Fiscal Year ended October 31, 2003

Summary of Company Financial Statements
December 11, 2003

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
December 11, 2003
Interim Dividend System
The Company has an interim dividend system
Regular General Meeting of the Shareholders
January 28, 2003
Has the Company adopted a Unit Stock System? Yes (One unit equals 1,000 shares)
1. Operating Results for the Fiscal year ended October 31, 2003
(November 1, 2002–October 31, 2003)(Numbers less than one million yen have been rounded down)(1) Operating Results
Revenues

Operating Income％

Millions of yen

Ordinary Income％

Millions of yen％

Millions of yen

Fiscal year ended
October 31, 2003

60,494

– 0.2

2,350

4.2

2,447

– 1.2

Fiscal year ended
October 31, 2002

60,606

– 5.7

2,255

– 18.62,477– 24.8％Yen

Net Income
per Share ofCommonStock Fully
DilutedYen

Net Income
per Share ofCommonStock

Net Income

Millions of yen

Return on
Shareholders’EquityReturnon
Total
AssetsOrdinary
IncomeMargin％％％Fiscal year ended
October 31, 2002

953（−15.9）

31.30

28.30

3.0

2.7

4.1

Fiscal year ended
October 31, 2002

1,134

（ 118.7）

37.49

28.85

3.6

2.5

4.1

(Notes) 1. Average number of shares outstanding during the fiscal year
Fiscal Year ended October 31, 2003

30,030,383 sharesFiscal Year ended October 31, 2002

30,250,808 shares

2. Are there any changes in accounting method?

No

3. The percentages shown for revenues, operating income, ordinary income and net income are the percent
increase or decrease compared to the same period of the prior fiscal year(2) Dividends
Annual Dividend per Share ofCommon Stock

Yen

InterimYear-end

Yen

Yen

Total
Dividends(Annual)Dividend
Payout Ratio

Dividends as a Percentageof Shareholders’Equity%%

Millions of yen

Fiscal year ended
October 31, 2003

18. 00

9. 00

9. 00

537

57.5

1.7

Fiscal year ended
October 31, 2002

18.00

9.00

9.00

544

48.0

1.7

Summary of Company Financial Statements, FY Ended October 31, 2003
P.44

(3) Financial Position
Total Assets

Shareholders’Equity Ratio

Shareholders’Equity

Shareholders’Equity per Share
％Millions of yen

Millions of yen

Yen

Fiscal year ended
October 31, 2003

87,62732,00436.5

1,071.50

Fiscal year ended
October 31, 2002

96,71731,35632.4

1,036.63(Notes) 1. Number of shares issued and outstanding at fiscal year
Fiscal Year ended October 31, 2003

29,868,824 sharesFiscal Year ended October 31, 2002

30,248,756 shares

2. Number of shares of treasury stock at end of period
Fiscal year ended April 30, 2003

384,417 sharesFiscal year ended October 31, 2002

4,485 shares

2. Projected Operating Results for the Fiscal Year Ending October 31, 2004
(November 1, 2003 - October 31, 2004)
Revenues
Millions of yen

Ordinary Income
Millions of yen

Interim period

29,060810

Full year

61,0002,170

Net Income
Millions of yen

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

Annual Dividend per Share ofCommon Stock
InterimYear-end

Yen

Yen

Yen

350

9.00

-----

-----

790

------

9.00

18.00

¥22.10(Note) The above projections were prepared based upon information available to the Company at the time theprojections were announced as well as various assumptions concerning the future economic and businessenvironment. Actual operating results may differ from the projected figures depending upon various factors in
the future.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.45

VIII

Company Financial Statements

1. Comparative Balance Sheets

PeriodCategory

Amount(Assets)

Ⅰ

Percent¥ thousands%

Current Fiscal Year(As of October 31, 2003)
AmountPercent¥ thousands%

Change from prioryear
Amount¥ thousands

Current Assets
Cash and deposits

14,578,410

11,346,085– 3,232,325

Notes receivable, trade

10,422,798

10,148,086– 274,711

Accounts receivable, trade

11,796,391

11,159,099– 637,292

75,07539,192– 35,883

Negotiable securities
Merchandise inventory

347,504

321,595– 25,909

Construction equipment

2,466,271

1,958,064– 508,207

Supplies

51,22354,4193,195

Prepaid expenses

242,097

227,240– 14,857

Tax receivables

56,109−– 56,109

Deferred tax assets

151,957

227,744

75,786

Other current assets

133,976

174,548

40,571

Allowance for doubtful
accounts– 462,026– 490,153– 28,127

Total Current Assets

Ⅱ(Unit: Thousands of yen)

Prior Fiscal Year(As of October 31, 2002)

39,859,790

41.2

35,165,921

40.1– 4,693,869

Fixed Assets(1)

