2001Semiannual Report

For the six months ended April 30, 2001

CONTENTS

3
A Message
from the President

4
Financial Highlights

5
Special Issue

10
Consolidated Statementsof Income11
Consolidated Statementsof Cash Flows12
Non-Consolidated
Balance Sheets

Segment Information

14
Non-Consolidated
Statements of Income

18
Corporate Data

15
Topics17
Branch Network

8
Consolidated
Balance SheetsA

M e s s a g e

f r o mt h e

P r e s i d e n t

Basic policies concerning business managementand distribution of earnings

For Kanamoto Company, this means we will take advantageof this “wind at our backs” and pursue the following dual
strategy in each of our operating areas

At the Kanamoto Company group we’ve made commitment
to change – embodied in the philosophy “never be satisfied
with present conditions and constantly move ahead,

Regional dominanceregardless of the environment” – the fundamental

In areas that we already cover as sales territories we will
pursue further dominance. Our aim is to establish small

management outlook for developing our businesses. Ourbasic policy is to achieve a successful performance thatbranches with a minimum expense and staff that have aclose relationship with the local area and create a synergistic

produces maximum satisfaction for all stakeholders of thecompany, including customers and shareholders.

effect with existing branches. Using this approach we

The Kanamoto group will further strengthen consolidated

opened 15 branches in Hokkaido and the Tohoku region lastyear as well, which are providing excellent results.

group management and continue to take actions adapted tothe current environment by seeking new customer needs andAlliancesestablishing new information and services focused aroundthe construction equipment rental business, the mainstay ofIn the Chugoku region and the islands of Shikoku andKyushu where Kanamoto does not have branches, we are

the Company’s principal business activity.

pursuing alliances with strong local equipment rental

In order to ensure the long-term, integrated expansion ofshareholders’ profits, Kanamoto Company continues tocompanies.
We have already concluded business alliances with leading

focus comprehensively on both capital investments based on
its medium-term profit plan and on profitability, dividend

regional companies in Okinawa and Kyushu, to which weare supplying equipment (Machida Kikou Co., Ltd., Daiichi

trend and a sound financial position. The Company also

Machine Industries Co., Ltd. and Kyushu Kensan Group). In

remains committed to its policy of stable dividend growth.
To accomplish these goals Kanamoto Company focuses on

Shikoku, we formed a joint venture with Tadano, Ltd., amanufacturer of cranes, to jointly establish and financethe importance of cash flow and places particularimportance on the growth of EBITDA (earnings before

Kanamoto Shikoku Co., Ltd., a construction equipment
rental firm that began operating in June 2001. In addition weinterest, taxes and depreciation and amortization).

are moving forward gradually with our alliance with
Komatsu Group as well. Finally, we also plan to makeDaiichi Machine Industries Co., Ltd. a subsidiary ofMedium to long-term corporate management strategy

Kanamoto later this year.

The market for construction equipment rentals is influenced
greatly by the trend in construction spending. On this point,

At the same time, Kanamoto Company is continuing its

a revision of government public works spending will beventure business support activities, in order to nurture new
businesses that will follow the growth path of theinevitable because of policy measures to restore Japan’s
fiscal health and will become a negative factor in the future.

construction equipment rental business. The principal
objective of these efforts is to develop new businesses for

Nevertheless, the construction industry is engaged in an all-the company. To recovery these investments Kanamoto
follows a model in which it receives dividends plus a margin

out effort to rationalize management in response to thisearned by participating in the distribution of the target

outlook. As part of this response, reducing liabilities andparing assets have become particularly important objectives

companies’ products, rather than focus exclusively on
capital gains. Kanamoto’s investments include microturbine

for construction firms. Against this backdrop we are now
witnessing a sharp rise in the degree to which companies

electrical generators, VoIP technology and other productsthat show promise.

rely on equipment rentals, as the construction industry
utilizes outsourcing to reduce capital spending and lighten
its balance sheet. According to research by the Japan Civil
Engineering Association, construction companies usedequipment rentals for 54.3% of all their equipment needs infiscal 2000. This was a slight decline of 0.9 percentage
points from the prior year. Nevertheless, the use of rental
equipment increased in 42 of the 61 equipment categories

Kanchu Kanamoto President June 2001

covered by the association’s survey, and despite someweakening of demand the basic trend towards greater use of
equipment rentals continues to rise.

Semiannual Report 2001 3

F i n a n c i a l

H i g h l i g h t s

Non-Consolidated Financial Position

Rental revenues and sales of goods
Operating income
Net income
Total shareholders' equity
Total assets

Millions of yen

Thousands of
U.S. dollars

April 30,
2000

October 31,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)¥ 29,453
2,036
994
30,722102,157¥ 61,030
3,105
1,455
30,926
102,921¥ 31,234
1,505
509
31,883
104,562$ 252,812
12,184
4,123
258,062
846,311yen

U.S. dollars¥ 16.84
9.00$ 0.140.07

Per share of common stock:¥ 33.56
9.00

Net income
Cash dividends¥ 48.66
18.00

Note : U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥ 123.55=US$1, the approximate exchange rate on April 30, 2001.

