Oki Electric Financial Results for the First Quarter of FY ending March 31, 2005

July 28, 2004 Oki Electric Industry Co., Ltd.

1 Table of Contents

1. Financial Result Overview for Q1 of FY ending Mar. 2005

2. Segment Information

3. Full Year Projections for the FY ending Mar. 2005

* The projections and plans on this material are subject to change depending upon the changes of business environments and other conditions.

2 Q1 Financial Result Overview

Business Environment Net sales (consolidated) (Billion yen)

+ 30.2 B yen (27.0%) z Stable economy: Favorable business performances led improvement in 142.0 individual consumption and employment 97.0 111.8 situation. Q1, Mar. 03 Q1, Mar. 04 Q1, Mar. 05 z Sales growth thanks to increase of system Operating income (consolidated) investments by financial institutions, growth of color printer demands, expansion (15.0)(13.1) (2.1) of IP networks by telecom carriers, and + 11.0 B yen continuous favorable demands for semiconductors Net income (consolidated) z Operating income and net income improved substantially due to sales growth, (12.4) (11.1) (2.6) business structural reforms, and + 8.5 B yen procurement cost reduction. 3 Q1 Profit and Loss Outline

z Despite the yen appreciation, sales „ Comparison of consolidated P/L (Billion yen) and income increased in all segments. Q1 of FY Q1 of FY Variance Mar.04 Mar.05 Consolidated net sales (Billion yen) Q1, FY Q1, FY Variance Net sales 111.8 142.0 30.2 Mar. 04 Mar. 05 Info sys. 57.6 67.6 10.0 (Cost of sales ratio) (80.2%) (75.4%) (+4.8 %) Telecom 16.6 23.0 6.4 Cost of sales 89.7 107.1 17.4 Devices 27.2 37.6 10.4 SG&A 35.2 37.0 1.8 Others 10.4 13.8 3.4 Operating income (13.1) (2.1) 11.0 Consolidated operating income (Billion yen) Q1, FY Q1, FY Other income (1.0) (1.0) 0 Mar. 04 Mar. 05 Variance Info sys. (2.6) (0.9) 1.7 Recurring income (14.1) (3.1) 11.0 Telecom (2.8) (0.2) 2.6 Extraordinary 0 0.1 0.1 Devices (4.8) 1.2 6.0 income Others (0.3) 0.4 0.7 Extraordinary Corp. & (2.6) (2.6) 0.0 loss 1.5 1.3 (0.2) eliminates Average currency exchange rate Income before taxes (15.6) (4.3) 11.3 Actual rate Plan Q1, FY Q1, FY Income taxes (4.5) (1.7) 2.8 FY Mar. 05 Mar. 04 Mar. 05 Net income (11.1) (2.6) 8.5 USD 118.5 109.8 105 Euro 134.7 132.3 130 4 Q1 Balance Sheet Outline (1)

(Times) Q1, FY Q1, FY Turnover ratio Variance Mar. 04 Mar. 05 z Total assets decreased due to reduction of accounts receivable. Total assets 0.73 0.95 0.22 improvement Notes and accounts z Major turnover ratios improved 3.04 4.19 1.15 improvement receivable substantially. Inventory 2.65 3.90 1.25 improvement

26.2 B yen reduction (Billion yen) Variance with 622.9 606.4 609.6 583.4 Mar. 31, 2004 600 27.9 28.5 55.4 46.6 Cash and deposits -8.8 169.9 124.7 155.3 115.7 Notes and accounts receivable -39.6 400 180.1 157.4 139.0 152.3 Inventories + 13.3

27.7 33.1 33.3 30.1 Other current assets + 3.2 200 136.4 133.7 119.7 120.1 Propety, plant and equipment + 0.4 103.6 106.3 110.1 115.4 0 Investments and other assets + 5.3 Mar. 31, 03 Jun. 30, 03 Mar. 31, 04 Jun. 30, 04 5 Q1 Balance Sheet Outline (2)

(%) z Interest bearing debt decreased by 8.0 B Jun. 03 Jun. 04 Variance yen from Mar. 04, due to improvement in Interest-bearing 56.2 48.6 7.6 improvement cash flows. debt ratio Shareholders’ equity ratio 15.2 18.9 3.7 improvement

(Billion yen) Variance with 622.9 606.4 609.6 Mar. 31, 2004 600 583.4 116.1 99.9 Notes and accounts payable - 17.7 135.8 118.1

126.0 141.9 Short-term borrowings + 1.8 400 129.8 131.6 25.6 27.1 31.1 30.6 Other current liabilities -0.5 209.4 198.8 161.7 151.8 Long-term debt -9.9 200

