Fiscal Year ending October 31, 2007

Summary of First Quarter Operating Results (Consolidated)
March 2, 2007

Listed Company Name

Kanamoto Company, Ltd.

Company Code Number

9678

Listing Exchanges

Tokyo Stock Exchange, Sapporo Stock Exchange（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
1. Matters Related to Preparation of the Summary of First Quarter Operating Results① Has the Company adopted simplified methods for accounting treatment? Yes
The Company uses book value for inventory.
The Company charges an amount to its allowance for doubtful accounts
based on actual loss experience in the prior consolidated accounting fiscal
year for normal accounts.
② Are there any differences with the methods of recognition used in theaccounting treatment for the most recent consolidated fiscal year?
No③ Are there any changes in the scope of consolidation and/or application of theequity method? No
2. Operating Results for the First Quarter of the Fiscal Year Ending October 31, 2007
(November 1, 2006 - January 31, 2007)(Numbers less than one million yen have been rounded down)(1) Consolidated Operating Results
Revenues
Millions of yen

Fiscal Year Ending October 31,
2007: First Quarter
Fiscal Year Ended October 31,
2006: First Quarter(Reference) Fiscal Year Ended
October 31, 2006％

Fiscal Year Ended October 31,
2006: First Quarter(Reference) Fiscal Year Ended
October 31, 2006

Millions of yen

Millions of yen％％

2,173 ( 68.4 )2,115 ( 70.9 )17,503 (–0.6 )1,290 ( 72.3 )

1,237 ( 72.1 )68,023

4,068

3,788

Net Income per

Net Income per Share

Share of Common

on a Fully Diluted

％

Yen

Yen

1,618 ( 410.0 )49. 26－317 ( –20.3 )10. 63－

57. 41－Millions of yen

2007: First Quarter

Ordinary Income

18,856 ( 7.7 )Net Income

Fiscal Year Ending October 31,

Operating Income

1,742(Note) The percentages shown for revenues, operating income, ordinary income and net income are the percent
increase or decrease compared to the same period of the prior fiscal year

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.1

(Qualitative information concerning consolidated operating results)< Management Environment >(From November 1, 2006 to January 31, 2007)
During the first quarter, Japan’s economy maintained its expansionary trend, as private sector capital
investment centered on major metropolitan areas continued unabated. In regions where public works are amainstay of the local economy, however, both public and private sector demand were extremely weak, andin many areas of Japan, conditions unrelieved by a sense of economic recovery persisted. Given suchcircumstances, demand in the construction equipment rental industry, which is Kanamoto’s main business,
improved steadily in Japan's three major metropolitan areas around Tokyo, Osaka and Nagoya.
First Quarter Operating Results
In the construction-related businesses that are Kanamoto’s main sector of operations, operating results
exceeded those in the same period of the prior consolidated fiscal year. Under an environment in which total
construction investment is growing only slowly, the Company expanded at a steady pace centered on
construction equipment rentals as a result of aggressive business development throughout Japan aimed atsecuring private sector demand. The Company also increased used equipment sales, enjoying vigorous
demand from overseas buyers.
Operating results were positive in Kanamoto’s other businesses as well. In the steel products sales
business, healthy orders for private sector capital investment were received in the Doo Block in Hokkaido.
Personal computer rentals in the Company’s information and telecommunications-related division wererobust as well. As a result, operating results in all of the Company’s businesses were higher than in the same
period of the prior consolidated fiscal year.
From an earnings perspective, both operating income and ordinary income were substantially higher thanin the same period one year earlier, as a result of measures continued from the prior year to improve rental
equipment asset operating efficiency and reduce the depreciation and amortization burden. Net income aswell was substantially higher than in the same period of the prior consolidated fiscal year, reflecting theabove earnings improvements as well as higher extraordinary profits from the sale of fixed assets. This gainon sale or retirement of fixed assets has also been incorporated into the projected operating results for the
fiscal year ending October 31, 2007 released by Kanamoto on December 8, 2006.
As a result of the above factors, consolidated revenues from operations for the first quarter of theconsolidated fiscal year ending October 2007 increased 7.7% compared to the same period of the priorconsolidated fiscal year to ¥18,856 million, operating income rose 68.4% year-on-year to ¥2,173 million,
ordinary income jumped 70.9% year-on-year to ¥2,115 million and net income soared 410.0% over thesame period of the prior consolidated fiscal year to ¥1,618 million. A summary of operating results for eachof the Company’s businesses and business development issues deserving special mention are described
below.
< Summary of operating results by business >[ Business related to the Construction Equipment Rental Division ]In the Hokkaido Region and Tohoku Region, which faced a busy season, revenues increased steadily,growing by 4.2% and 8.9% year-on-year, respectively, as a result of proactive business development tosecure private sector demand. In the Kanto & Shinetsu Region revenues edged down 1.8% from the same
period of the prior consolidated fiscal year, despite the growth in private sector demand throughout the
Kanto area as a whole centered on Tokyo, as the special procurement demand for earthquake recovery workin the Shinetsu area wound down. In the Kinki-Chubu Region, orders received for large-scale projects rosesteadily, and revenues increased 7.7% from the same period one year earlier. As a result of these factors,
construction equipment rental revenues for Kanamoto on an unconsolidated basis increased 4.2% from theSummary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.2

