Fiscal Year ending October 31, 2002

Interim Financial Statements Bulletin (Consolidated)
June 14, 2002
Listed Company Name

Kanamoto Company, Ltd.

Listing Exchanges

Company Code Number

9678

Tokyo Stock Exchange

Head Office Address

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

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

Inquiries

Person to Contact

Corporate Officer and Division Manager, Accounting Division

Name

Nobuhito Utatsu

TEL (011)-209-1600

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

June 14, 2002

SEC Accounting Standards

The Company has not adopted SEC accounting standards

1. Consolidated Operating Results for the Interim Period ended April 30, 2002 (Nov. 1, 2001 – Apr. 30, 2002)(1) Consolidated Operating Results(Numbers less than one million yen have been rounded down)
Revenues
Millions of yen
Six months endedApril 30, 2002
Six months endedApril 30, 2001
Fiscal year ended
October 31, 2001

Operating Income％

Millions of yen

Ordinary Income％

Millions of yen%

32,615

– 0.1

1,695

3.5

1,779

– 13.632,640

−

1,637

−

2,059

−

67,346

2,872

Net Income

Net Income per Share ofCommon Stock
Yen

3,257
Net income per share on a
fully diluted basis
YenMillions of yen％
Six months ended
931
78.0
30.79
24.32
April 30, 2002
Six months ended
522
−
17.30
14.20
April 30, 2001
Fiscal year ended
472
15.64
13.89
October 31, 2001
Notes 1. Investment profit or loss accounted for by the equity method
Six months ended April 30, 2002−
Six months ended April 30, 2001−
Fiscal year ended October 31, 2001−
2. Average number of shares (consolidated) outstanding during the period
Six months ended April 30, 2002
30,234,542 share
Six months ended April 30, 2001
30,228,376 sharesFiscal year ended October 31, 2001
30,229,603 shares
3. Are there any changes in accounting method?
Yes
4. The percentages shown for revenues, operating income, ordinary income and net income are the percent
increase or decrease compared to the same period of the prior fiscal year

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1

(2) Consolidated Financial Position
Total Assets
Millions of yen

Shareholders’EquityMillions of yen

Shareholders’Equity Ratio％

Shareholders’Equity per ShareYen

Six months ended
103,857
31,42930.3
April 30, 2002
Six months ended
106,181
31,751
29.9
April 30, 2001
Fiscal year ended
106,639
30,84328.9
October 31, 2001
Notes 1. Number of shares (consolidated) issued and outstanding at end of period
Six months ended April 30, 2002
30,236,044 shares
Six months ended April 30, 2001
30,236,951 sharesFiscal year ended October 31, 2001
30,237,259 shares

1,039.46
1,050.09
1,020.03(3) Consolidated Cash Flows
Cash Flow fromOperating
Activities
Millions of yen
Six months endedApril 30, 2002
Six months endedApril 30, 2001
Fiscal year ended
October 31, 2001

Cash Flow from
Investing
Activities
Millions of yen

Cash Flow from
Financing
Activities
Millions of yen

Balance of Cash andEquivalents at End
of Period
Millions of yen

8,708

– 617

– 3,458

20,624

7,869

– 268

– 8,243

15,78012,469– 762– 12,137

15,991(4) Companies to which consolidation accounting and equity method accounting apply
Number of consolidated subsidiaries: 6
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)
1(Excluded)
Equity method accounting (new companies)
0(Excluded)00

2. Projected Consolidated Operating Results for the Fiscal Year Ending October 31, 2002
(November 1, 2001 - October 31, 2002)
Revenues

Ordinary Income

Millions of yen
Full year

63,200Millions of yen
2,320

Net Income
Millions of yen
1,130

Reference: Projected net income per share of common stock (Full year) ¥37.37※The above projections were prepared based upon information available to the Company at the time the projections
were announced as well as various assumptions concerning the future economic and business environment.
Actual operating results may differ from the projected figures depending upon various factors in the future.
Please refer to Page 6 for details of the projections.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2

I

Current Conditions of the Company’s group

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

〔Businesses related to the Construction Equipment Rental Division〕
The Company’s rental division, together with Taniguchi Co., Ltd. (a subsidiary company), Daiichi Machine
Industries Co., Ltd. (a subsidiary company) and Kanamoto Shikoku Co., Ltd. (a non-consolidated subsidiarycompany), is engaged in the rental and sale of construction equipment and machines used for construction. These
three subsidiary companies operate in designated marketing areas and borrow rental equipment assets from theCompany as needed in order to meet customer demand.
SRG Kanamoto Co., Ltd. (a subsidiary company) operates a rental business that provides temporary materials forconstruction use. Assist Co., Ltd. (a subsidiary company) is engaged in the rental and sale of furniture and fixturesand safety products for the construction industry. The Company and Taniguchi Co., Ltd. borrow rental assets fromSRG Kanamoto Co., Ltd. and Assist Co., Ltd. as needed to rent to their own customers.
In addition to the above companies, Kanatech Co., Ltd. (a subsidiary company) develops, manufactures and sells
modular housing units for temporary use, and Polyshield Services Co., Ltd. (a subsidiary company) is engaged in thesale and construction of specialized rust-proof, water-proof shields.

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

〔Businesses related to the Computer and Peripheral Equipment Rental Division and other businesses〕
As the Company’s information and telecommunications-related division, Kanamoto’s Computer and Peripheral
Equipment Rental Division is engaged in the rental and sale of computers, computer peripheral equipment andequipment for the development of computer products. Companies affiliated with this division include Active
Technology Co., Ltd. (an affiliated company), which is principally engaged in the sale of telecommunications-related
equipment such as wireless LAN devices. As supplemental businesses, Active Power Co., Ltd. (an affiliatedcompany) is engaged in the sale of microturbine generators manufactured by Capstone Corporation, a U.S. company,
and supplies these products to the Company, among others. Providence Brewery Co., Ltd. (a subsidiary company)
brews and sells regional beers.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .3

〔Relationship of the Operating Businesses〕(Note) ※Indicates companies to which equity method is not applied

Customers
Construction equipment rental
Kanamoto Co., Ltd.
Construction

Equipment

Construction-related businesses

RentalTaniguchi Co., Ltd.

Division
Steel Sales Division

Daiichi Machine Industries Co., Ltd.

Computer and Peripheral Equipment
Division

Kanamoto Shikoku Co., Ltd.

Microturbine
electrical generators

Rental of temporary scaffolding

Manufacture and sale ofmodular housing units

Rental of safety
products

SRG Kanamoto Co., Ltd.

Kanatech Co., Ltd.

Supply of modular housing units

Assist Co., Ltd.
Rental of safety products
Polyshield Services Co., Ltd.

Providence Brewery Co., Ltd.
Active Power Corporation
Consolidated
Active Technology Corporation

Non-consolidated

AffiliatedRental transactions

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .4

II

Management Policies and Operating Results

1. Basic policies concerning business management
Kanamoto Company’s basic mission is to achieve successful performance that produces maximum satisfaction for all
stakeholders of the Company, including customers, shareholders and the local community. The Company undertakes
its businesses based on a fundamental management policy embodied in the phrase, “constantly seek innovation andmove forward based on a spirit of independence and self-reliance.”
The Company’s group will further strengthen consolidated group management and continue to take actions adapted
to the current environment by seeking new customer needs and establishing new information and services focusedaround the construction equipment rental business, the mainstay of the Company’s principal business activity.

2. Basic policies concerning distribution of earnings
In order to ensure the long-term, integrated expansion of shareholders’profits, Kanamoto Company continues tofocus comprehensively on both capital investments based on its medium-term profit plan and on profitability,
dividend trend and a sound financial position. The Company also remains committed to its policy of stable dividend
growth.
To accomplish these goals, Kanamoto Company focuses on the importance of cash flow and places particularimportance on the growth of EBITDA (earnings before interest, taxes and depreciation and amortization).
Furthermore, given the Company’s present circumstances and markets, the Company believes it has adopted an
appropriate position with regard to its investments and has no plans to reduce its positions at this time. The
Company will continue to flexibly examine its activities, however, in accordance with the distribution of future
investment positions.

