Fiscal Year ending October 31, 2005

Interim Financial Statements Bulletin (Consolidated)
June 10, 2005
Listed Company Name

Kanamoto Company, Ltd.

Company Code Number 9678
Listing Exchanges

Tokyo Stock Exchange, Sapporo Stock Exchange

Head Office Address

1-19, Odori Higashi 3-chome, Chuo-ku, Sapporo, Hokkaido Japan 060-0041(URL

http://www.kanamoto.co.jp)

Representative

Kanchu Kanamoto

Inquiries

Nobuhito Utatsu

President

Director & Corporate Officer, Division Manager, Accounting Division
TEL 81-11-209-1600
Please send inquiries in English to takayama@kanamoto.co.jp.
Date of Report to the Board of Directors

June 10, 2005

SEC Accounting Standards

The Company has not adopted SEC accounting standards

1. Consolidated Operating Results for the Interim Period ended April 30, 2005
(Nov. 1, 2004 – Apr. 30, 2005)(Numbers less than one million yen have been rounded down)(1) Consolidated Operating Results
Revenues

Operating Income

Millions of yen
Six months endedApril 30, 2005
Six months endedApril 30, 2004
Fiscal year ended
October 31, 2004％

Six months endedApril 30, 2004
Fiscal year ended
October 31, 2004

％

%

7.0

1,291

-18.2

1,185

-22.4

30,955

- 5.0

1,578

-17.1

1,527

-15.0

61,336

1,878

1,749

Net Income per Share ofCommon StockMillions of yen
April 30, 2005%

33,126Net Income

Six months ended

Ordinary Income

Millions of yen

Net income per share on a
fully diluted basis

Yen

％

Yen

463

-57.8

15.53

−

1,097

40.6

36.75

−

36.50

−

1,097

Notes 1. Investment profit or loss accounted for by the equity method
Six months ended April 30, 2005−
Six months ended April 30, 2004−
Fiscal year ended October 31, 2004−
2. Average number of shares (consolidated) outstanding during the period
Six months ended April 30, 2005
29,857,851 shares
Six months ended April 30, 2004
29,868,128 sharesFiscal year ended October 31, 2004
29,865,301 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

平成 16（2004）年 10 月期 中間決算短信(連結)P. 1

(2) Consolidated Financial Position
Shareholders’EquityTotal Assets

Sixmonthsended

April 30, 2005
Six

monthsended

April 30, 2004
Fiscal

year

ended

October 31, 2004

Shareholders’Equity Ratio

Shareholders’ Equity
per Share

Yen

Millions of yen

Millions of yen

85,51033,09038.7

1,108.32

87,60532,96437.6

1,103.77

89,32332,74536.7

1,096.42％

Notes 1. Number of shares (consolidated) issued and outstanding at end of period
Six months ended April 30, 2005

29,856,811 shares

Six months ended April 30, 2004

29,865,040 sharesFiscal year ended October 31, 2004

29,859,442 shares(3) Consolidated Cash Flows
Cash Flow fromOperating
Activities
Millions of yen
Sixmonthsended

April 30, 2005
Six

monthsended

April 30, 2004
Fiscal

year

ended

October 31, 2004

Cash Flow from
Investing Activities

Cash Flow from
Financing Activities

Millions of yen

Balance of Cash andEquivalents at End of
PeriodMillions of yen

Millions of yen

12,739- 78- 5,563

18,831

4,955

119- 1,896

15,141

6,230-1,535-4,923

11,734(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)
Equity method accounting (new companies)

00(Excluded)(Excluded)00

2. Projected Consolidated Operating Results for the Fiscal Year Ending October 31, 2005
(November 1, 2004 - October 31, 2005)
Revenues

Full year

Operating Income

Millions of yen

Millions of yen

63,5001,220

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

Ordinary Income
Millions of yen

Net Income
Millions of yen

980

280

¥9.38

*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. Please refer to Page 11 for details of the projections

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 2

I Current Conditions of the Company’s GroupThe Kanamoto Company group is comprised of the parent company, seven subsidiaries and two
affiliated companies. The business activities of the group are centered on the rental of construction
equipment, and the development of businesses involved in the rental and sale of a full line ofconstruction-related materials. An explanation of each company’s position with regard to its relevantbusiness is provided below.

[ Businesses related to the Construction Equipment Rental Division ]Daiichi Kikai Co., Ltd. (a consolidated subsidiary company) and Kanki Corporation (a consolidated
subsidiary company) are engaged in the rental and sale of construction equipment and machines used
for construction. These two subsidiary companies operate in designated marketing areas and borrowrental equipment assets from the Company as needed in order to meet customer demand. SRG
Kanamoto Co., Ltd. (a consolidated subsidiary company) operates a rental business that provides
temporary materials for construction use. Assist Co., Ltd. (a consolidated subsidiary company) andComsupply Co., Ltd. (a non-consolidated subsidiary company) are engaged in the rental and sale offurniture and fixtures and safety products for the construction industry. The Company borrows rental
assets from SRG Kanamoto Co., Ltd., Assist Co., Ltd. and Comsupply Co., Ltd. as needed to rent to its
own customers.
In addition to the above companies, Kanatech Co., Ltd. (a consolidated subsidiary company)
develops, manufactures and sells modular housing units for temporary use. Kanki Maintenance Co.,
Ltd. (a non-consolidated subsidiary company) is engaged primarily in repair of construction
equipment.

[ 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 related to this division.

[ Businesses related to the Information Products Division and Other Businesses ]As the Company’s information and telecommunications-related division, Kanamoto’s Information
Products Division is engaged in the rental and sale of computers, computer peripheral equipment andequipment for the development of computer products. Active Technology Corporation (an affiliatedcompany), which is engaged principally in the sale of telecommunications-related equipment such as
wireless LAN devices, is affiliated with this division.
As a supplemental business, Active Power Corporation (an affiliated company) is engaged in thesale of microturbine generators

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 3

[Relationship of the Operating Businesses](Note) An asterisk indicates an affiliated company to which equity method is not applied

Costomer

Construction-related businesses
Construction

Kanamoto Co., Ltd. equipment rental
Construction
equipment rental

Rental of temporary
scaffolding

Information Products
Division-related
businesses
・
Other Businesses

Active Technology
Active Power
Corporation*Lines indicate：

Sale of telecom
devices
Sale ofmicroturbine
generators

Consolidated
subsidiaries

Construction
Equipment Rental
Division・
Steel Sales
Division・
Information
Products Division

housing units

Kanki Corporation
Repair of

SRG Kanamoto Co., Ltd.

Rental of safety
products
Manufacture and sale ofmodular housing units
Rental of safety
products
Repair of Construction

construction
equipment

Assist Co., Ltd.

Kanatech Co., Ltd.
Comsupply Co., Ltd.
Kanki MaintenanceCo., Ltd.

equipment

Non-consolidated
subsidiaries

Supply of modular

Daiichi Kikai Co., Ltd.

Affiliatedcompanies

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 4

II Management Policies
1. Basic policies concerning business management
Kanamoto and the Kanamoto Company group believe achieving sustainable growth and developmentof the group’s firms will enable the group to contribute to the benefits of its stakeholders (itsshareholders, customers, business partners, local communities, and employees and their families).
This is the reason the Company has made the centerpiece of its action agenda the concept “constantly
seek innovation and strive to energize the business,” while viewing customer satisfaction as the basisof its business and focusing on adapting to changes in its management environment to the extent
possible.
By taking maximum advantage of the rental business knowledge and experience accumulated overmany years, and increasing earnings by providing highly functional services, Kanamoto believes it cansatisfy the expectations and trust of its shareholders and group stakeholders, and truly contribute tosociety as a firm.

2. Basic policies concerning distribution of earnings
The Company places its primary emphasis on expanding shareholders’ long-term overall investment
return, while simultaneously regarding the maintenance of a stable return of earnings as the basis of
its earnings distribution policy. Kanamoto’s policy is to achieve a stable return of earnings to theextent possible, based on estimates of future earnings including its outlook for operating results.
At the same time, the Company utilizes its internal reserves by allocating funds for the introduction ofrental equipment assets that will serve as the source of future earnings, thereby contributing
substantially to the Company’s continuity.
To provide for future changes in its capital policy, Kanamoto has established a flexible system formaking purchases of treasury stock.

3. Policy concerning reduction of the Company’s investment unit
One important issue for Kanamoto from the standpoint of capital policy is increasing the number ofindividual shareholders and improving the liquidity of the Company’s stock. The Company recognizes
that reducing the size of its stock investment unit is one effective measure to stimulate trading of theCompany’s shares. Nevertheless, given the position of Kanamoto’s stock in the current market, theCompany judges present conditions do not require an immediate reduction in the size of the stock
investment unit. Management will maintain a flexible stance by continuing to review an increase in theliquidity of the stock, and study this issue while monitoring the authorities’ revision of Japan’s stock
certificate custody system and introduction of the system for dematerialization of stock certificates.
The Company currently also has no plans to execute a stock split.