same period of the prior consolidated fiscal year.
In addition, because of vigorous foreign demand for used equipment, revenue from sales for theConstruction Equipment Rental Division grew 37.1% year-on-year. As a result, on an unconsolidated basis
total revenues for Kanamoto’s construction-related businesses increased 9.0% compared with the same
period of the prior fiscal year.
Turning to the conditions at Kanamoto’s construction-related consolidated subsidiaries, at SRG KanamotoLtd., which is developing a temporary scaffolding rental business in Hokkaido, and at Kanatech Co., Ltd., atemporary housing manufacturer, revenues rose strongly compared with the same period of the priorconsolidated fiscal year. For Daiichi Machine Industries Co., Ltd. in Kagoshima Prefecture, where disasterrecovery demand came to an end, however, and at Kanki Corporation in Hyogo Prefecture, which revised
certain aspects of its business strategy, revenues fell year-on-year. As a result of these changes,
consolidated revenues for construction-related businesses was 8.3% higher than in the same period of theprior consolidated fiscal year.
[ Business related to the Steel Sales Division ]In the steel products sales business, revenues were up 1.7% year-on-year. This reflected comparatively
strong orders for private sector capital investment in Sapporo and the surrounding area and in the
Tomakomai East district.
[ Business related to the Information Products Division and Other Businesses ]In the Company’s information and telecommunications-related division, rentals of personal computersand servers expanded well, but sales of used equipment such as workstations weakened somewhat. As aresult, revenues slipped 1.2% from the same period of the prior consolidated fiscal year.
[ Business development issues deserving special mention and status of branch office changes ]During the first quarter under review, Kanamoto established a new Chiba Shinminato Branch (Chiba City,
Mihama Ward) in January 2007. The Company did not close any branches.
As already reported, on February 1, 2007 in the second quarter of the fiscal year ending in October 2007,
Kanamoto succeeded to the goodwill and rental equipment assets of Rental TO Co., Ltd. (President andRepresentative Director: Kiyoshi Ogasawara; Head Office: Hokuto City, Hokkaido; Capital: ¥30.0 million), a
subsidiary of TO Ogasawara Co., Ltd. (President and Representative Director: Yasumasa Ogasawara;
JASDAQ: 9812; Head Office: Hakodate City, Hokkaido) that is engaged in the construction equipment rental
business in the Donan district. In addition, on February 7 Kanamoto completed an additional acquisition ofoutstanding shares of Kyushu Kensan Co., Ltd. (President and Representative Director: Suburu Saitou;
Head Office: Fukuoka City; Fukuoka Prefecture), a member of the Kanamoto alliance group, and made thatcompany a Kanamoto subsidiary.
Shanghai Jinheyuan Equipment Rental Co., Ltd., a joint venture established as Kanamoto’s first overseas
presence, will begin business activities from February 2007.

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.3

(2) Change in Consolidated Financial Position

Fiscal Year Ending October
31, 2007: First Quarter
Fiscal Year Ended October
31, 2006: First Quarter(Reference) Fiscal Year
Ended October 31, 2006

(Numbers less than one million yen have been rounded down)

Net Assets

Millions of yen

Millions of yen

89,61339,82944.3

1,208.57

86,872

34,22239.4

1,146.46

86,81538,05143.7

1,155.22[Consolidated Cash Flows]

Fiscal Year Ending October
31, 2007: First Quarter
Fiscal Year Ended October
31, 2006: First Quarter(Reference) Fiscal Year
Ended October 31, 2006

Net Assets per

CapitalAdequacy

Total Assets

Share
Yen

％

(Numbers less than one million yen have been rounded down)

Cash Flow fromOperating
Activities

Cash Flow from
Investing
Activities

Cash Flow from
Financing
Activities

Balance of Cashand Equivalents
at End of Period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

2,018

681

–548

20,548

3,776

–168

993

18,710

8,414

–489

–3,635

18,398[ Qualitative information concerning change in consolidated financial position ](1) Change in financial position (consolidated)
Compared with the end of the prior consolidated accounting fiscal year, total assets at the end of the firstquarter under review increased ¥2,797 million to ¥89,613 million. This change was mainly from increases
in cash and deposits and investment securities.
Total net assets increased by ¥1,777 million compared with the end of the prior consolidated fiscal yearto ¥39,829 million yen. This change mainly reflected an increase in consolidated earned surplus. As aresult, the capital adequacy ratio for the first quarter was 44.3%.
(2) Consolidated cash flows
Cash and cash equivalents (referred to below as “cash”) at the end of the first quarter under review
totaled ¥20,548 million yen, an increase of ¥1,838 million yen compared with the end of the same period
in the prior consolidated fiscal year. Cash flows for the consolidated quarter under review are discussed
below.
(Cash flow from operating activities)
Cash flow from operating activities was ¥2,018 million yen, a decrease of ¥1,758 million from the same
period of the prior consolidated fiscal year. This mainly reflected the increase in income before taxes andadjustments, a smaller increase in accounts payable, trade, a gain on sale or retirement of fixed assets
and higher payment of corporate and other taxes.
(Cash flow from investing activities)
Cash flow provided by investing activities was ¥681 million, compared with cash flow used in investing
activities of ¥168 million in the same period of the prior consolidated fiscal year. This mainly reflected anincrease in funds provided from the sale of tangible fixed assets.
Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.4