3. Medium to long-term corporate management strategy
In its principal business of construction equipment rentals, the Company is continuing to implement to the extent
possible the following two business strategies, together with other firms that are recognized as being the leading
companies in their own businesses.
① Increase the efficient utilization of its rental assets through its strategy of building a dominant network inexisting sales territories, by opening a greater number of small-scale branch offices② Expand its business base by constructing an alliance group of business partners in regions such as westernJapan where the Company has not previously built its own sales branches
By continuing to pursue this strategy, the Company has created a group of firms that employs more than 1,300
individuals and has achieved an expansionary trend that will provide future growth.
Nevertheless, any increase in the number of offices and employees brings a danger of succumbing to so-called “bigcompany syndrome,”where a company’s organization becomes inflexible or employee morale stagnates. In order toavoid this result, based on the new “Kanamoto Survival Plan” Three-Year Plan initiated in November 2001,
Kanamoto Company will strengthen its internal management systems in the following areas.

Sales divisions

Administrative divisions
・Build risk management systems
・Review management systems
・Review personnel systems
・Obtain higher debt rating

Achieve low-cost
operation

・Strengthen alliances
・Dominate sales regions
・Scrap and build
・Implement results-oriented
approach

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .5

Among these objectives, Kanamoto will promote further improvements in business efficiency and greater operating
efficiency for its rental assets by taking maximum advantage of the online network linking all of the Company’sbranches. This system provides the underlying structure of the Company’s operations, and is more advanced andvastly superior to similar efforts at other companies in the industry.
Under its scrap and build policy, Kanamoto has adopted a proactive system to promptly close unprofitable branches
that do not satisfy the Company’s prescribed standards and shift its human resources and rental assets to regionswith higher needs. Kanamoto’s policy is to place priority on opening branches that can rapidly attain profitability.
Specifically the Company has placed its greatest priority on the Kanto region, particularly in the Tokyo area.
In addition, Kanamoto is taking steps to strengthen its alliance group. These include boosting business capabilities
without regard to whether a firm is a consolidated or non-consolidated company, and enhancing tie-ups among thefirms as a group. As part of this effort, Kanamoto made Daiichi Machine Industries Co., Ltd. (Head office: Kanoya,
Kagoshima Prefecture), whose main sales territory is the southern area of Kyushu, a subsidiary company inNovember 2001.
Finally, as its strategy in the finance and administrative division, Kanamoto will continue to focus on improving its
bond rating with a view of ensuring access to diverse, high-quality capital funding, in order to improve andstrengthen its financial position.

4. Changes to the Company’s management organization and measures concerning corporate governance
To provide overall management for the Kanamoto group, the Company holds a regular “alliance group meeting”thatis attended by the management of each group company. This meeting serves to ensure a thorough understanding of
the group’s business objectives and management policies, and to provide each firm participating in the group with asense of harmony as well as independence. For those companies subject to consolidation in particular, these meeting
focus on improvements to the business development capabilities of the entire group by strengthening the business ofeach respective firm and ensuring a solid financial base.
In January 2001, Kanamoto introduced an executive director system. The Company took this step as a means toclarify responsibility for execution of the Company’s business and speed up decision-making. In addition to
consolidating the organizational framework in the Construction Equipment Rental Division and clarifying thesystem of responsibility in each region, the new system will improve the communication function for top-down
notification of instructions such as management policies and provide a system for keeping every employee wellinformed about the Company’s policies.
The Company has also abolished the seniority system and replaced it with an emphasis on ability andperformance-based evaluations. Under this new system, Kanamoto is aggressively appointing promising young
employees as on-site managers of the Company’s 136 branch offices.

5. Issues to be addressed by the Company
Because of the pressure on construction companies to lower rental unit prices that has accompanied recent public
works spending cuts, the construction equipment rental industry is experiencing deteriorating profit margins. In
order to maintain its growth in the face of this environment, Kanamoto must continue to introduce equipment tomeet the demand for renewal construction (bridge inspection vehicles) and the most up-to-date equipment such as
specialized equipment (large-scale electrical generators or ground improvement equipment) that competitors cannot
make available. In addition, the Company must also build an organization that can deliver this equipment to users
throughout Japan and differentiate Kanamoto from other firms, through fast, accurate maintenance and a
responsive asset quality assurance system.
Because such differentiation also runs the risk leading to higher costs, however, as mentioned earlier Kanamoto has

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .6

drafted a “Kanamoto Survival Plan”Three-Year Plan, which the Company will implement beginning from November
2001. With this plan Kanamoto seeks to achieve a low-cost operation without sacrificing service quality, by lowering
its purchasing costs through planned rental asset purchases and reviewing and reducing all expenditures.
For its marketing efforts as well, Kanamoto will take maximum advantage of its high-quality services and top-downsystem of guidance created by the change in organization, in order to implement systematic marketing from its sales
force to top management.
In the past, Kanamoto Company delayed opening branches in the large market provided by the Kanto region,
particularly the Tokyo metropolitan area, because of the problem of obtaining suitable branch office sites. Over the
coming years Kanamoto will focus on the Tokyo metropolitan area as the most important business territory for new
growth and proceed to build a sales office network. While there are many competitors and achieving branch
profitability is expected to be challenging, the Company can anticipate suitable results because its branch network
will be newly constructed.
Kanamoto will also continue its venture business support activities, in order to nurture new businesses that will
follow the growth path of its construction equipment rental business. Among the companies Kanamoto has invested
in so far, microturbine electrical generators and VoIP (Internet telephony) technology show strong promise.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .7

2. Operating Results and Financial Position(1) Summary of the interim period under review
During the interim period under review, Japan’s economic conditions grew more serious. The sense of economic
gloom deepened, demonstrated not only by the continual negative outlook captured by the Diffusion Index (DI),which measures corporate sentiment, but also by the fact that the government’s forced efforts to restore government
finances disregarded economic trends and made it plausible to talk about a possible “March crisis” in Japan’seconomic and financial system.
In the construction industry, the principal customer for Kanamoto’s construction equipment rental business, anextremely severe business environment continued not only because of lower public works spending but also becauseof a rapid deceleration of private sector capital investment, with the exception of the Tokyo metropolitan area. A
summary of operating results for each operating division is discussed below.

① Construction-related business
The latest figures based on research by the Japan Civil Engineering Association (issued June 2002) showed thatJapan’s construction companies rely on construction equipment rentals for 55.5% (up 1.2% points over the prioryear) of their equipment needs. The demand for construction equipment rentals remains unchanged and vigorous.
The number of public works construction projects declined following cuts in the public works budget, however, andrevenues for the construction industry overall were lower. As a result, construction equipment rental companies
including Kanamoto faced strong pressure to reduce unit prices. Despite the upward trend in the use of rentals tomeet construction equipment needs, therefore, revenues for the construction equipment rental industry as a wholedeclined for the second year, and the business environment confronting the industry remained extremely difficult.

