Six-month Consolidated Financial Reportfor the Fiscal Year ending October 31, 2010
June 4, 2010
Listed Company Name
Kanamoto Company, Ltd.
Company Code Number 9678
Listing Exchanges
Tokyo Stock Exchange, Sapporo Stock Exchange(URL
http://www.kanamoto.co.jp)
Representative
Kanchu Kanamoto President
Inquiries
Nobuhito Utatsu
Director & Corporate Officer, Division Manager, Accounting Division
TEL 81-11-209-1600
Please send inquiries in English to takayama@kanamoto.co.jp.
Scheduled date for submission of Quarterly Report
June 11, 2010
Scheduled date for commencement of dividend payments
July 12, 2010
1. Operating Results for the Interim Period of the Fiscal Year Ending October 31, 2010
(November 1, 2009 - April 30, 2010)(1) Consolidated Operating Results (Cumulative) (Numbers less than one million yen have been rounded down)(Percentages shown are the percent increase or decrease compared to the same period of the prior consolidated fiscal year)

Operating
IncomeRevenues
Millions of yen

Fiscal Year ending October 31,
2010: Second quarter
Fiscal Year ended October 31,
2009: Second quarter％

Ordinary
IncomeMillions of yen％

Net Income

Millions of yen％

Millions of yen％

37,142

14.0

3,195

246.8

2,924

268.4

1,515

―

32,590

―

921

―

793

―

－143

―

Diluted Net
Income per
Share

Net Income
per Share
Yen

Fiscal Year ending October 31,
2010: Second quarter
Fiscal Year ended October 31,
2009: Second quarter

Yen

46.15

―

－4.38

―

Total Assets

Net Assets(2) Consolidated Financial Position

Millions of yen

Shareholders’Equity Ratio

Millions of yen

Fiscal Year ending October 31,
107,860
38,12534.8
2010: Second quarter
Fiscal Year ended October 31,
96,43536,541
37.5
2009(Reference) Shareholders’ equity
Fiscal Year Ending October 31, 2010 Second Quarter: ¥37,538 million
Fiscal Year Ended October 31, 2009:¥36,203 million

Net Assets
per Share％Yen

1,143.19
1,102.51

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Fiscal year ending October 31, 2010
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2. Dividends(Record Date)

End of 1Q
Yen

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

Yen

Fiscal year ended October 31, 2009
―
10.00
―
Fiscal year ending October 31, 2010
―
10.00
―
Fiscal Year ending October 31, 2010―――
(Projected)(Note) Has the Company revised its projected dividends during this quarter?

Yen

10.00
―
10.00

Full year
Yen

20.00
―
20.00

No

3. Projected Consolidated Operating Results for the Fiscal Year Ending October 2010
(November 1, 2009 - October 31, 2010)(Percentages indicate percent change from prior fiscal year)

Operating
IncomeRevenues
Millions of yen％

Millions of yen

Ordinary
Income％Millions of yen

Net Income
per Share

Net Income％

Millions of yen％

Yen

Full year
67,3005.4 1,340
875.8
730
―
330
―
10.04
(Note) Has the Company revised its projected consolidated operating results during thequarter? No

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Fiscal year ending October 31, 2010
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4. Other(1) Were there changes to material subsidiaries during the period under review (Transfer of
specified subsidiaries in conjunction with revisions to the scope of consolidation)?: No
Company newly included (Company name:)Company newly excluded (Company name:)(2) Has the Company adopted the simplified accounting method and special accounting
method in the preparation of quarterly consolidated financial statements?: Yes
Note: For details see “4. Other” under Qualitative Information and Financial Statements
on Page 7(3) Changes in accounting principles, procedures or representation methods relating topreparation of the consolidated quarterly financial statements (Matters stated in the
Change to the Basis for Preparation of Consolidated Quarterly Financial Statements)(a) Are there changes in conjunction with revision to accounting standards?: Yes(b) Changes other than the above: No
Note: For details see “4. Other” under Qualitative Information and Financial Statements
on Page 7(4) Number of shares issued (common stock)(a) Number of shares outstanding at the end of the period (including treasury stock)
Fiscal year ending October 31, 2010 Second Quarter:
32,872,241 sharesFiscal year ended October 31, 2009:
32,872,241 shares(b) Number of shares of treasury stock at the end of the period
Fiscal year ending October 31, 2010 Second Quarter:
35,878 sharesFiscal year ended October 31, 2009:
34,385 shares(c) Average number of shares during the period (Consolidated year-to-date)Fiscal year ending October 31, 2010 Second Quarter:
32,837,517 sharesFiscal year ended October 31, 2009:
32,839,730 shares

