Semiannual Report

2002

For the six months ended April 30, 2002

CONTENTS
3

Financial Highlights

4

A Message from the President

6

Consolidated Balance Sheets

8

Consolidated Statements of Income

9

Consolidated Statements of Cash Flows
Segment Information
Outstanding Balance of Future Lease Payments (Consolidated)10

Non-Consolidated Balance Sheets

12

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

13

Management Indicators Data Graphs

14

TopicsBranch Network

15

Corporate Data

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,
2002

April 30,
2001

October 31,
2001

Millions of yen
April 30,2002

¥ 31,234
1,505
509
31,883
104,561¥ 64,295
2,771
518
31,034105,423¥ 29,977
1,551
748
31,438100,934$ 231,756
11,991
5,787
243,049
780,322

Yen

U.S. dollars (Note)¥ 16.84
9.00¥ 17.1418.00¥ 24.75
9.00$ 0.130.07

Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥128.35=US$1, the approximate exchange rate on April 30, 2002.

Rental Revenues and Sales of Goods

Operating Income(Millions of Yen)

75,000

4,092

61,03060,58457,95445,0004,000

64,29560,000(Millions of Yen)

5,000

3,000

1,551

1,505

2,036

1,777

29,97831,23529,45329,338

0

0
98

99

00

01

02

Net Income

98

99

00

01

02

Net Income per Share(Millions of Yen)

2,000

1,727

1,985

1,500

(Yen)

100

75

68.01

1,455

1,306

1,000

1,000

2,771

3,105

2,000

28,77415,000

2,350

2,922

30,000

58.95
48.66

50

994

749

1,022

12 months ended

44.75
35.01

25

500

33.56

518
509

6 months ended

17.14
24.75
16.84

0

0
98

99

00

01

02

98

99

6 months ended April 30

00

01

02

12 months ended October 31

Semiannual Report 2002 3

A

M e s s a g e

f r o mt h e

P r e s i d e n t

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

and the local community. The Company undertakes its businesses
based on a fundamental management policy embodied in thephrase, “constantly seek innovation and move forward based on a
spirit of independence and self-reliance.”
The Company’s group will further strengthen consolidated groupmanagement 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.

2. Basic policies concerning distribution of earnings
Businesses related to the Construction Equipment Rental
Division
The Company’s rental division, together with Taniguchi Co., Ltd.
(a subsidiary company), Daiichi Machine Industries Co., Ltd. (asubsidiary company) and Kanamoto Shikoku Co., Ltd. (a nonconsolidated subsidiary company), is engaged in the rental and saleof construction equipment and machines used for construction.
These three subsidiary companies operate in designated marketingareas and borrow rental equipment assets from the Company asneeded in order to meet customer demand.
SRG Kanamoto Co., Ltd. (a subsidiary company) operates a rental
business that provides temporary materials for construction use.
Assist Co., Ltd. (a subsidiary company) is engaged in the rental andsale 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. (asubsidiary 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.

In order to ensure the long-term, integrated expansion ofshareholders’ profits, Kanamoto Company continues to focus
comprehensively on both capital investments based on its mediumterm profit plan and on profitability, dividend trend and a soundfinancial position. The Company also remains committed to its
policy of stable dividend growth.
To accomplish these goals, Kanamoto Company focuses on theimportance 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 andmarkets, the Company believes it has adopted an appropriate
position with regard to its investments and has no plans to reduce its
positions at this time. The Company will continue to flexibly
examine its activities, however, in accordance with the distributionof future investment positions.

3. Medium to long-term corporate management strategy
In its principal business of construction equipment rentals, theCompany is continuing to implement to the extent possible thefollowing two business strategies, together with other firms that arerecognized as being the leading companies in their own businesses.

