Fiscal Year ended October 31, 2013

Financial Statements Bulletin (Japan GAAP)

December 11, 2013
Kanamoto Co., Ltd.
9678
Tokyo Stock Exchange, Sapporo Stock Exchange
http://www.kanamoto.co.jp
Kanchu Kanamoto
President and CEO
Nobuhito Utatsu
Director and Executive Corporate Officer, Division Manager, Accounting Division
TEL 81-11-209-1600
Please send inquiries in English to takayama@kanamoto.co.jp
Scheduled date for Regular General Meeting of the Shareholders:January 29, 2014
Scheduled date for commencement of dividend payments:
January 30, 2014
Scheduled date for submission of Annual Securities Report :January 29, 2014
Preparation of Supplementary Explanatory Materials
Yes
Earnings Briefings (For institutional investors and analysts):
Yes

Listed Company Name
Company Code Number
Listing Exchanges
URL
Representative
Inquiries

1. Consolidated Operating Results for the Fiscal Year ended October 31, 2013
(Nov. 1, 2012 – Oct. 31, 2013)(Numbers less than one million yen have been rounded down)(Percentages show the change from the prior year)(1) Consolidated Operating Results
Net Sales
Fiscal year ended
October 31, 2013
Fiscal year ended
October 31, 2012

Operating Income

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

110,83128.7

11,392

77.2

11,073

86.6

5,809

62.5

86,106

21.1

6,430

121.3

5,932

164.9

3,575

206.7

(Note) Comprehensive income (millions of yen)
Fiscal year ended October 31, 2013 ¥7,457 (110.0%)
Fiscal year ended October 31, 2012 ¥3,551 (207.0%)

Fiscal year ended
October 31, 2013
Fiscal year ended
October 31, 2012

Net Income per
Share of Common
Stock
Yen

Net Income per
Share on a Fully
Diluted Basis
Yen

175.50108.88

Ordinary Income
to Total Assets

ROE

Operatingmargin

%

%

%

－

12.3

7.2

10.3

－

9.3

4.7

7.5

(Reference) Investment profit or loss accounted for by the equity method (millions of yen)
Fiscal year ended October 31, 2013－
Fiscal year ended October 31, 2012－

(2) Consolidated Financial Position

Millions of yen

Millions of yen%

Shareholders’ Equity
per ShareYen

169,250

56,19232.2

1,513.49

137,343

41,39929.2

1,221.56

Net cash provided by(used in) investing
activities
Millions of yen

Net cash provided by(used in) financing
activities
Millions of yen

Cash and Cash
Equivalents at End of
PeriodMillions of yen–1,117–6,532

32,957–835–14,074

19,717

Total Assets
Fiscal year ended
October 31, 2013
Fiscal year ended
October 31, 2012

(Reference) Shareholders’ equity (millions of yen):
Fiscal year ended October 31, 2013
Fiscal year ended October 31, 2012

(3) Consolidated Cash FlowsNet cash provided by(used in) operating
activities
Millions of yen
Fiscal year ended
20,759October 31, 2013
Fiscal year ended
14,306
October 31, 2012

Shareholders’Equity Ratio

Net Assets¥54,549¥40,106－1 －2. Dividends
Annual Dividends per Share

End offirstquarter
Fiscal year ended
October 31, 2012
Fiscal year ended
October 31, 2013
Fiscal year ending
October 31, 2014
(projected)

End ofthird
quarter

End ofsecondquarterYearendFull-year

Yen

Yen

Yen

Yen

－

10.00

－

10.00

20.00

－

10.00

－

10.00

20.00

－

15.00

－

15.00

30.00

Dividend
Dividends on
Dividends inPayout Ratio
Total
Net Assets(Full Year) (Consolidated) (Consolidated)

Yen Millions of yen

%

%

656

18.4

1.7

688

11.4

1.5

16.4

(Note) Breakdown of second quarter dividend for the fiscal year ending October 2014 (projected)
Ordinary dividend
10.00 yen
Commemorative dividend
5.00 yen
Breakdown of year-end dividend for the fiscal year ending October 2014
Ordinary dividend
10.00 yen
Commemorative dividend
5.00 yen

3. Projected Consolidated Operating Results for the Fiscal Year Ending October 31, 2014
(November 1, 2013 - October 31, 2014)(Percentages show the change from the prior year)
Net Income per
Net Sales

Operating Income

Ordinary Income

Net Income

Share ofCommon StockMillions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

Interim period

59,600

8.9

7,390

9.5

7,030

4.7

3,820

2.8

115.40

Full year

117,500

6.0

12,53010.0

12,090

9.2

6,050

4.1

182.77－2 －Notes(1) Changes in material subsidiaries during the period under review (changes in specific subsidiaries in
conjunction with a change in the scope of consolidation): No
Company newly included–
Company newly excluded–(2) Changes in accounting principles, changes in accounting estimates and retrospective restatements(a) Changes in accounting policy in conjunction with revision of accounting standards?: None(b) Changes other than the above?: No(c) Changes in accounting estimates: No(d) Retrospective restatements: No(3) Number of shares issued (common stock)(a) Number of shares outstanding at the end of the period (including treasury stock)
Fiscal year ended October 31, 201336,092,241 sharesFiscal year ended October 31, 2012
32,872,241 shares(b) Number of shares of treasury stock at end of period
Fiscal year ended October 31, 2013
50,041 sharesFiscal year ended October 31, 2012
39,955 shares(c) Average number of shares outstanding during the period
Fiscal year ended October 31, 201333,101,017 sharesFiscal year ended October 31, 2012
32,833,928 shares－

3 －(Reference) Summary of Company Operating Results
1. Operating Results for the Fiscal year Ended October 31, 2013
(November 1, 2012–October 31, 2013)(Numbers less than one million yen have been rounded down)(1) Operating Results
Net Sales

Operating Income

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

81,360

17.8

8,926

57.3

8,861

83.6

4,916

91.8

69,091

13.4

5,675

101.3

4,825

85.7

2,563

78.8

Fiscal year ended
October 31, 2013
Fiscal year ended
October 31, 2012

Net Income per Shareof Common StockNet Income per Shareon a Fully Diluted Basis

Yen

Yen

148.53

－

78.07

－

Fiscal year ended
October 31, 2013
Fiscal year ended
October 31, 2012
(2) Financial Position

Millions of yen

Millions of yen%

Shareholders’ Equity
per ShareYen

141,21353,30737.7

1,479.02

112,372

39,95235.6

1,216.87

Total Assets
Fiscal year ended
October 31, 2013
Fiscal year ended
October 31, 2012

Shareholders’Equity Ratio

Net Assets(Reference) Owners’ equity (millions of yen):
Fiscal year ended October 31, 2013

¥53,307

Fiscal year ended October 31, 2012

¥39,952

2. Projected Operating Results for the Fiscal Year Ending October 31, 2014
(November 1, 2013 - October 31, 2014)(Percentages show the change from prior year)
Net Sales

Ordinary Income

Net Income per Shareof Common StockNet Income

Millions of yen%

Millions of yen%

Millions of yen%

Interim period

42,700

8.9

5,040

5.0

3,010

3.5

Millions of yen
90.93

Full year

86,200

5.9

9,840

11.0

5,090

3.5

153.77

Note: Disclosure concerning implementation of audit proceduresThis financial report is exempt from audit procedures based on the Financial Instruments and Exchange Act.
At the time of disclosure of this financial report, the Company is in the process of implementing the audit
procedures for its consolidated financial statements.
Note: Explanation concerning appropriate use of the projected operating results and other items to note
(Note Concerning Forward-Looking Statements)
The forward-looking statements, including business results forecasts, contained in these materials are basedon information currently available to the Company and on certain assumptions deemed to be reasonable. The
Company does not guarantee the achievement of the projections. Actual operating results may differ
substantially due to a number of factors.

－

4 －○Attachments Table of Contents
1. Analysis of Operating Results and Financial Position………………………………………………………………………
(1) Analysis of Operating Results ………………………………………………………………………………………………………
(2) Analysis of Financial Position ………………………………………………………………………………………………………
(3) Basic Policy Concerning Distribution of Earnings and Dividends for the Consolidated Fiscal
Year under Review and Next Consolidated Fiscal Year …………………………………………………………….
(4) Business Risks and Other Risks …………………………………………………………………………………………………
2. Current Conditions of the Company’s Group …………………………………………………………………………………
3. Management Policies ………………………………………………………………………………………………………………………
(1) Basic Management Policies…………………………………………………………………………………………………………
(2) Management Indicators Established as Objectives ……………………………………………………………………
(3) Medium to Long-term Corporate Management Strategy …………………………………………………………
(4) Issues to be addressed by the Company …………………………………………………………………………………
(5) Other Important Company Management Issues ………………………………………………………………………
4. Consolidated Financial Statements …………………………………………………………………………………………………
(1) Consolidated Balance Sheets ……………………………………………………………………………………………………
(2) Consolidated Statements of Income andConsolidated Statements of Comprehensive Income ……………………………………………………………
Consolidated Statements of Income ………………………………………………………………………………………
Consolidated Statements of Comprehensive Income ……………………………………………………………
(3) Consolidated Statements of Changes in Net Assets …………………………………………………………………
(4) Consolidated Statements of Cash Flows ……………………………………………………………………………………
(5) Notes to the Consolidated Financial Statements ………………………………………………………………………
(Notes Relating to the Going Concern Assumption) …………………………………………………………………
(Important Matters Used as Basis for Preparation of the Consolidated Financial Statements)(Changes in Reporting Method) …………………………………………………………………………………………………
(Supplemental Information) ………………………………………………………………………………………………………
(Notes to the Consolidated Balance Sheets) ……………………………………………………………………………
(Notes to the Consolidated Statements of Income) …………………………………………………………………
(Notes to the Consolidated Statements of Comprehensive Income) ………………………………………
(Notes to the Consolidated Statements of Changes in Net Assets) …………………………………………
(Notes to the Consolidated Statements of Cash Flows) …………………………………………………………
(Business Segment Information) ………………………………………………………………………………………………
(Notes to Leasing Transactions) …………………………………………………………………………………………………
(Per Share Information) ……………………………………………………………………………………………………………
(Material Events after the Close of the Consolidated Fiscal Year) ……………………………………………
5. Company Financial Statements ………………………………………………………………………………………………………
(1) Balance Sheets ……………………………………………………………………………………………………………………………
(2) Statements of Income …………………………………………………………………………………………………………………
(3) Statements of Changes in Net Assets ………………………………………………………………………………………
6. Other …………………………………………………………………………………………………………………………………………………
(1) Changes of Directors …………………………………………………………………………………………………………………
(2) Other ……………………………………………………………………………………………………………………………………………

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1. Analysis of Operating Results and Financial Position(1) Analysis of Operating Resultsa) Summary of consolidated fiscal year operating results (From November 2012 to October 2013)
During the consolidated fiscal year under review, Japan’s economy exhibited a modest recovery trend.
Correction of the yen’s appreciation continued, and stock prices maintained their steady rise against the
backdrop of expectations towards the new administration’s monetary easing policy and economic measures.
Consumer sentiment and the corporate business outlook were more positive as well. Nevertheless, concerns
about the risk of an economic downturn, stirred by the slump in Europe and delay in recovery of theoverseas economy including China, proved impossible to dispel, and overall conditions remained uncertain.
In the construction-related business that is the Kanamoto Group’s main business, the so-called 15-monthbudget moved forward, and with government construction investment centered on the region devastated by
the recent earthquake trending upward, brighter signs of private sector construction investment were
evident as well. On the other hand, conditions raised a number of concerns regarding the future progress ofthese activities, including a conspicuous shortage of skilled construction workers, a sharp rise in labor costs,
glitches in project bidding activities and delays in the start of construction.
Amidst such conditions, the Kanamoto Group moved to build an organization that will enable it to respondwithout pause or delay to the quickening volume and pace of restoration-related works, while undertaking
aggressive capital investment, including the establishment of new branches and enhancement of its rental
equipment portfolio, and striving to improve profit margins through the efficient utilization of management
resources. The Group moved to thoroughly analyze, enhance and improve the efficiency of its present
activities and processes as well, while also initiating organizational changes aimed at strengthening earnings.
As a result of these factors, net sales greatly exceeded the Company’s initial plan, and consolidated net
sales for the fiscal year ended October 2013 rose 28.7% from the prior consolidated fiscal year level to¥110,831 million. In terms of earnings as well, operating income expanded 77.2% from the priorconsolidated fiscal year to ¥11,392 million and consolidated ordinary income increased 86.6% year-on-yearto ¥11,073 million. Net income rose 62.5% over the prior consolidated fiscal year to ¥5,809 million.
[Operating Results for the Fiscal Year ended October 31, 2013](% change from prior year)
Net Sales
Millions of yen
Consolidated

