Fiscal Year Ended October 31, 2002

Accounting Bulletin (Consolidated)
December 13, 2002
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 President

Inquiries

Nobuhito Utatsu 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 13, 2002

SEC Accounting Standards

The Company has not adopted SEC accounting standards

1. Consolidated operating results for the fiscal year ended October 31, 2002 (Nov. 1, 2001 – Oct. 31, 2002)(1) Consolidated operating results(Numbers less than one million yen have been rounded down)
Revenues

Operating Income¥ millions
Fiscal year ended
October 31, 2002
Fiscal year ended
October 31, 2001

Fiscal year ended
October 31, 2001%

（ △3.1 ）

2,287（△20.4 ）2,381（△26.9 ）67,346（2,872（ △5.6 ）3,257（ 27.8 ）8.6 ）Net income pershare ofcommon stock

Net income pershare of common
stock after
adjustment forpotential ordinary
sharesReturn on
shareholders’equityReturn on
total assets

Ordinary
incomemargin

%

Yen

Yen

%

%

%

1,209

( 155.8)

39.99

30.76

3.9

2.3

3.6

472

( △65.3)

15.64

13.89

1.5

3.1

4.8

¥ millions

October 31, 2002

¥ millions%

65,251Net Income

Fiscal year ended¥ millions%

Ordinary Income(Notes) 1. Equity method investment profit or loss
FY ended October 31, 2002−

FY ended October 31, 2001−

2. Average number of shares (consolidated) outstanding during the fiscal year
FY ended October 31, 2002: 30,235,808 shares
3. Are there any changes in accounting method?

FY ended October 31, 2001: 30,229,603 shares
Yes

4. The percentages shown for revenues, operating income, ordinary income and fiscal year net income are the percent increaseor decrease compared to the prior fiscal year

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 1

( 2) Consolidated financial position
Total assets

Shareholders’ equity¥ millions
Fiscal year ended

October 31, 2001

¥ millions

Shareholders’ equity per
share

%

Yen

99,31331,24031.5

1,033.30

106,639

30,84328.9

1,020.03

October 31, 2002
Fiscal year ended

Shareholders’ equity
ratio(Note) Number of shares (consolidated) issued and outstanding at the end of the fiscal year:
FY ended October 31, 2002: 30,233,756 shares

FY ended October 31, 2001: 30,237,259 shares(3) Consolidated cash flow
Cash flow fromoperating activities

Cash flow frominvesting activities¥ millions
Fiscal year ended
October 31, 2002
Fiscal year ended
October 31, 2001

Cash flow fromfinancing activities¥ millions

Cash and cash
equivalents at the endof the fiscal year

¥ millions¥ millions

10,645△ 442△10,761

15,433

12,469△ 762△12,137

15,991(4) Companies to which consolidation accounting and equity method accounting apply
Number of consolidated subsidiaries: 6 companies
Number of unconsolidated subsidiaries accounted for under the equity method: 0 companies
Number of affiliated companies accounted for under the equity method: 0 companies(5) Changes in scope of consolidation accounting and application of equity method accounting
Consolidation (New): 1 company (Excluded): 0 companies
Equity method accounting (New): 0 companies (Excluded): 0 companies

2. Projected consolidated operating results for the fiscal year ending October 31, 2003
(November 1, 2002 – October 31, 2003)
Revenues
Interim period
Full year

Ordinary Income¥ millions
33,30065,500¥ millions
1,410
2,180

Net Income¥ millions
690
1,000

(Reference) Projected net income per share of common stock (fiscal year): ¥33.08
Note: The above projection was created based on information and projections of the future economic environment available to theCompany’s management at the time this report was published. Actual operating results may differ from the projected figures, as aresult of various future factors.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 2

I

Current Conditions of the Company’s GroupThe 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 of construction equipment, and the development of businesses
involved in the rental and sale of a full line of construction-related materials. 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 subsidiary company), is
engaged in the rental and sale of construction equipment and machines used for construction. These three subsidiarycompanies operate in designated marketing areas and borrow rental equipment assets from the Company as needed inorder 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 fixtures andsafety products for the construction industry. The Company and Taniguchi Co., Ltd. borrow rental assets from SRG
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 Information Products 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 and equipment for thedevelopment of computer products. Companies affiliated with this division include Active Technology Corporation (anaffiliated company), which is principally engaged in the sale of telecommunications-related equipment such as wireless
LAN devices. As supplemental businesses, Active Power Corporation (an affiliated company) is engaged in the sale ofmicroturbine generators manufactured by Capstone Corporation, a U.S. company, and supplies these products to theCompany, among others. Providence Brewery Co., Ltd. (a subsidiary company), which brewed and sold regional beers,
has ceased all manufacturing and sales operations at the present time.

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

Customers
Construction equipment rental

Kanamoto Co., Ltd.

Construction-related
businesses

Construction Equipment

Taniguchi Co., Ltd.

Rental Div.
Steel Sales Div.

Daiichi Machine
Industries Co., Ltd.

Information Products Div.
Microturbine electricalgenerators

Kanamoto Shikoku
Co., Ltd.

Rental of
temporarySRG Kanamoto Co., Ltd.

scaffolding
Supply ofmodularhousing uints
Rental of Safety
Products

Kanatech Co., Ltd.
Assist Co., Ltd.

Supply of modular
housing uints
Rental of Safety Products

Polyshield Services
Co., Ltd.
Providence Brewery Co., Ltd.

*Active Power Corp.
*Active Technology Corp.

Consolidated

Non- Consolidated

AffilfatedRental Tranzactions
Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 3

II Management Policies and Operating Results
1. Basic policies concerning business management
Kanamoto Company has always made the centerpiece of its action agenda the concept, “constantly seek innovation andstrive to energize the business.” We believe that adapting to changes in the business environment, developing the firm ona sustainable basis and maximizing earnings contributes to the best results for our stakeholders. Our focus is on
maintaining an ability to continually distribute profits to our shareholder partners, and demonstrating Kanamoto’s
potential to customers and local communities as the leading construction equipment rental company, by developing its
business throughout Japan. We seek to offer detailed services that are intimately linked to each local area, by having eachbranch office act an independent business enterprise.

2. Basic policies concerning distribution of earnings
To ensure the long-term, integrated expansion of shareholders’ profits, Kanamoto Company continues to focus
comprehensively on both capital investments based on its medium-term profit plan and on profitability, dividend trend
and a sound financial position. The Company also remains committed to its policy of stable dividend growth.
At the same time, the Company utilizes its internal reserves by allocating funds for the introduction of the rental
equipment assets that will become the source of future earnings.
Furthermore, Kanamoto has established a policy and system for the amortization of treasury stock, based on theassumption the Company will execute the policy at the appropriate time according to circumstances.

2-2. Policy concerning reduction of the Company’s investment unit
Given the Company’s present circumstances and markets, the Company believes it has adopted an appropriate position
with regard to its investment unit and stock allocation, 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 future distribution of investment units.

2-3. Management indicators established as objectives
For aspects of its business that require strict valuation of assets at market prices and the application of conservative
accounting principles, Kanamoto believes it is vitally important to vigorously fulfill these requirements. Moreover,Kanamoto has always emphasized ROI (return on investment) and cash flow, and seeks growth in EBITDA (earnings
before interest, taxes, depreciation and amortization) to meet its primary objective of establishing a solid foundation for
management. The Company considers EBITDA to be the most appropriate measure for comprehensive evaluation of
earnings in an industry that requires a large portfolio of assets such as construction equipment rental, and continually
measures this index and applies it for making management decisions.

3. Medium to long-term corporate management strategy
In its principal business of construction equipment rentals, the Company is continuing to implement the following businessand financial strategies to the extent possible, based on the “Kanamoto Survival Plan,” the Three-Year Plan the Company
is currently implementing.
①

Adopt an offensive structure, by executing a bold scrap and build program and shifting human resources andconstruction equipment rental assets to major metropolitan areas where demand is concentrated, particularly
Tokyo, while adhering firmly to its strategy of improving operating rates of rental equipment assets and building adominant network to surround local customers. Over the short-term, place priority on sales branches that are able
to maintain profitability.

②

In regions such as western Japan where the Company has not previously built its own sales branches, continue
expansion of the business base by constructing an alliance group, and achieve synergistic results by strengthening
the quality of each partner firm, regardless of whether it is a consolidated or non-consolidated company, andenhancing cooperation among the firms as a group.

③

Aim at continuously raising the Company’s debt rating and improving and strengthening the Company’s financial
position from the standpoint of procuring diverse, high-quality capital resources.

