Six-month Consolidated Financial Report for the
Fiscal Year Ending October 31, 2011 [Japan GAAP]
June 8, 2011
Listed Company Name

Kanamoto Company, Ltd.

Company Code Number 9678
Listing Exchanges(URL

Tokyo Stock Exchange, Sapporo Stock Exchange

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.
Scheduled date for submission of Quarterly Report

June 13, 2011

Scheduled date for commencement of dividend payments

July 11, 2011

Preparation of Quarterly Settlement Supplementary
Explanatory Materials

No

Quarterly Earnings Briefings

No

1. Operating Results for the Interim Period of the Fiscal Year Ending October 31, 2011
(November 1, 2010 – April 30, 2011)(1) Consolidated Operating Results (Cumulative)(Numbers less than one million yen have been rounded down)(Percentages shown are the percent increase or decrease compared to the same period of the prior consolidated fiscal year)

Operating
IncomeRevenues
Fiscal Year ending October 31,
2011: Second quarter
Fiscal Year ended October 31,
2010: Second quarter

Millions of yen

Ordinary
IncomeMillions of yen％％

Millions of yen

Net Income％

35,309

－4.9

1,724

－46.0

1,408

－51.8

37,142

14.0

3,195

246.8

2,924

268.4

Diluted Net
Income per
Share

Net Income
per Share
Yen

Fiscal Year ending October 31,
2011: Second quarter
Fiscal Year ended October 31,
2010: Second quarter

―

46.15

―

Total Assets

Net Assets(2) Consolidated Financial Position
Millions of yen

Shareholders’Equity Ratio

Fiscal Year ending October 31,
111,959
37,07932.6
2011: Second quarter
Fiscal Year ended October 31,
108,509
37,025
33.7
2010(Reference) Shareholders’ equity
Fiscal Year Ending October 31, 2011 Second Quarter: ¥36,517 million
Fiscal Year Ended October 31, 2010:¥36,527 million

1％

49 －96.7
1,515

─

Yen

1.50

Millions of yen

Millions of yen

Net Assets
per Share％

Yen

1,112.19
1,112.46

2. Dividends
End of 1Q
Yen

Dividend per Share
End of 2Q End of 3Q Year-end
Yen

Yen

Fiscal year ended October 31, 2010
─
10.00
─
Fiscal year ending October 31, 2011
10.00
Fiscal Year ending October 31, 2011─
(Projected)(Note) Has the Company revised its projected dividends during this quarter?

Yen

Full year
Yen

10.00

20.00

10.00

20.00

No

3. Projected Consolidated Operating Results for the Fiscal Year Ending October 2011
(November 1, 2010 - October 31, 2011)(Percentages indicate percent change from prior fiscal year)

Operating
IncomeRevenues
Full year

Millions of yen％

67,160 －4.3

Millions of yen

Ordinary
Income％1,440 －45.6

Millions of yen

Net Income
per Share

Net Income％

700 －66.4

Millions of yen％

210 －79.8(Note) Has the Company revised its projected consolidated operating results during thequarter? No

2

Yen

6.40

4. Other (For details please refer to [Attachments] Page 4 “Other Information”.)(1) Were there changes to material subsidiaries during the period under review: No
Company newly included (Company name:)Company newly excluded (Company name:)Note: Transfer of specified subsidiaries in conjunction with revisions to the scope of
consolidation during the quarterly accounting period.
(2) Has the Company applied the simplified accounting method and special accounting
method: Yes
Note: Application of simplified accounting method, and special accounting method in the
preparation of quarterly consolidated financial statements.
(3) Changes in accounting principles, procedures or reporting methods(a) Are there changes in conjunction with revision to accounting standards?: Yes(b) Changes other than the above: No
Note: Changes in accounting principles, procedures and reporting methods pertaining topreparation of the quarterly consolidated financial statements, as recorded in the
Changes in Important Matters Used as the Basis for Preparation of Quarterly
Consolidated Financial Statements.
(4) Number of shares issued (common stock)(a) Number of shares outstanding at the end of the period (including treasury stock)
Fiscal year ending October 31, 2011 Second Quarter:
32,872,241 sharesFiscal year ended October 31, 2010:
32,872,241 shares(b) Number of shares of treasury stock at the end of the period
Fiscal year ending October 31, 2011 Second Quarter:
37,993 sharesFiscal year ended October 31, 2010:
36,906 shares(c) Average number of shares during the period (Consolidated year-to-date)Fiscal year ending October 31, 2011 Second Quarter:
32,834,891 sharesFiscal year ended October 31, 2010 Second Quarter:
32,837,517 shares
Note: Disclosure concerning status of implementation of quarterly review procedure
This quarterly earnings report is exempt from the quarterly review procedure based on the
Financial Instruments and Exchange Act. At the time of disclosure of this quarterly earnings
report, the Company has not completed the quarterly review procedure for financial
statements based on the Financial Instruments and Exchange Act.
Note: Explanation concerning appropriate use of the projected operating results and otheritems to note
(Note Concerning Forward-Looking Statements)
The above projections were prepared based upon information available to the Company at thetime the projections were announced as well as various assumptions concerning the future
economic and business environment. Actual operating results may differ from the projected
figures depending upon various factors in the future. Please refer to the Qualitative
Information Concerning Projected Operating Results on Page 3 of the Attachments for theconditions used as assumptions for the projected operating results and matters to note before
using the projected operating results.

