Nine-month Consolidated Financial Report for the
Fiscal Year ending October 31, 2011 [Japan GAAP]
September 2, 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
September 13, 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 Nine-Month Period of the Fiscal Year Ending October 31, 2011
(November 1, 2010 – July 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: Third quarter
Fiscal Year ended October 31,
2010: Third quarter％

Ordinary
IncomeMillions of yen％

Millions of yen

Net Income％

Millions of yen

51,779 －2.7

1,985 －31.2

1,525 －37.9

53,191

2,884

2,457

1,105

Shareholders’Equity Ratio

Net Assets
per Share

12.6

69 －93.7

Diluted Net
Income per
Share

Net Income
per Share
Yen

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

％

Yen

2.11

―

33.68

―

Total Assets

Net Assets(2) Consolidated Financial Position

Millions of yen

Millions of yen

Fiscal Year ending October 31,
112,32136,71632.2
2011: Third quarter
Fiscal Year ended October 31,
108,509
37,025
33.7
2010(Reference) Shareholders’ equity
Fiscal Year Ending October 31, 2011 Third Quarter:¥36,163 million
Fiscal Year Ended October 31, 2010:¥36,527 million

1

％

Yen

1,101.40
1,112.46

2. Dividends
End of 1Q
Yen

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

Yen

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

Yen

Full year
Yen

10.00

20.00

10.00

20.00

No

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

Operating
IncomeRevenues
Millions of yen％

Millions of yen

Ordinary
Income％Millions of yen

Net Income
per Share

Net Income％

Millions of yen％

Yen

1,640 －21.3
720 －30.9
69,590 －0.8
2,310 －12.8
21.93
Full year(Note) Has the Company revised its projected consolidated operating results during thequarter? Yes

2

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 simplified accounting methods and special accounting
methods: Yes
Note: Application of simplified accounting methods and special accounting methods inthe preparation of quarterly consolidated financial statements.
(3) Changes in accounting principles, procedures or presentation 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 presentation methods pertaining
to preparation of the quarterly consolidated financial statements recorded in the
Changes in Important Matters Used as the Basis for Preparation of theConsolidated Financial Statements.
(4) Number of shares issued (common stock)(a) Number of shares outstanding at the end of the period (including treasury stock)
Fiscal year ending October 31, 2011 Third Quarter:
32,872,241 sharesFiscal year ended October 31, 2010:
32,872,241 shares(b) Number of shares of treasury stock at the end of the period
Fiscal year ending October 31, 2011 Third Quarter:
38,566 sharesFiscal year ended October 31, 2010:
36,906 shares(c) Average number of shares during the period (Consolidated year-to-date)Fiscal year ending October 31, 2011 Third Quarter:
32,834,544 sharesFiscal year ended October 31, 2010 Third Quarter:
32,837,073 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 noteNote Concerning Forward-Looking Statements
These forward-looking statements were prepared based upon information available to theCompany at the time the projections were announced as well as various assumptions concerning
the future economic and business environment. Actual operating results may differ from the
projected figures depending upon various factors in the future. Please refer to the Qualitative
Information Concerning Projected Operating Results on Page 3 of the Attachments for theconditions used as assumptions for the projected operating results and matters to note before
using the projected operating results.

3

Attachments Table of Contents
I. Qualitative Information Concerning Quarterly Consolidated Operating Results .......................... 2
1. Qualitative Information Concerning Consolidated Operating Results.................................... 2
2. Qualitative Information Concerning Consolidated Financial Position .................................... 3
3. Qualitative Information Concerning Projected Consolidated Operating Results ...................... 3
II. Other Information .......................................................................................................... 4
1. Summary of Changes to Material Subsidiaries ................................................................ 4
2. Summary of Simplified Accounting Methods and Special Accounting Methods ....................... 4
3. Summary of Changes in Accounting Principles, Procedures or Presentation Methods ............. 4
III. Quarterly Consolidated Financial Statements ................................................................... 5
1. Quarterly Consolidated Balance Sheets .......................................................................... 5
2. Quarterly Consolidated Statements of Income ................................................................. 7(Nine-Month Period Ended July 31, 2011) ...................................................................... 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 July 31, 2011)
During the Kanamoto Group’s third quarter, Japan’s economy gradually made a transition fromits darkest period to a recovery trend as the negative pressures created by the Great East Japan
Earthquake weakened. Yet even as supply chains were restored and shipments bound for China
and other markets helped drive growth, and the economy achieved a trade surplus for thesecond consecutive business period, the persistent appreciation of the yen, spurred by concerns
over fiscal administration in Europe and the United States, cast a lengthening shadow over thebusiness sentiment of firms.
However, the trend for local economies generally continued to deteriorate under the weight ofmultiple factors, including a slump in the tourism sector spurred by harmful rumors concerning
the Fukushima nuclear accident, weak personal consumption that reflected a heightened desire
to save and the trend in public works spending, which continues to fall against the backdrop of
shrinking budgets for government authorities at both the national and local levels.
< Nine-month Period Ending July 31, 2011 > Consolidated Operating Results(From November 1, 2010 to July 31, 2011)

