Fiscal Year ended October 31, 2005

Summary of Company Financial Statements
December 9, 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

December 9, 2005

Interim Dividend System

The Company has an interim dividend system

Regular General Meeting of the Shareholders

January 27, 2006

Has the Company adopted a Unit Stock System?

Yes (One unit equals 1,000 shares)

1. Operating Results for the Fiscal Year Ended October 31, 2005
(November 1, 2004–October 31, 2005)(1) Operating Results(Numbers less than one million yen have been rounded down)
Revenues

Operating Income

Ordinary Income

Millions of yen％

Millions of yen％

Millions of yen％

Fiscal year ended
October 31, 2005

57,202

-3.5

1,526

-17.1

1,960

7.3

Fiscal year ended
October 31, 2004

59,274

-2.0

1,842

-21.6

1,827

-25.3

Return on
Total Assets

Ordinary
IncomeMargin％％Net Income
per Share ofCommonStock
Yen

Net Income

Fiscal year ended
October 31, 2005
Fiscal year ended
October 31, 2004

609 （-48.7）
1,187 ( 24.4)

Net Income per
Share ofCommon Stock
Fully Diluted
Yen

Return on
Shareholders’Equity
％

20.16

-

1.8

2.4

3.4

39.50

-

3.7

2.1

3.1

(Notes) 1. Average number of shares outstanding during the fiscal year
Fiscal Year ended October 31, 2005

29,856,334 sharesFiscal Year ended October 31, 2004

29,865,301 shares

2. Are there any changes in accounting method?

No

3. The percentages shown for revenues, operating income, ordinary income and net income are the percent
increase or decrease compared to the prior fiscal year(2) Dividends
Annual Dividend per Share of Common Stock
InterimYen
Fiscal year ended
October 31, 2005
Fiscal year ended
October 31, 2004

Year-end

Yen

Yen

Total
Dividends(Annual)Dividend
Payout Ratio

Dividends as a
Percentage ofShareholders’Equity%%Millions of yen

18.00

9.00

9.00

537

89.3

1.6

19.00

9.00

10.00

567

48.1

1.7

Summary of Company Financial Statements, FY Ended October 31, 2005

P.39

（3）Financial Position
Shareholders’EquityTotal Assets

Fiscal year ended
October 31, 2005
Fiscal year ended
October 31, 2004

Shareholders’Equity Ratio

Shareholders’ Equity
per Share

Millions of yen

Millions of yen

Yen

79,03733,90342.9

1,135.43

85,46932,93338.5

1,102.69％(Notes) 1. Number of shares issued and outstanding at fiscal year-end
Fiscal Year ended October 31, 2005

29,853,076 sharesFiscal Year ended October 31, 2004

29,859,442 shares

2. Number of shares of treasury stock at fiscal year-end
Fiscal year ended October 31, 2005

400,165 sharesFiscal year ended October 31, 2004

393,799 shares

2. Projected Operating Results for the Fiscal Year Ending October 31, 2006
(November 1, 2005 - October 31, 2006)
Annual Dividend per Share of

Revenues

Operating
IncomeOrdinary
IncomeNet Income

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Interim period

29,090

1,270

1,300

480

9.00

-----------

Full year

56,760

1,650

1,730

700

-----

9.00

18.00

Common Stock
Interim
Yen

Year-end
Yen

Yen

Reference: Projected net income per share of common stock (Full year) ¥23.45(Note) The above projections were prepared based upon information available to the Company at the time theprojections were announced as well as various assumptions concerning the future economic and businessenvironment. Actual operating results may differ from the projected figures depending upon various factors in
the future.

Summary of Company Financial Statements, FY Ended October 31, 2005

P.40

Company Financial StatementsV

1. Comparative Balance Sheets
PeriodPrior Fiscal Year(As of October 31, 2004)
AmountCategory（A(Unit: Thousands of yen)

s

s

e

t

s）

¥ thousands

Percent%

Current Fiscal Year(As of October 31, 2005)
Amount¥ thousands

Percent%

Change from prioryear
Amount¥ thousands

Current Assets

Ⅰ

Allowance for doubtful accounts

10,911,377
10,889,913
11,067,221
284,707
1,556,528
60,163
219,510229,340−
500,000
80,705-629,663

