Three-month Consolidated Financial Report for the
Fiscal Year ending October 31, 2011 [Japan GAAP]
March 4, 2011
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
March 14, 2011
Scheduled date for commencement of dividend payments–
Preparation of Quarterly Settlement Supplementary
Explanatory Materials
No
Quarterly Earnings Briefings
No
1. Operating Results for the Three-Month Period of the Fiscal Year Ending October 31, 2011
(November 1, 2010 – January 31, 2011)(1) Consolidated Operating Results (Cumulative)(Numbers less than one million yen have been rounded down)(Percentages shown are the percent increase or decrease compared to the same period of the prior consolidated fiscal year)

Operating
IncomeRevenues
Millions of yen

Fiscal Year ending October 31,
2011: First quarter
Fiscal Year ended October 31,
2010: First quarter％

Ordinary
IncomeMillions of yen％

18,280 －2.2

1,114 －33.2

18,699

1,666

7.2

149.0

％

979 －38.6
1,595

162.6

Millions of yen％

354 －58.4
853

─

Diluted Net
Income per
Share

Net Income
per Share
Yen

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

Millions of yen

Net Income

Yen

10.80

―

25.98

―

Total Assets

Net Assets(2) Consolidated Financial Position

Millions of yen

Shareholders’Equity Ratio

Millions of yen

Fiscal Year ending October 31,
108,695
37,33833.8
2011: First quarter
Fiscal Year ended October 31,
108,509
37,025
33.7
2010(Reference) Shareholders’ equity
Fiscal Year Ending October 31, 2011 First Quarter:¥36,775 million
Fiscal Year Ended October 31, 2010:¥36,527 million

1

Net Assets
per Share％Yen

1,120.02
1,112.46

2. Dividends
End of 1Q
Yen

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

Yen

Fiscal year ended October 31, 2010
─
10.00
─
Fiscal year ending October 31, 2011
Fiscal Year ending October 31, 201110.00
─(Projected)(Note) Has the Company revised its projected dividends during this quarter?

Yen

Full year
Yen

10.00

20.00

10.00

20.00

No

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

Operating
IncomeRevenues
Millions of yen％

Millions of yen

Ordinary
Income％Millions of yen

Net Income
per Share

Net Income％

Millions of yen％

Yen

Interim
750 －50.5
35,080 －5.6
1,940 －39.3 1,580 －46.0
22.84(Year-to-date)
700 －66.4
210 －79.8
67,160 －4.3
1,440 －45.6
6.40
Full year(Note) Has the Company revised its projected consolidated operating results during thequarter? No2

4. Other (For details please refer to [Attachments] Page 4 “Other Information”.)(1) Were there changes to material subsidiaries during the period under review: No
Company newly included (Company name:)Company newly excluded (Company name:)Note: Transfer of specified subsidiaries in conjunction with revisions to the scope of
consolidation during the quarterly accounting period.
(2) Has the Company applied the simplified accounting method and special accounting
method: Yes
Note: Application of simplified accounting method and special accounting method in the
preparation of quarterly consolidated financial statements.
(3) Changes in accounting principles, procedures or reporting methods(a) Are there changes in conjunction with revision to accounting standards?: Yes(b) Changes other than the above: No
Note: Changes in accounting principles, procedures and reporting methods pertaining topreparation of the quarterly consolidated financial statements recorded in the
Changes in Important Matters Used as the Basis for Preparation of Quarterly
Consolidated Financial Statements.
(4) Number of shares issued (common stock)(a) Number of shares outstanding at the end of the period (including treasury stock)
Fiscal year ending October 31, 2010 First Quarter:
32,872,241 sharesFiscal year ended October 31, 2010:
32,872,241 shares(b) Number of shares of treasury stock at the end of the period
Fiscal year ending October 31, 2010 First Quarter:
37,747 sharesFiscal year ended October 31, 2010:
36,906 shares(c) Average number of shares during the period (Consolidated year-to-date)Fiscal year ending October 31, 2010 First Quarter:
32,835,326 sharesFiscal year ended October 31, 2010:
32,837,656 shares
Note: Disclosure concerning status of implementation of quarterly review procedure
This quarterly earnings report is exempt from the quarterly review procedure based on the
Financial Instruments and Exchange Act. At the time of disclosure of this quarterly earnings
report, the Company has not completed the quarterly review procedure for financial statements
based on the Financial Instruments and Exchange Act.
Note: Explanation concerning appropriate use of the projected operating results and other items
to note(Note Concerning Forward-Looking Statements)
The above projections were prepared based upon information available to the Company at thetime the projections were announced as well as various assumptions concerning the future
economic and business environment. Actual operating results may differ from the projected
figures depending upon various factors in the future. Please refer to the Qualitative Information
Concerning Projected Operating Results on Page 3 of the Attachments for the conditions used asassumptions for the projected operating results and matters to note before using the projected
operating results.