Year underreviewPrior year

Company

Year underreviewPrior year

Operating Income% Millions of yen

110,831 28.7

11,392

86,106 21.1

Ordinary Income% Millions of yen

77.2

11,073Net Income% Millions of yen

%

86.6

5,809

62.5

6,430 121.3

5,932 164.9

3,575

81,360 17.8

8,926

57.3

8,861

83.6

4,916

91.8

69,091 13.4

5,675 101.3

4,825

85.7

2,563

78.8

206.
7

Results for each of the Group’s business segments were as follows.
b) Summary of consolidated operating results by business segment[Business related to the Construction Equipment Rental Division]
In the construction-related business that is the main business of Kanamoto, restoration-related works inthe earthquake-devastated region and decontamination-related works remained steady, as did
government construction investment to strengthen infrastructure such as roads, flood control systems,
sewerage systems and harbors in regions throughout Japan and works related to countermeasures,
maintenance and repairs of deteriorating infrastructure. Likewise, construction equipment rental demandremained brisk on a nationwide scale, supported by a rush in private sector capital investment demandahead of the consumption tax hike and a recovery trend centered particularly on energy-related
construction. To respond accurately to such demands and diversified frontline needs, the Kanamoto Group－6 －moved to ensure its organization is capable of meeting these demands to the maximum extent possible
through strengthened cooperation among Group firms, aggressive enhancement of the rental equipment
portfolio and optimal placement of these assets in the field.
As a result of these actions, net sales by region in the construction-related business expanded
substantially in all regions, rising 15.8% in the Hokkaido Region, 32.4% in the Tohoku Region, 43.6% in
the Kanto Region, 44.9% in the Kinki & Chubu Region and 5.3% in the Kyushu & Okinawa Region
compared with the prior consolidated fiscal year.
Growth in the Kanto Region and Kinki & Chubu Region, which expanded considerably compared with theprior consolidated fiscal year, was influenced significantly by Unite Co., Ltd., which was included in thescope of consolidation beginning in the consolidated fiscal year under review.
Overseas sales of used construction equipment were similarly affected by the improved balance between
supply and demand and greater price competitiveness because of the weaker yen, rising 16.0% year-onyear.
As a result of these factors, net sales for Kanamoto’s construction-related businesses for the
consolidated fiscal year under review increased 29.1% from the prior consolidated fiscal year to ¥102,359
million, and operating income climbed 78.4% year-on-year to ¥10,916 million.
[Other businesses]
In the steel products sales the Company is developing in Hokkaido, sales of steel materials for largescale projects and general steel materials remained steady, and net sales were up 26.8% compared withthe prior consolidated fiscal year. In Kanamoto’s information and telecommunications-related business,
specified worker dispatching also was stable and rose 7.1% year-on-year because of orders received for a
new major project.
As a result of the above factors, for the consolidated fiscal year under review net sales for theCompany’s other businesses increased 24.1% from the prior consolidated fiscal year to ¥8,472 million,
while operating income also surged 42.9% year-on-year to ¥204 million.
< Change in number of branches >During the consolidated fiscal year under review, Kanamoto newly opened 5 branches and closed 3
branches.
New branches:
Minamisanriku Branch (Motoyoshi-gun, Miyagi Prefecture) Hirono Branch (Futabagun, Fukushima Prefecture) Onagawa Branch (Oshika-gun, Miyagi Prefecture)
Minamisoma Branch (Minamisoma, Fukushima Prefecture) Oshamambe Branch(Yamakoshi-gun, Hokkaido Prefecture)
Closed branches: Tobetsu Branch (Ishikari-gun, Hokkaido Prefecture) Hakodate Chuo Branch(Hakodate, Hokkaido Prefecture) Sendai-kita Branch (Kurokawa-gun, Miyagi
Prefecture)(2) Analysis of Financial Positiona) Financial position
Compared with the end of the prior consolidated fiscal year, total assets at the end of the consolidated
fiscal year under review increased by ¥31,907 million to ¥169,250 million. This mainly reflected an increaseof ¥13,240 million in cash and deposits from the collection of accounts receivable-trade and the increase inequity capital, and an increase of ¥10,855 million in rental equipment.
Total liabilities were ¥113,058 million, an increase of ¥17,114 million compared with the end of the priorconsolidated fiscal year. The principal items contributing to this change were an increase of ¥3,282 million innotes and accounts payable-trade, and an increase of ¥9,621 million in long-term accounts payable-otherthat accompanied the increase in rental equipment.
Total net assets were ¥56,192 million, ¥14,792 million higher than at the end of the prior consolidated
accounting fiscal year. The principal items contributing to this change were an increase of ¥3,956 million incapital stock and capital surplus, respectively, because of the increase in equity capital, and net income of¥5,809 million.

－

7 －b) Consolidated cash flows(Unit: Millions of Yen)FY Ended October 2012
(Prior consolidated fiscal
year)
Net cash provided by (used in)operating activities
Net cash provided by (used in)investing activities
Net cash provided by (used in)financing activities
Net increase (decrease) in cash andcash equivalents
Cash and cash equivalents at
beginning of period
Cash and cash equivalents at end of
periodFY Ended October 2013
(Consolidated fiscal year
under review)

Change from prior year

14,306

20,759

6,453

–835

–1,117–282–14,074–6,532

7,542

–625

13,244

13,86920,374

19,717–657

19,717

32,957

13,240The balance of cash and cash equivalents (“cash”) on a consolidated basis at the end of the consolidated
fiscal year under review increased ¥13,240 million from the end of the prior consolidated fiscal year, to¥32,957 million. Cash flows for the consolidated fiscal year under review are discussed below.
(Net cash provided by (used in) operating activities)
Cash generated as a result of operating activities increased 45.1% from the prior consolidated fiscal yearto ¥20,759 million.
This mainly reflected depreciation and amortization of ¥15,181 million and income before income taxes
and minority interests of ¥10,686 million, expenditures for acquisition of rental assets of ¥3,047 million,
an increase in notes and accounts receivable-trade of ¥4,107 million and interest expenses paid of ¥1,087
million.
(Net cash provided by (used in) investing activities)
Cash flow utilized as a result of investing activities was ¥1,117 million, compared with ¥835 million in
the prior consolidated fiscal year.
This mainly reflected the purchase of property, plant and equipment of ¥1,092 million and purchase ofinvestment securities of ¥343 million.
(Net cash provided by (used in) financing activities)
Cash flow used for financing activities was ¥6,532 million, compared with cash flow used in financing
activities in the prior consolidated fiscal year of ¥14,074 million.
This mainly reflected ¥7,912 million of proceeds from issuance of common stock, repayments of
installment payables of ¥10,841 million and repayments of lease obligations of ¥2,040 million.

－

8 －The cash flow indicator trends for the Kanamoto Group are provided below.
FY Ended
October 2010

FY Ended
October 2012

FY Ended
October 2012

FY Ended
October 2013

33.7

32.2

29.2

32.2

12.6

15.1

23.3

56.4

Years to repay debt

5.7

8.5

4.9

3.9

Interest coverage ratio (times)

10.4

7.4

13.4

19.1

Shareholders’ equity ratio (%)
Shareholders’ equity ratio on a market
capitalization basis (%)(Notes) Shareholders’ equity ratio:
Shareholders’ equity / Total assets
Shareholders' equity ratio on amarket capitalization basis: Shareholders’ equity on a market capitalization basis / Total assets
Years to repay debt:
Interest-bearing liabilities / Cash flow from operating activities
Interest coverage ratio:
Cash flow from operating activities / 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 number of 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 expenses
paid on the Consolidated Statements of Cash Flows are used as interest payments.
Outlook for the next fiscal year (Business Period ending October 2014)
Turning to the outlook for the next fiscal year, in addition to full-scale restoration works in theearthquake-devastated areas, nationwide disaster prevention and disaster mitigation countermeasures areon the drawing boards based on the slogan “nation-toughening.” The re-building of Japan’s industrial
infrastructure has been raised as a growth strategy as well, and the government is undertaking a variety
of projects that will include the construction of ring roads in Japan’s major metropolitan areas,
improvement of logistics networks and the extension of Shinkansen lines. Moreover, with the decisions tohold the 2020 Olympics in Tokyo and open a linear Shinkansen line in 2027, incidental demand related tothese projects is anticipated as well. Finally, because private sector construction demand centered onenergy-related needs is likewise growing, Kanamoto believes construction equipment rental demand will
be vigorous not only in the disaster-stricken Tohoku Region but on a nationwide scale. Nevertheless, thebusiness climate will continue to discourage an optimistic view because of multiple concerns, ranging fromtender glitches and irregularities originating in the shortages of materials, equipment and manpower forworks ordered at such an accelerated pace, to the growing competition among firms triggered by thechanging balance of supply and demand, including excess inventories of rental equipment, that will result
from these projects.
The Kanamoto Group continues to declare a full response in support of restoration and recovery work by
every member of the Kanamoto Group to be its most important activity, and will ensure earnings and fulfill
its corporate responsibilities in the areas in question. Furthermore, we will simultaneously continue to lay
the foundation stones for our domestic operations by mainly bolstering activities in the Tokyo metropolitanarea, while pursuing the creation of bases overseas.
Although Kanamoto will continue to restrict sales of used construction equipment, which it partially
postponed in order to provide equipment for earthquake disaster reconstruction, for equipment that has
been used for a certain number of years the Company’s policy will be to proceed with sales on a timely
basis, while closely observing the overseas market and the exchange rate trend.
Furthermore, to establish an operations management organization that will generate earnings efficiently,
Kanamoto will continue to focus on lowering cost and managing its assets efficiently, while working tofurther strengthen the regional sales organization that has achieved excellent results so far. The Company
will strive as well to further secure earnings from every aspect, including the creation and management ofrental demand in sectors unrelated to construction.
Presently the percentage of total earnings accounted for by overseas businesses is not significant. As
Kanamoto seeks to deepen its presence in each region mainly through equipment rentals, however,including overseas development of geoengineering-related firms and development into new areas, mainly－ 9 －in Southeast Asian nations, the Company will seek to expand the contents of such operations while
continuing to give sufficient attention to the country risks and business risks.
Fiscal year ending October 2014 Projected Operating Results(November 1, 2013 -October 31, 2014)(Millions of yen except net income per share, which is in yen)
Net Sales
Consolidated
full-year projection
Company
full-year projection

Operating
IncomeOrdinary
IncomeNet Income

Net Income
per Share ofCommon Stock

117,500

12,53012,0906,050

182.77

86,200

9,700

9,840

5,090

153.77(3) Basic Policy Concerning Distribution of Earnings and Dividends for the Consolidated Fiscal Yearunder Review and Next Consolidated Fiscal Year
Kanamoto seeks to ensure a stable return of earnings to the maximum extent possible, and considers
maintaining a stable dividend to be a fundamental management policy. For the fiscal year ended October 2013
the Company set its annual dividend at ¥20 per share (including an interim dividend of ¥10 per share). For theannual dividend for the next fiscal year ending October 2014, the Company plans to pay its normal dividend of¥20 per share (including an interim dividend of ¥10 per share), plus a commemorative dividend of ¥10 per
share (including an interim dividend of ¥5 per share) to commemorate the 50th anniversary of the Company’s
establishment, for a total dividend of ¥30 per share. Furthermore, the Company plans to utilize its internal
reserves by allocating funds for capital investment, including the introduction of rental equipment that willserve as the source of future earnings, and for enhancing shareholders’ equity. To enable the Company toflexibly implement its capital policy, Kanamoto has also established a system for making purchases of treasury
stock.
Special benefits plan for shareholders
Shareholders owning at least 1,000 shares who are described or recorded in the Register of Shareholders
and List of Beneficial Shareholders as of October 31 (Date of Record) of each year will receive fresh products
from Hokkaido, the birthplace of Kanamoto, with a value equivalent to 3,000 yen (selected from a speciallymailed catalog).
(4) Business Risks and Other Risks
The following risks are included among the business and accounting matters described in the Financial
Statements Bulletin that might have an important influence on investors’ decisions. Forward-looking
statements included in this document are judgments made by the Company based on information available atthe present point in time.
a) Economic conditions
In the construction-related business that is the main business of Kanamoto Group, earnings are influenced
significantly by the domestic construction investment trend whether it reflects public or private sector
demand. Consequently there is a possibility future operating results will be negatively affected by events
such as large reductions in public works or cutbacks in private sector works, or if the utilization ratio ofrental equipment declines because of a deterioration in the rental prices for rental equipment or in theoperating environment as a result of the intensified competition for orders. Furthermore, overseas sales ofused construction equipment are affected by the global economy and the exchange rate trend prevailing at
the time of sale.
b) Seasonal variations 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 the construction-related businesses that are
Kanamoto’s main business experience a trend in which the busy season during each business period extends
from about October until the following March, and construction equipment rental demand reaches its
maximum peak during this period. As a result, the net sales and earnings of the Kanamoto group tend to be－

10 －concentrated in the Company’s first-half accounting period (the six-month period from November throughthe following April).
c) Interest rate trends
The Kanamoto Group allocates internal capital and procures funding from outside sources to meet its needfor funds to purchase rental equipment and other assets, make branch-related capital investments andprovide working capital for business activities. Although the Company takes steps to mitigate the affect ofinterest 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 and financial
position of the Kanamoto Group will be affected by future large changes in short-term interest rates.

