Investor Relations

IR Announcement

(This document is an English translation of the original Japanese document. If there are any discrepancies between this document and the original Japanese document, the original Japanese document prevails.)

December 18, 2015

To whom it may concern

Company name
Oki Electric Industry Co., Ltd.
Hideichi Kawasaki
Representative Director
Securities code
6703 (First Section, TSE)
Atsushi Yamauchi
General Manager
Investor Relations

Notice concerning filing of arbitration proceedings against subsidiary

As outlined below, OKI subsidiary Oki Banking Systems (Shenzhen) Co., Ltd. has received notice of the filing of arbitration proceedings against it by Shenzhen Yihua Computer Industrial Co., Ltd., as the petitioner.

1. Arbitrator

South China International Economic and Trade Arbitration Commission (SCIA)

2. Date of receipt of notice

December 17, 2015

3. Background of arbitration proceedings

As announced on November 2, 2015, Oki Banking Systems (Shenzhen) Co., Ltd. ("OBSZ" hereinafter) has sold ATMs in China since December 2012 through Shenzhen Yihua Computer Industrial Co., Ltd. ("Yihua Industrial" hereinafter) pursuant to an ATM sales contract concluded between the two parties. Because Yihua Industrial has, without justifiable cause, failed to pay to OBSZ due proceeds from sales of OBSZ products, OBSZ has filed for arbitration with SCIA, demanding payment by Yihua Industrial of uncollected proceeds from sales of the corresponding products. The SCIA continues to review the matter.

In regard to this matter, Yihua Industrial has filed new arbitration proceedings against OBSZ, claiming the presence of defects in approximately 22,000 units of products delivered by OBSZ and damages resulting from OBSZ's failure to assess these defects and implement appropriate upgrades.

4. Subject of these arbitration proceedings and amount demanded

(1) Subject
Damages, including assessment and upgrades of products entrusted by Yihua Industrial to third parties, arbitration costs, etc.
(2) Amount demanded
RMB 221,143,000 (approx. JPY4 billion)

5. Future outlook

We consider this filling by Yihua Industrial as a mere measure taken in response to OBSZ's earlier arbitration filing. Both OKI and OBSZ believe Yihua Industrial's claims are entirely groundless.

OKI and OBSZ place the highest priority on the quality of the products we supply to our customers. We have responded in good faith to any such problems that have emerged. Our products are free of issues, as is clear from the fact that all comparable OKI-brand products sold through channels other than Yihua Industrial have functioned smoothly and without problems. We believe Yihua Industrial's claims are based on distortions and overstatements of the facts. We do not believe we are liable to provide compensation for any of the damages claimed.

As with the earlier arbitration proceedings against Yihua Industrial, both OKI and OBSZ will continue to claim their proper rights pursuant to the contract. At this stage, we believe these arbitration proceedings will have no impact on our business performance or related matters. Any matters worthy of disclosure will be promptly announced as they arise.

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