Total Current Assets

35,169,805

Cash and deposits
Notes receivable, trade
Accounts receivable, trade
Merchandise inventory
Construction equipment
Supplies
Prepaid expenses
Deferred tax assets
Accrued consumption tax
Loans to affiliated companies
Other current assets

13,230,849
2,583,873
10,665,107
503,335
1,207,108
58,439227,935
367,932
28,532500,000
293,191-1,001,255
41.1

28,665,048

2,319,471-8,306,040-402,113
218,627-349,420-1,724
8,424
138,591
28,532−
212,485-371,592
36.3-6,504,756

Fixed Assets

Ⅱ(1) Tangible Fixed Assets
Rental equipment
Buildings
Structures

9,719,372
5,731,090
1,000,057
878,585

9,453,886
5,344,822
903,297773,622-265,485-386,268-96,760-104,963

2,738

2,338

-400

351,469

275,697-75,771

Construction in progress

25,838,381
2,793

25,869,082−

30,700-2,793

Total Tangible Fixed
Assets43,524,490

50.9

42,622,746

53.9-901,743

226,860

0.3

187,284

0.2-39,575

Machinery and equipment
Vehicles and delivery
equipment
Tools, furnishings andfixturesLand(2) Intangible Fixed Assets
Total Intangible Fixed
Assets(3) Investments and Other

3,800,470

5,684,987

1,884,517

1,037,210

979,307-57,902100,778

7,647-93,130

564,006

320,870-243,135

Long-term prepaid
expenses

67,02949,633-17,395

Deferred tax assets

1,004,962
50,572766,995

479,22455,016787,944-525,738
4,444
20,949-564,006-321,855

242,150-280,000-480,173-200,173

Investment securities
Stock of affiliatedcompanies
Advances
Claims in bankruptcy,
claims in reorganizationand other similar claims

Insurance reserve
Other
Allowance for doubtful
accounts
Reserve for investment
lossesTotal Investments andOther Assets
Total Fixed Assets
Total Assets

6,548,018

7.7

7,562,603

9.6

1,014,584

50,299,369

58.9

50,372,634

63.7

73,26585,469,174

100.0

79,037,683

100.0-6,431,491

Summary of Company Financial Statements, FY Ended October 31, 2005

P.41

(Unit: Thousands of yen)
PeriodAmountCategory（ L i a b i l i t i e s）
Ⅰ

Prior Fiscal Year(As of October 31, 2004)¥ thousands

Percent%

Current Fiscal Year(As of October 31, 2005)
AmountPercent¥ thousands%

Change fromprior year
Amount¥ thousands

Current Liabilities

Notes payable, trade

8,967,156

7,214,389-1,752,767

Accounts payable, trade

2,838,409

2,425,623-412,786

Short-term bank loans

10,747,000

10,555,000-192,000

Accounts payable, other

4,065,427

2,389,330-1,676,097

Accrued expenses

223,844

227,269

3,425

Corporate taxes payable362,284

530,934

168,649

148,864−-148,864

436,029

448,076

12,047Equipment notes payable

174,013

133,487-40,526

Other current liabilities

113,147

158,01344,866

Total Current Liabilities

28,076,177

Consumption and other taxes
payableAccrued bonuses to
employees

Ⅱ

32.9

24,082,124

30.5-3,994,052

Long-term Liabilities

Long-term bank loans
Long-term accrued expenses
Retirement allowance todirectors and auditors
Accrued employees retirement
benefits
Total Long-term Liabilities
Total Liabilities

