Nine-month Consolidated Financial Reportfor the Fiscal Year ending October 31, 2009
September 4, 2009
Company name: Kanamoto Company, Ltd.
Code number:9678
URL

Stock Change Listing: Tokyo, Sapporo

http://www.kanamoto.co.jp

Representative

Kanchu Kanamoto President

Inquiries

Nobuhito Utatsu
Director & Corporate Officer, Division Manager, Accounting Division
TEL +81-11-209-1631

1. Operating Results for the Nine-month of the Fiscal Year Ending October 31, 2009
(November 1, 2008 - July 31, 2009)(1) Consolidated Operating Results(Numbers less than one million yen have been rounded down)

Revenues
Millions of yen％

Operating income

Ordinary income

Millions of yen

Millions of yen％

Fiscal Year Ending October 31,
2009: Third Quarter

47,258

－

-299

－

-544

Fiscal Year Ended October 31,
2008: Third Quarter

53,668( 2.7 )

2,291

( -37.9 )2,188

Net Income
per Share

Net income
Millions of yen％％－( -44.1 )Diluted Net Income
per Share
Yen

Yen

Fiscal Year Ending October 31,
2009: Third Quarter

-858

－

-26.13－Fiscal Year Ended October 31,
2008: Third Quarter974( -62.4 )

29.68

－

(2) Consolidated Financial Position(Numbers less than one million yen have been rounded down)

Total Assets

Net Assets

Millions of yen

CapitalAdequacy Ratio

Millions of yen％

Net Assets
per Share
Yen

Fiscal Year Ending October
96,82636,78237.6
1,109.62
31, 2009: Third Quarter
Fiscal Year Ended October
91,741
38,20241.4
1,155.47
31, 2008(Reference) Shareholder’s equity Fiscal Year Ending October 31, 2009 Third Quarter: 36,438 million yen
Fiscal Year Ended October 31, 2008: 37,947 million yen
2. Dividends(Record date)

End of 1Q
Yen

Fiscal Year ended October 31,2008-

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

Yen

10.00

-

Fiscal Year ending October 31,2009
10.00
Fiscal Year ending October 31,2009(Projected)(Note) Revision of dividend project for the current quarter: No-

Full year

Yen

Yen

10.00

20.00

10.00

20.00

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.1

3. Projected Consolidated Operating Results for the Fiscal Year Ending October 2009
(November 1, 2008 - October 31, 2009)(Percentages show the change from the prior year)

Full year

Revenues

Operating
IncomeOrdinary
IncomeMillions of yen% Millions of yen% Millions of yen

63,700

-650

-8.2

－

-1,000Net Income
per Share

Net Income% Millions of yen%

Yen-1,700－-51.77－(Note) Revision of Projected Consolidated Operating Results for the current quarter: No
4. Other(1) Changes to material subsidiaries during the period (transfer of specified subsidiaries in conjunction
with revision to scope of consolidation)? : No
(2) Has the Company adopted simplified methods for accounting treatment? :No(3) Changes in accounting principles, procedures, or representation methods relating to preparation of theconsolidated quarterly financial statements (Matters stated in the Change to the Basis for presentationof the Consolidated Quarterly Financial Statements)(a) Changes in accordance with revisions to accounting standards: Yes(b) Changes other than the above: Yes(Note) For details, see “4. Other matters” on Page 6 (Qualitative information and financial statements).
(4) Number of shares issued (Common stock)(a)Number of shares outstanding at the end of period (including treasury stock):
Fiscal Year Ending October 31, 2009 Third Quarter: 32,872,241 sharesFiscal Year Ended October 31, 2008: 32,872,241 shares(b)Number of shares of treasury stock at the end of period
Fiscal Year Ending October 31, 2009 Third Quarter: 34,022 sharesFiscal Year Ended October 31, 2008: 30,848 shares(c)Average number of shares during the period (Consolidated cumulative period)
Fiscal Year Ending October 31, 2009 Third Quarter: 32,839,224 sharesFiscal Year Ended October 31, 2008 Third Quarter: 32,845,180 shares
Note: Explanation concerning appropriate use of the projected operating results and other items to note
(1) The projections above represent an outlook for the future and assumptions about uncertain factorsthat might affect future results, based on information available as of the date of the announcement of
this document. Actual results may differ from the projections as a result of factors arising in the
future.
(2) Commencing the current fiscal year, the Company is applying the Accounting Standard for Quarterly
Financial Reporting (Accounting Standards Board of Japan Statement No.12) and Guidance on
Accounting Standard for Quarterly Financial Reporting (ASBJ Guidance No.14). Quarterly
consolidated financial statements are prepared under the Rules for Quarterly Consolidated Financial
Statements.