4. Issues to be addressed by the Company
The profit environment continues to grow more severe as competition in the construction equipment rental industry
intensifies. To differentiated itself from other companies, in the past Kanamoto strengthened its base of rental assets best
suited to meeting customers’ needs and implemented actions such as enhancing its asset quality assurance system, while
continuing efforts to hold down cost increases. In addition, the Kanamoto group is a combination of firms that boast strong
relationships with sectors such as “temporary housing materials,” “furniture, fixtures and security equipment” and“specialized housing units,” which supplement the Company’s principal business of construction equipment rentals.
Because the prompt, flexible utilization of these relationships will be the key to differentiation from other companies,
Kanamoto will concentrate on further strengthening the alliance among the Group firms and seeking synergistic results.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 4

The company-wide application of ability and performance-based evaluations based on a review of the personnel system,
and low-cost operation activities at sales branches, are steadily improving operating results. Nevertheless, regional
differences in maintenance ability have increased as we rapidly expanded our branch network over the past few years. To
address this issue, we will accelerate construction of a knowledge management system and maintenance standardization
system to utilize effectively the online network linking every Kanamoto branch.
Kanamoto continues to support venture businesses, in order to nurture new businesses that will follow the growth path of
its construction equipment rental business. In this effort, the Company seeks to reduce risk by determining in a prompt
and timely manner whether a venture business has viable commercial prospects and growth potential.

5. Changes to the Company’s management organization and measures concerning corporate
governance
At Kanamoto, we have already introduced a corporate officer system to clarify responsibility for execution of theCompany’s business. Kanamoto has also consolidated its organizational framework, which will improve thecommunication function for top-down notification of instructions such as management policies, and provide a system forkeeping every employee well informed about the Company’s policies.
In addition, by preparing ethics guidelines and establishing a Compliance Committee that includes outside committee
members, the Company has taken steps to strengthen respect for the law and ethical regulations.
To improve the business development capabilities of the entire Kanamoto group, the Company holds a regular “alliancegroup meeting” that is attended by the management of each group company. This meeting serves to ensure a thoroughunderstanding of the group’s business objectives and management policies.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 5

2. Operating Results and Financial Position(1) Operating results① Summary of fiscal year consolidated operating results (Fiscal year ended October 2002)
During the fiscal year under review, restraints arising from the need to restore central government finances prevented theadministration from implementing fiscal stimulus measures, and Japan’s economy did not see any improvement inbusiness sentiment. In the construction industry, the principal customer for Kanamoto’s construction equipment rental
business, an extremely severe business environment continued not only because of lower public works spending, but also
because of a rapid slowdown in private sector capital investment, with the exception of the Tokyo metropolitan area. A
summary of operating results for each operating division is discussed below.

〔 Construction-related business 〕
The latest figures based on research by the Japan Civil Engineering Association (issued June 2002) showed that Japan’sconstruction companies rely on construction equipment rentals for 55.5% (up 1.2% points over the prior year) of theirequipment needs. The demand for construction equipment rentals remains unchanged and vigorous. The number ofpublic works construction projects declined, however, and revenues for the construction industry overall were lower. As aresult, companies faced strong pressure to reduce construction equipment rental prices. Despite the upward trend in theuse of rentals to meet construction equipment needs, therefore, revenues for the construction equipment rental industry
as a whole declined, and the business environment confronting the industry remained extremely challenging.

● Conditions for the Company (Unconsolidated)
In its Construction Equipment Rental Division, Kanamoto reorganized the existing branch network according to territories,
and revised management reporting lines. The Company also sought to reduce costs through several measures, including
closing four unprofitable branches and simultaneously integrating the back-office activities of the branch network. During
the fiscal year under review, Kanamoto opened two new branches in the Hokkaido territory, added three new branches
and closed one branch in the Tohoku territory, beefed up the Kanto-Shinetsu territory by opening four branches andclosing two branches, and added one new branch while closing an unprofitable branch in the Kinki-Chubu territory.
Altogether, the branch network grew by a net addition of six branches.
As a result of the above steps, the Company maintained the operating rates for its rental asset at the same high levels
achieved in the past. By keeping reductions in rental unit prices to a minimum, the Company held the decline inconstruction equipment rental revenues to 5.3%.
By region, compared to the prior fiscal year rental revenues declined by 10.6% in Hokkaido and 8.1% in the Tohoku
territory, respectively, as both regions bore the brunt of decreasing demand for public works construction. In the
Kanto-Shinetsu territory, revenues increased by 3.9%. While public works spending and private construction demand in
the Tokyo metropolitan area was vigorous, this was offset by weak conditions in the Shinetsu region and the northern
Kanto area. In the Kinki-Chubu territory, business remained brisk in both the Osaka and Nagoya metropolitan areas,demand also picked up in the Hokuriku region as that area shook off a temporary slump, and the alliance group strategy
for developing western Japan also contributed positive results. For the territory as a whole, equipment rental revenuesrose 9.8%.
With regard to sales revenues for the division, on the other hand, revenues from the overseas sale of used construction
equipment grew strongly, but despite steady sales activity in the domestic sales territories unit price declines greatly
influenced revenues. As a result, sales revenues were off by 3.8% compared to the prior fiscal year.
From the standpoint of profitability, the Construction Equipment Rental Division’s operating income can under intensepressure from the effects of lower rental unit prices, with the result that profitability declined compared to the prior fiscal
year. This was despite the fact that the Company achieved cost reductions based on the new “Kanamoto Survival Plan”
Three-Year Plan, which the Company began implementing during the period under review, and attained a more balanced
depreciation expense burden by emphasizing leases as the form for introducing assets.

● Conditions for consolidated subsidiaries
Fiscal year operating results for the consolidated subsidiaries in construction-related businesses were as follows.
At Taniguchi Co., Ltd., revenue increased by 1.6% compared to the prior fiscal year and net income jumped 35.1%, as
the firm fought strongly in a tough environment in which public sector construction in Hokkaido is declining.
Assist Co., Ltd. enjoyed the results of its prior year efforts to expand and strengthen its sales offices. Revenue increased
by 18.5%, and net income rose by 108.3%.
Although SRG Kanamoto Co., Ltd. set the stage for strengthening sales by opening a new branch in Sapporo, revenue
fell 4.7% and the company incurred a net loss as the result of stagnant construction demand, lower unit prices and the risein costs for opening the new branch.
Kanatech Co., Ltd. increased its revenue by 14.2%, aided by the supply of modular housing units to other members ofSummary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 6

Kanamoto’s alliance group. Net income declined by 72.2%, however, as costs of sales rose because of efforts to broaden
the firm’s product lineup and higher transportation expenses.
Daiichi Machine Industries Co., Ltd. became one of Kanamoto’s consolidated subsidiaries during the fiscal year underreview. Although a true comparison of year-to-year results is not possible because Daiichi changed its fiscal period closing
month and applied special accounting rules, the firm achieved steady growth in both revenues and operating earnings.
Nevertheless, the company ended the fiscal year with a net loss, as the amortization of prior year costs also increased.
As a result of the above activities, consolidated fiscal year revenues from construction-related businesses fell by 1.8% to¥56,558 million, and operating income decreased by 17.6% to ¥2,108 million.

〔 Steel sales-related business 〕
The Steel Sales Division focused its sales efforts by shifting human resources to the Sapporo metropolitan area, where
demand was strong. The division was unable to increase revenue despite great efforts made to cover the drop in revenues
generated by its steel production raw materials (iron scrap) section, which the division decided to abolish as of the end ofJanuary 2002, by handling steel materials with strong demand and construction materials. The division also lowered
prices to meet market unit prices. The division was able to minimize the negative influence of the local market, however,where private sector demand remained in a slump.
As a result, sales fell 10.8% to ¥7,435 million, and operating income declined 67.7% to ¥47 million.

〔 Computer and peripheral equipment related business and other businesses 〕
At Kanamoto’s Computer and Peripheral Equipment Rental Division, which manages the Company’s information andtelecommunications businesses, workstation rentals, which were strong i n the prior fiscal year, were weakened by a delay
in rental inquiries for models equipped with new OS because of the market’s outlook. Rentals of personal computers werestrong in terms of quantity, but rental prices weakened under the influence of falling sales prices. Given tough conditions,rental revenue declined 14.8% compared to the prior year. Equipment sales were strong, particularly for wireless LAN,
which enjoyed steady sales similar to the previous fiscal year, with unit prices showing only a minute decline of 0.8%. For
the division as a whole, revenues decreased 7.0%.
In other businesses, Kanamoto faced uncertain prospects at Providence Brewery Co., Ltd., which struggled from flat
personal consumption and the inability to expand sales channels in the tradition-bound alcoholic beverage industry. The
Company was unable to avoid a decision to discontinue local beer production in February 2002.
Revenues for the Company’s computer and peripheral equipment-related business and other businesses fell 9.6% to¥1,257 million, and operating income was down 83.7% to ¥4 million.