Note: Explanation concerning appropriate use of the projected operating results and other items to note
Forward-looking statements
The above projections were prepared based upon information available to the Company at the time theprojections were released as well as various assumptions concerning the future economic and businessenvironment. Actual operating results may differ from the projected figures depending upon various factors in
the future.

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Fiscal year ending October 31, 2010
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Qualitative Information and Financial Statements
1. Qualitative information concerning consolidated operating results< Management Environment > (From November 1, 2009 to April 30, 2010)
During the Kanamoto Group’s second quarter, Japan’s economy benefited from economic growth in China
and other Asian countries that expanded the base supporting an external demand-driven business recovery,
and corporate earnings – particularly at major manufacturers – showed improvement despite ongoing
weakness in consumption in the United States and Europe. In addition, consumption stimulus measures
such as a reduction of the automobile tax on environmentally friendly cars and the eco-point system also
demonstrated a certain positive effect, and overall the economy maintained a mild but steady recovery.
Nevertheless, deflation progressed further in some sectors, including services and the logistics industry,
and although private sector capital investment also enjoyed a cyclical upturn in reaction to the large
adjustments in the prior year, the sense that companies still face overcapacity lingered, and conditions
dampened expectations of a full-scale economic recovery.
In the construction industry, domestic private sector construction demand remained sluggish. The lull was
softened, on the other hand, by special procurement related to economic measures that was centered on
local areas. Financial countermeasures aimed at small and medium-sized firms also proved successful, andthe number of bankruptcies followed a slowing trend from the recent pace.
< Interim Period Consolidated Operating Results > (From November 1, 2009 to April 30, 2010)
For the interim period of the consolidated fiscal year ending in October 2010, the consolidated revenues of
the Kanamoto Group rose 14.0% compared with the same period of the previous consolidated fiscal year to¥37,142 million. Although the severe earnings environment was unchanged, construction equipment rental
demand generally was somewhat improved compared with the same period of the previous consolidated
fiscal year. The comparatively early recovery of the market for used construction equipment also was apositive factor.
The positive improvement carried through to earnings as well, as consolidated operating income jumped
246.8% year-on-year to ¥3,195 million and consolidated ordinary income rose 268.4% compared with thesame period one year earlier to ¥2,924 million. Interim consolidated accounting period net income was¥1,515 million, compared with an interim period net loss of ¥143 million in the same period of the previous
consolidated fiscal year.
A summary of operating results for each of the Company’s businesses is provided below.
[ Business related to the Construction Equipment Rental Division ]Domestic construction equipment rentals had all the appearance of a war of attrition. Price competition
throughout Japan grew even more feverish as the volume of work fell sharply from the prior year. The
Kanamoto Group aggressively developed tactics such as proposal-based sales that integrate all of theGroup’s businesses, and worked to restructure the construction equipment rental asset portfolio and align it
more appropriately with various markets, including a broader selection of new energy-saving equipment,
and strove to expand its market share in various regions. As a result, rental revenues in this business sector
exhibited double-digit growth, increasing 13.7% compared with the same period of the previous
consolidated fiscal year. By region, year-on-year growth was highest in the Hokkaido Region where
Kanamoto was able to demonstrate the Group’s capabilities, as revenues increased sharply by 51.7%.
Revenues rose 3.0% year-on-year in the Tohoku Region and recovered to the prior year level. Such growthSix-month Consolidated Financial Report for the
Fiscal year ending October 31, 2010P. 4

