FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May 2002
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
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
----- -----
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
----- -----
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-________
INFORMATION TO BE INCLUDED IN REPORT
------------------------------------
1.
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, 2002 By: /s/ Kenji Kinoshita
-------------------------------
Kenji Kinoshita
Executive Officer
May 10, 2002
For Immediate Release
Komatsu Ltd.
2-3-6 Akasaka, Minato-ku,
Tokyo 107-8414, Japan
Corporate Communications
Tel: +81-(0)3-5561-2616
URL:http://www.komatsu.com/
KOMATSU ANNOUNCES CONSOLIDATED RESULTS FOR FISCAL 2002
AND OUTLOOK FOR FISCAL 2003
--------------------------------------------------------------------------------
The accompanying consolidated 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)1,035 billion (US$7,789
million, at US$1=(YEN)133) for fiscal 2002 ended March 31, 2002, down 5.5% from
the previous fiscal year. Loss before income taxes for the fiscal year
registered (YEN)106 billion (US$802 million). Net loss for the fiscal year
amounted to (YEN)80 billion (US$606 million).
Millions of yen and US dollar, except per share amounts
--------------------------------------------------------------------------------
2002 2001 2002
--------------------------------------------------------------------------------
Net sales (YEN)1,035,891 (YEN) 1,096,369 $7,789
Japan 478,187 586,865 3,596
Overseas 557,704 509,504 4,193
Income (loss) before income taxes (106,724) 20,064 (802)
Net income (loss) (80,621) 6,913 (606)
Net income (loss) per share --- Basic (YEN) (84.46) (YEN) 7.24 (63.5)
--------------------------------------------------------------------------------
1. Management Environment
During the fiscal year under review, Japanese capital investment and industrial
production sharply dropped as accompanied by eroded corporate earnings against
the backdrop of sluggish conditions of IT-related markets and deflationary trend
of the economy. Japan's unemployment rate remained at a record-high level. As
such, it is projected that the Japanese economy will register real negative
growth for the year. The U.S. economy began to generate steady momentum for
recovery later in the year. Nevertheless, it was on a declining trend when
viewed for the whole year. European economies also weakened for the year. All
combined, world economies slowed down simultaneously.
The business environment for construction and mining equipment became very
serious in Japan with over 20% decline of demand from the previous year, which
was impacted by reduced construction investment. Overseas, while the Chinese
market continued to expand during the year, demand in the major markets of North
America and Europe declined, reflecting economic slowdown in these regions. As a
result, overall overseas demand was slack for the year under review.
The electronics business of the Company witnessed a record-breaking drop of
the international semiconductor market in 2001, resulting in a drastic fall in
demand for silicon wafers and their raw materials, polycrystalline silicon.
Demand for thermoelectric modules for use in fiber optic communication networks
took a sharp downturn during the year, partly in reaction to surging growth in
demand during the previous year.
1
In these difficult conditions, Komatsu Ltd. embarked on the Reform of
Business Structure in order to transform its corporate structure into a new one
capable of expanding profits. As part of this reform commitment, the Company
consolidated some operations, restructured its organizations, improved
operational efficiency and cut back expenses. Particularly in Japan, the Company
solicited voluntary retirees and transferred employees to affiliated companies
in order to reduce personnel expenses.
For its construction and mining equipment business, the Company made
aggressive market launchings of the new GALEO series machines equipped with IT
and other latest technological features in Japan, leading other markets of the
world. At the same time, the Company worked to further expand business
involvement in after-sales downstream markets. Overseas, the Company concerted
efforts to secure profits by carrying out different measures according to
regions and products.
In response to deteriorated profitability of its electronics business, the
Company made thorough reassessment of the business structure and recorded
impairment losses on fixed assets of two U.S. subsidiaries.
While Komatsu is determined to bring about positive results from these
measures above, the Company recorded an extra loss by including expenses
associated with voluntary retirement, transfers to affiliated companies and
impairment losses of fixed assets for the electronics business for the year
under review.
2. Business Results by Operation
Construction and Mining Equipment
---------------------------------
Sales of construction and mining equipment for fiscal 2002 increased 1.8% from
the previous fiscal year, to (YEN)731.3 billion (US$5,499 million), consisting
of (YEN)260.3 billion (US$1,958 million), down 14.8% in Japan and (YEN)470.9
billion (US$3,541 million), up 14.2% outside of Japan.
Japanese demand for construction equipment fell sharply from the previous
year, as customers' desire for investment was critically influenced by cutback
in public investments by the government as part of its urgent measures to
accelerate structural reforms and reduced private-sector construction investment
under the sluggish economy. In addition, customers' reluctant attitudes for
investment were compounded by uncertainty caused by bankruptcies of large-scale
general contractors. In particular, with demand rapidly faltering in the last
half period, fiscal 2002 demand registered over a 50% drop in the value of
factory shipment of construction equipment for Japanese market when compared to
the last peak period of fiscal 1997.
Komatsu worked to expand sales by teaming up with its distributors
nationwide for aggressive sales promotion timely with the market launchings of
over 20 new models under the GALEO series, including a renewed model of its
flagship PC200 hydraulic excavator. The Company also stepped up its involvement
in the downstream markets, however, its efforts fell short of making up for the
sizable fall in demand for new equipment, and Japanese sales declined sharply
from the previous year.
Overseas sales improved over the previous year, supported by expanded sales
generated in regions other than North America and Europe. In North America,
while construction investment and housing starts remained steady, demand for
construction equipment declined for three successive years from the peak year of
1998. While carrying out well-defined measures according to products and
distributors, Komatsu implemented aggressive sales activities for the GALEO
series and other machines. The Company also facilitated inventory reduction of
its distributors, and began to see their orders increase later in the year. For
the mining equipment business, demand for coal hit bottom, reflecting increased
price and other factors, and Komatsu expanded sales of large bulldozers to coal
mines and achieved steady sales of super-large, electric-drive dump trucks to
copper mines. For the utility equipment business, the Company embarked on
production of backhoe loaders at a new plant in Newberry, South Carolina during
the last half period, while launching sales of new
2
skidsteer loaders developed by Komatsu Utility Europe S.p.A. As a result, the
Company became better prepared to capture future recovery of demand in North
America, the world's largest market for utility equipment.
In Europe, market demand remained strong in the United Kingdom and Italy
during the year under review. Meanwhile, in addition to Germany, the largest
European market for construction equipment, demand turned downward in France,
Spain and other countries. As a result, overall European market for construction
equipment including utility equipment contracted after continued expansion for
the last few years. Under such an environment, Komatsu secured sales at the same
level as the previous year by capitalizing on increased demand in east European
nations and introducing renewed models of skidsteer and wheel loaders.
In China where market demand continued to grow, Komatsu expanded sales for
the year centering on hydraulic excavators produced by Komatsu Shantui
Construction Machinery Co., Ltd., a joint venture with a Chinese company. To
further reinforce its Chinese business, the Company concerted its efforts to
strengthen its distributors through training programs under coordination of
Komatsu (China) Ltd.
As to the business in other regions of the world, Komatsu expanded
sales in the Pacific region with 930E super-large dump trucks delivered to coal
mines. In Southeast Asia, demand for equipment from the logging industry slowed
down but sales of mining equipment expanded in Indonesia. In the Near & Middle
East, the Company accelerated sales of large bulldozers for use in agricultural
land development. Sales in Africa were also buoyant centering on mining
equipment.
Electronics
-----------
Sales from the electronics business declined 34.8% from the previous year, to
(YEN)76.7 billion (US$577 million). Nonconsolidated sales in this business also
decreased with slower sales of FA equipment and LAN-related peripherals,
reflecting sluggish conditions of IT-related markets.
For the silicon wafer business of Komatsu, Komatsu Electronic Metals Co.,
Ltd. has focused production in Japan and Taiwan since 1999 and enhanced its
market presence in these two regions as its basic policy. The company placed
all-out efforts on reinforcement of corporate strength by enhancing product
competitiveness mainly for 200mm wafers and production efficiency and reducing
capacity costs. As a result, the company sustained ordinary profit, when it
registered a drastic decline in sales as adversely affected by sluggish demand.
Formosa Komatsu Silicon Corporation, a joint-venture entity with a local
partner, experienced a sharp fall of demand at the time of its full-scale
production start-up and recorded the results in need for great improvement.
Concerning Komatsu Silicon America, Inc. which had ceased manufacturing
operation, Komatsu decided not to use it as a manufacturing plant for silicon
wafers and changed its policy to sell or dispose of the fixed assets of the
company. Accordingly, the Company re-evaluated the fixed assets of Komatsu
Silicon America, Inc. and recorded an impairment loss of (YEN)24.9 billion.
Business results of Advanced Silicon Materials LLC. worsened from those for the
previous year reflecting a loss resulting from an impairment loss of fixed
assets in addition to reduced sales of polycrystalline silicon. Concerning its
Butte Plant in Montana, the company determined that it would be difficult to
sustain a sufficient rate of operation for the time being, and recorded an
impairment loss of (YEN)13.4 billion. The company also decided to discontinue
production at the Moses Lake Plant in Washington during the year and recorded an
impairment loss and other related cost totaling to (YEN)15.9 billion. The
company has reached a basic agreement with Renewable Energy Corporation of
Norway to establish a joint-venture company to convert the plant into one
dedicated to producing polycrystalline silicon for solar applications. The two
have begun discussions for more specific matters.
