Fiscal Year ending October 31, 2001

Interim Financial Statements Bulletin (Consolidated)
June 14, 2001
Listed Company Name

Kanamoto Company, Ltd.

Listing Exchanges

Company Code Number

9678

Tokyo Stock Exchange
Sapporo Stock Exchange

Inquiries

Person to Contact

Corporate Officer and Division Manager, Accounting Division

Name

Nobuhito Utatsu

TEL (011)-209-1600

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

June 14, 2001

SEC Accounting Standards

The Company has not adopted SEC accounting standards

1. Consolidated Operating Results for the Interim Period ended April 30, 2001 (Nov. 1, 2000 – Apr. 30, 2001)(1) Consolidated Operating Results(Numbers less than one million yen have been rounded down)
Revenues
Six months endedApril 30, 2001
Six months endedApril 30, 2000
Fiscal year ended
October 31, 2000

Operating Income

Ordinary Income

Millions of yen％

Millions of yen％

Millions of yen%

32,640

−

1,637

−

2,059

−

−

−

−

−

−

−

61,996

3,042

Net Income

Net Income per Share ofCommon Stock
Yen

2,548
Net income per share on a
fully diluted basis
YenMillions of yen％
Six months ended
522
−
17.30
14.20
April 30, 2001
Six months ended−−−−April 30, 2000
Fiscal year ended
1,360
45.51
36.35
October 31, 2000
Notes 1. Investment profit or loss accounted for by the equity method
Six months ended April 30, 2001−
Six months ended April 30, 2000−
Fiscal year ended October 31, 2000−
2. Average number of shares (consolidated) outstanding during the period
Six months ended April 30, 2001
30,228,376 shares
Six months ended April 30, 2000
− sharesFiscal year ended October 31, 2000
29,894,781 shares
3. Are there any changes in accounting method?
No
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

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1

(2) Consolidated Financial Position
Total Assets
Millions of yen

Shareholders’EquityMillions of yen

Shareholders’Equity Ratio％

Shareholders’Equity per ShareYen

Six months ended
106,181
31,751
29.9
April 30, 2001
Six months ended−−−April 30, 2000
Fiscal year ended
103,41230,78129.7
October 31, 2000
Notes 1. Number of shares (consolidated) issued and outstanding at end of period
Six months ended April 30, 2001
30,236,951 shares
Six months ended April 30, 2000
−shares
Fiscal year ended October 31, 2000
30,215,864 shares

1,050.09−
1,018.72(3) Consolidated Cash Flows
Cash Flow fromOperating
Activities
Millions of yen
Six months endedApril 30, 2001
Six months endedApril 30, 2000
Fiscal year ended
October 31, 2000

Cash Flow from
Investing
Activities
Millions of yen

Cash Flow from
Financing
Activities
Millions of yen

Balance of Cash andEquivalents at End
of Period
Millions of yen

7,869

– 268

– 8,243

15,780––––10,616– 1,826–8,544

16,422(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(Excluded)
Equity method accounting (new companies)
0(Excluded)00

2. Projected Consolidated Operating Results for the Fiscal Year Ending October 31, 2001
(November 1, 2000 - October 31, 2001)
Revenues

Ordinary Income

Millions of yen
Full year

Millions of yen

64,500

Reference: Projected net income per share of common stock (Full year)

3,040

Net Income
Millions of yen
420¥13.89

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .2

I

Current conditions of the Company’s group

The Kanamoto Company group is comprised of the parent company, seven subsidiaries and three
affiliated companies. The business activities of the group are centered on the rental and sale ofconstruction equipment, temporary construction materials, safety equipment and other products, thesale of steel materials, and the rental and sale of information technology equipment (computers andperipheral equipment). The Company is also undertaking development of electric power supply andservice businesses and food and beverage businesses as supplemental business activities. An explanationof each company’s position with regard to its relevant business is provided below.

〔Businesses related to the Construction Equipment Rental Division〕
The Company’s rental division, together with Taniguchi Co., Ltd. (a subsidiary company) and Kanamoto
Shikoku Co., Ltd. (a subsidiary company), is engaged in the rental and sale of construction equipment
and machines used for construction. Taniguchi Co., Ltd. and Kanamoto Shikoku Co., Ltd. operate indesignated marketing areas, and borrow rental equipment assets from the Company as needed in order
to meet customer demand.
SRG Kanamoto Co., Ltd. (a subsidiary company) operates a rental business that provides temporary
materials for construction use. Assist Co., Ltd. (a subsidiary company) is engaged in the rental offurniture and fixtures and safety products for the construction industry. The Company and TaniguchiCo., Ltd. borrow rental assets from SRG Kanamoto Co., Ltd. and Assist Co., Ltd. as needed to rent totheir own customers.
In addition to the above companies, Kanatech Co., Ltd. (a subsidiary company) develops, manufacturesand sells modular housing units for temporary use, and Polyshield Services Co., Ltd. (a subsidiarycompany) is engaged in the sale and construction of specialized rust-proof, water-proof shields.
〔Businesses related to the Steel Sales Division〕
The Company’s Steel Sales Division sells steel products and construction-related manufactured goods.
The Company has no subsidiaries or affiliated companies that are related to this division.
〔Businesses related to the Computer and Peripheral Equipment Rental Division and other businesses〕
As the Company’s information and telecommunications-related division, Kanamoto’s Computer andPeripheral Equipment Rental Division is engaged in the rental and sale of computers, computer
peripheral equipment and equipment for the development of computer products. Companies affiliatedwith this division include Newtech Co., Ltd. (an affiliated company), which primarily manufactures andsells computer peripheral equipment such as RAID (large volume, high speed external storage products),
and Active Technology Co., Ltd. (an affiliated company), which is principally engaged in the sale oftelecommunications-related equipment such as wireless LAN devices.
As supplemental businesses, Active Power Co., Ltd. (an affiliated company) is engaged in the sale ofmicroturbine generators, and supplies these products to the Company, among others. Providence
Brewery Co., Ltd. (a subsidiary company) brews and sells regional beers.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .3

〔Relationship of the operating businesses〕
Kanamoto Co., Ltd.
Construction Equipment
Rental Division
Steel Sales Division
Computers and Peripheral

Construction-related Businesses(Consolidated companies)
Taniguchi Co., Ltd.
Assist Co., Ltd.
SRG Kanamoto Co., Ltd.
Kanatech Co., Ltd.

(Non-consolidated companies)
Polyshield Services Co., Ltd.
Kanamoto Shikoku Co,, Ltd.

