<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 June, 2000
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. Information Distributed to Security Holders
-------------------------------------------
The registrant, KOMATSU LTD., distributed to its security holders the
following documents, which are attached hereto and constitute a part
hereof:
Notice of Convocation of the 131st Ordinary General Meeting of
Shareholders attaching Referential Materials and Instruction Card
Concerning the Exercise of Voting Rights (including the 131st Business
Report (From April 1, 1999 to March 31, 2000), which contained the
financial statements which are prepared in accordance with accounting
principles generally accepted in Japan and are on non-consolidated
basis.)
<PAGE>
3
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: June , 2000 By: /s/ Masaru Fukase
-------------------------
Masaru Fukase
Senior Executive Officer
<PAGE>
4
(Translation)
May 31, 2000
NOTICE OF CONVOCATION OF THE
----------------------------
ONE HUNDRED AND THIRTY FIRST ORDINARY
-------------------------------------
GENERAL MEETING OF SHAREHOLDERS
-------------------------------
OF KOMATSU LTD.
---------------
TO: THE SHAREHOLDERS
Please be advised that the 131st Ordinary General Meeting of Shareholders
of the Company will be held in accordance with the particulars indicated in the
attachment hereto. Your attendance at the meeting is cordially requested. If
you are unable to attend the meeting, we would appreciate your reviewing the
attached documents, affixing your seal or signature on the enclosed instruction
card concerning the exercise of voting rights, and returning it to the Company
after indicating thereon your approval or disapproval of the items of business
enumerated in the attached documents.
Sincerely yours,
KOMATSU LTD.
3-6, Akasaka 2-chome
Minato-ku, Tokyo
By: Satoru Anzaki
President and
Representative Director
<PAGE>
5
PARTICULARS OF MEETING
----------------------
1. Date and Time: June 28, 2000 (Wed.) at 10:00 a.m.
2. Place: 2nd Floor, Komatsu Building
3-6, Akasaka 2-chome
Minato-ku, Tokyo
3. Purpose of Meeting:
Items to be Reported: Matters concerning the Balance Sheet as of
March 31, 2000 and the Business Report and
Statement of Income for the 131/st/ business
term (April 1, 1999-March 31, 2000).
Items of Business:
1st Item of Business: Matters concerning the approval of the
proposed Appropriation of Profit for the
131/st/ business term (April 1, 1999 - March
31, 2000).
2nd Item of Business: Matters concerning the election of two
directors.
3rd Item of Business: Matters concerning the election of two
statutory auditors.
4th Item of Business: Matters concerning the acquisition of
treasury shares for transfer to the directors
and employees. Details of this item are
provided in the Referential Documents
Regarding the Exercise of Voting Rights
(Proxy Statement).
* * *
(If you attend the meeting, please present the enclosed instruction card to
the receptionist.)
<PAGE>
6
ATTACHED DOCUMENTS
EXHIBIT I
BUSINESS REPORT
---------------
(April 1, 1999 - March 31, 2000)
(Note) As Komatsu's management is basically oriented towards global consolidated
management, this Business Report is prepared in an aim to also cover the
information on a consolidated basis as much as possible.
I Outline of Business
(1) Development and Results of Business Operations
The very cornerstone of Komatsu's management lies in its policy to achieve
Quality and Reliability. This policy does not only concern the supply of safe
and innovative products and services from the viewpoint of customers but also
extends to constant improvement of Quality and Reliability of the Komatsu
Group's entire organizations, businesses, employees and management. In pursuit
of this policy, the top management task will continue to improve this Quality
and Reliability year after year.
The pursuit for Quality and Reliable management will also enhance the
corporate value, and we will devote our best efforts to realize this goal.
For this period, Komatsu worked on the following three tasks to improve
business results as the highest management priority during the year. Komatsu's
management and all the employees worked to achieve these aim, and we have the
pleasure to report that solid results were achieved.
(i) To further improve its corporate governance, centering on the reform of
the Board of Directors;
(ii) To recover profitability of in the Japanese construction equipment
business; and
(iii) To restructure the Group's electronics business.
The Company effected reforms in the Board of Directors by introducing the
"Executive Officer" system and the "Global Officer" system, thereby
demonstrating a proactive stance for its corporate cooperative governance by
establishing the new management structure. By reducing the members of the Board
of Directors and inviting outside directors, the Company is now able to
thoroughly discuss significant matters that could affect the basis of the
management and arrive at a quick decision.
(Note) "Corporate governance" is generally interpreted as "governance",
however, at Komatsu, this is interpreted as a "cooperative governance" to
express the initiatives and efforts of the management.
The highest priority of the Company's Japanese construction equipment
business
<PAGE>
7
is to restructure the production system. The Company launched measures for this
purpose in the fall of 1998, and completed all the plans for the subject fiscal
year on schedule. The entire restructuring program is scheduled for completion
in August 2000 with consolidation of the Tachikawa and Saitama plants of Komatsu
Zenoah Co. in Kawagoe.
Preceding this restructuring program the Company had streamlined sales and
logistic operations. All combined, the Company has firmly secured its position
to generate stable earning even when total demand in the Japanese market remains
at about the current level.
In the electronics business, the demand for silicon wafers, the major
electronics product of the Komatsu Group, recovered on the back of the upturned
market for semiconductors. Prices of silicon wafers have also begun to recover.
By concentrating production of silicon wafers in Japan and Taiwan, Komatsu
Electronic Metals Co., Ltd. commenced production in Taiwan in a well-timed
manner.
The United States maintains its prospering economy for eight consecutive
years. Continuous mild growth can be seen in the European economy although Euro
has a downward tendency. Asian economy is showing signs of recovery, which,
however, remains insignificant. The Japanese economy began to show the effects
of the Government's comprehensive economic measures and emergency economic
measures and investments in facilities have overall hit the bottom, but personal
consumption is still at low levels and has not made self recovery yet.
Under such circumstances, consolidated sales for the year totaled JPY1055.6
billion (down 0.6% from the previous period), and consolidated net income
largely improved to JPY13.3 billion (JPY 25.7 billion increase).
Also, on a non-consolidated basis, sales totaled JPY441.4 billion (down
7.2% from the previous period), ordinary profit advanced 16.8% to JPY9.9
billion, and net income for the period totaled JPY13.6 billion (JPY11.4 billion
increase).
With regard to the "Y2K Problem", this was positioned as an important
managerial issue and the Company has taken a leading role to deal with this
issue systematically for the entire group since 1996. As a result, no
particular problems arose to the Company as well as to the affiliated companies.
The following is an outline of the business result of each division of the
Company.
Construction and Mining Equipment
---------------------------------
Consolidated sales of construction and mining equipment totaled JPY713.5
billion (down 2.4% from the previous period), and the unconsolidated sales of
the Company totaled JPY341.3 billion (down 6.3% from the previous period).
<PAGE>
8
In Japan, consolidated sales totaled JPY268.8 billion (up 8.8% from the
previous period), and the unconsolidated sales totaled JPY202.7 billion (up 4.3%
from the previous period). While demand for construction equipment declined
since fiscal 1997, it began to improve from the previous year. This increase in
demand was supported by positive effects of the government's economic stimulus
package as well as improved housing investment. In response to growing
preferences for rental use among the customers, the Company continued to
aggressively reinforce the rental equipment business mainly through its
distributors and rental companies within the Group. The Company also expanded
sales by focusing efforts on high-growth products and market segments, such as
the AVANCE NRO hydraulic excavators with small, rear-swing radius and series of
environment-friendly mobile recyclers.
In the restructuring of the Japanese production, the Company completed
transfer of large wheel loaders to the Mohka Plant in Tochigi Prefecture from
the Kawagoe Plant in Saitama Prefecture, the transfer of small and medium-sized
wheel loaders from the Kawagoe Plant to the Awazu Plant in Ishikawa Prefecture,
and the motor graders from the Kashiwazaki Plant in Niigata Prefecture to Mohka
Plant, respectively, on schedule. Supported by the dedicated efforts of
employees involved in the transfer, all plans have met with the Quality and
Reliability of machines which rolled off each new line.
The Company's underground construction equipment business improved its
results over the previous year, reflecting expanded sales of small-diameter
shield and tunnel boring machines, which feature technological superiority.
Consolidated sales outside of Japan totaled JPY 444.6 billion (US$4,317
million), down 8.1% (up 5.3% when converted into US dollar) from the previous
period, and unconsolidated sales of exports totaled JPY 138.6 billion (US$1,346
million), down 18.4% (down 6.6% when converted into US dollars) from the
previous period.
In North America and Europe where market demand remained strong, the
Company collaborated closely with Komatsu group companies in these regions and
deployed aggressive sales promotion. While the U.S. economy recorded eight
consecutive years of growth, U.S. demand for construction and mining equipment
declined from the previous year.
In the United States, having anticipated the decline in demand, Komatsu
America International Company was well prepared with improved efficiency in both
production and sales, and generated profits comparable to the record-high figure
a year ago. The Company further strengthened its position in the North American
market.
In Europe, demand remained brisk throughout the year under review. Each
business unit, i.e., Komatsu UK Limited for hydraulic excavators, Komatsu
Hanomag AG for wheel loaders, and Fai Komatsu Industries S.p.A. for utility
equipment (all-purpose small-sized construction equipment), reinforced sales
operation, expanded respective market-driven product mix, and improved sales for
the year.
<PAGE>
9
In Southeast Asia which suffered from the severe blow of the economic
crisis in 1997, demand for construction and mining equipment began to show some
signs of recovery in the logging and mining industries. In China, where demand
continued to grow, the Company expanded sales over the year, realizing positive
results of its determined efforts to localize production since 1995. Meanwhile,
market demand fell in Central America and the Middle East, resulting in a
decline in each regional sales over the previous period.
In the utility equipment business, the Company continued to boost sales in
the major markets of North America and Europe for the year. In addition to the
expanded demand in Europe, the Company launched export sales of backhoe loaders
in North America, produced by Fai Komatsu Industries S.p.A.
