Fiscal Year ending October 31, 2006

Interim Financial Statements Bulletin (Consolidated)
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

SEC Accounting Standards

The Company has not adopted SEC accounting standards

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

Operating Income

Millions of yen%

Ordinary Income

Millions of yen%

Millions of yen%

Six months endedApril 30, 2006

34,520

4.2

2,873

122.5

2,801

136.3

Six months endedApril 30, 2005

33,1267.0

1,291- 18.2

1,185- 22.4

Fiscal year ended
October 31, 2005

63,975

1,404
Net Income per Share ofCommon StockNet Income
Millions of yen

1,550

%

Net Income per Share on a
Fully Diluted Basis
Yen

Yen

Six months endedApril 30, 2006

1,048

126.1

35.12

−

Six months endedApril 30, 2005

463

- 57.8

15.53−

Fiscal year ended
October 31, 2005

352

11.57

−

Notes 1. Investment profit or loss accounted for by the equity method
Six months ended April 30, 2006−
Six months ended April 30, 2005−
Fiscal year ended October 31, 2005−
2. Average number of shares (consolidated) 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
3. Are there any changes in accounting method?
Yes
4. 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

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 1

(2) Consolidated Financial Position
Shareholders’EquityTotal Assets

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

Shareholders’Equity Ratio

Shareholders’ Equity
per Share

Millions of yen

Millions of yen%

87,00335,45440.5

1,181.45

85,51033,09038.7

1,108.32

81,97733,46540.8

1,120.76

Yen

Notes 1. Number of shares (consolidated) 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

29,856,076 shares(3) Consolidated Cash Flows
Cash Flow fromOperating Activities

Cash Flow from
Investing Activities

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

Cash Flow from
Financing Activities

Millions of yen

Balance of Cash andEquivalents at End of
PeriodMillions of yen

Millions of yen

9,183

501

- 2,731

21,062

12,739- 78- 5,563

18,831

10,219- 11- 7,833

14,108(4) Companies to which consolidation accounting and equity method accounting apply
Number of consolidated subsidiaries: 5
Number of non-consolidated subsidiaries accounted for by the equity method: 0
Number of affiliated companies accounted for by the equity method: 0(5) Changes in scope of consolidation and application of equity method accounting
Consolidation (new companies)

0

Equity method accounting (new companies)

0(Excluded)0(Excluded)0

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

Full year

Operating Income

Ordinary Income

Net Income

Millions of yen

Millions of yen

Millions of yen

Millions of yen

66,050

3,630

3,420

1,260

Reference: Projected net income per share of common stock (Full year) ¥42.21*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. Please refer toPage 11 for details of the projections.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 2

I

Current Conditions of the Company GroupThe Kanamoto Company group is comprised of the parent company and seven subsidiaries. The businessactivities of the group are centered on the rental of construction equipment and the rental and sale of afull line of construction-related materials. An overview of each segment by business of the Kanamotogroup, and the position of each company related to that business, is provided below.

〔 Businesses related to the Construction Equipment Rental Division 〕
The Company’s Construction Equipment Rental Division, Daiichi Kikai Co., Ltd. (a consolidated
subsidiary company) and Kanki Corporation (a consolidated subsidiary company) are engaged in therental and sale of construction equipment and machines used for construction. These two subsidiarycompanies borrow rental equipment assets from the Company as needed in order to meet customer
demand. SRG Kanamoto Co., Ltd. (a consolidated subsidiary company) operates a rental business thatprovides temporary materials for construction use. Assist Co., Ltd. (a consolidated subsidiary company)
and Comsupply Co., Ltd. (a non-consolidated subsidiary company) are engaged in the rental and sale offurniture and fixtures and safety products for the construction industry. The Company borrows rental
assets from SRG Kanamoto Co., Ltd., Assist Co., Ltd. and Comsupply Co., Ltd. as needed to rent to its
own customers.
In addition to the above companies, Kanatech Co., Ltd. (a consolidated subsidiary company) develops,
manufactures and sells modular housing units for temporary use. Flowtechno Corporation (a nonconsolidated subsidiary), which Kanamoto acquired in March 2006, is engaged in the development,
manufacture and sale of technology for construction equipment for ground improvement works.

〔 Businesses related to the Steel Sales Division 〕
The Company’s Steel Sales Division sells steel products and other construction-related manufactured
products. The Company has no subsidiaries or affiliated companies related to this division.

[ Business related to the Information Products Division and Other Businesses ]Kanamoto’s Information Products Division is engaged in the rental and sale of computers, including
workstations and PC servers, as well as computer peripheral equipment. Active Technology Corporation,
an affiliated company involved in the Company’s Other Businesses, has currently halted businessactivities.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 3

〔 Relationship of the Operating Businesses 〕

Customers

Construction-related businesses
Construction

Kanamoto Co., Ltd.

equipment rental
Construction
equipment rental
Rental of temporary
scaffolding

Construction
Equipment Rental
Division・
Steel Sales
Division・
Information
Products DivisionLines indicate：

Consolidated
subsidiaries

Supply of modular

Daiichi Kikai Co., Ltd.

Rental of safety
products
Manufacture and sale ofmodular housing units

housing units

Kanki Corporation

SRG Kanamoto Co., Ltd.

Assist Co., Ltd.

Kanatech Co., Ltd.

Rental of safety

Comsupply Co., Ltd.

products
Development, manufacture and sale ofFlowtechno

groundCorporation

improvement

equipment

Non-consolidated
subsidiaries

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 4

II

Management Policies

1. Basic management policy
Since being established, Kanamoto Co., Ltd. has never been complacent about its present condition, andhas always adhered to an action agenda of promoting maximization of revenues and absolute reductionof costs, while continually seeking innovation and striving to energize its businesses. The Company has
positioned this concept as the common philosophy of the entire Kanamoto Company group, and seeks
steady earnings growth by managing the group’s businesses to conform to changes in the businessenvironment. By following this approach, Kanamoto believes it can satisfy the demands of its
stakeholders and will be evaluated as a corporate group that truly is capable of contributing to society.

2. Basic policy concerning profit allocation
As the basis of its earnings distribution policy, Kanamoto seeks to ensure a stable return of earnings tothe extent possible, while taking into consideration its earnings level, payout ratio, and financial position
from a medium to long-term perspective. At the same time, the Company utilizes its internal reserves by
allocating funds for capital investment, including the introduction of rental equipment assets that willserve as the source of future earnings. To enable the Company to flexibly implement its capital policy,
Kanamoto has established a system for making purchases of treasury stock.

3. Policy concerning reduction of the Company's investment unit
Kanamoto recognizes that reducing the size of its stock investment unit is one effective measure tostimulate market trading of the Company’s shares. Therefore Kanamoto will maintain a flexible outlook,while carefully monitoring the position of the Company’s stock in the market, the affect on shareholders’returns, the introduction of the system for dematerialization of stock certificates and other factors, andcontinue to give due consideration to improving the liquidity of its stock. The Company has no plans at
this time to execute a stock split.

4. Management indicators established as objectives
Kanamoto’s operations require a substantial capital investment burden. Moreover, the structure of thisbusiness requires a profit and loss outlook extending over several years. Given these considerations,
Kanamoto has always emphasized cash flow, as well as growth in EBITDA+ (earnings before interest,
taxes, depreciation and amortization) as key management indicators.
Under the long-term management plan (November 2003-October 2008) it currently is implementing, theCompany has set the numerical targets shown below. Although the Company tempered the numericaltargets for its long-range management plan by making conservative corrections at the end of the priorbusiness period, based on interim period operating results Kanamoto has since revised upward theoutlook for the current business period ending in October 2006.
Nevertheless, given the environment surrounding the construction industry that is the major customer for
Kanamoto’s services, the trends in construction demand arising from differences in the economic
recovery between regions and other considerations, the industry’s sense of uncertainty remains deeprooted, and there are numerous evolving factors that will affect the Company’s operating results. Becauseof progress in further improving operating results based on measures it currently is implementing,however, at the present time the Company has set the numerical operating results targets for the period
ending in October 2008, the final year of Kanamoto’s long-term management plan, somewhat higher thanthe plan targets corrected downward at the end of the prior period.

(Millions of yen, except net income per share)

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 5

Consolidated operating
results
Non-consolidated
operating results(Kanamoto Company)

Fiscal Year ending

Fiscal Year ending

October 2006

October 2008

66,050

Revenues

3,420

3,890

42.21 yen68.34 yen

59,60061,700

3,430

3,900

18,33018,930Ordinary income
Net income per share
Revenues
Ordinary income
EBITDA＋

68,3905. Medium to long-term corporate management strategies
Because the severity of the business environment surrounding Kanamoto is expected to continue, theCompany adopted a conservative stance when setting the numerical objectives for Metamorphose, thelong-term management plan (November 2003 - October 2008) the Company currently is implementing.
Nevertheless, by continuing to practice earnings-focused management and maintaining its basic policy of
improving and strengthening its financial position, the Company seeks to further expand operating results
and build a “strong Kanamoto” that will be evaluated positively by the market. The Company’s specificstrategies are described below.
(1) Maintain an earnings-focused rental equipment asset portfolio
The Company is maintaining its priority on introducing assets boasting high profit margins. In addition,
the Company already has completed replacement of its large rental assets with the latest emissionscontrolled models, and will seek to improve profit margins by extending rental periods for such assets.
(2) Execute a bold scrap and build programBecause the share of earnings achieved in major urban areas, particularly the Tokyo metropolitan area,
will be closely linked to further growth in the Company’s operating results, Kanamoto is limiting new
branches in local areas to the minimum number required to maintain its present position, and pursuing
rapid establishment of new branches throughout the Tokyo metropolitan area and other key urban areas.
The Company also will carefully scrutinize the possibilities for expanding operating results and improving
the profitability of each branch, and continue to close and integrate branches.
(3) Build a powerful marketing organization where customers are always Number One
Based on a management model of thoroughly studying user needs, Kanamoto is gradually introducing
unique or specialized products that address the requirements at each construction site. Kanamoto also isfurther strengthening its relationships with local communities, through measures such as Kanamoto’s
comprehensive compensation system and agreements with local governments to respond to urgent
requests following a disaster.
(4) Alliance strategy
The Kanamoto group and its alliance firms currently are active in many regions, from Hokkaido to
Okinawa. The Company will continue to expand the common use of products and information, strengthen
cooperation among all Kanamoto group firms and increase the synergistic effects from this approach.