Rental Revenues and Sales of Goods

Operating Income(Millions of Yen)

(Millions of Yen)

5,000

61,03060,58457,95459,72360,000

4,092

4,063

4,000

45,000

3,105

3,000

1,505

2,036

1,777

15,000

2,350

2,921

2,000

2,396

29,45329,33828,77428,59931,23430,000

1,000

0

0
97

98

99

00

97

01

Net Income

98

99

00

Net Income per Share(Millions of Yen)

(Yen)

100

1,985

2,000

1,726

1,500

75

68.01

1,455

1,306

58.95

12 months ended

48.66

50

994

1,023

1,134

1,000

01

39.83

784

44.75

33.56
35.01

509

500

25

27.19
6 months ended

16.84
0

0
97

98

99

00

01

97

98

6 months ended April 30

4 Semiannual Report 2001

99

00

01

12 months ended October 31

Special Issue

Colloquy

Strategies for the 21st Century asa Leading Company
Toshihiko Fujie
Professor, Shukutoku University
Vs.
Kanchu Kanamoto
President, Kanamoto Co., Ltd.

10

8.96%
In the 35 years since it was established, Kanamoto has grown to berecognized as the leading company in the construction equipment rental
industry. The company isn’t about to rest on its laurels, however. From the
beginning Kanamoto Company has aimed at aggressive businessdevelopment, through efforts such as entry into new sectors that will
ensure this influential company continues to grow. We invited Professor
Toshihiko Fujie, an expert in marketing, public relations and investor
relations, to speak in a formal interview with President Kanchu Kanamoto
about Kanamoto Company’s strategies for the 21st century.

Part 1

9

8

7

96

97

98

99

00

01

Kanamoto’s share of the construction equipment rental market(Excludes companies in the Kanamoto alliance group)

Construction Equipment Rental Industry Focus and Vision

Strategically built top share

maintenance programs. It wasn’t a case of transferring the
U.S. business model to Japan “as is.”Fujie:Let me begin by asking how Kanamoto Company

For example, in the rental business the time period from
capital investment until the investment can be recovered isdeveloped its business up to this point. Kanamoto
undoubtedly enjoyed favorable conditions during the socalled “construction boom” that began from 1965. Did yourforward-looking management strategy also have a large
influence on your ability to achieve the Number One
position in today’s market?

seven to eight years on average, and it was roughly ten
years when we were first starting out. This means wecannot turn over the invested capital during this long
period. So it’s important that we adopt a precise strategy
for asset management, beginning with the equipment
portfolio. That is why at Kanamoto we quickly introduced

Kanamoto:That is probably the case. Although ourconstruction equipment rental business arose
spontaneously, in undertaking this business we noted theeconomic rationality in the business conditions themselves.
We had the conviction that the business would certainly

the use of computers and built our management systems toensure we understand the operating status of eachindividual piece of rental operating equipment. That was in1985. I believe that we were probably the first company inthis business in Japan to adopt such an approach.

expand, so from the very outset we worked to build theknow-how that would most efficiently provide customer
satisfaction at all levels, including aspects such as

Addressing two major themes: Rationalization and IT

merchandising, equipment inventory procedures andFujie:One aspect of the construction equipment rental
business is that a large quantity of equipment inventory is astrong point. On the other hand, businesses with as little
physical stock as possible are attracting attention as one
trend for the 21st century. Even if Kanamoto Company
doesn’t hold equipment stock itself, you can maintain arational level of product supply by using IT to create a
network connecting your branches with equipment users.
What are your thoughts about this type of businessapproach?
Semiannual Report 2001 5

Special Issue

Kanamoto:We want to move our business in this direction
as well. As a first step we are participating in Construction

on a worldwide basis. In that case, the careful managementof the historical data concerning the equipment’s use willEC.com, a network that the largest general contractors

be critically important. In this respect Kanamoto Company

started around December 2000. We are building this as one
opportunity. Although four major construction equipment

is overwhelmingly in the lead over other companies.
In fact, we’ve already exhibited 60 or 70 pieces of usedrental companies including Kanamoto are participating in
the network, at this point only Kanamoto has the systemequipment on a trial basis through AssetLine.com, theworld’s largest company for Internet sales of usedcapabilities to conform to the invitation.

construction equipment. We achieved a sales agreement

Fujie:Will it also be possible to utilize IT to develop

rate of 60% when we did so, which is an extremely
satisfying result. Moreover we were able to sell thealliances with overseas companies? For example, analliance in which Kanamoto would receive an order for an

equipment at prices higher than we predicted. I think thiswas also the result of the industry’s very positive

overseas construction site and a local alliance partner
would supply the equipment.

evaluation of Kanamoto’s equipment management system

Kanamoto:Certainly we want to seek out suchpossibilities. Kanamoto Company is very aggressive about
pursuing business linkages, which I think can be
AssetLine.com

understood by observing our domestic alliance strategy.
The area where IT is being utilized the most right now isused equipment auctions. In the future the Internet willprobably provide the best means not only for efficiently
selling used construction equipment, but also for selling it

Part 2

http://jp.assetline.com/
The world’s largest used construction equipment auction site.
Approximately 4,200 companies representing both buyers
and sellers in various countries are registered.