For the Kanamoto Group, the business environment was brightened by a strong turnaround.
Following the earthquake and damage caused by heavy rains, restoration works were begun inregions where Kanamoto enjoys a high market share. Construction equipment rental demand
increased in both the Tohoku and Kanto regions in particular, mainly for equipment such as
hydraulic excavators, dump trucks and generators. A positive correction trend was also noted inrental unit prices as the result of an improved supply and demand balance.
In regions other than the stricken areas, on the other hand, expansion of construction
equipment rental demand proved difficult. Because priority was given to public works
expenditures for rebuilding devastated areas, many regions saw their budgets reduced. A
deceleration of private sector capital investment because of concerns about the future businessoutlook played a role as well. In particular, consolidated entities that provide rentals of
temporary scaffolding material or specialized construction equipment such as shield-related
equipment were unable to overcome the decline in demand caused by the change in businessenvironment produced by the earthquake.
In addition to responding quickly immediately after the earthquake occurred by transferring
construction equipment between regions to assist in the earthquake recovery effort, andcontinuing its normal rental equipment maintenance and upgrade investments, Kanamoto sought
to expand earnings opportunities through steps such as adding new rental assets as anearthquake response measure. Despite these measures, revenues were slightly lower than in thesame period of the previous year, dipping 2.7% year-on-year to ¥51,779 million. This result also
reflected the postponement of used equipment sales because of the need to retain assets inorder to respond promptly to restoration demand.
From an earnings perspective, operating income decreased 31.2% from the same period of theprevious year to ¥1,985 million and ordinary income fell 37.9% year-on-year to ¥1,525 million.
Factors that influenced earnings included the drop in income because of the postponed sale ofused construction equipment as described above, and a heavier depreciation expense burden

5because of the additional capital investment. Net income retreated sharply, contracting 93.7%
from the same period of the previous year to ¥69 million; earnings in the third quarter alone
were insufficient to fully offset the extraordinary loss reported for damage from the earthquake.
Operating results by segment are reported below (in addition, beginning from this consolidated
fiscal year, the Company has partially revised its reporting method in conjunction with a change
in reporting standards for settlement of accounts bulletins).
[ Business related to the Construction Equipment Rental Division ]In regions other than the area devastated by the earthquake, conditions for domestic
construction equipment rental demand remain severe as the volume of public works overall
continues to shrink against the backdrop of central and local government budget cutbacks.
However, the Kanamoto Group’s rental revenues in this business segment expanded during thenine-month period in most areas, with total rental revenues edging up 1.4% compared with thesame period of the previous year. In addition to earthquake-related demand, positive factors
included increased demand for generators in industries other than construction because ofworries about the availability of power in the wake of rolling blackouts, and urgent restoration
works due to damage from heavy rainfall that occurred in various locations.
Looking at rental revenues through the third quarter by region, in the Hokkaido Region orders
expanded strongly in the third quarter, which improved the decline compared with thenine-month period of the previous year to 17.3%. On the other hand, in the Tohoku Region
rental revenues rose 21.8%, boosted by the rainfall disaster recovery works in Niigata andFukushima in addition to earthquake recovery works, while in the Kanto Region, rental revenues
increased 10.3% year-on-year, despite sluggish rental demand for specialized construction
equipment, as demand related to restoration and electric power supply expanded. In the Kinki &Chubu Region, rental revenues were up 3.8%, as demand remained driven by private sector
capital investment, and in the Kyushu & Okinawa Region, rental revenues grew 8.8% from thesame period one year ago because of heavy rainfall disaster-related demand.
Revenues from equipment sales in this business sector were fundamentally unchanged fromthe same period one year ago, as domestic sales of used construction equipment compensatedfor lower foreign sales that resulted from the postponement of overseas used construction
equipment sales.
On the other hand, in China the Shanghai Jinheyuan Group demonstrated results from its
branch development efforts by improving the year-on-year decline in rental revenues to 29.5%,
as rental revenues continued to approach the level seen in the period before the special
procurement for the Shanghai Expo, which was held last year.
As a result of these factors, in the construction-related businesses of the entire Kanamoto
Group, revenues for the nine-month period of the fiscal year ending October 31, 2011 were¥47,139 million and operating income was ¥1,679 million.
[ Other Businesses ]In the steel products sales business the Company is developing in Hokkaido, revenues climbed
17.3% compared with the same period last year, despite a lull in demand in Hokkaido at the
beginning of the new fiscal year. In Kanamoto’s information and telecommunications-related