6. Issues to be addressed by the Company
Even a cursory review of Japan’s fiscal position highlights the fact that conditions make it difficult for thegovernment to greatly expand public works in local areas in the future. On the other hand, the trend inconstruction equipment rental demand is positive because construction companies are restricting capital
investment. Demand for construction equipment rental also is growing because work process control has
become an important element of construction companies’ efforts to reduce costs. At the present time, theCompany is achieving positive results from actions based on its long-term management plan, including
Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 6

reform of Kanamoto’s earnings structure and measures to maintain market share in existing market areas,
and Kanamoto has set the objective of steadily improving operating income without being unduly affectedby the growing competition among firms. The measures Kanamoto is taking to attain this goal are
explained below.
(1) Enhance marketing capabilities and customer strategies
As the leading firm in the construction equipment rental industry, Kanamoto strives to develop theconstruction equipment rental market and promote a sound industry. The Company will also take steps tocultivate a new range of customers, including sectors such as facilities maintenance, landscaping andgardening and events, in addition to its traditional customers, which are mainly in civil engineering works
and construction, by diversifying the types of products handled.
(2) Emphasize group management and strengthen alliances
Kanamoto’s consolidated subsidiaries are still in a growth phase. To increase operating results at thesecompanies, Kanamoto will strengthen its cooperation from an operating, business and asset management
standpoint, including seconding the necessary individuals from Kanamoto, and seek further growth inearnings as a group. In addition, Kanamoto will build its alliance group, mainly through business alliancesin every part of Japan. In areas where the Company has not yet opened branches, Kanamoto
fundamentally plans to strengthen this alliance group, and also will consider techniques such as business
transfers and M&A as effective alternatives.
(4) Reinforce Kanamoto’s financial strategy
Kanamoto is taking steps to enhance its funds procurement flexibility, while giving consideration toequipment plans including rental equipment asset purchases. At the same time, the Company is striving
to improve its financial position, by reducing interest-bearing debt as much as possible while improving
capital efficiency through the liquidation of bill receivables.
(5) Cost reductions in every operation
Kanamoto will continue to seek greater operating efficiency by reviewing low-cost operations andeliminating wasteful expenses. Moreover, although rising interest rates and higher asset introduction
costs resulting from factors such as the sharp rise in crude oil and raw materials prices are a concern,
together with reviewing and introducing benchmarks the Company will strive for the proper level of asset
maintenance costs, based on a fundamental policy of extending the life of its rental assets.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 7

III

Operating Results and Financial Position(1) Operating resultsa) Summary of consolidated fiscal year interim period operating results
During the consolidated fiscal year interim period under review, Japan’s economy continued to experiencea growth phase. Led by major financial institutions, operating results recovered not only in export-relatedindustries such as manufacturing and marine transportation, which benefited from strong external
demand for products such as steel and machinery, but also in businesses catering to domestic demand,
including real estate, advertising and information services.
Nevertheless, this positive trend was centered on the Tokyo metropolitan area, and in most other areas
severe economic conditions were unchanged. The gap in personal consumption broadened as well, as
polarization in all aspects of the economy continued unabated. These circumstances applied for the
Kanamoto group’s main customers in the construction industry as well. Private sector demand remainedrobust in the Tokyo metropolitan area, but in other regions, construction and capital investment by boththe public and private sectors continued to decline, and the harsh business environment persisted.
Despite the fact the business environment for Kanamoto’s main customers in construction-relatedindustries remained severe as described above, the revenues of the Kanamoto group expanded at a
steady pace throughout Japan, centered on construction equipment rentals. Revenues also were strong
for both domestic sales and overseas sales of used equipment and exceeded the same period of theprevious consolidated fiscal year. In the steel products sales business the Company is developing in
Hokkaido based on condominium construction and other demand, revenues were unchanged from thesameperiodoftheprevious

consolidated

fiscal

year,

while

revenues

ininformationandtelecommunications-related businesses, which the Company is developing mainly in the Tokyo
metropolitan area, were strong and exceeded the same period one year earlier. Overall, revenues
expanded at a healthy pace.
From an earnings perspective, on the other hand, operating income, ordinary income and net income allwere substantially higher than the Company’s initial projection and the results for the same period of theprevious consolidated fiscal year. This reflected the gradual realization of results from various measuresinstituted under the long-term management plan the Company currently is implementing, including
improved operating efficiency of rental equipment assets, maintenance of unit prices and a reduction of
the Company’s depreciation burden.
As a result, revenues from operations for the interim period of the consolidated fiscal year ending October
2006 increased 4.2% compared to the same period of the previous consolidated fiscal year to ¥34,520
million, operating income jumped 122.5% year-on-year to ¥2,873 million, ordinary income increased
136.3% year-on-year to ¥2,801 million and net income soared 126.1% over the same period of theprevious consolidated fiscal year to ¥1,048 million. Operating income and the ordinary income for the
consolidated fiscal year interim period under review were the highest ever achieved by the Company.
Furthermore, beginning from the current consolidated fiscal year, the Company will apply the “AccountingStandard for Impairment of Fixed Assets,” and as previously reported booked an impairment loss of ¥594
million for the consolidated fiscal year interim period under review. A summary of operating results foreach of the Company’s businesses and business development issues deserving special mention are
described below.

[ Business related to the Construction Equipment Rental Division ]Despite the severe business environment, operating results for the construction-related businesses of theentire Kanamoto group rose significantly for the consolidated fiscal year interim period under review.
Revenues increased 4.7% year-on-year to ¥31,241 million, and operating income rose 133.0% to ¥2,742
million.
Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 8

For Kanamoto’s Construction Equipment Rental Division on a stand-alone basis, rental revenues increased
5.8％ year-on-year to ¥21,440 million, revenues from sales rose 9.1% year-on-year to ¥6,045 million
and total revenues increased 6.5% from the same period of the previous consolidated fiscal year to¥27,485 million.
< Kanamoto Co., Ltd. on an non-consolidated basis >Looking at the Company’s construction equipment rental revenues by region, total construction
investment in the Hokkaido Region and the Tohoku Region has fallen substantially below the levels in theprior year. As a result of efforts to win contracts in various markets including private construction and the
Hokkaido Shinkansen project, however, the Company maintained revenues in the Hokkaido Region at thesame level as in the same period of the previous consolidated fiscal year. In the Tohoku Region, revenues
increased 12.2% year-on-year.
In the Kanto & Shinetsu Region, revenues were up 7.9% year-on-year. In addition to the Tokyo
metropolitan area where demand is strong, the Company benefited from special procurement demand in
Niigata Prefecture related to disaster recovery work, and private sector capital investment in the KitaKanto Region. Revenues in the Kinki-Chubu Region were 5.5% higher than in the same period of theprevious consolidated fiscal year. In addition to the synergistic effect from making Kanki Corporation a
consolidated subsidiary company, revenue was boosted by disaster recovery work in Kobe, Awajishima
and Fukui and a recovery in private sector demand in Osaka. The division’s nationwide business efforts
bore fruit and produced strong results. The percentage of revenues accounted for by Hokkaido andHonshu and other regions was 31.4% and 68.6%, respectively.
During the consolidated fiscal year interim period under review, Kanamoto closed only one branch in
Kanazawa in the first quarter. As a result, Kanamoto had 145 branches.
< Consolidated subsidiaries >Daiichi Kikai Co., Ltd. enjoyed strong construction equipment rentals in both Kanoya and Tarumizu,
increasing revenues 5.8% compared to the same period of the previous consolidated fiscal year andboosting operating income 66.7% year-on-year.
SRG Kanamoto Co., Ltd. increased rentals of temporary scaffolding for private sector construction workand new bridge construction in the Sapporo area. Revenues expanded 15.1% from the same period of
the previous consolidated fiscal year, and the company substantially reduced its operating loss by 92.6%.
At Assist Co., Ltd., revenues were up 4.0% year-on-year, and operating income rose 39.1% from thesame period of the previous consolidated fiscal year, even though revenues and earnings for themeasurement equipment rental business were smaller than the initial objective because the company
outsourced rentals of this equipment to other Kanamoto alliance group firms.
At Kanki Corporation, which is restructuring its management, revenues were 17.7% lower than in thesame period of the previous consolidated fiscal year, despite strong growth in rental revenues
accompanying its business restructuring, because the company was unable to increase product sales.
Furthermore, operating income was greatly improved by ¥56 million, even though the cost burden forinvestment in rental equipment assets was substantially higher.
Kanatech Co., Ltd. saw its revenues decline 13.7% from the same period of the previous consolidated
fiscal year, because of the time lag between orders and productions. Nevertheless, the company greatly
reduced its operating loss by 97.6%.
As already reported, Flowtechno Corporation, a company that develops, manufactures and sells
technology for ground improvement construction equipment, was made a subsidiary company ofKanamoto on March 1.
[ Business related to the Steel Sales Division ]The Steel Sales Division achieved strong sales of products it handles, including new materials such as
high-endurance insulated waterproof roofing and the KT roof system). Because selling prices fell sharply
as a result of market concerns of excess steel materials inventories, however, revenues edged down
0.1% year-on-year to ¥3,058 million, and operating income was down 47.0% from the same period of
Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 9the previous consolidated fiscal year to ¥12 million.
[ Business related to the Information Products Division and Other Businesses ]Although rental demand in the Tokyo metropolitan area for personal computers is growing at a steadypace, revenues for the Information Products Division decreased 2.2% compared with the same period of
the previous consolidated fiscal year as rental fees also fell. On the other hand, revenues from sales ofused devices increased 45.0% year-on-year during the same period. Revenues for the entire division
increased 2.0% year-on-year to ¥219 million, and operating income climbed 100.6% to ¥21 million.