Tangible Fixed Assets
Rental equipment

16,609,158

12,932,042– 3,677,116

Buildings

6,082,853

5,825,344– 257,509

Structures

1,373,252

1,200,747– 172,504

Machinery andequipment

1,062,271

960,715– 101,556

Vehicles and delivery
equipment

2,033

3,567

1,534

Tools, furnishings andfixtures188,522436,799

248,276

24,227,409

24,381,774

154,364

104,184

1,892– 102,291

LandConstruction inprogress
Total Tangible Fixed
Assets(2)

51.3

45,742,882

52.2– 3,906,803

93,3580.1

97,3670.1

4,008

Intangible Fixed
AssetsTotal Intangible Fixed
Assets(3)49,649,685

Investments andOther

3,467,694

3,391,710– 75,983

805,435

1,025,082

219,646

Advances
Long-term prepaid
expenses

144,875

111,569– 33,305

134,839

66,758– 68,080

Insurance reserve

132,086

98,411– 33,675

Deferred tax assets

1,727,149

1,453,438– 273,710

Other1,275,329

1,243,979– 31,350

Allowance for doubtful
accounts– 572,830– 540,255

32,574

Reserve for investment
losses−– 229,402– 229,402

Total Investments andOther Assets

7,114,579

7.4

6,621,291

7.6– 493,288

Total Fixed Assets

56,857,624

58.8

52,461,541

59.9– 4,396,082

Total Assets

96,717,414

100.0

87,627,462

100.0– 9,089,951

Investment securities
Stockofcompanies

affiliatedSummary of Company Financial Statements, FY Ended October 31, 2003
P.46

(Unit: Thousands of yen)
PeriodCategory

Amount(Liabilities)

Ⅰ

Percent¥ thousands%

AmountPercent¥ thousands%

Change from prioryear
Amount¥ thousands

Current Liabilities
Notes payable, trade

8,091,133

7,387,353

Accounts payable, trade

2,856,865

3,048,841

191,976

Short-term bank loans

8,289,000

9,576,000

1,287,000

Corporate bonds to beredeemed within one year

5,277,692−– 5,277,692

Convertible bonds to beredeemed within one year

4,164,000−– 4,164,000

Accounts payable, other

7,887,580

5,785,173– 2,102,407

Corporate taxes payable−

644,977

644,977

Consumption and other taxes
payable338,870

174,665– 164,204

Accrued expenses

214,920

230,977

16,056

Accrued bonuses to
employees

519,580

428,739– 90,841

Equipment notes payable

289,066

362,936

73,870

Other current liabilities

122,361

117,093– 5,267

Total Current Liabilities
Ⅱ

Prior Fiscal Year
Current Fiscal Year(As of October 31, 2002) (As of October 31, 2003)

38,051,070

39.4

27,756,758– 703,779

31.7– 10,294,311

Long-term Liabilities
Long-term bank loans

16,858,000

20,592,000

3,734,000

Long-term accrued expenses

8,614,241

5,321,023– 3,293,217

177,723

176,210– 1,513

Accrued employees
retirement benefits

1,659,509

1,776,890

117,381

Accrued employees
retirement benefits

27,309,473

28.2

27,866,123

31.8

556,650

65,360,543

67.6

55,622,882

63.5– 9,737,661

Retirement allowance todirectors and auditors

Total Liabilities(Shareholders’Equity)
Ⅰ

Common stock

8,596,737

8.9

−

−

– 8,596,737

Ⅱ

Additional paid-in capital

9,720,343

10.0

−

−

– 9,720,343

Ⅲ

Legal earned surplus

1,372,487

1.4

−

−

– 1,372,487

Ⅳ

Retained earnings(1） Voluntary reserves(2)

General reserve

10,350,000−– 10,350,000

Unappropriated retained
earnings

1,427,837−– 1,427,837

Total retained earnings

11,777,837

12.2

−

−

– 11,777,837

Ⅴ

Valuation difference onother negotiable securities– 108,448

– 0.1

−

−

108,448

Ⅵ

Treasury stock– 2,086

– 0.0

−

−

2,086

31,356,871

32.4

−

−

– 31,356,871

Shareholders’Equity

Summary of Company Financial Statements, FY Ended October 31, 2003
P.47

(Unit: Thousands of yen)
PeriodCategory

Ⅰ
Ⅱ

Ⅲ

Prior Fiscal Year(As of October 31,
2002)
Perce
Amountnt%¥ thousands

Common stock−−

Current Fiscal Year(As of October 31, 2003)
AmountChange from prior
year

Percent

Amount¥ thousands%¥ thousands

8,596,737

9.8

8,596,737

Capital surplus
Additional paid-in capital−

Total capital surplus−

9,720,343−

9,720,343

9,720,343
11.1

9,720,343

Earned surplus
Legal earned surplus−

1,375,287

1,375,287

General reserve−

10,981,684

10,981,684

Unappropriated retained
earnings−

1,140,402

1,140,402

Total earned surplus−−

13,497,374

15.4

13,497,374

ⅣValuation difference onother negotiable securities−−

367,4420.4

367,442

Ⅴ

Treasury stock−−– 177,318– 0.2– 177,318−−

32,004,580

36.5

32,004,580

96,717,414

100.
087,627,462

100.0– 9,089,951

Total Shareholders’Equity
Total Liabilities andShareholders’Equity

2. Comparative Statements of Income
PeriodCategory

Ⅰ
Ⅱ
Ⅲ

Ⅳ

Ⅴ

Prior Fiscal Year
Current Fiscal Year(As of October 31, 2002) (As of October 31, 2003)
AmountPercent