3

Attachments Table of Contents
I. Qualitative Information Concerning Quarterly Consolidated Operating Results...........................2
1. Qualitative Information Concerning Consolidated Operating Results ....................................2
2. Qualitative Information Concerning Consolidated Financial Position .....................................3
3. Qualitative Information Concerning Projected Consolidated Operating Results ......................3
II. Other Information ............................................................................................................4
1. Summary of Changes to Material Subsidiaries .................................................................4
2. Summary of Simplified Accounting Method and Special Accounting Method ..........................4
3. Summary of Changes in Accounting Principles, Procedures or Reporting Methods ..................4
III. Quarterly Consolidated Financial Statements .....................................................................5
1. Quarterly Consolidated Balance Sheets ............................................................................5
2. Quarterly Consolidated Statements of Income ..................................................................7(Second Quarter Consolidated Year-to-Date)...................................................................7
3. Quarterly Consolidated Statements of Cash Flows ........................................................... 8
4. Notes Relating to the Going Concern Assumption ............................................................ 10
5. Business Segment Information .................................................................................... 10
6. Notes on Significant Changes to Shareholders’ Equity ...................................................... 111

I. Qualitative Information Concerning Quarterly Consolidated Operating Results
1. Qualitative Information Concerning Consolidated Operating Results< Management Environment > (From November 1, 2010 to April 30, 2011)
Despite the continuing lack of both a consumption stimulus plan and new economic stimulus
measures, and in sharp contrast to a sense of stagnation spreading through regional economies,
an optimistic business mood prevailed for Japan’s economy as a whole during the Kanamoto
Group’s second quarter because of the strong positive earnings at major companies generated bystable overseas economic trends and external demand.
Such optimistic sentiment, however, was also shattered abruptly by the Great East Japan
Earthquake that occurred on March 11, however, and was quickly replaced by a sense of urgency.
As doubts about the pace of Japan’s response to the earthquake and lack of informationtransparency increased, and fears concerning the influence on the global economy mounted, theresults cast a long shadow over Japan’s future.
In the service and construction industries in which the Kanamoto Group operates, thedeterioration of regional economies as the effects of economic measures faded was as striking as
projected at the beginning of the period. Moreover, despite the reasonable level of effort thatwas evident from the private sector following the earthquake, restoration measures and systems
that combined government and citizens’ effort remained in disarray, and as earthquake recovery
efforts failed to make headway, conditions that prevented a clear view of the future prevailed.
< Interim Period Consolidated Operating Results > (From November 1, 2010 to April 30, 2011)
As noted in the revised operating results projection dated June 1, the Kanamoto Group’s
operating results and management environment were affected by the severe competition amongfirms for construction equipment rentals because of a drop in domestic construction investment,
which further spread to various regions, and the intense struggle to secure earnings. The
Kanamoto Group is working to maintain revenues by aggressively developing proposal-based
selling that encompasses all of the Group’s firms, and working to review and optimize thecomposition of its construction equipment rental asset portfolio through various measures,
including computerized project execution being promoted by the Ministry of Land, Infrastructure
and Transport and the addition of new energy-saving equipment.
Because of the slump in construction demand, earnings through the second quarter of theconsolidated fiscal year under review fluctuated with a generally negative trend as initiallyanticipated.
In addition, conditions after the earthquake as well led directly to a decline in revenues andearnings, including interruptions of construction work in some regions as a consequence of thedisaster and the necessary suspension of operations in areas where entry has been restricted. At
the same time, however, there also were factors that boosted revenues, including increased
demand because of the initial disaster recovery efforts and electricity shortages.
Given such a management environment and complexly intermingled factors leading to both
higher and lower revenues and earnings, results from having created cooperative relationships
across the Group’s business sectors and among Group firms were evident as well, and theKanamoto Group was able to maintain its overall market share and adjust its pricing in
conjunction with the improvement in rental supply and demand. As a result, revenues slipped
4.9% compared with the same period one year earlier to ¥35,309 million.