20,735,000

17,590,000-3,145,000

2,426,551

1,876,971-549,579

71,542

79,1217,579

1,226,848

1,506,210

279,362

24,459,941
52,536,118

28.6
61.5

21,052,303
45,134,428

26.6
57.1

-3,407,637-7,401,690

8,596,737

10.0

8,596,737

10.9−（Shareholders’ Equity）
Ⅰ
II

Common stock
Capital surplus
Additional paid-in capital

9,720,343

Total capital surplus

9,720,343

9,720,343
11.4

9,720,343

−
12.3

−

III Earned surplus
Legal earned surplus

1,375,287

1,375,287−

11,281,684

11,831,684

550,000

1,443,580

928,192-515,387

Voluntary reserves
General reserve
Unappropriatedearnings

retained

14,100,552

16.5

14,135,164

17.9

34,612

IV

Valuation difference onother negotiable securities

697,8970.8

1,637,603

2.0939,706

V

Treasury stock

Total earned surplus-182,475-0.2-186,594-0.2-4,118

Total Shareholders’ Equity

32,933,055

38.5

33,903,254

42.9

970,199

Total
Liabilities
Shareholders’ Equity

85,469,174

100.0

79,037,683

100.0-6,431,491

andSummary of Company Financial Statements, FY Ended October 31, 2005

P.42

2. Comparative Statements of Income
PeriodCategory(Unit: Thousands of yen)

Prior fiscal year
（From November 1, 2003
To October 31, 2004）
AmountPercent

Current fiscal year
（From November 1, 2004
To October 31, 2005）
AmountPercent

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

Ⅰ

Operating revenues

59,274,381

100.0

57,202,641

100.0-2,071,740

Ⅱ

Cost of revenues

45,811,415

77.3

43,789,520

76.5-2,021,895

Gross profit

13,462,966

22.7

13,413,121

23.5-49,844

Selling,
generalandadministrative expenses

11,620,779

19.6

11,886,610

20.8

265,830

1,842,186

3.1

1,526,510

2.7-315,675

Non-operating revenues

529,4620.9

923,943

1.6

394,480

Interest and dividends

77,222

66,775-10,447

Gain on sale of investment
securities

47,261

359,093311,831

176,170

244,052

67,88228,85047,70918,8591,283−-1,283

198,673

206,311

7,638

ⅢOperating incomeⅣ

Rents received
Insurance
received

benefits

Cash bonus received
Other
Non-operating expenses

Ⅴ489,5900.9-54,555

332,619

317,034-15,584

Other

211,527

172,555-38,971

Extraordinary profits
Gain on disposal of fixed
assetsValuation
gain
oninvestment
enterprisepartnershipGainon
returnof
entrusted
portionof
corporate
Employee
Welfare Pension Fund
Other
Extraordinary losses

Ⅶ

0.9Interest expense

Ordinary income

Ⅵ544,146

1,827,502

3.1

1,960,863

3.4

133,360

620,226

1.0

69,4470.1-550,779

8,334

57,43349,0985,130

10,8495,719

606,420−-606,420

342

1,164

822

204,949

0.3

837,348

1.4

632,398

Loss on sale or disposal
fixed assets
Valuationloss
oninvestment securities
Lossonvaluationofaffiliated company stock
Transfer to reserve forinvestment losses
Transfer to reserve for
doubtfulaccounts
foraffiliated company stock

94,392

120,158

25,76641,89829,589-12,308−

55,00055,00050,597200,173

149,576−

407,149

407,149

Other

18,062

25,275

7,213

Income before taxes andadjustments
Corporate, local and business
taxes
Adjustment for corporate andother taxes

2,242,779

3.8

1,192,962

2.1-1,049,817

832,790

1.4

833,5791.4

789

222,880

0.4-249,835-0.4-472,715

Net income

1,187,109

2.0

609,2171.1-577,891

Profit carry-forward from priorperiod557,483

587,686

30,202

Interim cash dividends

268,785

268,711-74

32,226−-32,226

1,443,580

928,192-515,387

Loss on cancellation ofaffiliated company stock
related to merger
Unappropriated retained
earnings

Summary of Company Financial Statements, FY Ended October 31, 2005

P.43

3. Comparative Appropriation of Retained Earnings
PeriodCategory

Prior Fiscal Year
General Meeting of the
Shareholders approval date
(January 28, 2005)(Unit: Thousands of yen)
Current Fiscal Year(proposed)
Change from prior
General Meeting of theyear
Shareholders approval date
(January 27, 2006)¥ thousands¥ thousands¥ thousands

1,443,580

928,192-515,387

855,894

295,579-560,314

298,594(¥10 per share)

268,677(¥9 per share)-29,916

Directors bonuses

7,300

7,300

−

(Auditors bonuses)(1,800)(1,800)(−)

550,000−-550,000−

19,601

19,601

587,686

632,61344,927

Unappropriatedearnings

retained

To be appropriated as follows
Amountofappropriatedretained earnings(Note)Cash dividends

Voluntary reserves
General reserve
Reserve for advanced
depreciation of fixed
assets
Net income carried forward
to the next period(Notes) 1. The Company paid an interim dividend of ¥268,711,000 (¥9 per share) on July 19, 2005.
2. The shareholder dividend is calculated excluding 400,165 shares of treasury stock.