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
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Qualitative Information and Financial Statements
1. Qualitative information concerning consolidated operating results< Management Environment > (From November 1, 2008 to July 31, 2009)
During the Kanamoto Group’s first and second quarters, the earnings environment in Japan deteriorated
rapidly in the wake of the global recession. Government economic stimulus measures began gradually
producing results as the economy entered the third quarter, however, and signs of an upturn, centered onleading consumer goods-related firms, began to appear. Nevertheless, as demonstrated by trends such as
the swelling number of bankruptcies in every manufacturing region among small and medium-sized
downstream firms, which have reached new record highs with each passing month, and the rising
unemployment rate, this has failed to translate into improvement in the management environment.
< Third Quarter Year-to-Date Operating Results > (From November 1, 2008 to July 31, 2009)
In the construction industry, which is the main customer of the Kanamoto Group, the construction market
remained in a contraction phase because of the slump in private sector capital investment. Economic
measures by the government, however, including orders for public works that were pulled forward fromfuture periods, are gradually proving effective despite differences among regions.
The Kanamoto Group strove to strengthen its sales efforts, and in each region was able to expand its shareof the construction equipment rental business. Because construction equipment rentals continued to sufferfrom declining unit prices across a wide range of equipment, however, particularly on models for which the
supply-demand balance has collapsed, this did not result in a perceptible recovery in earnings. The fall in
earnings was particularly sharp at affiliated companies that are developing businesses in areas that werepummeled directly by the effects of the cutback in private sector demand.
At the same time, in light of conditions in the used construction equipment market and the foreign exchange
rate trend, Kanamoto as a management policy has limited the volume of used equipment sold in foreign
markets since the beginning of the current fiscal year. Consequently, overseas sales of used construction
equipment were not sufficient to offset the decline in domestic revenues and earnings.
As a result of the above factors, consolidated revenues through the third quarter of the Business Period
ending in October 2009 were ¥47,258 million. From the standpoint of earnings, the absolute decrease inconstruction demand, the failure of rental revenue to grow because of the downward slide in rental unit
prices and the weakening of the rental cost depletion effect produced a consolidated operating loss of ¥299
million and a consolidated ordinary loss of ¥544 million, and the Company reported its first operating loss
since being established. The valuation loss on investment securities was lower than previously projected,
and as a final loss, the Company posted a consolidated net loss for the first three quarters of ¥858 million.
A summary of operating results for each of the Company’s business segments is described below.
< Business related to the Construction Equipment Rental Division >By region, consolidated revenues from construction equipment rentals in the third quarter under review
increased 11.9% from the same period of the prior consolidated fiscal year in the Hokkaido Region,
decreased 7.8% year-on-year in the Tohoku Region and slipped 1.9% year-on-year in the Kanto district.
Revenues also fell 18.5% from the same period one year earlier in the Kinki & Chubu Region, and declined
9.8% year-on-year in the Kyushu & Okinawa Region. For the nine months year-to-date, consolidated
revenues fell 3.2% from the same period of the prior consolidated fiscal year in the Hokkaido Region,
decreased 8.5% year-on-year in the Tohoku Region, rose 1.4% year-on-year in the Kanto District, fell
10.5% compared with the same period one year earlier in the Kinki & Chubu Region and were off 3.3%
year-on-year in the Kyushu & Okinawa Region. During the third quarter, the Hokkaido Region gradually
benefitted from the effects of the government’s economic measures, but these were not sufficient to spur arecovery from the slump during the first half. In the Tohoku Region, no improvement was evident in either
public demand or private demand, and while the size of the decline compared with the change in industry net
sales in the same region was smaller, demand still fell substantially below the level in the same period of theprior year. The effect of the decrease in private sector demand was significant in the Kanto Region as well,
but thanks to support from large-scale projects such as the Tokyo International Airport (Haneda)
Re-expansion Project, and the synergistic effects from group marketing and sales, total revenues exhibiteda small amount of growth compared with the same period of the prior consolidated fiscal year. The Kinki &Chubu Region was unable to absorb the significant decline in private sector demand in the Tokai Region andKobe Region. In the Kyushu & Okinawa Region, the rapid decline in private sector works in Fukuoka
Prefecture and cutbacks in public works in Kagoshima Prefecture continued.
In addition, revenues from sales of used construction equipment by the Construction Equipment Rental
Division for the consolidated third quarter year-to-date period fell 28.2% from the same period of the priorconsolidated fiscal year. Although domestic sales rose significantly in the Kanto Region, the Company limited
the number of units of used equipment sold in other regions and overseas.
As a result of these factors, in the construction-related businesses of the entire Kanamoto Group, revenues
for the first three quarters of the consolidated fiscal year were ¥42,650 million, and the operating loss was¥299 million.