was sufficient to supplement revenue declines of 10.0% in the Kanto Region, 6.9% in the Kinki & Chubu
Region and 11.3% in the Kyushu & Okinawa Region, areas where private sector demand was curtailed.
Moreover, revenues from equipment sales in this business sector expanded briskly, rising 21.2%
compared with the same period of the previous consolidated fiscal year. Sales progressed according to theCompany’s plan against the backdrop of a recovery in the market for used construction equipment to thelevel enjoyed prior to the global recession.
Although Kanamoto’s overseas subsidiaries account for only a small percentage of the Group’s total
operating results, the Shanghai Jinheyuan Group (Shanghai Jinheyuan Equipment Rental Co., Ltd. andShanghai Jinheyuan Engineering Construction Co., Ltd.) expanded its operating performance by steadily
supporting infrastructure construction and demand related to the international exposition in Shanghai, anddeveloping its business in Tianjin.
As a result of these factors, revenues for Kanamoto’s construction-related businesses in the interim
consolidated accounting period under review increased 15.4% from the same period of the previous
consolidated fiscal year to ¥34,654 million, and operating income soared 243.7% year-on-year to ¥3,219
million.
[ Business related to the Steel Sales Division ]With the exception of demand related to economic stimulus measures similar to those for construction
equipment rental, demand for steel products in Hokkaido was extremely limited.

Despite efforts to secure

actual demand, such as steps to enhance sales of construction-related materials, revenues for the interim
consolidated accounting period under review declined 8.9% year-on-year to ¥2,129 million. Because of theinability to pass along steel manufacturers’ price increases to customers, the operating loss was ¥2.0 million,
compared with an operating loss of ¥3.0 million in the same period one year earlier.
[ Information Products Division-related businesses and other business ]Althoughitobtained

large

contractsforproduct

sales,

theCompany’s

informationandtelecommunications-related division was unable to stave off a decline in rental income as the number of
personal computer rental customers fell because of corporate cutbacks in development-related expenses.
The engineer dispatch business, on the other hand, achieved steady revenue growth despite having only
just started operations, reflecting the recovery trend in the research and development activities of firms. As
a result of these factors, for the interim consolidated accounting period under review revenues increased
57.8% from the same period of the previous consolidated fiscal year to ¥358 million. Operating income fell
76.3% year-on-year to ¥3.0 million.
[ Business development issues deserving special mention and status of branch office changes ](1) The Company did not open or close any branches during the interim consolidated accounting period
under review.
(2) During the first quarter of the consolidated accounting period under review, Kanamoto converted four
companies - Shanghai Jinheyuan Group described above (Shanghai Jinheyuan Equipment Rental Co., Ltd.
and Shanghai Jinheyuan Engineering Construction Co., Ltd.; Head office: Shanghai, China), SJ Rental, Inc.
(Head office: Territory of Guam, United States) and Kanamoto Engineering Co., Ltd. (Head office: Minato
Ward, Tokyo, Japan)) - into companies subject to consolidation.

2. Qualitative information on consolidated financial conditions

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Fiscal year ending October 31, 2010
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(1) Assets, liabilities and net assets
Total assets at the end of the interim period under review increased by ¥11,425 million compared with theend of the prior consolidated accounting fiscal year to ¥107,860 million. This mainly reflected an increase of¥5,037 million as the result of four consolidated subsidiaries being newly included in the scope of
consolidation from the first quarter consolidated accounting period, and an increase in cash and deposits inconjunction with higher short-term borrowing.
Total liabilities were ¥69,735 million, an increase of ¥9,841 million compared with the end of the priorconsolidated accounting fiscal year.

