Fiscal Year ended October 31, 2009

Financial Statements Bulletin
December 4, 2009
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 81-11-209-1600
Please send inquiries in English to takayama@kanamoto.co.jp.
Date for Regular General Meeting of the Shareholders: January 28, 2010
Date for start of dividend payments:
January 29, 2010
Date for submission of Annual Report:
January 28, 2010

1. Consolidated Operating Results for the Fiscal year ended October 31, 2009

(Nov. 1, 2008 – Oct. 31, 2009)(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%

Millions of yen

Ordinary Income (Loss)%

Millions of yen%

Fiscal year ended
October 31, 2009

63,863

-8.0

137

-93.8

-222

－

Fiscal year ended
October 31, 2008

69,411

1.1

2,227

-47.4

2,028

-54.1

Net Income (Loss)
Millions of yen%

Net Income (Loss) per Share ofCommon StockYen

Net Income per Share on a Fully
Diluted Basis
Yen

Fiscal year ended
October 31, 2009

-1,158－-35.28－

Fiscal year ended
October 31, 2008

644

-78.8

19.61

－

Notes 1. Investment profit or loss accounted for by the equity method－
Fiscal year ended October 31, 2009
Fiscal year ended October 31, 2008－

(2) Consolidated Financial Position
Total Assets

Shareholders’EquityShareholders’Equity Ratio

Shareholders’ Equity
per Share%

Yen

Millions of yen

Millions of yen

Fiscal year ended
October 31, 2009

96,43536,54137.5

1,102.51

Fiscal year ended
October 31, 2008

91,741

38,20241.4

1,155.47

Notes 1. Owners’ equity and valuation and translation adjustments: (Millions of yen)
Fiscal year ended October 31, 2009¥36,203
Fiscal year ended October 31, 2008
¥37,947

Summary of Company Financial Statements, FY Ended October 31, 2009P. 1

(3) Consolidated Cash Flows
Cash Flow fromOperating Activities

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

Cash Flow from
Investing Activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

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

3,456-4,125341

17,566

Fiscal year ended
October 31, 2009
Fiscal year ended
October 31, 2008

2. Dividends
Dividends per share
End ofFirst
quarter

End ofSecondquarter

End ofThird
quarterYearend

Yen

Yen

Yen

Yen

Yen

Fullyear

Dividends in
Total(full year)

Dividend
payout ratio(consolidated)

Dividends on
net assets(consolidated)

Millions of
yen

%

%

Fiscal year ended
October 31, 2008

10.00

10.00

20.00

656

102.0

1.7

Fiscal year ended
October 31, 2009

10.00

10.00

20.00

656

－

1.8

10.00

10.00

20.00

Fiscal year ending
October 31, 2010

597.0

(projected)

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

Millions of yen

Net Income per

Operating

Revenues

Ordinary Income

IncomeNet Income

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

Yen

Interim period

35,200

8.0

1,730

87.7

1,510

90.2

700

－

21.32

Full year

67,100

5.1

1,150

737.5

710

－

110

－

3.35

4. Other(1) Changes to material subsidiaries during the period (transfer of specified subsidiaries in conjunction withrevision to scope of consolidation)? No(Note) For details, please refer to “Current Conditions of the Company’s Group” on page 11.
(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)? Yes(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, 2009 32,872,241 sharesFiscal year ended October 31, 2008 32,872,241 shares(b) Number of shares of treasury stock at end of period
Fiscal year ended October 31, 2009
34,385 sharesFiscal year ended October 31, 2008
30,848 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 page 56.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 2

(Reference) Summary of Company Operating Results

1. Operating Results for the Fiscal year ended October 31, 2009
(November 1, 2008–October 31, 2009)(1) Operating Results(Numbers less than one million yen have been rounded down)
Revenues

Operating Income

Millions of yen%

Ordinary Income

Millions of yen%

Millions of yen%

Fiscal year ended
October 31, 2009

54,447

-10.0

417

-83.1

172

-92.7

Fiscal year ended
October 31, 2008

60,473

-1.8

2,461

-38.7

2,369

-45.8

Millions of yen

Net Income per Share ofCommon Stock Fully Diluted
Yen

Net Income (Loss) per Share ofCommon StockYen

Net Income (Loss)%

Fiscal year ended
October 31, 2009

-1,080－-32.28－

Fiscal year ended
October 31, 2008

183

-94.7

5.59

－

(2) Financial Position
Total Assets

Shareholders’Shareholders’Shareholders’ Equity

EquityEquity Ratio

per Share

Millions of yen

Millions of yen

Fiscal year ended
October 31, 2009%

Yen

88,53936,79441.6

1,120.50

Fiscal year ended
October 31, 2008

85,40038,44245.0

1,170.56

Notes 1. Owners’ equity and valuation and translation adjustments: (Millions of yen)
Fiscal year ended October 31, 2009
¥36,794
Fiscal year ended October 31, 2008
¥38,442

2. Projected Operating Results for the Fiscal Year Ending October 31, 2010
(November 1, 2009 - October 31, 2010)(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
21.62
7.92

Interim period

28,500

4.1

1,500

135.2

1,340

147.9

710

－

Full year

55,100

1.2

880

110.9

550

219.7

260

－

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, 2009
P. 3

1. Operating results(1) Analysis of operating resultsa) Summary of consolidated fiscal year operating results
During the Kanamoto Group’s Business Period ended October 2009, Japan’s domestic economy slowed
abruptly from the beginning of the period because of the global economic downturn. As individuals and firms
curtailed spending and foreign demand declined, the operating results of export-oriented firms deteriorated
and companies continued to postpone or cancel domestic capital investment. These conditions rippled throughother industries, creating an unfavorable economic climate. For personal consumption as well, it was a year
when deflation concerns grew darker day by day and talk remained focused only on low-price consumer goods,
despite a temporary surge in demand centered on home electrical appliances and environmentally-friendly
automobiles following the introduction of an “eco-point system” and a tax reduction, because of declining
incomes.
In the construction industry, which is the main customer of the Kanamoto Group, construction demand ingeneral fluctuated without any clear direction. In addition to the current downward trend in public works, allprivate sector works exhibited a broad plunge, beginning with the reduction of private sector capital
investment in sectors such as electrical machinery and automobiles under the impact of the global recession.
Markets such as residential construction, including condominiums, were affected as well. The result was anextremely severe operating environment, perhaps captured best by the conspicuous wave of bankruptcies
that continued from the previous year among middle-market firms and large local companies.
For the Kanamoto Group, rental revenues as a whole did not grow. Although Kanamoto implemented steps tostrengthen sales efforts, by working with affiliated companies and alliance firms in response to the severe
environment caused by the slump in construction demand, and successfully maintained its market share invarious regions, the industry saw order volume decline in absolute terms, and rental unit prices continued todrop as competition for a shrinking pie intensified.
Merchandise inventory sales, which expanded steadily in the previous consolidated fiscal year, were also weak
and steel products sales, domestic sales of construction-related equipment and overseas sales of used
construction equipment all fell below the level of the previous consolidated fiscal year as a result of the decline
in domestic and foreign demand caused by the global economic downturn.
Earnings were affected by the large decline in rental revenues caused by intensive competition and lower unit
prices in response to the shrinking volume of construction work. Operating income fell substantially below theresults in the previous consolidated fiscal year, and as a result Kanamoto reported its first ordinary loss and net
loss since the Company was established. With regard to net income in particular, stock prices that had
recovered by the third quarter fell again because of concerns regarding the recovery of the U.S. economy andworries over deterioration of corporate performance in Japan as the yen continued to appreciate, andconsequently the Company was compelled to book a valuation loss on investment securities. The Company
also increased its respective reserves for shares of and loans to unconsolidated subsidiaries on the basis of
more conservative judgments.
As a result of these factors, revenues for the consolidated fiscal year ended October 31, 2009 decreased 8.0%
from the previous consolidated fiscal year to ¥63,863 million, and operating income fell 93.8% year-on-yearto ¥137 million. The ordinary loss was ¥222 million, and for the period Kanamoto reported a net loss of ¥1,158
million. A summary of operating results for each of the Company’s businesses, and business development
issues deserving special mention, are described below.