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.3

< Business related to the Steel Sales Division >In the steel products sales business, sales of steel materials for engineering works expanded greatly as aresult of concentrating on orders for large-scale projects, despite lower market unit prices and a drop in
demand. Total revenues for the third quarter increased 12.3% compared with the same period of the priorconsolidated fiscal year, while revenues for the nine months year-to-date rose slightly, increasing 1.1%
compared with the same period of the prior consolidated fiscal year.
As a result, for the first three quarters of the consolidated fiscal year, revenues were ¥4,266 million andoperating income was ¥17 million.
< Information Products Division-related businesses and other business >In the Company’s information and telecommunications-related division, sales of used equipment expanded
during the third quarter, while PC rentals remained at a low level, despite signs of improvement comparedwith the first and second quarters, as customers continued to reduce spending. As a result, revenues for the
first three quarters of the consolidated fiscal year under review declined 14.4% compared with the same
period of the prior consolidated fiscal year to ¥340 million. Operating income for the first three quarters of
the consolidated fiscal year was ¥26 million.
[ Business development issues deserving special mention and status of branch office changes ]During the third quarter under review, the Company established the Osaka Chuo Branch (Konohana Ward,
Osaka) and closed the Osaka North Port Equipment Center (Konohana Ward, Osaka) and the Asahikawa
Ichijo-dori Higashi Branch (Asahikawa City, Hokkaido). The Company also established KANAMOTO (HK) CO.,LTD., a wholly-owned affiliate in Hong Kong that is not included in the scope of consolidation.

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
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2. Qualitative information concerning consolidated financial position(1) Assets, liabilities and net assets
Compared with the end of the prior consolidated accounting fiscal year, total assets at the end of the third
quarter consolidated accounting period under review increased by ¥5,084 million to ¥96,826 million. Thischange was mainly an increase in rental equipment assets of ¥5,508 million and an increase in buildings andstructures of ¥1,867 million, and a decrease in notes and accounts receivable of ¥2,050 million in
conjunction with the collection of accounts receivable, trade.
Total liabilities were ¥60,043 million, an increase of ¥6,504 million compared with the end of priorconsolidated accounting fiscal year. This was largely an increase in long-term bank loans of ¥4,973 million,
compared with the end of prior consolidated accounting fiscal year, including long-term bank loans due
within one year, and higher long-term accrued expenses, which increased ¥2,143 million compared with theend of prior consolidated accounting fiscal year.
Total net assets were ¥36,782 million, ¥1,419 million lower than at the end of prior consolidated accounting
fiscal year. This was primarily a decrease in earned surplus of ¥1,514 million, and mainly reflected the third
quarter year-to-date net loss of ¥858 million and dividends from surplus.
(2) Cash flows
Cash flow from operating activities for the third quarter year-to-date was ¥802 million, a decrease of ¥2,454
million compared with the first three quarters of the prior consolidated accounting fiscal year. This decrease
mainly reflected the net loss before taxes and adjustments for the first three quarters of the consolidated
fiscal year. Cash flow was provided by a decrease in accounts receivable, trade, and cash was used to reduce
accounts payable, trade.
Cash flow used in investing activities was ¥3,011 million, ¥962 million less than in the first three quarters of
the prior consolidated fiscal year. The main factors affecting cash used in investing activities were a decreasein funds used for the purchase of tangible fixed assets and an increase in funds used for the purchase ofinvestment securities.
Cash flow from financing activities was ¥1,145 million, ¥903 million less than in the first three quarters of theprior consolidated fiscal year. Factors that reduced the cash flow available from financing included anincrease in funds used to repay long-term bank loans and a high amount of funds used for repayment of
installment obligations.
As a result of the above, the balance of cash and cash equivalents at the end of the consolidated fiscal year
third quarter under review was ¥16,527 million. Together with an increase in cash and equivalents of ¥24
million in conjunction with the merger of an unconsolidated subsidiary, the balance of cash and cash
equivalents decreased by ¥1,039 million compared with the end of the prior consolidated accounting fiscal
year.