Kanamoto’s business style for the new era is seen in its venture business support activities

Aiming to enter promising business sectors of the future
Fujie:Kanamoto is aggressively investing in venture firms.
What is your strategic basis for such activity?
Kanamoto:Simply put it’s a question of diversification ofmanagement risk. Despite the fact that we’ve alreadyestablished construction equipment rentals as our principal
business, it will be risky in the future if the entire company
is too heavily dependent upon only one profit-making
activity. In order to secure other stable sources of earnings
we have to develop new businesses. It will be difficult,however, for us to participate in other sectors on our own in

the future and take a leading position. So we started ouractivities to support venture businesses as the most efficientmeans to succeed. Of course our investments areaccompanied by risk, but we believe we’ll be successful if
we achieve a .200 or .300 batting average.
That does not mean, however, that Kanamoto is investing
its money as venture capital. Our principal focus is not toshoot for capital gains. Rather we want to expand ourbusiness sectors by participating in promising venturebusinesses. We make sure we never lose sight of this point.
Fujie:Currently the micro power business is attracting a lotof attention. To me Kanamoto’s microturbine generator(MTG) business looks promising.

Telecommunications-related businesses

Kanamoto’s venture
support business group●NEW TECH CO., LTD.
●Active Technology Corporation●Soft Front, Inc.
●Saatec Engineering Corporation●J-DATA CO., LTD.

New energy -related businesses●Dream-Up Tomamae Co., Ltd.
●Active Power Corporation

New materials and recycling-related businesses●Active IN Co., Ltd.
◆Polyshield Services Co., Ltd.
●HFT SOHGO TSUSHO CO., LTD.

Investment advisory service businesses●DreamVisor. Com Incorporated●Ambitious Net Co., Ltd.

Food products and restaurant-related businesses●Providence Brewery Co., Ltd.
▲T’s Network Ltd.
▲OTARU UNGA SHOKUDOU CO., LTD.

● Firms to which equity accounting does not apply ◆ Non-consolidated companies ▲ Consolidated companies

6 Semiannual Report 2001

Professor at Shukutoku University, Faculty of International Communications.
Professor Fujie is a member of many organizations including the Japan OR
Academy, The Academy of Japanese Advertisers, The Foreign Correspondents’
Club of Japan and the Public Relations Society of Japan. He is the author ofnumerous books and articles and is best know for his work Gendai No Kouhou:
Senryaku to Jissai (Advertising for Today: Strategies and Reality), among others.

Kanamoto:Our company originally owned a large numberof stand alone-type generators as construction rental
equipment. So even though it’s a new business, in a sense it
is not completely incompatible because it represents anextension of our construction equipment rental business.
While the principle behind a MTG is really quite simple,
it’s actually a business that becomes more interesting thelonger we’re involved because we’re dealing with a hightech system in which various know-how is concentrated.
Fujie:Your sales objective is 5,000 to 10,000 MTG units,correct?
Kanamoto:We believe we can reach those numbers inabout five years. I say that because various uses for MTG
without sticking to any one business sector.

have emerged. We introduced the first demonstration unit
in Kanamoto’s Hamamatsu-cho K Building in Tokyo, andOne of the firms we are supporting in the restaurant industry

we’ve had absolutely no trouble with the unit at all.
Presently we’re using a 30-kilowatt system just for theis named T’s Network Ltd. The president of that company isalso serving as the president of the recently opened OTARU

building’s lighting. If we installed one of the new 60-

UNGA SHOKUDOU CO., LTD. Of course our company
also participated in the investment in the restaurant.

kilowatt systems that will be released shortly, we would be
able to cover the entire building’s energy needs.

One of the firms in which we’ve made a straight investment

Fujie:The energy-related business looks very importantas the sole investor is Soft Front, Inc. Soft Front isdeveloping Internet telephony software called Voice IP. It’seven from today’s viewpoint.

an extremely interesting company that can be called one of
the rising stars of “Sapporo Valley”, our local community

Kanamoto:Just as “ecology” is a critically important key

of start-up firms.

word. Both users and customers are taking a hard look at
the ecological impact of firms. It even has an influence on a

The origin of the company was a firm that had designed an
ISDN terminal adapter, which it supplied to NTT, andcompany’s debt rating. Given that ecological awareness is

succeeded by building a business model by which it wasable to increase earnings even though it received only aso significant, we hope that Kanamoto will be favorably
evaluated for its involvement with MTG and wind power

licensing fee. Soft Front is one of the new companies begun

generation and our decision to switch to hybrid cars for allof our company sales vehicles, 300 of which we’ve alreadyby a founder of that firm. Soft Front’s main product, anInternet telephony system, is viewed as a new business

put into service.

model that can, for example, charge a caller when theindividual makes a call over the Internet.