Equipment Division

Computer and Peripheral Equipment-related and Other Businesses

Computer and peripheral
equipment-related businesses(Affiliated companies)※
Newtech Co., Ltd.
Active Technology Co., Ltd.

Other Businesses(Consolidated company)
Providence Brewery Co., Ltd.
(Affiliated company) ※Active Power Corp.

(Note) ※ Indicates affiliated companies to which equity method accounting is not applied.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .4

II

Management policies and operating results

1. Basic policies concerning business management and distribution of earnings
Kanamoto Company’s basic mission is to achieve successful performance that produces maximum
satisfaction for all stakeholders of the Company, including customers, shareholders and the local
community. The Company undertakes its businesses based on a fundamental management policy
embodied in the phrase, “constantly seek innovation and move forward based on a spirit of independence
and self-reliance.”
The Company’s group will further strengthen consolidated group management and continue to takeactions adapted to the current environment, by seeking new customer needs and establishing new
information and services focused around the construction equipment rental business, the mainstay of
the Company’s principal business activity.
In order to ensure the long-term, integrated expansion of shareholders’profits, Kanamoto Company
continues to focus comprehensively on both capital investments based on its medium-term profit planand on profitability, dividend trend and a sound financial position. The Company also remains
committed to its policy of stable dividend growth.
To accomplish these goals, Kanamoto Company focuses on the importance of cash flow and places
particular importance on the growth of EBITDA (earnings before interest, taxes and depreciation andamortization).
2. Medium to long-term corporate management strategy
The market for construction equipment rentals is greatly affected by the trend in construction
investment. In this respect, we believe that a review of public works is inevitable because thegovernment is expected to undertake fiscal reform measures in the future, which will be a negative
factor for the Kanamoto group.
In contrast to this negative outlook, however, companies in the construction industry are engaged inall-out efforts to rationalize their management. Two objectives that are receiving particular emphasis
are “debt reduction” and “asset shrinkage.” Because of the trend in the construction industry to limit
capital investment and lighten balance sheets against this backdrop by utilizing outsourcing, thereliance on construction equipment rentals has increased. According to the Japan Civil Engineering
Association, the percentage of all equipment used at construction sites that was rented during Fiscal
2000 edged downward by 0.9% points to 54.3%. Nevertheless, because 42 of the 61 categories ofequipment covered by the survey are highly dependent upon rentals, as a basic trend we believe the useof equipment rentals will continue to rise.
At Kanamoto, we will use the following two strategies in each region to take the maximum advantage ofthis positive trend.

< Dominance >As its primary strategy, Kanamoto seeks to achieve dominance in its existing sales territories. Under
this strategy, Kanamoto aims for synergistic effects with existing branches by opening numerous
small-scale offices with strong local community ties, operated with a small staff and at minimum
expense. Over the past year, the Company opened 15 branch offices in Hokkaido and the Tohoku region
using this technique, which has succeeded in achieving the goal set by Kanamoto.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .5

< Alliances >At the same time, in western Japan where the Company does not have a sales branch network,
Kanamoto is actively forming alliances with other firms operating in the construction equipment rental
business in each region.
Kanamoto has already concluded business tie-ups in leading companies in Okinawa, southern Kyushu
and northern Kyushu (Machida Kikou Co., Ltd., Daiichi Machine Industries Co., Ltd. and Kyushu
Kensan Group), to which Kanamoto is supplying rental equipment. In Shikoku, Kanamoto established
Kanamoto Shikoku Co., Ltd. a construction equipment rental company, as a joint venture with Tadano,Ltd., a leading manufacturer of cranes and high work equipment. Kanamoto’s alliance with KomatsuGroup is also gradually moving into full operation. Finally, by the end of current year Kanamoto intends
to convert Daiichi Machine Industries Co., Ltd. into a subsidiary company.
Kanamoto is also continuing its venture business support activities, in order to nurture new businesses
that will follow the growth path of its construction equipment rental business. This is the major objective
for development of the Company’s new businesses. Kanamoto makes investments in venture businesses
not only for the purpose of capital gains from a new public offering, but also so these companies willcontribute to the Company’s earnings through dividends and profits from the distribution of new
products. Among the companies that Kanamoto has invested in so far, those developing microturbine
electrical generators and VoIP (Internet telephony) technology show strong promise.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .6

2. Operating Results(1) Summary of interim period operating results (November 1, 2000 – April 20, 2001)〔External environment〕
During the interim period under review, the business sentiment at Japanese firms began to deteriorate
for the first time in 27 months, as evidenced by the Bank of Japan’s Diffusion Index (DI) for April. In
addition, Japan’s economic climate presented increasingly serious aspects as stock prices fell along withan economic slowdown in the U.S. In the construction industry, the principal customer for Kanamoto’sconstruction equipment rental business, comparatively expansive public-works spending wasmaintained with a second supplementary budget approved in November 2000. Nevertheless, nationwide
there is a general downward trend in the number of orders received as the central and local governments
review public works projects. Private sector demand as well is showing a trend towards lower capital
investment, resulting in growing price competition in the face of scarce demand. Overall, the industry
environment was severe.
〔Conditions for the Company（Unconsolidated）〕
For the period under review, Kanamoto’s revenue rose by 6.1% over the same period of the prior year,
and ordinary income rose 14.6%. Revenues for each operating division are discussed below.
Construction Equipment Rental Division
The nationwide downward trend in construction spending that was exemplified by declining orders for
public works construction rekindled all-out competition among construction equipment rental companies.
Rental equipment prices were also on a downward path. Kanamoto’s Construction Equipment Rental
Division, however, continued to achieve strong results as the result of marketing synergy achieved
between 15 small-scale branch offices established in the prior fiscal year and its existing sales offices,which enabled Kanamoto to dominate the regions in which it operates.
By region, rental revenue rose 11.1% in Hokkaido as a result of increasing the number of small-scalebranches. Revenue growth in the Tohoku area was lower at 2.3%, reflecting the drop in public spending
in that region. Revenue increased 3.0% in the Kanto-Shinetsu region, thanks to the recovery of demandin the Tokyo metropolitan area. In the Kinki-Chubu region, revenue surged by 12.8% as the Company’salliance strategy in western Japan proved successful. As a result, a total rental equipment revenue
increased by 6.9%. Incidentally, during the interim period under review Kanamoto instituted changes to
its local operating division organization.
With regard to equipment sales handled by each division, despite difficulties in increasing sales of usedequipment in each local business region the Construction Equipment Rental Division attained sales ofused construction equipment that were 26.6% above the Company’s initial projection. This reflected theestablishment of the Used Products Sales Division in February, which enabled the division as a whole tomaintain used equipment sales at the prior year level. Total rental and sales revenue increased by 5.4%.
During the interim period the Company established one new branch in Hokkaido, one new branch in the
Tohoku area and one new branch in the Kinki-Chubu area.
In the Steel Sales Division, sales were up 12.3% compared to the prior year as the steel market
completed a round of inventory adjustments and private sector demand in the Hokkaido region showed asmall amount of growth.
The Computer and Peripheral Equipment Rental Division achieved a 14.4% increase in rental revenues
as the result of steady orders for new model workstations. Reduced investment in IT, however, led to an
11.8% decline in sales revenue. For the division as a whole, revenue edged downward by 1.4% comparedto the same period of the prior fiscal year.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .7