6division telecommunications-related revenues expanded 17.8% year-on-year, and in theengineer specific dispatch business and other activities revenues were up 15.9% compared withthe same period one year ago.
As a result of the above factors, for the nine-month period under review, revenues from otherbusinesses were ¥4,640 million and operating income was ¥115 million.
[ Business development issues deserving special mention and status of branch officechanges ]During its third quarter, the Company closed its Yaita Branch (Sakura City, Tochigi Prefecture),
Murakami Branch (Murakami City, Niigata Prefecture) and Nanyo Branch (Nanyo City, Yamagata
Prefecture) on July 31. These three domestic branches were located in close proximity and had
overlapping market areas.
The Company did not open any branches during the quarter.
On August 30, Kanamoto announced it will complete an absorption-type merger with SRG
Kanamoto Co., Ltd., a consolidated subsidiary, and succeed to that company’s business, on
November 1, 2011. This merger will occur after the Company’s third quarter. The Company has
been incorporated the costs related to this absorption-type merger into its projected full-year
operating results for the fiscal year ending October 31, 2011.

2. Qualitative Information Concerning Consolidated Financial Position(1) Assets, liabilities and net assets
Compared with the end of the prior consolidated fiscal year, total assets at the end of thenine-month period under review increased by ¥3,812 million to ¥112,321 million. This change
mainly reflected an increase of ¥3,594 million in rental equipment assets and an increase of ¥770
million in investment securities.
Total liabilities were ¥75,605 million, an increase of ¥4,121 million compared with the end of
the prior consolidated fiscal year. This change mainly reflected increases of ¥1,066 million inaccounts payable, other and of ¥2,813 million in long-term accrued expenses, respectively.
Factors including the increase of accounts payable, other based on installment payment contracts
utilized as a means of procurement in conjunction with the increase in rental equipment, and therecording of ¥301 million as an allowance for disaster losses, to account for projected damage
from the Great East Japan Earthquake.
Total Net Assets were ¥36,716 million, ¥309 million lower than at the end of the priorconsolidated fiscal year. This mainly reflected the fact retained earnings were reduced by
payments of a year-end dividend based on the prior consolidated fiscal year and an interim
dividend for the current consolidated fiscal year.
(2) Cash flows
Cash and cash equivalents (“cash”) at the end of the nine-month period under review
increased by ¥312 million compared with the end of the previous consolidated fiscal year to¥21,063 million.
The consolidated cash flows for the nine-month period under review are described below, alongwith the main factors affecting cash flows.

