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semiannual2003/011新 06.8.21 4:19 PM ページ 2

I n t r o d u c t i o n

t o

K a n a m o t oA pioneer in Japan’s construction equipment rental business,
Kanamoto Co., Ltd., has consistently been the foremost company
in the industry. Kanamoto’s full lineup of high-quality rental
equipment, construction equipment management system utilizing
an advanced online network and superb maintenance system

C o . ,

L t d .

TRENDS

Shift of business resources to Japan’s three major
metropolitan areas
Kanamoto is vigorously promoting new branch openings in theTokyo, Nagoya, and Osaka metropolitan areas.

remain unsurpassed and years ahead of the competition.
Review of rental asset introductions

9.1%

1.8%

Steel Sales Division
Develops its business as a

Kanamoto makes selective equipment investments by placing

distributor centered on Hokkaido,

recover invested capital.

maximum emphasis on the rate at which the company willhandling a variety of steel
materials and general steel

Pursuit of alliance strategy

products.

Kanamoto is expanding its business and supplying regions where
it does not have branch offices through business alliances with

89.1%
Interim period ended
October 31, 2003
Percentage of sales
by segment

Information Products Division
Meets users’ needs by proposing

specialized service companies that complement Kanamoto’s own
construction equipment rental business.

and supplying the most up-to-datemodels of various computers andReduction of priority cost categories

related peripheral equipment.

As part of its low-cost operation activities, Kanamoto is reducing
its main cost categories such as transportation costs and repair

Construction Equipment Rental Division
Promotes asset reductions and greater efficiency at construction
companies, by providing the right equipment at the right time andexpenses.
TOPICSin the right quantity from our full fleet of rental machinery andCut construction equipment power and render equipment

equipment.

impossible to move

As we continually upgrade our rental assets to the latest models,Kanamoto begins selling upgrade version Theft Sensor II

we are also achieving steady results from our exports of used

Hydro-Sever anti-theft device for construction equipment……＜For the full text of this article please refer to page 14＞

construction equipment. The majority of our end customers are in
China and various countries in Southeast Asia and the Middle

CS completes makeover into more aggressive organization

East.

In response to globalization of the company's operating
environment and expansion of its business activities, Kanamotoexecuted……＜For the full text of this article please refer to page 14＞
Komatsu product introductions break the 10,000 mark! A
world first for a single firm
A

Party to Commemorate the 10,000th Komatsu Product

Delivery

was held by Komatsu at Sapporo s Grand Hotel inJanuary……＜For the full text of this article please refer to page 15＞
Kanamoto forms alliance with Komeri Co., Ltd. for tool
rentals
Through its new alliance with Komeri Co., Ltd. (Head Office:Kanamoto’s mission is to provide all of the construction equipment and related materials needed at aconstruction site. Beginning with hydraulic excavators, the most commonly rented construction
equipment, we maintain a diversified lineup of rental construction equipment.

Niigata, Japan; listed on the Tokyo Stock Exchange First
Section) ……＜For the full text of this article please refer to page 15＞

CONTENTS
3

Financial Highlights

12

Non-Consolidated Statements of Income
Outstanding Balance of Future Lease Payments(Non-Consolidated)

4

A Message from the President

6

Consolidated Balance Sheets

13

Management Indicator Data Graphs

8

Consolidated Statements of Income

14

Topics9Consolidated Statements of Cash Flows
Segment Information
Outstanding Balance of Future Lease Payments (Consolidated)

16

Shareholders’ Information
Branch Network

17

Board of Directors

10

Non-Consolidated Balance Sheetssemiannual2003/011新 06.8.21 4:19 PM ページ 3

F i n a n c i a l

H i g h l i g h t s

Non-Consolidated Financial Position

Rental revenues and sales of goods
Operating income
Net income
Total shareholders' equity
Total assets

Per share of common stock:
Net income
Cash dividends

Thousands of
U.S. dollars
April 30,
2003

April 30,
2002

October 31,
2002

Millions of yen
April 30,2003

￥ 29,977
1,551
749
31,438100,934￥ 60,606
2,255
1,134
31,357
96,717￥ 30,643
1,648
705
31,626
95,383$ 256,109
13,772
5,889
264,320$ 797,184

Yen

U.S. dollars (Note)￥ 24.75
9.00￥ 37.49
18.00$ 0.200.08￥ 23.35
9.00

Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥119.65=US$1, the approximate exchange rate on April 30, 2003.