3

Attachments Table of Contents
I. Qualitative Information Concerning Quarterly Consolidated Operating Results .......................... 2
1. Qualitative Information Concerning Consolidated Operating Results.................................... 2
2. Qualitative Information Concerning Consolidated Financial Position .................................... 3
3. Qualitative Information Concerning Projected Consolidated Operating Results ...................... 3
II. Other Information .......................................................................................................... 4
1. Summary of Changes to Material Subsidiaries ................................................................ 4
2. Summary of Simplified Accounting Method and Special Accounting Method.......................... 4
3. Summary of Changes in Accounting Principles, Procedures or Reporting Methods ................. 4
III. Quarterly Consolidated Financial Statements ................................................................... 5
1. Quarterly Consolidated Balance Sheets .......................................................................... 5
2. Quarterly Consolidated Statements of Income ................................................................. 7
3. Quarterly Consolidated Statements of Cash Flows .......................................................... 8
4. Notes Relating to the Going Concern Assumption ........................................................... 10
5. Business Segment Information .................................................................................. 10
6. Notes on Significant Changes to Shareholders’ Equity..................................................... 114

I. Qualitative Information Concerning Quarterly Consolidated Operating Results
1. Qualitative Information Concerning Consolidated Operating Results< Management Environment > (From November 1, 2010 to January 31, 2011)
Driven by the effects of stimulus measures and economic conditions overseas, including a
gradual recovery of the U.S. business environment, Japan’s economy during the Kanamoto
Group’s first quarter presented some aspects of a recovery. Business sentiment was improved,
as major companies including export-oriented manufacturers began reporting positive operating
forecasts. But as the stimulus effect from programs to support automobile and home electricalappliance purchases faded and domestic demand weakened, brighter notes gradually appeared
from a private sector capital investment perspective, starting with condominium construction in
the Tokyo metropolitan area. Overall, the quarter was characterized by a moderate businessrecovery trend.
At the same time, however, the severity of the environment in regional areas was unabated.
Whether in terms of slumping domestic demand, the drag from deflationary conditions, pressureon earnings at middle-market corporations and small and medium-size firms, the worsening
employment situation or the upward trend in the number of bankruptcies, differences among
regions were further thrust into stark relief. For firms in service industries, including the
Kanamoto Group, competition among firms intensified, despite a halt in price cutting, against the
backdrop of an absolute drop in demand.
< First Quarter Consolidated Operating Results > (From November 1, 2010 to January 31, 2010)
The value of orders for construction work in all of 2010 totaled a low ¥41,598.4 billion, despite
the implementation of emergency economic measures (down 0.3% year-on-year according to asurvey by the Ministry of Land, Infrastructure and Transport). For the construction industry, thesevere operating climate continued. The construction equipment rental industry, which operates
incidentally to the construction industry, similarly experienced more intensive competition in
conjunction with the sharp decline in construction work.
Amidst these conditions, Kanamoto maintained its market share and improved its equipment
operating rates in each region as a result of pursuing proposal-type marketing. This included
aggressively adopting technologies registered in the NETIS program, and state-of-the-art
equipment for the computerization of construction-related procedures, being promoted by the
Ministry of Land, Infrastructure and Transport. Nevertheless, increased competition continued todepress rental unit prices, and in general earnings for the Kanamoto Group remained under
downward pressure.
Overseas sales of used construction equipment expanded robustly, supported by vigorous
foreign demand and high market prices.
As a result of these factors, consolidated revenues for the first quarter of the consolidated fiscal
year ending in October 2011 were ¥18,280 million, down 2.2% compared with the same periodof the previous consolidated fiscal year.
From an earnings perspective, on the other hand, consolidated operating income dropped
33.2% from the same period of the previous consolidated fiscal year to ¥1,114 million, andconsolidated ordinary income fell 38.6% year-on-year to ¥979 million. First quarter net income
declined 58.4% to ¥354 million.