Summary of Company Financial Statements, FY Ended October 31, 2009
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)

63,863-8.0%

137 -93.8%

-222

－

69,411

1.1%

2,227 -47.4%

2,028-54.1%

54,447 -10.0%

417 -83.1%

172-92.7%

2,461 -38.7%

2,369-45.8%

60,473-1.8%-1,158－644 -78.8%-1,060－183 -94.7%b) Summary of consolidated operating results by business segment[Business related to the Construction Equipment Rental Division]
The economic measures implemented by the former ruling Liberal-Democratic Party to spur an economic
recovery were partly suspended following the change in government as a result of the election in August 2009.
Nevertheless, in the Hokkaido Region the effect of the stimulus measures was evident even after the third
quarter, and the expansion of public works demand was sufficient to offset the weakness in demand during thefirst half of the consolidated fiscal year. In the Tohoku Region the private sector demand that had been
expected, including construction of a new automobile-related plant, dried up entirely, and with orders for
public works to compensate for this situation being weak as well, demand sank well below the level seen in theprevious consolidated fiscal year.
In the Kanto Region as well, which benefited from the Haneda Airport Expansion Project and other large-scale
works and enjoyed steady demand through the first quarter, general private sector construction works in theTokyo metropolitan area contracted sharply in subsequent quarters, erasing the accumulated revenue growthfrom large-scale projects. In the Kinki & Chubu Region, both public and private sector demand was weakthroughout the year in the Kansai and Tokai areas, a sharp contrast to the robust conditions in 2008. The
situation was similar in the Kyushu & Okinawa Region.
Compared with the previous consolidated fiscal year, construction equipment rental revenues by region edged
up 1.5% in the Hokkaido Region, decreased 7.6% in the Tohoku Region, slipped 0.9% in the Kanto Region andcontracted 9.9% and 4.4% in the Kinki & Chubu Region and the Kyushu & Okinawa Region, respectively. As aresult, rental revenues for Kanamoto’s construction equipment rental division were off 3.6% from the previous
fiscal year to ¥44,215 million. The percentage of revenues accounted for by Hokkaido and by Honshu andother regions was 32.5% and 67.5%, respectively.
Moreover, net sales for the Construction Equipment Rental Division from overseas sales of used construction
equipment were sharply lower than in the previous consolidated fiscal year, declining 46.9% during the period
as Kanamoto restricted sales in light of conditions in the used construction equipment market and theCompany’s rental asset strategy for the future. Domestic sales of used equipment were also weaker. As aresult, total net sales for the Construction Equipment Rental Division were ¥13,556 million, 20.1% lower thanin the previous consolidated fiscal year.
For the construction-related businesses of the entire Kanamoto Group, consolidated revenues decreased 8.0%
from the previous consolidated fiscal year to ¥57,771 million, and operating income plunged 93.0%
year-on-year to ¥151 million.
[Business related to the Steel Sales Division]
The Steel Sales Division generated revenues of ¥5,639 million. This was 7.5% lower than in the previous

Summary of Company Financial Statements, FY Ended October 31, 2009P. 5

consolidated fiscal year. Operating income was ¥20 million, down 38.5% year-on-year. Despite a jump in steel
products sales in Hokkaido, which greatly surpassed results in the previous consolidated fiscal year as orders
related to public works rose in the fourth quarter, the effects of the slump in private sector demand were felt
throughout the year.
[Business related to the Information Products Division and Other Businesses]
Rental revenues for the Information Products Division were down 11.0% compared with the previous
consolidated fiscal year. Overall replacement demand for new models contracted, as customers sought toreduce costs and extended their rental contract maturities. Sales of used devices also were lower, as used PC
sales fell 14.6% year-on-year because the return cycle for rental assets lengthened. For the division as a whole,revenues decreased 11.4% year-on-year to ¥452 million, and operating income slumped 62.3% from theprevious consolidated fiscal year to ¥22 million[Change in number of branches]
During the consolidated fiscal year under review, Kanamoto newly opened or expanded 33 branches andclosed 12 branches in its construction-related businesses. In operations other than its construction-related
businesses, the Company did not add or close any branches.

(2) Analysis concerning financial positiona) Summary of consolidated fiscal year operating results(Millions of yen)

FY Ended October 2008 FY Ended October 2009
(Previous Consolidated(Consolidated Fiscal
Fiscal Year)
Year Under Review)

Change from
Prior Year

Cash flow from operating activities

3,456

2,076

–1 , 3 7 9Cash flow from investing activities–4 , 1 2 5–3 , 1 9 2933

Cash flow from financing activities

341–2 , 4 3 9–2 , 7 8 0

Decrease in cash and equivalents–3 2 7–3 , 5 5 4–3 , 2 2 7

17,213

17,566352

17,566

14,086–3 , 4 8 0

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 fiscal
year under review decreased ¥3,480 million from the previous consolidated fiscal year to ¥14,086 million.
Cash flows for the consolidated fiscal year under review are discussed below.
(Cash flow from operating activities)
Cash generated as a result of operating activities decreased 39.9% from the previous consolidated fiscal yearto ¥2,076 million.
This mainly reflected the net loss before taxes and adjustments, an increase in expenditures for acquisition ofrental assets and lower payments for items such as corporate and other taxes.
(Cash flow from investing activities)
Cash flow used in investing activities decreased 22.6% from the previous consolidated fiscal year to ¥3,192
million.
This mainly reflected a decrease in funds used for the purchase of tangible fixed assets and an increase infunds used for the purchase of investment securities.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 6

(Cash flow from financing activities)
Cash flow used as a result of financing activities was ¥2,439 million, compared with cash flow provided as aresult of financing activities of ¥341 million in the previous consolidated fiscal year.
This primarily reflected a decrease in funds provided by long-term bank loans and an increase in funds used to
repay long-term bank loans, and an increase in funds used for repayment of installment obligations.
The cash flow indicator trends for the Kanamoto Group are provided below.

Shareholders’ equity ratio (%)
Shareholders’ equity ratio on amarket capitalization basis (%)
Years to repay debt
Interest coverage ratio (times)(Notes) Shareholders’ equity ratio:

FY Ended

FY Ended

FY Ended

FY Ended

October 2006

October 2007

October 2008

October 2009

43.7

46.9

41.4

37.5

32.0

41.3

11.2

13.2

3.5

6.4

10.2

20.2

21.0

11.9

7.1

3.3

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:

Operating cash flow / 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 2010)
Aspects of Japan and the Japanese economy experienced an extreme makeover in 2009, ranging from atransfer of power from the long-ruling Liberal-Democratic Party to the Democratic Party of Japan, to afull-fledged review during the process of formulating a budget draft for the new fiscal year. Yet as various
countries that made public works the centerpiece of their economic stimulus measures noted signs of arecovery, Japan did not announce any specific policies for future economic growth and remained in limbo, andas a deflationary trend picked up steam a clear path to economic recovery remained to be found. Although the
Bank of Japan embarked on quantitative easing to the tune of ¥10 trillion, the extent to which Japan will beable to avoid appreciation of the yen and sinking stock prices is uncertain. Kanamoto believes that overall, thebusiness period ending in October 2010 will be an opaque, uncertain year, during which it will be difficult if not
impossible to ascertain growth potential.
With regard to construction demand during the next consolidated fiscal year, during fiscal 2009 it was possible
to anticipate public works as an economic stimulus measure by the previous administration. On the other handa reduction of expenditures for public works by the current government beginning from fiscal 2010 appears to
be inevitable. This includes calls to halt and review large-scale public works, best symbolized by dam
construction of various regions, which are currently under construction. At the same time, as corporate profits
have withered with deflation, firms have not regained their appetite for capital investments, and Kanamoto
considers the probability of a substantial recovery in private sector construction demand to be low.
As a result of these factors, in the main business of the Kanamoto Group in construction equipment rentals
firms will be hard pressed by the painful, severe management conditions to generate earnings, just as in othercorporate services, despite growing reliance on equipment rentals, and because of the drop in construction
demand and severe competition among firms, moves to lower prices without regard for costs will continue.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 7

In the used construction equipment market, on the other hand, foreign demand could not be met in November
2009 because of short supplies of used construction equipment, and market prices have jumped as well. Yet
despite the sense that used construction equipment demand worldwide is recovering and the market is moving
upward after hitting bottom, unit selling prices can be expected to fall and put downward pressure on earnings
if the yen’s appreciation trend continues.
In response to this severe environment, Kanamoto has formulated a new five-year plan to transform itself into
a new Kanamoto. During the Business Period ending October 2010, the first year of its plan, Kanamoto willcontinue its current business improvement measures, and position the fiscal year as the period forstrengthening its business position and maintaining its capabilities, and will hold firm to its growth strategy bybasically continuing its traditional strategy. Specifically, domestically the Company will strive to further
develop wide-ranging businesses capable of generating positive results, while eliminating wasteful activities tothe extent possible by controlling costs resulting from additions to assets and facilities, reviewing expenditures,and strengthening the Company’s business and financial position. In addition, Kanamoto’s Group of domestic
and foreign firms has grown to 22 companies, and Kanamoto will redouble sales efforts as a unified groupthrough greater information sharing.
In its steadily expanding overseas operations, Kanamoto established KANAMOTO (HK) CO., LTD. as its newest
foreign entity after the Shanghai Jinheyuan Equipment Rental Co., Ltd. Group and SJ Rental, Inc. (Territory ofGuam, United States), and will work to continuously expand its business with these and other companies as
the foundation of the next-generation Kanamoto.
Beginning from the Business Period ending October 2010, the Shanghai Jinheyuan Equipment Rental Co., Ltd.
Group will be a consolidated subsidiary.
The Company’s earnings projection for the Business Period ending October 2010 is shown in the table below.
Fiscal year ending October 2010 Projected Operating Results (November 1, 2009-October 31, 2010)(Millions of yen except net income per share, which is in yen)
Revenues

Consolidated

Non-consolidated

OperatingincomeOrdinary
incomeNet income(loss)(loss)Net income
per share ofcommonstock

Full-year projection

67,100

1,150

710

110

3.35

Prior period(FY ended October 2009)

63,863137–2 2 2–1 , 1 5 8

35.28

Full-year projection

55,100

880

550

260

7.92

Prior period(FY ended October 2009)

54,447417

172–1 , 0 6 0

32.28

Fiscal year ending October 2010 Projected Financial Position (November 1, 2009 -October 31, 2010)(Cash flow from operating activities)
Cash flow from operating activities is projected to be approximately identical to the amount in the consolidated
fiscal year under review because there are no factors that will result in material changes.
(Cash flow from investing activities)
Cash flow from investing activities is projected to increase compared with the consolidated fiscal year underreview because of an increase in funds used for the purchase of tangible fixed assets(Cash flow from financing activities)
Cash flow from financing activities is projected to increase compared with the consolidated fiscal year underreview because of an increase in funds provided by long-term bank loans.
As a result of the above, the balance of cash and cash equivalents at the end of the next consolidated fiscal

Summary of Company Financial Statements, FY Ended October 31, 2009P. 8

year is projected to approximately the same as the balance at the end of the consolidated fiscal year underreview.

