Fiscal Year ending October 31, 2007

Interim Financial Statements Bulletin
June 8, 2007

Listed Company Name

Kanamoto Company, Ltd.

Company Code Number 9678
Listing Exchanges

Tokyo Stock Exchange, Sapporo Stock Exchange

Head Office Address

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

http://www.kanamoto.co.jp)

Representative

Kanchu Kanamoto

Inquiries

Nobuhito Utatsu

President

Director & Corporate Officer, Division Manager, Accounting Division
TEL 81-11-209-1600
Please send inquiries in English to takayama@kanamoto.co.jp.
Date for submission of Semi-Annual Report:
July 25, 2007
Date for start of dividend payments:
July 17, 2007

1. Consolidated Operating Results for the Interim Period ended April 30, 2007
(Nov. 1, 2006 – Apr. 30, 2007)(Numbers less than one million yen have been rounded down)(Percentages show the change from the prior year)(1) Consolidated Operating Results
Revenues

Operating Income

Millions of yen%

Ordinary Income

Millions of yen%

Millions of yen%

Six months endedApril 30, 2007

36,230

5.0

3,438

19.7

3,422

22.2

Six months endedApril 30, 2006

34,520

4.2

2,873

122.5

2,801

136.3

Fiscal year ended
October 31, 2006

68,023

－

4,068

－

3,788

－

Net Income per Share ofCommon StockNet Income
Millions of yen%

Net Income per Share on a
Fully Diluted Basis

Yen

Yen

Six months endedApril 30, 2007

2,382

127.3

72.53

－

Six months endedApril 30, 2006

1,048

126.1

35.12

－

Fiscal year ended
October 31, 2006

1,742

－

57.41

－

Notes 1. Investment profit or loss accounted for by the equity method
Six months ended April 30, 2007－
Six months ended April 30, 2006－
Fiscal year ended October 31, 2006－

(2) Consolidated Financial Position
Total Assets

Six months endedApril 30, 2007
Six months endedApril 30, 2006
Fiscal year ended
October 31, 2006

Shareholders’EquityShareholders’Equity Ratio

Shareholders’ Equity
per Share

Millions of yen

Millions of yen%

90,86740,40044.3

1,225.81

87,00335,26240.5

1,181.45

86,81538,05143.7

1,155.22

Yen

Notes 1. Owners’ equity and valuation and translation adjustments:
Six months ended April 30, 2007
¥40,272,000,000
Six months ended April 30, 2006–
Fiscal year ended October 31, 2006
¥37,959,000,000

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 1

(3) Consolidated Cash Flows
Cash Flow fromOperating Activities

Six months endedApril 30, 2007
Six months endedApril 30, 2006
Fiscal year ended
October 31, 2006

Cash Flow from
Investing Activities

Balance of Cash andEquivalents at End
of Period

Cash Flow from
Financing Activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

6,774- 1,105- 1,601

22,4659,183

501- 2,731

21,062

8,414

- 489

- 3,635

18,398

2. Dividends
Interim Dividendper Share ofCommon Stock

Year-end Dividend per
Share of Common
Stock

Full-year Dividend per
Share of Common
Stock

Yen

Yen

Yen
Fiscal year ended
October 31, 2006
Fiscal year ended
October 31, 2007

9.00

9.00

18.00

9.00

───

───

9.00

Fiscal year ended
October 31, 2007

18.00

(projected)

3. Projected Consolidated Operating Results for the Fiscal Year Ending October 31, 2007
(November 1, 2006 - October 31, 2007)(Percentages show the change from the prior year)
Operating

Revenues
Millions of yen

Full year

68,700Ordinary Income

Income4,600

Share on a Fully
Diluted Basis% Millions of yen

1.0

Net Income per

Net Income% Millions of yen

13.1

4,700

%

Yen

37.7

73.05

% Millions of yen

24.1

2,400

4. Other(1) Changes to material subsidiaries during the period (transfer of specified subsidiaries in conjunction
with revision to scope of consolidation)? No(2) Changes to accounting principles, procedures and reporting method pertaining to preparation of theinterim consolidated financial statements (matters described in the Changes in Important Matters
Used as the Basis for Preparation of the Interim Consolidated Financial Statements)(a) Changes accompanying revisions to accounting standards etc.? No(b) Changes other than those in (a)? No(3) Number of shares issued (common stock)(a) Number of shares issued and outstanding at end of period (including treasury stock)Six months ended April 30, 2007

32,872,241 shares

Six months ended April 30, 2006

30,253,241 sharesFiscal year ended October 31, 2006

32,872,241 shares(b) Number of shares of treasury stock at end of period
Six months ended April 30, 2007

18,670 shares

Six months ended April 30, 2006

406,309 sharesFiscal year ended October 31, 2006

13,123 shares(Reference) Summary of Company Interim Operating Results
Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 2

1. Operating Results for the Interim Period ended April 30, 2007
(1) Operating Results(Numbers less than one million yen have been rounded down)
Revenues

Operating Income

Millions of yen
Six months endedApril 30, 2007
Six months endedApril 30, 2006
Fiscal year ended
October 31, 2006

(November 1, 2006–April 30, 2007)%

Ordinary Income

Millions of yen%

Millions of yen%

32,449

5.5

3,070

23.0

3,195

24.4

30,764

5.8

2,496

113.4

2,569

109.6

60,753

－

3,715

－

3,739

－

Net Income per Share ofCommon StockNet Income
Millions of yen
Six months endedApril 30, 2007
Six months endedApril 30, 2006
Fiscal year ended
October 31, 2006%

Net Income per Share ofCommon Stock Fully Diluted

Yen

Yen

2,320

143.0

70.62

－

955

58.6

31.99

－

1,720

－

56.67

－

(2) Financial Position
Total Assets

Shareholders’Shareholders’Shareholders’ Equity

EquityEquity Ratio

per Share

Millions of yen

Millions of yen

87,406

40,62646.5

1,236.59

83,35835,60542.7

1,192.95

83,51438,37646.0

1,167.90

Six months endedApril 30, 2007
Six months endedApril 30, 2006
Fiscal year ended
October 31, 2006%

Yen

Notes 1. Owners’ equity and valuation and translation adjustments:
Six months ended April 30, 2007
¥40,626,000,000
Six months ended April 30, 2006–
Fiscal year ended October 31, 2006
¥38,376,000,000

2. Projected Operating Results for the Fiscal Year Ending October 31, 2007
(November 1, 2006 - October 31, 2007)(Percentages show the change from prior year)
Operating

Revenues

Full year

Ordinary Income

IncomeNet Income per

Net Income

Share on a Fully
Diluted Basis

Millions of yen%

Millions of yen

62,000

2.1

4,300

%

15.7

Millions of yen

4,700

%

25.7

Millions of yen

3,000

%

Yen

74.4

91.31

Note: Explanation concerning appropriate use of the projected operating results and other items to note
The projected operating results were prepared based upon information available to the Company at thetime the projections were announced as well as various assumptions concerning the future economic andbusiness environment. Actual operating results may differ from the projected figures depending uponvarious factors in the future.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 3

1. Operating Results(1) Analysis of operating results① Summary of fiscal year interim period operating results
Viewed comprehensively, during the fiscal year interim period under review Japan’s
economy exhibited a weakening of the yen from the middle of the period, and steady
positive growth centered on export-related industries. The economic recovery progressed
mainly among Japan’s major corporations and the largest metropolitan areas and thebracket of especially wealthy consumers, and the effects of the economic recovery began
to appear widely as the unemployment rate, which highlights the employment
environment, also fell below 4% after an interval of four years. Nevertheless, theeconomic upswing could be described as one in which the benefits of the recovery remain
lopsided, under which local regions strapped by severe fiscal circumstances, as well as
many individuals, cannot sense any real improvement.

Despite the harsh business environment in local regions faced with stringent fiscal
conditions as stated above, the revenues of the Kanamoto Group grew at a steady pace ineach region. This included higher revenues in both large metropolitan areas and local
regions for the Construction Equipment Rental Division, Kanamoto’s main business, as theresult of efforts to cultivate private sector demand and fight tenaciously to not lose any of
the few public works projects being initiated. Revenues from equipment sales by thisdivision also exceeded Kanamoto’s initial plan.
From an earnings perspective, for the second consecutive year Kanamoto continued tosteadily demonstrate results from the various measures outlined in the Company’s longterm management plan, including improvements in operating efficiency and reductions in
the depreciation and amortization burden for rental equipment assets. Operating income,ordinary income and interim net income all exceeded the Company’s initial projection andthe results for the same period of the prior fiscal year. As a result, revenues fromoperations for the interim period of the consolidated fiscal year ending October 2007
increased 5.0% compared to the same period of the prior consolidated fiscal year to¥36,230 million, operating income rose 19.7% year-on-year to ¥3,438 million, ordinary
income increased 22.2% year-on-year to ¥3,422 million and net income soared 127.3%
over the same period of the prior consolidated fiscal year to ¥2,382 million. A summary ofoperating results for each of the Company’s businesses and business development issues
deserving special mention are described below.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 4

〔 Fiscal Year ending October 31, 2007 Interim Operating Results 〕(Percentages show the change from prior year)
Revenues

Consolidated

Mil.

Current FYInterim period
Prior FY Interim
PeriodNon-consolidated

Prior FY
Current FYInterim period
Prior FY Interim
PeriodPrior FYof

Operating income

yen%36,23034,520

Mil.

yen

%

5.0

3,438

4.2

2,873

68,023ofOrdinary incomeofInterim net income

yen

%

19.7

3,422

122.5

2,801

4,068

Mil.

yen

%

22.2

2,382

127.3

136.3

1,048

126.1

3,788

Mil.

of

1,742

32,449

5.5

3,070

23.0

3,195

24.4

2,320

143.0

30,764

5.8

2,496

113.4

2,569

109.6

955

58.6

60,753

3,715

3,739

1,720

② Summary of operating results by business segment[Business related to the Construction Equipment Rental Division]
In the construction-related businesses of the entire Kanamoto Group, both revenues and earnings werehigher. For the consolidated fiscal year interim period under review, consolidated revenues increased
7.8% from the prior consolidated fiscal year to ¥33,668 million, and operating income rose 22.0% yearon-year to ¥3,346 million.
< Kanamoto Co., Ltd. on an non-consolidated basis >As the level of public works shrinks with each passing year, an extremely harsh business environment hascontinued in regions where private sector demand cannot be anticipated to supplement the shortfall. To
capture the scarce available demand, Kanamoto sought to exploit new markets, by aggressively
developing business in markets such as architecture-related and event-related sites, for example, where
until now the Company had been slow to seek customers, while further strengthening its sales offensive.
Construction equipment rental revenues on a non-consolidated basis by region rose 5.2% year-on-year in
the Hokkaido Region, where Kanamoto was successful in strengthening its marketing and in uncovering
private sector demand, and were up 5.8% from the same period of the prior fiscal year in the Tohoku
Region, where the Company continued its excellent momentum from the prior fiscal year. In the Kanto &Shinetsu Region, where special procurement for disaster recovery work in both Niigata and Nagano
Prefecture came to an end, revenues edged down 1.9% year on-year. Following an early surge, revenues
in the Kinki & Chubu Region eased to 3.4% growth for the period, despite vigorous private sector demandin the Nagoya area, as sales softened because of a slowdown in demand in Hyogo Prefecture. The
percentage of revenues accounted for by Hokkaido and by Honshu and other regions was 32.3% and67.7%, respectively.
As a result of these factors, for Kanamoto’s Construction Equipment Rental Division on a stand-alone
basis, rental revenues increased 3.0% year-on-year to ¥22,073 million, revenues from sales rose 29.2%
year-on-year to ¥7,813 million and total revenues increased 8.7% from the same period of the priorconsolidated fiscal year to ¥29,886 million.
During the consolidated fiscal year interim period under review, Kanamoto opened two new branches at
the Chiba Shinminato Branch (Chiba City, Mihama Ward) and in Higashidori (Higashidori, Shimokita-gun,
Aomori Prefecture) and closed the Ojiya Branch (Ojiya City, Niigata Prefecture). As a result, at the end of
the interim period Kanamoto had 148 branches.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

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< Consolidated subsidiaries >Daiichi Kikai Co., Ltd. experienced a slowdown in large-scale disaster recovery demand, but as a resultof securing both private sector demand and government demand and efforts to cultivate customers froma broadened marketing perspective, revenues were up 8.2% from the same period of the priorconsolidated fiscal year, and operating income increased 57.7% year-on-year.
SRG Kanamoto Co., Ltd. continued to achieve steady growth in rentals of temporary scaffolding for
condominium construction. Revenues expanded 25.1% increase from the same period of the priorconsolidated fiscal year, and operating income showed a ¥16.513 million improvement, producing thecompany’s first positive earnings as an interim period operating result.
At Assist Co., Ltd., revenues were slightly lower than the initial plan because revenues and earnings forthe measurement equipment rental business transferred by the company were eliminated. As a result,revenues were 1.6% lower than in the same period of the prior consolidated fiscal year, and operating
income also decreased 14.3% year-on-year.
At Kanki Corporation, which is restructuring its management, revenues were 8.0% less than in thesame period of the prior consolidated fiscal year because a decrease in construction equipment rental
demand in Hyogo Prefecture and the influence of unit price reductions. Earnings also were affected by theincreased cost burden for the company’s greatly expanded selection of rental equipment assets and thecost to move its business office to a new location, and the company posted an operating loss.
Kanatech Co., Ltd., successfully revised its product pricing in conjunction with the sudden rise in cost of
materials, and released new modular housing units. As a result, revenues increased 21.7% year-on-year,
and operating income rose ¥15.453 million compared with the same period of the prior consolidated fiscal
year, restoring this company to profitability.

[ Business related to the Steel Sales Division ]Demand fell for both private sector construction such as condominiums in Sapporo, which
had demonstrated strong steady growth until the interim period under review, and forsteel towers for the telecommunications industry. Price adjustments because of excess
inventory concerns also were less effective than anticipated. As a result, revenues
decreased 23.3% from the same period of the prior consolidated fiscal year to ¥2,345
million, and the division posted a small operating loss of ¥13 million.
[ Business related to the Information Products Division and Other Businesses ]Low rental fee conditions for personal computers prevailed, but rental demand for
personal computers grew at a steady pace, and revenues for the Information Products
Division increased 5.5% compared with the same period of the prior consolidated fiscal
year. On the other hand, revenues from sales of used devices fell 47.9% year-on-year as
the business entered its off season. Revenues for the entire division dipped 1.3% year-onyear to ¥216 million, and operating income decreased 2.4% from the same period of theprior consolidated fiscal year to ¥21 million.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

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(2) Analysis of financial position① Summary of fiscal year interim period operating results(Millions of yen)Interim Period
Interim Period
Ended April 2007
Ended April 2006
Change(Prior Consolidated FY(Current Consolidated FYInterim Period)

Interim Period)

Cash flow from operating activities

9,183

6,774

–2,408Cash flow from investing activities

501–1,105–1,606

Cash flow from financing activities–2,731–1,601

1,129

Increase in cash and equivalents

6,953

4,067

–2,885

14,10818,3984,289

21,062

22,465

1,403

Balance of cash and equivalents at
beginning of period
Balance of cash and equivalents at
end of interim period(Cash flow from operating activities)
Cash flow from operating activities was ¥6,774 million, a decrease of ¥2,408 million fromthe interim period of the prior consolidated accounting fiscal year.
This mainly reflected the increase in income before taxes and adjustments, a larger
decrease in accounts receivable, trade, a smaller increase in accounts payable, trade anda larger gain on sale or retirement of fixed assets.
(Cash flow from investing activities)
Cash flow used in investing activities was ¥1,105 million, a change of ¥1,606 million fromthe interim period of the prior consolidated accounting fiscal year.
This mainly reflected an increase in the funds provided from the sale of tangible fixed
assets, which was offset by an increase in funds used for the purchase of tangible fixed
assets and an increase in the funds used for the purchase of non-consolidated subsidiarystock.
(Cash flow from financing activities)
Cash flow used in financing activities was ¥1,601 million, a decrease of ¥1,129 million
from the interim period of the prior consolidated accounting fiscal year.
This mainly reflected an increase in funds provided by long-term bank loans.
As a result of the above, the balance of cash and equivalents at the end of theconsolidated fiscal year interim period under review increased ¥1,403 million comparedwith the end of the interim period of the prior consolidated fiscal year, to ¥22,465 million.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 7

The cash flow indicator trends for the Kanamoto group are provided below.
Interim Period
Ended April 2007
(Current
Consolidated FYInterim Period)

FY Ended

FY Ended

FY Ended

FY Ended

October 2003

October 2004

October 2005

October 2006

35.8

36.7

40.8

43.7

44.3

17.7

18.1

26.6

32.0

41.7

4.0

6.3

3.3

3.5

4.5

17.2

13.4

24.5

21.0

30.5

Shareholders’ equity ratio (%)
Shareholders’ equity ratio on amarket capitalization basis (%)
Years to repay debt
Interest coverage ratio (times)(Notes)Shareholders’ equity ratio: Shareholders’ equity / Total assets
Shareholders’ equity ratio on a market capitalization basis: Shareholders’ equity on a market capitalization basis /Total assets
Years to repay debt: Interest-bearing liabilities / Operating cash flow
Interest coverage ratio: Operating cash flow / Interest payments* All indicators are calculated using financial values on a consolidated basis.
* Total market capitalization is calculated by multiplying the closing share price at the end of the term by the numberof shares outstanding (after deducting treasury stock) at the end of the term.
* Cash flow from operating activities shown on the Consolidated Statements of Cash Flows is used as operating cash
flow. Interest-bearing liabilities include all liabilities on which the Company pays interest that are accounted for on
the Consolidated Balance Sheets. The amounts shown as interest expense on the Consolidated Statements of Cash
Flows are used as interest payments.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

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(3) Outlook for the fiscal year
Japan’s economy is following a recovery trend that is being driven by the strong operating results ofleading companies, and is maintaining the longest growth period on record, supported by factors such as
an improved employment environment. Conditions still remain subject to international circumstances,
however, including the sharp rise in crude oil prices and the uncertain outlook for the business climate in
the U.S. A close look at the underpinning of the current expansion reveals the polarization of domestic
economic disparity, such as the problems of local administrative authorities faced with a fiscal bankruptcy
crisis or the burgeoning number of socially vulnerable families, has not been resolved.
Construction demand, which is intimately related to Kanamoto’s main business of construction equipment
rentals, is expanding in the Tokyo metropolitan area and in major metropolitan centers in areas such as
the Chukyo Region and the Kansai Region because of ongoing capital investment against the backdrop of
the recovery in corporate operating performance. In regions that must rely heavily on public works,
however,

privatesectorconstruction

demandforredevelopment

projects

orcondominium

construction can be expected in certain local cities, but this remains inadequate to offset the sharp
cutbacks in public works, and economic severity is still projected to continue. Other factors, such as
delays in construction project starts under the influence of the House of Councilors election in July,
can also be assumed.
Accordingly, although Kanamoto revised its full-year projection on May 28, management believes thebusiness environment will remain extremely difficult because, in its view, there will not be any major
improvements in local construction demand trends. The Kanamoto group will strive to maintain its current
revenue and earnings growth trends, through efforts such as strengthening the cooperation among eachgroup company and proactive sale development. In June 2007, Kanamoto established its Hiroshima
Branch (Asaminami-ku, Hiroshima), the Company’s first foothold in the Chugoku Region, and plans tocontinue adding branches in the Tokyo metropolitan area, Nagoya and Osaka.