5

A summary of operating results for each of the Company’s reporting segments is provided
below (Beginning from the current period, the Company has partially revised its descriptive
method in conjunction with the revision of financial bulletin reporting standards).
[ Business related to the Construction Equipment Rental Division ]By region, construction equipment rental revenues in the Hokkaido Region, which was affectedby the end of economic stimulus measures, fell broadly by 26.3% compared with the revenues in
the first quarter of the previous consolidated fiscal year. As in the previous year, the Company
undertook strong business development measures aimed at both civil engineering works andconstruction projects, but the decline in demand across the public and private sectors was
remarkable, and operating results were at the level seen two years ago. In the Tohoku Region,on the other hand, revenues recovered as the result of large-scale projects, including
construction of the nuclear fuel reprocessing plant in Rokkasho Village, and rose 4.9%
year-on-year. Revenues in the Kanto Region were up 3.9% from the same period of the previous
consolidated fiscal year, thanks to public works such as the Tokyo Metropolitan Expressway andembankment works and a push from private sector construction investment, including
condominium construction in the Tokyo metropolitan area, which exhibited a recovery trend.
Revenues in the Kinki & Chubu Region increased 3.3% as private sector capital investment inmetropolitan areas recovered, and in the Kyushu & Okinawa Region expanded 3.1% because ofgovernment demand centered on northern Kyushu.
Overseas sales of used construction equipment expanded substantially, climbing 180.8%.
Moreover, among Kanamoto’s overseas subsidiaries, the two companies of the Shanghai
Jinheyuan Group steadily expanded their market area inland from the coast, to areas such as
Wuhan. Because the quarter did not benefit from works related to the Shanghai Expo, which
boosted results in the same quarter one year ago, and was affected by delays in construction
starts following the conclusion of the Expo, however, revenues were 19.0% lower.
As a result of these factors, first quarter revenues for Kanamoto’s construction-related
businesses slipped 5.3% from the same period of the previous consolidated fiscal year to¥16,645 million, and operating income fell 39.7% year-on-year to ¥1,023 million.
[ Other Businesses ]In the steel products sales business the Company is developing in Hokkaido, revenues rose
49.8% compared with the first quarter of the previous consolidated fiscal year as conditions inthe steel materials market improved and demand for foundation materials expanded. In addition,
the Company’s information and telecommunications-related division successfully developed new
personal computer rentals, increasing its revenues 25.0% year-over-year.
As a result of the above activities, for the first quarter of the current consolidated fiscal year,
revenues in the Company’s other businesses increased 46.4% to ¥1,634 million, and operating
income was ¥46 million, compared with an operating loss of ¥21 million in the same period one
year ago.
[ Business Development Issues Deserving Special Mention and Status of branch Office
Changes ]6(1) During the first quarter of the consolidated accounting fiscal year, Kanamoto opened a new
Rokkasho Branch (Village of Rokkasho in Kamikita-gun, Aomori Prefecture). In Hokkaido, theCompany closed the Shiranuka Equipment Center (Shiranuka-cho, Shiranuka-gun), Tomikawa
Equipment Center (Hidaka-cho, Saru-gun) and Muroran Equipment Center (Shikuji-cho,
Muroran).
(2) As already reported on February 25, 2011, Kanamoto established Kanamoto & JP Nelson
Equipment (S) PTE Ltd. in the Republic of Singapore through a joint venture with JP Nelson
Equipment PTE. LTD., the leading construction equipment rental company in Singapore, andregistered the new corporation on January 11, 2011. Because this new company will begin
full-scale business operations from March, earnings during the current fiscal year are expected tobe minimal.
2. Qualitative Information Concerning Consolidated Financial Position(1) Assets, liabilities and net assets
Total assets at the end of the first quarter under review increased by ¥186 million comparedwith the end of the prior consolidated fiscal year to ¥108,695 million. This mainly reflected anincrease of ¥1,732 million in rental equipment and an increase of ¥419 million in investment
securities, and a decrease of ¥2,025 million in cash and deposits.
Total liabilities were ¥71,357 million, a decrease of ¥126 million compared with the end of theprevious consolidated fiscal year. This mainly reflected the repayment of corporate taxes andconsumption taxes.
Total Net Assets were ¥37,338 million, ¥313 million higher than at the end of the previous
consolidated fiscal year. This was largely the result of an increase of ¥225 million increase in thevaluation difference on other investment securities, as stock prices for shares that have a market
price and which are included among investment securities rose above the prices recorded at theend of the previous consolidated fiscal year.
(2) Cash flows
Cash and cash equivalents (“cash") at the end of the first quarter under review decreased by¥1,825 million compared with the end of the previous consolidated fiscal year to ¥18,925 million.
The consolidated cash flows for the first quarter consolidated accounting period under review
are described below, along with the main factors affecting cash flows.
(Cash flow from operating activities)