AmountPercent

Change from prioryear
Amount¥ thousands%¥ thousands%¥ thousands

Operating revenues

60,606,901

100.0

60,494,281

100.0– 112,619

Cost of revenues

46,456,572

76.7

46,694,601

77.2

238,028

Gross profit

14,150,328

23.3

13,799,680

22.8– 350,647

Selling, general andadministrative expenses

11,894,836

19.6

11,449,012

18.9– 445,823

Operating income

2,255,491

3.7

2,350,667

3.9

95,175Non-operating revenues

825,1161.4

609,144

1.0– 215,972

Interest and dividends

55,887

81,47425,586

Gain on sale ofinvestment securities

157,293

134,900– 22,392

Rents received

150,222

153,875

3,653

Insurance benefits
received

38,354

23,148– 15,205

Cash bonus received

168,536

18,733– 149,802

Gain on redemption ofstraight bonds

46,450890– 45,560

Other

208,372

196,121– 12,250

Non-operating expenses

603,011

Interest expense

334,493

348,875

14,382

Bond interest expense

111,986

23,947– 88,038

Other

156,531

139,960– 16,571

Ordinary income

Ⅵ(Unit: Thousands of yen)

Extraordinary profits
Gain on disposal of fixes
assets1.0

512,783

0.8– 90,227

2,477,597

4.1

2,447,028

4.1– 30,568

413,449

0.7

49,9520.1– 363,497

14,266365– 13,900

Summary of Company Financial Statements, FY Ended October 31, 2003
P.46

Reimbursement of
accrued employees
retirement benefit

395,091

49,586

4,092

Other

Ⅶ

838,356

Extraordinary losses– 395,091−

1.4

640,169

45,494
1.1– 198,186

Loss on sale or disposal
fixed assets

197,038

86,447– 110,590

Valuation loss on
investment securities

232,561

259,639

27,078Loss on sale ofinvestment securities

70,085−– 70,085

Loss on advanceprovided to affiliate

100,000−– 100,000

Loss of redemption of
convertible bonds

96,085−– 96,085

Transfer to reserve forinvestment losses−

229,402229,402

142,585

64,679– 77,906

Other
Income before taxes andadjustments

2,052,690

3.4

1,856,811

3.1– 195,879

Corporate, local and business
taxes

829,703

1.4

1,031,595

1.7

201,892

Adjustment for corporate andother taxes

88,8340.1– 128,717– 0.2– 217,551

1,134,153

1.9

953,933

1.6– 180,219

Net income
Profit carry-forward fromprior period

565,944588,999

23,054

Cash dividends

272,259

268,978– 3,280

Loss on cancellation ofaffiliated company stock
related to merger−– 133,551– 133,551

Unappropriated retained
earnings

1,427,837

1,140,402– 287,435

3. Comparative Appropriation of Retained Earnings
PeriodCategory

Unappropriated retained
earnings(Unit: Thousands of yen)

Prior Fiscal Year General
Meeting of the
Shareholders approvaldate (January 28, 2003)

Current Fiscal Year(proposed)
General Meeting of the
Shareholders approvaldate (January 27, 2004)¥ thousands¥ thousands

Change from prioryear¥ thousands

1,427,837

1,140,402– 287,435

838,838

582,919– 255,919

272,238(¥9 per share)

268,819(¥9 per share)– 3,419

Directors bonuses

16,60014,100– 2,500(Auditors bonuses)(1,700)(1,700)（−）

550,000

300,000– 250,000

588,999

557,483– 31,515

To be appropriated as follows
Amount of appropriated retained
earnings(Note)Cash dividends

Voluntary reserve
General reserve
Net income carried forward to
the next period(Notes) 1. The Company paid an interim dividend of ¥268,978 (¥9 per share) on July 22, 2003.
2. The shareholder dividend is calculated excluding 384,417 shares of treasury stock.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.47

4. Notes to the financial statements(Significant accounting policies)
PeriodItem
1. Valuation standards andvaluation methods fornegotiable securities