7(Cash flow from operating activities)
Cash generated as a result of operating activities decreased 24.0% from the same period of
the previous consolidated fiscal year to ¥5,723 million. This mainly reflected a decrease inquarterly income before taxes and adjustments, a higher payment of corporate and other taxes,
an increase in depreciation and amortization expense and a decrease in expenditures foracquisition of rental assets compared with the same period one year ago.
(Cash flow from investing activities)
Cash flow used in investing activities was ¥769 million, compared with cash flow provided byinvesting activities in the same period of the previous consolidated fiscal year of ¥227 million.
This mainly reflected a decrease in funds provided from sale of investment securities, and adecrease in funds provided from collection of short-term loans receivable, compared with thesame period of the previous consolidated fiscal year.
(Cash flow from financing activities)
Cash flow used as a result of financing activities was ¥4,640 million, up 98.8% compared withthe same period of the previous consolidated fiscal year. This mainly reflected a smaller increasein short-term bank loans, and increases in funds used for repayment of installment obligations
and funds used for repayment of lease obligations, compared with the same period one year
earlier.
3. Qualitative Information Concerning Projected Consolidated Operating Results
Prior to the release of its Nine-month Consolidated Financial Report, Kanamoto announced arevision of its projected full-year operating results for the Business Period ending October 31,
2011 on the same date.
The intent of the revised projection is to reflect the fact that although removal of debris in the
Tohoku Region is proceeding rapidly, and restoration and recovery works in areas damaged by
the massive earthquake, including the preparation of new budgets to address the cleanup, arebeing accelerated and measures to address stricken areas in the Kanto Region are expected tobe approved, and the demand for restoration works following heavy rains is envisaged tocontinue, expenditures for public works in other regions are being reduced. The effects of thesecutbacks are expected to surface gradually after September, and the full extent to which thesefactors will affect Kanamoto’s operating results is uncertain at this time.
Consequently the recently released consolidated operating results projections were preparedusing forecasts based on information available to the Company at the present time, 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 ofvarious future factors, including but not limited to economic conditions surrounding the Company,
market trends, and competitive conditions.

8Other Information
1. Summary of Changes to Material Subsidiaries
The Company had no material items to report.
2. Summary of Simplified Accounting Methods and Special Accounting Methods
1. Appraisal methods for inventory assets
The appraisal value of inventories at the end of the nine-month period under review has
been calculated using a rational method based on physical inventories at the end of theinterim consolidated period, rather than physical inventories at the end of the quarter underreview.
When writing down inventory carrying amounts, the Company writes down inventory bookvalues to estimated net sales values only for inventory for which there has been a clear
decline in profitability.
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 pertaining to
the consolidated fiscal year on a pro-rata basis for each period.
3. Summary of Changes in Accounting Principles, Procedures or Presentation Methods
Changes in accounting standards used for normal accounting treatment
1. Adoption of the Accounting Standard for Asset Retirement Obligations
Beginning from the first quarter of the current consolidated fiscal year, the Company has
adopted the Accounting Standard for Asset Retirement Obligations (Accounting Standards
Board of Japan Statement No. 18 dated March 31, 2008 and the Guidance on AccountingStandard for Asset Retirement Obligations (Accounting Standards Board of Japan Guidance
No. 21 dated March 31, 2008).
As a result, operating income and ordinary income for the nine-month period under review
were ¥5,473,000 lower, respectively, and income before taxes was ¥101,003,000 lower, thanthey 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 nine-month consolidated earnings is not material.
Change in Presentation Method
Nine-month period (From November 1, 2010 to July 31, 2011)9

(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 (ASBJ Statement No. 22 dated December 26, 2008), theCompany has disclosed the line item “income (loss) before minority interests” for thenine-month period under review.
2. In the nine-month period of the previous consolidated fiscal year, “gain on sale orretirement of fixed assets” was reported in “Other” under extraordinary income. For thenine-month period under review, the Company has classified this item separately because theamount exceeded 20/100 of total extraordinary income. The amount for “gain on sale orretirement of fixed assets” included in “Other” under extraordinary income for the nine-month
period of the previous consolidated fiscal year is ¥6,301,000.
(Quarterly Consolidated Statements of Cash Flows)
Because the “funds used for repayment of lease obligations” that were reported in “Other”
under cash flow from financing activities in the nine-month period of the previous
consolidated fiscal year have increased in importance, the Company has decided to report
this item separately for the nine-month period under review. The amount for “funds used for
repayment of lease obligations” that was reported in “Other” under cash flow from financing
activities

in

the

nine-month

periodofthe-¥466,228,000.