Summary of Company Financial Statements, FY Ended October 31, 2005

P.44

4. Notes to the Financial Statements(Significant accounting policies)
Prior fiscal year
From November 1, 2003
To October 31, 2004

Current fiscal year
From November 1, 2004
To October 31, 2005

Common stock of subsidiaries andaffiliated companies
The Company has adopted the cost
method based upon the moving
average method

Common stock of subsidiaries andaffiliated companies
Same as at left

PeriodItem
1. Valuation standards andvaluation methods fornegotiable securities

Other negotiable securities
Negotiable securities with a market
on a securities exchange
The Company has adopted themarket value method (the fullamount of the valuation difference ischarged to equity using the directtransfer to capital method, with thedisposal cost determined by themoving average method) based on
the market price on the fiscal year
closing date or similar prices

Other negotiable securities
Same as at left

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

3. Appraisal standards andappraisal method forConstruction equipment
Amountafter
deductionofdepreciation
expensecalculated
according to the declining-balancemethod from the original prices, byseparate fiscal year of purchase
Merchandise inventories and supplies

Merchandise inventories and supplies(1) Merchandise inventories(1) Merchandise inventories

merchandise inventories

Lower of cost or market based on theand supplies

last-in, first-out method(2) Supplies

fixed assets

Same as at left
(2) Supplies

The Latest purchase cost method
4. Depreciation method forConstruction equipment
Same as at left

Same as at left
(1) Tangible fixed assets(1) Tangible fixed assets
The Company has adopted theSame as at left

declining-balance method. Buildings
on land that is leased under a fixedterm land lease agreement, however,are depreciated using the straightline

methodusing

theremaining

period of the fixed-term lease as thedepreciable

life

and

zero

residualvalue.
The depreciable lives mainly usedby the Company are as follows.
Rental assets 5-10 years
Buildings
31-34 years

Summary of Company Financial Statements, FY Ended October 31, 2005

P.45

(2) Intangible fixed assets
Softwarefor(2) Intangible fixed assets

usewithintheSame as at left

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

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

straight-line depreciation.
5. Accounting standards for(1) Allowance for doubtful accounts(1) Allowance for doubtful accounts

To provide for losses on doubtful

allowances and reserves

Same as at left

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

experience for normal accounts, plusanamountunrecoverableforprojected

amounts

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

To fully provide for expenditures ofSame as at left

bonuses the Company will pay toemployees,anamountisappropriated to the reserve during
the fiscal year based upon a salaryestimate amount.

(3) Accrued employees retirement(3) Accrued employees retirement

benefits

benefits

The Company provides for accrued

Same as at left

employees retirement benefits based
upon the projected amounts of theliabilityforaccruedemployees

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

difference

based

on

an

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

the

amounts

allocated

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

periodofemployment for employees at thetime the difference arises.

Summary of Company Financial Statements, FY Ended October 31, 2005

P.46

(Supplemental information)
On January 1, 2004 the Company
received approval from the Minister of
Health, Labour and Welfare for
exemption from the obligation to makefuture payments for the entrusted
portion of the Employee Welfare
PensionFund,
accompanying
enforcement of the Defined Benefit
Corporate Pension Law.
The Company has adopted theinterimmeasuresprescribedinParagraph 47-2 of the Business
Guidelines
Concerning
Retirement
Benefit Accounting (Interim Report)
concerning return of the entrusted
portion of the corporate Employee
WelfarePensionFund(Japanese
InstituteofCertifiedPublicAccountants,
Accounting
SystemCommittee Report No. 13), and on the
day authorization was received theCompany accounted for the retirement
benefit liability related to the entrusted
portion andthe pension assets
equivalent to the return amount as
being extinguished.
The Company accounted for theaffects on earnings accompanying thistreatment
at
the
end
of
the
consolidated fiscal accounting year
under review by booking extraordinary
income of ¥606,420,000.
The returned equivalent amount(minimumactuarial──────

liability)

measured as of the end of theconsolidated accounting fiscal year
under review was ¥1,296,434,000.
(4) Retirement allowances to directors
and auditors
The(4) Retirement allowances to directors
and auditors