The main factors were an increase of ¥4,720 million from the increasein the number of consolidated subsidiaries – the same reason for the increase in total assets – and anincrease in short-term bank loans of ¥7,313 million.
Total net assets rose ¥1,583 million compared with the end of the prior consolidated accounting fiscal
year to ¥38,125 million. This was mainly the increase in earned surplus as a result of interim period income
before income taxes and minority interests.
(2) Consolidated cash flows
Cash flow from operating activities was ¥5,575 million. This mainly reflected interim period income before
taxes and adjustments of ¥3,023 million, depreciation and amortization expense of ¥3,684 million and
expenditures for acquisition of rental assets totaling ¥2,052 million.
Cash flow from investing activities was ¥729 million. The main factor was funds provided from sale ofinvestment securities of ¥773 million.
Cash flow from financing activities was ¥1,346 million. The main factors were an increase in short-termbank loans of ¥7,536 million, funds used to repay long-term bank loans of ¥5,567 million and funds used for
repayment of installment obligations of ¥2,077 million.

3. Qualitative information concerning projected consolidated operating results
The Company announced a revision to its projected operating results for the business period ending
October 2010 on May 28.
Because the third quarter of the Kanamoto Group’s fiscal year (May-July) overlaps the start of the new
fiscal year for the central government and national budget, and consequently construction demand tends tobe slack, the Company does not project significant growth during the second half compared with its interim
period operating results. Moreover, during the current fiscal year in particular, construction demand in mostregions is expected to contract substantially as construction works related to economic stimulus measuresduring the first half near an end, and the country prepares for the approaching summer elections for theUpper House. This decline in demand is expected to accelerate the tendency for earnings conditions todeteriorate, including greater competition and concomitant price reductions. Moreover, there are still nosigns of activity that would indicate a recovery of private sector demand in urban areas including Japan’smajor metropolitan areas, and the direction of construction demand in the remaining six months of the
fiscal year is regarded as extremely uncertain. The full-year projection reflects this severe and uncertain
operating climate in the second half.
Although not a matter pertaining to the interim consolidated accounting period under review, as reported
previously the Company will execute an absorption-type merger with Narasaki Lease Co., Ltd. (head office:Chuo-ku, Sapporo, Hokkaido) and Aomori Narasaki Rental Co., Ltd. (head office: Aomori, Aomori
Prefecture) on June 1, 2010.

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Fiscal year ending October 31, 2010
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These projected consolidated operating results materials were prepared using projections based on
information available to the Company as of the date this material was released and forecasts of the future
economic environment, and include various risks and uncertainty factors. Accordingly, there is a possibility
the Company’s actual consolidated operating results will differ from the projected amounts shown above asa result of various future factors, including but not limited to economic conditions surrounding the Company,
market trends, and competitive conditions.

4. Other(1) Changes in material subsidiaries during the period under review (changes in specificsubsidiaries 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 of quarterly consolidated financial statements
1. Calculation method for fixed asset depreciation expense
For depreciation and amortization expense for fixed assets for which it has adopted the declining balancemethod, the Company calculates the amount of depreciation and amortization pertaining to the consolidated
fiscal year on a pro-rata basis for each period.
2. Method of calculating estimated balance of doubtful accounts for normal accounts
Because there has been no significant change in the actual loss experience calculated at the end of theprior consolidated accounting fiscal year for the end of the interim consolidated accounting period underreview, the Company has calculated the estimated balance of doubtful accounts by using the actual loss
experience at the end of the prior consolidated accounting fiscal year.
(3) Changes in accounting principles, procedures and reporting methods pertaining topreparation of the quarterly consolidated financial statements
Change in accounting method for completed contract revenues and cost of completed contracts
The Company traditionally reported revenues and costs of construction contracts by applying thecompleted-contract method. Beginning from the first quarter consolidated accounting period, the Company
will apply the Accounting Standard for Construction Contracts (Accounting Standards Board of Japan
Statement No. 15, December 27, 2007) and the Guidance on Accounting Standard for Construction
Contracts (Accounting Standards Board of Japan Implementation Guidance No. 18, December 27, 2007).
Beginning from works contracts for which construction activity was begun during the first quarter
consolidated accounting period, the Company will apply the percentage of completion method for works forwhich the outcome of the construction activity is deemed certain by the end of the second quarter
consolidated accounting period (with the estimate of the percentage of completion based on the cost
incurred as a percentage of estimated total cost), and will apply the completed-contract method for all otherworks.
The affect of this change on the Company’s earnings and information by segment is not material.