The Company's mining equipment business faced strongly reserved attitudes
for investment by the mining industry which suffered from sluggish prices of
copper, coal and other primary products. As a result, sales of mining equipment
declined from the previous period. Meanwhile, Komatsu Mining Systems, Inc. won
an order for 25 units of the world's largest class 930E dump trucks for one of
the world's largest open-pit copper mines in Chile. Shipment was completed by
March 2000.
The Company also facilitated integration of development, production and
product support operations among mining equipment companies of the Komatsu Group
to strengthen its business foundation. At this time, the Company also
introduced the super large WA1200 wheel loader and the renewed model of the
large D475 bulldozer in preparation for a full-scale recovery of demand.
Electronics
-----------
Consolidated sales from electronics operations totaled JPY90.3 billion (up
4.3% from the previous period), and unconsolidated sales totaled JPY11.1 billion
(up 24.6% from the previous period). In our electronics business, sales of
Excimer laser units expanded significantly from the previous period, supported
by aggressive market introduction of a new model. Also the Company sustained
brisk sales of network devices and IT-related devices.
Komatsu Electronic Metals Co., Ltd. worked to improve earnings through
exclusive production in Japan and Taiwan, cost reduction and enhanced
productivity, and shortened lead-time for delivery. As a result, the company
registered profits for the second-half period of the current year on a non-
consolidated basis as projected. In December 1999, the Company decided to
transfer production of discrete wafers from the Hiratsuka Manufacturing
Department and consolidate the production of this at the Nagasaki and Miyazaki
plants in the next two years. The Company will be better positioned to further
improve efficiency by consolidating Japanese production at these two plants and
to timely deliver high-quality silicon wafers. In the rapidly growing Taiwan
market, a new business style is emerging, which features exclusively order-based
production like the so-called "Foundry". Production of diversified
semiconductors such as DRAMs is also quickly progressing. During the year,
Formosa
<PAGE>
10
Komatsu Silicon Corporation, a subsidiary of Komatsu Electronic Metals Co.,
Ltd., received recognition from its customers as their supplier and commenced
successful shipment of wafers.
Sales of polycrystalline silicon by Advanced Silicon Materials, Inc. were
slow during the year, adversely affected by inventory adjustment of the silicon
wafer manufacturing industry. Meanwhile, Komatsu Electronics, Inc. continued to
boost sales of thermoelectric modules.
Industrial Machinery
--------------------
Consolidated sales in the industrial machinery business dropped 27.7% from
the previous period, to JPY30.8 billion, and unconsolidated sales also dropped
57.4% from the previous period to JPY12.0 billion largely due to depressed
demand in the Japanese market. The decrease in the unconsolidated sales is due
to the transfer of the export business and the production business of the sheet
metal forming machines to Komatsu Industries Corporation which is a subsidiary
of the Company in addition to the decrease of sales of large presses. While
demand of large presses declined as adversely affected by restraints in
investment by the automobile manufacturing industry, the Company strengthened
sales operation outside Japan, winning new orders from a major European
automaker during the year.
However, Komatsu Industries Corporation, in charge of sheet metal forming
machines, started on a high note under a new management team in July 1999,
winning a larger number of orders compared to the corresponding period last
year. The Company also decided to further strengthen the current sales alliance
agreement reached in 1995 with Trumpf GbmH & Co. of Germany. Under the new
agreement, in addition to mutually supplying competitive machines, the two
partners will fully utilize their service networks, customer support and other
management resources to reinforce the complementary relationship.
Civil Engineering and Construction
----------------------------------
(Note: This division is operated mainly by subsidiaries.)
The consolidated sales for this division totaled JPY78.6 billion (an
increase of 2.1% from the previous period) and unconsolidated sales for the
Company was JPY0.5 billion.
The Japanese construction industry continued to face difficult business
environment with sluggish private-sector works as well as public works which
began a downturn in the last half period of the year. However, as a result of
steady efforts to improve and strengthen the financial position, profits
increased from the previous period.
In February 2000, Komatsu Construction Ltd. increased its capital by
issuing new shares in the form of third-party allotment to Komatsu Ltd. to
increase its equity capital and improve its financial position. As a result, the
Company now owns 68.0% of the shares of Komatsu Construction Ltd.
<PAGE>
11
Others
------
Consolidated sales of other divisions climbed 14.5% to JPY142.2 billion,
and unconsolidated sales also climbed 3.7% to JPY76.2 billion for the year.
Sales of products for the Defense Agency, engines and other components,
and environmental friendly system products manufactured by Komatsu Zenoah Co.
expanded from the previous period. Meanwhile, sales in the logistics business
operated by Komatsu Logistics Corp. and in steel casting by Komatsu Castex Ltd.
declined from the previous period.
(2) Investments in Facilities
In addition to investments for improving the production efficiency and
quality, the Company also invested in the information technology-related fields.
Meanwhile, the Company cut the total investments in facilities in the
electronics division except in silicon wafers in the rapidly growing Taiwan
market in consideration of the market environment. As a result, the total
amount of investments in facilities declined from the previous period to JPY57.7
billion (JPY57.1 billion decrease from the previous period) on a consolidated
basis and JPY18.3 billion (JPY3.2 billion decrease from the previous period) on
a non-consolidated basis.
(3) Fund Raising
During this period, the Company improved its cash flow by expanding the
securitization of trade receivables, reducing the inventory, and selling idle
properties such as Osaka Plant's former Nakamiya District plant site, while it
continues to strengthen its financial structure.
As a result, the cash flow by operating and investing activities totaled
JPY53.1 billion (JPY82.7 billion increase from the previous period) on a
consolidated basis.
Also, the Company introduced the cash management system to the Japanese
consolidated subsidiaries and the local subsidiaries in Europe to effectively
manage funds, and in the U.S. and Europe, set the commitment line in order to
better repay the borrowings. Following the United States, Euro medium term
notes were issued in Europe.
(4) Future Challenges
In response to dramatic changes taking place in the global business
environment, Komatsu has recently reassessed the "'G' 2000 mid-range management
strategy" in order to renew the course of growth as a true global Company in the
21st century. As has been mentioned, the reorganization of the Board of
Directors and the establishment of a corporate governance clarify the
responsibilities between management and business execution in order to develop a
renewed growth strategy.
<PAGE>
12
In a new mid-range management strategy, the Company has aimed to further
promote business on a global scale which included additional perspectives to
meet new changes, namely the dynamic progress of IT (Information Technology) and
conservation of the earth's environment. The Company has named the new strategy,
"'G' to the 21st", to demonstrate a resolute determination for Growth on a
Global scale in the 21st century. Specifically, the Company is emphasizing the
improvement of profits by centering on growth strategies for the construction
and mining equipment business.
In the Japanese construction equipment market, the Company is determined to
capture changes astutely and provide products designed to meet customers' needs
and expectations in order to heighten its market position. The Company will
also expand solutions business for customers by utilizing IT.
Overseas, the Company will solidify its business base as a global company
by promoting research and development as the next phase of globalization, in
addition to expanding business by deploying its global production network.
With respect to environmental protection efforts, the Company has
undertaken a variety of tasks in R&D, production, marketing and product support
activities. The Company has also introduced environment-friendly products
including engines, hydraulics and other key components for construction and
mining equipment. The Company has introduced innovative construction machinery
designed expressly for environmental conservation such as series of environment-
friendly mobile recycler. With all these products which offer a great business
opportunity, the Company will further reinforce environment-related business and
assume a global leadership position.
The Company's electronics business is now on a recovery track. As the
electronics business offers promising opportunities for growth in the middle to
long-range perspective, the Company is ready to meet drastic changes in the
market by differentiating products and technologies and making quick management
decisions. For industrial machinery, underground construction equipment,
logistic systems and other businesses, the Company will multiply groupwide
technological collaboration to enhance its respective competitive edge. As a
basic strategy, such collaboration will focus on the area where each company can
maintain or build up technological superiority in the future.
On par with environmental areas, the Company believes IT should lead its
future business growth and differentiation. The Company has previously worked
to establish the global information network as the infrastructure of management.
Based on this foundation, the Company is now proactively incorporating IT for
powerful business expansion. In April 2000, the Company created the e-KOMATSU
Division to accelerate the pace of business undertaken on a global scale.
Moreover, the Company will make sure of differentiation in this area by
capitalizing on its strength and originality.
On a variety of occasions, the Company has consistently announced its
efforts related to environmental protection. In May 2000, the Company will
publish its first
<PAGE>
13
annual Environmental Report. The Report will state the results and future
directions of the Company in a wide range of areas including R&D, production,
marketing and product support. In addition to the development of construction
machinery designed to conserve the earth's environment, the Company faces the
challenge of undertaking immediate tasks, including the establishment of mid-
range goals for environmental conservation technologies and their
accomplishments, energy savings, Zero Emission and recycling.
With the main focus on "Quality and Reliability", the Company will engage
in business on a global and group-wide basis, aim for further development of the
business and higher performance, and realize the Komatsu Group where all of the
Komatsu employees around the world will contribute their creativity and
challenging spirit.
(5) Comparison of Financial Data
The financial position for this period and the recent 3 years are as
follows:
(i) Consolidated Results
(Unit: in billion yen)
--------------------------------------------------------------------------------
1996 1997 1998 1999
(April 1996 - (April 1997 - (April 1998 - (April 1999 -
March 1997) March 1998) March 1999) March 2000)
--------------------------------------------------------------------------------
Net Sales 1,098.9 1,104.0 1,061.5 1,055.6
--------------------------------------------------------------------------------
Income before 45.7 40.2 (9.6) 19.3
taxes
--------------------------------------------------------------------------------
Net Income 18.1 19.2 (12.3) 13.3
--------------------------------------------------------------------------------
Total Assets 1,512.7 1,561.6 1,524.6 1,375.2
--------------------------------------------------------------------------------
<PAGE>
14
(ii) Unconsolidated Results
(Unit: in billion yen except per share data)
--------------------------------------------------------------------------------
128/th/ 129/th/ 130/th/ 131/th/
(April 1996 - (April 1997 - (April 1998 - (April 1999 -
March 1997) March 1998) March 1999) March 2000)
--------------------------------------------------------------------------------
Net Sales 550.1 533.0 475.7 441.4
--------------------------------------------------------------------------------
Operating Profit 26.7 20.1 11.6 12.9
--------------------------------------------------------------------------------
Ordinary Profit 24.7 19.7 8.5 9.9
--------------------------------------------------------------------------------
Net Income 12.2 11.3 2.1 13.6
--------------------------------------------------------------------------------
Earnings per 12.41 11.69 2.24 14.05
Common Share
--------------------------------------------------------------------------------
Total Assets 791.3 781.3 771.7 746.8
--------------------------------------------------------------------------------
Net Assets 454.4 448.5 450.4 469.1
(Shareholders'
Equity)
--------------------------------------------------------------------------------
(Shareholders' (57.4%) (57.4%) (58.4%) (62.8%)
Equity Ratio(%))
--------------------------------------------------------------------------------
(Note) The earnings per common share for the relevant period are based on the
total number of shares issued and outstanding at the end of such period.