Businesses related to the Steel Sales Division

 Increase the efficient utilization of its rental assets through its

The Company’s Steel Sales Division sells steel products andconstruction-related manufactured goods. The Company has no
subsidiaries or affiliated companies related to this division.

strategy of building a dominant network in existing sales territories,
by opening a greater number of small-scale branch offices
 Expand its business base by constructing an alliance group ofbusiness partners in regions such as western Japan, where theCompany has not previously built its own sales branches

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

1. Basic policies concerning business management
Kanamoto Company’s basic mission is to achieve successful
performance that produces maximum satisfaction for all
stakeholders of the Company, including customers, shareholders
4 Semiannual Report 2002

By continuing to pursue this strategy, the Company has created agroup of firms that employs more than 1,300 individuals and has
achieved an expansionary trend that will provide future growth.
Nevertheless, any increase in the number of offices and employees
brings a danger of succumbing to so-called “big company
syndrome,” where a company’s organization becomes inflexible oremployee morale stagnates. In order to avoid this result, based on
the new “Kanamoto Survival Plan” Three-Year Plan initiated in
November 2001, Kanamoto Company will strengthen its internalmanagement systems in the following areas.
Among these objectives, Kanamoto will promote further
improvements in business efficiency and greater operating
efficiency for its rental assets by taking maximum advantage of theonline network linking all of the Company’s branches. This systemprovides the underlying structure of the Company’s operations, andis more advanced and vastly superior to similar efforts at othercompanies in the industry.

Under this new system, Kanamoto is aggressively appointing
promising young employees as on-site managers of the Company’s
136 branch offices.
Administrative divisions･Build risk management systems･Review management systems･Review personnel systems･Obtain higher debt rating

Achieve low-cost
operation

Sales divisions

5. Issues to be addressed by the Company･Strengthen alliances･Dominate sales regions･Scrap and build･Implement results-oriented･approachBecause of the pressure on construction companies to lower rental
unit prices that has accompanied recent public works spending cuts,
the construction equipment rental industry is experiencing
deteriorating profit margins. In order to maintain its growth in theface of this environment, Kanamoto must continue to introduce
equipment to meet the demand for renewal construction (bridge
inspection vehicles) and the most up-to-date equipment such as
specialized equipment (large-scale electrical generators or ground
improvement equipment) that competitors cannot make available.
In addition, the Company must also build an organization that candeliver this equipment to users throughout Japan and differentiate
Kanamoto from other firms, through fast, accurate maintenance anda responsive asset quality assurance system.
Because such differentiation also runs the risk leading to higher
costs, however, as mentioned earlier Kanamoto has drafted a“Kanamoto Survival Plan” Three-Year Plan, which the Company
will implement beginning from November 2001. With this plan
Kanamoto seeks to achieve a low-cost operation without sacrificing
service quality, by lowering its purchasing costs through planned
rental asset purchases and reviewing and reducing all expenditures.

Under its scrap and build policy, Kanamoto has adopted a proactive
system to promptly close unprofitable branches that do not satisfy
the Company’s prescribed standards and shift its human resources
and rental assets to regions with higher needs. Kanamoto’s policy is
to place priority on opening branches that can rapidly attainprofitability. Specifically the Company has placed its greatest
priority on the Kanto region, particularly in the Tokyo area.
In addition, Kanamoto is taking steps to strengthen its alliancegroup. These include boosting business capabilities without regard
to whether a firm is a consolidated or non-consolidated company,
and enhancing tie-ups among the firms as a group. As part of thiseffort, Kanamoto made Daiichi Machine Industries Co., Ltd. (Headoffice: Kanoya, Kagoshima Prefecture), whose main sales territoryis the southern area of Kyushu, a subsidiary company in November
2001.
Finally, as its strategy in the finance and administrative division,
Kanamoto will continue to focus on improving its bond rating witha view of ensuring access to diverse, high-quality capital funding, inorder to improve and strengthen its financial position.

