October 2001 Accounting Bulletin (Consolidated)
December 13, 2001

Kanamoto Company, Ltd.
Head Office:

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

Stock Code:
Listing Exchanges :9678
Tokyo Stock Exchange(First Section), Sapporo Stock Exchange

Contact:

Nobuhito Utatsu, Corporate Officer & Division Manager, Accounting Division

Phone:

81-11-209-1600
Please send inquiries in English to takayama@kanamoto.co.jp.

Date of Report to the Board of Directors :December 13, 2001
SEC (United States) Accounting Standards :The Company has not adopted SEC accounting standards

1. Consolidated operating results for the fiscal year ended October 31, 2001
(1) Consolidated operating results(Numbers less than one million yen have been rounded down)(¥ millions & %)Revenues
Fiscal year ended
October 31, 2001
Fiscal year ended
October 31, 2000

Operating Income

67,346( 8.6 )
61,996( -)Ordinary Income

Net Income

3,257( 27.8 )
2,548
( -)

472
(- 65.3)
1,360
-)
(

2,872
( - 6.0 )
3,042
( -)

Net income pershare of common
stock

Net income pershare of common
stock after
adjustment forpotential ordinary
sharesYen

Yen

Return on
shareholders’equityReturn on total
assets%Ordinary income
margin%%Fiscal year ended
October 31, 2001

15.64

13.89

1.5

3.1

4.8

Fiscal year ended
October 31, 2000

45.51

36.35

4.4

2.5

4.1

(Notes) ① Equity method investment profit or loss−
Fiscal year ended October 31, 2001−
Fiscal year ended October 31, 2000
② Average number of shares (consolidated) outstanding during the period
Fiscal year ended October 31, 2001: 30,229,603 sharesFiscal year ended October 31, 2000: 29,894,781 shares③ Changes in accounting method
We haven’t changes in this fiscal year.
④ The percentages shown for revenues, operating income, ordinary income and fiscal year net income are
the percent increase or decrease compared to the prior fiscal year

(2) Consolidated financial position
Total assets¥ millions

Shareholders’ equity

Shareholders’ equity
ratio¥ millions

Shareholders’ equity
per share%

Yen

Fiscal year ended
October 31, 2001

106,639

30,84328.9

1,020.03

Fiscal year ended
October 31, 2000

103,41230,78129.7

1,018.72(Note) Number of shares (consolidated) issued and outstanding at the end of the period:
Fiscal year ended October 31, 2001: 30,237,259 sharesFiscal year ended October 31, 2000: 30,215,864 sharesFiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.1

(3) Consolidated cash flow

( ¥ millions )Cash flow fromoperating activities

Cash flow frominvesting activities

Cash flow fromfinancing activities

Cash and cash
equivalents at the endof the fiscal year

Fiscal year ended
October 31, 2001

12,469- 762? 12,137

15,991

Fiscal year ended
October 31, 2000

10,616- 1,826? 8,544

16,422(4) Com panies to which consolidation accounting and equity method accounting apply
Number of consolidated subsidiaries: 5 companies
Number of unconsolidated subsidiaries accounted for under the equity method: 0 companies
Number of affiliated companies accounte d for under the equity method: 0 companies(5) Changes to which consolidation accounting and equity method accounting apply
Consolidation(New): 0 companies(Excluded): 0 companies

Equity method accounting(New): 0 companies(Excluded): 0 companies

2. Projected consolidated operating results for the fiscal year ending October 31, 2002
(November 1, 2001 – October 31, 2002)(¥ millions)

Revenues

Ordinary Income

Net Income

Interim period

32,3001,250

590

Full year

65,5001,530

700(Reference) Projected net income per share of common stock (fiscal year) ¥23.15

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.2

I

Current conditions of the Company’s group

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

〔Businesses related to the Construction Equipment Rental Operation〕
The Company’s rental division, together with Taniguchi Co., Ltd. (a subsidiary company) and Kanamoto Shikoku Co., Ltd. (asubsidiary company), is engaged in the rental and sale of construction equipment and machines used for construction. TaniguchiCo., Ltd. and Kanamoto Shikoku Co., Ltd. operate in designated marketing areas and borrow rental equipment assets from theCompany as needed in order to meet customer demand.
SRG Kanamoto Co., Ltd. (a subsidiary company) operates a rental business that provides temporary materials for constructionuse. Assist Co., Ltd. (a subsidiary company) is engaged in the rental of furniture and fixtures and safety products for theconstruction 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 the sale and construction of
specialized rust-proof, water-proof shields.

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

〔Businesses related to the Information Products Operation and other businesses〕
As the Company’s information and telecommunications-related operation, Kanamoto’s Information Products
Division is engaged in the rental and sale of computers, computer peripheral equipment and equipment for the development ofcomputer products. Companies affiliated with this division include Newtech Co., Ltd. (an affiliated company), which primarily
manufactures and sells computer peripheral equipment such as RAID (large volume, high speed external storage products), andActive Technology Corp. (an affiliated company), which is principally engaged in the sale of telecommunications-related
equipment such as wireless LAN devices.
As supplemental businesses, Active Power Corp. (an affiliated company) is engaged in the sale of micro -turbine generators
manufactured by the U.S. company Capstone Corporation, and supplies these products to the Company, among others. Providence
Brewery Co., Ltd. (a subsidiary company) brews and sells regional beers.

〔Relationship of the operating businesses〕
Construction-related Businesses

Kanamoto Co., Ltd.
??
Construction Equipment Rental??
Steel Sales??
Information Products(Consolidated companies)
Taniguchi Co., Ltd. Assist Co., Ltd. SRG Kanamoto Co., Ltd. Kanatech Co., Ltd.
(Non-consolidated companies)
Polyshield Services Co., Ltd. Kanamoto Shikoku Co,, Ltd.

Information and Telecommunications-related and Other Businesses
Computer and peripheral
equipment-related businesses
Other Businesses(Affiliated companies)※
Newtech Co., Ltd. Active Technology Corp.

(Consolidated company) Providence Brewery Co., Ltd.
(Affiliated company) ※Active Power Corp.

(Note) * Indicates affiliated companies to which equity method accounting is not applied.

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.3

II

Management policies and operating results

1. Basic policies concerning business management and distribution of earnings
Kanamoto Company’s basic mission is to achieve successful performance that produces maximum satisfaction for all stakeholdersof the Company, including customers, shareholders and the local community. The Company undertakes its businesses based on afundamental management policy embodied in the phrase, “constantly seek innovation and move forward based on a spirit ofindependence and self-reliance.”
The Company’s group will further strengthen consolidated group management and continue to take actions adapted to the current
environment by seeking new customer needs and establishing new information and services focused around the construction
equipment rental business, the mainstay of the Company’s principal business activity.
In order 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 asound financial position. The Company also remains committed to its policy of stable dividend growth.
To accomplish these goals, Kanamoto Company focuses on the importance of cash flow and places particular importance on thegrowth of EBITDA (earnings before interest, taxes and depreciation and amortization).
Furthermore, given the Company’s present circumstances and markets, the Company believes it has adopted an appropriate
position with regard to its investment and has no plans to reduce its positions at this time. The Company will continue to flexibly
examine its activities, however, in accordance with the distribution of future investment positions.