44.5 46.2 40.7 40.8 Other fixed liabilities and minority + 0.1 interests 101.3 92.5 110.5 110.5 0 Shareholders' equity + 0 Mar. 31, 03 Jun. 30, 03 Mar. 31, 04 Jun. 30, 04 Bonds due within a year and commercial paper are included in long-term debt and short-term borrowings respectively. 6 Conditions of Cash Flows

z Reduction of net loss and working capital improved free cash flow by 5.4 B yen. z Continue reduction of interest-bearing debt

Q1, FY Q1, FY Variance Notes (Billion yen) Mar. 04 Mar. 05 I. Cash flows from operating activities (1.0) 10.4 11.4 Income (loss) before income taxes (15.6) (4.3) 11.3 (Q1/FY 04) (Q1/FY 05) Depreciation & amortization 7.8 7.3 (0.5) Receivables 46.0 40.3 Inventories (21.9) (13.2) Changes in operating assets & liabilities 13.9 17.2 3.3 Payables (10.2) ( 9.9) Others (7.1) (9.8) (2.7) Total 13.9 17.2 II. Cash flows from investing activities (3.0) (9.0) (6.0) Purchases of property, plant & equipment (3.1) (6.7) (3.6) Others 0.1 (2.3) (2.4) Free cash flows (I+II) (4.0) 1.4 5.4 III. Cash flows from financing activities 4.8 (8.4) (13.2) Redemption of bonds (7.7) 0 7.7 Changes in other interest bearing debts, etc. 12.5 (8.4) (20.9) Net cash flow (I+II+III) 0.8 (7.0) (7.8) IV. Cash and cash equivalents at the period end 30.3 51.4 21.1 7 Q1 Results & 1st Half Projections z Both sales and profits for the 1st half are expected to increase from the previous projections. Net sales Net sales (Billion yen) (Billion yen) 142.0 310.0 281.3 290.0 13.8 Others 27.0 Others 111.8 Electronic devices 25.2 27.0 75.0 Electronic 10.4 37.6 60.0 68.0 devices 27.2 23.0 Telecom systems 44.5 45.0 50.0 Telecom 16.6 systems Information 158.0 Information 57.6 67.6 systems 151.6 150.0 systems

1H, FY Apr. 27 July 28 Q1, FY Mar. Q1, FY Mar. Mar. 04 04 05 1H, FY Mar. 05 projections Operating & net incomes Operating & net incomes (Billion yen) (Billion yen) Operating 0.0 Operating (2.1) (2.0) (2.6) income (3.9) income (6.0) (6.0) Net income Net income (13.1)(11.1) (10.5) 8 Info Systems: Q1 Results & 1st Half Projections z Sales is expected to increase from the previous projection. z Operating income is unchanged from the previous projection due to development cost increase.

Net sales (Billion yen) Net sales (Billion yen) 158.0 67.6 151.6 150.0 57.6 Financial system solutions Financial 28.0 • Sales increase in branch terminals 61.5 57.5 64.5 system solutions for financial institutions and 23.7 ATMs for convenience stores 10.1 Information Information solutions 30.6 30.5 30.5 8.2 • Sales increase in systems for solutions governments 29.5 25.7 Printers 59.5 62.0 63.0 Printers • Favorable sales in color NIP printers Q1, FY Mar. Q1, FY Mar. 1H, FY Apr. 27 July 28 04 05 Mar. 04 1H, FY Mar. 05 projections Operating income Operating income (Billion yen) (Billion yen) • Operating income • Increase in investment for increased by 1.7 B yen development and free (0.9) due to sales growth charge maintenance 5.1 related to new banknote (2.6) 2.0 2.0 9 Financial System Solutions

„ Demand related to new banknote finishes in Sales transition st the 1 half of FY Mar. 05, followed by (Billion yen) increasing investment for retail channel 87.5 ATM Financial IT solutions enhancement and back office operation 70.3 efficiency. 61.5 64.5 62.5 60.0 „ Focus on sales expansion of solutions for 40.5 29.0 42.0 43.0 bank branches and back office operation concentrations, and solutions for information 29.8 33.5 19.5 27.5 21.5 and telecommunication convergence ¾Solutions for bank branches and back office 2H, FY 1H, FY 2H, FY 1H, FY 2H, FY Mar 03 Mar 04 Mar 04 Mar 05 Mar 05 operation concentrations: (Projection) (Projection) “ConsulStation”, individual identification, and sales support systems “NokiNavigation” ATM remodeling and replacement units ¾Solutions for info and telecom convergence: (Thousand units) 33.4 IP network, call center “CTstage 4i,” and IP Replace telephony transfer solutions Remodeling „ Favorable sales in ATMs for convenience 8.5 11.6 9.2 stores, unattended response system for 1.1

financial institutions “RT21,” and unified cash 2H, FY 1H, FY 2H, FY 1H, FY 2H, FY Mar 03 Mar 04 Mar 04 Mar 05 Mar 05 management system “CM21” (Projection) (Projection) 10 Printer Business