〔 Fiscal Year ending October 31, 2002

Consolidated operating results 〕(Million yen)

Revenues

Operating Income

Ordinary Income

Net Income

Consolidated FY under review

65,251

2,287

2,381

1,209

Change from prior year

△3.1%

△20.4%△26.9%

155.8%(Percentage figures show the change compared to prior year)〔Other business operating results 〕
The Company did not locate any promising investment targets for Kanamoto’s venture business support activities and did
not provide any support, such as new capital investment, during the consolidated fiscal year under review.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 7

② Outlook for the next consolidated fiscal year (Business period ending October 2003)
The Japanese government is slowly taking steps to put Japan’s financial system back on a sound footing at an early stage,as part of the Koizumi Cabinet’s reforms. As a result, many observers believe this will accelerate the restructuring andshuttering of so-called “heavily -indebted troubled companies.” With regard to the supplementary budget as well, although
the government drafted a public works budget totaling roughly ¥1.5 trillion, this failed to satisfy industry expectations
because of sharp cuts in the total amount of the initial budget. Given these conditions, Kanamoto believes the toughcompetitive situation among manufacturer-related rental companies, large multi-regional rental firms and middle-market
rental companies will continue, but this will also serve as a factor leading to greater industry reliance on construction
equipment rentals.
The present circumstances provide an opportunity to expand market share in the construction equipment rental business,
which is the leading sector among construction-related industries. Kanamoto will focus on ensuring increased earnings, by
acting to strengthen its business through greater cooperation and integration among the Kanamoto alliance groupcompanies, and promoting a product line-up that suits customers’ needs by reviewing some of the products thecompanies handle. Kanamoto will simultaneously promote the rationalization of back-office operations and maintenance,
to bolster low-cost operations. The priority for new sales branch openings will be on the Tokyo metropolitan area. Together
with the recent expansion of Kanamoto’s market share, we will aggressively introduce rental assets during the next fiscal
year as well.
In other areas, although the Steel Sales Division and the Computer and Peripheral Equipment Rental Division represent
only a small portion of Kanamoto’s total net revenues, we will work to continually increase the revenues at each division.
Furthermore, the Company will fully write off the estimated loss incurred from the liquidation of Providence Brewery Co.,
Ltd. during the consolidated fiscal year under review.

〔Fiscal year ending October 31, 2003

Projected consolidated operating results 〕(Million yen)

Revenues

Operating Income

Ordinary Income

Net Income

Interim period

33,300

2.1%

1,480

△12.7%

1,410△20.7%

690△25.9%

Full year

65,500

0.4%

2,360

3.2%

2,180

△8.4%

1,000

△17.3%(Percentage figures show the change compared to prior year)(2) Financial position
For the consolidated accounting fiscal year under review, cash flow from operating activities was down 14.6% to¥10,645. This was ¥1,823 million less than in the prior consolidated accounting fiscal year. In addition to higher income
before taxes and adjustments, this reflected a decrease in accrued employee retirement benefits and lower depreciation
and amortization expense, plus an increase in payment of corporate and other taxes.
Cash flow used for investing activities was ¥442 million, ¥320 million (42.0%) less than in the prior fiscal year. This wasprimarily the result of fewer funds used for the purchase of tangible fixed assets.
Cash flow used for financing activities was ¥10,761 million, ¥1,376 million less than in the prior consolidated accounting
fiscal accounting year. The Company used funds provided by long-term bank borrowings to repay outstanding loans andredeem straight and convertible bonds.
As a result of the above, the balance of cash and the cash equivalents at the end of the consolidated accounting fiscal year
under review was ¥15,433 million, ¥558 million (3.5%) less than at the end of the prior consolidated accounting fiscal
year.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 8

III Consolidated Financial Statements
1. Consolidated Balance Sheets
PeriodCategory(Assets )Current Assets
Cash and deposits
Notes and trade accounts
receivable
Negotiable securities
Inventory
Construction equipment
Corporate and other taxes
receivable
Deferred tax assets
Other current assets
Allowance for doubtful accounts
Total Current Assets
Fixed Assets
Tangible fixed assets
Rental equipment
Buildings and structures
Machinery, equipment, andvehicles and delivery equipment
Land
Construction in progress
Other assets(Amounts less than ¥1 thousand have been rounded down)
Current consolidated accounting
fiscal year
(As of October 31, 2002)
AmountPercent

Prior consolidated accounting
fiscal year
(As of October 31, 2001)
AmountChange fromprior year

Percent

15,437,482

15,996,639△559,156

23,120,417

25,807,750△2,687,333

75,075
809,466
2,466,271

114,440
1,117,400
2,931,588△39,365△307,934△465,316

56,109−56,109167,379
437,337△494,633

230,232
351,760△324,938△62,853

42,074,906

42.4

46,224,874

85,577△169,694
43.3△4,149,968

16,896,190
7,685,672

19,820,577
8,163,141△2,924,386△477,468

1,087,738

1,300,205△212,467

24,600,974
108,792
189,559

24,396,831
58,896
231,088

204,143
49,896△41,528

Total Tangible Fixed Assets
Intangible Fixed Assets
Other assets

50,568,929

Total Intangible Fixed Assets

100,72750.9

100,727

53,970,740

50.6

84,251
0.1

84,251△3,401,810
16,4760.1

16,476

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 9

PeriodCategory

AmountInvestments and Other Assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts
Total Investments
AssetsCurrent consolidated accounting
fiscal year
(As of October 31, 2002)

and

Other

Total Fixed Assets
Total Assets
Current Liabilities
Notes and accounts payable, trade
Short-term bank loans
Long-term bank loans due
within one year
Current Liabilities
Corporate bonds to be redeemedwithin one year
Convertible bonds to beredeemed within one year

Percent

3,682,356
1,748,980
1,717,732△580,183(Amounts less than ¥1 thousand have been rounded down)Prior consolidated accounting
Change fromfiscal year
(As of October 31, 2001)
Amountprior year

Percent△107,035

3,789,391
1,567,069
1,449,550△446,847

181,910
268,181△133,336

6,568,886

6.6

6,359,165

6.0

209,720

57,238,543
99,313,449

57.6
100.0

60,414,156
106,639,030

56.7
100.0

△3,175,613△7,325,581

11,965,279

12,620,598△655,318

905,454510,053

395,401

8,484,358

7,819,446

664,911

5,277,692−

5,277,692

4,164,000−

4,164,000

Corporate taxes payable
Accrued bonuses to employees
Accounts payable, other
Other current liabilities

19,309541,179
7,909,341
753,119

1,319,459
594,6888,299,274
763,794△1,300,149△53,509△389,932△10,674

Total Current Liabilities

40,019,734

Long-term Liabilities
Straight bonds
Convertible bonds
Long-term bank loans
Accrued employees retirement
benefit
Retirement allowances todirectors and auditors
Long-term accrued expenses
Consolidation adjustment account
Other

40.3

−
−

31,927,314

29.9

8,092,420△5,277,692△9,281,000

17,301,830

5,277,692
9,281,000
14,547,095

1,675,725

2,008,761△333,035

196,643

282,426△85,782

8,636,876
25,493
118,996

12,405,133−−△3,768,257

2,754,734

25,493
118,996

Total Long-term Liabilities

27,955,564

28.1

43,802,108

41.1△15,846,543

Total Liabilities

67,975,299

68.4

75,729,422

71.0△7,754,123

97,5740.1

66,6010.1

30,972（Minority Interest）
Minority interest

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 10

PeriodCategory(Amounts less than ¥1 thousand have been rounded down)Prior consolidated accounting
fiscal year
Change from(As of October 31, 2001)prior year
Percent
AmountPercent

Current consolidated accounting
fiscal year
(As of October 31, 2002)
Amount（Shareholders’ Equity ）−−Common stock
Additional paid-in capital
Consolidated retained earnings
Valuation difference on otherinvestment securities

8,596,737
9,720,343
13,044,002

8.7
9.8
13.1

8,596,737
9,720,343
12,395,900

8.1
9.1
11.6

648,102△108,448△0.1

140,5350.1△248,984

Total Shareholders’ Equity

31,252,634△2,08631.5△0.0

30,853,516
△537

28.9
△0.0

399,117△1,548△9,973△0.0△9,973△0.0−

Total Shareholders’ Equity

31,240,575

31.5

30,843,006

28.9

397,569

Total Liabilities, Minority Interest andShareholders’ Equity

99,313,449

100.0

106,639,030

100.0△7,325,581

Treasury stock
Parent company stock held bysubsidiaries

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 11

2. Consolidated Statements of Income
PeriodCategory
Revenues from operations
Rental revenues
Sales
Total revenues from operations(Amounts less than ¥1 thousand have been rounded down)

Current consolidated accounting
fiscal year
(From November 1, 2001
to October 31, 2002)
AmountPercent

40,560,882
24,690,988
65,251,870

Prior consolidated accounting
fiscal year
(From November 1, 2000
to October 31, 2001)
Amountprior year

Percent△1,278,723△815,830

41,839,605
25,506,819
100.0

Change from67,346,425

100.0△2,094,554

Cost of revenues from operations
Cost of rental revenues
Cost of goods sold

30,630,540
19,376,376

Total cost of revenues

50,006,917

76.6

51,175,992

76.0△1,169,075

Gross profit
Selling and administrative
expenses

15,244,953

23.4

16,170,432

24.0△925,478

12,957,410

19.9

13,298,018

19.7△340,608

Operating income
Non-operating revenue
Interest revenue
Dividend income
Gain on sale of investment
securities
Insurance benefits
Rents
Cash bonus received
Amortization of consolidation
adjustment accountOther2,287,543

