<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 May, 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
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INFORMATION TO BE INCLUDED IN REPORT
------------------------------------
1. Three company announcements made on May 2, 2000.
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: May 10, 2000 By: /s/ Masaru Fukase
----------------------
Masaru Fukase
Senior Executive
Officer
<PAGE>
NEWS RELEASE
[LETTERHEAD OF KOMATSU APPEARS HERE]
KOMATSU DECIDES ON ITS MID-RANGE MANAGEMENT STRATEGY
"G" TO THE 21ST
Following the review of its "G" 2000 Mid-range Management Strategy which set
forth the goals for a period ending March 2001, Komatsu Ltd. has decided on a
new mid-range management strategy dubbed "G" to the 21st for a 3-year period
from fiscal 2001 to 2003. "G" of the "G" to the 21st stands for the Global
Growth, underscoring the Company's strong determination to sustain growth in the
21st century.
The business environment for the Company has been changing at a dazzling
rate, represented by progressive globalization, evolution of information
technology (IT) and increased importance of addressing environmental issues.
Having anticipated such changes, Komatsu has already started some business
efforts in the respective fields. However, in order to come out as a winner in
the 21st century by further strengthening and developing its competitive edges,
the Company is ready to deploy its management strategy based on the "G" to the
21st.
1. Basic Concepts of the "G" to the 21st Mid-range Management Strategy
"Global," "Environment," and "e-Komatsu" represent the vital keywords for
the growth of Komatsu in the 21st century. In addition to further advancing
its global business as one of the goals of the "G" 2001 Mid-range Management
Strategy, the "G" to the 21st will includes new changes as additional points of
view achieve profit growth at a rate higher than that of sales, centering
around the growth strategy of the Company's construction and mining equipment
business.
The "G" 2000 Mid-range Management Strategy set its ROE and ROA goals at
10% and 8%, respectively, which will remain as our goals to achieve. We have
positioned the "G" to the 21st as a transit point for achieving these goals.
[Management Strategies]
1) To implement new growth strategies for the construction and mining equipment
business.
2) To further expand environment-related business areas as a leading company,
while working to reduce environmental stress in all aspects of R&D,
production, and product support.
3) To concentrate where Komatsu can maintain its technological edge on a global
basis.
4) To deploy IT in the form of "e-KOMATSU" in order to realize growth of all
businesses, differentiation with other companies and Komatsu's competitive
edges.
Based on the global network built up over the years, the Company will
press powerfully ahead with IT-driven business deployment. Centered on the
e-KOMATSU Division as an across-the-company organization, the Company will
strive to combine IT with all business activities, taking advantage of its
strengths and unique characteristics.
2. Management Goals
(Consolidated) Management Goals of the "G" to the 21st
<TABLE>
<CAPTION>
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Fiscal 2000 (Actual Results) Fiscal 2003 (Goals)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales (Yen) 1,055 billion (Yen) 1,180 billion
- -------------------------------------------------------------------------------------------------------------
</TABLE>
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-4-
<TABLE>
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Profit (Yen) 17 billion (Yen) 84 billion
- -------------------------------------------------------------------------------------------------------------
Net Profit (Yen) 13 billion (Yen) 34 billion
- -------------------------------------------------------------------------------------------------------------
Free Cash Flows (Yen) 37 billion (Yen) 37 billion
- -------------------------------------------------------------------------------------------------------------
ROE 2.7% 6.5%
- -------------------------------------------------------------------------------------------------------------
ROA 1.3% 6.0%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Note: ROE (Return on Equity) = Net Profit/Shareholders' Equity
ROA (Return on Assets) = Pre-tax Profit/Total Assets
3. New Growth Strategy for the Construction and Mining Equipment Business
Komatsu will work to create a new business model for its construction and
mining equipment business, encompassing a range of activities from "hardware
sales" to "solutions provider." In other words, this growth strategy becomes
a possibility by adding IT to the existing advantages and strengths the
Company possesses in the forms of "global sales and service networks," "brand
power and overwhelming stock of products for allocation" and "internal
production of key components." "e-Komatsu" is already in its operational
phase, positioned to transform Komatsu itself.
Komatsu has defined the following four initiatives as the core of its
growth strategy for the construction and mining equipment business:
1) Globalization;
2) Full-line product range;
3) Environment-related businesses; and
4) Solution to different stages of the product lifecycle.
(Growth Strategy for the Construction and Mining Equipment)
Solution-Providing
--------------------
Insurance
--------------------
--------------------
Used Equipment
--------------------
--------------------
Lease & Rental
--------------------
--------------------
Parts & Service
--------------------
--------------------------------------------------
Environment Expansion of
Environment- -related New Equipment Overseas Globalization
related Areas Businesses Sales Market
--------------------------------------------------
Full-line Product
Range
---------------------
New business areas
1) Globalization
Komatsu has led other companies in the industry in establishing its sales,
service and manufacturing bases in the key overseas markets. From now on, the
Company will press ahead with the creation of customer-driven organization,
while increasing its market presence with finely-tuned marketing strategies.
At the same time, the Company will seek to achieve differentiation through
the launch of new products matching regional attributes, along with model
changes of its existing products by strengthening its marketing activities
attuned to particular market characteristics and globalizing its R&D.
2) Full-line Strategy
Komatsu will proactively consider and establish strategic alliances with
other companies for high-growth
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products which the Company does not handle and in high-growth business areas.
3) Environment-related Businesses
Komatsu has striven to develop key components and products such as
environment-friendly engines which anticipate emission control regulations,
while also tackling the issue of reducing environmental stress at its plants.
From now on, the Company will work harder to support customers' environmental
management efforts on their job sites.
Komatsu also identifies the growing importance of environment-
consciousness as the source of important business opportunities. With a huge
room left open for Komatsu to expand its environment-related businesses, the
Company is convinced that the chances for success are high.
4) Solutions to Different stages of the Product Lifecycle
With the restructuring of Japanese production scheduled for completion during
the current fiscal year, along with sales, service and distribution reformed
in fiscal 1998, the Company has firmly secured its position to generate
stable earnings. From now on, the Company will strive to expand sales and
profits by vigorously addressing after-market businesses, ranging from lease
and rental, parts and service, and used equipment sales to logistics, and
marine and fire insurance.
In addition, the Company will work to achieve differentiation through the
utilization of IT. While its DISPATCH mine management systems which utilize
GPS are widely used at large-scale mines around the world, the Company will
also promote new IT-based business deployment in the rental and used
equipment sales businesses.
The very cornerstone of Komatsu's management lies in its commitment to
Quality and Reliability. This commitment is not only limited to 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
organizations, businesses, employees and management. In this light, the top
management task is to heighten this Quality and Reliability year after year.
Through execution of the "G" to the 21st, Komatsu will strive to improve
Quality and Reliability of its management in order to further enhance its
corporate value.