Prior fiscal year
From November 1, 2001
To October 31, 2002
Common stock of subsidiaries andaffiliated companies
The Company has adopted the cost
method based upon the moving averagemethodOther negotiable securities
Negotiable securities with a market on
a securities exchange
The Company has adopted themarket value method (the full amountof the valuation difference is charged
to equity using the direct transfer tocapital method, with the disposal cost
determined by the moving averagemethod) based on the market priceon the fiscal year closing date orsimilar prices

Current fiscal year
From November 1, 2002
To October 31, 2003
Common stock of subsidiaries andaffiliated companies
Same as at left

Other negotiable securities
Same as at left

Other negotiable securities
The Company has adopted the cost
method based upon the moving
average method
2. Appraisal standards andappraisal method forconstruction equipment

Construction equipment
Amountafter
deductionofdepreciation
expensecalculated
according to the declining-balancemethod from the original prices, byseparate fiscal year of purchase

Construction equipment
Amountafter
deductionofdepreciation
expensecalculated
according to the declining-balancemethod from the original prices, byseparate fiscal year of purchase(Supplemental information)
The Company formerly used 7
years as the depreciable life for floor
plate and steel plate. In considerationof the period over which suchproducts can be used physically andeconomically, however, based upontheirphysicalconditionandcustomers’ intentionstorent,
respectively, beginning in the interim
period under review the Company
changed the durable life of suchproducts to 10 years based upon a
projection of the period for their
possible use.
As a result, during the fiscal year
under review depreciation expense
was ¥209,320,000 lower, and grossprofit, operating income, ordinary
income and income before taxes andadjustments
were¥209,320,000
higher, respectively, compared towhat they otherwise would have been
had the accounting standards used inprevious periods been applied.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.48

3. Appraisal standards and(1) Merchandise inventories and supplies

appraisal method for

Merchandise inventory

merchandise inventories

Lower of cost or market based on theand supplies(1) Merchandise inventories
Same as at leftlast-in, first-out method(2) Supplies(2) Supplies

The Latest purchase cost method

4. Depreciation method for
fixed assets

Same as at left

(1) Tangible fixed assets
The

Company(1) Tangible fixed assets

has

the

The Company has adopted thedeclining-balance method. Buildings

declining-balance method. Buildings

on land that is leased under a fixed-on land that is leased under a fixed-

term land lease agreement, however,term land lease agreement, however,are depreciated using the straight-line

are depreciated using the straight-

method using the remaining period of

line

the

period of the fixed-term lease as the

fixed-term

depreciable

life

adopted

lease
and

as

zero

the

residualvalue.

methoddepreciable

using
life

the

and

remainingzero

residualvalue.

The depreciable lives mainly used

The depreciable lives mainly usedby the Company are as follows.

by the Company are as follows.

Rental assets
5-10 years
Buildings
31-34 years

Rental assets
5-10 years
Buildings
31-34 years(Supplemental information)
The

Company

years

as

the

temporary

formerlyused7

depreciable

life

for

structures.

In

rentalconsideration of the period over whichsuch products can be used physicallyandeconomically,

however,

basedupon improved product quality andcustomers’

intentions

to

rent,

respectively, beginning in the fiscal
year

under

changedthereviewthedurablelife

Company
ofsuchproducts to 10 years based upon a
projection of the period for their
possible use.
As a result, during the fiscal year
under review depreciation expense
was ¥232,276,000 lower, and grossprofit,operatingincome,ordinary

income and income before taxes andadjustments
higher,were¥232,276,000

respectively,

comparedtowhat they otherwise would have been
had the accounting standards used inprevious periods been applied.
(2) Intangible fixed assets
Softwarefor(2) Intangible fixed assets

usewithintheSame as at left

Company is depreciated using thestraight-line method based on theassumed useful life for internal use (5years).
(3) Long-term prepaid expenses
The

Companyhas(3) Long-term prepaid expenses
adoptedSame as at left

straight-line depreciation.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.49

5. Accounting standards for(1) Allowance for doubtful accounts(1) Allowance for doubtful accounts

To provide for losses on doubtful

allowances and reserves

Same as at left

accounts such as accounts receivable,
the Company charges to income anamountbasedonactualloss

experience for normal accounts, plusanamountunrecoverableforprojected

amounts

basedonassessments of individual accounts.
(2) Accrued bonuses to employees(2) Accrued bonuses to employees

To fully provide for expenditures ofSame as at left

bonuses the Company will pay toemployees,anamountisappropriated to the reserve during
the fiscal year based upon a salaryestimate amount.
(3) Accrued employees retirement(3) Accrued employees retirement

benefits

benefits

The Company provides for accrued

Same as at left

employees retirement benefits based
upon the projected amounts of theliabilityforaccruedemployees

retirement benefits and the value ofpension assets at the end of the fiscal
year. At the end of each fiscal year,
the Company appropriates an amountto the reserve to provide for theliability recognized during the period.
Past years’service liabilities are fully
written off in the year incurred.
The

difference

based

on

an

actuarial calculation is charged toincome beginning in the fiscal year
following the year in which incurred,
with

the

amounts

allocated

proportionately using the straight-line
method, based on a specified numberof years (10 years) that is less thantheaverageremaining

periodofemployment for employees at thetime the difference arises.
(4) Retirement allowances to directors(4) Retirement allowances to directors

and auditors
Theand auditors

Company

retirement

providesallowances

to

for

Same as at left

directors

and auditors based upon pertinent
rules and appropriated to the account
at

the

end

of

the

fiscalyear

proportionately based upon length ofservice.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.50