● Conditions for the Company (Unconsolidated)
Kanamoto took further steps to secure revenues for its Construction Equipment Rental Division. These included
reorganizing the existing branch network, dividing Hokkaido into two territories and consolidating the six
prefectures in the Tohoku, Kanto-Shinetsu and Kinki-Chubu areas into three territories, implementing measures toimprove the distribution efficiency of rental assets, and closing unprofitable branches while simultaneously
pursuing flexible business development by shifting human resources and rental assets away from unprofitableareas.
During the interim period under review, the Company increased the number of branches by six. This reflected one
new branch in Hokkaido, three new branches and one branch closing in the Tohoku region, three new branches andone branch closing in the Kanto area and one new branch in the Kinki-Chubu area. Based on these changes, andassisted by the positive results of the Company’s alliance strategy in western Japan, the Company kept the decline
in construction equipment rental revenues to 5.8%.
By region, rental revenue declined by 12.5% in Hokkaido, as demand for public works construction decreased.
Revenues also fell 9.2% in the Tohoku area for the same reason. Rental revenues grew 5.8% in the Kanto-Shinetsu
area that includes Tokyo, where public works spending and private construction demand remained vigorous. In the
Kinki-Chubu area, revenues climbed 9.1%.
With regard to sales revenue, on the other hand, the division’s sales of used construction equipment exhibited strong
growth, supported by the healthy economies of Southeast Asia and by the Company’s development of sales activities
in other parts of Japan. As a result, revenues from sales of equipment increased 12.2% compared to the same periodof the prior fiscal year.
From the standpoint of profitability, the Company restored the Construction Equipment Rental Division’sprofitability and achieved results that greatly exceeded its initial projections. This was the result of cost reductions
based on the Company’s new “Kanamoto Survival Plan”Three-Year Plan, which the Company began implementing
during the period under review, and greater balance from reviewing the way in which the Company introduces
assets, which enabled it to smooth the depreciation expense burden while maintaining capital investment(construction equipment rental assets).

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .8

● Conditions for consolidated subsidiaries
Interim period operating results for consolidated subsidiaries in construction-related businesses were as follows.
At Taniguchi Co., Ltd., interim period net income fell 30.1% compared to the same period of the prior fiscal year
despite a revenue increase of 0.6%, as the firm made a strong effort to obtain more orders in the face of lower public
works construction in Hokkaido.
Assist Co., Ltd. enjoyed the results of its prior year efforts to expand and strengthen its sales offices. Revenue
increased by 20.0%, and net income rose by 12.5%.
Although SRG Kanamoto Co., Ltd. was able to increase revenue by 16.5% after opening a new branch in Sapporo,net income remained unchanged from the same period of the prior fiscal year because of lower unit prices.
Kanatech Co., Ltd. doubled its revenues as the supply of its modular housing units to other members of Kanamoto’salliance group remained on track. Net income declined by 10.0% from the same period of the prior fiscal year,
however, as costs rose because of efforts to broaden the firm’s product line-up and higher transportation expenses.
Daiichi Machine Industries Co., Ltd. became a new consolidated subsidiary in November 2001. Because thiscompany changed its fiscal period closing month and applied special accounting rules, a direct comparison to theprior fiscal year operating results is not possible. Nevertheless, the firm achieved steady growth in construction
equipment rental and sales income and net income.
As a result of the above activities, interim period consolidated revenues from construction-related business rose by
2.8% to ¥28,833 million, and operating income increased by 5.1% to ¥1,664 million.

② Steel sales-related business
The Steel Sales Division focused its sales efforts on the Sapporo metropolitan area, which accounts for the largest
portion of sales in the Hokkaido region. Nevertheless, the weakening of construction investment including private
sector demand negatively affected sales. The division also made a decision to abolish its steel production raw
materials (iron scrap) section as of the end of January 2002. As a result, sales fell 19.3% from the level of the same
period of the prior fiscal year to ¥3,157 million, and the division incurred an operating loss of ¥11 million.

③ Computer and peripheral equipment related business and other businesses
Rental revenue at Kanamoto’s Computer and Peripheral Equipment Rental Division, which manages the Company’sinformation and telecommunications-related businesses, came under pressure as firms reached the end of apurchasing cycle for new equipment and demand weakened because of customer cutbacks in research expenses.
Compared to the same period of the prior fiscal year, rental revenue declined 14.2%. Equipment sales rose
marginally by 1.5%.
In other businesses, Kanamoto established Providence Brewery Co., Ltd. in July 1999 with the goal of creating abusiness to help to revitalize the city of Muroran, where the Company first began. Despite this intention, however,weak personal consumption demand and the inability to expand sales channels in the tradition-bound alcoholic
beverage industry made it difficult to continue operations. Faced with uncertain prospects, Kanamoto was unable to
avoid a decision to discontinue local beer production in February 2002. Because of the small scale of the brewery’searnings, this decision did not have a material affect on the Company’s revenues and earnings.
Revenues for the Company’s computer and peripheral equipment-related business and other businesses fell 8.1% to¥624 million, and these businesses incurred an operating loss of ¥25 million.

(Fiscal Year ending October 31, 2002
Interim period
Change from same

Interim Consolidated Operating Results)

Revenues

Operating Income

Ordinary Income

Mil. yen

32,615

1,695

1,779

931

％

– 0.1

3.5

– 13.678.0

Net Income

period of prior year

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .9

〔Other business operating results〕
The effect of Japan’s economic recession has reduced the number of promising investment targets for the Company’sventure business support activities. The Company did not provide any support such as new capital investment
during the interim consolidated period under review.
Kanamoto is currently pursuing project sales of Capstone microturbine electrical generators that will run on avariety of previously underutilized gases (methane gases such as colliery gas, biogas and sludge digestion gas). The
Company expects these efforts to result in additional new business in the future.

(2) Consolidated cash flow
Cash flow from operating activities increased by ¥838 million compared to the interim period of the priorconsolidated fiscal year to ¥8,708 million. This change primarily reflected the increase in income before taxes andadjustments, a smaller increase in accrued employees retirement benefits, a decrease in trade accounts receivable, adecrease in accounts payable and an increase in corporate and other taxes paid.
Cash flow used for investing activities was ¥617 million. This was ¥348 million greater than in the same period of
the prior fiscal year, and was mainly the result of larger expenditures for the acquisition of tangible fixed assets andoutlays for the acquisition of subsidiary company stock that accompanied the change in the scope of application of
consolidation accounting.
Cash flow used for financing activities declined by ¥4,784 million compared with the interim period of the priorfiscal year to ¥3,458 million. Although the Company made payments to redeem corporate bonds by purchase, thiswas largely funded by an increase in long-term bank borrowing.
As a result of the above activities, the balance of cash and equivalents at the end of the interim consolidated
accounting period was ¥20,624 million, up ¥4,844 million compared with the end of the interim period of the priorconsolidated fiscal year.

(3) Outlook for the full fiscal year
Kanamoto expects the budget for public works construction to remain on a downward trend as Japan’s government
implements spending cutbacks. We also do not foresee any immediate turnaround in private sector capital
investment demand, although the consensus is that such demand has reached the bottom and will not worsen. The
Company therefore cannot anticipate any large increases in construction equipment rental revenue. Based on its
projections of slightly lower revenues, a lighter depreciation and amortization expense burden, improvement to its
earnings structure and no further one-time expenses such as those that accompanied the adoption of new accounting
standards, Kanamoto projects that it will be able to maintain a suitable level of profitability.

(Fiscal Year ending October 31, 2002

Projected Full-year Consolidated Operating Results)

Revenues

Operating Income

Ordinary Income

Net Income

Full year projection

Mil. yen

63,200

2,350

2,320

1,130

Change from prior

％

– 6.2

– 18.2– 28.8

139.4

year(The above projection reflects adjustments to Company forecast announced on May 29, 2002)
The Kanamoto group aims to ensure higher earnings in the Company’s main business of construction equipment
rentals by strengthening the management of this division and each group company within the division. The
Company will simultaneously promote rationalization of administrative and maintenance activities, in order tostrengthen low-cost operations. The priority for creation of new branches will be on the Tokyo metropolitan area.
In November 2001, Kanamoto opened its Hassumu Mega-Station, a large-scale multi-use facility located in
Hassumu in Sapporo, Hokkaido. Because this facility has gradually begun to show synergistic results, the Company
plans to carry out a similar management arrangement in other areas of Japan that will similarly unify the group.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 0With regard to the Company’s consolidated subsidiaries as well, there are many alliance partners for the company’smain operations in the construction equipment rental business. Kanamoto plans to further create alliances andunify operations, in order to improve operating efficiency.
The Company’s Computer and Peripheral Equipment Rental Division will newly commercialize and market
KISARA, the VoIP Internet telephone product developed by Soft Front Inc. In other areas, Kanamoto will continue
its efforts to expand sales of Capstone Corporation’s microturbine electrical generators.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 1

III

1.

