Fiscal Year ending October 31, 2006

Summary of Company Interim Financial Statements
June 9, 2006
Listed Company Name

Kanamoto Company, Ltd.

Company Code Number

9678

Listing Exchanges

Tokyo Stock Exchange, Sapporo Stock Exchange

Head Office Address

1-19, Odori Higashi 3-chome, Chuo-ku, Sapporo, Hokkaido Japan 060-0041(URL http://www.kanamoto.co.jp)
Representative

Kanchu Kanamoto

Inquiries

Nobuhito Utatsu

President

Director & Corporate Officer, Division Manager, Accounting Division
TEL 81-11-209-1600

Please send inquiries in English to takayama@kanamoto.co.jp.
Date of Report to the Board of Directors

June 9, 2006

Interim Dividend System

The Company has an interim dividend system

Interim Dividend Payment Date
Has the Company adopted a Unit Stock System?

July 18, 2006
Yes (1 unit equals 1,000 shares)

１．Operating Results for the Interim Period ended April 30, 2006 (November 1, 2005–April 30, 2006)(1) Operating Results(Numbers less than one million yen have been rounded down)
Revenues

Millions of yen
Six months endedApril 30, 2006
Six months endedApril 30, 2005
Fiscal year ended
October 31, 2005

Operating Income%

Six months endedApril 30, 2005
Fiscal year ended
October 31, 2005%

Millions of yen

%

5.8

2,496

113.4

2,569

109.6

29,080

- 2.2

1,169

-12.8

1,225

-8.0

57,202Millions of yen
April 30, 2006

Millions of yen

30,764

1,526

1,960

Net Income per Share ofCommon StockNet Income

Six months ended

Ordinary Income%

Net Income per Share ofCommon Stock Fully Diluted

Yen

Yen

955

58.6

31.99

−

602

-39.4

20.16

−

20.16

−

609

Notes 1. Average number of shares outstanding during the period
Six months ended April 30, 2006

29,849,847 shares

Six months ended April 30, 2005

29,857,851 sharesFiscal year ended October 31, 2005

29,856,334 shares

2. Are there any changes in accounting method?

Yes

3. The percentages shown for revenues, operating income, ordinary income and net income are the percent
increase or decrease compared to the same period of the prior fiscal year

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 43

(2) Dividends
Interim Dividendper Share ofCommon Stock

Annual Dividend per
Share of Common
Stock

Yen

Yen

Six months endedApril 30, 2006
Six months endedApril 30, 2005
Fiscal year ended
October 31, 2005

9.00

───

9.00

───

───

18.00

(3) Financial Position
Total Assets

Six months endedApril 30, 2006
Six months endedApril 30, 2005
Fiscal year ended
October 31, 2005

Shareholders’Shareholders’Shareholders’ Equity

EquityEquity Ratio

per Share

Millions of yen

Millions of yen%

Yen

83,35835,60542.7

1,192.95

81,65533,41640.9

1,119.22

79,03733,90342.9

1,135.43

Notes 1. Number of shares issued and outstanding at end of period
Six months ended April 30, 2006

29,846,932 shares

Six months ended April 30, 2005

29,856,811 sharesFiscal year ended October 31, 2005

29,853,076shares

2. Number of shares of treasury stock at end of period
Six months ended April 30, 2006

406,309 shares

Six months ended April 30, 2005

396,430 sharesFiscal year ended October 31, 2005

400,165 shares

2. Projected Operating Results for the Fiscal Year Ending October 31, 2006
(November 1, 2005 - October 31, 2006)
Operating

Ordinary

IncomeIncomeMillions of yen

Millions of yen

Millions of yen

Millions of yen

59,600

3,330

3,430

1,310

Revenues

Full year

Net Income

Annual Dividend per
Year-end
Yen

Yen

9.00

18.00

Reference: Projected net income per share of common stock (Full year) ¥43.89*The above projections were prepared based upon information available to the Company at the time the projections
were announced as well as various assumptions concerning the future economic and business environment. Actual
operating results may differ from the projected figures depending upon various factors in the future.