(Cash flow from financing activities)
Cash flow used in financing activities was ¥548 million, compared with cash flow provided by financing
activities of ¥993 million in the same period of the prior consolidated fiscal year. This change was mainly
the result of a substantial decrease in the amount of funds provided through short-term bank loans.
3. Projected Consolidated Operating Results for the Fiscal Year Ending October 2007
(November 1, 2006 - October 31, 2007)
Projected
Revenues

Projected
Operating
IncomeProjected
Ordinary Income

Projected Net
IncomeMillions of yen

Millions of yen

Millions of yen

Millions of yen

Interim35,530

2,940

2,870

1,830

Full-year

68,570

4,230

4,020

2,360

(Reference) Projected net income per share (full-year)¥71.82[ Qualitative information concerning projected operating results ]Based on decision criteria concerning materiality, and the fact Kyushu Kensan’s current conditions will nothave a material affect on Kanamoto’s consolidated operating results, Kanamoto will account for Kyushu
Kensan Co., Ltd., the Company’s new subsidiary, as a non-consolidated subsidiary.
Although operating results up to the present point in time generally continue to exceed Kanamoto’s initialplan, because of the lingering sense of uncertainty concerning second quarter operating results in Hokkaido
and the Tohoku region, including a dip in demand because of an unseasonably mild winter, and factors suchas the tendency for Kanamoto’s earnings to be concentrated in the first six months of the fiscal year, theCompany has not revised its projected interim and full-year consolidated operating results.
These projected consolidated operating results were prepared using projections based on information
available to the Company as of the date this material was released and forecasts of the future economic,
environment, and include various risks and uncertainty factors.
Accordingly, there is a possibility the Company’s actual consolidated operating results will differ from the
projected amounts shown above as a result of various future factors, including but not limited to economic
conditions surrounding the Company, market trends, and competitive conditions.

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.5

1. (Summary) First Quarter Consolidated Balance Sheets(Unit: Thousands of yen, %)Current Quarter Prior FY Quarter(First Quarter of(First Quarter of

Period the Consolidated the Consolidated
Accounting Fiscal Accounting Fiscal
Year Ending
Year Ended
October 31, 2007) October 31, 2006)

Item(Reference)

Consolidated
Accounting Fiscal
Year Ended
October 31, 2006

Change fromprior year

AmountAmountAmount1．Cash and deposits

20,548,969

18,713,419

1,835,549

9.8

18,398,312

2．Notes receivable, trade

14,722,876

14,250,444

472,432

3.3

14,959,325

495,225545,517–50,291–9.2

560,203

1,177,502

1,394,794–217,292–15.6

1,193,669

5．Deferred tax assets

333,364

333,624

–260

–0.1

391,803

6．Other

597,639

1,818,630–1,220,990–67.1

752,572

Allowance for doubtful
accounts–527,744–905,355

377,610–41.7–523,650

Total current assets

37,347,833

36,151,076

1,196,757

3.3

35,732,235

Rental(1) equipment assets

9,921,091

9,769,262

151,828

1.6

9,358,195

Buildings(2) and structures

6,605,659

6,369,129

236,530

3.7

6,631,891(3) Land

25,991,252

25,796,559

194,693

0.8

25,906,130(4) Other

1,219,557

1,108,340

111,21710.0

1,227,220

43,737,561

43,043,291

694,270

1.6

43,123,437－

409,519–409,519–100.0－359,379－

359,379－

395,109

137,693

238,255–100,561–42.2

141,585

497,072

647,774–150,701–23.3

536,695

6,858,369

6,078,029

780,33912.8

6,224,097

1,889,829

1,787,115

102,7135.7

1,874,002

Allowancefor doubtful accounts–717,223–834,987

117,763–14.1–674,876

Total
investments
and other assets

8,030,975

7,030,157

1,000,817

14.2

7,423,223

Total fixed assets

52,265,609

50,721,223

1,544,385

3.0

51,083,356

89,613,442

86,872,299

2,741,143

3.2

86,815,592

Assets（I

Percent

Amount）Current Assets

3．Inventory
4．Construction equipment

II

Fixed assets

1. Tangible fixed assets

Total tangible
assetsfixed

2. Intangible fixed assets
Consolidation(1) adjustment account(2) Goodwill(3) Other
Total intangible fixed
assetsInvestments and other3. assets(1) Investment securities(2) Other

Total Assets

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.6

(Unit: Thousands of yen, %)Current Quarter Prior FY Quarter(First Quarter of(First Quarter of

Period the Consolidated the Consolidated
Accounting Fiscal Accounting Fiscal
Year Ending
Year Ended
October 31, 2007) October 31, 2006)

Item(Reference)