The 128/th/ period showed slow movement toward recovery domestically and
the overseas economy also developed steadily. The Company introduced new
products that satisfy the needs of the customers promoted aggressive sales
activities, and strengthened the electronics business foundation in the Asian
markets. As a result, we were able to increase income and profit for two
consecutive periods.
The 129/th/ period experienced harsh environment in which the real GDP
witnessed negative growth. On the other hand, at overseas, the U.S. economy
maintained favorable growth and the European economy showed signs of mild
recovery while the Asian economy fell sharply into a depression and the
discrepancies between regions became ever more apparent. While the Company
focused its efforts on the mining equipment division, utilities division, and in
the electronics division, the reorganization of business and organization
including the sale of the synthetics division and the conversion of the forging
division into a subsidiary were conducted. However, sales and profits decreased
compared to the previous period.
In the 130/th/ period, the domestic economy continued to suffer from the
long-prevailing recession where the real GDP ended in a negative growth for two
consecutive periods. The Company pooled the efforts of all Komatsu companies
inside and outside of Japan to provide customers with safe and creative products
by closely watching the needs of the customers based on the motto of "Quality
and Reliability", and aimed to improve sales and profit. At the same time, we
will assume measures towards the declining demands in construction equipment in
Japan and reorganized the production system to strengthen the competitive edge
and to stabilize the earning base. While these measures are anticipated to bear
fruit in the future, the effects have been minimal
<PAGE>
15
for this period and sales and profit both resulted in a decrease from the
previous period. On a consolidated base, the construction equipment achieved
performance above that of the previous period, however, due to the significant
drop in the results of the electronics division, the sales dropped from the
previous period and net income for the period was regretfully a loss.
The outline of business for the current 131st period is as set forth in
above (1) "Development and Results of Business Operations".
<PAGE>
16
II Outline of the Company (as of March 31, 2000)
(1) Major Lines of Business
--------------------------------------------------------------------------------
Division Principal Products and Business
--------------------------------------------------------------------------------
Construction & Excavating hydraulic excavators, mini excavators,
Mining Equipment Equipment and backhoe loaders*
--------------------------------------------------------------------------------
Loading wheel loaders and mini wheel loaders
Equipment
--------------------------------------------------------------------------------
Grading and bulldozers, motor graders, vibratory
Roadbed rollers
Preparation
Equipment
--------------------------------------------------------------------------------
Hauling dump trucks, crawler carriers
Equipment
--------------------------------------------------------------------------------
Tunneling shield machines, tunnel-boring machines
machines (TBM), small-diameter pipe jacking
machines (Iron Moles)
--------------------------------------------------------------------------------
Recycling mobile debris crushers, automatic soil
Equipment improver, and automatic lumber crusher
--------------------------------------------------------------------------------
Other Equipment rough-terrain cranes, reach tower cranes,
and railroad maintenance equipment
--------------------------------------------------------------------------------
Electronics Electronic silicon wafers* and polycrystalline
Materials silicon*
--------------------------------------------------------------------------------
Control FA computers, vehicles controller, and
Equipment and LAN peripheral equipment
Communications
Equipment
--------------------------------------------------------------------------------
Semiconductor excimer lasers, thermoelectric modules*,
Processing and thermoelectric semiconductor
Equipment and devices*
Temperature
Control
Equipment
--------------------------------------------------------------------------------
<PAGE>
17
--------------------------------------------------------------------------------
Industrial Metal Forging Large sized presses, middle and small
Machinery and Stamping sized presses*, and forging presses*
Presses
--------------------------------------------------------------------------------
Sheet-metal press brakes*, shears*, gatling press
Machines and centers*, laser cutting machines*, fine
Machines Tools plasma cutting machines*, and
crankshaft millers*
--------------------------------------------------------------------------------
Civil Civil Engineering civil engineering and construction* and
Engineering & & prefabricated office structures*
Construction Construction,
etc.
--------------------------------------------------------------------------------
Other Products Engine and diesel engines, diesel generator sets, and
Equipment hydraulic equipment
--------------------------------------------------------------------------------
Defense ammunition and armored personnel carriers,
--------------------------------------------------------------------------------
Others steel castings, iron castings, packing and
logistics
--------------------------------------------------------------------------------
(Note : The products and businesses listed above include those of the
subsidiaries. Those with * mark are the principal products and major lines of
businesses of the subsidiaries.)
(2) Shares of the Company
(i) Number of Shares and Number of Shareholders
--------------------------------------------------------------------------------
Number of Shares Authorized to be Issued: 3,965,000,000 shares
--------------------------------------------------------------------------------
Total Number of Shares Issued and 968,921,701 shares
Outstanding:
--------------------------------------------------------------------------------
Stated capital: JPY70,120,637,607
--------------------------------------------------------------------------------
Number of Shareholders: 62,065
--------------------------------------------------------------------------------
<PAGE>
18
(ii) Major Shareholders (Top 10)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Status of Investment by the Status of Investment by the
Shareholder in the Company Company in the Shareholder
------------------------------------------------------------------------------------------------
Number of Ratio of Number of Ratio of
Shares held shareholding Shares held Shareholding
(thousand (%) (thousand (%)
shares) shares)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Taiyo Mutual 55,224 5.7 - -
Life Insurance
Company
------------------------------------------------------------------------------------------------
NATS CUMCO 46,356 4.8 - -
------------------------------------------------------------------------------------------------
Daihyaku Mutual 34,455 3.6 - -
Life Insurance
Company
------------------------------------------------------------------------------------------------
The Sumitomo Bank, 29,988 3.1 25,294 0.8
Ltd.
------------------------------------------------------------------------------------------------
Nippon Life 28,863 3.0 - -
Insurance Co.
------------------------------------------------------------------------------------------------
Komatsu Ltd. 27,398 2.8 - -
Employees
Stockholding
Association
------------------------------------------------------------------------------------------------
The Fuji Bank, Ltd. 22,877 2.4 17,649 0.5
------------------------------------------------------------------------------------------------
The Industrial 21,755 2.2 11,074 0.4
Bank of Japan,
Limited
------------------------------------------------------------------------------------------------
State Street Bank 19,414 2.0 - -
and Trust Company
------------------------------------------------------------------------------------------------
The Sumitomo Trust 18,824 1.9 3,070 0.2
and Banking Co.,
Ltd.
(held by trust
units)
------------------------------------------------------------------------------------------------
</TABLE>
(Notes)
1. The number of shares held by the Company in The Sumitomo Bank, Ltd.,
The Fuji Bank, Ltd., The Industrial Bank of Japan, Limited, and The
Sumitomo Trust and Banking Co., Ltd. shown above excludes the
respective bank's preferred shares having no voting rights.
2. NATS CUMCO is the share nominee of CITIBANK, N.A. which is a trustee of
the Company's ADR (American Depository Receipts).
(iii) The Status of Acquisition, Disposal, etc. and Holding of the Treasury
Shares
The below is the status of acquisition, cancellation and holding of treasury
shares to be transferred to the Company's Directors and Employees.
<PAGE>
19
1) Treasury shares acquired during this period:
Type and Number:
Ordinary shares with par value 1,200,000 shares
Acquisition Price:
Total: JPY924,828,500
2) Treasury shares disposed during this period:
Type and Number:
Ordinary shares with par value 20,000 shares
Disposal Price:
Total: JPY11,865,938
(These are the treasury shares for which stock options were determined to
be unexercisable and sold in the market.)
3) Treasury shares held at the end of this period:
Type and Number:
Ordinary shares with par value 2,180,000 shares
<PAGE>
20
(3) Employees
-------------------------------------------------------------------------------
Number of Increase (Decrease) Average Age Average Service
--------- ------------------- ----------- ----------------
Employees Over Previous Period Years
--------- -------------------- -----
-------------------------------------------------------------------------------
11,488 202 44.1 22.4
-------------------------------------------------------------------------------
(Note) The number of employees has increased from the previous period due to
the merger with Komatsu MEC Corp. and Komatsu Est Corp. on April 1,
1999.
The number of employees on consolidated base is 28,522.
(4) Affiliates
(i) Results of Consolidation
<TABLE>
<CAPTION>
=========================================================================================================
Fiscal 1998 Fiscal 1999 Increase/Decrease from
(From April 1, (From April 1, the Previous
1998 to March 31, 1999 to March Period
1999) 31, 2000)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consolidated Net 1,061.5 1,055.6 Decrease of 0.6%
Sales (in billion yen)
---------------------------------------------------------------------------------------------------------
Consolidated Net (12.3) 13.3 Increase of
Income (in billion yen) JPY25.7 billion
---------------------------------------------------------------------------------------------------------
Consolidated ROE (2.4%) 2.7%
(Ratio of Net Income to
Shareholders'
Equity)
---------------------------------------------------------------------------------------------------------
Consolidated ROA (0.6%) 1.3%
(Ratio of Pretax
Income to Total
Assets)
=========================================================================================================
</TABLE>
(Note) The Company's consolidated financial statements are based on the
accounting principles generally accepted in the United States of
America.