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 44

IX

Company Financial Statements

1. Comparative Balance Sheets(Unit: Thousands of yen)
PeriodEnd of Prior Fiscal Year
Interim Period(As of April 30, 2005)
AmountCategory

Percent

End of Current Fiscal
Year Interim Period(As of April 30, 2006)
AmountPercent

Prior Fiscal Year
Summary Balance Sheet(As of October 31, 2005)
AmountPercent(Assets)
Current Assets

Ⅰ

Cash and deposits

17,732,891

20,185,604

13,230,849

2,317,748

2,339,487

2,583,873

8,687,044

9,328,574

10,665,107

346,111

343,948

311,947

Other current assets

2,764,063

1,811,191

2,874,525

Allowanceaccounts- 573,665- 534,302- 1,001,255

Notes receivable, trade*1

Accounts receivable, trade
Inventoryfordoubtful

Total Current Assets

31,274,193

38.3

33,474,504

40.2

28,665,048

36.3

Fixed Assets

Ⅱ(1) Tangible Fixed Assets*2

Rental equipment

9,980,521

8,891,692

9,453,886

5,542,979

5,200,752

5,344,822*4

25,788,514

25,520,058

25,869,082*4

2,187,840

1,852,404

1,954,956

43,499,856

41,464,908

42,622,746

208,273

165,321

187,284

Investment securities

4,196,108

6,487,262

5,684,987

Other assets

3,363,991

2,773,017

2,679,645- 606,832- 526,201- 321,855- 280,000- 480,173- 480,173

6,673,267

8,253,904

7,562,603

Buildings
structures

and

Land
Other tangible
assetsTotal Tangible
Assets

fixed
Fixed

(2) Intangible Fixed Assets
Investments and Other(3)
AssetsAllowance for doubtful
accounts
Reserve for investment
lossesTotal Investments andOther Assets
Total Fixed Assets

50,381,396

61.7

49,884,133

59.8

50,372,634

63.7

Total Assets

81,655,589

100.0

83,358,638

100.0

79,037,683

100.0

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 45

(Unit: Thousands of yen)
PeriodCategory

End of Prior Fiscal Year
Interim Period(As of April 30, 2005)
AmountPercent

End of Current Fiscal
Year Interim Period(As of April 30, 2006)
AmountPercent

Prior Fiscal Year
Summary Balance Sheet(As of October 31, 2005)
AmountPercent( L i a b i l i t i e s )Ⅰ Current Liabilities
Notes payable, trade*1,5

9,313,631

9,573,536

7,214,389

Accounts payable, trade*5

1,930,210

2,314,041

2,425,623

Short-term bank loans

10,324,000

10,415,000

10,555,000

Accounts payable, other

3,249,439

2,495,925

2,389,330

Corporate taxes payable

646,600

1,068,767

530,934

Accrued bonuses to
employees
Accrued bonuses todirectors and auditors

466,202489,431448,076

−

2,750

−

Equipment notes payable

231,998

265,073

133,487

Other current liabilities

502,749

1,038,789

385,282

Total Current Liabilities

26,664,832

32.7

27,663,314

33.2

24,082,124

30.5

Ⅱ Long-term Liabilities
Long-term bank loans

18,040,000

16,555,000

17,590,000

Long-term accrued
expensesLong-term deferred tax
liability
Accrued employees
retirement benefits
Retirement allowance todirectors and auditors

2,125,996

1,744,805

1,876,971−

118,773−

1,315,092

1,567,178

1,506,210

93,236103,657

79,121

Total Long-term Liabilities

21,574,325

26.4

20,089,414

24.1

21,052,303

26.6

Total Liabilities

48,239,158

59.1

47,752,729

57.3

45,134,428

57.1

8,596,737

10.5

8,596,737

10.3

8,596,737

10.9（Shareholders’ Equity）

Ⅰ Common stock
Ⅱ Capital surplus
Additional
capitalpaid-in

Total capital surplus

9,720,343
9,720,343

9,720,343
11.9

9,720,343

9,720,343
11.6

9,720,343

12.3

Ⅲ Earned surplus
Legal earned surplus
General reserve
Reserve for advanced
depreciation of fixed
assetsGeneral reserve
Unappropriated retained
earnings (interim period)

1,375,287

1,375,287

1,375,287

11,831,684

11,851,286

11,831,684−

19,601−

11,831,684

11,831,684

11,831,684

1,189,722

1,587,646

928,192

14,396,694

17.6

14,814,220

17.8

14,135,164

17.9

886,693

1.1

2,666,072

3.2

1,637,603

2.0-184,036-0.2-191,464-0.2-186,594-0.2

Total Shareholders’ Equity

33,416,431

40.9

35,605,909

42.7

33,903,254

42.9

Total Liabilities andShareholders’ Equity

81,655,589

100.0

83,358,638

100.0

79,037,683

100.0

Total earned surplus

Ⅳ

Valuation difference onother negotiable

Ⅴ Treasury stock

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 46

2. Comparative Statements of Income(Unit: Thousands of yen)
Prior Fiscal Year
Prior Fiscal Year
Current Fiscal Year
PeriodSummaryStatement ofInterim Period
Interim Period
Income(From November 1, 2004 (From November 1, 2005
(From November 1, 2004
to April 30, 2005)
to April 30, 2006)
to October 31, 2005)