Consolidated
Accounting Fiscal
Year Ended
October 31, 2006

Change fromprior year

AmountAmount12,762,257

12,227,863

534,394

4.4

12,419,337

2．Short-term bank loans

535,000

2,650,935–2,115,935–79.8

497,704

bank loans
3．Long-term
due within one year

10,082,356

10,741,996–659,640–6.1

10,077,496

1,350,718

596,220754,498

126.5

1,365,479

664,329

667,012–2,683–0.4

511,737

－

－

－

－

5,500

2,335,892

2,452,800–116,907–4.8

2,676,023

719,902860,657–140,754–16.4

1,017,823

28,450,457

30,197,485–1,747,028–5.8

28,571,100

16,285,472

18,439,233–2,153,761–11.7

16,031,111

1,726,803

1,548,890

177,91311.5

1,681,719

131,784

136,859–5,074–3.7

129,2142,689,868

2,019,112

670,75633.2

2,107,836

499,358

202,294

297,063146.8

242,843

21,333,288

22,346,390–1,013,102–4.5

20,192,724

49,783,745

52,543,876–2,760,131–5.3

48,763,825－

105,918

－

－

－

(
I

Liabilities

AmountPercent

Amount)Current liabilities
and accounts
1．Notespayable, tradetaxes
4．Corporate
payablebonuses to
5．Accrued
employees

bonuses to
6．Accrued
directors and auditors
7．Accounts payable, other
8．Other
Total current liabilities
II

Long-term liabilities

1．Long-term bank loans
employees
2．Accrued
retirement benefits
Retirement allowances
3．to directors andauditors
accrued4．Long-term
expenses
5．Other
Total long-term
liabilities
Total Liabilities(M i n o r i t y i n t e r e s t s)
Minority interests（Shareholders’ Equity）
I

Common stock－

8,596,737

－

－

－

II

Additional paid-in
capital－

9,720,343

－

－

－

－

13,733,006

－

－

－

－

2,360,778

－

－

－

－

–188,360

－

－

－

－

34,222,504

－

－

－

－

86,872,299

－

－

－

III
IV
V

Consolidated retained
earnings
Valuation difference onother investment
securities
Treasury stock
Total Shareholders’EquityTotal Liabilities,
Minority Interests andShareholders’ Equity

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.7

(Unit: Thousands of yen, %)Current Quarter Prior FY Quarter(First Quarter of(First Quarter of

Period the Consolidated the Consolidated
Accounting Fiscal Accounting Fiscal
Year Ending
Year Ended
October 31, 2007) October 31, 2006)

Item

Amount（Net Assets

Amount(Reference)

Consolidated
Accounting Fiscal
Year Ended
October 31, 2006

Change fromprior year

AmountPercent

Amount）I Owners’ equity
1．Paid-in capital

9,696,717－－－

9,696,717

2．Capital surplus

10,960,869

－

－

－

10,960,869

3．Earned surplus

16,212,507

－

－

－

14,889,638

4．Treasury stock–8,577－－－–6,30336,861,517

－

－

－

35,540,922

Valuation difference onother investment
securities

2,847,934－－－

2,418,684

Total Valuation andTranslation
Adjustments

2,847,934－－－

2,418,684

120,245－－－

92,159Total Net Assets

39,829,697

－

－

－

38,051,766

Total Liabilities and Net
Assets89,613,442

－

－

－

86,815,592

Total Owners’ Equity
andII Valuationtranslation adjustments

III Minority interests

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.8

2. (Summary) First Quarter Consolidated Statements of Income(Unit: Thousands of yen, %)Current Quarter Prior FY Quarter(First Quarter of(First Quarter of

Period the Consolidated the Consolidated
Item

Accounting Fiscal Accounting Fiscal
Year Ending
Year Ended
October 31, 2007) October 31, 2006)(Reference)

