Fiscal Year ended October 31, 2010

Financial Statements Bulletin
December 8, 2010
Listed Company Name

Kanamoto Company, Ltd.

Company Code Number

9678

Listing Exchanges

Tokyo Stock Exchange, Sapporo Stock Exchange

Head Office Address

1-19, Odori Higashi 3-chome, Chuo-ku, Sapporo, Hokkaido Japan 060-0041(URL

http://www.kanamoto.co.jp)

Representative

Kanchu Kanamoto

Inquiries

Nobuhito Utatsu

President

Director & Corporate Officer, Division Manager, Accounting Division
TEL 81-11-209-1631
Please send inquiries in English to takayama@kanamoto.co.jp
Date for Regular General Meeting of the Shareholders: January 27, 2011
Date for start of dividend payments:
January 28, 2011
Date for submission of Annual Report:
January 27, 2011

1. Consolidated Operating Results for the Fiscal Year ended October 31, 2010

(Nov. 1, 2009 – Oct. 31, 2010)(Numbers less than one million yen have been rounded down)(Percentages show the change from the prior year)(1) Consolidated Operating Results
Revenues

Operating Income

Millions of yen%

Ordinary Income (Loss)

Millions of yen%

Millions of yen%

Fiscal year ended
October 31, 2010

70,173

9.9

2,648

－

2,083

－

Fiscal year ended
October 31, 2009

63,863

-8.0

137

-93.8

-222

－

Net Income (Loss)
Millions of yen%

Net Income(Loss) per
Share ofCommon StockNet Income
per Share on a
Fully Diluted
Basis

Yen

Yen

ROE
%

Ordinary
Income to
Total
AssetsOperatingmargin%%Fiscal year ended
October 31, 2010

1,041

－

31.73

－

2.9

1.9

3.8

Fiscal year ended
October 31, 2009

-1,158－-35.28

－

-3.1

-0.2

0.2

Notes 1. Investment profit or loss accounted for by the equity method－
Fiscal year ended October 31, 2010－
Fiscal year ended October 31, 2009

(2) Consolidated Financial Position
Total Assets

Fiscal year ended
October 31, 2010
Fiscal year ended
October 31, 2009

Shareholders’EquityShareholders’ Equity
per Share

Shareholders’Equity Ratio%

YenMillions of yen

Millions of yen

108,509

37,02533.7

1,112.46

96,43536,54137.5

1,102.51

Notes 1. Owners’ equity and valuation and translation adjustments (millions of yen):
Fiscal year ended October 31, 2010
¥36,527
Fiscal year ended October 31, 2009¥36,203

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 1

(3) Consolidated Cash Flows

Millions of yen
Fiscal year ended
October 31, 2010
Fiscal year ended
October 31, 2009

Balance of Cash andEquivalents at End of
PeriodCash Flow from
Financing Activities

Cash Flow from
Investing Activities

Cash Flow fromOperating Activities

Millions of yen

Millions of yen

Millions of yen

9,088

101

-2,737

20,751

2,076-3,192-2,43914,086

2. Dividends
Dividends per share
End ofFirst
quarter

End ofSecondquarter

End ofThird
quarterYearend

Yen

Yen

Yen

Yen

Yen

Dividends in
Total(full year)

Dividend
payout ratio(consolidated)

Dividends on
net assets(consolidated)

Millions of yen%%

Fullyear

Fiscal year ended
October 31, 2009

－

10.00

－

10.00

20.00

656

－

1.8

Fiscal year ended
October 31, 2010

－

10.00

－

10.00

20.00

656

63.0

1.8

－

10.00

－

10.00

20.00

Fiscal year ending
October 31, 2011

312.5

(projected)

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

Millions of yen

Net Income per

Operating

Revenues

Ordinary Income

Income% Millions of yen

Net Income

Share of Common
Stock% Millions of yen% Millions of yen%

Yen

Interim period

35,080

-5.6

1,940

-39.3

1,580

-46.0

750

-50.5

22.84

Full year

67,160

-4.3

1,440

-45.6

700

-66.4

210

-79.8

6.40

4. Other(1) Changes to material subsidiaries during the period (transfer of specified subsidiaries in conjunction withrevision to scope of consolidation)? No(2) Changes to accounting principles, procedures and reporting method pertaining to preparation of theconsolidated financial statements (matters described in the Changes in Important Matters Used as theBasis for Preparation of the Consolidated Financial Statements)(a) Changes accompanying revisions to accounting standards etc.? Yes(b) Changes other than those in (a)? No(Note) For details, please refer to “Changes in Important Matters Used as the Basis for Preparation of theConsolidated Financial Statements” on p. 41.
.
(3) Number of shares issued (common stock)(a) Number of shares issued and outstanding at end of period (including treasury stock)
Fiscal year ended October 31, 2010 32,872,241 sharesFiscal year ended October 31, 2009 32,872,241 shares(b) Number of shares of treasury stock at end of period
Fiscal year ended October 31, 2010
36,906 sharesFiscal year ended October 31, 2009
34,385 shares(Note) For the number of shares used as the basis for calculation of earnings per share (consolidated),
please refer to “Per Share Information” on p. 57.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 2

(Reference) Summary of Company Operating Results

1. Operating Results for the Fiscal year Ended October 31, 2010
(November 1, 2009–October 31, 2010)(Numbers less than one million yen have been rounded down)(1) Operating Results
Revenues

Operating Income

Millions of yen%

Millions of yen

Ordinary Income%

Millions of yen%

Fiscal year ended
October 31, 2010

58,083

6.7

2,538

508.4

2,370

－

Fiscal year ended
October 31, 2009

54,447

-10.0

417

-83.1

172

-92.7

Net Income (Loss)
Millions of yen%

Net Income per Share ofCommon Stock Fully Diluted
Yen

Net Income (Loss) per Share ofCommon StockYen

Fiscal year ended
October 31, 2010

1,032

－

31.45

－

Fiscal year ended
October 31, 2009

-1,060－-32.28－(2) Financial Position
Total Assets

Shareholders’Shareholders’Shareholders’ Equity

EquityEquity Ratio

per Share

Millions of yen

Millions of yen

Fiscal year ended
October 31, 2010%

Yen

97,72937,08938.0

1,129.57

Fiscal year ended
October 31, 2009

88,53936,79441.6

1,120.50

Notes 1. Owners’ equity and valuation and translation adjustments (millions of yen):
Fiscal year ended October 31, 2010
¥37,089
Fiscal year ended October 31, 2009
¥36,794

2. Projected Operating Results for the Fiscal Year Ending October 31, 2011
(November 1, 2010 - October 31, 2011)(Percentages show the change from prior year)
Operating

Revenues
Millions of yen

Ordinary Income

Income% Millions of yen

Net Income per

Net Income

Share of common
stock% Millions of yen% Millions of yen%

Yen

Interim period

29,130

-3.3

1,500

-40.8

1,320

-46.7

650

-45.0

19.79

Full year

55,840

-3.9

1,040

-59.0

670

-71.7

270

-73.9

8.22

Note: Explanation concerning appropriate use of the projected operating results and other items to note
The projected operating results were prepared based upon information available to the Company at the time
the projections were announced as well as various assumptions concerning the future economic andbusiness environment. Actual operating results may differ from the projected figures depending uponvarious factors in the future.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 3

1. Operating results(1) Analysis of operating resultsa) Summary of consolidated fiscal year operating results
During the consolidated accounting fiscal year review, Japan’s economy exhibited an overall recovery trend
centered on export-oriented manufacturers that was driven by the comparatively early recovery in China andother newly developing countries since the beginning of the fiscal year. Growth was also supported by theeffects of Japan’s emergency economic measures. Nevertheless, the rapid appreciation of the yen during thesecond half because of global factors, including the moribund European and US economies and a resurgenceof alarm over fiscal administration in Europe, weakened exports and again frustrated private sector capital
investment, which had shown signs of improvement. For Japan’s economy, which was still groping for an
economic recovery, this became a major obstacle and cast a long shadow over the recovery trend. With the
exception of the domestic emergency economic measures initiated by the prior administration under the
Liberal Democratic Party, and demand stimulus measures such as the eco-point system and the eco-friendly
automobile tax reduction that were intended to encourage personal consumption, overall the year began andended with policies unrealized, and a sense that the economy had begun to grow failed to materialize.
In the construction industry that is the leading customer of the Kanamoto Group, public works in regional
areas funded by the emergency economic measures mentioned above produced some effect through the firsthalf of the fiscal year. During the second half, however, the influence of cutbacks in public works graduallycame to the fore and the extremely severe demand environment continued. This situation was compounded byprivate sector capital investment, which enjoyed a brief recovery but then faltered because of the strong yen.
The sole bright spot was the declining trend in the number of bankruptcies among small and medium-sized
construction-related firms as the result of financial measures for small and medium-sized enterprises.
In the Kanamoto Group’s leading business of construction equipment rentals as well, this contracting demand
resulted in fierce competition among firms throughout the fiscal year, and rental unit prices continued trending
downward. The Kanamoto Group, which envisaged an unprecedented harsh operating environment, reviewed
its asset operations with its primary focus on holding the appropriate rental equipment and achieving efficientutilization, and created an organization that continues working to improve its physical portfolio in line with thebusiness environment. During the consolidated accounting fiscal year review, numerous public works were
implemented through emergency economic measures in Hokkaido and the Tohoku Region, two of theKanamoto Group’s key areas, and operating results expanded briskly during the first two quarters. Because
demand in each area from the second half of the fiscal year was comparatively stronger than initial assumed,and Kanamoto’s market share rose in some areas as the result of enhanced sales measures being pursued
throughout the Group, the Company was able to keep to a minimum the negative trend in operating results inthe second half of the fiscal year that has been evident over the past several years.
From a profit perspective as well, earning improved because of growth in rental revenues and steadymerchandise inventory sales, which exceeded the Company’s initial plan. Both overseas demand and unit
prices for used construction equipment recovered from the waning days of the previous consolidated fiscal
year, and foreign sales of used construction equipment progressed steadily. Domestic sales of used equipment
also rose, despite some regional variations, as the Company strove to uncover new demand.
As a result of these factors, revenues for the consolidated fiscal year ended October 31, 2010 rose 9.9% fromthe previous consolidated fiscal year level to ¥70,173 million, operating income soared 1,832.8%
year-on-year to ¥2,648 million and ordinary income was ¥2,083 million, compared with an ordinary loss of¥222 million in the previous consolidated fiscal year. Net income was ¥1,041 million, compared with a net lossof ¥1,158 million in the previous consolidated fiscal year. A summary of operating results for each of theCompany’s businesses is described below.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 4

[Operating Results for the Fiscal Year ended October 31, 2009](Million yen; % change from prior year)
Revenues
Year underConsolidated

reviewPrior year
Year under

Non-consolidated

reviewPrior year

Operating

Ordinary

Net income

incomeincome (loss)(loss)

70,1739.9

2,648 1,832.8

2,083

－

1,041

－

63,863-8.0%

137 -93.8%

-222

－

-1,158－58,083

6.7

508.6

2,370

－

1,032

－

417 -83.1%

172-92.7%-1,060－54,447 -10.0%

2,538b) Summary of consolidated operating results by business segment[Business related to the Construction Equipment Rental Division]
In the Hokkaido Region, the Company further expanded its market share as a result of the government’s
emergency economic measures and Kanamoto’s broad area support organization. Total revenues increased
14.3%, including a 17.4% year-over-year increase in rental revenue and 3.4% growth in equipment sales
compared with the previous consolidated fiscal year. In the Tohoku Region, the demand environment generally
was severe despite some effect from emergency economic measures, but the receipt of orders for works toextend the Tohoku Shinkansen helped boost rental revenue by 3.6% and increase equipment sales 10.0%
compared with the previous consolidated fiscal year, and total revenue for the region increased 4.5%
year-over-year.
In the Kanto Region, on the other hand, total revenue slipped 3.2% from the previous consolidated fiscal year,
as rental revenue fell 7.3% and equipment sales expanded 19.5% year-over-year. Following completion of theHaneda Airport Expansion Project, private sector construction works in the Tokyo metropolitan area, which had
exhibited signs of recovery, were affected as new construction starts were put on hold because of the uncertain
economic outlook and even tougher price competition with a packed field of competitors. In the Kinki & Chubu
Region demand in both the public and private sectors remained weak for the second straight year, while in the
Kyushu & Okinawa Region, restoration works were undertaken in some areas that had been struck by heavy
rains but the demand effect remained limited. Consequently rental revenue in these regions edged down 3.3%
and 5.6%, and equipment sales increased 8.2% and 20.5%, respectively. As a result, total revenue slipped
1.4% in the Kinki & Chubu Region, and rose 2.2% in the Kyushu & Okinawa Region, compared with theprevious consolidated fiscal year.
Overseas sales of used construction equipment increased significantly, jumping 65.7% year-over year as
conditions in the overseas used construction equipment market remained hot from the beginning of theconsolidated accounting fiscal year review.
Turning to the overseas firms that were converted to consolidated companies during the consolidated
accounting fiscal year review, the Shanghai Jinheyuan Group (Shanghai Jinheyuan Equipment Rental Co., Ltd.
and Shanghai Jinheyuan Engineering Construction Co., Ltd.) achieved revenue and earnings that were lower
than its initial plan as the result of works in conjunction with the opening of the Shanghai Expo being
completed earlier than assumed, and a delay in the start of asset operations in other regions. On the other
hand, SJ Rental, Inc. (Guam) saw its net sales remain nearly unchanged from the previous year because
full-scale work on infrastructure related to the transfer of US military bases on the island has still not begun.
As a result of these activities, consolidated rental revenue for this operating division increased 7.0% from theprevious consolidated fiscal year to ¥47,321 million, equipment sales rose 25.0% year-over-year to ¥16,941
million and consolidated revenues were up 11.2% from the prior consolidated fiscal year level to ¥64,263

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 5

million. Earning in particular improved substantially, with operating income rocketing 1,748.5%
year-over-year to ¥2,653 million. The percentage of revenues accounted for by Hokkaido and by Honshu andother regions was 35.6% and 61.7%, respectively; overseas revenues accounted for the remaining 2.7%.
[Business related to the Steel Sales Division]
In steel products sales, which Kanamoto is developing in the Hokkaido Region, demand for the main steel
materials handled by the Steel Sales Division tumbled despite special procurement spurred by thegovernment’s emergency economic measures and identification of demand for items such as waterproof
roofing materials and exterior walls because of private sector new construction and maintenance. Revenues
were off 7.4% from the previous consolidated fiscal year to ¥5,219 million, and operating income rose 28.1%
year-over-year to ¥26 million.
[Business related to the Information Products Division and Other Businesses]
The Information Products Division saw both new equipment rentals and sales of used devices shrink for thesecond year in a row, as the number of agreements to extend rental contract maturities increased because ofcustomers’ cost reduction efforts and lower demand for replacement with the latest devices. Kanamoto
Engineering Co., Ltd., which manages a specified worker dispatching business to dispatch engineers andtechnical employees, benefited from a market recovery trend and grew steadily.
For this operating division as a whole, revenues increased 52.5% from the previous consolidated fiscal year to¥690 million and operating income fell 15.0% year-over-year to ¥19 million.
[Change in number of branches]
As a result of implementing a consolidation and reorganization of business bases following the absorption-typemerger with Narasaki Lease Co., Ltd. and Tohoku Narasaki Rental Co., Ltd. and the liquidation of Tokyo
Narasaki Rental Co., Ltd. and Akita Narasaki Rental Co., Ltd. on June 1, the Company established eight new
branches and closed 22 offices.

(2) Analysis concerning financial positiona) Financial position
Total assets at the end of the consolidated accounting fiscal year review increased by ¥12,074 million
compared with the end of the previous consolidated fiscal year to ¥108,509 million. The main factors were an
increase of ¥4,938 million from four subsidiaries newly included within the scope of consolidation, and anincrease of ¥7,657 million in cash and deposits and an increase of ¥2,966 million in rental equipment.
Total liabilities were ¥71,484 million, an increase of ¥11,590 million compared with the end of the previous
consolidated fiscal year. This was mainly for the same reason as the increase in total assets, namely an
increase of ¥4,664 million resulting from the increase in the number of consolidated subsidiaries, and anincrease of ¥11,289 million in short-term bank loans and an increase of ¥2,032 million in long-term accrued
expenses. The balance of long-term bank loans fell by ¥7,775 million.
Total Net Assets were ¥37,025 million, ¥483 million higher than at the end of the previous consolidated fiscal
year.

This mainly reflected net income of ¥1,041 million, and a decrease in earned surplus as the result ofdividend payments.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 6b) Cash flows(Millions of yen)
FY Ended October 2009
(Previous consolidated
accounting fiscal year)

FY Ended October 2009
(Consolidated fiscal

Change fromaccounting year underprior year

review)

Cash flow from operating activities

2,076

9,088

7,012

Cash flow from investing activities-3,192

101

3,293

Cash flow from financing activities-2,439-2,737-298

Decrease in cash and equivalents-3,554

6,429

9,984

17,566

14,086-3,48014,086

20,751

6,665

Balance of cash and equivalents at
beginning of period
Balance of cash and equivalents at
end of the period

The balance of cash and cash equivalents (“cash”) on a consolidated basis at the end of the consolidated
accounting fiscal year review increased ¥6,665 million from the previous consolidated fiscal year to ¥20,751
million. Cash flows for the consolidated accounting fiscal year review are discussed below.
(Cash flow from operating activities)
Cash generated as a result of operating activities increased 337.7% from the previous consolidated fiscal yearto ¥9,088 million.
This mainly reflected the return to positive net income before taxes and adjustments, compared with a loss inthe previous consolidated fiscal year, an increase in depreciation expense accompanying an increase in rental
assets as the result of capital investment and a decrease in expenditures for acquisition of rental assets.
(Cash flow from investing activities)
Cash flow provided by investing activities was ¥101 million, compared with cash used in investing activities in
the previous consolidated fiscal year of ¥3,192 million.
This mainly reflected an increase in funds provided from sale of investment securities and decrease in funds
used for the purchase of tangible fixed assets.
(Cash flow from financing activities)
Cash flow provided as a result of financing activities was ¥2,737 million, compared with cash flow used infinancing activities in the previous consolidated fiscal year of ¥2,439 million.
This mainly reflected an increase in short-term borrowing and a decrease in funds provided by long-term bankloans, and increases in funds used for repayment of installment obligations and funds used for repayment oflease obligations.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 7

The cash flow indicator trends for the Kanamoto Group are provided below.