〔Business conditions at consolidated subsidiaries〕
Taniguchi Co., Ltd. is building a solid market share in the Shiribeshi region of Hokkaido. The company
increased both revenue and profits during the business period and continued to achieve steady growth.
Assist Co., Ltd. (Hokkaido) increased both revenue and earnings, as it strengthened its office network by
opening sales offices in Kushiro and Takikawa. SRG Kanamoto Co., Ltd., which closed its books on its
second fiscal year since being established, was able to expand its sales network and steadily improve its
share of the market for temporary construction materials rentals. Kanatech Co., Ltd., which began
operations in October 2000, achieved good operating results that were in line with its initial businessplan.
Providence Brewery Co., Ltd. moved to reform its profit structure through actions such as consigning
management of the restaurant adjacent to it local brewery in Muroran, Hokkaido, to an outside firm.
〔Other business operating results〕
Successive reductions of electric power rates by electric utilities created a situation that made it morechallenging to demonstrate to users the benefits of the microturbine electrical generators manufacturedby the U.S. firm Capstone Corporation. Nevertheless interest is high among users who are concerned
about environmental problems, and the number of inquiries is also gradually increasing. Kanamoto has
begun to deliver units that will be used to provide regular power supply as well as standby emergency
power.
As a result of the above activities, interim period consolidated revenues were ¥32,640 million. Ordinary
income was ¥2,059 million, and interim period net income was ¥522 million.

(2) Outlook for the full fiscal year (Business period ending October 2001)〔Business environment〕
Although public-works spending of ¥7,251.1 billion for the Fiscal 2001 budget was maintained at thelevel of the prior fiscal year’s initial budget, under the new Koizumi administration’s intent to pursue“structural reforms with no sanctuaries” the central government will continue the reassessment ofpublic works begun last year, and move towards resolutely carrying out the abolition of public
corporations that have fulfilled their initial mission. Although the government’s structural reforms are
expected to lead to economic recovery in the long term, it appears that Japan’s economy will continue toface tough going for the immediate future considering the slump in personal consumption and private
capital investment, the high unemployment rate and the level of corporate bankruptcies.
Under these circumstances, it is clear that construction firms will continue to increase their use of
construction equipment rentals in order to ensure earnings from the smaller number of revenue sources.
This means there is still substantial room for construction equipment rentals to grow.
At the same time, however, the fight for survival among construction equipment rental industry firms is
becoming increasingly intense day by day, requiring considerable effort just to maintain the level of
earnings.
〔Company response (including consolidated subsidiaries)〕
As the construction industry takes steps to streamline operations, the role achieved by construction
equipment rentals as an important outsourcing industry can be expected to take on even greater
importance on a nationwide scale.
As a result, Kanamoto Company also enjoys numerous factors that will enable it to grow. These include
expanding operations into business territories where the Company has not opened sales branches,
responding more to private sector construction demand, and strengthening operations in theSummary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .8

construction equipment sector. Because considerably more time will be required to cultivate new corebusinesses through venture business support activities, Kanamoto will seek to further secure theearnings generated by its construction rental business, which remain the Company’s principal business.
Accordingly, Kanamoto’s primary response to current business conditions is to strengthen this division.
Since the beginning of the Company’s current fiscal year, the Construction Equipment Rental Division
reorganized its operations and established several new operations as described below.
① Reorganized regional business divisions
In order to rationalize operations, the division restructured its operating divisions from five regions,previously organized into Hokkaido, Tohoku, the Sea of Japan, Kanto and Kinki-Tokai to follow
government administrative divisions, into four divisions serving the Hokkaido, Tohoku, Kanto-Shinetsu
and Kinki-Chubu areas.
② Established new division to improve customer service
The division established a Quality Assurance Department in order to improve the quality of theCompany’s services on a uniform basis, a New Products Department that is developing and adopting new
rental product groups, and a Used Products Sales Division that is responsible for the sale of used
construction equipment each year.
From the perspective of marketing, the Construction Equipment Rental Division will pursue its current
strategy to further increase its dominance in existing market areas while pursuing its alliance strategy
in western Japan. The Company plans to establish eight new branch offices in order to strengthen its
sales base in existing markets. In addition, Kanamoto Shikoku Co., Ltd. began business activities inJune.
In other actions, Kanamoto has responded promptly to electronic commerce via the Internet, which
Japan’s construction industry has begun utilizing. The Company’s Used Products Sales Division inparticular maintains close cooperation with the maintenance sections at all of the Company’s branches,and has begun selling used equipment through Internet auctions.
Finally, the Company set up a Market Development Division to implement broad, organic management
activities that extend across all of the Company’s operating divisions, and build the Company’sknowledge management infrastructure.
The Steel Sales Division and the Computer and Peripheral Equipment Rental Division will continue toexpand the quantity of new products they handle respectively, and work to maintain earnings. The
Company’s consolidated subsidiaries, which share many links with the Construction Equipment Rental
Division, will pursue further cooperation with the Company’s sales activities and strive to improve
operating efficiency. In its other business activities, Kanamoto will continue its efforts to increase salesof microturbine electrical generators.
Based on these fundamental approaches, the consolidated Kanamoto group will also aim at bolstering
the financial position of each firm and maintaining a solid financial foundation, and focus on improving
the business development capabilities of the entire group.
〔Projected consolidated operating results for the fiscal year ending October 2001〕
Total revenues are projected to increase by 4.0% over the prior fiscal year to ¥64,500 million. Ordinary
income will climb by 19.3% to ¥3,040 million, and net income will decline by 69.1% to ¥420 million,
reflecting the lump-sum write-off of a valuation difference of approximately ¥1,982 million (insufficient
reserves) that was incurred with the introduction of post-employment retirement benefit accounting.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .9

III

1.