<PAGE>
21
(ii) Principal Subsidiaries
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Name Capital Ownership (%) Main Business
---- ------- ------------- -------------
(in JPY
-------
million)
--------
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Komatsu Electronic 11,636 54.3 Manufacture and sales of
Metals Co., Ltd. silicon wafers for
semiconductors
-------------------------------------------------------------------------------------------------
Komatsu Zenoah Co. 5,099 51.1 Manufacture and sales of
agricultural and forestry
equipment, construction
equipment, industrial
machinerys
-------------------------------------------------------------------------------------------------
Komatsu Castex Ltd. 4,979 100.0 Manufacture and sales of
steel castings and iron
castings
-------------------------------------------------------------------------------------------------
Komatsu Construction 1,808 68.0 Contracts for civil engineering
Ltd. and
construction
-------------------------------------------------------------------------------------------------
Komatsu House Co., 1,436 82.6 Manufacture, sales and lease of
Ltd. commercial-use-prefabricated
structures for businesses
-------------------------------------------------------------------------------------------------
Komatsu Soft Ltd. 1,234 91.8 Subcontracts for computer
software development and
sales
-------------------------------------------------------------------------------------------------
Komatsu Logistics 1,080 91.4 Packing, baling,
Corp. transportation, warehousing
and port-and-harbor services
-------------------------------------------------------------------------------------------------
Komatsu Industries 1,000 100.0 Manufacture and sale of middle
Corporation and small sized presses and
forging presses
-------------------------------------------------------------------------------------------------
Komatsu Machinery 600 100.0 Manufacture of machine tools and
Tool Corporation semiconductor material processing
equipment
-------------------------------------------------------------------------------------------------
Komatsu Tokyo Ltd. 287 100.0 Sales of construction
equipment, repair and service
-------------------------------------------------------------------------------------------------
Komatsu Hokkaido Ltd. 287 100.0 Sales of construction
equipment, repair and service
-------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
22
<TABLE>
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Komatsu America Corp. US$281mil 100.0 Holding company in the U.S.
-------------------------------------------------------------------------------------------------
Komatsu America - 100.0 Manufacture and sales of
International Company construction equipment
-------------------------------------------------------------------------------------------------
Komatsu Mining US$ 65 mil 100.0 Manufacture and sales of
Systems, Inc. mining equipment
-------------------------------------------------------------------------------------------------
Komatsu do Brasil CR$ 55 mil 100.0 Manufacture and sales of
Ltda. construction equipment and
castings
-------------------------------------------------------------------------------------------------
Advanced Silicon US$ 215 mil 100.0 Manufacture and sales of
Materials, Inc. polycrystalline silicon and
silane gas
-------------------------------------------------------------------------------------------------
Komatsu Europe 100.0 Supervision of European
International N.V. EUR 45mil subsidiaries' operations and
sales of construction equipment
-------------------------------------------------------------------------------------------------
Komatsu UK Ltd. Stg. 100.0 Manufacture and sales of
(Pounds)23 mil construction equipment
-------------------------------------------------------------------------------------------------
Komatsu Hanomag AG DM 37 mil 98.4 Manufacture and sales of
construction equipment
-------------------------------------------------------------------------------------------------
Komatsu Mining DM 10 mil 100.0 Manufacture and sales of
Germany GmbH mining equipment
-------------------------------------------------------------------------------------------------
FAI Komatsu 12,000 mil lira 100.0 Manufacture and sales of
Industries S.p.A. construction equipment
-------------------------------------------------------------------------------------------------
Komatsu Asia & 12 mil 100.0 Supervision of Asian Pacific
Pacific Pte. Ltd. Singapore $ subsidiaries' operations, sales
of construction equipment and
industrial machines
-------------------------------------------------------------------------------------------------
P.T. Komatsu Indonesia 192,780 mil 55.1 Manufacture and sales of
Rupiahs construction equipment and steel
and iron castings
-------------------------------------------------------------------------------------------------
Bangkok Komatsu Co., 620 mil 74.8 Manufacture and sales of
Ltd. Bahts construction equipment
-------------------------------------------------------------------------------------------------
Komatsu Changlin US$ 21 mil 85.0 Manufacture and sales of
Construction construction equipment
Machinery Corp.
-------------------------------------------------------------------------------------------------
</TABLE>
(Note) 1. Komatsu America International Company is a general partnership
established under the laws of Delaware, U.S.A. The Company holds an
equity interest in this
<PAGE>
23
company indirectly through its subsidiary, which investments amount
to US$23 million.
2. Komatsu Mining Systems, Inc. and Komatsu do Brasil Ltda. are
indirectly owned by the Company through subsidiaries.
3. The shareholding percentages in Komatsu U.K. Ltd., Komatsu Hanomag
AG, FAI Komatsu Industries, S.p.A. and Bangkok Komatsu Co., Ltd.
include the shares held by the Company's subsidiaries.
(iii) Principal Affiliated Companies
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Name Capital Ownership (%) Main Business
----- ------- ------------- -------------
(in JPY
-------
million)
--------
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Komatsu Forklift Co., 8,370 39.2% Manufacture and sales of
Ltd. industrial vehicles,
logistics-related machinery and
equipment and automatic warehouses
-------------------------------------------------------------------------------------------------
Komatsu Cummins 1,400 50.0 Manufacture of diesel engines
Engine Co., Ltd.
-------------------------------------------------------------------------------------------------
Cummins Komatsu - 50.0 Manufacture of diesel engines
Engine Company
-------------------------------------------------------------------------------------------------
Komatsu Shantui US$ 21 mil 40.0 Manufacture and sales of
Construction construction equipment
Machinery Co., Ltd.
-------------------------------------------------------------------------------------------------
</TABLE>
(Note) Cummins Komatsu Engine Company is a general partnership established
under the laws of Indiana, U.S.A. The Company holds an equity
interest in this company indirectly through its subsidiary, which
investments amount to US$2 million.
(iv) Report on Business Consolidation
1) The company merged with Komatsu MEC Corp. and Komatsu Est Corp. both
effective April 1, 1999 in accordance with the provision of Article
413-3 of the Commercial Code and succeeded to all of their assets,
liabilities and rights and obligations.
2) In October, 1999, the Company sold all its shares held in Applied
Komatsu Technology, Inc. to Applied Materials, Inc., of the United
States.
3) In September 1999, the Company acquired the majority of the issued and
outstanding shares of Bangkok Komatsu Co., Ltd. which then became a
subsidiary of the Company.
<PAGE>
24
(5) Major Borrowing
-----------------------------------------------------------------------------
Name of Lenders Balance of Loans Number of Shares of the
--------------- ---------------- -----------------------
(in JPY billions) Company held by such
--------------------
Lenders
------
(Ratio of Shareholding)
-----------------------
(in thousand shares)
-----------------------------------------------------------------------------
The Taiyo Mutual Life 4.0 55,224(5.7%)
Insurance Co.
-----------------------------------------------------------------------------
Daihyaku Mutual Life 2.9 34,455(3.6%)
Insurance Company
-----------------------------------------------------------------------------
Japan Bank 2.8 -(-)
For International
Cooperation
-----------------------------------------------------------------------------
Pension Welfare Fund 1.7 -(-)
-----------------------------------------------------------------------------
Nippon Life Insurance Co. 1.3 28,863(3.0%)
-----------------------------------------------------------------------------
The major lenders on a consolidated basis are The Bank of Tokyo-Mitsubishi, Ltd.
(JPY26.6 billion), The Sumitomo Bank, Limited (JPY25.9 billion) and the Japan
Bank for International Cooperation (JPY25.9 billion).
(The amounts are the balance of borrowing)
(6) Principal Business Offices
===============================================================================
Name Location
---- --------
-------------------------------------------------------------------------------
Head Office Minato-ku, Tokyo
-------------------------------------------------------------------------------
(Research Division)
Research Center Hiratsuka-shi, Kanagawa Pref.
(Branch Offices)
Hokkaido Tohoku Regional Sales Office Sendai-shi, Miyagi Pref.
Kanto Regional Sales Office Ohmiya-shi, Saitama Pref.
Chubu Regional Sales Office Nagoya-shi, Aichi Pref.
Osaka Regional Sales Office Toyonaka-shi, Osaka Pref.
Chugoku-Kyushu Regional Sales Office Fukuoka-shi, Fukuoka Pref.
<PAGE>
25
-------------------------------------------------------------------------------
(Plants)
Awazu Plant Komatsu-shi, Ishikawa Pref.
Osaka Plant Hirakata-shi, Osaka Pref.
Mohka Plant Mohka-shi, Tochigi Pref.
Oyama Plant Oyama-shi, Tochigi Pref.
-------------------------------------------------------------------------------
(Notes)
1. The Hokkaido and Tohoku Regional Sales Offices were consolidated to form
the Hokkaido Tohoku Regional Sales Office effective April 1, 1999.
2. The respective production locations of Komatsu MEC Corp. and Komatsu Est
Corp., which were both acquired and merged with the Company, were
consolidated into together as the Mohka Plant effective October, 1999.
(7) Directors and Auditors
----------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Position Name Responsibility in the Company,
-------- ---- ------------------------------
or Principal Occupation
-----------------------
----------------------------------------------------------------------------------------------
<S> <C> <C>
Chairman and Director Tetsuya Katada
----------------------------------------------------------------------------------------------
President and *Satoru Anzaki
Representative Director
----------------------------------------------------------------------------------------------
Executive Vice President *Masahiro Sakane General Manager of Corporate
and Representative Planning Dept.
Director
----------------------------------------------------------------------------------------------
Executive Vice President *Toshitaka Hagiwara Supervision of Administration
and Representative and Liaison
Director
----------------------------------------------------------------------------------------------
Executive Managing *Koji Ogaki General Manager of Research
Director Division and General Manager of
Research Center
----------------------------------------------------------------------------------------------
Executive Managing *Norimichi Kitagawa Supervision of Development
Director
----------------------------------------------------------------------------------------------
Director Arlie G. Tucker Chairman and Director of
Komatsu America Corp.