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

End of Current
Consolidated Fiscal Year
Interim Period(As of April 30, 2002)
AmountPercent

End of Prior
Consolidated Fiscal
Year Interim Period(As of April 30, 2001)
Percent
AmountPrior Fiscal Year Summary
Consolidated Balance
Sheet(As of October 31,2001)
AmountPercent(Assets)
Current Assets
Cash and deposits

21,011,766

15,784,766

15,996,639

20,439,161

24,047,536

25,807,750

Negotiable securities

204,510

272,882

114,440

Inventory

958,989

1,368,469

1,117,400

Construction
equipment

2,784,487

3,378,866

2,931,588

Deferred tax assets

247,114222,143

230,232

Other current assets

375,898

769,201

351,760

Allowance for
doubtful accounts– 400,964– 200,367– 324,938

Total Current Assets

45,620,962

Notes and accounts
receivable, trade※4,5,643.9

45,643,498

43.0

46,224,874

43.3

Fixed Assets
Tangible Fixed Assets
Rental equipment
Buildings andstructures
Machinery,equipment anddelivery equipment
Land
Construction inprogress
Other tangible fixed
assetsTotal Tangible Fixed
AssetsIntangible Fixed
AssetsTotal Intangible
Fixed Assets※1

17,549,688

20,336,553

19,820,577※2

8,068,926

8,182,337

8,163,141

1,239,391

1,338,636

1,300,205

24,635,142

24,181,603

24,396,831

57,505

110,100

58,896

217,880

230,047

231,088※2

51,768,535

49.9

54,379,278

51.2

53,970,740

50.6

89,5570.1

72,5290.1

84,251

0.1

Investments and Other
AssetsInvestment securities

3,745,300

4,560,930

3,789,391

Deferred tax assets

1,701,602

609,073

1,567,069

Other assets

1,538,571

1,495,262

1,449,550– 606,624– 579,240– 446,847

Allowance for
doubtful accounts
Total Investments
and Other Assets

6,378,849

6.1

6,086,026

5.7

6,359,165

6.0

Total Fixed Assets

58,236,943

56.1

60,537,834

57.0

60,414,156

56.7

Total Assets

103,857,906

100.0

106,181,333

100.0

106,639,030

100.0

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 2

Period(Amounts have been rounded down to the nearest thousand yen)
End of Current
End of Prior
Prior Fiscal Year
Consolidated Fiscal Year
Consolidated Fiscal
Summary Consolidated
Interim Period
Year Interim Period
Balance Sheet(As of April 30, 2002)
AmountPercent

Category(As of April 30, 2001)
AmountPercent(As of October 31,2001)
AmountPercent(Liabilities)
Current Liabilities
Notes and accounts
payable, trade※6

10,724,769

13,324,434

12,620,598

Short-term bank loans※2

750,385

516,525510,053※2

8,304,937

7,889,407

7,819,446

5,277,692−−

920,796

1,263,445

1,319,459

573,459

538,760

594,688

8,129,085

8,349,533

8,299,274

739,274

580,146

763,794

Long-term bank loans
due within one year
Corporate bonds to beredeemed within one
year
Corporate taxes
payableAccrued bonuses to
employees
Accounts payable,
other
Other current
liabilities
Total Current
Liabilities

35,420,400

34.1

32,462,253

30.6

31,927,314

29.9

Long-term Liabilities
Straight bonds
Convertible bonds
Long-term bank loans
Retirement allowances
to directors andauditors
Accrued employees
retirement benefits
Long-term accrued
expenses
Consolidation
adjustment
Other long-term
liabilities
Total Long-term
Liabilities
Total Liabilities※2−

5,277,692

5,277,692

7,754,000

9,733,000

9,281,000

16,831,060

13,293,542

14,547,095

176,174

273,522

282,426

2,054,945

1,018,988

2,008,761

9,829,051

12,262,848

12,405,133

28,679−−164,105−−

36,838,016

35.5

41,859,592

39.4

43,802,108

41.1

72,258,417

69.6

74,321,846

70.0

75,729,422

71.0

169,9460.2

108,030

0.1

66,601

0.1

8,596,737

8.3

8,596,080

8.1

8,596,737

8.1

9,720,343

9.3

9,719,689

9.1

9,720,343

9.1

13,038,067

12.5

12,718,429

12.0

12,395,900

11.6

85,3920.1

727,3230.7

140,535

0.1(Minority Interests)
Minority interests(Shareholders’Equity)
Common stock
Additional paid-in
capitalConsolidated retained
earnings
Valuation differenceon other investment
securities

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 3securities

Treasury stock
Parent company stock
held by subsidiaries
Total Shareholders’EquityTotal Liabilities,
Minority Interests andShareholders’Equity

31,440,540

30.2

31,761,522

29.9

30,853,516

28.9– 1,024

– 0.0

– 93

– 0.0

– 537

– 0.0

– 9,973– 0.0– 9,973– 0.0– 9,973– 0.0

31,429,542

30.2

31,751,456

29.9

30,843,006

28.9

103,857,906

100.0

106,181,333

100.0

106,639,030

100.0

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 4

2. Consolidated Statements of Income
PeriodCategory(Amounts have been rounded down to the nearest thousand yen)
Current Consolidated
Prior Consolidated
Prior Fiscal Year
Fiscal Year Interim
Fiscal Year Interim
Summary Consolidated
PeriodPeriodStatement of Income(From November 1, 2001
(From November 1,(From November 1, 2000
to April 30, 2002)
2000 to April 30, 2001)
to October 31,2001)
AmountPercent
AmountPercent
AmountPercent

Revenues from operations
Rental revenues

21,024,837

21,658,504

41,839,605

Sales

11,591,052

10,981,724

25,506,819

Total revenues fromoperations
Cost of revenues fromoperations

32,615,889

100.0

32,640,228

100.0

67,346,425

100.0

Cost of rental revenues

15,327,322

15,625,679

31,189,827

Cost of goods sold8,847,179

8,678,648

19,986,164

Total cost of revenues

24,174,502

74.1

24,304,327

74.5

51,175,992

76.0

Gross profit

8,441,387

25.9

8,335,901

25.5

16,170,432

24.0

6,745,872

20.7

6,698,161

20.5

13,298,018

19.7

1,695,514

5.2

1,637,740

5.0

2,872,413

4.3

Selling, general andadministrative expenses※1

Operating income
Non-operating revenues
Interest revenue

8,268

20,172

17,257

Dividend income

2,854

6,786

22,19044,506

361,017376,299

28,821

127,103242,730

Rents received

48,395

118,956

256,066

Gain on redemption of
corporate bonds bypurchase

44,915−

8,143

Cash bonus received

158,980−

86,487

Consolidation
adjustment accountwrite-off

3,186

−

−

Other

85,514

139,593

83,239Total non-operating
revenues

425,443

Gain on sale ofinvestment securities
Insurance benefits

1.3

773,629

2.4

1,092,413

1.6

Non-operating expenses
Interest expense

241,941

293,706

544,075

Other

99,684

58,161

163,512

Total non-operating
expenses341,6261.0

351,8681.1

707,587

1.1

Ordinary income

1,779,331

5.5

2,059,501

6.3

3,257,239

4.8

Extraordinary profits
Adjustment of priorperiod profit or loss
Gain on sale orretirement of fixed assets
Guarantee of moving
expenses

※2

5,943

−

2,256

※3

275

−

4,178

−

−

24,782

Other

4,168

−

1,934

Total extraordinary profits

10,3860.0−−

33,151

0.0

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 5Period(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year
Current Consolidated
Prior Consolidated
Summary Consolidated
Fiscal Year Interim
Fiscal Year InterimStatement of Income
PeriodPeriod(From November 1, 2001
to April 30, 2002)
AmountPercent(From November 1, 2000
April 30, 2001)
AmountPercent(From November 1, 2000
to October 31,2001)
AmountPercent