Interim Consolidated Financial Statements
Interim Consolidated Balance Sheets(Amounts have been rounded down to the nearest thousand yen)
PeriodEnd of Current Consolidated
Prior Fiscal Year Summary
Fiscal Year Interim Period
Consolidated Balance Sheet(As of April 30, 2001)(As of October 31, 2000)
Percent
AmountPercent
AmountCategory(Assets)
Current Assets
Cash and deposits※3

15,784,766

16,432,624

Notes and accounts receivable,
trade※1,2,624,047,536

23,331,420

272,882746,755

Inventory

1,368,469

826,210

Construction equipment

3,378,866

3,691,573

Deferred tax assets

222,143

103,282

Other current assets

769,201

434,903

Allowance for doubtful accounts– 200,367– 173,786

Total Current Assets

45,643,498

Negotiable securities

43.0

45,392,983

43.9

Fixed Assets
Tangible Fixed Assets※3

Rental equipment

20,336,553

18,825,832

8,182,337

8,384,950

Machinery, equipment and delivery
equipment

1,338,636

1,401,100

Land

24,181,603

24,181,603

Construction in progress

110,100

338,959

Other tangible fixed assets

230,047

228,985

Total Tangible Fixed Assets

54,379,278

51.2

53,361,432

51.6

72,5290.1

62,6580.1

Buildings and structures※4

Intangible Fixed Assets
Total Intangible Fixed Assets
Investments and Other Assets
Investment securities

4,560,930

2,960,312

Deferred tax assets

609,073

485,310

Other assets

1,495,262

1,380,019

Allowance for doubtful accounts– 579,240– 230,181

Total Investments and Other Assets

6,086,026

5.7

4,595,461

4.4

Total Fixed Assets

60,537,834

57.0

58,019,552

56.1

106,181,333

100.0

103,412,535

100.0

Total Assets

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 0(Amounts have been rounded down to the nearest thousand yen)
End of Current Consolidated
Prior Fiscal Year Summary
PeriodFiscal Year Interim Period
Consolidated Balance Sheet(As of April 30, 2001)
AmountPercent

Category(As of October 31, 2000)
AmountPercent(Liabilities)
Current Liabilities
Notes and accounts payable, trade13,324,434

11,696,005

516,525

4,726,615

7,889,407

7,793,285

1,263,445

203,817538,760

502,903

Accounts payable, other8,349,533

7,607,164

Other current liabilities

580,146

418,080

Total Current Liabilities

32,462,253※6

Short-term bank loans
Long-term bank loans due within
one year※3

Corporate taxes payable
Accrued bonuses to employees

30.6

32,947,871

31.9

Long-term Liabilities
Straight bonds

5,277,692

5,277,692

Convertible bonds

9,733,000

9,796,000

13,293,542

13,230,142

273,522

287,454

1,018,988−

Long-term accrued expenses

12,262,848

11,023,476

Total Long-term Liabilities

41,859,592

39.4

39,614,765

38.3

Total Liabilities

74,321,846

70.0

72,562,637

70.2

108,030

0.1

68,261

0.1

Common stock

8,596,080

8.1

8,591,481

8.3

Additional paid-in capital

9,719,689

9.1

9,715,111

9.4

Consolidated retained earnings

12,718,429

12.0

12,484,124

12.0

Valuation difference on otherinvestment securities

727,3230.7−−

31,761,522

29.9

30,790,717

29.7

– 93

– 0.0

– 165

– 0.0

– 9,973– 0.0– 8,915– 0.0

Total Shareholders’Equity

31,751,456

29.9

30,781,636

29.7

Total Liabilities, Minority Interests
and Shareholders’Equity

106,181,333

100.0

103,412,535

100.0Long-term bank loans※3

Retirement allowances to directors
and auditors
Accrued employees retirement
benefits(Minority Interests)
Minority interests(Shareholders’Equity)

Treasury stock
Parent company stock
subsidiaries

held

by

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 12. Consolidated Statements of Income
PeriodCategory(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year Summary
Consolidated Statement of
Income(From November 1, 1999 to
October 31, 2000)
AmountPercent
AmountPercent

Current Consolidated Fiscal
Year Interim Period(From November 1, 2000 to
April 30, 2001)

Revenues from operations
Rental revenues

21,658,504

40,376,456

Sales

10,981,724

21,620,128

Total revenues from operations

32,640,228

100.0

61,996,584

100.0

Cost of revenues from operations
Cost of rental revenues

15,625,679

29,407,688

Cost of goods sold

8,678,648

17,426,785

Total cost of revenues

24,304,327

74.5

46,834,473

75.5

Gross profit

8,335,901

25.5

15,162,111

24.5

Selling, general and administrative
expenses

6,698,161

20.5

12,119,518

19.6

Operating income

1,637,740

5.0

3,042,592

4.9

Non-operating revenues
Interest revenue

20,17247,972

Dividend income

6,786

39,486

Gain on sale of negotiable securities
Gain on sale of investment securities−
361,017

128,873−

Insurance benefits

127,103

224,685

Rents received

118,956

211,014

−

1,425

Other

139,593

123,975

Total non-operating revenues

773,629

Consolidation adjustment accountwrite-off

2.4

777,433

1.3

Non-operating expenses
Interest expense

293,706

627,344

Valuation loss on negotiablesecurities−

197,066

Bond issue expense−

147,500

Contribution to pension plan−

159,724

Other

58,161

139,474

Total non-operating expenses

351,868

1.1

1,271,109

2.1

2,059,501

6.3

2,548,916

4.1

Ordinary income
Extraordinary profits
Adjustment of prior period profit or
loss
Gain on sale or retirement of fixed
assets−42,596−

205

Guarantee of moving expenses−

131,462

Gain on sale of investment securities

−

1,561

Total extraordinary profits−−

175,825

0.3

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 2Category(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year Summary
Current Consolidated Fiscal
PeriodConsolidated Statement ofYear Interim Period
Income(From November 1, 2000 to(From November 1, 1999 toApril 30, 2001)
October 31, 2000)
AmountPercent
AmountPercent

Extraordinary losses
Loss on sale or retirement of fixed
assetsValuation loss on investment
securities
Transfer to reserve for accrued
employees retirement benefits

42,621

199,694

15,00016,351

991,011−

Total extraordinary losses

1,048,633

3.2

216,046

0.4

Income before taxes and adjustments

1,010,868

3.1

2,508,695

4.0

Corporate, local and business taxes

1,230,987

3.8

1,242,998

2.0

Adjustment for corporate and othertaxes– 762,853– 2.3– 51,884– 0.1

Minority interest in income or loss

– 19,768– 0.0

42,8290.1

Net income

522,965

1.6

1,360,411

2.2

3. Statements of Consolidated Retained Earnings

Category
Balance of consolidated retained
earnings at the beginning of theperiodReduction in consolidated retained
earnings(Amounts have been rounded down to the nearest thousand yen)
Current Consolidated Fiscal
Prior Fiscal Year Consolidated
PeriodYear Interim Period
Retained Earnings(From November 1, 2000 to(From November 1, 1999 toApril 30, 2001)
October 31, 2000)
AmountAmount12,484,124