Contributing to local areas through promotion ofventure firms

means a business that does not generate value from a

Fujie:To my way of thinking Kanamoto’s venture businessmaterial thing itself but rather establishes sales throughsoftware and know-how. The key to success depends up

support is the right answer. What about the long-term care

whether a company can convert this concept into reality.

and welfare sector, which you have also investigated. Whenone sees how hard the firms that jumped into this sector are

Kanamoto:Originally that was true of the construction

battling it out, I can appreciate the certainty provided by
Kanamoto’s approach.

equipment rental business as well. The renter took all of therisk from ownership of the materials, or in other words

Kanamoto:The long-term care and welfare sector would infact be easy for us to handle, with the rental of beds andwhat not. We’ve reviewed a number of proposals, but weturned all of them down because there are some many areas

Fujie:I think the expression “21st century-type business”

created value from the fact that users could simply address
their risk management needs.
Because Kanamoto Company has this kind of style as abusiness background, I think we can probably adapt
ourselves smoothly to new business models.

of the business where the future direction is impossible todiscern.
Our company is based in Hokkaido and our goal is local
revitalization, so we are investing in promising local firms
Semiannual Report 2001 7

C o n s o l i d a t e d

B a l a n c e

S h e e t s[As of April 30, 2001 and October 31, 2000]

ASSETS
Millions of yen

Thousands of
U.S. dollars

October 31,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)¥ 16,422¥ 15,780$ 127,722

757

278

2,247

23,332

24,048

194,638

Inventories

826

1,368

11,076

Deferred income taxes

103

222

1,798

Other current assets

4,127

4,148

33,574

Less : Allowance for doubtful accounts

(174)

(200)

(1,622)45,39345,644369,433

Rental equipment

58,85659,473

481,373

Building and structures

14,337

14,503

117,385

Machinery and equipment

4,936

4,859

39,330(49,289)(48,748)(394,562)

28,84030,087

243,526

24,182

24,182

195,723

339

110

891

53,361

54,379440,140Investments in securities

2,960

4,561

36,916

Deferred income taxes

485

609

4,930

Other assets

1,443

1,567

12,689Less : Allowance for doubtful accounts

(230)

(579)

(4,688)

Total investments and other assets

4,658

6,158

49,847¥ 103,412¥ 106,181$ 859,420

Current assets :Cash and cash equivalents
Short-term investments
Notes and accounts receivable, trade

Total current assets

Property and equipment :Less : Accumulated depreciation

Land
Construction in progress
Total property and equipment

Investments and other assets :Note : U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥ 123.55=US$1, the approximate exchange rate on April 30, 2001.

8 Semiannual Report 2001

LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of yen

Thousands of
U.S. dollars

October 31,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)

Short-term bank loans¥ 4,727¥ 517$ 4,181

Current portion of long-term debt

14,477

14,715

119,106

Notes and accounts payable, trade

11,696

13,324

107,846

Accrued income taxes

204

1,263

10,226

Accrued bonuses for employees

503

539

4,361

1,341

2,104

17,02632,94832,462

262,746

38,36838,233

309,453

–

1,019

8,248

1,247

2,608

21,106

39,61541,860338,807

68

108

874

2001 – 30,250,241shares

–

8,596

69,576

2000 – 30,229,241shares

8,591

–

–

Additional paid-in capital

9,715

9,720

78,670Retained earnings

12,484

12,718102,941

–

727

5,887

30,79031,761

257,074

15,190 shares in 2001

–

(10)

(81)

13,377 shares in 2000

(9)

–

–

30,781

31,751

256,993¥ 103,412¥ 106,181$ 859,420

Current liabilities :Other current liabilities
Total current liabilities

Non-current liabilities :Long-term debt
Accrued pension and severance costs
Other liabilities
Total non-current liabilities

Minority interests

Shareholders' equity :Common stock, par value ¥ 50 per share :Authorized – 66,000,000 shares
IssuedNet unrealized gains on securities

Less, treasury stock, at cost :Total shareholders' equity

Semiannual Report 2001 9

C o n s o l i d a t e d

S t a t e m e n t so f

I n c o m e[For the six months ended April 30, 2001 and the 12 months ended October 31, 2000]

Millions of yen

Thousands of
U.S. dollars

October 31,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)

Rental revenues¥ 40,377¥ 21,659$ 175,302

Cost of rentals

29,40815,626

126,473

Sales of goods

21,62010,982

88,885

Cost of sales

17,427

8,679

70,244Gross profit

15,162

8,336

67,470

Selling, general and administrative expenses

12,1196,698

54,214

Operating income

3,043

1,638

13,256

87

27

218

(627)

(294)

(2,377)6(360)(2,915)

2,509

1,011

8,182

Current

1,243

1,231

9,963

Deferred

(52)

(763)

(6,174)

1,191

468

3,789

Income before minority interests

1,318

543

4,393

Minority interests in subsidiaries

(42)

20

160

¥ 1,360¥ 523$ 4,233

yen

U.S. dollars

Other income (expenses) :Interest and dividend income
Interest expenses
Others, net
Income before income taxes
Income taxes :Net income

October 31,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)Basic¥ 45.51¥ 17.30$ 0.14

Diluted

36.35

14.20

0.11

Net income per share :Note : U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥ 123.55=US$1, the approximate exchange rate on April 30, 2001.