2. Medium to long-term corporate management strategy
During the three years since the Company’s stock was raised to the First Section of the Tokyo Stock Exchange in April 1998,
Kanamoto Company has implemented efforts to seek new businesses, expand the operating are as for the Company’s main
business of construction equipment rentals and enhance in-house systems, in order to strengthen the Company’s managementbase. We are confident these activities have produced favorable results, such as the Company’s venture business support activity,
the creation of various alliances and the regional office reorganization of the construction equipment rental division, and theestablishment of Used Products Sales Division, respectively. Each of these measures has helped Kanamoto Company to form acompany group that currently employs more than 1,000 individuals.
Nevertheless, growth in the number of offices and employees brings a danger of succumbing to so -called big company syndrome,
where a company’s organization becomes inflexible or employee morale stagnates. In order to avoid this result, Kanamoto
Company will implement a new three-year plan, the “Medium-term Management Plan for the 38th-40th Business Periods,” startingfrom November 2001. The core of this plan is policies to strengthen the Company’s internal management systems, as shown below.
Sales

Administrative divisions*Build risk management system*Strengthen alliances
Achieve low-cost*Improve management systems*Dominate sales regions
operation*Obtain higher debt rating*Scrap and build

With regard to achieving a low-cost operation, Kanamoto Company is aggressively continuing the program it began several years
ago to build a dominant network in existing sales territories, by opening a greater number of small-scale branch offices andincreasing the efficient utilization of its rental assets. The Company is also pursuing greater operating efficiency, andsimultaneously implementing a scrap and build policy that is aligned with local economies and regional characteristics. For new
branch offices, the Company has placed its greatest priority on the Kanto region, particularly in the vicinity of Tokyo.
Kanamoto Company is also moving as a group to strengthen its corporate alliances in western Japan. This effort is centered onleading companies in the Okinawa and Kyushu region with which Kanamoto has already formed business alliances (Machida
Kikou Co., Ltd. and Kyushu Kensan Group), together with Daiichi Machine Industries Co., Ltd. (headquarters in Kanuma,
Kagoshima Prefecture), whose sales region is in the southern part of Kyushu, and Kanamoto Shikoku Co., Ltd. (headquarters in
Takamatsu, Kagawa Prefecture), which operates in Shikoku. In November 2001, Daiichi Machine Industries Co., Ltd. became asubsidiary of Kanamoto Company.
Based upon these fundamental activities, the Kanamoto Company group will aim to enhance the business development
capabilities of the consolidated group as a whole, by strengthening the capabilities of each business and ensuring that each firm
Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.4

has a solid financial foundation.
Kanamoto is also continuing its venture business support activities, in order to nurture new businesses that will follow the growth
path of its construction equipment rental business. This is the major objective for development of the Company’s new businesses.
Kanamoto makes investments in venture businesses not only for the purpose of capital gains from a new public offering, but alsoso these companies will contribute to the Company’s earnings through dividends and profits from the distribution of new products.
Among the companies that Kanamoto has invested in so far, those developing micro -turbine electrical generators and VoIP
(Internet telephony) technology show strong promise.

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.5

Ⅱ. Operating Results(1) Summary of fiscal year operating results (Fiscal year ended October 2001)〔 External environment 〕
The condition of Japan’s economy grew more serious throughout the business period, as shown by the negative outlook at all firms
in the Bank of Japan’s Diffusion Index (DI). The business sentiment of firms continued to deteriorate, as demonstrated
particularly by the most recent business outlook survey, which showed the worst business conditions outlook since the survey was
begun.
In the construction industry, the principal customer for Kanamoto’s construction equipment rental business, public spending in
the central government’s initial FY2001 budget was maintained at ¥7,251,100 million. Nevertheless, as a result of fears that apublic spending increase could not be expected in the second supplementary budget because of financial reform measuresannounced by Prime Minister Koizumi’s administration and a tight lid on local government spending budgets, the number oforders nationwide for public construction fell after May. Added to the rapid slowdown in private capital investment throughout
Japan, with the exception of the Tokyo metropolitan area, Japan’s business environment was exceedingly severe.

〔Conditions for the Company（Unconsolidated）〕
Kanamoto Company’s total revenues for the fiscal year were ¥64,295 million (an increase of 5.4% compared to the prior fiscal
year), and ordinary income was ¥2,394 million (up 23.5%). Revenues for each operating division are discussed below.

Construction Equipment Rental Division
Although excess competition intensified among companies in the construction equipment rental industry as public spending
slowed, demand for construction equipment rentals remained strong as construction companies sought to control capital spending.
At Kanamoto, total rental revenues for the Construction Equipment Rental Division rose 3.8% compared to the prior fiscal year as
the result of a reorganization of the sales team to cover regional markets, establishment of small local offices to provide close
customer contact and efforts to expand the Company’s marketing area. Sales of construction equipment increased 9.6% over theprior year, as a result of a transition to low-exhaust emissions equipment owned by the Company (rental assets) and aggressive
sales of used equipment. Both activities were part of as an ecology-oriented project at the new Used Products Sales Division,
which Kanamoto Company established during the fiscal year. Revenue for the division as a whole was up 5.2%. By region, rental
revenue rose 4.0% in Hokkaido as a result of increasing the number of small-scale branches, while sales were flat in the Tohoku
area as a cycle of public spending ended. Sales increased 7.3% in the Kanto -Joetsu region as both public spending and private
demand were strong. In the Kinki-Chubu region, sales grew by 10.7% as the Company’s alliance strategy in western Japan proved
successful. During the fiscal year the Company established nine new branches, including four new branches in Hokkaido, one
branch in the Tohoku area, two branches in the Kanto area and two branches in the Kinki-Chubu area.
In the Steel Sales Division, sales were up 5.4% compared to the prior year as the result of greater emphas is on sales in the
Sapporo metropolitan area, which accounts for large portion of sales in the Hokkaido region.
The Information Products Division achieved an 11.0% increase in rental revenues as the result of steady orders for investment in
new model work stations, which rose 14.2%, and an 8.7% increase in sales revenue from higher demand for wireless LAN
equipment.

〔Business conditions at consolidated subsidiaries〕
Taniguchi Co., Ltd. is building a solid market share in the Shiribeshi region of Hokkaido. The company increased both revenue
and profits during the business period and continued to achieve steady growth.
Assist Co., Ltd. (Hokkaido) increased the number of its branches from four to nine in order to expand its sales area to all of
Hokkaido. As a result, the company had higher sales but lower profits because of a larger burden for capital equipment.
SRG Kanamoto Co., Ltd., which closed its books on its second fiscal year since being established, was within the range of revenue
and earnings projecte d in its initial business plan. The firm was able to steadily improve its operating results despite competition
from other companies in the same business.
Although this was the first fiscal year for external sales by Kanatech Co., Ltd., the company posted good operating results thatexceeded the objectives set in its initial business plan.
Providence Brewery Co., Ltd. moved to reform its profit structure through actions such as consigning management of its
restaurant business to an outside firm. Revenue and profit declined, however, because of a brief shutdown for remodeling and theeffect of cool summer weather on sales.

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.6

〔Consolidated operating results for the fiscal year ended October 2001〕
During the current accounting period, the Company charged to income an extraordinary loss for the full amount of ¥1,982 million
for a one-time valuation difference for a change in accounting standards based on the introduction of accounting forpost-employment benefits.
As a result of the above activities, the Company had total revenues of ¥67,346 million, an increase of 8.6% over the prior fiscal
year. Ordinary income was ¥3,257 million (up 27.8%) and net income for the period was ¥472 million (down 65.3%).