Consolidated
Accounting Fiscal
Year Ended
October 31, 2006

Change fromprior year

AmountAmountAmountRevenues
Cost of revenues
from operations

18,856,014

17,503,425

1,352,589

7.7

68,023,782

12,488,476

12,222,266

266,2102.2

49,745,294

Gross profit

6,367,537

5,281,158

1,086,378

20.6

18,278,487

Selling, general andadministrative
expenses

4,194,275

3,990,994

203,280

5.1

14,210,350

Operating income

2,173,262

1,290,164

883,098

68.4

4,068,136

1．Interest revenue

561

10

551

－

2,467

2．Dividend income

13,666

9,845

3,820

38.8

40,396

Gain on sale of
3．investment securities

3,482

8,388

–4,905–58.5

24,883

4．Insurance benefits

9,121

6,403

2,717

42.4

40,9105．Rents received

21,952

22,346–393–1.8

90,902

6. Other

29,69631,899–2,203–6.9

116,10378,481

78,894–412–0.5

315,662

1． Interest expense

107,108

84,62822,47926.6

357,750

2． Other

28,702

46,497–17,795–38.3

237,590

135,810131,126

4,683

3.6

595,340

2,115,933

1,237,931

878,00270.9

3,788,458

Gain on sale or
1．retirement of fixed
assets920,700－

920,700－

50,018Gain on reversal of
2．allowance for
doubtful accounts

20,634

9,524

11,110116.7

33,270

752

846

–93

–11.0

311,436

942,088

10,370931,718－

394,726

39,1795,915

33,263562.3

52,366890

344,417–343,527–99.7

594,568

on valuation of
3．Lossinvestment securities

3,516

－

3,516

－

－

4． Other

19,5082,961

16,547558.7

82,666Ⅰ
Ⅱ

Ⅲ

Ⅳ

Non-operating expenses

Total non-operating
expenses
Ordinary income
Ⅵ

Extraordinary profits

3． Other
Total extraordinary
profits
Ⅶ

AmountNon-operating
revenues

Total non-operating
revenues
V

Percent

Extraordinary losses

Loss on sale or
1．retirement of fixed
assets2．Impairment loss

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.9

Total extraordinary
losses

63,094353,294–290,200–82.1

729,600

Income before taxes
and adjustments

2,994,927

895,0072,099,920

234.6

3,453,583

1,320,021

581,060

738,960127.2

1,767,872

28,218–38,235

66,454–173.8–77,965

28,08534,782–6,696–19.3

21,024

1,618,600

317,398

1,301,202

410.0

1,742,652

Corporate, local andbusiness taxes
Adjustment forcorporate and othertaxes
Minority interest inincomeNet income

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.10

3. (Summary) First Quarter Consolidated Statement of Changes in Net Assets

First Quarter of the Fiscal Year Ending October 31, 2007 (November 1, 2006 - January 31, 2007)(Thousands of yen)
Owners’ equity

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

Total owners’
equityPaid-in capital

Capital surplus

Earned surplus

Treasury stock

9,696,717

10,960,869

14,889,638–6,30335,540,922–2,273–295,732
1,618,600–2,273

Change of items during the firstquarter under review–295,732
1,618,600

Dividends from surplus
First quarter net income
Purchase of treasury stock
Net change of items otherthan owners’ equity during
the first quarter under review
Total change of items during thefirst quarter under review
Balance at the end of the firstquarter under review(January 31, 2007)－－

1,322,868–2,273

1,320,595

9,696,717

10,960,869

16,212,507–8,57736,861,517

Valuation and translation adjustments

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

Valuationdifference on otherinvestment
securities

Total valuation andtranslation
adjustments

2,418,684

2,418,684

Minority interests

92,159Total net assets

38,051,766

Change of items during the firstquarter under review
Dividends from surplus－–295,732

First quarter net income－

1,618,600

Purchase of treasury stock－–2,273

Net change of items otherthan owners’ equity during
the first quarter under review

429,249

429,249

28,085457,335

Total change of items during thefirst quarter under review

429,249

429,249

28,085

1,777,930

2,847,934

2,847,934

120,245

39,829,697

Balance at the end of the firstquarter under review(January 31, 2007)

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.11

4. (Summary) First Quarter Consolidated Statements of Cash Flows
Current Quarter

PeriodItem(First Quarter of theConsolidated
Accounting Fiscal YearEnding October 31,
2007)

Amount(Unit: Thousands of yen)
Prior FY Quarter(Reference)(First Quarter of theConsolidated
Consolidated
Accounting Fiscal Year
Accounting Fiscal
Ended October 31,
Year Ended October
2006
31, 2006)
AmountAmountⅠ Cash flow from operating activities
Income before taxes andadjustments

2,994,927

895,0073,453,583

Depreciation and amortization
expense1,010,746

1,102,864

4,792,624

890

344,417594,568－

26,136－35,729－136,546

Gain on sale or retirement of fixed
assets–920,700－–50,018

Loss on sale or retirement of fixed
assets39,1795,915

52,36640,60846,505125,132

7,369

645

6,866

88,40142,008569,273–421,876–266,388–1,811,898－－

14,762

Valuation loss on investment
securities

3,516

－

－

Gain on sale of investment
securities–3,482–8,388–24,883

Increase (decrease) in allowancefor doubtful accounts

46,441

38,937–502,887

Increase (decrease) in accrued
bonuses to employees

152,592

151,216–4,059

Increase (decrease) in accrued
bonuses to directors and auditors–5,500－5,500

Increase in accrued employees
retirement benefits

45,08422,897

155,725

Increase in retirement allowances
to directors and auditors

2,570

26,386

18,741

Interest revenue and dividend
income–14,228–9,855–42,863Interest expense on installment
purchases of rental assets

9,931

12,09442,906

Interest expense

107,108

84,628357,750

Increase (decrease) in accounts
receivable, trade236,449

78,645–630,235

Increase (decrease) in inventory
assets64,977–6,566–21,251

Increase (decrease) in accounts
payable, trade342,920

1,390,245

1,581,719

Impairment loss
Amortization of consolidation
adjustment account
Amortization of goodwill

Installment purchases of assets forsmall-value rentals
Reclassification of cost of sales
associated with disposal of
construction equipment
Reclassification of cost of sales
associated with disposal of rental
assetsExpenditures for acquisition ofrental assets
New share issuance costs