〔 Projected Operating Results for the Consolidated Fiscal Year Ending October 31,
2007(November 1, 2006 - October 31, 2007) 〕

Non-consolidated

Consolidated(Millions of yen, except for net income per share which is in yen)

Revenues

OperatingincomeOrdinary
incomeNet income

Net
incomeFull-year projected
results

68,700

4,600

4,700

2,400

73.05

Prior year results（FY Ended October 2006）

68,023

4,068

3,788

1,742

57.41

Full-year projected
results

62,000

4,300

4,700

3,000

91.31

Prior year results（FY Ended October 2006）

60,753

3,715

3,739

1,720

56.67

Fiscal Year Ending October 2007 Interim Accounting Bulletin

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[ Projected Financial Position for the Fiscal Year Ending October 31, 2007
(November 1, 2006 - October 31, 2007) ]Cash flow from operating activities
Cash flow provided from operating activities is expected to decrease compared with theprior consolidated fiscal year, because expenditures for acquisition of rental assets will
increase.
Cash flow from investing activities
Expenditures are projected to increase year-on-year, because of funds used for theacquisition of subsidiary company stock.
Cash flow from financing activities
Cash flow used in financing activities is expected to increase compared with the priorconsolidated fiscal year, because the Company will not have funds provided by theissuance of stock and will increase funds provided by long-term bank loans.
As a result of the above, the balance of cash and equivalents at the end of theconsolidated fiscal year is projected to decrease compared to the balance at the end of theprior consolidated fiscal year.

(4) Basic policies concerning distribution of earnings and current period dividends
As the basis of its earnings distribution policy, Kanamoto seeks to ensure a stable return of earnings tothe extent possible, while taking into consideration its earnings level, payout ratio, and financial position
from a medium to long-term perspective. In the future, Kanamoto will consider a dividend payout ratio ofat least 30% at its objective, while taking its earnings into consideration.
At the same time, the Company will utilize its internal reserves by allocating funds for capital investment,
including the introduction of rental equipment assets that will serve as the source of future earnings, andfor enhancing shareholders’ equity.
To enable the Company to flexibly implement its capital policy, Kanamoto has established a system formaking purchases of treasury stock.

(5) Business and other risks
The following risks are included among the business and accounting matters described in
the Accounting Bulletin (Consolidated) that might have an important influence on
investors’ decisions.
Statements concerning future matters are judgments made by the Company based on
information available at the present point in time.

① Economic conditions
Because the construction-related businesses that are the main business of the Kanamotogroup remain highly dependent on public works, the stagnation of market growth andintensification of price competition resulting from ongoing cutbacks in public works
investment are continuing and the severity of the business environment is expected tocontinue.
To minimize the affects from cutbacks in public works, the Kanamoto group is
implementing various management measures, such as shifting management resources tomajor metropolitan areas where private sector demand is strong, and seeking to maintainand improve operating results. Nevertheless, there is a possibility future operating results
including revenues will be negatively affected if further large reductions in public works orother changes affecting industry demand occur in the future.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

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② Seasonal changes in operating results
Because budget decisions for public works are made in April of each year, there is a time
lag of roughly six months before construction actually is begun. Therefore theconstruction-related businesses that are Kanamoto’s main business experience a trend inwhich the busy season during each business period extends from about October until thefollowing March, and construction equipment rental demand reaches its maximum peakduring this period. As a result, the revenues and earnings of the Kanamoto group tend to
be concentrated in the Company’s interim accounting period (the six-month period from
November through the following April).
③ Interest rate fluctuations
The Kanamoto group allocates internal capital and procures funding from outside sources
to meet its need for funds to purchase rental equipment and other assets, make branchrelated capital investments and provide working capital for business activities. Although
the Company takes steps to mitigate the affect of interest rate fluctuations on its
externally borrowed funds, including transactions to fix the interest rates paid on
borrowed funds to the extent possible, there is a possibility the operating results andfinancial position of the Kanamoto group will be affected by future large changes in shortterm interest rates.
④ Projected benefit obligation
The projected employee benefit obligation and costs of the Kanamoto group are calculated
mainly based on basic rates such as a discount rate and expected rate of return on
pension assets. Because these basic rates are determined in each annual review, they
have a material affect on changes in the operating results and financial position of theKanamoto group. There is a possibility the operating results and financial position of theKanamoto group might be negatively affected if the discount rate declines further or theyield on investments deteriorates.
⑤ Asset impairment accounting for fixed assets
Beginning from the business period ending in October 2006, the Kanamoto group will
apply the “Accounting Standard for Impairment of Fixed Assets.” There is a possibility theoperating results and financial position of the Kanamoto group might be negatively
affected if the profitability of fixed assets declines because of factors such as a marked
deterioration in the Company’s business environment in the future.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

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2. Current Conditions of the Company’s GroupThe Kanamoto Company group (Kanamoto and its affiliated companies) has organized its
principal business activities around “businesses related to the Construction Equipment
Rental Division,” which is engaged in the rental and sale of construction equipment andconstruction-related equipment parts, “businesses related to the Steel Sales Division,”
which sells materials for construction such as steel products, and “businesses related to
the Information Products Division and Other Businesses,” which rents and sells computers
including workstations and PC servers and computer peripheral equipment. The group iscomprised of the parent company, five consolidated subsidiaries and seven nonconsolidated subsidiaries. There are no companies that apply equity method accounting to
non-consolidated subsidiaries.
An explanation of the business activities and position of each company in the Kanamoto
Group, and the relationships to the group’s segments by business category, is provided
below.
[ Business related to the Construction Equipment Rental Division ]The Company’s Construction Equipment Rental Division, Daiichi Kikai Co., Ltd. (aconsolidated subsidiary) and Kanki Corporation (a consolidated subsidiary) are engaged in
the rental and sale of construction equipment and machines used for construction. These
two subsidiary companies borrow rental equipment assets from the Company as needed inorder to meet customer demand.
Assist Co., Ltd. (a consolidated subsidiary) and Comsupply Co., Ltd. (a non-consolidated
subsidiary) are engaged in the rental and sale of furniture and fixtures and safety
products, and SRG Kanamoto Co., Ltd. (a consolidated subsidiary) rents and sells
temporary materials for construction use. The Company borrows rental assets from SRG
Kanamoto Co., Ltd., Assist Co., Ltd. and Comsupply Co., Ltd. as needed to rent to othercompanies.
Kanatech Co., Ltd. (a consolidated subsidiary) sells modular housing units for temporary
use. Flowtechno Co., Ltd. (a non-consolidated subsidiary), is engaged in the technicaldevelopment, manufacture and sale of construction equipment for ground improvement
works. Kanamoto purchases modular housing units for temporary use and construction
equipment for ground improvement from these two companies as needed to rent to its
own customers.
Furthermore, in February 2007 Kanamoto acquired the majority of the outstanding sharesof Kyushu Kensan Co., Ltd., and made the company and its company group firms
subsidiaries of Kanamoto. This company group, which is composed of Kyushu Kensan Co.,
Ltd., Kensan Fukuoka Co., Ltd., Kensan Techno Co., Ltd. and Center Corporation Ltd., is
Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 12

engaged in the rental and sale of construction equipment in northern Kyushu (all four
companies are non-consolidated subsidiaries). Kyushu Kensan borrows rental equipment
assets from Kanamoto as needed in order to meet its customer demand.
In addition, in February 2007 Kanamoto established Shanghai Jinheyuan Equipment Rental
Co., Ltd., a joint management with a Chinese firm in Shanghai, China. The nonconsolidated subsidiary represents the first overseas foray for the Kanamoto Group. This
company, which currently is engaged in importing and exporting of construction materials,
also plans to develop a construction equipment rental business in the future.
[ Business related to the Steel Sales Division ]The Company’s Steel Sales Division sells steel products and other construction-related
manufactured products. The Company has no subsidiaries or affiliated companies related
to this division.

[ Business related to the Information Products Division and Other Businesses ]Kanamoto’s Information Products Division is engaged in the rental and sale of computers,
including workstations and PC servers, as well as computer peripheral equipment. Active
Technology Corporation, an affiliated company related to the Company’s Other Businesses,
has currently halted business activities.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 13

The companies and activities described above are shown in the following diagram
illustrating their operating businesses relationships.

Domestic Customers

Construction equipment rental

Kanamoto Company
Ltd.

Daiichi Kikai Co., Ltd.

Rental of construction related products and parts

Assist Co., Ltd.

Construction equipment rentals
Rental and sale of safety products

and sales

Kanki Corporation

Comsupply Co., Ltd.

Construction equipment rentals

Rental of furniture, fixtures andand salessafety products

Kyushu Kensan Co., Ltd.

SRG Kanamoto Co., Ltd.

Construction equipment rentals

Rental and sale of temporary

centered on basic equipment

materials for construction use

Kensan Fukuoka Co., Ltd.
Generator rentals

Construction
Equipment Rental

Overseas

Division

Kensan Techno Co., Ltd.

Shanghai Jinheyuan Equipment Rental Co., Ltd.

Construction crane rentals

Construction equipment import and export
business and rental of construction materials

Center Corporation Ltd.
Small equipment rentals

Steel Sales Division
Information Products Division

Customers and overseas trading

Supply of steel frames andSupply of modular
housing units

companies in China

construction materials
Design, manufacture and sale of related products

Kanatech Co., Ltd.
Design, manufacture and sale of modular
housing units for temporary use

Users, trading
companies, etc.

Flowtechno Corporation
Technical development, manufacture and sale of ground
improvement construction equipment

Equipment supply,
technical assistance(Notes)① There are no companies that apply equity method accounting to non-consolidated subsidiaries.
② Consolidated subsidiaries are indicated by white boxes, and non-consolidated subsidiaries are shown in grey boxes.
Dotted lines indicated the companies that are grouped in the same business classification.
③

Arrows indicate business transactions. For details please see the text on the previous page.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 14

3. Management Policies(1) Basic policies concerning the Company’s business management
The Kanamoto group has never been complacent about its present condition. Every groupcompany has positioned Kanamoto’s action agenda of promoting maximization of revenues
and absolute reduction of costs, while continually seeking innovation and striving toenergize its businesses, as the common philosophy of the entire Kanamoto group. By
managing the group’s businesses to conform to changes in market conditions, theCompany seeks to achieve continual growth in earnings by accurately providing theservices truly demanded by Kanamoto’s customers. Through this approach to its business,
Kanamoto believes it will be evaluated positively as a corporate group that canfundamentally satisfy the expectations and trust of its stakeholders and make a valuable
and tangible contribution to society.
(2) Management indicators established as objectives
The Kanamoto Group’s core operations in the construction equipment rental business
require a substantial capital investment burden. Moreover, the structure of this business
requires a profit and loss outlook extending over several years. Given these considerations,
the Kanamoto group has always positioned growth in EBITDA+ (earnings before interest,
taxes, depreciation and amortization) as its most important management indicator, while
also taking into consideration ROI (return on investment).
With regard to the numerical targets set in the long-term management plan Kanamoto
currently is implementing (November 2003 - October 2008), there remains uncertainty
concerning the trend in construction demand during the plan period, and on several
occasions in the past the Company has revised its targets compared with initial plan. On
May 28, 2007, the Company released the latest revisions to its full-year operating results
outlook for the current consolidated fiscal year. After taking into consideration construction
demand in regions where economic recovery has been slow, at this time the Company has
not made any additional changes to the numerical targets for the fiscal year ending in
October 2008. The Company will work to improve the profitability of the entire Kanamotogroup, focusing on maintaining and expanding EBITDA+, which has a direct influence on
Kanamoto’s consolidated operating results.

Consolidated
operating results

Revenues

F i s c a l Ye a r E n d i n g

October 2007

October 2007

68,70070,980Ordinary income

4,700

4,560

Net income per share

73.05

67.87

62,00063,670

4,700

4,500

19,117

19,960Non-consolidated

Revenues

operating results

Ordinary income(Kanamoto)F i s c a l Ye a r E n d i n g

EBITDA+(Unit: Millions of yen, except for net income per share which is in yen)(3) Medium to long-term corporate management strategy
The Company has now completed the fourth period of its long-range management plan “Metamorphose”(November 2003 - October 2008). During this four-year period, the Company has gradually realized theresults of measures it has promoted, centered on reorganization of its earnings profile and improvementof its financial position, and as a result has three times revised its initial operating results projections
upwards. By continuing to practice earnings-focused management and further expanding operating
results, the Company seeks to build a “strong Kanamoto” that will be evaluated positively by the market.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 15

① Maintain an earnings-focused rental equipment asset portfolio
In addition to replacing its large rental assets with the latest emissions-controlled models, and extending
rental periods for such assets, the Company will seek to improve profit margins by also strengthening its
emphasis on equipment boasting high returns.

② Execute a bold scrap and build program
The Company has adopted a fundamental approach of giving priority to establishing new
branches in the Tokyo metropolitan area and regions surrounding other large metropolitan
areas, while maintaining its existing branch network in other regions. In areas where theKanamoto group has not yet opened branches, the Company’s policy is to investigate
moving aggressively into a region after analyzing all pertinent information and available
opportunities. The Company also will carefully scrutinize the possibilities for expanding
operating results and improving the profitability of each branch, and continue to close andintegrate branches. The Company also will actively utilize techniques such as M&A as
engines of growth.
③ Build a powerful marketing organization and alliance group where customers
are always Number One
Kanamoto seeks to be a firm that enjoys a high level of customer trust and is firmly rooted in its local
communities. The Company pursues this objective by offering services that take maximum advantage ofits corporate scale, such as Kanamoto’s comprehensive compensation system and agreements with local
governments to respond to urgent requests following a disaster, and offering products that are linked
directly to customers’ needs.
In addition, the Kanamoto group forms a network reaching from Hokkaido to Okinawa, and the Company
will continue to strengthen cooperation among all Kanamoto group firms, and increase the synergistic
effects from this approach.

(4) Issues to be addressed by the Company
Based on Japan’s fiscal policies, public works construction is projected to continue following a declining
trend. On the other hand, the demand for construction equipment rentals is showing a positive trend,
driven by the efforts of construction companies to control capital spending. The severity of thecompetition among construction equipment rental firms, however, continues to increase. Given thisenvironment, the issue faced by Kanamoto is to maintain its traditional earnings and ensure its profit
base is sound, by responding accurately to the demands of user firms as their needs become moreadvanced and complex.

① Enhance marketing capabilities and customer strategies
As the leading firm in the construction equipment rental industry, Kanamoto strives tofoster employees who possess appropriate knowledge and skills. The Company also istaking steps to cultivate a new range of customers, including sectors such as facilities
maintenance, landscaping and gardening and events, by diversifying the types of products
it handles.
② Emphasize group management and strengthen alliances
Kanamoto will strengthen cooperation among Kanamoto group companies from an
operating, business and asset management standpoint, increase alliances with firms inevery region of Japan and seek mechanisms aimed at the creation of mutual earnings
opportunities.
③ Reinforce Kanamoto’s financial strategy
Kanamoto is taking steps to enhance funds procurement flexibility, while giving consideration toequipment plans including its purchases of rental equipment assets. At the same time, the Company isstriving to improve its financial position, by reducing interest-bearing debt as much as possible while
Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 16

improving capital efficiency, by incorporating measures such as the liquidation of assets.

④ Continuous cost reductions
Because of factors such as the sharp rise in crude oil and raw materials prices and increasing interest
rates, increasing asset introduction costs are a concern. Together with the thorough use of benchmarks
when introducing assets, the Company also will strive to maintain asset value by optimizing asset
maintenance costs based on its rental assets operating policies. The Company also will continue
measures aimed at achieving low-cost operations and eliminating wasteful expenses.