Company

providesfor

Same as at left

retirement allowances to directors
and auditors based upon pertinent
rules and appropriated to the account
at

the

end

of

the

fiscalyear

proportionately based upon length ofservice.
(5) Reserve for investment losses(5) Reserve for investment losses

The Company provides for losses

Same as at leftfrom the decline in real prices ofassetssuch

subsidiary
subject
accounting

as

the

companies
to
by

asset
applying

stock

of

that

are

impairment
internallyestablished standards that take into
consideration

subsidiarycompany

operating results and asset quality.

Summary of Company Financial Statements, FY Ended October 31, 2005

P.47

6. Lease transactions

Forfinance

exceptfor

leaseleasestransactions
that

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

The Company accounts for hedge

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

standards

forfinancial

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

The Company uses currency swaps

Same as at left

and forward transactions in order toavoid the currency fluctuation risk
related to the Company’s foreign
currency-denominated straight bonds
and liabilities for import payments.
The

Company

swaps

to

also

avoid

uses

interest

interest

rate

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

The Company’s use of derivative

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

subject

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

effectiveness of hedges

The Company does not evaluatetheeffectiveness

of

its

Same as at left

hedge

transactions because it can assume
that its currency swap transactions
andforwardtransactions

will

completely offset market fluctuations
or changes in cash flow from thetime the hedge begins until it isterminated.

In

Company’s

addition,interesttheswaptransactions fulfill the requirements
for special rule accounting, and theCompany has elected to use this in
place

of

an

evaluationofeffectiveness.
8. Other significant matters for (1) Accounting treatment of consumption (1) Accounting treatment of consumption
tax
tax
preparation of the fiscal
year financial statements

Consumption tax is taken out of all
StatementofIncomeitems

Same as at left

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

forconsumptionThe

suspensetax

receipts

andconsumption

tax

payableareincluded in “other current liabilities”
because the financial importance isminimal after the amounts are offset.

Summary of Company Financial Statements, FY Ended October 31, 2005

P.48

Change in Presentation Method
Prior fiscal year
From November 1, 2003
To October 31, 2004

Current fiscal year
From November 1, 2004
To October 31, 2005──────

(Company Balance Sheets)
Following promulgation of the Law to Partially Amend
the Securities and Exchange Law Etc. (Law No. 97 of
2004) on June 9, 2004 and its application on December
1, 2004, and the revision of the Practical Guidelines for
Accounting for Financial Instruments (Accounting
Committee Report No. 14) on February 15, 2005, theCompany changed its reporting method to disclose
investments in venture capital investment limited
partnerships and similar associations (investments
regarded as negotiable securities under Article 2paragraph 2 of the Securities and Exchange Law) as“investment securities” beginning from the fiscal year
under review.
The amount of a such investments included ininvestment securities for the fiscal year under review is¥96,201,000, and the amount of such investments
included in “Other” under Investments and Other Assets
in the prior fiscal year was ¥92,556,000.
(Company Statements of Income)1. The Company has reported cash bonus received(¥2,905,000 for the fiscal year under review), which wasreported as a separate category until the prior fiscal year,
in “Other” under non-operating revenues because theamount remains less than 10% of total non-operating
revenues.
2. In prior fiscal years, the Company reported the loss on
valuation of affiliated company stock in “Other” under
extraordinary losses, but for the fiscal year under review
this item is reported separately because the amountexceeded 10% of the total amount of extraordinary
losses.
The amount of the loss on valuation of affiliatedcompany stock at the end of the prior fiscal year was¥646,000.