(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. Although in the past it set a dividend payout ratio objective of at least 30%, theCompany’s earnings level has fallen because of the recent deterioration of the operating environment, and thedivergence of the substantive dividend payout ratio from this goal is growing. Nevertheless, the Company
fundamentally will maintain its dividend payout ratio objective of at least 30%, and for the time being will
strive to maintain and continue its present full-year dividend 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
introduction of the 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 2009, 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 25, 2009).

(5) Special benefits plan for shareholders
Shareholders owning at least thousand shares who are described or recorded in the Register of Shareholders
and List 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 (selected from a speciallymailed 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 business of Kanamoto Group, earnings are influenced
significantly by the domestic construction investment trend whether it reflects public or private sector demand.
Consequently there is a possibility future operating results will be negatively affected if further large
reductions in public works or cutbacks in private sector demand occur in the future.
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 fluctuations
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

Summary of Company Financial Statements, FY Ended October 31, 2009P. 9

fluctuations on its externally borrowed funds, including transactions to pay fixed interest rates 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.
d) 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.
e) 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, 2009
P. 10

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, nine consolidated subsidiaries and twelve 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 to rent
to other companies. Kanamoto absorbed and merged with Kyokuto Lease Co., Ltd. (a non-consolidated
subsidiary) on September 1, 2009.
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) sells modular housing units for temporary use. Flowtechno
Corporation (a non-consolidated subsidiary), is engaged in the technical development, manufacture and saleof construction equipment for ground improvement works. Kanamoto purchases modular housing units for
temporary use and construction equipment for ground improvement from these two companies as needed torent 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, Kensan Techno Co., Ltd. (aconsolidated subsidiary) rents construction cranes and Center Corporation (a non-consolidated subsidiary)
mainly rents and sells small machines. Kyushu Kensan borrows rental equipment assets from Kanamoto asneeded in order to meet its customer demand. After completing its settlement of accounts in August, Kensan
Techno Co., Ltd. absorbed and merged with Kyushu Kensan Co., Ltd. on September 1, 2009.
The Shanghai Jinheyuan Group (Shanghai Jinheyuan Equipment Rental Co., Ltd. and Shanghai
Jinheyuan Engineering Construction Co., Ltd.; both companies, which are classified based on local
government guidance because of differences in the equipment they rent, are non-consolidated subsidiaries;
Shanghai, China) and SJ Rental, Inc. (a non-consolidated subsidiary; Territory of Guam, United States), areengaged 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), a company with its head office in Tokyo, mainly

Summary of Company Financial Statements, FY Ended October 31, 2009P. 11

rents specialized large-scale construction equipment in foreign countries.
KANAMOTO (HK) CO., LTD. (a non-consolidated subsidiary; Hong Kong, People’s Republic of China) wasestablished in June 2009 to engage in the rental and sale of construction equipment and machinery and theimport and export of construction materials.
[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 non-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 relationships.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 12

Domestic Customers

Construction equipment rental

Kanamoto Co., Ltd.

Daiichi Kikai Co., Ltd.

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

Construction equipment rentals
and salesand safety products

Kanki Corporation

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

Construction equipment rentals
and sales
Kyushu Kensan Co., Ltd.
Construction equipment rentals
centered on foundation equipment

Rental of construction related products and parts

Construction
Equipment Rental
Division

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

Kensan Techno Co., Ltd.
Construction crane rentals

Overseas
Shanghai Jinheyuan Group

Center Corporation

Shanghai Jinheyuan Equipment
Rental Co., Ltd.

Small equipment rentals

Steel Sales Division
Toyo Industry Co., Ltd.
Shield tunneling method-related
computer peripheral equipment
rentals and sales

Information Products
Division

Construction materials import and export
business and construction equipment rentals

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

Narasaki Lease Co., Ltd.
Construction equipment rentals
and sales
Supply of modular housing units
Aomori Narasaki Rental Co., Ltd.
Construction equipment rentals
and sales
Akita Narasaki Rental Co., Ltd.
Construction equipment rentals
and sales

Supply of steel frames and construction materials

Business cooperation and technical support

Provision and exchange of market information

Overseas customers andDesign, manufacture and sale of related products

overseas trading companies

Kanatech Co., Ltd
Design and sale of modular housing
units for temporary use
Other Business(Specialized construction equipment rentals)

KG Machinery Co., Ltd.
Ground improvement equipment
rentals and sales

SJ Rental, Inc.
Construction materials import andexport business and construction
equipment rentals

Provision and exchange of market information

Tokyo Narasaki Rental Co., Ltd.
Construction equipment rentals
and sales

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

Flowtechno Corporation

Technical development, manufactureand sale of ground improvement
construction equipment

Overseas customers andCustomers, trading companies,

overseas trading companies

etc.

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

Manufacturers, etc.

(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 greyboxes. 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, 2009
P. 13

3. Management Policies(1) Basic policies concerning the Company’s business management
The Kanamoto Group’s main business of construction equipment rental is a business in which earnings areachieved through relentlessly executed accumulation of finely-honed improvements. Kanamoto believes that
focusing on this awareness and pursuing its business with sincerity in each transaction, whether large or small,will enable it to continuously secure earnings and meet the expectations of every stakeholder including its
shareholders. Because equipment rentals have the effect of reducing the environmental burden, Kanamoto
implements its group management by utilizing an approach that enables further growth while contributing tosociety.

(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.
Kanamoto began implementing its new long-term management plan in November 2009 (Business Period
ending October 2010). The Company’s revenues and earnings objectives for the Business Period ending
October 2014, the final year of the plan, are provided below.
Business Period ending OctoberBusiness Period ending October

2012 (Interim Objective)

2014 (Long-term Objective)

Consolidated revenues¥69.0 billion¥72.0 billion

Consolidated operating income¥2.9 billion¥4.3 billion(3) Medium to long-term corporate management strategy
The Company began implementing its new long-term management plan in November 2009 (Business Period
ending October 2010). Because the Kanamoto Group’s extremely severe external environment appears likely
to continue, including further cutbacks in the public works budget by the new administration under the
Democratic Party of Japan and a projected slump in private sector capital investment, Kanamoto has
responded to this adversity by viewing this period as an excellent time to improve the Company’s business andfinancial position and will work to lower its break-even point by taking a sharp knife to all costs.
As the Kanamoto Group, we will continue efforts to increase the number of domestic alliance partners andraise the Group’s market share, while working overseas to steadily boost demand in Shanghai and Hong Kongby sharpening our focus on business expansion in China in the first and subsequent fiscal years of the newlong-term management plan. Lastly, we will pursue overseas base development, to enable Kanamoto toadvance into newly developing countries other than China by the final year of the new long-term management
plan.
a) Expand and enlarge Kanamoto’s domestic base of operations
For Kanamoto’s main business of construction equipment rental, domestically the Number One priority is toincrease earnings. The Company will place its primary emphasis on new branches in major metropolitan areas
and unserved markets and shift management resources accordingly. The Company will continue to position
M&A as a growth engine for the Kanamoto Group, and pursue M&A proactively in the future while verifying theresults comprehensively.
To expand coordinated marketing and sales efforts, Kanamoto will strengthen sales activities based oncollaboration between regional branches and the Regional Special Procurement Sales Division, which has
achieved positive results from a sales perspective, and further promote sharing of information contents within
the Group.