d) Guarantees
The Kanamoto Group has entered into guarantee agreements with financial institutions for certain
obligations owed by affiliated companies on the basis of loans, finance lease obligations and installment
payment contracts. There is a possibility the operating results and financial position of the Kanamoto Groupmight be adversely affected should circumstances under which the Company is requested to perform its
guarantee arise in the future.
e) Asset impairment accounting for noncurrent assets
The Kanamoto Group has adopted the Accounting Standard for Impairment of Fixed Assets. There is apossibility the operating results and financial position of the Kanamoto group might be negatively affected if
the profitability of noncurrent assets declines because of factors such as a marked deterioration in the
Company’s business environment in the future.
f) Restrictive financial covenants
Agreements with financial institutions pertaining to the borrowings of the Kanamoto Group frequently
establish restrictive financial covenants. Although Kanamoto judges the probability of violating theserestrictive financial covenants to be low, there is a possibility the operating results and financial position of
the Kanamoto Group will be adversely affected if the Company has violated such restrictive financial
covenants.
2. Current Conditions of the Company’s GroupThe Kanamoto Group (Kanamoto and its affiliated companies) has organized its principal business activities
around “Business related to the Construction Equipment Rental Division,” which is engaged in the rental and saleof construction equipment and construction-related equipment parts, and “Other businesses” comprised of“Business related to the Steel Sales Division,” which sells materials for construction such as steel products, and“Business related to the Information Products Division and Other Businesses,” including the rental and sale ofcomputers such as PC servers and computer peripheral equipment, and the provision of specified worker
dispatching services.
The group is comprised of 14 companies including the parent company, nine consolidated subsidiaries and four
non-consolidated 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 therelationships to the Group’s segments, is provided below.
<Business related to the Construction Equipment Rental Division>
The Company’s Construction Equipment Rental Division and Daiichi Kikaisangyo Co., Ltd (a consolidated
subsidiary company), Kanki Corporation (a consolidated subsidiary company), Toyo Industry Co., Ltd. (aconsolidated subsidiary company) and Kyushu Kensan Co., Ltd. (a consolidated subsidiary company) areengaged in the rental and sale of foundation equipment, construction cranes and equipment and apparatus used
for construction. These companies borrow rental equipment assets from the Company as needed in order tomeet customer demand. In addition, the Company borrows rental assets from each of these companies asneeded to rent to other companies.
－

11 －Assist Co., Ltd. (a consolidated subsidiary company) is engaged in the rental and sale of furniture, fixtures andsafety products. Kanatech Co., Ltd. (a consolidated subsidiary company) designs and sells modular housing units
for temporary use. The Company borrows rental assets from each of these companies as needed to rent to othercompanies. In addition, Kanamoto purchases modular housing units for temporary use from Kanatech as
needed.
Unite Co., Ltd. (a consolidated subsidiary) is engaged in the rental and sale of road construction equipment,
and manages a road construction business. Unite Co., Ltd. borrows rental equipment assets from the Company
as needed in order to meet customer demand. In addition, the Company borrows rental assets from Unite Co.,
Ltd. as needed to rent to other companies.
Shanghai Jinheyuan Engineering Construction Co., Ltd. (a consolidated subsidiary; Shanghai, China) is
engaged in the rental and sale of construction equipment and tools and the import and export of construction
materials.
In addition to the above, Kanamoto has four unconsolidated subsidiaries: KG Flowtechno Co., Ltd., KANAMOTO(HK) CO., LTD., Kanamoto & JP Nelson Equipment (S) PTE Ltd. (Singapore) and SJ Rental, Inc. (Territory ofGuam, United States). KG Flowtechno Co., Ltd. rents specialized large-scale construction equipment in foreigncountries, and is engaged in the technical development, manufacture and sale of ground improvement
construction equipment in Japan. KANAMOTO (HK) CO., LTD. borrows rental assets from Kanamoto and isengaged in the rental and sale of construction equipment and tools and the import and export of construction
materials. Kanamoto & JP Nelson Equipment (S) PTE Ltd. rents and sells specialized equipment for engineering
works in Singapore.
At its Board of Directors meeting held on September 7, 2012, the Company resolved to dissolve and liquidate
SJ Rental, Inc., and that company currently is continuing its liquidation procedures.
< Other businesses >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 business. The Information Products
Division is engaged in the rental and sale of computers, including workstations and PC servers, as well as
computer peripheral equipment. Kanamoto Engineering Co., Ltd. (a consolidated subsidiary) manages specified
worker dispatching undertakings to dispatch engineering-related research and development employees tomanufacturers and other entities.

－

12 －

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

Domestic Customers

Construction equipment rental

Kanamoto Co., Ltd

Daiichi Kikaisangyo Co., Ltd
Construction equipment
rentals and sales

Rental of construction related products and parts

Assist Co., Ltd
Rental and sale of furniture, fixturesand safety products

Kanki Corporation
Construction equipment
rentals and sales
Kyushu Kensan Co., Ltd.
Construction equipment rentals andsales centered on foundationequipment and sales

Construction
Equipment Rental
Division
Overseas

Toyo Industry Co., Ltd.
Rentals and sales of equipment
related to the shieldtunneling

Shanghai Jinheyuan Engineering
Construction Co., Ltd.
rentals and sales
construction equipment,
import and export of construction
materials

Unite Co., Ltd.
Rental and sale of road construction
equipment,road construction business

SJ Rental, Inc.

Steel Sales Division

Construction equipment
rentals and sales
KANAMOTO (HK) CO., LTD.

Information Products
Division

Construction equipment
rentals and sales
Kanamoto & JP Nelson
Equipment (S) PTE. Ltd
rentals and sales of specializedengineering works equipment

Overseas customers andoverseas trading companies

Rental and design, manufacture and sale ofspecialized construction equipment

Design, manufacture and sale of related products

Kanatech Co., Ltd

KG Flowtechno Co., Ltd.
rentals and technical development,
manufacture and sales of construction
equipment for ground improvement

Design and sale of modular housing
units for temporary use

Overseas customers anddomestic trading companies

Customers, trading companies,
etc.

Other Businesses
Kanamoto Engineering Co., Ltd.
Dispatch of engineering-related
R&D employees(Specified Worker Dispatching Undertakings)

Manufacturers, etc.

(Notes)(1) There are no non-consolidated subsidiaries to which equity method accounting is applied.
(2) Consolidated subsidiaries are indicated by white boxes, and non-consolidated subsidiaries are shown in greyboxes. Dotted lines indicate 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.
(4) SJ Rental, Inc. currently is continuing liquidation procedures.

－

13 －

3. Management Policies(1) Basic Management Policies
The Kanamoto Group believes that seeking innovation, maintaining a dynamic corporate culture andcontinually pushing businesses forward, by regarding “customers’ interests as Kanamoto’s interests,” is thebest way to meet the expectations of shareholders and group stakeholders and ensure earnings growth.
Through this philosophy, Kanamoto practices group management with the objective of being a corporategroup that can make a valuable and tangible contribution to society.
(2) Management Indicators Established as Objectives
Because the construction equipment rental businesses managed by the Kanamoto Group require asubstantial capital investment burden, which necessitates a profit and loss outlook extending over several
years, 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). As an indicator for measuring the size and corresponding
efficiency of a business, EBITDA+ in particular complements future earnings, and Kanamoto recognizes thatmaintaining and expanding EBITDA+ is absolutely critical to its future success. At the same time, net sales
and operating income are also figures that show the size and earning capacity of a company, and Kanamotoemphasizes the steady growth of these measures as indicators highlighting its growth potential as a firm.
The Company’s medium and long-term operating results objectives are shown below.
(3) Medium to Long-term Corporate Management Strategy
Details of Kanamoto’s management strategy are provided below.
a) Respond to the Great East Japan Earthquake and Fukushima nuclear accident
The Kanamoto Group has declared a full response in support of restoration and recovery work by every
member of the Kanamoto Group as its most important activity. This effort includes ground improvement
works, an activity in which Kanamoto particularly excels, establishing a team of specialists to concentrate on
the Fukushima nuclear accident, and support for decontamination operations. The Kanamoto Group willcontinue working zealously to achieve the quick restoration and recovery of the stricken areas.
b) Expand and enlarge Kanamoto’s domestic base of operations
Beyond the Tokyo metropolitan area, which was selected for the 2020 Olympics and remains the region
where much of Japan’s public and private sector demand is concentrated, the Kanamoto Group is actively
pursuing branch development, including M&A, in areas west of the Kanto Region, where the Company’spresence until now has been limited. Moreover, Group firms are also working to expand operations throughcooperation centered on Kanamoto’s Regional Special Procurement Sales Division.
c) Undertake overseas deployment
In addition to operations in mainland China, Hong Kong and Singapore where it has established overseas
affiliates, the Company will pursue development in ASEAN countries that are exhibiting remarkable growth.
Because the sales of high-quality used construction equipment implemented by Kanamoto each year
enhance the Company’s reputation, and contribute substantially to business development in other countries,
Kanamoto also will continue to offer high-quality used construction equipment for sale.
d) Take steps to improve operating activities
Kanamoto regards adept construction equipment management, together with improved operating
efficiency, to be the foundation of the Group’s earnings. Consequently we are taking steps to maximize
earnings during the life of rental equipment and boost operating margins. These include launching operating
improvement measures, thoroughly analyzing and enhancing current operational processes, strengthening
loss controls and sharpening the Group’s competitive capabilities.
(4) Issues to be addressed by the Company
Because construction equipment rentals are its core business, the Kanamoto Group must achieve a robust
earnings structure and establish a strong sales and marketing organization, by seeking to optimize thebusiness sectors, owned asset levels and asset portfolio structure whose operating results are not affectedby the volume of domestic construction investment.
a) Strengthen human resources training and the Kanamoto Group and allianceOver the next several years, rising competition among firms is expected to further throw distinctions into
sharp relief. As the leading firm in the corporate construction equipment rental industry, Kanamoto strives to－14 －foster employees who possess appropriate knowledge and skills and is working to provide employee trainingaligned with the Company’s overseas development and domestic business expansion. Strengthening
cooperation among Group firms and increasing transactions with alliance firms will be essential for expansionof the Kanamoto Group’s business sectors and regions, and Kanamoto will pursue measures to augment theGroup’s integrated corporate vitality.
b) Reinforce Kanamoto’s financial strategy
Kanamoto is taking steps to ensure timely and optimal funds procurement, while giving consideration toequipment plans including purchases of rental equipment assets and corporate facilities. At the same time,
the Company is focusing on improving its financial position, and reducing interest-bearing debt andimproving capital efficiency as much as possible, by incorporating measures such as the liquidation ofassets.
c) Continuous cost reductions
When introducing assets the Company utilizes a thorough benchmark system, and further strives tomaintain asset value by optimizing asset maintenance costs based on its rental assets operating policies.
d) Strengthen overseas branch management
The Company will enhance marketing and sales aspects, and strengthen management systems in areas
such as asset management and operations management, to match its overseas development. It also will
urgently prepare a system for the assignment of human resources and personnel training for this purpose.
(5) Other Important Company Management Issues
Compliance and internal controls
Even if it does not work continuously to strengthen its employee training and compliance system or takespecial steps to heighten compliance awareness, a firm must fulfill its social responsibility by establishing anorganization to ensure compliance will be implemented.
For the Kanamoto Group, which aspires to sustained growth, a compliance organization is indispensablefor the formation of a staunch organization. Kanamoto therefore several years ago prepared ethicalguidelines to serve as a compliance standard, established a Compliance Committee headed by Kanamoto’s
president, and took steps to strengthen company-wide observance of laws and ethics regulations. The
Company works to ensure every individual is thoroughly familiar with its guidelines, and manages its
organization in accordance with these compliance materials.
In addition, to respond appropriately and take measures to prevent a recurrence if unforeseen
circumstances that will have a serious affect on the Company’s operations have occurred, or if there isconcern such circumstances might occur, the Company has prepared an Emergency Response Manual(Contingency Plan). One measure for clarifying these activities further is Kanamoto’s “internal controls
reporting system,” which all of the Company’s employees have been united in supporting since the system
was placed into full-scale operation in the Business Period ended October 2009.
The Great East Japan Earthquake damaged the assets of many of the Kanamoto Group’s valued
customers. The Group’s own business offices were damaged as well. Much of the local telecommunications
infrastructure in particular failed, creating conditions that made confirmation of the situation in many areasdifficult. Nevertheless, the Company’s Emergency Response Manual clearly demonstrated its value by
generally working as envisaged for the gathering of information from nearby branches, providing situational
reports and following the chain of command. Points that need to be upgraded in the future were highlighted,
however, and Kanamoto is improving the accuracy of the manual with a focus on the related divisions.
Other measures taken by the Company included the publication of compliance bulletins mailed from theCompliance Committee Secretariat to each company in the Kanamoto Group to enlighten employees
concerning legal compliance, and a reorganization that will enable a more precise response based onstrengthening the Legal Office’s staff. In addition, guidance and training programs were conducted by theInternal Control and Auditing Office at 54 offices, and internal controls similar to Kanamoto’s have been
established and are now being utilized by 9 Kanamoto Group companies. In addition, the Safety and Health
Office conducted audits at 66 offices, and when combined with the safety patrols by the Industrial Safety
and Health Section, all of the offices were covered.