〔Other business operating results〕
The effect of Japan ’s economic recession has reduced the number of promising investment targets for the Company’s venturebusiness support activities. Support such as new capital investment provided by the Company declined as a result, totaling ¥35
million for the fiscal year.
The number of inquiries for rentals and purchases of the Capstone micro-turbine electrical generators increased as the result ofoffering Active Power Co., Ltd.’s specifications and cogeneration systems, and the start of unit deliveries. The delivery of units to
the Shin Akabira Mine owned by Sumitomo Coal Mining Co., Ltd. in particular, which is the first “multi-pack” micro-turbine
system to be installed in Japan, is expected to produce more business in the future.

(2) Outlook for the next fiscal year (Business period ending October 2002)〔Business environment 〕
The details of the Koizumi administration’s reform concepts, which were announced in the phrase “structural reform with nosanctuaries,” are gradually becoming clearer. Sectors being emphasized are IT, urban renewal, the environment, the aging ofJapan’s population and shrinking youth population, education, science and technology and regional revitalization. The strength ofvarious forces arrayed against reforms is also strong, however, and it is impossible to predict how public sentiment will change
when the pain accompanying the progress of the reforms becomes evident. It will be difficult to avoid reductions in public
spending, however, and the construction industry and related industries are projected to be greatly effected. The Koizumi
administration has also made a public promise to quickly dispose of the non-performing loan problems at Japan’s financial
institutions, a large proportion of which are loans to general construction companies and real estate-related businesses. Thismeans detailed attention to credit management will be vitally important, because the clean-up of loans to firms that cannot
reduce their liabilities through rationalization of operations can be expected to proceed quickly.
In order to reduce their assets and maintain earnings, construction firms facing this type of situation will undoubtedly utilize
construction equipment rentals even more than they have in the past. This means the rental industry still has substantial roomfor growth. Nevertheless, the severity of the competition to determine the survivors in the construction equipment rental industry
is growing more intense. Maintaining future growth will require appropriate management efforts and solid financial strength.
Although public spending will be curtailed, urban renewal has been cited by the Koizumi administration as one sector foremphasis. For Kanamoto Company this means that growth in the Tokyo metropolitan area will be a critically important futureissue.

〔Company response (including consolidated subsidiaries)〕
Kanamoto will focus on maintaining the profitability of its construction equipment rental business, which is the Company’s theprimary business, and will seek to strengthen the division’s marketing. The Company will simultaneously proceed to rationalize
its operations and equipment in order to enhance its low-cost operations. Priority for opening new branch offices will be placed on
the Tokyo metropolitan area.
On November 1, 2001, Kanamoto opened its Hassumu Mega-Station, a large (total area 32,456m 2) multi-use facility located in
Hassumu in Sapporo, Hokkaido. In addition to housing the Sapporo sales office of the Company’s Steel Sales Division and the
Sapporo Equipment Center for the Construction Equipment Rental Division, the Sapporo sales offices of Assist Co., Ltd and SRG
Kanamoto and the Company’s parts center are also located at the facility. Kanamoto plans to use the facility to conduct sales
operation for the group as a whole. For the Steel Sales Division in particular, the facility consolidates and centralizes the threesales offices for Sapporo, Muroran and Tomakomai in Sapporo, where the metropolitan and surrounding areas account for thebulk of demand for steel in Hokkaido. The Company intends to use the facility to engage in strong sales linked with construction
equipment rentals.
With regard to the Company’s consolidated subsidiaries as well, there are many alliance partners for the company’s main
operations in the construction equipment rental business. Kanamoto plans to further create alliances and unify operations, inorder to improve operating efficiency.
In addition to the products it already handles, the Company’s Computer and Peripheral Equipment Rental Division will newly
Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.7

commercialize and market KISARA, the VoIP Internet telephone product developed by Soft Front Inc., a company with strong ties
to Kanamoto through the Company’s venture business support activities. In other areas, Kanamoto will continue its efforts to
expand sales of Capstone Corporation’s micro-turbine electrical generators.

〔Projected consolidated operating results for the fiscal year ending October 2002〕
During the current business period the Company nearly completed its shift to low -gas emissions equipment. As a result, theCompany anticipates that revenues will decline because this will sharply reduce sales of used equipment. Total revenues for the
next fiscal year are projected to be ¥65,500 million, 2.7% lower than in the fiscal year ended on October 31, 2001.
Furthermore, from a long -term perspective the Company projects a higher level of depreciation expense as a result of its
aggressive introduction of rental assets, and forecasts ordinary income will be ¥1,530 million (53.0% lower than in the prior fiscal
year).
Because it will not incur the extraordinary loss that accompanied the change to accounting for post-employment benefits, however,
the Company projects net income for the coming fiscal year will be ¥700 million, 48.3% higher than in the fiscal year just ended.

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.8

III Consolidated Financial Statements
1. Consolidated Balance Sheets

PeriodCategory(Amounts less than ¥1 thousand have been rounded down)Prior consolidated accounting
fiscal year
(As of October 31, 2000)

Current consolidated
accounting fiscal year
(As of October 31, 2001)

Changefrom prioryear（Assets）
Current Assets
Cash and deposits

16,432,624

15,996,639- 435,984

Notes and trade accounts receivable

23,331,420

25,807,750

2,476,330

Negotiable securities

746,755

114,440- 632,315

Inventory

826,210

1,117,400

291,190

3,691,573

2,931,588- 759,984

Deferred tax assets

103,282

230,232

126,950

Other current assets

434,903351,760- 83,143

Allowance for doubtful accounts- 173,786- 324,938- 151,152

Construction equipment

Total Current Assets

45,392,983

43.9%

46,224,874

43.3%

831,890

Fixed Assets
Tangible fixed assets
Rental equipment

18,825,832

19,820,577

994,744

Buildings and structures

8,384,950

8,163,141- 221,809

Machinery, equipment and delivery
equipment

1,401,100

1,300,205- 100,894

Land

24,181,603

24,396,831

215,227

Construction in progress

338,959

58,896- 280,062

Other assets

228,985

231,088

2,102

Total Tangible Fixed Assets

53,361,432

51.6%

53,970,740

50.6%

609,307

Intangible Fixed Assets
Other assets
Total Intangible Fixed Assets

62,65862,65884,251
0.1%

84,251

21,5920.1%

21,592

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.9

PeriodCategory(Amounts less than ¥1 thousand have been rounded down)
ChangeCurrent consolidated
from prioraccounting fiscal year
year
(As of October 31, 2001)

Prior consolidated accounting
fiscal year
(As of October 31, 2000)

Investments and Other Assets
Investment securities

2,960,312

3,789,391

829,079

Deferred tax assets

485,310

1,567,069

1,081,759

Other

1,380,019

1,449,550

69,531

Allowance for doubtful accounts- 230,181- 446,847- 216,665

Total Investments and Other Assets

4,595,461

4.4

6,359,165

6.0

1,763,704

Total Fixed Assets

58,019,552

56.1

60,414,156

56.7

2,394,604

Total Assets

103,412,535

100.0

106,639,030

100.0

3,226,495（Liabilities）
Current Liabilities
Notes and accounts payable, trade

11,696,005

12,620,598

924,592

Short-term bank loans

4,726,615

510,053- 4,216,562

Long-term bank loans due within one
year

7,793,285

7,819,446

26,160

Corporate taxes payable

203,817

1,319,459

1,115,641

Accrued bonuses to employees

502,903594,688

91,785

Accounts payable, other

7,607,164

8,299,274

692,110

Other current liabilities

418,080

763,794

345,714

Total Current Liabilities

32,947,871

31.9

31,927,314

29.9- 1,020,557

Long-term Liabilities
Straight bonds

5,277,692

5,277,692-

Convertible bonds

9,796,000

9,281,000- 515,000

Long-term bank loans

13,230,142

14,547,095

1,316,953

Accrued employees retirement benefit-

2,008,761

2,008,761

Retirement allowances to directors
and auditors

287,454

282,426- 5,028

Long-term accrued expenses

11,023,476

12,405,133

1,381,656

Total Long-term Liabilities

39,614,765

38.3

43,802,108

41.1

4,187,343

Total Liabilities

72,562,637

70.2

75,729,422

71.0

3,166,785

68,261

0.1

66,601

0.1- 1,660（Minority Interest）
Minority interest

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.10

(Amounts less than ¥1 thousand have been rounded down)
PeriodCategory

Prior consolidated accounting
fiscal year
(As of October 31, 2000)