Summary of Company Financial Statements, FY Ended October 31, 2009P. 14

In addition, Kanamoto established a New Products Office and event rental business as complementary
divisions. The New Products Office has received numerous orders from general contractors for its newbattery-powered LED floodlighting equipment, which has become a genuine hit product over the past several
years. This office has also quickly begun LED lamp rentals to building tenants and factories, which has
increased the volume of orders from different user groups and sectors as well. Although established later, theevent rental business is gradually making headway as well. Kanamoto plans to undertake further developmentof both operations quickly.
b) Undertake overseas development
Kanamoto currently has set up overseas affiliates in Guam and China. Construction works in regions such as
Southeast Asia, Oceania, the Middle East and North Africa also are performed using construction equipment
procured from Kanamoto, although the Company has not developed branches in these areas. Kanamoto has
positioned the expansion of profitable opportunities in rapidly growing newly developing countries as thelargest measure that will determine the future of the Kanamoto Group, and will create a solid base for businessin such regions while giving prudent consideration to the various risks to early recovery of the Company’s
invested capital, including latent country risk, exchange rate risk and capital recovery risk.
Moreover, because of the high quality of its equipment, Kanamoto has earned a strong brand reputation invarious countries for used construction equipment sales. This brand awareness also makes a significant
contribution to the Company’s business development in foreign countries, and Kanamoto will strive to continue
supplying high-quality used construction equipment for overseas sale.
c) Increase asset management and business support function efficiency
Kanamoto’s construction equipment management system is the wellspring of the Kanamoto Group’s domestic
earnings. In particular, disposing of assets with low rental demand and achieving the most appropriatecomposition of models and ages of equipment in the rental portfolio are essential for further assuring earnings.
To maximize earnings during the operating periods of its rental assets, the Company seeks to improve theaccuracy of its rental asset structure and improve operating profitability based on models with high profit
margins.
For its own branches, Kanamoto is maintaining its locally-based sales and marketing organization while
consolidating business support functions in large-scale branches located in the biggest cities in each region,and improving the efficiency of local branches and small branches as delivery service and maintenance service
line branches.
Kanamoto is also increasing the number of municipalities in each region with which it has concluded anagreement to respond to urgent requests following a disaster, and will create a regional network in the future
to take maximum advantage of the Company’s size.

(4) Issues to be addressed by the Company
As also described in Kanamoto’s medium-term management strategy, the Company believes the Kanamoto
Group cannot anticipate a significant expansion and recovery of domestic construction investment and willcontinue to face a severe external environment. The Company views this as an excellent time to improve thequality of its operations, however, and will build a strong sales and marketing organization by resolving thefollowing issues.
a) Strengthen human resources training and the Kanamoto Group and alliance
The industry shakeout resulting from increasingly severe competition among firms is expected to continue. As
the leading firm in the construction equipment rental industry, Kanamoto strives to foster employees who
possess appropriate knowledge and skills to meet this challenge, and will work to generate earning byenhancing collaboration among Kanamoto Group firms and broadening the number of alliance tie-up firms in
different market areas.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 15b) Reinforce Kanamoto’s financial strategy
Kanamoto is taking steps to enhance its funds procurement flexibility, while giving consideration to equipment
plans including purchases of rental equipment assets. At the same time, the Company is striving to improve its
financial position and is reducing interest-bearing debt as much as possible, while improving capital efficiency
by incorporating measures such as the liquidation of assets.
c) Continuous cost reductions
The Company will strive to maintain asset value, by introducing assets based on the thorough use ofbenchmarks and 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. The Company will
urgently prepare a system for the assignment of human resources and personnel training for this purpose.

(5) Compliance and internal controls
To create an organization that is aligned with society’s demands, the Company has prepared ethical rules toserve as a standard concerning compliance, and established a Compliance Committee headed by Kanamoto’s
president and taken steps to strengthen observance of laws and ethics regulations throughout the entire
company. The Company works to ensure every individual is thoroughly familiar with these guidelines, andmanages its organization in accordance with these materials. In addition, to respond appropriately and takemeasures to prevent a recurrence if unforeseen circumstances that will have a serious affect on the Company’s
operations have occurred, or if there is concern such circumstances might occur, the Company has preparedan Emergency Response Manual (Contingency Plan).
Other measures taken by the Company include the publication of Compliance Communications (22 issues from
No. 12 to No. 33), which was sent 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 40 offices, compliance audits performed by Safety and
Health Office at 28 offices and a safety training program held in 14 regional blocks, representing roughly 80%
of all the Company’s management regions, in which Group companies also participated.
The Company plans to continue these fiscal 2009 enlightenment and training efforts during the Business
Period ending October 2010, by convening each program in various locations.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 16

5

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

Notes

Prior Consolidated Accounting
Fiscal Year(As of October 31, 2008)

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

AmountAmount(Assets)
Current assets
Cash and deposits*2

14,070,345

12,345,028

Notes and accounts
receivable, trade*5,7

15,297,757

14,388,250

3,700,000

1,800,000

956,322－

Merchandise and finished
goods

－

643,091

Raw materials and supplies－

140,857

Construction equipment

874,680

1,011,437

Income taxes receivable

110,491

355,911

Consumption taxes
receivable282,196

71,661

Deferred tax assets

256,893

261,523

Other

534,758

822,031-526,414-475,964

35,557,032

31,363,829

43,694,544

54,406,793-31,437,026-35,145,234

12,257,517

19,261,559

17,869,527

20,904,695-10,968,596-12,296,819

6,900,931

8,607,875

4,622,991

5,206,308-3,854,409-4,316,731*2

768,582

889,577*2

29,075,816

29,448,053

683,294－

1,163,486

1,344,459

Negotiable securities
Inventory

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
Accumulated depreciation
Net machinery,equipment, vehicles anddelivery equipment
Land
Construction in progress
Other

Summary of Company Financial Statements, FY Ended October 31, 2009P. 17

Accumulated depreciation-930,597-1,033,713

Net other

232,889

310,746

49,919,031

58,517,812

557,260

542,304

170,056

323,684

727,316

865,989

2,847,982

3,218,486

Deferred tax receivable

1,054,883

1,286,857

Other

2,552,794

2,399,931-917,742-929,977

Allowance for investment
loss－-287,897

Total Investments and Other
Assets5,537,917

5,687,400

Total Fixed Assets

56,184,266

65,071,202

Total Assets

91,741,299

96,435,031

Total Tangible Fixed Assets
Intangible fixed assets
Goodwill*6

Other
Total Intangible Fixed Assets
Investments and other assets
Investment securities*1

Allowance for doubtful
accounts

Classification

Notes

Prior Consolidated Accounting
Fiscal Year(As of October 31, 2008)

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

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

*7

12,878,993

13,150,825

338,521

1,258,931

9,599,494

10,537,364

Current portion of bonds

62,00042,000

Corporate taxes payable

149,932

14,722

Accrued bonuses to
employees

549,981464,636

3,325,933

4,293,687

1,490,017

856,71128,394,874

30,618,878

86,00044,000Long-term bank loans

19,379,661

20,987,266

Accrued employees
retirement benefits

1,080,005

1,320,173

Short-term bank loans
Long-term bank loans due
within one year

Accounts payable, other
Other
Total Current Liabilities*7Long-term liabilities
Bonds

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 18

Retirement allowances todirectors and auditors

174,824

226,356

3,935,016

6,327,718

488,612368,783

Total Long-term Liabilities

25,144,119

29,274,298

Total Liabilities

53,538,994

59,893,177

Capital stock

9,696,717

9,696,717

Capital surplus

10,960,869

10,960,869

Retained earnings

17,149,945

15,334,652-22,729-23,91737,784,803

35,968,321

Valuation difference on otherinvestment securities

162,358

235,603

Total Valuation andTranslation Adjustments

162,358

235,603

255,143

337,929

Total Net Assets

38,202,305

36,541,854

Total Liabilities and Net
Assets

91,741,299

96,435,031

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

Treasury stock
Total Shareholders’ Equity
Valuation and translation
adjustments

Minority Interests

Summary of Company Financial Statements, FY Ended October 31, 2009P. 19

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

Notes

Prior Consolidated Accounting
Fiscal Year

Current Consolidated Accounting
Fiscal Year

From November 1, 2007
to October 31, 2008

From November 1, 2008
to October 31, 2009

AmountAmountRevenues from operations
Rental revenues

46,295,930

44,615,982

Sales

23,115,824

19,248,007

Total sales

69,441,755

63,863,989

Cost of rental revenues

33,158,452

31,089,862

Cost of goods sold

17,645,122

15,824,158

Total cost of revenues fromoperations

50,803,574

46,914,021

18,608,180

16,949,968

16,380,327

16,812,650

2,227,853

137,317

Interest revenue

69,54042,985

Dividend income

68,11040,306

Insurance benefits

70,52842,800Rents received

71,10552,436

Cash bonus received

7,204

5,621

123,703

142,939

410,193396,921

Interest expense

375,799455,700

Loss on sale of notes
receivable

80,07457,012

Other

154,043244,351

609,918

757,065

2,028,128-222,825

23,031

3,742

Management gain on
investment partnershipenterprise

1,927

5,366

Gain on reversal of allowancefor doubtful accounts

44,38432,606

Cost of revenues fromoperations

Gross profit
Selling, general andadministrative expenses*1

Operating income
Non-operating revenues

Other
Total non-operating revenues
Non-operating expenses

Total non-operating expenses
Ordinary income
Extraordinary profits
Gain on sale of fixed assets*2