10 Semiannual Report 2001

C o n s o l i d a t e d

S t a t e m e n t s

o f

C a s hF l o w s

[For the six months ended April 30, 2001 and the 12 months ended October 31, 2000]

Millions of yen

Thousands of
U.S. dollars

October 31,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)

Cash flows from operating activities¥ 10,616¥ 7,870$ 63,696

Cash flows from investing activities(1,826)(269)(2,175)

Cash flows from financing activities(8,545)(8,243)(66,720)

245

(642)

(5,199)Cash and cash equivalents at beginning of period

16,177

16,422

132,921

Cash and cash equivalents at end of period

16,422

15,780127,722

Net increase (decrease) in cash and cash equivalents

S e g m e n t

I n f o r m a t i o n[For the six months ended April 30, 2001 (Unaudited)]

Millions of yen

Construction
relatedbusiness

Steel related
business

Information
andcommunication
related andother business

Operating expenses¥ 28,048
0
28,04826,464¥ 3,912
–
3,912
3,873

¥ 680
–
680
678

¥ 32,640
032,64031,015

Operating profit¥ 1,584¥ 39¥2¥ 1,625

Total

Eliminations
andcorporate
items

Consolidated

Sales
Outside customers
Intersegment
Total

¥

–
(0)
(0)
(13)

¥ 32,640–
32,64031,002¥ 13¥ 1,638

Thousands of U.S. dollars

Construction
relatedbusiness

Steel related
business

Information
andcommunication
related andother business

Operating expenses$ 227,020
1
227,021214,202$ 31,664–
31,664
31,348$ 5,503
–
5,503
5,487

$ 264,187
1
264,188
251,037

Operating profit$ 12,819

$ 316

$ 16

13,151

Total

Eliminations
andcorporate
items

Consolidated

Sales
Outside customers
Intersegment
Total

$

–
(1)
(1)
(106)
$ 105

$ 264,187–
264,187
250,931$ 13,256

Semiannual Report 2001 11

N o n - C o n s o l i d a t e d

B a l a n c e

S h e e t s[As of April 30, 2001 and October 31, 2000]

ASSETS
Millions of yen

Thousands of
U.S. dollars

October 31,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)¥ 10,197¥ 9,038$ 73,155

Time deposits

6,100

5,950

48,159Notes receivable, trade

11,85914,734

119,257

Accounts receivable, trade

11,487

8,848

71,616

817

928

7,513

Other current assets

4,967

4,608

37,293

Less : Allowance for doubtful accounts

(173)

(197)

(1,600)45,25443,909355,393

Rental equipment

58,85659,473

481,370

Buildings

10,172

10,50485,018Structures

3,686

3,740

30,272

Machinery and equipment

4,846

4,814

38,963(49,118)(48,592)(393,302)

28,44229,939242,32124,04324,043

194,601

339

110

891

52,82454,092437,813

Investments and other assets

5,073

7,140

57,793

Less : Allowance for doubtful accounts

(230)

(579)

(4,688)

Total investments and other assets

4,843

6,561

53,105¥ 102,921¥ 104,562$ 846,311

Current assets :CashInventories

Total current assets

Property and equipment :Less : Accumulated depreciation

Land
Construction in progress
Total property and equipment

Investments and other assets :Note : U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥ 123.55=US$1, the approximate exchange rate on April 30, 2001.

12 Semiannual Report 2001

LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of yen

Thousands of
U.S. dollars

October 31,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)¥ 4,400¥$

Current liabilities :Short-term bank loans––

Current portion of long-term debt

7,735

7,851

63,545

Notes payable, trade

8,367

10,33883,673

Accounts payable, trade

2,785

1,856

15,019

792

375

3,036

Accounts payable, other

7,583

8,348

67,565

Accrued income taxes

203

1,234

9,990

Accrued bonuses for employees

492

524

4,241

Other current liabilities

403

530

4,293

Total current liabilities

32,76031,056251,362

Straight bonds

5,278

5,278

42,717

Convertible bonds

9,796

9,733

78,778Long-term bank loans

12,865

13,076

105,836

Long-term accounts payable, other

11,00812,24899,131

–

1,015

8,211

288

273

2,214

39,235

41,623336,887

2001 – 30,250,241 shares

–

8,596

69,576

2000 – 30,229,241 shares

8,591

–

–

Additional paid-in capital

9,715

9,720

78,670Legal reserve

1,245

1,345

10,888Retained earnings

11,375

11,49593,041

–

727

5,887

30,92631,883

258,062¥ 102,921¥ 104,562$ 846,311

Notes payable, otherNon-current liabilities :Accrued pension and severance costs
Other liabilities
Total non-current liabilities