－

15 －

4. Consolidated Financial Statements(1) Consolidated Balance Sheets(Unit: Thousands of yen)
Prior Consolidated

Current Consolidated

Fiscal Year

Fiscal Year(As of October 31, 2012)(As of October 31, 2013)

AssetsCurrent assets
Cash and deposits* 2 19,387,264* 2 32,627,458

Notes and accounts receivable-trade* 5 23,560,769* 5 27,731,488

Securities

350,000

350,000

Merchandise and finished goods

521,615642,805

Costs on uncompleted construction contracts

53,18720,081

Raw materials and supplies

213,177

201,740

Construction machine parts

2,578,013

3,954,840

Income taxes receivable

10,67629,255

Consumption taxes receivable

57,839

8,313

Deferred tax assets

616,057

983,057

Other

719,242754,987

Allowance for doubtful accounts–384,382–335,792

47,683,461

66,968,236

Total Current Assets
Noncurrent assets
Property, plant and equipment

111,689,105

131,975,682

Accumulated depreciation–65,644,512–75,075,764

Rental equipment, net

46,044,593

56,899,918

Buildings and structures

22,253,505

22,843,038

Rental equipment

Accumulated depreciation–14,565,048–15,140,640

Buildings and structures, net* 2 7,688,457* 2 7,702,397

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Land
Other
Accumulated depreciation

5,367,137

5,480,758–4,771,202–4,861,608

595,935

619,149* 2 29,548,049* 2 29,798,341

1,579,813

1,315,544–1,301,459–1,012,516

278,353

303,028

84,155,389

95,322,835* 6 192,389* 6 19,894

Other

203,849

250,882

Total intangible assets

396,239

270,777* 1 3,196,840* 1 5,256,183

622,077

147,708

Other

1,947,320

1,894,365

Allowance for doubtful accounts–590,261–541,221

Other, net
Total property, plant and equipment
Intangible assets
Goodwill

Investments and other assets
Investment securities
Deferred tax assets

Allowance for investment loss
Total investments and other assets
Total Noncurrent Assets
Total Assets

－

16 －

–67,985–67,985

5,107,991

6,689,049

89,659,620

102,282,662

137,343,082

169,250,899

(Unit: Thousands of yen)
Prior Consolidated

Current Consolidated

Fiscal Year

Fiscal Year(As of October 31, 2012)(As of October 31, 2013)

Liabilities
Current liabilities
Notes and accounts payable-trade

18,011,309

21,293,370* 2 834,688* 2 591,774* 2 12,671,669

12,179,620

Lease obligations

1,106,553

1,085,477

Income taxes payable

2,344,595

3,533,247

Provision for bonuses

774,430

823,580

Provision for loss on disaster

10,014－－200,001

Accounts payable-other

9,386,566

12,728,761

Other

1,641,311

1,983,706

Total current liabilities

46,781,139

54,419,541

Long-term loans payable

25,945,267

26,288,975

Lease obligations

3,041,801

2,662,783

959

7,896

19,707,957

29,329,772

207,696

210,132* 7 258,310

138,957

Short-term loans payable
Current portion of long-term loans payable

Allowance for losses on employee pension fundwithdrawal

Noncurrent liabilities

Provision for retirement benefits
Long-term accounts payable-other
Asset retirement obligations
Other49,161,991

58,638,518

95,943,130

113,058,060

Capital stock

9,696,717

13,652,938

Capital surplus

10,960,761

14,916,981

Retained earnings

19,199,668

24,462,016

Total noncurrent liabilities
Total Liabilities
Net Assets
Shareholders’ equity

Treasury stock
Total Shareholders’ Equity–27,523–48,497

39,829,623

52,983,438

331,641

1,567,744–54,766–1,706

276,874

1,566,038

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeMinority interests

1,293,453

1,643,362

Total Net Assets

41,399,951

56,192,839

137,343,082

169,250,899

Total Liabilities and Net Assets

－

17 －

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive
Income(Consolidated Statements of Income)(Unit: Thousands of yen)
Prior Consolidated

Current Consolidated

Fiscal Year

Fiscal Year

(From November 1, 2011

(From November 1, 2012

to October 31, 2012)

to October 31, 2013)

Net Sales

86,106,869

110,831,865

Cost of sales

60,333,558

76,522,505

Gross profit

25,773,311

34,309,359* 1 19,343,124* 1 22,916,435

6,430,186

11,392,924

Selling, general and administrative expenses
Operating income
Non-operating income
Interest income

10,001

9,023

Dividends income

85,91458,038Insurance income

64,381

84,874

Rent income

53,91458,767

Bonus received

23,25635,786

Foreign exchange gains

9,416

223,687

Amortization of negative goodwill

69,831

51,577

Reversal of allowance for doubtful accounts

22,654

19,471

Reversal of provision for loss on disaster

101,483

6,486

Other

174,102

221,021

Total non-operating income

614,956

768,736856,374

824,103

Non-operating expenses
Interest expenses
Loss on sales of notes payable

45,92541,013

Other

209,971

223,030

1,112,271

1,088,147

5,932,871

11,073,513

177,532

36,464* 2 21,106* 2 34,298

1,092

1,039

671,889－－* 5 55,639

Other

19,674116

Total extraordinary income

891,296

127,559

Total non-operating expenses
Ordinary income
Extraordinary income
Subsidy income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Gain on bargain purchase
Reversal of provision incurred from businesscombination

Extraordinary losses
Loss on sales and retirement of noncurrent assets* 3 185,006* 3 95,031

Impairment loss

* 4 343,425* 4 217,679

Loss on sales of investment securities

116,009－

107

187,809－

13,573644,549

514,093

Income before income taxes and minority interests

6,179,618

10,686,978

Income taxes-current

2,752,132

4,856,274

Loss on valuation of investment securities
Other
Total extraordinary losses

Income taxes-deferred

2,563–315,376

Total income taxes

2,754,696

4,540,898

Income before minority interests

3,424,922

6,146,079

Minority interests in income (loss)–150,132

336,788

Net income

3,575,054

5,809,291－

18 －(Consolidated Statements of Comprehensive Income)(Unit: Thousands of yen)
Prior Consolidated

Current Consolidated

Fiscal Year

Fiscal Year

(From November 1, 2011

(From November 1, 2012

to October 31, 2012)

to October 31, 2013)

Income before minority interests

3,424,922

6,146,079

132,730

1,236,459

Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment–5,89374,475

Total other comprehensive income

126,836

1,310,935

3,551,758

7,457,015

3,695,827

7,098,454–144,068

358,560

Comprehensive income(Breakdown)Comprehensive income attributable to owners of
the parent
Comprehensive income attributable to minority
interests－

19 －(3) Consolidated Statements of Changes in Net Assets(Unit: Thousands of yen)
Current Consolidated

Prior Consolidated
Fiscal Year

Fiscal Year

(From November 1, 2011

(From November 1, 2012

to October 31, 2012)

to October 31, 2013)

Shareholders’ equity
Capital stock
9,696,717

9,696,717

Issuance of new shares－

3,956,220

Total changes of items during the period－

3,956,220

9,696,717

13,652,938

10,960,749

10,960,761－

3,956,220

Balance at the beginning of current period
Changes of items during the period

Balance at the end of current period
Capital surplus
Balance at the beginning of current period
Changes of items during the period
Issuance of new shares
Disposal of treasury stock

11－

Total changes of items during the period

113,956,220

10,960,761

14,916,981

16,297,314

19,199,668

Balance at the end of current period
Retained earnings
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus–656,678–656,593

Net income

3,575,054

5,809,291－

109,648–16,022－

Change of scope of consolidation
Increase (decrease) from accounting periodchanges of consolidated subsidiaries

2,902,354

5,262,347

19,199,668

24,462,016–25,240–27,523

Purchase of treasury stock–2,569–20,973

Disposal of treasury stock285－

Total changes of items during the period
Balance at the end of current period
Treasury stock
Balance at the beginning of current period
Changes of items during the period

Total changes of items during the period
Balance at the end of current period–2,283–20,973–27,523–48,497

36,929,541

39,829,623－

7,912,441

Total Shareholders’ Equity
Balance at the beginning of current period
Changes of items during the period
Issuance of new shares
Dividends from surplus–656,678–656,593

Net income

3,575,054

5,809,291－

109,648–16,022－–2,569–20,973

Change of scope of consolidation
Increase (decrease) from accounting periodchanges of consolidated subsidiaries
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balance at the end of current period

－

20 －

297

－

2,900,082

13,153,815

39,829,623

52,983,438

(Unit: Thousands of yen)
Prior Consolidated

Current Consolidated

Fiscal Year

Fiscal Year

(From November 1, 2011

(From November 1, 2012

to October 31, 2012)

to October 31, 2013)

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Balance at the beginning of current period

198,819

331,641

132,821

1,236,103

132,821

1,236,103

331,641

1,567,744–42,758–54,766–12,00753,060–12,00753,060–54,766–1,706

156,060

276,874

120,813

1,289,163

120,813

1,289,163

276,874

1,566,038

507,104

1,293,453–26,450－

812,799

349,909

Changes of items during the period
Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the beginning of current period
Changes of items during the period
Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total accumulated other comprehensive income
Balance at the beginning of current period
Changes of items during the period
Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at the end of current period
Minority interests
Balance at the beginning of current period
Changes of items during the period
Increase (decrease) from accounting periodchanges of consolidated subsidiaries
Net changes of items other than shareholders’equityTotal changes of items during the period
Balance at the end of current period

786,348

349,909

1,293,453

1,643,362

37,592,706

41,399,951－

7,912,441

Total net assets
Balance at the beginning of current period
Changes of items during the period
Issuance of new shares
Dividends from surplus–656,678–656,593

Net income

3,575,054

5,809,291－

109,648–42,473－

Purchase of treasury stock–2,569–20,973

Disposal of treasury stock297－

933,613

1,639,072

3,807,244

14,792,887

41,399,951

56,192,839

Change of scope of consolidation
Increase (decrease) from accounting periodchanges of consolidated subsidiaries

Net changes of items other than shareholders’equityTotal changes of items during the period
Balance at the end of current period

－

21 －

(4) Consolidated Statements of Cash Flows(Unit: Thousands of yen)
Current Consolidated

Prior Consolidated
Fiscal Year

Fiscal Year

(From November 1, 2011

(From November 1, 2012

to October 31, 2012)

to October 31, 2013)

Net cash provided by (used in) operating activities
Income before income taxes and minority interests

6,179,618

10,686,978

Depreciation and amortization

11,071,145

15,181,430

343,425

217,679

Amortization of goodwill

158,667

29,928Gain on bargain purchase–671,889－

163,900

60,73246,002

4,410

5,646

9,125

512,971866,983–1,238,618–64,041–1,916,267–3,047,268

Impairment loss

Loss (gain) on sales and retirement of noncurrent
assetsAmount of installment purchases of assets forsmall rentals
Amount of cost price transfer with sale ofconstruction machine parts
Amount of cost price transfer with sale of rental
assetsExpenditures for acquisition of construction
machine parts
Expenditures for acquisition of rental equipment

107

187,809

114,917–1,039–151,989–12,570

7,000－

140,367

54,722–35,686

6,937–205,964－–142,425–10,014－200,001–95,916–67,062

238,141

243,203856,374

824,103910–160,839－–55,639–1,442,561–4,107,487

39,561–72,014

1,165,452

3,331,075

Increase (decrease) in accounts payable-other727,8121,031,297

Other

286,447

114,534

16,157,151

25,452,977

95,95967,067–1,065,306–1,087,481

Loss (gain) on valuation of investment securities
Loss (gain) on sales of investment securities
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in allowance for investment
loss
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement
benefits
Increase (decrease) in provision for directors’
retirement benefits
Increase (decrease) in provision for loss on
disaster
Increase (decrease) in allowance for losses on
employee pension fund withdrawal
Interest and dividends income
Interest expense on installment purchases ofrental assets
Interest expenses
Foreign exchange losses (gains)
Reversal of provision incurred from businesscombination
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable-trade

SubtotalInterest and dividends income received
Interest expenses paid

－

22 －

Payments for loss on disaster
Income taxes paid
Net cash provided by (used in) operating activities

－

23 －

–137,410－–744,054–3,672,968

14,306,339

20,759,594

(Unit: Thousands of yen)
Prior Consolidated

Current Consolidated

Fiscal Year

Fiscal Year

(From November 1, 2011

(From November 1, 2012

to October 31, 2012)

to October 31, 2013)

Net cash provided by (used in) investing activities
Proceeds from withdrawal of time deposits

15,000－Purchase of property, plant and equipment–451,920–1,092,570

121,932

100,135

Purchase of intangible assets–10,431–123,477

Purchase of investment securities–61,295–343,428

Proceeds from sales of investment securities

174,845

1,440* 2 –662,777－

Proceeds from sales of property, plant andequipment

Purchase of investments in subsidiaries resulting
in change in scope of consolidation
Purchase of investments in subsidiaries–50,060－

Payments of loans receivable－–76,507

Collection of loans receivable

45,315

418,442

Other
Net cash provided by (used in) investing activities

44,061–1,470–835,331–1,117,435–2,340,610–322,613

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans
payableProceeds from long-term loans payable