Rental Revenues and Sales of Goods

Operating Income(Millions of Yen)

75,0004,092

60,60661,03060,58445,0004,000

64,29560,000(Millions of Yen)

5,000

3,000

1,647

1,551

1,505

1,000

0

2,255

2,771

3,105
2,036

30,64329,977

31,23529,45329,33815,000

2,000

2,350

30,000

0
99

00

01

02

03

Net Income

00

01

02

03

Net Income per Share(Millions of Yen)

2,000

1,727

1,500

99

(Yen)

100

75

1,455

58.95
48.66

50

994

1,022

1,134

1,000

12 months ended

33.56
704

748

500

25

37.49

35.01

518

509

17.14

6 months ended

24.75

23.35

16.84
0

0
99

00

01

02

03

99

00

6 months ended April 30

01

02

03

12 months ended October 31

Semiannual Report 2003 3

semiannual2003/011新 06.8.21 4:19 PM ページ 4A

M e s s a g e

f r o mt h e

P r e s i d e n t

Kanamoto Company has always made the centerpiece of its

Medium to long-term corporate management strategy

action agenda the concept, “constantly seek innovation and

In its principal business of construction equipment rentals,

strive to energize the business.” Through management of an

the Company is continuing to implement the following

integrated construction equipment rental business, our focus

business and financial strategies to the extent possible basedis on being an enterprise that can continually distributeon the “Kanamoto Survival Plan.”

profits to our shareholder partners, and truly contribute to① In existing sales territories, execute a bold scrap and build

local communities by offering detailed services that areprogram while adhering firmly to the strategy of building a

intimately linked to each local region.

dominant network to surround local customers. Adopt anoffensive structure, by shifting human resources andBasic policies concerning distribution of earnings

construction equipment rental assets to major metropolitan

To ensure the long-term, integrated expansion ofareas where demand is concentrated, particularly Tokyo.

shareholders’ profits, Kanamoto Company continues to focus

Over the short-term, place priority on sales branches that arecomprehensively on capital investments based on its

able to maintain profitability.

medium-term profit plan and on profitability, dividend trend② In regions such as western Japan where the Company has

and a sound financial position. The Company also remains

not previously built its own sales branches, continuecommitted to its policy of stable dividend growth.

expansion of the business base by constructing an alliance

At the same time, the Company utilizes its internal reservesgroup, and achieve synergistic results by strengthening theby allocating funds for the introduction of the rental

quality of each partner firm, regardless of whether it is aequipment assets that will become the source of future

consolidated or non-consolidated company, and enhancing

earnings.

cooperation among the firms as a group.

In addition, Kanamoto has established a policy and system③ Reaffirm all operations that will maintain a strong

for the amortization of treasury stock, based on the

Kanamoto group and restore the Company’s leadership, andassumption the Company will execute the policy at theexecute thorough cost reduction measures.

appropriate time according to circumstances.

④ Aim at continuously raising the Company’s debt rating
and improving and strengthening the Company’s financial

P o l i c y c o n c e r n i n g r e d u c t i o n o f t h e C o m p a n y’ s
investment unit

position, from the standpoint of procuring diverse, highquality capital resources.

Given the Company’s position in the current market, theCompany has no plans to reduce the size of its investment

Issues to be addressed by the Company

unit at this time. The Company currently also has no plans to

To differentiate itself from other companies, in the past

execute a stock split.

Kanamoto strengthened its base of rental assets best suited tomeeting customers’ needs and implemented actions such as

Management indicators established as objectives

enhancing its asset quality assurance system, while

Because of the need for the Company to maintain a large

continuing efforts to hold down cost increases. In addition,

quantity of assets, Kanamoto has always emphasized ROI

the Kanamoto group is an alliance of firms that boast strong(return on investment) and cash flow, and seeks growth inrelationships with sectors such as temporary housing

EBITDA (earnings before interest, taxes, depreciation andmaterials, furniture, fixtures and security equipment andamortization) to meet its primary objective of establishing a

specialized housing units, which supplement the Company’ssolid management foundation.

principal business of construction equipment rentals. Because

As specific numerical targets, Kanamoto plans to achieve

the prompt, flexible utilization of these relationships is therevenues of ￥65.0 billion and ordinary income of ￥2.5

key to differentiation from other companies, Kanamoto willbillion on a consolidated basis for the fiscal year ending inconcentrate on further strengthening the alliance among the

October 2004, the final year of the “Kanamoto Survival

Group firms and seeking synergistic results.

Plan,” the Three-Year Plan the Company is currently

On the other hand, to increase the firm’s dynamism throughexecuting.

steps such as enhancing sales ability and improving

Furthermore, in order to improve its debt rating, Kanamotoprofitability, the Company will thoroughly implement

has declared one of its long-term objectives to be increasing

performance-based evaluations based on a review of theshareholders’ equity to at least ￥50.0 billion. To achieve

personnel system, promote low-cost operating activities atthis goal, the Company has set an earnings target of ￥2.0

sales branches, and diligently address creation of abillion on a net income basis for the fiscal year endingknowledge

October 2006, which will be a new record, and targets of atstandardization system that effectively utilizes the online

least 40.0%, 6.0% and 2.5% for capital ratio, ROE and ROA,

network linking every Kanamoto branch.

respectively, for the final year of its next medium-term plan(fiscal year ending October 2007).
4 Semiannual Report 2003

management

systemandmaintenancesemiannual2003/011新 06.8.21 4:19 PM ページ 5

Changes to the Company’s management organizationand measures concerning corporate governanceeven when overall construction investment shows a

Together with already introducing a corporate officer system

by winning more orders for these models and sectors,

that clarifies responsibility for execution of the Company’s

through closer cooperation among companies in thebusiness, Kanamoto has also improved the communication