Category

AmountPercent

AmountPercent

AmountPercent

Ⅰ

Operating revenues

29,080,330

100.0

30,764,168

100.0

57,202,641

100.0

Ⅱ

Cost of revenues

21,963,898

75.5

22,230,983

72.3

43,789,520

76.5

7,116,431

24.5

8,533,184

27.7

13,413,121

23.5

Selling, general andadministrative

5,946,705

20.5

6,037,131

19.6

11,886,610

20.8

Operating

1,169,725

4.0

2,496,053

8.1

1,526,510

2.7*2283,977

1.0

296,539

1.0

923,943

1.6*3

227,9810.8

223,5120.7

489,5900.9

1,225,721

4.2

2,569,079

8.4

1,960,863

3.4

107,312

0.4

4,743

0.0

69,4470.1

246,400

0.9

621,880

2.0

837,348

1.4

1,086,633

3.7

1,951,942

6.4

1,192,962

2.1

571,986

2.0

1,032,592

3.4

833,579

1.4- 87,388-0.3-35,683-0.1- 249,835-0.4

i n c o m e

602,035

2.0

955,033

3.1

609,217

1.1

Profit carry-forwardfrom prior period

587,686

632,613587,686−−

268,7111,189,722

1,587,646

928,192

G r o s sⅢⅣⅤ

p r o f i t

incomeNon-operatingr e v e n u e s
Non-operatinge x p e n s e s
Ordinary

incomeⅥ

Extraordinary profits

Ⅶ

Extraordinary losses
Income before taxes anda d j u s t m e n t s
Corporate, local andbusiness taxes
Adjustment forcorporate and otherN e t

C a s hd i v i d e n d s

Unappropriatedearnings

retained*4,5

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 47

3. Notes to the Interim Financial Statements and Significant Accounting Policies
PeriodItem
1. Valuation standards

Prior Fiscal Year
Interim Period(From November 1, 2004 to
April 30, 2005)(1) Negotiable securities

Current Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)(1) Negotiable securities

Prior Fiscal Year Summary
Statement of Income(From November 1, 2004
to October 31, 2005)(1) Negotiable securities

and valuation methods
for assets

CommonstockofCommonstockofCommonstockofsubsidiaries and affiliatedsubsidiaries and affiliatedsubsidiaries and affiliatedcompanies

companies

companies

The

Company

hasSame as at left

Same as at left

Other negotiable securities

Other negotiable securities

Other negotiable securities

Negotiable securities with a

Negotiable securities with a

Negotiable securities with amarketmarketmarketadopted the cost method
based

upon

the

movingaverage methodonasecurities

exchange
The

on

a

securities

exchange
Company

has

on

a

securities

exchange

Same as at left

The

Companyhasadopted the market value

adopted the market value

method (the full amount ofmethod (the full amount of

the valuation difference isthe valuation difference ischarged to equity using thecharged to equity using thedirect transfer to capital

direct transfer to capitalmethod, with the disposal

method, with the disposal

cost

cost

determinedmovingaveragebythedetermined

by

the

method)moving average method)

based on the market pricebased on the market priceonperiodon the accounting period

similarclosingtheclosing

interimdateorpricesdateorsimilarpricesOther negotiable securities

Other negotiable securities

Other negotiable securities

Same as at left

Same as at left

(2) Construction equipment(2) Construction equipment(2) Construction equipment

Amount after deduction

Amount after deduction

The

Companyhasadopted the cost method
based

upon

the

movingaverage methodofdepreciation

expenseofdepreciation

expenseAmount after deductionofdepreciation

expensecalculated according to thecalculated according to thecalculated according to thedeclining-balance

declining-balance

declining-balancemethodmethodmethodfrom the original prices, byfrom the original prices, byfrom the original prices, byseparate

separate

separate

fiscalyearoffiscalyearoffiscalyearofpurchasepurchasepurchase(3) Merchandise inventories(3) Merchandise inventories(3) Merchandise inventories

and supplies

and supplies

and supplies

Merchandise inventory

Merchandise inventory

Merchandise inventory

Lower of cost orSame as at left

Same as at left

market based on thelast-in, first-out
methodSupplies
The Latest purchase

Supplies
Same as at left

Supplies
Same as at left

cost method

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 48

2.Depreciation

methodfor fixed assets(1) Tangible fixed assets
The

Company

adoptedthe(1) Tangible fixed assets
has(1) Tangible fixed assets

Same as at left

Same as at left(2) Intangible fixed assets(2) Intangible fixed assets

declining-balance method. Buildings
on

land

under

that

a

is

leasedfixed-term

landlease agreement, however,are depreciated using thestraight-line method using
the remaining period of the
fixed-term

lease

as

the

depreciable life and zero
residual value.
The

depreciable

mainly

used

lives

by

the

Company are as follows.
Rental assets:
5-10 years
Buildings:
31-34 years(2) Intangible fixed assets
The