4. Changes to the Company’s management organizationand measures concerning corporate governance
To provide overall management for the Kanamoto group, theCompany holds a regular “alliance group meeting” that is attended
by the management of each group company. This meeting serves toensure a thorough understanding of the group’s business objectives
and management policies, and to provide each firm participating in
the group with a sense of harmony as well as independence. For
those companies subject to consolidation in particular, thesemeeting focus on improvements to the business development
capabilities of the entire group by strengthening the business ofeach respective firm and ensuring a solid financial base.
In January 2001, Kanamoto introduced a corporate officer system.
The Company took this step as a means to clarify responsibility forexecution of the Company’s business and speed up decisionmaking. In addition to consolidating the organizational frameworkin the Construction Equipment Rental Division and clarifying thesystem of responsibility in each region, the new system will
improve the communication function for top-down notification of
instructions such as management policies and provide a system forkeeping every employee well informed about the Company’s
policies.
The Company has also abolished the seniority system and replaced
it with an emphasis on ability and performance-based evaluations.

For its marketing efforts as well, Kanamoto will take maximum
advantage of its high-quality services and top-down system of
guidance created by the change in organization, in order toimplement systematic marketing from its sales force to top
management.
In the past, Kanamoto Company delayed opening branches in thelarge market provided by the Kanto region, particularly the Tokyo
metropolitan area, because of the problem of obtaining suitablebranch office sites. Over the coming years Kanamoto will focus on
the Tokyo metropolitan area as the most important businessterritory for new growth and proceed to build a sales office
network. While there are many competitors and achieving branch
profitability is expected to be challenging, the Company cananticipate suitable results because its branch network will be newly
constructed.
Kanamoto will also continue its venture business support activities,
in order to nurture new businesses that will follow the growth pathof its construction equipment rental business. Among thecompanies Kanamoto has invested in so far, microturbine electricalgenerators and VoIP (Internet telephony) technology show strong
promise.

Kanchu Kanamoto, President
June 2002

Semiannual Report 2002 5

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, 2002]ASSETS
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)¥ 15,780¥ 15,991¥ 20,624$ 160,686

278

120

592

4,614

Notes and accounts receivable, trade

24,04825,80820,439159,246

Inventories

1,368

1,118

959

7,472

Deferred income taxes

222

230

247

1,925

Other current assets

4,148

3,283

3,160

24,623

Less : Allowance for doubtful accounts

(200)

(325)

(401)

(3,124)45,644

46,22545,620355,442

Rental equipment

59,47356,322

52,392

408,195

Building and structures

14,503

14,883

15,216

118,548

Machinery and equipment

4,859

4,949

4,879

38,015(48,748)(46,639)(45,411)(353,804)

30,08729,51527,076

210,954

24,182

24,397

24,635

191,937

110

59

58

448

54,37953,971

51,769403,339

Investments in securities

4,561

3,789

3,745

29,180

Deferred income taxes

609

1,567

1,702

13,257

Other assets

1,567

1,534

1,628

12,685Less : Allowance for doubtful accounts

(579)

(447)

(607)

(4,726)

Total investments and other assets

6,158

6,443

6,468

50,396¥ 106,181¥ 106,639¥ 103,857$ 809,177

Current assets :Cash and cash equivalents
Short-term investments

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 ￥128.35=US$1, the approximate exchange rate on April 30, 2002.

6 Semiannual Report 2002

LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)

Short-term bank loans

¥ 517

¥ 510

¥ 750

$ 5,846

Current portion of long-term debt

14,715

15,24020,962

163,323

Notes and accounts payable, trade13,324

12,62010,72583,559Accrued income taxes

1,263

1,319

921

7,174

539

595

573

4,468

2,104

1,643

1,489

11,59732,462

31,92735,420275,967

Long-term debt

38,23340,04333,863

263,835

Accrued pension and severance costs

1,019

2,009

2,055

16,010

Other liabilities

2,608

1,750

920

7,167

41,86043,802

36,838287,012

108

67

170

1,324

Common stock

8,596

8,597

8,597

66,979Additional paid-in capital

9,720

9,720

9,720

75,733Retained earnings

12,71812,396

13,038

101,582

Net unrealized gains on securities

727

141

85

665

Treasury stock

(10)

(11)

(11)

(85)

31,75130,84331,429244,874¥ 106,181¥ 106,639¥ 103,857$ 809,177

Current liabilities :Accrued bonuses for employees
Other current liabilities
Total current liabilities

