Komatsu and Topcon Form an Alliance

TOKYO, JAPAN – MARCH 25, 2004 – Komatsu Ltd. announces that Komatsu Ltd. and Topcon Corporation signed an agreement on business cooperation on March 24, 2004 so that the IT-based advanced automated machine control systems that are jointly developed by the parties may be added on as optional equipment for motor graders and bulldozers that Komatsu Ltd. markets through its worldwide sales network. The business collaboration between the two companies ranges from onboard blade control devices, pertinent software programs, to other system components including off-board rotating lasers and GPS base stations. The new automated machine control systems, named 2D/3D AUTO BLADE, include laser-based two dimensional blade control system for level finishing and laser-based or geopositioning three dimensional systems for blade control for slope finishing, which are factory-installed on such products. The plan is to first introduce them to Japan, North America and Europe's markets and then to the rest of the world.

Komatsu Ltd. elected alliance with Topcon Corporation for many reasons, but two major ones are as follows:
1. Nowadays, we see more and more utilization of information technology in the construction industry. For example, GPS-based topographic survey and CAD construction design are in particular prevailing. If these digital data from such works could be directly used for the operation of construction machinery, i.e., automated control of a blade in this case, we will be able to almost eliminate conventional finishing stakes, largely reduce chances of doing over due to grade errors, and thus make for more efficient construction. Our test results show it could reduce construction time by 50-60 percent.
We, as construction equipment manufacturer, would like to provide the best value to customers. So we considered what we need for us to incorporate IT devices as system into our construction equipment to allow integration of such digital data and thereby reduce construction time and costs in total and improve work safety. We certainly hope that those systems will be used as widely as possible. Then, we reached a conclusion that alliance with Topcon is the most effective way to this end because the company has highly valued terrain modeling technologies using laser, GPS and other means and has been at the world-leading position in this area.

2. Geopositioning, a key technology for the new control systems, uses satellite networks like the U.S. NavStar's GPS (Global Positioning System) and the Russia's GLONASS (Global Orbiting Navigation Satellite System). Both the GPS and the GLONASS are part of military technologies and are evolving very fast. We expect our partner to be able to well respond to such rapid technological evolution. Topcon Position Systems, Inc., a U.S.-based subsidiary of Topcon Corporation, has excellent product development capabilities. Topcon's latest positioning products that integrate TPS' technologies are highly appreciated in precision markets and its laser-based survey systems have also well established in the marketplace. As such, cooperation with the Topcon distributors' network will be most effective for the market introduction of our new products. Thus, we believe association with Topcon Corporation and Topcon Position Systems, Inc. will be the best for us to maintain and strengthen our market competitiveness in the construction equipment business.

Under the agreement, Komatsu Ltd. markets through its global distributing network the system as a package including onboard IT devices such as laser-based two dimensional blade control system for level finishing and laser-/GPS-based three dimensional blade control systems for slope finishing, pertinent software programs, and off-board revolving lasers and GPS base stations. This will broaden our business chances in addition to the conventional construction equipment business. Full support by Topcon distributors for sales promotional activities including in-advance demonstrations and advice on necessary software as well as for after-the-sales services will very much facilitate our market introduction.
Meanwhile, Topcon distributors also benefit from cooperation with Komatsu distributors in many ways, such as market share growth, eliminated credit management work, and increased opportunities for active deployment of their trained, skilled engineers.

Komatsu Ltd. and Topcon Corporation both think that this agreement will surely be a foothold for efficient, smooth, worldwide pervasion of the innovative construction methods using 2D/3D AUTO BLADE.

System prices vary greatly depending on technology used, whether 2D or 3D, or whether laser-based or GPS-based. The GPS-based 3D AUTO BLADE, for instance, is about 10 million yen. Komatsu Ltd. projects 200 or more units sales on a global basis in 2005.

ABOUT KOMATSU
Komatsu, Ltd., established in 1921, is one of the world's leading manufacturers of construction and mining equipment. In addition to construction and mining equipment, the Company has placed "industrial-use machinery," such as metal-sheet machines and forging presses, forklift trucks and forestry equipment, as its core business, in which we can demonstrate advantages of our superior manufacturing. In 2002 its net sales were USD 9,236 million and it employs nearly 31,000 people. Komatsu's shares are listed on the Tokyo Stock Exchange.

ABOUT TOPCON
Since it was founded in 1932, Topcon has remained true to a vision of technological innovation. As the sole proprietor of optomechatronics--a unique, synergistic blend of optics and electronic technologies--Topcon continually introduces innovative and high-precision ophthalmic, laser, surveying and equipment automation systems for a wide range of applications. Topcon has over 300 active patents in the U.S. alone. In addition to its current joint venture with Sauer-Danfoss to bring its equipment automation into the core electrohydraulic design of many off-highway equipment brands, Topcon has also developed OEM relationships with many notable brands, as well as maintaining aftermarket compatibility for all earthmoving and paving machinery brands.

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