Company

adoptedthehasSame as at left

Same as at left

(3) Long-term prepaid(3) Long-term prepaid

declining-balance method.
Software for use withintheCompany

depreciated

is

using

the

straight-line method basedon the assumed useful life
for internal use (5 years).
(3) Long-term prepaid
expensesThe

expensesCompany

adoptedhas

expensesSame as at left

Same as at left

straight-line

depreciation.
3. Accounting standards(1) Allowance for doubtful(1) Allowance for doubtful

for allowances andaccounts

reserves

To provide for losses on

accounts(1) Allowance for doubtful
accounts

Same as at left

Same as at left

(2) Accrued bonuses to(2) Accrued bonuses todoubtful accounts such asaccounts

receivable,

theCompany

chargestoincome an amount basedon actual loss experience
for normal accounts, plus
an amount for projected
unrecoverable

amounts

based on assessments ofindividual accounts.
(2) Accrued bonuses to
employees
To

fully

expenditures

employees
provideofforbonusesSame as at left

employees
To

fully

expenditures

provideofforbonusesthe Company will pay to

the Company will pay toemployees, an amount is

employees, an amount isappropriated to the reserve

appropriated to the reserve

during the interim period

during the fiscal year based

based

upon

upon

a

estimate amount.

salaryasalaryestimate

amount.

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 49

--------(3) Accrued bonuses to--------

directors and auditors
The

Company

providesfor accrued directors andauditors’ bonuses. At theend of the interim period,
the Company accrued anamount to provide for theliability recognized during
the period.
(Supplemental information)
In
the
past,
the
Company

accounted

directors

and

for

auditors’bonuses as a decrease inunappropriatedretainedearnings,

on

based

the

Proposal for AppropriationofRetained

Earnings

approved at the General
MeetingoftheShareholders.

Beginningfrom this interim period,
however, the Company willaccrueanamountprovidefortheliabilityashavingrecognizedtooccurred during the period,
based

on

SolutionthePractical

on

Tentative

Treatments of AccountingforDirectors’

Bonuses(Accounting
Board

of

Standards
Japan,

Advisory

Theme

Committee

Recommendation

No.

13

dated March 9, 2004). As aresult,operatingordinary

income,incomeandincome before taxes andadjustments

were¥2,750,000 less than they
otherwise would have been
had

the

standards

accounting
used

in

past

periods been applied.

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 50

(4) Accrued employees(4) Accrued employees

retirement benefits

retirement benefits

The
for

Company
accruedprovidesSame as at left

(4) Accrued employees
retirement benefitsThefor

employees’

Company

providesemployees’

accruedretirement benefits based

retirement benefits based

upon

upon

the

projected

theprojected

amounts of the liability for

amounts of the liability for

accruedaccruedemployees

employees’

retirement benefits and theretirement benefits and thevalue of pension assets atvalue of pension assets at

the end of the fiscal year.

the end of the fiscal year.

At the end of each interim

At the end of each fiscal

period,

year,

the

CompanytheCompany

appropriates an amount toappropriates an amount to

the reserve to provide forthe reserve to provide for

the

the

liability

duringtherecognizedperiod.

Past

liability

duringtherecognizedperiod.

Pastyears’ service liabilities are

years’ service liabilities are

fully written off in the year

fully written off in the year

incurred.

incurred.

The difference based on

The difference based onan actuarial calculation isan actuarial calculation ischargedchargedtoincometoincomebeginning in the fiscal year

beginning in the fiscal year

following the year in which

following the year in which

incurred, with the amounts

incurred, with the amounts

allocatedallocatedusing

proportionatelythemethod,straight-line

based

on

using

a

proportionatelythemethod,straight-line

based

on

a

specified number of years

specified number of years(10 years) that is less than

(10 years) that is less than

the

the

averageremaining

averageremaining

period of employment forperiod of employment for

employees at the time theemployees at the time thedifference arises.

difference arises.