Interim Period for the Fiscal Year ending October 31, 2006 Consolidated Operating Results(Million yen; % change from prior year)
Revenues

Operating Income

Ordinary Income

Net Income

Consolidated Fiscal
Year Under Review

34,520

4.2

2,873

122.5

2,801

136.3

1,048

126.1

Prior Consolidated
Fiscal Year33,1267.0

1,291- 18.2

1,185- 22.4463- 57.8

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 10

2. Financial position
Summary of consolidated fiscal year interim period financial position
Cash flow from operating activities was ¥9,183 million, 27.9% less than in the same period of theprevious consolidated fiscal year. Although income before taxes and adjustments increased, cash flowfrom operating activities was lower mainly because cash flow in the same period one year earlier wasboosted substantially by a large decrease in accounts receivable, trade that resulted from the start of theCompany’s bill receivables liquidation program, and liquidations of bill receivables have now returned to astabilized level.
Cash flow from investing activities was ¥501 million, up ¥580 million compared to the same period of
the previous consolidated fiscal year. This mainly reflected funds provided from the sale of investment
securities.
Cash flow used for financing activities was ¥2,731 million, a decrease of 50.9% compared to thesame period of the previous consolidated fiscal year. This mainly reflected an increase in funds provided
by long-term bank loans, and a decrease in funds used for repayment of installment obligations.
As a result of the above, the balance of cash and cash equivalents at the end of the consolidated fiscal
year interim period under review increased ¥2,231 million compared with the interim period of theprevious consolidated fiscal year, to ¥21,062 million.
〔 Cash flow indicator trends for the Kanamoto group 〕
The cash flow indicator trends for the Kanamoto group are provided below.
Fiscal Year Ended

Fiscal Year Ended

Fiscal Year Ended

Interim Period

October 2003

October 2004

October 2005

Ended April 2006

Shareholders’ equity ratio (%)

35.8

36.7

40.8

40.5

Shareholders’ equity ratio on amarket capitalization basis (%)

17.7

18.1

26.6

31.7

Years to repay debt

4.0

6.3

3.3

3.5

Interest coverage ratio (times)

17.2

13.4

24.5

46.6

(Notes)Shareholders’ equity ratio: Shareholders’ equity / Total assets
Shareholders’ equity ratio on a market capitalization basis: Shareholders’ equity on a market capitalization basis /Total assets
Years to repay debt: Interest-bearing liabilities / Operating cash flow
Interest coverage ratio: Operating cash flow / Interest payments*All indicators are calculated using financial values on a consolidated basis.
*Total market capitalization is calculated by multiplying the closing share price at the end of the term by the numberof shares outstanding (after deducting treasury stock) at the end of the term.
*Cash flow from operating activities shown on the Consolidated Statements of Cash Flows is used as operating cash
flow.
Interest-bearing liabilities include all liabilities on which the Company pays interest that are accounted for on theConsolidated Balance Sheets.
The amounts shown as interest expense on the Consolidated Statements of Cash Flows are used as interest payments.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 11

3. Outlook for the fiscal year (Business Period ending October 2006)
Japan’s economy is demonstrating steady growth centered on large-scale firms in sectors such asmachinery and automobiles, which have been stimulated by foreign demand, and boosted by the
progress major financial institutions have made in disposing of non-performing loans. While numericalvalues shown for disposal income would appear to be one aspect of a nationwide boom that seems
supported by signs of a recovery in most industries, the construction industry is one industry that has notbenefited from the business recovery. Economic polarization in Japan continues to grow, with disparities
evident from every perspective including differences among regions, differences among firms in size,
differences among industries and finally, differences among individuals in standard of living. The
environment surrounding the construction industry in local regions remains difficult because of stringent
local government financial conditions, and this business environment is not expected to improvesignificantly.
Against this backdrop of differences among regions in the extent of economic recovery and differencesamong industries as described above, the Company expects the business environment surrounding the
Kanamoto group to be affected by uncertain construction demand and the severity of business conditions
to continue. Nevertheless, as already reported in the press release “Notification Concerning Revision of
Projected Interim and Full-year Operating Results and Extraordinary Loss” dated May 25, 2006, based oninterim operating results the Company has revised its projected full-year operating results.
Although actual results are unpredictable from the standpoint of both revenues and earnings, theCompany will seek to generate revenues that will maintain this earnings trend, as it continues toachieve positive results from the various measures based on the long-term management plan the
Company currently is executing, including improvements in the Company’s earnings capabilities and therecovery of its sales and marketing momentum.

Projected Operating Results for the Fiscal Year Ending October 31, 2006
(November 1, 2005 - October 31, 2006)(Consolidated)(Numbers less than one million yen have been rounded down)
Revenues

Operating
IncomeOrdinary Income

Net Income

Prior projection（A）

63,210

1,910

1,680

610

Revised projection（B）

66,050

3,630

3,420

1,260

（B−A）

2,840

1,720

1,740

650

（%）

4.5%

90.1%

103.6%

106.6%

Fiscal year ended October 31, 2005

63,975

1,404

1,550

352

Increase (decrease)
Rate of change

Reference: Projected net income per share of common stock (Full year)¥42.21(Numbers less than one million yen have been rounded down)(Non-consolidated)

Revenues

Operating
IncomeOrdinary Income

Net Income

Prior projection（A）

56,760

1,650

1,730

700

Revised projection（B）

59,600

3,330

3,430

1,310

（B−A）

2,840

1,680

1,700

610

（%）

5.0%

101.8%

98.3%

87.1%

Fiscal year ended October 31, 2005

57,202

1,526

1,960

609

Increase (decrease)
Rate of change

Reference: Projected net income per share of common stock (Full year)¥43.89Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 12

〔 Projected Financial Position for the Fiscal Year Ending October 31, 2006 〕
Cash flow from operating activities is projected to decrease compared with the previous consolidated
fiscal year because the decrease in accounts receivable, trade accompanying the liquidation of billreceivables has reached a stabilized level.
Cash flow from investing activities is projected to remain at the same level as the previous
consolidated fiscal year because there are no large factors that will change.
Cash flow from financing activities is projected to decrease compared with the previous consolidated
fiscal year because of a decrease in funds provided by long-term bank loans.
Based on the results described above, the balance of cash and equivalents at end of the consolidated
fiscal year is projected to decrease compared with previous consolidated fiscal year.

4. Business and other risks
The following risks are included among the business and accounting matters described in the interim
financial statements bulletin that might have an important influence on investors’ decisions.
Statements concerning future matters are judgments made by the Company during the consolidated
fiscal year interim period.
(1) Economic conditions
Because the construction-related businesses that are the main business of the Kanamoto group remain
highly dependent on public works, the stagnation of market growth and intensification of pricecompetition resulting from ongoing cutbacks in public works investment are continuing and the severityof the business environment is expected to continue.
To minimize the affects from cutbacks in public works, the Kanamoto group is implementing various
management measures, such as shifting management resources to major metropolitan areas where
private sector demand is strong, and seeking to maintain and improve operating results. Nevertheless,there is a possibility future operating results including revenues will be negatively affected if further large
reductions in public works or other changes affecting industry demand occur in the future.
(2) Seasonal changes in operating results
Because budget decisions for public works are made in April of each year, there is a time lag of roughly
six months before construction actually is begun. Therefore the construction-related businesses that are
Kanamoto’s main business experience a trend in which the busy season during each business period
extends from about October until the following March, and construction equipment rental demandreaches its maximum peak during this period. As a result, the revenues and earnings of the Kanamotogroup tend to be concentrated in the Company’s interim accounting period.
(3) Interest rate fluctuations
The Kanamoto group allocates internal capital and procures funding from outside sources to meet its
need for funds to purchase rental equipment and other assets, make branch-related capital investments
and provide working capital for business activities. Although the Company takes steps to mitigate theaffect of interest rate fluctuations on its externally borrowed funds, including transactions to fix theinterest rates paid on borrowed funds to the extent possible, there is a possibility the operating results
and financial position of the Kanamoto group will be affected by future changes in interest rates.
(4) Projected benefit obligation
The projected employee benefit obligation and costs of the Kanamoto group are calculated mainly basedon basic rates such as a discount rate and expected rate of return on pension assets. Because these basic
rates are determined in each annual review, they have a material affect on changes in the operating
results and financial position of the Kanamoto group. Although the Kanamoto group is studying ways tominimize this influence, including conversion of benefit plans to a defined contribution pension plan or a
Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 13

cash balance pension system, there is a possibility the operating results and financial position of theKanamoto group will be negatively affected by a further reduction in the discount rate or a deteriorationin returns on invested assets.
(5) Asset impairment accounting for fixed assets
Beginning from the business period ending in October 2006, the Kanamoto group will apply the“Accounting Standard for Impairment of Fixed Assets.” During the consolidated fiscal year interim period
under review, the Company booked an impairment loss of ¥594 million for certain tangible fixed assets (5land parcels) owned by Kanamoto. There is a possibility the operating results and financial position of theKanamoto group might be negatively affected if the profitability of fixed assets declines because offactors such as a marked deterioration in the Company’s business environment in the future.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 14

IV
1.