11,704,914

Dividends

272,060

566,500

Directors and auditors’bonuses

16,60014,700Total reduction in retained earnings

288,660

581,200

Net income for the period

522,965

1,360,411

12,718,429

12,484,124

Balance of consolidated retained
earnings at the end of the period

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 3

4. Consolidated Statements of Cash Flows
PeriodCategory(Amounts have been rounded down to the nearest thousand yen)
Current Consolidated Fiscal
Prior Fiscal Year SummaryYear Interim Period
Consolidated Statement of(From November 1, 2000 to
Cash Flow
April 30, 2001)(From November 1, 1999 to
October 31, 2000)
AmountAmountCash flow from operating activities
Income before taxes and adjustments

1,010,868

2,508,695

Depreciation and amortization expense

4,372,913

8,925,928

Loss on sale or retirement of fixed assets

42,621

199,694

274,690

477,179

21,174

100,156

488,759784,842– 301,880– 909,340

Valuation loss on negotiable securities–

197,066

Valuation loss on investment securities

15,00016,351Gain on sale of negotiable securities–– 128,873

Gain on sale of investment securities– 361,017– 1,561–

147,500– 2,457– 28,358

375,640

77,84035,85723,486

1,018,988−– 13,932

8,653Interest revenue and dividend income– 26,958– 87,458

Interest expense on installment purchasesof rental assets

151,370

287,428

Interest expense

293,706

627,344(Increase) decrease in accounts receivable,trade– 716,116

2,118,674(Increase) decrease in inventory assets– 542,258

96,8601,604,956– 640,466

549,627– 452,636

Directors and auditors’bonuses paid

– 16,600– 14,700

Other, net

181,665– 303,848

Subtotal

8,456,618

14,030,456

26,95887,458Interest expense– 442,641– 904,592

Payment of corporate and other taxes– 171,359– 2,597,030

7,869,575

10,616,292

Installment purchases of assets forsmall-value rentals
Reclassification of cost of sales associatedwith disposal of construction equipment
Reclassification of cost of sales associatedwith disposal of rental assets
Expenditures for acquisition of rental
assetsBond issuance expense
Gain on redemption of corporate bonds bypurchase
Increase in allowance for doubtful
accounts
Increase in accrued bonuses to employees
Increase in accrued employees retirement
benefits
Increase in retirement allowances todirectors and auditors

Increase (decrease) in accounts payable,
trade
Increase (decrease) in accounts payable,
otherInterest and dividends received

Cash flow from operating activities

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 4

(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year Summary
Current Consolidated Fiscal
Consolidated Statement of
PeriodYear Interim Period
Cash Flow(From November 1, 2000 to
April 30, 2001)
Amount(From November 1, 1999 to
October 31, 2000)
Amount−– 5,506

5,500

200,000−

37,500−– 3,034,898−

3,145,151– 2,047,491– 814,647

2,100,406

243,454– 57,665– 140,234– 336,341– 1,445,974

82,6893,510– 15,821– 14,710– 268,724– 1,826,355– 4,210,089– 3,975,710

Funds provided by long-term bank loans

4,556,450

7,762,200

Funds used to repay long-term bank loans– 4,396,928– 7,909,668−

4,852,500– 60,543– 310,642

20,000−9,177

44,137– 3,888,227– 8,441,391

Payment of dividends to parent company– 272,060– 565,352

Funds used for other financing activities

– 985

– 943

– 8,243,207– 8,544,869– 642,357

245,067

16,422,395

16,177,328

15,780,037

16,422,395

Category

Cash flow from investing activities
Disbursements for investments in term
deposits
Revenue from redemption of term deposits
Funds provided from repayment of loans
Funds used for purchase of negotiablesecurities
Funds provided from the sale of negotiablesecurities
Funds used for the purchase of investment
securities
Funds provided from sale of investment
securities
Funds used for purchase of investments
Funds used for the purchase of tangible
fixed assets
Funds provided from the sale of tangible
fixed assets
Funds used for the purchase of intangible
fixed assets
Cash flow used for investing activities
Cash flow from financing activities
Decrease in short-term bank loans

Funds provided from the issue of straightbonds
Funds used for redemption of straightbonds
Funds provided from the issue of stock tominority shareholders
Funds provided from the issue of common
stock
Funds used for repayment of installment
obligations

Cash flow used for financing activities
Increase (decrease) in cash and equivalents
Balance of cash and equivalents at beginning of
periodBalance of cash and equivalents at end of period

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 5

5. Significant Accounting Policies for the Interim Consolidated Financial Statements(1) Companies included in the consolidation
The five subsidiary companies included in the consolidation are Taniguchi Co., Ltd., Assist Co., Ltd., SRG
Kanamoto Co., Ltd., Providence Brewery Co., Ltd. and Kanatech Co., Ltd.
In addition to the subsidiary companies listed above, Kanamoto Shikoku Co., Ltd. and Polyshield Services
Co., Ltd. have been excluded from consolidation because they are small in size and their total assets, sales,
profit or loss and retained earnings do not have a material effect on the interim consolidated financial
statements.

(2) Matters pertaining to application of equity method accounting
The Company’s investments in the two unconsolidated companies Polyshield Services Co., Ltd. andKanamoto Shikoku Co., Ltd., and in the affiliated companies Newtech Co., Ltd., Active Technology Corporation
and Active Power Corporation, have been excluded from items to which equity method accounting is applied
because their respective effect on interim consolidated net income or loss and interim consolidated retained
earnings is immaterial and these firms are not important to the Company’s overall operations.

(3) Matters pertaining to the interim period closing date for consolidated subsidiaries
The interim period closing date for all of the consolidated subsidiary companies is February 28. When
preparing the interim consolidated financial statements, the Company used the subsidiaries’ financial
statements as of February 28 and made adjustments for significant transactions that occurred between March
1, 2001 and the interim consolidated accounting date on April 30, 2001 that were deemed to have a material
effect on the interim consolidated financial results.