2

From an earnings perspective, on the other hand, operating income fell 46.0% year-on-year to¥1,724 million and ordinary income decreased 51.8% compared with the same period one year
earlier to ¥1,408 million. This reflected the impact of lower earnings from the partial
postponement of used construction equipment sales in light of the need to direct equipment toearthquake recovery efforts.
Moreover, some of the Company’s branch office buildings and structures and rental assets(construction equipment etc.) in the disaster-stricken region were damaged or destroyed, andthe Company recorded an amount equivalent to this damage as the loss. As a result, net income
for the interim period retreated sharply, declining 96.7% compared with the interim period of theprior consolidated fiscal year to ¥49 million.
Operating results by segment are reported below (In addition, beginning from the interim
period under review, the Company has partially revised its reporting method in conjunction witha change reporting standards for settlement of accounts bulletins.
[ Business related to the Construction Equipment Rental Division ]In some respects, domestic construction equipment rentals resembled a war of attrition, as
price competition throughout Japan further intensified, hand-in-hand with the sharp contractionin the volume of work since last year. Rental revenues in this business sector were 5.9% lower
than in the same period one year earlier. By region compared with the same period of the priorconsolidated fiscal year, an environment marked by a marked decline in both public and private
sector demand continued as construction works related to economic measures came to an end in
the Hokkaido Region and economic activity slowed in other regions. By maintaining its
overwhelming market share, however, the drop in earnings was held to 24.9%, an improvementof 6.4 points over the steeper year-on-year decline in revenues witnessed in the first quarter. In
contrast, in the Tohoku Region rental revenue rose 7.7% year-on-year as recovery demand wasadded to demand for large-scale project construction works, while rental revenue in the Kanto
Region increased 2.6% compared with the same period of the prior consolidated fiscal year,
despite sluggish demand for specialized construction equipment, thanks to growth in private
sector demand as well as disaster recovery demand and power supply demand. In the Kinki &Chubu Region, which was not influenced by the earthquake, rental revenue increased 5.4% overthe same period one year earlier, driven by private sector capital investment, and in the Kyushu& Okinawa Region, new demand from countermeasures at Mount Shinmoe was added to
outstanding public sector demand to push rental revenues up 7.1% year-on-year.
Revenues from equipment sales in this business sector were off 23.6% compared with thesame period of the previous consolidated fiscal year. Despite greater stocking and sale of regularconstruction equipment, these revenues were affected by a decision to postpone some overseas
used construction equipment sales and utilize the equipment to meet reconstruction and recovery
demand.
Although currently accounting for only a small proportion of Kanamoto’s operating results, in
China the Shanghai Jinheyuan Group (Shanghai Jinheyuan Equipment Rental Co., Ltd. andShanghai Jinheyuan Engineering Construction Co., Ltd.) steadily expanded its market area to
Tianjin, Wuhan, Nanjing, Ningbo and other cities, in addition to Shanghai. The difference indemand compared with the previous year’s results, however, which were boosted by special