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Fiscal year ending October 31, 2010
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5

Consolidated Financial Statements(1) Consolidated Quarterly Balance Sheets(Unit: Thousands of yen)Classification

Current Consolidated Fiscal Year
Interim Period(As of April 30, 2010)

Prior Fiscal Year Summary
Consolidated Balance Sheet(As of October 31, 2009)

AmountAmount(Assets)
Current assets
Cash and deposits

20,684,278

12,345,028

Notes and accounts receivable, trade

14,081,082

14,388,250

Negotiable securities

1,350,000

1,800,000

Work in progress

16,64038,326Merchandise and finished goods

699,267

643,091

Raw materials and supplies

159,293

140,857

Construction equipment

1,010,910

1,011,437

Income taxes receivable－

355,911

Consumption taxes receivable－

71,661

Deferred tax assets

456,106

261,523

Other

913,264

783,704-438,758-475,964

38,832,083

31,363,829

61,263,268

54,406,793

Accumulated depreciation-36,490,069-35,145,234

Net rental Equipment assets

24,773,199

19,261,559

20,833,660

20,904,695

Accumulated depreciation-12,599,617-12,296,819

Net buildings and structures

8,234,043

8,607,875

Machinery, equipment, vehicles anddelivery equipment

5,201,248

5,206,308-4,375,899-4,316,731

825,349

889,577

29,545,804

29,448,053

8,648

－

1,347,044

1,344,459-1,058,417-1,033,713

288,627

310,746

63,675,671

58,517,812

446,982

542,304

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

Buildings and structures

Accumulated depreciation
Net machinery, equipment, vehicles
and delivery equipment
Land
Construction in progress
Other
Accumulated depreciation
Net other
Total Tangible Fixed Assets
Intangible fixed assets
Goodwill

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Fiscal year ending October 31, 2010
P. 8

Other321,714323,684

768,696865,989

Investment securities

2,343,826

3,218,486

Deferred tax receivable

1,028,738

1,286,857

Other2,154,409

2,399,931

Allowance for doubtful accounts-892,730-929,977

Allowance for investment loss

-50,025-287,897

Total Investments and Other Assets

4,584,218

5,687,400

Total Fixed Assets

69,028,587

65,071,202

Total Assets

107,860,670

96,435,031

Total Intangible Fixed Assets
Investments and other assets

Classification

Current Consolidated Fiscal Year
Interim Period(As of April 30, 2010)

Prior Fiscal Year Summary
Consolidated Balance Sheet(As of October 31, 2009)

AmountAmount(Liabilities)
Current liabilities
Notes and accounts payable, trade12,447,318

13,150,825

Short-term bank loans

9,701,686

1,258,931

Long-term bank loans due within one year

10,461,451

10,537,364

Current portion of bonds

22,00042,000

Corporate taxes payable

1,613,951

14,722

Accrued bonuses to employees

619,731464,636

Allowance for loss on affiliated company
liquidation

94,764－

Accounts payable, other

4,495,515

4,293,687

Other

1,933,835

856,711

41,390,254

30,618,878

33,00044,000Long-term bank loans

17,527,061

20,987,266

Accrued employees retirement benefits

1,390,641

1,320,173

Retirement allowances to directors andauditors

239,089

226,356

Long-term accrued expenses

7,324,998

6,327,718

Other

1,829,990

368,783

Total Long-term Liabilities

28,344,781

29,274,298

Total Liabilities

69,735,036

59,893,177

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

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Fiscal year ending October 31, 2010
P. 9