(4) Accounting principles and standards used for normal accounting treatment① Valuation standards and valuation methods for principal assets
a. Negotiable securities
Other negotiable securities
Securities with a market priceMarket value method based on the market price or similar prices on the interim period closing
date (The full amount of the valuation difference is charged to equity using the direct transfer tocapital method, with the disposal cost determined by the moving average method)
Other negotiable securities
Cost method, cost being determined by the moving average method
b. Appraisal standards and appraisal method for construction equipment
Amount after deduction of depreciation expense calculated according to the declining-balance methodfrom the original prices, by separate fiscal year of purchasec. Appraisal standards and appraisal method for merchandise inventories and supplies
Merchandise Inventories・・・Lower of cost or market based on the last-in, first-out method
Supplies ・・・・・・・・・・The latest purchase cost method② Depreciation methods for principal depreciable assets
a. Tangible fixed assets
The Company has adopted the declining-balance method. Buildings on land that is leased under afixed-term land lease agreement, however, are depreciated using the straight-line method using theremaining period of the fixed-term lease as the depreciable life and zero residual value. For certain
consolidated subsidiaries, the Company adopted the straight-line method for buildings and structuresacquired on or after April 1, 2000 but excluding fixtures and equipment.
b. Intangible fixed assets
Software acquired for the Company’s internal use is depreciated using the straight-line method basedon the assumed useful life for internal use (5 years).
③ Accounting standards for principal allowances and reserves
a. Allowance for doubtful accounts
The Company charges to income an amount based on actual loss experience for normal accounts, plus
an amount for projected unrecoverable amounts based on assessments of individual accounts.
b. Accrued bonuses to employees

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 6

To provide for bonuses the Company will pay to employees, the Company appropriates an amount to thereserve for the interim accounting period liability based upon the estimated amounts of bonuses andsalaries.
c. Accrued employees retirement benefits
The Company provides for employees’accrued retirement benefits based upon the projected amounts of
the liability for accrued employees retirement benefits and the value of pension assets at the end of theconsolidated fiscal year. At the end of each interim consolidated accounting period, the Company
appropriates an amount to the reserve to provide for the liability recognized during the period.
The Company charged 1/2 of the difference for a one-time change in accounting standards(¥1,982,023,000) to expenses at the end of the current fiscal year interim consolidated accounting
period.
d. Retirement allowances to directors and auditors
The Company provides for retirement allowances to directors and auditors based upon pertinent rules
and appropriated to the account proportionately based upon length of service.
④ Accounting treatment for lease transactions
For finance lease transactions except for leases that transfer ownership of the property to the lessee, rent
expenses are charged to income as payments are made.
⑤ Hedge accounting for principal hedging methods
a. Hedge transactions
The Company accounts for hedge transactions using allocations based on accounting standards forforeign currency-denominated transactions, and special rule accounting based on accounting standards
for financial products.
b. Hedge methods and hedged transactions
The Company uses currency swaps and forward transactions in order to avoid the currency fluctuation
risk related to the Company’s foreign currency-denominated straight bonds and liabilities for import
payments. The Company also uses interest swaps to avoid interest rate fluctuation risk related tointerest on bank borrowing.
c. Hedging policies
The Company’s use of derivative transactions is limited to hedging risk within the scope of theCompany’s assets and liabilities subject to market fluctuation risk.
d. Method for evaluating the effectiveness of hedges
The Company does not evaluate the effectiveness of its hedge transactions because it can assume thatits currency swap transactions and forward transactions will completely offset market fluctuations orchanges in cash flow from the time hedge begins until it is terminated. In addition, the Company’sinterest swap transactions fulfill the requirements for special rule accounting, and the Company has
elected to use this in place of an evaluation of effectiveness.
⑥ Accounting treatment of consumption tax
Consumption tax is taken out of all Statement of Income items and Balance Sheet items, except mainly forreceivables and payables.

(5) Items included in cash and equivalents on the Interim Consolidated Statements of Cash Flows
Funds included in cash (cash and equivalents) on the Interim Consolidated Statements of Cash
Flows include cash on hand, deposits that can be withdrawn on demand and highly liquid
short-term investments that mature within three months of the date of acquisition and which can beeasily converted into cash and that have minimal risk of a change in price.
(Supplemental information)(Accounting for employees retirement benefits)
The Company has adopted the accounting standards for post-employment benefits (“Opinions on
Setting Standards for Post-employment Benefits,”Business Accounting Council, June 16, 1998)
from the interim period of the current consolidated fiscal year. As a result, the Company’s expense
for accrued employees retirement benefit increased by ¥1,018,987,000, and ordinary income
decreased by ¥27,976,000 and income before taxes decreased by ¥1,018,987,000, compared towhat they would have been had the accounting standards used in the prior fiscal year been
applied.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 7

(Accounting for financial instruments)
The Company has adopted the accounting standards for financial instruments (“Opinions on
Setting Standards for Financial Instruments,”Business Accounting Council, January 22, 1999)
from the interim period of the current consolidated fiscal year. By adopting the standards theCompany changed the negotiable securities valuation standards applied to other negotiablesecurities that have market prices from the lower of cost or market method based on the moving
average method to cost method, cost being determined by the moving average method.
As a result, the Company’s ordinary income was unchanged and interim period income before
taxes and adjustments increased by ¥45,174,000, compared to what it would have been had theaccounting standards used in the prior fiscal year been applied.
In addition, the Company reviewed its holding objectives for negotiable securities held at the
beginning of the fiscal year, and has disclosed the securities included in other negotiablesecurities that mature within one year as negotiable securities in current assets, and has
disclosed all other securities as investment securities. As a result, the Company’s negotiablesecurities accounted for as current assets were reduced by ¥746,755,000 and its investment
securities increased by ¥746,755,000, compared to what they would have been had theaccounting standards used in the prior fiscal year been applied.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 8

6. Notes to the Financial Statements(Notes to the Interim Period Consolidated Balance Sheets)
PeriodCategory

End of Current Consolidated
Fiscal Year Interim Period(As of April 30, 2001)

1. Discount on notes receivable, trade162,645,000

126,279,000

270,103,000

141,558,000

48,748,131,000

49,288,766,000

2. Balance of notes receivable – tradeendorsed
3. Accumulated depreciation of tangible
fixed assets

End of Prior Consolidated Fiscal
Year(As of October 31, 2000)

4. Assets offered as collateral security
Cash3,012,000

─────

230,911,000

Buildings and structures
Total

233,924,000
The assets shown above havebeen pledged as collateral for¥18,995,000 of long-term bankloans due within one year and¥226,005,000 of long-term bankloans.

5. Guarantees
Joint and several guarantees of employeebank loans
Guarantee of debt for long-term bankloan to affiliated company (Active Power
Corporation)
Total
6. Accounting treatment of notes maturing
at the end of the period

26,243,000

25,398,000

350,000,000

280,000,000

376,243,000

305,398,000

The interim period-end was afinancial

institution

Japan.