Current consolidated
accounting fiscal year
(As of October 31, 2001)

Changefrom prioryear（Shareholders’ Equity）
Common stock

8,591,481

8.3

8,596,737

8.1

5,256

Additional paid-in capital

9,715,111

9.4

9,720,343

9.1

5,232

12,484,124

12.1

12,395,900

11.6- 88,224--

140,5350.1

140,535

30,790,717

29.8

30,853,516

28.9

62,799

- 165

- 0.0

- 537

- 0.0

- 372

- 8,915- 0.0- 9,973- 0.0- 1,057

Total Shareholders’ Equity

30,781,636

29.8

30,843,006

28.9

61,369Total Liabilities, Minority Interest andShareholders’ Equity

103,412,535

100.0

106,639,030

100.0

3,226,495

Consolidated retained earnings
Valuationdifference
investment securities

on

other

Total Shareholders’ Equity
Treasury stock
Parent company
subsidiaries

stock

held

by

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.11

2. Consolidated Statements of Income
PeriodCategory(Amounts less than ¥1 thousand have been rounded down)Prior consolidated accounting
fiscal year
(From November 1, 1999 to
October 31, 2000)

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

Changefrom prioryear

Revenues from operations
Rental revenues

40,376,456

41,839,605

1,463,149

Sales

21,620,128

25,506,819

3,886,691

Total revenues from operations

61,996,584

100.0

67,346,425

100.0

5,349,840

Cost of revenues from operations
Cost of rental revenues

29,407,688

31,189,827

1,782,139

Cost of goods sold

17,426,785

19,986,164

2,559,379

Total cost of revenues

46,834,473

75.5

51,175,992

76.0

4,341,519

Gross profit

15,162,111

24.5

16,170,432

24.0

1,008,320

Selling and administrative expenses

12,119,518

19.6

13,298,018

19.7

1,178,499

Operating income

3,042,592

4.9

2,872,413

4.3- 170,179

Non-operating revenue
Interest revenue

47,972

17,257- 30,714

Dividend income

39,48622,190- 17,295

Gain on sale of negotiable securities

128,873-- 128,873

Gain on sale of investment securities-

376,299376,299

224,685

242,730

18,045211,014

256,066

45,052

1,425-- 1,425

123,975

177,869

53,894

Insurance benefits
Rents
Consolidation
write-offOtheradjustment

account

Total non-operating revenues

777,433

1.3

1,092,413

1.6

314,980

Non-operating expenses
Interest expense

627,344544,075- 83,268

Valuation loss on negotiable securities

197,066-- 197,066

Bond issue expense

147,500-- 147,500

Contribution to pension plan

159,724-- 159,724

Other

139,474

163,512- 24,038

Total non-operating expenses

1,271,109

2.1

707,587

1.1- 563,521

Ordinary income

2,548,916

4.1

3,257,239

4.8

708,322Extraordinary profit
Adjustment of prior period profit or loss
Gain on sale of fixed assets
Guarantee of moving expenses
Gain on sale of investment securities
Other
Total extraordinary profit

42,5962,256- 40,339

205

4,178

3,972

131,462

24,782- 106,679

1,561

-

- 1,561

-

1,934

1,934

175,825

0.3

33,1510.0- 142,673

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.12

(Amounts less than ¥1 thousand have been rounded down)
PeriodCategory

Prior consolidated accounting
fiscal year
(From November 1, 1999 to
October 31, 2000)

Current consolidated
accounting fiscal year
(From November 1, 20000 to
October 31, 2001)

Changefrom prior
year

Extraordinary loss
Loss on sale or retirement of fixed
assets

199,694

101,886- 97,807

Valuation loss on investment securities

16,351

126,450

110,098

Money transferred to reserve for accrued
employees retirement benefit-

1,982,023

1,982,023

Other

-

55,34055,340Total extraordinary loss

216,0460.4

2,265,701

3.4

2,049,654

Income before taxes and adjustments

2,508,695

4.0

1,024,690

1.5- 1,484,005

Corporate, local and business taxes

1,242,998

2.0

1,883,570

2.8

640,571

Adjustment for corporate and other taxes- 51,884- 0.1- 1,308,431- 1.9- 1,256,546

Minority interest loss

42,8290.1

23,1350.0- 19,694

1,360,411

2.2

472,686

0.7- 887,724

Net income

3. Statements of Consolidated Retained Earnings
Period(Amounts less than ¥1 thousand have been rounded down)

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

Change fromprior year

11,704,914

12,484,124

779,210

Dividends

566,500

544,311- 22,189

Directors and auditors’ bonuses

14,70016,6001,900(1,200)(1,700)(500)

581,200

560,911- 20,289

Net income for the period

1,360,411

472,686- 887,724

Balance of consolidated retained
surplus at the end of the period

12,484,124

12,395,900- 88,224

Category
Balance of consolidated retained
surplus at the beginning of the period
Reduction in consolidated retained
earnings(Auditors’ bonuses)
Total reduction in consolidated retained
earnings

Prior consolidated accounting
fiscal year
(From November 1, 1999 to
October 31, 2000)

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.13

4. Consolidated Statements of Cash Flows
PeriodCategory(Amounts less than ¥1 thousand have been rounded down)Prior consolidated accounting
Current consolidated
fiscal year
accounting fiscal year
Change from
(From November 1, 1999 to(From November 1, 2000 toprior year
October 31, 2000)
October 31, 2001)

Cash flow from operating activities
Net
incomebeforetaxes
andadjustments
Depreciation and amortization e xpense

2,508,695

1,024,690- 1,484,005

8,925,928

9,486,358

560,430

Amortizationof
consolidated
adjustment accountGain on sale of fixed assets- 1,425

−

1,425

- 205

- 4,178- 3,972

Loss on disposal of fixed assets

199,694

101,886- 97,807

Profit from adjustment of prior period
profit or loss
Installment purchases of assets forsmall-value rentals
Reclassification of cost of sales
associatedwithdisposalof
Reclassification of cost of sales
associated with disposal of rental
Expenditures
for acquisition of rental
assetsassetsValuation loss on negotiable securities- 41,232- 1,618