10previous

consolidated

fiscalyear

wasIII. Quarterly Consolidated Financial Statements
1. Quarterly Consolidated Balance Sheets(Unit: Thousands of yen)
Current Consolidated Fiscal Year
Third Quarter(As of July 31, 2011)

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

AmountAmountClassification(Assets)
Current assets
Cash and deposits

20,598,577

20,486,217

Notes and accounts receivable, trade

14,916,764

14,987,135

Negotiable securities

550,000

350,000

Work in progress

25,59137,046Merchandise and finished goods

679,224

606,265

Raw materials and supplies

202,096

161,250

1,164,777

1,187,474

Deferred tax assets

185,124

360,857

Other

644,622585,387-393,712-372,925

38,573,067

38,388,709

69,377,226

62,487,304

Accumulated depreciation-40,036,096-36,740,651

Net rental Equipment assets

29,341,129

25,746,653

20,859,980

20,754,755

Accumulated depreciation-13,347,972-12,855,277

Net buildings and structures

7,512,008

7,899,477

Machinery, equipment, vehicles anddelivery equipment

5,129,416

5,136,911-4,456,752-4,386,927

672,664

749,983

Land

29,686,028

29,689,403

Other

1,392,503

1,332,572-1,168,842-1,076,712

223,660

255,859

67,435,491

64,341,377

Goodwill

205,675

345,456

Other

256,554304,779

462,229

650,235

3,539,174

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

1,194,634

1,186,595

Other

2,026,014

2,081,861

Allowance for doubtful accounts-823,964-827,005

Allowance for investment loss

-84,700-80,700

Total Investments and Other Assets

5,851,159

5,129,276

Total Fixed Assets

73,748,881

70,120,890

Total Assets

112,321,948

108,509,599

Current Consolidated Fiscal Year
Third Quarter(As of July 31, 2011)

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

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

13,310,949

13,076,469

Short-term bank loans

8,207,782

13,415,487

Long-term bank loans due within one year

10,285,249

9, 529,170

Current portion of bonds

22,00022,000

Lease obligations

884,427

859,558

Corporate taxes payable

74,621

1,106,405

Accrued bonuses to employees

403,683

589,042

Allowance for disaster losses

301,275－

Accounts payable, other

6,653,880

5,587,413

Other

1,357,288

1,514,896

41,501,158

45,700,445－

22,000Long-term bank loans

18,992,538

13,762,305

Lease obligations

1,928,227

1,903,249

Accrued employees retirement benefits

1,472,267

1,341,459

Retirement allowances to directors andauditors

205,948

205,627

Long-term accrued expenses

11,306,717

8,493,598

Asset retirement obligations

150,645－

Other

47,98455,316

Total Long-term Liabilities

34,104,328

25,783,556

Total Liabilities

75,605,486

71,484,001

Capital stock

9,696,717

9,696,717

Capital surplus

10,960,869

10,960,869

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

2Retained earnings

15,200,696

15,788,189-25,811-24,963

35,832,472

36,420,813

Valuation difference on other investment
securities

371,668

147,516

Translation adjustments account-41,012-40,486

Total Valuation and Translation
Adjustments

330,656

107,030

553,332

497,753

Total Net Assets

36,716,461

37,025,597

Total Liabilities and Net Assets

112,321,948

108,509,599

Treasury stock
Total Shareholders’ Equity
Valuation and translation adjustments

Minority Interests32. Consolidated Quarterly Statements of Income(Nine-month period ended July 31, 2011)(Unit: Thousands of yen)
Prior Consolidated Fiscal Year
Third Quarter

Current Consolidated Fiscal Year
Third Quarter

From November 1, 2009
to July 31, 2010

From November 1, 2010
to July 31, 2011

AmountAmountClassification
Revenues

53,191,412

51,779,568

Cost of revenues

37,096,852

36,697,694

Gross profit

16,094,559

15,081,873

Selling, general and administrative expenses

13,209,732

13,096,837

Operating income

2,884,827

1,985,036

Interest income

10,802

7,853

Dividend income

41,67350,547

Insurance benefits

72,01130,848Rents received

28,56339,507

Cash bonus received

1,627

4,794

Amortization of negative goodwill

52,37452,374

Other

106,627

77,364

313,680

263,289

Interest expense

552,842

567,700

Loss on sale of notes receivable

36,091

31,483

Other

152,163

123,849

741,097

723,034

2,457,410

1,525,291－

11,547

Gain on sale of investment securities

153,765

52

Reversal of allowance for doubtful
accounts

42,9795,625

Subsidies

89,441

32,848Other

10,373

6,645

Total extraordinary income

296,560

56,719Loss on sale or retirement of fixed assets

60,855

85,125

Valuation loss on investment securities

15,199104,059

Transfer to allowance for doubtful
accounts

35,507

－

－

4,000

Non-operating income

Total non-operating income
Non-operating expenses

Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on sale or retirement of fixed assets