10,641,125

13,200,000

Repayment of long-term loans payable–12,042,300–13,762,341－

7,912,441

Proceeds from issuance of common stock
Redemption of bonds–22,000－

Repayments of installment payables–8,423,533–10,841,670

Repayments of lease obligations–1,253,430–2,040,006–2,569–20,973

297

－

–55

－

–659,737–656,519

27,830－Purchase of treasury stock
Proceeds from sale of treasury stock
Purchase of treasury stock of subsidiaries in
consolidation
Cash dividends paid
Proceeds from stock issuance to minority
shareholders
Cash dividends paid to minority shareholders
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation－–1,006–14,074,983–6,532,689–21,387

134,768–625,363

13,244,238

20,374,836

19,717,264－–4,045–32,208－* 1 19,717,264* 1 32,957,458

Increase (decrease) in cash and cash equivalents
resulting from change in accounting period ofsubsidiaries
Cash and cash equivalents at end of period

－

24 －

(5) Notes to the Consolidated Financial Statements(Notes Relating to the Going Concern Assumption)
The Company had no material items to report.
(Important Matters Used as Basis for Preparation of the Consolidated Financial Statements)
1. Companies included in the consolidation(1) Number of consolidated companies: 9
Consolidated subsidiary name
Assist Co., Ltd
Kanatech Co., Ltd
Kanki Corporation
Kanamoto Engineering Co., Ltd.
Kyushu Kensan Co., Ltd.
Shanghai Jinheyuan Engineering Construction Co., Ltd.
Daiichi Kikaisangyo Co., Ltd
Toyo Industry Co., Ltd.
Unite Co., Ltd.
SJ Rental, Inc., which was a consolidated subsidiary in the prior consolidated fiscal year, has been
excluded from the scope of consolidation since the first quarter consolidated accounting period
because it is completing liquidation procedures and its materiality has decreased.
(2) Number of non-consolidated companies: 4
Non-consolidated subsidiary name
KG Flowtechno Co., Ltd.
KANAMOTO (HK) CO., LTD.
Kanamoto & JP Nelson Equipment (S) PTE. Ltd.
SJ Rental, Inc.
KG Machinery Co., Ltd. and Flowtechno Corporation, which was an unconsolidated subsidiary in theprior consolidated fiscal year, merged on November 1, 2012 and the name of the company waschanged to KG Flowtechno Co., Ltd.
(Reason for exclusion from consolidation)
The size of each of the non-consolidated subsidiaries is small, and each company’s total assets, sales
and fiscal year profit or loss (amount corresponding to equity) and retained earnings (amountcorresponding to equity) are small in size and do not have a material effect on the consolidated
financial statements.
2. Matters pertaining to application of equity method accounting
The four non-consolidated subsidiaries have been omitted from items to which equity method accounting
is applied because their respective effect on consolidated net income or loss (amount corresponding tominority interest) and consolidated retained earnings (amount corresponding to minority interest) is
immaterial and none of the companies is important to the Company’s overall operations.
3. Matters pertaining to the fiscal year closing date for consolidated subsidiaries
The fiscal year closing date for all of the consolidated subsidiaries except Shanghai Jinheyuan Engineering
Construction Co., Ltd. is October 31. The fiscal year closing date for Shanghai Jinheyuan Engineering
Construction Co., Ltd. is December 31.
When preparing the consolidated financial statements the Company used the financial statements ofShanghai Jinheyuan Engineering Construction Co., Ltd. based on a provisional settlement of accounts
implemented as of September 30, adjusted for significant transactions that occurred between thesubsidiary’s fiscal year-end and the consolidation date that have a material effect on the consolidated
financial results.
4. Accounting principles and standards used for normal accounting treatment(1) Appraisal standards and appraisal methods for principal assets
a. Securities
Other securities－

25 －Securities with a market price
The Company has adopted the market value method (the full amount of the valuation differenceis charged to net assets using the direct transfer to capital method, with the disposal cost
determined by the moving average method) based on the market price on the consolidated fiscal
year closing date or similar prices.
Securities without market prices
The Company has adopted the cost method, cost being determined by the moving averagemethod.
b. Construction equipment
The Company calculates the amount after deduction of depreciation expense according to thestraight-line method from the original prices, by separate fiscal year of purchase.
c. Inventory(i) Merchandise and finished goods
The Company has adopted the cost method, cost being determined based on the periodic averagemethod (amounts shown on the balance sheet are calculated by determining write-downs of bookvalue based on the decline in profitability)(ii) Costs on uncompleted construction contracts
The Company has adopted the cost method, cost being determined by the specific identification
method(iii) Raw materials and supplies
The Latest Purchase Cost method (amounts shown on the balance sheet are calculated bydetermining write-downs of book value based on the decline in profitability)(2) Depreciation methods for principal depreciable assets
a. Property, plant and equipment (excluding lease asset)
The Company has adopted the straight-line method for rental equipment (for certain consolidated
subsidiaries, the declining-balance method) and the declining-balance method for other assets.
Buildings on land that is leased under a fixed-term land lease agreement, however, are depreciatedusing the straight-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 method for buildings and structures acquired on or after April 1, 2000, but excluding
fixtures and equipment.
The depreciable lives mainly used by the Company are as follows.
Rental equipment
2-15 years
Buildings and structures
2-60 years
b. Intangible assets (excluding lease assets)
The Company has adopted the straight-line method.
Software for use within the Company is depreciated using the straight-line method based on theassumed useful life for internal use (5 years).
c. Lease assets
The Company has adopted straight-line depreciation using the lease term as the depreciable lifeand zero residual value.
The Company accounts for finance lease transactions except for leases that transfer ownership of
the property for which the lease start date is before October 31, 2008 by applying accounting
treatment based on the method applied for ordinary rental transactions.
(3) Accounting standards for principal allowances and reserves
a. Allowance for doubtful accounts
To provide for losses on doubtful accounts such as accounts receivable, the Company charges toincome an amount based on actual loss experience for normal accounts, plus an amount for
projected unrecoverable amounts based on separate assessments of the probability of collection
from specified credits such as credits in danger of bankruptcy.
b. Provision for bonuses
To fully provide for expenditures of bonuses the Company will pay to employees, an amount isappropriated to the reserve during the fiscal year based upon a salary estimate amount.
c. Provision for retirement benefits

－

26 －

The Company provides for accrued employees retirement benefits at certain consolidated
subsidiaries based upon pertinent rules and appropriated to the account proportionately at the endof the consolidated fiscal year based upon length of service.
d. Allowance for investment loss
The Company provides for losses from the decline in real prices of assets such as the stock ofsubsidiary companies that are subject to asset impairment accounting by applying internallyestablished standards that take into consideration subsidiary company operating results and asset
quality.
e. Allowance for losses on employee pension fund withdrawal
To provide for losses that occur in conjunction with withdrawal from the pension fund in which theconsolidated subsidiaries are enrolled, the Company appropriates the projected amount of thespecial premium to a reserve.
(4) Accounting standards for principal income and expenses
Accounting standards for amount of completed works and cost of completed construction works
a. Construction works for which the portion of the works completed by the end of the year can bereliably determined
Percentage-of-completion method (progress in construction works is estimated using the costcomparison method)b. Other construction works
Completed-contract method(5) Standard for conversion of main foreign currency-denominated assets or liabilities into Japanese yen
The Company converts monetary claims and monetary liabilities denominated in foreign currencies
into Japanese yen at the exchange market spot rate on the consolidated fiscal year settlement date, andcharges the translation difference to income as a gain or loss. The assets and liabilities of controlledforeign corporations are converted into Japanese yen at the spot exchange rate on the foreign
corporation’s fiscal year closing date, and the earnings and costs are converted into Japanese yen using
to the average market price during the period, and the translation adjustments are accounted for by
including the amounts in the foreign currency translation adjustment and minority interests in net
assets.
(6) Hedge accounting for principal hedging methods
a. Hedge accounting method
The Company’s interest swap transactions fulfill the requirements for special rule accounting, andthe Company has elected to use this to account for hedge transactions.
b. Hedge methods and hedged transactions
The Company uses interest swaps to avoid interest rate fluctuation risk related to interest on bankborrowing.
c. Hedging policies
The Company’s use of derivative transactions is limited to hedging risk within the scope of theCompany’s assets and liabilities subject to market fluctuation risk.
c. Method for evaluating the effectiveness of hedges
The Company’s interest swap transactions fulfill the requirements for special rule accounting, andthe Company has elected to use this in place of an evaluation of effectiveness.
(7) Amortization method and amortization period for goodwill
The Company amortizes goodwill and negative goodwill generated before October 31, 2010 using thestraight-line depreciation over five years. However, extremely small amounts are written off completely
in the year in which they occur.
(8) Items included in cash on the Consolidated Statements of Cash Flows
Funds included in cash (cash and cash equivalents) on the Consolidated Statement of Cash Flows
include cash on hand, deposits that can be withdrawn on demand and highly liquid short-term
investments that mature within three months of the date of acquisition and which can be easily
converted into cash and that have minimal risk of a change in price.
(9) Accounting standards for consumption tax
Consumption tax is taken out of all Statement of Income items and Balance Sheet items, except
mainly for receivables and payables.

－

27 －

(Changes in Reporting Method)(Consolidated Statements of Income)In the prior consolidated fiscal year, the Company reported “Foreign exchange gains” in “Other” under nonoperating income. The Company has reported this item separately for the current consolidated fiscal year
because the amount exceeded 10% of total extraordinary losses. To reflect this change in reporting method,
the Company has made certain reclassifications to its consolidated financial statements for the priorconsolidated fiscal year.
As a result, ¥183,518 thousand that was reported in “Other” under non-operating income in theConsolidated Statement of Income in the prior consolidated fiscal year has been reclassified, with ¥9,416
thousand reported in “Foreign exchange gains” and ¥174,102 thousand reported in “Other.”(Consolidated Statements of Cash Flows)
Because the “Foreign exchange losses (gains)” that were reported in “Other” under net cash provided by(used in) operating activities in the prior consolidated fiscal year have increased in importance, the Company
has decided to report this item separately beginning from the current consolidated fiscal year. To reflect thischange in reporting method, the Company has made certain reclassifications to its consolidated financial
statements for the prior consolidated fiscal year.
As a result, ¥287,357 thousand that was reported in “Other” under net cash provided by (used in) operating
activities in the prior consolidated fiscal year has been reclassified, with ¥910 thousand reported in “Foreignexchange losses (gains)” and ¥286,447 thousand reported in “Other.”(Supplemental Information)(Allowance for losses on employee pension fund withdrawal)
The Corporate Management Committee at Unite Co., Ltd., a consolidated subsidiary, approved a policy towithdraw from from the Japan Construction Equipment Rental Pension Fund in which Unite participates, andbeginning from the consolidated fiscal year under review the Company recorded the projected special premium
amount at the time of withdrawal as an allowance for losses on employee pension fund withdrawal.
(Notes to the Consolidated Balance Sheets)*1. Matters related to non-consolidated subsidiaries and affiliated companies are as follows.

Prior consolidated fiscal year
(As of October 31, 2012)
Investment securities (stock)262,708(Unit: Thousands of yen)
Current Consolidated Fiscal Year(As of October 31, 2013)
262,708*2. Assets provided for security and secured debts

Assets provided for security are as follows.
Prior consolidated fiscal year
(As of October 31, 2012)
Cash and deposits
Buildings and structuresLand

20,00035,074150,221(Unit: Thousands of yen)
Current Consolidated Fiscal Year(As of October 31, 2013)
20,00032,829150,221

Secured debts are as follows.
Prior consolidated fiscal year
(As of October 31, 2012)
Short-term loans payable
Current portion of long-term loans
payable－(Unit: Thousands of yen)
Current Consolidated Fiscal Year(As of October 31, 2013)

280,000

280,000

8,326

－

28 －

3. Guarantees

Joint and several guarantees of
employee bank loans (North PacificBank, Ltd., others)
Guarantee of borrowing liabilities of
Flowtechno Corporation, a nonconsolidated subsidiary company
Guarantee of borrowing liabilities of
KG Machinery Co., Ltd., a nonconsolidated subsidiary company
Guarantee of installment payment
liabilities of KG Machinery Co., Ltd., a
non-consolidated subsidiary company
Guarantee of borrowing liabilities of
KG Flowtechno Co., Ltd., a nonconsolidated subsidiary company (seeNote)
Guarantee of installment payment
liabilities of KG Flowtechno Co., Ltd.,a non-consolidated subsidiarycompany (see Note)
Guarantee of borrowing liabilities of
KANAMOTO (HK) CO., LTD., a nonconsolidated subsidiary company
Guarantee of borrowing liabilities of
KANAMOTO (HK) CO., LTD., a nonconsolidated subsidiary company
Guarantee of installment payment
liabilities of unconsolidated subsidiarycompany (Kanamoto & JP Nelson)

Prior consolidated fiscal year
(As of October 31, 2012)(Unit: Thousands of yen)
Current Consolidated Fiscal Year(As of October 31, 2013)

35,60926,594

100,000－

110,000－

25,201－－160,000－

11,455

HK$13,310,000(136,826)

HK$16,120,000(204,885)

US$197,000(15,693)

US$102,000(10,127)

SG$3,529,000(230,595)

SG$2,981,000(237,141)