3.5

2,872,413

4.3△584,870

Total non-operating revenues
Non-operating expenses
Interest expense
Other754,419

Total non-operating expenses
Ordinary income
Extraordinary profit
Adjustment of prior period profit
or loss
Gain on sale of fixed assets
Reimbursement of accrued
employees retirement benefit
Guarantee of moving expenses
Other
Total extraordinary profit△559,287△609,788

31,189,827
19,986,164

10,08945,627

17,25722,190△7,168157,293376,299△219,005

38,354
95,177
168,536

242,730
256,066−△204,376△160,888

6,237

−

6,237

233,103

177,869

55,233△337,994

1.1

475,129
185,605
660,735
2,381,227

1,092,413

23,437

168,536

1.6△68,946

544,075
163,5121.0
3.6

707,587
3,257,239

1.1
4.8

22,093△46,852△876,012−

2,256△2,256

14,266

4,178

10,088395,091−

395,091−

24,782
1,934△24,782

11,101
420,459

0.6

33,151

9,167
0.1

387,307

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 12

PeriodCategory

Current consolidated accounting
fiscal year
(From November 1, 2001
to October 31, 2002)
AmountExtraordinary loss
Loss on sale or retirement of
fixed assets
Valuation loss on investment
securities
Loss on sale of investment
securities
Loss on redemption of convertible
bonds
Money transferred to accrued
employees retirement benefit
Other
Total extraordinary loss
Income before taxes andadjustments
Corporate, local and business taxes
Adjustment for corporate and othertaxes
Minority interest loss
Net income

Percent(Amounts less than ¥1 thousand have been rounded down)Prior consolidated accounting
fiscal year
Change from
(From November 1, 2000
prior year
to October 31, 2001)
AmountPercent

199,356

101,886

97,470240,765

126,450

114,31470,085−70,08596,085−96,085−

1,982,023△1,982,023

67,58555,340673,878

1.0

2,265,701

3.4

12,245△1,591,822

2,127,807

3.2

1,024,690

1.5

1,103,117

864,430

1.3

1,883,570

2.7△1,019,139

59,3970.1△1,308,431△1.9

1,367,829

5,252

0.0

23,1350.0△17,882

1,209,231

1.8

472,686

0.7

736,545

3. Statements of Consolidated Retained Earnings(Amounts less than ¥1 thousand have been rounded down)
PeriodCategory
Balance of consolidated retained
surplus at the beginning of the period
Reduction in consolidated retained
earnings
Dividends
Directors and auditors’ bonuses(Auditors’ bonuses)
Total reduction in consolidated retained
earnings
Net income for the period
Balance of consolidated retained
surplus at the end of the period

Current consolidated accounting
fiscal year
(From November 1, 2001
to October 31, 2002)
AmountPrior consolidated accounting
fiscal year
(From November 1, 2000
to October 31, 2001)
Amount12,395,900

12,484,124△88,224544,529
16,600(1,700)544,311
16,600(1,700)

218
−
( −)

561,129

560,911218

1,209,231

472,686

736,545

13,044,002

12,395,900

648,102

Change fromprior year

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 13

4. Consolidated Statements of Cash Flows(Amounts less than ¥1 thousand have been rounded down)
PeriodCategory
Cash flow from operating activities
Net income before taxes andadjustments
Depreciation and amortization expense
Amortization of consolidated adjustment
account
Gain on sale of fixed assets
Loss on disposal of fixed assets
Profit from adjustment of prior period
profit or loss
Installment purchases of assets forsmall-value rentals
Reclassification of cost of sales
associated with disposal of construction
equipment
Reclassification of cost of sales
associated with disposal of rental assets
Expenditures for acquisition of rental
assetsValuation loss on investment
securities
Gain on sale of investment securities
Loss on sale of investment securities
Gain on redemption of bonds
Loss on redemption of convertible
bonds
Increase in allowance for doubtful
accounts
Increase (decrease) in accrued bonuses
to employees
Increase (decrease) in accrued
employees retirement benefit
Decrease in retirement allowances todirectors and auditors
Interest revenue and dividend income
Interest expense on installment
purchases of rental assets
Interest expense(Increase) decrease in accounts
receivable, trade(Increase) decrease in inventory assets
Increase (decrease) in accounts
payable, trade
Increase in accounts payable, other
Directors and auditors’ bonuses paid
Other
SubtotalInterest and dividends received
Interest expense
Payment of corporate and other taxes
Cash flow from operating activities

Current consolidated
accounting fiscal year
(From November 1, 2001
to October 31, 2002)
AmountPrior consolidated
accounting fiscal year
(From November 1, 2000
to October 31, 2001)
Amount2,127,807

1,024,690

1,103,117

8,119,889

9,486,358△1,366,468△6,237−△6,237△14,266△4,178101,886△10,088

199,356−△1,618

1,618

265,647

361,621△95,973

35,359134,927△99,567

1,504,216

1,193,637

310,578△1,251,943△295,556△956,387

240,765

126,450

114,314△157,293
70,085△46,450△376,299−△8,143

219,005
70,085△38,307

96,085−96,085

300,631367,817△67,186△53,50991,785△145,294△333,035

2,008,761△2,341,797△85,782△5,028△80,754△55,717△39,448△16,269

271,236

299,831△28,594475,129544,075△68,946

2,985,326△2,476,330

5,461,657

336,554△291,190

627,744△1,104,285

901,119△2,005,404

107,073△16,600△563,520

487,864△16,600
426,291
14,042,726
39,448△844,586△767,928
12,469,659△380,791−△989,811△596,202

13,446,523
55,717△747,992△2,108,470
10,645,777

Change from prioryear

97,47016,26996,594△1,340,542△1,823,881

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 14

PeriodCategory
Cash flow from investing activities
Disbursements for investments in term
deposits
Revenue from redemption of term
deposits
Funds used for the purchase of tangible
fixed assets
Funds provided from the sale of tangible
fixed assets
Funds used for the purchase ofintangible fixed assets
Funds used for the purchas e ofinvestment securities
Funds provided from sale of investment
securities
Funds used for purchase of investments
Funds used for purchase of subsidiarycompany stock following change inscope of consolidation
Other
Cash flow from investing activities
Cash flow from financing activities
Decrease in short-term bank borrowing
Funds provided by long-term bankborrowing
Funds used to repay long-term bankborrowing
Funds used for redemption of straightbonds
Funds used for redemption of
convertible bonds
Funds provided from the issue ofcommon stock
Funds used for repayment of installment
obligations
Funds provided from the sale of treasury
stock
Funds used for the purchase of treasury
stock
Payment of dividends to parent
company
Funds provided from the issue of stock
to minority shareholders
Funds used for other financing
activities
Cash flow from financing activities
Increase in cash and equivalents
Balance of cash and equivalents at
beginning of period
Balance of cas h and equivalents at end of
the interim period

Current consolidated
accounting fiscal year
(From November 1, 2001
to October 31, 2002)
Amount(Amounts less than ¥1 thousand have been rounded down)Prior consolidated
accounting fiscal year
Change from prior(From November 1, 2000
year
to October 31, 2001)
Amount△207,190△4,233△202,956

645,1319,129

636,002△398,195△1,073,093

674,897

112,805

122,249△9,443△26,294△28,669

2,374△2,645,631△2,772,134

126,5032,243,014

3,066,275△823,261△16,129△82,439

66,309△114,274−△114,274△35,512△442,276−△762,916△35,512160,001△4,216,562

4,376,563

13,670,000

10,136,450

3,533,550△10,538,637△8,793,335△1,745,301△1,576,550△506,857△1,069,693△3,590,085−△3,590,085−

10,488△10,488△8,348,209△8,242,273△105,936−

3,153△3,153△1,548△3,525

1,976△544,529△544,311

△218

8,000

20,000△12,000−△1,057

1,057△10,761,559△558,058△12,137,831△431,088

1,376,271△126,969

15,991,306

16,422,395△431,088

15,433,247

15,991,306△558,058

320,639

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 15

5. Significant Accounting Policies for the Consolidated Financial Statements

1. Companies included in
the consolidation

2. Matters pertaining toapplication of equity
method accounting

3. Matters pertaining to thefiscalyear
forconsolidated
subsidiaries

4. Accounting principles
and standards used fornormal accounting
treatment(1) Appraisal standards
and appraisal methods
for principal assets

Current consolidated accounting fiscal year
(From November 1, 2001
to October 31, 2002)

Prior consolidated accounting fiscal year
(From November 1, 2000
to October 31, 2001)

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. andPolyshield Services Co., Ltd. have been excluded
from consolidation because their total assets,
sales, profit or loss and retained earnings are
small in size and do not have a material effect on
the consolidated financial statements.