Shareholders’ equity ratio (%)
Shareholders’ equity ratio on amarket capitalization basis (%)

FY Ended

FY Ended

FY Ended

FY Ended

October 2007

October 2008

October 2009

October 2010

46.9

41.4

37.5

33.7

41.3

11.2

13.2

12.6

6.4

10.2

20.2

5.7

11.9

7.1

3.3

10.4

Years to repay debt
Interest coverage ratio (times)(Notes) Shareholders’ equity ratio:

Shareholders’ equity / Total assets

Shareholders’ equity ratio on amarket capitalization basis:

Shareholders’ equity on a market capital basis / Total assets

Years to repay debt:

Interest-bearing liabilities / Cash flow from operating activities

Interest coverage ratio:

Cash flow from operating activities / Interest payments*All indicators are calculated using financial values on a consolidated basis.
*Total market capitalization is calculated by multiplying the closing share price at the end of the term by the
number of shares outstanding (after deducting treasury stock) at the end of the term.
*Cash flow from operating activities shown on the Consolidated Statements of Cash Flows is used as operating
cash flow. Interest-bearing liabilities include all liabilities on which the Company pays interest that are
accounted for on the Consolidated Balance Sheets. The amounts shown as interest expense on the Consolidated
Statements of Cash Flows are used as interest payments.

(3) Outlook for the next fiscal year (Business Period ending October 2011)
The US economy remains burdened with a weak recovery, while governments in Europe are still unable todrive out concerns over fiscal uncertainties and tax increases. In addition, conditions that make it impossible
to predict the future trend of the global economy have coalesced, including the tight-money policies being
formulated in China and other newly-developing countries that until now have acted as a global economic
engine. On the other hand, given the backdrop of political disarray, the fact that Japan’s economy will needmore time before the economic growth measures and stimulus policies kick in, and the fact that the stronger
yen is likely to remain unchanged even as the effects of economic measures undertaken to date fade,conditions can be expected to change in a way that makes it difficult to confirm, as has been possible until now,a clear recovery trend. Consequently the next year is expected to be one in which the management
environment surrounding firms remains extremely opaque.
Looking at construction demand during the Kanamoto Group’s next business period, overall neither public nor
private sector demand can be expected to demonstrate strength. Although the budget request for the new
fiscal year will be ¥96.7 trillion, a record amount, there is a strong probability public works allocations will be
reduced further. Moreover, when the outlook for private sector capital investment from the start of the year is
considered, firms have not relaxed their careful stance toward new investment because of the economic
uncertainty. In addition, depending on how financial assistance for small and medium-sized enterprises isrevised, there is concern as well that the number of bankruptcies will rise because of a deterioration of
corporate profits as a result of the current demand trend continuing. In domestic construction equipment
rentals, the primary business of the Kanamoto Group, conditions will place greater pressure on management
and make it more difficult to ensure earnings, despite the growing reliance on rentals in construction-related
businesses, as the intensification of competition among firms is inevitable because of the continuing
contraction in construction demand.
In the used construction equipment market, both foreign demand and market prices are comparatively steady,but delay of the planned sales of used equipment will have to be studied if the yen appreciates further from its
current condition. Although Kanamoto responds to the sale of used equipment as flexibly as possible, taking
market and exchange rate conditions into consideration, any postponement of sales can be expected to affectthe earnings plan of the entire Kanamoto Group.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 8

In overseas operations, on the other hand, the Shanghai Jinheyuan Group has been steadily expanding bothits sales area and business areas. Kanamoto will carefully watch to ascertain the effect the construction
investment trend following the end of the Beijing Olympics and Shanghai Expo, as well as financial tightening
measures, might have on the operations of these two companies. In addition, in the Territory of Guam, UnitedStates, SJ Rental, Inc. is supplying equipment for infrastructure works that have partially begun on Guam, andin light of the uncertainty that has arisen concerning the timing of the relocation of US military forces becauseof domestic and overseas circumstances, Kanamoto is monitoring the trend sufficiently.
Moreover, KANAMOTO (HK) CO., LTD., an unconsolidated subsidiary, is participating indirectly in large-scale
projects such as subway works, and orders are envisaged to increase further in the same region during thenext business period. This subsidiary will continue focusing on the growth of its business and expansion of thecontents of its operations, while conforming to the intent of its long-term management plan and giving
sufficient consideration to the respective country risk and business risks.
Finally, Kanamoto will further pursue efforts from every perspective to secure earnings. This will include
continuing to focus on internal reform measures implemented during the current period, including cost
controls and efficient operation of assets and equipment and a review of other expenses, as well as
strengthening the regional sales system that is demonstrating significant results and creating demand for new
products other than construction-related products.
The Company's earnings projection for the fiscal year ending October 2011 is shown in the table below.
Fiscal year ending October 2011 Projected Operating Results (November 1, 2010-October 31, 2011)(Millions of yen except net income per share, which is in yen)

Revenues
Consolidated
full-year projection
Non-consolidated
full-year projection

Operating

Ordinary

incomeincomeNet income

Net income
per share ofcommonstock

67,160

1,440

700

210

6.40

55,840

1,040

670

270

8.22

In light of the operating environment described above, Kanamoto must anticipate a large decline in revenues
and earnings in the Business Period ending October 2011. Nevertheless, in the operating results plan for eachyear of Kanamoto’s new five-year plan, which began in the Business Period ended October 2010, the fiscal year
ended October 2010 was assumed to be the year when revenues and earnings would grow because of external
factors, including the effect of emergency economic measures, and in its initial plan projection, Kanamoto
projected its operating results for the fiscal year ending October 2011 (second year) will be somewhat lower.
At this time there are no changes to the operating results objectives in Kanamoto’s initial plan for the fiscal
years ending October 2011 through October 2014.
Although Kanamoto assumed a strict operating results forecast, the corporate reform measures that are thecore of Kanamoto’s long-term management plan, and that will enable the Company to generate stableearnings under this harsh operating environment, are in fact steadily demonstrating results. In addition,although slow to begin the development of new products from the customer’s point of view, the Company is
now steadily achieving results with products such as Kanamoto’s battery-powered LED floodlight, which theCompany began renting at the end of last year and recently registered with the Ministry of Land, Infrastructure
and Transport’s New Technology Information System (NETIS) program. Kanamoto will do its best to open new
sectors and new markets both inside and outside Japan and achieve results that surpass the operating results
forecast shown above.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 9

(4) Basic policies concerning distribution of earnings and current period dividends
As the basis of its earnings distribution policy, Kanamoto seeks to ensure a stable return of earnings to the
maximum extent possible. The Company fundamentally maintains a dividend payout ratio target of 30% or
higher, and at the present time is working to ensure it can maintain and continue its current full-year dividend
amount of ¥20 per share, consisting of an interim dividend of ¥10 and a year-end dividend of ¥10.
Furthermore, the Company will utilize its internal reserves by allocating funds for capital investment, including
the introduction of rental equipment assets that will serve as the source of future earnings, and for enhancing
shareholders’ equity. To enable the Company to flexibly implement its capital policy, Kanamoto also has
established a system for using internal reserves to make purchases of treasury stock.
For the Business Period ended October 2010, the Company plans to pay a regular dividend of ¥20 per share forthe full year, consisting of an interim dividend of ¥10 per share and a year-end dividend of ¥10 per share(subject to approval of a resolution at the regular Board of Directors meeting on December 27, 2010).

(5) Special benefits plan for shareholders
Shareholders owning at least 1,000 shares who are described or recorded in the Register of Shareholders andList of Beneficial Shareholders as of October 31 (Date of Record) of each year will receive fresh products from
Hokkaido, the birthplace of Kanamoto, with a value equivalent to 3,000 yen (selected from a specially mailed
catalog).

(6) Business and other risks
The following risks are included among the business and accounting matters described in the Accounting
Bulletin (Consolidated) that might have an important influence on investors’ decisions. Forward-looking
statements included in this document are judgments made by the Company based on information available atthe present point in time.
a) Economic conditions
In the construction-related business that is the main activity of the Kanamoto Group, earnings are influenced
significantly by the domestic construction investment trend without regard to whether such investment
reflects public or private sector demand. Consequently there is a possibility future operating results including
revenues will be negatively affected if further large reductions in public works or other changes affecting
industry demand occur in the future. In addition, overseas sales of used construction equipment are affectedby the global economy and the exchange rate trend prevailing at the time of sale.
b) Seasonal variations in operating results
Because budget decisions for public works are made in April of each year, there is a time lag of roughly six
months before construction actually is begun. Therefore the construction-related businesses that are
Kanamoto’s main business experience a trend in which the busy season during each business period extends
from about October until the following March, and construction equipment rental demand reaches its
maximum peak during this period. As a result, the revenues and earnings of the Kanamoto group tend to beconcentrated in the Company’s interim accounting period (the six-month period from November through thefollowing April).
c) Interest rate trends
The Kanamoto group allocates internal capital and procures funding from outside sources to meet its need forfunds to purchase rental equipment and other assets, make branch-related capital investments and provide
working capital for business activities. Although the Company takes steps to mitigate the affect of interest rate
fluctuations on its externally borrowed funds, including transactions to fix the interest rates paid on borrowed
funds to the extent possible, there is a possibility the operating results and financial position of the Kanamoto
Group will be affected by future large changes in short-term interest rates.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 10d) Guarantees
The Kanamoto Group has entered into guarantee agreements with financial institutions for certain obligations
owed by affiliated companies. Although the Company judges the probability of being requested to perform
such guarantees to be small, there is a possibility the operating results and financial position of the Kanamoto
Group will be adversely affected should circumstances under which the Company is requested to perform its
guarantee occur the future.
e) Projected benefit obligation
The projected employee benefit obligation and costs of the Kanamoto Group are calculated mainly based on
basic rates such as a discount rate and expected rate of return on pension assets. Because these basic rates
are determined in each annual review, they have a material effect on changes in the operating results andfinancial position of the Kanamoto Group. There is a possibility the operating results and financial position of
the Kanamoto Group might be negatively affected if the discount rate declines further or the yield on
investments deteriorates.
f) Asset impairment accounting for fixed assets
Beginning from the business period ended in October 2006, the Kanamoto Group has applied the AccountingStandard for Impairment of Fixed Assets. There is a possibility the operating results and financial position of
the Kanamoto Group might be negatively affected if the profitability of fixed assets declines because of factors
such as a marked deterioration in the Company’s business environment in the future.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 11

2. Current Conditions of the Company’s GroupThe Kanamoto Company Group (Kanamoto and its affiliated companies) has organized its principal businessactivities around “Business related to the Construction Equipment Rental Division,” which is engaged in therental and sale of construction equipment and construction-related equipment parts, “Business related to the
Steel Sales Division,” which sells materials for construction such as steel products, and “Business related to the
Information Products Division and Other Businesses,” including the rental and sale of computers, including
workstations and PC servers, and computer peripheral equipment.
The Group is comprised of the parent company, eleven consolidated subsidiaries and five non-consolidated
subsidiaries. There are no companies that apply equity method accounting to non-consolidated subsidiaries.
An explanation of the business activities and position of each company in the Kanamoto Group, and therelationships to the Group’s segments by business category, is provided below.
[Business related to the Construction Equipment Rental Division]
The Company’s Construction Equipment Rental Division, Daiichi Kikai Co., Ltd. (a consolidated subsidiary),
Kanki Corporation (a consolidated subsidiary), Toyo Industry Co., Ltd. (a consolidated subsidiary) and
newly-added Narasaki Lease Co., Ltd. (a consolidated subsidiary) and the non-consolidated subsidiaries
Tokyo Narasaki Rental Co., Ltd., Akita Narasaki Rental Co., Ltd. and Aomori Narasaki Rental Co., Ltd.
are engaged in the rental and sale of construction equipment and machines used for construction. These
companies borrow rental equipment assets from the Company as needed in order to meet customer demand.
Furthermore, Kanamoto borrows rental equipment from Kanki Corporation, Narasaki Lease Co., Ltd., Tokyo
Narasaki Rental Co., Ltd. Akita Narasaki Rental Co., Ltd. and Aomori Narasaki Rental Co., Ltd. as needed forrental to other companies.
On June 1, 2010 Kanamoto completed an absorption-type merger with Narasaki Lease Co., Ltd. (Head office:Sapporo, Hokkaido) and Aomori Narasaki Rental Co., Ltd. (Head office: Aomori, Aomori Prefecture), andliquidated the businesses of Tokyo Narasaki Rental Co., Ltd. (Head office: Tokyo) and Akita Narasaki Rental Co.,
Ltd. (Head office: Akita, Akita Prefecture) on the same date.
Assist Co., Ltd. (a consolidated subsidiary) and Comsupply Co., Ltd. (a non-consolidated subsidiary) areengaged in the rental and sale of furniture and fixtures and safety products, and SRG Kanamoto Co., Ltd. (aconsolidated subsidiary) rents and sells temporary materials for construction use. The Company borrows
rental assets from these three companies as needed to rent to other companies.
Kanatech Co., Ltd. (a consolidated subsidiary company) sells modular housing units for temporary use.
Flowtechno Co., Ltd. (a non-consolidated subsidiary), is engaged in the technical development,
manufacture and sale of construction equipment for ground improvement works. Kanamoto purchases
modular housing units for temporary use and construction equipment for ground improvement from these twocompanies as needed to rent to its own customers.
The Kyushu Kensan Group is engaged in the rental and sale of construction equipment. Kyushu Kensan Co.,
Ltd. (a consolidated subsidiary) rents and sells mainly foundation equipment and rents construction cranes,
and Center Corporation (a non-consolidated subsidiary) mainly rents and sells small machines. Kyushu
Kensan borrows rental equipment assets from Kanamoto as needed in order to meet its customer demand.
The Shanghai Jinheyuan Group (Shanghai Jinheyuan Equipment Rental Co., Ltd. and Shanghai Jinheyuan
Works (both companies, which are classified based on local government guidance because of differences in theequipment they rent, are consolidated subsidiaries; Shanghai, China) and SJ Rental, Inc. (a consolidated
subsidiary; Territory of Guam, United States), are engaged in the rental and sale of construction equipment
and tools and the import and export of construction materials.
KG Machinery Co., Ltd. (a non-consolidated subsidiary), has its head office in Tokyo and mainly rents
specialized large-scale construction equipment in foreign countries.
In addition KANAMOTO (HK) CO., LTD. (a non-consolidated subsidiary; Hong Kong, China) is engaged in therental and sale of construction equipment and tools and the import and export of construction materials.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 12

KANAMOTO (HK) CO., LTD. borrows rental equipment assets from the Company as needed in order to meetcustomer demand.
[Business related to the Steel Sales Division]
The Company’s Steel Sales Division sells steel products and other construction-related manufactured products.
The Company does not have any subsidiaries or affiliated companies related to this business.
[Business related to the Information Products Division and Other Businesses]
Kanamoto’s Information Products Division is engaged in the rental and sale of computers, including
workstations and PC servers, as well as computer peripheral equipment. Kanamoto Engineering Co., Ltd.
(a consolidated subsidiary) manages specified worker dispatching undertakings to dispatch engineers andresearch and development employees to manufacturers and other entities.
The companies and activities described above are shown in the following diagram illustrating their operating
businesses and relationships.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 13

Domestic Customers

Construction equipment rental

Kanamoto Co., Ltd.

Daiichi Kikai Co., Ltd.

Assist Co., Ltd.
Rental and sale of furniture, fixtures

Construction equipment rentals andsales

and safety products

Kanki Corporation
Construction equipment rentals andsales
Kyushu Kensan Co., Ltd.
Construction equipment rentals
centered on foundation equipment

Rental of construction related products and parts

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

Construction
Equipment Rental
Division

SRG Kanamoto Co., Ltd
Rental and sale of temporary
materials for construction use

Center Corporation
Overseas

Small equipment rentals

Shanghai Jinheyuan GroupToyo Industry Co., Ltd.

Shanghai Jinheyuan Equipment
Rental Co., Ltd.

Shield tunneling method-related
peripheral equipment rentals andSteel Sales Division

Information Products
Division

Supply of modular housing units
Supply of steel frames and construction materials

Business cooperation and technical support

Construction materials import and export
business and construction equipment rentals

Shanghai Jinheyuan Engineering
Construction Co., Ltd.
Shield tunneling method-related
rentals and sales

KANAMOTO (HK) CO., LTD.
Construction materials import andexport business and construction
equipment rentals
SJ Rental, Inc.
Construction materials import andexport business and construction
equipment rentals

Provision and exchange of market information

Provision and exchange of market information

Overseas customers andDesign, manufacture and sale of related products

overseas trading companies

Kanatech Co., Ltd
Design, manufacture and sale of modular
housing units for temporary use

Other Business(Specialized construction equipment rentals)

Ground improvement equipment
rentals and sales

Technical development, manufacture and sale ofground improvement construction equipment

Kanamoto Engineering Co., Ltd. Ltd.
Engineer dispatching(Specified Worker Dispatching
Undertakings)

Overseas customers andCustomers, trading companies,

Manufacturers, etc.

domestic trading companies

etc.

KG Machinery Co., Ltd.

Flowtechno Corporation(Notes)(1) There are no non-consolidated subsidiaries to which equity method accounting is applied.
(2) Consolidated subsidiaries are indicated by white boxes, and non-consolidated subsidiaries are shown in grey boxes. Dotted lines indicate
the companies that are grouped in the same business classification.
(3) Arrows indicate business transactions. For details please see the text on the previous page.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 14

3. Management Policies(1) Basic policies concerning the Company’s business management
The Kanamoto Group’s primary objective is to be a corporate group that can contribute to local communities
and ultimately Japan by providing customers with reasonable and highly convenient services in Kanamoto’s
core equipment rental business. When managing its business, the Group adheres to the thinking that it shouldbe aggressive yet prudent in sales and marketing, while always being conservative in the management of its
financial affairs.
Kanamoto believes managing its business means providing employees with a sense of accomplishment andsatisfaction, customers with the greatest convenience, suppliers with opportunities to expand their businessand shareholders with rising asset value and continuous dividends, and in its basic policies has affirmed these
ideals to be vital for sincerely achieving corporate growth, making a contribution to society and ensuring
timely information disclosure.