Performance of Komatsu Electronics, Inc. worsened from the previous year,
as sales of thermoelectric modules for use in fiber optic communication networks
suffered from a drastic drop in demand and those of temperature-control
semiconductor manufacturing equipment were adversely affected by reduced capital
investment of the industry.
3
Others
------
Consolidated net sales from other businesses declined 12.6% over the previous
year, (YEN)227.7 billion (US$1,713 million).
On a nonconsolidated basis, sales of large presses advanced, supported by
expanded investment by Japanese automobile manufacturers mainly in their
overseas plants. Sales to Japan Defense Agency remained steady in spite of a
decline in sales resulting from partial completion of commissioned research
projects. Sales of recycling plants and other environmental equipment declined
sharply from the previous year.
Komatsu Forklift Co., Ltd. implemented aggressive sales activities
including market launchings of battery-driven Arion Plus renewed models. Also
during the year under review, the company further reinforced its cooperative
relationship with Linde AG of Germany. While the company's U.S. manufacturing
subsidiary began OEM supply of forklift trucks to Linde's U.S. subsidiary,
Linde's Chinese subsidiary embarked on production of Komatsu Forklift-brand
forklift trucks. However, the company registered a considerable decline in sales
from the previous year, due to reduced demand for industrial vehicles in Japan
and overseas.
Komatsu Industries Corporation, a manufacturer of sheet metal forming
machinery and small and medium-sized presses, stepped up customer-tailored,
proposal-oriented sales and service activities based on products with unique
features, including transfer presses of the E2W Series, Twister Fine Plasma
cutting machines, and laser cutting machines made by TRUMPF GmbH of Germany, an
alliance partner. In spite of the extremely tough market conditions, the company
expanded both sales and profits for the year, after becoming profitable last
fiscal year.
Komatsu Zenoah Co. made strong sales of EZ Start brushcutters which feature
significantly improved ignition as well as brush-cutting tractors in Japan. The
company also received increased orders for blowers developed for the U.S.
market. As a result, the company sustained sales at about the same level from
the previous year.
3. Conditions of Consolidated Cash Flows
Net cash provided by operating activities for fiscal 2002 amounted to (YEN)60.3
billion (US$454 million), primarily supported by concerted efforts to reduce
receivables and inventories. Net cash used in investing activities was kept to
(YEN)16.9 billion (US$127 million) largely as a result of focused investment in
facilities and sale of non-performing assets. Net cash used in financing
activities totaled (YEN)40.4 billion (US$304 million), reflecting repayment of
interest-bearing debts with cash provided by operating activities. As a result,
cash and cash equivalents at the end of fiscal 2002 totaled (YEN)45.3 billion
(US$341 million), up (YEN)5.6 billion (US$42 million) over the previous year,
which includes an addition of (YEN)1.8 billion (US$14 million) resulting from
changed consolidation periods of subsidiaries.
4. Important Decisions Made or Important Occurrences during the Year and
Important Subsequent Events
Implementation of the Reform of Business Structure
--------------------------------------------------
Komatsu is earnestly implementing the Reform of Business Structure program in
order to overcome the current difficult conditions and accomplish early recovery
of business results after transforming its corporate structure into one that is
capable of expanding profits even under a low-growth business environment.
[Substantial Reduction of Capacity Costs]
While the Company initially planned to generate approximately (YEN)30 billion
annually as an effect of capacity cost reduction by the end of fiscal 2004, it
expects to accomplish this target by one year ahead of schedule. For fiscal
2004, the Company projects reduction of about (YEN)38 billion by adding
4
(YEN)8 billion of capacity costs. Extra expenses associated with early
retirement program and transfers of employees to affiliated companies in Japan
totaled (YEN)23.7 billion for the year.
[Impairment Losses of Fixed Assets of Subsidiaries in Electronics Business]
As described in the Business Performance above, the Company thoroughly
reassessed its electronics business in response to worsening profits and future
expectations. Komatsu Silicon America, Inc. and Advanced Silicon Materials LLC
recorded impairment losses of (YEN)24.9 billion and (YEN)27.2 billion,
respectively, thereby alleviating future risks.
Reinforcement of Alliances
--------------------------
[Cooperation with Volvo Construction Equipment in the Areas of Production and
Development] To strengthen the cost competitiveness of Komatsu and Volvo CE and
heighten customer satisfaction, the Company began discussions with Volvo CE in
November 2001 concerning cooperation in production and development of components
for construction equipment, and reached a basic agreement with Volvo CE in March
2002. As the first step, the Company has decided to consign to Volvo CE the
production of cabs for four models of Komatsu's small wheel loaders which are
produced in North America and Europe.
[Cooperation with Hitachi Construction Machinery Co., Ltd. in the Areas of
Production and Joint Procurement] To strengthen cost competitiveness by means of
reducing production costs for Komatsu and Hitachi Construction Machinery, the
Company began discussions with Hitachi Construction Machinery in April 2002
primarily concerning reciprocal supply and joint procurement of components for
construction equipment. For those measures perceived as beneficial for both
parties, the two will materialize them timely in the second half period of
fiscal 2003 and thereafter.
The Company will aggressively build cooperative relationships with Volvo CE and
Hitachi Construction Equipment Machinery and promote cost reduction and
efficient utilization of management resources. However, matters related to
sales, service or equity participation are not considered by the three. Under an
intensified global competition, Komatsu is determined to promote a new form of
alliance designed to reinforce cost competitiveness, while maintaining its
original brand and sales network.
5. Outlook for Fiscal 2003
There are signs of recovery in market demand for construction equipment in North
America along with economic signs of bottoming out as a result of the inventory
adjustment in progress. While it is projected that demand for construction
equipment will remain sluggish in Europe, there are signs of recovery in overall
overseas markets with the rapidly growing Chinese market and other regions with
promising potential demand. Meanwhile, in Japan, it is difficult to anticipate
definite developments for economic recovery, and it is projected that reduction
of construction investment will continue. In this light, the Company anticipates
a difficult and challenging business environment for fiscal 2003.
Under such an environment, Komatsu will promptly and boldly carry out the
following measures of capacity cost reduction, self-driven reconstruction of the
electronics business and reform based on the "Spirits of Manufacturers." The
Company will also continue to decisively propel the new "Growth Strategy for the
Construction and Mining Equipment Business." All employees of the Komatsu Group
are ready to converge their knowledge to improve profitability of all businesses
and accomplish a V-shaped recovery of performance.
5
Consolidated and nonconsolidated results for fiscal 2003 are projected as
follows as of today.
1) Consolidated
Net sales: (YEN) 1,070 billion (up 3.3%)
Income before income taxes: (YEN) 11 billion (up (YEN)117.7 billion)
Net income: (YEN) 7 billion (up (YEN)87.6 billion)
2) Nonconsolidated (Japanese GAAP)
Net sales: (YEN) 375 billion (down 2.1%)
Ordinary profit: (YEN) 7 billion (up 84.5%)
Net income: (YEN) 6 billion (up (YEN)47.8 billion)
Foreign exchange rates are premised at (YEN)130 to US$1 and (YEN)115 to EUR1 for
fiscal 2003.
6. Redistribution of Profits for Fiscal 2002
The Company recorded net loss of (YEN)80.6 billion due to deteriorated market
conditions and temporary expenses associated with the Reform of Business
Structure activities which were undertaken to ensure the generation of profits
in next fiscal year and thereafter. The Company plans to set (YEN)3 cash
dividends per share for fiscal year-end, because it anticipates positive results
from the reform activities should contribute to the recovery of profits for next
fiscal year and thereafter. Combined with (YEN)3 for interim cash dividends per
share already paid, annual cash dividends per share amount to (YEN)6.
6
Management Policy
1. Basic Management Policy
The cornerstone of Komatsu's management lies in its commitment to Quality and
Reliability in order to maximize the corporate value of the Company. This
commitment is not limited to delivering safe and innovative products and
services which incorporate the viewpoints of customers. Komatsu is continuing
its efforts to enhance the Quality and Reliability of all organizations,
businesses, employees and management of the entire Komatsu Group. It is the top
management task of Komatsu to continue improving the Quality and Reliability of
these mentioned above.
2. Mid- and Long-Range Management Strategy and Issues Ahead
We have developed the "G" to the 21st mid-range management strategy for a period
of three years from fiscal 2001 to fiscal 2003, defined the following four basic
strategies, and are aggressively implementing a variety of measures to
facilitate growth and strengthen our corporate structure.
1) New growth strategy for the construction and mining equipment business,
2) Reduction of environmental stress and expansion of environmental business,
3) Focused attention to businesses in which Komatsu can maintain a
technological edge on a global scale, and
4) Attainment of competitive advantage by deploying IT or e-KOMATSU
However, world economies slowed down simultaneously during the year under
review. Under such a difficult environment, we have embarked on the Reform of
Business Structure which underscores a cutback of capacity costs, a substantial
reduction of production costs, and new growth for its mainstay business of
construction and mining equipment as priority commitments. We will work on the
following tasks in order to improve profitability and accomplish a V-shaped
recovery of business results.
1) To accelerate the implementation of the new Growth Strategy of the
Construction and Mining Equipment Business.
We will focus our involvement on the following two areas in order to ensure our
growth with the construction and mining equipment business.
First, in the Japanese market, we are going to place more efforts on the
after-sale downstream markets such as rental, used equipment, spare parts,
service and other business areas. To generate positive results in these markets,
we need to change conventional ways of doing business and develop new business
models. Based on innovative machines as represented by the GALEO series
equipment, we will develop solutions-centered businesses and reinforce our used
equipment business, and thus differentiate ourselves from competitors.