39,614477,179

361,621- 115,557

100,156

134,927

34,770784,842

1,193,637

408,795- 909,340- 295,556

613,784

197,066−- 197,066

Valuation loss on investment securities

16,351

126,450

110,098

Gain on sale of negotiable securities- 128,873−

128,873

Gain on sale of investment securities- 1,561- 376,299- 374,738

Bond issuance expense

147,500−- 147,500

Gain on redemption of bonds- 28,358- 8,143

20,21577,840367,817289,977

23,486

91,78568,299−2,008,761

2,008,761

8,653- 5,028- 13,681- 87,458- 39,448

48,010287,428

299,831

12,402

627,344544,075- 83,268

2,118,674- 2,476,330- 4,595,005

96,860- 291,190- 388,050

Decrease in accounts payable, trade- 640,466

901,119

1,541,585

Decrease in accounts payable, other- 452,636

487,864

940,501

Directors and auditors’ bonuses paid

- 14,700- 16,600- 1,900

Other- 260,986

426,291

687,277

14,030,456

14,042,726

12,27087,45839,448- 48,010- 904,592- 844,586

60,005- 2,597,030- 767,928

1,829,101

10,616,292

12,469,659

1,853,366

Increase in allowance for doubtful
accounts
Increase in accrued bonuses to
employees
Increasein accrued employees
retirement benefit
Increase in retire ment allowances todirectors and auditors
Interest revenue and dividend income
Interest expense on installment
purchases of rental assets
Interest expense
Decrease in accounts receivable, trade
Decrease in inventory assets

SubtotalInterest and dividends received
Interest expense
Payment of corporate and other taxes
Cash flow from operating activities

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.14

(Amounts less than ¥1 thousand have been rounded down)
PeriodCategory

Prior consolidated accounting
fiscal year
(From November 1, 1999 to
October 31, 2000)

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

Change fromprior year

△5,506△4,2331,273

200,000

9,129△190,870△3,034,898−

3,034,898

3,145,151−△3,145,151△1,445,974△1,073,093

372,880

3,510

122,249

118,739△14,710△28,669△13,959△814,647△2,772,134△1,957,487

243,454

3,066,275

2,822,821△140,234△82,439

57,79537,500−△37,500△1,826,355△762,916

1,063,438△3,975,710△4,216,562△240,852

7,762,200

10,136,450

2,374,250△7,909,668△8,793,335△883,667

4,852,500−△4,852,500△310,642△506,857△196,215

44,137

10,488△33,649△8,441,391△8,242,273

199,118

20,0183,153△16,865△19,211△3,525

15,686△565,352△544,311

21,040△1,750

−

1,750

−

20,00020,000−△1,057△1,057△8,544,869△12,137,831△3,592,961

245,067△431,088△676,155

16,177,328

16,422,395

245,067

16,422,395

15,991,306△431,088

Cash flow from investing activities
Disbursements for investments in term
deposits
Revenue from redemption of term
deposits
Funds used for purchase of negotiablesecurities
Funds provided from the sale ofnegotiable securities
Funds used for the purchase of
tangible fixed assets
Funds provided from the sale oftangible fixed assets
Funds used for the purchase ofintangible fixed assets
Funds used for the purchase ofinvestment securities
Funds
provided
from
sale
of
investment securities
Funds
used
for
purchaseof
investments
Funds provided from repayment ofloans
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 provided from the issue ofstraight bonds
Funds used for redemption of straightbonds
Funds provided from the issue ofcommon stock
Funds used for repayment of
installment obligations
Funds provided from the sale oftreasury stock
Funds used for the purchase oftreasury stock
Payment of dividends to parent
company
Payment of dividends to minority
interest shareholders
Funds provided from the issue ofstock 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 cash and equivalents at endof the interim period

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.15

5. Significant Accounting Policies for the Consolidated Financial Statements(1) Companies included in the consolidation
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. and Polyshield Services Co., Ltd. havebeen excluded from consolidation because their total assets, sales, profit or loss and retained earnings are small in size anddo not have a material effect on the consolidated financial statements.

(2) Matters pertaining to application of equity method accounting
The Company’s investments in two unconsolidated companie s and in Newtech Co., Ltd., and two other affiliatedcompanies have been omitted from items to which equity method accounting is applied because their respective effect on
consolidated net income or loss and consolidated retained earnings is immaterial and none of these companies is importantto the Company’s overall operations. All of these companies have been valued using the cost method.

(3) Matters pertaining to the fiscal year for consolidated subsidiaries
The fiscal year-end for 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 for significant transactions
that have occurred between the subsidiaries’ fiscal year-end and the consolidation date that have a material effect on the
consolidated financial results.

(4) Accounting principles and standards used for normal accounting treatment① Appraisal standards and appraisal methods for principal assets
a. Negotiable securities
Securities with a market price
The Company has adopted the market value method (the full amount of the valuation difference is charged toequity using the direct transfer to capital method, with the disposal cost determined by the moving averagemethod) based on the market price on the accounting period closing date or similar prices
Other negotiable securities
The Company has adopted the cost method, cost being determined by the moving average method
b. Construction equipment
Amount after deduction of depreciation expense calculated according to the declining-balance method from theoriginal prices, by separate fiscal year of purchase.
c. Merchandise inventories and supplies
Merchandise inventories ･･･････････ Lower of cost or market based on the Last-in, First-out method
Supplies ････････････････････････ The Latest Purchase Cost method② Depreciation methods for principal depreciable assets
a. Tangible fixed assets
The Company has adopted the declining-balance method. Furthermore, for some consolidated subsidiary companies theCompany has adopted the straight-line method for buildings acquired on or after April 1, 1998 (excluding equipment
installed in buildings).
The useful lives mainly used by the Company are as follows:
Rental assets
5-10 years
Buildings and structures
10-34 years
b. Intangible fixed assets
Software acquired for the Company’s internal use is depreciated using the straight-line method based on the assumed
useful life for internal use (5 years).
③ Accounting standards for principal allowances and reserves
a. Allowance for doubtful accounts
To provide for losses on doubtful accounts such as accounts receivable, the Company charges to income an amountbased on actual loss experience for normal accounts, plus an amount for projected unrecoverable amounts based on
assessments of individual accounts.

b. Accrued bonuses to employees
Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.16

To fully provide for expenditures of bonuse s the Company will pay to employees, an amount is appropriated to thereserve for the current year liability based upon a salary estimated amount.
c. Accrued employee retirement benefit
The Company provides for employees’ accrued retirement benefits based upon the projected amounts of the liability for
accrued retirement benefit and pension assets at the end of the consolidated accounting year. Furthermore, the fullamount of th e one-time difference for change in accounting standards (¥1,982,023,000) was charged to income at theend of the current consolidated accounting year. The difference based on an actuarial calculation is charged to income
beginning in the following consolidated accounting fiscal year 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
The Company provides for retirement allowances to directors and auditors based upon pertinent rules andappropriates amounts proportionately to the account based upon length of service.
④ Accounting treatment for lease transactions
For finance lease transactions except for leases that transfer ownership of the property to the lessee, rent expenses arecharged to income as payments are made.
⑤Hedge accounting for principal hedging methods
a. Hedge transactions
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.
b. Hedge methods and hedged transactions
The Company uses currency swaps and forward transactions in order to avoid the currency fluctuation risk related to
the Company’s foreign currency-denominated straight bonds and liabilities for import payments. The Company alsouses interest swaps to avoid interest rate fluctuation risk related to interest on bank borrowing.
c. Hedging policies
The Company’s use of derivative transactions is limited to hedging risk within the scope of the Company’s assets andliabilities subject to market fluctuation risk.
d. Method for evaluating the effectiveness of hedges
The Company does not evaluate the effectiveness of its hedge transactions, because it can assume that its currency
swap transactions and forward transactions will completely offset market fluctuations or changes in cash flow from thetime hedge begins until it is terminated. In addition, the Company’s interest swap transactions fulfill the requirements
for special rule accounting, and the Company has elected to use this in place of an evaluation of effectiveness.
⑥ Other important matters that are the basis for creation of the consolidated financial statements
Accounting treatment for consumption tax
Consumption tax is taken out of all Statement of Income items and Balance Sheet items, except mainly forreceivables and payables.

