<PAGE>
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 1999
COMMISSION FILE NUMBER: 1-7239
KOMATSU LTD.
...............................................
Translation of registrant's name into English
3-6 Akasaka 2-chome, Minato-ku, Tokyo, Japan
............................................
Address of principal executive offices
<PAGE>
-2-
INFORMATION TO BE INCLUDED IN REPORT
------------------------------------
1. One company announcement made on November 2, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KOMATSU LTD.
--------------------------
(Registrant)
Date: November 2, 1999 By: /s/ Masaru Fukase
-------------------------
Masaru Fukase
Senior Executive
Officer
<PAGE>
-3-
NEWS RELEASE
[LOGO OF KOMATSU]
2-3-6 Akasaka, Minato-ku,
Tokyo 107-8414, Japan
Public Relations Section
Tel: 03-5561-2616
No. 0043(1577)
November 2nd, 1999
KOMATSU RECOVERS CONSOLIDATED INTERIM PROFIT
--------------------------------------------
FOR FISCAL 2000
---------------
Consolidated net sales for the first half of fiscal 2000, ended September 30,
1999, totaled (Yen)515.8 billion (US$4,821 million at US$1.00=(Yen)107), down
2.6 percent from the same period last year. Consolidated net income reached
(Yen)9.2 billion (US$86 million), turning positive from a net loss of (Yen)1.1
billion a year before.
<TABLE>
<CAPTION>
Millions of yen and US dollar, except per share amounts
--------------------------------------------------------------------------------------
2000 1999 2000
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales (Yen)515,843 (Yen)529,808 $4,821
Domestic 250,027 234,268 2,337
Overseas 265,816 295,540 2,484
Net income (loss) 9,226 (1,147) 86
Earnings (loss) per share --- Basic (Yen) 9.52 (Yen)(1.18) (Cent) 8.90
--------------------------------------------------------------------------------------
</TABLE>
Results by operation are as follows:
Construction and Mining Equipment
- ---------------------------------
Sales of construction and mining equipment totaled (Yen)360.8 billion
(US$3,373 million), down 5.0 percent from the corresponding period a year
earlier, with sales in Japan accounting for (Yen)123.9 billion (US$1,159
million), up 8.7 percent.
During the period under review, Komatsu quickly moved to expand a
series of hydraulic excavators with small rear-swing radius as the mainstay
models for the Japanese market. In particular, sales of the new models of
this series made a sizeable gain, further strengthening Komatsu's position in
the market. By tapping new markets for environment-conscious equipment for
waste recycling, Komatsu also increased sales of mobile soil improvers and
tub grinder. In addition, the Company improved sales of large equipment,
mainly to the quarry industry.
In Japan, Komatsu has been advancing a production-restructuring program
involving the closure of three plants by August 2000, in order to increase
its cost competitiveness and improve profitability through optimization of
production efficiency. During the 6-month period under review, production of
motor graders at Kashiwazaki Plant in Niigata and production of wheel loaders
at Kawagoe Plant in
<PAGE>
-4-
Saitama were transferred to Mooka Plant in Tochigi, where large wheel loaders
are being produced. At the same time, production of small and medium-sized
wheel loaders was also transferred from Kawagoe Plant to Awazu Plant in
Ishikawa. Production of the transferred products has already begun without
delay on the new lines. Coupled with increased efficiency in both production
and sales, these actions have positioned the Company to expect improved
earnings in the all-important Japanese market.
Outside Japan, sales remained generally robust. However, reflecting the
adverse effect of the substantially appreciated yen against the U.S. dollar
and the euro, yen-converted overseas sales for the interim period diminished
10.8 percent to (Yen)236.9 billion (US$2,214 million).
As the globalization of operation, which Komatsu has vigorously
pursued, has taken root, the Company continued to expand sales in the key
markets of Europe and the United States, enhancing its market position,
especially in the U.S. Komatsu also stepped up sales in China, where the
Company launched local production in 1995. In the utility equipment business
for small construction equipment which features high maneuverability and
versatility, the Company has launched full-scale export sales of backhoe
loaders made by FKI Fai Komatsu Industries S.p.A. to the North American
market. By reinforcing its commitment, Komatsu has expanded sales in the
utility equipment market, where new growth is promising.
In Southeast Asia, where demand had been depressed, signs of recovery
have begun to emerge, centering on the logging and mining sectors, although
the degree of recovery varies by country. Since the economic crisis of 1997,
the Company has sustained production at its plants in Indonesia and Thailand
as export bases for finished products and components via its global sales
network. As a result, Komatsu is well prepared to respond quickly to any
further recovery of demand in the region.