Extraordinary losses

Transfer to reserve for investment losses

4Loss on adjustment for changes ofaccounting standard for asset retirement
obligations－

95,530Loss from disaster－

677,957

Loss on affiliated company liquidation

81,511－Other

29,325

114

222,399

966,787

Income before taxes and adjustments

2,531,570

615,223

Corporate, local and business taxes

1,317,693

536,540

86,15522,087

Total corporate and other taxes

1,403,849

558,628

Income before minority interest－

56,595

Minority interest in income (loss)

21,902-12,608

1,105,819

69,203

Total extraordinary losses

Adjustment for corporate and other taxes

Net income

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

Current Consolidated Fiscal Year
Third Quarter

From November 1, 2009
to July 31, 2010

From November 1, 2010
to July 31, 2011

Classification
Cash flow from operating activities
Income before taxes and adjustments

2,531,570

615,223

Depreciation and amortization expense

5,687,100

6,528,131

Amortization of goodwill

151,978

139,784

Loss on sale or retirement of fixed assets

54,55473,578Installment purchases of assets forsmall-value rentals

17,062

38,057

Reclassification of cost of sales
associated with disposal of construction
equipment

646

2,780

Reclassification of cost of sales
associated with disposal of rental assets

725,626

557,526–2,554,082–1,457,576

15,199104,059(Gain) loss on sales of investment
securities–153,309–52

Increase (decrease) in allowance for
doubtful accounts–101,651

18,891

Increase (decrease) in accrued bonuses
to employees–139,934–185,322

Increase (decrease) in accrued
employees retirement benefits

23,474130,807

Increase (decrease) in retirement
allowances to directors and auditors

11,337320

Interest revenue and dividend income–52,476–58,400

Interest expense on installment
purchases of rental assets

136,094

133,431

Interest expense

552,842

567,700

1,698,339

65,248–90,412–102,790

Increase (decrease) in accounts payable,
trade–1,262,613

229,500

Loss on adjustment for changes ofaccounting standard for asset retirement
obligations－

95,530Loss from disaster－

677,957

Increase (decrease) in accounts payable,
other189,179

77,605

Other636,169–276,190

Subtotal

8,076,694

7,975,801

Expenditures for acquisition of rental
assetsValuation loss on investment securities

Decrease in accounts receivable, trade
Decrease in inventory6Interest and dividends received

52,09958,413

Interest expense–716,237–631,748

Payment of corporate and other taxes

114,021–1,679,410

7,526,578

5,723,055

Cash flow from operating activities

Prior Consolidated Fiscal Year
Third Quarter

Current Consolidated Fiscal Year
Third Quarter

From November 1, 2009
to July 31, 2010

From November 1, 2010
to July 31, 2011

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

500－

Funds used for the purchase of tangible
fixed assets–46,434–171,712

Funds provided from the sale of tangible
fixed assets

12,29915,839Funds used for the purchase of intangible
fixed assets–36,676–4,881

Funds used for the purchase ofinvestment securities–537,007–439,227

Funds provided from sale of investment
securities

775,390296

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

Payments of loans receivable–163,675–163,140

Funds provided from collection ofshort-term loans receivable

193,709

31,946

Other

91,69424,964

Cash flow from investing activities

227,552–769,941

Increase in short-term bank loans

7,957,651

6,795,496

Funds provided by long-term bank loans

2,317,733

2,180,000

Funds used to repay long-term bankloans

–8,286,450–8,205,589–42,000–22,000–3,182,845–4,104,001－–747,072

–738

–851

–631,575–627,353

Revenue from redemption of term
deposits

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

7Funds provided by payment fromminority shareholders－

68,265–466,228

22,732–2,334,455–4,640,373

385

–381

Increase (decrease) in cash and equivalents

5,420,060

312,360

Balance of cash and equivalents at
beginning of period

14,086,028

20,751,217

Increase in cash and cash equivalents due
to newly consolidated subsidiaries

185,114－

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

50,797－

Balance of cash and equivalents at end of
period19,742,000

21,063,577

Other
Cash flow from financing activities
Effect of exchange rate changes on cash
and cash equivalents