(5) Valuation of consolidated subsidiary assets and liabilities
The Company has adopted the market value appraisal method for the evaluation of assets and liabilities of consolidated
subsidiaries.

(6) Amortization of the consolidation adjustment account
As a general rule, the Company’s offsetting elimination s of the parent company’s investment account and thesubsidiaries’ capital accounts are based on the date of investment rule. The portion of the excess of cost over underlying
net assets at the date of investment resulting from the offset elimination for which the cause is not known is transferredto 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
which are written off completely in the year in which they occur.

(7) Appropriation of retained earnings
The Statement of Consolidated Retained Earnings is created based upon the appropriation of net income decided uponby the Company during the consolidated accounting fiscal year.

(8) Items included in cash and equivalents on the Consolidated Statement of Cash Flows
Funds included in cash (cash and cash equivalents) on the Consolidated Statement of Cash Flows include cash on hand,
Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.17

deposits that can be withdrawn on demand and highly liquid short-term investments that mature within three months ofthe date of acquisition and which can be easily converted into cash and that have minimal risk of a change in price.

(Supplemental information)①Accounting for employees retirement benefits
The Company has adopted the accounting standards for post-employment benefits (“Opinions on Setting Standards for
Post-employment Benefits,” Business Accounting Council, June 16, 1998) from the current fiscal year. As a result, theCompany’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 decreased by ¥2,008,761,000, compared to what they would have been
had the accounting standards used in the prior fiscal year been applied.
②Accounting for financial instruments
The Company has adopted the accounting standards for financial instruments (“Opinions on Setting Standards for
Financial Instruments,” Business Accounting Council, January 22, 1999) from the current fiscal year. As a result, theCompany’s ordinary income increased by ¥79,351,000 and income before taxes increased by ¥14,153,000 compared towhat they would have been had the accounting standards used in the prior fiscal year been applied.
In addition, the Company reviewed its holding objectives for negotiable securities held at the beginning of the fiscal
year, and has disclosed the securities included in other negotiable securities that mature within one year as negotiablesecurities 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 they would have been had the accounting standards used in the prior fiscal
year been applied.

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.18

6. Notes to the Financial Statements(Notes to the Consolidated Balance Sheets)
Prior consolidated accounting fiscal year
(As of October 31, 2000)

Current consolidated accounting fiscal year
(As of October 31, 2001)

1. Accumulated depreciation of tangible fixed assets¥49,288,766,000

1. Accumulated depreciation of tangible fixed assets¥46,638,798,000

2. Discount on notes receivable, trade

2. Discount on notes receivable, trade¥126,279,000

3. Balance of notes receivable – trade endorsed¥67,100,000
3. Balance of notes receivable – trade endorsed¥141,558,000¥167,213,000

4. Items pertaining to non-consolidated subsidiaries andaffiliated companies are as follows.

4. Items pertaining to non-consolidated subsidiaries andaffiliated companies are as follows.

Investment securities (stocks)

Investment securities (stocks)¥76,500,000(Straight bonds)¥230,500,000(Straight bonds)¥10,000,000
5. Assets offered as collateral security¥10,000,000
5. Assets offered as collateral security

Cash-----¥3,012,000

Buildings and structures¥230,911,000
Total¥233,924,000
The assets shown above have been pledged as collateral for¥18,995,000 of long-term bank loans due within one year and¥226,005,000 of long-term bank loans.
6. Guarantees

6. Guarantees

Joint and several guarantees of employee bank loans (Bankof Tokyo-Mitsubishi, others)

Joint and several guarantees of employee bank loans (Bankof Tokyo-Mitsubishi, others)¥25,398,000
Guarantee of debt for long-term bank loan (Daiichi KangyoBank) to affiliated company (Active Power Co., Ltd.)¥26,839,000
Guarantee of debt for long-term bank loan (Daiichi KangyoBank) to affiliated company (Active Power Co., Ltd.)¥280,000,000
Total¥350,000,000
Total¥305,398,000¥376,839,000

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.19

(Notes to the Consolidated Statements of Income)Prior consolidated accounting fiscal year
(From November 1, 1999
to October 31, 2000)

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

1. Major expense categories and amounts included inselling expense and administrative expenses.

1. Major expense categories and amounts included inselling expense and administrative expenses.

Employee salaries and wages

Employee salaries and wages¥4,596,035,000

Depreciation expense¥4,958,744,000
Depreciation expense¥1,108,982,000¥1,099,677,000

Rents

Rents

¥1,441,240,000
Amount transferred to allowance for doubtful accounts¥246,747,000
Amount transferred to accrued bonuses to employees¥502,903,000
Amount transferred to retirement allowances to directors
and auditors¥8,653,000¥1,421,216,000
Amount transferred to allowance for doubtful accounts¥573,957,000
Amount transferred to accrued bonuses to employees¥594,688,000
Employees retirement benefit expense¥440,050,000
Amount transferred to retirement allowances to directors
and auditors¥17,808,000

2. Details of the adjustment to prior period profit or loss

2. Details of the adjustment to prior period profit or loss

Amount received from adjustment of tax liability¥41,232,000
Recovery of bad debts¥971,000
Reduction in allowance for doubtful accounts¥392,000
Total¥42,596,000

Amount received from adjustment of tax liability¥1,618,000
Recovery of bad debts¥638,000
Total¥2,256,000

3. Loss on sale or disposal of fixed assets

3. Loss on sale or disposal of fixed assets

Vehicles and delivery equipment

Land¥205,000¥4,068,000
Buildings and structures¥109,000
Total¥4,178,000

4. Loss on sale or disposal of fixed assets(Loss on sale of fixed assets)
Buildings

4. Loss on sale or disposal of fixed assets(Loss on sale of fixed assets)
Buildings and structures¥18,716,000(Loss on disposal of fixed assets)
Rental assets

3,847,000
Machinery, equipment and delivery equipment¥818,000¥62,375,000
Buildings and structures¥19,908,000
Machinery, equipment and delivery equipment¥4,904,000
Golf club memberships¥92,930,000
Other¥858,000
Total¥199,694,000(Loss on disposal of fixed assets)
Rental assets¥85,707,000
Buildings and structures¥8,437,000
Machinery, equipment and delivery equipment¥1,551,000
Other¥1,524,000
Total¥101,886,000

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.20

(Notes to the Consolidated Statements of Cash Flows)
Prior consolidated accounting fiscal year
(From November 1, 1999
to October 31, 2000)

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

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

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

Cash and equivalents

Cash and equivalents¥16,423,624,000
Term deposits with a maturity longer than 3 months? ¥10,229,000
Cash and cash equivalents¥16,422,395,000¥15,996,639,000
Term deposits with a maturity longer than 3 months? ¥5,333,000
Cash and equivalents¥15,991,306,000

2. Details of major non-cash transactions(1) Conversion of convertible bonds to capital

2. Details of major non-cash transactions(1) Conversion of convertible bonds to capital------

Increase in capital from conversion of convertible bonds¥253,000,000
Increase in additional paid-in capital from conversion of
convertible bonds¥253,000,000
Decrease in convertible bonds from conversion¥506,000,000(2) The amount of assets and liabilities related to installment
transactions that are newly accounted for during thisconsolidated accounting fiscal year is ¥10,127,608
respectively.