3. Qualitative information concerning projected consolidated operating results
Kanamoto previously announced its projected consolidated operating results in the press release“Notification Concerning Revision of Projected Full-Year Operating Results for the Business Period Ending
October 2009” dated Friday, August 28, 2009.
The Company is not contemplating a revision of its year-end dividend at this time. There is a possibility theCompany will revise the dividend sometime in the future, however, depending upon the future change inoperating results.
These projected consolidated operating results were prepared using projections based on information
available to the Company as of the date this material was released and forecasts of the future economic,
environment, and include various risks and uncertainty factors. Furthermore, there is a possibility theCompany’s actual consolidated operating results will differ from the projected amounts shown above as aresult of various future factors, including but not limited to economic conditions surrounding the Kanamoto
Group, market trends and competitive conditions.

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.5

4. Other matters(1) Changes in material subsidiaries during the period under review (changes in specific subsidiaries in
conjunction with a change in the scope of consolidation)
The Company had no material items to report.
(2) Application of simplified accounting method and special accounting method in the preparation ofquarterly consolidated financial statements
The Company had no material items to report.
(3) Changes in accounting principles, procedures and presentation methods pertaining to preparation of thequarterly consolidated financial statementsa) Beginning from this consolidated accounting fiscal year, the Company has adopted the “AccountingStandard for Quarterly Financial Reporting” (Accounting Standards Board of Japan Statement No. 12) andthe “Guidance on Accounting Standard for Quarterly Financial Reporting” (Accounting Standards Board ofJapan Implementation Guidance No. 14). In addition, the quarterly consolidated financial report has been
prepared in accordance with the “Regulation for Quarterly Consolidated Financial Statements.”b) Changes in appraisal standards and appraisal methods for principal assets
Inventory assets
Traditionally the Company has valued merchandise inventories held by the Company for normal sales
purposes at cost, with cost being determined by the lower of cost or market based on the Last-in, First-out
method. Beginning from the first quarter consolidated accounting fiscal period under review, the Company
will apply the “Accounting Standard for Measurement of Inventories” (Accounting Standards Board of Japan
Statement No. 9, issued July 5, 2006) and will value inventories based on the original cost method, with cost
being determined mainly by the Last-in, First-out method (amounts shown on Balance Sheets will the
reduced book value based on decline in profitability).
The affect of this change on earnings is not material.
Construction equipment
Traditionally, the Company and its domestic consolidated subsidiaries valued construction equipment using
the amount after deduction of depreciation expense as calculated according to the declining-balance methodfrom the original prices, by separate fiscal year of purchase. Beginning from the first quarter consolidated
accounting period under review, the Company will calculate the amount after deduction of depreciation
expense as calculated according to the straight-line method from the original prices, by separate fiscal yearof purchase.
Because rental earnings obtained from construction equipment are generated on average over the period
during which the construction equipment is used, the Company has made this change in conjunction with thechange of depreciation method for rental equipment from the declining balance method to the straight-line
depreciation method from the first quarter consolidated accounting period under review, in order to similarly
recognize a fixed expense amount corresponding to earnings, achieve a correspondence between expenses
and earnings and more properly calculate accounting period profits and losses for construction equipmentthat contributes to the acquisition of rental earnings.
As a result, the cost of revenues from operations decreased by ¥53 million, and gross profit, operating
income, ordinary income and income before taxes and adjustments increased by the same amount,respectively, compared to what they otherwise would have been had the accounting standards used in past
periods been applied.
The affect of this change on the Company’s information by segment is described in the relevant section.
c) Changes in accounting standards used for normal accounting treatment
Application of accounting standards for lease transactions(Lessee side)
The Company traditionally accounted for finance lease transactions other than leases that transfer
ownership of the property by applying accounting treatment based on the method applied for ordinary rental
transactions. For quarterly consolidated financial statements pertaining to the consolidated fiscal year thatbegins on or after July 1, 2008, however, corporations will be able to apply the “Accounting Standard forLease Transactions” (Accounting Standards Board of Japan Statement No. 13 (issued June 17, 1993
(Business Accounting Council, First Subcommittee), revised March 30, 2007)) and the “Guidance on
Accounting Standard for Lease Transactions” (Accounting Standards Board of Japan Implementation
Guidance No. 16 (issued January 18, 1994 (The Japanese Institute of Certified Public Accountants,
Accounting System Committee), revised March 30, 2007)), and beginning from the first quarter
consolidated accounting period under review, the Company will apply these standards and account for suchtransactions using a method similar to that used for ordinary sale and purchase transactions. In addition, fordepreciation for lease assets related to finance lease transactions other than leases that transfer ownershipof the property, the Company has adopted the straight-line depreciation method, using the term of the leaseas the depreciable life and a residual value of zero.
For finance lease transactions other than leases that transfer ownership of the property for which the leasetransaction starting date predates the beginning of the first year in which the lease accounting standard will
Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.6