The five subsidiary companies included in the
consolidation are SRG Kanamoto Co., Ltd.,
Taniguchi Co., Ltd., Assist Co., Ltd., Kanatech Co.,
Ltd. and Providence Brewery Co., Ltd.
In addition to the subsidiary companies listed
above, Kanamoto Shikoku Co., Ltd. andPolyshield Services Co., Ltd. have been excluded

Two unconsolidated subsidiaries and two
affiliatedcompanies(Active
Technology
Corporation and Active Power Corporation) havebeen omitted from items to which equity method
accounting is applied because their respective
effect on consolidated net income or loss andconsolidated retained earnings is immaterial andnone of these companies is important to thecompany’s overall operations.
The fiscal year-end for all of the consolidated
subsidiary companies is August 31.
When preparing the consolidated financial
statements the Company uses the subsidiaries’
financial statements as of August 31, adjusted forsignificant transactions that have occurred
between the subsidiaries’ fiscal year-end and theconsolidation date that have a material effect on
the consolidated financial results.

Same as at left

a. Negotiable securities
Other negotiable securities
Securities with a market price
The Company has adopted the market
value method (the full amount of thevaluation difference is charged to equity
using the direct transfer to capital method,with the disposal cost determined by themoving average method) based on themarket price on the accounting period
closing date or similar prices
Securities without market prices
The Company has adopted the cost
method, cost being determined by themoving average method
b. Construction equipment
Amount after deduction of depreciation
expense calculated according to thedeclining-balance method from the original
prices, by separate fiscal year of purchase.

from consolidation because their total assets,
sales, profit or loss and retained earnings are
small in size and do not have a material effect on
the consolidated financial statements.

Same as at left

a. Negotiable securities
Other negotiable securities
Securities with a market priceSame as at left

Securities without market prices
Same as at leftb. Construction equipment
Amount after deduction of depreciation
expense calculated according to thedeclining-balance method from the original
prices, by separate fiscal year of purchase.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 16

(Supplemental information)
The Company formerly used 7 years as thedepreciable life for floor plate and steel plate. In
consideration of the period over which suchproducts can be used physically and economically,
however, based upon their physical condition andcustomers’ intentions to rent, respectively,
beginning in the consolidated accounting fiscal
year under review the Company changed the
durable life of such products to 10 years based
upon a projection of the period for their possibleuse.
As a result, during the consolidated accounting
fiscal year under review, depreciation expense
was ¥209,320,000 lower, and gross profit,
operating income, ordinary income and income
before taxes and adjustments were ¥209,320,000
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 information bybusiness segment is described in the relevant
section of this report.
c. Merchandise inventories and supplies(i) Merchandise inventories
Lower of cost or market based on the
Last-in, First- out method(ii) Supplies
The Latest Purchase Cost method(2) Depreciation methods
for principal depreciable
assetsa. Tangible fixed assets
The
Companyhasadoptedthedeclining-balance method. Buildings on land thatis leased under a fixed-term land leaseagreement, however, are depreciated using thestraight-line method using the remaining period of
the fixed-term lease as the depreciable life andzero residual value. For certain consolidated
subsidiaries, the Company has adopted thestraight-line method for buildings and structuresacquired on or after April 1, 2000 but excluding
fixtures and equipment.
The depreciable lives mainly used by theCompany are as follows.
Rental assets
5-10 years
Buildings
31-34 years(Supplemental information)
The Company formerly used 7 years as thedepreciable life for temporary rental structures. In
consideration of the period over which suchproducts can be used physically and economically,
however, based upon improved product quality
and customers’ intentions to rent, respectively,
beginning in the consolidated accounting fiscal
year under review the Company changed the
durable life of such products to 10 years based
upon a projection of the period for their possibleuse.

c. Merchandise inventories and supplies(i) Merchandise inventories
Same as at left(ii) Supplies
Same as at left
a. Tangible fixed assets
The
Companyhasadoptedthedeclining-balance method. Buildings on land thatis leased under a fixed-term land leaseagreement, however, are depreciated using thestraight-line method using the remaining period of
the fixed-term lease as the depreciable life andzero residual value. For certain consolidated
subsidiaries, the Company has adopted thestraight-line method for buildings and structuresacquired on or after April 1, 2000 but excluding
fixtures and equipment.
The depreciable lives mainly used by theCompany are as follows.
Rental assets
5-10 years
Buildings
31-34 years

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 17

As a result, during the consolidated accounting
fiscal year under review depreciation expense was¥232,276,000 lower, and gross profit, operating
income, ordinary income and income before taxes
and adjustments were ¥232,276,000 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 information bybusiness segment is described in the relevant
section of this report.

(3）Accounting standards
for principal allowancesand reservesb. Intangible fixed assets
Software for use within the Company isdepreciated using the straight-line method basedon the assumed useful life for internal use (5years).
a. Reserve for doubtful accounts
To provide for losses on doubtful accounts suchas accounts receivable, the Company charges toincome an amount based on actual loss
experience for normal accounts, plus an amountfor projected unrecoverable amounts based on
assessments of individual accounts.
b. Accrued bonuses to employees
To fully provide for expenditures of bonuses theCompany will pay to employees, an amount isappropriated to the reserve during the year based
upon a salary estimate amount.
c. Accrued employees retirement benefit
The Company provides for employees’ accrued
retirement benefits based upon the projectedamounts of the liability for accrued employees
retirement benefits and the value of pension
assets at the end of the consolidated accounting
fiscal year. At the end of each consolidated
accounting fiscal year, the Company appropriates
an amount to the reserve to provide for the liability
recognized during the period. Past years’ service
liabilities are fully amortized in the year incurred.
The difference based on an actuarial calculationis charged to income beginning in the
consolidated accounting fiscal year following theyear in which incurred, with the amounts allocatedproportionately using the straight-line method,
based on a specified number of years (10 years)
that is less than the average remaining period of
employment for employees at the time thedifference arises.
d. Retirement allowances to directors and auditors(4) Lease transactions

The Company provides for retirement
allowances to directors and auditors based upon
pertinent rules and appropriated to the accountproportionately based upon length of service.
For finance lease transactions except for leases
that transfer ownership of the property to thelessee, rent expenses are charged to income aspayments are made.

b. Intangible fixed assets
Same as at left

a. Reserve for doubtful accounts
Same as at leftb. Accrued bonuses to employees
Same as at leftc. Accrued employee retirement benefit
The Company provides for employees’ accrued
retirement benefits based upon the projectedamounts of the liability for accrued retirement
benefit and pension assets at the end of theconsolidated accounting fiscal year. Furthermore,
the full amount of the one-time difference forchange in accounting standards (¥1,982,023,000)
was charged to income at the end of the current
consolidated accounting fiscal year. The
difference based on an actuarial calculation ischarged to income beginning in the following
consolidated accounting fiscal year using thestraight-line method, based on a specified numberof years (10 years) that is less than the averageremaining period of employment for employees at
the time the difference arises.

d. Retirement allowances to directors and auditors
Same as at left

Same as at left

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 18

(5）Hedge accounting forprincipal
hedging
methodsa. Hedge transactions
a. Hedge transactions
Same as at left
The Company accounts for hedge transactions
using allocations based on accounting standards
for foreign currency-denominated transactions ,and special rule accounting based on accounting
standards for financial products.
a. Hedge methods and hedged transactions
b. Hedge methods and hedged transactions
Same as at left
The Company uses currency swaps andforward transactions in order to avoid the currency
fluctuation risk related to the Company’s foreign
currency-denominated straight bonds andliabilities for import payments. The Company alsouses interest swaps to avoid interest rate
fluctuation risk related to interest on bankborrowing.
c. Hedging policies
The Company’s use of derivative transactions islimited to hedging risk within the scope of theCompany’s assets and liabilities subject to market
fluctuation risk.
d. Method for evaluating the effectiveness ofhedges(6）Other significant
matters for
preparation of theconsolidated fiscal
year financial
statements
5. Valuation of
consolidated
subsidiary assets andliabilities
6. Amortization of theconsolidation
adjustment account

The Company does not evaluate theeffectiveness of its hedge transactions because it
can assume that its currency swap transactions
and forward transactions will completely offset
market fluctuations or changes in cash flow fromthe time hedge begins until it is terminated. In
addition,theCompany’s
interest
swap
transactions fulfill the requirements for special ruleaccounting, and the Company has elected to use
this in place of an evaluation of effectiveness.
Accounting treatment of consumption tax

c. Hedging policies
Same as at left

d. Method for evaluating the effectiveness ofhedgesSame as at left

Accounting treatment of consumption tax

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

Same as at left

The Company has adopted the market value

Same as at left

appraisal method for the evaluation of assets andliabilities of consolidated subsidiaries.
As a general rule, the Company’s offsetting

Same as at left

eliminations of the parent company’s investment
account and the subsidiaries’ capital accounts are
based on the date of investment rule. The portionof the excess of cost over underlying net assets atthe date of investment resulting from the offset
elimination for which the cause is not known istransferred to the appropriate account. The
remainder is transferred to the consolidation
adjustment account.
The consolidation account is amortized over
five years using level amortization, except for
extremely small amounts that are written off
completely in the year in which they occur.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 19

7. Appropriation of retained
earnings

The

StatementofConsolidated

Retained

Same as at left

Earnings is created based upon the appropriationof net income decided upon by the Company
during the consolidated accounting fiscal year.