(2) Management indicators established as objectives
Because the construction equipment rental businesses managed by the Kanamoto Group require a substantial
capital investment burden, which necessitates a profit and loss outlook extending over several years, theKanamoto Group has always positioned growth in EBITDA+ (earnings before interest, taxes, depreciation andamortization) as its most important management indicator, while also taking into consideration ROI (return on
investment). EBITDA+ in particular complements future earnings, and Kanamoto recognizes that maintaining
and expanding EBITDA+ is absolutely critical to its future success.
Although the Business Period ended October 2010 was a year that ushered in a change in government from the
Liberal-Democratic Party to the Democratic Party of Japan, as well as numerous uncertainties, Kanamoto
ultimately was able to achieve substantial growth in revenues and earnings as discussed above. Because
further cutbacks in public works expenditures will be implemented, however, and private sector capital
investment is expected to remain lackluster in light of concerns about an economic slowdown, Kanamoto
unfortunately projects lower revenues and earnings for the Business Period ending October 2011. The forecast
for the Business Period ending October 2014, the final year of Kanamoto’s long-term management plan, is
unchanged from the Company’s initial plan.
The Company’s revenues and earnings objectives for the new long-term management plan Kanamoto began
implementing from November 2009 (Business Period ending October 2010) are provided below.
Business
Period ending
October 2010
(Initial plan)

Business
Period ending
October 2010
(Actual)Business
Period ending
October 2011
(Initial plan)

Consolidated
revenues¥67.1 billion¥70.17 billion¥68.1 billion

Consolidated
operating income¥1.1 billion¥2.64 billion¥1.8 billion

Business
Period ending
October 2011
(Latestrevision)

Business
Period ending
October 2012
(Plan)

Business
Period ending
October 2013
(Plan)

Business
Period ending
October 2014
(Plan)¥69.3 billion¥70.7 billion¥72.2 billion¥2.9 billion¥3.8 billion¥4.3 billion¥67.16 billion¥1.44 billion(3) Medium to long-term corporate management strategy
The Company began implementing its new long-term management plan in the Business Period ended October
2010, and at the present time there are no significant changes to the Company’s medium and long-term
management strategy. Details of Kanamoto’s management strategy are provided below. Because of its
conviction that the results of the corporate reforms implemented by each company in the Kanamoto Group
were the fundamental factor for the strong business recovery during the Business Period ended October 2010,
the Company intends to expand its alliances within Japan, increase cooperation among Group firms,
strengthen its regional business support system and advance into other newly developing countries, inaddition to China and Guam, by the Business Period ending October 2014, while continuing to lower its
break-even point.
a) Expand and enlarge Kanamoto’s domestic base of operations
The Company has positioned M&A as the future growth engine of the Kanamoto Group, and will aggressively

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 15

pursue opportunities while comprehensively verifying the results. In addition, the Company will use its Market
Development Division and Regional Special Procurement Sales Division, which are developing their activities
over a broad range, as the “glue” for the Group to expand coordinated operations.
b) Broaden sectors and enlarge new businesses
The New Products Office has steadily demonstrated results, including its battery-powered LED floodlights,
which recently became a registered technology with the Ministry of Land, Infrastructure and Transport’s New
Technology Information System (NETIS) program. With these unique LED products, which demonstrate theCompany’s prowess, Kanamoto has gradually penetrated the event rental business, where it will pursue fasterdevelopment. Kanamoto also plans to develop its equipment rental business in other sectors, including the
agricultural and forestry sectors that are unrelated to the construction business.
c) Undertake overseas deployment
In addition to fully developing operations in mainland China, Hong Kong, Guam and Singapore where it hasestablished overseas affiliates, the Company will develop overseas affiliates and seek to broaden earnings
opportunities in newly developing countries that are exhibiting remarkable growth. Kanamoto will seek todevelop this business while giving sufficient consideration to the risks, including the early recovery of its
invested capital.
Because the sales of high-quality used construction equipment implemented by Kanamoto each year enhance
the Company’s reputation, and contribute substantially to business development in other countries, Kanamoto
also will continue to offer high-quality used construction equipment for sale.
d) Increase asset management efficiency
In the future the Company will continue efforts to further enhance its operating income margin by disposing ofrental equipment assets with low operating rates and optimizing its asset portfolio by model and age, steps
that contributed significantly to operating results in the Business Period ended October 2010.

(4) Issues to be addressed by the Company
Construction equipment rentals are the core business of the Kanamoto Group. Although Kanamoto believes it
must seek businesses to develop in other sectors that can grow to become a second or third mainstay of its
operations, it recognizes that completely unrelated sectors also engender significant investment risk.
Consequently the Company will expand its business arena centered on the current construction equipment
and rental sectors where the Kanamoto Group has accumulated solid know-how, create an asset portfolio
whose operating results are not affected by the volume of domestic construction investment, achieve an
earnings structure that pursues the proper level of asset ownership, and establish a strong sales andmarketing organization.
a) Strengthen human resources training and the Kanamoto Group and allianceOver the next several years, rising competition among firms is expected to further throw distinctions into
sharp relief. As the leading firm in the construction equipment rental industry, Kanamoto strives to foster
employees who possess appropriate knowledge and skills and is working to provide employee training alignedwith the Company’s overseas development and domestic business expansion.
b) Reinforce Kanamoto’s financial strategy
Kanamoto is taking steps to enhance funds procurement flexibility, while giving consideration to its equipment
plans including purchases of rental equipment assets. At the same time, the Company is striving to improve its
financial position, by reducing interest-bearing debt as much as possible while improving capital efficiency, byincorporating measures such as the liquidation of assets.
c) Continuous cost reductions

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 16

When introducing assets, the Company utilizes a thorough benchmark system and strives to maintain asset
value by optimizing asset maintenance costs based on its rental assets operating policies.
d) Strengthen overseas branch management
The Company will enhance marketing and sales aspects, and strengthen management systems in areas suchas asset management and operations management, to match its overseas development. It also will urgently
prepare a system for the assignment of human resources and personnel training for this purpose.

(5) Compliance and internal controls
Until it has established an organization for implementing compliance – even if that organization does notalways work to continuously strengthen employee training or awaken concern regarding compliance – a firmhas failed to fulfill its social responsibility.
For the Kanamoto Group, which aspires to continued growth, a compliance organization is indispensable forthe formation of a staunch organization. Kanamoto therefore several years ago prepared ethical guidelines toserve as a compliance standard, and established a Compliance Committee headed by Kanamoto’s president
and took steps to strengthen company-wide observance of laws and ethics regulations. The Company works toensure every individual is thoroughly familiar with its guidelines, and manages its organization in accordancewith these compliance materials.
In addition, to respond appropriately and take measures to prevent a recurrence if unforeseen circumstancesthat will have a serious affect on the Company’s operations have occurred, or if there is concern suchcircumstances might occur, the Company has prepared an Emergency Response Manual (Contingency Plan).
One measure in particular for clarifying these activities further is Kanamoto’s “internal controls reporting
system,” which all of the Company’s employees have been united in supporting since the system was placed
into full-scale operation in the Business Period ended October 2009.
Other measures taken by the Company included the publication of Compliance Communications (No. 34 to No.
42), which was mailed nine times from the Compliance Committee Secretariat to each company in the
Kanamoto Group to enlighten employees concerning legal compliance, a guidance and training program
conducted by the Internal Control Promotion Office at 52 offices, compliance audits performed by the Safety
and Health Office at 53 offices and a safety training program held in 11 regional blocks, representing nearly
70% of all the Company’s management regions. Group companies located nearby also are participating insafety education programs implemented outside the Kansai Region.
Kanamoto will basically continue the awareness and training organization implemented in the Business Period
ended October 2010 during the Business Period ending October 2011 as well. The Company continues to vieweducational activities for steadily implementing “internal controls on financial reporting” as its foremost
priority, and is addressing “control of working hours” as one critical issue for complying with the amended
Labor Standards Law that took effect on April 1, 2010. To address this issue, Kanamoto began formal operationof its new work management system from November 2010 and all of the Company’s employees are working toboost efficiency and shorten the time required for activities.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 17

5

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

Notes

Prior Consolidated Accounting
Fiscal Year(As of October 31, 2009)

Current Consolidated Accounting
Fiscal Year(As of October 31, 2010)

AmountAmount(Assets)
Current assets
Cash and deposits*212,345,028

20,486,217

Notes and accounts
receivable, trade*5,7

14,388,250

14,987,135

1,800,000

350,000

Merchandise inventories andproducts

643,091

606,265

Work in progress

38,32637,046

Raw materials and supplies

140,857

161,250

Construction equipment

1,011,437

1,187,474

Income taxes receivable

355,911－

Consumption taxes
receivable

71,661－

Deferred tax assets

261,523360,857

Other

783,704

585,387-475,964-372,925

31,363,829

38,388,709

54,406,793

62,487,304-35,145,234-36,740,651

19,261,559

25,746,653

20,904,695

20,754,755-12,296,819-12,855,277

8,607,875

7,899,477

5,206,308

5,136,911

Accumulated depreciation-4,316,731-4,386,927

Net machinery,equipment, vehicles anddelivery equipment

889,577

749,983

29,448,053

29,689,403

1,344,459

1,332,572-1,033,713-1,076,712

Negotiable securities

Allowance for doubtful
accounts
Total Current Assets
Fixed assets
Tangible fixed assets
Rental equipment assets
Accumulated depreciation
Net rental Equipment
assets*2

Buildings and structures
Accumulated depreciation
Net buildings andstructures*2

Machinery, equipment,
vehicles and delivery
equipment

Land
Other
Accumulated depreciation*2

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 18

Net other

310,746

255,859

58,517,812

64,341,377

542,304

345,456

323,684

304,779

865,989

650,235

3,218,486

2,768,524

Deferred tax receivable

1,286,857

1,186,595

Other

2,399,931

2,081,861

Allowance for doubtful
accounts-929,977-827,005

Allowance for investment
loss-287,897-80,700

Total Investments and Other
Assets5,687,400

5,129,276

Total Fixed Assets

65,071,202

70,120,890

Total Assets

96,435,031

108,509,599

Total Tangible Fixed Assets
Intangible fixed assets
Goodwill*6

Other
Total Intangible Fixed Assets
Investments and other assets
Investment securities

Classification

*1

Notes

Prior Consolidated Accounting
Fiscal Year(As of October 31, 2009)

Current Consolidated Accounting
Fiscal Year(As of October 31, 2010)

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

*7

13,150,825

13,076,469

Short-term bank loans

1,258,931

13,415,487

Long-term bank loans due
within one year

10,537,364

9, 529,170

42,00022,000－859,558

Corporate taxes payable

14,722

1,106,405

Accrued bonuses to
employees

464,636

589,042

4,293,687

5,587,413

856,711

1,514,896

30,618,878

45,700,445

44,00022,00020,987,266

13,762,305－

1,903,249

1,320,173

1,341,459

Current portion of bonds
Lease obligations

Accounts payable, other
Other
Total Current Liabilities*7Long-term liabilities
Bonds
Long-term bank loans
Lease obligations
Accrued employees
retirement benefits

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 19

Retirement allowances todirectors and auditors

226,356

205,627

6,327,718

8,493,598

368,783

55,316

Total Long-term Liabilities

29,274,298

25,783,556

Total Liabilities

59,893,177

71,484,001

Capital stock

9,696,717

9,696,717

Capital surplus

10,960,869

10,960,869

Retained earnings

15,334,652

15,788,189-23,917-24,963

35,968,321

36,420,813

235,603

147,516

Translation adjustments
account－-40,486

Total Valuation andTranslation Adjustments

235,603

107,030

337,929497,753

Total Net Assets

36,541,854

37,025,597

Total Liabilities and Net
Assets96,435,031

108,509,599

Long-term accrued expenses
Other(Net Assets)
Shareholder’s equity

Treasury stock
Total Shareholders’ Equity
Valuation and translation
adjustments
Valuation difference on otherinvestment securities

Minority Interests

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 20

(2) Consolidated Statements of Income(Unit: Thousands of yen)Classification

Notes

Prior Consolidated Accounting
Fiscal Year

Current Consolidated Accounting
Fiscal Year

From November 1, 2008
to October 31, 2009

From November 1, 2009
to October 31, 2010

AmountAmountTotal revenues

63,863,989

70,173,653

Total cost of revenues fromoperations

46,914,021

49,855,304

Gross profit

16,949,968

20,318,348

16,812,650

17,669,412

137,317

2,648,935

Interest revenue

42,985

15,877

Dividend income

40,306

41,768Insurance benefits

42,80096,312

Rents received

52,43639,093

Cash bonus received

5,621

23,10969,831

69,831

142,939

158,841

396,921444,834

Interest expense

455,700

764,399

Loss on sale of notes
receivable

57,01245,411

Other

244,351

200,477

Total non-operating expenses

757,065

1,010,288

Ordinary income-222,825

2,083,481－

164,389

3,742

10,459－

153,765

Management gain on
investment partnershipenterprise

5,366

795

Gain on reversal of allowancefor doubtful accounts

32,606

57,842

Other

22,771

9,214

Total extraordinary profits

64,487396,466

Selling, general andadministrative expenses*1

Operating income
Non-operating revenues

Amortization of negative
goodwill*1

Other
Total non-operating revenues
Non-operating expenses

Extraordinary profits
Subsidies
Gain on sale of fixed assets
Gain on sale of investment
securities*2

Extraordinary losses

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 21

Loss on sale or retirement of
fixed assets*3

107,659

104,323

Impairment loss

*4

312

－

Valuation loss on investment
securities

435,945

27,925

Provision of allowance forinvestment losses

287,897

30,675

Provision of allowance for
doubtful accounts

46,71435,507

Provision of allowance for
doubtful accounts for
subsidiaries and affiliates

27,094－－81,51189,65037,605

Total extraordinary losses

995,274

317,547

Income before taxes andadjustments-1,153,612

2,162,400

Corporate, local and business
taxes

223,620

1,171,343

Adjustment for corporate andother taxes-285,228-17,068

Income taxes-deferred-61,608

1,154,275

Minority interest in income

66,493-33,838-1,158,497

1,041,964

Loss on liquidation ofsubsidiaries
Other

Net income (loss)

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 22

(3) Consolidated Statement of Changes in Net Assets

Classification

Prior Consolidated Accounting
Fiscal Year

Current Consolidated Accounting
Fiscal Year

From November 1, 2008
to October 31, 2009

From November 1, 2009
to October 31, 2010

AmountAmountShareholders’ equity
Capital stock
Balance at beginning of year

9,696,717

9,696,717－－

9,696,717

9,696,717

10,960,869

10,960,869－－

10,960,869

10,960,869

17,149,945

15,334,652-656,796-656,742-1,158,497

1,041,964

Decrease from change in scope of
consolidation－

68,315

Total changes of items during theyear-1,815,293

453,537

15,334,652

15,788,189-22,729-23,917

Purchase of treasury stock-1,188-1,045

Total changes of items during theyear-1,188-1,045-23,917-24,963

37,784,803

35,968,321-656,796-656,742-1,158,497

1,041,964－

68,315

Changes of items during the year
Total changes of items during theyear
Balance at end of year
Capital surplus
Balance at beginning of year
Changes of items during the year
Total changes of items during theyear
Balance at end of year
Retained earnings
Balance at beginning of year
Changes of items during the year
Dividends from surplus
Net income (loss)

Balance at end of year
Treasury stock
Balance at beginning of year
Changes of items during the year

Balance at end of year
Total shareholders’ equity
Balance at beginning of year
Changes of items during the year
Dividends from surplus
Net income (loss)
Decrease from change in scope of
consolidation

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 23

Purchase of treasury stock-1,188-1,045-1,816,481

452,491

35,968,321

36,420,813

162,358

235,603

Net changes of items other thanshareholders’ equity

73,245-88,086

Total changes of items during theyear

73,245-88,086

235,603

147,516－－

Net changes of items other thanowners’ equity－-40,486

Total changes of items during theyear－-40,486－-40,486

162,358

235,603

Net changes of items other thanshareholders’ equity

73,245-128,572

Total changes of items during theyear

73,245-128,572

235,603

107,030

255,143

337,929

Net changes of items other thanshareholders’ equity

82,786

159,823

Total changes of items during theyear

82,786

159,823

337,929497,753

38,202,305

36,541,854-656,796-656,742-1,158,497

1,041,964－

68,315

Total changes of items during theyear
Balance at end of year
Valuation and translation adjustments
Valuation difference on
available-for-sale securities
Balance at beginning of year
Changes of items during the year

Balance at end of year
Translation adjustments accountBalance at beginning of year
Changes of items during the year

Balance at end of year
Total valuation and translation
adjustments
Balance at beginning of year
Changes of items during the year

Balance at end of year
Minority interests
Balance at beginning of year
Changes of items during the year

Balance at end of year
Total net assets
Balance at beginning of year
Changes of items during the year
Dividends from surplus
Net income (loss)
Decrease from change in scope of
consolidation

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 24

Purchase of treasury stock-1,188-1,045

Net changes of items other thanshareholders’ equity

156,031

31,250Total changes of items during theyear-1,660,450

483,742

36,541,854

37,025,597

Balance at end of year

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 25

(4) Consolidated Statements of Cash Flows(Unit: Thousands of yen)
Prior Consolidated Accounting
Fiscal Year
(From November 1, 2008
to October 31, 2009)

Current Consolidated Accounting
Fiscal Year
(From November 1, 2009
to October 31, 2010)

Classification
Cash flow from operating activities
Income before taxes and adjustments-1,153,612

2,162,400

Depreciation and amortization expense

5,093,229

7,766,703

312－

Amortization of goodwill

186,775

202,746

Loss on sale or retirement of fixed
assets107,659

93,864

Installment purchases of assets forsmall-value rentals

24,074

17,062

Reclassification of cost of sales
associated with disposal of construction
equipment

15,596

11,065

Reclassification of cost of sales
associated with disposal of rental
assets710,602804,250-4,113,072-2,462,216