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 20

Other

4,053

22,771

Total extraordinary profits

73,39764,487Extraordinary losses
Loss on sale or retirement of
fixed assets*381,837

107,659

Impairment loss

*4

490

312

54,978435,945

Provision of allowance forinvestment loss－

287,897

Provision of allowance for
doubtful accounts－

46,714

Provision of allowance for
doubtful accounts for
subsidiaries and affiliates－

27,09485,98089,650Total extraordinary losses

223,287995,274

Income before taxes andadjustments

1,878,238-1,153,612

Corporate, local and business
taxes

1,159,368

223,620

Adjustment for corporate andother taxes-7,858-285,228

1,151,510

61,608

Minority interest in income

82,68966,493

Net income (loss)

644,038-1,158,497

Valuation loss on investment
securities

Other

Income taxes-deferred

Summary of Company Financial Statements, FY Ended October 31, 2009P. 21

(3) Consolidated Statement of Changes in Net Assets

Classification

Prior Consolidated Accounting
Fiscal Year

Current Consolidated Accounting
Fiscal Year

From November 1, 2007
to October 31, 2008

From November 1, 2008
to October 31, 2009

AmountAmountShareholders’ equity
Capital stock
9,696,717

9,696,717－－

9,696,717

9,696,717

10,960,869

10,960,869－－

10,960,869

10,960,869

17,333,642

17,149,945

Dividends from surplus-689,760-656,796

Net income (loss)

644,038-1,158,497

Decrease by change of scope of
consolidation-137,975－

Total changes of items during theyear-183,696-1,815,293

17,149,945

15,334,652-19,784-22,729

Purchase of treasury stock-2,944-1,188

Total changes of items during theyear-2,944-1,188

Balance at end of year

-22,729-23,917

37,971,444

37,784,803

Dividends from surplus-689,760-656,796

Net income (loss)

644,038-1,158,497

Decrease by change of scope of
consolidation-137,975－

Balance at beginning of year
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
Capital surplus
Balance at beginning of year
Changes of items during the year

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

Total shareholders’ equity
Balance at beginning of year
Changes of items during the year

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 22

Purchase of treasury stock-2,944-1,188-186,641-1,816,481

37,784,803

35,968,321

2,002,072

162,358

Net changes of items other thanshareholders’ equity-1,839,714

73,245

Total changes of items during theyear-1,839,714

73,245

162,358

235,6032,002,072

162,358

Net changes of items other thanshareholders’ equity-1,839,714

73,245

Total changes of items during theyear-1,839,714

73,245

162,358

235,603

39,973,517

38,202,305

Dividends from surplus-689,760-656,796

Net income (loss)

644,038-1,158,497

Decrease by change of scope of
consolidation-137,975－-2,944-1,188Net changes of items other thanshareholders’ equity-1,584,570

156,031

Total changes of items during theyear-1,771,212-1,660,450

38,202,305

36,541,854

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
Total valuation and translation
adjustments
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

Purchase of treasury stock

Balance at end of year

Summary of Company Financial Statements, FY Ended October 31, 2009P. 23

(4) Consolidated Statements of Cash Flows(Unit: Thousands of yen)
Prior Consolidated Accounting
Fiscal Year
(From November 1, 2007
to October 31, 2008)

Current Consolidated Accounting
Fiscal Year
(From November 1, 2008
to October 31, 2009)Classification
Cash flow from operating activities
Income before taxes and adjustments

1,878,238-1,153,612

Depreciation and amortization expense

5,573,783

5,093,229

490

312

Amortization of goodwill

253,914

186,775

Gain on sale of fixed assets-23,031－

Loss on sale or retirement of fixed
assets81,837

107,659

Installment purchases of assets forsmall-value rentals

49,871

24,074

Reclassification of cost of sales
associated with disposal of construction
equipment

5,598

15,596

662,011710,602-3,345,941-4,113,072

Impairment loss

Reclassification of cost of sales
associated with disposal of rental
assetsExpenditures for acquisition of rental
assetsValuation loss on investment securities

54,978Loss on sales of investment securities

349

2,036

108,936-98,502－287,897

Decrease in accrued bonuses to
employees-18,277-97,354

Increase in accrued employees
retirement benefits

88,657

165,337

Increase in retirement allowances todirectors and auditors

41,01943,469Interest revenue and dividend income-137,650-83,291

Interest expense on installment
purchases of rental assets

99,494

160,584

Interest expense

375,799455,700

Decrease in accounts receivable, trade492,557

1,499,982

Increase in inventory-162,961

166,504

Increase (decrease) in accounts
payable, trade991,555-835,855

Increase (decrease) in accounts
payable, other

25,604

463,799

Increase in allowance for doubtful
accounts
Increase in allowance for investment
loss

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 24

Other-723,791-215,111

Subtotal

6,373,045

3,222,716

Interest and dividends received

138,787

86,232

Interest expense-484,373-623,498

Payment of corporate and other taxes-2,571,015-608,830

Cash flow from operating activities

3,456,444

2,076,620

Prior Consolidated Accounting
Fiscal Year
(From November 1, 2007
to October 31, 2008)

Current Consolidated Accounting
Fiscal Year
(From November 1, 2008
to October 31, 2009)Classification
Cash flow from investing activities
Disbursements for investments in term
deposits-148,877-9,528

Revenue from redemption of term
deposits

277,908

154,178-3,524,233-2,286,995

Funds provided from the sale oftangible fixed assets

171,712

21,265

Funds used for the purchase ofintangible fixed assets-51,653-164,426

Funds used for the purchase ofinvestment securities-223,395-675,186

Funds provided from sale of investment
securities

56,324

51,984

Funds used for the purchase of
consolidated subsidiary stock-62,714－

Funds used for the purchase ofnon-consolidated subsidiary stock-313,711-46,000

5,000

15,000Funds used for establishment ofaffiliated company-100,000-52,339

Funds used for the purchase ofinvestments in subsidiaries resulting inchange in scope of consolidation-231,931-199,304

20,333-780-4,125,236-3,192,133

Decrease in short-term bank loans-136,478

28,409Funds provided by long-term bankloans

13,960,000

12,760,500

Funds used to repay long-term bankloans

-10,223,652-11,119,275-40,000-62,000

Funds used for the purchase of tangible
fixed assets

Funds provided from non-consolidated
subsidiary stock

Other
Cash flow from investing activities
Cash flow from financing activities

Funds used to redeem corporate bonds

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 25

Funds used for repayment of
installment obligations-2,524,901-3,388,942-2,944-1,188

Payment of dividends to parent
company-689,760-655,981

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

Cash flow from financing activities

341,257-2,439,483

Decrease in cash and equivalents-327,534-3,554,996

Balance of cash and equivalents at
beginning of period

17,213,890

17,566,695

680,339－－

74,32917,566,695

14,086,028

Funds used for the purchase of treasury
stock

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

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 26

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

Significant Accounting Policies for the Consolidated Financial Statements
Prior Consolidated Accounting Fiscal Year Current Consolidated Accounting Fiscal Year
(From November 1, 2007
(From November 1, 2008
to October 31, 2008)
to October 31, 2009)
1. Companies included in the(1) Number of consolidated companies: 9(1) Number of consolidated companies: 9

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 Fukuoka Co., Ltd.

Kensan Techno Co., Ltd.

Kensan Techno Co., Ltd.

Toyo Industry Co., Ltd.

Toyo Industry Co., Ltd.
Beginningfromconsolidated
KyushuNarasaki Lease Co., Ltd.
theinterimNarasaki Lease Co., Ltd. is included inaccounting

period,the scope of consolidation because theKensanCompany acquired a majority of that

Kensan

Co.,

Ltd.,

Fukuoka Co., Ltd. and Kensan Techno

company’sstockCo., Ltd. are included in the scope of

consolidated

accounting fiscal year

consolidation because the importanceunder review.

of these companies to Kanamoto’s

Kensan Fukuoka Co., Ltd. is excluded

operations has increased.

from the scope of consolidation because

Beginning

from

the

consolidated

duringtheit merged with Kyushu Kensan Co., Ltd.

accounting fiscal year under review,on November 1, 2008.

Toyo Industry Co., Ltd. is included

Kensan Techno Co., Ltd. merged withwithinKyushu Kensan Co., Ltd. on September

the

scope

of

consolidation

because the Company acquired all ofthat company’s stock.
(2) Number of non-consolidated

1, 2009.
(2) Number of non-consolidated

companies: 8companies: 12

Non-consolidated subsidiary company

Non-consolidated subsidiary company

name:

name:

Comsupply Co., Ltd.

Comsupply Co., Ltd.

Flowtechno Corporation

Flowtechno Corporation

Center Corporation

Center Corporation

Shanghai Jinheyuan Equipment

Shanghai Jinheyuan Equipment

Rental Co., Ltd.

Rental Co., Ltd.