Shareholders' equity :Common stock, par value ¥50 per share :Authorized – 66,000,000 shares
IssuedNet unrealized gains on securities
Total shareholders' equity

Semiannual Report 2001 13

N o n - C o n s o l i d a t e d

S t a t e m e n t so f

I n c o m e[For the six months ended April 30, 2001 and April 30, 2000]

Millions of yen

Thousands of
U.S. dollars

April 30,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)

Rental revenues¥ 19,753¥ 21,143$ 171,129

Cost of rentals

14,067

15,470125,209

Sales of goods

9,700

10,092

81,683

Cost of sales

7,677

7,900

63,942Gross profit

7,709

7,865

63,661

Selling, general and administrative expenses

5,673

6,360

51,477

Operating income

2,036

1,505

12,184

25

27

216

(301)

(284)

(2,296)15(300)(2,430)

1,775

948

7,674

Current

736

1,202

9,725

Deferred

45

(763)

(6,174)

781

439

3,551

¥ 994

¥ 509

$ 4,123

yen

U.S. dollars

April 30,
2000

April 30,
2001
(Unaudited)

April 30,
2001
(Unaudited)¥ 33.56¥ 16.84$ 0.14

9.00

9.00

0.07

Other income (expenses):
Interest and dividend income
Interest expenses
Others, net
Income before income taxes
Income taxes

Net income

Per share of common stock:
Net income
Cash dividends applicable to the year

Note : U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥ 123.55=US$1, the approximate exchange rate on April 30, 2001.

14 Semiannual Report 2001

T o p i c s

OTARU UNGA SHOKUDOU Opened in May 2001!
(Otaru Canal Restaurant)
OTARU UNGA SHOKUDOU, established as a joint investmentby nine companies including Kanamoto and Nippon Flour Mills
Co., Ltd., opened its doors in May 2001. The restaurant has
garnered high expectations as the newest attraction in Otaru, oneof Hokkaido’s most famous sightseeing venues.
The spot that’s generated the hottest excitement at OTARUUNGA SHOKUDOU is the “Ramen Atelier”, where popular
noodle restaurants from around Japan are gathered under one
roof. Six famous shops often covered by the mass media –Hakata Ippudo, Yokohama’s Kujiraken, Ganso Ichijouryuu
Ganko from Tokyo, plus Debi, Taishouken and Hokkaido’s own
local representative Sumire – are competing head to head, theirowners energetically trumpeting the merits of their local flavors.
All of the shops are designed in styles that evoke the good olddays of yesteryear in Otaru. In an atmosphere of comfortablesurroundings, with designs resembling gable-roofed two-story
wooden tradesmen’s homes, western-style buildings in the port’s
elegant uptown district and private houses made of stone, thedesign guarantees customers can enjoy a fun experience while
trying a wide range of delicious ramen.
The Asakusabashi Beer Hall is a reconstruction of the old MitsuiBank Otaru Branch, the first iron-frame reinforced concretebuilding in Otaru. Here customers can enjoy a reasonably priced
buffet dinner at Aji no Sekai Kiko for only 1,980 yen, selectingfrom a menu of popular foods fromcountries around the world.
The local specialty is “Genghis
Khan”, a dish that boasts of beingrefined until the individual flavorsof succulent lamb meat, carefully
selected vegetables and Hokkaido’s
The Ramen Atelier
original sauce and seasonings are

blended just right. And because it’s Hokkaido, customers know
they’ll find 12 different dishes prepared each day from anabundance of the freshest seafood and farm products for which
Hokkaido is famous. Top it all off with the nationally popularkaiten sushi and a full range of desserts, and customers canexperience a unique, full-course dining experience not foundanywhere else in Japan.
In addition there is even a regular menu of delicious, all-you-caneat world cuisine including French, Italian and Chinese. With sucha complete menu, plus Otaru’s own locally-brewed “OTARUUNGADORI BEER”, it’s no wonder that OTARU UNGASHOKUDOU has become the biggest topic of conversation for
tourists and local residents alike. Asakusabashi Beer Hall is sure
to be known soon as the most popular dining spot in Otaru.
OTARU UNGA SHOKUDOU
also prepares many souvenir
goods that can only bepurchased at the restaurant. Be
sure to drop by whenever
you’re in Hokkaido. You’ll behappy you did.
Asakusabashi beer HallOTARU UNGA SHOKUDOU(Otaru Canal Restaurant)
6-5 Minato-cho, Otaru, Hokkaido Japan
http://www.otaun-shokudo.com