Kanamoto group and strong alliances with partner firms thatfunction for top-down notification of information such as

are developing each region, and by implementing further costmanagement policies, and prepared a system for keeping

reductions for transportation and maintenance.

downward trend. Kanamoto will strive to maintain earnings

every employee well informed regarding the Company’s
policies. In conjunction with these improvements, by also

Kanamoto will also pay careful attention to circumstances inrevamping part of its organizational structure, establishing aother countries, to ensure there are no disruptions to steadyseparate Management Planning Division and restructuring its

overseas sales of used construction equipment, pursue

Business Coordination Headquarters, Kanamoto is able todevelopment efforts such as used equipment sales campaigns

create accurate management strategies that conform to thefor modular housing units and portable construction site

marketcomprehensive

toilets and build overseas sales of Theft Sensor and Hydro-

management and control for each operating division and each

Sever, two anti-theft devices developed by Kanamoto toaffiliated company.

protect construction equipment and rental vehicles against

Kanamoto also has prepared ethics guidelines, andtheft.

environment,

andexecuteestablished a Compliance Committee including outsidecommittee members that is already fulfilling its functions,

In other areas, although the Steel Sales Division and theand maintains a corporate organization that observes the law

Information Products Division represent only a small portionand ethics regulations.

of Kanamoto’s total net revenues, we will work to

To improve the business development capabilities of thecontinually increase revenues at each division.

entire Kanamoto group, the Company holds a regular“alliance group meeting” that is attended by the management

Kanamoto also formed an alliance for tool rentals withof each group company. This meeting serves to ensure a

Komeri Co., Ltd. (Tokyo Stock Exchange, First Section;

thorough understanding of the group’s business objectives

stock code: 8218) the leader in Japan’s do-it-yourself homeand management policies.

center industry, and has already begun rental activities at
Komeri Power Niitsu (opened in March 2003) and Komeri

Outlook for the next consolidated fiscal year
(Business period ending October 2003)

Power Kodo (opened April 2003), two of Komeri’s top-class

While progress is being made under the Koizumi Cabinet to

Although the tie-up will not have a large impact on earnings

restore Japan’s financial system to health, Kanamoto projects

during the current fiscal year because the alliance focuses on

there will not be any changes to the present economic policy.

rentals of small-scale construction equipment, the alliance is

The Company sees no concrete measures to attack the

expected to expand rentals to new users including farmers,

deflationary economy, and believes the chaotic conditions

building contractors and the general public, which until now

enveloping Japan’s economy will continue.

have not been major Kanamoto customers.

megastores.

In the future, the two firms plan to conduct market research
Looking at the public works budget for fiscal 2003 as well,and will set up temporary rental corners at other Komeri

although the government announced it would place

stores.

government orders early there has been no strong stimulus
effect from such orders, which were overwhelmed by the
influence from further budget tightening. The supplementarybudget also is not expected to have an effect, and offers little
hope for much construction demand.
Given these conditions, Kanamoto forecasts the toughcompetitive situation in the construction equipment rental
industry among manufacturer-related rental companies, large
multi-regional rental firms and middle-market rental
companies will continue.
In Kanamoto’s main activities in construction-related

Kanchu Kanamoto, President
June 2003

businesses and the construction equipment rental business,some models and sectors exhibit smaller unit price declines
Semiannual Report 2003 5

semiannual2003/011新 06.8.21 4:19 PM ページ 6

C o n s o l i d a t e d

B a l a n c e

S h e e t s[As of April 30, 2003]

ASSETS
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)￥ 20,624￥ 15,433￥ 18,515$ 154,743

592

79

28

231

20,43923,121

21,533179,966

Inventories

959

810

1,158

9,679

Deferred income taxes

247

167

249

2,084

Other current assets

3,160

2,960

2,617

21,875Less : Allowance for doubtful accounts

(401)

(495)

(574)

(4,797)45,62042,075

43,526

363,781

Rental equipment

52,39250,00945,161

377,444

Building and structures

15,21615,177

15,346

128,253

Machinery and equipment

4,879

4,770

4,882

40,804(45,411)(44,097)(42,059)(351,518)

27,07625,85923,330

194,983

24,63524,601

24,623

205,788

58

109

2

18

51,76950,56947,955400,789

Investments in securities

3,745

3,682

3,508

29,316

Deferred income taxes

1,702

1,749

1,754

14,657

Other assets

1,628

1,819

1,741

14,558Less : Allowance for doubtful accounts

(607)

(580)

(567)

(4,740)Total investments and other assets

6,468

6,670

6,436

53,791￥ 103,857￥ 99,314￥ 97,917$ 818,361

Current assets :Cash and cash equivalents
Short-term investments
Notes and accounts receivable, trade

Total current assets

Property and equipment :Less : Accumulated depreciation

Land
Construction in progress
Total property and equipment

Investments and other assets :Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥119.65=US$1, the approximate exchange rate on April 30, 2003.

