2014 $ 46,058 9,774 333 $ 56,176 36 Annual Report 2014

  • Page 39
    ...the obligations with any cash deposited with the bank. The aggregate annual maturities of long-term debt subsequent to March 31, 2014 were summarized as follows: Year ending March 31, 2015 2016 ... available to the Group at March 31, 2014 was ¥15,564 million ($152,588 thousand). Annual Report 2014 37

  • Page 40
    ...business partnership (¥18 million ($176 thousand) and ¥55 million) at March 31, 2014 and 2013, respectively, are not included in (3) Securities and investments in securities because they have no market price and it is deemed extremely difficult to assess their fair values. 38 Annual Report 2014

  • Page 41
    ... for retirement benefits Asset for retirement benefits Net asset for retirement benefits in the balance sheet 2014 ¥ 95,414 (115,995) (20,581) 13,298 (7,282) 20,225 (27,507) ¥ (7,282) $ 2014 935,431 (1,137,205) (201,774) 130,372 (71,392) 198,284 (269,676) (71,392) $ Annual Report 2014 39

  • Page 42
    ...assets, by major category, as a percentage of total plan assets as of March 31, 2014 were as follows: 2014 36% 49 15 100% Bonds Stocks Other Total* * The Company's pension and retirement ... subsidiaries joined the OKI Pension Fund which was established on January 1, 2005. 40 Annual Report 2014

  • Page 43
    ...benefits to directors and statutory auditors." Therefore, it differs from the retirement benefits reported in the accompanying consolidated balance sheets. Components of net periodic pension cost for the years ... arising from the initial adoption of a new method of accounting: Annual Report 2014 41

  • Page 44
    ...2,983 2,158 1,578 6,992 79,024 (68,065) 10,959 - (3,830) (1,222) (490) (5,543) ¥ 5,415 2014 $ 268,264 - 171,794 73,950 71,588 45,009 30,205 21,166 15,156 69,205 766,392 (659,431)...rates (0.5) 2.8 (26.1) 1.0 2.1 (4.0) 13.3 % (0.5) 2.1 4.4 1.6 - (20.0) 25.6 % 38.0 % 2013 38.0 % 42 Annual Report 2014

  • Page 45
    ...Thailand. 14. GAIN ON TRANSFER OF BUSINESS For the year ended March 31, 2014, certain subsidiary recognized gain due to the sale of the insurance business. 15. BUSINESS RESTRUCTURING EXPENSES For the year ended March 31, 2014, certain subsidiaries in the printer... 31, 2014. Annual Report 2014 43

  • Page 46
    ... over 1 year Fair value Contract amount 2014 Contract amount over 1 year Fair value Pay Yen/receive U.S.Dollars Long-term borrowings ¥ 2,286 ¥ 1,778 ¥ (26) $ 22,411 $ 17,431 $ (254) Note: Fair value is based on the quotes presented by the financial institutions. 44 Annual Report 2014

  • Page 47
    ... March 31, 2014 required under operating leases with noncancelable lease terms in excess of one year are summarized as follows: Year ending March 31, 2015 2016 and thereafter Total Millions of yen Thousands of U.S.dollars ¥ 2,352 10,412 ¥ 12,765 $ 23,058 102,078 $ 125,147 Annual Report 2014 45

  • Page 48
    ... of yen Thousands of U.S. dollars As guarantors of employees' housing loans Other Total 2014 ¥ 460 - ¥ 460 2013 ¥ 568 34 ¥ 602 2014 $ 4,509 - $ 4,509 20. AMOUNTS PER SHARE In accordance with the... to be issued Number of shares reserved Exercise price Exercisable period 46 Annual Report 2014

  • Page 49
    ... banking as well as retail automation, and services in Brazil. 3. Date of the business combination January 10, 2014 4. Legal form of the business combination Acquisition of shares 5. Name of company after business combination OKI Brasil Indústria e Comércio de Produtos e Tecnologia em Automa...

  • Page 50
    ... of the goodwill Investments in equity-method affiliates Increase in property, plant, equipment and intangible assets Printers EMS Subtotal $ 2,976,470 41,068 3,017,549 $ 229,568 $ 2,046,843 $ 52...thousand) and ¥166,879 million at March 31, 2014 and 2013, respectively. 48 Annual Report 2014

  • Page 51
    REPORT OF INDEPENDENT AUDITORS Annual Report 2014 49

  • Page 52
    ... de Mexico OKI Brasil OKI Data do Brasil ASIA/OCEANIA OKI Hong Kong OKI Electric Industry (Shenzhen) OKI Banking Systems (Shenzhen) OKI Electric Technology (Kunshan) OKI Software Technology OKI Trading (Beijing) OKI Data Dalian OKI Systems Korea OKI Data (Singapore) OKI Data Manufacturing (Thailand...

  • Page 53
    ...Banking Co., Ltd. Contact for Further Information Investor Relations Public Relations Division Oki Electric Industry Co., Ltd. 1-7-12 Toranomon, Minato-ku, Tokyo 105... included in this annual report are trademarks or registered trademarks of each of the companies they represent. Annual Report 2014 51

  • Page 54
    This report is printed with VOC (volatile organic compounds) free vegetable based ink, using "waterless printing" on FSCTM certified paper.