Cautionary Statement
The announcement set forth herein contains forward-looking statements which
reflect management's current views with respect to certain future events,
including expected financial position, operating results, and business
strategies. These statements can sometimes be identified by the use of forward-
looking words such as "will," "believes," "should," "projects," and similar
terms and expressions that identify future events or expectations. Actual
results may differ materially from those projected and the achievement of such
forward-looking statements cannot be assured.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include unanticipated changes in
the demand for the Company's principal products which may come about by changes
in economic conditions in the Company's principal markets, changes in exchange
rates or the impact of increased competition; unanticipated cost or delays
encountered in achieving the Company's objectives with respect to globalized
production sourcing and new Information Technology tools; uncertainties as to
the results of the Company's research and development efforts and its ability to
access and protect certain intellectual property rights; and, the impact of
regulatory changes and accounting principle and practice.
<PAGE>
NEWS RELEASE
[LETTERHEAD OF KOMATSU APPEARS HERE]
KOMATSU ANNOUNCES CONSOLIDATED BUSINESS RESULTS
FOR FISCAL 2000 AND OUTLOOK FOR FISCAL 2001
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The accompanying financial information is prepared in accordance with generally
accepted accounting principles in the United States of America.
Komatsu Ltd. posted consolidated net sales of (Yen)1,055.6 billion (US$10,249
million, at US$1=(Yen)103) for fiscal 2000 ended March 31, 2000, registering a
slight decline of 0.6% from the previous year. Operating income for the year
grew 304.5% over the previous year, to (Yen)17.3 billion (US$168 million). Net
income for the year improved to (Yen)13.3 billion (US$130 million), recovering
from a loss recorded last year.
Millions of yen and US dollar, except per share amounts
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
2000 1999 2000
<S> <C> <C> <C>
Net sales (Yen) 1,055,654 (Yen)1,061,597 $10,249
Domestic 553,822 523,946 5,377
Overseas 501,832 537,651 4,872
Operating income 17,318 4,281 168
Net income (loss) 13,395 (12,378) 130
Earnings (loss) per share -- Basic (Yen) 13.85 (Yen) (12.77) 13.45
- ----------------------------------------------------------------------------------------------
</TABLE>
1. Management Highlights
Komatsu Ltd. worked on the following three tasks to improve business results as
the highest management priority during the year under review:
(1) To further improve its corporate governance, centering on the reform of the
Board of Directors;
(2) To recover profitability of its Japanese construction equipment business;
and
(3) To restructure its electronics business.
The Company was able to make important progress in each of the three tasks
above, reflecting the concerted efforts and diligence of all management officers
and employees.
The Company reorganized the Board of Directors and newly appointed
Executive Officers and Global Officers, demonstrating a proactive stance for its
corporate governance by establishing the new management structure. The new Board
of Directors, including a new member appointed from outside the Komatsu Group,
is now able to discuss urgent matters thoroughly and undertake speedy decision-
making.
The Company has continued to ensure the successful restructuring of
production as the highest priority to recover profitability of its Japanese
construction equipment business since its launching in the fall of 1998. The
Company completed all the plans for the 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 earnings even when total demand in the Japanese
market remains at about the current level.
With respect to the electronics business, 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
6
<PAGE>
in Japan and Taiwan, Komatsu Electronic Metals Co. commenced production in
Taiwan in a well-timed manner. The Company's electronics business is on a steady
course of renewing growth.
2. Business Results by Operation
Construction and Mining Equipment
Sales of construction and mining equipment for fiscal 2000 totaled (Yen)713.5
billion (US$6,927 million), down 2.4% (up 11.8% in U.S. dollar) from the
previous year.
In Japan, sales of construction equipment advanced 8.8% over the previous
year, to (Yen)268.8 billion (US$2,610 million) for the year. While demand for
construction equipment had deteriorated since fiscal 1997, it began to improve
from the start of fiscal 2000 over the previous year. This increase in demand
was supported by positive effects of the government's comprehensive economic
stimulus package implemented two years ago as well as improved housing. In
response to growing interest in rental use among customers, the Company
continued to aggressively reinforce the rental equipment business especially
with its distributors and their rental companies. The Company also expanded
sales by focusing its efforts on high-growth products and market segments, such
as the AVANCE NRO hydraulic excavators with small, rear-swing radius and the
mobile recycler series for conserving the earth's environment.
With respect to the restructuring of Japanese production, the Company
completed transfer of motor graders and large wheel loaders to the Mooka Plant
from the Kashiwazaki and Kawagoe plants, respectively, on schedule during the
year. Production transfer of small and medium-sized wheel loaders from the
Kawagoe Plant to the Awazu Plant was also successfully managed as planned.
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.
Sales outside of Japan totaled (Yen)444.6 billion (US$4,317 million) for the
year, down 8.1% (up 5.3% in U.S. dollar) from the previous year.
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 FKI Fai Komatsu Industries S.p.A. for utility
equipment, reinforced sales operation, expanded respective market-driven product
mix, and advanced sales for the year.
In Southeast Asia, where economies have remained depressed since the
currency crisis of 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 and South America, the Middle
East and other regions, resulting in a decline in each regional sales for the
Company.
Concerning 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 capitalizing on expanded demand in Europe, the Company launched export sales
of backhoe loaders in North America, produced by FKI Fai Komatsu Industries
S.p.A. in Italy.
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 commodities. As a result, sales of mining equipment
declined from the previous year. 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
7
<PAGE>
business foundation. At the same time, the Company introduced the super large
WA1200 wheel loader and the renewed model of the large D475 bulldozer in
preparation for recovery of demand.
Electronics
Fiscal 2000 sales from electronics operations improved 4.3% over the previous
year, to (Yen)90.3 billion (US$877 million).
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 fiscal 2000 on a non-
consolidated basis as planned. In December 1999, the company decided to transfer
production of discrete wafers from the Hiratsuka Manufacturing Department and
consolidate at the Nagasaki and Miyazaki plants over the next two years. The
company will be better positioned to further improve efficiency by consolidating
Japanese production at these two plants and to deliver high-quality wafers
timely. 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 advancing there.
During the year, Formosa Komatsu Silicon Corporation, a subsidiary of Komatsu
Electronic Metals, was approved by its customers as their supplier and launched
successful shipment of wafers.
Sales of polycrystalline silicon were slow during the year, adversely
affected by inventory adjustment of the silicon wafer manufacturing industry.
Meanwhile, sales of Excimer laser units expanded significantly over the previous
year, supported by aggressive market introduction of a new model. The Company
sustained brisk sales of IT-related devices such as LAN devices and touch panel
computers. Komatsu Electronics, Inc. also continued to boost sales of
thermoelectric modules.
Civil Engineering and Construction
Sales in the civil engineering and construction business grew 2.1% to (Yen)78.6
billion (US$764 million) for the year, upturning three consecutive years of
sales decline. The Japanese construction industry continued to face a 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. As a result of
steady efforts to improve and strengthen the financial position, profits
increased over the previous year.
In February 2000, Komatsu Construction Ltd. issued new shares in the form
of third-party allotment to Komatsu Ltd. to increase its shareholders' equity
and improve its financial position. As a result, the Company now owns 68.0% of
the shares.