(2) The amount of assets and liabilities related to installment
transactions that are newly accounted for during thisconsolidated accounting fiscal year is ¥9,701,009
respectively.

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.21

(Notes for leasing transactions)
Prior consolidated accounting fiscal year
(From November 1, 1999
to October 31, 2000)

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

1. Finance lease transactions except for leases that transfer
ownership of the property to the lessee.
(1) Amounts corresponding to lease property acquisition prices,
accumulated depreciation and outstanding balances at theend of the fiscal year accounting period.

1. Finance lease transactions except for leases that transfer
ownership of the property to the lessee.
(1) Amounts corresponding to lease property acquisition prices,
accumulated depreciation and outstanding balances at theend of the fiscal year accounting period.

Acquisition price (¥ ’000)
Accumulated depreciation (¥ ‘000)
Outstanding balance (¥ ‘000)

Acquisition price (¥ ‘000)
Accumulated depreciation (¥ ‘000)
Outstanding balance (¥ ‘000)

Rental assets

Rental assets¥16,688,293¥8,788,906¥7,899,386

Other tangible fixed assets¥14,913,569¥7,162,742¥7,750,826
Other tangible fixed assets¥775,954¥366,698¥409,255¥1,220,026¥563,453¥656,572

Total

Total
¥17,464,247¥9,155,605¥8,308,641¥16,133,596¥7,726,196¥8,407,399(2) Outstanding balance of future lease payments at the end of
the fiscal year(2) Outstanding balance of future lease payments at the end of
the fiscal year

Within one year

Within one year
¥2,654,146,000

After one year

¥3,264,160,000
After one year

¥5,490,558,000
Total¥5,323,430,000
Total¥8,144,704,000¥8,587,590,000(3) Amount of lease payments, depreciation expense andinterest expense(3) Amount of lease payments, depreciation expense andinterest expense

Lease payments

Lease payments¥3,095,716,000

Depreciation expense¥3,115,473,000
Depreciation expense¥2,834,121,000Interest expense¥2,837,451,000Interest expense¥292,721,000¥291,179,000(4) Accounting method for amount equivalent to depreciation
expense
Straight-line depreciation using the lease term as thedepreciable life and zero residual value.
(5) Accounting method for amount equivalent to interest
expenseInterest method using the difference between total lease
payments and the acquisition price of the lease property,
allocated equally to each year.
2. Operating leases
Future lease payments(4) Accounting method for amount equivalent to depreciation
expenseSame as at left

Within one year

Within one year

(5) Accounting method for amount equivalent to interest
expenseSame as at left

2. Operating leases
Future lease payments¥1,422,400,000
After one year

¥1,680,768,000
After one year

¥2,704,382,000
Total¥2,837,561,000
Total¥4,126,782,000¥4,518,329,000
Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.22

(Notes related to negotiable securities)
Prior accounting fiscal year (As of October 31, 2000)
Market value of negotiable securities(Unit: Yen thousands)
Prior consolidated accounting fiscal year
(As of October 31, 2000)
Type

Amount reported on the
consolidated balance sheet

Market value

Valuation profit orloss(1) Assets classified as current assets
Stocks479,035

477,964

Bonds

227,681

227,808

126

Other
Subtotal- 1,070

40,03839,188- 850

746,755744,961- 1,793

1,041,030

1,928,794

887,763(2) Assets classified as fixed assets
StocksBonds

38,33738,39254

Other1,000,578

771,210- 229,368

2,079,945

2,738,396

658,450

2,826,701

3,483,358

656,657

Subtotal
Total(Notes)Prior consolidated accounting year
(As of October 31, 2000)

1. Method used to calculate market value(1) Listed negotiable securities
Valued mainly on the basis of the final closing prices on theTokyo Stock Exchange(2) Over-the-counter negotiable securities
Valued on the basis of trading prices such as thosepublished by the Japan Association of Securities
Dealers(3) Beneficiary certificates for unlisted security investment
trusts are valued on the basis of each trust’s standard
valuation
2. Consolidated balance sheet valuation of negotiablesecurities that are excluded from disclosure requirements(Assets classified as fixed assets)
Unlisted stock except for over-the-counter stocks¥870,367,000
Corporate bonds with stock warrants attached (corporate
bonds of affiliated companies)¥10,000,000

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.23

Current consolidated accounting year
1. Other negotiable securities with a market value (As of October 31, 2001)(Unit: Yen thousands)
Amount shown on
the consolidatedbalance sheet

Valuation difference

838,578

1,520,394

681,815

a. Government & local
bonds, etc.

−

−

−

b. Corporate bonds

−

−

−

c. Other−−−(3) Other−−−

838,578

1,520,394

681,815

839,415

636,731- 202,683

Type

Acquisition price(1) Stocks(2）Bonds
Negotiable securities whosebalance on the consolidatedbalance sheet exceeds theacquisition price

Subtotal(1) Stocks(2）Bonds
a. Government & local
bonds, etc.

Negotiable securities whosebalance on the consolidatedbalance sheet is less than
the acquisition price−b. Corporate bonds−−

231,270

227,830- 3,440c. Other−−−(3) Other

1,032,448

797,813- 234,635

2,103,134

1,662,374- 440,759

2,941,712

3,182,768

241,056

Subtotal
Total

2. Other negotiable securities sold during the current con solidated accounting fiscal year
(November 1, 2000 – October 31, 2001)(Unit: Yen thousands)

Selling amount

Total gain on sale

1,806,471

Total loss on sale377,186887

3. Details of other negotiable securities that do not have a market value (As of October 31, 2001)
Type

Amount shown on the consolidated balance sheet

Other negotiable securities
Unlisted stocks (excluding over the counter stocks)¥470,510,000

Unlisted foreign bonds¥10,053,000

4. Planned future redemption amounts of other securities that have a maturity date
(As of October 31, 2001)
Type(Unit: Yen thousands)
Within one year

After one year andwithin five years

After five years andwithin ten years

After ten years

1. Bonds
−

−

−

−

114,440

113,390−−(3) Other

−

−

−

−

2. Other securities−

14,938763,705−

Total

114,440

128,328

763,705−(1) Government & local bonds(2) Corporate bonds(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
Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.24

benefit system as a defined benefit plan. In addition, when an employee retires or leaves the Company, in some cases theCompany 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(Unit: Yen thousands)

Current consolidated accounting fiscal year
(As of October 31, 2001)(1) Liability for accrued employees retirement benefit- 5,269,961(2) Pension assets

2,782,025(3) Liability for unreserved accrued employees retirement benefit (1) ＋(2)(4) Unamortized amount of the one-time valuation difference forchange in accounting standards- 2,487,936−(5) Unrecognized actuarial differences

479,176−(6) Unrecognized past service obligation (reduction in liability)(7) Net liability shown on the consolidated balance sheet (3)＋(4) ＋(5)＋(6)

- 2,008,761−(8) Prepaid pension expense(9) Accrued employees retirement benefit (7) ＋(8)- 2,008,761(Note) The Company’s consolidated companies have adopted the simple method for calculating the accrue d employees
retirement benefit.

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

Retirement benefit expense(1 Service costs

407,249(2) Interest costs

138,371(3) Expected return on plan investments (reduction)

105,570(4) Amount of one-time valuation difference for change in accounting
standards charged as an expense(5) Retirement benefit expense (1)＋(2) ＋(3)＋(4)1,982,023
2,422,074(Note) The retirement benefit expense of consolidated companies that have adopted the simple method is charged to service
costs.