Interim Consolidated Financial Statements
Interim Consolidated Balance Sheets(Amounts have been rounded down to the nearest thousand yen)

PeriodCategory

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

AmountPrior Fiscal Year
Summary Consolidated
Balance Sheet(As of October 31, 2005)
Percent
AmountPercent

Current Consolidated
Fiscal Year Interim
Period(As of April 30, 2006)(Assets)
Current Assets
Cash and deposits

18,839,080

21,065,337

14,111,882

Notes and accounts
receivable, trade

12,705,791

13,242,954

14,329,090

575,110

641,479

538,951

1,688,674

1,312,970

1,469,376

Deferred tax assets

371,742

316,581

318,999

Other current assets

Inventory
Construction
equipment

648,807494,345873,516

Allowance for
doubtful accounts- 680,494- 605,691- 923,256

Total Current Assets

34,148,712

39.9

36,467,976

41.9

30,718,560

37,4

Fixed Assets
Tangible Fixed Assets
Rental equipment
Buildings andstructures
Machinery, equipment
anddeliveryequipment
Land
Construction inprogress
Other tangible fixed
assetsTotal Tangible Fixed
Assets*1
10,452,285

9,260,137

9,811,304

6,752,856

6,291,934

6,501,912

848,215

740,549

792,395

26,062,314

25,791,953

26,140,976

95,752

24,244−

342,568

273,850

292,326

44,553,992

52.1

42,382,668

48.7

43,538,915

53.1

782,7240.9

610,652

0.7

688,4210.8

Intangible Fixed Assets
Total Intangible Fixed
AssetsInvestments and Other
AssetsInvestment securities

4,318,655

6,601,532

5,753,056

Deferred tax assets

749,681−302,238

2,146,377

1,778,065

1,754,473- 1,189,438- 837,154- 778,148

Other assets
Allowance for doubtful
accounts
Total Investments andOther Assets

6,025,276

7.1

7,542,443

8.7

7,031,620

8.5

Total Fixed Assets

51,361,993

60.1

50,535,764

58.1

51,258,957

62.5

Total Assets

85,510,705

100.0

87,003,740

100.0

81,977,517

100.0

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 15

(Amounts have been rounded down to the nearest thousand yen)

PeriodCategory

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

Prior Fiscal Year
Summary Consolidated
Balance Sheet(As of October 31, 2005)
Percent
AmountPercent

Current Consolidated
Fiscal Year Interim
Period(As of April 30, 2006)
Amount(Liabilities)
Current Liabilities
Notes and accounts
payable, trade
Short-term
bank
loans
Long-term bank loans
due within one year
Corporate taxes
payableAccrued bonuses to
employees
Accrued bonuses todirectors and auditors
Accounts payable,
other
Other current
liabilities
Total Current
Liabilities

13,039,913

13,441,414

10,837,618

655,972

558,696577,364

10,497,496

10,570,496

10,718,496

708,982

1,158,159

555,570

532,609566,786

515,796

−

2,750

−

3,327,415

2,617,049

2,464,772

610,636

1,167,947

467,946

29,373,025

34.4

30,083,300

34.6

26,137,564

31.9

Long-term Liabilities
Long-term bank loans
Accruedemployees
retirement benefits
Retirement
allowances todirectors and auditors
Long-term accrued
expenses
Consolidation
adjustment
Other long-term
liabilities
Total Long-term
Liabilities

19,185,855

17,545,359

18,643,607

1,341,001

1,589,518

1,525,993

120,535

141,254

110,473

2,237,469

1,871,385

1,968,265−

364,763−

72,49133,87155,003

22,957,352

26.8

21,546,152

24.8

22,303,342

27.2

Total Liabilities

52,330,378

61.2

51,629,452

59.3

48,440,907

59.1

89,536

0.1

111,603

0.1

71,1350.1

8,596,737

10.0

8,596,737

9.9

8,596,737

10.5

9,720,343

11.4

9,720,343

11.2

9,720,343

11.8

14,071,358

16.5

14,464,078

16.6

13,691,585

16.7

886,387

1.0

2,672,989

3.1

1,643,403

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

33,090,790

38.7

35,262,684

40.5

33,465,475

40.8

85,510,705

100.0

87,003,740

100.0

81,977,517

100.0(Minority Interests)
Minority interests(Shareholders’ Equity)
Common stock
Additional paid-in
capitalEarned surplus
Valuation differenceon other negotiablesecurities
Treasury stock
Total Shareholders’EquityTotal Liabilities andShareholders’ Equity

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 16

2. Interim Consolidated Statements of Income(Amounts have been rounded down to the nearest thousand yen)
PeriodCategory

Prior Fiscal Year
Prior Consolidated
Current Consolidated
Summary Consolidated
Fiscal Year Interim
Fiscal Year Interim
Balance Sheet
PeriodPeriod(From November 1, 2004 (From November 1, 2005 (From November 1, 2004
to October 31, 2005)
to April 30, 2006)
to April 30, 2005)
AmountPercent
AmountAmountPercent
AmountRevenues fromoperations
Rental revenues

22,504,784

24,004,132

42,985,807

Sales

10,621,999

10,516,055

20,989,405

Total revenues fromoperations
Cost of revenues fromoperations
Cost of rental
revenues

33,126,783

100.0

34,520,187

100.0

63,975,212

100.0

16,332,000

16,446,658

31,949,570

Cost of goods sold

8,564,883

8,144,894

16,785,504

Total cost of revenues

24,896,884

75.2

24,591,553

71.2

48,735,074

76.1

8,229,899

24.8

9,928,633

28.8

15,240,137

23.8

6,938,617

20.9

7,055,561

20.4

13,835,766

21.6

1,291,282

3.9

2,873,072

8.3

1,404,371

2.2

Gross profit
Selling, general andadministrative
expenses*1

Operating income
Non-operating revenues
Interest revenue

2,985

229

3,756

Dividend income

26,826

10,104

57,149Gain on sale ofinvestment securities

17,807

17,799363,963

Insurance benefits

16,601

22,93447,709Rents received

46,80144,84994,173888−−

70,75876,859149,796

Cash bonus received
Other
Total non-operating
revenues
Non-operating
expenses

182,669

0.6

172,7760.5

716,548

Interest expense

180,106

168,160

353,256

Other

108,362

76,327

217,449

Total non-operating
expenses
Ordinary income

1.1

288,4690.9

244,4870.7

570,7050.9

1,185,481

3.6

2,801,361

8.1

1,550,213

2.4

Extraordinary profits
Gain on sale orretirement of fixed
assetsValuation gain on
investment
partnership
Gain on reversal of
allowance for doubtful
accounts
Gain on sale ofinvestment securities
Other
Total extraordinary
Profits

*2

4,742

883

57,9306,299

544

10,849−−24,174−−

26,906

103,378

14,864

1,164

114,419

0.3

16,2920.1

121,025

0.2

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 17

(Amounts have been rounded down to the nearest thousand yen)
PeriodCategory

Prior Fiscal Year
Prior Consolidated
Current Consolidated
Summary Consolidated
Fiscal Year Interim
Fiscal Year Interim
Balance Sheet
PeriodPeriod(From November 1, 2004 (From November 1, 2005 (From November 1, 2004
to October 31, 2005)
to April 30, 2006)
to April 30, 2005)
AmountPercent
AmountPercent
AmountPercent

Extraordinary losses
Loss on sale orretirement of fixed
assets*3

40,181

16,753

147,388

Impairment loss

*4−594,568−

221−

29,961−−55,0005,470

17,804

15,613

192,465−

255,724

19,608

9,365

1,802

Valuation loss on
investment securities
Loss on valuation ofaffiliated company
stock
Valuation loss on
investment partnershipTransfer to allowancefor doubtful accounts
to affiliated companies
Other
Total extraordinary losses
Income before taxes andadjustments
Corporate, local andbusiness taxes
Adjustment for corporate
and other taxes
Minority interest inincome or loss
Net income

257,947

0.8

638,492

1.9

545,383

0.8

1,041,953

3.1

2,179,161

6.3

1,125,855

1.8

634,288

1.9

1,121,920

3.3

858,422

1.3- 86,311- 0.3- 31,697- 0.1- 97,079- 0.1

30,2910.1

40,4680.1

11,8890.0

463,684

1.4

1,048,470

3.0

352,623

0.6

3. Interim Statements of Consolidated Retained Earnings(Amounts have been rounded down to the nearest thousand yen)
PeriodCategory

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

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

AmountAmountPrior Fiscal Year
Summary Consolidated
Statement of Income(From November 1, 2004
to October 31, 2005)
Amount(Capital Surplus)
Balance of capitalsurplus at the
beginning of the period
Balance of capitalsurplus at the end of
the interim period(consolidated fiscal
year)

9,720,343

9,720,343

9,720,343

9,720,343

9,720,343

9,720,343

13,913,568

13,691,585

13,913,568(Earned Surplus)
Balance of earned
surplus at the
beginning of the period
Increase in earned
surplusInterim period net
incomeDecrease in earned
surplusDividends

463,684

298,594

463,684

1,048,470

268,677

1,048,470

352,623352,623567,305

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 18

Directors andauditors’ bonuses
Balance of earned
surplus at the end of
the interim period(consolidated fiscal
year)

7,300

305,894

7,300

14,071,358

275,977

14,464,078

7,300

574,605

13,691,585

4. Interim Consolidated Statements of Cash Flows(Amounts have been rounded down to the nearest thousand yen)
PeriodCategory