Sales of mining equipment could not match up to the level of a year
earlier, as prices of commodities, such as copper and coal, remained sluggish
until the start of the current fiscal year under review. Such depressed
prices notably discouraged the willingness of customers to invest in
equipment. However, it is expected that a full-fledged recovery of demand
will surface in 2000. To further strengthen its business base, Komatsu is
pressing ahead with development, production and product support activities by
integrating the operations of Group companies. The Company has also launched
new products, such as the super-large "WA1200" wheel loader and the large and
remodeled "D475" bulldozer.
Electronics
-----------
Total sales of electronics business amounted to (Yen)41.8 billion (US$391
million), down 9.8 percent. In keeping with recovery of the semiconductor
market, demand for silicon wafers has turned to improve, putting a halt to
the decline of their prices. For the silicon wafer business, Komatsu is
promoting differentiation of its products and technologies by combining the
Groupwide strength. At Komatsu Electronic Metals Co., Ltd., efforts are being
made to consolidate production exclusively in Japan and fast-growing Taiwan,
thoroughly reduce cost and lead-time, and improve business performance at a
rate outpacing the recovery in total demand. At the Taiwan plant, which
celebrated completion of construction in March this year, the company
received approvals of customers for its silicon wafers
<PAGE>
-5-
and commenced shipment as scheduled during the interim period under review.
Fortunately, the plant had no damage from the powerful earthquake in Taiwan
in September.
Komatsu's polycrystalline silicon business registered sluggish sales as
affected by inventory adjustment of the silicon wafer manufacturing industry.
However, the Company is certain that the market for polycrystalline silicon
will begin to improve in 2000 and continue to do so in the following years.
In this light, it is working to expand sales of unique products based on its
proprietary silane gas technology as well as silane gas itself in order to
improve profitability.
In the Excimer laser business, Komatsu started sales of the new
high-powered 2kHz "G20K" model, and has already earned high regard of the
customers. In addition to Japan where sales have gotten on track, the Company
also expanded overseas sales of the "G20K" model by initiating marketing in
North America, Europe, Taiwan and Korea. Elsewhere, sales remained buoyant
for peripheral LAN equipment as well as thermoelectric modules and other
products of Komatsu Electronics, Inc.
Applied Komatsu Technology, Inc., a supplier of fabrication systems
used to produce flat panel displays, has markedly improved sales and earnings
on the back of expanded demand for flat panel displays in Taiwan and other
Asian countries. Large-scale restructuring implemented last year also
contributed to the improvement.
While the market should continue to grow on a long-term basis, the
percentage of their sales in Japan has become smaller. The market is also
fiercely changeable, with the cycle of fluctuations getting shorter year
after year. Under such market conditions, there are limitations in making
fast, accurate management decisions as a joint venture. Thus, Komatsu
determined that management transfer of the business to Applied Materials Inc.
would be the best choice and sold all of its 50% stake in the joint venture
to the American partner as of the end of October, 1999.
Civil Engineering and Construction
----------------------------------
Sales of the business increased 12.7 percent, to (Yen)32.0 billion (US$299
million).
Demand from public works was steady, and housing starts were fairly
firm during the period. However, private-sector investments remained
sluggish, making the management environment more difficult. Komatsu worked to
reinforce sales capabilities, enhance earnings, and improve its financial
position during the period under review. However, earnings declined from the
corresponding period last year.
Industrial Machinery
--------------------
Sales of industrial machinery decreased 33.3 percent, to (Yen)15.7 billion
(US$147 million), reflecting continued sluggishness of Japanese demand.
In this business segment, Komatsu Industries Corporation, which
manufactures and sells sheet metal forming machines, implemented extensive
organizational reforms in July this year. Under the new organization, the
company was divided into four business units with clearly defined
responsibilities. In addition, now with lean management and administration
organizations capable of accelerating the speed of decision making, the
company has undertaken a variety of measures to
<PAGE>
-6-
improve profitability.
Others
- ------
From a viewpoint of strengthening consolidated management, Komatsu increased
its equity in Komatsu Zenoah Co., converting the status of Komatsu Zenoah to
a consolidated subsidiary. As a result, sales in this businesses segment
increased 26.5 percent, to (Yen)65.3 billion (US$611 million). In the
meantime, sales of Komatsu Zenoah remained robust.
Outlook for the Rest of Fiscal 2000
- -----------------------------------
To further reinforce globally consolidated management of Komatsu, we will
continue to meet the changes in our business environment accurately.
Similarly, we are going to implement a multitude of measures to solve the
three most urgent management tasks described at the top of this message and
other tasks for sound management and improved profitability. For fiscal 2000
ending March 31, 2000, we expect to secure net sales of (Yen)1,060.0 billion
and net income of (Yen)14.0 billion.
We are continuing to improve the efficiency of our management in
order to make Komatsu where each and every employee can be creative and ready
to challenge for our shared goal of global, Groupwide growth into the 21st
century.