24,151

42,621

101,886

13,32915,000126,450−

991,011

1,982,023

Other27,908−55,340Total extraordinary losses

65,3890.2

1,048,633

3.2

2,265,701

3.4

Income before taxes andadjustments

1,724,329

5.3

1,010,868

3.1

1,024,690

1.5

866,375

2.6

1,230,987

3.8

1,883,570

2.8– 111,075– 0.3– 762,853– 2.3– 1,308,431– 1.9– 37,992– 0.1– 19,768– 0.0

23,1350.0

931,0362.9

522,9651.6

472,686

0.7

Category

Extraordinary losses
Loss on sale orretirement of fixed
assetsValuation loss on
investment securities
Transfer to reserve for
accrued employees
retirement benefits※4

Corporate, local andbusiness taxes

Adjustment forcorporate and othertaxes
Minority interest inincome or loss
Net income

3. Statements of Consolidated Retained Earnings
PeriodCategory

Balance of consolidated
retained earnings at the
beginning of the period
Reduction inconsolidated retained
earnings(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year
Current Consolidated
Prior Consolidated
Consolidated Retained
Fiscal Year Interim
Fiscal Year Interim
Earnings
PeriodPeriod(From November 1, 2001
to April 30, 2002)
Amount(From November 1, 2000
April 30, 2001)
Amount(From November 1, 2000
to October 31,2001)
Amount12,395,900

12,484,124

12,484,124

Dividends

272,270272,060

544,311

Directors and auditors’
bonuses

16,60016,60016,600(Auditors’bonuses)(1,700)(1,700)(1,700)288,870

288,660

560,911

931,036

522,965472,686

13,038,067

12,718,429

12,395,900

Total reduction inretained earnings
Net income for theperiodBalance of consolidated
retained earnings at theend of the period

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 6

4. Consolidated Statements of Cash Flows
PeriodCategory(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year
Current Consolidated
Prior Consolidated
Summary Consolidated
Fiscal Year Interim
Fiscal Year InterimStatement of Cash Flow
PeriodPeriod(From November 1, 2001
to April 30, 2002)
Amount(From November 1, 2000
April 30, 2001)
Amount(From November 1, 2000
to October 31,2001)
AmountCash flow from operating activities

Income before taxes andadjustments
Amortization of
consolidation adjustment
account
Depreciation andamortization expense
Gain on sale or retirement of
fixed assets
Loss on sale or retirement of
fixed assets
Gain from adjustment ofprior period profit or loss

1,724,329

1,010,868

1,024,690– 3,186−−

3,991,836

4,372,913

9,486,358

– 275

−

– 4,178

24,151

42,621

101,886−−– 1,618

179,985274,690361,62132,412

21,174

134,927

Reclassification of cost of
sales associated withdisposal of rental assets

705,656

488,759

1,193,637

Expenditures for acquisition ofrental assets– 363,898– 301,880– 295,556

13,32915,000126,450– 44,506– 361,017– 376,299– 44,915– 2,457– 8,143

233,403375,640

367,817– 21,228

35,857

91,78546,184

1,018,988

2,008,761– 106,251– 13,932– 5,028– 11,122– 26,958– 39,448

146,993

151,370

299,831

241,941

293,706

544,075

5,666,581– 716,116– 2,476,330

187,031– 542,258– 291,190– 2,344,794

1,604,956

901,119

401,758

549,627

487,864– 16,600– 16,600– 16,600

Installment purchases of assets
for small-value rentals
Reclassification of cost of sales
associated with disposal of
construction equipment

Valuation loss on investment
securities
Gain on sale of investment
securities
Gain on redemption of
corporate bonds by purchase
Increase in allowance for
doubtful accounts
Increase in accrued bonuses
to employees
Increase in accrued
employees retirement
benefits
Increase in retirement
allowances to directors andauditors
Interest revenue anddividend income
Interest expense on
installment purchases ofrental assets
Interest expense(Increase) decrease inaccounts receivable, trade(Increase) decrease ininventory assets
Increase (decrease) in
accounts payable, trade
Increase in accounts
payable, other
Directors and auditors’
bonuses paid

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 7Other, net– 288,736

181,665426,291

Subtotal

10,350,078

8,456,618

14,042,726

11,122

26,95839,448– 387,940– 442,641– 844,586

Payment of corporate andother taxes– 1,265,038– 171,359– 767,928

Cash flow from operating activities

8,708,222

7,869,575

12,469,659

Interest and dividends
received
Interest expense

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 8PeriodCategory(Amounts have been rounded down to the nearest thousand yen)
Prior Fiscal Year
Current Consolidated
Prior Consolidated
Summary Consolidated
Fiscal Year Interim
Fiscal Year InterimStatement of Cash Flow
PeriodPeriod(From November 1, 2001
to April 30, 2002)
Amount(From November 1, 2000
April 30, 2001)
Amount(From November 1, 2000
to October 31,2001)
AmountCash flow from investing activities

Disbursements forinvestments in term deposits
Revenue from redemption ofterm deposits
Funds used for the purchaseof tangible fixed assets
Funds provided from the saleof tangible fixed assets– 207,188−– 4,233

261,662

5,500

9,129

– 472,829– 336,341– 1,073,093

18,74382,689122,249– 114,274−−– 8,198– 15,821– 28,669– 1,207,113– 2,047,491– 2,772,134

1,112,187

2,100,406

3,066,275−– 57,665– 82,439– 617,011– 268,724– 762,916

4,932– 4,210,089– 4,216,562

7,080,000

4,556,450

10,136,450– 4,598,828– 4,396,928– 8,793,335– 1,482,085– 60,543– 506,857

−

9,177

10,488– 4,189,714– 3,888,227– 8,242,273

−

−

3,153

– 487

−

– 3,525– 272,270– 272,060– 544,311

Funds provided from the issueof stock to minority
shareholders−

20,00020,000Funds used for otherfinancing activities

−

– 985

– 1,057– 3,458,453– 8,243,207– 12,137,831

4,632,757– 642,357– 431,088

15,991,306

16,422,395

16,422,395

20,624,063

15,780,037

15,991,306

Funds used for acquisition ofsubsidiary stock at time ofchange in scope of consolidation
Funds used for the purchase ofintangible fixed assets
Funds used for the purchase ofinvestment securities
Funds provided from sale ofinvestment securities
Funds used for purchase ofinvestments
Cash flow used for investing
activities
Cash flow from financing activities

Decrease in short-term bankloans
Funds provided bylong-term bank loans
Funds used to repay
long-term bank loans
Funds used for redemptionof straight bonds
Funds provided from theissue of common stock
Funds used for repayment
of installment obligations
Funds provided from thesale of treasury stock
Funds used for the purchaseof treasury stock
Payment of dividends toparent company

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

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .1 9

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

(2) Matters pertaining to application of equity method accounting
The Company’s investments in two affiliated companies (Active Technology Corporation and Active Power
Corporation) have been excluded from items to which equity method accounting is applied because theirrespective effect on interim consolidated net income or loss and interim consolidated retained earnings isimmaterial and neither company is important to the Company’s overall operations.

(3) Matters pertaining to the fiscal year for consolidated subsidiaries
The interim period closing date for all of the consolidated subsidiary companies is February 28. When
preparing the interim consolidated financial statements, the Company used the subsidiaries’ financial
statements as of February 28 and made adjustments for significant transactions that occurred between March
1, 2002 and the interim consolidated accounting date on April 30, 2002 that were deemed to have a material
effect on the interim consolidated financial results.