Cash flow from operating
activities
Income before taxes andadjustments
Amortization of consolidation
adjustment accountDepreciation and amortization
expenseImpairment loss
Gain on sale or retirement of
fixed assets
Loss on sale or retirement of
fixed assets
Installment purchases ofassets for small-value rentals
Reclassification of cost of
sales associated with disposalof construction equipment
Reclassification of cost of
sales associated with disposalof rental assets
Expenditures for acquisition ofrental assets
Valuation loss on investment
securities
Gain on sale of investment
securities
Increase in allowance for
doubtful accounts
Increase (decrease) in
accrued bonuses to
employees
Increase in accrued bonuses
to directors and auditors
Increase (decrease) in
accrued employees retirement
benefits
Increase in retirement
allowances to directors andauditors
Interest revenue and dividend
incomeInterest expense on
installment purchases ofrental assets
Interest expense(Increase) decrease inaccounts receivable, trade(Increase) decrease ininventory assets
Increase (decrease) in
accounts payable, trade
Increase (decrease) in
accounts payable, other

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

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

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

AmountAmountAmount

1,041,953

2,179,161

1,125,855

54,28952,273

106,7812,434,740

2,282,463

5,211,105−

594,568−- 4,742- 883- 57,930

40,181

16,753

147,388

46,432

8,749

69,455

4,924

1,615

7,442

450,189

244,027564,032- 1,421,374- 567,212- 2,465,393

221−

84,961- 17,807- 17,799- 363,963- 521,731- 258,557- 690,259

52,01250,99035,198

−

2,750

−

112,171

66,070297,163

24,253

28,235

14,191- 29,811- 10,333- 60,905

36,46423,25968,120180,106

168,160

353,256

10,774,757

1,086,136

9,151,458

127,949- 102,528

164,108- 365,689

2,603,795- 2,567,984

119,717385,363- 195,552

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 19

Directors and auditors’
bonuses paid
Other, net
SubtotalInterest and dividends
received
Interest expense
Payment of corporate andother taxes
Cash flow from operating
activities- 7,300- 7,300- 7,300

90,445

1,060,185

256,190

13,222,355

9,889,946

11,247,422

29,811

10,33360,905- 218,317- 197,163- 417,194- 294,120- 519,330- 671,665

12,739,730

9,183,785

10,219,467

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 20

(Amounts have been rounded down to the nearest thousand yen)
PeriodCategory

Cash flow from investing
activities
Disbursements forinvestments in term deposits
Funds used for the purchaseof tangible fixed assets
Funds provided from the saleof tangible fixed assets
Funds used for the purchaseof intangible fixed assets
Funds used for the purchaseof investment securities
Funds provided from the saleof investment securities
Funds used for payment of
capital contribution
Funds provided from sale ofconsolidated subsidiary stock
Funds used for the purchaseof non-consolidated subsidiary
stock
Other
Cash flow from investing
activities
Cash flow from financing
activities
Decrease in short-term bankloans
Funds provided by long-termbank loans
Funds used to repay longterm bank loans
Funds used for repayment of
installment obligations
Funds used for the purchaseof treasury stock
Payment of dividends toparent company
Cash flow from financing
activities
Increase (decrease) in cash andequivalents
Balance of cash and equivalents
at beginning of period
Balance of cash and equivalents
at end of the interim period(consolidated fiscal year)

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

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

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

AmountAmountAmount

−

−

5,000

- 250,051- 403,049- 484,985

118,689

24,563314,122- 44,151- 5,914- 50,730- 444,132- 308,269- 1,188,707

539,556

1,244,098

1,386,291

−

- 200

−

−

−

2,902

−

- 50,025

−

1,096

60

4,741

- 78,992

501,264- 11,364- 20,667- 18,668- 99,275

2,500,000

4,400,000

7,900,000- 5,704,248- 5,646,248- 11,425,496- 2,038,759- 1,193,130- 3,637,197- 1,560- 4,869- 4,118- 298,594- 268,677- 567,305- 5,563,830- 2,731,594- 7,833,393

7,096,906

6,953,455

2,374,708

11,734,154

14,108,863

11,734,154

18,831,061

21,062,318

14,108,863

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 21

5. Significant Accounting Policies for the Consolidated Financial Statements
PeriodCategory
1. Companies included in
the consolidation

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

Consolidated

company

company

name:

name:

Assist Co., Ltd.

Assist Co., Ltd.

Assist Co., Ltd.

SRG Kanamoto Co., Ltd.

SRG Kanamoto Co., Ltd.

SRG Kanamoto Co., Ltd.

Kanatech Co., Ltd.

Kanatech Co., Ltd.

Kanatech Co., Ltd.

Daiichi Kikai Co., Ltd.

Daiichi Kikai Co., Ltd.

Daiichi Kikai Co., Ltd.

Kanki Corporation

Kanki CorporationMain

non-consolidated

(2)

Main

Kanki Corporation

non-consolidated(2) Main non-consolidated

subsidiaries

subsidiaries

subsidiaries

Non-consolidated subsidiaryNon-consolidated subsidiaryNon-consolidated subsidiarycompany namecompany namecompany nameComsupply Co., Ltd.

Comsupply Co., Ltd.

Comsupply Co., Ltd.

Kanki Maintenance Co.,

Flowtechno Corporation

Kanki

for

exclusionfrom consolidation)
The

Maintenance

Co.,

Ltd.

Ltd.
(Reasonsize

of(Reasonfor

exclusionfrom consolidation)

the

non-

The

size

of

the

non-

(Reasonfor

exclusionfrom consolidation)
The size of thenon-consolidated subsidiaries is

consolidated subsidiaries is

consolidated subsidiaries issmall and their net assets,

small and their net assets,

small and their net assets,

sales and interim period

sales and interim period

sales and fiscal year profit

profitprofit

or

or

loss

correspondingand(amount

toretained

equity)earnings

orloss

correspondingand(amount

toretained

equity)earnings

loss(amount

corresponding
andtoretained

equity)earnings(amount corresponding to(amount corresponding to(amount corresponding toequity) are small in size

equity) are small in size

equity) are small in sizeand do not have a material

and do not have a material

and do not have a material

effectinterimeffectinterimeffect on the consolidated

financialconsolidated

financialfinancial statements.

on

the

consolidated
statements.

method accounting(1) Number of consolidated

name:

(2)

application of equity

Consolidated

company

Prior Consolidated Fiscal Year
(From November 1, 2004
to October 31, 2005)
companies: 5companies: 5companies: 5
Consolidated

2. Matters pertaining toCurrent Consolidated Fiscal
Year Interim Period(From November 1, 2005
to April 30, 2006)(1) Number of consolidated

Two

on

the

statements.
unconsolidated

Two

unconsolidated

subsidiaries(Comsupply

subsidiaries

Co.,

and

Co., Ltd.

Ltd.

Kanki

(Comsupply

and FlowtechnoTwo

unconsolidated

subsidiaries(Comsupply

Co.,

and

Ltd.

Maintenance Co., Ltd.) andCorporation)twoaffiliated company (Active
Technology Corporation ）twoActivehave been omitted from

Corporation

have

items

Power

affiliatedcompanies(Active

Technology

Corporation
Power

and

Corporation)

to

and

which

equitybeen omitted from items tomethodaccounting

whichbecauseisaffiliatedcompanies(Active

Technology
andActiveCorporation)

havebeen omitted from items tomethodappliedisappliedrespective effect on interim

accounting

becausetheirrespective

consolidated net income or

becauseeffectoninterimloss(amount

effect on consolidated net

equityaccounting

their

Kanki

Maintenance Co., Ltd.) andwhich

equitymethodisappliedtheirrespective

consolidated net income orcorresponding

toequity)income or loss (Amount

loss

and

consolidated

corresponding to minority(amount

corresponding

toequity)andconsolidated

interimcapitalsurplus(amount

interest) and consolidated

corresponding to equity) is

capital(amount

immaterial and none of thecorresponding to minority

corresponding to equity) is

companies is important tointerest) is immaterial andimmaterial and none of thethenone of the companies iscompanies is important tooperations.

interimcapitalthesurpluscompany’s

operations.

overallcompany’s

overall

surplusimportantcompany’s

to(Amount

theoverall

operations.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 22

3. Matters pertaining toTheinterimperiod-end

Theinterimperiod-end

The fiscal year closing

the interim period-end

closing date for all of theclosing date for all of thedate(fiscalconsolidated

consolidated

consolidated

year-end)

consolidated
subsidiaries

forsubsidiaries

subsidiaries

for

all

of

the

subsidiaries

except Kanki Corporation

except Kanki Corporation

except Kanki Corporation

is February 28.

is February 28.

is August 31.