(5) Reserve for investment losses
The Company provides for losses
from the decline in real prices ofassets such as the stock of subsidiarycompanies that are subject to asset
impairment accounting by applying
internally established standards that
take

into

consideration

subsidiarycompany operating result and asset
quality.
6. Lease transactions

Forfinance

exceptfor

leaseleasestransactions
that

Same as at lefttransferownership of the property to thelessee, rent expenses are charged toincome as payments are made.
7. Hedge transactions(1) Hedge transactions(1) Hedge transactions

The Company accounts for hedge

Same as at lefttransactions using allocations basedon accounting standards for foreign
currency-denominatedtransactions,and special rule accounting based on
accounting

standards

forfinancial

products.
(2) Hedge methods and hedged(2) Hedge methods and hedgedtransactionstransactions

The Company uses currency swaps

Same as at left

and forward transactions in order toavoid the currency fluctuation risk
relatedtotheCompany’sforeigncurrency-denominated straight bonds
and liabilities for import payments.
The

Company

swaps

to

also

uses

avoid

interest

interest

rate

fluctuation risk related to interest onbank borrowing.
(3) Hedging policies(3) Hedging policies

The Company’s use of derivative

Same as at lefttransactions is limited to hedging risk
within the scope of the Company’sassetsandliabilities

subject

tomarket fluctuation risk.
(4) Method for evaluating the(4) Method for evaluating theeffectiveness of hedges

effectiveness of hedges

The Company does not evaluatetheeffectiveness

of

its

Same as at left

hedge

transactions because it can assume
that its currency swap transactions
andforwardtransactions

will

completely offset market fluctuations
or changes in cash flow from the timehedge begins until it is terminated. In
addition,
swap

the

Company’stransactions

requirementsforinterest

fulfillthespecialruleaccounting, and the Company has
elected to use this in place of anevaluation of effectiveness.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.51

8. Other significant mattersfor preparation of the fiscal
year financial statements(1) Accounting treatment of consumptiontax(1) Accounting treatment of consumption
tax

Consumption tax is taken out of all
StatementofIncomeitems

Same as at left

andBalance Sheet items, except mainly
for receivables and payables.
Thesuspense

consumptiontax

accounts

forreceipts

andconsumption tax payable are included
in “other current liabilities” because
the financial importance is minimal
after the amounts are offset.
（2）Accounting standards for treasury
stock and reversal of legal reserves
Beginning in the fiscal year underreview,

Kanamoto

Accounting

willStandard

apply

for

the

Treasury

Stock and Reversal of Legal Reserves(Corporate Accounting Standard No.
1), which will be applied in Japan tofinancial statements from the fiscal
year that begins after April 1, 2002.
The effect of this change on the
Company’s income statement for the
fiscal

year

under

review

is

not

of

the

material.
Based

on

provisions

amendment
concerning

financialstatements, the shareholders’ equity
section of the Comparative Balance
SheetsandtheComparative

Appropriation

of

have

preparedbeen

Retained

Earnedusing

theamended balance sheet provisions.
（3）Per share information
Beginning in the fiscal year underreview,

Kanamoto

will

apply

the

Accounting Standard for Earnings Per
Share(Corporate

Standard

No.

Implementation2)

Accounting
and

the

Guidancefor

Accounting Standard for Earnings Per
Share(Corporate

AccountingStandards Implementation Guidance
No. 4), which will be applied in Japanto financial statements from the fiscal
year that begins after April 1, 2002.
The effect of this change is describedin the “Note Concerning Information
Per Share.”Summary of Company Financial Statements, FY Ended October 31, 2003
P.52

(Changes in Accounting Treatment)
Item

Prior fiscal year
(From November 1, 2001
To October 31, 2002)

Period1. Change in revenue and

In

prior

years

the

Current fiscal year
(From November 1, 2002
To October 31, 2003)

Company

expense classifications

accounted for revenue from insurance

when accounting for

benefits as insurance benefits in non-accidents involving

operating revenues whenever it sufferedequipment under leasedamages to rental assets and equipment

contract

utilized under leases as the result of an──────

accident, and accounted for the asset
book value as a loss on abandonment of
fixed assets in extraordinary losses and
the

lease

equipment

contract

cancellation charge as a miscellaneous
loss

in

non-operating

expenses,

respectively. Beginning in the fiscal year
under review, the Company changed its
accounting treatment to account for
insurance

benefits

asoperatingrevenues and account for the rental
asset book value and lease equipment
contract cancellation charge as cost ofrevenues from operations.
The