4. Management indicators established as objectives
Kanamoto has always emphasized ROI (return on investment) and cash flow, and seeks growth in
EBITDA+ (earnings before interest, taxes, depreciation and amortization) to meet its primaryobjective of establishing a solid management foundation. Kanamoto adopted these indicators because
in its primary business of construction equipment rental, the Company faces a substantial capital
investment burden and the profit or loss of its operations should be evaluated over a period of several
years.
The following table shows the initial objectives set in the Company’s long-term management plan
“Metamorphose” (November 2003 to October 2008). This plan seeks to increase earnings while
maintaining the EBITDA+ that will become the source of future profits. Although the Company has
revised its full-year operating results outlook for the current consolidated fiscal year to project a
decrease in earnings, this partially reflects temporary profit-reducing factors. Moreover, in light of its
progress in achieving results from its long-range management plan measures, the Company has notrevised its numerical targets for the consolidated fiscal year ending October 2006, which will be theturning point under “Metamorphose,” or for the consolidated fiscal year ending October 2008, the final
year of the plan.
Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 5

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

Revenues

Fiscal Year endingO
b 200664,440Fiscal Year endingO
b 200867,250

3,360

5,420

Ordinary income
Net income per

58yen

96 yen

Revenues

58,00060,600

3,160

5,070

18,02919,553

Ordinary income
EBITDA＋

5. Medium to long-term corporate management strategy
As discussed above, the numerical targets for the Company’s long-range management plan
“Metamorphose” (Five-Year Plan from November 2003 to October 2008) reflect a plan in which
operating results will be under substantial pressure during the first two fiscal years after the plan’s
launch.
The Company will continue to pursue the optimization of operating assets begun in the priorconsolidated fiscal year (i.e., seek to create a highly profitable asset portfolio while controlling new
asset introductions and reducing depreciation and amortization expense). By creating a corporate
structure and the business capabilities capable of responding fully to this tough management
environment, and using its product line-up featuring state-of-the-art equipment not available fromany other company to the maximum advantage, the Company will shift to earnings-focusedmanagement and maintain profitability, while seeking to avoid competition through its alliances withsuperior local firms in selected regions.
With regard to net revenues by region, the Company will focus on the development of low-costbranches equipped with a smaller product line-up in the Tokyo metropolitan area, with the goal ofstabilizing the percentage of net revenues in the Honshu territory at about 70% of total revenues,
while continuing to maintain its market share in the Hokkaido territory.
The Kanamoto Group and its alliance firms currently are active in many regions, from Hokkaido to
Okinawa. In regions where its market share is low, the group will continue to build a marketingorganization where customers are Number One, while working to ensure market share and improveequipment utilization rates through tie-ups with local construction equipment rental firms. The
Company will seek to strengthen cooperation among these firms as the Kanamoto Group, andincrease the synergistic effects from this approach, by seeking additional high-quality alliancemembers.
The Company seeks to create a strong Kanamoto that is evaluated positively by the market as theleading company in the construction equipment rental business, while simultaneously achieving thebusiness objectives described above, and is focused on invigorating the Kanamoto Group so it iscapable of prevailing in today’s changing business environment.

6. Issues to be addressed by the Company
Because of the sharp decrease in total construction investment, the construction industry continues toface a challenging management environment. The negative impact has been severe particularly inareas that traditionally had relied heavily on public works construction, reflecting the crisis in local
government finances.
Because of this environment, demand for the construction equipment rental industry as a whole has
been declining. On the other hand, however, reliance on construction equipment rentals is expected torise as firms increasingly turn to rentals for equipment used at construction sites.
Nevertheless, under current market conditions, construction equipment rental firms are scrambling fora share of a shrinking pie, price competition is unabated and the number of rental days per rental
asset continues to fall, and the Company is unable to take maximum advantage of the overwhelming
Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 6

dominance of Kanamoto’s asset portfolio.
The remarkable drop in equipment rental fees faced by the industry today and the concomitantdecrease in earnings has also resulted in a substantial slump in profitability, and is the single greatest
issue shaking the foundation of the construction equipment rental business. Currently both theconstruction equipment rental industry and construction equipment manufacturers are struggling to
improve this situation, and as the leading company in the industry Kanamoto also is taking corrective
measures.
Moreover, in recent years accidents injurious to individuals and property caused by construction
equipment and vehicles during rental have occurred with alarming frequency, and the trend inincidents of theft of rental construction equipment from job sites has been climbing. While theCompany has always offered the Kanamoto comprehensive compensation system from the standpointof customer convenience, we have implemented additional enhancements to this system and will
begin offering this service as a new Kanamoto comprehensive compensation system from June 2005.
We anticipate broader use of this new compensation system will help reduce costs Kanamoto has
incurred in the past, including rental construction equipment maintenance and repair costs andcompensation for time away from work due to injury. In addition, given its present circumstances, theCompany must accelerate the pace of its advance into the Tokyo metropolitan area, and further
improving the capabilities of Kanamoto’s mid-level employees will be indispensable for this effort. The
Company therefore made changes to its personnel system during the consolidated fiscal year interim
period under review, and revised its employee training system, and also has been implementing
special training programs for mid-level employees since last year.
Recently natural disasters have occurred as frequently as accidents. During the past year alone a totalof 19 typhoons, including those that approached Japan, left wide swathes of damage in various
locations throughout Japan, and ten typhoons moved inland with full force, the largest number onrecord. Japan also suffered from numerous volcanic eruptions and earthquakes.
Through its construction equipment rental business, the Kanamoto Group is working even today toassist with disaster recovery in the various stricken areas, and is working to strengthen its grouporganization to enable it to respond to requests for assistance anywhere in Japan, whenever andwherever disaster strikes. Following the Niigata Chuetsu Earthquake, the Kanamoto group contributed
materials and offered items such as temporary housing units, temporary toilet facilities and heating
equipment immediately after the earthquake occurred, and put priority on loans of equipment forlifeline restoration works. Based on this past disaster relief experience, Kanamoto will work to create adisaster recovery support organization in cooperation with other companies in the construction
equipment rental industry, construction firms and local municipal governments, based on the principleof humanitarian assistance first.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 7

7. Basic approach concerning corporate governance and status of corporate
governance measures(1) Basic approach concerning corporate governanceKanamoto recognizes that establishing a relationship of trust with its stakeholders is vitally important
for the stable development of the Company. To put this relationship of trust on an even stronger
foundation, the Company has implemented measures to strengthen its in-house management systemfor corporate governance, maintain and improve management transparency and fairness, and develop
activities that will ensure timely disclosure and establish an information feedback system for
management.
(2) Status of corporate governance measures
Kanamoto Company’s Board of Directors is composed of nine directors, including two outside directors.
As the highest decision-making body concerning execution and supervision of the Company’s businessstrategies and business plans, the Board of Directors acts to respond quickly to the Company’s
continually evolving business conditions based on its governing provisions.
Kanamoto has adopted the auditor system. The Audit Committee is composed of four auditors(including two outside auditors), who participate in all meetings of the Board of Directors and provide
a fully satisfactory audit function in an environment that enables them to share proper opinions, suchas exchanging information with managers, on a daily basis.
Kanamoto also has introduced a corporate officer system to clarify responsibility for execution of theCompany’s businesses. To provide a system for keeping employees well informed about Company
policies, the Company has consolidated its organizational framework, and is making every effort toprepare precise business strategies that conform to the market environment and executecomprehensive management controls at each business division and each affiliated company.
In addition to expanding the authority of the auditors’ office, strengthening its internal audit system,and preparing ethics guidelines and establishing a Compliance Committee that includes outsidecommittee members, the Company has taken steps to strengthen observance of laws and ethics
regulations.
жKanamotot’s corporate governance organization
General Meeting of the shareholderes
Election andDismissal

Election andDismissal

Election and Dismissal
Board of directors(Decision making and supervision)

Auditors（Auditors andOutside auditors ）OperatingauditsConsultation
and reporting

Election andsupervision

Independent
Accounting
auditsPresident and executive vice president（Execution of activities）
Corporate Officer

Auditors(auditcorporation)

Intermal Controls

Auditing section
Advising attoney

Legal section
Operating divisions

Compliancecommittee

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 8

III Operating Results and Financial Position(1) Operating resultsa) Summary of consolidated fiscal year interim period operating results
Despite numerous factors still affecting the external environment, during the consolidated fiscal year
interim period under review there were visible signs of a recovery centered on manufacturing. The
shift to improving economic circumstances in the Tokyo metropolitan area and surrounding regions
continued. Other regions, however, were less fortunate in benefiting from these positive changes.
Overall, conditions remained unchanged despite improving business sentiment, and the gap between
the Tokyo metropolitan area and other regions in terms of both local economic circumstances andpersonal consumption were actualized further.
Conditions were similar in the construction industry, which is a major customer for Kanamoto’s
services. The difference between the Tokyo metropolitan area, where public works and private sector
capital investment are linked and produce a synergistic effect, and other regions where this effect isless pronounced, was thrown into sharp relief as the tough management environment continued.