6 Semiannual Report 2003

semiannual2003/011新 06.8.21 4:19 PM ページ 7

LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)

Short-term bank loans

￥ 750

￥ 905

￥ 853

$ 7,130

Current portion of long-term debt

20,962

24,965

20,138168,311

Notes and accounts payable, trade

10,725

11,965

10,81990,423

Accrued income taxes

921

19

790

6,600

Accrued bonuses for employees

573

541

507

4,235

1,489

1,625

1,259

10,52035,42040,02034,366287,219

Long-term debt

33,86324,70029,082

243,057

Accrued pension and severance costs

2,055

1,676

1,745

14,590

920

1,580

981

8,198

36,83827,95631,808265,845

170

97

152

1,271

Common stock

8,597

8,597

8,597

71,849Additional paid-in capital

9,720

9,720

9,720

81,240Retained earnings

13,03813,044

13,536113,130

Net unrealized gain (loss) on other securities, net of taxes

85

(108)

(91)

(764)

Treasury stock

(11)

(12)

(171)

(1,429)31,42931,241

31,591

264,026￥ 103,857￥ 99,314￥ 97,917$ 818,361

Current liabilities :Other current liabilities
Total current liabilities

Non-current liabilities :Other liabilities
Total non-current liabilities

Minority interests

Shareholders' equity :Total shareholders' equity

Semiannual Report 2003 7

semiannual2003/011新 06.8.21 4:19 PM ページ 8

C o n s o l i d a t e d

S t a t e m e n t so f

I n c o m e[For the six months ended April 30, 2003]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)

Rental revenues￥ 21,024￥ 40,561￥ 21,044$ 175,877

Cost of rentals

15,32730,631

15,514

129,657

Sales of goods

11,591

24,691

11,527

96,337

Cost of sales

8,847

19,376

8,755

73,171Gross profit

8,441

15,245

8,302

69,386

Selling, general and administrative expenses

6,745

12,957

6,397

53,463Operating income

1,696

2,288

1,905

15,923

11

56

39

328

Interest expenses

(242)

(475)

(212)

(1,768)Others, net

259

259

(232)

(1,944)

1,724

2,128

1,500

12,539Current

866

865

766

6,408

Deferred

(111)

59

(101)

(845)

755

924

665

5,563

Income before minority interests

969

1,204

835

6,976

Minority interests in subsidiaries

38

(5)

54

450

￥ 931

￥ 1,209￥ 781$ 6,526

Yen

U.S.dollars (Note)

Other income (expenses) :Interest and dividend income

Income before income taxes
Income taxes :Net income

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)Basic￥ 30.79￥ 39.99￥ 25.88$ 0.22

Diluted

24.32

30.76

23.32

0.19

Net income per share :Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥119.65=US$1, the approximate exchange rate on April 30, 2003.

8 Semiannual Report 2003

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C o n s o l i d a t e d

S t a t e m e n t s

o f

C a s hF l o w s

[For the six months ended April 30, 2003]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)

Cash flows from operating activities￥ 8,708￥ 10,646￥ 6,346$ 53,040

Cash flows from investing activities

(617)

(442)

(313)

(2,614)

Cash flows from financing activities(3,458)(10,762)(2,951)(24,670)

Net increase (decrease) in cash and cash equivalents

4,633

(558)

3,082

25,756

Cash and cash equivalents at beginning of period

15,991

15,991

15,433

128,987￥ 20,624￥ 15,433￥ 18,515$ 154,743

Eliminations
andcorporate
items

Consolidated

Cash and cash equivalents at end of period

S e g m e n t

I n f o r m a t i o n[For the six months ended April 30, 2003

Construction
relatedbusiness

Steel related
business

Information
andcommunication
related andother business

Total￥ 29,239$ 244,370￥ 2,777$ 23,209￥ 554$ 4,635￥ 32,570$ 272,214￥−$−￥ 32,570$ 272,214

￥−
$−

￥−
$−

￥−
$−

￥−
$−

￥−
$−

￥−
$−

￥ 29,239$ 244,370￥ 2,777$ 23,209￥ 554$ 4,635￥ 32,570$ 272,214￥−$−￥ 32,570$ 272,214

Operating expenses￥ 27,398$ 228,981￥ 2,809$ 23,476￥ 531$ 4,442￥ 30,738$ 256,899(￥ 73)( $ 608)￥ 30,665$ 256,291

Operating profit￥ 1,841$ 15,389(￥ 32)( $ 267)

￥ 23
$ 193

￥ 1,832$ 15,315

￥ 73
$ 608

￥ 1,905$ 15,923

Sales
Outside customers
Intersegment
Total

Amounts shown in the table are millions of yen and thousands of U.S. dollars.