Industrial Machinery
Sales in the industrial machinery business dropped 27.7% from the previous year,
to (Yen)30.8 billion (US$300 million), largely due to depressed demand in the
Japanese market. However, Komatsu Industries Corporation, in charge of sheet
metal forming machines and small and medium-sized presses, 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 alliance agreement reached in 1995 with TRUMPF
GmbH+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.
Sales of large presses declined as adversely affected by restraints in
investment by the automobile manufacturing industry. However, the Company
strengthened sales operation outside Japan, winning new orders from a major
European automaker during the year.
Others
Sales in the other businesses climbed 14.5% to (Yen)142.2 billion (US$1,381
million) for the year. Komatsu Zenoah Co. expanded sales of agricultural and
forestry machines over the previous year, centering on eco-friendly systems,
including the chipper-shredder. Sales of engines and other components also grew.
However, sales in the logistics business and in steel casting declined from the
previous year.
8
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Conditions of Consolidated Cash Flows
Net cash provided by operating activities for the year amounted to (Yen)34.2
billion (US$332 million), net cash provided by investing activities to (Yen)18.8
billion (US$183 million), and net cash used in financing activities to (Yen)61.5
billion (US$598 million). As a result, cash and cash equivalents at the end of
the year totaled (Yen)80.4 billion (US$781 million), a decrease of (Yen)6.8
billion (US$66 million) from the previous year.
Conditions of Year 2000 Readiness
The Company has addressed the Y2K issue as one of the most important management
tasks and has worked on it according to a well-defined plan. As a result, no
major problem has occurred to date at the Company or other companies of the
Komatsu Group.
Important Decisions Made or Important Facts Occurred and Important Subsequent
- -----------------------------------------------------------------------------
Events Occurred during the Year
- -------------------------------
[Joint Venture Agreement with Applied Materials of the U.S. Cancelled]
Applied Komatsu Technology, Inc., a joint venture manufacturer of LCD
manufacturing systems, accounted for by the equity method, notably improved
sales and earnings for the year, reflecting positive effects of large-scale
restructuring initiated two years ago. Expanded demand for flat panel displays
in Taiwan and other Asian countries also contributed to the improvement.
While the market should continue to grow on a long-range basis, the
percentage of the company's sales in Japan became smaller. The market is also
fiercely changeable, with the cycle of fluctuations getting shorter year after
year. Under such market conditions, there are limitations in making speedy,
accurate management decisions as a joint venture. In this light, Komatsu
determined that management transfer of the business to Applied Materials Inc.
would be the best choice and sold all of its 50% stake in the joint venture to
the American partner as of the end of October 1999.
[Komatsu, Komatsu Forklift and Linde of Germany Agreed on Cooperation]
To enhance the competitiveness of the forklift truck business, the Company and
Komatsu Forklift Co., Ltd., a manufacturer of forklift trucks, accounted for by
the equity method, reached a basic, mutual agreement with Linde AG of Germany on
the outline of their intent to cultivate global collaboration for the
manufacture and sales of lift trucks and related products in February 2000.
Under the current plan, Komatsu Forklift will acquire 10% of Fiat-OM (a Linde
subsidiary) shares, while Linde will acquire 10% of Komatsu Forklift shares. The
shares to be acquired by Linde will be made available through third-party
allotment of new shares.
When the third-party allotment is executed, the Company plans to
underwrite part of the allotment and raise its shareholding ratio in Komatsu
Forklift from the current 39.2% to a little over 45%, with a view to making
Komatsu Forklift a consolidated company in the future. The two companies are
discussing details.
[Komatsu Soft Shares Transferred to Toyo Information Systems]
In March 2000, the Company decided to establish an alliance with Toyo
Information Systems Co., Ltd. in the area of core systems to capitalize on the
rapid progress of Information Technology (IT), and transfer 65% of the
outstanding shares of Komatsu Soft Ltd. to Toyo Information Systems. Komatsu
Soft will grow and expand its business as a member of the Toyo Information
Systems Group. The Company sold the above-mentioned shares to Toyo Information
Systems, and Komatsu Soft became a subsidiary of Toyo Information Systems in
April 2000.
[Disposed Fixed Assets]
The Company sold the non-performing land of the former Nakamiya area on the site
of the Osaka Plant during the year.
[Repurchase and Retirement of Komatsu's Own Shares]
9
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At the Board of Directors meeting held on May 2, 2000, Komatsu Ltd. resolved to
appropriate retained earnings in order to repurchase and retire its own shares
up to a maximum aggregate acquisition cost of (Yen)7.0 billion or up to a
maximum of 10 million par value common shares pursuant to Article 3 of the Law
Concerning Special Exceptions to the Commercial Code Relating to the Procedures
for Cancellation of Shares.
3. Outlook for Fiscal 2001
As the Company continues to globalize its businesses, competition will become
more severe and complex, compounded by the accelerated speed of changes in the
world. While the Company's involvement in environmental protection issues is
becoming ever more important, the revolutionary progress of IT is requiring the
Company to redefine new business models. By viewing such changes as
opportunities in the business environment, the Company will further reinforce
globally consolidated management and implement measures to ensure sound
management and improve earnings in order to accomplish the goals of the "G" to
the 21st mid- range management strategy for fiscal 2003.
For the construction and mining equipment business, the Company is working
to expand its earnings and thrust for new growth based on globalized operations
in different regions of the world. Furthermore, by staying away from
conventional business concepts and practices, the Company will double its
efforts to flexibly offer solutions for which customers are looking.
With respect to the electronics business, the Company will continue to
converge its Groupwide strength to differentiate products and technologies and
improve profitability.
For industrial machinery and other businesses, the Company will
concentrate on the areas where it can demonstrate technological superiority on a
global basis and ensure steady profitability.
With these efforts already in progress, the Company projects consolidated
net sales of (Yen)1,050.0 billion and net income of (Yen)15.0 billion for fiscal
2001, the first year of the new mid-range management strategy. Foreign exchange
rates are premised at (Yen)100 to US$1 and (Yen)100 to EUR1 for fiscal 2001.
4. Distribution of Profits for Fiscal 2000 and 2001
With its basic policy on distribution of profits, the Company plans to set at
(Yen)3 cash dividends per share for fiscal period-end. The Company already paid
(Yen)3 for interim cash dividends per share. Cash dividends of (Yen)6 per share
are being planned for fiscal 2000. As a result, it is projected that the payout
ratio for fiscal 2000 will be 42.6%.
Similarly for fiscal 2001, the Company anticipates (Yen)3 each for interim
and fiscal period-end cash dividends per share ((Yen)6 for fiscal 2001), based
on its policy of distribution of profits and projected business results.
10
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Management Policy
Basic Management Policy
The very cornerstone of Komatsu's management lies in its commitment to Quality
and Reliability. This commitment is not only limited to 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 organizations,
businesses, employees and management. In this light, the top management task is
to heighten this Quality and Reliability year after year.
Mid- and Long-range Management Strategies and Tasks
- ----------------------------------------------------
In response to dramatic changes taking place in the global business environment,
Komatsu has recently reassessed the "G"2000 mid-range management strategy with
goals for March 31, 2001 in order to renew the course of growth as a true global
company in the 21st century.