[Construction-related business]
In Kanamoto’s main business in the construction equipment rental business, market conditions
improved steadily in regions where Tokyo, Osaka and Nagoya are the key market areas, which enjoy
extensive private sector capital investment, thanks to a recovery in private demand. In regions that
depend heavily on public works, however, demand other than disaster recovery work decreased
markedly and the business environment remained severe. In the construction-related businesses ofthe entire Kanamoto Group, for the consolidated fiscal year interim period under review, consolidated
revenues increased 5.6% from the same period of the prior consolidated fiscal year to ¥29,849 million,
but operating income fell 22.1% year-on-year to ¥1,177 million.
For the Company’s Construction Equipment Rental Division on a standalone basis, rental revenues
increased 1.8% compared with the same period of the prior consolidated fiscal year to ¥20,259 million,
while sales dropped 44.5% year-on-year to ¥5,543 million. This drop reflected reductions in usedequipment sales as provided in the Company’s initial plan. As a result, total revenues for theConstruction Equipment Rental Division were ¥25,802 million, down 4.6% from the same period of theprior consolidated fiscal year.
By region, the Company’s rental revenues decreased 6.1% in the Hokkaido territory, where disaster
relief work ended and public works and large-scale construction are limited. In the Tohoku territory,
the Company achieved growth in specialized areas, such as machines for ground improvement, andrevenues increased 2.2% year-on-year. On the other hand, revenues grew steadily in both the KantoShinetsu territory and the Kinki-Chubu territory, which include major metropolitan areas, as the resultof new sales branches opened by the Company. Revenues increased 11.5% year-on-year in the Kanto
territory and 11.4% in the Kinki-Chubu territory, which offset the drop in revenues in the Hokkaido
territory. As a result of these changes, the percentage of total rental revenues accounted for by
Hokkaido and Honshu plus other regions were 33.4% are 66.6%, respectively, as the Company
further shifted its focus to Honshu.
Recovery works in parts of the Kinki-Chubu territory were brisk in the wake of natural disasters lastyear that were designated serious disasters. Following the Niigata Chuetsu Earthquake, the Company
received orders related to temporary housing units for restoration construction, and full-scale
restoration works will be carried out in the second half of the Company’s current fiscal year.
During the consolidated fiscal year interim period under review, Kanamoto increased the total numberof branches by four to 144 branches. Only one location was closed, the Asahikawa South Equipment
Center in Asahikawa, Hokkaido. Thus one branch was closed in the Hokkaido territory, while four
branches were added in the Tohoku territory and one branch was added in the Kanto-Shinetsu
territory. No branches were opened or closed in the Kinki-Chubu territory.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 9

Turning to the operations of its consolidated subsidiaries, Daiichi Kikai Co., Ltd., which manages aconstruction equipment rental business in Kyushu, achieved a 19.9% increase in revenues comparedwith the same period of the prior consolidated fiscal year, thanks to strong sales of used temporary
housing units, but operating income fell 20.4% year-on-year under pressure from capital investment
for additions to rental equipment. This resulted in revenue growth and a decline in earnings.
SRG Kanamoto Co., Ltd. saw its revenues decrease by 6.8% from the same period of the priorconsolidated fiscal year under the influence of a drop in construction work, but improved its operating
profit and loss by 5.9% year-on-year by reducing its cost of revenues from operations. Assist Co., Ltd.
was affected by cutbacks in public works, and was unable to increase revenues from rentals of safety
equipment, its main products, and saw its revenues shrink 8.7% from the same period of the priorconsolidated fiscal year. Operating income also fell year-on-year by 13.7%.
Kanki Corporation, which became a new consolidated subsidiary in the prior consolidated fiscal year,
was subject to a change in accounting accompanying the change in that company’s accounting period.
Although revenues increased 19.0% compared to the initial plan value, the company booked an
operating loss resulting from an increase in small-sum assets because of the renewal of rental
equipment assets and its response to disaster relief works.
Kanatech Co., Ltd., which provides unique manufacturing services within the group, saw its revenues
grow 4.4% year-on-year, but posted an operating loss because of higher manufacturing costs
resulting from a jump in materials costs. Consolidation expenses resulting from the consolidation of
profitable branches were also a factor.

[Steel Sales-related business]
Supported by raw materials prices and strong exports since last year, the Steel Sales Division
maintained sales prices at a high level. The division’s business was also boosted by successful
participation in large-scale projects in Hokkaido and strong results from the handling of new materials(the KT Roof System, a highly durable insulated and waterproof roofing system). As a result, revenues
increased 25.0% year-on-year to ¥3,062 million, and operating profit and loss changed from a loss inthe same period of the prior consolidated fiscal year to positive operating income of ¥23 million.

[Information Products-related business and Other Businesses]
Although rental rates remained low, rental revenues for the Information Products Division rose 9.7%
from the same period of the prior consolidated fiscal year. This reflected growth in personal computerdemand with the economic recovery in the Tokyo metropolitan area, and an increase in the number oflarge projects increased after the start of the Company’s fiscal year. Revenues from sales, on theother hand, dropped 69.0% year-on-year because there were no new products to replace LAN
products, the division’s core product, and product sales fell.
As a result of the above, revenues for the entire division were off 10.6% from the same period of theprior consolidated fiscal year to ¥215 million, and operating income was flat at ¥10 million.
〔 Fiscal Year ending October 31, 2004
Revenues
Consolidated
interim period
Prior FY interim
periodFYInterim Consolidated Operating Results 〕(Million yen; % change from prior year)

Operating Income

Ordinary Income

Net Income

33,126

7.0

1,291

-18.2

1,185

-22.4

463

-57.8

30,955

-5.0

1,578

-17.1

1,527

-15.0

1,097

40.6

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 10b) Outlook for the next consolidated fiscal year (Business Period ending October 2005)
Significant concerns remain that Japan’s economic recovery might still be disrupted at points largely
susceptible to the external environment. In the construction equipment rental business in particular,
which is Kanamoto’s principal business, the cutbacks in public works in many regions including
Hokkaido is more severe than anticipated, despite the fact the Company initially made strong
reductions in local construction demand in its initial projections. These conditions are expected tocontinue during the second half of the consolidated fiscal year.
Because the majority of the Company’s earnings are concentrated in the first six months of the fiscal
year, which overlaps the construction industry’s busy period, based on its review of earnings
conditions during the consolidated fiscal year interim period under review, local economic conditions
and market trends, the Company has revised the operating results outlook for the Business Period
ending October 2005 (fiscal year ending October 2005 (November 1, 2004 - October 31, 2005)),
which it released at the presentation of Company operating results on December 13, 2004, as shown
below.
Fiscal year ending October 2005
（November1, 2004-October31,2005）

Revision of projected operating results (Consolidated)（Millions of yen）
Revenue

Operating Income

Ordinary income

Net income

Prior projection（Ａ）

63,400

2,130

1,790

740

Revised projection（Ｂ）

63,500

1,220

980

280

Increase(decrease)

（Ｂ−Ａ）

100

-910

-810

-460

0.2%

-42.7%-45.3%-62.2%

61,336

1,878

1,749

1,097

Rate of change
Prior fiscal year results(fiscal year ended October 2004)

Fiscal year ending October 2005 Revision of projected operating results(Non-Consolidated)（November1, 2004-October31,2005）（Millions of yen）
Revenue

Operating Income

Ordinary income

Net income

Prior projection（Ａ）

57,050

1,960

1,890

900

Revised projection（Ｂ）

56,920

1,320

1,340

350

Increase(decrease)

（Ｂ−Ａ）

-130

-640

-550

-550

Rate of change-0.2%-32.7%-29.1%-61.1%

Prior fiscal year results(fiscal year ended October 2004)

59,274

1,842

1,827

1,187

[Reasons for revision]
Rental revenues are forecast to fall below the Company’s initial plan target because of thecircumstances discussed above. Because product sales will remain comparatively robust, however, theCompany believes it can anticipate similar results in the second half of the consolidated fiscal year andrevenues are forecast to be nearly unchanged from plan.
Nevertheless, with regard to operating income and ordinary income, gross margin is expected to
exceed last year's results, but the Company forecasts selling, general and administrative expenses to
exceed its initial plan because of the effect of rental revenues falling below plan, the burden for the
pro forma standard tax introduced during the current fiscal year and other factors. Finally, from thestandpoint of conservative accounting, the Company plans to book reserves for valuation losses onloans to subsidiary companies and affiliated companies and equities, and this will affect net income.
Based on these factors, the Company decided to revise its initial outlook substantially in a moreconservative direction.
Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 11

The Company also decided to revise its consolidated operating results because Kanki Corporation and
Kanatech Co., Ltd. experienced earnings declines that were larger than projected in the initial plan. At
Kanki Corporation, however, operating results are expected to improve in the next fiscal year, because
the decrease in earnings was the result of a temporary cost burden resulting from an increase inrental assets and small-sum assets that will contribute to Kanki’s business restructuring, and at
Kanatech Co., Ltd. the replacement of that company’s temporary housing units had been planned.
[Outlook for the next consolidated fiscal year]
In the Construction Equipment Rental Division, Kanamoto will seek to strengthen its organization in
every business territory and work to maintain earnings. The Company will focus on enhancing its
bases to aggressively participate in the numerous large-scale, private sector-related construction
projects in regions such as the Tokyo metropolitan area and the Kanto region, where construction
equipment rental demand is strong. In the Tohoku, Tokai and Kinki territories, revenues haveincreased compared with the prior consolidated fiscal year, and the Company believes these conditions
will continue. In the Hokkaido territory, where the environment is severe, the Company will reassign
personnel, merge and consolidate bases and continue efforts to maintain the level of earnings in lightof the vital importance of this region as Kanamoto’s base of operations. With regard to theestablishment of new bases, the Company is studying the creation of about four bases in the Tokyo
metropolitan area during the one-year period until the spring of 2005.
A large-scale, public works-related supplementary budget totaling ¥1,238,400 million has been
appropriated for disaster relief works, and Kanamoto is already responding vigorously to such work inregions with disaster relief work, such as Fukui Prefecture. Kanamoto has decided to locate anearthquake disaster reaction office in Ojiya City in Niigata Prefecture, because full-scale restoration
construction following the Niigata Chuetsu Earthquake will begin during the second half of the current
business period. The Company will respond to asset allocations in disaster recovery areas throughflexible inter-branch transfers of assets stored at existing branches.
In its Steel Sales business, the Company will bolster sales of new materials for expansion andrehabilitation of existing facilities because it detects a slowdown in the upward trend in the steel
materials market, and because steel demand in Hokkaido is supported by private sector demand. In
the Information Products business, Kanamoto will concentrate on rentals of Sun Microsystems
products, which are a specialized market, and on increasing the number of customers outside of Tokyoin Sendai, Osaka and Nagoya, based on its expectation that the economic recovery and large-scalerental projects will continue.
Although the environment surrounding Kanamoto will remain challenging, the Kanamoto Group is
united and will move forward to accomplish its long-range management plan.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 12

Interim Consolidated Financial Statements

Ⅳ
1.