Asahikawa Fujisho Co., Ltd.

Shanghai Jinheyuan Engineering

SJ Rental, Inc.
Kanamoto Engineering Co., Ltd.
Kyokuto Lease Co., Ltd.

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)

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 27

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 toEight non-consolidated subsidiaries

Twelve non-consolidated subsidiaries

application of equity

have been omitted from items tohave been omitted from items to which

method accounting

which equity method accounting isequity method accounting is applied

applied because their respective effectbecause their respective effect on

on consolidated net income or loss

consolidated(amount corresponding to minority(amount corresponding to minority

interest)andinterest)

andsurplus(amount

surplus(amount

consolidated

earnedcorresponding

to

net

incomeconsolidated

or

loss

earnedcorresponding

tominority interest) is immaterial andminority interest) is immaterial andnone of the companies is important tonone of the companies is important to

the Company’s overall operations.

the Company’s overall operations.

Kanamoto transferred all of the
stock

held

in

ActiveCorporationtoaTechnology

third

party

on

December 10, 2007.
3. Matters pertaining to the

The fiscal year closing date for all of

The fiscal year closing date for all offiscal year closing date forthe consolidated subsidiaries except

the consolidated subsidiaries except

consolidated subsidiaries

Kanki Corporation is August 31.

Kanki Corporation is August 31. The

When preparing the consolidated
financialusedstatements

the

the

Company

subsidiaries’

financialfiscal year closing date for Narasaki
Lease Co., Ltd. is September 30.
When

preparingtheconsolidated

statements as of August 31, adjusted

financial statements the Company usedforthe subsidiaries’ financial statements as

significant

transactions

thatoccurred between the subsidiaries’
fiscal year-end and the consolidation
date that have a material effect on the
consolidated financial results.

of August 31, adjusted for significant
transactions that occurred between thesubsidiaries’ fiscal year-end and theconsolidation date that have a material
effect on the consolidated financial
results.

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
The

CompanyhasadoptedSecurities with a market pricetheSame as at left

market value method (the full amountof the valuation difference is charged
to net assets using the direct transfer
to capital method, with the disposal
cost

determined

by

the

movingaverage method) based on the market
price on the consolidated accounting
fiscal year closing date or similar
prices.
Securities without market prices

Securities without market prices

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 28

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

Amountafter

deduction

depreciation

expenseaccording

the

to

of

calculated

declining-balancemethod from the original prices, byseparate fiscal year of purchase.
(Change in accounting method)
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

under review, the Company will calculatetheamountafter

deductionofdepreciation 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

withdepreciation

thechangemethodforofrentalequipment 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 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, 2009P. 29

c. Merchandise inventories and suppliesc. Merchandise inventories and supplies(i) Merchandise inventories(i) Merchandise inventories

Lower of cost or market based on
the Last-in, First-out method

The Company has adopted the cost
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)(Change in accounting method)
Beginning from the consolidated
accounting fiscal year under review,theCompanyhasadoptedthe

Accounting Standard for Measurementof Inventories (Accounting Standards
Board of Japan Accounting Standard
Statement No. 9 dated July 5, 2006).
The affect of this change on earnings
is not material.
(ii) Work in process(ii) Work in process

The Company has adopted the cost

Same as at left

method, cost being determined by the
specific identification method(iii) Supplies(iii) Supplies

The Latest Purchase Cost method

Same as at left

Summary of Company Financial Statements, FY Ended October 31, 2009P. 30

(2) Depreciation methods forprincipal depreciable
assetsa. Tangible fixed assets
The

Companya. Tangible fixed assets

has

adoptedtheThe

Companyhasadoptedthedeclining-balance method. Buildings

straight-line method for rental assets

on

land

that

a

and the declining-balance method foragreement,

other assets. Buildings on land that is

however, are depreciated using theleased under a fixed-term land leasestraight-line

theagreement, however, are depreciatedremaining period of the fixed-term

using the straight-line method using

lease as the depreciable life and zero

the remaining period of the fixed-term

residuallease as the depreciable life and zero

fixed-term

consolidated
Company

islandleasedlease

methodvalue.

under

using

For

certainsubsidiaries,
have

adoptedtheresidual value.

the

For

certainconsolidated

straight-line method for buildings andsubsidiaries,

structures acquired on or after April 1,

adopted the straight-line method for2000

buildings and structures acquired on

but

excluding

fixturesandequipment.

theCompanyhasor after April 1, 2000, but excluding

The depreciable lives mainly used by

fixtures and equipment.

the Company are as follows.
Rental assets
5-10 years
Buildings
10-34 years

The depreciable lives mainly used by
the Company are as follows.
Rental assets
2-16 years
Buildings andstructures
2-60 years(Change in accounting method)
Traditionally, the Company and its
domestic

consolidated

subsidiaries

depreciated rental assets using thedeclining-balance method. Beginning
from

the

consolidated

accounting

fiscal year under review, the Company
has changed its depreciation method
to the straight-line method.
Because rental earnings obtained
from rental equipment are generated
on average over the period during
which the rental equipment is used,
the Company has made this change asaresultofinvestingamore

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,
expensetorecognize

amounta

fixed

correspondingtoearnings, achieve a correspondence
between expenses and earnings andcalculate accounting period profits andlosses more properly.

Summary of Company Financial Statements, FY Ended October 31, 2009P. 31

As a result, for the consolidated
accounting fiscal year under review
the cost of revenues from operations
decreased by ¥2,760,115 thousand,and gross profit and operating income
increased and ordinary loss and loss
beforetaxes

decreased

by

and
the

adjustments

sameamount,respectively, compared to what they
otherwise would have been had theaccounting 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.
(Supplemental information)
Beginning from the consolidated
accounting fiscal year under review,
the Company has revised the durable
lives

appliedtomachineryandequipment owned by the Company
and

its

domestic

subsidiaries
accounted

consolidated(includingforasrentalassetsassets),following the revision of statutory
useful lives based on amendment of
the Corporation Tax Law in Fiscal
2008.
As a result, operating income was¥1,143,563 thousand higher and theordinary loss and loss before taxes andadjustments

were¥1,143,563

thousand less than 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.
b. Intangible fixed assets (excluding leaseb. Intangible fixed assets

assets)The

CompanyhasadoptedthewithintheSame as at left

straight-line method.
Softwareforuse

Company is depreciated using thestraight-line method based on theassumed useful life for internal use (5years)

Summary of Company Financial Statements, FY Ended October 31, 2009P. 32

c. Lease assets
The

Companyhasadoptedthestraight-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.
(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 anamountbasedonactualloss

experience for normal accounts, plusanamountunrecoverableforprojected

amounts

basedonassessments of individual accounts.
b. Accrued bonuses to employeesb. 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 year based
upon a salary estimate amount.
c. Accrued employees retirement benefit
The
employees’

Company

providesaccruedforc. Accrued employees retirement benefit
Same as at left

retirement

benefits based upon the projectedamounts of the liability for accrued
employees retirement benefits and thevalue of pension assets at the end of
the consolidated fiscal year. At the endof each consolidated accounting fiscal
year, the Company appropriates anamount to the reserve to provide forthe liability recognized during theperiod. The difference based on an
actuarial calculation is charged toincome beginning in the consolidated
accounting fiscal year following theyear

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, 2009P. 33

d. Retirement allowances to directors andauditors

d. Retirement allowances to directors andauditors

The

Company

providesfor

Same as at left

retirement allowances to directors andauditors based upon pertinent rules
andappropriated

to

the

account

proportionately at the end of theconsolidated accounting fiscal year
based upon length of service.
e. Reserve for investment losses──────

The Company provides for losses
from the decline in real prices of assets
such

as

the

stock

of

subsidiarycompanies that are not subject to
asset

impairment

applying

accounting

internallybyestablishedstandards that take into consideration
subsidiary company operating results
and asset quality.
(4) Standard for conversionof foreign
currency-denominatedassets or liabilities into
Japanese yen

TheCompany

claimsandconverts

monetarymoney

Same as at left

liabilities

denominated in foreign currencies into
Japanese yen at the spot exchange
market rate on the final day of the
fiscal year, and charges the translationdifference to income as a gain andloss.

(5) Lease transactions

Forfinance

exceptfor

leaseleasestransactionsthat──────

transferownership of the property to thelessee, rent expenses are charged toincome as payments are made.
(6) Hedge accounting forprincipal hedging
methodsa. Hedge transactions

a. 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.
b. Hedge methods and hedgedb. Hedge methods and hedgedtransactionstransactions

The Company uses currency swaps

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.
c. Hedging policies
The Company’s use of derivativec. 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.