3

procurement for the Shanghai Expo, was great and the expansion into new cities could not offset
the decrease.
As a result of these factors, in the construction-related businesses of the entire Kanamoto
Group, revenues for the interim period of the consolidated fiscal year were ¥32,169 million andoperating income was ¥1,617 million.
[ Other Businesses ]In the steel products sales business the Company is developing in Hokkaido, conditions in thesteel materials market remained strong, aided somewhat by the general sense of insufficient
supply because of the earthquake. Demand in Hokkaido, however, experienced a lull. As a result,for the interim period under review revenues climbed 29.3% compared with the same period of
the prior consolidated fiscal year. In Kanamoto’s information and telecommunications-related
division, on the other hand, new business development efforts were successful and personal
computer rental income rose 7.6% year-on-year.
As a result of these factors, for the interim consolidated period under review revenues were
¥3,140 million, and operating income was ¥1.4 million.
[ Business Development Issues Deserving Special Mention and Status of Branch Office
Changes ]During the second quarter consolidated period, Kanamoto did not establish any new branches
and closed one domestic branch. Details are provided bellow.
Closed: Makubetsu Equipment Center (Makubetsu-cho, Nakagawa-gun, Hokkaido)
2. Qualitative Information Concerning Consolidated Financial Position(1) Assets, liabilities and net assets
Compared with the end of the prior consolidated fiscal year, total assets at the end of theinterim consolidated period under review increased ¥3,449 million to ¥111,959 million. This was
mainly the result of an increase in rental equipment of ¥2,179 million and an increase of ¥843
million in investment securities.
Total liabilities were ¥74,879 million, an increase of ¥3,395 million compared with the end of
the prior consolidated fiscal year. This was mainly increases of ¥414 million and ¥1,724 million inaccounts payable, other and long-term accrued expenses, respectively, resulting from increases
in amounts such as accounts payable based on installment payment contracts as the
procurement method in conjunction with the increase in rental equipment, and the recording of¥461 million as an allowance for disaster losses for the estimated amount of damage resulting
from the Great East Japan Earthquake.
Total Net Assets were ¥37,079 million, ¥54 million higher than at the end of prior consolidated
fiscal year. This was mainly an increase of ¥267 million in valuation difference on otherinvestment securities reflecting changes such as an increase since the end of the previous
consolidated fiscal year in stock prices of shares that have a market price that are reported ininvestment securities, and a decrease in retained earnings from the payment of dividends basedon the prior consolidated fiscal year.
(2) Cash flows

4Cash and cash equivalents (“cash”) at the end of the interim consolidated period under review
increased by ¥1,887 million compared with the end of the previous consolidated fiscal year to¥22,638 million.
Factors affecting cash flows for the interim consolidated period under review are described
below.
(Cash flow from operating activities)

Cash generated as a result of operating activities edged up 0.8% compared with the same
period of the previous consolidated fiscal year to ¥5,623 million. This mainly reflected a decrease
in interim period income before taxes and adjustments and an increase in payment of corporate
and other taxes, and an increase of depreciation and amortization expense, decrease in
expenditures for acquisition of rental assets and increase in accounts payable, trade.
(Cash flow from investing activities)

Cash flow used in investing activities was ¥701 million, compared with cash flow provided byinvesting activities in the interim period of the previous consolidated fiscal year of ¥729 million.
This mainly reflected increases in funds used for the purchase of investment securities and funds
used for the purchase of tangible fixed assets.
(Cash flow from financing activities)

Cash flow used as a result of financing activities was ¥3,035 million, compared with cash flowfrom financing activities of ¥1,346 million in the interim period of the previous consolidated fiscal
year. This mainly reflected an increase in short-term bank loans and decrease in funds provided
by long-term bank loans, and higher amounts of funds used for repayment of installment
obligations and funds used for repayment of lease obligations.
3. Qualitative Information Concerning Projected Consolidated Operating Results
As previously described in the Company’s announcement on June 1 concerning the revision to
its projected full-year operating results for the fiscal year ending October 2011, since theearthquake, construction equipment rental demand in the stricken areas in Tohoku and Kanto isextremely vigorous, while rental fees have risen as well because of the improved supply anddemand balance, and the Company expects to see a commensurate bottom-line effect during thesecond half of the fiscal year.
Nevertheless, there are many factors that cannot be clarified at the present time, including
what percentage of the full-scale reconstruction and recovery demand following the earthquake
can be expected to be carried out during the Company’s current business period, and the extent
to which the effect from concentrating this demand in one region will restrain demand in otherregions. Consequently the Company has maintained its full-year projected operating results
values at the level announced in December 2010.
These projected consolidated operating results materials were prepared using projections
based on information available to the Company as of the date this material was released andforecasts 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 not5limited to economic conditions surrounding the Company, market trends, and competitive
conditions.
II. Other Information
1. Summary of Changes to Material Subsidiaries
The Company had no material items to report.
2. Summary of Simplified Accounting Method and Special Accounting Method
Calculation method for fixed asset depreciation expense
For depreciation and amortization expense for fixed assets for which it has adopted thedeclining balance method, the Company calculates the amount of depreciation andamortization pertaining to the consolidated fiscal year on a pro-rata basis for each period.
3. Summary of Changes in Accounting Principles, Procedures or Reporting Methods
Changes in accounting standards used for normal accounting treatment
1. Adoption of the Accounting Standard for Asset Retirement Obligations
Beginning from the first quarter of the current consolidated fiscal year, the Company has
adopted the Accounting Standard for Asset Retirement Obligations (Accounting Standards
Board of Japan Statement No. 18 dated March 31, 2008 and the Guidance on AccountingStandard for Asset Retirement Obligations (Accounting Standards Board of Japan Guidance
No. 21 dated March 31, 2008).
As a result, in the interim consolidated period under review, operating income andordinary income were ¥3,648,000 lower, respectively, and income before taxes was¥99,178,000 lower, than they otherwise would have been had the accounting standards usedin past periods been applied.
Furthermore, the change in asset retirement obligations as a result of the application ofthis standard was ¥151,255,000.
2. Adoption of the Accounting Standard for Measurement of Inventories
Beginning from the first quarter of the current consolidated fiscal year, the Company has
adopted the Accounting Standard for Measurement of Inventories (Accounting Standards
Board of Japan Statement No. 9 dated September 26, 2008), and Kanamoto and certain of its
domestic consolidated subsidiaries have changed the measurement method for merchandise
inventories and products from the last-in-first-out method to the periodic average method.
The affect of this change on earnings for the interim consolidated period under review is
not material.
Changes in Reporting Method
Interim Consolidated Period Under Review (From November 1, 2010 to April 30, 2011)(Quarterly Consolidated Statements of Income)As a result of the application of the “Cabinet Office Ordinance Partially Revising theRegulations for Terminology, Formats and Preparation Methods of Financial Statements”(Cabinet Ordinance No. 5 dated March 24, 2009) based on the Accounting Standard forConsolidated Financial Statements (Accounting Standards Board of Japan Statement No.