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.12

Increase (decrease) in accounts
payable, other－261,773

71,440428,072

Directors and auditors' bonuses
paid－－7,300－7,300Other－153,892

366,309

489,036

Subtotal

3,447,991

4,407,804

9,729,787

14,2289,855

42,863-109,204－100,780－400,061

Payment of corporate and othertaxes－1,334,782－540,411－957,962

Cash flow from operating activities

2,018,231

3,776,468

8,414,626

Interest and dividends received
Interest expense

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.13

Current Quarter

PeriodItem(Unit: Thousands of yen)
Prior FY Quarter(Reference)(First Quarter of theConsolidated
Accounting Fiscal
Year Ending October
31, 2007)(First Quarter of theConsolidated
Accounting Fiscal
Year Ended October
31, 2006)

Consolidated
Accounting Fiscal
Year Ended October
31, 2006

AmountAmountAmount

IICash flow from investing activities
Funds provided from redemption ofterm deposits

－

－

3,018

－1,223,118－89,835－2,248,477

Funds provided from the sale oftangible fixed assets

1,845,395

857

931,262

Funds used for the purchase ofintangible fixed assets－2,964－1,400－14,729

Funds used for the purchase ofinvestment securities－47,191－176,183－465,832

Funds provided from sale of investment
securities

109,288

98,195

1,353,015

Funds used for purchase of subsidiarycompany stock－－－50,025

Other

－

－200

2,556

681,410－168,566－489,212

37,2952,073,571－79,660

Funds provided by long-term bankloans

3,050,000

2,700,000

8,200,000

Funds used to repay long-term bankloans

－2,790,779－2,880,874－11,453,496－547,496－628,617－2,271,544

Funds provided by issuance of stock－－

2,182,264

Funds provided from disposal oftreasury stock－－

335,552

Funds used for the purchase oftreasury stock－2,273－1,765－11,781

Payment of dividends to parent
company－295,732－268,677－537,300

Cash flow from financing activities－548,985

993,635－3,635,966

Funds used for the purchase of tangible
fixed assets

Cash flow from investing activities
III

Cash flow from financing activities
Increase (decrease) in short-term bankloans

Funds used for repayment of
installment obligations

Ⅳ

Increase in cash and equivalents

2,150,657

4,601,537

4,289,448

Ⅴ

Balance of cash and equivalents at
beginning of period

18,398,312

14,108,863

14,108,863

Ⅵ

Balance of cash and equivalents at
end of the period

20,548,969

18,710,400

18,398,312

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.14

5. Business Segment Information[ Segment information by type of business ]Current quarter (From November 1, 2006 to January 31, 2007)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

Revenues

17,413,478

1,334,930

107,605

Operatingexpenses

15,271,540

1,350,481

Operatingincome2,141,938－15,550

Eliminations
or entirecompany

Consolidated

18,856,014－

18,856,014

103,035

16,725,057－42,304

16,682,752

4,569

2,130,957

42,3042,173,262

Total

Same quarter of the prior consolidated accounting fiscal year
(From November 1, 2005 to January 1, 2006)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

Revenues

16,082,315

1,312,201

108,908

Operatingexpenses

14,847,599

1,314,738

Operatingincome1,234,715－2,536

Eliminations
or entirecompany

Consolidated

17,503,425－

17,503,425

101,061

16,263,399－50,138

16,213,260

7,846

1,240,025

50,1381,290,164

Total[ Segment information by location ]Current quarter and same quarter of the prior consolidated accounting fiscal year
The Company does not report segment information by location because the Company does not have any
consolidated subsidiaries or important offices located in countries or regions outside of Japan.

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.15

6. (Summary) First Quarter Company Balance Sheets(Unit: Thousands of yen, %)PeriodItem

Current Quarter Prior FY Quarter(First Quarter of (First Quarter of
the Fiscal Yearthe Fiscal YearEnding October Ended October 31,
31, 2007)
2006)(Reference)

Change fromprior year

Fiscal Year Ended
October 31, 2006

AmountAmountAmount1．Cash and deposits
receivable,
2．Notestrade
receivable,
3．Accounts
trade

19,831,003

17,889,861

1,941,142

10.9

17,461,345

2,569,242

2,838,609－269,366－9.5

2,876,924

10,485,278

9,889,272

596,006

6.0

10,734,102

4．Inventory
5．Construction
equipment
6．Deferred tax assets

328,333

316,670

11,662

3.7

320,863910,344

1,143,789－233,445－20.4

968,243

325,896382,619－56,723－14.8

384,442

7. Other
Allowance for
doubtful accounts

541,238

2,246,468－1,705,229－75.9

694,408－456,590－981,080

524,489－53.5－456,245

34,534,746

33,726,209

808,536

2.4

32,984,085(1) Rental equipment

9,655,732

9,359,278

296,454

3.2

9,087,513(2) Buildings

5,411,561

5,249,177

162,383

3.1

5,462,248(3) Structures

961,919

869,472

92,447

10.6

933,405(4) Land

25,719,358

25,524,664

194,693

0.8

25,634,236(5) Other

1,185,252

1,075,354

109,898

10.2

1,191,381

42,933,823

42,077,947

855,876

2.0

42,308,785

136,524

174,898－38,374－21.9

147,261

Investment(1) securities

6,749,299

6,006,321

742,978

12.4

6,115,087

Stock of affiliated(2) companies

1,029,332

979,307

50,025

5.1

1,029,332－

18,352－18,352－100.050,933

1,819,775

1,261,561

558,21444.2

1,830,127－412,531－385,619－26,9117.0－385,941

Assets（Percent

Amount）I Current assets

Total current assets
II

Fixed assets

1. Tangible fixed assets

Total tangible fixed
assetsfixed
2. Intangible
assetsTotal intangible
fixed assets
and
3. Investments
other assets(3) Deferred tax assets(4) Other
Allowance for
doubtful accounts
Reserve forinvestment losses
Total investments
and other assets－565,171－480,173－84,99717.7－565,171