84. Notes Relating to the Going Concern Assumption

The Company had no material items to report.
5. Business Segment Information[Segment Information by Type of Business]

Third quarter of the prior consolidated fiscal year (From May 1, 2010 to July 31, 2010)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Revenues from customers

14,579,550

1,302,668

166,673

16,048,892－

16,048,892(2) Sales or transfers between
segments

－

－

－

－

－

－

14,579,550

1,302,668

166,673

16,048,892－

16,048,892–335,717

19,733

8,532–307,451–16,333–323,785

Eliminations
or entire
Consolidated
company

Total

Revenues

Total
Operating income (loss)

Nine-month period of the prior consolidated fiscal year (From November 1, 2009 to July 31, 2010)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Revenues from customers

49,233,892

3,432,204

525,315

53,191,412－

53,191,412(2) Sales or transfers between
segments

－

－

－

－

－

－

Total

49,233,892

3,432,204

525,315

53,191,412－

53,191,412

Operating income

2,896,642

17,413

12,4072,926,463–41,635

2,884,827

Eliminations
or entire
Consolidated
company

Total

Revenues(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as thetype of services and products, the nature of the business and the businessmarkets.
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

93. Changes in accounting method
Nine-month period of the prior consolidated fiscal year
Change in reporting standard for completed contract revenues and cost ofcompleted contracts
As described in “2. Changes in accounting standards used for normal
accounting treatment” under “Revision of Important Matters Used as theBasis for Preparation of the Quarterly Consolidated Financial Statements”,
beginning from the first quarter of the current consolidated fiscal year theCompany changed its accounting standards for revenues and costs related toconstruction works.
The effect of this change on the Company’s businesses related to the
Steel Sales Division is not material, compared to what the results otherwise
would have been had the accounting standards traditionally used by theCompany been applied.

[Segment information]
1. Summary of reporting segments
Nine-month period (From November 1, 2010 to July 31, 2011) and third quarter(From May 1, 2011 to July 31, 2011)
The Company’s reporting segments are those units of the Company’s for which
discrete financial information is available and for which the Board of Directors
regularly conducts a review for the purpose of making decisions about resources
to be allocated to the segments and assess the segments’ performance.
The Company is developing its businesses according to products and services,and has assumed “business related to the Construction Equipment Rental Division”
as its reporting segment.
The Company’s “business related to the Construction Equipment Rental
Division” rents and sells construction equipment and temporary materials forconstruction use.
2. Information concerning revenues and profit or loss of each reporting segment
Nine-month period(From November 1, 2010 to July 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

47,139,363

4,640,204

51,779,568(2) Sales or transfers between
segments

－

－

－

Total

47,139,363

4,640,204

51,779,568

Operating income

1,679,333

115,345

1,794,679

10

Third quarter(From May 1, 2011 to July 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

14,970,346

1,499,788

16,470,135(2) Sales or transfers between
segments－－－

14,970,346

1,499,788

16,470,135

61,480100,933

162,413

Total
Operating income(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.

3. Difference between total reporting segment profit or loss and the amount reported on
the Consolidated Quarterly Statements of Income, and the main reasons for thedifference (Matters Pertaining to Reconciliation of Difference)Nine-month period(From November 1, 2010 to July 31, 2011)(Unit: Thousands of yen)
Earnings

AmountReporting segment total

1,679,333

Earnings from other classifications

115,345

Other adjustments

190,356

Operating income reported on the Consolidated
Quarterly Statements of Income

1,985,036

Third quarter(From May 1, 2011 to July 31, 2011)(Unit: Thousands of yen)
Earnings

AmountReporting segment total

61,480Earnings from other classifications

100,933

Other adjustments

97,982

Operating income reported on theConsolidated Quarterly Statements of Income

260,395

11

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 ofan Enterprise and Related Information (Accounting Standards Board of Japan Guidance No.
20 dated March 21, 2008).

6. Note on Significant Changes to Shareholders’ Equity

The Company had no material items to report.

12