8. Items included in cash
and equivalents on theConsolidated
Statement of Cash
Flows

Funds included in cash (cash and cash

Same as at left

equivalents) on the Consolidated Statement of
Cash Flows include cash on hand, deposits thatcan be withdrawn on demand and highly liquid
short-term investments that mature within threemonths of the date of acquisition and which can beeasily converted into cash and that have minimalrisk of a change in price.

(Changes in accounting treatment)

Change in revenue andexpensewhenclassifications
accounting

accidents
equipment
contract

Current consolidated accounting fiscal year
(From November 1, 2001
to October 31, 2002)

Prior consolidated accounting fiscal year
(From November 1, 2000
to October 31, 2001)

In prior years the Company accounted for──────

revenue from insurance benefits as insuranceforbenefits in non-operating revenues whenever it

involving

suffered damages to rental assets and equipment

under

lease

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. Beginningin the consolidated accounting fiscal year underreview, the Company changed its accounting
treatment to account for insurance benefits as
operating revenues and account for the rental
asset book value and lease equipment contract
cancellation charge as cost of revenues fromoperations. The Company made this change
because the Company seeks to recover the fullamount of capital invested in the equipment rental
business through rental charges as equipment isleased and the insurance benefits received
following an accident can also be considered as
recovery of invested capital, and because theamount of revenue from insurance benefits has
been increasing. As a result, revenue increased by¥204,754,000, gross profit and operating income
increased by ¥75,843,000, and ordinary income
decreasedby¥61,017,000,

respectively,

compared to what they otherw ise would havebeen had the accounting standards used inprevious periods been applied. The change had
no effect on income before taxes and adjustments.
The effect of this change on information bybusiness segment is described in the relevant
section of this report.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 20

Changeaccounting

In prior years, the Company accounted fortreatment for revenue andinpayments of employee housing rents in selling,

expenses

generalfor

employeehousing rents

andadministrative

expenses,──────

andaccounted for the employee portion of such
expenses in non-operating revenues. Beginning in
the consolidated accounting fiscal year underreview, the Company changed its accounting
method to exclude the employee portion of
employee housing rent expense from selling andadministrative expenses. The Company adopted
this change in order to disclose the actual amountof the Company’s housing rental burden, because
the materiality of the amounts in question has
been increasing as the Company increases thenumber of its employees. As a result, operating
income increased by ¥165,232,000 compared towhat it otherwise would have been had theaccounting standards used in previous periods
been applied. The change had no effect on
ordinary income and income before taxes andadjustments.
The effect of this change on information bybusiness segment is described in the relevant
section of this report.

(Change in disclosure method)
Current consolidated accounting fiscal year
(From November 1, 2001
to October 31, 2002)

Prior consolidated accounting fiscal year
(From November 1, 2000
to October 31, 2001)

The amount of “cash bonus received” that was included in──────

other non-operating income in prior consolidated accounting fiscal
years has increased and now accounts for more than ten percent
of non-operating income. Accordingly, the Company reclassified
this item into a separate reporting category. The amount of the“cash bonus received” in the prior consolidated accounting fiscal
year was ¥86,487,000.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 21

(Supplemental information)
Current consolidated accounting fiscal year
(From November 1, 2001
to October 31, 2002)──────

Prior consolidated accounting fiscal year
(From November 1, 2000
to October 31, 2001)
Accounting for accrued employees retirement benefits
The Company has adopted the accounting standards for
retirement

benefits(“Opinions

on SettingStandards for

Post-employment Benefits,” Business Accounting Council, June
16, 1998) from the current consolidated accounting f iscal year. As
a result, the Company’s expense for accrued employees
retirement benefit increased by ¥2,008,761,000, and ordinary
income decreased by ¥26,737,000 and income before taxes andadjustments decreased by ¥2,008,761,000, compared to what
they would have been had the accounting standards used in theprior fiscal year been applied.
──────

Accounting for financial instruments
The Company has adopted the accounting standards for financial
instruments (“Opinions on Setting Standards for Financial
Instruments,” Business Accounting Committee, January 22,1999) from the current consolidated accounting fiscal year. As aresult, the Company’s ordinary income increased by ¥79,351,000
and income before taxes and adjustments increased by¥14,153,000 compared to what they would have been had theaccounting standards used in the prior consolidated accounting
fiscal year been applied. In addition, the Company reviewed its
holding objectives for negotiable securities held at the beginningof the consolidated accounting fiscal year, and has disclosed the
securities included in other negotiable securities that mature
within one year as negotiable securities in current assets, and has
disclosed all other securities as investment securities. As a result,
the Company’s negotiable securities accounted for as current
assets were reduced by ¥278,026,000 and its investment
securities increased by ¥278,026,000 compared to what theywould have been had the accounting standards used in the priorconsolidated accounting fiscal year been applied.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 22

6. Notes to the Financial Statements(Notes to the Consolidated Balance Sheets)
Current consolidated accounting fiscal year
(As of October 31, 2002)
1. Accumulated depreciation of tangible

44,097,260,000

fixed assets

Prior consolidated accounting fiscal year
(As of October 31, 2001)
1. Accumulated depreciation of tangible

46,638,798,000

fixed assets

2. Discount on notes receivable, trade

84,562,000

2. Discount on notes receivable, trade67,100,000

3. Balance of notes receivable – trade178,242,000

3. Balance of notes receivable – trade167,213,000

endorsedendorsed

4. Items pertaining to non-consolidated subsidiaries and affiliated

4. Items pertaining to non-consolidated subsidiaries and affiliatedcompanies are as follows.
Investment securities (stocks)

companies are as follows.
199,000,000

5. Assets offered as collateral security

204,000,000

5. Assets offered as collateral security

Buildings and structures

37,554,000

Land

197,434,000

Total

Investment securities (stocks)------

234,988,000

The assets shown above have been pledged as collateral for¥223,400,000 of short-term bank loans, ¥118,120,000 oflong-term bank loans due within one year and ¥226,580,000
of long-term bank loans.
6. Guarantees
Joint and several guarantees of
employee bank loans (Bank ofTokyo-Mitsubishi, others)
Guarantee of debt for long-termbank loan to affiliated company(Active Power Co., Ltd.)(Mizuho Bank, Ltd.)
Total

6. Guarantees
22,334,000

Joint and several guarantees of
employee bank loans (Bank ofTokyo-Mitsubishi, others)

26,839,000

350,000,000

Guarantee of debt for long-termbank loan to affiliated company(Active Power Co., Ltd.)(Mizuho Bank, Ltd.)

350,000,000

372,334,000

Total

376,839,000

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 23

(Notes to the Consolidated Statements of Income)Current consolidated accounting fiscal year
(From November 1, 2001
to October 31, 2002)

Prior consolidated accounting fiscal year
(From November 1, 2000
to October 31, 2001)

1. Major expense categories and amounts included in selling and

1. Major expense categories and amounts included in selling andadministrative expenses

administrative expenses

Employee salaries and wages

4,846,212,000

Employee salaries and wages

4,958,744,000

Depreciation expense

1,021,701,000

Depreciation expense

1,099,677,000

Rents

1,397,906,000

Rents

1,421,216,000

Transfer to allowance for
doubtful accounts

549,086,000

Transfer to allowance for
doubtful accounts

573,957,000

Employees retirement benefit
expense503,711,000

Transfer to accrued bonuses to
employees

594,688,000

Transfer to accrued bonuses to
employees

539,350,000

Employees retirement benefit
expense

440,050,000

Transfer to retirement
allowances to directors andauditors

22,016,000

Transfer to retirement
allowances to directors andauditors

17,808,000

2. Details of gain from adjustment to prior period profit or loss
Amount received fromadjustment of tax liability

2. Details of gain from adjustment to prior period profit or loss

1,541,000

Amount received fromadjustment of tax liability

1,618,000

Recovery of bad debts

638,000

Total
3. Gain on sale or retirement of fixed assets

3. Gain on sale or retirement of fixed assets

Machinery, equipment, andvehicles and delivery equipment

8,546,000

Land

5,639,000

Land

4,068,000

Buildings and structures

Buildings and structures
Total

2,256,000

Total

109,000
4,178,000

81,00014,266,000

4. Reimbursement of accrued employees retirement benefit４．

──────

Decrease in liability for retirement benefits as a result ofraising the age at which the welfare pension system will
begin paying pension annuities from April 2002.
5. Loss on sale or retirement of fixed assets(Loss on sale of fixed assets)
Buildings and structures

5. Loss on sale or retirement of fixed assets(Loss on sale of fixed assets)
17,583,000

Buildings and structures

3,847,000

Land

306,000
275,000

Machinery, equipment anddelivery equipment

818,000

Other(Loss on retirement of fixed assets)(Loss on retirement of fixed assets )Rental equipment

23,021,000

Rental equipment

85,707,000

Buildings and structures

33,637,000

Buildings and structures

8,437,000

Machinery, equipment, andvehicles and delivery
equipment

104,212,000

Machinery, equipment anddelivery equipment

1,551,000

Other assets

20,319,000

Total

Other assets
Total

1,524,000
101,886,000

199,356,000

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 24

(Notes to the Consolidated Statements of Income)Current consolidated accounting fiscal year
(From November 1, 2001
to October 31, 2002)