Outstanding Balance of Future Lease Payments (Consolidated)[For the six months ended April 30, 2003 ]Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)

Within one year

￥ 3,789￥ 4,663￥ 5,147$ 43,019

After one year

7,264

13,357

15,531

129,805￥ 11,053￥ 18,019￥ 20,678$ 172,824

Within one year

￥ 1,616￥ 1,543￥ 1,897$ 15,855

After one year

2,783

2,643

3,290

27,504￥ 4,399￥ 4,186￥ 5,188$ 43,359

Finance leases

Total
Operating leases

Total

Semiannual Report 2003 9

semiannual2003/011新 06.8.21 4:19 PM ページ 10

N o n - C o n s o l i d a t e d

B a l a n c e

S h e e t s[As of April 30, 2003]

ASSETS
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)￥ 19,985￥ 14,578￥ 17,513$ 146,371

Notes receivable, trade

11,376

10,423

12,998

108,629

Accounts receivable, trade

8,160

11,796

7,958

66,510

544

399

417

3,490

Other current assets

3,540

3,126

2,832

23,665Less : Allowance for doubtful accounts

(367)

(462)

(573)

(4,787)

43,23839,86041,145

343,878

Rental equipment

51,12048,81643,935367,193

Buildings

10,876

10,825

10,92291,283Structures

3,866

3,874

3,940

32,932

Machinery and equipment

4,754

4,644

4,748

39,683(44,179)(42,841)(40,784)(340,858)

26,43725,31822,761

190,233

24,25824,22824,247

202,645

57

104

2

18

50,75249,65047,010392,896

Investments and other assets

7,551

7,780

7,786

65,075Less : Allowance for doubtful accounts

(607)

(573)

(558)

(4,665)

Total investments and other assets

6,944

7,207

7,228

60,410￥ 100,934￥ 96,717￥ 95,383$ 797,184

Current assets :CashInventories

Total current assets

Property and equipment :Less : Accumulated depreciation

Land
Construction in progress
Total property and equipment

Investments and other assets :Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥119.65=US$1, the approximate exchange rate on April 30, 2003.

10 Semiannual Report 2003

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LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)￥ 5,278￥ 5,278

￥−

$−

−

4,164

4,098

34,250Current portion of long-term bank loans

8,115

8,289

9,761

81,580Notes payable, trade

7,831

8,091

7,898

66,004

Accounts payable, trade

1,695

2,857

1,851

15,472

215

289

389

3,255

Accounts payable, other

8,105

7,888

6,695

55,959Accrued income taxes

898

−

773

6,458

Accrued bonuses for employees

553

519

485

4,057

Other current liabilities

682

676

574

4,795

Total current liabilities

33,372

38,051

32,524

271,830

Convertible bonds

7,754

−

−

−

Long-term bank loans

16,336

16,85822,780190,389

Long-term accounts payable, other

9,816

8,614

6,545

54,700Accrued pension and severance costs

2,042

1,660

1,732

14,473

176

177

176

1,472

36,12427,30931,233

261,034

Common stock

8,597

8,597

8,597

71,849Additional paid-in capital

9,720

9,720

9,720

81,240Legal reserve

1,372

1,372

1,372

11,471Retained earnings

11,665

11,77812,194

101,911

Net unrealized gain (loss) on other securities, net of taxes

85

(108)

(91)

(764)

Treasury stock

(1)

(2)

(166)

(1,387)31,43831,357

31,626

264,320￥ 100,934￥ 96,717￥ 95,383$ 797,184

Current liabilities :Current portion of straight bonds
Current portion of convertible bonds

Notes payable, otherNon-current liabilities :Other liabilities
Total non-current liabilities

Shareholders' equity :Total shareholder's equity

Semiannual Report 2003 11

semiannual2003/011新 06.8.21 4:19 PM ページ 12

N o n - C o n s o l i d a t e d

S t a t e m e n t so f

I n c o m e[For the six months ended April 30, 2003]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)

Rental revenues￥ 19,925￥ 39,206￥ 20,090$ 167,907

Cost of rentals

14,762

29,952

15,116

126,338

Sales of goods

10,052

21,401

10,553

88,202

Cost of sales

7,467

16,505

7,942

66,376Gross profit

7,748

14,1507,585

63,395

Selling, general and administrative expenses

6,197

11,895

5,937

49,623Operating income

1,551

2,255

1,648

13,772

8

56

39

326

Interest expenses

(227)

(446)

(195)

(1,629)Others, net

145

188

(142)

(1,187)

1,477

2,053

1,350

11,282Current

843

830

749

6,265

Deferred

(115)

89

(104)

(872)

728

919

645

5,393

￥ 749

￥ 1,134￥ 705$ 5,889

Yen

U.S.dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)￥ 24.75￥ 37.49￥ 23.35$ 0.20

9.00

18.00

9.00

0.08

Other income (expenses) :Interest and dividend income

Income before income taxes
Income taxes :Net income

Per share of common stock :Net income
Cash dividends applicable to the year

Outstanding Balance of Future Lease Payments (Non-Consolidated)[For the six months ended April 30, 2003]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2002
(Unaudited)

October 31,
2002

April 30,
2003
(Unaudited)

April 30,
2003
(Unaudited)

Within one year

￥ 3,438￥ 4,259￥ 4,778$ 39,929

After one year

6,621

12,90015,120126,365￥ 9,969￥ 17,159￥ 19,897$ 166,294

Within one year

1,616

1,543

1,897

15,855After one year

2,783

2,643

3,291

27,504￥ 4,400￥ 4,186￥ 5,188$ 43,359

Finance Leases

Total
Operating Leases

Total
12 Semiannual Report 2003

semiannual2003/011新 06.8.21 4:19 PM ページ 13

M a n a g e m e n t

I n d i c a t o r

D a t aG r a p h s

Cash FlowPCFR

EBITDA＋
EBITDA＋ Ratio

CF = Net income + Depreciation expense - (Cashdividends + Bonuses to directors and auditors)
PCFR =Total market capitalization ÷ CF = Stock Price ÷
Cash flow per share of common stock