In a new mid-range management strategy, the Company has included
additional perspectives to meet new changes, namely the dynamic progress of IT
(Information Technology) and conservation of the earth's environment. The
Company continues to advance the same globalization context of the "G"2000
strategy. 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
more than sales 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 is also
going to expand solutions business for customers by utilizing IT.
Outside of Japan, the Company is going to 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 and product support activities. The
Company has also introduced eco-friendly products including engines, hydraulic
and other key components for construction and mining equipment. As represented
by the mobile recycler series, the Company has introduced innovative
construction machinery designed expressly for environmental conservation. With
all these products which offer a great business opportunity, the Company is
going to 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 mid- and
long-range perspective, the Company is ready to meet drastic changes in the
market by differentiating products and technologies and making speedy management
decisions.
For industrial machinery, underground construction equipment, logistic
systems and other businesses, the Company is going to 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 "K-ing" 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 undertakings
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 is going to
publish its first annual Environmental Report. The Report will disclose 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.
11
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Management Goals
Under the new mid-range management strategy, the Company has the following
figures as management goals for March 2003. In addition to net sales and income,
the Company will work to ensure that each division accomplishes its respective
business plan. To improve its corporate value for shareholders, the Company is
also committed to concerting its efforts to build a strong, stable financial
position by defining specific goals for ROE, ROA and free cash flows.
In the previous "G"2000 mid-range management strategy, the Company set the
goals of 10% for ROE and 8% for ROA. By all means, these original goals must be
attained in the future. By positioning the new "G" to the 21st strategy as a
transit point for achieving these goals, the Company is emphasizing the growth
strategies for its construction and mining equipment business.
Goals of "G" to the 21st (Consolidated Basis)
<TABLE>
<CAPTION>
------------------------------------------------------------------
2003
Year ended March 31
------------------------------------------------------------------
<S> <C>
Sales (Yen)1,180 billion
------------------------------------------------------------------
Operating income (Yen)84 billion
------------------------------------------------------------------
Net income (Yen)34 billion
------------------------------------------------------------------
Free cash flows (Yen)37 billion
------------------------------------------------------------------
ROE 6.5%
------------------------------------------------------------------
ROA 6.0%
------------------------------------------------------------------
</TABLE>
Notes: ROE = Net income / Shareholders' equity
ROA = Income before income taxes / Total assets
Reorganization of the Board of Directors
In June 1999, the Company reorganized the Board of Directors and separated
management decision-making and supervisory functions from executive functions.
While eight members of the new Board of Directors are responsible for the former
duties, newly appointed Executive Officers with appropriate power are
responsible for the latter duties. Komatsu Electronic Metals Co., Ltd. and
Komatsu Zenoah Co., important consolidated subsidiaries engaging in the
Company's strategic businesses, similarly reformed their management structures.
As a result, speedy decision-making has become possible following thorough
discussion of urgent issues for the Komatsu Group.
At the same time, the Company also appointed Global Officers from presidents
of major Komatsu companies outside of Japan, who are positioned equally with
Executive Officers. To come ahead of the global, mega competition, Global
Officers are expected to be more actively involved in management of the Company.
Preparedness for Postretirement Benefits Accounting
The Company has worked to maintain a sound pension program by expanding the
percentage of amortization of liability for pension plans for prior service cost
and reassessing the planned rate of return. As a result, the Company had a
surplus of (Yen)1 billion under the new postretirement benefits accounting
effective April 1, 2000, applicable to the non-consolidated settlement.
In addition to previous efforts, the Company has decided to set up a
postretirement benefits trust effective for the year ended March 31, 2001. By
contributing shares owned by the Company through a trust bank, the Company will
continue to ensure the sound pension program by designating those shares as the
source of funds for payment of postretirement benefits in both consolidated and
non-consolidated settlements.
Basic Policy for Dividends
The Company works to build a sound and stable financial position and flexible
and agile corporate setup. Concerning cash dividends to shareholders, the
Company maintains the basic policy of redistributing profits by taking payout
ratios into account and linking with business results, as it secures sufficient
internal reserve for reinvestment.
12
<PAGE>
Cautionary Statement
The announcement set forth herein contains forward-looking statements which
reflect management's current views with respect to certain future events,
including expected financial position, operating results, and business
strategies. These statements can sometimes be identified by the use of
forward-looking words such as "will," "believes," "should," "projects," and
similar terms and expressions that identify future events or expectations.
Actual results may differ materially from those projected and the achievement
of such forward-looking statements cannot be assured.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include unanticipated changes
in the demand for the Company's principal products which may come about by
changes in economic conditions in the Company's principal markets, changes in
exchange rates or the impact of increased competition; unanticipated cost or
delays encountered in achieving the Company's objectives with respect to
globalized production sourcing and new Information Technology tools;
uncertainties as to the results of the Company's research and development
efforts and its ability to access and protect certain intellectual property
rights; and, the impact of regulatory changes and accounting principle and
practice.
13
<PAGE>
Consolidated Financial Highlights
---------------------------------
<TABLE>
<CAPTION>
Millions of yen & US dollars
except per share amounts
- ---------------------------------------------------------------------------------------------------------------
2000 1999 Changes(2000-1999)
Year ended March 31 Year ended March 31 Increase(Decrease)
--------------------------------------------------------------------------------------
Yen Dollar Yen Yen (%)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales 1,055,654 10,249 1,061,597 (5,943) (0.6)
Domestic 553,822 5,377 523,946 29,876 5.7
Overseas 501,832 4,872 537,651 (35,819) (6.7)
- ---------------------------------------------------------------------------------------------------------------
Income (loss) 19,395 188 ( 9,604) 28,999 -
before income
taxes
- ---------------------------------------------------------------------------------------------------------------
Net income 13,395 130 (12,378) 25,773 -
(loss)
- ---------------------------------------------------------------------------------------------------------------
Earnings (loss)
per share
Basic 13.85 13.45 (Yen)(12.77) 26.62 -
Diluted 13.76 13.36 (Yen)(12.77) 26.53 -
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Note:
1) . Number of consolidated subsidiaries: 102 companies
. Number of affiliated companies: 141 companies (including 39
companies accounted for by the equity method)
2) The translation of Japanese yen amounts into US dollar amounts is
included solely for convenience and has been made for 2000 at the rate
of (Yen)103 to $1, the approximate rate of exchange at March 31, 2000.