(4) Accounting principles and standards① Valuation standards and valuation methods for principal assets
a. Negotiable securities
Other negotiable securities
Securities with a market price・・・Market value method based on the market price or similar prices on the interim period closing
date (The full amount of the valuation difference is charged to equity using the direct transfer tocapital method, with the disposal cost determined by the moving average method)
Other negotiable securities
・・・Cost method, cost being determined by the moving average method
b. Appraisal standards and appraisal method for construction equipment
Amount after deduction of depreciation expense calculated according to the declining-balance methodfrom the original prices, by separate fiscal year of purchase(Supplemental information)
The Company formerly used 7 years as the depreciable life for floor plate and steel plate. In
consideration of the period over which such products can be used physically and economically, however,based upon their physical condition and customers’intentions to rent, respectively, beginning in theinterim consolidated accounting 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 theinterim consolidated accounting period under review depreciation expense was ¥104,640,000 lower, andgross profit, operating income, ordinary income and income before taxes and adjustments were
¥104,640,000 higher, respectively, compared to what they otherwise would have been had theaccounting standards used in previous periods been applied. The effect of this change on the Company’s
operating segment results is described in the section concerning segment information.
c. Appraisal standards and appraisal method for merchandise inventories and supplies
Merchandise Inventories・・・Lower of cost or market based on the last-in, first-out method
Supplies ・・・・・・・・・・The latest purchase cost method② Depreciation methods for principal depreciable assets
a. Tangible fixed assets
The Company has adopted the declining-balance method. Buildings on land that is leased under afixed-term land lease agreement, however, are depreciated using the straight-line method using theremaining period of the fixed-term lease as the depreciable life and zero residual value. For certain
consolidated subsidiaries, the Company has adopted the straight-line method for buildings andSummary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 0structures acquired on or after April 1, 2000 but excluding fixtures and equipment. The depreciable
lives mainly used by the Company are as follows.
Rental assets
5-10 years
Buildings
31-34 years(Supplemental information)
The Company formerly used 7 years as the depreciable life for temporary rental structures. In
consideration of the period over which such products can be used physically and economically, however,based upon improved product quality and customers’intentions to rent, respectively, beginning in theinterim consolidated accounting 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 interim consolidated accounting period under review depreciation expense was¥123,550,000 lower, and gross profit, operating income, ordinary income and income before taxes andadjustments were ¥123,550,000 higher, respectively, compared to what they otherwise would have been
had the accounting standards used in previous periods been applied. The effect of this change on the
Company’s operating segment results is described in the section concerning segment information.
b. Intangible fixed assets
Software for use within the Company is depreciated using the straight-line method based on theassumed useful life for internal use (5 years).
③ Accounting standards for principal allowances and reserves
a. Allowance for doubtful accounts
To provide for losses on doubtful accounts such as accounts receivable, the Company charges to income
an amount based on actual loss experience for normal accounts, plus an amount for projected
unrecoverable amounts based on assessments of individual accounts.
b. Accrued bonuses to employees
To fully provide for bonuses the Company will pay to employees, the Company appropriates an amountto the reserve for the interim accounting period liability based upon the estimated amounts of bonuses
and salaries.
c. Accrued employees retirement benefits
The Company provides for employees’accrued retirement benefits based upon the projected amounts of
the liability for accrued employees retirement benefits and the value of pension assets at the end of theconsolidated fiscal year. At the end of each interim consolidated accounting period, the Company
appropriates an amount to the reserve to provide for the liability recognized during the period.
d. Retirement allowances to directors and auditors
The Company provides for retirement allowances to directors and auditors based upon pertinent rules
and appropriated to the account proportionately based upon length of service.
④ Accounting treatment for lease transactions
For finance lease transactions except for leases that transfer ownership of the property to the lessee, rent
expenses are charged to income as payments are made.
⑤ Hedge accounting for principal hedging methods
a. Hedge transactions
The Company accounts for hedge transactions using allocations based on accounting standards forforeign currency-denominated transactions, and special rule accounting based on accounting standards
for financial products.
b. Hedge methods and hedged transactions
The Company uses currency swaps and forward transactions in order to avoid the currency fluctuation
risk related to the Company’s foreign currency-denominated straight bonds and liabilities for import
payments. The Company also uses interest swaps to avoid interest rate fluctuation risk related tointerest on bank borrowing.
c. Hedging policies
The Company’s use of derivative transactions is limited to hedging risk within the scope of theCompany’s assets and liabilities subject to market fluctuation risk.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 1

d. Method for evaluating the effectiveness of hedges
The Company does not evaluate the effectiveness of its hedge transactions because it can assume that its
currency swap transactions and forward transactions will completely offset market fluctuations orchanges in cash flow from the time hedge begins until it is terminated. In addition, the Company’sinterest swap transactions fulfill the requirements for special rule accounting, and the Company has
elected to use this in place of an evaluation of effectiveness.
⑥ Accounting treatment of consumption tax
Consumption tax is taken out of all Statement of Income items and Balance Sheet items, except mainly forreceivables and payables.

(5) Items included in cash and equivalents on the Interim Consolidated Statements of Cash Flows
Funds included in cash (cash and equivalents) on the Interim Consolidated Statements of Cash Flows include
cash on hand, deposits that can be withdrawn on demand and highly liquid short-term investments thatmature within three months of the date of acquisition and which can be easily converted into cash and thathave minimal risk of a change in price.

Change in significant matters for preparation of the interim consolidated financial statements(Change in accounting treatment)
In prior years the Company accounted for revenue from insurance benefits as insurance benefits in
non-operating revenues whenever it suffered damages to rental assets and equipment 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. Because the purpose of providing equipment through the rental
industry is to fully recover the invested amount from rental income earned by renting the equipment and it
is possible to consider insurance proceeds collected as the result of an accident as a recovery of the invested
amount, however, and because revenue from insurance benefits has been increasing, beginning in theinterim consolidated accounting period under review the Company changed its method of accounting toaccount for insurance benefits as operating revenues and account for the book value of the rental asset andlease equipment contract cancellation charge as cost of revenues, respectively, in order for these items
correspond to the cost of earnings.
As a result, gross profit and operating income increased by ¥46,038,000, ordinary income decreased by¥31,560,000, and income before taxes and adjustments was unchanged, respectively, compared to what
they otherwise would have been had the accounting standards used in previous periods been applied. The
effect of this change on the Company’s operating segment results is described in the section concerning
segment information.
In prior years, the Company accounted for payments of employee housing rents as rental housing fees inselling, general and administrative expenses, and accounted for the employee portion of such expenses asrents received in non-operating revenues. Because the amounts for rental housing fees and rents received
have been increasing with the growth in the number of Company employees, beginning in the interim
consolidated accounting period under review the Company changed its accounting method in order todisclose the Company’s material burden for housing rental expenses, by excluding the employee portion of
employee housing rent expense from rental housing fees.
As a result, operating income increased by ¥80,512,000 and ordinary income and income before taxes andadjustments were unchanged, respectively, compared to what they otherwise would have been had theaccounting standards used in previous periods been applied. The effect of this change on the Company’s
operating segment results is described in the section concerning segment information.

Change in Disclosure Method
The Company included the gain on redemption of corporate bonds by purchase and cash bonuses received in"Other" under non-operating revenues at the end of the prior consolidated fiscal year interim period. At theend of the interim consolidated accounting period under review, however, the Company classified these items
separately because they account for more than ten percent of non-operating revenue.
The gain on redemption of corporate bonds by purchase and the cash bonuses received were ¥2,457,000 and¥81,675,000, respectively, at the end of the prior consolidated fiscal year interim accounting period.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 2

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

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

End of Prior Consolidated
Fiscal Year¥48,748,131,000¥46,638,798,000

────

────

¥24,936,000¥26,243,000¥26,839,000¥350,000,000¥350,000,000¥350,000,000¥162,725,000¥162,645,000¥67,100,000※ 5. Balance of notes
receivable, trade-endorsed¥290,717,000¥270,103,000¥167,213,000※ 6. Accounting treatment ofnotes maturing at the endof the period─────Category

End of Current
Period Consolidated Fiscal Year
Interim Period(As of April 30, 2002)※ 1. Total accumulated
depreciation for tangible
fixed assets※ 2. Assets offered as collateral
security

Corresponding liabilities¥45,410,825,000
Buildings

andstructures¥38,883,000

Land¥184,669,000

Total¥223,553,000

Short-term bankloans

(As of October 31,2001)¥189,400,000

Long-term bankloans due within¥121,120,000

one yearLong-term bank
loans

Total
3. Contingent liabilities
Joint and several guaranteeof employee bank loans
Debt guarantee of affiliatedcompany (Active Power
Corporation) loan liability※ 4. Discount on notes
receivable, trade¥284,640,000¥595,160,000