----------------------------------------------------------------------------------------------
Director Toshio Morikawa Chairman and Representative
Director of The Sumitomo Bank,
Ltd.
----------------------------------------------------------------------------------------------
Standing Statutory Auditor Toshiro Nakaya
----------------------------------------------------------------------------------------------
Standing Statutory Auditor Hiroyuki Watanabe
----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
26
<TABLE>
----------------------------------------------------------------------------------------------
<S> <C> <C>
Statutory Auditor Masahiro Yoshiike President and Representative
Director of The Taiyo Mutual
Life Insurance Co.
----------------------------------------------------------------------------------------------
Statutory Auditor Takahary Doi Lawyer
----------------------------------------------------------------------------------------------
</TABLE>
(Notes) 1. Mr. Toshio Morikawa was newly elected as director and Mr.
Takaharu Dohi was newly elected as statutory auditor at the 130th
Ordinary General Meeting of Shareholders held on June 29, 1999
and each has assumed their respective position since then.
2. Messrs. Hiroyuki Watanabe, Masahiro Yoshiike and Takaharu Dohi,
each of them being a Statutory Auditor, satisfy the requirements
for outside auditors provided in Article 18, Paragraph 1 of the
"Law for Special Exceptions to the Commercial Code Concerning
Audit, etc. of Kabushiki-Kaisha".
3. Each Director with the mark * concurrently holds the post of an
Executive Officer.
The Directors and the Statutory Auditor who resigned from their positions during
this term are as follows (All resigned effective June 29, 1999).
-------------------------------------------------------------------------------
Resigned Name Resigned Name
-------- ---- -------- ----
Position Position
-------- --------
-------------------------------------------------------------------------------
Managing Masatake Mizusawa Director Masaru Fukase
Director
-------------------------------------------------------------------------------
Managing Akio Fukunishi Director Kiyokazu Baba
Director
-------------------------------------------------------------------------------
Managing Kazuhiro Aoyagi Director Teruo Nakahara
Director
-------------------------------------------------------------------------------
Managing Masatoshi Kamatani Director Kunio Noji
Director
-------------------------------------------------------------------------------
Managing Naomi Anesaki Director Makoto Inoue
Director
-------------------------------------------------------------------------------
Director Yoshiaki Kato Director Shuji Sugi
-------------------------------------------------------------------------------
Director Hideo Ueda Director Kota Hoshino
-------------------------------------------------------------------------------
<PAGE>
27
-------------------------------------------------------------------------------
Director Tadashi Ishikawa Director Susumu Isoda
-------------------------------------------------------------------------------
Director Kunihiko Komiyama Director Yoshitaka Ohmura
-------------------------------------------------------------------------------
Director Hisashi Wada Statutory Yoshio Komori
Auditor
-------------------------------------------------------------------------------
(Reference)
In June, 1999, the Company introduced the "Executive Officer" system and
the "Global Officer" system in which the latter is comprised of the
management class personnel of the major foreign local subsidiaries. The
below is the list of the Executive Officers and the Global Officers as of
March 31st, 2000.
The five persons with * mark holds both of the post as a Director and an
Executive Officer.
--------------------------------------------------------------------------------
Position Name Responsibility in the
-------- ---- ---------------------
Company, or Principal
---------------------
Occupation
----------
--------------------------------------------------------------------------------
President and *Satoru Anzaki
Representative
Director
(Executive Officer)
--------------------------------------------------------------------------------
Executive Vice *Masahiro Sakane General Manager of
President and Corporate Planning Dept.
Representative
Director
(Executive Officer)
--------------------------------------------------------------------------------
Executive Vice *Toshitaka Hagiwara Supervision of
President and Administration and Liaison
Representative
Director
(Executive Officer)
--------------------------------------------------------------------------------
Executive Managing *Koji Ogaki General Manager of Research
Director (Executive Division and General Manager
Officer) of Research Center
--------------------------------------------------------------------------------
Executive Managing *Norimichi Kitagawa Supervision of Development
Director (Executive
Officer)
--------------------------------------------------------------------------------
<PAGE>
28
--------------------------------------------------------------------------------
Senior Executive Kazuhiro Aoyagi General Manager of
Officer International Division
--------------------------------------------------------------------------------
Senior Executive Masatoshi Kamatani General Manager of
Officer Production Division
--------------------------------------------------------------------------------
Senior Executive Naomi Anesaki Deputy General Manager of
Officer Corporate Planning Dept.
--------------------------------------------------------------------------------
Senior Executive Kunihiko Komiyama General Manager of
Officer Engines and Hydraulics
Division
--------------------------------------------------------------------------------
Senior Executive Hisashi Wada General Manager of
Officer Domestic Sales Division
--------------------------------------------------------------------------------
Senior Executive Masaru Fukase Accounting, Finance and
Officer Audit
--------------------------------------------------------------------------------
Senior Executive Teruo Nakahara General Manager of
Officer Development Division
--------------------------------------------------------------------------------
Executive Officer Kiyokazu Baba General Manager of
Industrial Machinery
Division
--------------------------------------------------------------------------------
Executive Officer Kunio Noji General Manager of
Information Systems
Division
--------------------------------------------------------------------------------
Executive Officer Makoto Inoue General Manager of
Electronics Division
--------------------------------------------------------------------------------
Executive Officer Shuji Sugi Deputy General Manager of
Development Division and
General Manager of
Product Planning Dept.
--------------------------------------------------------------------------------
Executive Officer Susumu Isoda General Manager of
Osaka Plant,
Production Division
--------------------------------------------------------------------------------
Executive Officer Yoshitaka Ohmura Deputy General Manager of
Corporate Planning Dept.
--------------------------------------------------------------------------------
Executive Officer Teruo Nagayasu General Manager of
Mohka Plant,
Production Division
--------------------------------------------------------------------------------
<PAGE>
29
--------------------------------------------------------------------------------
Executive Officer Kanetake Nakatani General Manager of
Awazu Plant, Production
Division
--------------------------------------------------------------------------------
Executive Officer Yuzo Tsumura Deputy General Manager of
Production Division and
General Manager of
Purchasing Dept.
--------------------------------------------------------------------------------
Executive Officer Masahiro Yoneyama Manager of Human
Resources Dept.
--------------------------------------------------------------------------------
Global Officer Dave W. Grzelak Chairman and CEO of
Komatsu America
International Company
--------------------------------------------------------------------------------
Global Officer Kota Hoshino President and COO of
Komatsu America
International Company
--------------------------------------------------------------------------------
Global Officer Junro Kawanabe Director and President of
Komatsu do Brasil Ltda.
--------------------------------------------------------------------------------
Global Officer Michael W. Kerschen Director, President and COO
of Advanced Silicon
Materials, Inc.
--------------------------------------------------------------------------------
Global Officer Yoichi Kobayashi Director and President of
Komatsu Latin America
Corp.
--------------------------------------------------------------------------------
Global Officer Yoshinori Komamura Director and President of
Komatsu Europe
International N.V.
--------------------------------------------------------------------------------
Global Officer Gerhard Lehnen Director and President of
Komatsu Hanomag AG
--------------------------------------------------------------------------------
Global Officer John H. Matlock Director, President and CEO
of Komatsu Silicon America,
Inc.
--------------------------------------------------------------------------------
Global Officer Edson R. McCord Director, President and CEO
of Komatsu Mining Systems,
Inc.
--------------------------------------------------------------------------------
Global Officer Kenichi Nakamura Director and President of
Komatsu Utility Corp.
--------------------------------------------------------------------------------
<PAGE>
30
--------------------------------------------------------------------------------
Global Officer Makoto Nakamura Director, President and CEO
of Komatsu America Corp.
--------------------------------------------------------------------------------
Global Officer Ian Olivieri Director and President of NS
Komatsu Pty., Ltd.
--------------------------------------------------------------------------------
Global Officer Toshiji Onuma Director and President of
Komatsu Mexicana S.A. de
C.V.
--------------------------------------------------------------------------------
Global Officer Yuzo Suzuki Director and President of
Komatsu Asia & Pacific Pte.
Ltd.
--------------------------------------------------------------------------------
Global Officer Tetsuo Takiguchi Director, President and COO
of Komatsu Mining Systems,
Inc.
--------------------------------------------------------------------------------
Global Officer Keith Tipping Director and President of
Komatsu UK Ltd.
--------------------------------------------------------------------------------
Global Officer Enrico Tonetti Director and President of FAI
Komatsu
Industries S.p.A.
--------------------------------------------------------------------------------
Global Officer Hideo Ueda Director, Chairman and CEO of
Advanced Silicone Materials,
Inc.
--------------------------------------------------------------------------------
Global Officer Norbert H.H. Walther Director and President of
Komatsu Mining
Germany GmbH
--------------------------------------------------------------------------------
III Important Events Subsequent to the Current Business Period
The Company transferred 65.0% of issued and outstanding shares of Komatsu
Soft Ltd. to Toyo Information Systems Co., Ltd. effective April, 2000 and
Komatsu Soft Ltd. became a subsidiary of Toyo Information Systems Co., Ltd.
Komatsu Soft Ltd. will strengthen and develop its business as a member of Toyo
Information Systems Group.