Non-current liabilities :Total non-current liabilities

Minority interests

Shareholders' equity :Total shareholders' equity

Semiannual Report 2002 7

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, 2002]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)

Rental revenues¥ 21,659¥ 41,839¥ 21,024$163,808

Cost of rentals

15,626

31,19015,327

119,418

Sales of goods

10,98225,507

11,59190,308

Cost of sales

8,679

19,986

8,847

68,930Gross profit

8,336

16,1708,441

65,768Selling, general and administrative expenses

6,698

13,298

6,745

52,558Operating income

1,638

2,872

1,696

13,210

27

40

11

87

Interest expenses

(294)

(544)

(242)

(1,885)

Others, net(360)(1,343)

259

2,023

1,011

1,025

1,724

13,435Current

1,231

1,883

866

6,750

Deferred(763)(1,308)

(111)

(865)

468

575

755

5,885

Income before minority interests

543

450

969

7,550

Minority interests in subsidiaries

20

(23)

38

296

¥ 523

¥ 473

¥ 931

$ 7,254

Yen

U.S.dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)Basic¥ 17.30¥ 15.64¥ 30.79$ 0.24

Diluted

14.20

13.89

24.32

0.19

Other income (expenses) :Interest and dividend income

Income before income taxes
Income taxes :Net income

Per share of common stock :Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥128.35=US$1, the approximate exchange rate on April 30, 2002.

8 Semiannual Report 2002

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, 2002]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)

Cash flows from operating activities¥ 7,870¥ 12,470¥ 8,708$ 67,847

Cash flows from investing activities

(269)

(763)

(617)

(4,807)

Cash flows from financing activities(8,243)(12,138)(3,458)(26,945)

(642)

(431)

4,633

36,095

16,422

16,422

15,991

124,591¥ 15,780¥ 15,991¥ 20,624$ 160,686

Eliminations
andcorporate
items

Consolidated

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
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, 2002 (Unaudited)]

Construction
relatedbusiness

Steel related
business

Information
andcommunication
related andother business

Total¥ 28,833$ 224,647¥ 3,158$ 24,601¥ 625$ 4,869¥ 32,616$ 254,117¥–$–¥ 32,616$ 254,117

¥–
$–

¥–
$–

¥–
$–

¥–
$–

¥–
$–

¥–
$–

¥ 28,833$ 224,647¥ 3,158$ 24,601¥ 625$ 4,869¥ 32,616$ 254,117¥–$–¥ 32,616$ 254,117

Operating expenses¥ 27,169$ 211,680¥ 3,169$ 24,687¥ 650$ 5,064¥ 30,988$ 241,431(¥ 67)($ 524)¥ 30,921$ 240,907

Operating profit¥ 1,664$ 12,967(¥ 11)($ 86)(¥ 25)($ 195)¥1,628$ 12,686

¥ 67
$ 524

¥ 1,695$ 13,210

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, 2002 ]Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)

Within one year

¥ 2,483¥ 3,264¥ 3,789$ 29,523

After one year

5,482

5,323

7,264

56,594

7,965

8,587

11,053

86,117

Within one year

1,428

1,681

1,616

12,593After one year

3,386

2,837

2,783

21,686¥ 4,814¥ 4,518¥ 4,399$ 34,279

Finance Leases

Total
Operating Leases

Total

Semiannual Report 2002 9

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, 2002]ASSETS
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)¥ 9,038¥ 8,282¥ 19,985$ 155,711

Time deposits

5,950

7,410

–

–

Notes receivable, trade

14,734

12,52011,376

88,632

Accounts receivable, trade

8,848

12,587

8,160

63,574

928

806

544

4,239

Other current assets

4,608

3,598

3,540

27,580Less : Allowance for doubtful accounts

(197)

(318)

(367)

(2,858)43,90944,88543,238336,878

Rental equipment

59,47356,321

51,120398,283

Buildings

10,504

10,766

10,876

84,736Structures

3,740

3,857

3,866

30,119Machinery and equipment

4,814

4,923

4,754

37,042(48,592)(46,491)(44,179)(344,206)

29,93929,37626,437

205,974

24,04324,25824,258

189,000

110

59

57

448

54,092

53,69350,752395,422

Investments and other assets

7,140

7,292

7,551

58,828Less : Allowance for doubtful accounts

(579)

(447)

(607)

(4,726)

Total investments and other assets

6,561

6,845

6,944

54,102¥ 104,562¥ 105,423¥ 100,934$ 786,402

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 ￥128.35=US$1, the approximate exchange rate on April 30, 2002.