<PAGE>
-7-
Komatsu Ltd.
Consolidated Financial Highlights
- ---------------------------------
For the first six months of fiscal 2000 and 1999 ended September 30, 1999 and
1998, respectively.
Millions/of yen & US dollars
except per share amounts
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 Changes('00-'99)
Apr.1-Sept.30,1999 Apr.1-Sept.30,1998 Increase(Decrease)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Yen dollar yen yen dollar (%)
- ------------------------------------------------------------------------------------------------------------------
Net sales 515,843 4,821 529,808 (13,965) (131) (2.6)
Domestic 250,027 2,337 234,268 15,759 147 6.7
Overseas 265,816 2,484 295,540 (29,724) (278) (10.1)
- ------------------------------------------------------------------------------------------------------------------
Income before 12,612 118 2,382 10,230 96 429.5
income taxes
- ------------------------------------------------------------------------------------------------------------------
Net income 9,226 86 (1,147) 10,373 97 ---
(loss)
- ------------------------------------------------------------------------------------------------------------------
Earnings (loss)
per share
- ------------------------------------------------------------------------------------------------------------------
Basic (Yen) 9.52 (Cent) 8.90 (Yen)(1.18) (Yen) 10.70 (Cent) 10.00 ---
- ------------------------------------------------------------------------------------------------------------------
Diluted (Yen) 9.40 (Cent) 8.79 (Yen) (1.18) (Yen) 10.58 ( Cent) 9.89 ---
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
1) . Number of consolidated subsidiaries : 97 companies
. Number of affiliated companies : 149 companies (including 40 companies
accounted for by the equity method)
2) The translation of Japanese yen amounts into US dollar amounts is include
solely for convenience and has been made for 2000 at the rate of (Yen) 107
to $1, the approximate rate of exchange at September 30, 1999.
Financial Position (As of September 30, 1999 and 1998)
- ------------------------------------------------------
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Total assets (Millions of yen) 1,516,071 1,550,788
- --------------------------------------------------------------------------------
Shareholders' equity (Millions of yen) 521,337 503,557
- --------------------------------------------------------------------------------
Equity ratio (%) 34.4 32.5
- --------------------------------------------------------------------------------
Shareholders' equity per share (Yen) 538.06 519.71
- --------------------------------------------------------------------------------
Projection for FY2000 (Year ending March 31, 2000)
- --------------------------------------------------
(from April 1, 1999 to March 31, 2000)
Millions of yen
- --------------------------------------------------------------------------------
Net sales Income before income taxes Net income
- --------------------------------------------------------------------------------
The entire FY2000 1,060,000 19,000 14,000
- --------------------------------------------------------------------------------
<PAGE>
-8-
Komatsu Ltd.
Consolidated Sales by Operation
- -------------------------------
For the six months ended September 30, 1999 and 1998.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 Changes
Increase (Decrease)
-----------------------------------------------------------------------------------
<CAPTION>
Apr.1-Sept.30,1999 Apr.1-Sept.30,1998 (2000-1999)
-----------------------------------------------------------------------------------
(Yen)million Ratio(%) (Yen)million Ratio(%) (Yen)million (%)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Construction Domestic 123,967 24.0 114,033 21.5 9,934 8.7
------------------------------------------------------------------------------------------------
& Mining Overseas 236,930 45.9 265,728 50.2 ( 28,798) (10.8)
------------------------------------------------------------------------------------------------
Equipment 360,897 69.9 379,761 71.7 ( 18,864) (5.0)
- ----------------------------------------------------------------------------------------------------------------------
Electronics Domestic 28,787 5.6 30,480 5.7 ( 1,693) (5.6)
------------------------------------------------------------------------------------------------
Overseas 13,013 2.5 15,852 3.0 ( 2,839) (17.9)
------------------------------------------------------------------------------------------------
41,800 8.1 46,332 8.7 ( 4,532) (9.8)
- ----------------------------------------------------------------------------------------------------------------------
Civil Domestic 32,042 6.2 28,438 5.4 3,604 12.7
------------------------------------------------------------------------------------------------
Engineering Overseas --- --- --- --- --- ---
------------------------------------------------------------------------------------------------
& Construction 32,042 6.2 28,438 5.4 3,604 12.7
- ----------------------------------------------------------------------------------------------------------------------
Industrial Domestic 8,755 1.7 11,268 2.2 ( 2,513) (22.3)
------------------------------------------------------------------------------------------------
Machinery Overseas 7,014 1.4 12,357 2.3 ( 5,343) (43.2)
------------------------------------------------------------------------------------------------
15,769 3.1 23,625 4.5 ( 7,856) (33.3)
- ----------------------------------------------------------------------------------------------------------------------
Others Domestic 56,476 11.0 50,049 9.4 6,427 12.8
------------------------------------------------------------------------------------------------
Overseas 8,859 1.7 1,603 0.3 7,256 452.7
------------------------------------------------------------------------------------------------
65,335 12.7 51,652 9.7 13,683 26.5
- ----------------------------------------------------------------------------------------------------------------------
Total Domestic 250,027 48.5 234,268 44.2 15,759 6.7
------------------------------------------------------------------------------------------------
Overseas 265,816 51.5 295,540 55.8 ( 29,724) (10.1)
------------------------------------------------------------------------------------------------
515,843 100.0 529,808 100.0 ( 13,965) (2.6)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-9-
Komatsu Ltd.