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

Prior Consolidated
Fiscal Year Interim Period(As of April 30, 2004)
AmountPercent

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

Prior Fiscal Year Summary
Consolidated Balance
Sheet(As of October 31, 2004)
AmountPercent(Assets)
Current Assets

15,149,601

18,839,080

11,742,173

19,551,382

12,705,791

23,480,548

19,038−−1,043,460

575,110703,059

2,120,993

1,688,674

1,905,762

Deferred tax assets

283,583

371,742

252,069

Other current assets

298,436

648,807429,435-561,565-680,494-730,669

Cash and deposits
Notes and accounts
receivable, trade
Negotiable securities
Inventory
Construction
equipment

Allowance for
doubtful accounts

37,904,929

Total Current Assets

43.3

34,148,712

39.9

37,782,380

42.3

Fixed Assets
Tangible Fixed Assets
Rental equipment
Buildings andstructures
Machinery,equipment

and delivery equipment
Land
Construction inprogress
Other tangible fixed
assetsTotal Tangible Fixed
Assets*1
10,950,116

10,452,285

10,309,578

6,898,402

6,752,856

7,011,800

950,300

848,215

907,542

24,651,537

26,062,314

26,112,181

11,14995,752

2,793

420,731

342,568

361,10943,882,237

50.1

44,553,992

52.1

44,705,006

50.1

113,4820.1

782,7240.9

821,637

0.9

Intangible Fixed Assets
Total Intangible Fixed
AssetsInvestments and Other
AssetsInvestment securities

3,821,658

4,318,655

3,938,162

Deferred tax assets

917,206

749,681911,019

1,583,838

2,146,377

2,826,514-618,021-1,189,438-1,660,994

Other assets
Allowance for doubtful
accounts
Total Investments and5,704,681

6.5

6,025,276

7.1

6,014,701

6.7

Total Fixed Assets

49,700,401

56.7

51,361,993

60.1

51,541,344

57.7

Total Assets

87,605,331

100.0

85,510,705

100.0

89,323,725

100.0

Other Assets

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 13

PeriodCategory(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year Summary
Current Consolidated Fiscal
Prior Consolidated
Consolidated Statement ofYear Interim Period
Fiscal Year Interim Period
Income(As of April 30, 2005)(As of April 30, 2004)(As of October 31, 2004)
AmountPercent

AmountPercent

AmountPercent(Liabilities)
Current Liabilities
Notes and accounts

10,539,732

13,039,913

13,405,603

934,845655,972

676,639

10,445,875

10,497,496

10,935,496

682,306

708,982

368,813464,132

532,609

480,597

4,746,007

3,327,415

4,129,127

Other current liabilities

603,304

610,636

623,001

Total Current Liabilities

28,416,203

payable, trade
Short-term bank loans
Long-term bank loans
due within one year
Corporate taxes
payableAccrued bonuses to
employees
Accounts payable,
other

32.4

29,373,025

34.4

30,619,278

34.3

Long-term Liabilities
Long-term bank loans
Accruedemployees

retirement benefits
Retirementto21,202,424

19,185,855

21,952,103

1,185,974

1,341,001

1,228,829

94,979120,535

96,281

3,601,192

2,237,469

2,496,910

14,679−−44,15072,491

125,226

allowances

directors

andauditors
Long-term accrued
expenses
Consolidation
adjustment
Other long-term
liabilities
Total Long-term
Liabilities
Total Liabilities

26,143,401

29.9

22,957,352

26.8

25,899,351

29.0

54,559,604

62.3

52,330,378

61.2

56,518,630

63.3

81,5730.1

89,5360.1

59,2450.0

8,596,737

9.8

8,596,737

10.0

8,596,737

9.6

9,720,343

11.1

9,720,343

11.4

9,720,343

10.9

14,182,462

16.2

14,071,358

16.5

13,913,568

15.6

643,902

0.7

886,387

1.0

697,675

0.8-179,292-0.2-184,036-0.2-182,475-0.2

32,964,152

37.6

33,090,790

38.7

32,745,849

36.7

87,605,331

100.0

85,510,705

100.0

89,323,725

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

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 14

2. Interim Consolidated Statements of Income
PeriodCategory(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year Summary
Current Consolidated Fiscal
Prior Consolidated
Consolidated Statement ofYear Interim Period
Fiscal Year Interim Period
Income(From November 1, 2003 to (From November 1, 2004
(From November 1, 2003
to April 30, 2005)
April 30, 2004)
to October 31, 2004)
AmountPercent
AmountPercent
AmountPercent

Revenues fromoperations
Rental revenues

20,831,504

22,504,784

39,759,242

Sales

10,124,280

10,621,999

21,577,015

Total revenues fromoperations
Cost of revenues fromoperations

30,955,785

100.0

33,126,783

100.0

61,336,258

100.0

15,241,041

16,332,000

29,998,533

Cost of goods sold7,830,897

8,564,883

17,018,896

Total cost of revenues

23,071,938

74.5

24,896,884

75.2

47,017,429

76.6

7,883,846

25.5

8,229,899

24.8

14,318,828

23.4

6,305,263

20.4

6,938,617

20.9

12,440,160

20.3

1,578,582

5.1

1,291,282

3.9

1,878,668

3.1

Cost of rental revenues

Gross profit
Selling, general andadministrative
expenses*1

Operating income
Non-operating revenues
Interest revenue

578

2,985

2,781

Dividend income

26,796

26,82668,308Gain on sale ofinvestment securities

34,466

17,80747,261

Insurance benefits

16,893

16,601

28,850Rents received

44,302

46,801

113,474

Cash bonus received

656

888

1,283

Consolidation
adjustment accountwrite-off

2,922

−

5,845

Other

102,282

70,758

170,632

Total non-operating
revenues

228,8990.7

182,669

0.6

438,4380.7

Non-operating expenses
Interest expense

172,513180,106

347,660

Other

107,076108,362

219,738

Total non-operating
expenses
Ordinary income

279,5890.9

288,4690.9

567,3990.9

1,527,892

4.9

1,185,481

3.6

1,749,707

2.9

Extraordinary profits
Gain on sale orretirement of fixed
assetsValuation gain on
investment partnership
Gain on return of
entrusted portion of
welfare pension fund
Other
Total extraordinary
Profits

*2

442

4,742

8,334

53

6,299

5,130

606,420−

606,420

5,260

103,378

342

612,176

2.0

114,4190.3

620,226

1.0

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 15

PeriodCategory(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year Summary
Current Consolidated
Prior Consolidated
Consolidated Statement of
Fiscal Year Interim Period Fiscal Year Interim Period
Income(From November 1, 2003 (From November 1, 2004
(From November 1, 2003 toto April 30, 2005)
to April 30, 2004)
October 31, 2004)
AmountPercent
AmountPercent
AmountPercent

Extraordinary losses
Loss on sale orretirement of fixed
assetsValuation loss on
investment securities
Valuation loss on
investment
partnershipTransfer to allowance for
doubtful accounts toaffiliated companies
Other
Total extraordinary
lossesIncome before taxes
and adjustments
Corporate, local andbusiness taxes
Adjustment forcorporate and othertaxes
Minority interest inincome or loss
Net income*373,49940,181

97,82410,000221

42,544

14,803

5,470

15,613−

192,465−−

19,6081,802

98,3020.3

257,9470.8

157,7850.3

2,041,765

6.6

1,041,953

3.1

2,212,149

3.6

643,560

2.1

634,2881.9

839,083

1.4

259,3900.8-86,311-0.3

256,687

0.4

41,2670.1

30,291

0.1

18,9390.0

1,097,547

3.6

463,684

1.4

1,097,439

1.8

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 16

3. Interim Statements of Consolidated Retained Earnings
PeriodCategory(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year Summary
Current Consolidated Fiscal
Prior Consolidated
Consolidated Statement ofYear Interim Period
Fiscal Year Interim Period
Cash Flows(From November 1, 2004
(From November 1, 2003 to(From November 1, 2003 toto April 30, 2005)
April 30, 2004)
October 31, 2004)
AmountAmountAmount(Capital Surplus)
Balance of capital surplus
at the beginning of theperiodBalance of capital surplus
at the end of the interim
period9,720,343