8,620,705

7,399,748

1,220,956

16.5

8,074,368

Total fixed assets

51,691,053

49,652,594

2,038,458

4.1

50,530,415

Total Assets

86,225,799

83,378,804

2,846,995

3.4

83,514,501

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.16

(Unit: Thousands of yen, %)PeriodItem

Current Quarter Prior FY Quarter(First Quarter of (First Quarter of
the Fiscal Yearthe Fiscal YearEnding October Ended October 31,
31, 2007)
2006)(Reference)

Change fromprior year

AmountAmount9,189,439

8,789,391

400,048

4.6

8,246,886

1,869,489

2,016,186－146,696－7.3

2,522,512－

2,000,000－2,000,000－100.0－9,928,000

10,580,000－652,000－6.2

9,935,000

2,196,243

2,349,402－153,159－6.5

2,562,743

1,297,942

542,141755,801

139.4

1,291,556

606,793

612,083－5,290－0.9

437,693

－

－

－

－

5,500

1,087,872

927,528

160,34417.3

1,232,666

26,175,780

27,816,733－1,640,952－5.9

26,234,559

II Long-term liabilities
bank
1．Long-term
loans

15,377,000

17,425,000－2,048,000－11.8

15,120,000

accrued2．Long-term
expenses

2,554,534

1,882,788

671,74635.7

2,030,031

deferred
3．Long-term
taxes

210,031－210,031－－

90,261

102,969－12,708－12.3

90,261（I

Liabilities

AmountFiscal Year Ended
October 31, 2006

Percent

Amount）Current liabilities

1．Notes payable, trade
payable,2．Accounts
trade
3．Short-term bank loansbank loans
4．Long-term
due within one year
payable,5．Accounts
other
taxes
6．Corporate
payablebonuses to
7．Accrued
employees
bonuses to
8．Accrued
directors and auditors
9．Other
Total current liabilities

Retirement
allowances to
4．directors andauditors
employees
5．Accrued
retirement benefits
Totallong-term
liabilities

1,708,029

1,525,607

182,42112.0

1,663,537

19,939,856

20,936,365－996,509－4.8

18,903,829

Total Liabilities

46,115,637

48,753,099－2,637,462－5.4

45,138,388－

8,596,737

－

－

－

－

9,720,343

－

－

－

－

9,720,343－－－

Legal earned surplus－

1,375,287－－－

Voluntary reserves－

11,851,286

－

－

－

Reserve for advanced
depreciation of fixed
assets－

19,601－－－（ Shareholders’ ）EquityI
Common stock
II

Capital surplus
Additional paid-in
capital
Total capitalsurplus
III Earned surplus

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.17

General reserve
Unappropriatedretained earnings－

11,831,684

－

－

－

－

918,075－－－

Total earned surplus－

14,144,649

－

－

－

Ⅳ

Valuation differenceon other investment
securities－

2,352,335

－

－

－

Ⅴ

Treasury stock－－188,360

－

－

－

－

34,625,704

－

－

－

－

83,378,804

－

－

－

Total Shareholders’EquityTotal Liabilities andShareholders’ Equity

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.18

(Unit: Thousands of yen, %)PeriodItem（

Current Quarter Prior FY Quarter(First Quarter of (First Quarter of
the Fiscal Yearthe Fiscal YearEnding October Ended October 31,
31, 2007)
2006)

AmountNet Assets

Amount(Reference)

Change fromprior year
AmountFiscal Year Ended
October 31, 2006

Percent

Amount）Ⅰ Owners’ equity
1．Paid-in capital

9,696,717－－－

9,696,717

Capital legal reserve

10,817,389

－

－

－

10,817,389

Other capital surplus

143,480－－－

143,480

10,960,869

－

－

－

10,960,869

Earned legal reserve

1,375,287－－－

1,375,287

Other earned surplus

15,242,232

－

－

－

13,935,479

Reserve for advanced
depreciation of fixed
assets

19,601－－－

19,601

12,931,684

－

－

－

11,831,684

2,290,946－－－

2,084,192

16,617,519

－

－

－

15,310,766－8,577－－－－6,30337,266,529

－

－

－

35,962,049

Valuation difference onother investment
securities

2,843,632－－－

2,414,062

Total valuation andtranslation adjustments

2,843,632－－－

2,414,062

Total Net Assets

40,110,162

－

－

－

38,376,112

Total Liabilities and Net
Assets

86,225,799

－

－

－

83,514,501

2．Capital surplus

Total Capital Surplus

3．Earned surplus

General reserve
Earned surplus brought
forward
Total earned surplus

4．Treasury stock
Total owners' equity
Valuation and translation

Ⅱ adjustments

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.19

7. (Summary) First Quarter Company Statements of Income(Unit: Thousands of yen, %)PeriodItem