Financial Position
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total assets (Millions of yen) 1,375,280 1,524,600
- --------------------------------------------------------------------------------------------------------
Shareholders' equity (Millions of yen) 490,454 495,643
- --------------------------------------------------------------------------------------------------------
Equity ratio (%) 35.7 32.5
- --------------------------------------------------------------------------------------------------------
Shareholders' equity per share (Yen) 507.26 511.54
- --------------------------------------------------------------------------------------------------------
</TABLE>
Projection for FY2001 (Year ending March 31, 2001)
<TABLE>
<CAPTION>
Millions of yen
- ---------------------------------------------------------------------------------------------------------
Net sales Income before income taxes Net income
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The first half of FY2001 495,000 13,000 8,000
- ---------------------------------------------------------------------------------------------------------
The entire FY2001 1,050,000 28,000 15,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Consolidated Balance Sheets
---------------------------
As of March 31
<TABLE>
<CAPTION>
Millions of yen, Increase (Decrease)
-------------------------------------------------------------------------------
2000 1999 Changes
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(A) (B) (A)-(B)
Assets
- ------
Current Assets:
Cash and cash equivalents (Yen) 80,476 (Yen) 87,301 (Yen) (6,825)
Time deposits 915 844 71
Marketable securities 40,219 54,434 (14,215)
Trade notes and accounts receivable 368,452 374,157 (5,705)
Inventories 209,089 244,868 (35,779)
Other current assets 93,347 101,944 (8,597)
- ------------------------------------------------------------------------------------------------------------------------------
Total current assets 792,498 863,548 (71,050)
- ------------------------------------------------------------------------------------------------------------------------------
Investments 110,763 126,575 (15,812)
- ------------------------------------------------------------------------------------------------------------------------------
Property, plant, and equipment -
Less accumulated depreciation 397,534 440,706 (43,172)
- ------------------------------------------------------------------------------------------------------------------------------
Other assets 74,485 93,771 (19,286)
- ------------------------------------------------------------------------------------------------------------------------------
Total 1,375,280 1,524,600 (149,320)
- ------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Short-term debt (including current
maturities of long-term debt) 214,970 272,989 (58,019)
Trade notes and accounts payable 184,624 193,167 (8,543)
Income taxes payable 12,792 15,007 (2,215)
Other current liabilities 118,376 126,346 (7,970)
- ------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 530,762 607,509 (76,747)
- ------------------------------------------------------------------------------------------------------------------------------
Long-term liabilities 324,195 387,853 (63,658)
- ------------------------------------------------------------------------------------------------------------------------------
Minority interests 29,869 33,595 (3,726)
- ------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock 68,370 68,370 -
Capital surplus 117,366 117,083 283
Retained earnings 325,914 318,322 7,592
Accumulated other
comprehensive income (loss) (*) (19,590) (7,436) (12,154)
Treasury Stock (1,606) (696) (910)
-----------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity - net 490,454 495,643 (5,189)
-----------------------------------------------------------------------------------------------------------------------------
Total (Yen) 1,375,280 (Yen) 1,524,600 (Yen) (149,320)
- ------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
2000 1999 Changes
Increase(Decrease)
- ------------------------------------------------------------------------------------------------------------------------------
(*) Accumulated other comprehensive income:
Foreign currency translation adjustments (Yen) (39,724) (Yen) (24,159) (Yen) (15,565)
Net unrealized holding gains on securities
available for sale 23,467 25,650 (2,183)
Pension liability adjustments (Yen) (3,333) (Yen) (8,927) (Yen) 5,594
</TABLE>
15
<PAGE>
Consolidated Statements of Income
---------------------------------
(Years ended March 31)
<TABLE>
<CAPTION>
Millions of yen, Increase (Decrease)
---------------------------------------------------------------------
2000 1999 Changes
- -----------------------------------------------------------------------------------------------------------------------------------
(A) (B) (A)-(B) %
<S> <C> <C> <C> <C>
Revenues
- --------
Net sales (Yen) 1,055,654 (Yen) 1,061,597 (Yen) (5,943) (0.6)
Interest and other income 55,857 25,655 30,202
- ------------------------------------------------------------------------------------------------------------------------------------
Total 1,111,511 1,087,252 24,259 2.2
- -----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
- ------------------
Cost of sales 796,820 807,255 (10,435)
Selling, general, and administrative 241,516 250,061 (8,545)
Interest and other expenses 53,780 39,540 14,240
- -----------------------------------------------------------------------------------------------------------------------------------
Total 1,092,116 1,096,856 (4,740) (0.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes, -
minority interests, and equity in 19,395 (9,604) 28,999
earnings
----------------------------------------------------------------------------------------------------------------------------------
Income taxes 9,950 2,061 7,889
- -----------------------------------------------------------------------------------------------------------------------------------
Minority interests in income (loss) of (88) 6,862 (6,950)
consolidated subsidiaries - net
- -----------------------------------------------------------------------------------------------------------------------------------
Equity in earnings (loss) of affiliated
companies - net 4,038 (7,575) 11,613
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) (Yen) 13,395 (Yen) (12,378) (Yen) 25,773 -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Komatsu's comprehensive income (loss) consists of net income, change in
foreign currency translation adjustments, change in net unrealized holding
gains on securities available for sale, and change in pension liability
adjustments. Aggregated net comprehensive income (loss) for the years
ended March 31, 2000 and 1999 were 1,241 million yen and (19,643) million
yen, respectively.
16
<PAGE>
Consolidated Statements of Shareholders' Equity
-----------------------------------------------
(Years ended March 31)
<TABLE>
<CAPTION>
Millions of yen, Increase (Decrease)
----------------------------------------------------------
2000 1999 Changes
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(A) (B) (A)-(B)
Common stock
Balance, beginning of year (Yen) 68,370 (Yen) 68,416 (Yen) (46)
Purchase and retirement of common stock: - (46) 46
921,000 shares in 1999
- --------------------------------------------------------------------------------------------------------------------------------
Balance, end of year (Yen) 68,370 (Yen) 68,370 (Yen) 0
- --------------------------------------------------------------------------------------------------------------------------------
Capital surplus
Balance, beginning of year (Yen) 117,083 (Yen) 116,981 (Yen) 102
Sales of treasury stock 283 102 181
- --------------------------------------------------------------------------------------------------------------------------------
Balance, end of year (Yen) 117,366 (Yen) 117,083 (Yen) 283
- --------------------------------------------------------------------------------------------------------------------------------
Retained earnings
Appropriated for legal reserve
Balance, beginning of year (Yen) 20,200 (Yen) 19,921 (Yen) 279
Transfer from unappropriated retained earnings 231 279 (48)
- --------------------------------------------------------------------------------------------------------------------------------
Balance, end of year (Yen) 20,431 (Yen) 20,200 (Yen) 231
- --------------------------------------------------------------------------------------------------------------------------------
Unappropriated retained earnings
Balance, beginning of year (Yen) 298,122 (Yen) 319,054 (Yen) (20,932)
Net income(loss) 13,395 (12,378) 25,773
Cash dividends paid (5,803) (7,751) 1,948
Transfer to retained earnings appropriated for legal
reserve (231) (279) 48
Purchase and retirement of common stock - (524) 524
- --------------------------------------------------------------------------------------------------------------------------------
Balance, end of year (Yen) 305,483 (Yen) 298,122 (Yen) 7,361
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income(loss)
Balance, beginning of year (Yen) (7,436) (Yen) (171) (Yen) (7,265)
Other comprehensive income(loss) for the year, net of tax (12,154) (7,265) (4,889)