10 Semiannual Report 2002

LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)¥–¥–¥ 5,278$ 41,120

Current portion of long-term bank loans

7,851

7,755

8,115

63,226

Notes payable, trade

10,338

9,151

7,831

61,011

Accounts payable, trade

1,856

2,647

1,695

13,205

Notes payable, other

375

422

215

1,675

Accounts payable, other

8,348

8,284

8,105

63,145

Accrued income taxes

1,234

1,290

898

6,998

Accrued bonuses for employees

524

575

553

4,306

Other current liabilities

530

722

682

5,322

31,05630,84633,372260,008

Straight bonds

5,278

5,278

–

–

Convertible bonds

9,733

9,281

7,754

60,413Long-term bank loans

13,076

14,305

16,336

127,277

Long-term accounts payable, other

12,24812,3999,816

76,476

Accrued pension and severance costs

1,015

1,998

2,042

15,912

273

282

176

1,373

41,62343,54336,124281,451

8,596

8,597

8,597

66,979

–

9,720

9,720

75,733

Legal reserve

9,720

1,372

1,372

10,693Retained earnings

1,345

11,205

11,66590,881

Net unrealized gains on securities

11,495

141

85

665

727

(1)

(1)

(8)

31,88331,03431,438244,943¥ 104,562¥ 105,423¥ 100,934$ 786,402

Current liabilities :Current portion of straight bonds

Total current liabilities

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

Shareholders' equity :Common stock
Additional paid-in capital

Treasury stock
Total shareholders' equity

Semiannual Report 2002 11

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, 2002]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)

Rental revenues¥ 21,143¥ 41,456¥ 19,925$ 155,242

Cost of rentals

15,47031,303

14,762

115,017

Sales of goods

10,092

22,84010,05278,320

Cost of sales

7,900

17,5707,467

58,179Gross profit

7,865

15,423

7,748

60,366

Selling, general and administrative expenses

6,360

12,652

6,197

48,281

Operating income

1,505

2,771

1,551

12,085

27

40

8

62

Interest expenses

(284)

(524)

(227)

(1,768)Others, net(300)(1,215)

145

1,131

948

1,072

1,477

11,510Current

1,202

1,854

843

6,574

Deferred(763)(1,300)

(115)

(896)

439

554

728

5,678

¥ 509

¥ 518

¥ 749

$ 5,832

April 30,
2001
(Unaudited)

October 31,
2001

Yen
April 30,
2002
(Unaudited)

U.S.dollars (Note)
April 30,
2002
(Unaudited)¥ 16.84¥ 17.14¥ 24.75$ 0.19

9.00

18.00

9.00

0.07

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

Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥128.35=US$1, the approximate exchange rate on April 30, 2002.

Outstanding Balance of Future Lease Payments (Non-Consolidated)[For the six months ended April 30, 2002 ]Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2001
(Unaudited)

October 31,
2001

April 30,
2002
(Unaudited)

April 30,
2002
(Unaudited)

Within one year

¥ 2,468¥ 2,893¥ 3,348$ 26,085

After one year

5,420

4,788

6,621

51,583

7,888

7,681

9,969

77,668Within one year

1,428

1,681

1,616

12,593After one year

3,386

2,837

2,783

21,686¥ 4,814¥ 4,518¥ 4,399$ 34,279

Finance Leases

Total
Operating Leases

Total

12 Semiannual Report 2002

M a n a g e m e n t

I n d i c a t o r s

D a t aG r a p h s

Cash FlowPCFR

EBITDA＋
EBITDA＋ Ratio

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

EBITDA+ =Operating income + Depreciation expense + Other depreciation
and amortization expense+ Low-price rental assets, and others(Millions of Yen)