9,720,343

9,720,343

9,720,343

9,720,343

9,720,343

13,400,060

13,913,568

13,400,060(Earned Surplus)
Balance of earned surplus
at the beginning of theperiodIncrease in earned
surplusInterim period net
incomeDecrease in earned
surplusDividends
Directors and auditors’
bonuses
Decrease in earned
surplus from merger of
non-consolidated
subsidiary
Balance of earned surplus
at the end of the interim
period

1,097,547

1,097,547

463,684

463,684

1,097,439

268,819

298,594

537,604

14,1007,300

14,10032,226315,145

14,182,462−

305,894

14,071,358

32,226

1,097,439

583,931

13,913,568

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 17

4. Interim Consolidated Statements of Cash Flows(Amounts have been rounded down to the nearest thousand yen)
PeriodCategory
Cash flow from operating
activities
Income before taxes andadjustments
A m o r t i z a t i o n o f
consolidation adjustment
a
c
c
o
u
n
t
Depreciation andamortization expense
Gain on sale or retirement of
fixed assets
Loss on sale or retirement of
fixed assets
Installment purchases ofassets for small-value rentals
Reclassification of cost of
sales associated with disposalof construction equipment
Reclassification of cost of
sales associated with disposalof rental assets
Expenditures for acquisition ofrental assets
Valuation loss on investment
securities
Gain on sale of investment
securities
Increase in allowance for
doubtful accounts
Increase (decrease) in
accrued bonuses to
employees
Increase (decrease) in
accrued employees retirement
benefits
Increase in retirement
allowances to directors andauditors
Interest revenue and dividend
incomeInterest expense on
installment purchases ofrental assets
Interest expense(Increase) decrease inaccounts receivable, trade(Increase) decrease ininventory assets
Increase (decrease) in
accounts payable, trade
Increase (decrease) in
accounts payable, other
Directors and auditors’
bonuses paid

Prior Consolidated
Fiscal Year Interim Period(From November 1, 2003
to April 30, 2004)

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

AmountAmountPrior Fiscal Year Summary
Consolidated Statement of
Cash Flows(From November 1, 2003
to October 31, 2004)
Amount2,041,765

1,041,953

2,212,149-2,92254,289-5,8452,561,656

2,434,740

5,294,745-442-4,742-8,33473,49940,181

97,824

8,663

46,432

12,47517,097

4,924

22,224

889,142450,189

1,482,068-195,017-1,421,374-1,278,248

10,000221

42,544- 34,466-17,807-47,261

121,894-521,731

152,945

21,26452,012

6,692-591,340

112,171-548,485-102,113

24,253-101,749- 27,375-29,811-71,090

64,93836,464

111,954

172,513180,106

347,660

1,915,433

10,774,757-944,131-188,614

127,949

204,823-526,440-365,689

1,071,687- 81,952

119,717239,627- 14,100-7,300-14,100

Other, net-352,126

90,445-538,148

Subtotal

5,780,956

13,222,355

7,742,029

27,37529,811

71,090Interest expense-243,329-218,317-463,881

Payment of corporate andother taxes
Cash flow from operating
activities-609,674-294,120-1,119,008

4,955,327

12,739,730

6,230,229

Interest and dividends
received

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 18

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

Prior Fiscal Year
Prior Consolidated
Current Consolidated
Summary Consolidated
Fiscal Year Interim Period Fiscal Year Interim Period
Statement of Cash Flows(From November 1, 2003 (From November 1, 2004
(From November 1, 2003
to April 30, 2004)
to April 30, 2005)
to October 31, 2004)
AmountAmountAmountCash flow from investing activities
Disbursements for investments
in term deposits
Funds used for the purchase of
tangible fixed assets
Funds provided from the sale oftangible fixed assets
Funds used for the purchase ofintangible fixed assets
Funds used for the purchase ofinvestment securities
Funds provided from the sale ofinvestment securities
Funds used for payment of
capital contribution
Funds used for purchase of
consolidated subsidiary stock
Funds provided from purchase of
subsidiary company stock
following change in scope of
consolidation
Other
Cash flow from investing activities

−

−

-1

- 86,540-250,051-1,899,402

2,801

118,689

15,555- 20,540-44,151-182,859-588,401-444,132-1,044,472

888,970

539,556

1,332,729

- 10

−

-10

- 27,875−-27,875−−

319,306- 48,581

1,096- 48,581

119,823-78,992-1,535,610

221,486-20,667-36,718

6,400,000

2,500,000

11,930,000- 5,158,816-5,704,248-10,709,516- 3,088,038-2,038,759-5,564,061-1,973-1,560-5,157-268,819-298,594-537,604

-150

−

-150

- 1,896,311-5,563,830-4,923,208

3,178,839

7,096,906-228,589

11,920,620

11,734,154

11,920,620

42,124−

42,124

15,141,584

18,831,061

11,734,154

Cash flow from financing
activities
Decrease in short-term bankloans
Funds provided by long-termbank loans
Funds used to repay longterm bank loans
Funds used for repayment of
installment obligations
Funds used for the purchaseof treasury stock
Payment of dividends toparent company
Other
Cash flow from financing
activities
Increase (decrease) in cash andequivalents
Balance of cash andequivalents at beginning of
periodIncrease in cash andequivalents accompanying
merger with non-consolidated
subsidiary
Balance of cash and equivalents
at end of the interim period

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 19

5. Significant Accounting Policies for the Consolidated Financial Statements

Category

Period Prior Consolidated Fiscal Year
Interim Period(From November 1, 2003
to April 30, 2004)

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

Prior Consolidated Fiscal Year
(From November 1, 2003
to October 31, 2004)(1) Number of consolidated
companies: 4
Consolidated company
name:Assist Co., Ltd.
SRG Kanamoto Co., Ltd.
Kanatech Co., Ltd.
Daiichi Machine Industries(1) Number of consolidated
companies: 5
Consolidated
company
name:Assist Co., Ltd.
SRG Kanamoto Co., Ltd.
Kanatech Co., Ltd.
Daiichi Kikai Co., Ltd.

(1) Number of consolidated
companies: 5
Consolidated
company
name:Assist Co., Ltd.
SRG Kanamoto Co., Ltd.
Kanatech Co., Ltd.
Daiichi Kikai Co., Ltd.

1. Companies included in
the consolidation

Co., Ltd.

Kanki Corporation

Kanki Corporation
Kanki Corporation is
included in the scope of
consolidation beginning in
the consolidated fiscal year
under review following theacquisition of its stock byKanamoto in September
2004. Only the company’sbalance sheet has been
consolidated, however,
because the acquisition wasconsidered to occur at
Kanamoto’s consolidated(2) Main non-consolidated
subsidiaries
Non-consolidated
subsidiary company
namePolyshield Services Co.,Ltd.
Com Supply Co., Ltd.

(2) Main non-consolidated
subsidiaries
Non-consolidated subsidiarycompany namefiscal year-end.
(2) Main non-consolidated
subsidiaries
Non-consolidated subsidiarycompany nameComsupply Co., Ltd.

Comsupply Co., Ltd.

Kanki Maintenance Co., Ltd.

Kanki Maintenance Co., Ltd.

(Reason for exclusion fromconsolidation)(Reason for exclusionfrom consolidation)

The size of the non-The size of the non-(Reasonfor

exclusionfrom consolidation)
The size of the non-consolidated subsidiaries is

consolidated subsidiaries is

consolidated subsidiaries

small and their net assets,

small and their net assets,

is small and their net

sales and interim period

sales and interim period

assets, sales and fiscal

profit or loss (amountprofit or loss (amountcorresponding to equity)

corresponding to equity)and retained earnings

and retained earnings(amount corresponding to)(amount corresponding to)corresponding to equity)

are small in size and do not

are small in size and do not

are small in size and dohave a material effect on

have a material effect on

the consolidated interim

the consolidated interim

financial statements.

financial statements.

year profit or loss
(amount corresponding
to equity) and retained
earnings (amount

not have a material
effect on the
consolidated financial
statements.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 20

Two unconsolidated

Two unconsolidated

Two unconsolidated

application of equity

subsidiaries (Polyshieldsubsidiaries (Comsupply

subsidiaries

method accounting

Services Co., Ltd. and Com

Co., Ltd. and Kanki

Co., Ltd. and Kanki

Supply Co., Ltd.) and two

Maintenance Co., Ltd.) andMaintenance Co., Ltd.) andaffiliated companies (Active

two affiliated companies

two affiliated companies

Technology Corporation(Active Technology(Active Technology

and Active Power

Corporation and Active

Corporation and Active

Corporation) have been

Power Corporation) havePower Corporation) haveomitted from items tobeen omitted from items tobeen omitted from items towhich equity method

which equity method

which equity method

accounting is applied

accounting is applied

accounting is applied

because their respective

because their respective

because their respective

effect on interim

effect on interim

effect on consolidated net

consolidated net income orconsolidated net income orincome or loss (Amountloss (amount corresponding

loss (amountcorresponding to minority

to equity) and interim

corresponding to equity)interest) and consolidated

consolidated capital surplus

and interim consolidated

capital surplus (Amount(amount corresponding tocapital surplus (amountcorresponding to minority

equity) is immaterial andcorresponding to equity) isinterest) is immaterial andnone of the companies isimmaterial and none of thenone of the companies isimportant to the company’s

companies is important toimportant to the company’s

overall operations.

the company’s overall

overall operations.