Cash generated as a result of operating activities fell 99.6% from the same period of theprevious consolidated fiscal year to ¥7 million. This was mainly the result of a decrease inquarterly income before income taxes and minority interests and larger payments for corporate
and other taxes.
(Cash flow from investing activities)

Cash flow used in investing activities increased 96.7% from the first quarter of the previous
consolidated fiscal year to ¥186 million. This mainly reflected an increase in funds used for thepurchase of tangible fixed assets and funds used for the purchase of subsidiary stock.

7

(Cash flow from financing activities)

Cash flow used as a result of financing activities was ¥1,639 million, compared with cash flow
provided as a result of financing activities of ¥25 million in the same period of the previous
consolidated fiscal year. The main factors were decreases in the net amount of short-term bankloans and funds provided by long-term bank loans, and increases in funds used for repayment of
installment obligations and funds used for repayment of lease obligations.
3. Qualitative Information Concerning Projected Consolidated Operating Results
These projected consolidated operating results were prepared using projections based on
information available to the Company as of the date this material was released and forecasts ofthe future economic, environment, and include various risks and uncertainty factors.
Accordingly, there is a possibility the Company’s actual consolidated operating results will differ
from the projected amounts shown above as a result of various future factors, including but notlimited to economic conditions surrounding the Company, market trends, and competitive
conditions.
II. Other Information
1. Summary of Changes to Material Subsidiaries
The Company had no material items to report.
2. Summary of Simplified Accounting Method and Special Accounting Method
1. Appraisal methods for inventory assets
The appraisal value of inventories at the end of the first quarter under review has been
calculated using a rational method based on physical inventories at the end of the previous
consolidated fiscal year, rather than physical inventories at the end of the quarter underreview.
To write down the book value of inventory, the Company estimates the net selling valuesof assets for which there has been a clear decline in profitability, and writes down the bookvalues to those amounts.
2. Method of calculating fixed asset depreciation expense
For depreciation and amortization expense for fixed assets for which it has adopted thedeclining balance method, the Company calculates the amount of depreciation andamortization pertaining to the consolidated fiscal year on a pro-rata basis for each period.
3. Summary of Changes in Accounting Principles, Procedures or Reporting Methods
1. Adoption of the Accounting Standard for Asset Retirement Obligations
Beginning from the first quarter of the current consolidated fiscal year, the Company has
adopted the Accounting Standard for Asset Retirement Obligations (Accounting Standards
Board of Japan Statement No. 18 dated March 31, 2008 and the Guidance on AccountingStandard for Asset Retirement Obligations (Accounting Standards Board of Japan Guidance
No. 21 dated March 31, 2008).