(5) Retirement allowances todirectors and auditors
The Company provides(5) Retirement allowances
to directors and auditors
Same as at left

(5) Retirement allowances todirectors and auditors
The Company provides

for retirement allowances

for retirement allowances

to directors and auditors

to directors and auditors

based upon pertinent rules

based upon pertinent rules

and

and

appropriated

to

the

appropriated

to

the

account at the end of theaccount at the end of theinterimfiscal year proportionately

periodproportionately based uponbased

length of service.

service.

uponlengthofSummary of Company Interim Financial Statements, FY ending October 31, 2006

P. 51

(6) Reserve for investment
lossesThe Company provides(6) Reserve for investment
lossesSame as at left

(6) Reserve for investment
lossesSame as at left

Same as at left

Same as at left

(1) Hedge transactions(1) Hedge transactions

Same as at left

Same as at left

for losses from the decline
in real prices of assets suchas the stock of subsidiarycompanies that are subject
to

asset

impairment

accountingbyinternally

applying
establishedstandards that take into
consideration

subsidiarycompany operating results
and asset quality.
4. Lease transactions

Forfinancetransactions
leaseslease

exceptthatfortransferownership of the property
tothelessee,rent

expenses are charged toincome as payments aremade.
5. Hedge transactions(1) Hedge transactions
The
for

Company
hedge

accounts

transactions

using allocations based on
accounting

standards

foreignforcurrency-

denominated transactions,and special rule accounting
based

on

standards

accountingforfinancial

products.
(2) Hedge methods and(2) Hedge methods and(2) Hedge methods andhedged transactions

hedged transactions

hedged transactions

The

Company

uses

currency

swaps

and

forwardtransactions

inSame as at left

Same as at leftorder to avoid the currency
fluctuation risk related totheCompany’s

foreigncurrency-denominatedstraight

bonds

liabilities

forimportandpayments.

The

Company

also uses interest swaps to
avoid

interest

rate

fluctuation risk related tointerest on bank borrowing.
(3) Hedging policies(3) Hedging policies

The Company’s use ofderivative
limitedtotransactions

ishedgingrisk

Same as at left

(3) Hedging policies
Same as at left

within the scope of theCompany’s

assetsandliabilities subject to market
fluctuation risk.

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 52

(4) Method for evaluating(4) Method for evaluating(4) Method for evaluating

the effectiveness ofthe effectiveness ofthe effectiveness ofhedgeshedgeshedgesThe Company does not

Same as at left

Same as at left

evaluate the effectivenessof its hedge transactions
because it can assume thatits

currencytransactions

swap

and

forwardtransactions will completely
offset market fluctuations
or changes in cash flowfrom the time hedge begins
until it is terminated. In
addition,theCompany’s

interest swap transactions
fulfill the requirements for
special
and

rule

the

accounting,Company

haselected to use this in placeofanevaluationofeffectiveness.
6. Other significant
matters for
preparation of the

Accounting treatment of

Accounting treatment of

Accounting treatment ofconsumption tax

consumption tax

consumption tax

Consumption tax is takeninterim period (fiscal

outyear) financial

Income items and Balancestatements

Sheet items, except mainly

of

for

all

Statement

receivables

Same as at left

Same as at left

of

and

payables.
The
forsuspense

accounts

consumption

tax

receipts and consumption
tax payable are included in“otherbecausecurrent

liabilities”

thefinancial

importance is minimal after
the amounts are offset.

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 53

Changes in Important Matters Used as the Basis for Preparation of the Interim
Financial Statements
Prior Fiscal Year Interim Period(From November 1, 2004
to April 30, 2005)──────

Prior Fiscal Year Summary Statement of
Income(From November 1, 2004
to October 31, 2005)

Current Fiscal Year Interim Period(From November 1, 2005
to April 30, 2006)(Accounting Standard for Impairment──────

of Fixed Assets)
Beginning from the interim period ofthenon-consolidated

accounting

period, the Company has adopted the
Accounting Standard for Impairmentof Fixed Assets ("Opinion Concerning
Establishment of Accounting Standard
forImpairment

of

Fixed

Assets"(Business Accounting Council, August
8,

2002)

and

"Implementation

Guidance for the Accounting Standard
forImpairment(Accounting

of

Fixed

Standards

Assets"BoardofJapan, October 31, 2003, Financial
Accounting Standard Implementation
Guidance No. 6).
As a result, interim period income
before taxes and adjustments was¥594,568,000 lower

than it would

have

the

been

had

accounting

standards used in previous periods
been applied.
The total amount of the impairment
loss is deducted directly from thebalance for each asset based on therevised interim financial statements
standards and other rules.