Total
653,926
650,203(Note) KG Machinery Co., Ltd. and Flowtechno Corporation merged on November 1, 2012. The new entitychanged its company name to KG Flowtechno Co., Ltd., and the Company provided a guarantee of
liabilities to which it succeeded.
4. Discount on notes receivable- trade and notes receivable-trade transferred by endorsement(Unit: Thousands of yen)
Prior consolidated fiscal year
Current Consolidated Fiscal Year(As of October 31, 2012)(As of October 31, 2013)
Discount on notes receivable-trade
Notes receivable-trade transferred byendorsement

121,727

144,335

6,195

10,155*5. Liquidation of receivables based on receivables transfer facility

Prior consolidated fiscal year
(As of October 31, 2012)
Notes receivable-trade

5,248,823(Unit: Thousands of yen)
Current Consolidated Fiscal Year(As of October 31, 2013)
6,277,225

Liquidated claims bearing a right of recourse to the Company and included in the balance of notes
receivable-trade transferred are as follows.
(Unit: Thousands of yen)
Current Consolidated Fiscal Year
Prior consolidated fiscal year
(As of October 31, 2012)(As of October 31, 2013)
Notes receivable-trade

1,063,730－

29 －

1,281,521

*6. Goodwill and negative goodwill

Goodwill and negative goodwill are offset and shown as a net amount.
The amounts before being offset are shown below.
Prior consolidated fiscal year
(As of October 31, 2012)
Goodwill
Negative goodwill
Net amount(Unit: Thousands of yen)
Current Consolidated Fiscal Year(As of October 31, 2013)

243,967
51,577

19,894－

192,389

19,894*7. Provision incurred from business combination

Prior consolidated fiscal year (October 31, 2012)
The amount for “Other” under noncurrent liabilities includes a provision incurred from businesscombination of ¥255,641thousand. This is the amount of the contribution for the projected shortfall in thefinancial position in the employee’s pension fund in which Unite Co., Ltd. is enrolled and was incurred as aresult of Kanamoto’s purchase of that company’s shares on June 28, 2012.
Consolidated fiscal year under review (October 31, 2013)
The Company had no material items to report.
(Notes to the Consolidated Statements of Income)*1. The main expense items included in selling, general and administrative expenses are as follows.
(Unit: Thousands of yen)
Prior Consolidated Fiscal Year Current Consolidated Fiscal Year
(From November 1, 2011
(From November 1, 2012
to October 31, 2012)
to October 31, 2013)
Employee salaries and wages
Depreciation and amortization
Rent expenses
Provision of allowance for doubtful
accounts
Provision for bonuses
Retirement benefit expenses
Provision for directors’ retirement
benefits
Amortization of goodwill

7,836,635
862,456
2,041,198

9,201,186
908,3542,439,597

121,309297,926

636,277
323,513797,851
350,453

11,174－228,499

81,506*2. The breakdown of gain on sales of noncurrent assets is as follows.

Prior Consolidated Fiscal Year
(From November 1, 2011
to October 31, 2012)(Unit: Thousands of yen)
Current Consolidated Fiscal Year
(From November 1, 2012
to October 31, 2013)

Buildings and structures
Machinery, equipment and vehicles
Land
Other

－
11,605
－
9,500

463
2,454
31,380－

Total

21,10634,298－30 －*3. The breakdown of loss on sales and retirement of noncurrent assets is as follows.

Prior Consolidated Fiscal Year
(From November 1, 2011
to October 31, 2012)(Unit: Thousands of yen)
Current Consolidated Fiscal Year
(From November 1, 2012
to October 31, 2013)(Loss on sale of noncurrent assets)
Buildings and structures
Machinery, equipment and vehicles
Land
Other
(Loss on retirement of noncurrent
assets)Rental equipment
Buildings and structures
Machinery, equipment and vehicles
Land
Other

1,013
155
89,427
8

－
480
－
176

64,853
26,429
2,079
－
1,039

57,318
10,696
2,649
1,787
21,921

Total

185,006

95,031－31 －*4. Impairment loss

During the consolidated fiscal year the Kanamoto Group recorded impairment losses on the following
asset groups.
Prior consolidated fiscal year (From November 1, 2011 to October 31, 2012)
Location

Use

Asset

Nagara Town, Choseigun, Chiba Prefecture

Plant

Land

Dormant
Rentalassetsequipment
Asset groupings used by the Kanamoto Group to apply asset impairment accounting are based on theblock classified by the segment and operating area for which profitability can be determined regularly.
Dormant assets are grouped as units that generate independent cash flow.
For certain dormant assets for which the asset value was less than book value, the Company reduced
book value to the recoverable value, and accounted for the reduction as an impairment loss (¥343,425
thousand) under extraordinary losses. This was comprised of ¥183,896 thousand for land and ¥159,528
thousand for rental equipment.
The recoverable value for rental equipment is measured according to net sales price, and therecoverable value for land is measured according to its value in use, which is calculated by discounting
future cash flow at a rate of 3.2%.
Shanghai, China

Current consolidated fiscal year (From November 1, 2012 to October 31, 2013)
Location

Shanghai, China

Use

Asset

Dormant
assetsRentalequipment-

Goodwill

Asset groupings used by the Kanamoto Group to apply asset impairment accounting are based on theblock classified by the segment and operating area for which profitability can be determined regularly.
Dormant assets are grouped as units that generate independent cash flow.
During the consolidated fiscal year under review, for dormant assets for which the asset value was lessthan book value, the Company reduced book value to the recoverable value, and accounted for the
reduction as an impairment loss (¥75,113 thousand) under extraordinary losses. This was for rental
equipment of ¥75,113 thousand.
The recoverable value for rental equipment is measured according to net sales price, and calculated
based on the estimated appraised value.
The Kanamoto Group judges whether to recognize impairment losses by grouping assets for eachcompany or business. The Company recorded an impairment loss of ¥142,566 thousand for the fullamount of the book value of the goodwill generated by its investment in Shanghai Jinheyuan
Engineering Construction Co., Ltd., a consolidated subsidiary, because the Company no longer expects
to achieve the earnings envisaged at the time of its investment.
*5. Reversal of provision incurred from business combination

Consolidated fiscal year under review (From November 1, 2012 to October 31, 2013)
The Company recorded ¥55,639 thousand for the reversal of provision incurred from businesscombination. This reflected the portion of the contribution amount projected for the shortfall in thefinancial position in the employee’s pension fund in which Unite Co., Ltd., a consolidated subsidiary, isenrolled, which was recorded as a provision incurred from business combination, that reversed thedifference between the projected amount at the time of Unite’s withdrawal in the consolidated fiscal year
under review and the amount recorded as an allowance for losses on withdrawal from pension fund.

－

32 －

(Notes to the Consolidated Statements of Comprehensive Income)Note: Reclassification adjustments and the related tax effects concerning Other Comprehensive Income(Unit: Thousands of yen)
Current Consolidated
Prior Consolidated Fiscal Year
Fiscal Year
(From November 1, 2011
(From November 1, 2012
to October 31, 2012)
to October 31, 2013)
Valuation difference on available-for-salesecurities:
Amount occurring during the current
periodReclassification adjustments

65,281

1,909,406

114,940－

Before adjustment for tax effects
Tax effects

180,221–47,491

1,909,406–672,946

Valuation difference on available-forsale securities

132,730

1,236,459

Foreign currency translation adjustment:
Amount occurring during the current
period–5,89374,475

Total Other Comprehensive Income

126,836

1,310,935(Notes to the Consolidated Statement of Changes in Net Assets)
Prior consolidated fiscal year (From November 1, 2011 to October 31, 2012)
1. Class of shares issued and number of shares, treasury stock and number of shares
Number of shares at

Increase in number of

Decrease in number of

Number of shares at

beginning ofshares during

shares during

end of consolidated

consolidated fiscal year consolidated fiscal year consolidated fiscal year

fiscal year

(thousands of shares)(thousands of shares)(thousands of shares)(thousands of shares)

Common stock

32,872－－32,872

Total

32,872－－32,872

37

2

0

39

37

2

0

39

Outstanding shares

Treasury stock
Common stock(Note 1, 2)
Total(Notes) 1. The number of treasury stock shares of common stock increased by 20,000 shares through purchasesof shares comprising less than one investment unit.
2. The number of treasury stock shares of common stock decreased by 0 shares through sales of sharescomprising 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(Thousands of yen)

Dividend pershare (yen)Date of record

Payment date

December 27, 2011
Board of Directors Common stock

328,345

10.00

October 31,
2011

January 30, 2012

June 8, 2012
Board of Directors

328,333

10.00

April 30, 2012

July 9, 2012

Common stock(2) Dividends for which the date of record falls in the current consolidated fiscal year and the dividend
payment date is in the following consolidated fiscal year
Source ofClass of
Total dividend
Dividend per
Resolution
Date of record
Payment datefunds forstock (Thousands of yen)share (yen)dividend
December 27, 2012 Common
Board of Directors
stock

328,322

Retainedearnings
－

33 －

10.00

October 31,
2012

January 30, 2013

Current consolidated fiscal year (From November 1, 2012 to October 31, 2013)
1. Class of shares issued and number of shares, treasury stock and number of shares
Number of shares at

Increase in number of

Decrease in number of

Number of shares at

beginning ofshares during

shares during

end of consolidated

consolidated fiscal year consolidated fiscal year consolidated fiscal year

fiscal year

(thousands of shares)(thousands of shares)(thousands of shares)(thousands of shares)

Outstanding shares
Common stock(Note 1)
Total

32,872

3,220－

36,09232,872

3,220－

36,092

39

10

－

50

39

10

－

50

Treasury stock
Common stock(Note 2)
Total

(Notes) 1. The total number of outstanding shares of common stock increased by 3,220,000 shares, including an
increase of 2,800,000 shares from the issuance of new shares and an increase of 420,000 sharesfrom the issuance of new shares by third-party allotment.
2. The number of treasury stock shares of common stock increased by 10,000 shares through purchasesof 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
Dividend per
Total dividend
Date of record
Payment date
Resolution
Class of stock(Thousands of yen) share (yen)December 27, 2012
Common stock
328,32210.00 October 31, 2012 January 30, 2013
Board of Directors
June 7, 2013
Board of Directors

Common stock

328,270

10.00

April 30, 2013

July 8, 2013

(2) Dividends for which the date of record falls in the current consolidated fiscal year and the dividend
payment date is in the following consolidated fiscal year
Source ofTotal dividend
Dividend per
Resolution
Class of stock
funds forDate of record Payment date(Thousands of yen)share (yen)dividend
December 27, 2013
Retained
October 31,
January 30,
Board of Directors
360,422
10.00
Common stockearnings
2013
2014(Planned)(Notes to the Consolidated Statements of Cash Flows)*1. Relationship between fiscal year ending balances for cash and equivalents and amounts for items shown on

the fiscal year consolidated balance sheets
Prior Consolidated Fiscal Year
(From November 1, 2011 to
October 31, 2012)
Cash and deposits accountTime deposits with a maturity longer
than 3 months
Securities
Cash and cash equivalents－(Unit: Thousands of yen)
Current Consolidated Fiscal Year
(From November 1, 2012
to October 31, 2013)

19,387,264

32,627,458–20,000–20,000

350,000

350,000

19,717,264

32,957,458

34 －*2. Prior consolidated fiscal year (From November 1, 2011 to October 31, 2012)

Principal assets and liabilities of companies that became newly consolidated subsidiaries as a result of
the purchase of their stock during the current consolidated fiscal year
The relationship between the principal assets and liabilities and acquisition price for the shares of Unite
Co., Ltd. and the net funds used for the purchase of Unite Co., Ltd. at the start of consolidation of Unite
Co., Ltd. as a result of the acquisition of stock is as follows.
(Unit: Thousands of yen)
Current assets
5,818,226
Noncurrent assets
6,338,726
Current liabilities–4,780,195
Noncurrent liabilities–5,142,934
Gain on bargain purchase–671,889
Minority interests–740,504
Acquisition price of Unite Co., Ltd.
Cash and cash equivalents of Unite Co., Ltd.