8

As a result, operating income and ordinary income were ¥1,864,000 lower, respectively,
and income before taxes was ¥97,394,000 lower, than they otherwise would have been had
the accounting standards used in past periods been applied.
Furthermore, the change in asset retirement obligations as a result of the application ofthis standard was ¥151,255,000.
2. Adoption of the Accounting Standard for Measurement of Inventories
Beginning from the first quarter of the current consolidated fiscal year, the Company has
adopted the Accounting Standard for Measurement of Inventories (Accounting Standards
Board of Japan Statement No. 9 dated September 26, 2008), and Kanamoto and certain of its
domestic consolidated subsidiaries have changed the measurement method for merchandise
inventories and products from the last-in-first-out method to the periodic average method.
The affect of this change on earnings is not material.
Change in Reporting Method(Quarterly Consolidated Statements of Income)
1. As a result of the application of the Cabinet Office Ordinance Partially Revising theRegulations for Terminology, Formats and Preparation Methods of Financial Statements(Cabinet Ordinance No. 5 dated March 24, 2009) based on the Accounting Standard forConsolidated Financial Statements (Accounting Standards Board of Japan Statement No. 22
dated December 26, 2008), the Company has disclosed the line item “income (loss) before
minority interests” for the first quarter consolidated period under review.
2. In the first quarter of the previous consolidated fiscal year, “gain on sale or retirement of
fixed assets” was reported in “Other” under extraordinary profits. For the first quarter
consolidated period under review, the Company has classified this item separately because
the amount exceeded 20/100 of total extraordinary profits. The “gain on sale or retirement of
fixed assets” included in “Other” under extraordinary profits for the first quarter of theprevious consolidated fiscal year is ¥324,000.
(Quarterly Consolidated Statements of Cash Flows)
Because the “funds used for repayment of lease obligations” reported in “Other” undercash flow from financing activities in the first quarter of the previous consolidated fiscal year
have increased in importance, the Company has decided to report this item separately
beginning from the first quarter consolidated period under review. The “funds used for
repayment of lease obligations” included in “Other” under cash flow from financing activities
for the first quarter of the previous consolidated fiscal year is ¥105,959,000.

9III. Quarterly Consolidated Financial Statements
1. Quarterly Consolidated Balance Sheets(Unit: Thousands of yen)
Current Consolidated Fiscal YearFirst Quarter(As of January 31, 2011)

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

AmountAmountClassification(Assets)
Current assets
Cash and deposits

18,460,262

20,486,217

Notes and accounts receivable, trade15,271,498

14,987,135

Negotiable securities

550,000

350,000

Work in progress

32,49037,046Merchandise inventories and products

706,316

606,265

Raw materials and supplies

166,608

161,250

1,239,379

1,187,474

Deferred tax assets

168,105

360,857

Other

527,870

585,387–371,221–372,925

36,751,309

38,388,709

65,776,866

62,487,304

Accumulated depreciation–38,298,111–36,740,651

Net rental equipment assets

27,478,755

25,746,653

20,932,238

20,754,755

Accumulated depreciation–13,106,684–12,855,277

Net buildings and structures

7,825,553

7,899,477

Machinery, equipment, vehicles anddelivery equipment

5,170,058

5,136,911–4,448,501–4,386,927

721,557

749,983

Land

29,686,945

29,689,403

Other

1,393,401

1,332,572–1,150,005–1,076,712

243,395

255,859

65,956,207

64,341,377

Goodwill

298,862

345,456

Other

288,088304,779

586,951

650,235

3,187,774

2,768,524

Construction equipment

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

Buildings and structures

Accumulated depreciation
Net machinery, equipment, vehicles
and delivery equipment