The
interimperiod-end
wasafinancial
institution
holiday in Japan. Notes
receivable and payablethat matured on thatdate were settled on theimmediately following
business day, as iscustomary in Japan.
Notes outstanding forwhich settlement was
postponed and which
are included in theinterim balances wereas follows.
Notes

─────

¥2,089,610,000

receivable, tradeNotes

payable, ¥1,340,272,000

trade

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 3

(Notes to the Interim Period Consolidated Statements of Income)Current Consolidated Fiscal Year
Interim Period(From November 1, 2001
to April 30, 2002)※1. Major expense categories andPrior Consolidated Fiscal Year
Interim Period(From November 1, 2000
to April 30, 2001)※1. Major expense categories andPrior Consolidated Fiscal Year
(From November 1, 2000
to October 31, 2001)※1. Major expense categories andamounts included in selling, generalamounts included in selling, generalamounts included in selling, generaland administrative expenses

and administrative expenses

and administrative expenses

Employee salaries andEmployee salaries and¥2,515,395,000¥2,461,314,000

wages

wages

Employee salaries and¥4,958,744,000

wages

Depreciation expense¥509,745,000

Depreciation expense¥538,780,000

Depreciation expense¥1,099,677,000

Rents¥703,769,000

Rents¥705,409,000

Rents¥1,421,216,000

Transfer to allowance¥320,694,000

Transfer to allowance¥424,513,000

Transfer to allowance forfor doubtful accounts

for doubtful accounts
Transfer to accrued¥570,609,000

doubtful accounts¥527,730,000

bonuses to employees

bonuses to employees
Transfer to retirement
allowances todirectors and auditors

Transfer to accrued¥1,548,000※2. Details of gain from adjustment toTransfer to retirement
allowances to directors
and auditors¥8,904,000

Employees retirement
benefit expense¥17,808,000

prior period profit or loss
Amount received from¥5,943,000¥1,618,000

adjustment of tax liability
Recovery of bad debts
Total※3. Gain on sale or retirement of fixed¥638,000¥2,256,000※3. Gain on sale or retirement of fixed

─────

※３

assetsassetsBuildings and structures¥81,000

Land

Machinery, equipment and¥194,000

Buildings and structuresdelivery equipment

Total¥4,068,000¥109,000¥4,178,000¥275,000※4. Loss on sale or retirement of fixed
assets※4. Loss on sale or retirement of fixed
assets(Loss on sale of fixed assets)
Machinery, equipment and¥440,050,000※2. Details of gain from adjustment toadjustment of tax liability

Total¥594,688,000

Transfer to retirement
allowances to directors
and auditors

prior period profit or loss
Amount received fromTransfer to accrued
bonuses to employees

─────

※2

¥573,957,000

assets(Loss on sale of fixed assets)(Loss on sale of fixed¥243,000

Machinery, equipment andBuildings and structures¥91,000(Loss on retirement of fixed assets)

Other assets¥31,000

delivery equipment¥762,000delivery equipment(Loss on retirement of fixed assets)

Rental equipment※4. Loss on sale or retirement of fixed

assets)Buildings and structures¥3,847,000

Machinery, equipment¥818,000¥34,174,000

and delivery equipment

Buildings and structures¥5,992,000(Loss on retirement of fixed

Rental equipment¥7,788,000

Machinery, equipment and¥1,280,000

assets)Buildings and structures¥11,875,000

delivery equipment

Machinery, equipment and¥1,555,000

Other assets
Total

delivery equipment

Rental equipment¥85,707,000¥412,000

Buildings and structures¥8,437,000¥42,621,000

Machinery, equipment¥1,551,000

Other assets¥2,564,000

and delivery equipment

Total¥24,151,000

Other assets¥1,524,000

Total¥101,886,000

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 4

(Notes to the Interim Consolidated Statements of Cash Flows)
Current Consolidated Fiscal Year
Interim Period(From November 1, 2001
to April 30, 2002)

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

Prior Consolidated Fiscal Year
(From November 1, 2000
to October 31, 2001)

Relationships between interim period

Relationships between interim period

Relationships between interim period

ending balance for cash and equivalents

ending balance for cash and equivalents

ending balance for cash and equivalents

and amounts for items shown on theand amounts for items shown on theand amounts for items shown on theinterim consolidated balance sheet

interim consolidated balance sheet

interim consolidated balance sheet(As of April 30, 2002)(As of April 30, 2001)(As of October 31, 2001)¥21,011,766,000

Cash and equivalents¥15,784,766,000

Cash and equivalents¥15,996,639,000

Term deposits with amaturity longer than 3months– ¥387,702,000

Term deposits with amaturity longer than 3months– ¥4,729,000

Term deposits with amaturity longer than 3months– ¥5,333,000

Items considered to be¥20,624,063,000

Items considered to be¥15,780,037,000

Items considered to be¥15,991,306,000

Cash and equivalents

cash and equivalents

cash and equivalents

cash and equivalents

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 5

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

Steel sales

rentalbusinessbusiness

Computer andperipheral
equipment
and otherbusinesses

Eliminations
or entire
Consolidated
company

Total

Revenues
28,048,269(1) Sales to outside customers(2) Sales or transfers between
178
related segments

3,912,105

679,853

32,640,228−

32,640,228

−

−

178

– 178

−

Total

28,048,447

3,912,105

679,853

32,640,407– 178

32,640,228

Operating expenses

26,464,698

3,873,033

677,929

31,015,661– 13,173

31,002,488

Operating income

1,583,749

39,072

1,923

1,624,745

12,994

1,637,740

Consolidated fiscal year interim period under review (From November 1, 2001 to April 30, 2002)(Unit: Yen thousands)
Construction
equipment

Steel sales

rentalbusinessbusiness

Computer andperipheral
equipment
and otherbusinesses

Eliminations
or entire
Consolidated
company

Total

Revenues
28,833,499(1) Sales to outside customers(2) Sales or transfers between
related segments

3,157,515

624,874

32,615,889-

32,615,889

-

-

-

-

-

Total

28,833,499

3,157,515

624,874

32,615,889-

32,615,889

Operating expenses

27,169,129

3,168,629

649,919

30,987,678– 67,303

30,920,375

Operating income

1,664,369– 11,113– 25,044

1,628,210

67,303

1,695,514

Prior consolidated fiscal year (From November 1, 2000 to October 31, 2001)(Unit: Yen thousands)

Computer andperipheral
equipment
and otherbusinesses

Total

8,341,786

1,391,105

67,346,425-

67,346,425

-

-

-

-

-

Construction
equipment

Steel sales

rentalbusinessbusiness

Eliminations
or entire
Consolidated
company

Revenues
57,613,533(1) Sales to outside customers(2) Sales or transfers between
related segments
Total

57,613,533

8,341,786

1,391,105

67,346,425-

67,346,425

Operating expenses

55,054,767

8,194,171

1,364,354

64,613,292– 139,281

64,474,011

Operating income

2,558,766

147,615

26,7502,733,132

139,2812,872,413(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.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 6

2. Principal products, by businessBusiness
Construction
equipment rentals
Steel sales
Computers andperipherals andother businesses

Principal products
Construction equipment such as hydraulic shovels, generators,
temporary construction materials, construction safety equipment,
temporary modular housing units, special rustproof andwaterproof shields
Steel bar, sheet steel, steel products such as round bar, steel scrap
Computers and peripheral devices, telecommunications-related
equipment, microturbine generators, microbrewery