2. Matters pertaining to(Comsupply

operations.
3. Matters pertaining to

The interim period-end

The interim period-end

the interim period-end

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

consolidated subsidiaries

consolidated subsidiaries

is February 29.

except Kanki Corporation

except Kanki

is February 28.

Corporation is August

year-end)

consolidated
subsidiaries

forWhen preparing theinterim consolidated

When preparing the

The fiscal year closing

31.
When preparing thefinancial statements, theinterim consolidated

Company uses thefinancial statements, theconsolidated financial

subsidiaries’ financial

Company uses thestatements the Company

statements as of

subsidiaries’ financial

used the subsidiaries’

February 29, and makes

statements as offinancial statements as ofadjustments for

February 28, and makes

August 31, adjusted forsignificant transactions

adjustments for

significant transactions

that occurred between

significant transactions

that occurred between

March 1, 2004 and thethat occurred between

the subsidiaries’ fiscal

interim consolidated

March 1, 2005 and theyear-end and theaccounting date on April

interim consolidated

consolidation date that30, 2004 that were

accounting date on April

have a material effect ondeemed to have a30, 2005 that werethe consolidated financial

material effect on thedeemed to have a

results.

interim consolidated

material effect on thefinancial results.

interim consolidated
financial results.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 21

4. Accounting principles
and standards used fornormal accounting
treatment(1) Appraisal standards
and appraisal
methods for principal
assetsa. Negotiable securities
Other negotiable securities
Securities with a market
price
The

Companyhasadopted the market value

a. Negotiable securities
Other negotiable securities
Securities with a market
price

a. Negotiable securities
Other negotiable securities
Securities with a market
price
The Company has adopted

Same as at left

the market value method

method (the full amount(the full amount of theof the valuation difference

valuationis charged to equity usingthedirecttransfertocapital method, with thedisposal cost determined

Securities

without

market prices
Same as at left

based

on

the

market

price

on

the

consolidatedischarged to equity usingthedirecttransfertocapital method, with thedisposal cost determinedby the moving averagemethod)differencebyaccounting

themovingaveragemethod)

based

on

the

market

price

on

the

fiscal year closing date orconsolidated

accounting

similar prices.

fiscal year closing date orsimilar prices

Securities without market
pricesThe
Company
has

Securities without market
pricesSame as at left

adopted the cost method,
cost being determined bythemovingaveragemethodb. Construction equipment
Amount after deduction ofb. Construction equipment
Same as at leftb. Construction equipment
Same as at left

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

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at leftdepreciation expense
calculated according to thedeclining-balance methodfrom the original prices, byseparate fiscal year ofpurchasec. Merchandise inventories
and supplies(i)
Merchandise
inventories
Lower of cost or market
based on the Last-in,
First-out method(ii) Supplies
The Latest Purchase Cost
method(ii) Supplies
Same as at left(ii) Supplies
Same as at left

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 22

(2) Depreciation
methods for principal
depreciable assets

a. Tangible fixed assets
The
Companyhasadoptedthedecliningbalance method. Buildings
on land that is leased
under a fixed-term landlease agreement, however,are depreciated using thestraight-line method using
the remaining period of the
fixed-term lease as thedepreciable life and zero
residual value. For certain
consolidated subsidiaries,
the Company has adopted
the straight-line method forbuildings and structuresacquired on or after April
1, 2000 but excluding
fixtures and equipment.
The
depreciable
lives
mainlyusedbytheCompany are as follows.
Rental assets
5-10
years
Buildings
31-34
years
b. Intangible fixed assets
Softwareforuse

a. Tangible fixed assets
Same as at left

b. Intangible fixed assets
Same as at left

b. Intangible fixed assets

a. Reserve for doubtful
accounts

a. Reserve for doubtful
accounts

Same as at left

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

within the Company isdepreciatedusingstraight-line

a. Tangible fixed assets
Same as at left

Same as at leftthemethodbased on the assumed
useful(3) Accounting standards
for principal allowancesand reserves

life

for

internaluse (5 years)
a. Reserve for doubtful
accounts
To provide for losses on
doubtful accounts such asaccounts receivable, theCompany charges toincome an amount basedon actual loss experience
for normal accounts, plus
an amount for projected
unrecoverable amounts
based on assessments ofindividual accounts.
b. Accrued bonuses to
employees
To fully provide

forSame as at left

expenditures of bonuses
the Company will pay toemployees, an amount isappropriated

to

the

reserve during the year
based

upon

a

salaryestimate amountFiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 23

c. Accrued employees
retirement benefit
The Company provides

c. Accrued employees
retirement benefit
Same as at leftc. Accrued employees
retirement benefit
The Company provides

for employees’ accrued

for employees’ accrued

retirement benefits based

retirement benefits based

upon the projected

upon the projectedamounts of the liability for

amounts of the liability for

accrued employees

accrued employees

retirement benefits andretirement benefits andthe value of pension

the value of pension

assets at the end of theassets at the end of theconsolidated fiscal year. At

consolidated fiscal year.

the end of each interim

At the end of each interim

consolidated accounting

consolidated accounting

period, the Company

period, the Company

appropriates an amount toappropriates an amount to

the reserve to provide forthe reserve to provide forthe liability recognized

the liability recognized

during the period.

during the period.

The difference based on

The difference based onan actuarial calculation isan actuarial calculation ischarged to income

charged to income

beginning in the

beginning in the

consolidated accounting

consolidated accounting

fiscal year following the

fiscal year following theyear in which incurred,

year in which incurred,with the amounts

with the amounts

allocated proportionately

allocated proportionately

using the straight-line

using the straight-line

method, based on amethod, based on a

specified number of years

specified number of years(10 years) that is less

(10 years) that is lessthan the averagethan the averageremaining period ofremaining period of

employment for

employment for

employees at the time theemployees at the time thedifference arises.

difference arises.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 24

(Supplemental information)

On January 1, 2004 the──────

(Supplemental information)

On January 1, 2004 theCompany received approval

Company received approval

from the Minister of Health,from the Minister of Health,Labour and Welfare forLabour and Welfare for

exemption from theexemption from theobligation to make future

obligation to make future

payments for the entrusted

payments for the entrusted

portion of the Employee

portion of the Employee

Welfare Pension Fund,

Welfare Pension Fund,

accompanying enforcement

accompanying enforcementof the Defined Benefitof the Defined Benefit

Corporate Pension Law.
The Company has adopted

Corporate Pension Law.
The Company has adopted thethe interim measuresinterim measures prescribedprescribed in Paragraph 47-2

in Paragraph 47-2 of theof the Business Guidelines

Business Guidelines

Concerning Retirement

Concerning Retirement

Benefit Accounting (Interim

Benefit Accounting (Interim

Report) concerning return ofReport) concerning return ofthe entrusted portion of thethe entrusted portion of thecorporate Employee Welfare

corporate Employee Welfare

Pension Fund (The JapanesePension Fund (The JapaneseInstitute of Certified Public

Institute of Certified Public

Accountants, Accounting

Accountants, Accounting

System Committee Report

System Committee Report

No. 13), and on the day

No. 13), and on the day

authorization was received

authorization was received

the Company accounted for

the Company accounted forthe retirement benefit liability

the retirement benefit

related to the entrusted

liability related to the

portion and the pension

entrusted portion and theassets equivalent to thepension assets equivalent toreturn amount as being

the return amount as being
extinguished.

extinguished.
The Company accounted

The Company accounted forfor the affects accompanying

the affects accompanying

this treatment by booking

this treatment by booking

extraordinary profits ofextraordinary profits of ¥606

¥606,420,000 as of the end

million as of the end of theof the interim consolidated

interim consolidated

accounting period.

accounting period.

The returned equivalentamount (minimum actuarial

The returned equivalentliability) measured as of theamount (minimum actuarial

end of the interim

liability) measured as of theconsolidated accounting

end of the consolidated

period under review was

accounting fiscal year under¥1,316,579,000.

review was ¥1,296,434,000.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 25

d. Retirement allowances todirectors and auditors
The Company provides ford. Retirement allowances to d. Retirement allowances todirectors and auditors
directors and auditors
Same as at left
The Company provides for

retirement allowances toretirement allowances todirectors and auditors based

directors and auditors based

upon pertinent rules andupon pertinent rules andappropriated to the accountappropriated to the accountproportionately at the end of

proportionately at the end of

the interim consolidated

the consolidated fiscal year

accounting period based uponbased upon length ofservice.

length of service.
(4) Lease transactions

For finance lease

Same as at left

Same as at left

a. Hedge transactions

a. Hedge transactions

Same as at left

Same as at left

b. Hedge methods andhedged transactions

b. Hedge methods andhedged transactions

Same as at left

Same as at lefttransactions except for leases
that transfer ownership of theproperty to the lessee, rent
expenses are charged toincome as payments are（5）Hedge accounting
for principal
hedging methods

made.
a. Hedge transactions
The Company accounts forhedge transactions using
allocations based on
accounting standards forforeign currencydenominated transactions,and special rule accounting
based on accounting
standards for financial
products.
b. Hedge methods and hedgedtransactions
The Company uses
currency swaps and forward
transactions in order to avoid
the currency fluctuation risk
related to the Company’s
foreign currencydenominated straight bonds
and liabilities for import
payments. The Company alsouses interest swaps to avoid
interest rate fluctuation risk
related to interest on bankborrowing.
c. Hedging policies
The Company’s use ofc. Hedging policies
Same as at left

c. Hedging policies
Same as at leftderivative transactions islimited to hedging risk within
the scope of the Company’s
assets and liabilities subject
to market fluctuation risk.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 26

d. Method for evaluating theeffectiveness of hedges
The Company does not

d. Method for evaluating the d. Method for evaluating theeffectiveness of hedges
effectiveness of hedges
Same as at left

Same as at left

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 thetime hedge begins until it isterminated. In addition, theCompany’s interest swap
transactions fulfill therequirements for special ruleaccounting, and the Company
has elected to use this inplace of an evaluation of(6)Other material
matters pertaining
to preparation of
the interim
consolidated
financialstatements(consolidated
financialstatements)
5.