Consolidated Statements of Income
---------------------------------
(For the six months ended September 30, 1999 and 1998)
<TABLE>
<CAPTION>
Millions of yen
------------------------------------------------------------------
2000 1999 Changes(%)
Increase(Decrease)
- ---------------------------------------------------------------------------------------------------------------------
(A) (B) (A)-(B)
<S> <C> <C> <C> <C>
Revenues
- --------
Net sales (Yen)515,843 (Yen)529,808 (Yen)(13,965) (2.6)
Interest and other income 32,287 14,601 17,686
- ---------------------------------------------------------------------------------------------------------------------
Total 548,130 544,409 3,721 0.7
- ---------------------------------------------------------------------------------------------------------------------
Costs and expenses
- ------------------
Cost of sales 397,270 398,154 (884)
Selling, general and administrative 116,737 118,509 (1,772)
Interest and others 21,511 25,364 (3,853)
- ---------------------------------------------------------------------------------------------------------------------
Total (Yen)535,518 (Yen)542,027 (Yen)(6,509) (1.2)
- ---------------------------------------------------------------------------------------------------------------------
Income before income taxes, minority interests 12,612 2,382 10,230 429.5
and equity in earnings
- ---------------------------------------------------------------------------------------------------------------------
Income taxes 1,394 1,586 (192)
- ---------------------------------------------------------------------------------------------------------------------
Minority interests in (income) losses of (1,924) 699 (2,623)
consolidated subsidiaries - net
- ---------------------------------------------------------------------------------------------------------------------
Equity in losses of affiliated companies - net (68) (2,642) 2,574
- ---------------------------------------------------------------------------------------------------------------------
Net income (loss) (Yen)9,226 (Yen)(1,147) 10,373 ---
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Komatsu Ltd. has adopted SFAS 130, "Reporting Comprehensive Income,"
from the fiscal year beginning April 1, 1998. In this standard,
comprehensive income is defined as the changes in stockholders' equity
except capital transactions. Komatsu's comprehensive income consists of
net income, change in foreign currency translation adjustments, change
in net unrealized holding gains on securities available for sale, and
change in pension liability adjustments. Aggregated net comprehensive
income (loss) for the six months ended September 30, 1999 and 1998 were
29,336 million yen (US$ 274 million) and (15,499) million yen,
respectively.
<PAGE>
-10-
Komatsu Ltd.
Consolidated Balance Sheets
---------------------------
(As of September 30, 1999 and 1998)
<TABLE>
<CAPTION>
Millions of yen
------------------------------------------------------------------
2000 1999 Changes
------------------------------------------------------------------
Increase(Decrease)
- -------------------------------------------------------------------------------------------------------------------------
Assets (A) (B) (A)-(B)
- ------
<S>
Current assets:
Cash, cash equivalents and time deposits (Yen)63,920 (Yen)85,682 (Yen)(21,762)
Marketable securities 59,949 46,968 12,981
Trade notes and accounts receivable, 378,828 407,591 (28,763)
less allowance for doubtful receivables
Inventories 241,751 254,437 (12,686)
Other current assets 93,781 111,443 (17,662)
- -------------------------------------------------------------------------------------------------------------------------
Total current assets 838,229 906,121 (67,892)
- -------------------------------------------------------------------------------------------------------------------------
Investments 134,982 112,427 22,555
- -------------------------------------------------------------------------------------------------------------------------
Property, plant, and equipment -
Less accumulated depreciation 442,192 449,127 (6,935)
- -------------------------------------------------------------------------------------------------------------------------
Other assets 100,668 83,113 17,555
- -------------------------------------------------------------------------------------------------------------------------
Total (Yen)1,516,071 (Yen)1,550,788 (Yen)(34,717)
- -------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Short-term debt (including current 280,944 399,098 (118,154)
Maturities of long-term debt)
Trade notes and accounts payable 178,068 193,666 (15,598)
Income taxes payable 6,180 9,065 (2,885)
Other current liabilities 124,342 113,367 10,975
- -------------------------------------------------------------------------------------------------------------------------
Total current liabilities 589,534 715,196 (125,662)
- -------------------------------------------------------------------------------------------------------------------------
Long-term liabilities 369,697 306,127 63,570
- -------------------------------------------------------------------------------------------------------------------------
Minority interests 35,503 25,908 9,595
- -------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock 68,370 68,370 0
Capital surplus 117,269 116,981 288
Retained earnings 324,645 333,425 (8,780)
Accumulated other 12,674 (14,523) 27,197
Comprehensive income (*)
Treasury stock (1,621) (696) (925)
- -------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 521,337 503,557 17,780
- -------------------------------------------------------------------------------------------------------------------------
Total (Yen)1,516,071 (Yen)1,550,788 (Yen)(34,717)
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------
2000 1999 Changes
Increase (Decrease)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(*)Accumulated other comprehensive income:
Foreign currency translation adjustments (22,037) (10,265) (11,772)
Net unrealized holding gains on securities 40,161 267 39,894
available for sale
Pension liability adjustments (5,450) (4,525) (925)
</TABLE>
<PAGE>
-11-
Komatsu Ltd.