⑤ Compliance and internal controls
Recently, scandals perpetrated by firms have been reported frequently. The Kanamoto group should profit
from such incidents as well, and to create an organization that is aligned with society’s demands theCompany has prepared ethical standards, a code of conduct and a compliance manual. The Company
works to ensure every individual is thoroughly familiar with these guidelines, and manages its
organization in accordance with these materials. The Company also has reconfirmed its management
processes for maintaining reliable and trusted financial reporting. At each group company as well,
Kanamoto is directing the development of systems as quickly as possible and guiding system operation,
and working to ensure a group-wide organization for observing all laws is in place.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 17

IV
1.

Interim Consolidated Financial Statements
Interim Consolidated Balance Sheets(Amounts have been rounded down to the nearest thousand yen)
PeriodCurrent Consolidated Fiscal Year Interim

Fiscal Year Interim Period

PeriodBalance Sheet(As of April 30, 2006)(As of April 30, 2007)(As of October 31, 2006)

AmountCategory

Prior Fiscal Year Summary Consolidated

Prior Consolidated

Percent

AmountPercent

AmountPercent(Assets)
Ⅰ

Current Assets

1.Cash and deposits

21,065,337

22,465,779

18,398,312

13,242,954

13,012,758

14,959,325

641,479

685,271560,203

1,312,970

1,132,334

1,193,669

5.Deferred tax assets

316,581356,582

391,803

6.Other current assets

494,345

290,729752,572- 605,691- 523,190- 523,650

2.Notes and accounts
receivable, trade*3

3.Inventory
4.Construction
equipment

Allowance for
doubtful accounts
Total Current Assets
Ⅱ36,467,976

41.9

37,420,264

41.2

35,732,235

41.2

Fixed Assets

1.Tangible Fixed Assets(1)Rental equipment
Accumulated
depreciation(2)Buildings andstructures
Accumulated
depreciation

37,169,078
27,908,940

37,038,152
9,260,137

27,227,145

15,965,488

9,673,554

37,784,220
9,811,007

28,426,025

16,517,185

6,291,934

9,788,405

9,358,195

16,561,916

6,728,780

9,930,025

6,631,891(3)Machinery,equipment and

4,280,489

4,375,415

4,322,961

delivery equipment
Accumulated
depreciation

3,539,940(4)Land(5)Construction inprogress(6)Other tangible fixed
assets
Accumulated
depreciation
Total Tangible Fixed
Assets
2.Intangible Fixed Assets

740,549

3,590,806

3,602,186

720,775

25,791,953

26,264,162

25,906,130

24,24487,065

246,544

1,112,607

838,757

784,609

1,092,233

273,850

836,431

1,126,604

255,802866,704

259,900

42,382,668

48.7

43,931,427

48.4

43,123,437

49.7

610,6520.7

489,0360.5

536,695

0.6

3.Investments and Other
assets(1)Investment
securities(2)Other assets
Allowance for
doubtful accounts
Total Investments and

6,601,532

7,753,593

6,224,097

1,778,065

2,008,911

1,874,002- 837,154- 735,621-674,876

7,542,443

8.7

9,026,884

9.9

7,423,223

8.5

Total Fixed Assets

50,535,764

58.1

53,447,348

58.8

51,083,356

58.8

Total Assets

87,003,740

100.0

90,867,612

100.0

86,815,592

100.0

Other Assets

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 18

(Amounts have been rounded down to the nearest thousand yen)
PeriodCurrent Consolidated Fiscal Year

Fiscal Year Interim Period

Interim Period

Balance Sheet(As of April 30, 2006)(As of April 30, 2007)(As of October 31, 2006)

AmountCategory

Prior Fiscal Year Summary Consolidated

Prior Consolidated

Percent

AmountPercent

AmountPercent(Liabilities)
Current Liabilities

Ⅰ

1.Notes and accounts
payable, trade
2.Short-term bank loans
3.Long-term bank loans
due within one year
4.Corporate taxes
payable5.Accrued bonuses to
employees
6.Accrued bonuses todirectors and auditors
7.Accounts payable,
other
8.Other current
liabilities
Total Current Liabilities*3

13,441,414

13,224,826

12,419,337

558,696

390,000

497,704

10,570,496

9,772,856

10,077,496

1,158,159

1,828,399

1,365,479

566,786

537,423

511,737

2,750

－

5,500

2,617,049

2,968,714

2,676,023

1,167,947

713,158

1,017,823

30,083,300

34.6

29,435,377

32.4

28,571,100

32.9

Long-term Liabilities

Ⅱ

1.Long-term bank loans
2.Accrued employees
retirement benefits

17,545,359

16,204,883

16,031,111

1,592,064

1,763,508

1,681,719

138,708

127,150

129,214

1,871,385

2,485,270

2,107,836

364,763440,671

221,336

33,871

10,72721,507

3.Retirement allowances
to directors andauditors
4.Long-term accrued
expenses
5.Consolidation
adjustment
6.Other long-term
liabilities
Total Long-term

21,546,152

24.8

21,032,211

23.1

20,192,724

23.3

51,629,452

59.4

50,467,589

55.5

48,763,825

56.2

111,603

0.1－－

8,596,737

9.9

－

－

9,720,343

11.2

－

－

14,464,078

16.6

－

－

2,672,989

3.0

－

－

- 191,464

- 0.2

－

－

35,262,684

40.5

－

－

87,003,740

100.0

－

－

I Owners’ equity－－

1.Paid-in capital－－

9,696,717

10.7

9,696,717

11.2

2.Capital surplus－－

10,960,869

12.0

10,960,869

12.6

Liabilities
Total Liabilities(Minority Interests)
Minority interests(Shareholders’ Equity)
Ⅰ

Common stockⅡ

Additional paid-in
capitalⅢ

Earned surplus

Ⅳ

Valuation differenceon other negotiablesecurities
Treasury stockⅤ

Total Shareholders’EquityTotal Liabilities andShareholders’ Equity(Net Assets)

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 19

3.Earned surplus－－

16,976,821

18.7

14,889,638

17.2

4.Treasury stock－－- 11,415- 0.0- 6,303- 0.1

Total Owners’ Equity－－

37,622,992

41.4

35,540,922

40.9

－

－

2,649,377

2.9

2,418,684

2.8

－

－

2,649,377

2.9

2,418,684

2.8

III Minority Interests－－

127,653

0.2

92,1590.1

Total Net Assets－－

40,400,023

44.5

38,051,766

43.8

－

－

90,867,612

100.0

86,815,592

100.0

II Valuation andtranslation
adjustments
1.Valuation differenceon other investment
securities
Total Valuation andtranslation
adjustments

Total Liabilities andNet Assets

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 20

2. Interim Consolidated Statements of Income(Amounts have been rounded down to the nearest thousand yen)
PeriodPrior Consolidated

Current Consolidated Fiscal Year Interim

Fiscal Year Interim Period

PeriodBalance Sheet(From November 1, 2005 to April 30,(From November 1, 2006 to April 30,(From November 1, 2005 to October 31,

2006)
Category

AmountPrior Fiscal Year Summary Consolidated

2007)
Percent

Amount2006)
Percent

AmountPercent

Revenues fromⅠ

operations
1.Rental revenues

24,004,132

2.Sales

10,516,055

24,776,553
34,520,187

100.0

11,454,139

46,058,582
36,230,692

100.0

21,965,199

68,023,782

100.0

49,745,294

73.1

Cost of revenues

Ⅱfrom operations
1.Cost of rental

2.Cost of goods sold

8,144,894

Gross profitⅢ

16,708,757

16,446,658

revenues

24,591,553

71.2

9,928,633

8,575,926

32,697,199
25,284,683

69.8

17,048,094

28.8

10,946,008

30.2

18,278,487

26.9

7,055,561

20.5

7,507,667

20.7

14,210,350

20.9

2,873,072

8.3

3,438,340

9.5

4,068,136

6.0

315,6620.5

595,3400.9

3,788,458

5.6

394,726

0.6

Selling, generaland administrative*1

expenses
Operating income
Non-operatingⅣrevenues
1.Interest revenue

229

11,8072,467

2.Dividend income

10,104

14,05940,396

17,7994,312

24,883

4.Insurance benefits

22,934

18,84340,9105.Rents received

44,84943,41590,902－

101,816－3.Gain on sale ofinvestment
securities

6.Cash bonus
received
7.OtherⅤ

76,859172,776

0.5

45,141

239,3960.7

116,103

Non-operating
expenses

1.Interest expense
2.New shareissuance costs
3.Other

168,160

194,164

357,750－－

14,762

76,327

Ordinary income
Ⅵ244,4870.7

2,801,361

8.1

61,176

255,3400.7

3,422,396

9.5

222,828Extraordinary
profits

1.Gain on sale orretirement of fixed

*2

883

920,700

50,018

544

4,946

8,515

11,54820,99033,270

3,246

1,336

－

－

－

275,500

assets2.Valuation gain on
investment
partnership
3.Gain on reversal of
allowance for
doubtful accounts
4.Gain on sale ofinvestment
securities
5.Compensation
received
6.OtherⅦ

69

16,2920.1

59

948,033

2.6

27,421

Extraordinary
losses

1.Loss on sale orretirement of fixed*3

16,75345,77452,366assetsFiscal Year Ending October 2007 Interim Accounting Bulletin

P. 21

2.Impairment loss

*4594,568890

594,568

17,80449－

3.Valuation loss on
investment
partnership
4.Other

9,365

Income before taxes
and adjustments
Corporate, local and638,492

1.9

2,179,161

6.3

1,121,920

business taxes

28,57675,2890.2

4,295,140

11.9

1,778,552

82,666729,600

1.1

3,453,583

5.1

1,689,906

2.5

1,767,872

Adjustment forcorporate and other- 31,697

1,090,222

3.2

40,4681,048,470

98,1801,876,732

5.2- 77,965

0.1

35,4930.1

21,0240.0

3.0

2,382,914

6.6

1,742,652

2.6

taxes
Minority interest inincome or loss
Net income

3. Interim Statements of Consolidated Retained Earnings(Amounts have been rounded down to the nearest thousand yen)
PeriodPrior Consolidated
Fiscal Year Interim Period(From November 1, 2005 to April 30,
2006)

Category

Amount(Capital Surplus)
Ⅰ

Balance of capital surplus
at the beginning of the9,720,343

periodⅡ

Balance of capital surplus
at the end of the interim

9,720,343

period(Earned Surplus)
Ⅰ

Balance of earned surplus
at the beginning of the

13,691,585

periodⅡ

Increase in earned surplus
Interim period net incomeⅢ

1,048,470

Decrease in earned surplus

1.Dividends
2.Directors and auditors’
bonusesⅣ

1,048,470

268,677
7,300

275,977

Balance of earned surplus
at the end of the interim

14,464,078

periodFiscal Year Ending October 2007 Interim Accounting Bulletin

P. 22

Current Consolidated Accounting Fiscal Year Interim Period (From November 1, 2006 to April 30, 2007)(Unit: Thousands of yen)
Owners’ equity
Paid-in capital
Balance at the end of theprior consolidated accounting
fiscal year (October 31,
2006)

Capital surplus

9,696,717

Earned surplus

10,960,869

Total owners’
equityTreasury stock

14,889,638- 6,30335,540,922

Change of items during theconsolidated accounting fiscal
year interim period
Dividends from surplus- 295,732- 295,732

Net income

2,382,914

2,382,914

Purchase of treasury stock- 5,112- 5,112

Change of items other thanowners’ equity during theconsolidated accounting
fiscal year interim period(net amount)
Total changes of items during
the consolidated accounting
fiscal year interim period
Balance at the end of theconsolidated accounting
fiscal year interim period(April 30, 2007)－－

2,087,182- 5,1122,082,070

9,696,717

10,960,869

16,976,821- 11,415

37,622,992

Valuation and translation adjustments
Valuationdifference on otherinvestment
securities
Balance at the end of theprior consolidated accounting
fiscal year (October 31,
2006)

2,418,684

Total valuation andtranslation
adjustments

2,418,684

Minority interests

92,159Total net assets

38,051,766

Change of items during theconsolidated accounting fiscal
year interim period
Dividends from surplus- 295,732

Net income

2,382,914- 5,112Purchase of treasury stock
Change of items other thanowners' equity during theinterim consolidated
accounting period (netamount)230,693

230,693

35,493

266,186

Total changes of items during
the consolidated accounting
fiscal year interim period

230,693

230,693

35,493

2,348,256

2,649,377

2,649,377

127,653

40,400,023

Balance at the end of theconsolidated accounting
fiscal year interim period(April 30, 2007)

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 23

Prior Consolidated Accounting Fiscal Year (From November 1, 2005 to October 31, 2006)(Unit: Thousands of yen)
Owners’ equity
Paid-in capital
Balance at the end of theprior consolidated fiscal year
(October 31, 2005)

Capital surplus

Earned surplus

Treasury stock

8,596,737

9,720,343

13,691,585- 186,594

1,099,980

1,097,046

Total owners’
equity31,822,071

Change of items during theconsolidated fiscal year
Issuance of new shares

2,197,026

Dividends from surplus- 268,677- 268,677

Dividends from surplus(interim dividend)- 268,622- 268,622- 7,300- 7,300

1,742,652

1,742,652

Directors and auditors’
bonuses from appropriationof earnings
Net income
Purchase of treasury stock
Disposal of treasury stock

143,480-11,781-11,781

192,072

335,552

Change of items other thanshareholders’ equity during
the consolidated fiscal year
(net amount)－

Total changes of items during
the consolidated accounting
fiscal year

1,099,980

1,240,526

1,198,052

180,290

3,718,850

Balance at the end of theconsolidated accounting fiscal
year (October 31, 2006)

9,696,717

10,960,869

14,889,638- 6,30335,540,922

Valuation and translation adjustments
Valuation
Total valuation anddifference on othertranslation
investment
adjustments
securities
Balance at the end of theprior consolidated fiscal year
(October 31, 2005)

1,643,403

1,643,403

Minority interests

71,135

Total net assets

33,536,610

Change of items during theconsolidated fiscal year
Issuance of new shares

2,197,026

Dividends from surplus- 268,677

Dividends from surplus(interim dividend)- 268,622

Directors and auditors’
bonuses from appropriationof earnings- 7,300

Net income

1,742,652

Purchase of treasury stock- 11,781

Disposal of treasury stock

335,552

Change of items other thanshareholders’ equity during
the consolidated fiscal year
(net amount)775,281775,281

21,024

796,305

Total changes of items during
the consolidated accounting
fiscal year under review

775,281775,281

21,0244,515,155

Balance at the end of theconsolidated accounting fiscal
year under review (October
31, 2006)

2,418,684

2,418,684

92,15938,051,766

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 24

4. Interim Consolidated Statements of Cash Flows(Amounts have been rounded down to the nearest thousand yen)
PeriodCategoryⅠ

Prior Consolidated

Current Consolidated

Prior Fiscal Year Summary

Fiscal Year Interim Period

Fiscal Year Interim Period(From November 1, 2005 to April(From November 1, 2006

30, 2006)

to April 30, 2007)

AmountAmountConsolidated Statement of Cash
Flows
(From November 1, 2005 to
October 31, 2006)
AmountCash flow from operating activities
Income before taxes and adjustments

2,179,161

4,295,140

3,453,583

Depreciation and amortization expense

2,282,463

2,176,707

4,792,624

594,568890

594,568

52,273－－－73,859136,546- 883- 920,700- 50,018

16,75345,74452,366

8,749

56,728125,132

1,615

8,609

6,866

244,027

210,073

569,273- 567,212-1,168,121- 1,811,898

New share issuance costs－－

14,762

Valuation loss on investment securities

－

3,516

－

- 17,799- 4,312- 24,883- 258,557

60,284- 502,887

50,99025,686- 4,059

2,750- 5,500

5,500

66,07081,789155,725

28,235- 2,063

18,741- 10,333- 25,867- 42,863

23,25920,85642,906

168,160

194,164

357,750

1,086,136

1,946,567- 630,235- 102,528- 124,438- 21,251

2,603,795

805,489

1,581,719

385,363546,673

428,072- 7,300－- 7,300

Other, net

1,060,185- 12,693

489,036

Subtotal

9,889,946

8,289,113

9,729,787

10,33325,86742,863

Interest expense- 197,163- 224,521- 400,061

Payment of corporate and other taxes- 519,330- 1,315,632- 957,962

9,183,785

6,774,826

8,414,626

Impairment loss
Amortization of consolidation
adjustment account
Amortization of goodwill
Gain on sale or retirement of fixed
assetsLoss on sale or retirement of fixed
assetsInstallment purchases of assets forsmall-value rentals
Reclassification of cost of sales
associated with disposal of construction
equipment
Reclassification of cost of sales
associated with disposal of rental assets
Expenditures for acquisition of rental
assetsGain on sale of investment securities
Increase in allowance for doubtful
accounts
Increase (decrease) in accrued bonuses
to employees
Increase in accrued bonuses to directors
and auditors
Increase (decrease) in accrued
employees retirement benefits
Increase in retirement allowances todirectors and auditors
Interest revenue and dividend income
Interest expense on installment
purchases of rental assets
Interest expense(Increase) decrease in accounts
receivable, trade(Increase) decrease in inventory assets
Increase (decrease) in accounts
payable, trade
Increase (decrease) in accounts
payable, other
Directors and auditors’ bonuses paid

Interest and dividends received

Cash flow from operating activities

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 25

(Amounts have been rounded down to the nearest thousand yen)
PeriodCategoryⅡ

Prior Consolidated

Current Consolidated

Prior Fiscal Year Summary

Fiscal Year Interim Period

Fiscal Year Interim Period(From November 1, 2005 to April 30,(From November 1, 2006

2006)

to April 30, 2007)

AmountAmountConsolidated Statement of Cash
Flows
(From November 1, 2005 to
October 31, 2006)
AmountCash flow from investing activities
Disbursements for investments in term
deposits
Funds used for the purchase ofinvestment securities
Funds provided from the sale ofinvestment securities

－

－

3,018

- 308,269- 68,933- 465,832

1,244,098

153,208

1,353,015- 34,778

－

- 200

－

－

- 403,049- 1,771,801- 2,248,477

24,563

1,846,880

931,262- 5,914- 40,866- 14,729- 50,025- 1,199,992- 50,02560

10,8072,556

501,264- 1,105,476- 489,212- 18,668- 107,704- 79,660

4,400,000

5,350,000

8,200,000- 5,646,248- 5,480,868- 11,453,496- 1,193,130- 1,062,467- 2,271,544－－

2,182,264－－

335,552- 4,869- 5,112- 11,781- 268,677- 295,732- 537,300- 2,731,594- 1,601,883- 3,635,966

6,953,455

4,067,466

4,289,448

14,108,863

18,398,312

14,108,863

21,062,318

22,465,779

18,398,312

Funds used for establishment ofaffiliated company
Funds used for payment of capital
contribution
Funds used for the purchase of tangible
fixed assets
Funds provided from the sale of tangible
fixed assets
Funds used for the purchase ofintangible fixed assets
Funds used for the purchase of nonconsolidated subsidiary stock
Other
Cash flow from investing activities
Cash flow from financing activities
Decrease in short-term bank loans
Funds provided by long-term bank loans
Funds used to repay long-term bankloans
Funds used for repayment of installment
obligations
Funds provided by new share issuanceFunds provided from disposal oftreasury stock
Funds used for the purchase of treasury
stock
Payment of dividends to parent
company
Cash flow from financing activities
Increase (decrease) in cash andequivalents
Balance of cash and equivalents at
beginning of period
Balance of cash and equivalents at end of
the interim period (consolidated fiscal
year)

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 26

Significant Accounting Policies for the Consolidated Financial Statements
PeriodCategory
1. Companies included in
the consolidation

Prior Consolidated Fiscal
Year Interim Period(From November 1, 2005
to April 30, 2006)(1) Number of consolidated

Current Consolidated Fiscal
Year Interim Period(From November 1, 2006
to April 30, 2007)(1) Number of consolidated

Consolidated

Consolidated

company(1) Number of consolidated
companies: 5companies: 5companies: 5

Prior Consolidated Fiscal Year
(From November 1, 2005
to October 31, 2006)

Consolidated

company

company

name:

name:

name:

Assist Co., Ltd.