Second, in overseas markets, we are going to heighten our presence based on
new products. Overseas demand is on a growth track when viewed from a long-range
perspective. We have recently revised the organizations related to marketing of
construction and mining equipment and assigned directors to four international
regions of the Americas, Europe, Southeast Asia & Pacific, and China. We are now
positioned for closer cooperation among all regional operations and the best use
of our strength of globalization. Specifically, we are going to improve our
position and profitability in each region by expanding our business centering on
the GALEO series equipment and enhancing our cost competitiveness of each
production base.
2) To reinforce the base of our competitiveness by reducing capacity costs in
all businesses As to capacity cost reduction, we are ahead of the initial plan,
and intend to build on more results as we move on. In the construction and
mining equipment business, we are working on a sizable reduction in production
costs from an early phase of development in addition to consolidation of models.
7
We are also going to establish alliances actively and thus reduce costs and
facilitate efficiency of management resources. At present, we are discussing
with Volvo Construction Equipment and Hitachi Construction Machinery Co., Ltd.
separately to collaborate in production and development or joint procurement of
components for construction equipment, while remaining as competitors in sales
and services. As the first step with Volvo CE, we have agreed to consign local
production of cabs for our wheel loaders to Volvo CE.
3) To facilitate self-driven reconstruction of the electronics business
Our electronics businesses will work to reconstruct by themselves in their own
fields. As to silicon wafer and polycrystalline silicon businesses, we
alleviated their future risks during the year under review. Therefore, they are
going to strive for reinforcement of their competitiveness by working on
productivity enhancement and capacity cost reduction, while further advancing
their efforts for technological differentiation. Concerning the operations of
thermoelectric modules and Excimer laser, they will work to expand business
under the respective alliance based on their technological advantage.
4) To promote the reform based on the "Spirits of Manufacturers"
For Komatsu, a manufacturer to enhance competitiveness, the reform based on the
"Spirits of Manufacturers" is extremely important. By the "Spirits of
Manufacturers," we mean that manufacturers must provide products (hardware and
software) that customers are happy to own and we generate profits. We also
believe these spirits are our power of challenge to constantly produce the best
possible products by a unified team of all employees from research and
development, procurement, production and sales to service. This power is the
foundation of Komatsu's competitive strength. By reinforcing our original system
of manufacturing, we will develop products, services and systems with
outstanding features which overwhelm our competitors, and our production bases
worldwide will strive to achieve the top-level product competitiveness in
respective regions.
What we have to do, as a top of priority, is to recover the profit-making
capability of our businesses and to upturn business results. All employees,
including management officers, of course, are determined to work for the early
recovery of Komatsu's performance by converging their knowledge and inspirations
and speedily working on these tasks above.
3. Basic Policy for Dividends
Komatsu works to build a sound and stable financial position and flexible and
agile corporate strength. Concerning cash dividends to shareholders, the Company
maintains the basic policy of redistributing profits by taking payout ratios
into account and reflecting business results, as it secures sufficient internal
reserve for reinvestment.
4. Stance on the Lowering of Trading Unit of Shares
Komatsu has a policy to decide on the trading unit of shares of the Company
after considering the shareholder composition, liquidity, invested amounts and
the like. The Company will continue to study the matter while closely monitoring
developments on the stock market.
5. Measures to Strengthen Corporate Governance
Komatsu reorganized its Board of Directors and introduced the system of
Executive Officers and Global Officers in June 1999, with an eye to
strengthening corporate governance and establishing a system capable of quickly
responding to the changes and fierce competition in its business environment. In
order to facilitate sufficient deliberation and quick decision making on
important management matters, we minimized the number of members of the board.
An external board director was also appointed to ensure the transparency and
objectivity of management.
8
We publish the Komatsu's Code of Worldwide Business Conduct and ensure all
employees of Komatsu Group companies around the world understand how important
it is to observe the Rules of the Business Community. Komatsu created an
organization to manage and lead our group-wide compliance activities during the
year. By assigning this work to exclusive staff members, Komatsu is diligently
improving the compliance program.
--------------------------------------------------------------------------------
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 be identified by the use of terms 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 events and results of such forward-looking
assumptions cannot be assured.
Factors that may cause actual results to differ materially from those
predicted by such forward-looking statements include, but are not limited to,
unanticipated changes in demand for the Company's principal products, owing to
changes in the 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 product 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 principles and practices.
--------------------------------------------------------------------------------
9
Consolidated Financial Highlights
(For the fiscal years ended March 31, 2002 and 2001)
Millions of yen & US dollars
except per share amounts
------------------------------------------------------------------------------------------------------
Changes (2002-2001)
2002 2001 Increase (Decrease)
------------------------------------------------------------------------
Yen Dollar Yen Yen (%)
------------------------------------------------------------------------------------------------------
Net sales 1,035,891 7,789 1,096,369 (60,478) (5.5)
Japan 478,187 3,596 586,865 (108,678) (18.5)
Overseas 557,704 4,193 509,504 48,200 9.5
------------------------------------------------------------------------------------------------------
Income (loss) before (106,724) (802) 20,064 (126,788) ---
Income taxes
------------------------------------------------------------------------------------------------------
Net income (loss) (80,621) (606) 6,913 (87,534) ---
------------------------------------------------------------------------------------------------------
Net income (loss)
per share
Basic (YEN)(84.46) (CENT)(63.5) (YEN)7.24 (YEN)(91.70) ---
Diluted --- --- --- --- ---
------------------------------------------------------------------------------------------------------
Notes:
1) . Number of consolidated subsidiaries : 121 companies
. Number of companies accounted for by the equity method :
42 companies
2) The translation of Japanese yen amounts into US dollar amounts is
included solely for convenience and has been made for fiscal 2002 at
the rate of (YEN)133 to $1, the approximate rate of exchange at
March 29, 2002.
Financial Position
(As of March 31, 2002 and 2001)
--------------------------------------------------------------------------------
2002 2001
--------------------------------------------------------------------------------
Total assets (Millions of yen) 1,340,282 1,403,195
--------------------------------------------------------------------------------
Shareholders' equity (Millions of yen) 395,143 474,257
--------------------------------------------------------------------------------
Equity ratio (%) 29.5 33.8
--------------------------------------------------------------------------------
Shareholders' equity per share (Yen) 414.02 497.12
--------------------------------------------------------------------------------
Projections for FY2003
(From April 1, 2002 to March 31, 2003)
-------------------------------------------------------------------------------------------
Millions of yen
-------------------------------------------------------------------------------------------
Net sales Income before income taxes Net income
-------------------------------------------------------------------------------------------
The first half of FY2003 515,000 0 0
-------------------------------------------------------------------------------------------
The entire FY2003 1,070,000 11,000 7,000
-------------------------------------------------------------------------------------------
10
Condensed Consolidated Balance Sheets
(As of March 31, 2002 and 2001)
Millions of yen
-------------------------------------------------------------------
2002 2001 Changes
Increase (Decrease)
--------------------------------------------------------------------------------------------------------------------------
(A) (B) (A)-(B)
Assets
Current assets:
Cash and cash equivalents (YEN) 45,392 (YEN) 39,760 (YEN) 5,632
Time deposits 1,076 1,110 (34)
Trade notes and accounts receivable 337,093 394,658 (57,565)
Inventories 266,952 255,801 11,151
Other current assets 109,429 94,799 14,630
--------------------------------------------------------------------------------------------------------------------------
Total current assets 759,942 786,128 (26,186)
--------------------------------------------------------------------------------------------------------------------------
Investments 74,092 95,179 (21,087)
--------------------------------------------------------------------------------------------------------------------------
Property, plant, and equipment -
Less accumulated depreciation 405,301 438,795 (33,494)
--------------------------------------------------------------------------------------------------------------------------
Other assets 100,947 83,093 17,854
--------------------------------------------------------------------------------------------------------------------------
Total 1,340,282 1,403,195 (62,913)
--------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt (including current 219,717 230,137 (10,420)
maturities of long-term debt)
Trade notes and accounts payable 196,069 209,526 (13,457)
Income taxes payable 6,011 11,598 (5,587)
Other current liabilities 170,564 131,634 38,930
--------------------------------------------------------------------------------------------------------------------------
Total current liabilities 592,361 582,895 9,466
--------------------------------------------------------------------------------------------------------------------------
Long-term liabilities 306,525 296,776 9,749
--------------------------------------------------------------------------------------------------------------------------
Minority interests 46,253 49,267 (3,014)
--------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock 67,870 67,870 ---
Capital surplus 117,439 117,418 21
Retained earnings 231,161 321,217 (90,056)
Accumulated other (18,393) (29,204) 10,811
comprehensive income (loss) (*)
Treasury stock (2,934) (3,044) 110
--------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity - net 395,143 474,257 (79,114)
==========================================================================================================================
Total (YEN) 1,340,282 (YEN) 1,403,195 (YEN) (62,913)
==========================================================================================================================
-------------------------------------------------------------------
2002 2001 Changes
Increase (Decrease)
--------------------------------------------------------------------------------------------------------------------------
(*) Accumulated other comprehensive income (loss):
Foreign currency translation adjustments (YEN) (10,344) (YEN) (29,340) (YEN) 18,996
Net unrealized holding gains on securities 3,055 7,249 (4,194)
available for sale
Pension liability adjustments (10,927) (7,113) (3,814)
Net unrealized holding gains (losses) on (177) --- (177)
derivative instruments
11
Condensed Consolidated Statements of Income
(For the fiscal years ended March 31, 2002 and 2001)
Millions of yen
-------------------------------------------------------------------
2002 2001 Changes
Increase (Decrease)
--------------------------------------------------------------------------------------------------------------------------
(A) (B) (A)-(B) %
Revenues
Net sales (YEN) 1,035,891 (YEN) 1,096,369 (YEN) (60,478) (5.5)
Interest and other income 34,278 30,718 3,560
--------------------------------------------------------------------------------------------------------------------------
Total 1,070,169 1,127,087 (56,918) (5.1)
--------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of sales 792,748 804,700 (11,952)
Selling, general and administrative expenses 256,364 263,854 (7,490)
Interest expense 16,842 22,194 (5,352)
Other expense 110,939 16,275 94,664
--------------------------------------------------------------------------------------------------------------------------
Total 1,176,893 1,107,023 69,870 6.3
--------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes, minority
(106,724) 20,064 (126,788) ---
interests, and equity in earnings
--------------------------------------------------------------------------------------------------------------------------
Income taxes (21,930) 13,715 (35,645)
--------------------------------------------------------------------------------------------------------------------------
Minority interests in income of consolidated
subsidiaries - net 3,775 179 3,596
--------------------------------------------------------------------------------------------------------------------------
Equity in earnings of affiliated companies - net 398 385 13
--------------------------------------------------------------------------------------------------------------------------
Net income (loss) (YEN) (80,621) (YEN) 6,913 (YEN) (87,534) ---
--------------------------------------------------------------------------------------------------------------------------
Note: Aggregated net comprehensive loss for the years ended March 31, 2002 and
2001 were 79,257 million yen and 2,701 million yen, respectively.