(Millions of Yen)（％）

EBITDA+ is an indicator used only for the construction equipment rental businessand excludes steel products and computers and peripheral equipment=Annual=Interim=Annual=Interim

（％）

6

7
6

4.5
5
3.0

4
3

1.5
2

02

1

Net Income
PER

02

0

PBR
PBR = ROE × PER

PER = Total market capitalization at end of period ÷ Net Income(Millions of Yen)

（％）

（％）

02

02

Shareholders' Equity
Shareholders' Equity Ratio

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

Shareholders' Equity Ratio = Shareholders' Equity ÷ Total Assets(Millions of Yen)（％）

35,00032

28,00030

21,00028

14,000

26

7,000

24

02

（％）

20

02

Dividend per Share of Common StockROA
ROA = Net income ÷ Total Assets

(Yen)

（％）

02

02

Semiannual Report 2002 13

T o p i c s

Daiichi Machine Industries Co., Ltd. becomes a Kanamoto subsidiary
As previously announced, on November 1, 2001 Kanamoto acquired
majority ownership of the stock of Daiichi Machine Industries Co., Ltd.
(Head office: Kanoya, Kagoshima Prefecture), making the company a
subsidiary of Kanamoto.
Daiichi Machine and Kanamoto have built a strong, positive business
relationship over many years. As one of the original members of theCompany’s alliance group, Daiichi Machine is helping Kanamoto grow as
our business partner in the southern half of Kyushu.

[Company summary]
Daiichi Machine Industries Co., Ltd.
1056-1 Kasanoharacho, Kanoya, Kagoshima Prefecture, Japan
Kiyoto Matsui, President and Representative Director
Established September 1, 1977
Sales offices 7 branches
Employees 47
Capital ¥498 million
Sales ¥1,400 million(Fiscal year ended June 2001)

Daiichi Machine Industries Co., Ltd.
President, Kiyoto Matsui

Daiichi Machine Industries Co., Ltd.
head office

MTG adopted for electric power generation technology development research andtesting using sewage digestion gas
The Fukuoka Sewage Works
Bureau, NKK Corporation (NKK)and Kanamoto Co., Ltd. will
undertake joint research on power
generation technology developmentusing sewage digestion gas. The
companies will conduct empiricaltests using a microturbine electricalgenerator (MTG) built by the U.S.
manufacturer Capstone Corporationand imported, sold and rented by
Kanamoto.
The research will test the feasibilityof generating electricity using an
Industrial package microturbine electrical generator
from U.S. manufacturer Capstone Corporation
MTG and methane gas obtained
from decomposition of organic
materials by microorganisms in sewage sludge as a fuel. The tests arescheduled to begin this summer, and will be continued for about three
years until the end of March 2005.

The equipment used in the planned tests will be located at the Fukuoka
Wajiro Water Treatment Center. The plant will generate electricity byheating dehydrated sludge in a stirrer-agitator, and drawing off themethane gas produced by fermentation to burn as fuel in the MTG. The
plant will also use waste heat to warm the digestion tank and supply heatto other facilities.
One of the most significant aspects of the tests is the point that byutilizing a compact MTG, the quantity of methane required for plant
operations will be limited to approximately 450Nm3 each day. This will
make it possible to construct systems that can be introduced even for use
by existing small and medium-scale
sewage treatment facilities. For
Kanamoto, the project will provide
promising research that can be
expected to result in future demand
for the corresponding number of
MTG.
Water Treatment Center

Sewage digestion gas electricity generation flow
Filtration and concentration
evaporator

System link

Digestion tankstirrer-agitator

Electricity
Sewage digestion gas(Methane gas)

SludgeCondensed
sludgeSeparated liquids

DigestedsludgeSiloxaneremoverHeat exchanger
Hot water

ExhaustBoiler
MTG

Diagram created by Kanamoto based on flow drawings drafted by the Planning Division of the Engineering Headquarters at NKK

B r a n c h

N e t w o r k[As of April 30, 2002]

Our Growing Branch Network
As of April 30,2002

Number of Branches

Hokkaido

HonshuTotal

Construction Equipment Rental Operations

56

76

132

Steel Sales

3

0

3

Computer and Peripheral Equipment Rental Operations

0

1

1

Total

59

77

136

Kanamoto opened 8 branches and closed 2 branches during the first half of Fiscal 2002 (ends October 31, 2002).