Valuation loss on investment securities

435,945

27,925

Loss on sales of investment securities

2,036-153,309

Increase in allowance for doubtful
accounts-98,502-220,029

Increase in allowance for investment
loss

287,897

30,675Decrease in accrued bonuses to
employees-97,345

115,490

Increase in accrued employees
retirement benefits

165,337

21,285

Increase in retirement allowances todirectors and auditors

43,469-20,729

Interest revenue and dividend income-83,291-57,646

Interest expense on installment
purchases of rental assets

160,584

179,445

Interest expense

455,700

764,399

1,499,982-267,722

Increase in inventory

166,504

55,469

Increase (decrease) in accounts
payable, trade-835,855-551,554

Increase (decrease) in accounts
payable, other463,799

490,071

Other-215,111

757,743

Impairment loss

Expenditures for acquisition of rental
assetsDecrease in accounts receivable, trade

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 26

Subtotal

3,222,716

9,767,392

86,23259,396

Interest expense-623,498-869,996

Payment of corporate and other taxes-608,830

131,844

Cash flow from operating activities

2,076,620

9,088,637

Interest and dividends received

Current Consolidated Accounting
Fiscal Year
(From November 1, 2009
to October 31, 2010)

Prior Consolidated Accounting
Fiscal Year
(From November 1, 2008
to October 31, 2009)Classification
Cash flow from investing activities
Disbursements for investments in term
deposits-9,528-85,000

154,178

59,000-2,286,995-265,253

Funds provided from the sale oftangible fixed assets

21,26560,577

Funds used for the purchase ofintangible fixed assets-164,426-47,944

Funds used for the purchase ofinvestment securities-675,186-538,548

51,984775,390-199,304－

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

Funds provided from sale ofnon-consolidated subsidiary stock

15,000－Funds used for establishment ofaffiliated company-52,339－

Funds used for short-term loans－-84,986

Funds provided from collection ofshort-term loans receivable－

160,680-780

80,180-3,192,133

101,846

Decrease in short-term bank loans

28,40911,332,180

Funds provided by long-term bankloans

12,760,500

2,609,045

Funds used to repay long-term bankloans

-11,119,275-10,804,656-62,000-42,000

Revenue from redemption of term
deposits
Funds used for the purchase of tangible
fixed assets

Funds provided from sale of investment
securities
Funds used for the purchase ofinvestments in subsidiaries resulting inchange in scope of consolidation

Other
Cash flow from investing activities*2

Cash flow from financing activities

Funds used to redeem corporate bonds

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 27

Funds used for repayment of
installment obligations-3,388,942-4,382,407－-790,532-1,188-1,045-655,981-657,319

Payment of dividends to minority
shareholders-1,006-1,006

Cash flow from financing activities-2,439,483-2,737,741－-23,465

Decrease in cash and equivalents-3,554,996

6,429,277

Balance of cash and equivalents at
beginning of period

17,566,695

Funds used for repayment of leaseobligations
Funds used for the purchase of treasury
stock
Payment of dividends

Effect of exchange rate changes on cash
and cash equivalents

Increase in cash and cash equivalents due
to newly consolidated subsidiaries
Increase in cash and cash equivalents
resulting from merger withunconsolidated subsidiaries
Balance of cash and equivalents at end of
the period*1*1

14,086,028－

185,114

74,32950,797

14,086,028

20,751,217

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 28

Events or conditions that create significant doubt concerning the going concern assumption
The Company had no material items to report.

Significant Accounting Policies for the Consolidated Financial Statements

1. Companies included in the

Prior Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)

Current Consolidated Accounting Fiscal Year
(From November 1, 2009
to October 31, 2010)(1) Number of consolidated companies: 9(1) Number of consolidated companies: 11

consolidation
Assist Co., Ltd.

Assist Co., Ltd.

SRG Kanamoto Co., Ltd.

SRG Kanamoto Co., Ltd.

Kanatech Co., Ltd.

Kanatech Co., Ltd.

Daiichi Kikai Co., Ltd.

Daiichi Kikai Co., Ltd.

Kanki Corporation

Kanki Corporation

Kyushu Kensan Co., Ltd.

Kyushu Kensan Co., Ltd.

Kensan Techno Co., Ltd.

Toyo Industry Co., Ltd.

Toyo Industry Co., Ltd.

ShanghaiNarasaki Lease Co., Ltd.
Narasaki Lease Co., Ltd. is included

Rental Co., Ltd.

Jinheyuan

ShanghaiEquipment

Jinheyuan

Engineeringin the scope of consolidation because

Construction Co., Ltd.

the Company acquired a majority of

SJ Rental, Inc.

that

Kanamoto Engineering Co., Ltd.
Beginning from the consolidated

company’s

consolidated

stock

duringtheaccounting

fiscalyear

under review.

accounting fiscal year under review,

Kensan Fukuoka Co., Ltd. is excluded
from

the

scope

of

consolidation

Shanghai Jinheyuan Equipment Rental
Co.,

Ltd.,

Shanghai

Jinheyuan

because it merged with Kyushu Kensan

Engineering Construction Co., Ltd., SJ,

Co., Ltd. on November 1, 2008.

Rental, Inc. and Kanamoto Engineering

Kensan Techno Co., Ltd. merged with

Co., Ltd. are included in the scope of

Kyushu Kensan Co., Ltd. on September

consolidation because the importance

1, 2009.

of these companies to Kanamoto's
operations has increased.
Kensan Techno Co., Ltd., which was
included in the scope of consolidation
until

the

previous

consolidated

accounting

fiscalyear,

has

excluded

from

the

scope

been
of

consolidation because it merged with
Kyushu Kensan Co., Ltd
Narasaki

Lease

Co.,

Ltd.,

a

consolidated subsidiary, was absorbed
by and merged with the Company
duringthefiscalyear

consolidated
under

accounting

review,

with

Kanamoto, the owner company, as thesurviving company.
(2) Number of non-consolidated(2) Number of non-consolidated

companies: 12companies: 5

Non-consolidated subsidiary company

Non-consolidated subsidiary company

name:

name:

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 29

Comsupply Co., Ltd.

Comsupply Co., Ltd.

Flowtechno Corporation

Flowtechno Corporation

Center Corporation

Center Corporation

Shanghai Jinheyuan Equipment Rental

KG Machinery Co., Ltd.

Co., Ltd.

KANAMOTO (HK) CO., LTD.

Shanghai Jinheyuan Engineering
Construction Co., Ltd.
SJ Rental, Inc.
Kanamoto Engineering Co., Ltd.
KG Machinery Co., Ltd.
Akita Narasaki Rental Co., Ltd.
Aomori Narasaki Rental Co., Ltd.
Tokyo Narasaki Rental Co., Ltd.
KANAMOTO (HK) CO., LTD.
(Reason for exclusion from scope of(Reason for exclusion from scope of

consolidation)

consolidation)

The size of the non-consolidated

Same as at left

subsidiaries is small and their total
assets, sales and fiscal year profit orloss (amount corresponding to equity)andretainedearnings(amount

corresponding to equity) are small insize and do not have a material effectontheconsolidated

financialstatements.
2. Matters pertaining to

Twelve non-consolidated subsidiaries

application of equity

have been omitted from items to whichhave been omitted from items to which

method accounting

equity method accounting is applied

equity method accounting is applied

becausebecausetheirrespective

effecton

Five

non-consolidated

theirsubsidiaries

respective

effect

on

or

loss

consolidated net income or loss (amountconsolidated

corresponding to minority interest) and(amount

corresponding

consolidated retained earnings (amountinterest)andcorresponding to minority interest) isearnings(amount

immaterial and none of the companies isminority interest) is immaterial andimportant to the Company’s overall

none of the companies is important tooperations.

the Company’s overall operations.

netincometominority

consolidated

retainedcorresponding

toSummary of Company Financial Statements, FY Ended October 31, 2010
P. 30

3. Matters pertaining to the

The fiscal year closing date for all of

The fiscal year closing date for all offiscal year closing date fortheconsolidated subsidiaries

Kanki Corporation and Narasaki Lease

Kanki

Co., Ltd. is August 31. The fiscal year

Engineering Co., Ltd. is August 31. The

closing date for Narasaki Lease Co., Ltd.

fiscal year closing date for SJ Rental,

is September 30.

Inc. is September 30. The fiscal year

consolidated

Whensubsidiaries

preparingthe

exceptconsolidated

theconsolidated

subsidiaries

Corporation

andexceptKanamoto

closing date for Shanghai Jinheyuan

financial statements the Company used

Equipment

Rentalthe subsidiaries’ financial statements as

Shanghai

Jinheyuan

of August 31, adjusted for significant

Construction Co., Ltd. is December 31.

transactions that occurred between the

When

Co.,

preparing

Ltd.

and

Engineering

theconsolidated

subsidiaries’ fiscal year-end and thefinancial statements the Company usedconsolidation date that have a material

the financial statements of Shanghai

effectJinheyuan Equipment Rental Co., Ltd.

on

the

consolidated

financialresults.

and Shanghai Jinheyuan Engineering
Construction

Co.,

provisional

settlement

Ltd.

based
of

on

a

accounts

implemented as of September 30 andthe financial statements of the othersubsidiaries

as

of

each

company's

closing date, adjusted for significant
transactions that occurred between thesubsidiaries’ fiscal year-end and theconsolidation date that have a material
effectontheconsolidated

financialresults.
4. Accounting principles andstandards used for normal
accounting treatment(1) Appraisal standards andappraisal methods forprincipal assets

a. Negotiable securities

a. Negotiable securities

Other negotiable securities

Other negotiable securities

Securities with a market price

Securities with a market price

The Company has adopted the market

Same as at left

value method (the full amount of thevaluation difference is charged to net
assets using the direct transfer to capitalmethod,withthedisposal

cost

determined by the moving averagemethod) based on the market price on
the consolidated accounting fiscal year
closing date or similar prices.
Securities without market prices

Securities without market prices

The Company has adopted the cost

Same as at left

method, cost being determined by themoving average method
b. Construction equipment
Amountafter

depreciation

expenseaccordingthetob. Construction equipment

deductionofcalculated

declining-balance

Amountafter

deduction

depreciation

expenseaccording

the

to

of

calculated

declining-balancemethod from the original prices, bymethod from the original prices, byseparate fiscal year of purchase.

separate fiscal year of purchase.

(Change in accounting method)

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 31

Traditionally, the Company and its
domestic

consolidated

subsidiaries

valued construction equipment using theamount after deduction of depreciation
expense calculated according to thedeclining-balancemethodfrom

theoriginal prices, by separate fiscal year ofpurchase.

Beginning

from

the

consolidated

accounting

fiscalyear

Company

will

under

review,

thecalculate the amount after deduction ofdepreciation expense according to thestraight-line method from the original
prices,byseparate

fiscalyearofpurchase.
Because rental earnings obtained fromconstruction equipment are generated
on average over the period during which
the construction equipment is used, theCompany has made this change inconjunction
depreciation

with

the

changemethodforofrentalequipment from the declining-balancemethod to the straight-line method fromthe consolidated accounting fiscal year
under review to similarly recognize afixed cost amount corresponding toearnings,

achievebetweencosts

acorrespondence

andearnings

andcalculate accounting period profits andlosses more properly for construction
equipment

that

contributes

to

the

acquisition of rental earnings.
As a result, for the consolidated
accounting fiscal year under review the
cost

of

revenues

fromoperations

decreased by ¥74,180,000, and grossprofit and operating income increased
and ordinary loss and loss before taxes
and adjustments decreased by the sameamount, respectively, compared to what
they otherwise would have been had theaccounting

standards

used

in

past

periods been applied.
The effect of this change on the
Company’s information by segment is
described in the relevant section.
c. Merchandise inventories and suppliesc. Merchandise inventories and supplies(i) Merchandise inventories and products(i) Merchandise inventories and products

The Company has adopted the cost

Same as at left

method, cost being determined basedontheLast-in,First-out

method(amounts shown on the balance sheet
arecalculatedbydetermining

write-downs of book value based on the
decline in profitability)(ii) Work in process(ii) Work in process

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 32

The Company has adopted the cost

Same as at left

method, cost being determined by the
specific identification method(iii) Raw materials and supplies(iii) Raw materials and supplies

The Latest Purchase Cost method

Same as at left

(amounts shown on the balance sheet
arecalculatedbydetermining

write-downs of book value based on the
decline in profitability)(Change in accounting method)
Beginning

from

the

consolidated

accounting fiscal year under review, theCompany has adopted the AccountingStandardfor

Inventories(Accounting

MeasurementofStandards

Board of Japan Accounting Standard
Statement No. 9 dated July 5, 2006).
The effect of this change on earnings is
not material.
(2) Depreciation methods forprincipal depreciable
assetsa. Tangible fixed assets (excluding leasea. Tangible fixed assets (excluding leaseassets)assets)The

CompanyhasadoptedtheSame as at left

straight-line method for rental assets
and the declining-balance method forother assets. Buildings on land that isleased under a fixed-term land leaseagreement, however, are depreciatedusing the straight-line method using theremaining period of the fixed-term leaseas the depreciable life and zero residual
value.

For

certainconsolidated

subsidiaries the Company has adopted
the straight-line method for buildings
and structures acquired on or after April
1, 2000, but excluding fixtures andequipment.
The depreciable lives mainly used by
the Company are as follows.
Rental assets
Buildings andstructures

2-16 years
2-60 years

The depreciable lives mainly used by
the Company are as follows.
Rental assets
Buildings andstructures

2-16 years
2-60 years

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 33

(Change in accounting method)
Traditionally, the Company and its
domestic

consolidated

subsidiaries

depreciated rental assets using thedeclining-balancemethod.

Beginningfrom the consolidated accounting fiscal
year under review, the Company haschanged its depreciation method to thestraight-line method.
Because rental earnings obtained fromrental equipment are generated on
average over the period during whichtherentalequipment

is

used,

the

Company has made this change as aresultofinvestigating

a

more

appropriate method for allocation of
expenses following the increase in thescale of purchases, and increase in themonetary

importanceofrentalequipment, as a result of changing its
methodforacquisitionofrentalequipment from leasing agreements topurchases, to recognize a fixed expense
amountcorrespondingachieveatoearnings,

correspondence

betweenexpenses and earnings and calculate
accounting period profits and losses
more properly.
As a result, for the consolidated
accounting fiscal year under review the
cost

of

revenues

decreased
gross

by

profitfromoperations¥2,697,551,000,
andoperatingandincomeincreased and ordinary loss and loss
before taxes and adjustments decreased
by

the

same

amount,respectively,

compared to what they otherwise would
have been had the accounting standards
used in past periods been applied.
The affect of this change on the
Company’s information by segment is
described in the relevant section.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 34

(Supplemental information)
Beginning

from

the

consolidated

accounting fiscal year under review, theCompany has revised the durable lives
applied to machinery and equipment
owned by the Company and its domestic
consolidated

subsidiaries(including

assets accounted for as rental assets),
following the revision of statutory useful
lives

based

on

amendmentoftheCorporation Tax Law in Fiscal 2008.
As a result, operating income was¥62,524,000 higher and the ordinary
loss

and

loss

adjustments

before

were

taxes

and

¥62,524,000

lessthan they otherwise would have been
had the accounting standards used inpast periods been applied.
The affect of this change on the
Company’s information by segment is
described in the relevant section.
b. Intangible fixed assets excluding leaseassets)The

Companyhasadoptedtheb. Intangible fixed assets (excluding leaseassets)Same as at left

straight-line method.
Software for use within the Company
is depreciated using the straight-line
method based on the assumed useful life
for internal use (5 years)c. Lease assets
Thec. Lease assets

CompanyhasadoptedtheSame as at left

straight-line method using the leaseterm as the depreciable life and zero
residual value.
The Company accounts for financelease transactions except for leases thattransfer ownership of the property forwhich the lease start date is before
October

31,

2008

by

applying

accounting treatment based on themethodappliedforordinary

rentaltransactions.
(3) Accounting standards forprincipal allowances andreserves

a. Reserve for doubtful accounts

a. Reserve for doubtful accounts

To provide for losses on doubtfulSame as at left

accounts such as accounts receivable,
the Company charges to income anamount based on actual loss experience
for normal accounts, plus an amount for
projected unrecoverable amounts basedon assessments of individual accounts.
b. Accrued bonuses to employeesb. Accrued bonuses to employees

To fully provide for expenditures ofbonusestheCompany

will

paySame as at leftto

employees, an amount is appropriatedto the reserve during the year based
upon a salary estimate amount.
c. Accrued employees retirement benefitc. Accrued employees retirement benefit

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 35

The Company provides for employees’Same as at left

accrued retirement benefits based upon
the projected amounts of the liability for
accrued employees retirement benefits
and the value of pension assets at theend of the consolidated fiscal year. At
the end of each consolidated accounting
fiscal year, the Company appropriates
an amount to the reserve to provide fortheliability

recognized

duringtheperiod. The difference based on an
actuarial

calculationischargedtoincome beginning in the consolidated
accounting fiscal year following the year
in which incurred, with the amounts
allocated

proportionately

straight-line

method,

using

based

the

on

a

specified number of years (10 years)
that is less than the average remaining
period of employment for employees at
the time the difference arises.
(Change in accounting method)
Beginning

from

the

consolidated

accounting fiscal year under review, theCompanyhas

Amendments

adoptedthetoAccounting

thePartialStandard for Retirement Benefits (Part3)(AccountingStandards

Board

of

Japan Accounting Standard Statement
No. 19 dated July 31, 2008).
The effect of this change on theoperating income, ordinary income andincome before income taxes is notmaterial.
d. Retirement allowances to directors andauditors

d. Retirement allowances to directors andauditors

The Company provides for retirement

Same as at left

allowances to directors and auditors
based

upon

pertinent

appropriatedtoproportionately
consolidated

at

rules

the
the

accounting

andaccount

endoffiscaltheyear

based upon length of service.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 36

e. Reserve for investment losses

e. Reserve for investment losses

The Company provides for losses

Same as at leftfrom the decline in real prices of assets
such

as

the

stock

of

subsidiarycompanies that are not subject to asset
impairment

accounting

byapplying

internally established standards that
take

into

consideration

subsidiarycompany operating results and asset
quality.
(4) Accounting standards forconstruction works
revenues and costAccounting standards for amount ofcompleted works and cost of construction
works
a. Construction works for which theportion of the works completed by theend of the year can be reliably
determined
Percentage-of-completion method(progressin

construction

works

is

estimated using the cost comparison
method)b. Other construction works
Completed-contract method

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 37

(Change in accounting method)
The Company traditionally reported
revenues and costs of construction
contracts

byapplying

thecompleted-contract method. Beginningfrom the consolidated accounting fiscal
year under review, the Company will
apply the Accounting Standard forConstruction

Contracts(AccountingStandards Board of Japan Statement
No. 15, December 27, 2007) and the
Guidance on Accounting Standard forConstruction

Contracts(AccountingStandards

Board

of

Implementation

Japan

GuidanceNo.