Accumulated depreciation
Net other
Total Tangible Fixed Assets
Intangible fixed assets

Total Intangible Fixed Assets
Investments and other assets
Investment securities

1Deferred tax receivable

1, 079,732

1,186,595

Other2,033,406

2,081,861

Allowance for doubtful accounts–814,683–827,005

Allowance for investment loss

–84,700–80,700

Total Investments and Other Assets

5,401,528

5,129,276

Total Fixed Assets

71,944,687

70,120,890

Total Assets

108,695,997

108,509,599

Current Consolidated Fiscal YearFirst Quarter(As of January 31, 2011)

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

AmountAmountClassification(Liabilities)
Current liabilities
Notes and accounts payable, trade

13,034,476

13,076,469

Short-term bank loans

16,061,790

13,415,487

Long-term bank loans due within one year

8,824,428

9, 529,170

Current portion of bonds

22,00022,000

Lease obligations

980,526

859,558

Corporate taxes payable

341,035

1,106,405

Accrued bonuses to employees

295,763

589,042

Accounts payable, other5,377,178

5,587,413

Other

1,276,274

1,514,896

46,213,475

45,700,445

11,00022,000Long-term bank loans

12,205,790

13,762,305

Lease obligations

1,561,817

1,903,249

Accrued employees retirement benefits

1,384,589

1,341,459

Retirement allowances to directors andauditors

195,919

205,627

Long-term accrued expenses

9,580,738

8,493,598

Asset retirement obligations

151,562－

Other

52,47455,316

Total Long-term Liabilities

25,143,891

25,783,556

Total Liabilities

71,357,367

71,484,001

Capital stock

9,696,717

9,696,717

Capital surplus

10,960,869

10,960,869

Retained earnings

15,814,585

15,788,189–25,334–24,963

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

Treasury stock2

Total Shareholders’ Equity

36,446,838

36,420,813

Valuation difference on other investment
securities

373,062

147,516

Translation adjustments account–44,657–40,486

Total Valuation and Translation
Adjustments

328,405

107,030

563,385

497,753

Total Net Assets

37,338,629

37,025,597

Total Liabilities and Net Assets

108,695,997

108,509,599

Valuation and translation adjustments

Minority Interests32. Quarterly Consolidated Statements of Income(Unit: Thousands of yen)
Prior Consolidated Fiscal YearFirst Quarter

Current Consolidated Fiscal YearFirst Quarter

From November 1, 2009
to January 31, 2010

From November 1, 2010
to January 31, 2011

AmountAmountClassification
Revenues

18,699,932

18,280,145

Cost of revenues

12,563,002

12,723,821

Gross profit

6,136,930

5,556,324

Selling, general and administrative expenses

4,470,079

4,442,061

Operating income

1,666,850

1,114,262

Interest income

3,384

1,879

Dividend income

11,50914,639Insurance benefits

57,507

3,936

Rents received

12,833

12,878380

521

Amortization of negative goodwill

17,45817,458Other

37,48429,939140,558

81,252

Interest expense

174,660

174,537

Loss on sale of notes receivable

13,997

11,370Other

22,92529,920211,583

215,828

1,595,825

979,686－

2,142

Reversal of allowance for doubtful
accounts

33,233

3,596

Subsidies

13,362

－

Other

3,496

1,647

Total extraordinary income

50,092

7,387

9,310

62,428Transfer to reserve for investment losses

－

4,000

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

95,530

2,792

－

286

－

12,389161,958

Non-operating income

Cash bonus received

Total non-operating income
Non-operating expenses

Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of fixed assets

Extraordinary losses
Loss on sale and retirement of fixed
assetsTransfer to allowance for doubtful
accounts of affiliated companies
Other
Total extraordinary losses