be applied, the Company will continue to apply the accounting practices based on the method for ordinary
rental transactions.
The affect of this change on earnings is not material.
Change in depreciation methods for principal depreciable assets
Tangible fixed assets
Traditionally, the Company and its domestic consolidated subsidiaries have applied the declining balancemethod for depreciation of rental equipment. Beginning from the first quarter consolidated accounting
period under review, the Company and its domestic subsidiaries have adopted the straight-line depreciation
method.
Because rental earnings obtained from rental equipment are generated on average over the period during
which the rental equipment is used, the Company has made this change as a result of investigating a more
appropriate method for allocation of expenses, following an increase in the size of purchases and increase in
the monetary importance of rental equipment as a result of changing its method for acquisition of rental
equipment from leasing agreements to purchases, in order to recognize a fixed expense amountcorresponding to earnings, achieve a correspondence between expenses and earnings and more properly
calculate accounting period profits and losses.
As a result, the cost of revenues from operations decreased by ¥1,660 million, and gross profit, operating
income, ordinary income and income before taxes and adjustments increased by the same amount,respectively, compared to what they otherwise would have been had the accounting standards used in past
periods been applied.
The affect of this change on the Company’s information by segment is described in the relevant section.

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.7

5. Consolidated Financial Statements(1)Consolidated Quarterly Balance Sheets(Unit: Thousands of yen)
As of July 31, 2009

As of October 31,2008

Cash and deposits

12,763,238

14,070,345

Notes and accounts receivable-trade

13,246,998

15,297,757

Short-term investment securities

3,850,000

3,700,000

46,284147,054

Merchandise and finished goods

679,063

662,924

Raw materials and supplies

142,611

146,343

construction machine parts

959,775

874,680

AssetsCurrent assets

Costs on uncompleted construction
contracts

Deferred tax assets

381,951

256,893

Other

1,096,855

927,446

Allowance for doubtful accounts-435,816-526,414

32,730,962

35,557,032

53,288,926

43,694,544

accumulated depreciation-35,522,931-31,437,026

rental equipment, net

17,765,994

12,257,517

20,877,458

17,869,527-12,108,982-10,968,596

8,768,475

6,900,931

Total current assets
Noncurrent assets
Property, plant and equipment
rental equipment

Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles

5,199,414

4,622,991

Accumulated depreciation-4,261,837-3,854,409

937,577

768,582

29,446,265

29,075,816

35,723

683,294

1,333,720

1,163,486-1,013,800-930,597

Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net

319,920

232,889

57,273,958

49,919,031

Goodwill

593,753557,260

Other

323,722

170,056

Total intangible assets

917,475

727,316

Investment securities

3,145,963

2,847,982

Deferred tax assets

1,208,936

1,054,883

Other

2,689,441

2,552,794

Allowance for doubtful accounts-1,140,702-917,742

Total investments and other assets

5,903,638

5,537,917

64,095,072

56,184,266

96,826,035

91,741,299

Total property, plant and equipment
Intangible assets

Investments and other assets

Total noncurrent assets
Total assets

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.8

(Unit: Thousands of yen)
As of July 31, 2009

As of October 31,2008

Notes and accounts payable-trade

11,486,382

12,878,993

Short-term loans payable

1,383,256

338,521

10,924,026

9,599,494

Current portion of bonds

42,00062,000

Income taxes payable

29,711

149,932

Liabilities
Current liabilities

Current portion of long-term loans
payableProvision for bonuses

207,769

549,981

Accounts payable-other

3,699,082

3,325,933

Other1,265,970

1,490,017

Total current liabilities

29,038,198

28,394,874

44,00086,000Long-term loans payable

23,028,796

19,379,661

Provision for retirement benefits

1,257,741

1,080,005

181,234

174,824

6,078,456

3,935,016

415,001

488,61231,005,231

25,144,119

60,043,429

53,538,994

Noncurrent liabilities
Bonds payable

Provision for directors' retirement
benefits
Long-term accounts payable-other
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock

9,696,717

9,696,717

Capital surplus

10,960,869

10,960,869

Retained earnings

15,635,125

17,149,945

Treasury stock
Total shareholders' equity-23,770-22,729

36,268,942

37,784,803

169,099

162,358

169,099

162,358

344,563

255,143

36,782,605

38,202,305

96,826,035

91,741,299

Valuation and translation adjustments
Valuation difference on
available-for-sale securities
Total valuation and translation
adjustments
Minority interests
Total net assets
Total liabilities and net assets

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.9

(2)Consolidated Quarterly Statement of Income(Unit: Thousands of yen)
9 months FY2009(November 1, 2008
-July 31, 2009)
Net sales

47,258,092

Cost of sales

34,976,723

Gross profit

12,281,368

Selling, general and administrative expenses

12,580,792

Operating income-299,423

Non-operating income
Interest income

33,878Dividends income

40,029Insurance income

29,878Rent income

35,614

A receipt bonus

4,450

Amortization of negative goodwill

52,374Other

92,808

Total non-operating income

289,034

Non-operating expenses
Interest expenses

327,650

Loss on sales of notes receivable

45,236

Other

160,874

Total non-operating expenses

533,761

Ordinary income-544,150

Extraordinary income
Reversal of allowance for doubtful accounts

22,057

Reversal of provision for retirement benefits

17,332

Other

11,875

Total extraordinary income

51,265Extraordinary loss
Loss on sales and retirement of noncurrent
assetsImpairment loss

47,940312

Loss on valuation of investment securities

288,378

Other

41,277

Total extraordinary losses

377,907

Income before income taxes and minority
interests-870,793

Income taxes-current

197,765

Income taxes-deferred-282,656

Total income taxes-84,891

Minority interests in income

72,121

Net loss-858,023

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.10

(3) Consolidated Quarterly Statements of Cash Flows(Unit: Thousands of yen)
9 months FY2009(November 1, 2008
-July 31, 2009)
Net cash provided by (used in) operating activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Amortization of goodwill
Loss on sales and retirement of noncurrent assets
The amount of assets buy on the installment planpurchase for small rentals
The amount of cost price transfer with theconstruction machine parts sale
The amount of cost price transfer with asset sell-off
for rentals
Expenditure by the assets acquisition for rentals
Loss on valuation of investment securities
Loss on sales of investment securities
Increase in allowance for doubtful accounts-870,793
3,574,528
312
135,326
47,94024,714
16,436590,695-2,839,317
288,378
2,086
72,073

Decrease in provision for bonuses
Increase in provision for retirement benefits
Decrease in provision for directors' retirement
benefits
Interest and dividends income
Assets buy on the installment plan purchase
payment interest for rentals
Interest expenses
Decrease in notes and accounts receivable-trade
Decrease in inventories
Decrease in notes and accounts payable-trade
Increase in accounts payable-other
Other, net

327,650
2,641,234
101,946-2,112,666
165,693-128,851

Subtotal

1,831,422

Interest and dividends income received
Interest expenses paid
Income taxes paid

76,136-474,846-630,607

Net cash provided by (used in) operating activities

802,105

Net cash provided by (used in) investment activities
Funds used for investment in term deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Purchase of investments in subsidiaries
Payments for Establishment of Subdiaries
Other, net
Net cash provided by (used in) investment activities-354,212
102,906-1,651-73,908
120,900-9,228127,136-2,234,261
37,000-141,864-538,916
52,849-199,304-46,000-52,339-6,146-3,011,075

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.11

(Unit: Thousands of yen)
9 months FY2009(November 1, 2008
-July 31, 2009)
Net cash provided by (used in) financing activities
Net increase in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Repayments of installment payables
Purchase of treasury stock
Cash dividends paid
Net cash provided by (used in) financing activities