18,

December 27, 2007). Beginning fromworks contracts for which construction
activity

wasconsolidated

begun

duringtheaccounting

fiscalyear

under review, the Company will apply
the percentage of completion method
for works for which the outcome of theconstruction activity is deemed certain
by

the

end

of

the

consolidated

accounting fiscal year under review(with the estimate of the percentage ofcompletion based on the cost incurred
as a percentage of estimated totalcost),

andwill

completed-contract

apply
method

the
for

all

other works.
The effect of this change on earnings
is not material.
The effect of this change on the
Company’s information by segment is
described in the relevant section.
(5) Standard for conversionof foreign
currency-denominatedassets or liabilities into
Japanese yen

TheCompany

converts

monetary

The

Company

converts

monetaryclaimsandmonetary

liabilities

claimsandmonetary

liabilities

denominated in foreign currencies into

denominated in foreign currencies into

Japanese yen

Japanese yenat the spot market

at the spot market

exchange rate on the consolidated fiscal

exchange rate on the consolidated fiscal

year settlement date, and charges theyear settlement date, and charges thetranslation difference to income as atranslation difference to income as again and loss.

gain or loss. The assets and liabilities ofcontrolledforeigncorporations

areconverted into Japanese yen at the spot
exchange

rate

on

the

foreigncorporation’s fiscal year closing date,
and

the

earnings

and

costs

are

converted into Japanese yen using to
the average market price during theperiod, and the translation difference isaccounted for by including the amounts
in the total valuation and translation
adjustments

account

andminority

interests in net assets.
(6) Hedge accounting fora. Hedge transactions

a. Hedge transactions

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 38

principal hedging
methods

The Company accounts for hedge

Same as at lefttransactions using allocations based on
accounting

standards

forcurrency-denominatedforeigntransactions,and special rule accounting based on
accounting

standards

forfinancial

products.
b. Hedge methods and hedgedb. Hedge methods and hedgedtransactionstransactions

The Company uses currency swaps

Same as at left

and forward transactions in order toavoid thecurrency fluctuation risk

relatedthetoCompany’s

foreigncurrency-denominated straight bonds
and liabilities for import payments. The
Company also uses interest swaps to
avoid

interest

rate

fluctuation

risk

related to interest on bank borrowing.
c. Hedging policies

c. Hedging policies

The Company’s use of derivative

Same as at lefttransactions is limited to hedging risk
within the scope of the Company’s
assets and liabilities subject to market
fluctuation risk.
d. Method for evaluating the effectivenessd. Method for evaluating the effectivenessof hedgesof hedges

The Company does not evaluate theSame as at left

effectiveness of its hedge transactions
because it can assume that its currency
swap

transactionstransactions

will

and

forwardcompletely

offsetmarket fluctuations or changes in cash
flow from the time hedge begins until it
isterminated.

In

addition,theCompany’s interest swap transactions
fulfill the requirements for special ruleaccounting, andtheCompany

haselected to use this in place of anevaluation of effectiveness.
(7) Accounting standards for
consumption tax

Consumption tax is taken out of all

Same as at left

Statement of Income items and Balance
Sheet

items,

exceptmainlyforadoptedthereceivables and payables.
5. Valuation of consolidated

The

Companyhas

subsidiary assets andmarket value appraisal method for theliabilities

evaluation of assets and liabilities ofSame as at left

consolidated subsidiaries.
6. Amortization of goodwill

The remainder is amortized over fiveand negative goodwill

years using level amortization, except

Same as at left

for extremely small amounts that are
written off completely in the year inwhich they occur.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 39

7. Items included in cash andCash on hand, deposits that can beequivalents on thewithdrawn on demand and highly liquid

Consolidated Statements

short-term investments that matureof Cash Flows

within three months of the date ofSame as at left

acquisition and which can be easily
converted into cash and that haveminimal risk of a change in price.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 40

Changes in Important Matters Used as the Basis for Preparation of the Consolidated
Financial Statements
Prior Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)

Current Consolidated Accounting Fiscal Year
(From November 1, 2009
to October 31, 2010)(Accounting Standard for Lease Transactions)(Application of the Accounting Standard for Business
Combinations etc.)

Traditionally, the Company accounted for financeIn conjunction with the application of the Accounting

lease transactions except for leases that transfer

Standard

ownership of the property by applying accountingStandards Board of Japan Statement No. 21, December

forBusiness

Combinations(Accounting

treatment based on the method applied for ordinary

26, 2008, the Accounting Standard for Consolidated

rental transactions. Beginning from the consolidated

Financial Statements (Accounting Standards Board ofaccounting fiscal year under review, the Company has

Japan Statement No. 22, December 26, 2008), theadoptedPartial Amendments to the Accounting Standard fortheAccountingStandard

for

Lease

Transactions (Accounting Standards Board of Japan

Research

Statement No. 13, June 17, 1993 (Business AccountingStandards Board of Japan Statement No. 23, December

andDevelopment

Costs(Accounting

Council Subcommittee No. 1), revised March 30, 2007)

26, 2008), the Accounting Standard for Business

andDivestitures (Accounting Standards Board of Japanthe Implementation

Standard

for

Lease

Guidance on

Transactions

AccountingonStatement No. 7, December 26, 2008), the Revised

Accounting Standard for Lease Transactions No. 16,(Guidance

Accounting Standard for Equity Method of Accounting

January 18, 1994 (The Japanese Institute of Certified

for Investments (Accounting Standards Board of Japan

Public Accountants, Accounting System Committee),Statement

revised March 30, 2007), and will apply the standard for

December 26, 2008) and the Revised Guidance on thelease transactions based on the accounting treatment

Accounting Standard for Business Combinations andapplied for ordinary purchase and sale transactions.

Accounting

No.

16,

portionStandardfor

released

Businesspubliclyon

Divestitures

The Company has adopted the straight-line method(Accounting Standards Board of Japan Guidance No. 10,

using the lease term as the depreciable life and zero

December 26, 2008) beginning from the first businessresidual value as the depreciation method for leasecombination

assets related to finance lease transactions except for

implemented on or after April 1, 2010, beginning fromleases that transfer ownership of the property.

the consolidated accounting fiscal year under review theFor finance lease transactions except for leases thatandbusiness

separation

that

is

Company will apply these accounting standards fortransfer ownership of the property that began before thebusiness

first year in which the lease accounting standard was

implemented on or after April 1, 2010.

combinations

andbusinessdivestitures

applied, the Company will continue to apply accounting
treatment based on the method applied for ordinary
rental transactions.
The affect of this change on earnings is not material.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 41

Prior Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)

Current Consolidated Accounting Fiscal Year
(From November 1, 2009
to October 31, 2010)(Consolidated Balance Sheets)
Beginning from consolidated accounting fiscal year
under review the Company will classify items reported
as “inventory” in the prior consolidated accounting fiscal
year into “merchandise inventories and products” and“raw materials and supplies,” in conjunction with therequirement to apply the Cabinet Office Ordinance on
Partial Revision of the Regulation for Terminology,
Forms and Preparation of Financial Statements andOther Regulations (Cabinet Office Ordinance No. 50,
August7,2008).

The

amountsof“merchandise

inventories and products,” “work in progress” and “rawmaterials and supplies” included in inventory in the priorconsolidated accounting fiscal year were ¥662,924,000,¥147,054,000 and ¥146,343,000, respectively.
(Consolidated Statements of Income)1. Until the previous consolidated accounting fiscal year,“rentalrevenues”

and“sales”

werereported

separately under “Revenues from Operations,” andthe “cost of rental revenues” and “cost of goods sold”
were reported separately under “Cost of revenues
from operations,” respectively. Beginning from theconsolidated accounting fiscal year under review,
these items will be reported as single amounts in“Total revenues” and “Total cost of revenues fromoperations,” respectively.
2. Until the previous consolidated accounting fiscal year,
the Company reported the gain on sale of investment
securities in “Other” under extraordinary profits. The
Company has reported this item separately because
the amount exceeded 10% of total extraordinary
profits.
The amount of “Gain on sale of investment securities”
in the previous consolidated accounting fiscal year was¥50,000.
(Consolidated Statements of Cash Flows)
Beginning from the consolidated accounting fiscal
year under review, the Company will report the line item
“Funds used for the purchase of non-consolidated
subsidiary stock,” which it classified separately inprevious consolidated accounting fiscal years undercash flows from investing activities, as “Funds used forthe acquisition of subsidiary stock” in order to match theaccount reporting taxonomy designed to improveconsolidated

financialstatement

comparability

inconjunction with the introduction of XBRL.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 42

Notes to the Financial Statements(Notes to the Consolidated Balance Sheets)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year(As of October 31, 2009)

Current Consolidated Accounting Fiscal Year(As of October 31, 2010)

1. Matters related to non-consolidated subsidiaries and

1. Matters related to non-consolidated subsidiaries andaffiliated companies are as follows.
Investment securities (stocks)

affiliated companies are as follows.
563,724

2. Assets provided for security
Cash and deposits

Investment securities (socks)

117,270

2. Assets provided for security
15,000Cash and deposits

35,000

Buildings and structures

113,548

Buildings and structures

44,713

Rental assets

115,108Land

472,376

Land

838,422

The above assets have been pledged as security for

The above assets have been pledged as security forshort-term bank loans of ¥160,700, long-term bankshort-term bank loans of ¥295,000, long-term bankloans due within one year of ¥329,266 and long-termloans due within one year of ¥98,344 and long-termbank loans of ¥544,128.

bank loans of ¥115,296.

3. Guarantees
Joint and several guarantees ofbank loans to employees (Bankof Tokyo-Mitsubishi UFJ, others)
Guarantee of borrowing liabilities
of Flowtechno Corporation, a
non-consolidated subsidiarycompany
Guarantee of installment
payment liabilities of SJ Rental,
Inc., a non-consolidated
subsidiary company
Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Equipment Rental Co., Ltd., an
non-consolidated subsidiarycompany
Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Equipment Rental Co., Ltd., an
non-consolidated subsidiarycompany
Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., an non-consolidated
subsidiary company
Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., an non-consolidated
subsidiary company

3. Guarantees
34,788

Joint and several guarantees ofbank loans to employees (Bankof Tokyo-Mitsubishi UFJ, others)

34,788100,000

Guarantee of borrowing liabilities
of Flowtechno Corporation, a
non-consolidated subsidiarycompany

100,000

Guarantee of borrowing liabilities
of KG Machinery Co., Ltd., an
non-consolidated subsidiarycompany

15,010

Guarantee of installment
payment liabilities of KG
Machinery Co., Ltd., a
non-consolidated subsidiarycompany

52,693

US$1,945,000(177,884)

10,000,000 yuan
(133,900)

Total
118,033,000 yuan
(1,580,468)

57,800,000 yuan
(773,942)

93,099,000 yuan
(1,246,603)

Guarantee of borrowing liabilities
of KG Machinery Co., Ltd., an
non-consolidated subsidiarycompany

29,050

Guarantee of installment
payment liabilities of KG
Machinery Co., Ltd., a
non-consolidated subsidiarycompany

66,439Total

202,491

4,143,076

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 43

4. Discount on notes receivable, trade133,744

5. Liquidation of receivables based on receivablestransfer facility
Notes receivable, trade

4. Discount on notes receivable, trade

110,006

5. Liquidation of receivables based on receivablestransfer facility

5,126,484

Notes receivable, trade

4,732,008

Liquidated claims bearing a right of recourse to the

Liquidated claims bearing a right of recourse to theCompany and included in the balance of notes

Company and included in the balance of notes

receivable, trade transferred total ¥1,321,551.

receivable, trade transferred total ¥1,046,075.

6. Intangible fixed assets and goodwill includes negative

6. Goodwill and negative goodwill

goodwill of ¥261,073 and goodwill of ¥31,066.
Goodwill and negative goodwill are offset and shown
as a net amount.
The amounts before being offset are shown below
Goodwill

7. Notes and bills maturing at the end of the consolidated
accounting fiscal year

536,697

Negative goodwill

191,241

Net amount

345,456

7. Notes and bills maturing at the end of the consolidated
accounting fiscal year

Notes and bills maturing on the last day of theNotes and bills maturing on the last day of theconsolidated accounting fiscal year are settled andconsolidated accounting fiscal year are settled andprocessed on the note and bill clearing date. Because

processed on the note and bill clearing date. Because

the last day of the Company's consolidated fiscal year

the last day of the Company's consolidated fiscal year

was a financial institution holiday, notes and bills

was a financial institution holiday, notes and bills

maturing on the final day of the following consolidated

maturing on the final day of the following consolidated

fiscal year are included in the consolidated fiscal year

fiscal year are included in the consolidated fiscal year

balance.

balance.

Notes receivable, trade
Notes payable, trade
Other

91,516
1,477,524
14,249Notes receivable, trade
Notes payable, tradeOther

70,284
1,193,675
12,658

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 44

(Notes to the Consolidated Statements of Income)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)

Current Consolidated Accounting Fiscal Year
(From November 1, 2009
to October 31, 2010)

1. Major expense categories and amounts included in

1. Major expense categories and amounts included inselling, general and administrative expenses

selling, general and administrative expenses

Employee salaries and wages

Employee salaries and wages

7,071,779

Depreciation expense

1,016,536

Rents

1,851,971

6,902,026

Depreciation expense

996,586

Rents

1,954,370

Transfer to allowance for
doubtful accounts
Transfer to accrued bonuses to
employees
Employees retirement benefit
expenseTransfer to retirement
allowances to directors andauditors
Amortization of goodwill

139,370
453,268
503,161
23,193

256,607

Transfer to allowance for
doubtful accounts
Transfer to accrued bonuses to
employees
Employees retirement benefit
expenseTransfer to retirement
allowances to directors andauditors
Amortization of goodwill

38,187562,261524,374
23,692

272,578

In previous consolidated accounting fiscal years,“amortizationofgoodwill”

and“amortizationofnegative goodwill” were reported in selling, generaland administrative expenses after offsetting (theamount for “amortization of goodwill” in the previous
consolidated accounting fiscal year after offsetting was“amortization of negative goodwill” of ¥18,848).
Because the materiality of the amount has increased,
beginning from the current consolidated accounting
fiscal year the Company report the total amounts for“amortization
negativeofgoodwill”

goodwill”

inand“amortizationofselling,

generalandadministrative expenses and non-operating revenues,
respectively.
2. Gain on sale or retirement of fixed assets

2. Gain on sale or retirement of fixed assets

Buildings and structures

1,803

Buildings and structures

2,770

Machinery, equipment and

1,875

Ma

3,475

delivery equipment
Other

64

Total

3,742

3. Loss on sale or retirement of fixed assets

Buildings and structures
equipment

39

delivery equipment
Land

4,212

Total

10,459(Loss on sale of fixed assets)
3,643

and

Other

3. Loss on sale or retirement of fixed assets(Loss on sale of fixed assets)
Machinery,

hinery, equipment anddelivery equipment

Buildings and structures
Machinery, equipment anddelivery equipment

40(Loss on retirement of fixed assets)

11,4581,100

Land

10,344

Other

208(Loss on retirement of fixed assets)

Rental equipment

36,401

Buildings and structures

54,088

Rental equipment

41,355

Machinery, equipment and

4,068

Buildings and structures

28,726

Machinery, equipment and

2,730

delivery equipment
Other
Total

9,378
107,659

delivery equipment
Other
Total

8,399
104,323

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 45

Prior Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)

Current Consolidated Accounting Fiscal Year
(From November 1, 2009
to October 31, 2010)

4. Impairment loss
During this consolidated accounting fiscal year the
Kanamoto Group incurred an impairment loss on thefollowing asset groups.
Location
Tomakomai City,
Hokkaido

Use

Asset

Dormant assets

Land

Asset groupings used by the Kanamoto Group to
apply asset impairment accounting are based on theblock classified as the smallest segment for which
profitability can be determined regularly by business.
Specifically, dormant assets are grouped as units thatgenerate independent cash flow.
For certain dormant assets for which the asset value
was less than book value, the Company reduced bookvalue to the recoverable value, and accounted for the
reduction as an impairment loss (¥312,000) under
extraordinary losses. This ¥312,000 was for land.
The recoverable value for this asset group ismeasured according to net sales price, and the land isevaluated using the inheritance tax assessment value
based on the land tax assessment value or otheramount as a base.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 46

(Notes to the Consolidated Statement of Changes in Net Assets)
Prior consolidated accounting fiscal year (From November 1, 2008 to October 31, 2009)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)
Increase in number Decrease in number Number of shares at
Number of shares atof shares during the of shares during thethe end of thethe end of priorcurrent
current
current
consolidated
consolidated
consolidated
consolidated
accounting fiscal
accounting fiscal
accounting fiscal
accounting fiscal
year
year
year
year
Number of shares issued
Common stock (Note)
Total

32,872－－32,87232,872－－32,872

30

3

－

34

30

3

－

34

Treasury stock
Common stock (Note)
Total(Notes) The number of treasury stock shares of common stock increased by 3,000 shares through purchasesof shares comprising less than one investment unit.
2. Matters pertaining to subscription rights and treasury stock subscription rights
The Company had no material items to report.
3. Dividends(1) Dividends paid
Resolution
December 26, 2008
Board of Directors
June 5, 2009
Board of Directors

Class of stock

Total dividend(‘000 yen)

Dividend pershare (yen)Common stock

328,413

Common stock

328,382

Date of record

Payment date

10.0

October 31, 2008

January 30, 2009

10.0

April 30, 2009

July 13, 2009

(2) Dividends for which the date of record falls in the current consolidated accounting fiscal year andthe dividend payment date is in the following fiscal year
Resolution

Class ofstock

December 29, 2009

CommonBoard of Directors

stock

Total dividend Source of funds Dividend per(‘000 yen)for dividend
share (yen)328,378

Retainedearnings

10.0

Date of record

Payment date

October 31, 2009 January 29, 2010

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 47

Current consolidated accounting fiscal year (From November 1, 2009 to October 31, 2010)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)
Increase in number Decrease in number Number of shares at
Number of shares atof shares during the of shares during thethe end of thethe end of priorcurrent
current
current
consolidated
consolidated
consolidated
consolidated
accounting fiscal
accounting fiscal
accounting fiscal
accounting fiscal
year
year
year
year
Number of shares issued
Common stock (Note)
Total