Supplemental Information
Prior fiscal year
From November 1, 2003
To October 31, 2004

Current fiscal year
From November 1, 2004
To October 31, 2005──────

Following promulgation of the Law to Partially Amend
the Local Tax Law (Law No. 9 of 2003) on March 31,
2003 and the introduction of a corporate size-based tax
system in the corporate fiscal year beginning after April
1, 2004, the Company will report the added value portionand capital portion of corporate taxes in selling, generaland administrative expenses from the fiscal year underreview in accordance with the Practical Solution on
Presentation for Corporate Size-Based Portion of
Corporate Business Tax on the Income Statement(Accounting Standards Board of Japan, Corporate
Accounting Standards Committee Report No. 12 dated
February 13, 2004).
As a result, selling, general and administrative
expenses increased by ¥75,654,000, and operating
income, ordinary income and income before taxes andadjustments decreased by ¥75,654,000.

Summary of Company Financial Statements, FY Ended October 31, 2005

P.49

5. Notes to the Financial Statements(Notes to the Balance Sheets)
PeriodCategory
1.Totalaccumulated

depreciation

fortangibleandseveralofemployee

Prior Fiscal Year(As of October 31, 2004)

Current Fiscal Year(As of October 31, 2005)

38,291,314,000

39,514,952,000

25,669,000

30,779,000

fixed assets
2. Guarantees
Jointguaranteesbank loans.
Guarantees of borrowed

Guaranteed

Company

indebtedness of subsidiary

Amountcompanies (Daiichi Kikai Co.,

Daiichi Kikai

Ltd., Assist Co., Ltd., Kanki

Co., Ltd.

Corporation) and affiliated

Assist Co., Ltd.

company （Active Power Co.,

Kanki CorporationLtd.).

Active Power210,000,000

190,000,000

Co., Ltd.
Assist Co., Ltd.

1,260,000,000

85,187,000

Kanki Corporation

1,134,000,000

Total

1,409,187,000

269,500,000

Total

AmountDaiichi Kikai

223,183,000

Co., Ltd.

Guaranteed

Company

1,962,683,000

3. Notes and bills maturing at

Notes and bills maturing on the last

the end of the fiscal year

day of the fiscal year are settled and──────

processed on the note and bill clearing
date.

Because

the

last

day

of

the

Company’s fiscal year was a financial
institution

holiday,

maturing

on

the

notes
final

and

day

bills

of

the

following fiscal year are included in the

4. Common stock

fiscal year-end balance.
Notes receivable

766,154,000

Bills receivable

900,142,000

Shares issued

Shares issued

Common stock

66,000,000 shares

Number of shares outstanding
5. Treasury stock

Common stock

66,000,000 shares

Number of shares outstanding

Common stock

30,253,241 shares

Common stock

30,253,241 shares

Common stock393,799 shares

Common stock400,165 shares

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

Land¥3,569,000¥3,569,000

Total¥8,613,000

7. Limitation on dividends¥8,613,000

The amount of the increase in net

The amount of the increase in net

assets from applying a market price toassets from applying a market price toassetsassetsasprovided

by

124

as

by

provided

Article124

paragraph 3 of the Commercial Codeparagraph 3 of the Commercial Code

Enforcement

Enforcement

Regulations¥697,897,000.
8. Liquidation of receivables

Article──────

isRegulationsis¥1,637,603,000.
The Company liquidates receivables

based on receivables

based on a receivables transfer facility.

transfer facility

Notes receivable,
trade¥5,348,993,000

Liquidated claims bearing a right ofrecourse to the Company and included in
the balance of notes receivable, tradetransferred total ¥1,152,352,000.
Summary of Company Financial Statements, FY Ended October 31, 2005

P.50

(Notes to the Statements of Income)Prior fiscal year
(From November 1, 2003
To October 31, 2004)

PeriodCategory
1. Transactions with affiliates

2. Loss on sale or retirement

Seconded employees

Current fiscal year
(From November 1, 2004
To October 31, 2005)
Seconded employees

Salaries¥75,636,000

Rent receipts¥67,141,000（Loss on sale of fixed assets）

of fixed assets
Land¥309,000

Machinery and¥32,000

equipment

Salaries¥105,532,000

Rent receipts¥154,325,000（Loss on sale of fixed assets）
Land
Machinery andequipment
Buildings

Vehicle transport¥51,000

equipment

Tools, furnishings
and fixtures
Structures（Loss on retirement of fixed assets）
Rental equipment¥20,404,000

Buildings¥26,476,000

Structures
Machineryequipment¥40,233,000
and¥5,746,000

Tools, furnishings
and fixtures
Other

¥

Total

¥94,392,000¥473,000
665,000¥1,915,000¥605,000¥58,008,000¥53,000¥108,000（Loss on retirement of fixed assets）
Rental equipment¥23,585,000