When

preparinginterimtheWhenconsolidated

interimpreparingtheconsolidated

When

preparingconsolidatedthefinancialfinancialstatements,

thefinancialstatements,

thestatements, the Company

Companyuses

theCompany

uses

the

used

subsidiaries’

financialsubsidiaries’

financial

thestatements as of February

statements as of February

August28,

28,

significant

and

makes

and

makes

subsidiaries’

financial statements as of
31,

adjustedfortransactions

adjustments for significant

adjustments for significant

that occurred between thetransactions that occurredtransactions that occurred

subsidiaries’

betweenMarch

between

March

2006

end and the consolidation

and

the

interimandtheinterimdate that have a material

consolidated

accounting

consolidated

accounting

effect on the consolidated

1,

2005

1,

date on April 30, 2005 thatdate on April 30, 2006 thatwere deemed to have awere deemed to have amaterial

thematerial

consolidated

interiminterimeffectfinancial results.

oneffectonfiscalyear-

financial results.

theconsolidated

financial results.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 23

(1)

Appraisal

standards

andappraisal

methods for principal
assetsa. Negotiable securities
Other negotiable securities
Securities with a market
price
The

Company

hasa. Negotiable securities
Other negotiable securities
Securities with a market
priceSame as at left

a. Negotiable securities
Other negotiable securities
Securities with a market
price
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 thechargeddirect transfer to capitalthemethod, with the disposal

capital method, with thecost

determinedusing

transfer

todisposal

cost

by

the

movingaveragebased on the market pricemethod)

based

on

the

on

consolidated

market

price

on

the

fiscalyear

consolidatedorsimilaraccounting
closingdate

theequitymoving average method)
the

by

to

directdeterminedaccounting

fiscal year closing date or

prices.

similar prices

Securities without market
pricesThe

Companyhasadopted the cost method,

Securities without market

Securities without market

pricespricesSame as at left

Same as at leftb. Construction equipment
Same as at leftb. Construction equipment
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

cost being determined bythemovingaveragemethodb. Construction equipment
Amount after deductionofdepreciation

expensecalculated according to thedeclining-balancemethodfrom the original prices, byseparate

fiscalyearofpurchasec. Merchandise inventories
and supplies(i)
Merchandise
inventories
Lower of cost or market
based on the Last-in,
First-out method(ii) Supplies
The Latest Purchase Cost
method(ii) Supplies
Same as at left(ii) Supplies
Same as at left

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 24

(2) Depreciation methods
for principal
depreciable assets

a. Tangible fixed assets
The
Companyhasadoptedthea. Tangible fixed assets
Same as at left

a. Tangible fixed assets
Same as at left

b. Intangible fixed assets
Same as at left

b. Intangible fixed assets

a. Reserve for doubtful
accounts

a. Reserve for doubtful
accounts

Same as at left

Same as at leftb. Accrued bonuses to
employees
Same as at leftb. Accrued bonuses to
employees

declining-balance method. Buildings
on

land

that

is

leasedunder a fixed-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. For certain
consolidated

subsidiaries,

the Company has adopted
thestraight-line

methodfor buildings and structuresacquired on or after April
1,

2000

but

excluding

fixtures and equipment.
The

depreciable

mainly

used

lives

by

the

Company are as follows.
Rental assets
5-10
years
Buildings
31-34
years
b. Intangible fixed assets
The
Companyhasadoptedthedeclining-

Same as at leftbalance method.
Software for use withintheCompany

depreciated

is

using

the

straight-line method basedon the assumed useful life(3) Accounting standards
for principal allowancesand reserves

for internal use (5 years).
a. Reserve for doubtful
accounts
To provide for losses on
doubtful 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.
b. Accrued bonuses to
employees
To fully provide
expenditures

of

for

Same as at left

bonusesthe Company will pay toemployees, an amount isappropriated to the reserve
during
upon

the
a

year

salarybased

estimate

amount.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 25──────c. Accrued bonuses todirectors and auditors
The Company provides──────

for accrued directors andauditors’ bonuses. At the
end

of

the

consolidated

interimaccounting

period,theaccruedanamountprovidefortherecognizedCompany
toliability

duringtheperiod.
(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
Meetingof

Shareholders.
from

the
Beginning

thisinterimconsolidated
period,accounting

however,theCompany will accrue anamount to provide for theliability

recognizedashaving occurred during theperiod,onthePractical

based

Solutionon

Tentative

TreatmentsofAccountingforBonuses

Directors’(AccountingStandards Board of Japan,
Theme

Advisory

Committee
Recommendation

No.

13

dated March 9, 2004). As aresult, operating income,ordinary

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.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 26

d. Accrued employees
retirement benefit
The Company provides
foremployees’d. Accrued employees
retirement benefit
Same as at left

accruedd. Accrued employees
retirement benefit
The Company provides
foremployees’

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 consolidated

the end of the consolidated

fiscal year. At the end of

fiscal year. At the end ofeach interim consolidated

each interim consolidated

accounting

accounting

period,theperiod,theCompany appropriates an

Company appropriates anamount to the reserve toamount to the reserve toprovideprovidefortherecognizedliability

during

the

for

the

recognizedperiod.

liability

duringtheperiod.

The difference based on

The difference based onan actuarial calculation isan actuarial calculation ischargedchargedtoincomebeginninginconsolidated

accounting

fiscal

year

year

in

the

following

which

the

to
in

consolidated

accounting

fiscal year

incurred,incomebeginning

year

in

the

following

which

the

incurred,with the amounts allocatedwith the amounts allocatedproportionately using the

proportionately using thestraight-line

method,straight-line

specified

based

based

on

number

a

of

years

(10

on

numberofmethod,aspecified

years

(10

years) that is less than theyears) that is less than the

average remaining period

average remaining periodofof

employment

for

employees at the time thedifference arises.
e. Retirement allowances todirectors and auditors
The Company provides

employment

for

employees at the time thee. Retirement allowances todirectors and auditors
Same as at leftdifference arises.
e. 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 appropriatedtheand appropriated to theaccount proportionately at

account proportionately atthethe end of the consolidated

end

of

the

consolidated

tointerimaccounting

accounting

period based upon length

basedof service.

service.

(4) Lease transactions

Forfinancetransactions
leaseslease

exceptthat

Same as at left

upon

fiscalyear

lengthofSame as at leftfortransferownership of the property
tothelessee,rent

expenses are charged toincome as payments are
made.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 27

(5) Hedge accounting forprincipal hedging
methodsa. Hedge transactions
The Company accounts
for

hedge

a. Hedge transactions

a. Hedge transactions

Same as at left

Same as at left

b. Hedge methods andhedged transactions

b. Hedge methods andhedged transactions

Same as at left

Same as at lefttransactions

using allocations based on
accounting

standards

foreignforcurrency-

denominated transactions,and special rule accounting
based

on

standards

accountingforfinancial

products.
b. Hedge methods andhedged transactions
The
Company
uses
currency

swaps

and

forwardtransactions

inorder 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 tointerestonbankborrowing.
c. Hedging policies
The Company’s use ofc. Hedging policies

c. Hedging policies

Same as at left

Same as at left

d. Method for evaluating theeffectiveness of hedges

d. Method for evaluating theeffectiveness of hedges

Same as at left

Same as at leftderivative transactions islimitedtohedgingrisk

within the scope of theCompany’s

assetsandliabilities subject to market
fluctuation risk.
d. Method for evaluating theeffectiveness of hedges
The Company does notevaluate the effectivenessof its hedge transactions
because it can assume thatits

currencytransactions

forwardoffsetmarkettransactions
completely

swap

and

will

fluctuations or changes incash flow from the timehedge begins until it isterminated.
theIn

addition,

Company’s

interest

swap transactions fulfill therequirementsforspecialrule accounting, and theCompany has elected touse this in place of anevaluation of effectiveness.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 28

(6)Other material
matters pertaining topreparation of theinterim consolidated
financial statements(consolidated financial
statements)

Accounting treatment ofconsumption tax
Consumption tax is taken

Accounting treatment ofconsumption tax

Accounting treatment ofconsumption tax

Same as at left

Same as at left

out of all Statement of
Income items and Balance
Sheet items, except mainlyforreceivables

andpayables.
5.

Items included in cash

Funds included in cash

and equivalents on the(cash and equivalents) on(cash and equivalents) on

InterimthetheConsolidated

Statements
Flows

Statements
Flows)

ofCash(Consolidated
of

Cash

Interim

Consolidated

Same as at left

Funds included in cash
Consolidated

Statements of Cash Flows

Statement of Cash Flows

includecash

includecash

deposits

that

deposits

that

on

hand,

can

be

on

hand,

can

be

withdrawn on demand andwithdrawn on demand andhighlyhighlyliquidinvestments

short-term
thatmatureliquidinvestments

short-term
thatmaturewithin three months of thewithin three months of the

date

and

date

easily

which

which

of

acquisition
can

be

of

acquisition
can

be

and
easilyconverted into cash andconverted into cash andthat have minimal risk of athat have minimal risk of achange in price.

change in price.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 29

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

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

Prior Consolidated Fiscal Year
(From November 1, 2004
to October 31, 2005)──────

(Accounting Standard for Impairment──────

of Fixed Assets)
Beginning from this consolidated
fiscalyear

interimCompanyhasperiod,adoptedthethe

Accounting Standard for Impairmentof Fixed Assets (“Opinion Concerning
EstablishmentofAccountingStandard for Impairment of Fixed
Assets,”Council,Business
August8,

Accounting
2002)

and

“Implementation Guidance for the
Accounting Standard for Impairment
of

Fixed

Assets,”AccountingStandards Board of Japan, October
31,

2003,

Financial

AccountingStandard Implementation Guidance
No. 6).
As a result, interim period income
before taxes and adjustments was¥594,568,000 lower than it would
have

been

had

the

accounting

standards used in previous periods
been applied.
The

total

amountoftheimpairment loss is deducted directlyfrom the balance for each asset
based on the revised standards for
preparation of interim consolidated
financial statements and other rules.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 30

Change in Reporting Method
Prior Consolidated Fiscal Year Interim Period(From November 1, 2004
to April 30, 2005)

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

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 and revision of the Practical Guidelines Concerning
Accounting for Financial Instruments (The JapaneseInstitute of Certified Public Accountants, Accounting
Committee Report No. 14) dated February 15, 2005, theCompany changed its method for reporting limited
partnerships

forinvestment

andinvestments

inassociations 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” beginningfrom the current consolidated fiscal year interim period.
Theamountofsuchinvestments

includedin“Investment securities” for the consolidated fiscal year
interim accounting period under review is ¥108,218,000,
and the amount of such investments included in “Other
assets” in Investments and other assets in the priorconsolidated fiscal year interim period is ¥88,290,000.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 31

6. Notes to the Interim Financial Statements(Notes to the Interim Consolidated Balance Sheets)
PeriodPrior Consolidated Fiscal
Year Interim Period

Current Consolidated Fiscal
Year Interim Period

Prior Consolidated
Fiscal Year(As of April 30, 2005)(As of April 30, 2006)(As of October 31, 2005)

41,862,006,000

41,961,192,000

42,107,202,000

31,294,000

31,159,000

30,779,000−

100,000,000−

155,972,000

475,474,000

373,580,000

93,700,000

−

−

Item

*1. Total accumulated
depreciation for tangible
fixed assets
2. Guarantees
Joint and several
guarantees of employeebank loans
Guarantee of debt for
long-term bank loan toaffiliated company(Active Power Co., Ltd.)
3. Discount on notes
receivable, trade
4. Balance of notes
receivable-trade endorsed

Notes and bills maturing

5. Notes and bills

Notes and bills maturing

maturing at the end ofon thelast day of theon the last day of thethe interim periodinterim period are settledinterim period are settled(consolidated fiscal year)

and processed on the noteand processed on the note

and

and

bill

clearing

date.

clearing

date.