32,872－－32,87232,872－－32,872

34

2

－

36

34

2

－

36

Treasury stock
Common stock (Note)
Total(Notes) The number of treasury stock shares of common stock increased by 2,000 shares through purchasesof shares comprising less than one investment unit.
2. Matters pertaining to subscription rights and treasury stock subscription rights
The Company had no material items to report.
3. Dividends(1) Dividends paid
Resolution
December 29, 2009
Board of Directors
June 4, 2010
Board of Directors

Class of stock

Total dividend(‘000 yen)

Dividend pershare (yen)Common stock

328,378

Common stock

328,363

Date of record

Payment date

10.0

October 31, 2009

January 29, 2010

10.0

April 30, 2010

July 12, 2010

(2) Dividends for which the date of record falls in the current consolidated accounting fiscal year andthe dividend payment date is in the following fiscal year
Resolution

Class ofstock

December 27, 2010

CommonBoard of Directors

stock

Total dividend Source of funds Dividend per(‘000 yen)for dividend
share (yen)328,353

Retainedearnings

10.0

Date of record

Payment date

October 31, 2010 January 28, 2011

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 48

(Notes to the Consolidated Statements of Cash Flows)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)

Current Consolidated Accounting Fiscal Year
(From November 1, 2009
to October 31, 2010)

1. Relationships between fiscal year-end balance for cash

1. Relationships between fiscal year-end balance for cash

and equivalents and amounts for items shown on theand equivalents and amounts for items shown on the

consolidated accounting fiscal year balance sheet

consolidated accounting fiscal year balance sheet

Cash and deposits account

12,345,028

Time deposits with a maturity-59,000

longer than 3 months

Cash and deposits accountTime deposits with a maturity

20,486,217-85,000

longer than 3 months

Negotiable securities

1,800,000

Negotiable securities

Cash and cash equivalents

14,086,028

Cash and cash equivalents

350,000
20,751,217

2. Main assets and liabilities of company converted to a
new consolidated subsidiary through an acquisition ofsharesThe opening balances for assets and liabilities at thetime of initial consolidation in conjunction with the newconsolidation through an acquisition of shares, theacquisition

price

and

expenditure

(net)

for

the

acquisition is as follows.
Narasaki Lease Co., Ltd.
Current assets

884,456

Fixed assets

2,028,399

Current liabilities-2,009,070

Long-term liabilities-696,805

Goodwill (negative goodwill)

171,819

Minority interests-17,299

Narasaki Lease Co., Ltd. acquisition

361,500

price
Narasaki Lease Co., Ltd. cash and-162,195

cash equivalents
Balance: Expenditure for acquisition

199,304

of Narasaki Lease Co., Ltd.
3. Details of major non-cash transactions

3. Details of major non-cash transactions

The amount of assets and liabilities related to

The amount of assets and liabilities related to

installment transactions that are newly accounted for

installment transactions and the amount of assets andduring this consolidated accounting fiscal year isliabilities related to lease transactions that are newly¥6,107,959 respectively.

accounted for during the consolidated accounting fiscal
year under review are ¥6,774,979 and ¥1,484,045,
respectively.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 49

4. A breakdown of the main assets and liabilities

4. A breakdown of the main assets and liabilities

succeeded to from the non-consolidated subsidiaries

succeeded to from the non-consolidated subsidiary

Asahikawa Fujisho Co., Ltd. and Kyokuto Lease Co.,

Aomori Narasaki Rental Co., Ltd., which was mergedLtd., which were merged into Kanamoto during theinto Kanamoto during the consolidated accounting fiscal

consolidated accounting fiscal year under review, isyear under review, is shown below:

shown below:
Asahikawa Fujisho Co., Ltd.

Aomori Narasaki Rental Co., Ltd.

Current assets

79,833Current assets

Fixed assets

163,284

Fixed assets

94,787
8,489

Total assets

243,118

Total assets

103,277

Current liabilities

155,207

Current liabilities

89,309Long-term liabilities

62,965

Total liabilities

89,309Total liabilities

218,173

Kyokuto Lease Co., Ltd.
Current assets

128,477

Fixed assets

54,880Total assets

183,358

Current liabilities

115,579

Long-term liabilities

62,085

Total liabilities

177,664

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 50

(Business Segment Information)
1. Segment Information by Type of BusinessPrior consolidated accounting fiscal year (From November 1, 2008 to October 31, 2009)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

57,771,178

5,639,820

452,991

63,863,989－

63,863,989

－

－

－

－

－

－

Eliminations
or entire
Consolidated
company

Total

I. Revenues and operating income
Revenues(1) Sales to outside customers(2) Sales or transfers between
related segments
Total
Operating expenses

57,771,178

5,639,820

452,991

63,863,989－

63,863,989

57,619,403

5,619,174

430,170

63,668,748

57,92363,726,672

151,774

20,64622,820195,241-57,923

137,317

II. Assets, depreciation expenseand capital disbursements
Assets71,553,415

1,612,011

192,966

73,358,393

23,076,638

96,435,031

Depreciation expense

4,815,790

3,356

224

4,819,371

273,858

5,093,229

312

－

－

312

－

312

11,266,098

469－

11,266,567

1,038,184

12,304,751

Operating income

Impairment loss
Operating expenses(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the type of labor and products, the natureof 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
equipment

andperipheraldevices,

telecommunications-related

3. The total amount for assets that were eliminated or included in the categories for all companies was¥23,076,638,000 and represents primarily idle working capital (cash, deposits and negotiable securities)
long-term investment funds (investment securities) and assets used in administrative departments at theparent company.
4. Changes in accounting methods(Change in depreciation method for construction equipment)
Beginning from the consolidated accounting fiscal year under review, the Company has changed the methodof depreciation for construction equipment from the amount after deduction of depreciation expense according to
the declining-balance method from the original prices, by separate fiscal year of purchase to the amount after
deduction of depreciation expense according to the straight-line method from the original prices, by separate
fiscal year of purchase as described in 4. (1) b. in “Important Matters Used as the Basis for Preparation of theConsolidated Financial Statements.” In conjunction with this change, the operating income of the Company’s
construction-related business increased by ¥74,180,000 compared with what it otherwise would have been had
the accounting standard used in prior fiscal years been applied.
(Change in depreciation method for tangible fixed assets and rental assets)
Beginning from the consolidated accounting fiscal year under review, the Company has changed the methodof depreciation for rental assets included in tangible fixed assets from the declining-balance method to thestraight-line method as described in 4. (2) a) in “Important Matters Used as the Basis for Preparation of theSummary of Company Financial Statements, FY Ended October 31, 2010
P. 51

Consolidated Financial Statements.” In conjunction with this change, the operating income of the Company’s
construction-related business increased by ¥2,697,551,000 compared with what it otherwise would have been
had the accounting standard used in prior fiscal years been applied.
5. Supplemental information
Beginning from the consolidated accounting fiscal year under review, the Company has revised the durable
lives applied to machinery and equipment (including assets accounted for as rental assets) as described in 4. (2)a) in “Important Matters Used as the Basis for Preparation of the Consolidated Financial Statements.”
In conjunction with this change, the operating income of the Company’s construction-related businessincreased by ¥62,524,000 compared with what it otherwise would have been had the accounting standard usedin prior fiscal years been applied.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 52

Consolidated accounting fiscal year review (From November 1, 2009 to October 31, 2010)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

64,263,139

5,219,731

690,782

70,173,653－

70,173,653

－

－

－

－

－

－

Eliminations
or entire
Consolidated
company

Total

I. Revenues and operating income
Revenues(1) Sales to outside customers(2) Sales or transfers between
related segments

64,263,139

5,219,731

690,782

70,173,653－

70,173,653

Operating expenses

61,609,389

5,193,281

671,385

67,474,056

50,66067,524,717

Operating income

2,653,749

26,44919,3972,699,596-50,660

2,648,935

78,896,353

2,011,089

125,245

81,032,679

Depreciation expense

7,427,005

3,218

598

7,430,822

335,880

7,766,703

Capital disbursements

15,160,136

756－

15,160,893

269,511

15,430,405

Total

II. Assets, depreciation expenseand capital disbursements
Assets27,476,919 108,509,599(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the type of labor and products, the natureof 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
equipment

andperipheraldevices,

telecommunications-related

3. The total amount for assets that were eliminated or included in the categories for all companies was¥27,476,919,000 and represents primarily idle working capital (cash, deposits and negotiable securities)
long-term investment funds (investment securities) and assets used in administrative departments at theparent company.
4. Changes in accounting methods(Change in accounting standard for completed contract revenues and cost of completed contracts)
As reported in 4. (4) in “Important Matters Used as the Basis for Preparation of the Consolidated Financial
Statements,” beginning from the consolidated accounting fiscal year under review the Company will apply the
Accounting Standard for Construction Contracts (ASBJ Statement No. 15, December 27, 2007) and the Guidanceon Accounting Standard for Construction Contracts (ASBJ Implementation Guidance No. 18, December 27,2007).
In conjunction with this change, the effect on the profit and loss of the Company's Steel Sales Division-related
businesses is not material compared with what earnings otherwise would have been had the accounting standard
used in prior fiscal years been applied.

2. Segment information by location
Prior consolidated accounting fiscal year (From November 1, 2008 to October 31, 2009)
The Company had no material items to report because the Company did not have any consolidated
subsidiaries or important offices located in countries or regions outside of Japan.
Current consolidated accounting fiscal year (From November 1, 2009 to October 31, 2010)
The Company has omitted a description of segment information by location because the amounts for

Summary of Company Financial Statements, FY Ended October 31, 2010P. 53

revenues and assets in Japan account for more than 90% of total revenue and total assets in all
segments.
3. Foreign sales
Prior consolidated accounting fiscal year (From November 1, 2008 to October 31, 2009) andcurrent consolidated accounting fiscal year (From November 1, 2009 to October 31, 2010)
The Company has omitted a description of foreign sales because foreign sales are less than 10% ofconsolidated revenues.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 54

(Notes for Leasing Transactions)(Unit: Thousands of yen)
Current Consolidated Accounting Fiscal Year
(From November 1, 2009
to October 31, 2010)

Prior Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)
1. Finance lease transactions (Lessor)

1. Finance lease transactions (Lessor)

Finance lease transactions except for leases that

Finance lease transactions except for leases thattransfer ownership of the property to the lesseetransfer ownership of the property to the lesseea) Lease assetsa) Lease assets

Tangible fixed assets

Tangible fixed assets

Construction-related business rental equipment andSame as at left

other tangible fixed assets.
b) Method of depreciation for lease assetsb) Method of depreciation for lease assets

Lease assets are depreciated according to the method

Same as at left

described in “4. Accounting principles and standards
used for normal accounting treatment(2) Depreciation

methods

assets”

forprincipal

depreciable

in

the

Important Matters Used as the Basis for Preparation of
the Consolidated Financial Statements.
The Company accounts for finance lease transactions
except for leases that transfer ownership of the property
for which the lease start date is before October 31, 2008
by applying accounting treatment based on the method
applied for ordinary rental transactions. Details areprovided below.
(1) Amounts corresponding to lease property(1) Amounts corresponding to lease property
acquisition price, accumulated depreciation andacquisition price, accumulated depreciation andoutstanding balances at the end of the consolidated

outstanding balances at the end of the consolidated

accounting fiscal year

accounting fiscal year

Acquisition
price

Acquisition
price

Outstandingbalance

Rental assets

28,254,481

13,297,924

14,956,557

Other assets

88,36359,26929,094

28,342,845

13,357,193

14,985,651

Total

Acquisition
price

Acquisition
price

Outstandingbalance

Rental assets

20,542,117

11,098,177

9,443,939

Total

20,542,117

11,098,177

9,443,939(2) Outstanding balance of future lease payments at(2) Outstanding balance of future lease payments at

the end of the consolidated accounting fiscal year

the end of the consolidated accounting fiscal year

Within one year

5,010,807

Within one year

3,538,973

After one year

10,493,840

After one year

6,347,709

Total

15,504,648(3) Amount of lease payments, depreciation expense
and interest expense

Total

9,886,682(3) Amount of lease payments, depreciation expense
and interest expense

Lease payments

5,673,301

Lease payments

4,240,829

Depreciation expense

4,649,608

Depreciation expense

2,867,517

Interest expense

520,240(4) Accounting method for amount equivalent todepreciation expense

Interest expense

413,752(4) Accounting method for amount equivalent todepreciation expense

Straight-line depreciation using the lease term as theSame as at leftdepreciable life and zero residual value.
(5) Accounting method for amount equivalent tointerest expense(5) Accounting method for amount equivalent tointerest expense

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 55

Interest method using the difference between total

Same as at left

lease payments and the acquisition price of the leaseproperty, allocated to each year.
2. Operating leases

2. Operating leases

Prepaid lease payments pertaining to non-cancellable
operating lease transactions

Prepaid lease payments pertaining to non-cancellable
operating lease transactions

Within one year

1,830,165

Within one year

1,621,381

After one year

3,602,752

After one year

4,078,407

Total

5,432,918

Total

5,699,788

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 56

(Per Share Information)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)
Net assets per share
Net income (loss) per share ofcommon stock¥1,102.51-¥35.28

Current Consolidated Accounting Fiscal Year
(From November 1, 2009
to October 31, 2010)
Net assets per share¥1,112.46

Net income (loss) per share ofcommon stock¥31.73

Net income per share of common－
stock after adjustment for potential
ordinary shares
The Company has not reported net income per share of

Net income per share of common－
stock after adjustment for potential
ordinary shares
The Company has not reported net income per share ofcommon stock after adjustment for potential ordinarycommon stock after adjustment for potential ordinary

shares because it had a net loss per share, and it does notshares because it does not have any potential shares thathave any potential shares that would have a dilution

would have a dilution effect.

effect.
(Note) The basis for calculating consolidated fiscal year earnings per share or net loss per share is as follows.
(Unit: Thousands of yen)
Prior Consolidated Accounting
Fiscal Year
(From November 1, 2008
to October 31, 2009)

Current Consolidated Accounting
Fiscal Year
(From November 1, 2009
to October 31, 2010)-1,158,497

1,041,964－－

Net income related to common stock-1,158,497

1,041,964

Average number of outstanding shares
during the fiscal year

32,838,970

32,836,692

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

(Items Omitted from Disclosure)
The Company has omitted disclosure of notes concerning information on financial products, negotiablesecurities, derivatives transactions, retirement benefits, tax effect accounting, rented and leased real estate,transactions with related parties and business combinations because disclosure of these items in its financial
bulletin for the consolidated fiscal year is not deemed necessary.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 57

5

Company Financial Statements
1. Comparative Balance Sheets(Unit: Thousands of yen)Classification

Notes

Prior Fiscal Year(As of October 31, 2009)

Current Fiscal Year(As of October 31, 2010)

AmountAmount(Assets)
Current assets
Cash and deposits

10,728,117

18,067,374

2,273,263

2,044,034

Accounts receivable, trade

9,771,824

10,289,247

Negotiable securities

1,800,000

350,000

Merchandise inventories andproducts

248,457

303,056

Work in process

38,32637,046

Construction equipment

753,499

993,929

Raw materials and supplies

78,65984,612

Prepaid expenses

251,002214,506

Deferred tax assets

199,932

322,794

Income taxes receivable

337,075－

Consumption taxes receivable

29,786－

Short-term loans receivable

306,390

360

Other

85,952

211,510-350,548-254,464

26,551,740

32,664,008

41,046,227

49,930,606

Accumulated depreciation-24,953,646-30,376,404

Net rental equipment

16,092,580

19,554,202

14,078,535

14,489,771

Accumulated depreciation-7,426,988-8,203,064

Net buildings

6,651,547

6,286,707

4,749,778

4,887,085

Accumulated depreciation-3,507,956-3,811,190

Net structures

1,241,822

1,075,895

4,523,311

4,706,551-3,703,999-4,013,045

819,311

693,505

Notes receivable, trade*3, *4

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

Buildings

Structures

Machinery and equipment
Accumulated depreciation
Net machinery andequipment*1

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 58

Vehicles and delivery
equipment

56,68675,611

Accumulated depreciation-50,108-69,798

Net vehicles and delivery
equipment

6,578

5,813

1,164,366

1,193,280

Accumulated depreciation-883,803-965,515

Net tools, furnishings andfixtures280,562

227,764

28,041,096

28,439,924－

2

53,133,499

56,283,815

Goodwill

14,400133,725

Software205,131

196,552

Telephone subscription rights

42,46950,769Total Intangible Fixed Assets

262,000

381,047

Investment securities

2,568,472

2,597,327

Stock of affiliated companies

3,945,528

3,556,028

8,107

9,137

1,941,287

2,617,080

Claims in bankruptcy, claims inreorganization and other similar
claims

233,866

160,309

Long-term prepaid expenses

53,85038,082

1,236,636

1,057,220

Insurance reserve

17,52817,528Long-term guaranty money
deposited

877,818

851,664

Other

18,17853,326

Allowance for doubtful accounts-1,656,326-1,812,033

Reserve for investment losses-653,144-744,710

Total investments and otherassets8,591,802

8,400,962

Total Fixed Assets

61,987,302

65,065,825

88,539,042

97,729,834

Tools, furnishings andfixtures

Land
Construction in progress
Total Tangible Fixed Assets*1

Intangible fixed assets

Investments and other assets

Advances
Long-term loan to affiliatedcompany

Deferred tax assets

Total Assets

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 59

Classification

Notes

Prior Fiscal Year(As of October 31, 2009)

Current Fiscal Year(As of October 31, 2010)