152,734
12,300,000-8,230,583-62,000-2,388,641-1,041-625,327
1,145,140

Net increase in cash and cash equivalents-1,063,829

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting frommerger with unconsolidated subsidiaries
Cash and cash equivalents at end of period

17,566,695
24,62916,527,496

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.12

Beginning from this consolidated accounting fiscal year, the Company has adopted the “AccountingStandard for Quarterly Financial Reporting” (Accounting Standards Board of Japan Statement No. 12) andthe “Guidance on Accounting Standard for Quarterly Financial Reporting” (Accounting Standards Board ofJapan Implementation Guidance No. 14). In addition, the quarterly consolidated financial report has been
prepared in accordance with the “Regulation for Quarterly Consolidated Financial Statements.”(4) Notes relating to the going concern assumption
The Company had no material items to report.
(5) Business Segment Information[Segment information by type of business]
Current quarter (From November 1, 2008 to July 31, 2009)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

42,650,581

4,266,700

340,810－－42,650,581-299,402

Eliminations
or entirecompany

Consolidated

47,258,092－

47,258,092

－

－

－

－

4,266,700

340,81047,258,092－

47,258,092

17,55626,276-255,570-43,852-299,423

Total

Revenues(1)Revenues from
customers(2)Intersegment revenue

Total

Operating income

Changes in accounting method
1. Changes in appraisal methods for principal assets
As described in Section 4. (3) b) under Qualitative Information and Financial Statements, the Company andits domestic consolidated subsidiaries traditionally valued construction equipment using the amount after
deduction of depreciation expense as calculated according to the declining-balance method from the original
prices, by separate fiscal year of purchase. Beginning from the first quarter consolidated accounting period
under review, the Company will calculate the amount after deduction of depreciation expense as calculated
according to the straight-line method from the original prices, by separate fiscal year of purchase.
In conjunction with this change, the operating income of the Company’s construction-related businessincreased by ¥53,233 thousands compared with what it otherwise would have been had the accounting
standard used in past periods been applied.
2. Change in depreciation method for depreciable assets
As described in Section 4. (3) c) under Qualitative Information and Financial Statements, beginning from thefirst quarter consolidated accounting period under review the Company and its domestic subsidiaries havechanged the method for depreciation of rental equipment from the declining balance method to thestraight-line depreciation method.
In conjunction with this change, the operating income of the Company’s construction-related businessincreased by ¥1,660,568 thousands compared with what it otherwise would have been had the accounting
standard used in past periods been applied.
[Segment information by location]
Third quarter consolidated year-to-date (from November 1, 2008 to July 31, 2009)
The Company had no material items to report because the Company did not have any consolidated
subsidiaries or important offices located in countries or regions outside of Japan.

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.13

[Foreign sales]
Third quarter consolidated year-to-date (from November 1, 2008 to July 31, 2009)
The Company has omitted a description of foreign sales because foreign sales are less than 10% ofconsolidated revenues.
(6) Note on significant changes to shareholders’ equity
The Company had no material items to report.

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.14

(Reference) Financial Statements for the Previous Fiscal Year
(1) (Summary) Consolidated statements of income(Unit: Thousands of yen)
Prior FY Quarter
9 months FY Quarter
Period(Third Quarter of theConsolidated Accounting

Item

Fiscal Year Ended October
31, 2008)

AmountI Revenues

53,668,788

II Cost of revenues from operations

39,296,596

Gross profit
III Selling, general and administrative expenses
Operating incomeIV

2,291,578

Non-operating revenues
44,805

2.Dividend income

67,904

3.Insurance benefits

50,9004.Rents received

59,483

5.Cash bonus received

5,890

6.Other

94,397323,381Non-operating expenses
1. Interest expense

267,411

2. Loss on sale of notes receivable

60,666

3. Valuation loss on investment securities
4. Other
Total non-operating expenses
Ordinary income
VI

12,080,613

1.Interest revenue

Total non-operating revenues
V

14,372,192

Extraordinary profits
1.Gain on sale of fixed assets
Gain on reversal of allowance for doubtful
2.
accounts
3.Other
Total extraordinary profits

477
98,028426,583
2,188,376
21,805
267,411
5,341
53,480VII Extraordinary losses
1.Loss on sale or retirement of fixed assets
2.Impairment loss