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 54

Change in Reporting Method
Current Fiscal Year Interim Period

Prior Fiscal Year Interim Period(From November 1, 2005

(From November 1, 2004 to April 30, 2005)

to April 30, 2006)(Interim Balance Sheet)--------

1. “Investment securities” were included in Investments
and Other Assets until the prior fiscal year interim period,
but have been disclosed separately at the end of thecurrent fiscal year interim period because they exceeded
5% of total assets.
The amount of “Investment securities” at the end of theprior fiscal year interim period was ¥3,743,612,000.
2. Following promulgation of The Law to Revise Parts of
the Securities and Exchange Law (Law No. 97 of 2004) on
June 9, 2004 and its enforcement on December 1, 2004
andrevision

Accounting
Institute

of

for

of

the

Practical

Financial

Certified

Guidelines

Instruments

Public(The

Accountants,

Concerning
Japanese
Accounting

Committee Report No. 14) dated February 15, 2005, theCompanychangedpartnerships

for

its

methodinvestmentforreportingandinvestments

limitedinassociations similar to such partnerships (instruments
regarded as negotiable securities under the provisions ofArticle 2 paragraph 2 of the Securities and Exchange Law)
to show them as “investment securities” beginning fromthe current fiscal year interim period.
The amount of such investments included in “Investment
securities” for the interim accounting period under review
is ¥93,642,000, and the amount of such investments
included in “Other” in Investments and other assets in theprior fiscal year interim period is ¥88,290,000.

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 55

Notes to the Interim Period Balance Sheets
PeriodItem*1. Notes and bills
maturing at the endof the (interim
period) fiscal year

Prior Fiscal Year Interim Period(As of April 30, 2005)

Current Fiscal Year Interim
Period(As of April 30, 2006)

Notes and bills maturing on
the last day of the interim
periodaresettledandprocessed on the note and billclearing date. Because the last
day of the Company’s current
fiscal year interim accounting
periodwasafinancial
institution holiday, notes andbills maturing on the final dayof the following interim period
are included in the fiscal year
interimaccounting
periodbalance.

Notes and bills maturing on
the last day of the interim
periodaresettledandprocessed on the note and billclearing date. Because the last
day of the Company’s current
fiscal year interim accounting
periodwasafinancial
institution holiday, notes andbills maturing on the final dayof the following interim period
are included in the fiscal year
interimaccounting
periodbalance.

Notes

Notes

receivable,

42,930,000 receivable,

trade

Prior Fiscal Year(As of October 31, 2005)--------

28,656,000

tradeNotes payable,
trade

Notes
1,330,120,000 payable,

1,333,786,000

trade*2. Total
accumulated
depreciation for

38,769,434,000

38,381,436,000

39,514,952,000

31,294,000

31,159,000

30,779,000

tangible fixed
assets*3. Contingent
liabilities
Joint and several
guarantee

ofemployee bankloans
Guarantees ofborrowed
indebtedness of
subsidiary companies(Daiichi Kikai Co.,

Daiichi Kikai
Co., Ltd

Ltd., Assist Co., Ltd.,

Assist Co., Ltd.

Kanki Corporation)
and Non-consolidated
subsidiary company

Guaranteed

Company

AmountCompany

200,000,000

Daiichi Kikai
Co., Ltd

94,435,000

Assist Co., Ltd.

Kanki
Corporation

1,207,500,000

Total

1,501,935,000(Flowtechno

Kanki
Corporation
Flowtechno
Corporation
Total

Guaranteed
AmountCompany

Guaranteed
Amount190,000,000

Daiichi Kikai
Co., Ltd

190,000,000

46,939,000

Assist Co., Ltd.

85,187,000

1,081,500,000
100,000,000

Kanki
Corporation

1,134,000,000

Total

1,409,187,000

1,418,439,000

Corporation)*4. Reduction tobook value

Amounts for assets acquired
in prior fiscal years for whichaccumulated book values werereducedbygovernment
subsidiesAmounts for assets acquired
in prior fiscal years for whichaccumulated book values werereducedbygovernment
subsidies

Machinery andMachinery

5,044,000

5,044,000

Amountsforassetsacquired in prior fiscal
years
for
which
accumulated book values
werereducedbygovernment subsidies
Machinery

5,044,000

equipment

and

and

Land

3,569,000

equipmentLand

3,569,000

equipmentLand

3,569,000

Total

8,613,000

Total

8,613,000

Total

8,613,000

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 56

*5. Affiliated--------The Company had thefollowing
liabilities
inaddition to liabilities toaffiliatedcompanies
separately
classified
elsewhere.