6

22 dated December 26, 2008), the Company has disclosed the line item “Income (loss)
before minority interests” for the interim consolidated period under review.
(Quarterly Consolidated Statements of Cash Flows)
Because the funds used for repayment of lease obligations that were reported in “Other”
under cash flow from financing activities in the interim period of the previous consolidated
fiscal year have increased in importance, the Company has decided to report this item
separately beginning from the interim consolidated period under review. The amount for
funds used for repayment of lease obligations that was reported in “Other” under cash flowfrom financing activities in the interim period of the previous consolidated fiscal year was–¥194,445,000.

7III. Quarterly Consolidated Financial Statements
1. Quarterly Consolidated Balance Sheets(Unit: Thousands of yen)
Current Consolidated Fiscal Year
Interim Period(As of April 30, 2011)

Prior Fiscal Year Summary
Consolidated Balance Sheet(As of October 31, 2010)

AmountAmountClassification(Assets)
Current assets
Cash and deposits

22,373,252

20,486,217

Notes and accounts receivable, trade14,177,456

14,987,135

Negotiable securities

350,000

350,000

Work in progress

19,91737,046Merchandise inventories and products

701,350

606,265

Raw materials and supplies

166,001

161,250

1,198,255

1,187,474

Deferred tax assets

318,090360,857

Other

470,306

585,387–387,299–372,925

39,383,331

38,388,709

66,233,446

62,487,304

Accumulated depreciation–38,307,404–36,740,651

Net rental equipment assets

27,926,041

25,746,653

20,854,712

20,754,755

Accumulated depreciation–13,183,261–12,855,277

Net buildings and structures

7,671,451

7,899,477

Machinery, equipment, vehicles anddelivery equipment

5,122,729

5,136,911–4,428,734–4,386,927

693,994

749,983

Land

29,688,582

29,689,403

Other

1,378,855

1,332,572–1,150,740–1,076,712

228,115

255,859

66,208,185

64,341,377

Goodwill

252,268

345,456

Other

273,478

304,779

525,747

650,235

3,612,500

2,768,524

Construction equipment

Allowance for doubtful accounts
Total Current Assets
Fixed assets
Tangible fixed assets
Rental equipment assets

Buildings and structures

Accumulated depreciation
Net machinery, equipment, vehicles
and delivery equipment

Accumulated depreciation
Net other
Total Tangible Fixed Assets
Intangible fixed assets

Total Intangible Fixed Assets
Investments and other assets
Investment securities

1Deferred tax receivable

1, 109,999

1,186,595

Other

2,034,733

2,081,861

Allowance for doubtful accounts–830,259–827,005

Allowance for investment loss

–84,700–80,700

Total Investments and Other Assets

5,842,273

5,129,276

Total Fixed Assets

72,576,206

70,120,890

Total Assets

111,959,537

108,509,599

Current Consolidated Fiscal Year
Interim Period(As of April 30, 2011)