Summary of Company Financial Statements, FY Ended October 31, 2009P. 34

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
becauseitcurrency

swap

can

assumethattransactions

its
and

forward transactions will completely
offset market fluctuations or changes
in cash flow from the time 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.
(7) Accounting standards for
consumption tax

Consumption tax is taken out of all
StatementofIncomeitems

Same as at left

andBalance Sheet items, except mainly
for receivables and payables.
5. Valuation of consolidated

The

Companyhasadoptedthesubsidiary 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.
7. Items included in cash andCash on hand, deposits that can beequivalents on the Interim

withdrawn on demand and highly

Consolidated Statements

liquid short-term investments thatof Cash Flows

mature within three months of the(Consolidated Statements

date of acquisition and which can beof Cash Flows)

easily converted into cash and that

Same as at left

have minimal risk of a change in price.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 35

Change in Presentation Method
Prior Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)

Current Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)(Accounting Standard for Lease Transactions)──────

Traditionally, the Company accounted for financelease transactions 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 consolidated
accounting fiscal year under review, the Company has
adoptedthe

AccountingStandard

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(Guidanceon

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
for lease transactions based on the accounting
treatment applied for ordinary purchase and saletransactions.
The Company has adopted the straight-line method
using the lease term as the depreciable life and zero
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
the first year in which the lease accounting standard
was applied, the Company will continue to apply
accounting treatment based on the method applied forordinary rental transactions.
The affect of this change on earnings is not material.

Prior Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)──────

Current Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)(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 withthe requirement to apply the Cabinet Office Ordinanceon Partial Revision of the Regulation for Terminology,
Forms and Preparation of Financial Statements andOther Regulations (Cabinet Office Ordinance No. 50,
August 7, 2008). The amounts of “merchandise
inventories and products” and “raw materials andsupplies"

includedin"inventory”

in

the

prior

consolidated accounting fiscal year were ¥662,924
thousand and ¥146,343 thousand, respectively.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 36

Notes to the Financial Statements(Notes to the Consolidated Balance Sheets)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year(As of October 31, 2008)

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

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.
519,966

Investment securities (stocks)

563,724

2. Assets provided for security──────Cash and deposits

15,000

Buildings and structures

113,548

Rental assets

115,108Land

838,422

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

3. Guarantees
32,145

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

33,014

Guarantee of installment
payment liabilities of SJ Rental,
Inc., a non-consolidated
subsidiary company

177,884

1,253,670

Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Equipment Rental Co., Ltd., an
non-consolidated subsidiarycompany

133,900

1,632,416

Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Equipment Rental Co., Ltd., an
non-consolidated subsidiarycompany

1,580,468

Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., an non-consolidated
subsidiary company

773,942

Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., an non-consolidated
subsidiary company

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

66,4393,051,246

Total

4,143,076

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 37

4. Discount on notes receivable, trade185,756

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

4. Discount on notes receivable, trade133,744

5. Liquidation of receivables based on receivablestransfer facility

5,135,881

Notes receivable, trade5,126,484

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 ¥1,164,588.

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

6. Intangible fixed assets and goodwill includes negative
goodwill of ¥330,905 and goodwill of ¥58,266.

6. Intangible fixed assets and goodwill includes negative
goodwill of ¥261,073 and goodwill of ¥31,066.
7. Notes and bills maturing at the end of the consolidated
accounting fiscal year
Notes and bills maturing on the last day of theconsolidated accounting fiscal year are settled andprocessed on the note and bill clearing date. Because
the last day of the Company's consolidated fiscal year
was a financial institution holiday, notes and bills
maturing on the final day of the following consolidated
fiscal year are included in the consolidated fiscal year
balance.
Notes receivable, trade
Notes payable, trade
Other

91,516
1,477,524
14,249

Summary of Company Financial Statements, FY Ended October 31, 2009P. 38

(Notes to the Consolidated Statements of Income)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)

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

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

Depreciation expense
Rents

6,490,413
794,297
1,876,323

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

335,618
534,357
323,495
28,043

194,714

2. Gain on sale or retirement of fixed assets
Land

Depreciation expense
Rents
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

Machinery, equipment and3,866

delivery equipment

delivery equipment

Other
120

23,193

256,607

64

Total

3,742

23,031

3. Loss on sale or retirement of fixed assets

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

Buildings and structures
Machinery, equipment andRental equipment

20,134delivery equipment

Buildings and structures

38,751Land

Machinery, equipment and

5,901

3,643
39
40

(Loss on retirement of fixed assets)
Rental equipment

36,401

16,349Buildings and structures

54,08881,836

Machinery, equipment and4,068

delivery equipment
Total

516,907

1,875

18,094

Other453,268

1,803

Machinery, equipment andBuildings and structures

139,370

Buildings and structures

Buildings and structures

Total

996,586
1,954,370

2. Gain on sale or retirement of fixed assets
949

Other

6,902,026

delivery equipment
Other
Total

9,378
107,659

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 39

Prior Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)
4. Impairment loss

Current Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)
4. Impairment loss

During this consolidated accounting fiscal year theDuring this consolidated accounting fiscal year the

Kanamoto Group incurred an impairment loss on the

Kanamoto Group incurred an impairment loss on thefollowing asset groups.

following asset groups.

Location
Tomakomai City,
Hokkaido

Use
Dormant assets

Asset

Location
Tomakomai City,

Land

Hokkaido

Use

Asset

Dormant assets

Land

Asset groupings used by the Kanamoto Group to

Asset groupings used by the Kanamoto Group to

apply asset impairment accounting are based on theapply asset impairment accounting are based on theblock classified as the smallest segment for whichblock classified as the smallest segment for which

profitability can be determined regularly by business.

profitability can be determined regularly by business.

Specifically, dormant assets are grouped as units thatSpecifically, dormant assets are grouped as units thatgenerate independent cash flow.

generate independent cash flow.

For certain dormant assets for which the asset value

For certain dormant assets for which the asset value

was less than book value, the Company reduced bookwas less than book value, the Company reduced bookvalue to the recoverable value, and accounted for thevalue to the recoverable value, and accounted for the

reduction as an impairment loss (¥490 thousand)reduction as an impairment loss (¥312 thousand)under extraordinary losses. This ¥490 thousand wasunder extraordinary losses. This ¥312 thousand wasfor land.

for land.

The recoverable value for this asset group is

The recoverable value for this asset group ismeasured according to net sales price, and the land ismeasured according to net sales price, and the land isevaluated using the inheritance tax assessment value

evaluated using the inheritance tax assessment value

based on the land tax assessment value or otherbased on the land tax assessment value or otheramount as a base.

amount as a base.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 40

(Notes to the Consolidated Statement of Changes in Net Assets)
Prior consolidated accounting fiscal year (From November 1, 2007 to October 31, 2008)
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

25

5

－

30

25

5

－

30

Treasury stock
Common stock (Note)
Total(Notes) The number of treasury stock shares of common stock increased by 5 thousand shares throughpurchases of 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

Class of stock

Total dividend(‘000 yen)

Dividend pershare (yen)Common stock

361,311

Common stock

328,448

Date of record

Payment date

11.0

October 31, 2007

January 30, 2008

10.0

April 30, 2008

July 14, 2008

January 29, 2008
Regular General
Meeting of the
Shareholders
June 6, 2008
Board of Directors(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 26, 2009

CommonBoard of Directors

stock

Total dividend Source of funds Dividend per(‘000 yen)for dividend
share (yen)328,413

Earnedsurplus

10.0

Date of record

Payment date

October 31, 2008 January 30, 2009

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 41

Current 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 thousand shares throughpurchases of 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
January 29, 2009
Board of Directors
June 6, 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
December 29, 2009
Board of Directors

Class of stock
Common stock

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

Earnedsurplus

10.0

Date of record

Payment date

October 31, 2009 January 29, 2010

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 42

(Notes to the Consolidated Statements of Cash Flows)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)

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

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 accountTime deposits with a maturity

14,070,345-203,650

longer than 3 months

Cash and deposits accountTime deposits with a maturity

12,345,028-59,000

longer than 3 months

Negotiable securities

3,700,000

Negotiable securities

1,800,000

Cash and cash equivalents

17,566,695

Cash and cash equivalents

14,086,028

2. Main assets and liabilities of company converted to a

2. Main assets and liabilities of company converted to a

new consolidated subsidiary through an acquisition of

new consolidated subsidiary through an acquisition ofsharessharesToyo Industry Co., Ltd.

Narasaki Lease Co., Ltd.

Current assets

949,444

Current assets

884,456

Fixed assets

732,930

Fixed assets

2,028,399

Current liabilities-661,600

Current liabilities-2,009,070

Long-term liabilities-363,623

Long-term liabilities-696,805

Goodwill (negative goodwill)-244,642

Goodwill (negative goodwill)

171,819

Toyo Industry Co., Ltd. acquisition

412,510

Minority interests-17,299

Narasaki Lease Co., Ltd. acquisition

361,500

price
Toyo Industry Co., Ltd. cash and-180,578

pricecash equivalents

Narasaki Lease Co., Ltd. cash andBalance: Expenditure for acquisition

cash equivalents

231,931of Toyo Industry Co., Ltd.