- --------------------------------------------------------------------------------------------------------------------------------
Balance, end of year (Yen) (19,590) (Yen) (7,436) (Yen) (12,154)
- --------------------------------------------------------------------------------------------------------------------------------
Treasury stock
Balance, beginning of year (Yen) (696) (Yen) - (696)
Purchase of treasury stock (925) (1,175) 250
Sales of treasury stock 15 479 (464)
- --------------------------------------------------------------------------------------------------------------------------------
Balance, end of year (Yen) (1,606) (Yen) (696) (910)
- --------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity (Yen) 490,454 (Yen) 495,643 (Yen) (5,189)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
Consolidated Statements of Cash Flows
-------------------------------------
(Years ended March 31)
<TABLE>
<CAPTION>
Millions of yen, Increase (Decrease)
----------------------------------------------------------------
2000 1999 Changes
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(A) (B) (A)-(B)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities (Yen) 34,224 (Yen) 34,346 (Yen) (122)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing 18,880 (64,003) 82,883
activities
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financial (61,565) 6,614 (68,179)
activities
- ----------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate change on cash and cash 1,636 1,082 554
equivalents
---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash (6,825) (21,961) 15,136
equivalents
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 87,301 109,262 (21,961)
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year (Yen) 80,476 (Yen) 87,301 (Yen) (6,825)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
Business Information
--------------------
1. Information by Business Unit
(1) Sales and Operating Profit (loss)
<TABLE>
<CAPTION>
Millions of yen
- ------------------------------------------------------------------------------------------------------------------
2000 1999
Year ended March 31 Year ended March 31
------------------------------------------------------------------------------------------
Operating Margin Operating Margin
Sales Profit (loss) % Sales Profit (loss) %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction & Mining
Equipment 716,800 28,445 4.0 732,770 30,963 4.2
- -----------------------------------------------------------------------------------------------------------------
Electronics 90,415 (9,839) (10.9) 86,710 (18,074) (20.8)
- -----------------------------------------------------------------------------------------------------------------
Civil Engineering &
Construction 85,252 801 0.9 90,715 (2,984) (3.3)
- -----------------------------------------------------------------------------------------------------------------
Industrial Machinery 33,785 (1,719) (5.1) 44,175 (1,961) (4.4)
- -----------------------------------------------------------------------------------------------------------------
Others 231,746 3,788 1.6 185,031 1,133 0.6
- -----------------------------------------------------------------------------------------------------------------
Total 1,157,998 21,476 1.9 1,139,401 9,077 0.8
- -----------------------------------------------------------------------------------------------------------------
Elimination & Corporate (102,344) (4,158) --- (77,804) (4,796) ---
- -----------------------------------------------------------------------------------------------------------------
Total 1,055,654 17,318 1.6 1,061,597 4,281 0.4
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Sales amount of each business unit includes inter-unit transactions.
(2) Assets, Depreciation, and Capital Expenditures
<TABLE>
<CAPTION>
Millions of yen
- ------------------------------------------------------------------------------------------------------------
2000 1999
------------------------------------------------------------------------------------
As of Year ended March 31 As of Year ended March 31
March 31 Mar. 31
------------------------------------------------------------------------------------
Assets Depreciation Capital Assets Depreciation Capital
Expenditures Expenditures
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction & Mining
Equipment 711,475 29,425 34,856 837,637 26,511 45,531
- ------------------------------------------------------------------------------------------------------------
Electronics 231,317 20,860 13,089 263,951 16,328 61,854
- ------------------------------------------------------------------------------------------------------------
Civil Engineering &
Construction 78,508 2,141 1,543 82,506 2,547 1,656
- ------------------------------------------------------------------------------------------------------------
Industrial Machinery 30,614 1,058 707 41,463 1,119 862
- ------------------------------------------------------------------------------------------------------------
Others 254,251 8,016 7,533 218,495 5,645 4,971
- ------------------------------------------------------------------------------------------------------------
Total 1,306,165 61,500 57,728 1,444,052 52,150 114,874
- ------------------------------------------------------------------------------------------------------------
Elimination & Corporate 69,115 --- --- 80,548 --- ---
- ------------------------------------------------------------------------------------------------------------
Total 1,375,280 61,500 57,728 1,524,600 52,150 114,874
- ------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
2. Information by Region
(1) Sales and Operating Profit (loss)
<TABLE>
<CAPTION>
Millions of yen
- -------------------------------------------------------------------------------------------------------------------
2000 1999
Year ended March 31 Year ended March 31
-------------------------------------------------------------------------------------------
Sales Operating Margin Sales Operating Margin
Profit (loss) % Profit (loss) %
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Japan 759,149 955 0.1 753,731 (10,052) (1.3)
- -------------------------------------------------------------------------------------------------------------------
Americas 253,991 12,354 4.9 299,784 7,594 2.5
- -------------------------------------------------------------------------------------------------------------------
Europe 129,407 4,284 3.3 121,514 9,253 7.6
- -------------------------------------------------------------------------------------------------------------------
Others 84,715 2,202 2.6 62,935 534 0.8
- -------------------------------------------------------------------------------------------------------------------
Total 1,227,262 19,795 1.6 1,237,964 7,329 0.6
- -------------------------------------------------------------------------------------------------------------------
Elimination & Corporate (171,608) (2,477) --- (176,367) (3,048) ---
- -------------------------------------------------------------------------------------------------------------------
Total 1,055,654 17,318 1.6 1,061,597 4,281 0.4
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Sales and operating profit (loss) amount of each region are based on the
regions where the Company and its consolidated subsidiaries locate.
(2) Assets
<TABLE>
<CAPTION>
Millions of yen
- -------------------------------------------------------------------------------------------------------
2000 1999
As of March 31 As of March 31
-----------------------------------------------------------------------------
Assets Ratio(%) Assets Ratio(%)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Japan 961,674 69.9 1,008,678 66.2
- ------------------------------------------------------------------------------------------------------
Americas 289,258 21.0 341,414 22.4
- ------------------------------------------------------------------------------------------------------
Europe 73,558 5.3 93,482 6.1
- ------------------------------------------------------------------------------------------------------
Others 83,760 6.1 89,151 5.8
- ------------------------------------------------------------------------------------------------------
Total 1,408,250 102.4 1,532,725 100.5
- ------------------------------------------------------------------------------------------------------
Elimination & Corporate (32,970) (2.4) (8,125) (0.5)
- ------------------------------------------------------------------------------------------------------
Total 1,375,280 100.0 1,524,600 100.0
- ------------------------------------------------------------------------------------------------------
</TABLE>
3. Export Sales
<TABLE>
<CAPTION>
Millions of yen
- --------------------------------------------------------------------------------------
2000 1999
Year ended March 31 Year ended March 31
- --------------------------------------------------------------------------------------
<S> <C> <C>
Export Sales 65,733 80,081
- --------------------------------------------------------------------------------------
</TABLE>
Note: Export sales represent the sales of the company and its domestic
consolidated subsidiaries to unaffiliated customers in foreign countries.