Prior Fiscal Year Summary
Consolidated Balance Sheet(As of October 31, 2010)

AmountAmountClassification(Liabilities)
Current liabilities
Notes and accounts payable, trade14,124,317

13,076,469

Short-term bank loans

6,075,573

13,415,487

Long-term bank loans due within one year

10,541,161

9, 529,170

Current portion of bonds

22,00022,000

Lease obligations

787,754859,558

Corporate taxes payable

493,693

1,106,405

Accrued bonuses to employees

619,382

589,042

Allowance for disaster losses

461,061－

Accounts payable, other

6,001,931

5,587,413

Other

1,295,798

1,514,896

40,422,675

45,700,445

11,00022,000Long-term bank loans

20,528,039

13,762,305

Lease obligations

1,868,309

1,903,249

Accrued employees retirement benefits

1,428,252

1,341,459

Retirement allowances to directors andauditors

201,452

205,627

Long-term accrued expenses

10,218,489

8,493,598

Asset retirement obligations

150,654－

Other

50,98355,316

Total Long-term Liabilities

34,457,180

25,783,556

Total Liabilities

74,879,856

71,484,001

Capital stock

9,696,717

9,696,717

Capital surplus

10,960,869

10,960,869

Retained earnings

15,509,148

15,788,189

Total Current Liabilities
Long-term liabilities
Bonds(Net Assets)
Shareholder’s equity2

–25,480–24,963

36,141,255

36,420,813

Valuation difference on other investment
securities

414,838

147,516

Translation adjustments account–38,201–40,486

Total Valuation and Translation
Adjustments

376,636

107,030

561,789

497,753

Total Net Assets

37,079,681

37,025,597

Total Liabilities and Net Assets

111,959,537

108,509,599

Treasury stock
Total Shareholders’ Equity
Valuation and translation adjustments

Minority Interests32. Quarterly Consolidated Statements of Income(Interim Consolidated Period)(Unit: Thousands of yen)
Prior Consolidated Fiscal Year
Interim Period

Current Consolidated Fiscal Year
Interim Period

From November 1, 2009
to April 30, 2010

From November 1, 2010
to April 30, 2011

AmountAmountClassification
Revenues

37,142,520

35,309,433

Cost of revenues

25,144,506

24,819,767

Gross profit

11,998,013

10,489,665

Selling, general and administrative expenses

8,802,474

8,765,024

Operating income

3,195,539

1,724,640

Interest income

8,681

5,628

Dividend income

11,643

14,761

Insurance benefits

63,939

9,664

Rents received

26,172

26,825

Cash bonus received

1,272

4,625

Amortization of negative goodwill

34,91634,916

Other

77,04956,627

223,676

153,047

Interest expense

362,103

365,124

Loss on sale of notes receivable

26,522

22,462

Other106,105

81,782494,731469,369

2,924,485

1,408,318

Gain on sale of investment securities

153,765－

Reversal of allowance for doubtful
accounts

52,3502,932

Subsidies

77,27932,743

Other

7,868

10,591

291,264

46,267

Loss on sale and retirement of fixed
assets38,415

85,125

Valuation loss on investment securities

4,137

104,059

Transfer to allowance for doubtful
accounts

35,507－

Transfer to allowance for loss on
liquidation of affiliated companies

94,764

－

－

4,000

Non-operating income

Total non-operating income
Non-operating expenses

Total non-operating expenses
Ordinary income
Extraordinary income

Total extraordinary income
Extraordinary losses

Transfer to reserve for investment losses

4Extraordinary expenses resulting fromapplication of the Accounting Standard for
Asset Retirement Obligations－

95,530Loss resulting from natural disaster－

724,969874

114

173,698

1,013,799

Income before taxes and adjustments

3,042,050

440,786

Corporate, local and business taxes

1,561,187

451,622–73,159–52,700

Total corporate and other taxes

1,488,027

398,922

Income before minority interest－

41,86438,458–7,447

1,515,564

49,312

Other
Total extraordinary losses

Adjustment for corporate and other taxes

Minority interest in income
Net income53. Quarterly Consolidated Statements of Cash Flows(Unit: Thousands of yen)
Prior Consolidated Fiscal Year
Interim Period

Current Consolidated Fiscal Year
Interim Period

From November 1, 2009
to April 30, 2010

From November 1, 2010
to April 30, 2011

AmountAmountClassification
Cash flow from operating activities
Income before taxes and adjustments