<PAGE>
31
EXHIBIT II
BALANCE SHEET
-------------
(As of March 31, 2000)
(in million yen)
--------------------------------------------------------------------------------
ASSETS AMOUNT (JPY)
------ ------------
--------------------------------------------------------------------------------
CURRENT ASSETS: 377,853
--------------------------------------------------------------------------------
Cash on hand and in banks 48,469
--------------------------------------------------------------------------------
Notes receivable trade 8,570
--------------------------------------------------------------------------------
Accounts receivable trade 169,196
--------------------------------------------------------------------------------
Marketable securities 25,576
--------------------------------------------------------------------------------
Finished products 24,285
--------------------------------------------------------------------------------
Materials and supplies 2,532
--------------------------------------------------------------------------------
Work in process 23,952
--------------------------------------------------------------------------------
Prepaid expenses 452
--------------------------------------------------------------------------------
Deferred taxes 11,416
--------------------------------------------------------------------------------
Short-term loans receivable 58,282
--------------------------------------------------------------------------------
Other current assets 10,647
--------------------------------------------------------------------------------
Allowance for doubtful receivables (5,530)
--------------------------------------------------------------------------------
FIXED ASSETS: 369,017
--------------------------------------------------------------------------------
TANGIBLE FIXED ASSETS: 150,167
--------------------------------------------------------------------------------
Buildings 49,159
--------------------------------------------------------------------------------
Structures 9,080
--------------------------------------------------------------------------------
Machinery and equipment 34,485
--------------------------------------------------------------------------------
Vehicles and delivery equipment 317
--------------------------------------------------------------------------------
Tools, furniture and fixtures 11,167
--------------------------------------------------------------------------------
Land 44,979
--------------------------------------------------------------------------------
Construction in progress 977
--------------------------------------------------------------------------------
INTANGIBLE FIXED ASSETS: 9,339
--------------------------------------------------------------------------------
Utility rights 194
--------------------------------------------------------------------------------
Software 9,066
--------------------------------------------------------------------------------
<PAGE>
32
--------------------------------------------------------------------------------
Other intangible fixed assets 78
--------------------------------------------------------------------------------
INVESTMENTS AND MISCELLANEOUS 209,511
ASSETS:
--------------------------------------------------------------------------------
Investment securities 42,666
--------------------------------------------------------------------------------
Capital stock of subsidiaries 175,188
--------------------------------------------------------------------------------
Long-term loans receivable 3,667
--------------------------------------------------------------------------------
Non-current prepaid expenses 1,002
--------------------------------------------------------------------------------
Deferred taxes 2,280
--------------------------------------------------------------------------------
Treasury stock 1,065
--------------------------------------------------------------------------------
Other investments 5,587
--------------------------------------------------------------------------------
Allowance for doubtful receivables (171)
--------------------------------------------------------------------------------
Allowance for overseas (21,774)
Investments valuation
--------------------------------------------------------------------------------
TOTAL ASSETS 746,871
------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LIABILITIES
-----------
--------------------------------------------------------------------------------
CURRENT LIABILITIES: 144,567
--------------------------------------------------------------------------------
Notes payable trade 5,947
--------------------------------------------------------------------------------
Accounts payable trade 74,904
--------------------------------------------------------------------------------
Short-term loans payable 3,615
--------------------------------------------------------------------------------
Accounts payable 25,713
--------------------------------------------------------------------------------
Accrued corporation taxes, etc. 6,309
--------------------------------------------------------------------------------
Advances received 1,517
--------------------------------------------------------------------------------
Deferred profit on installment sales 11,795
--------------------------------------------------------------------------------
Accrued bonuses 4,964
--------------------------------------------------------------------------------
Warranty reserve 4,367
--------------------------------------------------------------------------------
Other current liabilities 5,433
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LONG-TERM LIABILITIES: 133,135
--------------------------------------------------------------------------------
Bonds 62,447
--------------------------------------------------------------------------------
Long-term loans payable 19,059
--------------------------------------------------------------------------------
<PAGE>
33
--------------------------------------------------------------------------------
Liabilities for severance payments 51,199
--------------------------------------------------------------------------------
Other long-term liabilities 430
--------------------------------------------------------------------------------
TOTAL LIABILITIES
----------------- 277,703
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
--------------------
--------------------------------------------------------------------------------
CAPITAL: 70,120
--------------------------------------------------------------------------------
Common stock 70,120
--------------------------------------------------------------------------------
LEGAL RESERVES: 127,366
--------------------------------------------------------------------------------
Capital surplus 109,337
--------------------------------------------------------------------------------
Legal earned surplus 18,029
--------------------------------------------------------------------------------
RETAINED EARNINGS: 271,680
--------------------------------------------------------------------------------
Reserve for special depreciation 210
--------------------------------------------------------------------------------
Reserve for losses on overseas investment 1
--------------------------------------------------------------------------------
Reserve for advanced depreciation deduction 12,141
--------------------------------------------------------------------------------
Reserve for special advanced depreciation account 1,675
--------------------------------------------------------------------------------
General reserve 205,359
--------------------------------------------------------------------------------
Unappropriated retained earnings for this period 52,292
--------------------------------------------------------------------------------
(including net income for this period,
JPY13,612 million)
--------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 469,167
--------------------------
--------------------------------------------------------------------------------
TOTAL LIABILITIES &
-------------------
SHAREHOLDERS' EQUITY 746,871
--------------------
--------------------------------------------------------------------------------
<PAGE>
34
EXHIBIT III
STATEMENT OF INCOME
-------------------
(From April 1, 1999 to March 31, 2000)
(in million yen)
-------------------------------------------------------------------------
ORDINARY PROFITS AND LOSSES
---------------------------
-------------------------------------------------------------------------
Operating Profit and Loss
-------------------------------------------------------------------------
Operating income:
-------------------------------------------------------------------------
Net sales 441,423
-------------------------------------------------------------------------
Operating expenses:
-------------------------------------------------------------------------
Cost of sales 326,342
-------------------------------------------------------------------------
Adjustment to deferred (686)
Profit on installment
Sales
-------------------------------------------------------------------------
Selling, general and 102,855 428,511
Administrative expenses
-------------------------------------------------------------------------
Operating profit: 12,912
-------------------------------------------------------------------------
Non-operating Profit and Loss:
-------------------------------------------------------------------------
Non-operating income:
-------------------------------------------------------------------------
Interest and dividend 6,264
Income
-------------------------------------------------------------------------
Other non-operating income 8,605 14,870
-------------------------------------------------------------------------
Non-operating expenses:
-------------------------------------------------------------------------
Interest expenses 2,444
-------------------------------------------------------------------------
Other non-operating Expenses 15,401 17,846
-------------------------------------------------------------------------
Ordinary Profit: 9,936
-------------------------------------------------------------------------
SPECIAL PROFITS AND LOSSES
--------------------------
-------------------------------------------------------------------------
Special Income:
-------------------------------------------------------------------------
Restoration to income of 814
Liabilities for severance payments
-------------------------------------------------------------------------
Proceeds from sale of land 23,196
-------------------------------------------------------------------------
Consideration for transfer of goodwill 971
-------------------------------------------------------------------------
<PAGE>
35
-------------------------------------------------------------------------
Proceeds from sale of 9,037
Investment securities
-------------------------------------------------------------------------
Gains from sale of shares 485
of subsidiaries
-------------------------------------------------------------------------
Gains from sale of money invested 31 34,536
-------------------------------------------------------------------------
Special Losses:
-------------------------------------------------------------------------
Amortization of prior service cost under 6,692
qualified pension plan
-------------------------------------------------------------------------
Loss from sale of land 237
-------------------------------------------------------------------------
Valuation loss from sale of 404
Investment securities
-------------------------------------------------------------------------
Deferred allowance of securities 10,339
investment valuation
-------------------------------------------------------------------------
Structure Improvement Costs 4,686 22,360
-------------------------------------------------------------------------
Income before income taxes 22,112
-------------------------------------------------------------------------
Corporation, resident and 8,255
Enterprise taxes
-------------------------------------------------------------------------
Adjustments to corporation tax, etc. 244
-------------------------------------------------------------------------
Net income for the period 13,612
-------------------------------------------------------------------------
Unappropriated retained earnings 31,093
Brought forward
-------------------------------------------------------------------------
Unappropriated retained earnings from 10,485
mergers
-------------------------------------------------------------------------
Interim cash dividend paid 2,900
-------------------------------------------------------------------------
Unappropriated retained 52,292
Earnings at the end of the period
-------------------------------------------------------------------------
<PAGE>
36
(Notes)
1. Accounting Principles
(1) Method and basis of valuation of securities
Quoted securities: Lower of cost (moving average) or market
(separation method)
Unquoted securities: Cost (moving average)
(2) Method and basis of valuation of inventories
Finished products (excluding spare parts and real estate held for sale)
and work in process: Lower of cost (specific identification basis) or
market
Spare parts: Lower of cost (last-in, first-out) or market
Real estate held for sale: Cost (specific identification basis)
Materials and supplies: Lower of cost (periodic average) or market
(3) Depreciation of tangible fixed assets and intangible fixed assets is
computed according to the declining-balance method and the straight-line
method respectively.
With regard to the software used by the Company, the relevant amount was
changed to be accounted as Intangible Fixed Assets from Non-current
prepaid expenses in the Investments and Miscellaneous Assets section
starting from this period due to the application of "Guidelines
Concerning the Accounting for Research and Development Expenses and
Software" (prepared by the Association of the Certified Public
Accountants of Japan and issued in Accounting System Committee Report No.
12 dated March 31, 1999). The depreciation has been made in accordance
with the straight line method based on the available period (5 years) of
the Company.
(4) As for the provision of severance payments to officers and/or employees,
the necessary amount for employees is appropriated at the end of the
period, except for the amount transferred to the qualified retirement
pension plan account, and the necessary amount for officers in accordance
with the Company's regulations is appropriated at the end of the period.
The sum of JPY900 million as provision severance allowance to officers is
included in the reserves for severance payments and said amount is in
accordance with the provisions of Article 287-2 of the Commercial Code of
Japan.
(5) For long-term installment sales in which the installment period is in
excess of
<PAGE>
37
two years, the profits to be collected after the next period
are deferred.
(6) Accounting method of lease transactions
General accounting methods employed for ordinary lease transactions are
used for accounting finance lease transactions, excluding such
transactions in which it is recognized that the ownership of the leased
article is being transferred to the borrower.
(7) Accounting for consumption tax
Accounting procedures in regard to consumption taxes follow the tax-
exempt method.
2. Matters concerning the Balance Sheet
(1) Fractions of one million yen have been discarded.
(2) Short-term receivables from
subsidiaries: JPY163,271 million
Short-term debts payable to
subsidiaries: JPY29,237 million
Long-term receivables from
subsidiaries: JPY400 million
(3) Securities include treasury stock in the amount of JPY2 million.