Business Information
--------------------
1. Information by Business Unit
(1) Sales and Operating Profit (Loss)
- -------------------------------------
<TABLE>
<CAPTION>
Millions of yen
- -----------------------------------------------------------------------------------------------------------------------
2000 1999
Apr. 1-Sept. 30, 1999 Apr. 1-Sept. 30, 1998
-----------------------------------------------------------------------------------------
Operating Margin Operating Margin
Sales Profit(Loss) % Sales Profit(Loss) %
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction &
Mining Equipment 363,657 13,929 3.8 380,348 19,420 5.1
- -----------------------------------------------------------------------------------------------------------------------
Electronics 41,829 (10,279) (24.6) 46,373 (3,611) (7.8)
- -----------------------------------------------------------------------------------------------------------------------
Civil Engineering &
Construction 34,789 (328) (0.9) 35,305 485 1.4
- -----------------------------------------------------------------------------------------------------------------------
Industrial Machinery 16,889 (1,247) (7.4) 24,099 (1,059) (4.4)
- -----------------------------------------------------------------------------------------------------------------------
Others 95,490 1,273 1.3 80,320 (268) (0.3)
- -----------------------------------------------------------------------------------------------------------------------
Total 552,654 3,348 0.6 566,445 14,967 2.6
- -----------------------------------------------------------------------------------------------------------------------
Corporate &
Eliminations (36,811) (1,512) --- (36,637) (1,822) ---
- -----------------------------------------------------------------------------------------------------------------------
Total 515,843 1,836 0.4 529,808 13,145 2.5
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Sales amount of each business segment includes inter-segment transactions.
(2) Assets, Depreciation and Amortization, and Capital Expenditures
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
Millions of yen
- -------------------------------------------------------------------------------------------------------------------------
2000 1999
-------------------------------------------------------------------------------------------
As of Apr. 1-Sept. 30, 1999 As of Apr. 1-Sept. 30, 1999
Sept. 30 Sept. 30
- -------------------------------------------------------------------------------------------------------------------------
Assets Depreciation Capital Assets Depreciation Capital
and Expenditures and Expenditures
Amortization Amortization
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction &
Mining Equipment 822,699 14,181 19,545 899,698 12,639 19,341
- -------------------------------------------------------------------------------------------------------------------------
Electronics 257,150 11,561 4,297 275,939 7,242 46,121
- -------------------------------------------------------------------------------------------------------------------------
Civil Engineering &
Construction 73,141 988 652 86,524 1,215 436
- -------------------------------------------------------------------------------------------------------------------------
Industrial Machinery 40,023 481 654 47,340 513 459
- -------------------------------------------------------------------------------------------------------------------------
Others 213,694 3,584 4,153 224,019 2,744 2,413
- -------------------------------------------------------------------------------------------------------------------------
Total 1,406,707 30,795 29,301 1,533,520 24,353 68,770
- -------------------------------------------------------------------------------------------------------------------------
Corporate &
Eliminations 109,364 --- --- 17,268 --- ---
- -------------------------------------------------------------------------------------------------------------------------
Total 1,516,071 30,795 29,301 1,550,788 24,353 68,770
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-12-
Komatsu Ltd.