3. As described in “5. (4) Accounting principles and standards” beginning in the interim consolidated
accounting period under review the Company changed the depreciable life it uses for floor plate and steel
plate from 7 years to 10 years. As a result of this change, operating expenses for construction-related
businesses decreased by ¥104,640,000 and operating income increased by the same amount, respectively,
for the interim consolidated accounting period under review, compared to what they otherwise would
have been had the accounting standards used in prior period been applied.
During the interim consolidated accounting period under review, the Company similarly changed the
durable life for rental housing from 7 years to 10 years. As a result of this change, operating expenses forconstruction-related businesses decreased by ¥123,550,000 and operating income increased by the sameamount, respectively, for the interim consolidated accounting period under review, compared to what they
otherwise would have been had the accounting standards used in prior period been applied.
As described in “Change in significant matters for preparation of the interim consolidated financial
statements,” the Company has changed its accounting treatment for revenue and expenses when it
suffers damages to rental assets and equipment utilized under leases as the result of an accident.
Beginning in the interim consolidated accounting period under review, the Company will recognize
revenue received from insurance benefits as operating revenues rather than insurance benefits, and therental asset book value and the lease equipment contract cancellation charge will be recognized as cost ofrevenues rather than as a loss on abandonment of fixed assets and miscellaneous loss, respectively. As aresult, operating expenses for construction-related businesses decreased by ¥46,038,000 and operating
income increased by the same amount, respectively, compared to what they otherwise would have been
had the accounting standards used in previous periods been applied.
During the interim consolidated accounting period under review, the Company similarly changed its
accounting method to exclude the employee portion of employee housing rent expense from rental
housing fees. As a result of this change, operating expenses for construction-related businesses decreasedby ¥78,074,000, operating expenses for steel sales-related business decreased by ¥1,698,000 andoperating expenses for computer and peripheral equipment business and other businesses decreased by¥739,000, respectively, and the operating income for each business increased by the same amounts,
respectively, compared to what they otherwise would have been had the accounting standards used inprevious periods been applied.

(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 consolidated fiscal year interim period, the consolidated fiscal year interim period and the priorconsolidated accounting fiscal year.

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

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 7

V

Lease Transactions

Current Consolidated Fiscal Year
Interim Period(From November 1, 2001
to April 30, 2002)

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

Prior Consolidated Fiscal Year
(From November 1, 2000
to October 31, 2001)

1. Finance lease transactions except for

1. Finance lease transactions except for

1. Finance lease transactions except forleases that transfer ownership of theleases that transfer ownership of theleases that transfer ownership of theproperty to the lessee.

property to the lessee.

property to the lessee.

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

RentalassetsOther
assetsTotalproperty acquisition prices,

property acquisition prices,

property acquisition prices,

accumulated depreciation andaccumulated depreciation andaccumulated depreciation andoutstanding balances at the end ofoutstanding balances at the end ofoutstanding balances at the end of

the interim accounting period.

the interim accounting period.

the interim accounting period.

Acquisition

Accumulated

Outstanding

Acquisition

Accumulated

Outstanding

Acquisition

Accumulated

Outstanding

price

depreciation

balance

pricedepreciation

balance

pricedepreciation

balance

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

(¥ ‘
000)

¥19,042,497¥8,378,550¥10,663,947¥13,230,516¥5,871,914¥7,358,602¥14,913,569¥7,162,742¥7,750,826¥567,003¥337,739¥229,264¥794,854¥334,152¥460,702¥1,220,026¥563,453¥656,572¥19,609,501¥8,716,289¥10,893,211¥14,025,371¥6,206,067¥7,819,304¥16,133,596¥7,726,196¥8,407,399(2) Outstanding balance of future leas

RentalassetsOther
assetsTotal(2) Outstanding balance of future leas

RentalassetsOther
assetsTotal(2) Outstanding balance of future leas

payments at the end of thepayments at the end of thepayments at the end of theinterim periodinterim periodinterim period

Within one year

¥3,789,278,000

Within one year

¥2,483,331,000

Within one year

¥3,264,160,000

After one year

¥7,263,822,000

After one year

¥5,482,320,000

After one year

¥5,323,430,000

Total¥11,053,101,000(3) Amount of lease payments,

Total¥7,965,652,000(3) Amount of lease payments,

Total¥8,587,590,000(3) Amount of lease payments,

depreciation expense and interest

depreciation expense and interest

depreciation expense and interest

expenseexpenseexpenseLease payments¥1,839,058,000

Lease payments¥1,357,042,000

Lease payments¥3,115,473,000

Depreciation expense¥1,657,595,000

Depreciation expense¥1,239,438,000

Depreciation expense¥2,837,451,000Interest expense¥164,976,000(4) Accounting method for amountequivalent to depreciation expense
Straight-line depreciation using

Interest expense¥124,679,000(4) Accounting method for amountequivalent to depreciation expense

Interest expense¥291,179,000(4) Accounting method for amountequivalent to depreciation expense

Same as at left

Same as at left

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

Interest method using theSame as at left

Same as at left

the lease term as the depreciable
life and zero residual value.

difference between total lease
payments and the acquisition priceof the lease property, allocatedequally to each year.
2. Operating leases

2. Operating leases

Future lease payments

2. Operating leases

Future lease payments

Future lease payments

Within one year

¥1,616,353,000

Within one year

¥1,427,854,000

Within one year

¥1,680,768,000

After one year

¥2,783,375,000

After one year

¥3,386,803,000

After one year

¥2,837,561,000

Total¥4,399,728,000

Total¥4,814,658,000

Total¥4,518,329,000

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 8

VI

Notes related to negotiable securities
Prior consolidated fiscal year interim period (As of April 30, 2001)
Market value of negotiable securities(Unit: Yen thousands)

1. Other negotiable securities with a market value

Prior consolidated fiscal year interim period end
Acquisition cost(1) Stocks

2,918,702

1,450,553−−−

280,652

280,978

325

20,00019,378– 622

1,097,994

895,290– 202,704

2,866,797

4,114,349

1,247,552

Other

Total

Difference

1,468,149(2) Bonds
Centraland
local
government bonds
Corporate bonds(3) OtherAmount reported on theinterim consolidatedbalance sheet

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousands)
Prior consolidated fiscal year interim
period end
Amount shown on the interim period
consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter stocks)

719,463

Consolidated fiscal year interim period under review (As of April 30, 2002)
Market value of negotiable securities(Unit: Yen thousands)

1. Other negotiable securities with a market value

Consolidated fiscal year interim period under review(1) Stocks

Acquisition cost

Acquisition cost

Acquisition cost

1,793,449

2,092,469

299,020−−−

250,407245,785– 4,622

20,00014,800– 5,200

1,018,218

875,492– 142,726

3,082,075

3,228,547

146,471(2) Bonds
Centraland
local
government bonds
Corporate bonds
Other(3) OtherTotal

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousands)

Consolidated fiscal year interim period
under review period end
Amount shown on the interim period
consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter stocks)

502,210

Unlisted foreign bonds

10,053

Corporate bonds with attached warrants

10,000

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .2 9Prior consolidated fiscal year (As of October 31, 2001)
Market value of negotiable securities(Unit: Yen thousands)

1. Other negotiable securities with a market value

Prior consolidated fiscal year end(1) Stocks

Acquisition cost

Acquisition cost

Acquisition cost

1,677,993

2,157,125

479,132−−−

231,270

227,830– 3,440−−−

1,032,448

797,813– 234,635

2,941,712

3,182,768

241,056(2) Bonds
Centraland
local
government bonds
Corporate bonds
Other(3) OtherTotal

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousands)

Prior consolidated fiscal year end
Amount shown on the consolidated
fiscal year-end balance sheet
Other negotiable securities

VII

Unlisted stocks (excluding over-the-counter stocks)

497,010

Unlisted foreign bonds

10,053

Corporate bonds with attached warrants

10,000Notes related to Derivative Transactions
Prior consolidated fiscal year interim period (As of April 30, 2001)
Because it applies hedge accounting, the Company had no material items to report.

Consolidated fiscal year interim period under review (As of April 30, 2002)
Because it applies hedge accounting, the Company had no material items to report.

Prior consolidated fiscal year (As of October 31, 2001)
Because it applies hedge accounting, the Company had no material items to report.

Summary of Consolidated Interim Financial Statements, FY ending October 31, 2002
P .3 0