EBITDA+ =Operating income + Depreciation expense + Other depreciation andamortization expense+ Low-price rental assets, and others(millions of yen)(millions of yen)（％）

12,0007

10,000

6

8,000

5

6,000

4

4,000

3

2,000

2

0

EBITDA+ is an indicator used only for the construction equipment rental business andexcludes steel products and information products

00

01

02

8

15,000

6

10,000

4

5,000

2

0

03

0
99

Net Income
PER

（％）

20,000

1
99=Annual=Interim=Annual=Interim

00

01

02

03

01

02

03

PBR
PBR = ROE × PER

PER = Total market capitalization at end of period ÷ Net Income(millions of yen)

（％）

（％）

2,000

40

1.0

1,500

30

0.75

1,000

20

0.5

500

10

0.25

0

0.0

0
99

00

01

02

03

Shareholders' Equity
Shareholders' Equity Ratio

99

00

ROE
ROE = Net income ÷ Shareholders' equity = EPS ÷ BPS

Shareholders' Equity Ratio = Shareholders' equity ÷ Total assets(millions of yen)

（％）

（％）

35,00034

2.5

28,00032

2.0

21,00030

1.5

14,000

28

1.0

7,000

26

0.5

24

0.0

99

00

01

02

03

99

00

01

02

03

Dividend per Share of Common StockROA
ROA = Net income ÷ Total assets
（％）

(yen)

8

20

6

15

4

10

2

5

0

0
99

00

01

02

03

99

00

01

02

03

Semiannual Report 2003 13

semiannual2003/011新 06.8.21 4:19 PM ページ 14

T o p i c s

Cut construction equipment power and render equipment impossible to move
Kanamoto begins selling upgrade version Theft Sensor II Hydro-Sever antitheft device for construction equipment
Even as it anticipates widespread use of Theft Sensor, the antitheft device developed in-house and now being marketed by
Kanamoto, the number of construction equipment thefts
throughout Japan continues to climb. Cases have also been noted
where the stolen construction equipment is used to commit othercrimes. Incidents in which bank ATM corners are smashed witha stolen hydraulic excavator and the cash stolen from each ATM
machine show no signs of tapering off.
Kanamoto has thought long and hard about this situation and has
begun marketing Theft Sensor II Hydrosever, the company’s
second device designed to stop crime in its tracks.

By disabling the power circuit, Hydro-Sever prevents thieves
from starting the engine, or moving the equipment even if they
manage to start the engine by some means. Because the hydrauliccircuits are also disabled, all operations such as forward or
backward movement are also impossible, making Hydro-Sever
the optimal anti-theft device for large-scale construction
equipment that must be driven onto a trailer under its own power.
At Kanamoto, we’re well informed about the mechanisms ofevery type of construction equipment, and we’ll continue tozealously apply our know-how to the development of new
security systems in the future.

CS completes makeover into more aggressive organization
In response to globalization of the company's operating
environment and expansion of its business activities, Kanamotoexecuted a corporate reorganization to strengthen its business
management systems.
The largest changes were made to the Business Coordination
Headquarters and the Management Planning Division of the
Operations Control Headquarters. The Business Coordination
Headquarters opened respective offices in Sapporo and Tokyo
that will enable it to achieve a more aggressive stream ofbusiness. The headquarters will also be directly responsible for

quality assurance and new products.
The Operations Control Headquarters’ Management Planning
Division, launched in 1983 as a link between the Operations
Control Headquarters and the operating divisions, wasreorganized into a management planning division with activities
centered on essential management planning and management
strategy.

Kanamoto Company, Ltd. organization chart (As of April 1, 2003)

General Meeting of the Shareholders
Auditors

Board of Directors
President
Secretarial Office
Auditing Section
Legal Section

Managing Directors Committee
Operations Control Headquarters
Management Planning Division Business Administration Section,
Facilities Management Section,
Public Relations Section

Administration Division

Administration Section,
Personnel Section

Accounting Division

Accounting Section,
Finance Section

Credit Management Division

Credit Management Section,
Credit Analysis Section

14 Semiannual Report 2003

Quality Assurance Section
New Products Department
Construction Equipment Rental Division Used Products Sales Division
North Hokkaido Region
South Hokkaido Region
Tohoku Region
Kanto & Shinetsu Region
Kinki & Chubu Region

Steel Sales Division
Information Products DivisionMarket Development Division
Information System Division