Capital stock

9,696,717

9,696,717

Capital surplus

10,960,869

10,960,869

Retained earnings

16,590,153

15,334,652-24,519-23,917

37,223,221

35,968,321

Valuation difference on other investment
securities

333,772

235,603

Translation adjustments account-18,839－

Total Valuation and Translation
Adjustments

314,932

235,603587,481

337,929

Total Net Assets

38,125,634

36,541,854

Total Liabilities and Net Assets

107,860,670

96,435,031

Treasury stock
Total Shareholders’ Equity
Valuation and translation adjustments

Minority Interests

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Fiscal year ending October 31, 2010
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(2) Consolidated Quarterly Statements of Income(Unit: Thousands of yen)Classification

Prior Consolidated Fiscal Year
Interim Period

Current Consolidated Fiscal Year
Interim Period

From November 1, 2008
to April 30, 2009

From November 1, 2009
to April 30, 2010

AmountAmountRevenues

32,590,313

37,142,520

Cost of revenues

23,241,760

25,144,506

Gross profit

9,348,552

11,998,013

Selling, general and administrative expenses

8,427,012

8,802,474

921,539

3,195,539

Interest income

27,006

8,681

Dividend income

7,937

11,643

Insurance benefits

22,012

63,939Rents received

22,59026,172

Cash bonus received

2,405

1,272

Amortization of negative goodwill

34,91634,916

Other

66,61777,049183,468

223,676

Interest expense

199,722362,103

Loss on sale of notes receivable

34,46926,522

Other

77,064

106,105

Total non-operating expenses

311,257

494,731

Ordinary income

793,768

2,924,485－

153,765

Reversal of allowance for doubtful
accounts

3,749

52,350

Reversal of accrued employees retirement
benefits

16,310－－77,279

Other

9,522

7,868

Total extraordinary income

29,582291,264

29,80938,415

312－586,336

4,137

Operating income
Non-operating income

Total non-operating income
Non-operating expenses

Extraordinary income
Gain on sale of investment securities

Subsidies

Extraordinary losses
Loss on sale or retirement of fixed assets
Impairment loss
Valuation loss on investment securities

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Fiscal year ending October 31, 2010
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Transfer to allowance for doubtful
accounts－

35,507

Transfer to allowance for loss on affiliatedcompany liquidation－

94,76438,716874

Total extraordinary losses

655,175

173,698

Income before taxes and adjustments

168,176

3,042,050

Corporate, local and business taxes

402,548

1,561,187

Adjustment for corporate and other taxes-183,469-73,159

Total corporate and other taxes

219,079

1,488,027

Minority interest in income

93,08438,458-143,986

1,515,564

Other

Net income

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(3) Consolidated Quarterly Statements of Cash Flows(Unit: Thousands of yen)
Prior Consolidated Fiscal Year
Interim Period

Current Consolidated Fiscal Year
Interim Period

From November 1, 2008
to April 30, 2009

From November 1, 2009
to April 30, 2010

Classification
Cash flow from operating activities
Income before taxes and adjustments

168,176

3,042,050

Depreciation and amortization expense

2,230,638

3,684,244

312－

Amortization of goodwill

85,31592,892

Loss on sale or retirement of fixed assets

29,80933,855

Installment purchases of assets forsmall-value rentals

17,637－

Reclassification of cost of sales
associated with disposal of construction
equipment

12,750375

Reclassification of cost of sales
associated with disposal of rental assets

331,115

413,812-2,234,037-2,052,130

586,336

4,137(Gain) loss on sales of investment
securities

2,086-153,765

Increase (decrease) in allowance for
doubtful accounts

118,268-91,451

Increase (decrease) in accrued bonuses
to employees-148,633

145,677

Increase (decrease) in accrued
employees retirement benefits

94,83970,468

Increase (decrease) in retirement
allowances to directors and auditors-5,423

12,732－

94,764

Interest revenue and dividend income-34,944-20,325

Interest expense on installment
purchases of rental assets

81,63289,293

Interest expense

199,722362,1032,061,630

683,507210,246-12,732

Increase (decrease) in accounts payable,
trade-1,352,782-1,195,013

Increase (decrease) in accounts payable,
other352,445

90,574

Other

112,548426,630

Impairment loss

Expenditures for acquisition of rental
assetsValuation loss on investment securities