4. Matters related to the basis for accounting for the accrued employees retirement benefit and other items
Current consolidated accounting fiscal year
(As of October 31, 2001)(1) Discount rate

3.00％(2) Expected rate of return on plan investments

4.00％(3) Method of allocating projected benefits to periods of service

Service period fixed benefit basis(4) Amortization period of past service liability−(5) Amortization period for actuarial differences

10 years(5) Number of years for amortization of one-time valuation difference forchange in accounting standards

１ yearFiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.25

(Notes related to tax effect accounting)Prior consolidated accounting fiscal year
(From November 1, 1999
to October 31, 2000)

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

1. Principal causes of deferred tax assets
Deferred tax assets (current)
Amount in excess of limit for accrued bonuses to employees¥68,370,000
Disallowance of deferred business taxes¥11,708,000
Other¥23,203,000
Total¥103,282,000
Deferred tax assets (fixed)
Disallowance of excess depreciation¥315,974,000
Amount in excess of limit for accrued retirement allowances
to directors and auditors¥119,868,000
Other¥49,467,000
Total¥485,310,000

1. Principal causes of deferred tax assets and deferred tax
liabilities
Deferred tax assets
Amount in excess of limit for inclusion in expense s forallowance for doubtful accounts¥139,048,000
Disallowance of deferred business taxes¥105,214,000
Amount in excess of limit for inclusion in expenses for
accrued employees retirement benefit¥836,513,000
Amount in excess of limit for accrued retirement allowances
to directors and auditors¥117,771,000
Amount in e xcess of limit for accrued bonuses to employees¥123,001,000
Disallowance of excess depreciation¥476,600,000
Amount of loss carried forward¥139,600,000
Other¥99,674,000
Deferred tax asset subtotal¥2,037,421,000
Valuation reserve- ¥139,600,000
Total deferred tax assets¥1,897,821,000
Deferred tax liability
Valuation difference on other negotiable securities- ¥100,520,000
Total deferred tax liability- ¥100,520,000
Net deferred tax assets¥1,797,301,000

2. Causes of principal differences between the statutory tax
rate and burden ratio for corporate and other taxes
following application of tax effect accounting, by major
category.

2. Causes of principal differences between the statutory tax
rate and burden ratio for corporate and other taxes
following application of tax effect accounting, by major
category.

Statutory corporate tax rate

Statutory corporate tax rate
41.7％

41.7％

(Adjustments)(Adjustments)

Local tax equalization

Local tax equalization

2.9％
Items not included permanently in losses such as expense
accounts
1.1％
Consolidated subsidiary losses
2.0％

7.8％
Items not included permanently in losses such as expense
accounts
2.6％
Consolidated subsidiary losses
4.4％

Other

Other
- 0.2％- 0.4％

Burden ratio for corporate and other taxes after applicationof tax effect accounting
47.5％

Burden ratio for corporate and other taxes after applicationof tax effect accounting
56.1％

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.26

IV

Business segment information

1. Segment information by type of businessPrior consolidated accounting fiscal year (From November 1, 1999 to October 31, 2000)(Unit: Yen thousands)

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

Construction
equipment
rentalbusiness

Steel sales
business

Computerandperipheral
equipment
and otherbusinesses

52,750,998

7,913,856

1,331,730

Eliminations
or entirecompany

Consolidated

61,996,584−

61,996,584

Total

−

−

−

−

−

−

Total
Operating expenses

52,750,998
49,824,402

7,913,856
7,786,326

61,996,584
59,003,353−- 49,361

61,996,584
58,953,992

Operating income

2,926,596

127,530

1,331,730
1,392,625? 60,895

2,993,231

49,361

3,042,592

II. Assets,
depreciation expenseand capital disbursements
AssetsDepreciation expense
Capital disbursements

74,087,494
8,749,672
10,310,902

3,957,846
140,073
2,148

1,797,710
36,181
3,405

79,843,051
8,925,928
10,316,457

23,569,484−

103,412,535
8,925,928
10,626,212

309,754(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
Construction
rentals

equipment

Steel sales
Computers and peripherals
and other businesses

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

equipment,

3. The total amount for assets that were eliminated or included in the categories for all companies was ¥23,569,484,000 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.

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.27

Current consolidated accounting fiscal year (From November 1, 2000 to October 31, 2001)(Unit: Yen thousands)
Construction
equipment
rentalbusiness

Steel sales
business

Computerandperipheral
equipment
and otherbusinesses

57,613,533

8,341,786

1,391,105

−

−

Total
Operating expenses

57,613,533
55,054,767

Operating income
II. Assets,
depreciation expenseand capital disbursements
AssetsDepreciation expense
Capital disbursements

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

Eliminations
or entirecompany

Consolidated

67,346,425−

67,346,425

−

−

−

−

8,341,786
8,194,171

1,391,105
1,364,354

67,346,425
64,613,292−- 139,281

67,346,425
64,474,011

2,558,766

147,615

26,7502,733,132

139,2812,872,413

76,592,085
9,455,330
10,044,569

3,969,760
12,563895

1,438,888
18,463621

82,000,734
9,486,358
10,046,085

24,638,295−
458,204

106,639,030
9,486,358
10,504,289

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

Principal products

Steel sales

Construction equipment such as hydraulic shovels, generators, temporary
construction materials, construction safety equipment, temporary modular housing
units, special rustproof and waterproof shields
Steel bar, sheet steel, steel products such as round bar, steel scrap

Computers and peripherals
and other businesses

Computers and peripheral devices,micro-turbine generators, microbrewery

Construction
rentals

equipment

telecommunications-related

equipment,

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.

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.

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.28

VI

Derivative contract amount, market value and valuation profit and loss
Prior consolidated accounting fiscal year (From November 1, 1999 to October 31, 2000)
From time to time Kanamoto Company utilizes interest rate and currency derivative transactions. The amounts of thesecontracts and the amounts equivalent to valuation profit and loss were very small. Details of the transactions have been
omitted because the amounts are deemed to be immaterial to the Company’s financial position.

Current consolidated accounting fiscal year (From November 1, 2000 to October 31, 2001)
The Company has adopted hedge accounting and did not record this information for the current consolidated accounting
fiscal year.

Transactions with affiliated parties

Ⅶ

Prior consolidated accounting fiscal year (From November 1, 1999 to October 31, 2000)
Directors and individual shareholders(Unit: Yen thousands)

Position

Name

Address

Capital or
financingWork or
responsibilities

Owned (Unowned)
percentage ofvoting rights, etc.

Concurrent
director’s
duties, etc.

BusinessrelationshipType of transaction

Amount oftransaction

Category

Balance at end of
periodDirectorTaichuKanamoto

Shibuya-ku,
Tokyo

−

Chairman(Unowned)
Direct5.5%−−

Commonstock
purchase

3,342

−

−

Director

KanchuKanamoto

Higashi-ku,
Sapporo−President(Unowned)
Direct1.5%−−

Commonstock
purchase

5,014

−

−

Director

SaburoKanamoto

Muroran,
Hokkaido−

SeniorAdvisor(Unowned)
Direct5.2%−−

Commonstock
purchase

3,342

−

−

Relationship(Note s) Transaction terms and conditions and policy for decisions on transaction terms and conditions
Stock purchase prices are determined based on the appraised price, with the terms of payment being a lump-sum
cash payment.

Current consolidated accounting fiscal year (From November 1, 2000 to October 31, 2001)
The Company did not have any transactions with affiliated parties during the current consolidated accounting fiscal year.

Fiscal Year Ended October 31, 2001
Consolidated Financial Statements
P.29