Business Coordination Headquarters

System Support Section,
System Solutions Section

semiannual2003/011新 06.8.21 4:19 PM ページ 15

Komatsu product introductions break the 10,000 mark! A world first for a single
firm
A “Party to Commemorate the 10,000th Komatsu Product
Delivery” was held by Komatsu at Sapporo’s Grand Hotel inJanuary 2003.
The ceremony was sponsored by Komatsu, one of Japan’s
leading construction equipment manufacturers and a participant
in certain segments of the construction equipment rental
industry, to commemorate the volume of construction equipment
delivered by Komatsu to Kanamoto, which reached a cumulative
total of 10,000 units. Kanamoto became the first company in theworld to introduce over 10,000 units of Komatsu products.
As a purchaser of rental assets, Kanamoto has maintained a closebusiness relationship with Komatsu for many years. Following
Komatsu’s entry into the construction equipment rental sector, in1999 Kanamoto and Komatsu formed an alliance for theconstruction equipment rental business. The two companies arebuilding a partnership that goes beyond the traditional
construction equipment supplier-purchaser relationship, enabling
both partners’ groups to improve investment efficiency.
Kanamoto and Komatsu intend to progressively continue theircooperation in the future, and the commemoration ceremony
further strengthened bonds between the two companies.
The party was attended by 30 individuals from Komatsu
including Chairman Satoru Anzaki, Executive Officer andConstruction and Mining Equipment Marketing Division
Manager Yasuo Kimura and representatives of the Komatsu
dealer group throughout Japan, and 168 individuals from
Kanamoto including Chairman Taichu Kanamoto, President
Kanchu Kanamoto, directors, headquarters managers, various
regional managers and block managers and branch officemanagers. The party grew into a large-scale meeting as thepacked crowd, ranging from managers of the two leading
domestic construction equipment suppliers – one a manufacturer
and one an equipment rental company - to staff active in sales on
the front lines, mingled together to celebrate a majorachievement.
Satoru Anzaki, Komatsu’s chairman, declared during his address
to the attendees that “we want to share and utilize our two
companies’ unique advanced know-how, and in turn develop ourpartnership into a broad and unprecedented multi-dimensional
cooperation that will contribute to mutual operating results
improvements.” Kanamoto’s president Kanchu Kanamoto
responded by stating his aspiration to “further strengthen
Kanamoto’s relationship with Komatsu Ltd., a global enterprise,and continue advancing towards Kanamoto’s next 10,000 units,”
while Kanamoto chairman Taichu Kanamoto spoke of his belief
that “we must put aside minor differences, seek mutual future
development of similarities and review the basics.”
Following the ceremony, with its air of quiet tension, thegathering underwent a swift change as the mood swung into a
warm social gathering filled with voices of camaraderie and shop
talk. As the party slowly wound down, all of the participants
renewed their desire to revitalize the construction industry.

Kanamoto president Kanchu Kanamoto was presented with a commemorative plaque from Komatsuchairman Satoru Anzaki

Kanamoto forms alliance with Komeri Co., Ltd. for tool rentals

Large-scale Komeri Power store operated by Komeri Co., Ltd., the leader in Japan’s do-it-yourself home
center industry

Through its new alliance with Komeri Co., Ltd. (Head Office:Niigata, Japan; listed on the Tokyo Stock Exchange First
Section), the leader in Japan's do-it-yourself home center
industry, Kanamoto will provide rentals of small-scaleconstruction equipment through home centers (HC) being
developed by Komeri.
Komeri will establish rental corners on the premises of its
Komeri Power megastores, large-scale outlets being developed
by Komeri where it has also set up professional shops aimed at
the construction trades, and use the corners to continually display
and rent Kanamoto rental assets such as hand tools and small

electrical generators.
The main items the rental corners will stock include small
construction equipment such as hand tools (electric power tools,
air-powered tools, etc.), small electrical generators, washingequipment, plates, rammers, weed mowers, lighting equipment
and mini-excavators that can be used for applications such as
small-scale farming, week-end home improvement projects andgardening in addition to construction activities. Komeri will also
act as a sales outlet for other Kanamoto construction-related
rental products, such new and used modular housing units andstorage sheds designed for the general public, and will also offer
rentals of other construction equipment.
Kanamoto believes the potential demand for the new rental
service will be strong among building contractors, farmers andthe general public, market segments which have not been large
Kanamoto customers in the past. Because the Tohoku-Chubu
region where Komeri is developing its stores is an area where
Kanamoto has relatively few sales branches, Kanamoto also
anticipates the alliance will help expand its business territories.
The two alliance partners have already begun rental operations at
two Komeri Power stores in Niigata, Japan, and plan to conduct
market research and begin studying the installation of rental
corners at other stores Komeri plans to open in the future.
Semiannual Report 2003 15

semiannual2003/011新 06.8.21 4:19 PM ページ 16

S h a r e h o l d e r s ’

I n f o r m a t i o n[As of April 30, 2003]

Company Name
Kanamoto Company, Ltd.
Head Office
1-19, Odori Higashi 3-chome
Chuo-ku, Sapporo, Hokkaido
060-0041 Japan

Primary Lenders
The Bank of Tokyo-Mitsubishi
The Mitsubishi Trust and Banking Corporation
Mizuho Corporate BankSUMITOMO MITSUI Banking Corporation
The Norinchukin Bank
North Pacific Bank
Hokkaido Shinren
Shinkin Central Bank
The Hokkaido Bank
UFJ Bank Limited