Items included in

effectiveness.
Accounting treatment ofconsumption tax
Consumption tax is taken

Accounting treatment ofconsumption tax
Same as at left

Accounting treatment ofconsumption tax
Same as at left

out of all Statement of
Income items and Balance
Sheet items, except mainly
for receivables and payables.

Funds included in cash

Same as at left

Funds included in cash

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

Interim Consolidated

the Consolidated

Statements of Cash Flows

Statement of Cash Flows

include cash on hand,include cash on hand,

Consolidated

deposits that can bedeposits that can beStatements of Cashwithdrawn on demand andwithdrawn on demand andhighly liquid short-term

highly liquid short-term

investments that matureinvestments that mature

within three months of thewithin three months of thedate of acquisition and whichdate of acquisition andcan be easily converted into

which can be easily

cash and that have minimal

converted into cash andrisk of a change in price.

that have minimal risk of a

cash

and

equivalents on theInterim

Flows (Consolidated
Statements of Cash
Flows)

change in price.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 27

Change in Reporting Method
Prior Consolidated Fiscal Year Interim Period(From November 1, 2003
to April 30, 2004)──────

Current Consolidated Fiscal Year Interim Period(From November 1, 2004
to April 30, 2005)(Interim Consolidated Balance Sheet)
Following promulgation of The Law to Revise Parts of
the Securities and Exchange Law (Law No. 97 of 2004) on
June 9, 2004 and its enforcement on December 1, 2004
and revision of the Practical Guidelines Concerning
Accounting for Financial Instruments (The JapaneseInstitute of Certified Public Accountants, Accounting
Committee Report No. 14) dated February 15, 2005, theCompany changed its method for reporting limited
partnerships for investment and investments inassociations similar to such partnerships (instruments
regarded as negotiable securities under the provisions ofArticle 2 paragraph 2 of the Securities and Exchange Law)
to show them as “investment securities” beginning fromthe current consolidated fiscal year interim period.
The amount of such investments included in“Investment securities” for the consolidated fiscal year
interim accounting period under review is ¥108,218,000,
and the amount of such investments included in “Other
assets” in Investments and other assets in the priorconsolidated fiscal year interim period is ¥88,290,000.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 28

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

Prior Consolidated Fiscal Year
(From November 1, 2003
to October 31, 2004)

Interim Period(From November 1, 2003
to April 30, 2004)

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

39,597,140,000

41,862,006,000

41,979,902,000

26,097,000

31,294,000

25,669,000

269,500,000−,000

269,500,000

64,045,000

155,972,000

456,467,000−,000

93,700,000

45,618,000

Notes and bills maturing

Notes and bills maturing*1. Total accumulated
depreciation for
tangible fixed assets
2. Guarantees
Joint and several
guarantees of
employee bank loans
Guarantee of debt for
long-term bank loan toaffiliated company(Active Power Co., Ltd.)
3. Discount on notes
receivable, trade
4. Balance of notes
receivable-trade endorsed
5. Notes and bills─────maturing at the endon the last day of the interim on the last day of theof the (interim

period are settled andconsolidated fiscal year are

period) consolidated

processed on the note andsettled and processed on thefiscal year

bill clearing date. Becausenote and bill clearing date.

the last day of the

Because the last day of theCompany’s current

Company’s consolidated

consolidated fiscal year

accounting fiscal year was ainterim accounting period

financial institution holiday,

was a financial institution

notes and bills maturing on

holiday, notes and bills

the final day of the following

maturing on the final day of

consolidated accounting

the following consolidated

fiscal year are included ininterim period are included

the consolidated accounting

in the consolidated fiscal

fiscal year-end balance.

year interim accounting
period balance.
Notes

Notes

receivable,

receivable,

48,946,000

trade
Notes
payable,Notes
1,515,268,000

trade
6.Contingent liabilities─────

766,154,000

trade

The Company liquidates

payable,1,059,945,000

trade

─────

bill receivables based on
notes receivables transfer
program.
Notes
receivable, 8,324,410,000
trade
The amount of notes
receivable, trade with a rightof recourse to the Company
included in balance of notes
receivable, trade is¥1,337,614,000.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 29

(Notes to the Interim Consolidated Statements of Income)Prior Consolidated Fiscal Year Interim
Period(From November 1, 2003
to April 30, 2004)

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

Prior Consolidated Fiscal Year
(From November 1, 2003
to October 31, 2004)*1. Major expense categories and*1. Major expense categories and*1. Major expense categories andamounts included in selling,amounts included in selling,amounts included in selling,

general and administrative

general and administrative

general and administrative

expenses

expenses

expenses

Employee salaries andwages
Depreciation expense

Employee salaries andwages
Depreciation expense

4,703,521,000

Rents

1,453,865,000

404,853,000

Employee salaries and 2,615,448,000
wages
Depreciation expense
422,427,000

Rents

699,432,000

Rents

Transfer to allowancefor doubtful accounts

217,265,000

Transfer to allowancefor doubtful accounts

8,368,000

Transfer to allowancefor doubtful accounts

331,332,000

Transfer to accrued

450,967,000

Transfer to accrued

517,787,000

Transfer to accrued

442,825,000

2,374,471,000

bonuses to employees

769,684,000

bonuses to employees

888,113,000

bonuses to employees

Employees
retirement benefit
expenseTransfer toretirement
allowances todirectors andauditors

427,675,000

10,396,000

Amortization of
consolidation
adjustment account*2. Gain on sale or retirement of fixed
assetsLand*2. Gain on sale or retirement of fixed
assets442,000

Land−*2. Gain on sale or retirement of fixed
assets4,248,000

Machinery, equipment

487,000

and delivery

Land8,310,000

Building

24,000Total

8,334,000

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

6,000

Total

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

(Loss on retirement of fixed assets)
Rental equipment
Buildings andstructures
Machinery,equipment anddelivery equipment
Other
Total

Other

14,250,000
55,024,000
3,489,000

735,000
73,499,000

assets.

(Loss on sale of fixed assets)
Buildings and(Loss on sale of fixed assets)

6,906,000

structures
Machinery, equipment
and delivery equipment
Land

Other

605,000
1,915,000
53,000(Loss on retirement of fixed assets)
Rental equipment

16,840,000

Buildings andstructures
Machinery,equipment anddelivery equipment
Other

4,250,000

Total*3. Loss on sale or retirement of fixed

7,599,000

Machinery, equipment
and delivery equipmentLand

83,000309,000(Loss on retirement of fixed assets)
Rental equipment

20,915,000

Buildings andstructures
Machinery,equipment anddelivery equipment
Other

69,482,000

Total

5,895,000

1,138,000
97,824,000

2,010,000
40,181,000

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 30

(Notes to the Interim Consolidated Statements of Cash Flows)
Prior Consolidated Fiscal Year Interim
Period(From November 1, 2003
to April 30, 2004)

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

Prior Consolidated Fiscal Year
(From November 1, 2003
to October 31, 2004)

Relationships between interim

Relationships between interim

period ending balance for cash andperiod ending balance for cash andending balance for cash andequivalents and amounts for items

equivalents and amounts for items

equivalents and amounts for items

shown on the interim consolidated

shown on the interim consolidated

shown on the fiscal year consolidatedbalance sheet

balance sheet

balance sheet(As of April 30, 2004)
Cash and equivalents

1.Relationships between fiscal year

(As of April 30, 2005)（As of October 31, 2004）

15,149,601,000

Cash and equivalents

18,839,080,000

Cash and equivalents

11,742,173,000

Term deposits with amaturity longer than 3months-8,017,000

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

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

Items considered to be

15,141,584,000

Items considered to be

18,831,061,000

Items considered to be

11,734,154,000

cash and equivalents

cash and equivalents

cash and equivalents

2. Assets and liabilities of companies
thatbecamenewly

consolidated

companies as the result of purchases of
their stock.
The details of assets and liabilities andtheir relationship to the stock purchaseamount and expenditures (net amount)for stock purchases at the start ofconsolidation

for newly

consolidated

companies as the result of purchase ofstock are as follows.
Kanki Corporation
Current assets
Fixed assets