20
<PAGE>
Consolidated Sales by Operation
-------------------------------
<TABLE>
<CAPTION>
Increase (Decrease)
- ---------------------------------------------------------------------------------------------------------------------
2000 1999 Changes
Year ended March 31 Year ended March 31 (2000-1999)
--------------------------------------------------------------------------------------
(Yen) million Ratio(%) (Yen) million Ratio(%) (Yen) million (%)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction Domestic 268,867 25.5 247,102 23.3 21,765 8.8
& Mining
---------------------------------------------------------------------------------------------------
Equipment Overseas 444,662 42.1 483,975 45.6 (39,313) (8.1)
---------------------------------------------------------------------------------------------------
713,529 67.6 731,077 68.9 (17,548) (2.4)
- ---------------------------------------------------------------------------------------------------------------------
Electronics Domestic 62,530 5.9 56,903 5.4 5,627 9.9
---------------------------------------------------------------------------------------------------
Overseas 27,805 2.6 29,705 2.8 (1,900) (6.4)
---------------------------------------------------------------------------------------------------
90,335 8.6 86,608 8.2 3,727 4.3
- ---------------------------------------------------------------------------------------------------------------------
Civil Domestic 78,653 7.5 77,020 7.2 1,633 2.1
Engineering
---------------------------------------------------------------------------------------------------
& Overseas -- -- -- -- -- --
Construction
---------------------------------------------------------------------------------------------------
78,653 7.5 77,020 7.2 1,633 2.1
- ---------------------------------------------------------------------------------------------------------------------
Industrial Domestic 18,301 1.7 23,549 2.2 (5,248) (22.3)
---------------------------------------------------------------------------------------------------
Machinery Overseas 12,555 1.2 19,127 1.8 (6,572) (34.4)
---------------------------------------------------------------------------------------------------
30,856 2.9 42,676 4.0 (11,820) (27.7)
- ---------------------------------------------------------------------------------------------------------------------
Others Domestic 125,471 11.9 119,372 11.2 6,099 5.1
---------------------------------------------------------------------------------------------------
Overseas 16,810 1.6 4,844 0.5 11,966 247.0
---------------------------------------------------------------------------------------------------
142,281 13.5 124,216 11.7 18,065 14.5
- ---------------------------------------------------------------------------------------------------------------------
Total Domestic 553,822 52.5 523,946 49.4 29,876 5.7
---------------------------------------------------------------------------------------------------
Overseas 501,832 47.5 537,651 50.6 (35,819) (6.7)
---------------------------------------------------------------------------------------------------
1,055,654 100.0 1,061,597 100.0 (5,943) (0.6)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Financial Highlights of the Parent Company
------------------------------------------
The following financial information is prepared based on the non-consolidated
financial results of the parent company in accordance with generally accepted
accounting principles and practices in Japan.
<TABLE>
<CAPTION>
Millions of yen & US dollars
except per share amounts
- ----------------------------------------------------------------------------------------------------------------
2000 1999 Changes(2000-1999)
Year ended March 31 Year ended March 31 Increase(Decrease)
-------------------------------------------------------------------------------------------
Yen Dollar yen Yen (%)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales 441,423 4,286 475,700 (34,276) (7.2)
Domestic 281,029 2,728 278,284 2,745 1.0
Overseas 160,393 1,557 197,416 (37,022) (18.8)
- ----------------------------------------------------------------------------------------------------------------
Operating income 12,912 125 11,669 1,242 10.6
- ----------------------------------------------------------------------------------------------------------------
Ordinary income 9,936 96 8,504 1,431 16.8
- ----------------------------------------------------------------------------------------------------------------
Net income 13,612 132 2,172 11,439 526.5
- ----------------------------------------------------------------------------------------------------------------
Earnings per
Share
Basic (Yen)14.05 (cents) 13.64 (Yen) 2.24 (Yen)11.81 ---
Diluted (Yen)13.95 (cents) 13.54 --- --- ---
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Note:
1. The translation of Japanese yen amounts into United States dollar
amounts is included solely for convenience and has been made for 2000
at the rate of (Yen)103 to $1, the approximate rate of exchange at
March 31, 2000.
2. The numbers of shares were as follows:
. March 31,2000 --- 968,921,701
. March 31,1999 --- 968,921,701
3. The diluted earnings per share computations for fiscal 1999 were not
dilutive.
Dividends
- -----------------------------------------------------------------------
2000 1999
- -----------------------------------------------------------------------
Cash dividends per share (yen)
per annum 6.00 7.00
- -----------------------------------------------------------------------
Financial Position
- -----------------------------------------------------------------------
2000 1999
- -----------------------------------------------------------------------
Total assets ((Yen) million) 746,871 771,753
- -----------------------------------------------------------------------
Shareholders' equity ((Yen) million) 469,167 450,429
- -----------------------------------------------------------------------
Equity ratio (%) 62.8 58.4
- -----------------------------------------------------------------------
Shareholders' equity per share (Yen) 484.22 464.88
- -----------------------------------------------------------------------
22
<PAGE>
Sales by Operation
Increase (Decrease)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
2000 1999 Changes
Year ended March 31 Year ended March 31 (2000-1999)
------------------------------------------------------------------------------------
(Yen) million Ratio(%) (Yen) million Ratio(%) (Yen) million (%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Construction Domestic 202,763 45.9 194,357 40.9 8,406 4.3
-----------------------------------------------------------------------------------------------------
& Mining Overseas 138,607 31.4 169,965 35.7 (31,357) (18.4)
-----------------------------------------------------------------------------------------------------
Equipment 341,371 77.3 364,322 76.6 (22,951) (6.3)
- --------------------------------------------------------------------------------------------------------------------
Electronics Domestic 11,194 2.5 8,981 1.9 2,213 24.6
-----------------------------------------------------------------------------------------------------
Overseas --- --- --- --- --- ---
-----------------------------------------------------------------------------------------------------
11,194 2.5 8,981 1.9 2,213 24.6
- --------------------------------------------------------------------------------------------------------------------
Industrial Domestic 6,405 1.5 13,362 2.8 (6,957) (52.1)
-----------------------------------------------------------------------------------------------------
Machinery Overseas 5,613 1.3 14,841 3.1 (9,228) (62.2)
-----------------------------------------------------------------------------------------------------
12,018 2.7 28,204 5.9 (16,185) (57.4)
- --------------------------------------------------------------------------------------------------------------------
Others Domestic 60,665 13.7 61,582 12.9 (916) (1.5)
-----------------------------------------------------------------------------------------------------
Overseas 16,173 3.7 12,609 2.7 3,563 28.3
-----------------------------------------------------------------------------------------------------
76,839 17.4 74,192 15.6 2,646 3.6
- --------------------------------------------------------------------------------------------------------------------
Total Domestic 281,029 63.7 278,284 58.5 2,745 1.0
-----------------------------------------------------------------------------------------------------
Overseas 160,393 36.3 197,416 41.5 (37,022) (18.8)
-----------------------------------------------------------------------------------------------------
441,423 100.0 475,700 100.0 (34,276) (7.2)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Projection for FY2001 (Year ending March 31, 2001)
<TABLE>
<CAPTION>
Millions of yen
- --------------------------------------------------------------------------------------------------------------------
Net Sales Ordinary Income Net Income
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The first half of FY2001 205,000 4,000 4,000
- --------------------------------------------------------------------------------------------------------------------
The entire FY2001 440,000 12,000 8,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
NEWS RELEASE
------------
[LETTERHEAD OF KOMATSU]
Stock Option Scheme and Acquisition of Own Shares
Komatsu Ltd. presents the following notification of the decision made at its
Board of Directors meeting held on May 2, 2000, to propose a stock options
scheme and to acquire its own shares in order to carry out the stock options
scheme. The implementation of this decision by the Board of Directors is
conditional on approval of the proposal at the 131/st/ regular general meeting
of the shareholders to be held on Wednesday, June 28, 2000.