Because the last day of the

Because the last day of theCompany’s

current

Company’s

year

consolidated

consolidated

fiscalcurrent
fiscalyear

interim accounting periodinterim accounting period

was a financial institution

was a financial institution

holiday,holiday,

notes

and

bills

notes

and

bills

maturing on the final day

maturing on the final day

of

of

the

followingthefollowing

consolidated interim period

consolidated interim period

areincludedconsolidated

in

the

are

fiscalyear

consolidated

interim accounting period

includedbalance.

Notes

Notes
48,946,000

trade

in

the

fiscalyear

interim accounting periodbalance.
receivable,

receivable,

43,551,000

trade

Notes

Notes

payable,1,515,268,000

trade
6.Contingent liabilities

bill

─────

payable,1,485,239,000

trade

The Company liquidates

The Company liquidates

The Company liquidates

bill receivables based onbill receivables based onbill receivables based on

notes receivables transfer

notes receivables transfer

notes receivables transfer

program.

program.

program.

Notes

Notes

Notes

receivable,
trade
The

8,324,410,000 receivable,amountreceivable,

of

trade

notes
with

a

trade
The

7,921,742,000 receivableamountreceivable,

of

trade

notes
with

a

, tradeThe

5,348,993,000

amountreceivable,

of

trade

notes
with

a

right of recourse to theright of recourse to theright of recourse to theCompany

includedCompany

includedCompany

includedbalanceofbalanceofbalanceofreceivable,

trade¥1,337,614,000.

in
notes
is

receivable,

trade¥1,665,477,000.

in
notes
is

receivable,

trade

in
notes
is

¥1,152,352,000.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 32

(Notes to the Interim Consolidated Statements of Income)Prior Consolidated Fiscal Year
Interim Period(From November 1, 2004
to April 30, 2005)*1. Major expense categories andCurrent Consolidated Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)*1. Major expense categories and*1. Major expense categories andamounts included in selling,amounts included in selling,amounts included in selling,

general and administrative

general and administrative

general and administrative

expenses

expenses

expenses

Employee salaries
and wages
Depreciation expense
Rents
Transfer to allowancefor doubtful accounts
Transfer to accrued
bonuses to employees
Amortization of
consolidation
adjustment account2,615,448,000
422,427,000
769,684,000
8,368,000
517,787,000
54,289,000*2. Gain on sale or retirement of fixed
assetsEmployee salaries andwages
Depreciation expense
Rents
Transfer to allowancefor doubtful accounts
Transfer to accrued
bonuses to employees
Transfer to accrued
bonuses to directors
and auditors

2,673,627,000
382,867,000
779,729,000
49,261,000
553,776,000

4,248,000

Machinery, equipment and

487,000

delivery equipment
Other

5,220,900,000
861,893,000
1,529,712,000

Employees retirement
benefit expense

156,204,000

Transfer to retirement
allowances todirectors and auditors

14,191,000

Transfer to retirement
allowances to directors
and auditors

9,268,000

Amortization of
consolidation
adjustment account106,781,000

Amortization of
consolidation
adjustment account52,273,000*2. Gain on sale or retirement of fixed*2. Gain on sale or retirement of fixed
assetsLand772,000

Land

51,273,000

Buildings and structures

110,000

Buildings and structures

3,122,000

883,000

Machinery, equipment

Totaland delivery equipment

Buildings andstructures
Machinery, equipment
and delivery
equipment

6,000

6,906,000

1,915,000
53,000(Loss on retirement of fixed assets)
Buildings andstructures

16,840,000
4,250,000

and delivery

Total

Other

284,000

7,599,000
2,010,000

structuresand delivery(Loss on retirement of fixed assets)
Rental equipment
Buildings andstructures

12,040,000
1,541,000

58,116,000

155,000

Other

304,000
15,427,000

605,000

equipment
Land

1,915,000

Other

53,000(Loss on retirement of fixed assets)
Rental equipment

Machinery, equipment

Total
40,181,000

Buildings andMachinery, equipment

equipment

equipment
Other2,428,000

and delivery

Machinery, equipment*3. Loss on sale or retirement of fixed(Loss on sale of fixed assets)

Land

605,000

Other

57,930,000

assets.

(Loss on sale of fixed assets)

Land

Rental equipment*3. Loss on sale or retirement of fixed
assets.

(Loss on sale of fixed assets)

3,528,000

Other
Total

assets.

509,379,000
515,384,000

4,742,000*3. Loss on sale or retirement of fixed

203,769,000

Employees retirement
benefit expense

6,000

Total

Employee salaries andwages
Depreciation expense
Rents
Transfer to allowancefor doubtful accounts
Transfer to accrued
bonuses to employees

2,750,000

assetsLand

Prior Consolidated Fiscal Year
(From November 1, 2004
to October 31, 2005)

Buildings andstructures

38,767,000
5,623,000

Machinery, equipment
and delivery

8,855,000

equipment
Other

Total

33,449,000
147,388,000

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 33

Prior Consolidated Fiscal Year
Interim Period(From November 1, 2004
to April 30, 2005)*4.

──────

Current Consolidated Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)*4.

Impairment loss

In

the

*4.

consolidated

interimperiod,Prior Consolidated Fiscal Year
(From November 1, 2004
to October 31, 2005)

fiscalthe──────

year

Company

incurred an impairment loss on thefollowing asset group.
LocationUse

Muroran,
Hokkaido and 5

Dormant

Land

asset

other locations

Asset

Asset

groupings

used

by

the

Company to apply asset impairment
accounting

are

based

on

the

smallest unit for which profitability
canbeSpecifically,

determined
dormant

regularly.
assetsaregrouped using the assets for each
property.
For certain dormant assets forwhich the asset value was less thanbook value, the Company reduced
book value to the recoverable value,
and accounted for the reduction as
an impairment loss (¥594,568,000)
under

extraordinary

losses.

This¥594,568,000 was for land.
The

recoverable

value

for

this

asset group is measured according
to net sales price, and the land isevaluated using the inheritance tax
assessment value based on the landtax

assessment

value

or

other

amount as a base.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 34

(Notes to the Interim Consolidated Statements of Cash Flows)
Prior Consolidated Fiscal Year
Interim Period(From November 1, 2004
to April 30, 2005)
Relationships

betweeninterimCurrent Consolidated Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)
Relationships

betweeninterimPrior Consolidated Fiscal Year
(From November 1, 2004
to October 31, 2005)
Relationships between fiscal year

period ending balance for cash andperiod ending balance for cash andendingequivalents and amounts for items

equivalents and amounts for items

equivalents and amounts for items

shown on the interim consolidated

shown on the interim consolidated

shownbalance sheet

balance sheet

consolidated balance sheet(As of April 30, 2005)(As of April 30, 2006)

balance
on

the

for

cash
fiscalandyear(As of October 31, 2005)

18,839,080,000

Cash and equivalents

21,065,337,000

Cash and equivalents

14,111,882,000

Term deposits with amaturity longer than 3months-8,019,000

Term deposits with amaturity longer than 3months- 3,018,000

Term deposits with amaturity longer than 3months- 3,018,000

Items considered to be

18,831,061,000

Items considered to be

21,062,318,000

Items considered to be

14,108,863,000

Cash and equivalents

cash and equivalents

cash and equivalents

cash and equivalents

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 35

V Business Segment Information(Segment Information by Type of Business)
Prior interim consolidated accounting period (From November 1, 2004 to April 30, 2005)(Unit: Yen thousand)Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

Total(1) Sales to outside customers

29,849,040

3,062,334

215,408

33,126,783(2) Sales or transfers between
related segments

−

−

−

−

Total

29,849,040

3,062,334

215,408

33,126,783− 33,126,783

Operating expenses

28,671,849

3,038,434

204,459

31,914,743- 79,242 31,835,501

Operating income

1,177,190

23,90010,9481,212,039

Eliminations
or entire Consolidated
company

Revenues− 33,126,783−

79,242−

1,291,282(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the type of labor and products,
the nature of the business and the business markets.
2. Principal products, by businessBusiness

Principal products

Construction equipment
rentals

Construction equipment such as hydraulic shovels, generators,
temporary construction materials, construction safety equipment,
temporary modular housing units

Steel sales

Steel bar, sheet steel, steel products such as round bar, steel scrap

Information products andother businesses

Computers and peripheral devices, telecommunications-related
equipment, microturbine generators