Aiming to be the Number One Construction Equipment Rental Company in Shikoku
Kanamoto Shikoku Co., Ltd. Opens for Business
After carefully laying the
groundwork since being
established in October 2000,
Kanamoto Shikoku finallybegan operations in June
2001. Established as a joint
venture by Kanamoto Co.,
Ltd. and Tadano Ltd.,
Japan’s largest manufacturer
Kanchu Kanamoto(left), President of Kanamoto of cranes for construction use,
and Kanamoto Shikoku Co., Ltd. and Sakae the company is Kanamoto’s
Tadano(right), President of Tadano Ltd.
first sales office in the
Shikoku region. Headquartered in Takamatsu City in Kagawa
Prefecture, the firm has a first-year sales objective of roughly
200 million for the single sales office. With plans to open fiveor six sales offices generating annual revenues of 3.5-4.0
billion and obtaining a 20% share of the construction equipment
rental market in Shikoku after 10 years, Kanamoto Shikoku willplay a pivotal role in the expansion of Kanamoto’s dominancestrategy in western Japan.
Prior to the start of sales activities, on June 5 the company held its
opening celebration in the Kanamoto Shikoku headquarters.
Joined by numerous invited guests including local companies
related to the construction business, the new business received
prayers for success at a traditional Shinto ceremony, hosted a tourof the company’s facilities and sponsored an open-for-businesscelebration party to deepen relations with the local community.
At the Shinto ceremony that began at 10:00, the directors ofKanamoto Company, Tadano, Ltd. and Kanamoto Shikoku werejoined by President Hiroshi Murakami of Murakami-gumi Co.,
Ltd., the company that handled the construction of Kanamoto
Shikoku’s office and Takeshi Murakami, President of Showa
Kosan Co., Ltd., to perform the traditional dedication of paperdecked tree branches and pray for the business’ success. The
festivities continued with a tour of the facilities, as guests
reviewed the company’s headquarters office and rental
operations systems, warehouse and equipment yard. Participants
gained a solid understanding of the thoroughness of Kanamoto
Shikoku’s business systems.
Followed by an informal get-together, the celebration served toincrease the bonds between the industry-related well-wishers who
attended the day’s events and Kanamoto Shikoku, which willcontribute to the development of Shikoku’s construction industry
and the local area. This mutual trust isan irreplaceable asset that will help
Kanamoto Shikoku as it strives
towards its goals. Kanamoto Company
appreciates everyone’s warm support
for the success of the venture.

Semiannual Report 2001 15

T o p i c sJapanese Representative Delivers First Multi-Unit System of Five
Microturbine Generators for U.S. Firm Capstone Corporation
Kanamoto Company completed delivery of a generating systemthat will operate five Capstone Corporation microturbine
generators (MTG) as a “multi-pack” (parallel operation) system to
the Shin Akabira Mine owned by Sumitomo Coal Mining Co., Ltd.
(Akabira, Hokkaido). The order represents the first construction
and delivery of a system in Japan to operate multiple MTG units intandem. Sumitomo Coal Mining Co., Ltd. is also the first customer
to install and use multiple Capstone MTG.
Shin Akabira Mine is the world’s first project to utilize coalmine methane gas as a fuelThe project, one of several Japan-U.S. joint research efforts, will
be operated as an environmentally-friendly, highly-efficient coalmine gas recovery and utilization technology study project fromNEDO (New Energy and Industrial Technology Development
Organization) and JCOAL (Japan Coal Energy Center) that is
supported by Sumitomo Coal Mining Co., Ltd. Sumitomo Coal
will also operate the system for purposes such as field tests,
including the use of coal mine gas (coal mine methane) createdunderground to generate electricity using MTG, returning MTG
exhaust gases to the mine, increasing recovery of methane gas
and sequestrating CO2 in the coal seams. The project will be theworld’s first to collect and utilize coal mine methane gas.
Currently a similar project is being operated in the U.S. in
Wyoming, using coal seam methane gas as a fuel. The project at
Shin Akabira Mine, however, which will make practicalapplication of a coal mine after it has been shut down, is an

Methane gas created in coalseams is supplied to the MTG

BlowerMulti-pack system of 5 MTG delivered by Kanamoto Company

unprecedented, epoch-making process that has attracted
worldwide attention. While ushering in a new phase in theapplication of MTG in Japan, the project will also be extremely
significant from the standpoint of helping to prevent global
warming through the recovery of CO2.
Kanamoto Company is also planning to further promote the saleof MTG within Japan, using this project and the new demand it
has cultivated as a base to remain ahead of other companies.

Recovery of CO2 exhaust
during generation

Compressor

Micro-turbine generators (MTG)
Generation of electricity using methane gas as fuelCoal seam
Methane gas
recovery equipment

CO2 adsorbed into coal seamincreases methane gas emissions

CO2 is sequestrated
in coal seams
CO2 sequestrationequipment

MTG electric power generating system
based on recovery and use of coal mine
methane gas at the Shin Akabira Mine

Eco-electric power using Microturbine Generators and Kajima Corporation’s Bio-Reactor at
the Beautiful Fukushima Future Exposition in Fukushima Prefecture
The Japan Expo “Beautiful Fukushima Future Exposition” is being held Sukagawa in Fukushima Prefecture, Japan from
July 7 through September 30. The theme of the exposition is ecology and the environment, making it a perfectopportunity to display the microturbine generators being sold by Kanamoto Company.
A Capstone Corporation MTG will be used to provide part of the electricity
for the exposition pavilion lighting. The MTG will be powered by a “bioreactor” (a device to generate methane gas from the garbage produced at
the exposition’s pavilions) developed by Kajima Corporation.
The Japan Expo