Assist Co., Ltd.

Assist Co., Ltd.

SRG Kanamoto Co., Ltd.

SRG Kanamoto Co., Ltd.

SRG Kanamoto Co., Ltd.

Kanatech Co., Ltd.

Kanatech Co., Ltd.

Kanatech Co., Ltd.

Daiichi Kikai Co., Ltd.

Daiichi Kikai Co., Ltd.

Daiichi Kikai Co., Ltd.

Kanki Corporation

Kanki Corporation

(2)

Main

non-consolidated

(2)

Main

Kanki Corporation

non-consolidated(2) Main non-consolidated

subsidiaries

subsidiaries

subsidiaries

Non-consolidated subsidiaryNon-consolidated subsidiaryNon-consolidated subsidiarycompany namecompany namecompany nameComsupply Co., Ltd.

Comsupply Co., Ltd.

Comsupply Co., Ltd.

Kanki Maintenance Co.,

Flowtechno Corporation

Kanki

Ltd.

Kyusyu Kensan Co., Ltd.

Ltd.

KensanFukuoka

Maintenance

Co.,

Co.,

Ltd.
(Reasonfor

exclusionfrom consolidation)
The

size

of

Center Corporation.
(Reason for exclusionfrom consolidation)

the

non-

The

size

of

the

non-

(Reasonfor

exclusionfrom consolidation)
The size of thenon-consolidated subsidiaries is

consolidated subsidiaries is

consolidated subsidiaries issmall and their net assets,

small and their net assets,

small and their net assets,

sales and interim period

sales and interim period

sales and fiscal year profit

profitprofit

or

or

loss

corresponding
andtoretained(amount
equity)earnings

orloss

corresponding
andtoretained(amount
equity)earnings

loss

corresponding
andretained(amount
toequity)earnings(amount corresponding to(amount corresponding to(amount corresponding toequity) are small in size

equity) are small in size

equity) are small in sizeand do not have a material

and do not have a material

and do not have a material

effectinterimeffectinterimeffect on the consolidated

financialconsolidated

financialfinancial statements.

onconsolidated
statements.

the

on

the

statements.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 27

2. Matters pertaining toThreeapplication of equity

subsidiaries

method accountingCo.,

non-consolidated

non-consolidated

Three

non-consolidated(Comsupply

subsidiaries

and

Co.,

Ltd.,

Flowtechno

affiliatedcompanies

Maintenance Co., Ltd. andCorporation,

KyushuFlowtechno

Corporation)

Kensan Co., Ltd., Kensan

Corporation

affiliatedFukuoka Co., Ltd., Kensan

Power

Ltd.,

and

Kanki

two

(Active

Technology

Ltd.

and

been omitted from items to

Technology

Corporation

CenterCorporation)

and

which

Active

Power

two

been

(Activehave

equitycompanies

accounting

Technology

becauseaffiliatedmethodisappliedtheirrespective

Corporation and Shanghai

effect on consolidated net

methodJinheyuan

income orisappliedRentaltheirrespective

omitted

from

which

equityitems

toEquipment

Co.,

Ltd.)

loss (amounthave

corresponding to minority

been omitted from items tointerest) and consolidated

effect on consolidated net

whichmethodcapitalincomeaccounting

isappliedcorresponding to minority

their

or

loss

(amount

equitysurplus(amount

corresponding to minority

becauserespective

interest) is immaterial andinterest) and consolidated

effect on consolidated net

none of the companies iscapitalincome(amount

importantcorresponding to minority

corresponding to minority

Company’s

interest) is immaterial andinterest) and consolidated

operations.

none of the companies iscapital(amount

Active Power Corporation

importantthecorresponding to minority

was liquidated on January

overallinterest) is immaterial and18,

none of the companies is

Maintenance Co., Ltd. was
liquidated on October 3,

surplus(amounttoCompany’s
operations.

or

loss

surplus

Active Power Corporation

important

was liquidated on January

Company’s

18, 2006.

operations.

The

interimperiod-end

The

to

the
overallinterimperiod-end

to

2006,

Kanki

The fiscal year closing

closing date for all of thedate(fiscalconsolidated

consolidated

consolidated

subsidiaries

and

2006.

closing date for all of thesubsidiaries

theoverallthe interim period-end

subsidiaries

have

Co.,

becauseconsolidated

ActiveCorporation)

Technoaccounting

for

and

(Active

Corporation)

year-end)

twocompanies
and

3. Matters pertaining toSixsubsidiaries(Comsupply

for

all

of

the

subsidiaries

except Kanki Corporation

except Kanki Corporation

except Kanki Corporation

is February 28.

is February 28.

is August 31.

When

preparinginterimtheWhenconsolidated

interimpreparingtheconsolidated

When

preparingconsolidatedthefinancialfinancialstatements,

thefinancialstatements,

thestatements, the Company

CompanyusedtheCompany

used

the

used

subsidiaries’

financialsubsidiaries’

financialthesubsidiaries’

financial statements as ofstatements as of February

statements as of February

August28, and made adjustments

28, and made adjustments

significant

for significant transactions

for significant transactions

that occurred between the

that

that

subsidiaries’

occurred

betweenoccurred

between31,

adjustedfortransactions
fiscalyear-

March 1, 2006 and the

March 1, 2007 and theend and the consolidationinteriminterimconsolidated

date that have a material

accounting date on April

consolidated

accounting date on April

effect on the consolidated

30,

30,

financial results.

2006

that

were

2007

that

were

deemed to have a material

deemed to have a material

effectinterimeffectfinancialconsolidatedon

consolidated
results.

the

on

the

interimfinancialresults.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 28

4.

Accounting

principles

and standards used fornormalaccounting

treatment(1)

Appraisal

standards

andappraisal

methods for principal
assetsa. Negotiable securities
Other negotiable securities
Securities with a market
price
The

Company

hasa. Negotiable securities
Other negotiable securities
Securities with a market
price
The

Company

hasa. Negotiable securities
Other negotiable securities
Securities with a market
price
The

Companyhasadopted the market value

adopted the market value

adopted the market value

method (the full amount ofmethod (the full amount ofmethod (the full amount of

the valuation difference isthe valuation difference isthe valuation difference ischarged to equity using thecharged to equity using thechargeddirect transfer to capital

direct transfer to capitalthemethod, with the disposal

method, with the disposal

capital method, with the

cost

cost

determined

cost

by

the

movingaveragebased on the market pricebased on the market pricemethod)

based

on

the

on

consolidatedon

consolidated

market

price

on

the

fiscalaccounting

fiscalconsolidated

the

by

the

to

disposal

year

determinedusing

transfermoving average method)

accounting

theequitymoving average method)
the

by

to

directyear

determinedaccounting

interim period closing dateinterim period closing datefiscal year closing date oror similar prices.

or similar prices.

similar prices

Securities without market
pricesSecurities without market

Securities without market

pricespricesThe

Companyhasadopted the cost method,Same as at left

Same as at leftb. Construction equipment
Same as at leftb. Construction equipment
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

cost being determined bythemovingaveragemethodb. Construction equipment
Amount after deductionofdepreciation

expensecalculated according to thedeclining-balancemethodfrom the original prices, byseparate

fiscalyearofpurchasec. Merchandise inventories
and supplies(i)
Merchandise
inventories
Lower of cost or market
based on the Last-in,
First-out method(ii) Supplies
The Latest Purchase Cost
method(ii) Supplies
Same as at left(ii) Supplies
Same as at left

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 29

(2) Depreciation methods
for principal
depreciable assets

a. Tangible fixed assets
The
Companyhasadoptedthea. Tangible fixed assets
Same as at left

a. Tangible fixed assets
Same as at left

b. Intangible fixed assets
Same as at left

b. Intangible fixed assets

declining-balance method. Buildings
on

land

that

is

leasedunder a fixed-term landlease agreement, however,are depreciated using thestraight-line method using
the remaining period of the
fixed-term

lease

as

the

depreciable life and zero
residual value. For certain
consolidated

subsidiaries,

the Company has adopted
thestraight-line

methodfor buildings and structuresacquired on or after April
1,

2000

but

excluding

fixtures and equipment.
The

depreciable

mainly

used

by

lives
the

Company are as follows.
Rental assets
5-10
years
Buildings
31-34
years
b. Intangible fixed assets
The
CompanyhasadoptedtheSame as at left

declining-balance method.
Software for use withintheCompany

depreciated

using

is
the

straight-line method basedon the assumed useful life
for internal use (5 years).
New(3) Accounting standards

shareissuance

costs

for deferred assets

The Company expenses
the full amount of newshare issuance costs when(4) Accounting standards
for principal allowancesand reserves

a. Reserve for doubtful
accounts
To provide for losses on
doubtful accounts such asaccounts

receivable,

theCompany

chargestoa. Reserve for doubtful
accounts
Same as at left

the costs are incurred.
a. Reserve for doubtful
accounts
Same as at left

income an amount basedon actual loss experience
for normal accounts, plus
an amount for projected
unrecoverable

amounts

based on assessments ofindividual accounts.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 30

b. Accrued bonuses to
employees
To fully provide
expenditures

of

for

b. Accrued bonuses to
employees
Same as at leftb. Accrued bonuses to
employees
Same as at left

bonusesthe Company will pay toemployees, an amount isappropriated to the reserve
during
upon

the
a

year

salarybased

estimate

amount.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 31

c. Accrued bonuses todirectors and auditors
The Company provides

c. Accrued bonuses todirectors and auditors──────

c. Accrued bonuses todirectors and auditors
The Company provides

for accrued directors andfor accrued directors andauditors’ bonuses. At theauditors’ bonuses. At theendend of the consolidated

of

the

consolidated
period,interimaccounting

theaccounting

fiscalyear,

Company

the Company accrued an

accrued an amount toamount to provide forprovide for the liability

therecognized

during the period.

duringtheperiod.

liability

recognized(Supplemental information)(Supplemental information)
In

the

past,

the

In

the

past,

the

Company accounted for

Company accounted for

directors

directors

auditors’bonuses as a decrease inbonuses as a decrease inunappropriated retained

unappropriated retained

earnings, based on theearnings, based on the

Proposal

ProposalforAppropriation

AppropriationofRetainedandRetained

Earnings

andauditors’forofEarnings

approved at the Generalapproved at the General

Meeting

Meeting

Shareholders. Beginning

of

the

of

the

Shareholders. Beginning

from

from

consolidated

accounting

fiscalyear,

however, the Company

however, the Company

will account for directors

will account for directors

and auditors’ bonuses as

and auditors’ bonuses asananaccounting

thisaccounting

expensethisconsolidated
fiscalexpense

year,

of

the

period

in

of

the

periodinwhich such bonuses arewhich such bonuses are

accrued, based on theaccrued, based on the

Accounting Standard for

Accounting Standard for

Directors’

Bonuses

Directors’(AccountingStandards

accounting

Bonuses(Accounting
Board

Standards

ofJapan,

Accounting

Board

of

Japan,

Accounting

Statement

Statement

No. 4 dated November

No. 4 dated November

29, 2005). As a result,29, 2005). As a result,operatingoperatingordinary

ordinary

income,incomeandincome,incomeincome before taxes andadjustments

adjustments

were¥5,500,000

less

than

they

otherwise

would

have

been

¥2,750,000

hadaccounting
used

in

the

standards
pastotherwise

would

have

been

used

in

the

standards
past

periodsof

thischangeontheCompany’s

informationonCompany’s

information

segment

had

accounting
been applied.

change
by

than

they

The

affectwere
lessperiods

been applied.
The

and

income before taxes and

is

not

by

affectsegment

of

this
the

is

not

material.

material.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 32

d. Accrued employees
retirement benefit
The Company provides
foremployees’d. Accrued employees
retirement benefit
Same as at left

accruedd. Accrued employees
retirement benefit
The Company provides
foremployees’

accruedretirement benefits based

retirement benefits based

upon

upon

the

projected

theprojected

amounts of the liability for

amounts of the liability for

accruedaccruedemployees

employees

retirement benefits and theretirement benefits and thevalue of pension assets atvalue of pension assets at

the end of the consolidated

the end of the consolidated

fiscal year. At the end of

fiscal year. At the end ofeach interim consolidated

each

accounting

theaccounting fiscal year, theCompany appropriates an

Company appropriates anamount to the reserve toamount to the reserve toprovideprovideperiod,fortherecognizedliability

duringtheconsolidated

for

the

recognizedperiod.

liability

duringtheperiod.

The difference based on

The difference based onan actuarial calculation isan actuarial calculation ischargedchargedtoincomebeginninginconsolidated

accounting

fiscal

year

year

in

the

following

which

the

to
in

consolidated

accounting

fiscal year

incurred,incomebeginning

year

in

the

following

which

the

incurred,with the amounts allocatedwith the amounts allocatedproportionately using the

proportionately using thestraight-line

method,straight-line

specified

based

based

on

number

a

of

years

(10

on

numberofmethod,aspecified

years

(10

years) that is less than theyears) that is less than the

average remaining period

average remaining periodofof

employment

for

employees at the time thedifference arises.
e. Retirement allowances todirectors and auditors
The Company provides

employment

for

employees at the time thee. Retirement allowances todirectors and auditors
Same as at leftdifference arises.
e. Retirement allowances todirectors and auditors
The Company provides

for retirement allowances

for retirement allowances

to directors and auditors

to directors and auditors

based upon pertinent rules

based upon pertinent rules

and appropriatedtheand appropriated to theaccount proportionately at

account proportionately atthethe end of the consolidated

end

of

consolidated

the

to

interimaccounting

accounting

period based upon length

basedof service.

service.

(5) Lease transactions

Forfinancetransactions
leaseslease

exceptthat

Same as at left

upon

fiscalyear

lengthofSame as at leftfortransferownership of the property
tothelessee,rent

expenses are charged toincome as payments are
made.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 33

(6) Hedge accounting forprincipal hedging
methodsa. Hedge transactions
The Company accounts
for

hedge

a. Hedge transactions

a. Hedge transactions

Same as at left

Same as at left

b. Hedge methods andhedged transactions

b. Hedge methods andhedged transactions

Same as at left

Same as at lefttransactions

using allocations based on
accounting

standards

foreignforcurrency-

denominated transactions,and special rule accounting
based

on

standards

accountingforfinancial

products.
b. Hedge methods andhedged transactions
The
Company
uses
currency

swaps

and

forwardtransactions

inorder to avoid the currency
fluctuation risk related totheCompany’s

foreigncurrency-denominatedstraight

bonds

liabilities

forimportandpayments.