3,042,050

440,786

Depreciation and amortization expense

3,684,244

4,308,627

Amortization of goodwill

92,892

93,190Loss on sale or retirement of fixed assets

33,85577,430－28,980Reclassification of cost of sales
associated with disposal of construction
equipment

375

2,049

Reclassification of cost of sales
associated with disposal of rental assets

413,812368,476–2,052,130–1,243,130

4,137

104,059(Gain) loss on sale of investment
securities–153,765－

Increase (decrease) in allowance for
doubtful accounts–91,451

17,492

Increase (decrease) in accrued bonuses
to employees

145,677

30,369

Increase (decrease) in accrued
employees retirement benefits

70,46886,792

Increase (decrease) in retirement
allowances to directors and auditors

12,732–4,174

Increase (decrease) in allowance for loss
on liquidation of affiliated companies

94,764－

Interest revenue and dividend income–20,325–20,390

Interest expense on installment
purchases of rental assets

89,29387,522

Interest expense

362,103

365,124

Decrease in accounts receivable, trade683,507

816,506(Increase) decrease in inventory–12,732–81,312–1,195,013–1,102,028

Extraordinary expenses resulting fromapplication of the Accounting Standard
for Asset Retirement Obligations－

95,530Loss resulting from natural disaster－

724,969

90,574–141,535

Installment purchases of assets forsmall-value rentals

Expenditures for acquisition of rental
assetsValuation (gain) loss on investment
securities

Increase (decrease) in accounts payable,
trade

Increase (decrease) in accounts payable,
other

6

Other426,630–202,790

Subtotal

5,721,702

7,056,604

20,361

20,410Interest expense–412,802–388,102

Payment of corporate and other taxes

246,714–1,065,777

5,575,975

5,623,135Interest and dividends received

Cash flow from operating activities

Prior Consolidated Fiscal Year
Interim Period

Current Consolidated Fiscal Year
Interim Period

From November 1, 2009
to April 30, 2010

From November 1, 2010
to April 30, 2011

AmountAmountClassification
Cash flow from investing activities
Disbursements for investments in term
deposits–50,000

Revenue from redemption of term
deposits

500－

Funds used for the purchase of tangible
fixed assets–75,559–169,920

Funds provided from the sale of tangible
fixed assets

13,232

10,158Funds used for the purchase of intangible
fixed assets–28,891–4,281

Funds used for the purchase ofinvestment securities–14,721–437,253

Funds provided from sale of investment
securities

773,768－

Funds used for the purchase of
subsidiary stock–12,250–41,310Funds used for establishment ofsubsidiary－–22,718

Payments of loans receivable–62,100–97,140

Funds provided from collection of loans
receivable

59,426

31,053

Other

126,01030,086

Cash flow from investing activities

729,415–701,326

Net increase in short-term bank loans

7,536,111

4,654,045

Funds provided by long-term bank loans

2,008,983

1,130,000

Funds used to repay long-term bankloans

–5,567,641–5,374,717–31,000–11,000–2,077,105–2,603,790－–580,683

–601

–519

Cash flow from financing activities

Funds used to redeem corporate bonds
Funds used for repayment of installment
obligations
Funds used for repayment of leaseobligations
Funds used for the purchase of treasury
stock

7

–327,757–327,835－

68,265

Other–194,445

10,304

Cash flow from financing activities

1,346,543–3,035,931

2,701

1,156

Increase (decrease) in cash and equivalents

7,654,636

1,887,035

Balance of cash and equivalents at
beginning of period

14,086,028

20,751,217

Increase in cash and cash equivalents due
to newly consolidated subsidiaries

185,114－

Balance of cash and equivalents at end of
period21,925,778

22,638,252

Payment of dividends
Funds provided by payment fromminority shareholders

Effect of exchange rate changes on cash
and cash equivalents

84. Notes Relating to the Going Concern Assumption
The Company had no material items to report.
5. Business Segment Information[Segment Information by Type of Business]
Prior consolidated fiscal year second quarter (From February 1, 2010 to April 30, 2010)(Unit: Thousands of yen)

Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Revenues from customers

17,070,936

1,164,310

207,339

18,442,587－

18,442,587(2) Sales or transfers between
segments

－

－

－

－

－

－

Total

17,070,936

1,164,310

207,339

18,442,587－

18,442,587

Operating income

1,520,992

10,015

13,326

1,544,334–15,645

1,528,688

Eliminations
or entire
Consolidated
company

Total

Revenues

Prior consolidated fiscal year interim period (From November 1, 2009 to April 30, 2010)(Unit: Thousands of yen)

Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Revenues from customers

34,654,342

2,129,535

358,642

37,142,520－

37,142,520(2) Sales or transfers between
segments

－

－

－

－

－

－

Total

34,654,342

2,129,535

358,642

37,142,520－

37,142,520

Operating income (loss)

3,219,286–2,3193,874

3,220,842–25,302

2,195,539

Eliminations
or entire
Consolidated
company

Total

Revenues(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the type of labor and products, thenature 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, Specified Worker Dispatching
Undertakings

3. Changes in accounting methods
Prior consolidated fiscal year interim period
Change in reporting standard for completed contract revenues and cost of completed contracts
As described in 2. Changes in accounting standards used for normal accounting treatment under9

“Revision of Important Matters Used as the Basis for Preparation of the Quarterly Consolidated Financial
Statements”, beginning from the first quarter of the consolidated fiscal year the Company changed its
accounting standards for revenues and costs related to construction works.
The effect of this change on the Company’s businesses related to the Steel Sales Division is notmaterial, compared to what the results otherwise would have been had the accounting standards
traditionally used by the Company been applied.

[Segment Information]
1. Summary of reporting segments
Interim period of the consolidated fiscal year under review (From November 1, 2010
to April 30, 2011) and second quarter consolidated period under review (FromFebruary 1, 2011 to April 30, 2011)

The Company’s reporting segments are those units of the Company for which
discrete financial information is available and for which the Board of Directors
regularly conducts a review for the purpose of making decisions about resources to beallocated to the segments and assess the segments’ performance.
The Company is developing its businesses according to products and services, andhas assumed “business related to the Construction Equipment Rental Division” as its
reporting segment.
The Company’s “business related to the Construction Equipment Rental Division”
rents and sells construction equipment and temporary materials for construction use.
2. Information concerning revenues and profit or loss of each reporting segment
Current consolidated fiscal year interim period (From November 1, 2010 to April 30, 2011)(Unit: Thousands of yen)
Reporting segment
Business related to theConstruction Equipment
Rental Division

Other businesses(see Note)

Total

Revenues(1) Revenues from customers

32,169,016

3,140,416

35,309,433(2) Sales or transfers between
segments

－

－

－

Total

32,169,016

3,140,416

35,309,433

Operating income (loss)

1,617,853

14,412

1,632,26510

Current consolidated fiscal year second quarter (From February 1, 2011 to April 30, 2011)(Unit: Thousands of yen)

Reporting segment
Business related to theConstruction Equipment
Rental Division

Other businesses(see Note)

Total

Revenues(1) Revenues from customers

15,523,468

1,505,818

17,029,287(2) Sales or transfers between
segments－－－

15,523,468

1,505,818

17,029,287

594,49–31,876562,273

Total
Operating income (loss)(Note) The “Other businesses” classification encompasses business segments not included in the reporting
segment, and includes business related to the Steel Sales Division and business related to the
Information Products Division and other businesses.

11

3. Difference between total reporting segment profit or loss and the amountreported on the Consolidated Quarterly Statements of Income, and the main
reasons for the difference (Matters Pertaining to Reconciliation of Difference)
Current consolidated fiscal year interim period(From November 1, 2010 to April 30, 2011)(Unit: Thousands of yen)
Earnings

AmountReporting segment total

1,617,853

Earnings from other classifications

14,412Other adjustments

92,374

Operating income reported on the Consolidated
Quarterly Statements of Income

1,724,640

Current consolidated fiscal year second quarter(From February 1, 2011 to April 30, 2011)(Unit: Thousands of yen)
Earnings

AmountReporting segment total

594,149

Earnings from other classifications–31,876

Other adjustments

47,440Operating income reported on the Consolidated
Quarterly Statements of Income

609,713

4. Information concerning fixed asset impairment loss and goodwill by reporting
segment
The Company had no material items to report.

(Supplemental Information)
Beginning from the first quarter of the current consolidated fiscal year, the Company
has adopted the Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information (Accounting Standards Board of Japan Statement No. 17, revision
dated March 27, 2009 and the Guidance on Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information (Accounting Standards Board of Japan
Guidance No. 20 dated March 31, 2008).
6. Notes on Significant Changes to Shareholders’ Equity
The Company had no material items to report.

12