1,591,473,000
760,065,000

Current liabilities−1,602,439,000

Long-term
liabilities−1,232,023,000

Consolidation
adjustment

570,824,000

Kanki Corporation
purchase price

87,900,000

Kanki Corporation
cash and cash

−407,206,000

equivalents
Net: Amount expended
to acquireKanki−319,306,000

Corporation

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 31

V Business Segment Information(Segment Information by Type of Business)
Prior interim consolidated accounting period (From November 1, 2002 to April 30, 2003)(Unit: Yen thousand)Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Sales to outside customers

28,265,167

2,449,561

241,056

30,955,785−

30,955,785(2) Sales or transfers between
related segments

−

−

−

−

−

−

28,265,167

2,449,561

241,056

30,955,785−

30,955,785

Operating expenses

26,754,031

2,450,027

249,939

29,453,998-76,796

29,377,202

Operating income

1,511,135-465-8,883

1,501,786

76,796

1,578,582

Eliminations
or entire Consolidated
company

Total

Revenues

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

Principal products

Construction equipment
rentals

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

Steel sales

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

Information products andother businesses

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

Interim consolidated accounting period under review (From November 1, 2004 to April 30, 2005)(Unit: Yen thousand)Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Sales to outside customers

29,849,040

3,062,334

215,408

33,126,783−

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

−

−

−

−

−

−

29,849,040

3,062,334

215,408

33,126,783−

33,126,783

Operating expenses

28,671,849

3,038,434

204,459

31,914,743-79,242

31,835,501

Operating income

1,177,190

23,90010,9481,212,039

79,242

1,291,282

Eliminations
or entire Consolidated
company

Total

Revenues

Total(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

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 sales

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

Information products andother businesses

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

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 32

Prior consolidated fiscal year (From November 1, 2002 to October 31, 2003)(Unit: Yen thousand)Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Sales to outside customers

54,823,199

6,058,708

454,349

61,336,258−

61,336,258(2) Sales or transfers between
related segments

−

−

−

−

−

−

Total

54,823,199

6,058,708

454,349

61,336,258−

61,336,258

Operating expenses

53,142,297

6,013,546

454,178

59,610,022-152,432

59,457,590

Operating income

1,680,902

45,161171

1,726,235

152,432

1,878,668

Total

Eliminations
or entire Consolidated
company

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

Principal products

Construction equipment
rentals

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

Steel sales

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

Information products andother businesses

Computers and peripheral devices, telecommunications-related
equipment, microturbine generators(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 theprior interim consolidated accounting period, the interim consolidated accounting period under review andthe prior consolidated fiscal year.

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

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 33

VI Notes for leasing transactions
Prior Consolidated Fiscal Year Interim
Period(From November 1, 2003
to April 30, 2004)

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

Prior Consolidated Fiscal Year
(From November 1, 2003
to October 31, 2004)

1. Finance lease transactions except

1. Finance lease transactions except

1. Finance lease transactions except

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

of the property to the lessee.

of the property to the lessee.

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

property acquisition prices,

accumulated depreciation andaccumulated depreciation andoutstanding balance at the end

outstanding balance at the endof the interim periodof the interim period

Please refer to Annex A

Please refer to Annex B(1) Amounts corresponding to leaseproperty acquisition prices,
accumulated depreciation andoutstanding balance at the endof the fiscal year accounting
periodPlease refer to Annex C(2) Outstanding balance of future(2) Outstanding balance of future(2) Outstanding balance of futurelease payments at the end oflease payments at the end oflease payments at the end of

the interim period

the interim period

the interim period

Within one year

5,850,363,000

Within one year

5,839,307,000

Within one year

5,450,340,000

After one year

17,100,732,000

After one year

17,883,217,000

After one year

15,748,713,000

Total

22,951,096,000

Total

23,722,525,000

Total

21,199,054,000(3) Amount of lease payments,(3) Amount of lease payments,(3) Amount of lease payments,

depreciation expense anddepreciation expense anddepreciation expense andinterest expenseinterest expenseinterest expense

Lease payments
Depreciation
expenseInterest expense

3,037,511,000
2,881,672,000
435,287,000

Lease payments
Depreciation
expenseInterest expense

3,452,747,000
3,152,562,000
423,232,000

Lease payments

6,015,002,000

Depreciation

5,633,557,000

expenseInterest expense

777,925,000(4) Accounting method for amountequivalent to depreciation
expense(4) Accounting method for amountequivalent to depreciation
expense(4) Accounting method for amountequivalent to depreciation
expense

Straight-line depreciation

Same as at left

Same as at left

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

Interest method using theSame as at left

Same as at left

using the lease term as thedepreciable life and zero
residual value.

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

2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

Within one year

1,614,250,000

Within one year

1,793,354,000

Within one year

1,869,826,000

After one year

2,266,430,000

After one year

4,063,870,000

After one year

3,603,704,000

Total

3,880,680,000

Total

5,857,224,000

Total

5,473,531,000

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 34

AnnexA
Acquisition
price（¥’000）32,550,957

9,080,934

23,470,022

Other assets

419,727

184,038

235,688

32,970,684

9,264,973

23,705,711

B

Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

36,156,017

12,377,018

23,778,999

Other assets

457,485

241,637

215,848

36,613,503

12,618,656

23,994,847

Total

Annex

Outstandingbalance（¥’000）Rental assets

Total

Annex

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

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

32,088,419

10,492,130

21,596,289

Other assets

435,397

228,409

206,988

32,523,817

10,720,539

21,803,278

Total

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 35

VII

Notes related to negotiable securities）
Prior interim consolidated accounting period (As of April 30, 2004)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Yen thousand)Prior interim consolidated accounting period (As of April 30, 2004)
Acquisition price(¥’000)Acquisition price(¥’000)1,254,727

2,401,043

1,146,315

a. Government bonds

-

-

-

b. Corporate bonds

-

-

-

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

1,075,448

1,009,505-65,943

Subtotal

2,330,175

3,410,548

1,080,372(1) Stock

Acquisition price(¥’000)(2) Bonds

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousand)Prior interim consolidated accounting period(As of April 30, 2004)
Amount shown on the interim consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter
stocks)369,500

Interim consolidated accounting period under review (As of April 30, 2005)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Yen thousand)Interim consolidated accounting period under review (As of April 30, 2005)
Acquisition price(¥’000)Acquisition price(¥’000)Acquisition price(¥’000)1,271,273

2,785,762

1,514,489

a. Government bonds

-

-

-

b. Corporate bonds

-

-

-

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

1,012,213

987,534-24,679

Subtotal

2,283,486

3,773,296

1,489,810(1) Stock(2) Bonds

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

377,139108,218

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 36

Prior consolidated accounting fiscal year (As of October 31, 2003)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Yen thousand)Prior consolidated accounting fiscal year (As of October 31, 2004)
Acquisition price(¥’000)

Amount reported on the
consolidated balance sheet(¥’000)

Valuation profit or loss(¥’000)1,304,905

2,508,055

1,203,149

a. Government bonds

-

-

-

b. Corporate bonds

-

-

-

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

998,248

968,363-29,885

Subtotal

2,303,153

3,476,418

1,173,264(1) Stock(2) Bonds

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousand)Prior consolidated accounting fiscal year
(As of October 31, 2004)
Amount shown on the consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter
stocks)VIII

401,743

Notes related to Derivative Transactions
Prior consolidated fiscal year interim period (As of April 30, 2004)
Because it applies hedge accounting, the Company had no material items to report.

Consolidated fiscal year interim period under review (As of April 30, 2005)
Because it applies hedge accounting, the Company had no material items to report.

Prior consolidated fiscal year (As of October 31, 2004)
Because it applies hedge accounting, the Company had no material items to report.

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 37

(Per Share Information)
PeriodCategory

Prior Consolidated Fiscal
Year Interim Period(From November 1, 2003
to April 30, 2004)

Net assets per share
Interim period (fiscal year)
net income per share

Current Consolidated Fiscal Prior Consolidated Fiscal
Year Interim Period
Year(From November 1, 2004
(From November 1, 2003
to October 31, 2004)
to April 30, 2005)¥1,103.77¥1,108.32¥1,096.42¥36.75¥15.53¥36.50---Net income per share ofcommonstock

adjustment

for

after
potential

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

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

(Note) The basis for calculating interim period (fiscal year) earnings per share is as follows.
PeriodCategory

Prior Consolidated Fiscal
Year Interim Period(From November 1, 2003
to April 30, 2004)

Interim period (fiscal year)
net income (¥ ‘000)
Amountnotattributed

Current Consolidated Fiscal Prior Consolidated Fiscal
Year Interim Period
Year(From November 1, 2004
(From November 1, 2003
to October 31, 2004)
to April 30, 2005)

1,097,547

463,684

1,097,439

-

-

7,300

1,097,547

463,684

1,090,139

29,868,128

29,857,851

29,865,301

tocommon stock shareholders(¥ ‘000)
Interim period (fiscal year)
net

incomerelatedtocommon stock (¥ ‘000)
Averagenumberofoutstanding

sharesduringthe period
Summary of latent stock notincluded in the calculation ofinterim period (fiscal year)
earnings per share on a fully
diluted basis because it does
not have a dilution effectNew stock warrants (stock-------

New

stock

warrants

the(stock options) based onprovisions of Article 280-

the provisions of Article

19 of the old Commercial

280-19Code

Commercial Codeoptions)

based

on

of

the

old

Fiscal Year Ending October 2005 Interim Accounting Bulletin (Consolidated)

P. 38