Company

made

this

changebecause the Company seeks to recover
the full amount of capital invested in theequipment

rentalbusinessthroughrental charges as equipment is leased
and

the

insurance

followinganconsideredbenefits

accidentascanrecoveryofreceivedalso

beinvested

capital, and because the amount ofrevenue from insurance benefits has
been increasing.
As a result of this change, operating
revenuegrossincreased

profitandby¥204,754,000,

operatingincomeincreased by ¥75,843,000, respectively,andordinary

incomedecreasedby¥61,017,000, compared to what they
otherwise would have been had theaccounting standards used in previous
periods been applied. The change had
no effect on fiscal year income before
taxes and adjustments.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.53

In

2. Change in accounting

prior

years,

theCompany

treatment for revenue andaccounted for payments of employee

expenses for employee

housing rents in selling, general andhousing rents

administrative expenses, and accounted──────

for the employee-paid portion of such
expensesin

non-operating

Beginninginthereview,theaccounting

fiscalCompany
methodtorevenues.

year

under

changedits

excludetheemployee portion of employee housing
rent

expensefrom

sellingandadministrative expenses.
The Company adopted this change inorder to disclose the actual amount of
the Company’s housing rental burden,
because the materiality of the amounts
in question has been increasing as theCompany increases the number of its
employees.
As a result of this change, operating
incomeincreasedby¥165,232,000

compared to what it otherwise would
have

been

standards

had

used

in

the

accounting

previous

periods

been applied. The change had no effecton ordinary income and fiscal year
income before taxes and adjustments.

(Change in disclosure method)
Prior fiscal year
(From November 1, 2001
To October 31, 2002)
The amount of “cash bonus received” that was

Current fiscal year
(From November 1, 2002
To October 31, 2003)──────

included in other non-operating income has increased
and now accounts for more than ten percent of nonoperating

income.

Accordingly,

theCompany

reclassified this item into a separate reporting category.
The amount of the “cash bonus received” in the priorfiscal year was ¥86,487,000.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.54

Notes to the Financial Statements(Notes to the Balance Sheets)
PeriodCategory

Prior Fiscal Year(As of October 31, 2002)

Current Fiscal Year(As of October 31, 2003)

1. Total accumulated¥42,840,623,000

depreciation for tangible
fixed assets
2. Guarantees

Joint and several
guarantees of
employee bank loans
Guarantee of debt
for long-term bankloan to affiliatedcompany. (Active
Power Co., Ltd.)¥22,334,000¥350,000,000(Mizuho Bank, Ltd.)
Shares issued

3. Common stock

Common stock

Joint and several
guarantees of
employee bank loans
Guarantee of debt
for long-term bankloan to affiliatedcompany. (Active
Power Co., Ltd.)¥20,902,000¥269,500,000(Mizuho Bank, Ltd.)
Shares issued
66,000,000 shares

Number of shares outstanding
4. Treasury stock¥41,201,008,000

Common stock

66,000,000 shares

Number of shares outstanding

Common stock

30,253,241 shares

Common stock

4,485 shares

Common stock
Common stock

30,253,241 shares
384,417 shares

5. Reduction to book value
Amounts for assets
acquired for whichaccumulated book values
were reduced bygovernment subsidies
Machinery and5,044,000

5,044,000

equipment

3,569,000

3,569,000

8,613,000

8,613,000

Land
Total

(Notes to the Statements of Income)
PeriodCategory
1. Reimbursement of accrued

Prior Fiscal Year
(From November 1, 2001
to October 31, 2002)
Decreaseinliabilityfor

Current Fiscal Year
(From November 1, 2002
to October 31, 2003)

retirement

employees retirement

benefits as a result of raising the age at

benefitwhich the welfare pension system will──────

begin paying pension annuities from
April 2002.
2. Loss on sale or retirementof fixed assets(Loss on sale of fixed assets)

17,492,000

Buildings

Machinery and
243,000
equipment
Other
123,000(Loss on retirement of fixed assets)
Rental22,174,000
equipment(Loss on sale of fixed assets)
Buildings
Telephonesubscription
rights172,000
243,000(Loss on retirement of fixed assets)
Rental
17,957,000
equipment

Buildings

18,858,000

Buildings

13,407,000

Structures

13,751,000

Structures

31,529,000

104,118,000

Machinery andequipment
Tools,
furnishings andfixtures
Construction
materials

Machinery andequipment
Tools,
furnishings andfixturesOther

11,346,000
8,929,000

2,827,000
79,00020,349,000

Summary of Company Financial Statements, FY Ended October 31, 2003
P.55

(Notes for leasing transactions)
Prior Fiscal Year
(From November 1, 2001
to October 31, 2002)

Current Fiscal Year
(From November 1, 2002
to October 31, 2003)

1. Finance lease transactions except for leases that

1. Finance lease transactions except for leases thattransfer ownership of the property to the lessee.

transfer ownership of the property to the lessee.