AmountAmount(Liabilities)
Current liabilities
Notes payable, trade*4

8,926,198

8,987,870

Accounts payable, trade

2,440,169

2,483,085

Long-term bank loans due
within one year

9,930,000

9,089,000－

12,000,000

3,384,855

4,636,566

258,538

314,150

Corporate taxes payable－

1,017,327

Consumption and other taxes
payable－448,544

Deposits

41,06938,692

Accrued bonuses to employees

390,137

501,488

192,468

263,493

75,56979,79325,639,004

39,860,013

Long-term bank loans

19,686,000

12,349,000

Long-term accrued expenses

4,861,786

6,875,527

Accrued employees retirement
benefits

1,209,868

1,334,958

Retirement allowances todirectors and auditors

140,833

153,892

Provision for loss on guarantees

206,622

66,773

26,105,111

20,780,151

51,744,115

60,640,165

9,696,717

9,696,717

Capital legal reserve

10,817,389

10,817,389

Other capital surplus

143,480

143,480

Total capital surplus

10,960,869

10,960,869

1,375,287

1,375,287

Short-term bank loans
Accounts payable, otherAccrued expenses

Equipment notes payable
Other
Total Current Liabilities*4Long-term liabilities

Total long-term liabilities
Total Liabilities(Net Assets)
Shareholders’ equity
Capital stock
Capital surplus

Retained earnings
Earned legal reserve
Other retained earnings

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 60

Reserve for advanced
depreciation of fixed assets

19,601

19,601

General reserve

15,631,684

13,731,684

Retained earnings brought
forward-1,099,417

1,176,466

15,927,156

16,303,040-23,917-24,963

36,560,825

36,935,664

Valuation difference on otherinvestment securities

234,101

154,004

Total valuation and translation
adjustments

234,101

154,004

Total Net Assets

36,794,927

37,089,669

Total Liabilities and Net Assets

88,539,042

97,729,834

Total retained earnings
Treasury stock
Total Shareholders’ Equity
Valuation and translation
adjustments

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 61

2. Comparative Statements of Income(Unit: Thousands of yen)Classification

Notes

Prior fiscal year

Current fiscal year

(From November 1, 2008
to October 31, 2009)(From November 1, 2009
to October 31, 2010)

AmountAmountOperating revenues
Rental revenues

38,260,952

39,480,705

Sales

16,186,922

18,603,078

Total revenues

54,447,875

58,083,784

28,233,776

28,596,893

259,968

248,457

12,131,319

12,748,642

648,395

663,191

13,039,683

13,660,290

248,457

303,056

Valuation loss onmerchandise

1,528

2,263

Total goods sold

12,792,754

13,359,497

Total cost of revenues

41,026,530

41,956,391

13,421,344

16,127,393

Freight-out

69,622

71,542

Vehicle fuel expense

141,389

155,218

Advertising and public relations
expense137,223

126,177

Transfer to allowance for
doubtful accounts

89,608－

Director compensation

69,83366,745

Salaries and allowance

5,366,895

5,462,976

Bonuses628,172

981,366

Transfer to accrued bonuses to
employees

390,137

501,488

Transfer to retirement
allowances to directors andauditors

13,643

13,059

Cost of revenues
Cost of rental revenues
Cost of goods sold
Balance of merchandise
inventories at beginning of
periodMerchandise inventories
purchases
Merchandise received fromother accounts
Total
Balance of merchandise atend of period

Gross profit*2

Selling, general andadministrative expenses

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 62

Employees retirement benefit
expense433,747

428,836

Travel and transportation
expenses

261,481

267,602

Entertainment expenses

73,24469,090Insurance premiums

136,987

148,418

Communications expense

320,706

284,940

Maintenance and repairs

94,637133,281Consumables expense

286,214281,363

Utilities

243,725

243,339

Taxes and public charge

396,045423,699

Welfare expense

884,513946,968

Depreciation expense

874,939915,384

1,561,583

1,475,794

529,824

592,070

13,004,176

13,589,363

417,168

2,538,030

Interest revenue

28,513

27,769Interest revenue on negotiablesecurities

19,852

3,514

Dividend income

40,85242,350156,811

166,053

Insurance benefits

35,70069,990Cash bonus received

5,372

22,966138,128

140,864

425,231473,509

Interest expense

403,314431,634

Loss on sale of notes receivable

53,09842,466

Other

213,924

166,821

Total non-operating expense

670,337

640,923

172,062

2,370,616

89

3,781

Gain on sale of investment
securities－

153,765

Subsidies－

144,854

170,594

139,849

Rent
Other expenses
Total selling, general andadministrative expenses
Operating income
Non-operating revenues

Rents received

Other

*1

*1

Total non-operating revenues
Non-operating expenses

Ordinary income
Extraordinary profits
Gain on disposal of fixed assets

Reversal of provision for loss on
guarantees*3

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 63

Reversal of allowance for
doubtful accounts

360

45,686

Reversal of allowance forinvestment loss

41,416－

Other

10,806

7,631

Total extraordinary income

223,265

495,569

Extraordinary losses
Loss on sale or disposal fixed
assets*4

73,66867,245

Impairment loss

*5

312

－

435,945

20,097

Management loss on
investment partnershipenterprise

4,215

5,117

Transfer to allowance forinvestment loss

287,897

103,065

Transfer to reserve for doubtful
accounts for affiliated company
stock478,631200,000

Loss on cancellation of stock
due to absorption of subsidiary－

173,205

Loss on liquidation ofsubsidiaries－

81,511

47,11140,325

Total extraordinary losses

1,327,782

690,568

Income (loss) before taxes-932,454

2,175,617

Corporate, local and business
taxes

143,244

1,032,143

Adjustment for corporate andother taxes-15,575

110,847

Total income taxes

127,668

1,142,991

Net income (loss)-1,060,122

1,032,626

Valuation loss on investment
securities

Other

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 64

Detailed Statement of Cost of Rental Revenues(Unit: Thousands of yen)Classification

Notes

Prior Fiscal Year

Current Fiscal Year

From November 1, 2008
to October 31, 2009

From November 1, 2009
to October 31, 2010

AmountAmountPercent

Percent

Rent

15,089,135

53.4

13,813,285

48.3

Repair expense

2,790,681

9.9

2,796,705

9.8

Freight charges

4,728,983

16.8

4,779,140

16.7

3,409,168

12.1

5,197,025

18.2

945,496

3.3

762,2382.7

1,270,311

4.5

1,248,496

4.3

28,233,776

100.0

28,596,893

100.0

Depreciation expense*2

Consumables expense
Other costs

*3

Total

Note *1

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

Same as at left

Note *2

The Company posted rental equipment
asset
depreciation
expenseof¥3,326,471,000
andconstruction
equipment depreciation expense of¥82,696,000.

The Company posted rental equipment
asset
depreciation
expenseof¥5,130,041,000
andconstruction
equipment depreciation expense of¥66,983,000.

Note *3

Other costs consisted mainly of taxes
and public charges of ¥529,530,000,
insurance premiums of ¥518,979,000
and interest of ¥95,964,000 related to
installment payment purchases of rental
equipment assets.

Other costs consisted mainly of taxes andpublicchargesof¥455,766,000,
insurance premiums of ¥532,623,000
and interest of ¥103,927,000 related to
installment payment purchases of rental
equipment assets.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 65

3. Statement of Changes in Net Assets(Unit: Thousands of yen)Classification

Prior Fiscal Year

Current Fiscal Year

From November 1, 2008
to October 31, 2009

From November 1, 2009
to October 31, 2010

AmountAmountShareholders’ equity
Capital stocks
Balance at beginning of year

9,696,717

9,696,717－－

9,696,717

9,696,717

10,817,389

10,817,389－－

10,817,389

10,817,389

143,480

143,480－－

143,480

143,480

10,960,869

10,960,869－－

10,960,869

10,960,869

1,375,287

1,375,287－－

1,375,287

1,375,287

Changes of items during theyear
Total changes of items
during the year
Balance at end of year
Capital surplus
Legal capital surplus
Balance at beginning of year
Changes of items during theyear
Total changes of items
during the year
Balance at end of year
Other capital surplus
Balance at beginning of year
Changes of items during theyear
Total changes of items
during the year
Balance at end of year
Total capital surplus
Balance at beginning of year
Changes of items during theyear
Total changes of items
during the year
Balance at end of year
Retained earnings
Legal retained earnings
Balance at beginning of year
Changes of items during theyear
Total changes of items
during the year
Balance at end of year
Other retained earnings

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 66

Reserve for advanced
depreciation of noncurrent
assetsBalance at beginning of year

19,601

19,601－－

19,601

19,601

15,631,684

15,631,684

Provision of generalreserve－-1,900,000

Total changes of items
during the year－

-1,900,000

15,631,684

13,731,684

617,502-1,099,417－

1,900,000-656,796-656,742

Net income (loss)-1,060,122

1,032,626

Changes of items during
the year-1,716,919

2,275,884-1,099,417

1,176,466

17,644,075

15,927,156－－-656,796-656,742

Net income (loss)-1,060,122

1,032,626

Total changes of items
during the year

-1,716,919

375,884

15,927,156

16,303,040-22,729-23,917

Purchase of treasury stock-1,188-1,045

Total changes of items during
the year-1,188-1,045-23,917-24,963

Changes of items during theyear
Total changes of items
during the year
Balance at end of year
General reserve
Balance at beginning of year
Changes of items during theyear

Balance at end of year
Retained earnings brought
forwardBalance at beginning of year
Total changes of items
during the year
Provision of generalreserve
Dividends from surplus

Balance at end of year
Total retained earnings
Balance at beginning of year
Changes of items during theyear
Provision of general reserve
Dividends from surplus

Balance at end of year
Treasury stock
Balance at beginning of year
Changes of items during the year

Balance at end of year

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 67

Total shareholders’ capital
Balance at beginning of year

38,278,933

36,560,825-656,796-656,742-1,060,122

1,032,626-1,188-1,045-1,718,107

374,838

36,560,825

36,935,664

163,845

234,101

Net changes of items otherthan shareholders’ equity

70,255-80,096

Total changes of items
during the year

70,255-80,096

234,101

154,004

163,845

234,101

Net changes of items otherthan shareholders’ equity

70,255-80,096

Total changes of items
during the year

70,255-80,096

234,101

154,004

38,442,779

36,794,927-656,796-656,742-1,060,122

1,032,626

Purchase of treasury stock-1,188-1,045

Net changes of items otherthan shareholders’ equity

70,255-80,096-1,647,852

294,742

36,794,927

37,089,669

Changes of items during the year
Dividends from surplus
Net income (loss)
Purchase of treasury stock
Total changes of items during
the year
Balance at end of year
Valuation and translation
adjustments
Valuation difference on
available-for-sale securities
Balance at beginning of year
Changes of items during theyear

Balance at end of year
Total valuation and translation
adjustments
Balance at beginning of year
Changes of items during theyear

Balance at end of year
Total net assets
Balance at beginning of year
Changes of items during the year
Dividends from surplus
Net income (loss)

Total changes of items during
the year
Balance at end of year

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 68

Events or conditions that create significant doubt concerning the going concern assumption
The Company had no material items to report.
Significant accounting policies
Item
1. Valuation standards andvaluation methods fornegotiable securities

Prior fiscal year

Current fiscal year

From November 1, 2008
to October 31, 2009

From November 1, 2009
to October 31, 2010

Common stock of subsidiaries andaffiliated companies
The Company has adopted the cost
method

based

upon

the

Common stock of subsidiaries andaffiliated companies
Same as at left

movingaverage method
Other negotiable securities

Other negotiable securities

Negotiable securities with a market on asecurities exchange
The Company has adopted the

Negotiable securities with a market on asecurities exchange
Same as at left

market value method (the full amountof the valuation difference is charged to
net assets using the direct transfer tocapital method, with the disposal cost
determined by the moving averagemethod) based on the market price on
the fiscal year closing date or similar
pricesOther negotiable securities without amarket price
The Company has adopted the cost
method

based

upon

the

Other negotiable securities without amarket priceSame as at left

movingaverage method

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 69

2. Appraisal standards andAmountappraisal method for

depreciation

construction equipment

according to the straight-line method

according to the straight-line methodfrom the original prices, by separate

from the original prices, by separate

after

deduction

expenseof

calculated

fiscal year of purchase(Change in accounting method)
Traditionally, the Company valued
construction

equipment

using

Amountafter

depreciation

deduction

expenseof

calculated

fiscal year of purchasetheamount after deduction of depreciation
expense calculated according to thedeclining-balancemethodfrom

theoriginal prices, by separate fiscal yearof purchase. Beginning from the fiscal
year under review, the Company willcalculate the amount after deduction ofdepreciation expense according to thestraight-line method from the original
prices,byseparate

fiscalyearofpurchase.
Becausefromrentalearnings

construction

obtained

equipment

aregenerated on average over the period
duringwhich

theconstruction

equipment is used, the Company has
made this change in conjunction withthe change of depreciation method forrental equipment from the decliningbalance method to the straight-line
method from the fiscal year underreview to similarly recognize a fixed
cost amount corresponding to earnings,
achieve
costs

a

and

correspondence

betweenearnings

calculateandaccounting period profits and losses
moreproperly

equipment

that

for

construction

contributes

to

the

acquisition of rental earnings.
As a result, for the fiscal year underreview the cost of revenues fromoperations decreased by ¥54,258,000,
and gross profit, operating income andordinary income increased by the sameamount, respectively, and loss before
taxes and adjustments decreased by
the same amount, compared to what
they otherwise would have been had
the accounting standards used in past
periods been applied.
3. Appraisal standards andappraisal method forinventories(1) Merchandise inventories and products
The Company has adopted the cost(1) Merchandise inventories and products
Same as at left

method, cost being determined basedontheLast-in,First-out

method(amounts shown on the balance sheet
arecalculatedbydetermining

write-downs of book value based on the
decline in profitability).

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 70

(2) Work in process(2) Work in process

The Company has adopted the cost

Same as at left

method, cost being determined by the
specific identification method(3) Raw materials and supplies
The Latest Purchase Cost method(3) Raw materials and supplies
Same as at left

(amounts shown on the balance sheet
arecalculatedbydetermining

write-downs of book value based on the
decline in profitability)(Change in accounting method)
Beginning from the fiscal year underreview, the Company has adopted the
Accounting Standard for Measurementof Inventories (Accounting Standards
Board of Japan Accounting Standard
Statement No. 9 dated July 5, 2006).
The effect of this change on earnings
is not material.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 71

4. Depreciation method for
fixed assets(1) Tangible fixed assets (excluding leaseassets)The Company has adopted the(1) Tangible fixed assets (excluding leaseassets)Same as at left

straight-line method for rental assets
and the declining-balance method forother assets. Buildings on land that isleased under a fixed-term land leaseagreement, however, are depreciatedusing the straight-line method using
the remaining period of the fixed-termlease as the depreciable life and zero
residual value. The depreciable lives
mainly used by the Company are as
follows.
Rental assets
2-16 years
Buildings
2-50 years(Change in accounting method)
Traditionally,theCompany

Rental assets
Buildings

2-16 years
2-50 years

depreciated rental assets using thedeclining-balance method. Beginningfrom the fiscal year under review, theCompany has changed its depreciation
method to the straight-line method.
Becauserentalearnings

obtainedfrom rental equipment are generated
on average over the period during
which the rental equipment is used, theCompany has made this change as aresult of investing a more appropriate
methodforallocationof

expensesfollowing the increase in the scale ofpurchases,

andmonetary

importanceincrease

in

of

the
rentalequipment, as a result of changing its
methodforacquisitionofrentalequipment from leasing agreements topurchases, to recognize a fixed expense
amountcorrespondingachieveatoearnings,

correspondence

betweenexpenses and earnings and calculate
accounting period profits and losses
more properly.
As a result, for the fiscal year underreview the cost of revenues fromoperations

decreased¥2,404,546,000,

and

gross

by
profit,operating income and ordinary income
increased by the same amount, andloss before taxes and adjustments
decreased

by

the

same

amount,respectively, compared to what they
otherwise would have been had theaccounting standards usedin pastperiods been applied.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 72

(Supplemental information)
Beginning from the fiscal year underreview, the Company has revised theuseful

lives

for

the

Company’s

machinery and equipment (including
equipment accounted for as rental
assets)followingthechangestostatutory useful lives based on theamendment of the Corporation Tax
Law in fiscal 2008.
As a result, operating income andordinary income were ¥37,922,000
higher, and the loss before taxes was¥37,922,000

lower,

than

theyotherwise would have been had theaccounting standards used in past
periods been applied.
(2) Intangible fixed assets (excluding
lease assets)
The Company has adopted the(2) Intangible fixed assets (excluding
lease assets)
Same as at left

straight-line method.
Software for use within the Company
is depreciated using the straight-line
method based on the assumed usefullife for internal use (5 years)(3) Lease assets(3) Lease assets

The

CompanyhasadoptedtheSame as at left

straight-line method using the leaseterm as the depreciable life and zero
residual value.
The Company accounts for financelease transactions except for leases
thattransferownershipoftheproperty for which the lease start dateis before October 31, 2008 by applying
accounting treatment based on themethod applied for ordinary rental
transactions.
(4) Long-term prepaid expenses
The

Companyhas(4) Long-term prepaid expenses
adoptedSame as at left

straight-line depreciation.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 73

5. Standard for conversion of

The Company converts monetaryforeignclaimsandmonetary

currency-denominateddenominated in foreign currencies into

assets or liabilities into

Japanese yen at the spot market

Japanese yen

exchange rate on the fiscal year

Same as at left

liabilities

settlement date, and charges thetranslation difference to income as again or loss.
6. Accounting standards for(1) Allowance for doubtful accounts(1) Allowance for doubtful accounts

allowances and reserves
To provide for losses on doubtfulSame as at left

accounts such as accounts receivable,
the Company charges to income anamountbasedonactualloss

experience for normal accounts, plusanamountunrecoverableforamounts

projected
based

on

assessments of individual accounts.
(2) Accrued bonuses to employees(2) Accrued bonuses to employees

To fully provide for expenditures ofSame as at left

bonuses the Company will pay toemployees, an amount is appropriatedto the reserve during the fiscal year
based upon a salary estimate amount.
(3) Accrued employees retirement(3) Accrued employees retirement

benefits

benefits

The Company provides for accrued
employees retirement benefits

upon the projected amounts ofliabilityforaccruedSame as at left

based
the

employees

retirement benefits and the value ofpension assets at the end of the fiscal
year.
At the end of each fiscal year, theCompany appropriates an amount to
the reserve to provide for the liability
recognized during the period. Past
years’

servicewritten

off in the year incurred.

liabilities

are

fully

The difference based on an actuarial
calculationischargedtoincomebeginning in the fiscal year following
the year in which incurred, with theamounts

allocated

proportionately

using the straight-line method, basedon a specified number of years (10years) that is less than the averageremaining period of employment for
employees at the time the difference
arises.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 74

(Change in accounting method)
Beginning from the fiscal year underreview, the Company has adopted thePartial Amendments to the AccountingStandard for Retirement Benefits (Part3) (Accounting Standards Board ofJapan Accounting Standard Statement
No. 19 dated July 31, 2008).
Theeffectof

thischangeonoperating income, ordinary income
and income before income taxes is notmaterial.
(4) Retirement allowances to directors(4) Retirement allowances to directors

and auditors

and auditors

The

Company

providesfor

Same as at left

retirement allowances to directors andauditors based upon pertinent rules
and appropriated to the account at theend of the fiscal year proportionately
based upon length of service.
(5) Reserve for investment losses(5) Reserve for investment losses

The Company provides for losses

Same as at leftfrom the decline in real prices of assets
such

as

the

stock

of

subsidiarycompanies that are subject to asset
impairment accounting by applying
internally established standards that
take

into

consideration

subsidiarycompany operating results and asset
quality.
(6) Provision for loss on guarantees(6) Provision for loss on guarantees

To provide for losses resulting fromthefutureexecutionofSame as at left

liability

guarantees, the Company charges toincome a reasonably estimated loss
amount based on the outstanding
amount of guarantees.
7. Accounting standards forconstruction works
revenues and costAccounting standards for amount ofcompleted works and cost of construction
works
a. Construction works for which theportion of the works completed by theend of the year can be reliably
determined
Percentage-of-completion method(progressin

construction

works

is

estimated using the cost comparison
method)b. Other construction works
Completed-contract method

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 75

(Change in accounting method)
The Company traditionally reported
revenues and costs of construction
contracts

byapplying

completed-contract

themethod.