12
Condensed Consolidated Statements of Cash Flows
(For the fiscal years ended March 31, 2002 and 2001)
Millions of yen
--------------------------------------------------------------
2002 2001 Changes
Increase (Decrease)
-----------------------------------------------------------------------------------------------------------------
(A) (B) (A)-(B)
Operating activities
Net income (loss) (YEN) (80,621) (YEN) 6,913 (YEN) (87,534)
Depreciation and amortization 61,581 65,106 (3,525)
Impairment loss on long-lived assets 52,242 4,337 47,905
Decrease in trade receivables 62,551 3,874 58,677
Decrease (increase) in inventories 20,611 (3,899) 24,510
Increase (decrease) in trade payables (37,942) 8,652 (46,594)
Others, net (18,101) (15,007) (3,094)
-----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 60,321 69,976 (9,655)
-----------------------------------------------------------------------------------------------------------------
Investing activities
Capital expenditures (54,118) (60,046) 5,928
Proceeds from sales of property 32,377 20,452 11,925
Others, net 4,808 4,452 356
-----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (16,933) (35,142) 18,209
-----------------------------------------------------------------------------------------------------------------
Financing activities
Decrease in short - and long-term debt (34,905) (62,416) 27,511
Sales (repurchase) of common stock, net 180 (7,677) 7,857
Dividends paid (5,730) (5,770) 40
-----------------------------------------------------------------------------------------------------------------
Net cash used in financial activities (40,455) (75,863) 35,408
-----------------------------------------------------------------------------------------------------------------
Effect of exchange rate change on cash and cash 881 313 568
equivalents
-----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash 3,814 (40,716) 44,530
equivalents
Cash and cash equivalents, beginning of year 39,760 80,476 (40,716)
-----------------------------------------------------------------------------------------------------------------
Adjustments for change of fiscal period on 1,818 1,818
consolidated subsidiaries
-----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year (YEN) 45,392 (YEN) 39,760 (YEN) 5,632
-----------------------------------------------------------------------------------------------------------------
13
Basis of Financial Statements (Consolidated)
1) Changes in group of entities
Consolidated subsidiaries
Addition: Komatsu Cummins Chile LTDA., Komatsu (China) LTD., and
one other company
Removal: Komatsu Utility Corporation (merger), KEM America Inc.
(liquidation), and eight other companies
Companies accounted for by the equity-method
Addition: one company
Removal: Komatsu Cummins Chile LTDA., Komatsu Kobe LTD.
(merger), and two other companies
2) Impact to integration of fiscal year end
Certain consolidated subsidiaries changed the fiscal year end from December 31
to March 31. The change resulted in a decrease to retained earnings of (YEN)3.7
billion and an increase to other comprehensive income of (YEN)9.4 billion,
respectively.
3) Derivative Instruments and Hedging Activities
The Company adopted Statement of Financial Accounting Standards (SFAS) No.133,
"Accounting for Derivative Instruments and Hedging Activities" and SFAS No.138,
"Accounting for Derivative Instruments and Certain Hedging Activities, an
amendment of FASB Statement No.133," for the year beginning April 1, 2001.
14
Business Information
1. Information by Business Unit
(1) Sales and Operating Profit (Loss)
(For the fiscal years ended March 31, 2002 and 2001)
Millions of yen
----------------------------------------------------------------------------
2002 2001
----------------------------------------------------------------------------
Operating Margin Operating Margin
Sales Profit (Loss) % Sales Profit(Loss) %
-----------------------------------------------------------------------------------------------------
Construction &
Mining Equipment 738,358 881 0.1 725,547 22,203 3.1
-----------------------------------------------------------------------------------------------------
Electronics 77,005 (14,925) (19.4) 118,237 2,887 2.4
-----------------------------------------------------------------------------------------------------
Others 264,973 4,976 1.9 309,698 6,450 2.1
-----------------------------------------------------------------------------------------------------
Subtotal 1,080,336 (9,068) (0.8) 1,153,482 31,540 2.7
-----------------------------------------------------------------------------------------------------
Corporate &
Elimination (44,445) (4,153) --- (57,113) (3,725) ---
-----------------------------------------------------------------------------------------------------
Total 1,035,891 (13,221) (1.3) 1,096,369 27,815 2.5
-----------------------------------------------------------------------------------------------------
Notes: Sales amount of each business unit includes inter-unit transactions.
(2) Assets, Depreciation, and Capital Expenditures
Millions of yen
-----------------------------------------------------------------------------------------------------------------------------
2002 2001
--------------------------------------------------------------------------------------------------
As of Mar. For the fiscal year ended As of Mar. For the fiscal year ended
31, 2002 Mar. 31, 2002 31, 2001 Mar. 31, 2001
-----------------------------------------------------------------------------------------------------------------------------
Assets Depreciation Capital Assets Depreciation Capital
and Expenditures and Expenditures
Amortization Amortization
-----------------------------------------------------------------------------------------------------------------------------
Construction &
Mining Equipment 879,732 36,442 46,354 868,611 32,317 47,380
-----------------------------------------------------------------------------------------------------------------------------
Electronics 181,746 17,235 18,927 240,592 20,210 16,476
-----------------------------------------------------------------------------------------------------------------------------
Others 231,287 6,217 9,187 254,960 11,388 15,454
-----------------------------------------------------------------------------------------------------------------------------
Subtotal 1,292,765 59,894 74,468 1,364,163 63,915 79,310
-----------------------------------------------------------------------------------------------------------------------------
Corporate &
Elimination 47,517 --- --- 39,032 --- ---
-----------------------------------------------------------------------------------------------------------------------------
Total 1,340,282 59,894 74,468 1,403,195 63,915 79,310
-----------------------------------------------------------------------------------------------------------------------------
Note: In fiscal 2002 and 2001, the Company recorded impairment losses on assets
in the electronics segment.
15
2. Information by Region
(1) Sales and Operating Profit (Loss)
(For the fiscal years ended March 31, 2002 and 2001)
Millions of yen
-------------------------------------------------------------------------------------------------------------------------
2002 2001
------------------------------------------------------------------------------------------
Sales Operating Margin Sales Operating Margin
Profit (Loss) % Profit (Loss) %
-------------------------------------------------------------------------------------------------------------------------
Japan 690,062 130 0.0 804,670 29,253 3.6
-------------------------------------------------------------------------------------------------------------------------
Americas 284,181 (10,562) (3.7) 252,376 (2,302) (0.9)
-------------------------------------------------------------------------------------------------------------------------
Europe 117,873 3,077 2.6 125,808 5,945 4.7
-------------------------------------------------------------------------------------------------------------------------
Others 102,921 (354) (0.3) 83,557 364 0.4
-------------------------------------------------------------------------------------------------------------------------
Subtotal 1,195,037 (7,709) (0.6) 1,266,411 33,260 2.6
-------------------------------------------------------------------------------------------------------------------------
Corporate & Elimination (159,146) (5,512) -- (170,042) (5,445) ---
-------------------------------------------------------------------------------------------------------------------------
Total 1,035,891 (13,221) (1.3) 1,096,369 27,815 2.5
-------------------------------------------------------------------------------------------------------------------------
Note: Sales amount of each region segment includes inter-segment transactions.