(4) Accumulated depreciation of
tangible fixed assets: JPY292,722 million
(5) In addition to the fixed assets shown in the balance sheet, there are
computers and peripherals leased and used as important fixed assets.
(6) Important assets and liabilities denominated in foreign currencies
Accounts receivable denominated in foreign currencies:
JPY10,662 million
Denominated in:
US dollars: US$ 80 million
Euro: EUR 14 million
Deutsche Mark: DM 14 million
The above does not include accounts subject to forward foreign
exchange contracts.
<PAGE>
38
(7) Pledged assets: JPY1,690 million
(including Tangible fixed assets: JPY1,690 million)
(8) Guarantee liability: JPY52,122 million
Balance under letters of awareness, etc.:
JPY139,130 million
(9) Earnings per common share (calculated based on the number of outstanding
shares as of March 31, 2000):
JPY14.05
3. Matters concerning the Statement of Income
(1) Fractions of one million yen have been discarded.
(2) Tradings with subsidiaries
Sales: JPY246,791 million
Purchases: JPY115,375 million
Trading other than operating
transactions: JPY20,694 million
<PAGE>
39
EXHIBIT IV
PROPOSAL FOR APPROPRIATION OF PROFIT
------------------------------------
(For the period ending in March 2000)
(in Yen)
-------------------------------------------------------------------------------
Unappropriated retained earnings at the 52,292,295,516
end of the period
-------------------------------------------------------------------------------
Reversal of reserve for special 44,176,569
Depreciation
-------------------------------------------------------------------------------
Reversal of reserve for loss on 409,400
Overseas investments
-------------------------------------------------------------------------------
Reversal of reserve for advanced 1,885,918,544
Depreciation deduction
-------------------------------------------------------------------------------
Reversal of reserve for special 1,675,946,995
Advanced depreciation account
-------------------------------------------------------------------------------
TOTAL 55,898,747,024
-------------------------------------------------------------------------------
The foregoing amount is proposed to be appropriated as follows:
-------------------------------------------------------------------------------
Cash dividends 2,900,208,783
(Per share) (JPY3)
-------------------------------------------------------------------------------
Bonus to directors 70,000,000
(including JPY9,000,000 for statutory
auditors)
-------------------------------------------------------------------------------
Reserve for special depreciation 26,685,174
-------------------------------------------------------------------------------
Reserve for loss 988,600
on overseas investments
-------------------------------------------------------------------------------
Reserve for advanced depreciation 1,722,305,156
Deduction
-------------------------------------------------------------------------------
Reserve for special advanced 10,745,373,574
Depreciation account
-------------------------------------------------------------------------------
Unappropriated retained earnings carried 40,433,185,737
forward to the next period
-------------------------------------------------------------------------------
Notes: 1. The total dividends applicable to this fiscal period would amount
to JPY5,800,360,272 (including the interim dividends of JPY3 per
share, totaling JPY2,900,151,489 paid on December 10, 1999).
2. The amounts entered respectively for reversals and provisions of
<PAGE>
40
"Reserve for special depreciation", "Reserve for loss on overseas
investments", "Reserve for advanced depreciation deduction" and
"Reserve for special advanced depreciation account" are recorded
in accordance with the Special Taxation Measures Law.
<PAGE>
41
EXHIBIT V
AUDIT REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------------
AUDIT REPORT
------------
April 28, 2000
To: KOMATSU LTD.
Mr. Satoru Anzaki
President and
Representative Director
We have made an examination, under the provision of Article 2 of "The Law
for Special Exceptions to the Commercial Code Concerning Audit, etc. of
Kabushiki-Kaisha", of the Balance Sheet, Statement of Income, Business Report
(as to accounting information only), Proposal for Appropriation of Profit, and
Supplemental Schedules (as to accounting information only) of Komatsu Ltd. (the
"Company"), with respect to its 131st fiscal period beginning on April 1, 1999
and ending on March 31, 2000. Our examination with respect to the Business
Report and Supplemental Schedules was limited to the information therein derived
from the Company's books of account.
In performing the above examination, we have followed the auditing
standards generally recognized as fair and appropriate and applied such auditing
procedures as are normally required. This auditing procedures also include the
audits conducted on the subsidiaries which we considered as necessary.
Our opinions, based on such examination, are as follows:
(1) The above-mentioned Balance Sheet and Statement of Income properly
present the conditions concerning assets of the Company and its profit and
loss in compliance with applicable laws and regulations and the Company's
Articles of Incorporation.
(2) The above-mentioned Business Report (as to the accounting information
only) properly presents the conditions of the Company in compliance with
applicable laws and regulations and the Company's Articles of
Incorporation.
(3) The above-mentioned Proposal for Appropriation of Profit is in
conformity with applicable laws and regulations and the Company's Articles
of Incorporation.
(4) There are no matters that the auditors are required to mention with
respect to the above-mentioned Supplemental Schedules (as to accounting
information only) in accordance with applicable provisions of the
Commercial Code.
<PAGE>
42
In the Business Report, under the item "Important Events of the Company
After the Subject Business Period", there are indications concerning the
transfer of shares held in subsidiaries.
We do not have any interest in or relationship with the Company as to which
disclosure is required under the applicable provision of the Certified Public
Accountants Law.
Auditing Corporation, Asahi & Co.
Partner & Accountant:
Kozo Uno (seal)
Certified Public Accountant
Partner & Accountant
Tadao Kuwano (seal)
Certified Public Accountant
Accountant:
Teruo Suzuki (seal)
Certified Public Accountant
Accountant:
Fumio Koike (seal)
Certified Public Accountant
<PAGE>
43
EXHIBIT VI
BOARD OF STATUTORY AUDITORS' REPORT
-----------------------------------
AUDIT REPORT
------------
May 2, 2000
To: KOMATSU LTD.
Mr. Satoru Anzaki
President and
Representative Director
Having been reported by each Statutory Auditor on the method and results of
the audit in regard to the performance of duties by the directors of KOMATSU
LTD. (the "Company") for the 131st fiscal year (beginning on April 1, 1999 and
ending on March 31, 2000), the Board of Statutory Auditors of the Company
prepares this Audit Report on deliberation and reports as follows:
1. Outline of Method of Examination
In accordance with the policy of audit and the assignment prescribed by the
Board of Statutory Auditors, each Statutory Auditor participated in meetings of
the Board of Directors and other important meetings of the Company, received
reports from the directors, etc. on matters relating to the business operations
of the Company, read important approval documents, etc., investigated at the
head office and the major places of business of the Company into matters
relating to the management of business and the status of property thereof, and
requested subsidiaries to report on business as considered necessary. We also
received reports and explanations from the independent certified public
accountants and examined the contents of the Company's financial documents and
supplemental schedules.
We requested reports from directors, etc. as necessary, in addition to the
above method of audit, for matters such as those concerning the directors'
involvement in transactions competitive with the Company's business and in
transactions which may conflict with the Company's interests, the Company's
bestowing benefits, the Company's unusual transactions with subsidiaries and
shareholders and the Company's acquisition or disposal of its own stocks, and
investigated such transactions in detail.
<PAGE>
44
2. Results of Examination
We are of the view:
(1) that the method and results of the audit conducted by Asahi & Co., the
Company's independent certified public accountants, are appropriate;
(2) that the contents of the Business Report (other than accounting
information) present fairly the conditions of the Company as required by
related laws and regulations and the Articles of Incorporation of the
Company;
(3) that there are no matters which we are required to mention in the
Proposal for Appropriation of Profit in the light of the financial
conditions of the Company and other circumstances;
(4) that the Supplemental Schedules (other than accounting information)
properly contain information required to be contained therein and that there
are no matters which we are required to mention; and
(5) that in connection with performance of duties by the directors
including their duties relating to subsidiaries, we did not find any
unlawful act or any material fact which constitutes violation of laws and
regulations or the Articles of Incorporation of the Company. Further, with
respect to matters such as the directors' involvement in transactions
competitive with the Company's business and in transactions which may
conflict with the Company's interests, the Company's bestowing of benefits
and the Company's unusual transactions with subsidiaries and shareholders,
and the Company's acquisition or disposal of its own stocks, we are of the
opinion that there was no breach of obligation of directors.
Toshiro Nakaya (seal)
Standing Statutory Auditor
Hiroyuki Watanabe (seal)
Standing Statutory Auditor
Masahiro Yoshiike (seal)
Statutory Auditor
Takaharu Dohi (seal)
Statutory Auditor
Note: Mr. Hiroyuki Watanabe of Standing Statutory Auditor and Messrs.
Masahiro Yoshiike and Takaharu Dohi of Statutory Auditors are outside
auditors provided in Article 18, Paragraph 1 of the "Law for Special
Exceptions to the Commercial Code Concerning Audit, etc. of Kabushiki-
Kaisha".
<PAGE>
REFERENTIAL DOCUMENTS REGARDING
--------------------------------
THE EXERCISE OF VOTING RIGHTS
-----------------------------
(PROXY STATEMENT)
-----------------
1. Total Number of shares held by shareholders with voting rights:
955,252,000 shares
2. Explanations of items of business:
1st Item of Business: Matters concerning the approval of the
proposed Appropriation of Profit for the
131st business term (April 1, 1999 - March
31, 2000)
The proposal for appropriation of profit is as described in EXHIBIT IV (see
page 39).
Based on our comprehensive consideration of our current fiscal year's
performance and dividend payout ratio, we decided for the amount of cash
dividend per share as of the end of this period be JPY3.00 per share which is
the same amount as the interim dividend for the current fiscal year and the
dividend of the previous fiscal year.
2nd Item of Business: Matters concerning the election of two
directors
The terms of office of two directors, Messrs. Satoru Anzaki and Toshitaka
Hagiwara, will terminate as of the close of this General Shareholders' Meeting
(hereinafter, the "Meeting"). Last year, we effected reforms to the board by
decreasing the number of directors and inviting outside directors, and we also
introduced the "Executive Officer" system and the "Global Officer" system. We
hope to achieve a further strengthened corporate governance with the board of
directors comprised of small number of members.