4Income before taxes and adjustments

1,633,528

825,115

Corporate, local and business taxes

650,821

320,512Adjustment for corporate and other taxes

79,481

149,159

Total corporate and other taxes

730,303469,672

Income before minority interest－

355,443

Minority interest in income

50,122693

Net income

853,102354,749

5

3. Quarterly Consolidated Statements of Cash Flows(Unit: Thousands of yen)
Prior Consolidated Fiscal YearFirst Quarter

Current Consolidated Fiscal YearFirst Quarter

From November 1, 2009
to January 31, 2010

From November 1, 2010
to January 31, 2011

Classification
Cash flow from operating activities
Income (loss) before taxes andadjustments

1,633,528

825,115

Depreciation and amortization expense

1,795,314

2,129,066

Amortization of goodwill

50,462

46,593

Loss on sale or retirement of fixed assets

8,985

60,285

Installment purchases of assets forsmall-value rentals

－

4,334

Reclassification of cost of sales
associated with disposal of construction
equipment

92

97

Reclassification of cost of sales
associated with disposal of rental assets

70,278

179,942

Expenditures for acquisition of rental
assets–1,602,354–929,729

Increase (decrease) in allowance for
doubtful accounts

17,941–13,192–220,331–293,227

Increase (decrease) in accrued
employees retirement benefits

40,671

43,130

Increase (decrease) in retirement
allowances to directors and auditors

6,220–9,708－4,000Interest revenue and dividend income–14,894–16,518

Interest expense on installment
purchases of rental assets

45,492

43,925Interest expense

174,660

174,537

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

95,530Decrease in accounts receivable, trade–802,790–295,790(Increase) decrease in inventory

107,394–102,244

Increase (decrease) in accounts payable,
trade

316,648

31,866

Increase (decrease) in accounts payable,
other

78,019–444,808

Other

587,260–237,952

Subtotal

2,292,601

1,295,255

15,444

16,521–224,489–217,409

Increase (decrease) in accrued bonuses
to employees

Increase (decrease) in reserve forinvestment losses

Interest and dividends received
Interest expense

6

Payment of corporate and other taxes–127,418–1,087,087

Cash flow from operating activities

1,956,138

7,279

Prior Consolidated Fiscal YearFirst Quarter

Current Consolidated Fiscal YearFirst Quarter

From November 1, 2009
to January 31, 2010

From November 1, 2010
to January 31, 2011

Classification
Cash flow from investing activities
Revenue from redemption of term
deposits

500－

Funds used for the purchase of tangible
fixed assets–52,105–99,119

Funds provided from the sale of tangible
fixed assets

5,922

12,141

Funds used for the purchase of intangible
fixed assets–13,697–1,089Funds used for the purchase ofinvestment securities–2,107–1,664

Funds used for the purchase of
subsidiary stock－–41,310

Payments of loans receivable–62,100–88,000

Funds provided from collection of loans
receivable

18,94021,434Other

10,157

11,726

Cash flow from investing activities–94,490–185,881

Net increase in short-term bank loans

3,212,084

2,661,204

Funds provided by long-term bank loans

1,149,510

530,000

Funds used to repay long-term bankloans

–2,814,043–2,785,107–31,000–11,000–1,053,012

1,341,880－–481,235

–74

–371

–300,131–296,791－

68,265–137,982

16,95025,350–1,639,966

270–7,387

Increase (decrease) in cash and equivalents

1,887,269–1,825,955

Balance of cash and equivalents at
beginning of period

14,086,028

20,751,217

Cash flow from financing activities

Funds used to redeem corporate bonds
Funds used for repayment of installment
obligations
Funds used for repayment of leaseobligations
Funds used for the purchase of treasury
stock
Payment of dividends
Funds provided by payment fromminority shareholders
Other
Cash flow from financing activities
Effect of exchange rate changes on cash
and cash equivalents7Increase in cash and cash equivalents due
to newly consolidated subsidiaries