(2) Assets
(As of March 31, 2002 and 2001)
Millions of yen
--------------------------------------------------------------------------------------------------------------
2002 2001
-----------------------------------------------------------------------------
Assets Ratio (%) Assets Ratio (%)
--------------------------------------------------------------------------------------------------------------
Japan 948,294 70.8 1,030,872 73.5
--------------------------------------------------------------------------------------------------------------
Americas 354,438 26.4 343,967 24.5
--------------------------------------------------------------------------------------------------------------
Europe 82,102 6.1 83,389 5.9
--------------------------------------------------------------------------------------------------------------
Others 106,626 8.0 98,057 7.0
--------------------------------------------------------------------------------------------------------------
Subtotal 1,491,460 111.3 1,556,285 110.9
--------------------------------------------------------------------------------------------------------------
Corporate & Elimination (151,178) (11.3) (153,090) (10.9)
--------------------------------------------------------------------------------------------------------------
Total 1,340,282 100.0 1,403,195 100.0
--------------------------------------------------------------------------------------------------------------
3. Overseas Sales
(1) For the fiscal year ended March 31, 2002
Millions of yen
-------------------------------------------------------------------------------------------
Americas Europe Others Total
-------------------------------------------------------------------------------------------
Overseas sales 262,341 128,029 167,334 557,704
-------------------------------------------------------------------------------------------
Consolidated net sales --- --- --- 1,035,891
-------------------------------------------------------------------------------------------
Ratio of overseas sales to
consolidated net sales (%) 25.3 12.4 16.1 53.8
-------------------------------------------------------------------------------------------
(2) For the fiscal year ended March 31, 2001
Millions of yen
-------------------------------------------------------------------------------------------
Americas Europe Others Total
-------------------------------------------------------------------------------------------
Overseas sales 241,091 126,479 141,934 509,504
-------------------------------------------------------------------------------------------
Consolidated net sales --- --- --- 1,096,369
-------------------------------------------------------------------------------------------
Ratio of overseas sales to
consolidated net sales (%) 22.0 11.5 13.0 46.5
-------------------------------------------------------------------------------------------
Note: Overseas sales represent the sales of the Company and its consolidated
subsidiaries to areas other than Japan.
16
Consolidated Sales by Operation
(For the fiscal years ended March 31, 2002 and 2001)
Millions of yen
------------------------------------------------------------------------------------------------------------------
2002 2001 Changes
Increase (Decrease)
Sales Ratio (%) Sales Ratio (%) Sales (%)
------------------------------------------------------------------------------------------------------------------
Construction Japan 260,351 25.1 305,593 27.9 (45,242) (14.8)
-------------------------------------------------------------------------------------------------
& Mining Overseas 470,989 45.5 412,554 37.6 58,435 14.2
-------------------------------------------------------------------------------------------------
Equipment 731,340 70.6 718,147 65.5 13,193 1.8
------------------------------------------------------------------------------------------------------------------
Electronics Japan 43,085 4.2 74,455 6.8 (31,370) (42.1)
-------------------------------------------------------------------------------------------------
Overseas 33,684 3.2 43,290 3.9 (9,606) (22.2)
-------------------------------------------------------------------------------------------------
76,769 7.4 117,745 10.7 (40,976) (34.8)
------------------------------------------------------------------------------------------------------------------
Others Japan 174,751 16.9 206,817 18.8 (32,066) (15.5)
-------------------------------------------------------------------------------------------------
Overseas 53,031 5.1 53,660 5.0 (629) (1.2)
-------------------------------------------------------------------------------------------------
227,782 22.0 260,477 23.8 (32,695) (12.6)
------------------------------------------------------------------------------------------------------------------
Total Japan 478,187 46.2 586,865 53.5 (108,678) (18.5)
-------------------------------------------------------------------------------------------------
Overseas 557,704 53.8 509,504 46.5 48,200 9.5
-------------------------------------------------------------------------------------------------
1,035,891 100.0 1,096,369 100.0 (60,478) (5.5)
------------------------------------------------------------------------------------------------------------------
17
Financial Instruments
(As of March 31, 2002 and 2001)
1. Derivative Financial Instruments
Millions of yen
---------------------------------------------------------------------------------------------------------------------------
2002 2001
Contract, Carrying Estimated Contract, Carrying Estimated
Notional Amounts Fair Value Notional Amounts Fair Value
Amounts Amounts
---------------------------------------------------------------------------------------------------------------------------
Foreign exchange contracts and 4,713 326 326 7,941 25 (367)
option contracts
FY 2001
Purchase of foreign currencies
The equivalent of yen 28,528
Sale of foreign currencies
The equivalent of yen 33,074
Option contracts (Purchased)
The equivalent of yen 3,395
FY 2002
Purchase of foreign currencies
The equivalent of yen 27,328
Sale of foreign currencies
The equivalent of yen 28,870
Option contracts (Purchased)
The equivalent of yen 3,171
Interest rate swap, currency swap and 308,477 (10,086) (10,086) 295,448 (738) (564)
Interest rate cap agreements
---------------------------------------------------------------------------------------------------------------------------
2. Marketable Securities
Millions of yen
---------------------------------------------------------------------------------------------------------------------------
2002 2001
---------------------------------------------------------------------------------------------------------------------------
Investment Securities available for sale
Marketable equity securities
Cost 26,094 39,876
Fair value 33,468 54,574
Net unrealized holding gains 7,374 14,698
Marketable debt securities
Cost 981 965
Fair value 981 965
Net unrealized holding gains 0 0
---------------------------------------------------------------------------------------------------------------------------
18
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.
(For the fiscal years ended March 31, 2002 and 2001)
Millions of yen & US dollars
except per share amounts
---------------------------------------------------------------------------------------------------------------------------
2002 2001 Changes (2002-2001)
Increase (Decrease)
---------------------------------------------------------------------------------------
Yen Dollar Yen Yen (%)
---------------------------------------------------------------------------------------------------------------------------
Net sales 382,908 2,879 430,270 (47,361) (11.0)
Japan 234,607 1,764 283,148 (48,541) (17.1)
Overseas 148,301 1,115 147,122 1,179 0.8
---------------------------------------------------------------------------------------------------------------------------
Operating income 8,708 65 14,181 (5,473) (38.6)
---------------------------------------------------------------------------------------------------------------------------
Ordinary income 3,794 29 11,281 (7,487) (66.4)
---------------------------------------------------------------------------------------------------------------------------
Net income (loss) (41,828) (314) 7,222 (49,050) ---
---------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) per
share
Basic (YEN)(43.81) (cent)(32.9) (YEN) 7.52 (YEN)(51.33) ---
Diluted --- --- --- --- ---
---------------------------------------------------------------------------------------------------------------------------
Notes: 1) The translation of Japanese yen amounts into United States dollar
amounts is included solely for convenience and has been made for 2002
at the rate of (YEN)133 to $1, the approximate rate of exchange at
March 29, 2002.
2) The average numbers of shares for fiscal 2002 and 2001 are as
follows: Fiscal 2002: 954,720,148 Fiscal 2001: 960,181,975
Dividends
(For the fiscal years ended March 31, 2002 and 2001)
--------------------------------------------------------------------------------
2002 2001
--------------------------------------------------------------------------------
Cash dividends per share (yen) per annum 6.00 6.00
--------------------------------------------------------------------------------
Financial Position
(As of March 31, 2002 and 2001)
--------------------------------------------------------------------------------
2002 2001
--------------------------------------------------------------------------------
Total assets ((YEN) million) 685,922 765,446
--------------------------------------------------------------------------------
Shareholders' equity ((YEN) million) 418,818 473,794
--------------------------------------------------------------------------------
Equity ratio (%) 61.1 61.9
--------------------------------------------------------------------------------
Shareholders' equity per share (Yen) 438.83 494.09
--------------------------------------------------------------------------------
Note: The numbers of shares issued and outstanding as of the end of fiscal 2002
and 2001 are as follows:
Fiscal 2002: 954,401,729
Fiscal 2001: 958,921,701
19
Sales by Operation
(For the fiscal years ended March 31, 2002 and 2001)
Millions of yen
-----------------------------------------------------------------------------------------------------------------------
Changes
2002 2001 Increase (Decrease)
-----------------------------------------------------------------------------------
Sales Ratio (%) Sales Ratio (%) Sales (%)
-----------------------------------------------------------------------------------------------------------------------
Construction Japan 182,942 47.8 221,757 51.5 (38,815) (17.5)
------------------------------------------------------------------------------------------------------
& Mining Overseas 140,045 36.6 139,177 32.3 867 0.6
------------------------------------------------------------------------------------------------------
Equipment 322,987 84.4 360,935 83.9 (37,947) (10.5)
-----------------------------------------------------------------------------------------------------------------------
Electronics Japan 3,358 0.9 8,484 2.0 (5,125) (60.4)
------------------------------------------------------------------------------------------------------
Overseas 393 0.1 58 0.0 334 573.6
------------------------------------------------------------------------------------------------------
3,751 1.0 8,542 2.0 (4,791) (56.1)
-----------------------------------------------------------------------------------------------------------------------
Others Japan 48,306 12.6 52,906 12.3 (4,599) (8.7)
------------------------------------------------------------------------------------------------------
Overseas 7,862 2.1 7,886 1.8 (23) (0.3)
------------------------------------------------------------------------------------------------------
56,169 14.7 60,792 14.1 (4,623) (7.6)
-----------------------------------------------------------------------------------------------------------------------
Total Japan 234,607 61.3 283,148 65.8 (48,541) (17.1)
------------------------------------------------------------------------------------------------------
Overseas 148,301 38.7 147,122 34.2 1,179 0.8
------------------------------------------------------------------------------------------------------
382,908 100.0 430,270 100.0 (47,361) (11.0)
-----------------------------------------------------------------------------------------------------------------------
Projection for FY2003
(From April 1, 2002 to March 31, 2003)
Millions of yen
--------------------------------------------------------------------------------
Net Sales Ordinary Income Net Income
--------------------------------------------------------------------------------
The first half of FY2003 175,000 2,000 3,000
--------------------------------------------------------------------------------
The entire FY2003 375,000 7,000 6,000
--------------------------------------------------------------------------------
20
May 10, 2002
For Immediate Release
Komatsu Ltd.