Beginning from the fiscal year underreview, the Company will apply the
Accounting Standard for Construction
Contracts(AccountingStandards

Board of Japan Statement No. 15,
December 27, 2007) and the Guidanceon

AccountingStandard

forConstruction

Contracts(AccountingStandards

Board

of

Implementation

Guidance

Japan
No.

18,

December 27, 2007). Beginning fromworks contracts for which construction
activity was begun during the fiscal
year under review, the Company will
apply the percentage of completion
method

for

works

for

which

the

outcome of the construction activity isdeemed certain by the end of the fiscal
year under review (with the estimateof the percentage of completion basedon the cost incurred as a percentage of
estimated total cost), and will apply
the completed-contract method for allother works.
The effect of this change on earnings
8. Hedge transactions

is not material.
(1) Hedge transactions(1) Hedge transactions
The Company accounts for hedge

Same as at lefttransactions using allocations basedon accounting standards for foreign
currency-denominatedtransactions,and special rule accounting based on
accounting

standards

forfinancial

products.
(2) Hedge methods and hedgedtransactions
The Company uses currency swaps(2) Hedge methods and hedgedtransactions
Same as at left

and forward transactions in order toavoid the currency fluctuation risk
relatedtotheCompany’s

foreigncurrency-denominated straight bonds
and liabilities for import payments.
The Company also uses interest swaps
to avoid interest rate fluctuation risk
related to interest on bank borrowing.
(3) Hedging policies
The Company’s use of derivative(3) Hedging policies
Same as at lefttransactions is limited to hedging risk
within the scope of the Company’s
assets and liabilities subject to market
fluctuation risk.
(4) Method for evaluating theeffectiveness of hedges(4) Method for evaluating theeffectiveness of hedges

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 76

The Company does not evaluate theSame as at left

effectiveness of its hedge transactions
becauseitcurrency

swap

can

assumethattransactions

its
and

forward transactions will completely
offset market fluctuations or changes
in cash flow from the time the hedge
begins

until

it

is

terminated.

In

addition, the Company’s interest swap
transactions fulfill the requirements
for special rule accounting, and theCompany has elected to use this inplace of an evaluation of effectiveness.
9. Other significant mattersfor preparation of the fiscal
year financial statements

Accounting treatment of consumption tax
Consumption tax is taken out of all
StatementofIncomeitems

Accounting treatment of consumption tax
Same as at left

andBalance Sheet items, except mainly
for receivables and payables.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 77

Change in Accounting Method
Prior fiscal year
From November 1, 2008
to October 31, 2009

Current fiscal year
From November 1, 2009
to October 31, 2010

(Accounting Standard for Lease Transactions)(Application of the Accounting Standard for Business
Combinations etc.)

Traditionally, the Company accounted for finance leasetransactions except for leases that transfer ownership of
the property by applying accounting treatment based on
the method applied for ordinary rental transactions.
Beginning from the fiscal year under review, theCompany has adopted the Accounting Standard for Lease
Transactions (Accounting Standards Board of Japan
Statement No. 13, June 17, 1993 (Business Accounting
Council Subcommittee No. 1), revised March 30, 2007)
and the Implementation Guidance on AccountingStandard for Lease Transactions (Guidance on
Accounting Standard for Lease Transactions No. 16,
January 18, 1994 (The Japanese Institute of Certified
Public Accountants, Accounting System Committee),revised March 30, 2007), and will apply the standard forlease transactions based on the accounting treatment
applied for ordinary purchase and sale transactions.
In addition, the Company has adopted the straight-line
method using the lease term as the depreciable life andzero residual value as the depreciation method for leaseassets related to finance lease transactions except forleases that transfer ownership of the property.
For finance lease transactions except for leases thattransfer ownership of the property that began before thefirst year in which the lease accounting standard wasapplied, the Company will continue to apply accounting
treatment based on the method applied for ordinary
rental transactions.
The affect of this change on earnings is not material.

In conjunction with the application of the AccountingStandard for Business Combinations (AccountingStandards Board of Japan Statement No. 21, December
26, 2008, the Partial Amendments to the AccountingStandard for Research and Development Costs(Accounting Standards Board of Japan Statement No. 23,
December 26, 2008), the Accounting Standard forBusiness Divestitures (Accounting Standards Board ofJapan Statement No. 7, December 26, 2008) and the
Revised Guidance on the Accounting Standard forBusiness Combinations and Accounting Standard forBusiness Divestitures (Accounting Standards Board ofJapan Guidance No. 10, December 26, 2008) beginningfrom the first business combination and businessseparation that is implemented on or after April 1, 2010,
beginning from the fiscal year under review the Company
will apply these accounting standards for businesscombinations and business divestitures implemented on
or after April 1, 2010.

Change in Presentation Method
Current fiscal year
From November 1, 2009
to October 31, 2010

Prior fiscal year
From November 1, 2008
to October 31, 2009
(Balance sheet)
Beginning from fiscal year under review the Company
will classify items reported as “inventories” and “supplies”
in the prior fiscal year into “merchandise inventories andproducts” and “raw materials and supplies” in conjunction
with the requirement to apply the Cabinet Office
Ordinance on Partial Revision of the Regulation for
Terminology, Forms and Preparation of Financial
Statements and Other Regulations (Cabinet Office
Ordinance No. 50, August 7, 2008). The amounts of“inventories" and “supplies” included in “inventory” in theprior fiscal year were ¥259,968,000 and ¥72,526,000,
respectively.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 78

Notes to the Financial Statements(Notes to the Balance Sheets)(Unit: Thousands of yen)
Prior Fiscal Year(As of October 31, 2009)

Current Fiscal Year(As of October 31, 2010)*1. Reduction to book value
Amounts for assets acquired for which accumulated
book values were reduced by government subsidies
Machinery and equipment

5,044

Land

3,569

Total

8,613

2. Contingent liabilities

2. Contingent liabilities

Joint and several guarantees ofbank loans to employees (Bankof Tokyo-Mitsubishi UFJ, others)

34,788

Joint and several guarantees ofbank loans to employees (Bankof Tokyo-Mitsubishi UFJ, others)

34,788

Guarantee of consolidated
subsidiary debt (Kanki
Corporation)

433,877

Guarantee of consolidated
subsidiary debt (Kanki
Corporation)

447,726

100,000

Guarantee of borrowing liabilities
of Flowtechno Corporation, a
non-consolidated subsidiarycompany

100,000

Guarantee of borrowing liabilities
of Flowtechno Corporation, a
non-consolidated subsidiarycompany
Guarantee of installment
payment liabilities of SJ Rental,
Inc., a non-consolidated
subsidiary company
Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Equipment Rental Co., Ltd., a
non-consolidated subsidiarycompany
Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Equipment Rental Co., Ltd., a
non-consolidated subsidiarycompany
Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., a non-consolidated
subsidiary company
Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., a non-consolidated
subsidiary company
Guarantee of borrowing liabilities
of KG Machinery Co., Ltd., a
non-consolidated subsidiarycompany
Guarantee of installment
payment liabilities of KG
Machinery Co., Ltd., a
non-consolidated subsidiarycompany

US$1,945,000(177,884)

10,000,000 yuan
(133,900)

118,033,000 yuan
(1,580,468)

57,800,000 yuan
(773,942)

93,099,000 yuan
(1,246,603)

29,05066,439

Guarantee of installment
payment liabilities of SJ Rental,
Inc., a consolidated subsidiarycompany
Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Equipment Rental Co., Ltd., aconsolidated subsidiary company
Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Equipment Rental Co., Ltd., aconsolidated subsidiary company
Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., a consolidated subsidiarycompany
Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., a consolidated subsidiarycompany

US$1,503,000(121,627)

28,572,000 yuan
(345,149)

128,066,000(1,547,046)

49,144,000 yuan(593,659)

115,990,000 yuan
(1,401,169)

Guarantee of borrowing liabilities
of KG Machinery Co., Ltd., a
non-consolidated subsidiarycompany

15,010

Guarantee of installment
payment liabilities of KG
Machinery Co., Ltd., a
non-consolidated subsidiarycompany

52,693

Summary of Company Financial Statements, FY Ended October 31, 2010P. 79

*3. Liquidation of receivables based on receivables
The Company liquidates receivables based on a

The Company liquidates receivables based on areceivables transfer facility agreement.

receivables transfer facility agreement.
Notes receivable, trade*3. Liquidation of receivables based on receivablestransfer facility

transfer facility

5,126,484

Notes receivable, trade

4,732,008

Liquidated claims bearing a right of recourse to the

Liquidated claims bearing a right of recourse to theCompany and included in the balance of notes

Company and included in the balance of notes

receivable, trade transferred total ¥1,321,551.

receivable, trade transferred total ¥1,046,075.

*4. Notes and bills maturing at the end of the fiscal year

*4. Notes and bills maturing at the end of the fiscal year

Notes and bills maturing on the last day of the fiscal

Notes and bills maturing on the last day of the fiscal

year are settled and processed on the note and billyear are settled and processed on the note and billclearing date. Because the last day of the Company’s

clearing date. Because the last day of the Company’s

current fiscal year was a financial institution holiday,

current fiscal year was a financial institution holiday,

notes and bills maturing on the final day of thenotes and bills maturing on the final day of thefollowing fiscal year are included in the fiscal year

following fiscal year are included in the fiscal year

interim accounting period balance.

interim accounting period balance.

Notes receivable, trade
Notes payable, trade
Equipment notes payable

26,162
1,410,626
11,658Notes receivable, trade
Notes payable, trade
Equipment notes payable

30,8691,118,555
12,658

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 80

(Notes to the Statements of Income)(Unit: Thousands of yen)
Current fiscal year
(From November 1, 2009
to October 31, 2010)

Prior fiscal year
(From November 1, 2008
to October 31, 2009)*1. Transactions with affiliates*1. Transactions with affiliates

Seconded employees’ salaries

46,301

Seconded employees’ salaries

35,885

Rents received

123,441

Rents received

125,778*2. Balance in other accounts transferred to cost ofrentalequipment

assetsandconstruction

equipment

assets648,082

Rental equipment assets

312

Construction equipment

Construction equipment
Total

rentalandconstruction

equipment soldequipment sold
Rental equipment assets*2. Balance in other accounts transferred to cost of

648,395*3. Gain on sale or retirement of fixed assets

Total

662,673517
663,191*3. Gain on sale or retirement of fixed assets

Building

25

Building

2,426

Tools, furniture and fixtures

64

Tools, furniture and fixtures

1,355

Total

89

*4. Loss on sale or retirement of fixed assets

Land

3,781

*4. Loss on sale or retirement of fixed assets(Loss on sale of fixed assets)(Loss on sale of fixed assets)
Machinery and equipment

Total

39

Buildings

40

Structures

130

Tools, furnishings and fixtures

200(Loss on retirement of fixed assets)

266

11,246Land

Buildings

43,232(Loss on retirement of fixed assets)

Structures

5,714

Rental equipment assets

33,171

Machinery and equipment

3,692

Buildings

16,549Vehicles and delivery equipment

339

Structures

3,660

Tools, furnishings and fixtures

1,603

Machinery and equipment

1,399

7,759

Vehicles and delivery equipment

360

73,668Tools, furnishings and fixtures

1,162

Rental equipment assets

Other
Total

Other
Total

10,344

0
67,245

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 81

Current fiscal year
(From November 1, 2009
to October 31, 2010)

Prior fiscal year
(From November 1, 2008
to October 31, 2009)*5. Impairment loss
During this fiscal year the Kanamoto Group incurred
an impairment loss on the following asset groups.
Location

Use

Asset

Tomakomai City,
Hokkaido

Dormant assets

Land

Asset groupings used by the Kanamoto Group to
apply asset impairment accounting are based on theblock classified as the smallest segment for which
profitability

can

be

determined

regularlybybusiness. Specifically, dormant assets are grouped
as units that generate independent cash flow.
For certain dormant assets for which the asset
value was less than book value, the Company
reduced book value to the recoverable value, andaccounted for the reduction as an impairment loss(¥312,000)

under

extraordinary

losses.

This¥312,000 was for land.
The recoverable value for this asset group ismeasured according to net sales price, and the landis evaluated using the inheritance tax assessment
value based on the land tax assessment value orother amount as a base.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 82

(Statements of Changes in Net Assets)
Prior fiscal year (From November 1, 2008 to October 31, 2009)Class of treasury stock and number of shares(Thousands of shares)
Number of shares at Increase in number Decrease in number Number of shares at
end of prior fiscal of shares during the of shares during the end of the current
current fiscal year
year
current fiscal year
fiscal year
Treasury stock
Common stock(Note)

Total

30

3

－

34

30

3

－

34

(Note) The number of treasury stock shares of common stock increased by 3,000 shares through purchasesof shares comprising less than one investment unit.

Current fiscal year (From November 1, 2009 to October 31, 2010)
Class of treasury stock and number of shares(Thousands of shares)
Number of shares at Increase in number Decrease in number Number of shares at
end of prior fiscal of shares during the of shares during the end of the current
current fiscal year
year
current fiscal year
fiscal year
Treasury stock
Common stock(Note)

Total

34

2

－

36

34

2

－

36

(Note) The number of treasury stock shares of common stock increased by 2,000 shares through purchasesof shares comprising less than one investment unit.

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 83

(Notes for Leasing Transactions)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)

Current Consolidated Accounting Fiscal Year
(From November 1, 2009
to October 31, 2010)

1. Finance lease transactions (Lessor)

1. Finance lease transactions (Lessor)

Finance lease transactions except for leases that

Finance lease transactions except for leases thattransfer ownership of the property to the lesseetransfer ownership of the property to the lesseea) Lease assetsa) Lease assets

Tangible fixed assets

Tangible fixed assets

Construction-related business rental assets and tools,

Same as at left

furnishings and fixturesb) Method of depreciation for lease assetsb) Method of depreciation for lease assets

Lease assets are depreciated according to the method

Same as at left

described in “4. Depreciation methods for principal
depreciable assets” in the Important Matters Used as theBasis for Preparation of the Financial Statements.
The Company accounts for finance lease transactions
except for leases that transfer ownership of the property
for which the lease start date is before October 31, 2008
by applying accounting treatment based on the method
applied for ordinary rental transactions. Details areprovided below.
(1) Amounts corresponding to lease property(1) Amounts corresponding to lease property
acquisition price, accumulated depreciation andacquisition price, accumulated depreciation andoutstanding balances at the end of the fiscal year

outstanding balances at the end of the fiscal year

Acquisition
price

Acquisition
price

Outstandingbalance

Rental assets

23,696,944

10,752,533

12,944,411

Tools,
furnishings
and fixtures

9,662

5,580

4,082

23,706,607

10,758,113

12,948,493

Total(2) Outstanding balance of future lease payments at
the end of the fiscal year
Within one year
After one year
Total

Acquisition
price

Acquisition
price

Outstandingbalance

Rental assets

17,080,348

8,938,093

8,142,254

Total

17,080,348

8,938,093

8,142,254(2) Outstanding balance of future lease payments at
the end of the fiscal year

4,307,600

Within one year

2,762,381

9,100,038

After one year

5,830,329

13,407,638(3) Amount of lease payments, depreciation expense
and interest expense

Total

8,592,710(3) Amount of lease payments, depreciation expense
and interest expense

Lease payments

4,844,575

Lease payments

3,613,452

Depreciation expense

3,958,767

Depreciation expense

2,440,470Interest expense

442,387(4) Accounting method for amount equivalent todepreciation expense

Interest expense

282,560(4) Accounting method for amount equivalent todepreciation expense

Straight-line depreciation using the lease term as theSame as at leftdepreciable life and zero residual value.
(5) Accounting method for amount equivalent tointerest expense(5) Accounting method for amount equivalent tointerest expense

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 84

Interest method using the difference between total

Same as at left

lease payments and the acquisition price of the leaseproperty as the amount equivalent to interest, allocatedto each year.
2. Operating leases

2. Operating leases

Prepaid lease payments pertaining to non-cancellable
operating lease transactions

Prepaid lease payments pertaining to non-cancellable
operating lease transactions

Within one year

1,702,940

Within one year

1,541,889

After one year

3,245,720

After one year

3,576,530

Total

4,948,660

Total

5,118,419

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 85

6. Others(1) Changes to Directors
a. Change to representative director
There are no pertinent items.
b. Changes to other directors
Auditors scheduled to be newly appointed
Standing Corporate Auditor

Naoyuki Yokota

AuditorHisao Oba (North Pacific Bank, Ltd., Standing Corporate Auditor)

Auditors schedules to retire
Standing Corporate Auditor

Toshizo Okumura

AuditorHideto Otsu

Planned date of new appointments and retirements
January 27, 2011

Summary of Company Financial Statements, FY Ended October 31, 2010
P. 86