2. Information by Region
(1) Sales and Operating Profit (Loss)
- -------------------------------------
<TABLE>
<CAPTION>
Millions of yen
- ---------------------------------------------------------------------------------------------------------------------
2000 1999
Apr. 1-Sept. 30, 1999 Apr. 1-Sept. 30, 1998
------------------------------------------------------------------------------------------
Operating Margin Operating Margin
Sales Profit(Loss) % Sales Profit(Loss) %
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Japan 354,306 (7,143) (2.0) 356,532 5,616 1.6
- ---------------------------------------------------------------------------------------------------------------------
Americas 138,982 5,325 3.8 165,255 10,767 6.5
- ---------------------------------------------------------------------------------------------------------------------
Europe 63,951 3,305 5.2 61,122 4,018 6.6
- ---------------------------------------------------------------------------------------------------------------------
Others 41,640 927 2.2 34,439 598 1.7
- ---------------------------------------------------------------------------------------------------------------------
Total 598,879 2,414 0.4 617,348 20,999 3.4
- ---------------------------------------------------------------------------------------------------------------------
Corporate &
Eliminations (83,036) (578) --- (87,540) (7,854) ---
- ---------------------------------------------------------------------------------------------------------------------
Total 515,843 1,836 0.4 529,808 13,145 2.5
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Sales amount of each region segment includes inter-segment transactions.
(2) Assets
- ----------
<TABLE>
<CAPTION>
Millions of yen
- ----------------------------------------------------------------------------------------
2000 1999
As of Sept. 30, 1999 As of Sept. 30, 1998
-------------------------------------------------------------------
Assets Ratio(%) Assets Ratio(%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Japan 969,248 63.9 972,430 62.7
- ----------------------------------------------------------------------------------------
Americas 375,593 24.8 414,483 26.7
- ----------------------------------------------------------------------------------------
Europe 89,595 5.9 102,664 6.6
- ----------------------------------------------------------------------------------------
Others 85,428 5.7 70,809 4.6
- ----------------------------------------------------------------------------------------
Total 1,519,864 100.3 1,560,386 100.6
- ----------------------------------------------------------------------------------------
Corporate &
Eliminations (3,793) (0.3) (9,598) (0.6)
- ----------------------------------------------------------------------------------------
Total 1,516,071 100.0 1,550,788 100.0
- ----------------------------------------------------------------------------------------
</TABLE>
(3) Export Sales
- ----------------
<TABLE>
<CAPTION>
Millions of yen
- --------------------------------------------------------------------------------
2000 1999
Apr. 1-Sept. 30, 1999 Apr. 1-Sept. 30, 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Export sales 35,540 49,322
- --------------------------------------------------------------------------------
</TABLE>
Export sales represents the sales of the company and its domestic consolidated
subsidiaries to unaffiliated customers in foreign countries.
<PAGE>
-13-
Komatsu Ltd.
Interim Financial Highlights of Parent Company
- ----------------------------------------------
For the first six months of fiscal 2000 and 1999 ended September 30, 1999 and
1998 respectively.
Financial Results
- -----------------
<TABLE>
<CAPTION>
Millions of yen & US dollars
except per share amounts
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
2000 1999 Changes('99-'98)
Apr.1-Sept.30,1999 Apr.1-Sept.30,1998 Increase(Decrease)
----------------------------------------------------------------------------------------------------
Yen dollar yen yen dollar (%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales 210,558 1,968 225,953 (15,395) (144) (6.8)
Domestic 128,013 1,196 122,339 5,674 53 4.6
Overseas 82,544 771 103,614 (21,069) (197) (20.3)
- --------------------------------------------------------------------------------------------------------------------------
Operating 3,910 37 7,694 (3,783) (35) (49.2)
Income
- --------------------------------------------------------------------------------------------------------------------------
Ordinary 1,071 10 7,234 (6,163) (58) (85.2)
Income
- --------------------------------------------------------------------------------------------------------------------------
Net income 7,184 67 (8,438) 15,622 146 ---
(loss)
- --------------------------------------------------------------------------------------------------------------------------
Earnings (loss) (Yen)7.41 (Cent)6.93 (Yen)(8.71) (Yen)16.12 15.07 ---
Per share
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note:
1) The translation of Japanese yen amounts into United States dollar
amounts is included solely for convenience and has been made for 2000
and 1999 at the rate of (Yen)107 to $1, the approximate rate of
exchange at September 30, 1999.
2) The numbers of average common shares outstanding were as follows;
. September 30, 1999 ---968,921,701
. September 30, 1998 ---968,961,963
. March 31, 1999 ---968,941,887
Dividends
- ---------
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Cash dividends per share (Yen)
Interim 3.00 4.00
Year-end --- 3.00
- --------------------------------------------------------------------------------
Financial Position (at September 30, 1999 and 1998)
- ---------------------------------------------------
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Total assets (Millions of yen) 746,044 706,418
- --------------------------------------------------------------------------------
Shareholders' equity (Millions of yen) 465,639 435,598
- --------------------------------------------------------------------------------
Equity ratio (%) 62.4 61.7
- --------------------------------------------------------------------------------
Shareholders' equity per share (Yen) 480.57 449.57
- --------------------------------------------------------------------------------
<PAGE>
-14-
Komatsu Ltd.