Corporate Communications
Tel: +81-(0)3-5561-2616
Komatsu Forklift Co., Ltd.
Corporate Planning Dept.
Tel: +81-(0)3-3224-6531
Komatsu Zenoah Co.
Finance & Accounting Dept.
Tel: +81-(0)49-243-1112
Komatsu Forklift and Komatsu Zenoah to become Wholly Owned Subsidiaries of
Komatsu through Stock for Stock Exchanges
Komatsu Ltd., Komatsu Forklift Co., Ltd. and Komatsu Zenoah Co. held the
meetings of the respective Board of Directors today and resolved that Komatsu
Forklift and Komatsu Zenoah, both listed companies, become wholly owned
subsidiaries of Komatsu on October 1, 2002 through stock for stock exchanges
(hereinafter, Exchanges). Komatsu signed the Exchange agreements respectively
with Komatsu Forklift and Komatsu Zenoah. Komatsu will conduct the concerned
Exchanges by a simplified procedure as specified in Article 358 of Japanese
Commercial Code without resolutions at its shareholders' meeting.
1. Purpose of Acquiring All Outstanding Shares of Two Subsidiaries
Komatsu is decisively promoting reforms of business structure in order to
reinforce competitiveness of each business of the entire Komatsu Group, and
substantially improve their profitability. As part of this commitment, Komatsu
has also studied reconstruction of an optimal management structure from a
viewpoint of improving efficiency of each business. As a result, in its
machinery business which includes construction and transportation-related
equipment, Komatsu has determined that it needs a highly dynamic management
structure based on more unified operations with Komatsu Forklift and Komatsu
Zenoah, both listed companies.
As to the mainstay business of construction and mining equipment, Komatsu
has worked to streamline and strengthen its business structure by merging
Komatsu MEC Corp. and Komatsu EST Corp., restructuring production plants in
Japan, and forging cooperation with Komatsu Zenoah (transformed into a
subsidiary in 1998). For the utility equipment business with promising growth
potentials into the future, Komatsu Zenoah occupies an important position in
Komatsu Group's global strategies. Komatsu and Komatsu Zenoah determined that
transformation of the latter into a wholly owned subsidiary of the former is the
most effective way to enhance their management efficiency while maintaining
their cost competitiveness by further refining cooperation in development and
production capabilities. Based on this mutual understanding, Komatsu and Komatsu
Zenoah reached an agreement on the Exchange scheme.
Komatsu Forklift, responsible for the forklift truck business, became a
subsidiary of Komatsu in 2000 in order to strengthen its management base and
profit generating capability.
-1-
While continuing to refine cooperation with the Komatsu Group, Komatsu Forklift
reached an agreement with Linde AG (hereinafter, Linde) of Germany, a world
leader of forklift truck manufacturers, on equity and business tie-ups, thus
building a global collaborative relationship. In view of the intensifying
competition on a global scale, however, Komatsu and Komatsu Forklift have
determined that it is necessary to expand cooperation within the Komatsu Group
and implement more dynamic management for further growth of the forklift truck
business, and thus reached an agreement on the Exchange. Furthermore, Komatsu
Forklift plans to become a joint-venture company held by Komatsu and Linde in
order to strengthen its competitiveness on a global basis and improve its
profits.
Komatsu tries to enhance the profitability and corporate value of the
Komatsu Group by optimizing the management structure of major Komatsu Group
companies, whose cooperation with Komatsu has so far been reinforced, and by
improving their management efficiency.
2. Terms and Conditions
A. Method
Komatsu will allot new shares to shareholders of Komatsu Forklift and Komatsu
Zenoah. The shareholders of each of the two companies will become shareholders
of Komatsu through the respective Exchange, and all of their shares will be
exchanged for shares of Komatsu. After the Exchanges, Komatsu Forklift and
Komatsu Zenoah will become wholly owned subsidiaries of Komatsu.
B. Schedule
May 10, 2002: Boards of Directors approve Exchange agreements
May 10, 2002: Signing of the Exchange agreements
June 26, 2002 (planned): Shareholder approval of the Exchange agreements
(annual shareholders meetings of Komatsu
Forklift and Komatsu Zenoah)
September 25, 2002 (planned): Delisting of Komatsu Forklift and Komatsu Zenoah
September 30, 2002 (planned): Shareholder submission of share certificates for
Exchanges
October 1, 2002 (planned): Exchanges
C. Exchange Ratios
In determining Exchange ratios, Komatsu sought advice from Nomura Securities
Co., Ltd. (hereinafter, Nomura Securities), while Komatsu Forklift and Komatsu
Zenoah consulted Deloitte Tohmatsu Corporate Finance Co., Ltd. (hereinafter,
Deloitte Tohmatsu). Each company requested its advisor to calculate relevant
Exchange ratios. As a result of discussions held separately by Komatsu and
Komatsu Forklift, and by Komatsu and Komatsu Zenoah with reference to the ratios
calculated by their advisors, Komatsu and Komatsu Forklift, and Komatsu and
Komatsu Zenoah respectively agreed on the following Exchange ratios for Komatsu
and Komatsu Forklift and for Komatsu and Komatsu Zenoah.
--------------------------------------------------------------------------------
Company Komatsu Komatsu Forklift Komatsu Zenoah
--------------------------------------------------------------------------------
Exchange Ratio 1 0.394 0.658
--------------------------------------------------------------------------------
-2-
Note: 1. To shareholders of Komatsu Forklift and Komatsu Zenoah who are
registered in the final shareholders' lists on the preceding day
of the Exchange day, Komatsu will allot 0.394 shares of Komatsu
per share of Komatsu Forklift and 0.658 shares per share of
Komatsu Zenoah. However, Komatsu will not allot its own shares
for 63,917,151 shares of Komatsu Forklift and 29,185,541 shares
of Komatsu Zenoah, which the Company already owns.
2. Concerning Komatsu and the two listed companies which would
become wholly owned subsidiaries of Komatsu, Komatsu's financial
advisor, Nomura Securities, primarily used the market price
analysis and the discounted cash flow analysis to evaluate each
of the three. Such results were used as a basis for calculating
the exchange ratios.
3. Regarding the Exchange ratios for Komatsu and Komatsu Forklift
and for Komatsu and Komatsu Zenoah, Deloitte Tohmatsu, the
financial advisor for Komatsu Forklift and Komatsu Zenoah,
applied the market price analysis and the discounted cash flow
method. And Deloitte Tohmatsu considered the premiums
comprehensively, appraised the stock values, and calculated the
exchange ratios.
4. Komatsu plans to issue 39,822,359 new shares for the Exchanges.
5. Dividends, if any, on the newly issued shares shall accrue as
from October 1, 2002.
6. In the event of any significant changes in assets, business or
operation, the concerned parties may through mutual discussions
adjust the respective exchange ratios to reflect the changes.
7. Komatsu Forklift and Komatsu Zenoah will separately conclude an
Exchange agreement with Komatsu and ask for an approval at each
of their respective shareholders' meeting concerning this matter.
Exchange for each of the two subsidiaries are separate and
independent in their procedures, and thus not conditional on
conclusion of the other Exchange agreement. Therefore, it is
possible that the two proposed Exchanges may not be implemented
at the same time.
3. General Information on Concerned Parties (As of March 31, 2002)
----------------------------------------------------------------------------------------------------------------------------
Komatsu Ltd. Komatsu Forklift Co., Ltd. Komatsu Zenoah Co.
Trade Name (to be 100% parent company) (to be 100% subsidiary) (to be 100% subsidiary)
----------------------------------------------------------------------------------------------------------------------------
Principal Lines Manufacture and sale of Manufacture, sale and Manufacture and sale of
of Business construction and mining repair of industrial-use agricultural and forestry
equipment vehicles and parts machinery, construction
equipment, industrial-use
equipment and repair of
aerospace engines
----------------------------------------------------------------------------------------------------------------------------
Date of Incorporation May 13, 1921 February 13, 1948 May 26, 1947
----------------------------------------------------------------------------------------------------------------------------
Principal Office 2-3-6 Akasaka, Minato-ku, 2-3-4 Akasaka, Minato-ku, 1-9 Minamidai, Kawagoe-shi,
Tokyo, Japan Tokyo, Japan Saitama-ken, Japan
----------------------------------------------------------------------------------------------------------------------------
Representative Masahiro Sakane, President Takeo Shibuya, President Masanori Kojima, President
----------------------------------------------------------------------------------------------------------------------------
Capital Stock
(million yen) 70,120 11,411 5,099
----------------------------------------------------------------------------------------------------------------------------
Total Number of Shares
Issued and Outstanding 954,401,729 124,039,073 53,002,777
----------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity
(million yen) 418,818 46,216 17,678
----------------------------------------------------------------------------------------------------------------------------
Total Assets
(million yen) 685,922 65,608 34,303
----------------------------------------------------------------------------------------------------------------------------
Financial Closing Date March 31 March 31 March 31
----------------------------------------------------------------------------------------------------------------------------
Number of Employees 5,859 592 663
----------------------------------------------------------------------------------------------------------------------------
-3-
----------------------------------------------------------------------------------------------------------------------------
Komatsu Ltd. Komatsu Forklift Co., Ltd. Komatsu Zenoah Co.