Interim consolidated accounting period under review (From November 1, 2005 to April 30, 2006)(Unit: Yen thousand)Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Sales to outside customers

31,241,904

3,058,485

219,797

34,520,187−

34,520,187(2) Sales or transfers between
related segments

−

−

−

−

−

−

Total

31,241,904

3,058,485

219,797

34,520,187−

34,520,187

Operating expenses

28,499,481

3,045,813

197,837

31,743,132- 96,017

31,647,114

Operating income

2,742,422

12,671

21,9602,777,054

96,0172,873,072

Total

Eliminations
or entire Consolidated
company

Revenues(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the type of labor and products,
the nature of the business and the business markets.
2. Principal products, by businessBusiness

Steel sales

Principal products
Construction equipment such as hydraulic shovels, generators,
temporary construction materials, construction safety equipment,
temporary modular housing units, special rustproof and waterproof
shields
Steel bar, sheet steel, steel products such as round bar, steel scrap

Information products andother businesses

Computers and peripheral devices,
equipment, microturbine generators

Construction equipment
rentals

telecommunications-related

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 36

Prior consolidated fiscal year (From November 1, 2004 to October 31, 2005)(Unit: Yen thousand)Steel sales
business

Information
products
businessand otherbusinesses

Total

57,844,580

5,699,737

430,894

63,975,212−

63,975,212

−

−

−

−

−

−

Total

57,844,580

5,699,737

430,894

63,975,212−

63,975,212

Operating expenses

56,640,650

5,675,002

410,775

62,726,427- 155,586

62,570,841

Operating income

1,203,930

24,734

20,1191,248,784

155,586

1,404,371

Construction
equipment
rentalbusiness(1) Sales to outside customers(2) Sales or transfers between
related segments

Eliminations
or entire Consolidated
company

Revenues(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the type of labor and products,
the nature of the business and the business markets.
2. Principal products, by businessBusiness

Principal products

Construction equipment
rentals

Construction equipment such as hydraulic shovels, generators,
temporary construction materials, construction safety equipment,
temporary modular housing units, special rustproof and waterproof
shields

Steel sales

Steel bar, sheet steel, steel products such as round bar, steel scrap

Information products andother businesses

Computers and peripheral devices,
equipment, microturbine generators

telecommunications-related(Segment information by location)
The Company does not report segment information by location because the Company did not haveany consolidated subsidiaries or important offices located in countries or regions outside of Japan
during the prior interim consolidated accounting period, the interim consolidated accounting period
under review and the prior consolidated fiscal year.

(Foreign sales)
The Company did not have any foreign sales during the prior interim consolidated accounting period,
the interim consolidated accounting period under review and the prior consolidated fiscal year.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 37

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

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

Prior Consolidated Fiscal Year
(From November 1, 2004
to October 31, 2005)

1. Finance lease transactions except

1. Finance lease transactions except

1. Finance lease transactions except

for leases that transfer ownershipfor leases that transfer ownershipfor leases that transfer ownershipof the property to the lessee.

of the property to the lessee.

of the property to the lessee.

(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

and(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

and(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

andoutstanding balance at the end

outstanding balance at the end

outstanding balance at the endof the interim periodof the interim periodof the fiscal year accounting
periodPlease refer to Annex B

Please refer to Annex C(2) Outstanding balance of future(2) Outstanding balance of future(2) Outstanding balance of futurelease payments at the end oflease payments at the end oflease payments at the end of

Please refer to Annex A

After one year
Total

the period

the interim period

the interim period
Within one year

5,839,307,000

Within one year

17,883,217,000

After one year

23,722,525,000

Total

6,217,624,000

Within one year

5,777,918,000

15,764,380,000

After one year

17,311,719,000

21,982,005,000

Total

23,089,637,000(3) Amount of lease payments,(3) Amount of lease payments,(3) Amount of lease payments,

depreciation expense anddepreciation expense anddepreciation expense andinterest expenseinterest expenseinterest expense

Lease payments

3,452,747,000

Lease payments

3,173,021,000

Lease payments

6,569,358,000

Depreciation expense

3,152,562,000

Depreciation expense

2,896,195,000

Depreciation expense

5,959,692,000Interest expense

423,232,000(4) Accounting method for amountInterest expense

359,123,000(4) Accounting method for amountInterest expense

772,799,000(4) Accounting method for amountequivalent to depreciationequivalent to depreciationequivalent to depreciation

expenseexpenseexpenseSame as at left

Same as at left

(5) Accounting method for amount(5) Accounting method for amount(5) Accounting method for amountequivalent to interest expenseequivalent to interest expenseequivalent to interest expense

Same as at left

Same as at left

Straight-line depreciation
using the lease term as thedepreciable life and zero
residual value.

Interest method using thedifference between total lease
payments and the acquisition
price of the lease property,
allocated to each year.
2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

Within one year

1,793,354,000

Within one year

1,922,375,000

Within one year

1,664,503,000

After one year

4,063,870,000

After one year

4,887,972,000

After one year

3,837,936,000

Total

5,857,224,000

Total

6,810,348,000

Total

5,502,439,000

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 38

AnnexA
Acquisition
price（¥’000）36,156,017

12,377,018

23,778,999

Other assets

457,485

241,637

215,848

36,613,503

12,618,656

23,994,847

B

Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

37,404,823

15,152,877

22,251,945

Other assets

317,756

183,501

134,255

37,722,579

15,336,379

22,386,200

Total

Annex

Outstandingbalance（¥’000）Rental assets

Total

Annex

Accumulated
depreciation（¥’000）C
Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

37,626,285

14,078,793

23,547,492

Other assets

350,675

196,156

154,519

37,976,961

14,274,949

23,702,011

Total

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 39

VII

Notes Related to Negotiable Securities
Prior interim consolidated accounting period (As of April 30, 2005)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Yen thousand)Prior interim consolidated accounting period (As of April 30, 2005)
Acquisition price

Balance on the interim
consolidated balance sheet

1,271,237(1) Stock

2,785,762

Difference

1,514,489(2) Bonds−−−

b. Corporate bonds

−

−

−

c. Other−−−(3) Other negotiable securities

1,012,213

987,534- 24,679

Subtotal

2,283,486

3,773,296

1,489,810

a. Government bonds

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousand)Prior interim consolidated accounting period(As of April 30, 2005)
Amount shown on the interim consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter
stocks)Other

377,139108,218

Interim consolidated accounting period under review (As of April 30, 2006)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Yen thousand)Interim consolidated accounting period under review (As of April 30, 2006)
Acquisition price

Balance on the interim
consolidated balance sheet

Difference

1,618,914

6,101,853

4,482,939

a. Government bonds

−

−

−

b. Corporate bonds

−

−

−

c. Other−−−(3) Other negotiable securities

123,000

127,610

4,610

Subtotal

1,741,914

6,229,463

4,487,549(1) Stock(2) Bonds

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousand)Interim consolidated accounting period under review(As of April 30, 2006)
Amount shown on the interim consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter
stocks)Other

229,400
87,644

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 40

Prior consolidated accounting fiscal year (As of October 31, 2005)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Yen thousand)Prior consolidated accounting fiscal year (As of October 31, 2005)
Acquisition price

Balance on the interim
consolidated balance sheet

Difference

1,643,538

4,431,987

2,788,449

a. Government bonds

−

−

−

b. Corporate bonds

−

−

−

c. Other−−−(3) Other negotiable securities

998,478970,084- 28,394

Subtotal

2,642,016

5,402,071

2,760,055(1) Stock(2) Bonds

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousand)Prior consolidated accounting fiscal year
(As of October 31, 2005)
Amount shown on the consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter
stocks)

Other

VIII

239,050
106,935

Notes Related to Derivative Transactions
Prior consolidated fiscal year interim period (As of April 30, 2005)
Because it applies hedge accounting, the Company had no material items to report.

Consolidated fiscal year interim period under review (As of April 30, 2006)
Because it applies hedge accounting, the Company had no material items to report.

Prior consolidated fiscal year (As of October 31, 2005)
Because it applies hedge accounting, the Company had no material items to report.

Fiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 41

(Per Share Information)
PeriodCategory
Net assets per share
Interim period (fiscal year)
net income per share
Net

incomepercommonstock

adjustment

for

share

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

Current Consolidated
Prior Consolidated Fiscal
Fiscal Year Interim Period
Year(From November 1, 2005 (From November 1, 2004
to October 31, 2005)
to April 30, 2006)¥1,108.32¥1,181.45¥1,120.76¥15.53¥35.12¥11.57

─

─

─

of

after
potential

ordinary shares
The Company has notreported net income pershare of common stock
after
adjustment
for
potential ordinary sharesbecause it does not haveany potential shares thatwould have a dilution
effect.

The Company has notreported net income pershare of common stock
after
adjustment
for
potential ordinary sharesbecause it does not haveany potential shares thatwould have a dilution
effect.

The Company has notreported net income pershare of common stock
after
adjustment
for
potential
ordinaryshares because it does
not have any potential
shares that would havea dilution effect.

(Note) The basis for calculating interim period (fiscal year) earnings per share is as follows.
PeriodCategory
Interim period (fiscal year)
net income (¥ ‘000)
Amountnotattributedcommonstock

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

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

463,684

1,048,470−−

shareholders

352,6237,300(¥ ‘000)(Amount

fordirectors

andauditors' bonuses based on

(−)

(−)

(7,300)463,684

1,048,470

345,323

29,857,851

29,849,847

29,856,334

appropriation of earnings)
Interim period (fiscal year)
net

incomerelatedtocommon stock (¥ ‘000)
Averagenumberofoutstanding shares during theperiodFiscal Year Ending October 2006 Interim Accounting Bulletin (Consolidated)

P. 42