185,114－

Balance of cash and equivalents at end of
the period

16,158,412

18,925,262

8

4. Notes Relating to the Going Concern Assumption

The Company had no material items to report.
5. Business Segment Information(Segment Information, etc.)[Segment Information by Type of Business]
Prior consolidated fiscal year first quarter (From November 1, 2009 to January 31, 2010)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Revenues from customers

17,583,405

965,225

151,302

18,699,932－

18,699,932(2) Sales or transfers between
segments

－

－

－

－

－

－

Total

17,583,405

965,225

151,302

18,699,932－

18,699,932

Operating income (loss)

1,698,294–12,334–9,452

1,676,507–9,656

1,666,850

Eliminations
or entire
Consolidated
company

Total

Revenues(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the type of labor and products, thenature of the business and the business markets.
2. Principal products, by businessBusiness

Principal products

Construction equipment
rentals

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

Steel sales

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

Information products andother businesses

Computers and peripheral devices, Specified Worker Dispatching
Undertakings

3. Changes in accounting methods
Prior consolidated fiscal year first quarter
Change in reporting standard for completed contract revenues and cost of completed contracts
As described in “Revision of Important Matters Used as the Basis for Preparation of the Quarterly
Consolidated Financial Statements” 2., beginning from the first quarter of the current consolidated fiscal
year the Company has changed its accounting standards for revenues and costs related to construction
works.
The effect of this change on the Company’s businesses related to the Steel Sales Division is notmaterial, compared to what the results otherwise would have been had the accounting standards
traditionally used by the Company been applied.

[Segment information by location]
Prior consolidated fiscal year first quarter (From November 1, 2009 to January 31, 2010)
The Company has omitted a description of segment information by location because revenues in Japanaccount for more than 90% of total revenue in all segments.

[Foreign sales]9Prior consolidated fiscal year first quarter (From November 1, 2009 to January 31, 2010)
The Company has omitted a description of foreign sales because foreign sales are less than 10% ofconsolidated revenues.

【Segment Information】
1. Summary of reporting segments
The Company’s reporting segments are those units of the Company for which
discrete financial information is available and for which the Board of Directors
regularly conducts a review for the purpose of making decisions about resources to beallocated to the segments and assessing the segments’ performance.
The Company is developing its businesses according to products and services, andhas assumed “business related to the Construction Equipment Rental Division” as its
reporting segment.
The Company’s “business related to the Construction Equipment Rental Division”
rents and sells construction equipment and temporary materials for construction use.

2. Information concerning revenues and profit or loss of each reporting segment
Current consolidated fiscal year first quarter (From November 1, 2010 to January 31, 2011)(Unit: Thousands of yen)
Reporting segment
Business related to theConstruction Equipment
Rental Division

Other businesses(see Note)

Total

Revenues(1) Revenues from customers

16,645,548

1,634,597

18,280,145(2) Sales or transfers between
segments

－

－

－

Total

16,645,548

1,634,597

18,280,145

Operating income (loss)

1,023,704

46,2891,069,903(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.

103. Difference between total reporting segment profit or loss and the amountreported on the Consolidated Quarterly Statements of Income, and the main
reasons for the difference (Matters Pertaining to Reconciliation of Difference)(Unit: Thousands of yen)
Earnings

AmountReporting segment total

1,023,704

Earnings from other classifications

46,289Intersegment eliminations－

Other adjustments

44,269Operating income reported on the Consolidated
Quarterly Statements of Income

1,114,262

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

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

11