–158,651

821,429

Balance: Purchase of investments in subsidiaries
resulting in change in scope of consolidation

662,777

Current consolidated fiscal year (From November 1, 2012 to October 31, 2013)
The Company had no material items to report.
3. Details of major non-cash transactions(1) Amount of assets and liabilities related to installment transactions, amount of assets and liabilities
related to lease transactions, and acquisition of investment securities by investments in kind, that are
newly accounted for(Unit: Thousands of yen)
Current Consolidated Fiscal Year
Prior Consolidated Fiscal Year
(From November 1, 2011 to October (From November 1, 2012 to October
31, 2012)
31, 2013)
Amount of assets and liabilities
16,006,786
22,532,980
related to installment transactions
Amount of assets and liabilities
1,648,088
872,095
related to lease transactions
Acquisition of investment securities
91,891－by investments in kind (Note)(Note) The Company acquired the stock of KANAMOTO (HK) CO., LTD., a non-consolidated subsidiary company.
(2) Amount related to asset retirement obligations that are newly accounted forPrior Consolidated Fiscal Year
(From November 1, 2011 to October
31, 2012)
Amount related to asset
retirement obligations

4,797

－

35 －

(Unit: Thousands of yen)
Current Consolidated Fiscal Year
(From November 1, 2012 to October
31, 2013)

13,696

(Business Segment Information)a. Segment information
1. Summary of reportable segments
The Company’s reporting segments are those units of the Company’s 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 be allocated to the segments and assess the segments’ performance.
The Company is developing its businesses according to products and services, and has 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. Method of calculating the amount of net sales, income or loss, assets, liabilities and other items of eachreporting segment
Except for the Standard for Measurement of Inventories, the accounting standards and methods for thereported business segment are generally identical to the description in “Significant Accounting Policies for
the Consolidated Financial Statements.”
The Company values inventory assets using prices before write-downs of book value based on decline inprofitability.
Reporting segment earnings are the values on an operating income basis.
3. Information concerning the amount of net sales, income or loss, assets, liabilities and other items of eachreporting segment
Prior consolidated fiscal year (From November 1, 2011 to October 31, 2012)(Unit: Thousands of yen)
Reporting segment
Construction-related

Other businesses(Note)Total

Net sales
Net sales to outside customers
Net sales or transfers between
related segments

79,280,857

6,826,012

86,106,869

－

－

－

79,280,857

6,826,012

86,106,869

Segment income

6,117,945

143,144

6,261,090

Segment assets

110,039,775

1,976,698

112,016,473

10,802,312

2,446

10,804,759

158,667－

158,667

Total

Other items
Depreciation and amortization
Amortization of goodwill
Extraordinary income

671,889－

671,889(Gain on bargain purchase)(671,889)(－)(671,889)

Extraordinary losses

343,425－

343,425(Impairment loss)
Amount of increase of property, plantand equipment and intangible assets(343,425)(－)(343,425)

20,979,162

800

20,979,962(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.

－

36 －

Current consolidated fiscal year (From November 1, 2012 to October 31, 2013)(Unit: Thousands of yen)
Reporting segment
Construction-related

Other businesses(Note)Total

Net sales
Net sales to outside customers
Net sales or transfers between
related segments

102,359,605

8,472,259

110,831,865

－

－

－

102,359,605

8,472,259

110,831,865

Segment income

10,916,113

204,510

11,120,623

Segment asset

124,460,056

2,672,155

127,132,211

14,936,983

2,327

14,939,310

Amortization of goodwill

29,928－29,928Extraordinary losses

217,679－

217,679(Impairment loss)
Amount of increase of property, plantand equipment and intangible assets(217,679)(－)(217,679)

26,528,373

13,536

26,541,910

Total

Other items
Depreciation and amortization(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.
4. Difference between total reporting segment amount and the amount reported on the Consolidated
Statements of Income, and the main reasons for the difference (Matters Pertaining to Reconciliation ofDifference)(Unit: Thousands of yen)
Prior consolidated Current consolidated
Net salesfiscal year
fiscal year
Reporting segment total

79,280,857

102,359,605

Net sales for “Other businesses” classification

6,826,012

8,472,259

Net sales reported in the consolidated financial statements

86,106,869

110,831,865(Unit: Thousands of yen)
Prior consolidated Current consolidated
fiscal year
fiscal year

Interest
Reporting segment total

6,117,945

10,916,113

Income for “Other businesses” classification

143,144

204,510

Other adjustments

169,095

272,300

6,430,186

11,392,924

Operating income reported in the consolidated financial
statements(Unit: Thousands of yen)
Prior consolidated Current consolidated
fiscal year
fiscal year

AssetsReporting segment total

110,039,775

124,460,056

Assets of “Other businesses” classification

1,976,698

2,672,155

Company assets (Note)

25,326,608

42,118,687

Total assets reported in the consolidated financial statements

137,343,082

169,250,899(Note) Company assets are mainly assets used in administrative divisions at the parent company that are not
attributable to the reporting segment.

(Unit: Thousands of yen)

－

37 －

Other items

Reporting segment total

Other businesses

Amount of adjustment

Amount reported in the
consolidated financial
statements

Prior
Current
Current
Current
Prior
Current
Prior
Prior
consolidated consolidated consolidated consolidated consolidated consolidated consolidated consolidated
fiscal year
fiscal year
fiscal year
fiscal year
fiscal year
fiscal year
fiscal year
fiscal year
Depreciation andamortization
Amount of increase ofproperty, plant andequipment andintangible assets

10,802,312

14,936,983

2,446

2,327

266,386

242,120

11,071,145

15,181,430

20,979,162

26,528,373

800

13,53657,787

252,980

21,037,750

26,794,891(Note) The adjustments to the increases in property, plant and equipment and intangible assets are capital
investments related to administrative divisions.

－

38 －

b. Related information
Prior consolidated fiscal year (From November 1, 2011 to October 31, 2012)
1. Information by product and service
The Company has omitted a description of information by product and service because this same
information is disclosed in segment information.
2. Information by region(1) Net sales
The Company has omitted a description of information by region because net sales to outside
customers in Japan account for more than 90% of total net sales reported in the Consolidated
Statements of Income.
(2) Property, plant and equipment
The Company has omitted a description of property, plant and equipment because the amount ofproperty, plant and equipment located in Japan account for more than 90% of the total for property,
plant and equipment reported in the Consolidated Balance Sheets.
3. Main customers
The Company has omitted a description of net sales to outside customers because there are no specificcustomers to which net sales account for more than 10% of the net sales reported in the Consolidated
Statements of Income.
Current consolidated fiscal year (From November 1, 2012, to October 31, 2013)
1. Information by product and service
The Company has omitted a description of information by product and service because this same
information is disclosed in segment information.
2. Information by region(1) Net sales
The Company has omitted a description of information by region because net sales to outside
customers in Japan account for more than 90% of total net sales reported in the Consolidated
Statements of Income.
(2) Property, plant and equipment
The Company has omitted a description of property, plant and equipment because the amount ofproperty, plant and equipment located in Japan account for more than 90% of the total for property,
plant and equipment reported in the Consolidated Balance Sheets.
3. Main customers
The Company has omitted a description of net sales to outside customers because there are no specificcustomers to which net sales account for more than 10% of the net sales reported in the Consolidated
Statements of Income.
c. Information concerning impairment loss on property, plant and equipment by reporting segment
Prior consolidated fiscal year (From November 1, 2011 to October 31, 2012)(Unit: Thousands of yen)
Businessrelated to the
Other
Corporate andConstruction
Totalbusinesses
eliminations
Equipment
Rental Division－－343,425
343,425
Impairment loss
Current consolidated fiscal year (From November 1, 2012, to October 31, 2013)(Unit: Thousands of yen)
Businessrelated to the
Other
Corporate andConstruction
Totalbusinesses
eliminations
Equipment
Rental Division
217,679－－
217,679
Impairment loss

－

39 －

d. Information concerning amortization of goodwill and unamortized balances by reporting
segment
Prior consolidated fiscal year (From November 1, 2011 to October 31, 2012)(Unit: Thousands of yen)
Businessrelated to the
Other
Corporate and
Total
Construction
businesses
eliminations
Equipment
Rental Division
Amortization in the current
period (Goodwill)

228,499－－

228,499

Amortization in the current
period (Negative goodwill)–69,831－－–69,831

Balance at the end of theperiod (Note)

192,389－－

192,389(Note) Goodwill and negative goodwill are offset and reported as a net amount.
Current consolidated fiscal year (From November 1, 2012, to October 31, 2013)(Unit: Thousands of yen)
Businessrelated to the
Other
Corporate andConstruction
Totalbusinesses
eliminations
Equipment
Rental Division
Amortization in the current
period (Goodwill)

81,506－－

81,506

Amortization in the current
period (Negative goodwill)–51,577－－–51,577

Balance at the end of theperiod (Note)

19,894－－

19,894(Note) In the current consolidated fiscal year the Company recorded an impairment loss on goodwill of¥142,566 thousand.
e. Information concerning gain on bargain purchase by reporting segment
Prior consolidated fiscal year (From November 1, 2011 to October 31, 2012)
In the “Business related to the Construction Equipment Rental Division” segment, the Company reported again on bargain purchase of ¥671,889 thousand in extraordinary income as a result of including Unite Co.,
Ltd., which was newly acquired in the current consolidated fiscal year, in the scope of consolidation.
Current consolidated fiscal year (From November 1, 2012, to October 31, 2013)
The Company had no material items to report.
(Notes to Leasing Transactions)(Lessor)
1. Finance lease transactions
Finance lease transactions except for leases that transfer ownership of the property(1) Lease assets
Property, plant and equipment
Construction-related business rental equipment and other property, plant and equipment.
(2) Method of depreciation for lease assets
Lease assets are depreciated according to the method described in “4. Accounting principles andstandards used for normal accounting treatment (2) Depreciation methods for principal depreciable
assets” in Important Matters Used as Basis for Preparation of the Consolidated Financial Statements.
The Company accounts for finance lease transactions except for leases that transfer ownership of
the property for which the lease start date is before October 31, 2008 by applying accounting
treatment based on the method applied for ordinary rental transactions. Details are provided below.

－

40 －

a) Amounts corresponding to lease property acquisition price, accumulated depreciation andoutstanding balances at the end of the fiscal year
(Unit: Thousands of yen)
Prior consolidated fiscal year (As of October 31, 2012)
Accumulated
Acquisition price
Outstanding balance
depreciation
Rental equipment

11,151,866

7,752,820

3,399,046

Total

11,151,866

7,752,820

3,399,046(Unit: Thousands of yen)

Current consolidated fiscal year (As of October 31, 2013)
Accumulated
Acquisition price
Outstanding balance
depreciation
Rental equipment

5,015,189

3,800,179

1,215,009

Total

5,015,189

3,800,179

1,215,009b) Outstanding balance of future lease payments at the end of the consolidated fiscal year
(Unit: Thousands of yen)
Prior consolidated fiscal year
(As of October 31, 2012)

Current consolidated fiscal year
(As of October 31, 2013)

Outstanding balance of futurelease payments at the end of theconsolidated fiscal year
Within one year

2,254,473

1,202,921

After one year

1,366,655

160,765

3,621,129

1,363,687

Totalc) Amount of lease payments, depreciation expense and interest expense(Unit: Thousands of yen)
Prior consolidated fiscal year
(From November 1, 2011
to October 31, 2012)

Current consolidated fiscal year
(From November 1, 2012
to October 31, 2013)

Lease payments

2,267,461

1,775,035

Depreciation expense

1,739,125

1,170,920

154,747

66,794

Interest expensed) Accounting method for amount equivalent to depreciation expense
Straight-line depreciation using the lease term as the depreciable life and zero residual value.
e) Accounting method for amount equivalent to interest expense
Interest method using the difference between total lease payments and the acquisition price of thelease property, allocated to each year.
(Impairment losses)
There is no impairment loss allocated to lease assets.
2. Operating lease transactions
Prepaid lease payments pertaining to non-cancellable operating lease transactions(Unit: Thousands of yen)
Prior consolidated fiscal year
(As of October 31, 2012)

Current consolidated fiscal year
(As of October 31, 2013)

Within one year

2,174,968

2,288,468

After one year

6,416,052

7,248,255

8,591,020

9,536,724

Total

－

41 －

(Per Share Information)
Prior consolidated fiscal year
(From November 1, 2011 to October 31, 2012)
Net assets per share
Net income per share of common stock

Current consolidated fiscal year
(From November 1, 2012 to October 31, 2013)¥1,221.56 Net assets per share¥1,513.49¥108.88 Net income per share of common stock¥175.50

Net income per share of common stock
Net income per share of common stock
after adjustment for potential ordinary－ after adjustment for potential ordinary
sharessharesThe Company has not reported net income per
Same as at left
share of common stock after adjustment forpotential ordinary shares because it does not haveany potential shares that would have a dilution
effect.

－(Note) The basis for calculating consolidated fiscal year earnings per share or net loss per share is as follows.
(Unit: Thousands of yen)
Prior consolidated fiscal year
(From November 1, 2011
to October 31, 2012)
Net income amountCurrent consolidated fiscal year
(From November 1, 2012
to October 31, 2013)

3,575,054

5,809,291－－

Net income related to common
stock3,575,054

5,809,291

Average number of outstanding
shares during the fiscal year

32,833,928

33,101,017

Amount not attributed to common
stock shareholders(Material Events after the Close of the Consolidated Fiscal Year)
The Company had no material items to report.