Construction Equipment Rental Division
Steel Sales Division
Computer and Peripheral Equipment Rental DivisionMarket Development Division

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 (8 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

14 Semiannual Report 2002

Kanamoto Alliance Group Firms (8 companies)

C o r p o r a t e

D a t a[As of April 30, 2002]

SHAREHOLDERS’ INFORMATION
Company Name
Kanamoto Company, Ltd.
Head Office
1-19, Odori Higashi 3-chome
Chuo-ku, Sapporo, Hokkaido
060-0041 Japan
Established
October 28, 1964
Capitalization¥8.6 billion (Paid-in capital)
Listing Exchanges
Tokyo Stock Exchange, First Section
Sapporo Stock Exchange
Stock Code9678

Common Shares Issued andOutstanding
30,253,000 sharesFiscal Year-end
October 31
Revenues¥64,295 million(Fiscal year ended October 2001)
Number of Employees
1,137(Excluding directors and temporary
or part-time workers)
Principal Businesses
Rental of construction equipment, sale ofsteel products
Rental of engineering workstations andcomputer peripherals

Primary Lenders
The Bank of Tokyo-Mitsubishi
The Mitsubishi Trust and Banking Corporation
Mizuho Corporate BankSUMITOMO MITSUI Banking Corporation
North Pacific Bank
The Norinchukin Bank
Hokkaido Shinren
The Hokkaido Bank
UFJ Bank Limited
Shinkin Central Bank
Principal Shareholders
ORIX Corporation
Taichu Kanamoto
Saburo Kanamoto
The Mitsubishi Trust and Banking Corporation
Komatsu Corporation
Kanamoto Capital Company
The Hokkaido BankThe Tokio Marine & Fire Insurance Company
North Pacific BankDENYO Co., Ltd.

BOARD OF DIRECTORS
Directors

Corporate Officers (Shown with the division that is representative of their work as a corporate officer)

Taichu Kanamoto

Shinroku Sawada

Hideki Nomiya

Chairman

Senior Corporate Officer
Manager in charge of Business Planning

Division Manager, Market Development
Division; Manager, New Products Department

President

Yukio Sato

Masakazu Hirata

Hidemitsu Washida

Senior Corporate Officer
Division Manager, Construction Equipment Rental
Division

Deputy Division Manager, Construction Equipment
Rental Division ; Division Manager, Used Products
Sales Division ; Manager, Quality Assurance
SectionKanchu Kanamoto

Executive Vice President

Eichu Kanamoto
Shinroku Sawada

Division Manager, Credit Management Division

Hitoshi Narita
Division Manager, Business Planning Division

Yukio Sato

Kimio Tsujioka
Division Manager, Administration Division

Saburo Kudo
Division Manager, Construction Equipment Rental
Division, Tohoku Region

Masahiro Matono
Kenichi Katayama
Kojiro Satsuma
Auditors
Toshizo Okumura

Affiliated Enterprises Section. Seconded to SRG
Kanamoto Co., Ltd.

Tetsuo Kanamoto

Yoshikatsu Kon

Division Manager, Construction Equipment Rental
Division, Kanto & Shinetsu Region ; Division
Manager, Information Products Division

Division Manager, Steel Sales Division

Standing Corporate Auditor

Keiichi Kitakata
Nobuhito Utatsu

Norizumi Tsuda

Division Manager, Research & Investment Division

Division Manager, Accounting Division

Standing Corporate Auditor

Kiyoshi Onishi
Outside Corporate Auditor

Semiannual Report 2002 15

1-19,Odori Higashi 3-chome,Chuo-ku,Sapporo,Hokkaido 060-0041 Japantel. +81-011-209-1600 fax. +81-011-219-1630

http://www.kanamoto.co.jp