Current Quarter Prior FY Quarter(First Quarter of (First Quarter of
the Fiscal Yearthe Fiscal YearEnding October Ended October 31,
31, 2007)
2006)(Reference)

Change fromprior year

Fiscal Year Ended
October 31, 2006

AmountAmountAmountⅠ Operating revenues

16,881,362

15,585,121

1,296,241

8.3

60,753,945

Ⅱ Cost of revenues

11,231,929

10,997,572

234,357

2.1

44,904,730

Gross profit

5,649,433

4,587,549

1,061,883

23.1

15,849,215

Ⅲ administrative expenses

3,639,662

3,492,128

147,534

4.2

12,133,316

Operating income

2,009,770

1,095,421

914,349

83.5

3,715,898

15,914

11,587

4,327

37.3

47,758

3,482

8,388

－4,905－58.5

24,883

3． Rents received

59,491

63,503－4,011－6.3

250,919

4． Other

54,794

63,842－9,048－14.2

237,818

133,683

147,321－13,638－9.3

561,380

1． Interest expense

99,85775,60624,25032.1

326,636

2． Other

24,71344,409－19,695－44.3

211,291

124,571

120,015

4,555

3.8

537,927

2,018,882

1,122,727

896,15579.8

3,739,351

920,700－

920,700－

50,01820,291846

19,445－

310,332

940,992846

940,146－

360,351

37,945

4,939

33,006668.3

49,845890

344,417－343,527－99.7

594,568

3,516

－

3,516

－

－

－

－

－

－

84,997－－－－

17,786

19,508－19,508－62,51861,860349,356－287,495－82.3

809,716

2,898,013

774,217

2,123,796

274.3

3,289,986

1,267,202

527,052

740,150140.4

1,684,230

28,325－38,297

66,623－174.0－114,543

1,602,485

285,462

1,317,022

461.4

1,720,300

Selling, general andPercent

AmountⅣ Non-operating revenues
1． Interest and dividends
Gain on sale of investment2．
securities

Total non-operating
revenues
Ⅴ Non-operating expenses

Total non-operating
expenses
Ordinary income
Ⅵ Extraordinary profits
1．

Gain on disposal of fixed
assets

2． Other
Total extraordinary
profits
Ⅶ Extraordinary losses
1．

Loss on sale or disposalof fixed assets

2． Impairment loss
Valuation loss on
3．
investment securities
Transfer to reserve for4．
investment losses
Transfer to allowance for5． doubtful loans toaffiliates
6． Other
Total extraordinary
lossesIncome before taxes andadjustments
Corporate, local andbusiness taxes
Adjustment for corporate
and other taxes
Net income

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.20

Profit carry-forward fromprior period
Unappropriated retained
earnings－

632,613

－

－

－

－

918,075－－－

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.21

8. (Summary) First Quarter Statement of Changes in Net Assets

First Quarter of the Fiscal Year Ending October 31, 2007 (November 1, 2006 - January 31, 2007)(Thousands of yen)
Owners’ Equity
Capital surplus

Other earned surplus

Paid-in
capitalBalance at the end of the priorfiscal year (October 31, 2006)

Earned surplus

9,696,717

Capital legal
reserve

Other
capitalsurplusTotal
capitalsurplus10,817,389

143,480

10,960,869

Earned legal
reserve

Reserveforadvanceddepreciati
on of fixed
assets1,375,287

19,601Total
earnedsurplusGeneralreserve

Net earned
surplusbrought
forward

11,831,684

2,084,192

15,310,766

1,100,000－1,100,000－

Change of items during thefirst quarter under review
Transfer to generalreserve－

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

First quarter net income－

1,602,485

1,602,485

Purchase of treasury stock－－

Net change of items otherthan owners' equity during
the first quarter underreview
Total change of items during
the first quarter under review

－

－

－

－

－

－

1,100,000

206,753

1,306,753

Balance at the end of the firstquarter under review(January 31, 2007)

9,696,717

10,817,389

143,480

10,960,869

1,375,287

19,601

12,931,684

2,290,946

16,617,519

Owners’ Equity

Valuation and translation adjustments
Total Net Assets

Valuation difference onother investment
securities

Total valuation andtranslation adjustments

2,414,062

2,414,062

38,376,112

－

－

－

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

First quarter net income

1,602,485－

1,602,485－2,273－－2,273

429,570429,570429,570

Treasury stock
Balance at the end of the priorfiscal year (October 31, 2006)－6,303

Total Owners’ Equity

35,962,049

Change of items during thefirst quarter under review
Transfer to generalreserve

Purchase of treasury stock－2,273

Net change of items otherthan owners' equity during
the first quarter underreview
Total change of items during
the first quarter under review－2,273

1,304,479

429,570429,570

1,734,050

Balance at the end of the firstquarter under review(January 31, 2007)－8,57737,266,529

2,843,632

2,843,632

40,110,162

Summary of First Quarter Operating Results (Consolidated)
Fiscal Year Ending October 31, 2007
P.22