(1) Amounts corresponding to lease property(1) Amounts corresponding to lease property

acquisition price, accumulated depreciation andacquisition price, accumulated depreciation andoutstanding balances at the end of the fiscal year

outstanding balances at the end of the fiscal year

Acquisition
price
（¥’
000）

Accumulated
depreciation
（¥’
000）

Outstandingbalance（¥’000）

RentalassetsOther
assets

24,072,116

7,532,570

16,539,546

562,620

339,044

223,576

Total

24,634,737

7,871,615

16,763,122(2) Outstanding balance of future lease payments at
the end of the fiscal year

Accumulated
depreciation
（¥’
000）

Outstandingbalance（¥’000）

RentalassetsOther
assets27,425,528

7,096,970

20,328,557

458,792

193,647

265,145

Total

27,884,320

7,290,617

20,593,703(2) Outstanding balance of future lease payments at
the end of the fiscal year

Within one year

4,258,886,000

Within one year

4,689,094,000

After one year

12,899,776,000

After one year

16,064,070,000

17,158,662,000

Total
(3)

Acquisition
price
（¥’
000）

Amountofleasepayments,

depreciation

expense and interest expense

20,753,164,000

Total
(3)

Amountofleasepayments,

depreciation

expense and interest expense

Lease payments

3,838,017,000

Lease payments

5,279,347,000

Depreciation expense

3,272,184,000

Depreciation expense

4,720,895,000Interest expense

333,786,000(4) Accounting method for amount equivalent todepreciation expense

Interest expense

656,827,000(4) Accounting method for amount equivalent todepreciation expense

Straight-line depreciation using the lease term as

Same as at left

the depreciable life and zero residual value.
(5) Accounting method for amount equivalent tointerest expense(5) Accounting method for amount equivalent tointerest expense

Interest method using the difference between total

Same as at left

lease payments and the acquisition price of thelease property, allocated to each year.
2. Operating leases

2. Operating leases

Future lease payments
Within one year
After one year
Total

Future lease payments

1,543,331,000
2,642,701,000
4,186,032,000

Within one year

1,789,778,000

After one year

3,238,604,000

Total

5,028,382,000(Negotiable securities)
The notes concerning the market price of negotiable securities included in the prior consolidated
accounting fiscal year financial statements and negotiable securities included in the current consolidated
accounting fiscal year financial statements (excluding the stock of subsidiary companies and affiliatedcompanies that has a market price) are part of the notes to the financial statements for the consolidatedbalance sheets. For the prior consolidated accounting fiscal year (as of October 31, 2002) and the current
consolidated accounting fiscal year (as of October 31, 2003), the stock of the Company’s subsidiarycompanies and affiliated companies did not have a market price.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.56

（Notes related to tax effect accounting）
Prior Fiscal Year
(From November 1, 2001 to October 31, 2002)

Current Fiscal Year
(From November 1, 2002 to October 31, 2003)

1. Major factors creating deferred tax assets and

1. Major factors creating deferred tax assets anddeferred tax liabilities

deferred tax liabilities

Deferred tax assets
Amount in excess of limit forinclusion
Disallowancebusiness taxesofdeferred

Excessaccruedretirement benefit

employees

Deferred tax assets
223,215,000

Amount in excess of limit forinclusion

236,877,000

Disallowancebusiness taxes

51,852,000ofdeferred

692,015,000

Excessaccruedretirement benefit

employees

Amount in excess of limit for
retirement benefit

74,110,000−

Amount in excess of limit for
accrued bonuses to employees

Amount in excess of limit for
retirement benefit

144,443,000

Amount in excess of limit for
accrued bonuses to employees

143,466,000

387,404,000

Disallowanceof
excessdepreciation
Disallowance of reserve forinvestment losses

Disallowance
depreciation
Other

of

excess−

280,350,000

Total deferred tax assets

1,801,537,000

Other

Valuationdifference
negotiable securities

404,014,000
92,678,000
272,413,000

Total deferred tax assets
Deferred tax liability

728,951,000

1,930,255,000

Deferred tax liabilityon

Net deferred tax assets
Disclosure classifications:
Current assets
Property and equipment

77,569,000

Valuationdifference
negotiable securities

1,879,106,000

Net deferred tax assets

151,957,000
1,727,149,000

onDisclosure classifications:
Current assets
Property and equipment

249,072,000
1,681,183,000
227,744,000
1,453,438,000

2. Causes of principal differences between the statutory

2. Causes of principal differences between the statutory

tax rate and burden ratio for corporate and othertax rate and burden ratio for corporate and othertaxes following application of tax effect accounting bytaxes following application of tax effect accounting bymajor category.

major category.