Prior consolidated accounting fiscal year
(From November 1, 2000
to October 31, 2001)

1. Relationships between the ending balance for cash and cash
equivalents and the amounts in the categories shown on the
consolidated balance sheet

1. Relationships between the ending balance for cash and cash
equivalents and the amounts in the categories shown on the
consolidated balance sheet

Cash and equivalents
Term deposits with a maturity longer

Cash and equivalents

15,437,482,000△4,234,000

Term deposits with a maturity longer

than 3 months
ash and equivalents

15,996,639,000△5,333,000

than 3 months
15,433,247,000

2. Assets and liabilities of companies that became new affiliatedcompanies as the result of purchases of their stock.
The details of assets and liabilities and their relationship to
the stock purchase amount and expenditures (net amount) for
stock purchases at the start of consolidation for newly
consolidated companies as the result of purchase of stock are
as follows.
Daiichi Machine Industries Co., Ltd.
Current assets
939,031,000
Fixed assets
805,543,000△990,508,000
Current liabilities△380,626,000
Long-term liabilities△ 31,866,000
Consolidation adjustment△ 65,352,000
Minority interest
Daiichi Machine Industries
purchase price276,222,000
Daiichi Machine Industries△161,948,000
Cash and cash equivalents
Net: Expenditure to acquire
Daiichi Machine Industries
114,274,000
3. Details of major non-cash transactions
The amount of assets and liabilities related to installment
transactions that are newly accounted for during thisconsolidated accounting fiscal year is ¥3,637,011,000
respectively.

Cash and equivalents
２．

15,991,306,000──────

3. Details of major non-cash transactions
The amount of assets and liabilities related to installment
transactions that are newly accounted for during thisconsolidated accounting fiscal year is ¥9,701,009,000
respectively.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 25

(Notes for leasing transactions)
Current consolidated accounting fiscal year
(From November 1, 2001
to October 31, 2002)

Prior consolidated accounting fiscal year
(From November 1, 2000
to October 31, 2001)

1. Finance lease transactions except for leases that transfer

1. Finance lease transactions except for leases that transfer

ownership of the property to the lessee.

ownership of the property to the lessee.

(1) Amounts corresponding to lease property acquisition
price,

accumulated

depreciation

andoutstandingbalances at the end of the fiscal year accounting period.
Acquisition
price(¥ ‘000)

Accumulated
depreciation(¥ ‘000)

Outstandingbalance(¥ ‘000)

Rentalassets25,612,138

8,300,356

17,311,781

Otherassets666,755

383,756

Total

26,278,894

8,684,113(1) Amounts corresponding to lease property acquisition
price,

accumulated

depreciation

andoutstandingbalances at the end of the fiscal year accounting period.
Acquisition
price(¥ ‘000)

Accumulated
depreciation(¥ ‘000)

Outstandingbalance(¥ ‘000)

Rentalassets

14,913,569

7,162,742

7,750,826

282,999

Other
assets1,220,026

563,453

656,572

17,594,780

Total

16,133,596

7,726,196

8,407,399(2) Outstanding balance of future lease payments at the endof the fiscal year(2) Outstanding balance of future lease payments at the endof the fiscal year

Within one year

4,662,895,000

Within one year

3,264,160,000

After one year

13,357,075,000

After one year

5,323,430,000

Total

18,019,970,000(3) Amount of lease payments, depreciation expense andinterest expense

Total

8,587,590,000(3) Amount of lease payments, depreciation expense andinterest expense

Lease payments

4,343,353,000

Lease payments

3,115,473,000

Depreciation expense

3,732,378,000

Depreciation expense

2,837,451,000Interest expense

384,087,000(4) Accounting method for amount equivalent to depreciation
expenseInterest expense

291,179,000(4) Accounting method for amount equivalent to depreciation
expense

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

Same as at left

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

2. Operating leases

Future lease payments

Future lease payments

Within one year

1,543,331,000

Within one year

1,680,768,000

After one year

2,642,701,000

After one year

2,837,561,000

Total

4,186,032,000

Total

4,518,329,000

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 26

(Notes related to negotiable securities)
Negotiable securities
1. Other negotiable securities with market prices
Current consolidated accounting fiscal year

Prior consolidated accounting fiscal year

(As of October 31, 2002)(As of October 31, 2001)

Type
Acquisition
price(¥ ‘000)(1) Stocks
Negotiablesecurities
whose balanceon theconsolidatedbalance sheet
exceeds theacquisition
price

Valuation
profit or loss(¥ ‘000)

Acquisition
price(¥ ‘000)

Amountreported on the
consolidatedbalance sheet

Valuation
profit or loss(¥ ‘000)

872,890

1,276,349

403,459

838,578

1,520,394

681,815

a. Government bonds

−

−

−

−

−

−

b. Corporate bonds

−

−

−

−

−

−

c. Other

−

−

−

−

−

−

−

−

−

−

−

−

872,890

1,276,349

403,459

838,578

1,520,394

681,815

1,143,040

782,536△360,503

839,415

636,731△202,683(2) Bonds(3) Other negotiable securities
Subtotal(1) Stocks

Negotiablesecurities
whose balanceon theconsolidatedbalance sheet
is l e s s t h a n t h eacquisition
price

Amount reported
on theconsolidatedbalance sheet(2) Bonds
a. Government bonds
b. Corporate bondsc. Other

−

−

−

−

−

−

141,005

136,959△4,046231,270

227,830△3,440

−

−

−

−

−

−

(3) Other negotiable securities

1,214,013

989,085△224,928

1,032,448

797,813△234,635

Subtotal

2,498,059

1,908,581△589,477

2,103,134

1,662,374△440,759

3,370,949

3,184,931△186,017

2,941,712

3,182,768

241,056

Total

2. Other negotiable securities sold during the prior consolidated accounting fiscal year and the current
consolidated accounting fiscal year
(Thousand yen)
Current consolidated accounting fiscal year
(From November 1, 2001 to October 31, 2002)
Selling amount
1,319,677

Prior consolidated accounting fiscal year
(From November 1, 2000 to October 31, 2001)

Total gain on sale

Total loss on sale

158,559

71,351

Selling amount

Total gain on sale

Total loss on sale377,186887

1,806,471

3. Details of other negotiable securities that do not have a market value
Type

Other negotiable securities
Unlisted stocks (excluding over thecounter stocks)
Unlisted foreign bonds
Corporate bonds with warrants for
new stock(Thousand yen)

Current consolidated accounting fiscal year

Prior consolidated accounting fiscal year

(As of October 31, 2002)
Amount shown on the consolidatedbalance sheet(As of October 31, 2001)
Amount shown on the consolidatedbalance sheet

373,500−

497,010−

10,00010,053

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 27

4. Planned future redemption amounts of other securities that have a maturity dateType

(Thousand yen)

Current consolidated accounting fiscal year

Prior consolidated accounting fiscal year

(As of October 31, 2002)(As of October 31, 2001)

After one year After five years
Within one
and within five and within ten
year
years
years

After ten
years

After one
After five
Within one
year and within
years and
year
five years within ten years

After tenyears

1. Bonds(1) Government & local bonds(2) Corporate bonds(3) Other

−

−

−

−

−

−

−

−

75,07561,884−−

114,440

113,390

−

−

−

−

−

−

−

−

−

−

2. Other securities−

11,738776,815

27,159−14,938763,705−

Total

75,07573,622776,815

27,159114,440

128,328

763,705−(Notes related to accrued employees retirement benefit)
1. Summary of the employees retirement benefit system adopted by the Company
The Company and its consolidated subsidiaries have established a pension fund system and a retirement lump-sum benefit
system as a defined benef it plan. In addition, when an employee retires or leaves the Company, in some cases the Company
pays an additional retirement amount that is not covered by the reserve for accrued employees retirement benefit when using
actuarial accounting based on retirement benefit accounting.

2. Details of the Company’s liability for accrued employees retirement benefit
Current consolidated accounting(Unit: Yen thousands)

Prior consolidated accounting

fiscal year

fiscal year

(As of October 31, 2002)△5,409,447
2,983,066(As of October 31, 2001)△5,269,961
2,782,025(1) Liability for accrued employees retirement benefit(2) Pension assets(3) Liability for unreserved accrued employees retirement△2,426,381△2,487,936
benefit (1) ＋(2)(4) Unamortized amount of the one-time valuation difference−−
for change in accounting standards(5) Unrecognized actuarial differences
750,657
479,176(6) Unrecognized past years’ service obligation (reduction in−−
liability)(7) Net liability shown on the consolidated balance sheet (3) ＋△1,675,725△2,008,761(4)＋(5)＋(6)−−(8) Prepaid pension expense△1,675,725△2,008,761(9) Accrued employees retirement benefit (7)−(8)(Note) The Company’s consolidated companies have adopted the simple method for calculating the accrued employees retirement
benefit.