The

Company

also uses interest swaps to
avoid

interest

rate

fluctuation risk related tointerestonbankborrowing.
c. Hedging policies
The Company’s use ofc. Hedging policies

c. Hedging policies

Same as at left

Same as at left

d. Method for evaluating theeffectiveness of hedges

d. Method for evaluating theeffectiveness of hedges

Same as at left

Same as at leftderivative transactions islimitedtohedgingrisk

within the scope of theCompany’s

assetsandliabilities subject to market
fluctuation risk.
d. Method for evaluating theeffectiveness of hedges
The Company does notevaluate the effectivenessof its hedge transactions
because it can assume thatits

currencytransactions

forwardoffsetmarkettransactions
completely

swap

and

will

fluctuations or changes incash flow from the timehedge begins until it isterminated.
theIn

addition,

Company’s

interest

swap transactions fulfill therequirementsforspecialrule accounting, and theCompany has elected touse this in place of anevaluation of effectiveness.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 34

(7) Other material
matters pertaining topreparation of theinterim consolidated
financial statements(consolidated
financial statements)

Accounting treatment ofconsumption tax
Consumption tax is taken

Accounting treatment ofconsumption tax
Same as at left

Accounting treatment ofconsumption tax
Same as at left

out of all Statement of
Income items and Balance
Sheet items, except mainlyforreceivables

andpayables.
5.

Items included in cash

Cash on hand, deposits

and equivalents on thethat can be withdrawn on

Interimdemand and highly liquid

Consolidated

Statements
Flows

Cash

(Consolidated

Statements
Flows)

of
of

Cash

short-termSame as at left

Same as at left

investmentsthat mature within threemonths

of

the

date

of

acquisition and which canbe easily converted into
cash

and

that

have

minimal risk of a change inprice.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 35

Changes in Important Matters Used as the Basis for Preparation of the Interim
Consolidated Financial Statements
Prior Consolidated Fiscal Year
Interim Period(From November 1, 2005
To April 30, 2006)

Current Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Prior Consolidated Fiscal Year
(From November 1, 2005
To October 31, 2006)(Accounting Standard for Impairment──────

(Accounting Standard for Impairmentof Fixed Assets)
Beginning from this consolidatedof Fixed Assets)
Beginning from this consolidated

accounting fiscal year interim period,

accounting fiscal year, the Company

the

has

Companyhasadoptedtheadoptedthe

Accounting

Accounting Standard for Impairment

Standard for Impairment of Fixedof Fixed Assets (“Opinion Concerning

AssetsEstablishment

EstablishmentofAccounting(“Opinion

Concerningof

AccountingStandard for Impairment of FixedStandard for Impairment of Fixed

Assets,”Accounting

Assets”(Business

Accounting

2002)

Council,August2002)

Council,Business
August

8,

and

9,

and

“Implementation Guidance for the“Implementation Guidance for the

Accounting Standard for Impairment

Accounting Standard for Impairment

of

of

Fixed

Assets,”Accounting

Fixed

Assets”(AccountingStandards Board of Japan, OctoberStandards Board of Japan, October

31,

31,

2003,

Financial

Accounting

2003,

Financial

AccountingStandard Implementation GuidanceStandard Implementation Guidance

No. 6).

No. 6).

As a result, interim period income

As a result, interim period income

before taxes and adjustments was

before taxes and adjustments was¥594,568,000 lower than it would¥594,568,000 lower than it would

have

have

been

had

the

accounting

been

had

the

accounting

standards used in previous periods

standards used in previous periods

been applied.

been applied.
The affect of this change on the
Company’s information by segment
is described in the relevant section.

The

total

amount

of

the

The

total

amountoftheimpairment loss is deducted directly

impairment loss is deducted directlyfrom the balance for each asset

from the balance for each asset

based on the revised standards forbased on the revised standards for

preparation of interim consolidated

preparation of interim consolidated

financial statements and other rules.

──────

financial statements and other rules.

──────

(Accounting Standard for Presentationof Net Assets in the Balance Sheet)
Beginning from this consolidated
accounting fiscal year, the Company
hasadoptedthe“AccountingStandard for Presentation of Net
Assetsin(Accounting
Japan

the

BalanceStandards

Statement

December

9,

No.

2005)

Sheet”

Board

of

5

dated

and

the

“Guidance on Accounting Standard
for Presentation of Net Assets in the
Balance

Sheet”(AccountingStandards Board of Japan Guidance
No. 8 dated December 9, 2005).

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 36

The amount corresponding to thetotal of shareholders’ equity basedon the past accounting standard is¥37,959,606,000.
The

net

asset

sectionof

theconsolidated balance sheet for the
consolidated accounting fiscal year
under review was prepared based ontherevisedconsolidated

financialstatements rules.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 37

Change in Reporting Method
Prior Consolidated Fiscal Year Interim Period(From November 1, 2005
to April 30, 2006)

Current Consolidated Fiscal Year Interim Period(From November 1, 2006
to April 30, 2007)(Interim Consolidated Statements of Income)(Interim Consolidated Statements of Income)

Until the prior consolidated accounting fiscal year──────

interim period, the Company reported income fromrecovery of bad debts in “Other” under extraordinary
profits. The Company has reported this item separately
becausetheamountexceeded

10%

of

total

extraordinary profits.
The amount of "income from recovery of bad debts" in
the interim period of the prior consolidated accounting
year was ¥61,000.

──────

Until the prior consolidated accounting fiscal year
interimperiod,theCompany

reported

cash

bonus

received as a separate category in “Other” under nonoperating revenues. The Company has reported this item
separately because the amount exceeded 10% of total
non-operating revenues.
The amount of “cash bonus received” in the interim
period of the prior consolidated
accounting fiscal year was ¥29,552,000.

(Interim Consolidated Statements of Cash Flows)(Interim Consolidated Statements of Cash Flows)
Beginning

from

the

current

interimconsolidated

accounting period, the goodwill amortization expensepreviously reported in “Depreciation and amortization
expense” (¥16,000,000 for the interim period of theprior consolidated accounting fiscal year) will be included
in “Amortization of goodwill,” based on the revisedinterim consolidated financial statements rules. Also,
beginning

from

the

current

interimconsolidated

accounting period the amount reported in the past as“amortization of consolidation adjustment account” will
be included in “Amortization of goodwill.”

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 38

Notes to the Interim Financial Statements(Notes to the Interim Consolidated Balance Sheets)
Prior Consolidated Fiscal Year
Interim Period

Current Consolidated Fiscal Year
Interim Period

Prior Consolidated
Fiscal Year(As of April 30, 2006)(As of April 30, 2007)(As of October 31, 2006)

1. Guarantees

1. Guarantees

1. Guarantees

Joint and several guarantees

Joint and several guarantees

of employee bank loansof employee bank loans

31,159,000

Guarantee of debt for long-termbank loan to affiliated company

bank loan to affiliated company

bank loans

100,000,000

100,000,000

2. Discount on notes receivable,

2.

trade

trade

27,162,000
term bank loan to affiliated(Flowtechno Corporation)

Total

company(Flowtechno Corporation)

100,000,000

127,763,000

Discount

on

notes

Total

receivable,

127,162,000

2. Discount on notes receivable,
trade

155,972,000

475,474,000

373,580,000─────

*3. Notes and bills maturing at the *3. Notes and bills maturing at the
end

of

the

interimperiod end of the interim period (consolidated(consolidated fiscal year)

fiscal year)

Notes and bills maturing on theNotes and bills maturing on thelast day of the interim period arelast day of the interim period aresettled and processed on the notesettled and processed on the noteand bill clearing date. Because theand bill clearing date. Because thelast day of the Company’s current

last day of the Company’s current

consolidated

consolidated

fiscalyear

interimfiscalyear

interimaccounting period was a financial

accounting period was a financial

institution holiday, notes and bills

institution holiday, notes and bills

maturing on the final day of thematuring on the final day of thefollowinginterimfollowing consolidated interim period

includedinarefiscalinterimperiodconsolidatedareconsolidated

year

the

includedinaccounting period balance.

balance.
Notes receivable,

Notes payable,
trade

43,551,000
1,485,239,000

4.Contingent liabilities
The

Company

receivables

based

trade

consolidated

39,698,000

tradeNotes payable,

1,542,050,000

trade
4.Contingent liabilities

liquidates
on

a

bill
notes

receivables transfer program.
Notes receivable,thefiscal year interim accounting period

Notes receivable,trade

severalof employee

Guarantee of debt for long-(Flowtechno Corporation)

131,159,000

andguarantees

27,763,000

Guarantee of debt for long-term

Total

Joint

The

Company

receivables

based

4.Contingent liabilities
liquidates
on

a

bill

The Company liquidates billnotes

receivables based on a notes

receivables transfer program.

7,921,742,000

Notes receivable,
trade

receivables transfer program.
Notes

7,492,647,000 receivable,

5,734,296,000

trade

The amount of notes receivable,

The amount of notes receivable,

trade with a right of recourse totrade with a right of recourse to thereceivable, trade with a right of

the Company included in balance ofCompany

included

notes

notes

receivable,

receivable,¥1,665,477,000.

trade

is

¥1,549,803,000.

in

The

amountofnotesbalanceofrecourse

trade

is

included in balance of notes

to

the

receivable,

Company

tradeis¥1,244,278,000.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 39

(Notes to the Interim Consolidated Statements of Income)Prior Consolidated Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)*1. Major expense categories andCurrent Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)*1. Major expense categories and*1. Major expense categories andamounts included in selling,amounts included in selling,amounts included in selling,

general and administrative

general and administrative

general and administrative

expenses

expenses

expenses

Employee salaries andwages
Depreciation expense
Rents
Transfer to allowancefor doubtful accounts
Transfer to accrued
bonuses to employees
Transfer to accrued
bonuses to directors
and auditors

2,673,627,000
382,867,000
779,729,000
49,261,000
553,776,000
2,750,000

Employee salaries and29,248,749,000
wages
Depreciation expense
393,138,000
Rents
782,282,000
Transfer to allowance
83,891,000
for doubtful accounts
Transfer to accrued
535,553,000
bonuses to employees
Transfer to accrued－
bonuses to directors
and auditors

Employees retirement
benefit expense

156,204,000

Employees retirement
benefit expense

163,365,000

Transfer to retirement
allowances to directors
and auditors

9,268,000

Transfer to retirement
allowances to directors
and auditors

9,424,000

Amortization of
consolidation
adjustment account52,273,000

Amortization of
goodwill

55,459,000*2. Gain on sale or retirement of fixed
assets

*2. Gain on sale or retirement of fixed
assetsPrior Consolidated Fiscal Year
(From November 1, 2005
to October 31, 2006)

Employee salaries andwages
Depreciation expense
Rents
Transfer to allowancefor doubtful accounts
Transfer to accrued
bonuses to employees

Transfer to retirement
allowances todirectors and auditors

304,966,000

Amortization of
consolidation
adjustment account

18,741,000

Amortization of
goodwill

136,546,000*2. Gain on sale or retirement of fixed
assets772,000

Land

906,198,000

Land

110,000

Buildings and structures

14,413,000

Buildings and structures

883,000

Machinery, equipment and88,000delivery equipment
Total

assets.

*3. Loss on sale or retirement of fixed(Loss on sale of fixed assets)
Land

26,859,000

Other

284,000

Other

420,000

Buildings andstructures

12,040,000
1,541,000

Machinery, equipment
and delivery
equipment
Other

Total

(Loss on retirement of fixed assets)
Rental equipment
Buildings and9,025,000
7,402,000

structuresand delivery

337,000

15,427,000

Other

Total

*3. Loss on sale or retirement of fixed

Buildings andstructures

108,000

Land

2,428,000

Other

284,000(Loss on retirement of fixed assets)
Rental equipment
Buildings andstructures

24,055,000
21,261,000

and delivery

2,464,000

equipment

equipment
304,000

50,018,000

Machinery, equipment

Machinery, equipment
155,000

3,000

Total

(Loss on sale of fixed assets)

2,428,000

Rental equipment

110,000

Othersassets.

Land(Loss on retirement of fixed assets)

49,905,000

920,700,000

assets.

(Loss on sale of fixed assets)

510,328,000
5,500,000

Buildings and structures*3. Loss on sale or retirement of fixed

746,963,000
1,587,085,000
45,529,000

Employees retirement
benefit expense

Land

Total

5,529,726,000

1,728,000
45,774,000

Other

Total

1,763,000
52,366,000

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 40

Prior Consolidated Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)

Current Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Prior Consolidated Fiscal Year
(From November 1, 2005
to October 31, 2006)*4. Impairment loss
*4. Impairment loss
*4. Impairment loss
In the consolidated fiscal year interim In the consolidated fiscal year interim In the consolidated accounting fiscal year,
period, the Kanamoto group incurred an period, the Kanamoto group incurred an the
KanamotoGroup
incurredanimpairment loss on the following asset impairment loss on the following asset impairment loss on the following asset
group.
group.
group.
Location

Use

Asset

Kamakura City,

Location

Use

Tomakomai City,

Dormant

Hokkaido

asset

Kanagawa

Asset

Location

Use

Kamakura City,

Land

Kanagawa

Prefecture

Prefecture

Kanazawa City,

Kanazawa City,

Ishikawa

Dormant

Ishikawa

Land

asset

Prefecture

Dormant

Muroran City,

Hokkaido

Hokkaido

Five other

Five otherlocations

Land

asset

Prefecture

Muroran City,

Asset

Asset

locationsgroupings

used

by

the

Asset

groupings

used

by

the

Asset

groupings

used

by

the

Company to apply asset impairment

Company to apply asset impairment

Company to apply asset impairment

accounting

accounting

accounting

are

based

on

the

are

based

on

the

are

based

on

the

smallest unit for which profitability

smallest unit for which profitability

smallest unit for which profitability

can

can

can

be

Specifically,

determined
dormant

regularly.
assetsarebeSpecifically,

determined
dormant

regularly.
assetsarebeSpecifically,

determined
dormant

regularly.
assetsaregrouped using the assets for eachgrouped using the assets for eachgrouped using the assets for each

property.

property.

property.

For certain dormant assets for

For certain dormant assets for

For certain dormant assets forwhich the asset value was less thanwhich the asset value was less thanwhich the asset value was less thanbook value, the Company reduced

book value, the Company reduced

book value, the Company reduced

book value to the recoverable value,

book value to the recoverable value,

book value to the recoverable value,

and accounted for the reduction as

and accounted for the reduction as

and accounted for the reduction as

an impairment loss (¥594,568,000)

an

an impairment loss (¥594,568,000)

under

under

extraordinary

losses.

This¥594,568,000 was for land.
The

recoverable

value

impairment

loss

extraordinary(¥890,000)
losses.

This¥890,000 was for land.
for

this

The

recoverable

value

under

extraordinary

losses.

This¥594,568,000 was for land.
for

this

The

recoverable

value

for

this

asset group is measured according

asset group is measured according

asset group is measured according

to net sales price, and the land isto net sales price, and the land isto net sales price, and the land isevaluated using the inheritance tax

evaluated using the inheritance tax

evaluated using the inheritance tax

assessment value based on the landassessment value based on the landassessment value based on the land

tax

tax

tax

assessment

amount as a base.

value

or

other

assessment

value

amount as a base.

or

other

assessment

value

or

other

amount as a base.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 41

(Notes to the Interim Consolidated Statement of Changes of Changes in Net Assets)
Current consolidated accounting fiscal year interim period (From November 1, 2006 to April
31, 2007)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)
Number of shares at Increase in number Decrease in number Number of shares at
end of priorof shares during the of shares during theend of the current

consolidated

current consolidated current consolidated

consolidated

accounting fiscal

accounting year

accounting year

accounting year

year

interim periodinterim periodinterim period

Number of shares issued
Common stockTotal

32,872－－32,87232,872－－32,872

13

5

－

18

13

5

－

18

Treasury stock
Common stock
Total(Note) The number of treasury stock shares of common stock increased by 5,000 shares throughpurchases of shares comprising less than one investment unit.

2. Matters pertaining to subscription rights and treasury stock subscription rights
The Company had no material items to report.
3. Dividends(1) Dividends paid
Resolution

Class of stock

Total dividend(‘000 yen)

Dividend pershare (yen)Date of record

Payment date

October 31, 2006

January 29, 2007

January 26, 2007
Regular General Meeting Common stock

295,732

9.0

of the Shareholders(2) Dividends for which the date of record falls in the current consolidated accounting fiscal year interim
period and the dividend payment date is after the close of the current consolidated accounting fiscal
year interim period
Resolution

June 8, 2007 Boardof Directors meeting

Class of stocks

Total dividend(‘000 yen)

Source offunds fordividend

Dividend pershare (yen)Date of record

Payment dateCommon stock

295,682

Earned surplus

9.0

April 30, 2007

July 17, 2007

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 42

Prior consolidated accounting fiscal year (From November 1, 2005 to October 31, 2006)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)
Number of sharesat end of the priorconsolidated
accounting fiscal
year

Increase in
number of shares
during theconsolidated
accounting fiscal
year

Decrease in
number of shares
during theconsolidated
accounting fiscal
year

Number of sharesat end of theconsolidated
accounting fiscal
year30,2532,619－

32,87230,2532,619－

32,872

Common stock (Note 2, 3)

400

12

400

13

Total

400

12

400

13

Number of shares issued
Common stock (Note 1)
Total
Treasury stock(Notes) 1. The number of shares of common stock issued increased by 2,619,000 shares. This included
an increase of 2,600,000 shares of new stock issued through a public offering and anincrease of 19,000 shares of new stock issued by a third party allocation.
2. The number of treasury stock shares of common stock increased by 12,000 shares throughpurchases of shares comprising less than one investment unit.
3. The number of treasury stock shares of common stock decreased by 400,000 shares throughdisposals of treasury stock.
2. Matters pertaining to subscription rights and treasury stock subscription rights
The Company had no material items to report.
3. Dividends(1) Dividends paid
Resolution

Class of stock

Total dividend(‘000 yen)

Dividend pershare (yen)Common stock

268,677

Common stock

268,622

Date of record

Payment date

9.00

October 31, 2005

January 30, 2006

9.00

April 30, 2006

July 18, 2006

January 27, 2006
Regular General
Meeting of the
Shareholders
June 9, 2006
Board of Directors(2) Dividends for which the date of record falls in the current consolidated accounting fiscal
year and the dividend payment date is in the following fiscal year
Resolution

Class of stocks

Total dividend(‘000 yen)

January 26, 2007
Regular General

CommonMeeting of thestock

Shareholders

Source offunds fordividend

Dividend pershare (yen)Date of record

Payment date

Consolidated
295,732

retained

9.00

October 31, 2006 January 29, 2007

earnings

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 43

(Notes to the Interim Consolidated Statements of Cash Flows)
Prior Consolidated Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)
Relationships

betweeninterimCurrent Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)
Relationships

betweeninterimPrior Consolidated Fiscal Year
(From November 1, 2005
to October 31, 2006)
Relationships between fiscal year

period ending balance for cash andperiod ending balance for cash andendingequivalents and amounts for items

equivalents and amounts for items

equivalents and amounts for items

shown on the interim consolidated

shown on the interim consolidated

shownbalance sheet

balance sheet

consolidated balance sheet(As of April 30, 2006)(As of April 30, 2007)

balance
on

the

for

cash
fiscalandyear(As of October 31, 2006)

21,065,337,000

Cash and equivalents

22,465,779,000

Cash and equivalents

18,398,312,000

Term deposits with amaturity longer than 3months- 3,018,000

Term deposits with amaturity longer than 3months－Term deposits with amaturity longer than 3months－

Items considered to be

21,062,318,000

Items considered to be

22,465,779,000

Items considered to be

18,398,312,000

Cash and equivalents

cash and equivalents

cash and equivalents

cash and equivalents

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 44

Lease Transactions
Prior Consolidated Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)

Current Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Prior Consolidated Fiscal Year
(From November 1, 2005
to October 31, 2006)

1. Finance lease transactions except

1. Finance lease transactions except

1. Finance lease transactions except

for leases that transfer ownershipfor leases that transfer ownershipfor leases that transfer ownershipof the property to the lessee.

of the property to the lessee.

of the property to the lessee.