Fiscal Year-end
October 31
Revenues¥60,606 million(Fiscal year ended October 2002)

Established
October 28, 1964
Capitalization¥8.6 billion (Paid-in capital)
Listing Exchanges
Tokyo Stock Exchange, First Section
Sapporo Stock Exchange
Stock Code9678

B r a n c hCommon Shares Issued andOutstanding
30,253,000 shares

Number of Employees
1,131(Excluding directors and temporary
or part-time workers)
Principal Businesses
Rental of construction equipment,
Sale of steel products
Rental of engineering workstations andcomputer peripherals

Principal Shareholders
ORIX Corporation
Taichu Kanamoto
Saburo Kanamoto
Komatsu
Kanamoto Capital Company
The Master Trust Bank of Japan,Ltd.
North Pacific Bank
The Hokkaido BankThe Tokio Marine & Fire Insurance Company
DENYO Co., Ltd.

N e t w o r k[As of April 30, 2003]

Our Growing Branch Network
Hokkaido

HonshuTotal

As of April 30, 2003

As of April 30, 2003

As of April 30, 2003

Construction Equipment Rental Operations

55

80

135

Steel Sales

3

0

3

Number of Branches

Information Products Operations

0

1

1

Total

58

81

139

Kanamoto opened 3 branches and closed 1 branch during the first half of Fiscal 2003 (ends October 31.2003).
Assist Co., Ltd. (9 offices)
Engaged in the rental of safety products such as signals or signs for the construction industry.

SRG Kanamoto Co., Ltd. (2 branches)
A joint venture between Kanamoto and SRG Takamiya Co., Ltd. that provides rentals of
temporary scaffolding.

Kanatech Co., Ltd. (13 branches)
Designs, manufactures and sells modular housing units for construction use.

Kanamoto Shikoku Co., Ltd.
A construction equipment rental company established as a joint venture between
Kanamoto and Tadano, Ltd.

Kyushu Kensan Group (9 branches, 4 group companies)
Construction equipment rental company headquartered in Fukuoka Prefecture.

Daiichi Machine Industries Co., Ltd. (7 branches)
Construction equipment rental company headquartered in Kagoshima Prefecture.

Taniguchi Co., Ltd. (3 branches) ＊Developing a construction equipment rental business in the area around Otaru, Hokkaido.

Machida Kikou Co., Ltd. (13 branches)
Construction equipment rental company headquartered in Okinawa Prefecture＊ On August 1, 2003, Kanamoto Co., Ltd. will merge with Taniguchi Co., Ltd., a consolidated subsidiary.

Construction Equipment Rental Division
Steel Sales Division
Information Products DivisionMarket Development Division
Kanamoto Alliance Group Firms (8 companies)
Semiannual Report 2003 16

semiannual2003/011新 06.8.21 4:19 PM ページ 17

B o a r d

O f

D i r e c t o r s[As of April 30, 2003]

Directors

Auditors

Taichu Kanamoto

Toshizo Okumura

ChairmanStanding Corporate Auditor

Kanchu Kanamoto

Norizumi Tsuda

President
CEOStanding Corporate Auditor

Nobuhito Utatsu
Division Manager, Accounting Division

Hideki Nomiya
Business Coordination Headquarters

Kiyoshi Onishi

Masakazu Hirata
Deputy Division Manager,
Construction Equipment Rental Division
Division Manager, Used Products Sales Division
Manager, Quality Assurance Section

Hidemitsu Washida

Outside Corporate Auditor

Executive Vice PresidentManager in Charge ofOperations Control Headquarters

Corporate Officers

Hitoshi Narita(Shown with the division that is representative of theirwork as a Corporate Officer)

Division Manager, Business Planning Division

Shinroku Sawada
Senior Corporate Officer
Manager in Charge of Business Planning

Yukio Sato
Senior Corporate Officer
Manager, Business Coordination Headquarters
Manager, New Products Department

Eichu Kanamoto
Division Manager, Administration DivisionNobuhito Utatsu
Division Manager, Accounting Division

Kojiro Satsuma

Kanchu Kanamoto
President
CEO

Hidemitsu Washida
Manager in Charge ofOperations Control Headquarters

Shinroku Sawada
Senior Corporate Officer
Manager in Charge of Business Planning

Yukio Sato
Senior Corporate Officer
Manager, Business Coordination Headquarters
Manager, New Products Department

Tadao Saika
Eichu Kanamoto
Division Manager, Administration Division

Tetsuo Kanamoto
Division Manager, Construction Equipment
Rental Division
Regional Manager, Kinki&Chubu Region
Construction Equipment Rental Division

Keiichi Kitakata
Division Manager, Market Deveropment Division

Hiroshi Kumagai
Division Manager, Information System Division

Tatsuo Kanamoto
Regional Manager, Tohoku Region
Construction Equipment Rental Division

Yuichi Asano
Division Manager, Credit Management Division
Manager, Auditing Section
Manager, Legal Section

Semiannual Report 2003 17

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