Thus, an election of two directors is requested and the following
candidates are nominated for the positions.
<PAGE>
46
DIRECTOR CANDIDATES
-------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Name Number of Shares
---- ----------------
(Date of Birth) Brief Personal History of the Company
--------------- ---------------------- --------------
Held
----
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Satoru Anzaki 4/1961 Joined the Company
(March 3, 1937)
3/1985 Director
11/1988 Managing Director
6/1991 Executive Managing 118,488
Director
6/1995 President and
Representative Director
(current position)
-----------------------------------------------------------------------------------------------
Toshitaka Hagiwara 12/1969 Joined the Company
(June 15, 1940)
6/1990 Director
6/1995 Managing Director
6/1997 Executive Managing
Director
6/1999 Executive Vice President 35,559
and Representative
Director
(current position)
(Representative positions in other
companies)
President and Representative Director of
Komatsu General Service , Inc.
-----------------------------------------------------------------------------------------------
</TABLE>
3rd Item of Business: Matters concerning the election of two
statutory auditors
The term of office of Statutory Auditors, Messrs. Hiroyuki Watanabe and
Masahiro Yoshiike, will expire at the close of this Meeting.
Accordingly, it is proposed that two statutory auditors be elected. The
following candidates are nominated for the position.
<PAGE>
47
STATUTORY AUDITOR CANDIDATES
----------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Name Brief Personal History Number of
---- ---------------------- ---------
(Date of Birth) (Positions held in other companies) Shares of the
--------------- ----------------------------------- -------------
Company Held
------------
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Hiroyuki Watanabe 4/1963 Joined the Company
(August 19, 1938)
6/1989 Director of Komatsu Forklift
Co., Ltd.
3/1992 Retired from the Company
6/1994 Managing Director of Komatsu 16,000
Forklift Co., Ltd.
6/1996 Executive Managing Director of
Komatsu Forklift Co., Ltd.
6/1997 Standing Statutory Auditor of the
Company (current position)
------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
48
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------------------------------------
Masahiro Yoshiike 4/1963 Joined The Taiyo Mutual Life
(March 23, 1940) Insurance Co.
7/1990 Director of the above Company
4/1991 Managing Director of the above
Company
7/1995 President and Representative
Director of the above Company 2,000
(current position)
6/1997 Statutory Auditor of the
Company (current position)
(Representative positions in other
companies)
President and Representative Director of the
Taiyo Mutual Life Insurance Company
-----------------------------------------------------------------------------------------------
</TABLE>
(Note 1) Messrs. Hiroyuki Watanabe and Masahiro Yoshiike satisfy the conditions
of outside auditors provided in Article 18, Paragraph 1 of the "Law for Special
Exceptions to the Commercial Code Concerning Audit, Etc. of Kabushiki Kaisha".
(Note 2) Mr. Masahiro Yoshiike concurrently serves as the President and
Representative Director of the Taiyo Mutual Life Insurance Company from which
the Company is receiving long-term loans.
4th item of Business: Matters concerning the acquisition of
treasury shares for transfer to the directors
and employees
The resolution of the shareholders is requested for the Company to acquire
1.2 million ordinary shares of the Company's treasury shares with par value at a
maximum total acquisition price of JPY1 billion during the period from the
closing of this Meeting until the end of the next Meeting, for transfer to the
Company's directors and employees in the following manner in accordance with the
provisions set forth in Article 210-2 of the Commercial Code for the purpose of
providing an incentive to and lifting the morale of the directors and employees
towards the improvement of the Company's business performance.
If the total number of the above shares cannot be acquired at the maximum
acquisition price stipulated above, the above total number of shares to be
acquired and the number of shares to be transferred to the grantees of the
rights will be decreased accordingly by a resolution of the Board of Directors.
<PAGE>
49
(Outline of the Transfer)
(1) Manner of Transfer of the Shares
To be conducted as provided in Article 210-2, Paragraph 2, Item 3 of the
Commercial Code, "Agreement to grant rights to acquire the shares of the Company
from the Company at the price set forth in advance" (hereinafter referred to as
the "Agreement"). Such Agreement shall be concluded between the Company and
each of the persons who are granted with such rights in accordance with the
resolutions to be passed at this Meeting and the future Board of Directors
Meeting.
(2) Type of Shares Subject to Transfer
The Company's ordinary shares with par value
(3) Persons to be Granted the Rights, and the Number of Shares to be Granted
(a) The following directors remaining in office as of the closing of this
Meeting (7 persons)
<TABLE>
<CAPTION>
Name Number of shares Name Number of shares
---- ---------------- ---- ----------------
<S> <C> <C> <C>
Tetsuya Katada 80,000 Satoru Anzaki 80,000
Masahiro Sakane 70,000 Toshitaka Hagiwara 70,000
Koji Ogaki 60,000 Norimichi Kitagawa 60,000
Arlie G. Tucker 20,000
</TABLE>
(b) The following executive officers pursuant to the Company's Executive
Officer system, and the counsels (riji), chief technician, chief technical
supervisors, and those who are given the treatment of counsels as of the
closing of this Meeting (39 persons)
Name Number of Name Number of
---- --------- ---- ---------
shares shares
------ ------
Kazuhiro Aoyagi 60,000 Naomi Anesaki 60,000
Kunihiko Komiyama 40,000 Hisashi Wada 40,000
Masaru Fukase 40,000 Teruo Nakahara 40,000
Kunio Noji 40,000 Kiyokazu Baba 20,000
Shuji Sugi 20,000 Susumu Isoda 20,000
Yoshitaka Ohmura 20,000 Teruo Nagayasu 20,000
Kanetake Nakatani 20,000 Yuzo Tsumura 20,000
<PAGE>
50
Masahiro Yoneyama 20,000 Shigeki Fujimori 20,000
Munenori Nakao 20,000 Yuji Watanabe 20,000
Kenji Kinoshita 20,000 Kanichi Kadotani 10,000
Kanenobu Yoshida 10,000 Takeyuki Sakata 10,000
Tomiji Ohara 10,000 Toshiji Onuma 10,000
Yoichi Kobayashi 10,000 Masatsugu Nagatomo 10,000
Mamoru Hironaka 10,000 Tetsuya Nakayama 10,000
Yoshito Maeyama 10,000 Masayuki Sato 10,000
Yasuo Kimura 10,000 Teruaki Noda 10,000
Yasuo Suzuki 10,000 Junro Kawanabe 10,000
Yoshinori Komamura 10,000 Kenichi Nakamura 10,000
Makoto Nakamura 10,000 Yuzo Suzuki 10,000
Tetsuo Takiguchi 10,000
(4) Purchase Price
The purchase price of the subject shares shall be in the amount of the
average of the closing price of the Company's ordinary shares with par value
(ordinary trades) of each day (excluding days on which there are no trades of
the shares) of the month immediately preceding the month in which the date of
the grant falls, at the Tokyo Stock Exchange, multiplied by 1.05, with fractions
less than one yen being rounded up to a whole yen. However, the purchase price
shall not be less than the closing price of such shares on the date of the
grant.
If the shares are subject to a stock split or if the new shares are issued
at a price below the market value (excluding those issuable upon conversion of
convertible bonds or exercise of warrants), the purchase price shall be adjusted
in accordance with the formula below, with fractions less than one yen being
rounded up to a whole yen.
<TABLE>
<S> <C> <C> <C> <C>
Number of Number of newly Amount paid per
currently + issued issued shares x share
shares
-----------------------------------------
Purchase price Purchase Price Stock price before stock split
= after before or new issuance
adjustment X adjustment
--------------------------------------------------------------
Number of currently issued shares + Increased number of
shares due to stock split or issuance of new shares
</TABLE>
(5) Period for Exercising the Rights
<PAGE>
51
From July 1, 2001 to June 30, 2006. Notwithstanding the foregoing, if any
of the persons who are granted the above rights dies before the end of the
exercising period, his or her heir may exercise the rights within 24 months of
the dated of the death of the person.
(6) Conditions for Exercising the Rights
(a) Any of the persons who have been granted the above rights may exercise his
or her rights pursuant to the Agreement even after the person is no longer
a director or an employee of the Company. If any of the persons granted
the rights dies, his or her heir may exercise the rights pursuant to this
Agreement.
(b) The granted rights may not be transferred or pledged.
(c) The other conditions to the exercise of rights shall be provided in the
Agreement.
END
[Notice]
Pursuant to the provisions of Article 7-2 of the Articles of Incorporation
of the Company, it was resolved at the Board of Directors Meeting of the Company
held on May 2, 2000 to acquire and cancel by appropriating to profit treasury
shares with a maximum of 10 million ordinary shares with par value at a total
acquisition price of JPY7 billion by the closing of the next Meeting to be held
in June 2000.
In accordance with this resolution, the Company acquired 10 million
ordinary shares with par value at a total acquisition price of JPY6,340,500,000
and completed procedures for cancellation of these shares on May 17, 2000.
<PAGE>
52
(TRANSLATION)
INSTRUCTION CARD
----------------
CONCERNING THE EXERCISE OF VOTING RIGHTS
----------------------------------------
To: KOMATSU LTD.
Number of Voting Shares: ____________ shares
The undersigned hereby exercises its voting rights as indicated below in
respect of the items of business proposed in the 131st Ordinary General Meeting
of Shareholders of KOMATSU LTD. to be held on June 28, 2000.
This Instruction Card will also be effective in the event of an adjournment
or continuation of the meeting.
<TABLE>
<S> <C> <C>
Re: 1st Item of Business:
Matters as proposed are ................ approved
disapproved
2nd Item of Business:
Matters as proposed are ................ approved
(excluding ________)
disapproved
3rd Item of Business:
Matters as proposed are ................ approved
(excluding ________)
disapproved
4th Item of Business:
Matters as proposed are ................ approved
disapproved
</TABLE>
June ___, 2000
Name of Shareholder (Seal)
---------------------------
* * *
(Note) Please be advised that if no instruction is indicated for any item of
business above, the voting rights attached to your shares shall be
voted in favor of the approval of such item.
Komatsu Ltd.