--------

companies

Current
liabilities
Notes andAccounts¥804,369,000

payable, trade.
6. Contingent
liabilities

The Company liquidates bill

The Company liquidates bill

The Company liquidates

receivables based on notes

receivables based on notes

bill receivables based onreceivables transfer program.

receivables transfer program.

notes receivables transfer
program.

Notes¥8,324,410,000 receivable,
trade.

trade.
The

Notes

Notes

receivable,amount

of

notes

The

¥7,921,742,000

amountreceivable,¥5,348,993,000

trade.
of

notes

The

amountofnotes

receivable, trade with a rightreceivable, trade with a rightreceivable, trade with aof recourse to the Companyof recourse to the Company

right of recourse to theincluded in balance of notes

included in balance of notes

Company

included

receivable,

receivable,balanceof

trade¥1,337,614,000.

is¥1,665,477,000.

trade

is

receivable,

trade

in
notes
is

¥1,152,352,000.

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 57

Notes to the Interim Period Statements of Income
PeriodItem

Prior Fiscal Year
Interim Period(From November 1, 2004
to April 30, 2005)

Current Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)

Prior Fiscal Year
(From November 1, 2004
to October 31, 2005)*1. Transactions with affiliates
Seconded employees’ salaries

50,482,000

59,005,000

105,532,000

Rent receipts

76,928,000

83,065,000

154,325,000

4,212,000

3,632,000

8,402,000

17,807,000

17,799,000

359,093,000

121,507,000

126,804,000

244,052,000

16,601,000

22,934,000

47,709,000

888,000−−

158,531,000

151,547,000

317,034,000

192,465,000−

407,149,000−

594,568,000−*2. Principal items included in nonoperating revenues
Interest received
Gain on sale of investment
securities
Rents received
Insurance benefits
Cash bonus received*3. Principal items included in nonoperating expenses
Interest expense*4. Principal items included in
extraordinary profits
Gain on return of entrusted portionof welfare pension fundI m p a i r m e n t*5.
I m p al o s s

i

r

m

e

l o s snt--------

In
theinterimaccounting period, theCompany incurred an
impairment loss on thefollowing asset groups.

--------

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 58

Location

Use

Asset

Muroran,
Hokkaido andDormant

5 other

asset

Land

locations

Asset groupings usedbytheCompany

toapply asset impairment
accounting

are

based

on the smallest unit for
which profitability canbedetermined

regularly.

Specifically,dormant

assetsaregrouped

using

the

assetsforeachproperty.
For certain dormant
assets

for

which

the

asset

value

was

less

than book value, theCompany reduced bookvalue to its recoverable
value,

andaccounted

for the reduction as an
impairment

loss(¥594,568,000)

under

extraordinary

losses.

This ¥594,568,000 was
for land. Furthermore,therecoverable

value

for this asset group ismeasured according to
net sales price, and theland is evaluated usingtheinheritanceassessment

tax
value

based on the land tax
assessment
other

value

amount

as

or
a

base.
6. Depreciation and amortization
Tangible fixed assets
Intangible fixed assets

2,096,491,000

2,005,765,000

4,541,985,000

27,596,000

27,250,000

55,164,000

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 59

Lease Transactions
PeriodItem
1. For finance leasetransactions
except leases thattransfer ownershipof the property to
the lessee

Prior Fiscal Year Interim
Period(From November 1, 2004
to April 30, 2005)

Current Fiscal Year Interim
Period(From November 1, 2005
to April 30, 2006)

Prior Fiscal Year Summary
Statement of Income(From November 1, 2004
to October 31, 2005)

1. Amounts corresponding
toleasepropertyacquisition
prices,accumulated depreciationand outstanding balanceat the end of the interim
period

1. Amounts corresponding
toleasepropertyacquisition
prices,accumulated depreciationand outstanding balanceat the end of the interim
period

1. Amounts corresponding
toleasepropertyacquisition
prices,accumulated depreciationand outstanding balanceat the end of the fiscal
year accounting period

Please refer to Annex A

Please refer to Annex B

Please refer to Annex C

2. Outstanding balance of
future lease payments at
the end of the interim
period

2. Outstanding balance of
future lease payments at
the end of the interim
period

2. Outstanding balance of
future lease payments at
the end of the fiscal year¥’000
Within

one

year
After

one

year
Total

3.

5,367,170, 000
15,941,251, 000
21,308,422, 000

Amountofleasepayments,
depreciation
expenseandinterest
expense¥’000
Within

one

year
After

one

year
Total

3.