－

42 －

5. Company Financial Statements(1) Balance Sheets(Unit: Thousands of yen)
Prior fiscal year

Current fiscal year

(As of October 31, 2012)(As of October 31, 2013)

AssetsCurrent assets
27,828,449

Cash and deposits

15,947,592

Notes receivable, trade2,615,496

3,238,793

Accounts receivable, trade12,960,369

15,669,496

Securities

350,000

350,000

Merchandise and finished goods

225,383

343,400

Costs on uncompleted construction contracts

53,18720,081

Construction machine parts

2,578,013

3,954,840

Raw materials and supplies

104,833

113,851

Prepaid expenses

213,731

241,478

Deferred tax assets

487,773

721,869

Short-term loans receivable

350,360

316,925

Other

198,495

212,183

Allowance for doubtful accounts–201,599–191,811

35,883,635

52,819,557

Total current assets
Noncurrent assets
Property, plant and equipment

70,174,214

86,534,917

Accumulated depreciation–38,548,745–44,839,812

Rental equipment, net

31,625,469

41,695,105

14,779,861

15,144,271

Accumulated depreciation–9,183,580–9,576,751

Buildings, net

5,596,281

5,567,520

Rental equipment

Buildings

Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
VehiclesAccumulated depreciation

4,923,789

5,178,610–4,048,001–4,159,418

875,788

1,019,191

4,734,717

4,810,245–4,214,300–4,273,337

520,417536,908

82,28098,821–71,716–89,794

10,564

9,027

Tools, furniture and fixtures

1,252,156

907,460

Accumulated depreciation–1,056,129–746,479

196,026

160,980

28,682,214

28,958,009

21,87231,08467,528,634

77,977,828

Vehicles, net

Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets
Goodwill

55,43819,894

Software93,498136,263

Telephone subscription right

52,00552,005

Total intangible assets

200,942

208,163－43 －(Unit: Thousands of yen)
Prior fiscal year

Current fiscal year

(As of October 31, 2012)(As of October 31, 2013)

Investments and other assets
Investment securities

2,864,881

4,868,622

Stocks of subsidiaries and affiliates

4,569,669

3,921,262

12,137

12,1372,450,758

2,468,737

135,540

92,666Long-term prepaid expenses

24,176

21,895

Deferred tax assets

513,424－

Investments in capital
Long-term loans receivable fromsubsidiaries and affiliates
Claims provable in bankruptcy, claims
provable in rehabilitation and otherInsurance funds

19,877

27,529

Guarantee deposits

836,905

825,930

Other

52,59652,236

Allowance for doubtful accounts–1,822,673–1,621,385

Allowance for investment loss

–898,193–461,807

Total investments and other assets
Total noncurrent assets
Total Assets

8,759,100

10,207,825

76,488,677

88,393,816

112,372,313

141,213,374

10,421,466

12,892,054

Liabilities
Current liabilities
Notes payable-trade
Accounts payable-trade

3,115,016

3,813,867

Current portion of long-term loans payable

10,647,500

10,190,168

Accounts payable-other7,342,038

10,242,771

Accrued expenses
Corporate taxes payable

412,228

453,348

2,107,652

2,599,922

Accrued consumption taxes

190,791

81,751

Deposits received

147,405

198,808

Provision for bonuses

488,671529,294

Provision for loss on disaster

10,014－

Notes payable-facilities

426,934

542,921

Other

104,190

115,119

35,413,909

41,660,028

Long-term loans payable

20,575,500

21,703,998

Long-term accounts payable-other

16,303,599

24,280,832

Total current liabilities
Noncurrent liabilities

Deferred tax liabilities
Asset retirement obligations
Total noncurrent liabilities
Total Liabilities

－

44 －

－

120,250

126,734

141,115

37,005,833

46,246,197

72,419,742

87,906,225

(Unit: Thousands of yen)
Prior fiscal year

Current fiscal year

(As of October 31, 2012)(As of October 31, 2013)

Net Assets
Shareholders’ equity
9,696,717

13,652,938

Legal capital surplus

10,817,389

14,773,610

Other capital surplus

143,371

143,371

10,960,761

14,916,981

1,375,287

1,375,287

19,601

19,601

General reserve

13,731,684

15,731,684

Retained earnings brought forward

3,859,862

6,119,776

18,986,436

23,246,350–27,523–48,497

39,616,391

51,767,772

336,179

1,539,377

Capital stock
Capital surplus

Total capital surpluses
Retained earnings
Legal retained earnings
Other retained earnings
Reserve for advanced depreciation of
noncurrent assets

Total retained earnings
Treasury stock
Total shareholders’' equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Total Net Assets
Total Liabilities and Net Assets

－

45 －

336,179

1,539,377

39,952,570

53,307,149

112,372,313

141,213,374

(2) Statements of Income(Unit: Thousands of yen)
Prior fiscal year

Current fiscal year

(From November 1, 2011

(From November 1, 2012

to October 31, 2012)

to October 31, 2013)

Net sales
51,129,560

60,381,668

Net sales of goods

17,962,161

20,978,965

Total net sales

69,091,722

81,360,634

34,678,520

40,190,004

Rental sales

Cost of sales
Cost of rentals sales
Cost of goods soldBeginning goods
Cost of purchased goods
Transfer from other account
Total
Ending goods
Valuation loss on goods
Cost of goods soldTotal cost of sales
Gross profit

261,074

225,383

13,868,447

16,188,816

212,624

247,775

14,342,145

16,661,975

225,383

343,400

2,435－

14,119,198

16,318,574

48,797,718

56,508,578

20,294,003

24,852,055

Selling, general and administrative expenses
Sales fare

75,66077,529Vehicle expenses

184,936

198,072

Advertising expenses

134,087

167,716

Provision of allowance for doubtful accounts

65,694

48,973

Directors’ compensations

85,34293,013

Salaries and allowances

5,942,930

6,530,244

Bonuses

1,251,186

1,476,100

488,671529,294

Provision for bonuses
Provision for directors’ retirement benefits

10,960－Retirement benefit expenses

242,921258,633

Traveling and transportation expenses

372,310374,267

Insurance expenses

173,246

180,564

Communication expenses

271,859

276,679

Repair expenses

128,235

138,679

Supplies expenses

336,252

415,314

Utilities expenses

266,027

278,051

Taxes and dues

408,675

438,333

Welfare expenses

1,129,981

1,257,090

Depreciation

739,770

672,617

Rent expenses

1,540,415

1,634,346

769,425880,016

14,618,589

15,925,539

5,675,414

8,926,515

Other
Total selling, general and administrative
expenses
Operating income

－

46 －

(Unit: Thousands of yen)
Prior fiscal year

Current fiscal year

(From November 1, 2011

(From November 1, 2012

to October 31, 2012)

to October 31, 2013)

Non-operating income
Interest income
Interest on securities

26,20236,398712

574

Dividends income

84,041

57,797

Rent income

163,830

240,934

Insurance income

35,67535,836

Cash bonus received

23,25635,729－131,160

Reversal of provision for loss on disaster

101,483

6,486

Other

222,256

301,213

Total non-operating income

657,459

846,131430,707355,838

Reversal of allowance for doubtful accounts

Non-operating expenses
Interest expenses
Loss on sales of notes payable

43,42938,165

Provision of allowance for doubtful accounts

225,123

307,608

Provision of allowance for investment loss

686,771

11,660

Other
Total non-operating expenses
Ordinary income

120,936

197,562

1,506,968

910,835

4,825,904

8,861,811

Extraordinary income
Gain on sales of noncurrent assets

334

222

Gain on sales of investment securities

115

1,039

Subsidy income

142,538

7,262

Other

17,547116

Total extraordinary income

160,536

8,641

108,571

79,599115,825－30

187,809－200,360

Extraordinary loss
Loss on sales and retirement of noncurrent
assetsLoss on sales of investment securities
Loss on valuation of investment securities
Loss on valuation of stocks of subsidiaries andaffiliates
Total extraordinary losses

224,428

467,769

Income before income taxes

4,762,012

8,402,682

Income taxes-current

2,442,503

3,743,055

Income taxes-deferred–243,894–256,879

Total income taxes

2,198,609

3,486,176

Net income

2,563,403

4,916,506－

47 －Statements of Cost of Rental Revenues
Prior Fiscal Year
(From November 1, 2011
to October 31, 2012)
Classification

Notes

Amount(Thousands of yen)

Current Fiscal Year
(From November 1, 2012
to October 31, 2013)

Percent

Amount(Thousands of yen)

Percent

Rent expenses

15,203,293

43.8

16,967,419

42.2

Repair expenses

3,620,567

10.4

3,857,726

9.6

Fares
Depreciation andamortization
Supplies expenses

5,842,390

16.9

6,536,126

16.3

2

7,698,663

22.2

9,793,034

24.4

728,966

2.1

1,068,175

2.6

Other

3
Total

1,584,639

4.6

1,967,522

4.9

34,678,520

100.0

40,190,004

100.0

Note 1

Cost of rental revenues is the direct cost
incurred to receive revenues from therental of construction equipment andother goods.

Same as at left

Note 2The Company recorded rental equipment
depreciation expense of ¥7,469,367
thousand and construction machine parts
depreciation
expenseof¥229,296
thousand.

The Company recorded rental equipment
depreciation expense of ¥9,459,430
thousand and construction machine parts
depreciation
expenseof¥333,603
thousand.

Note 3

Other costs consisted mainly of taxes anddues of ¥588,553 thousand, insurance
expenses of ¥584,089 thousand andinterest of ¥147,880 thousand related to
installment payment purchases of rental
equipment.

Other costs consisted mainly of taxes anddues of ¥676,808 thousand, insurance
expenses of ¥657,815 thousand andinterest of ¥182,527 thousand related to
installment payment purchases of rental
equipment.

－

48 －

(3) Statements of Changes in Net Assets(Unit: Thousands of yen)
Current Fiscal Year
(From November 1, 2012
to October 31, 2013)

Prior Fiscal Year
(From November 1, 2011
to October 31, 2012)
Shareholders’ equity
Capital stock
9,696,717

9,696,717

Issuance of new shares－

3,956,220

Total changes of items during the period－

3,956,220

9,696,717

13,652,938

10,817,389

10,817,389－

3,956,220－

3,956,220

10,817,389

14,773,610

143,359

143,371

11

－

11

－

143,371

143,371

10,960,749

10,960,761

Issuance of new shares－

3,956,220

Disposal of treasury stock

11

－

11

3,956,220

10,960,761

14,916,981

1,375,287

1,375,287－－

1,375,287

1,375,287

19,601

19,601－－

19,601

19,601

Balance at the beginning of current period
Changes of items during the period

Balance at the end of current period
Capital surplus
Legal capital surplus
Balance at the beginning of current
periodChanges of items during the period
Issuance of new shares
Total changes of items during theperiodBalance at the end of current period
Other capital surplus
Balance at the beginning of current
periodChanges of items during the period
Disposal of treasury stock
Total changes of items during theperiodBalance at the end of current period
Total capital surplus
Balance at the beginning of current
periodChanges of items during the period

Total changes of items during theperiodBalance at the end of current period
Retained earnings
Legal retained earnings
Balance at the beginning of current
periodChanges of items during the period
Total changes of items during theperiodBalance at the end of current period
Other retained earnings
Reserve for advanced depreciation of
noncurrent assets
Balance at the beginning of current
periodChanges of items during the period
Total changes of items during theperiodBalance at the end of current period

－

49 －

(Unit: Thousands of yen)
Current Fiscal Year
(From November 1, 2012
to October 31, 2013)

Prior Fiscal Year
(From November 1, 2011
to October 31, 2012)
General reserve
Balance at the beginning of current
period13,731,684

13,731,684－

2,000,000－

2,000,000

13,731,684

15,731,684

1,953,137

3,859,862

Changes of items during the period
Provision of general reserve
Total changes of items during theperiodBalance at the end of current period
Retained earnings brought forward
Balance at the beginning of current
periodChanges of items during the period－–2,000,000

Dividends from surplus–656,678–656,593

Net income

2,563,403

4,916,506

1,906,725

2,259,913

3,859,862

6,119,776

17,079,711

18,986,436－－

Provision of general reserve

Total changes of items during theperiodBalance at the end of current period
Total retained earnings
Balance at the beginning of current
periodChanges of items during the period
Provision of general reserve
Dividends from surplus–656,678–656,593

Net income

2,563,403

4,916,506

1,906,725

4,259,913

18,986,436

23,246,350–25,240–27,523

Purchase of treasury stock–2,569–20,973

Disposal of treasury stock285－–2,283–20,973–27,523–48,497

37,711,937

39,616,391－

7,912,441

Total changes of items during theperiodBalance at the end of current period
Treasury stock
Balance at the beginning of current period
Changes of items during the period

Total changes of items during the period
Balance at the end of current period
Total shareholders’ equity
Balance at the beginning of current period
Changes of items during the period
Issuance of new shares
Dividends from surplus–656,678–656,593

Net income

2,563,403

4,916,506–2,569–20,973

Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balance at the end of current period

－

50 －

297

－

1,904,453

12,151,381

39,616,391

51,767,772

(Unit: Thousands of yen)
Current Fiscal Year
(From November 1, 2012
to October 31, 2013)

Prior Fiscal Year
(From November 1, 2011
to October 31, 2012)
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Balance at the beginning of current period

199,832

336,179

136,346

1,203,197

136,346

1,203,197

336,179

1,539,377

199,832

336,179

136,346

1,203,197

136,346

1,203,197

336,179

1,539,377

37,911,770

39,952,570

Issuance of new shares－

7,912,441

Dividends from surplus–656,678–656,593

Net income

Changes of items during the period
Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total valuation and translation adjustments
Balance at the beginning of current period
Changes of items during the period
Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of current period
Changes of items during the period

2,563,403

4,916,506

Purchase of treasury stock–2,569–20,973

Disposal of treasury stock

297－

136,346

1,203,197

2,040,800

13,354,578

39,952,570

53,307,149

Net changes of items other thanshareholders’ equity
Total changes of items during the period
Balance at the end of current period

－

51 －

6. Other(1) Changes of directors
The Company had no material items to report.
(2) Other
The Company had no material items to report.

－

52 －