„ 1st half projections Sales by segment and color NIP ratio ¾ Sales of color NIP increases by 22% on year-on-year basis. 44 40 50 (%) ¾ Despite the shrink in the SIDM and 46 monochrome NIP markets, Oki keeps 35 sales equivalent to the previous 1st half 22 by increasing its share. 75.0 (Billion yen) „ Topics 65.3 63.0 59.5 56.9 ¾ New York Times (July 1, 2004) 51.1 evaluates Oki highly for its printing quality and easy set-up ¾ 3 models of Oki printer was ranked in Others the top 10 color business printers by PC SIDM World magazine (May 2004) Mono NIP

1. Oki C7300 6. IBM Infoprint 1354 Color NIP 2. HP LaserJet 5500 7. Xerox Phaser 7300 3. Oki C9500 8. Brother HL-4200 4. HP LaserJet 3700 9. Xerox Phaser 6250 1H, FY 2H, FY 1H, FY 2H, FY 1H, FY 2H, FY Mar 03 Mar 0 3 Mar 0 4 Mar 04 Ma. 0 5 Mar 0 5 5. Lexmark C752 10. Oki C5100 (Projection)(Projection) 11 Printer Business: Color NIP

z Oki’s shipment in Europe and North America increased by 10 folds in units and by 4 folds in share within 2 years and half. Color NIP units of shipment and share by manufacturers (Europe + N. America) (Thousand units) 280.8 60%

300 HP

66.8 40% Others 189.5 37.6% 200 30.4 Xerox 36.5 36.8 127.5 20.2 OKI Konica Minolta 105.8 17.7 41.3 20% 28.2 14.7% 100 24.1 20.8 39.3 Konica OKI 13.1% 18.3 6.1 Minolta 3.6 21.9 10.8% 11.7 105.5 Xerox 75.8 HP 48 50.5 0% 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1Q CY 01/Q3 02/Q1 03/Q1 04/1Q CY 01 02 03 04 (Source: IDC, May 04) 12 Telecom Systems: Q1 Results & 1st Half Projections z The telecom market, especially IP networks, shows recovery. z Both sales and operating income are expected to increase from the previous projections. Net sales Net sales (Billion yen) (Billion yen) 23.0 50.0 44.5 45.0 5.5 Enterprise networks 12.0 Enterprise 16.6 • Strong business inquiries 11.5 12.0 networks in SS9100 4.7

17.5 Carrier networks 38.0 Carrier 11.9 • Substantial sales increase 33.0 33.0 networks led by expansion of local IP networks

Q1, FY Mar. Q1, FY Mar. 1H, FY Apr. 27 July 28 Mar. 04 04 05 1H, FY Mar. 05 projections

Operating income Operating income (Billion yen) • Operating income (Billion yen) 0.5 (0.2) increased by 2.6 B yen due to sales growth and 0.0 (2.8) fixed cost reduction (1.6)

13 IP Networks

Carrier market Sales of broadband IP and its ratio „ Telecom carriers, including NTT-G and KDDI, focus on expansion of broadband IP networks. Broadband IP related (Billion yen) Improvement of local IP networks Legacy and FTTH, investment for IPv6, 80 Broadband IP ratio 71.5 construction of CDN, switching 68.1 FOMA to IP, etc. 68.1% 60 Enterprise market 52.2 65.1% Objective of enterprises’ investment to IP telephony shifts from communication cost 60.9% 36.5 reduction to enhancement of business 40 33.5 33.5 efficiency via issue-solving applications. Increase of expectation for IT and IP convergence ¾ Convergence of IP telephony and e-mail/ 20 group ware/e-commerce ¾ Integration of voice and video communi- cations to business processes applications

IP CONVERGENCE® Server SS9100 0 FY Mar. 03 FY Mar. 04 FY Mar. 05 (Projections) 14 Electronic Devices: Q1 Results & 1st Half Projections z Both sales and operating income are expected to increase from the previous projections.

Net sales Net sales (Billion yen) 75.0 (Billion yen) 37.6 Optical Optical components 68.0 1.0 60.0 1.0 components 27.2 1.0 25.2 System LSIs & 49.0 System LSIs Logic LSIs 46.0 & Logic LSIs 18.8 42.4

6.5 System memories System 4.6 13.0 15.0 memories 5.5 DRAMs 10.0 3.4 6.6 8.0 10.0 DRAMs Q1, FY Mar. Q1, FY Mar. 1H, FY Apr. 27 July 28 04 05 Mar. 04 1H, FY Mar. 05 projections

Operating income Operating income (Billion yen) (Billion yen) 1.2 • Despite the yen appreciation, operating 1.5 income increased due to 3.0 (4.8) sales growth and fixed cost reduction. (2.1) 15 Semiconductor Business Status