Buildings¥1,047,000

Structures
Machinery andequipment¥2,213,000

Tools, furnishings
and fixtures¥1,651,000¥1,502,000

Vehicle transport
equipment
Other¥29,442,000

Total¥120,158,000¥24,000

Summary of Company Financial Statements, FY Ended October 31, 2005

P.51

（Notes to Leasing Transactions）
Prior fiscal year
(From November 1, 2003
To October 31, 2004)

Current fiscal year
(From November 1, 2004
To October 31, 2005)

1. Finance lease transactions except for leases that

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

transfer ownership of the property to the lessee.

(1)

(1)

Amounts

corresponding

to

lease

property

Amounts

corresponding

to

lease

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

outstanding balances at the end of the fiscal year

Acquisition Accumulated Outstanding
depreciation
pricebalance（¥’000）（¥’000）（¥’000）Acquisition Accumulated Outstanding
depreciation
pricebalance（¥’000）（¥’000）（¥’000）Rental assets 31,262,997 10,026,592 21,236,404
416,266

Other assets

214,161

202,104

31,679,264 10,240,754 21,438,509

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

Rental assets

34,441,263 13,278,651 21,162,612
307,584

Other assets

174,410133,173

34,748,848 13,453,062 21,295,785

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

Within one year

¥5,242,607,000

Within one year

¥5,326,336,000

After one year

¥15,577,358,000

After one year

¥15,327,278,000

Total¥20,819,966,000

Total¥20,653,615,000(3) Amount of lease payments, depreciation expense
and interest expense(3) Amount of lease payments, depreciation expense
and interest expense

Lease payments¥5,721,008,000

Lease payments¥6,030,861,000

Depreciation expense¥5,369,497,000

Depreciation expense¥5,475,320,000

Interest expense¥754,622,000(4) Accounting method for amount equivalent todepreciation expense

Interest expense¥709,565,000(4) Accounting method for amount equivalent todepreciation expense

Straight-line depreciation using the lease term as

Same as at left

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

Interest method using the difference between

Same as at left

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

2. Operating leases

Future lease payments

Future lease payments

Within one year

¥1,813,177,000

Within one year

¥1,476,233,000

After one year

¥3,434,039,000

After one year

¥3,376,419,000

Total¥5,247,217,000

Total¥4,852,653,000（Negotiable Securities）
For the prior fiscal year (as of October 31, 2004) and the current fiscal year (as of October 31, 2005), thestock of the Company’s subsidiary companies and affiliated companies did not have a market price.

Summary of Company Financial Statements, FY Ended October 31, 2005

P.52

（Notes Related to Tax Effect Accounting）
Prior fiscal year
(From November 1, 2003
To October 31, 2004)

Current fiscal year
(From November 1, 2004
To October 31, 2005)

1. Major factors creating deferred tax assets and

1. Major factors creating deferred tax assets anddeferred tax liabilities

deferred tax liabilities

Amount in excess of limit forinclusion
Disallowanceofdeferredbusiness taxes
Excessaccruedemployees
retirement benefit
Amount in excess of limit forinclusion
Excessaccruedemployees
retirement benefit
Disallowanceof
excessdepreciation
Disallowance of reserve forinvestment losses
Other
Total deferred tax assets
Disallowance
depreciationof¥259,935,000¥24,011,000¥495,646,000¥28,902,000

Amount in excess of limit forinclusion
Disallowanceofdeferredbusiness taxes
Excessaccruedemployees
retirement benefit
Amount in excess of limit forinclusion
Excessaccruedemployees
retirement benefit¥113,120,000

Disallowanceof
excessdepreciation
Disallowance of reserve forinvestment losses
Other¥249,651,000

Total deferred tax assets¥176,155,000¥359,951,000

excess¥1,707,374,000

on¥473,071,000

Deferred tax liability
Valuationdifference
negotiable securities¥1,234,303,000

Net deferred tax assets

Deferred tax liability
Valuationdifference
negotiable securities
Net deferred tax assets

Disclosure classifications:
Current assets
Property and equipment¥229,340,000¥1,004,962,000

Disallowance
depreciationof¥203,734,000¥52,019,000¥599,817,000¥31,964,000¥181,022,000¥311,670,000¥193,990,000¥382,989,000

excess¥1,957,210,000

on¥1,110,053,000

Disclosure classifications:
Current assets
Property and equipment¥847,156,000¥367,932,000¥479,224,000

2. Causes of principal differences between the statutory

2. Causes of principal differences between the statutory

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

major category.