Comments
1. Description of the Share Acquisition
- ---------------------------------------
<TABLE>
<S> <C>
(1) Type of shares to be acquired: Par value common shares
(2) Total number of shares to be acquired: 1.2 million shares
(3) Total value of the share acquisition price ceiling: 1.0 billion yen
</TABLE>
2. Outline of the Transfer
- --------------------------
(1) Subjects of the Transfer
The subjects of the transfer shall include all current members of the Board
of Directors as of the 131st general meeting (7 persons), 19 of Executive
Officers and 8 of Global Officers as of the 131st general meeting, and those
employees who hold a rank equivalent to director (12 persons), based on the
Company's compensation system, and who are in office as of the 131st general
meeting.
(2) Number of Shares to be Transferred
A total of 440 thousand shares to the above-mentioned 7 directors and a total
of 760 thousand shares to the above-mentioned 39 officers and employees,
amounting to a combined total of 1.2 million shares, shall be transferred. A
breakdown of the number of shares to be transferred is given on the
attachment.
(3) Value of Shares to be Transferred
The value of the shares to be transferred shall be the average closing value,
multiplied by 1.05, of the Company's par value common shares averaged over
every business day of the month on the Tokyo Stock Exchange (with the
exception of days on which the Stock Exchange was closed) prior to the month
in which the grant of right was made (figures under one yen shall be counted
as one yen). However, the closing value on the date of the grant of right may
not be lower than the above average.
If the Company issues new shares at a price that is lower than the stock
split or the market price (excluding cases in which the right exercised
involves the conversion of a convertible bond or a subscription right), the
transfer price shall be adjusted according to the following formula (figures
under one yen shall be counted as one yen).
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No. of new shares issued x amount paid per share
No. of existing shares +----------------------------------------------
Price prior to stock split or issuance of new shares
Transfer price
after adjustment = transfer price prior to adjustment x ------------------------
No. of existing shares +
increased no. of shares
due to stock spilt or
issuance of new shares
(4) Method of Transfer
The "Contract Granting the Right to Demand the Transfer of Shares of the
Company's Stock Valued at a Certain Amount to be Set" (hereinafter the "Grant
Contract") shall be in accordance with the provisions stipulated in sub-
paragraph 3, paragraph 2, section 2 of Article 210 of the Commercial Code of
Japan. The Grant Contract shall be concluded between the Company and the
Subjects of the Transfer, in accordance with the previously mentioned
decisions of the general meeting of the shareholders and decisions to be made
in the future by the Board of Directors.
(5) Term of Exercise of Right
The term of exercise of right shall be from July 1, 2001, to June 30, 2006.
In cases in which the grantee of the right dies prior to the end of the term
of the exercise of the right, the right of exercise shall pass to the
successor (heir) of the decedent; however, the right may only be exercised
within a period not longer than 24 months from the date of death of the
decedent, notwithstanding the previous provisions.
(6) Conditions on the Right of Exercise
1) The grantee of the right may exercise this right according to the
provisions of the Grant Contract even after the grantee loses his/her
position as a director of the Company, an officer, or an employee. In
cases in which the grantee of the right dies, the successor of the grantee
may exercise this right according to the provisions of the Grant Contract.
2) It will be impermissible to transfer or pledge the right granted.
3) Any other conditions governing the exercise of rights shall be in
accordance with the provisions of the Grant Contract.
3. Reasons for Transfer
- -----------------------
To further raise the enthusiasm and morale of the Company's directors, officers
and employees, thereby improving its business results.
4. Others
- ---------
If it is not possible for the Company to acquire "the total number of shares to
be acquired" at the "total value of the share acquisition price," then the
Company shall be empowered, at the decision of the Board of Directors, to
reduce "the total number of shares to be acquired" and the "number of shares to
be transferred."
(end)
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Attachment
Individuals Eligible for Stock Options & the Number of Shares to be
Transferred
1. Members of the Board of Directors in office at the time of the
131/ST/ General Shareholders' Meeting (7 persons)
Tetsuya Katada 80,000 shares
Satoru Anzaki 80,000 shares
Masahiro Sakane 70,000 shares
Toshitaka Hagiwara 70,000 shares
Koji Ogaki 60,000 shares
Norimichi Kitagawa 60,000 shares
Arlie G. Tucker 20,000 shares
2. Executive Officers, Global Officers, and employees at the rank of
director-equivalent according to the Company's compensation system,
at the time of the 131/st/ General Shareholders' Meeting (39 persons)
Kazuhiro Aoyagi 60,000 shares Yoichi Kobayashi 10,000 shares
Naomi Anesaki 60,000 shares Yoshinori Komamura 10,000 shares
Kunihiko Komiyama 40,000 shares Kenichi Nakamura 10,000 shares
Hisashi Wada 40,000 shares Makoto Nakamura 10,000 shares
Masaru Fukase 40,000 shares Toshiji Onuma 10,000 shares
Teruo Nakahara 40,000 shares Yuzo Suzuki 10,000 shares
Kunio Noji 40,000 shares Tetsuo Takiguchi 10,000 shares
Kiyokazu Baba 20,000 shares Kanichi Kadotani 10,000 shares
Shuji Sugi 20,000 shares Kanenobu Yoshida 10,000 shares
Susumu Isoda 20,000 shares Takeyuki Sakata 10,000 shares
Yoshitaka Ohmura 20,000 shares Tomiji Ohara 10,000 shares
Teruo Nagayasu 20,000 shares Masatsugu Nagatomo 10,000 shares
Kanetake Nakatani 20,000 shares Mamoru Hironaka 10,000 shares
Yuzo Tsumura 20,000 shares Tetsuya Nakayama 10,000 shares
Masahiro Yoneyama 20,000 shares Yoshito Maeyama 10,000 shares
Shigeki Fujimori 20,000 shares Masayuki Satou 10,000 shares
Munenori Nakao 20,000 shares Yasuo Kimura 10,000 shares
Yuji Watanabe 20,000 shares Teruaki Noda 10,000 shares
Kenji Kinoshita 20,000 shares Yasuo Suzuki 10,000 shares
Junro Kawanabe 10,000 shares
26
