Annual Report 2007 - Komatsu

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Corporate Governance Framework to Ensure that Directors’ and Employees’ Execution of Duties Comply with the Law and the Articles of Incorporation We have established the Compliance Committee as the group to oversee compliance, and the Committee regularly reports its reviews and activities to the Board of Directors. We have also established a framework to ensure thorough compliance to business rules through a variety of measures, including the provision of Komatsu’s Code of Worldwide Business Conduct (established in 1998 and revised six times to date), appointment of the executive officer in charge of compliance, and establishment of the Compliance Department. Moreover, Komatsu has established the internal reporting system where those who are discretely reporting questionable actions and other related matters in light of compliance will not be penalized. Framework to Ensure Appropriateness of Business Operations of Komatsu and the Komatsu Group a) We have devised the Regulations for Affiliated Companies and related rules in order to contribute to appropriate and efficient management of the Komatsu Group, while respecting self-driven management of affiliated companies. Furthermore, we position the Komatsu’s Code of Worldwide Business Conduct as the code of business conduct applicable to all affiliated companies of the Komatsu Group. Based on these regulations and the code of business conduct, each company of the Komatsu Group has devised its own regulations designed to correctly promote business operations. b) Our important committees, such as the Compliance Committee, Risk Management Committee and Export Management Committee, shall implement their activities in light of the Komatsu Group, and the representatives of affiliated companies are required to participate in the meetings as needed. c) Especially important affiliated companies are required to report their business conditions, including risks and compliance, to the Board of Directors of Komatsu on a regular basis. d) Internal Audit Department of Komatsu not only audits Komatsu’s divisions but also audits affiliated companies of the Komatsu Group or oversees the audits, and monitors and instructs affiliated companies so that they will build their structure in conformity with Komatsu’s internal control and operate it correctly. Employees Responsible to Support Statutory Auditors When Performing Duties We have established the Office of Auditors’ Staff and allocated employees who work as full-time and part-time assistants to statutory auditors. Independence of Assistants to Statutory Auditors from Directors a) Concerning the recruitment, appointment and personnel change of those employees who belong to the Office of Auditors’ Staff, the approval of standing auditors is prerequisite. b) The full-time assistant is independent of the chain of command of Directors, and thus standing auditors conduct his or her performance evaluation. Report-to-Auditors Structure and Framework to Ensure Effective Audits by Auditors a) Directors and executive officers regularly report to auditors concerning their execution of operations in charge of Board of Directors and Board of Statutory Auditors meetings. b) When directors discover serious violations of the law and/or important facts related to compliance, they shall report the concerned matter immediately to auditors. c) Statutory auditors of Komatsu attend various committee meetings related to internal control and other important meetings as observers. They also look through Japanesestyle consensus-based, approved documents, which contain important decisions of the Company, and important arbitrary documents. KOMATSU’S CODE OF WORLDWIDE BUSINESS CONDUCT (7 th edition) 16 Annual Report 2007
The KOMATSU Way It was a journey of self-discovery from the past and self-confidence for the future. It all began in September 2005, when we reassessed our own strengths and weaknesses as part of the first-stage Reform of Business Structure project. It took a little over 10 months for the working group to compile The KOMATSU Way. They reviewed the contents of QC Handbooks from 1963 to the present, which include Komatsu words of wisdom which have been passed down at workplaces over the years. The working group also conducted over 50 hours of interviews with 40 employees -- both current and retired -- some of whom are considered the legendary “meisters” of our plants. In this feature story section, we would like to highlight some major contents of The KOMATSU Way which was put in writing for Komatsu Group employees last year. Born in Japan, The KOMATSU Way has just begun to reach our people in different parts of the world for possible modifications. We feel certain that the core values in the following pages are universal and thus capable of withstanding the passage of time and people, transcending cultural diversity and national borders. 17 Annual Report 2007
Page 1 and 2: Annual Report 2007
Page 3 and 4: UPWARD Fifth Consecutive Year of Gr
Page 5 and 6: Net Sales* Billions of yen 2,000 Op
Page 7 and 8: profit. Net income for the year, th
Page 9 and 10: Interview with Kunio Noji, Presiden
Page 11 and 12: previous tasks of enhancement of ou
Page 13 and 14: With respect to the development of
Page 15 and 16: Q Lastly, could you introduce The K
Page 17: public accounting firm when the fir
Page 21 and 22: The KOMATSU Way Corporate Governanc
Page 23 and 24: Brian Kober, Vice President, Corpor
Page 25 and 26: Bruce Nelson Senior Manager, Manufa
Page 27 and 28: Social Activities Management We ha
Page 29 and 30: Review of Operations Trends and Per
Page 31 and 32: Japan While public-sector investmen
Page 33 and 34: Research and Development We are pro
Page 35 and 36: Global Manufacturing Operation for
Page 37 and 38: change. These are the first updates
Page 39 and 40: Financial Section Financial Review.
Page 41 and 42: FINANCIAL REVIEW and mining equipme
Page 43 and 44: FINANCIAL REVIEW wholly owned subsi
Page 45 and 46: FINANCIAL REVIEW cash used in inves
Page 47 and 48: FINANCIAL REVIEW 5 Environmental la
Page 49 and 50: FINANCIAL REVIEW Interest Rate Risk
Page 51 and 52: FIVE-YEAR SUMMARY Millions of yen (
Page 53 and 54: CONSOLIDATED BALANCE SHEETS Thousan
Page 55 and 56: Consolidated Statements of Sharehol
Page 57 and 58: Notes to Consolidated Financial Sta
Page 59 and 60: NOTES TO CONSOLIDATED FINANCIAL STA
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Report of Independent Registered Pu
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Directors, Auditors and Officers (A
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KOMATSU GROUP INVESTMENT HOLDINGS S
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2-3-6 Akasaka, Minato-ku Tokyo 107-
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Annual Report 2007 - Komatsu

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