Trade Name (to be 100% parent company) (to be 100% subsidiary) (to be 100% subsidiary)
----------------------------------------------------------------------------------------------------------------------------
Construction and mining Sold to warehousing, Sold mainly to construction
equipment: sold to transportation and and civil engineering
construction and civil manufacturing customers companies as well as forestry
engineering customers as as well as machine leasing and agricultural customers
well as machine leasing companies mainly through through Komatsu and
companies through distributors. distributors
distributors. Other products:
sold to government agencies,
construction and civil
engineering and
Major Customers manufacturing customers.
----------------------------------------------------------------------------------------------------------------------------
Komatsu (54.35%)
The Taiyo Mutual Life Komatsu (51.5%) The Nissan Fire & Marine
Insurance Co. (5.8%) Linde (10.0%) Insurance Co., Ltd. (2.46%)
Major Shareholders Nats Cumco (5.7%) Komatsu Forklift Komatsu Zenoah Suppliers
and Shareholdings Nippon Life Insurance Employees Shareholding Shareholding Association
ratios Company (3.6%) Association (3.2%) (2.29%)
----------------------------------------------------------------------------------------------------------------------------
Sumitomo Mitsui Banking Sumitomo Mitsui Banking
Sumitomo Mitsui Banking Corporation, Corporation,
Corporation, Mizuho Corporate Bank, Mizuho Corporate Bank,
Mizuho Corporate Bank, The Bank of Tokyo- The Bank of Tokyo-
Major Banks* The Hokkoku Bank, Ltd., Mitsubishi, Ltd., Mitsubishi, Ltd.,
----------------------------------------------------------------------------------------------------------------------------
Notes: 1. Figures which are smaller than in millions of yen are omitted
(hereinafter).
2. Total number of shares issued and outstanding excludes treasury stock.
3. * As of April 1, 2002.
4. Financial Results (for the most recent three fiscal years) - Non-consolidated
(in millions of yen)
----------------------------------------------------------------------------------------------------------
Trade Name Komatsu Ltd. (to be 100% parent company)
----------------------------------------------------------------------------------------------------------
Fiscal Year ended 2000/3 2001/3 2002/3
----------------------------------------------------------------------------------------------------------
Sales 441,423 430,270 382,908
----------------------------------------------------------------------------------------------------------
Operating Profit 12,912 14,181 8,708
----------------------------------------------------------------------------------------------------------
Ordinary Profit 9,936 11,281 3,794
----------------------------------------------------------------------------------------------------------
Net Income (Loss) 13,612 7,222 (41,828)
----------------------------------------------------------------------------------------------------------
Net Income (Loss) per Share (yen) 14.05 7.52 (43.81)
----------------------------------------------------------------------------------------------------------
Annual Cash Dividends per Share (yen) 6.00 6.00 6.00
----------------------------------------------------------------------------------------------------------
Shareholders' Equity per Share (yen) 484.22 494.09 438.83
----------------------------------------------------------------------------------------------------------
(in millions of yen)
----------------------------------------------------------------------------------------------------------
Trade Name Komatsu Forklift Co., Ltd. (to be 100% subsidiary)
----------------------------------------------------------------------------------------------------------
Fiscal Year ended 2000/3 2001/3 2002/3
----------------------------------------------------------------------------------------------------------
Sales 52,882 59,906 47,860
----------------------------------------------------------------------------------------------------------
Operating Profit 205 902 598
----------------------------------------------------------------------------------------------------------
Ordinary Profit 262 833 685
----------------------------------------------------------------------------------------------------------
Net Income (Loss) 172 451 (2,420)
----------------------------------------------------------------------------------------------------------
Net Income (Loss) per Share (yen) 1.95 3.84 (19.51)
----------------------------------------------------------------------------------------------------------
Annual Cash Dividends per Share (yen) -- 2.00 2.00
----------------------------------------------------------------------------------------------------------
Shareholders' Equity per Share (yen) 478.72 394.56 372.59
----------------------------------------------------------------------------------------------------------
-4-
(in millions of yen)
----------------------------------------------------------------------------------------------------------
Trade Name Komatsu Zenoah Co. (to be 100% subsidiary)
----------------------------------------------------------------------------------------------------------
Fiscal Year ended 2000/3 2001/3 2002/3
----------------------------------------------------------------------------------------------------------
Sales 42,894 41,343 36,834
----------------------------------------------------------------------------------------------------------
Operating Profit 2,086 1,924 1,982
----------------------------------------------------------------------------------------------------------
Ordinary Profit 1,783 1,605 1,691
----------------------------------------------------------------------------------------------------------
Net Income 899 824 688
----------------------------------------------------------------------------------------------------------
Net Income per Share (yen) 16.75 15.35 12.95
----------------------------------------------------------------------------------------------------------
Annual Cash Dividends per Share (yen) 5.50 5.50 5.50
----------------------------------------------------------------------------------------------------------
Shareholders' Equity per Share (yen) 316.10 325.87 333.54
----------------------------------------------------------------------------------------------------------
Note: Net income (loss) per share and shareholders' equity per share for fiscal
year ended March 31, 2002 are calculated after deduction of treasury
stock at the fiscal year-end.
5. Changes After Stock Exchanges
A. Trade Names, Principal Lines of Business, Principal Offices,
Representatives, and Capital Stock No changes are currently contemplated
with respect to trade names, principal lines of business, or capital
stock for the above companies from those described in "3. General
Information on Concerned Parties." Concerning representatives of the
companies, while there is a plan for personnel change of the
representative of Komatsu Zenoah after its annual shareholders' meeting
to be held on June 26, 2002, there is no immediate plan for personnel
change of the representatives of Komatsu or Komatsu Forklift. Note:
Komatsu will not increase its capital stock when undertaking the
Exchanges.
B. Effects on Komatsu's Consolidated Financial Results
Because Komatsu Forklift and Komatsu Zenoah have been consolidated
subsidiaries, Komatsu does not anticipate significant effects on its
consolidated performance resulting from their transformation into wholly
owned subsidiaries through the Exchanges or transformation of Komatsu
Forklift into a joint-venture company. Komatsu will promote reforms of
business structure on a groupwide basis in order to enhance management
efficiency and profitability. Komatsu believes it will be able to improve
consolidated results in this manner.
With respect to the Exchanges between Komatsu and each of Komatsu Forklift and
Komatsu Zenoah
This press release includes forward-looking statements (within the meaning of
Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S.
Securities Exchange Act of 1934) that reflect the Komatsu Group's plans and
expectations in relation to the Exchange transactions described above and the
benefits resulting from them. To the extent that statement in this press release
do not relate to historical or current facts, they constitute forward-looking
statements. These forward-looking statements are based on the current
assumptions and beliefs of Komatsu Ltd. and two subsidiaries referred to above
in light of the information currently available for them, and involve known and
unknown risks, uncertainties, and other factors. Such risks, uncertainties, and
other factors include in particular the ability of Komatsu to integrate the
operations of the two subsidiaries effectively and the factors set forth in
"Risk Factors" of Komatsu's
-5-
Annual Report dated June, 2001 which has been filed with the U.S. Securities and
Exchange Commission. Such risks, uncertainties and other factors may cause the
Komatsu Group's actual results, performance, achievements, or financial position
to be materially different from any future results, performance, achievements or
financial position expressed or implied by these forward-looking statements.
Komatsu and the two subsidiaries undertake no obligation to publicly update any
forward-looking statements after the date of this press release.
The business combination referred to in this press release
(hereinafter, Transaction) involves shares of common stock of a non-U.S.
company. The Transaction is subject to disclosure requirements of a non-U.S.
country that are different from those of the United States. Financial
information included in this press release, if any, has been prepared in
accordance with non-U.S. accounting standards that may not be comparable to the
financial information of United States companies.
It may be difficult for you to enforce your rights and any claim you
may have arising under the U.S. federal securities laws, since the issuer of the
securities is located in a non-U.S. country, and some or all of its officers and
directors may be residents of a non-U.S. country. You may not be able to sue a
non-U.S. company or its officers or directors in a non-U.S. court for violations
of the U.S. securities laws. It may be difficult to compel a non-U.S. company
and its affiliates to subject themselves to a U.S. court's judgment.
For more information, contact any of the following personnel.
------------------------------------------------------------------------------------------------------
Komatsu Komatsu Forklift Komatsu Zenoah
------------------------------------------------------------------------------------------------------
Masakatsu Hioki, Tsutomu Kobayashi, Tatsuo Kamiya,
General Manager, General Manager, Executive Officer,
Corporate Communications Corporate Planning Dept. General Manager of Finance and
TEL: +81-(0)3-5561-2616 TEL: +81-(0)3-3224-6531 Accounting Dept.
TEL: +81-(0)49-243-1112
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(end)
-6-
May 10, 2002
For Immediate Release
Komatsu Ltd.
Corporate Communications
Tel: +81-(0)3-5561-2616
Komatsu Forklift Co., Ltd.
Corporate Planning Dept.
Tel: +81-(0)3-3224-6531
Komatsu and Linde Agree to Transform Komatsu Forklift into Joint-Venture Company
Komatsu Ltd. and Linde AG of Germany, a world leader of forklift truck
manufacturers, today reached a basic agreement under which two companies will
transform Komatsu Forklift Co., Ltd. into their joint-venture company. After
Komatsu Forklift becomes a wholly owned subsidiary of Komatsu by means of stock
for stock exchange, the two companies will conclude the joint-venture agreement
by the end of November this year, and transform Komatsu Forklift into their
joint-venture company. Linde will acquire 35% of shares of Komatsu Forklift by
the middle of 2003 and thereafter plans to increase its shareholding ratio up to
48%.