Increase (decrease) in allowance for loss
on affiliated company liquidation

Decrease in accounts receivable, trade(Increase) decrease in inventorySix-month Consolidated Financial Report for the
Fiscal year ending October 31, 2010
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Subtotal

2,919,690

5,721,702

36,334

20,361

Interest expense-297,581-412,802

Payment of corporate and other taxes-11,338

246,7142,647,106

5,575,975

Interest and dividends received

Cash flow from operating activities

Prior Consolidated Fiscal Year
Interim Period

Current Consolidated Fiscal Year
Interim Period

From November 1, 2008
to April 30, 2009

From November 1, 2009
to April 30, 2010

Classification
Cash flow from investing activities
Disbursements for investments in term
deposits－-50,000

121,123500

Funds used for the purchase of tangible
fixed assets-1,696,035-75,559

Funds provided from the sale of tangible
fixed assets

16,78813,232

Funds used for the purchase of intangible
fixed assets-29,805-28,891

Funds used for the purchase ofinvestment securities-515,008-14,72151,808773,768

Funds used for the purchase of
subsidiary stock in conjunction withchange in scope of consolidation-169,304－

Funds used for the purchase of
subsidiary stock-46,000-12,250

Funds used for establishment ofsubsidiary company-21,664－

Payments of loans receivable－-62,100

Funds provided from collection ofshort-term loans receivable－

59,426260

126,010-2,287,838

729,415

137,9887,536,111

Funds provided by long-term bank loans

8,000,000

2,008,983

Funds used to repay long-term bankloans

-5,391,542-5,567,641-31,000-31,000-1,800,065-2,077,105

Revenue from redemption of term
deposits

Funds provided from sale of investment
securities

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

Funds used to redeem corporate bonds
Funds used for repayment of installment
obligations

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Fiscal year ending October 31, 2010
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Funds used for the purchase of treasury
stock-1,028-601-326,459-327,757－-194,445

587,893

1,346,543

－

2,701

947,161

7,654,636

17,566,695

14,086,028

Increase in cash and cash equivalents
resulting from merger with unconsolidated
subsidiaries

24,629－

Increase in cash and cash equivalents due
to newly consolidated subsidiaries－

185,114

Balance of cash and equivalents at end of
the period

18,538,486

21,925,778

Payment of dividends
Other
Cash flow from financing activities
Effect of exchange rate changes on cash
and cash equivalents
Increase in cash and equivalents
Balance of cash and equivalents at
beginning of period

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2010
P. 15

(4) Notes Relating to the Going Concern Assumption

The Company had no material items to report.
(5) Business Segment Information[Segment Information by Type of Business]
Prior consolidated fiscal year second quarter (From February 1, 2009 to April 30, 2009)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

13,750,179

1,285,127

113,640

15,148,947－

15,148,947

－

－

－

－

－

－

13,750,179

1,285,127

113,640

15,148,947－

15,148,947

265,114-6,9008,681

266,895-15,318

251,576

Eliminations
or entire
Consolidated
company

Total

Revenues(1) Revenues from customers(2) Intersegment revenue
Total
Operating income (loss)

Current consolidated fiscal year second quarter (From February 1, 2010 to April 30, 2010)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

17,070,936

1,164,310

207,339

18,442,587－

18,442,587

－

－

－

－

－

－

Total

17,070,936

1,164,310

207,339

18,442,587－

18,442,587

Operating income (loss)

1,520,992

10,015

13,326

1,544,334-15,645

1,528,688

Eliminations
or entire
Consolidated
company

Total

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

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2010
P. 16

Prior consolidated fiscal year interim period (From November 1, 2008 to April 30, 2009)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

30,025,003

2,338,077

227,231

32,590,313－

32,590,313

－

－

－

－

－

－

30,025,003

2,338,077

227,231

32,590,313－

32,590,313

936,771-3,252

16,320949,838-28,298

921,539

Eliminations
or entire
Consolidated
company

Total

Revenues(1) Revenues from customers(2) Intersegment revenue
Total
Operating income (loss)