Projection for FY2000 (Year ending March 31, 2000)
- --------------------------------------------------
(from April 1, 1999 to March 31, 2000)
<TABLE>
<CAPTION>
Millions of yen
- ------------------------------------------------------------------------------------------------------------------
Net sales Ordinary Income Net income
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The entire FY2000 440,000 11,000 14,000
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Sales by Operation
- ------------------
For the six months ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
2000 1999 Changes
Increase(Decrease)
Apr.1-Sept.30,1999 Apr.1-Sept.30,1998
-------------------------------------------------------------------------------
(Yen)million Ratio(%) (Yen)million Ratio(%) (Yen)million (%)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Construction Domestic 94,674 45.0 90,125 39.9 4,548 5.0
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Equipment Overseas 71,809 34.1 87,208 38.6 (15,399) (17.7)
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166,483 79.1 177,333 78.5 (10,850) (6.1)
- ------------------------------------------------------------------------------------------------------------------
Industrial Domestic 4,040 1.9 5,708 2.5 (1,668) (29.2)
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Machinery Overseas 3,738 1.8 10,345 4.6 (6,606) (63.9)
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7,779 3.7 16,053 7.1 (8,274) (51.5)
- ------------------------------------------------------------------------------------------------------------------
Others Domestic 29,299 13.9 26,505 11.7 2,793 10.5
--------------------------------------------------------------------------------------------
Overseas 6,996 3.3 6,060 2.7 935 15.4
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36,295 17.2 32,566 14.4 3,729 11.5
- ------------------------------------------------------------------------------------------------------------------
Total Domestic 128,013 60.8 122,339 54.1 5,674 4.6
--------------------------------------------------------------------------------------------
Overseas 82,544 39.2 103,614 45.9 (21,069) (20.3)
--------------------------------------------------------------------------------------------
210,558 100.0 225,953 100.0 (15,395) (6.8)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-15-
Komatsu Ltd
MANAGEMENT POLICY
1. Basic Management Policy and Medium to Long-Range Management Strategy
Komatsu is committed to its management policy of Quality and Reliability. This
policy not only applies to deliver safe and innovative products and services
developed from the viewpoint of our customers, but also extends to constant
improvement of the Quality and Reliability of all employees of the Komatsu
Group. In other words, the Company is pursuing the Quality and Reliability of
all its companies, their business and management around the world.
In pursuit of growth into the 21st century, the Company started its 4-
year "G"2000 Mid-Range Management Program in April 1997. Under this initiative,
it is seeking to secure medium to long-range Groupwide growth through focused
allocation of management resources to the three strategic business areas of
construction and mining equipment, electronics and engineering. Goals have been
set to achieve net sales of (Yen)1,500 billion, operating income of (Yen)150
billion, ROE of 10% and ROA of 8% by March 31, 2001.
These goals, however, have been rendered difficult to achieve as
planned, because the business environment has changed at speeds beyond
expectations when they were originally premised upon. Hence, the Company has
decided to delay completion of the program by one to two years. Although
achieving these goals will not be an easy affair, the Company will do its utmost
to accomplish them by converging the creative and challenging spirits of each
and every employee around the world. Komatsu firmly believes that overcoming
difficulties becomes possible only when there is a willingness to challenge
higher goals and swiftly implement structural reforms.
2. Challenges for Fiscal 2000
The most urgent management task is nothing but improvement of its business
performance for this fiscal year by focusing our efforts at the following three
tasks as the highest management priority.
1. To further improve its corporate governance, centering on the reorganized
management structure,
2. To recover profitability of its construction equipment business in Japan;
and
3. To restructure its electronics business.
Structural Reorganization of Management
Effective June this year, Komatsu reorganized its management structure and
separated management decision-making and supervisory functions from executive
functions. While the new Board of Directors, which was reduced to eight members,
is responsible of the former, newly appointed Executive Officers with clearly
defined responsibilities are in charge of the latter. In tandem with this move
and with the same objectives, two consolidated companies engaging in the
company's strategic businesses, namely Komatsu Electronics Metals Co., Ltd. and
Komatsu Zenoah Co., also reorganized their management structures, enabling the
company to undertake quick management decision-making for the entire Komatsu
Group.
<PAGE>
-16-
To come ahead of the global mega competition, the Company has newly
appointed the presidents of its major units outside Japan as Global Officers
with responsibilities on a par with Executive Officers, in order to encourage
their active involvement in globally consolidated management.