(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

and(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

and(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

andoutstanding balance at the end

outstanding balance at the end

outstanding balance at the endof the interim periodof the interim periodof the fiscal year accounting
periodPlease refer to Annex B

Please refer to Annex C(2) Outstanding balance of future(2) Outstanding balance of future(2) Outstanding balance of futurelease payments at the end oflease payments at the end oflease payments at the end of

Please refer to Annex A

After one year
Total

the period

the interim period

the interim period
Within one year

6,217,624,000

Within one year

15,764,380,000

After one year

21,982,005,000

Total

6,609,317,000

Within one year

18,914,851,000

After one year

25,524,168,000

Total

6,355,705,000
15,869,153,000
22,224,858,000(3) Amount of lease payments,(3) Amount of lease payments,(3) Amount of lease payments,

depreciation expense anddepreciation expense anddepreciation expense andinterest expenseinterest expenseinterest expense

Lease payments

3,173,021,000

Lease payments

4,229,927,000

Lease payments

6,471,623,000

Depreciation expense

2,896,195,000

Depreciation expense

3,633,687,000

Depreciation expense

5,912,597,000Interest expense

359,123,000(4) Accounting method for amountInterest expense

401,923,000(4) Accounting method for amountInterest expense

677,257,000(4) Accounting method for amountequivalent to depreciationequivalent to depreciationequivalent to depreciation

expenseexpenseexpenseSame as at left

Same as at left

(5) Accounting method for amount(5) Accounting method for amount(5) Accounting method for amountequivalent to interest expenseequivalent to interest expenseequivalent to interest expense

Same as at left

Same as at left

Straight-line depreciation
using the lease term as thedepreciable life and zero
residual value.

Interest method using thedifference between total lease
payments and the acquisition
price of the lease property,
allocated to each year.
2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

Within one year

1,922,375,000

Within one year

1,961,312,000

Within one year

2,150,840,000

After one year

4,887,972,000

After one year

4,625,495,000

After one year

5,381,216,000

Total

6,810,348,000

Total

6,586,807,000

Total

7,532,057,000

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 45

AnnexA
Acquisition
price（¥’000）37,404,823

15,152,877

22,251,945

Other assets

317,756

183,501

134,255

37,722,579

15,336,379

22,386,200

B

Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

43,482,821

17,665,036

25,817,785

Other assets

226,728

152,441

74,28643,709,550

17,817,478

25,892,072

Total

Annex

Outstandingbalance（¥’000）Rental assets

Total

Annex

Accumulated
depreciation（¥’000）C
Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

39,777,357

17,228,654

22,548,702

Other assets

313,056

194,312

118,744

40,090,413

17,422,966

22,667,447

Total

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 46

Notes Related to Negotiable Securities
Prior consolidated accounting fiscal year interim period (As of April 30, 2006)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Yen thousand)Prior consolidated accounting fiscal year interim period (As of April 30, 2005)
Balance on the interim
consolidated balance sheet

Acquisition priceDifference

1,618,914

6,101,853

4,482,939

a. Government bonds

－

－

－

b. Corporate bonds

－

－

－

c. Other－－－(1) Stock(2) Bonds(3) Other negotiable securities

123,000

127,610

4,610

Subtotal

1,741,914

6,229,463

4,487,549

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousand)Prior consolidated accounting fiscal year interim period(As of April 30, 2005)
Amount shown on the interim consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter
stocks)Other

229,400
87,644

Consolidated accounting fiscal year interim period under review (As of April 30, 2007)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Yen thousand)Consolidated accounting fiscal year interim period under review(As of April 30, 2006)
Balance on the interim
Acquisition priceDifference
consolidated balance sheet

1,610,278

6,076,077

4,465,799

a. Government bonds

－

－

－

b. Corporate bonds

－

－

－

c. Other－－－(1) Stock(2) Bonds(3) Other negotiable securities

103,000

85,132－17,867

Subtotal

1,713,278

6,161,210

4,447,931

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousand)Consolidated accounting fiscal year interim period under review(As of April 30, 2006)
Amount shown on the interim consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter
stocks)Other

211,400
73,186

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 47

Prior consolidated accounting fiscal year (As of October 31, 2006)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Yen thousand)Prior consolidated accounting fiscal year (As of October 31, 2006)
Acquisition price

Balance on the interim
consolidated balance sheet

Difference

1,631,981

5,714,959

4,082,977

15,375

15,42045(3) Other negotiable securities

145,500

123,340-22,160

Subtotal

1,792,856

5,853,719

4,060,862(1) Stock(2) Bonds
a. Government bonds
b. Corporate bondsc. Other

2. Details of other negotiable securities that do not have a market value(Unit: Yen thousand)Prior consolidated accountingTypefiscal year
(As of October 31, 2006)
Amount shown on the consolidated balance sheet

Other negotiable securities
Unlisted stocks (excluding over-the-counter stocks)

229,400

Unlisted foreign bonds－

Corporate bonds with warrants for new stock

－

Other

85,953Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 48

Notes Related to Derivative Transactions
Prior consolidated fiscal year interim period (As of April 30, 2006)
Because it applies hedge accounting, the Company had no material items to report.

Consolidated fiscal year interim period under review (As of April 30, 2007)
Because it applies hedge accounting, the Company had no material items to report.

Prior consolidated fiscal year (As of October 31, 2006)
Because it applies hedge accounting, the Company had no material items to report.

Notes Related to Stock Options
Prior consolidated fiscal year interim period (From November 1, 2005 to April 30, 2006)
The Company had no material items to report

Consolidated fiscal year interim period under review (From November 1, 2006 to April
30, 2007)The Company had no material items to report

Prior consolidated fiscal year (From November 1, 2005 to October 31, 2006)
The Company had no material items to report

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 49

Business Segment Information(Segment Information by Type of Business)
Prior consolidated accounting fiscal year interim period (From November 1, 2005 to April 30, 2006)(Unit: Yen thousand)Steel sales
business

Information
products
businessand otherbusinesses

Total

31,241,904

3,058,485

219,797

34,520,187

－

－

－

－

Total

31,241,904

3,058,485

219,797

34,520,187－ 34,520,187

Operating expenses

28,499,481

3,045,813

197,837

31,743,132- 96,017 31,647,114

Operating income

2,742,422

12,671

21,9602,777,054

Construction
equipment
rentalbusiness(1) Sales to outside customers(2) Sales or transfers between
related segments

Eliminations
or entire Consolidated
company

Revenues－ 34,520,187－

96,017－2,873,072(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 the business and the business markets.
2. Principal products, by businessBusiness

Principal products

Construction equipment
rentals

Construction equipment such as hydraulic shovels, generators,
temporary construction materials, construction safety equipment,
temporary modular housing units

Steel sales

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

Information products andother businesses

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

Consolidated accounting fiscal year interim period under review (From November 1, 2006 to April 30,
2007)(Unit: Yen thousand)Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Sales to outside customers

33,668,481

2,345,274

216,936

36,230,692(2) Sales or transfers between
related segments

－

－

－

－

Total

33,668,481

2,345,274

216,936

36,230,692

Operating expenses

30,322,027

2,358,915

195,498

32,876,440-48,089

32,792,351

Operating income

3,346,454-13,640

21,4373,354,251

84,0893,438,340

Total

Eliminations
or entire Consolidated
company

Revenues
36,230,692－－
36,230,692(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 the business and the business markets.
2. Principal products, by businessBusiness

Steel sales

Principal products
Construction equipment such as hydraulic shovels, generators,
temporary construction materials, construction safety equipment,
temporary modular housing units
Steel bar, sheet steel, steel products such as round bar, steel scrap

Information products andother businesses

Computers and peripheral devices,
equipment, microturbine generators

Construction equipment
rentals

telecommunications-related

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 50

Prior consolidated fiscal year (From November 1, 2005 to October 31, 2006)(Unit: Yen thousand)Steel sales
business

Information
products
businessand otherbusinesses

Total

61,102,406

6,485,485

435,890

68,023,782－

68,023,782

－

－

－

－

－

－

－

－

－

－

－

－

Operating expenses

57,289,724

6,441,515

404,783

64,136,023- 180,377

63,955,645

Operating income

3,812,682

43,97031,106

3,887,758

180,377

4,068,136

Construction
equipment
rentalbusiness(1) Sales to outside customers(2) Sales or transfers between
related segments

Eliminations
or entire Consolidated
company

Revenues

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 the business and the business markets.
2. Principal products, by businessBusiness

Principal products

Construction equipment
rentals

Construction equipment such as hydraulic shovels, generators,
temporary construction materials, construction safety equipment,
temporary modular housing units

Steel sales

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

Information products andother businesses

Computers and peripheral devices,
equipment, microturbine generators

telecommunications-related(Segment information by location)
The Company does not report segment information by location because the Company did not haveany consolidated subsidiaries or important offices located in countries or regions outside of Japan
during the prior consolidated accounting fiscal year interim period, the consolidated accounting
fiscal year interim period under review and the prior consolidated accounting fiscal year.

(Foreign sales)
The Company did not have any foreign sales during the prior consolidated accounting fiscal year
interim period, the consolidated accounting fiscal year interim period under review and the priorconsolidated accounting fiscal year.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 51

(Per Share Information)
Prior Consolidated Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)

Current Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Prior Consolidated Fiscal Year
(From November 1, 2005
to October 31, 2006)

Net assets per share

Net assets per share

Net assets per share¥1,181.45¥1,225.81¥1,155.22

Interim period net income per

Interim period net income per

share

share

¥35.12¥35.12Same as at left

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

Fiscal year net income per share¥11.57The Company has not reported
net income per share of common
stock after adjustment for potential
ordinary shares because it does nothave any potential shares thatwould have a dilution effect.

(Note) The basis for calculating interim period (fiscal year) earnings per share is as follows.
PeriodCategory
Interim period (fiscal year)
net income (¥ ‘000)
Amountnotcommonstock

attributed

Prior Consolidated Fiscal
Year Interim Period(From November 1, 2005
to April 30, 2006)

Current Consolidated
Prior Consolidated Fiscal
Fiscal Year Interim Period
Year(From November 1, 2006 (From November 1, 2005
to April 30, 2007)
to October 31, 2006)

1,048,470

2,382,914

1,742,652

－

－

－

(－)

(－)

(－)

1,048,470

2,382,914

1,742,652

29,849,847

32,856,401

30,357,093

toshareholders(¥ ‘000)(Amount

fordirectors

andauditors' bonuses based on
appropriation of earnings)
Interim period (fiscal year)
net

incomerelatedtocommon stock (¥ ‘000)
Averagenumberofoutstanding shares during theperiod(Material Events after the Close of the Consolidated Fiscal Year)
The Company had no material items to report.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 52

V

Company Financial Statements (Non-consolidated)

1. Comparative Balance Sheets(Unit: Thousands of yen)
PeriodPrior Fiscal Year Interim Period(As of April 30, 2006)
AmountCategory

Percent

Current Fiscal Year Interim
Period(As of April 30, 2007)
AmountPercent

Prior Fiscal Year Summary Balance
Sheet(As of October 31, 2006)
AmountPercent(Assets)
Current Assets

Ⅰ

Cash and deposits

20,185,604

21,759,757

17,461,345

2,339,487

2,190,318

2,876,924

9,328,574

9,140,579

10,734,102

343,948

383,258

320,863

Other current assets

1,811,191

1,457,777

2,047,094

Allowance for doubtful accounts- 534,302-453,442-456,245

Notes receivable, trade*4

Accounts receivable, trade
Inventory

Total Current Assets

33,474,504

40.2

34,478,248

32,984,085

39.4

39.5

Fixed Assets

Ⅱ(1)Tangible Fixed Assets*1

Rental equipment

8,891,692

9,562,596

9,087,513

Buildings and structures

5,200,752

5,527,658

5,462,248

Land*3 25,520,058

25,992,268

25,436,236

Other tangible fixed assets*3

2,068,034

2,124,787

1,852,404

Total Tangible Fixed Assets(2)Intangible Fixed Assets(3)

41,464,908

43,150,558

42,308,785

165,321

159,176

147,261

Investments and Other Assets

Investment securities

6,487,262

6,390,840

6,115,087

Other assets

2,773,017

4,225,942

2,910,393

Allowance for doubtful accounts- 526,201-433,076-385,941

Reserve for investment losses- 480,173-565,171-565,171

Total Investments and Other Assets

8,253,904

Total Fixed Assets

49,884,133

59.8

52,928,270

60.6

50,530,415

60.5

Total Assets

83,358,638

100.0

87,406,519

100.0

83,514,501

100.0

9,618,535

8,074,368

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 53

(Unit: Thousands of yen)
PeriodPrior Fiscal Year Interim Period(As of April 30, 2006)

Category

AmountPercent

Current Fiscal Year Interim Period(As of April 30, 2007)
AmountPercent

Prior Fiscal Year Summary Balance
Sheet(As of October 31, 2006)
AmountPercent(Liabilities)
Ⅰ Current Liabilities
Notes payable, trade*4

9,573,536

9,672,407

8,246,886

Accounts payable, trade2,314,041

1,752,979

2,522,512

Short-term bank loans

10,415,000

9,608,000

9,935,000

Accounts payable, other

2,495,925

2,838,598

2,562,743

Corporate taxes payable

1,068,767

1,705,394

1,291,556

Accrued bonuses to employees

489,431481,288

437,693

Accrued bonuses to directors
and auditors

2,750

－

5,500

Equipment notes payable

265,073443,039

340,345

Other current liabilities

1,038,789

582,902892,321

Total Current Liabilities

27,663,314

33.2

27,084,610

31.0

26,234,559

31.4

Ⅱ Long-term Liabilities
Long-term bank loans

16,555,000

15,335,000

15,120,000

Long-term accrued expenses

1,744,805

2,359,944

2,030,031

Long-term deferred tax liability

118,773

168,5111,567,178

1,747,844

1,663,537

103,657

84,07990,261

Accrued employees retirement
benefits
Retirement allowance to directors
and auditors
Total Long-term Liabilities

20,089,414

24.1

19,695,379

22.5

18,903,829

22.6

Total Liabilities

47,752,729

57.3

46,779,990

53.5

45,138,388

54.0

8,596,737

10.3

－

－

－

－

－

－

（Shareholders’ Equity）
Ⅰ Common stock
Ⅱ Capital surplus
1.Additional paid-in capital

9,720,343

Total capital surplus－
9,720,343

11.6

－
－

－

Ⅲ Earned surplus
1.Legal earned surplus

1,375,287－－

2.General reserve

11,851,286－－

3.Unappropriated retained
earnings (interim period)

1,587,646－－

14,814,220

17.8

－

－

－

－

Valuation difference on otherⅣnegotiable

Total earned surplus

2,666,072

3.2

－

－

－

－

Ⅴ Treasury stock-191,464

-0.2

－

－

－

－

Total Shareholders’ Equity

35,605,909

42.7

－

－

－

－

Total Liabilities and Shareholders’Equity83,358,638

100.0

－

－

－

－

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 54

(Unit: Thousands of yen)
PeriodCategory

Prior Fiscal Year Interim Period(As of April 30, 2006)
AmountCurrent Fiscal Year Interim Period(As of April 30, 2007)

Percent

AmountPercent

Prior Fiscal Year Summary Balance
Sheet(As of October 31, 2006)
AmountPercent(Net Assets)
I Owners’ equity－