3. Details of accrued employees retirement benefit expense
Current consolidated accounting
fiscal year
(From November 1, 2001 to
October 31, 2002)(Unit: Yen thousands)
Prior consolidated accounting
fiscal year
(From November 1, 2000 to
October 31, 2001)

Retirement benefit expense
99,0062,422,074(1) Service costs
413,255
407,249(2) Interest costs
143,049
138,371(3) Expected return on plan investments (reduction)
110,125
105,570△395,091−(4) Write-off of past years’ service liability expense−(5) Write-off of expense for actuarial based difference
47,918(6) Amount of one-time valuation difference for change in−
1,982,023
accounting standards charged as an expense(Note) The retirement benefit expense of consolidated companies that have adopted the simple method is charged to service costs .

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 28

4. Matters related to the basis for accounting for the accrued employees retirement benefit andother items
Current consolidated accounting(1) Discount rate(2) Expected rate of return on plan investments(3) Method of allocating projected benefits to periods ofservice(4) Amortization period of past years’ service liability

Prior consolidated accounting

fiscal year

fiscal year

(As of October 31, 2002)
3.00%
4.00%

(As of October 31, 2001)
3.00%
4.00%

Service period fixed benefit basis Service period fixed benefit basis(5) Amortization period for actuarial differences(6) Number of years for amortization of one-time valuationdifference for change in accounting standards−

1 year10 years beginning from thenext consolidated accounting
fiscal year

10 years beginning from thenext consolidated accounting
fiscal year

1 year

1 year(Notes related to tax effect accounting)Current consolidated accounting fiscal year
(From November 1, 2001 to October 31, 2002)

Prior consolidated accounting fiscal year
(From November 1, 2000 to October 31, 2001)

1. Major factors creating deferred tax assets and deferred tax

1. Major factors creating deferred tax assets and deferred tax

liabilities

liabilities

Deferred tax assets

Deferred tax assets

Amount in excess of limit for inclusion in
expenses for allowance for doubtful
accounts
Disallowance of deferred business taxes

223,215,000

500,000

Amount in excess of limit for inclusion in
expenses for allowance for doubtful
accounts

139,048,000

Disallowance of deferred business taxes

105,214,000

Excess accrued employees retirement
benefit696,487,000

Excess accrued employees retirement
benefit

836,513,000

Amount in excess of limit for retirement
allowances to directors and auditors

81,980,000

Amount in excess of limit for retirement
allowances to directors and auditors

117,771,000

Amount in excess of limit for accrued
bonuses to employees

149,778,000

Amount in excess of limit for accrued
bonuses to employees

123,001,000

Disallowance of excess depreciation

388,081,000

Disallowance of excess depreciation

476,600,000

Amount of loss carried forward

176,365,000

Amount of loss carried forward

139,600,000

Other

298,748,000

Other

99,674,000

Deferred tax asset subtotal
Valuation reserve
Total deferred tax assets

2,015,155,000

Deferred tax asset subtotal

2,037,421,000△176,365,000

Valuation reserve△139,600,000

1,838,790,000

Total deferred tax assets

1,897,821,000

Deferred tax liability
Valuation
securities

difference

Deferred tax liabilityonnegotiable

differenceonnegotiable △100,520,000

77,569,000

Valuation
securities

Total deferred tax liability

77,569,000

Total deferred tax liability△100,520,000

Net deferred tax assets

1,916,359,000

Net deferred tax assets

1,797,301,000

2. Causes of principal differences between the statutory tax rate

2. Causes of principal differences between the statutory tax rate

and burden ratio for corporate and other taxes following

and burden ratio for corporate and other taxes following

application of tax effect accounting, by major category.

application of tax effect accounting, by major category.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 29

41.7％

Statutory corporate tax rate
(Adjustments)

Statutory corporate tax rate

41.7％

(Adjustments)

Local tax equalization

3.9％

Local tax equalization

7.8％

Items not included permanently in losses
such as expense accounts

1.1％

Items not included permanently in losses
such as expense accounts

2.6％

1.2％

Consolidated subsidiary losses

Consolidated subsidiary losses

4.4％

Valuation loss on investment in consolidated
companies

△3.4％

Other

△0.4％

Other

△1.1％

Burden ratio for corporate and other taxes
after application of tax effect accounting

56.1％

Burden ratio for corporate and other taxes
after application of tax effect accounting

43.4％

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 30

IV Business segment information
1. Segment information by type of businessPrior consolidated accounting fiscal year (From November 1, 2000 to October 31, 2001)(Unit: Yen thousands)
Construction
equipment

Steel sales

rentalbusinessbusiness

Computerandperipheral
equipment
and otherbusinesses

Total

Eliminations
or entirecompany

Consolidated

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

57,613,533

8,341,786

1,391,105

67,346,425−

67,346,425

−

−

−

−

−

−

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

Assets

76,592,085

3,969,760

1,438,888

82,000,734

24,638,295

106,639,030

Depreciation expense

9,455,330

12,563

18,4639,486,358−

9,486,358

Capital disbursements

10,044,569

895

621

10,046,085

458,204

10,504,289

Total

II. Assets, depreciation
expense and capital
disbursements(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 thebusiness and the business markets.
2. Principal products, by businessBusiness

Principal products

Construction equipment
rentals

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

Steel sales

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

Computers andperipherals and otherbusinesses

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

3. The total amount for assets that were eliminated or included in the categories for all companies was ¥24,638,295,000 andrepresents primarily idle working capital (cash, deposits and negotiable securities), long-term investment funds (investment
securities) and assets used in administrative departments at the parent company.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 31

Current consolidated accounting fiscal year (From November 1, 2001 to October 31, 2002)(Unit: Yen thousands)
Construction
equipment

Steel sales

rentalbusinessbusiness

Computerandperipheral
equipment
and otherbusinesses

Total

Eliminations
or entirecompany

Consolidated

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

56,558,591

7,435,642

1,257,635

65,251,870−

65,251,870

−

−

−

−

−

−

56,558,591

7,435,642

1,257,635

65,251,870−

65,251,870

Operating expenses

54,450,377

7,388,021

1,253,270

63,091,668△127,340

62,964,327

Operating income

2,108,214

47,6214,365

2,160,202

127,340

2,287,543

Assets70,990,352

3,443,460

1,437,308

75,871,121

23,442,328

99,313,449

Depreciation expense

7,950,023

6,182

11,822

7,968,028

151,860

8,119,889

Capital disbursements

4,677,086

1,938

−

4,679,024

31,2194,710,243

Total

II. Assets, depreciation
expense and capital
disbursements(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 thebusiness and the business markets.

2. Principal products, by businessBusiness

Principal products

Construction equipment
rentals

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

Steel sales

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

Computers andperipherals and otherbusinesses

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

3. The total amount for assets that were eliminated or included in the categories for all companies was ¥23,442,328,000 andrepresents primarily idle working capital (cash, deposits and negotiable securities), long-term investment funds (investment
securities) and assets used in administrative departments at the parent company.
4. As described in the ”Significant Accounting Policies for the Consolidated Financial Statements,” beginning in the
consolidated accounting fiscal year 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 ¥209,320,000 and operating income increased by the same amount, respectively, for the consolidated
accounting fiscal year under review, compared to what they otherwise would have been had the accounting standards usedin prior periods been applied.
As described in the “Significant Accounting Policies for the Consolidated Financial Statements,“ beginning in the
consolidated accounting fiscal year 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 for construction-related businesses decreased by¥232,276,000 and operating income increased by the same amount, respectively, for the consolidated accounting fiscal
year under review, compared to what they otherwise would have been had the accounting standards used in prior period
been applied.
As described in the “Changes in Accounting Treatment,” beginning in the consolidated accounting fiscal year underreview the Company 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 consolidated accounting fiscal year underreview,, the Company will recognize revenue received from insurance benefits as operating revenues rather than insurance

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 32

benefits, and the rental 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 a result of thischange, revenues for construction-related businesses increased by ¥204,754,000, operating expenses increased by¥128,910,000 and operating income increased by ¥75,843,000, respectively, for the consolidated accounting fiscal year
under review, compared to what they otherwise would have been had the accounting standards used in previous periods
been applied.
As described in the “Changes in Accounting Treatment,” beginning in the consolidated accounting fiscal year underreview 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
decreased by ¥160,393,000 for construction-related businesses , ¥3,532,000 for steel sales-related business and¥1,306,000 for computer and peripheral equipment business and other businesses, 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 in previous periods been applied.

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

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

VI

Derivative contract amount, market value and valuation profit and loss
Prior consolidated accounting fiscal year (From November 1, 2000 to October 31, 2001)
Because it applies hedge accounting, the Company had no material items to report.

Current consolidated accounting fiscal year (From November 1, 2001 to October 31, 2002)
Because it applies hedge accounting, the Company had no material items to report.

VII Transactions with related parties
Prior consolidated accounting fiscal year (From November 1, 2000 to October 31, 2001)
The Company had no material items to report.

Current consolidated accounting fiscal year (From November 1, 2001 to October 31, 2002)
The Company had no material items to report.

Summary of Consolidated Fiscal Year Financial Statements, FY ended October 31, 2002
P. 33