Notes

holidayreceivable

in

─────

and

payable that matured on that datewere settled on the immediately
followingbusinesscustomary

in

day,

Japan.

as

is

Notes

outstanding for which settlement
was postponed and which areincluded in the interim balanceswere as follows.
Notes

receivable,

2,089,610,000

payable,1,340,272,000

trade
Notes
trade

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .1 9(Notes to the Interim Period Consolidated Statements of Income)Current Consolidated Fiscal Year Interim Period(From November 1, 2000
to April 30, 2001)

Prior Consolidated Fiscal Year
(From November 1, 1999
to October 31, 2000)※1. Major expense categories and amounts included in※1. Major expense categories and amounts included inselling expense and administrative expenses.

selling expense and administrative expenses.

Employee salaries and wages

Employee salaries and wages

4,596,035,000

2,461,314,000

Depreciation expense

538,780,000

Depreciation expense

1,108,982,000

Rents

705,409,000

Rents

1,441,240,000

Amount transferred toallowance for doubtful

Amount transferred to424,513,000

allowance for doubtful accounts

accounts

Amount transferred to accrued

Amount transferred to accrued

bonuses to employees

bonuses to employees

527,730,000

Amount transferred to246,747,000
502,903,000

Amount transferred toretirement allowances to8,904,000

retirement allowances todirectors and auditors

8,653,000

directors and auditors
Employee salaries and wages

4,596,035,000※2. Details of adjustments to prior period net income──────────

Amount received fromadjustment of tax liability

41,232,000

Recovery of bad debts

971,000

Reduction to allowance for392,000

doubtful accounts
Total

42,596,000※3. Gain on disposal of fixed assets──────────Vehicles and delivery

205,000

equipment※4. Loss on sale or disposal of fixed assets※4. Loss on sale or disposal of fixed assets(Loss on sale of fixed assets)
Machinery, equipment anddelivery equipment(Loss on sale of fixed assets)
762,000(Loss on disposal of fixed assets)

Buildings
Rental assets

62,375,000
19,908,000

Rental assets

34,174,000

Buildings and structures

Buildings and structures

5,992,000

Machinery, equipment andMachinery, equipment anddelivery equipment
Other

1,280,000
412,000

Total

42,621,000

18,716,000(Loss on disposal of fixed assets)

delivery equipment
Golf club memberships
Other
Total

4,904,000
92,930,000
858,000
199,694,000

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .2 0(Notes to the Consolidated Statements of Cash Flows)
Current Consolidated Fiscal Year Interim Period(From November 1, 2000
to April 30, 2001)

Prior consolidated accounting fiscal year
(From November 1, 1999
to October 31, 2000)

1. Relationships between the interim period ending

1. Relationships between the ending balance for cash

balance for cash and cash equivalents and theand cash equivalents and the amounts in theamounts in the categories shown on the interim

categories shown on the consolidated balance sheet

period consolidated balance sheet
Cash and deposit accounts
Term deposits with amaturity longer than 3monthsCash and cash equivalents

15,784,766,000– 4,729,000円
15,780,037,000

2. Details of major non-cash transactions
The amount of assets and liabilities related to
installment payment transactions newly
accounted for in the current interim consolidated
accounting period is ¥5,248,524,000, respectively.

Cash and deposit accounts
Term deposits with amaturity longer than 3monthsCash and cash equivalents

16,432,624,000– 10,229,000
16,422,395,000

2. Details of major non-cash transactions(1) Conversion of convertible bonds to capital
Increase in capital fromconversion of convertible
253,000,000
bonds
Increase in additional paid-in
capital from conversion of

253,000,000

convertible bonds

Decrease in convertible

506,000,000

bonds from conversion(2) The amount of assets and liabilities related to
installment payment transactions newly
accounted for in the consolidated accounting fiscal
year is ¥10,127,608,000 respectively.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .2 1

V

Lease Transactions

Current Consolidated Fiscal Year Interim
Period(From November 1, 2000
to April 30, 2001)

1. Finance lease transactions except for leases that transfer

Prior Consolidated Fiscal Year
(From November 1, 1999
to October 31, 2000)
1. Finance lease transactions except for leases that transfer

ownership of the property to the lessee.

ownership of the property to the lessee.

(1) Amounts corresponding to lease property acquisition(1) Amounts corresponding to lease property acquisition prices,

prices, accumulated depreciation and outstanding

accumulated depreciation and outstanding balances at thebalances at the end of the interim accounting period.

end of the fiscal year.

Acquisition

Accumulated

Outstanding

Acquisition

Accumulated

Outstanding

price

depreciation

balance

pricedepreciation

balance

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

¥13,230,516¥5,871,914¥7,358,602¥16,688,293¥8,788,906¥7,899,386¥794,854¥334,152¥460,702¥775,954¥366,698¥409,255¥14,025,371¥6,206,067¥7,819,304¥17,464,247¥9,155,605¥8,308,641

RentalassetsOther
assetsTotal(2) Outstanding balance of future lease payments at theend of the interim period

RentalassetsOther
assetsTotal(2) Outstanding balance of future lease payments at the end of
the fiscal year

Within one year

2,483,331,000

Within one year

2,654,146,000

After one year

5,482,320,000

After one year

5,490,558,000

Total

7,965,652,000

Total(3) Amount of lease payments, depreciation expense andinterest expense

8,144,704,000(3) Amount of lease payments, depreciation expense andinterest expense

Lease payments

1,357,042,000

Lease payments

3,095,716,000

Depreciation expense

1,239,438,000

Depreciation expense

2,834,121,000Interest expense

124,679,000Interest expense(4) Accounting method for amount equivalent todepreciation expense

292,721,000(4) Accounting method for amount equivalent to depreciation
expense

Straight-line depreciation using the lease term as theSame as at leftdepreciable life and zero residual value.
(5) Accounting method for amount equivalent to interest(5) Accounting method for amount equivalent to interest
expenseexpenseInterest method using the difference between total lease

Same as at left

payments and the acquisition price of the leaseproperty, allocated equally to each year.
2. Operating leases

2. Operating leases

Future lease payments

Future lease payments

Within one year

1,427,854,000

Within one year

1,422,400,000

After one year

3,386,803,000

After one year

2,704,382,000

Total

4,814,658,000

Total

4,126,782,000

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .2 2

(Notes related to negotiable securities)※ The market prices of negotiable securities for the prior interim accounting period are reported
as a note to the interim financial statements.
(Current interim consolidated accounting period) (As of April 30, 2001)
Negotiable Securities
１. Other negotiable securities with market prices(Yen thousands)
Amount reported on the
Acquisitioninterim consolidated
Valuation profit or loss
pricebalance sheet(1) Stocks