1.Paid-in capital

9,696,717－

11.1

9,696,717

11.6

10,960,869

13.1

2.Capital surplus(1) Capital reserve－

10,817,389

10,817,389(2)Other capital surpluses－

143,480

143,480－

Total capital surplus

10,960,869

－

12.6

3.Earned surplus(1)Legal retained earnings－

1,375,287

1,375,287－

19,601

19,601

12,931,684

11,831,684

3,008,865

2,084,192(2)Other retained earnings
Reserve for advanced
depreciation of fixed assets
General reserve
Earned surplus brought－

forward－－17,335,439

19.8

15,310,766

18.4

4.Treasury stock－－- 11,415- 0.0- 6,303-0.0

Total Owners’ Equity－－

37,981,611

43.5

35,962,049

43.1

Total earned surplus

II Valuation and translation
adjustments
1

Valuation difference on other

2,644,918－

investment securities
Total Valuation and Translation

2,414,062－－

2,644,918

3.0

2,414,062

2.9

Total Net Assets－－

40,626,529

46.5

38,376,112

46.0

Total Liabilities and Net Assets－－

87,406,519

100.0

83,514,501

100.0

Adjustments

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 55

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

Prior Fiscal Year Interim Period(From November 1, 2005 to April
30, 2006)
AmountPercent

Current Fiscal Year Interim Period(From November 1, 2006
to April 30, 2007)
AmountPercent

Prior Fiscal Year Summary Statementof Income(From November 1, 2005
to October 31, 2006)
AmountPercent

Ⅰ Operating revenues

30,764,168

100.0

32,449,130

100.0

60,753,945

100.0

Ⅱ Cost of revenues

22,230,983

72.3

22,940,982

70.7

44,904,830

73.9

Gross profit

8,533,184

27.7

9,508,147

29.3

15,840,115

26.1

6,037,131

19.6

6,438,102

19.8

12,133,316

20.0

2,496,053

8.1

3,070,045

9.5

3,715,798

6.1

Selling, general andⅢadministrative expenses
Operating income
Ⅳ Non-operating revenues*1

296,5391.0

361,591

1.1

561,380

0.9

Ⅴ Non-operating expenses*2

223,5120.7

235,6520.7

537,9260.9

2,569,079

8.4

3,195,983

9.9

3,739,252

6.1

Ordinary income
Ⅵ Extraordinary profits

*3

4,743

0.0

946,3772.9

360,351

0.6

Ⅶ Extraordinary losses*4,5

621,880

2.0

68,2390.2

809,716

1.3

1,951,942

6.4

4,074,120

12.6

3,289,887

5.4

1,569,686

2.6

1,720,201

2.8

Income before taxes and adjustments
Corporate, local and business
taxes
Adjustment for corporate
other taxes

1,032,592
and3.3

Net income

955,033

3.1

Profit carry-forward from priorperiod632,613

－

－

－

－

－

1,587,646－－

Unappropriated retained earnings

98,206

1,684,230

996,906

Cash dividends-35,683

1,655,508
1,753,715

5.4

2,320,405

7.2-114,543

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 56

3. Statement of Changes in Net Assets
Statement of Changes in Net Assets
Current Fiscal Year Interim Period (From November 1, 2006 to April 31, 2007)(Unit: Thousands of yen)
Owners’ equity
Capital surplus

Earned surplus
Other earned surplus

Paid-in
capitalCapital legal
reserve

October 31, 2006 balance

9,696,717

10,817,389

Othercapitalsurplus

Total capital Earned legal Fixed assets
surplusreserve
Reserve for

143,480

10,960,869

advanceddepreciation
1,375,287

19,601

EarnedTotal earned
surplusGeneralreserve

surplusbrought
forward

11,831,684

2,084,192

15,310,766

1,100,000-1,100,000－

Changes of items during the fiscal
year interim period
Transfer to general reserve－

Dividends from surplus－- 295,732- 295,732

Net income－

2,320,405

2,320,405

Purchase of treasury stock－－

Disposal of treasury stock－

Net changes of items other thanowners’ equity during the fiscal
year interim period
Total changes of items during the
fiscal year interim period
April 30, 2007 balance

－

－

－

－

－

－

1,100,000

924,673

2,024,673

9,696,717

10,817,389

143,480

10,960,869

1,375,287

19,601

12,931,684

3,008,865

17,335,439

Valuation and translation
adjustments

Owners’ equity

Treasury stock
October 31, 2006 balance- 6,303

Total net assets

Total owners’ equity

Valuation differenceon other investment
securities

Total valuation andtranslation
adjustments

35,962,049

2,414,062

2,414,062

38,376,112

－

－

－

Changes of items during the fiscal
year interim period
Transfer to reserve for advanced
depreciation of fixed assets
Transfer to general reserve

－

－

－

Dividends from surplus- 295,732－- 295,732

Net income

2,320,405－

2,320,405- 5,112－- 5,112230,855

230,855

230,855

Purchase of treasury stock- 5,112Net changes of items other thanowners’ equity during the fiscal
year interim period
Total changes of items during the
fiscal year interim period- 5,1122,019,561

230,855

230,855

2,250,416

April 30, 2007 balance- 11,415

37,981,611

2,644,918

2,644,918

40,626,529

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 57

Prior Fiscal Year (From November 1, 2005 to October 31, 2006)(Unit: Thousands of yen)
Owners’ equity
Capital surplus

Earned surplus
Other earned surplus

Paid-in
capitalOctober 31, 2005 balance

Capital legal
reserve

8,596,737

9,720,343

1,099,980

1,097,046

Othercapitalsurplus

Total capital Earned legal Fixed assets
surplusreserve
Reserve foradvanceddepreciation－

9,720,343

1,375,287－

Earnedsurplusbrought
forwardGeneralreserve

11,831,684

928,192

Total earned
surplus14,135,164

Changes of items during the fiscal
year
Issuance of new shares

1,097,046

Transfer to reserve for advanced
depreciation of fixed assets－

Dividends from surplus－- 19,601－－- 268,677- 268,677

Dividends from surplus (interim
dividends)－- 268,622- 268,622

Directors and auditors bonuses
from appropriation of earnings－- 7,300- 7,300

Net income－

1,720,201

1,720,201

Purchase of treasury stock－－

143,480

143,480－

Disposal of treasury stock

19,601

Net changes of items other thanowners’ equity during the fiscal
year
Total changes of items during the
fiscal year

1,099,980

1,097,046

143,480

1,240,526－

19,601－

1,155,999

1,175,601

October 31, 2006 balance

9,696,717

10,817,389

143,480

10,960,869

1,375,287

19,601

11,831,684

2,084,192

15,310,766

Valuation and translation
adjustments

Owners’ equity

Total net assets

Total owners’ equity

Valuation differenceon other investment
securities

Total valuation andtranslation
adjustments

32,265,650

1,637,603

1,637,603

33,903,254

2,197,026－

2,197,026－－－

Dividends from surplus- 268,677－- 268,677

Dividends from surplus (interim
dividends)- 268,622－- 268,622

Directors and auditors bonuses
from appropriation of earnings- 7,300－- 7,300

1,720,201－

1,720,201

Treasury stock
October 31, 2005 balance- 186,594

Changes of items during the fiscal
year
Issuance of new shares
Transfer to reserve for advanced
depreciation of fixed assets

Net income
Purchase of treasury stock- 11,781- 11,781－- 11,781

Disposal of treasury stock

192,072

335,552－

335,552

776,458

776,458

776,458

Net changes of items other thanowners’ equity during the fiscal
year
Total changes of items during the
fiscal year

180,290

3,696,399

776,458

776,458

4,472,857

October 31, 2006 balance- 6,30335,962,049

2,414,062

2,414,062

38,376,112

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 58

4. Notes to the Interim Financial Statements and Significant Accounting Policies

PeriodCategory(1)

Appraisal

standards

and appraisal methods
for principal assets

Prior Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)

Current Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Prior Fiscal Year
(From November 1, 2005
to October 31, 2006)

a. Negotiable securities
Commonstockofsubsidiaries and affiliatedcompanies
The
Company
hasa. Negotiable securities
Commonstockofsubsidiaries and affiliatedcompanies
Same as at left

a. Negotiable securities
Commonstockofsubsidiaries and affiliatedcompanies
Same as at left

Other negotiable securities
Securities with a market
price

Other negotiable securities
Securities with a market
priceadopted the cost method
based

upon

the

movingaverage method
Other negotiable securities
Securities with a market
price
The

Company

hasSame as at left

The

Companyhasadopted the market value

adopted the market value

method (the full amount ofmethod (the full amount of

the valuation difference isthe valuation difference ischarged to equity using thechargeddirect transfer to capitalthemethod, with the disposal

capital method, with thecostdisposal cost determined

determined

by

the

to

directequityusing

transfertomoving average method)

by

the

movingaveragebased on the market pricemethod)

based

on

on

periodmarketpriceonsimilaraccounting

theclosing

interimdateorprices.

closing

date

the
the

fiscalyear

orsimilarpricesSecurities without market
pricesThe

Companyhasadopted the cost method,

Securities without market

Securities without market

pricespricesSame as at left

Same as at leftb. Construction equipment
Same as at leftb. Construction equipment
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

cost being determined bythemovingaveragemethodb. Construction equipment
Amount after deductionofdepreciation

expensecalculated according to thedeclining-balancemethodfrom the original prices, byseparate

fiscalyearofpurchasec. Merchandise inventories
and supplies(i)
Merchandise
inventories
Lower of cost or market
based on the Last-in,
First-out method(ii) Supplies
The Latest Purchase Cost
method(ii) Supplies
Same as at left(ii) Supplies
Same as at left

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 59

(2) Depreciation methods
forprincipal

depreciable assets

a. Tangible fixed assets
The
Companyhasadoptedthea. Tangible fixed assets
Same as at left

a. Tangible fixed assets
Same as at left

b. Intangible fixed assets
Same as at left

b. Intangible fixed assets

c. Long-term prepaid
expensesSame as at left

c. Long-term prepaid
expensesSame as at left

declining-balance method. Buildings
on

land

under

that

a

is

leasedfixed-term

landlease agreement, however,are depreciated using thestraight-line method using
the remaining period of the
fixed-term

lease

as

the

depreciable life and zero
residual value.
The

depreciable

mainly

used

by

lives
the

Company are as follows.
Rental assets
5-10
years
Buildings
31-34
years
b. Intangible fixed assets
The
CompanyhasadoptedtheSame as at left

declining-balance method.
Software for use withintheCompany

depreciated

using

is
the

straight-line method basedon the assumed useful life
for internal use (5 years).
c. Long-term prepaid
expensesThe
Company
adoptedhasstraight-line

depreciation.
(3) Accounting standards──────

──────

New

shareissuance

costs

for deferred assets

The Company expenses
the full amount of newshare issuance costs when
the costs are incurred.

(4) Accounting standards
forallowances
reserves

principal
anda. Reserve for doubtful
accounts
To provide for losses on
doubtful accounts such asaccounts

receivable,

theCompany

chargestoa. Reserve for doubtful
accounts

a. Reserve for doubtful
accounts

Same as at left

Same as at left

income an amount basedon actual loss experience
for normal accounts, plus
an amount for projected
unrecoverable

amounts

based on assessments ofindividual accounts.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 60

b. Accrued bonuses to
employees
To fully provide
expenditures

of

for

b. Accrued bonuses to
employees
Same as at leftb. Accrued bonuses to
employees
To fully provide
expenditures

bonusesofforbonusesthe Company will pay to

the Company will pay toemployees, an amount is

employees, an amount isappropriated to the reserve

appropriatedduring the interim period

reserve during the fiscal

basedyear based upon a salary

upon

a

salaryestimate amount.
c. Accrued bonuses todirectors and auditors
The Company provides

c. Accrued bonuses todirectors and auditors──────

totheestimate amount.
c. Accrued bonuses todirectors and auditors
The Company provides

for accrued directors andfor accrued directors andauditors’ bonuses. At theauditors’ bonuses. At theendinterimend of the fiscal year,

Company

the Company accrued an

accrued an amount toamount to provide forprovide for the liability

therecognized

during the period.

ofperiod,thetheduringtheperiod.

recognized(Supplemental information)(Supplemental information)Inliability

the

past,

the

In

the

past,

the

Company accounted for

Company accounted for

directors

directors

auditors’bonuses as a decrease inbonuses as a decrease inunappropriated retained

unappropriated retained

earnings, based on theearnings, based on the

Proposal

ProposalforAppropriation

AppropriationofRetainedandRetained

Earnings

andauditors’forofEarnings

approved at the Generalapproved at the General

Meeting

Meeting

Shareholders. Beginning

of

the

of

the

Shareholders. Beginningfromfrom this interim period,

however, the Company

however, the Company

will account for directors

will account for directors

and auditors’ bonuses as

and auditors’ bonuses asananaccounting

expensethisfiscalexpense

year,

of

the

period

in

of

the

periodinwhich such bonuses arewhich such bonuses are

accrued, based on theaccrued, based on the

Accounting Standard for

Accounting Standard for

Directors’

Bonuses

Directors’(AccountingStandards

accounting

Bonuses(Accounting
Board

Standards

ofAccounting

Japan,

Boardof

Accounting

Japan,
Statement

Statement

No. 4 dated November

No. 4 dated November

29, 2005). As a result,29, 2005). As a result,operatingoperatingordinary

ordinary

income,incomeandincome,incomeincome before taxes andadjustments

adjustments

were¥5,500,000

less

than

they

otherwise

would

have

been

¥2,750,000

accounting
used

in

had

the

standards
past

periods

andincome before taxes and
were
less

than

they

otherwise

would

have

been

accounting
used

in

had

the

standards
past

periods

been applied.

been applied.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 61

d. Accrued employees
retirement benefit
The Company provides
foremployees’d. Accrued employees
retirement benefit
Same as at left

accruedd. Accrued employees
retirement benefit
The Company provides
foremployees’

accruedretirement benefits based

retirement benefits based

upon

upon

the

projected

theprojected

amounts of the liability for

amounts of the liability for

accruedaccruedemployees

employees

retirement benefits and theretirement

value of pension assets atthe value of pension assets

the end of the fiscal year.

at the end of the fiscal

At the end of each interim

year. At the end of eachperiod,Company

fiscal year, the Company

appropriates an amount toappropriates an amount to

the reserve to provide forthe reserve to provide for

the

the

the

liability

recognized

during the period.

benefits

liability

andrecognized

during the period.

The difference based on

The difference based onan actuarial calculation isan actuarial calculation ischargedchargedtoincometoincomebeginning in the fiscal year

beginning in the fiscal year

following the year in which

following the year in which

incurred, with the amounts

incurred, with the amounts

allocatedallocatedusing

proportionatelythemethod,straight-line

based

on

using

a

proportionatelythemethod,straight-line

based

on

a

specified number of years

specified number of years(10 years) that is less than

(10 years) that is less than

the

the

averageremaining

averageremaining

period of employment forperiod of employment for

employees at the time theemployees at the time thedifference arises.
e. Retirement allowances todirectors and auditors
The Company provides

e. Retirement allowances todirectors and auditors
Same as at leftdifference arises.
e. Retirement allowances todirectors and auditors
The Company provides

for retirement allowances

for retirement allowances

to directors and auditors

to directors and auditors

based upon pertinent rules

based upon pertinent rules

and

the

and appropriated to theaccount proportionately at

account proportionately atthethe end of the fiscal year

appropriated
end

of

to

the

interimperiod based upon length

basedof service.
f. Reserve for investment
lossesThe Company provides

service.
f. Reserve for investment
lossesf. Reserve for investment
lossesSame as at left

upon

lengthofSame as at left

for losses from the decline
in

real

such

prices

as

the

of

assetsstockofsubsidiary companies thataresubject

to

asset

impairment accounting byapplying

internallyestablished standards that
take

into

consideration

subsidiarycompany

operating results and asset
quality.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 62

(5) Lease transactions

Forfinancetransactions
leaseslease

exceptthat

Same as at left

Same as at left

a. Hedge transactions

a. Hedge transactions

Same as at left

Same as at left

b. Hedge methods andhedged transactions

b. Hedge methods andhedged transactions

Same as at left

Same as at leftfortransferownership of the property
tothelessee,rent

expenses are charged toincome as payments aremade.
(6) Hedge accounting forprincipal hedging
methodsa. Hedge transactions
The Company accounts
for

hedge

transactions

using allocations based on
accounting

standards

foreignforcurrency-

denominated transactions,and special rule accounting
based

on

standards

accountingforfinancial

products.
b. Hedge methods andhedged transactions
The
Company
uses
currency

swaps

and

forwardtransactions

inorder to avoid the currency
fluctuation risk related totheCompany’s

foreigncurrency-denominatedstraight

bonds

liabilities

forimportandpayments.