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

Steel sales
business

Information
products
businessand otherbusinesses

34,654,342

2,129,535

358,642

37,142,520－

37,142,520

－

－

－

－

－

－

Total

34,654,342

2,129,535

358,642

37,142,520－

37,142,520

Operating income (loss)

3,219,286-2,3193,874

3,220,842-25,302

3,195,539

Eliminations
or entire
Consolidated
company

Total

Revenues(1) Revenues from customers(2) Intersegment revenue(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the typeof labor and products, the nature of the business and the business markets.
2. Principal products, by businessBusiness

Principal products

Construction equipment rentals

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

Steel sales

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

Information products and otherbusinesses

Computers and peripheral devices, telecommunications-related
equipment

3. Changes in accounting method
Current consolidated fiscal year interim period(a) Changes in appraisal methods for principal assets

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2010
P. 17

Traditionally, the Company and its domestic consolidated subsidiaries valued
construction equipment using the amount after deduction of depreciation expense
calculated according to the declining-balance method from the original prices, byseparate fiscal year of purchase. Beginning from the first quarter of the current
consolidated accounting fiscal year, the Company will calculate the amount after
deduction of depreciation expense 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 business for the consolidated accounting fiscal year interim
period under review increased by ¥34,192 thousand compared with what itotherwise would have been had the accounting standard used in past periods
been applied.
(b) Change in depreciation method for depreciable assets
Beginning from the first quarter of the current consolidated accounting fiscal
year, the Company and its domestic consolidated subsidiaries have changed themethod for depreciation of rental equipment from the declining balance method
to the straight-line depreciation method.
In conjunction with this change, the operating income of the Company’s
construction-related business for the consolidated accounting fiscal year interim
period under review increased by ¥1,211,483 thousand compared with what itotherwise would have been had the accounting standard used in past periods
been applied.
(c) Beginning from the first quarter of the current consolidated accounting fiscal
year, the Company and its domestic consolidated subsidiary have changed theuseful lives used for machinery and equipment (including machinery andequipment reported as rental equipment) based on revision of the Corporation
Tax Law.
In conjunction with this change, the operating income of the Company’s
construction-related business for the consolidated accounting fiscal year interim
period under review increased by ¥40,768 thousand compared with what itotherwise would have been had the accounting standard used in past periods
been applied.
Consolidated accounting fiscal year interim period under review
Change of accounting method for completed contract revenues and cost ofcompleted contracts
As described in item (3) of “4. Other” under Qualitative Information and
Financial Statements, beginning from the first quarter consolidated accounting
period the Company has revised its reporting method for completed contract
revenues and cost of completed contracts.
The effect of this change on the Company’s Steel Sales Division-related
businesses is not material when compared with the accounting method theCompany traditionally applied.
[Segment information by location]
FY2009 consolidated second quarter (from February 1, 2009 to April 30, 2009)
and FY2009 consolidated interim period (from November 1, 2008 to April 30,

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2010
P. 18

2009)The Company had no material items to report because the Company did not haveany consolidated subsidiaries or important offices located in countries or regions
outside of Japan.
FY2010 consolidated second quarter (from February 1, 2010 to April 30, 2010)
and FY2010 consolidated interim period (from November 1, 2009 to April 30,
2010)
The Company has omitted a description of segment information by location
because revenues in Japan account for more than 90% of total revenue in all
segments.
[Foreign sales]
FY2009 consolidated second quarter (from February 1, 2009 to April 30, 2009)
and FY2010 consolidated second quarter (from February 1, 2010 to April 30,2010), and FY2009 consolidated interim period (from November 1, 2008 to April
30, 2009) and FY2010 consolidated interim period (from November 1, 2009 to
April 30, 2010)
The Company has omitted a description of foreign sales because foreign sales areless than 10% of consolidated revenues.
(6) Note on Significant Changes to Shareholders’ Equity
The Company had no material items to report.

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2010
P. 19