“Beautiful Fukushima Future Exposition”
Expo Dates : Saturday, July 7 – Sunday, September 30, 2001
Evening hours from Friday, July 20, 2001
H o u r s : 9:30 a.m. to 6:00 p.m. (9:00 p.m. during evening hours)
L o c a t i o n : Sukagawa, Fukushima Prefecture (On the grounds of
the Sukagawa Technical Research Garden)
Home page : http://www.pref.fukushima.jp/miraihaku/

16 Semiannual Report 2001

MTG electrical generating system at theBeautiful Fukushima Future Exposition.
The MTG is in the center, with thespherical bio-gas storage tank behind it.

B r a n c h

N e t w o r k[As of April 30, 2001]

Our G row i n g B r a n ch N e two r k

Hokkaido

As of April 30, 2001
HonshuSubtotal

Construction Equipment
Rental Operations

51

69

120

Steel Sales

3

0

3

Computer and Peripheral
Equipment Rental Operations

0

1

1

Total

54

70

124

Number of Branches

Kanamoto opened 3 new branches during the first half of Fiscal 2001 (ends October 31, 2001).

New Branches Opened 2001
Construction Equipment Rental Division
Steel Sales Division
Computer and Peripheral Equipment Rental Division
Kanamoto Alliance Group

Kanamoto Shikoku Co., Ltd.
Kyushu Kensan Group
Daiichi Machine Industries Co., Ltd.
Machida Kikou Co., Ltd.

Semiannual Report 2001 17

C o r p o r a t e

D a t a[As of April 30, 2001]

SHAREHOLDERS’ INFORMATION
Company Name
Kanamoto Co., Ltd.
Head Office
1-19, Odori Higashi 3-chome
Chuo-ku, Sapporo, Hokkaido
060-0041 Japan
Established
October 28, 1964
Capitalization¥8.6 bllion (Paid-in capital)
Listing Exchanges
Tokyo Stock Exchange, First Section
Sapporo Stock Exchange
Stock Code9678

Common Shares Issued andOutstanding
30,250,000
Fiscal Year-end
October 31
Revenues¥61, 030 million(Fiscal year ended October 2000)
Number of Employees
1,131(Excluding directors and temporary
or part-time workers)
Principal Businesses
Rental of construction equipment, saleof steel products and steel scrap
Rental of engineering workstations
and computer peripherals

Primary Lenders
The Bank of Tokyo-Mitsubishi
Sumitomo Mitsui Banking Corporation
The Industrial Bank of JapanThe Fuji Bank
North Pacific Bank
The Norinchukin Bank
The Mitsubishi Trust and Banking Corporation
The Hokkaido Bank
Principal Shareholders
ORIX Corporation
Taichu Kanamoto
Saburo Kanamoto
State Street Bank and Trust Company
Kanamoto Capital Company
Komatsu Corporation
The Hokkaido Bank
The Mitsubishi Trust and Banking Corporation
North Pacific BankDENYO Co., Ltd.

BOARD OF DIRECTORS
Directors

Corporate Officers (Shown with the division that is representative of their work as Executive Director)

ChairmanDivision Manager, Credit Management
Division

Taichu Kanamoto

Market Development Division

Hideki Nomiya

Eichu Kanamoto
President

Kanchu Kanamoto

Division Manager, Administration Division

Kimio Tsujioka
Executive Vice President

Hidemitsu Washida
Senior Corporate Officer

Shinroku Sawada
Yukio Sato

Deputy Division Manager, Construction
Equipment Rental Division

Kenichi Katayama

Advisor

Quality Assuarance & New Products,
Deputy Division Manager of Construction
Equipment Rental Division, Division
Manager, Information Products Division

Saburo Kanamoto

Takemitsu Ikeda

Director

Deputy Division Manager, Construction
Equipment Rental Division

Norio Uemura
Masahiro Matono

Steel Sales Division

Standing Corporate Auditors

Yoshikatsu Kon

Toshizo Okumura
Norizumi Tsuda

Division Manager, Accounting DivisionNobuhito Utatsu
Kiyoshi Onishi

18 Semiannual Report 2001

Masakazu Hirata
Division Manager, Business Planning
Division

Hitoshi Narita
General Manager, Construction Equipment
Rental Division, Tohoku Region

Saburo Kudo
General Manager, Construction Equipment
Rental Division, Kantoshinetsu Region

Tetsuo Kanamoto

Kazuaki Tanaka

Auditors

Outside Corporate Auditor

Used Products Sales Division, Deputy
Division Manager of Construction
Equipment Rental Division

General Manager, Research & Investment
Division

Keiichi Kitakata

1-19,Odori Higashi 3-chome,Chuo-ku,Sapporo,Hokkaido 060-0041 Japantel. +81-011-209-1600 fax. +81-011-219-1630

http://www.kanamoto.co.jp

Printed on recycled paper
Printed in Japan