Construction Equipment Business in Japan:
Thanks to the positive effect of the government's comprehensive economic
measures which were enacted last year, Japanese demand for construction
equipment has at last bottomed out since April 1999 and rebounded to last year's
level. Against such a backdrop, the Company is striving to expand sales by
aggressively launching new products, such as hydraulic excavators with small
rear-swing radius and the mobile crusher/recycler series, to enhance its market
position. The Company is also focusing its efforts on promising business fields
and products. At the same time, it is working to increase efficiency in terms of
both production and sales so that it can secure stable profit even when the
market size in Japan stays at the present level. Concerning the ongoing
restructuring program of Japanese production since the fall of 1998, the Company
has completed all plans on schedule for the current fiscal year, significantly
reinforcing its cost competitiveness. Slated for completion by August 2000, the
restructuring program calls for the closure of three plants in Japan.
Electronics Business:
Komatsu has to improve profitability of its electronics business as soon as
possible through structural reform. In the silicon wafer business, the core
operation, demand is on the rise, keeping apace with the recovery of the
semiconductor market. The Company is pursuing decisive differentiation of
products and technologies by putting together the entire strength of the Komatsu
Group. Komatsu Electronic Metals Co., Ltd. is striving to improve and strengthen
its earning power through management reorganization, consolidation of production
in Japan and Taiwan, and reduction of lead-time and costs. Now that the cyclical
peak of capital investment is over for the company, its cash flows will improve
significantly.
In other electronics businesses, such as polycrystalline silicon and
Excimer lasers, Komatsu has products and technologies, with which the Company
can assert superiority in their respective markets. The Company will work to
further improve earnings and business performance by expanding these markets.
3. Basic Policy on Shareholder Dividends
Komatsu is replacing its conventional policy of maintaining stable dividend
payment with a new policy that emphasizes return on shareholders' equity. In its
basic policy on shareholder dividends, the Company will link returns more
directly with business performance, while working to secure internally generated
funds for reinvestment.
<PAGE>
-17-
Komatsu Ltd.
THE STATE OF ACTIONS ON THE "COMPUTER Y2K ISSUE"
------------------------------------------------
Defining the "Computer Y2K Issue" as a management priority issue to be
addressed, Komatsu Ltd. ("Komatsu") is making a company-wide effort, centering
on its Information Systems Division, to assure continued the Quality and
Reliability of its management. In addition, as the leader of the Komatsu Group,
the Company is vigorously supporting its Group companies in their efforts to
address the issue.
1. Progress of Activities
As a whole, along with the introduction of ERP (enterprise resource planning)
package software to build a global network, the Komatsu Group is dealing
properly with the Y2K issue.
To be specific, the actions on the domestic core business systems for
production, sales and accounting at Komatsu were completed in March 1998, while
those on the overseas business core systems, including other systems, were
completed in June 1999. Following their completion, a series of comprehensive
tests to confirm proper functioning of the measures was finished in August 1999,
leading to the detection of no material problems.
With regard to microcomputers and software installed in Komatsu's
manufacturing facilities and other equipment, investigations and actions have
already been undertaken, confirming the absence of any material problems.
Investigations into microcomputers and software incorporated in
Komatsu's products have also been finished. Although some products were found to
show such phenomena as failing to indicate accurate dates, customers have been
notified of such problems through the sales division while, at the same time,
undergoing appropriate counter-actions. In addition, Komatsu has posted
information concerning the Y2K issue on its website for timely disclosure to the
visitors, while inquiries from the customers are being quickly processed by
respective departments in charge.
2. Funding for Actions
The total amount of expenditure by the Komatsu Group for actions related to the
Y2K issue is estimated to amount to about (Yen)6.0 billion. Of this amount,
about (Yen)5.5 billion was accrued by the end of fiscal 1999, with the remaining
(Yen)0.5 billion being earmarked for the current fiscal year. Komatsu expects
these expenditures will not materially affect its future business performance
and cash flows.
<PAGE>
-18-
3. Crisis Management Plans
In order to prevent any possible disruption of its business activities resulting
from the Y2K issue, Komatsu is taking every precautionary measure. However, in
preparation for any conceivable contingency, Komatsu formed the Y2K Issue
Management Committee in February 1999. Presupposing various cases of trouble,
while also confirming the state of counter-actions by the Komatsu Group as a
whole, the Committee has formulated specific methods to respond to such problems
in its Crisis Management Plans.
The Plan covers identification of supposed problems and classification
of resultant distractions, preparation for counter-actions, establishment of
counter-measure headquarters depending on the importance of the problems,
emergency readiness of the persons in charge and engineers in office or at home,
and an emergency communication system.
For instance, Komatsu is planning to properly increase inventories of
parts and products at its manufacturing plants, and is scheduled to implement
confirmation of the proper function of its computer systems and network
operations on January 1 and 2, 2000. In addition, Komatsu has decided to move up
the clearance date for its trade notes payable drawn at the end of September
1999, from originally scheduled January 4th, 2000 to the end of this year, as
part of its activities to reduce risks at its suppliers.
(end)