Sales composition by products Oki’s unique LSIs „ Focus on system LSIs and logic LSIs PHS base band LSIs „ Deploy unique memory business including • Expand share in China and Taiwan (Currently 30%) P2ROM • Target to be world top share in LSIs for PHS 160(Billion yen) 147.5 Sound generator LSIs 140 130.3 • Expand share of sound generator LSIs for GSM 116.0 Foundry with strengths including high sound quality, W-CSP, 120 and standard format compliance (Currently 50%) 105.0 100 DRAM Driver LSIs

80 • Top share in driver LSIs used for rapidly-growing System large-scale LCD TVs 60 Memory • Expand product line-up used for mobile phones, digital cameras, automobiles, and organic ELs Logic LSI 40 P2ROMs (system memories) 20 System • Expand share of LSIs used for games, electronic LSI dictionaries and printers with strengths such as short 0 TAT and low cost (Currently 30% of ROM market) FY Mar. FY Mar. FY Mar. FY Mar. 02 03 04 05 • Accelerate development of next generation large (Projections) capacity P2ROMs (512M or more) 16 Full Year Projections for the FY ending Mar. 2005 z Due to uncertainty of the semiconductor market in the 2nd half, full year projections will be reviewed when establishing the detail business plan.

(Billion yen) Net sales 654.2 680.0 604.6 585.5 57.1 65.0 40.3 Others 50.2 132.2 150.0 113.7 119.2 104.6 105.0 103.2 85.7 Electronic devices Telecom 347.4 330.4 360.3 360.0 systems Info systems

FY Mar. 02 FY Mar. 03 FY Mar. 04 FY Mar. 05 (Apr. 27 projections) (Billion yen) Operating & net incomes 21.6 29.0 10.0 Operating 1.4 1.3 income (6.6) Net income

(27.2) (34.1) 17 P/L Projections for the 1st Half of FY ending Mar. 2005

(Reference) 1H, FY Mar. 04 1H, FY Mar. 05 Variance 1H, FY Mar. 05 (result) (Jul. 28 projections) (Apr. 27 projections) Net sales 281.3 310.0 28.7 290.0 (Cost to sales ration) (76.0%) (- %) (-%) Cost of sales 213.8 - - - SG&A 71.4 - - - Operating income (3.9) 0 3.9 (2.0) Other income (4.3) (4.5) (0.2) (4.5) Recurring income (8.2) (4.5) 3.7 (6.5) Extraordinary income (loss) (6.5) (3.5) 3.0 (1.5) Income before taxes (14.7) (8.0) 6.7 (8.0) Income taxes (4.2) (2.0) 2.2 (2.0) Net income (10.5) (6.0) 4.5 (6.0)

18 Cash Flows Projections z Free cash flows for the 1st half will improve by 5.0 B yen from the Apr. 27 projections due to working capital reduction. z Full year projections will be reviewed when establishing the detail business plan. FY Mar. FY Mar. 05 04 Notes (Billion yen) Full year 1st Half I. Cash flows from operating activities 92.3 55.0 13.0 Income (loss) before income taxes 2.3 18.0 (8.0) (*1, *2) (Mar.04) (Mar.05) Depreciation & amortization 33.6 36.0 17.0 Receivables 10.1 (17.0) Inventories 17.1 8.0 Changes in operating assets & liabilities (*1)40.1 (*2) 0 3.0 Payables 12.9 9.0 Others 16.3 1.0 1.0 Total 40.1 0 II. Cash flows from investing activities (19.2) (40.0) (23.0) Purchases of property, plant & equipment (24.0) (31.0) (15.0) Others 4.8 (9.0) (8.0) Free cash flows (I+II) 73.1 15.0 (10.0) III. Cash flows from financing activities (43.6) (25.0) (13.0) Redemption of bonds (39.9) (15.0) (10.0) Changes in other interest bearing debts, etc. (3.7) (10.0) (3.0) Net cash flow (I+II+III) 29.5 (10.0) (23.0) IV. Cash and cash equivalents at the period end 58.1 48.1 35.1 V. Interest-bearing debts at the period end 291.4 266.4 278.4 19 Glossary

P3 NIP Non-Impact Printer IP Internet Protocol P9 ATM Automated Teller Machine LED Light Emitting Diode P10 IT Information Technology P11 SIDM Serial Impact Dot Matrix P14 FTTH Fiber To The Home IPv6 Internet Protocol Version 6 CDN Content Delivery Network BB-IP Broadband IP P15 DRAM Dynamic Random Access Memory P16 P2ROM Production Programmed Read Only Memory PHS Personal Handy-phone System W-CSP Wafer level Chip Size Package GSM Global System for Mobile Communications EL Electro-Luminescence ROM Read Only Memory

* The projections and plans on this material are subject to change depending upon the changes of business environments and other conditions. 20