5,658,334, 000
13,535,224, 000
19,193,559, 000

Amountofleasepayments,
depreciation
expenseandinterest
expense

¥’000
Lease

3,198,490, 000¥’000
Within one
year
After

one

year
Total

3.

2,858,233, 000

¥’000
Lease

payments

payments

Depreciation

Depreciation

Interest

393,624, 000

20,653,615, 000

¥’000
Lease

Depreciation

2,923,044, 000

15,327,278, 000

Amountofleasepayments, depreciation
expenseandinterest
expensepayments
expense5,326,336, 000

expenseInterest

2,613,688, 000
319,360, 000

expenseInterest

6,030,861, 000
5,475,320, 000
709,565, 000

expenseexpenseexpense

4. Accounting method foramount equivalent todepreciation expense
Straight-line depreciation

4. Accounting method foramount equivalent todepreciation expense
Same as at left

4. Accounting method foramount equivalent todepreciation expense
Same as at left

5. Accounting method foramount equivalent tointerest expense
Same as at left

5. Accounting method foramount equivalent tointerest expense
Same as at left

Future lease payments

Future lease payments

using the lease term as thedepreciable life and zero
residual value.
5. Accounting method foramount equivalent tointerest expense
Interest method usingthedifference

between

total lease payments andthe acquisition price of theleaseproperty,

allocatedequally to each year.
2. Operating leases

Future lease payments
Within one year

1,612,110, 000 Within one year

1,681,931, 000 Within one year

1,476,233, 000

After one year

3,538,018, 000 After one year

4,213,379, 000 After one year

3,376,419, 000

Total

5,150,129, 000 Total

5,895,311, 000 Total

4,852,653, 000

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 60

Annex A
Acquisition
price(¥ ‘000)

Accumulated
depreciation(¥ ‘000)

Outstandingbalance(¥ ‘000)

Rental assets

33,216,539

11,773,455

21,443,084

Other assets

364,877

199,124

165,752

33,581,417

11,972,580

21,608,837

Total

Annex B
Acquisition
price(¥ ‘000)

Accumulated
depreciation(¥ ‘000)

Outstandingbalance(¥ ‘000)

Rental assets

33,840,891

14,313,360

19,527,530

Other assets

290,462

176,091

114,370

34,131,353

14,489,452

19,641,901

Total

Annex C
Acquisition
price(¥ ‘000)

Accumulated
depreciation(¥ ‘000)

Outstandingbalance(¥ ‘000)

Rental assets

34,441,263

13,278,651

21,162,612

Other assets

307,584

174,410133,173

34,748,848

13,453,062

21,295,785

Total

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 61

(Negotiable Securities)
The stock of the Company’s subsidiary companies and affiliated companies does not have a market price.

(Per Share Information)
PeriodItem

Prior Fiscal Year Summary
Current Fiscal Year
Prior Fiscal Year
Statement of Income
Interim Period
Interim Period(From November 1, 2004 (From November 1, 2005 (From November 1, 2004
to October 31, 2005)
to April 30, 2006)
to April 30, 2005)

Net assets per share¥1,119.22¥1,192.95¥1,135.43

Interim period net income pershare¥20.16¥31.99¥20.16

Interim period net income pershare on a fully diluted basis

-

-

-

The
not

Companyhasreportednet

The Company has
notreportednet

The Company has
notreportednet

income per share ofincome per share ofincome per share ofcommoncommoncommonstock

adjustment
potential

after
for

ordinarystock

adjustment
potential

after
for

ordinarystock

adjustment
potential

after
for

ordinaryshares because it does

shares because it does

shares because it does

not have any potential

not have any potential

not have any potential

shares that would haveshares that would haveshares that would havea dilution effect.

a dilution effect.

a dilution effect.

Note: The basis for calculating net income per share and net income per share on a fully diluted basis is provided
below.

PeriodItem
Interim period (fiscal year) net
income (¥ ‘000)
Amountnotattributed
tocommonstock
shareholders(¥ ‘000)
Interim period (fiscal year) net
income related to common stock(¥ ‘000)
Average number of outstanding
shares during the period

Prior Fiscal Year Summary
Current Fiscal Year
Prior Fiscal Year
Statement of Income
Interim Period
Interim Period(From November 1, 2004 (From November 1, 2005 (From November 1, 2004
to October 31, 2005)
to April 30, 2006)
to April 30, 2005)
602,035

955,033

609,217

─

─

7,300

602,035

955,033

601,91729,857,851

29,849,847

29,856,334

Summary of Company Interim Financial Statements, FY ending October 31, 2006

P. 62