In May 2000, Komatsu, Komatsu Forklift and Linde signed an agreement for
cooperative relations endorsed by mutual equity participation. Since then, three
companies have built on business cooperation on a global basis in the areas of
production and sales of forklift trucks (including warehouse trucks). As
competition intensifies worldwide, however, three companies shared the same view
that it is indispensable to construct a closer cooperative relationship to
strengthen the competitiveness and improve profits of their forklift truck
businesses by transcending the previous arrangements. In this light, Komatsu and
Linde determined that it is the best possible way to transform Komatsu Forklift
into the joint-venture company of the two.
Basic framework of global cooperation in the forklift truck business of Komatsu
and Linde is described below.
1. To maintain and expand distinctive products and sales networks based on a
multi-brand strategy as a basis, and establish a complementary operations
structure by way of making full use of their respective technological and
regional strengths.
2. To collaborate further as a unified team of partners to lead the forklift
truck business, based on mutually agreed common strategies.
3. To work to generate synergy effects through reciprocal supply of products and
components, joint development which incorporates technological advantages of the
two, licensed production and other arrangements.
-1-
As the joint-venture company of the two, Komatsu Forklift will be able to offer
competitive Komatsu-brand products which feature Linde Group's electric-powered
forklift technologies, while expanding its international marketing network.
Under this operational framework, Komatsu Forklift will be better positioned to
deliver a comprehensive range of products and services more efficiently to
customers and distributors.
Linde will work to expand its business by deploying Komatsu Forklift's marketing
network for sales of Linde-brand products in Japan, supply of electric-powered
forklift trucks in Asia, which are manufactured by STILL GmbH, a member of the
Linde Group, and other benefits. Linde will also be able to conduct more
efficient, non-overlapping product development by utilizing Komatsu's
leading-edge technologies and components such as transmissions.
Komatsu and Linde will establish this joint-venture company subject to the
approval of the Anti-Trust Authorities.
Outline of Linde AG
-------------------
Location: Wiesbaden, Germany
Establishment: June 1879
Capitalization: Euro 305 million
Sales: Euro 9,076 million (for 2001)
President: Gerhard Full
No. of employees: 46,400
Line of business: Process Engineering and Contracting Division, Industrial
Trucks and Hydraulics Division, Refrigeration and Shop
Equipment Division, Industrial Gases Division
(end)
-2-
May 10, 2002
For Immediate Release
Komatsu Ltd.
2-3-6 Akasaka, Minato-ku,
Tokyo 107-8414, Japan
Corporate Communications
Tel: 03-5561-2616
URL: http://www.komatsu.com/
Komatsu to Repurchase Its Common Shares
(Stock Repurchase Pursuant to the Provisions of Article 210 of the Commercial
Code)
Komatsu Ltd. (the "Company") announces that at the meeting of the Board of
Directors held on May 10, 2002, the Board of Directors resolved that repurchase
of the Company's outstanding common shares pursuant to Article 210 of the
Commercial Code will be proposed to the shareholders at the 133rd Annual Meeting
of Shareholders to be held on June 26, 2002.
1. Purpose of Repurchase of Its Own Shares
In accordance with Article 210 of the Commercial Code, the Company will
repurchase its outstanding shares after obtaining approval from the
shareholders. With repurchase of its shares, the Company will be able to
facilitate quick and flexible management in response to the changing business
environment.
2. Particulars of the Shares to Be Repurchased by the Company
(1) Type of Shares to be repurchased: Outstanding common shares
of Komatsu Ltd.
(2) Total Number of Shares to be
repurchased: Up to 10,000,000 shares.
(3) Total Cost of repurchase: (1.0% of total outstanding shares)
Up to 5,000,000,000 yen.
Note:
-----
Following the approval by the shareholders at the 133rd Annual Meeting of
Shareholders to be held on June 26, 2002, the Company will be authorized to
repurchase its common shares until completion of the 134th Annual Meeting of
Shareholders.
1
May 10, 2002
For Immediate Release
Komatsu Ltd.
2-3-6 Akasaka, Minato-ku,
Tokyo 107-8414, Japan
Corporate Communications
Tel: +81-(0)3-5561-2616
URL: http://www.komatsu.com/
Issuance of Share Acquisition Rights for Stock Option Scheme
Komatsu Ltd. presents the following notification of the resolution made at its
Board of Directors meeting held on May 10, 2002, to propose an agenda seeking
authorization to issue share acquisition rights for the purpose of its stock
option scheme to the 133rd ordinary general meeting of the shareholders to be
held on June 26, 2002, pursuant to the provisions of Articles 280-20 and 280-21
of the Commercial Code of Japan.
Comments
1. Reasons for issuing share acquisition rights to non-shareholders on specially
favorable terms: To further raise the enthusiasm and morale of its directors,
officers and employees, thereby improving its business results, the Company
is going to issue the rights to acquire new shares at no cost to the persons
mentioned above in the form of stock options. The amount to be paid in
exercise of share acquisition rights shall be determined by the market price
at the time of issuance as the standard as defined in 5) of 2 below.
2. Terms of share acquisition rights issue
1) Persons to whom share acquisition rights shall be allocated.
Directors and employees of the Company
2) Class and number of shares for share acquisition rights
Maximum of 950,000 common shares of the Company.
Pursuant to 3) below, in the event that the number of shares to be issued (or
transferred from the Company's treasury stock in lieu of thereof; hereinafter
the same shall apply) is adjusted upon exercise of share acquisition rights,
the maximum number of shares to be issued shall be adjusted according to the
change of the total number of shares due to such adjustment.
3) Total number of share acquisition rights to be issued
Up to 950 rights.
The number of shares which qualifies as one share acquisition right shall be
1,000 shares. However, in the case the Company splits or consolidates its
shares of common stock, the number of shares unused to exercise share
acquisition rights shall be adjusted according to the following formula,
whereby any fraction less than one share shall be omitted.
Adjusted number of shares = Pre-adjustment number of shares x Ratio of split
(or consolidation).
4) Issue price of share acquisition rights
No consideration shall be paid.
1
5) Amount to be paid in for exercise of share acquisition rights
The amount to be paid in for each share acquisition right (hereinafter to be
referred to as "paid-in amount") shall be the amount obtained by multiplying
the paid-in amount by the number of shares needed for each share acquisition
right.
The paid-in amount shall be the amount obtained by multiplying the
average closing price in the regular tradings of the shares of common stock
of the Company on the Tokyo Stock Exchange for each day (excluding any
trading day on which the closing price does not exist) prior to the month of
issue, by 1.05. Any fraction less than one (1) yen shall be rounded up to
the nearest one (1) yen. However, the amount shall not be lower than the
closing price of the Company's common stock traded on the market on the day
of issue of share acquisition rights.
Provided, however, in case the Company splits or consolidates its shares
of common stock on or after the issue date, the paid-in amount shall be
adjusted according to the following formula and any fraction less than one
(1) yen shall be rounded up to the nearest one (1) yen.
Post-adjustment paid-in amount = Pre-adjustment paid-in amount x (1/Split
(or consolidation) ratio)
If the Company issues new shares at a price that is lower than the market
price (excluding cases in which the right exercised involves either the
conversion of a convertible bond as specified in Commercial Code prior to
the revision of April 1, 2002 or the stock option), the paid-in amount shall
be adjusted according to the following formula, and resultant figures under
one (1) yen shall be rounded up to the nearest one (1) yen.
No. of new shares issued x Paid-in amount
No. of shares issued + -------------------------------------------
Post-adjustment Pre-adjudtment Market price per share
= x -------------------------------------------------
paid-in amount paid-in amount No. of shares issued + No. of new shares issued
6) Period during which the share acquisition rights may be exercised
From and including August l, 2003, to July 31, 2008. However, in case a
person to whom the share acquisition right was allocated deceased before the
end of the period for exercise of the right, his or her heir shall exercise
the right within 24 months from the day of death at the longest.
7) Conditions for exercise of share acquisition right
(1) Person to whom share acquisition right is allocated shall be able to
exercise the right, even after the person lost the position listed in 1)
of this announcement, according to the terms of contract concerning the
allocation of share acquisition right (hereinafter to be referred to as
"share acquisition right contract") to be concluded between the Company
and the person based on resolutions made by this general meeting of
shareholders and the Board of Directors of the Company.
(2) In the case that a person to whom share acquisition right is allocated
deceased, his or her heir shall be able to exercise the right according
to the terms of share acquisition right contract.
2
8) Cancellation of share acquisition rights and conditions thereof
In the case that any one of the following conditions is satisfied, share
acquisition rights can be cancelled gratis.
(1) In the case that the person to whom share acquisition right is allocated
pursuant to the provisions of the share acquisition right contract lost
the right or when no use of the right was confirmed.
(2) In the case that a merger agreement whereby the Company is deemed to
become extinct was authorized.
9) Restriction on transfer of share acquisition rights
Transfer of share acquisition rights shall require the approval of the Board
of Directors of the Company.
10) Arrangement at the time of share exchange or transfer
In the event that the Company chooses to exchange or transfer its stock to
become a wholly owned subsidiary, it is possible to have the company which
becomes the parent company through share exchange or transfer succeed the
obligations of the Company concerning share acquisition rights.
11) Other terms
Other terms concerning exercise of share acquisition rights shall be pursuant to
the conditions specified in the share acquisition right contract.
Note:
Concerning the issuance of share acquisition rights, it is conditional on
approval by the 133rd regular general meeting of shareholders of the Company to
be held on June 26, 2002. Details shall be decided in the form of resolutions at
the Board of Directors meeting after approval by the general meeting of
shareholders.
(end)
3