(Translation) This document has been translated from the Japanese original for the convenience of overseas stakeholders. In the event of any discrepancy between this document and the Japanese original, the original shall prevail. Annual Securities Report From April 1, 2018 to March 31, 2019 (The 150th Fiscal Year) KOMATSU LTD. E01532 The 150th Fiscal Year (from April 1, 2018 to March 31, 2019) Annual Securities Report 1. This is an English translation of the Annual Securities Report (“Yukashoken Hokokusho”) filed via the Electronic Disclosure for Investors’ Network (“EDINET”) system as set forth in Article 27-30-2 of the Financial Instruments and Exchange Act of Japan. The translation includes a table of contents and pagination that are not included in the electronic filing. 2. Appended to the back of this document, are English translations of the auditors’ report that was attached to the Annual Securities Report when it was filed using the aforementioned method, and the internal control report and confirmation letter that were filed at the same time as the Annual Securities Report. Certain References and Information This report is prepared for overseas investors and compiled based on contents of the Annual Securities Report (“Yukashoken Hokokusho”) of Komatsu Ltd. filed with the Director-General of the Kanto Local Finance Bureau of Japan on June 17, 2019. In this report, Komatsu Ltd. is hereinafter referred to as the “Company” and together with its consolidated subsidiaries as “Komatsu.” Cautionary Statement with respect to forward-looking statements: This report contains forward-looking statements that reflect managements’ views and assumptions in the light of information currently available 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,” “plans,” “expects” 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. Any forward-looking statements speak only as of the date of this report, and the Company assumes no duty to update such statements. 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 Komatsu’s principal products, owing to changes in the economic conditions in Komatsu’s principal markets; changes in exchange rates or the impact of increased competition; unanticipated costs or delays encountered in achieving Komatsu’s objectives with respect to globalized product sourcing and new information technology tools; uncertainties as to the results of Komatsu’s research and development efforts and its ability to access and protect certain intellectual property rights; the impact of regulatory changes and accounting principles and practices; and the introduction, success and timing of business initiatives and strategies. Contents Cover ................................................................................................................................................................................................... 1 Part I Company Information ................................................................................................................................................................ 2 Item 1. Overview of the Company and Its Consolidated Subsidiaries .......................................................................................... 2 1. Summary of Business Results ........................................................................................................................................... 2 2. History ............................................................................................................................................................................... 4 3. Description of Business ..................................................................................................................................................... 5 4. Overview of Subsidiaries and Affiliates ............................................................................................................................ 8 5. Employees ......................................................................................................................................................................... 15 Item 2. Business Overview ........................................................................................................................................................... 16 1. Management Policy, Business Environment and Tasks Ahead, etc. .................................................................................. 16 2. Risk Factors ....................................................................................................................................................................... 19 3. Analyses of Consolidated Financial Position, Operating Results and Cash Flows from the management’s perspective ... 22 4. Material Agreements, etc. .................................................................................................................................................. 33 5. Research and Development Activities ............................................................................................................................... 34 Item 3. Property, Plants and Equipment ....................................................................................................................................... 36 1. Overview of Capital Investments ...................................................................................................................................... 36 2. Major Facilities ................................................................................................................................................................. 36 3. Plans for Capital Investment, Disposal of Property, Plants and Equipment, etc. ............................................................... 40 Item 4. Information on the Company ............................................................................................................................................ 41 1. Information on the Company’s Share, etc. ........................................................................................................................ 41 (1) Total number of shares, etc. ........................................................................................................................................... 41 (2) Stock acquisition rights, etc. .......................................................................................................................................... 42 (3) Exercises, etc., of moving strike convertible bonds, etc. ................................................................................................ 66 (4) Changes in number of issued shares, capital stock, etc. ................................................................................................. 66 (5) Shareholding by shareholder category ........................................................................................................................... 66 (6) Major shareholders ........................................................................................................................................................ 67 (7) Voting rights .................................................................................................................................................................. 69 2. Acquisitions, etc. of Treasury Stock .................................................................................................................................. 71 3. Dividend Policy ................................................................................................................................................................. 72 4. Corporate Governance, etc. ............................................................................................................................................... 73 (1) Overview of corporate governance ................................................................................................................................ 73 (2) Board of Directors and Audit & Supervisory Board Members ...................................................................................... 79 (3) Conditions of Audits ...................................................................................................................................................... 96 (4) Compensation ................................................................................................................................................................ 99 (5) Shareholdings ................................................................................................................................................................ 103 Item 5. Financial Information ....................................................................................................................................................... 104 1. Consolidated Financial Statements, etc. ............................................................................................................................ 105 (1) Consolidated