The

Company

also uses interest swaps to
avoid

interest

rate

fluctuation risk related tointerestonbankborrowing.
c. Hedging policies
The Company’s use ofderivative
limitedtotransactions
hedgingc. Hedging policies
Same as at left

c. Hedging policies
Same as at left

is

risk

within the scope of theCompany’s

assetsandliabilities subject to market
fluctuation risk.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 63

d. Method for evaluating theeffectiveness of hedges
The Company does not

d. Method for evaluating theeffectiveness of hedges

d. Method for evaluating theeffectiveness of hedges

Same as at left

Same as at left

evaluate the effectivenessof its hedge transactions
because it can assume thatits

currencytransactions

swap

and

forwardtransactions will completely
offset market fluctuations
or changes in cash flow
from

the

beginstime

terminated.
the

hedge

until

it

is

In

addition,

Company’s

interest

swap transactions fulfill therequirementsforspecialrule accounting, and theCompany has elected touse this in place of anevaluation of effectiveness.
(7) Other significant
matters for
preparation of the

Accounting treatment ofconsumption tax
Consumption tax is taken

Accounting treatment ofconsumption tax
Same as at left

Accounting treatment ofconsumption tax
Consumptiontax

isout of all Statement of

taken out of all Statement

interim period (fiscal

Income items and Balanceofyear) financial

Sheet items, except mainly

BalanceSheetstatementsforexceptmainlyreceivables

andpayables.
The
for

Incomeitems

anditems,
forreceivables and payables.

suspense

accounts

consumption

tax

receipts and consumption
tax payable are included in"otherbecausecurrent

liabilities"thefinancial

importance is minimal after
the amounts are offset.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 64

Changes in Important Matters Used as the Basis for Preparation of the Interim
Financial Statements
Prior Fiscal Year Interim Period(From November 1, 2005
To April 30, 2006)

Current Fiscal Year Interim Period(From November 1, 2006
to April 30, 2007)

Prior Fiscal Year
(From November 1, 2005
To October 31, 2006)(Accounting Standard for Impairment──────

(Accounting Standard for Impairmentof Fixed Assets)
Beginning from this fiscal year, theof Fixed Assets)
Beginning from this fiscal year
interim period, the Company has

Company

adopted the Accounting Standard for

Accounting Standard for Impairment

Impairmentof Fixed Assets (“Opinion Concerning

of

Fixed

Assetshas

adoptedthe(“Opinion Concerning Establishment

EstablishmentofStandard for Impairment of Fixed

Accounting

Impairment

Standardofof

Accounting

Assets,”Assets”(Business

Accounting

Business Accounting Council, AugustCouncil,August

2002)

9,

2002)

Guidance

Fixed

for

9,

and

and

“Implementation“Implementation Guidance for the

for

the

Accounting Standard for Impairment

AccountingStandard for Impairment of FixedofAssets,” Accounting Standards Board

Standards Board of Japan, October

of

31,

Japan,

Financial

October

31,

Accounting

2003,

Standard

Fixed

Assets”

2003,

Financial(Accounting
AccountingStandard Implementation Guidance

Implementation Guidance No. 6).

No. 6).

As a result, interim period income

As a result, fiscal year income

before taxes and adjustments was

before taxes and adjustments was¥594,568,000 lower than it would¥594,568,000 lower than it would

have

have

been

had

the

accounting

been

had

the

accounting

standards used in previous periods

standards used in previous periods

been applied.

been applied.

The

total

amount

of

the

The

total

amountoftheimpairment loss is deducted directly

impairment loss is deducted directlyfrom the balance for each asset

from the balance for each asset

based on the revised standards forbased on the revised standards for

preparation

preparation of financial statementsofinterimfinancialstatements and other rules.

──────

and other rules.

──────

(Accounting Standard for Presentationof Net Assets in the Balance Sheet)
Beginning from this fiscal year, theCompanyhas“Accounting

adoptedtheStandardforPresentation of Net Assets in the
Balance

Sheet”(AccountingStandards Board of Japan Statement
No. 5 dated December 9, 2005) andthe“Guidanceon

AccountingStandard for Presentation of Net
Assetsin(Accounting
Japan

the

BalanceStandards

GuidanceNo.

Sheet”

Board
8

of

dated

December 9, 2005).
The amount corresponding to thetotal of shareholders’ equity basedon the past accounting standard is¥38,376,112,000.
The

net

asset

sectionofthebalance sheet for the fiscal year
under review was prepared based ontherevisedfinancialstatements

rules.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 65

6. Notes to the Interim Financial Statements(Notes to the Interim Balance Sheets)
PeriodItem

Prior Fiscal Year

Prior Fiscal Year
Interim Period(As of April 30, 2006)

Current Fiscal Year
Interim Period(As of April 30, 2007)

39,381,436,000

40,173,994,000

40,266,877,000

31,159,000

27,763,000

27,162,000(As of October 31, 2006)*1. Total
accumulated
depreciation for
tangible fixed
assets

*2. Contingent
liabilities
Joint and several
guarantee

ofemployee bankloans
Guarantees ofborrowed
indebtedness of
subsidiary companies

Company

Guaranteed
Amount(Daiichi Kikai Co.,

Daiichi Kikai
Co., Ltd.

190,000,000

Ltd., Assist Co., Ltd.,

Assist Co., Ltd.

46,939,000

Kanatech Co., Ltd.,and non-consolidated

Kanki
Corporation
Flowtechno
Corporation

subsidiary company

Total

Kanki Corporation)

1,081,500,000
100,000,000
1,501,935,000

Company
Kanatech

Co.,

Ltd.
Kanki
Corporation
Flowtechno
Corporation
Total

Guaranteed
Amount220,000,000

100,000,000
1,275,500,000(Flowtechno

AmountAssist Co., Ltd.
Kanatech955,500,000

Guaranteed

Company

10,000,000Co.,

220,000,000

Ltd.
Kanki
Corporation
Flowtechno
Corporation

1,008,000,000

Total

100,000,000
1,409,187,000

Corporation)*3. Reduction tobook value*4.Notes and bills
maturing at the endof the interim period(fiscal year)

Amounts for assets acquired
in prior fiscal years for whichaccumulated book values werereducedbygovernment
subsidiesAmounts for assets acquired
in prior fiscal years for whichaccumulated book values werereducedbygovernment
subsidies

Machinery andMachinery

5,044,000

5,044,000

Amountsforassetsacquired in prior fiscal years
for which accumulated bookvalues were reduced bygovernment subsidies
Machinery and5,044,000

equipment

and

Land

3,569,000

equipmentLand

3,569,000

Land

3,569,000

Total

8,613,000

Total

8,613,000

Total

8,613,000

equipment

Notes and bills maturing on
the last day of the interim
periodaresettledandprocessed on the note and billclearing date.
Because the last day of theCompany's current fiscal year
interim period was a financial
institution holiday, notes andbills maturing on the final dayof the following interim period
are included in the fiscal year
interim period balance.

Notes and bills maturing on
the last day of the interim
periodaresettledandprocessed on the note and billclearing date.
Because the last day of theCompany's current fiscal year
interim period was a financial
institution holiday, notes andbills maturing on the final dayof the following interim period
are included in the fiscal year
interim period balance.

Notes receivable, trade

Notes receivable, trade28,656,000

31,169,000

Notes payable, trade

Notes payable, trade

1,333,786,000

1,410,677,000――――――

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 66

5. Contingent
liabilities

The Company liquidates bill

The Company liquidates bill

The Company liquidates

receivables based on a notes

receivables based on a notes

bill receivables based on areceivables transfer program.

receivables transfer program.

notes receivables transfer

Notes

Notes

Notes

receivable,

receivable,

receivable,

program.
¥7,921,742,000
trade
The
amountofnotes
receivable, trade with a rightof recourse to the Company
included in the balance ofnotes receivable, trade is¥1,665,477,000.

¥7,492,647,000
trade
The
amountofnotes
receivable, trade with a rightof recourse to the Company
included in the balance ofnotes receivable, trade is¥1,549,803,000.

¥5,734,296,000
trade
The amount of notes
receivable, trade with aright of recourse to theCompany included in thebalance of notes receivable,
trade is ¥1,244,278,000.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 67

Notes to the Interim Period Statements of Income
PeriodItem

Prior Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)

Current Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Prior Fiscal Year
(From November 1, 2005
to October 31, 2006)*1. Principal items included in nonoperating revenues
Interest received
Gain on sale of investment
securities
Rents received
Insurance benefits
Cash bonus received

3,632,000

15,053,000

9,272,000

17,799,000

4,312,000

24,883,000

126,804,000

128,551,000

250,919,000

22,934,000

18,843,000

40,910,000－

101,816,000

151,547,000

177,623,000

326,636,000－

920,700,000

－

－

－

17,786,000

594,568,000

890,000

594,568,000*2. Principal items included in nonoperating expenses
Interest expense*3.

Principal

items

includedinextraordinary profits
Gain on sale or retirement of
fixed assets*4.

Principal

items

includedinextraordinary profits
Transfer to allowance for
doubtful accounts toaffiliated companies
Impairment loss

*5. Impairment lossIntheinterimaccounting period, theCompany incurred an
impairment loss on thefollowing asset groups.

Intheinterimaccounting period, theCompany incurred an
impairment loss on thefollowing asset groups.

In the fiscal year, theCompany incurred an
impairment loss on thefollowing asset groups.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 68

Location

Use

Asset

Kamakura

Kanagawa
Prefecture,
Kanazawa

Prefecture,

Use

Tomakomai

City,

City, Ishikawa

Location

Dormant
asset

Land

Muroran,
Hokkaido and5 other
locations

Asset groupings usedby the Company toapply asset impairment
accounting are based on
the smallest unit for
which profitability can be
determined
regularly.
Specifically,dormant
assets are grouped using
the assets for each
property.
For certain dormant
assets for which theasset value was lessthan book value, theCompany reduced bookvalue to its recoverable
value, and accounted forthe reduction as an
impairment
loss(¥594,568,000)
under
extraordinary
losses.
This ¥594,568,000 was
for land. Furthermore,
the recoverable value for
this
asset
group
is
measured according to
net sales price, and theland is evaluated usingtheinheritancetax
assessment value based
on
the
land
tax
assessment
value
orother amount as a base.

Dormant
asset

Asset
Land

Asset groupings usedby the Company toapply asset impairment
accounting are based on
the smallest unit for
which profitability can be
determined
regularly.
Specifically,dormant
assets are grouped using
the assets for each
property.
For certain dormant
assets for which theasset value was lessthan book value, theCompany reduced bookvalue to its recoverable
value, and accounted forthe reduction as an
impairment
loss(¥890,000)
under
extraordinary
losses.
This ¥890,000 was forland. Furthermore, therecoverable value for
this
asset
group
is
measured according to
net sales price, and theland is evaluated usingtheinheritancetax
assessment value based
on
the
land
tax
assessment
value
orother amount as a base.

Location

Use

Asset

KamakuraCity,
Kanagawa
Prefecture,
Kanazawa
City, Ishikawa
Prefecture,

Dormant
asset

Land

Muroran,
Hokkaido and5 other
locations

Asset groupings usedby the Company toapply asset impairment
accounting are based on
the smallest unit for
which profitability can be
determined
regularly.
Specifically,dormant
assetsaregroupedusing the assets for each
property.
For certain dormant
assets for which theasset value was lessthan book value, theCompany reduced bookvalue to its recoverable
value, and accounted forthe reduction as an
impairment
loss(¥594,568,000)
under
extraordinary
losses.
This ¥594,568,000 was
for land. Furthermore,
the recoverable value forthis asset group ismeasured according to
net sales price, and theland is evaluated usingtheinheritancetax
assessment value based
on
the
land
tax
assessment
value
orother amount as a base.

6. Depreciation and amortization
Tangible fixed assets
Intangible fixed assets

2,005,765,000

1,967,557,000

4,262,635,000

27,250,000

28,271,000

54,008,000

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 69

(Notes to the Interim Non-Consolidated Statement of Changes of Changes in Net Assets)
Current fiscal year interim period (From November 1, 2006 to April 31, 2007)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)
Increase in number Decrease in number
Number of shares at of shares during the of shares during theend of prior fiscal

current fiscal year

current fiscal year

year

interim accounting

interim accounting

periodperiodCommon stock
Total

Number of shares at
end of the current
fiscal year interim
accounting period

13

5

－

18

13

5

－

18

(Note) The number of treasury stock shares of common stock increased by 5,000 shares throughpurchases of shares comprising less than one investment unit.
Prior fiscal year (From November 1, 2005 to October 31, 2006)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)
Number of sharesat end of the priorfiscal year

Increase in
number of shares
during the fiscal
year

Decrease in
number of shares
during the fiscal
year

Number of sharesat end of the fiscal
year

Common stock (Note 2, 3)

400

12

400

13

Total

400

12

400

13

Number of shares issued(Notes)2. The number of treasury stock shares of common stock increased by 12,000 shares throughpurchases of shares comprising less than one investment unit.
3. The number of treasury stock shares of common stock decreased by 400,000 shares throughdisposals of treasury stock.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 70

VI Lease Transactions
Prior Fiscal Year Interim Period(From November 1, 2005
to April 30, 2006)

Current Fiscal Year Interim Period(From November 1, 2006
to April 30, 2007)

Prior Fiscal Year
(From November 1, 2005
to October 31, 2006)

1. Finance lease transactions except

1. Finance lease transactions except

1. Finance lease transactions except

for leases that transfer ownershipfor leases that transfer ownershipfor leases that transfer ownershipof the property to the lessee.

of the property to the lessee.

(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

andof the property to the lessee.

(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

and(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

andoutstanding balance at the end

outstanding balance at the end

outstanding balance at the endof the interim periodof the interim periodof the fiscal year accounting
periodPlease refer to Annex B

Please refer to Annex C(2) Outstanding balance of future(2) Outstanding balance of future(2) Outstanding balance of futurelease payments at the end oflease payments at the end oflease payments at the end of

the interim period

the interim period

the period

Please refer to Annex A

Within one year
After one year
Total

5,658,334,000

Within one year

13,535,224,000

After one year

19,193,559,000

Total

5,974,383,000

Within one year

5,815,719,000

16,576,068,000

After one year

13,838,896,000

22,550,452,000

Total

19,654,616,000(3) Amount of lease payments,(3) Amount of lease payments,(3) Amount of lease payments,

depreciation expense anddepreciation expense anddepreciation expense andinterest expenseinterest expenseinterest expense

Lease payments

2,858,233 ,000

Lease payments

3,874,509,000

Lease payments

5,812,109,000

Depreciation expense

2,613,688,000

Depreciation expense

3,315,420,000

Depreciation expense

5,344,449,000Interest expense

319,360,000(4) Accounting method for amountInterest expense

357,421,000(4) Accounting method for amountInterest expense

595,986,000(4) Accounting method for amountequivalent to depreciationequivalent to depreciationequivalent to depreciation

expenseexpenseexpenseSame as at left

Same as at left

(5) Accounting method for amount(5) Accounting method for amount(5) Accounting method for amountequivalent to interest expenseequivalent to interest expenseequivalent to interest expense

Same as at left

Same as at left

Straight-line depreciation
using the lease term as thedepreciable life and zero
residual value.

Interest method using thedifference between total lease
payments and the acquisition
price of the lease property,
allocated to each year.
2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

Within one year

1,681,931 ,000

Within one year

1,662,164,000

Within one year

1,938,033,000

After one year

4,213,379,000

After one year

3,831,074,000

After one year

4,808,904,000

Total

5,895,311,000

Total

5,493,239,000

Total

6,746,938,000

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 71

AnnexA
Acquisition
price（¥’000）33,840,891

14,313,360

19,527,530

Other assets

290,462

176,091

114,370

3,431,353

14,489,452

19,641,901

B

Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

39,391,466

16,481,474

22,909,991

Other assets

212,328

147,51764,81039,603,794

16,628,992

22,974,802

Total

Annex

Outstandingbalance（¥’000）Rental assets

Total

Annex

Accumulated
depreciation（¥’000）C
Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

36,236,228

16,177,904

20,058,323

Other assets

275,184

184,247

90,93636,511,412

16,362,152

20,149,260

Total

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 72

Notes Related to Negotiable Securities
Prior fiscal year interim period (As of April 30, 2006)
Negotiable securities
The stock of the Company's subsidiary companies and affiliated companies did not have a stock
price during the prior fiscal year interim period, the current fiscal year interim period and the priorfiscal year.
(Per Share Information)
Prior Fiscal Year Interim Period(From November 1, 2005
to April 30, 2006)

Current Fiscal Year Interim Period(From November 1, 2006
to April 30, 2007)

Prior Fiscal Year
(From November 1, 2005
to October 31, 2006)

Net assets per share

Net assets per share

Net assets per share¥1,192.95¥1,236.59¥1,167.90

Interim period net income per

Interim period net income per

share

share

¥31.99¥70.62The Company has not reported
net income per share of common
stock after adjustment for potential
ordinary shares because it does nothave any potential shares thatwould have a dilution effect.

Fiscal year net income per share¥56.67Same as at left

The Company has not reported
net income per share of common
stock after adjustment for potential
ordinary shares because it does nothave any potential shares thatwould have a dilution effect.
(Supplemental Information)
Beginning from the current fiscal
year, the Company has adopted therevised Accounting Standard for
Earnings Per Share (AccountingStandards
Board
of
Japan
Statement No. 2 dated January 31,
2006 (revised 2006) and the
Guidance on Accounting Standard
for Earnings Per Share (ASBJ
Guidance No. 4 dated January 31,
2006 (revised 2006). There are nomaterial items to report as a resultof this change.

(Note) The basis for calculating interim period (fiscal year) earnings per share is as follows.
PeriodCategory
Interim period (fiscal year)
net income (¥ ‘000)
Amountnotattributedcommonstock

toPrior Fiscal Year
Interim Period(From November 1, 2005
to April 30, 2006)

Current Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

955,033

2,320,405－－

shareholders

Prior Fiscal Year
(From November 1, 2005
to October 31, 2006)

1,720,201－(¥ ‘000)(Amount

fordirectors

andauditors' bonuses based on

(－)

(－)

(－)

955,033

2,320,405

1,720,201

29,849,847

32,856,401

30,357,093

appropriation of earnings)
Interim period (fiscal year)
net

incomerelatedtocommon stock (¥ ‘000)
Averagenumberofoutstanding shares during theperiodFiscal Year Ending October 2007 Interim Accounting Bulletin

P. 73

Summary of potential shares
not included in the calculation──────

──────

──────

of net income per share ofcommonstock

adjustment

for

after
potential

ordinary shares because theshares do not have a dilution
effect(Material Events after the Close of the Consolidated Fiscal Year)
The Company had no material items to report.

Fiscal Year Ending October 2007 Interim Accounting Bulletin

P. 74