Statutory corporate tax rate

41.7％

（Adjustment）

Statutory corporate tax rate

40.4％

（Adjustment）

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

3.8％

Other

-2.1％

Burden ratio for corporate and othertaxes after application of tax effectaccounting

47.1％

3.4％
0.3％

Local tax equalization

7.3％

Items not included permanently in
losses such as expense accountReversal of corporate taxes payablefrom past fiscal years
Burden ratio for corporate and othertaxes after application of tax effectaccounting

2.5％
-3.4％
46.8％

Summary of Company Financial Statements, FY Ended October 31, 2005

P.53

(Per Share Information)
PeriodCategory
Net assets per share

Prior fiscal year
(From November 1, 2003
To October 31, 2004)

Current fiscal year
(From November 1, 2004
To October 31, 2005)¥1,102.69¥1,135.43¥39.50¥20.16−−

Net income per share of common stock
Net income per share of common stock
after adjustment for potential ordinary
sharesThe Company has not reported
net income per share of common
stock
after
adjustment
for
potential ordinary shares because
it does not have any potential
shares that would have a dilution
effect.

The Company has not reported
net income per share of common
stock
after
adjustment
for
potential ordinary shares because
it does not have any potential
shares that would have a dilution
effect.

Note: The basis for calculating net income per share and net income per share on a fully diluted basis is provided
below.
(Unit: Thousands of yen)
Prior fiscal year
(From November 1, 2003
To October 31, 2004)

Current fiscal year
(From November 1, 2004
To October 31, 2005)

1,187,109

609,217

7,300

7,300

1,179,809

601,917

29,865,301

29,856,334

Fiscal year net income adjustment−−(Interest expense [Taxdeduction amount])

−

−

−

−

PeriodCategory
Net income per share
Fiscal year net income
Amountnotshareholders

attributable

to

major

Fiscal year net income related to common
stock
Average number of shares outstanding
during the fiscal year
Net income per share on a fully diluted
basis
equivalent

Change in number of shares of common
stock (shares)(Convertible bonds)
Summary of latent common stock notincluded in the calculation of net income
per share on a fully diluted basis because it
will not have a dilution effect−Common stock subscription rights−──────

based on the provisions of Article
280-19 of the old Commercial
Code (Stock Options)(Material events after the close of the consolidated fiscal year)
The Company had no material items to report.

Summary of Company Financial Statements, FY Ended October 31, 2005

P.54

VI Changes to Directors and Auditors
1. Changes to Representative Directors
Retiring representative directors
Name
Hidemitsu Washida

New position
Director and Advisor

Current position
Executive Vice President, Manager
in Charge of Operations Control
Headquarters

2. Changes to Directors(1) Candidates for new appointments as director
Name

Masakazu Hirata

Keiichi Kitakata

New position
Director and Corporate Officer
Deputy Division Manager,
Construction Equipment Rental
Division
Division Manager, Used Products
Sales Division
Manager, Quality Assurance
Department
Director and Corporate Officer
Division Manager, Research &Investment Division
Division Manager, Information
Products Rental Division

Current position
Corporate Officer
Deputy Division Manager,
Construction Equipment Rental
Division
Division Manager, Used Products
Sales Division
Manager, Quality Assurance
Department
Corporate Officer
Division Manager, Research &Investment Division(2) Candidates for new appointments as Corporate Officer
Name
Manabu Nagasaki

New position
Corporate Officer
Regional Manager, Tohoku Region
Construction Equipment Rental
Division

Current position
Regional Manager, Tohoku Region
Construction Equipment Rental
Division(3) Retiring directors
Name
Hideki Nomiya

Current position
Corporate Officer
Business Coordination Headquarters
Manager in Charge of Steel Sales
Division

Summary of Company Financial Statements, FY Ended October 31, 2005

P.55