50,493490

3.Valuation loss on investment securities

42,231

4.Other

74,517

Total extraordinary losses

167,733

Income before taxes and adjustments

2,074,123

Corporate, local and business taxes

874,391

Adjustment for corporate and other taxes

140,322

Minority interest in income

84,730Net income

974,679

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.15

(2) (Summary) Consolidated quarterly statements of cash flows(Unit: Thousands of yen)
Prior FY Quarter
9 months FY Quarter
PeriodItem(Third Quarter of theConsolidated Accounting
Fiscal Year Ended October
31, 2008)

AmountⅠ Cash flow from operating activities
Income before taxes and adjustments

2,074,123

Depreciation and amortization expense

3,977,407

Impairment loss

490

Amortization of goodwill

190,923

Gain on sale of fixed assets-21,805

Loss on sale or retirement of fixed assets
Installment purchases of assets for small-value
rentals
Reclassification of cost of sales associated withdisposal of construction equipment
Reclassification of cost of sales associated withdisposal of rental assets
Expenditures for acquisition of rental assets

50,493

Valuation loss on investment securities
Loss on sale of investment securities

44,6783,882
444,210-2,054,619
42,231
477

Increase in allowance for doubtful accounts

146,504

Decrease in accrued bonuses to employees-332,460

Increase in accrued employees retirement benefits
Increase in retirement allowances to directors andauditors
Interest revenue and dividend income
Interest expense on installment purchases ofrental assets
Interest expense-112,709

Decrease in accounts receivable, trade

1,504,836

Increase in inventory assets-291,330

Increase in accounts payable, trade538,529

Increase in accounts payable, other-15,162

Other-895,630

Subtotal

5,726,694

56,91733,76173,536
267,411

Interest and dividends received

112,982

Interest expense-357,350

Payment of corporate and other taxes-2,225,334

Cash flow from operating activities

3,256,991

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.16

Period(Unit: Thousands of yen)
Prior FY Quarter
9 months FY Quarter(Third Quarter of theConsolidated Accounting
Fiscal Year Ended October
31, 2008)

Item

AmountII Cash flow from investing activities
Funds used for investment in term deposits-52,098

Funds provided from redemption of term deposits

148,357

Funds used for the purchase of tangible fixed
assetsFunds provided from the sale of tangible fixed
assetsFunds used for the purchase of intangible fixed
assetsFunds used for the purchase of investment
securities
Funds provided from sell of investment securities
Funds used for the purchase of consolidated
subsidiary stock
Funds used for the purchase of non-consolidated
subsidiary stock
Funds used for establishment of affiliated company
Other
Cash flow from investing activities-3,246,784
159,810-54,768-91,80944,771-62,664-726,221-100,000
8,028-3,973,378

III Cash flow from financing activities
Increase in short-term bank loans

38,123Funds provided by long-term bank loans

12,160,000

Funds used to repay long-term bank loans-7,555,523

Funds used for redemption of bonds
Funds used for repayment of installment
obligations
Funds used for the purchase of treasury stock-40,000-1,863,035-1,585

Payment of dividends to parent company-689,760

Cash flow from financing activities

2,048,219

IV

Increase in cash and equivalents

1,331,832

V

Balance of cash and equivalents at beginning of
period17,213,890

VI

Increase in cash and equivalents resulting fromnewly consolidated subsidiaries

680,339

VII

Balance of cash and equivalents at end of theperiod19,226,063

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.17

(3)Business Segment Information[Segment information by type of business]
9 months FY2008 (From November 1, 2007 to July 31, 2008)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

Revenues

48,272,484

4,998,299

398,004

Operatingexpenses

46,036,822

4,972,650

Operatingincome2,235,661

25,649Eliminations
or entirecompany

Consolidated

53,668,788－

53,668,788

341,927

51,351,400

25,80951,377,210

56,0762,317,388-25,8092,291,578

Total[Segment information by location]
Third quarter consolidated year-to-date (From November 1, 2007 to July 31, 2008)
The Company had no material items to report because the Company did not have any consolidated
subsidiaries or important offices located in countries or regions outside of Japan.
[Foreign sales]
Third quarter consolidated year-to-date (From November 1, 2007 to July 31, 2008)
There are no pertinent items to report because the Company did not have any foreign sales.

Nine-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.18