Statutory corporate tax rate

41.7％

41.7％

（Adjustment）（Adjustment）
Local tax equalization
Items not included permanently
losses such as expense accountStatutory corporate tax rate

3.8％
in

1.1％

Other

−1.9％

Burden ratio for corporate and othertaxes after application of tax effectaccounting

44.7％

Local tax equalization

4.3％

Items not included permanently in losses
such as expense accountEffect of change in statutory corporate
tax rate

1.4％
1.4％

Other

−0.2％

Burden ratio for corporate and othertaxes after application of tax effectaccounting

48.6％

Summary of Company Financial Statements, FY Ended October 31, 2003
P.57

3.

The

statutory

corporate

tax

rate

used

in

the

calculation of deferred tax assets and deferred tax
liabilities for the fiscal year under review was changed
from 41.7% in the prior fiscal year to 40.4% with thepromulgation of the Law to Partially Amend the Local
Tax Law (Law No. 9 of 2003) on March 31, 2003
(However, the amendment is expected to be annulled
after November 1, 2004). As a result, the total
amount of deferred tax assets (the amount after
deductingdeferredtax

liabilities)

decreasedby¥18,006,000, and the adjustment for corporate andother taxes and the valuation difference for othernegotiable securities increased by ¥26,020,000 and¥8,014,000, respectively, compared to what they
otherwise

would

have

been

had

the

statutory

corporate tax rate used in previous periods been
applied.

(Per share information)
PeriodCategory

Current Fiscal Year
(From November 1, 2002
to October 31, 2003)

Prior Fiscal Year
(From November 1, 2001
to October 31, 2002)¥1,036.63¥1,071.50

Net income per share of common stock¥37.49¥31.30Net income per share of common stock
after adjustment for potential ordinary
shares¥28.85¥28.30Net assets per share(Supplemental information)
Beginning in the fiscal year
under

review,

Kanamoto

will

apply the Accounting Standard
for Earnings Per Share (Corporate
Accounting Standard No. 2) andthe Implementation Guidance for
Accounting Standard for Earnings
Per Share (Corporate AccountingStandards

Implementation

Guidance No. 4). Furthermore,for

information

purposespershare information was calculatedbyapplyingtheaccounting

standard and the implementation
guidance to the operating results
for the prior fiscal year and isshown below.
(Prior fiscal year)
Net assets per share¥1,036.63
Net income per share¥36.94
Net income per share on a fully
diluted basis¥28.44
Note: The basis for calculating net income per share and net income per share on a fully diluted basis is provided
below.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.58

PeriodCategory

Current Fiscal Year
(From November 1, 2002
to October 31, 2003)

Prior Fiscal Year
(From November 1, 2001
to October 31, 2002)

Net income per share
Fiscal year net income−

953,933

major−

14,100Fiscal year net income related to common
stock

−

939,833

Average number ofduring the fiscal year−

30,030,383−

13,961−（13,961）−

3,677,771

Amountnotshareholders

attributablesharestooutstanding

Net income per share on a fully diluted
basis
Fiscal year net income adjustment(Interest expense
deduction amount])[Taxequivalent

Change in number of shares of common
stock (shares)(Convertible bonds)
Summaryoflatentcommon

−
stock

not

included in the calculation of net income
per share on a fully diluted basis because it
will not have a dilution effect（3,677,771）
Common stock subscription rights−

based on the provisions of Article
280-19 of the old Commercial
Code (Stock Options)

Summary of Company Financial Statements, FY Ended October 31, 2003
P.59

IX Changes to directors and auditors
1. Changes to representative directors
There were no changes to the Company’s representative directors.
2. Changes to other directors and auditors
Candidates for new appointments as directors
Director Tetsuo Kanamoto
Director Hitoshi Narita(Current position
Corporate Officer
General Manager,
Construction Equipment Rental Division Kinki & Chubu Region(Current position
Corporate Officer
General Manager,
Management Planning Division and General Manager, Secretarial
Office)Candidates for new appointments as auditors
Auditor (Standing Corporate Auditor)
Shinroku Sawada(Current position Director and Senior Corporate Officer Manager
in Charge of Management Planning)
Auditor (Corporate Auditor)
Akio Hashimoto(Current position Attorney-at-law and President, Hashimoto andOkawa Godo Law Offices
Retiring directors
Director Taichu Kanamoto
Director Shinroku Sawada(Current position Chairman of the Board)(Current position Director and Senior Corporate Officer Manager
in Charge of Management Planning)

Retiring auditors
Auditor (Corporate Auditor)
Norizumi Tsuda
Akio Hashimoto and Shinroku Sawada, the candidates for new appointments as auditors, areoutside corporate auditors in accordance with Article 18 paragraph 1 of The Law for Special
Exceptions to the Commercial Code Concerning Audits, etc. of Joint Stock Corporations.

Summary of Company Financial Statements, FY Ended October 31, 2003
P.60