1,468,149

2,918,702

1,450,553−−−

Corporate bonds

280,652

280,978

325

Other

20,00019,378− 622(3) Other

1,097,994

895,290− 202,704

2,866,797

4,114,349

1,247,552(2) Bonds
Central and municipal
government bonds

Subtotal

2. Principal negotiable securities that do not have a market priceAmount reported on theinterim consolidated balance
sheet(Yen thousands)
Summary

Other negotiable securities
Unlisted stocks (excluding OTC stocks)

719,463(Prior consolidated fiscal year) (As of October 31, 2000)
Market value of negotiable securities
Amount reported onTypethe consolidated
Market valuebalance sheet
Assets classified as
current assets
479,035
477,964
Stocks(Yen thousands)
Valuation profit or loss

– 1,070

Bonds

227,681

227,808

126

Other

40,03839,188– 850

746,755744,961– 1,793

Stocks

1,041,030

1,928,794

887,763

Bonds

38,33738,39254

Other1,000,578

771,210– 229,368

Subtotal

2,079,945

2,738,396

658,450

Total

2,826,701

3,483,358

656,657

Subtotal
Assets classified as fixed
assetsSummary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .2 3

(Notes) 1. Method used to calculate market value(1) Listed negotiable securities
Valued mainly on the basis of the final closing prices on the Tokyo Stock
Exchange(2) Over-the-counter negotiable securities
Valued on the basis of trading prices such as those published by the Japan
Association of Securities Dealers(3) Beneficiary certificates for unlisted security investment trusts are valued on
the basis of each trust’s standard valuation
2. Consolidated balance sheet valuation of negotiable securities that are excluded
from disclosure requirements
Assets classified as fixed assets
Unlisted stock except for over-the-counter stocks
Corporate bonds with stock warrants attached

870,367,000
10,000,000

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .2 4(Derivative transactions)※ The notes concerning derivative transactions for the interim period of the prior accounting
fiscal year are included in the notes to the interim period financial statements.
(Current consolidated accounting fiscal year interim period) (As of April 30, 2001)
The Company has adopted hedge accounting and did not record this information for the current
consolidated accounting fiscal year.
(Prior consolidated accounting fiscal year)
1. Circumstances of transactions (November 1, 1999 – October 31, 2000)(1) Details and purpose of derivative transactions
From time to time, the Company uses forward exchange contracts and currency swap transactions in order toavoid the risk of future foreign exchange market exchange rate fluctuations for specific foreign
currency-denominated assets and liabilities. In addition, the Company uses interest rate caps and swaps tolimit the effect that a future rise in market interest rates will have on the interest paid by the Company.

(2) Transaction policy
The Company has adopted a policy of using derivatives transactions only for purposes of avoiding risks toassets and liabilities that are exposed to market price fluctuation risk. The Company does not engage in the useof derivatives transactions for the purpose of obtaining short-term trading gains (trading objectives) or for
speculative purposes.

(3) Transaction-related risks
Derivative transactions are accompanied by market risk created by fluctuation of the market prices of theitems covered by the transactions, and credit risk related to the possibility that counterparties may not performtheir obligations in accordance with the transaction contract. Forward exchange contracts related to currencies
used by the Company contain an element of risk created by fluctuations in foreign exchange market currency
rates, and interest rate cap and interest rate swap transactions contain an element of risk created byfluctuations in market interest rates. The Company believes it faces minimal credit risk because thecounterparties for its derivative transactions are domestic banks and securities firms with strong credit ratings.

(4) Transaction risk management system
The Company’s basic policies concerning derivative transactions are decided by the board of directors, andexecuted and managed by the Treasury and Securities Section Manager in the Accounting Division based on the
Company’s internal management regulations. The corporate officer in charge of accounting reports on financial
matters, including these derivative transactions, at the Company’s regular meetings of the board of directors.

(5) Supplemental information concerning transaction market prices and other matters
Forward exchange contracts and currency swaps allocated to foreign currency-denominated assets andliabilities at the end of the interim period and accounted for on the interim financial statements throughconversion into monetary assets and liabilities denominated in the relevant foreign currency are excluded fromdisclosure at market prices.

2. Transaction market value
The amounts of the Company’s currency and interest rate derivative transactions and the amounts
equivalent to the valuation profit and loss were small. Details of the transactions have been omitted
because the amounts are deemed to be immaterial to the Company’s financial position.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .2 5

IV Business segment information
1. Segment information by type of business
Consolidated fiscal year interim period under review (From November 1, 2000 to April 30, 2001)(Unit: Yen thousands)
Construction
equipment
rentalbusiness

Steel sales
business

Computerandperipheral
equipment
and otherbusinesses

28,048,269

3,912,105

679,853

Eliminations
or entirecompany

Consolidated

32,640,228−

32,640,228

Total

1. Revenues and operating
incomeRevenues(1) Sales to outside
customers(2) Sales or transfers
between related
segments
Total

178

−

−

178

– 178

−

28,048,447

3,912,105

679,853

32,640,407– 178

32,640,228

Operating expenses

26,464,698

3,873,033

677,929

31,015,661– 13,173

31,002,488

Operating income

1,583,749

39,072

1,923

1,624,745

12,994

1,637,740

Prior consolidated fiscal year interim period (From November 1, 1999 to April 30, 2000)(Unit: Yen thousands)
Steel sales
business

Computerandperipheral
equipment
and otherbusinesses

Total

52,750,998

7,913,856

1,331,730

Construction
equipment
rentalbusiness

Eliminations
or entirecompany

Consolidated

61,996,584−

61,996,584

1. Revenues and operating
incomeRevenues(1) Sales to outside
customers(2) Sales or transfers
between related
segments
Total

−

−

−

−

−

−

52,750,998

7,913,856

1,331,730

61,996,584−

61,996,584

Operating expenses

49,824,402

7,786,326

1,392,625

59,003,353– 49,361

58,953,992

Operating income

2,926,596

127,530– 60,895

2,993,231

49,361

3,042,592(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
Construction equipment
rentals
Steel sales
Computers andperipherals and otherbusinesses

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
Computers

andperipheraldevices,

telecommunications-related

equipment, microturbine generators, microbrewery

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .2 6

2. Segment information by location
The Company does not report segment information by location because the Company did not have any
consolidated subsidiaries or important offices located in countries or regions outside of Japan during thecurrent consolidated fiscal year interim period and the prior consolidated accounting fiscal year.

3. Foreign sales
The Company did not have any foreign sales during the current consolidated fiscal year interim period andthe prior consolidated accounting fiscal year.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2001
P .2 7