Balance: Expenditure for acquisition-162,195
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 that are newly accounted for

during this consolidated accounting fiscal year isduring this consolidated accounting fiscal year is¥3,410,178 respectively.
──────

¥6,107,959 respectively.
4. A breakdown of the main assets and liabilities
succeeded to from the non-consolidated subsidiaries
Asahikawa Fujisho Co., Ltd. and Kyokuto Lease Co.,
Ltd., which were merged into Kanamoto during theconsolidated accounting fiscal year under review, isshown below:
Asahikawa Fujisho Co., Ltd.
Current assets

79,833Fixed assets

163,284

Total assets

243,118

Current liabilities

155,207

Long-term liabilities

62,965

Total liabilities

218,713

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 43

Kyokuto Lease Co., Ltd.
Current assets
Fixed assets

128,477
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, 2009P. 44

(Notes Related to Negotiable Securities)
Negotiable securities
1. Other negotiable securities with market prices

Type

Negotiablesecurities
whosebalance ontheconsolidatedbalancesheet
exceeds theacquisition
price(1) Stocks

Prior consolidated accounting fiscal year

Current consolidated fiscal year

(As of October 31, 2008)(As of October 31, 2009)

Acquisition
price

Amountreported ontheconsolidatedbalance sheet

Valuation
profit or loss

Acquisition
price

Amountreported ontheconsolidatedbalance sheet

Valuation
profit or loss

1,160,156

1,485,642

325,485

1,484,799

1,919,137

434,337

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

1,160,156

1,485,642

325,485

1,484,799

1,919,137

434,337(2) Bonds
a. Government
bonds
b. Corporatebondc. Other(3) Othernegotiablesecurities
Subtotal(1) Stocks

Negotiablesecurities
whosebalance ontheconsolidatedbalancesheet is lessthan theacquisition
price(Unit: Thousands of yen)606,790

556,482-50,307

216,486

177,685-38,800(2) Bonds
a. Government
bonds
b. Corporate
bond

－

－

－

－

－

－

－

－

－

－

－

－

c. Other

－

－

－

－

－

－

(3) Othernegotiablesecurities

53,89553,895－－－－

Subtotal

660,685

610,377-50,307

216,486

177,685-38,800

1,820,842

2,096,020

275,177

1,701,286

2,096,822

395,536

Total

2. Other negotiable securities sold during the prior consolidated accounting fiscal year and thecurrent consolidated accounting fiscal year

(Unit: Thousands of yen)

Prior Consolidated Accounting Fiscal Year

Current Consolidated Accounting Fiscal Year

(From November 1, 2007

(From November 1, 2008

to October 31, 2008)

to October 31, 2009)

Selling amount

Total gain on sale

Total loss on sale

989

1,339

44,168Selling amount

Total gain on sale

Total loss on sale

50

2,086

51,984

3. Details of other negotiable securities that do not have a market value(Unit: Thousands of yen)Type

Prior consolidated accounting fiscal year

Current consolidated fiscal year

(As of October 31, 2008)(As of October 31, 2009)

Amount shown on the consolidatedbalance sheet

Amount shown on the consolidatedbalance sheet

Other negotiable securities
Unlisted stocks
Negotiable certificates ofdeposit
Other

211,400

537,400

3,700,000

1,800,000

20,595

20,539

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 45

4. Planned future redemption amounts of other securities that have a maturity date
(Unit: Thousands of yen)
Prior consolidated accounting fiscal year

Current consolidated fiscal year

(As of October 31, 2008)(As of October 31, 2009)

Type
Withinone year(1) Bonds
a. Government
bonds

After one
After five
After tenyear andyears within
years
within fiveten years
years

Withinone year

After one
After five
After tenyear andyears within
years
within fiveten years
years

－

－

－

－

－

－

－

－

b. Corporate bonds

－

－

－

－

－

－

－

－

c. Other

－

－

－

－

－

－

－

－

(2) Other negotiablesecurities

－

－

－

53,895

－

－

－

－

Total

－

－

－

53,895－－－－

Summary of Company Financial Statements, FY Ended October 31, 2009P. 46

(Notes related to Derivative Transactions)
1. Notes related to transaction conditions
Prior Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)

Current Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)a. Contents and purpose of derivative transactions

a. Contents and purpose of derivative transactions

The

Kanamoto

agreements

and

Group

uses

currency

forwardswap

exchangetransactions

Same as at leftfor

specified foreign currency-denominated assets andliabilities to avoid the risk of future exchange rate
fluctuations in currency markets related to its foreign
currency-denominated assets and liabilities.
The Company also uses interest swaps to limit withina specific range the affect any future increase inmarket interest rates will have on payments of intereston the Company’s floating rate loans. The Company
accounts for derivative transactions using hedge
accounting principles.
Hedge accounting methods
The Company accounts for hedge transactions
using allocations based on accounting standards
for foreign currency-denominated transactions,and special rule accounting based on accounting
standards for financial products.
Hedge methods and hedged transactions
Hedge methods
Currency swaps, forward exchange agreements
and interest swaps
Hedged transactions
Foreign currency-denominated straight bonds,
import payment liabilities and loans
Hedging policy
The Company’s use of derivative transactions islimited to hedging risk within the scope of theCompany’s assets and liabilities subject tomarket fluctuation risk.
Method for evaluating the effectiveness of hedges
The Company does not evaluate the effectiveness of
its hedge transactions because it can assume its
currency swap transactions and forward transactions
will completely offset market fluctuations or changes
in cash flow from the time the hedge begins until it isterminated. In addition, the Company’s interest swap
transactions fulfill the requirements for special ruleaccounting, and the Company has elected to use thisin place of an evaluation of effectiveness.
b. Transaction matching policyb. Transaction matching policy

The Kanamoto Group has adopted a policy of using

Same as at leftderivative transactions only to avoid the risks to its
assets and liabilities exposed to market fluctuation
risk. The Company’s policy is to not use derivativetransactions to earn short-term trading gains or for
speculative purposes.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 47

Prior Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)

Current Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)c. Transaction-related risksc. Transaction-related risksSame as at left

Derivative transactions present market risk related
to fluctuations in the market prices of the commodity
subject to the transactions and credit risk related to
non-performances of the agreements by customers.
The foreign currency-related forward agreements
used by the Kanamoto Group present risk fromcurrency market fluctuations, and the interest swaps
used by the Kanamoto Group present risk fromchanges in market interest rates.
The Company believes it faces minimal credit risk
because the counterparties to the Kanamoto Group’s
derivative transactions are always domestic banks or
securities firms with excellent creditworthiness.
d. Transaction risk management system

d. Transaction risk management system
Same as at left

The Company’s basic policy concerning derivativetransactions is determined by the Board of Directors,
and the manager responsible for the finance section in
the Accounting Division executes and manages thetransactions based on internal management guidelines.
The chief financial officer reports on the Company’s
financial affairs, including all derivative transactions, at
the regular meetings of the Board of Directors.
e. Supplemental explanation of matters related toe. Supplemental explanation of matters related totransaction market prices

transaction market prices

Forward agreements and currency swap transactions

Same as at left

accounted for on the Company’s financial statements
throughconversion

currency-denominatedliabilities

by

being

of

the

money

relevant

foreignclaimsandmoneyappropriatedtoforeigncurrency-denominated claims or liabilities or otheraccounts at the end of the consolidated fiscal year are
excluded from transactions for which market prices aredisclosed.

2. Notes related to transaction market prices etc.
Prior consolidated accounting fiscal year (As of October 31, 2008)
The Company had no material items to report.
Current consolidated accounting fiscal year (As of October 31, 2009)
The Company had no material items to report.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 48

（Notes related to accrued employees retirement benefit）
1. Summary of the employees retirement benefit system adopted by the Company
The Company and certain consolidated subsidiaries have established a defined-benefit pension system(cash balance system) and defined contribution pension system. In addition, when an employee retires orleaves the Company, in some cases the Company pays an additional retirement amount that is notcovered by the reserve for accrued employees retirement benefit when using actuarial accounting basedon retirement benefit accounting. Certain consolidated subsidiaries have adopted a termination
allowance plan and tax qualified pension plan system, or have joined the Kobe Machinery and Metal Firms
Employees Pension Fund as a welfare pension fund system.
The items concerning multi-employer pension plans that account for required contribution amounts as
employee retirement benefit costs are described below.
(1) Items concerning funded status of the pension plans (As of March 31, 2008)
Pension assets¥22,237,642 thousand

Benefit obligations under pension funding calculation¥37,788,872 thousand

Difference-¥15,551,229 thousand(2) Ratio of consolidated subsidiary contributions to total contributions
to the plans (From April 1, 2007 to March 31, 2008)

1.469%

2. Details of the Company’s liability for accrued employees retirement benefit(Unit: Thousands of yen)
Prior consolidated accounting
fiscal year
(As of October 31, 2008)

Current consolidated
accounting fiscal year
(As of October 31, 2009)(1) Liability for accrued employees retirement benefit-4,519,281-4,777,321(2) Pension assets

2,317,053

2,559,803-2,202,227-2,217,518－－-1,122,221

897,344－－-1,080,005-1,320,173－－-1,080,005-1,320,173(3) Liability for unreserved accrued employees
retirement benefit (1) ＋(2)(4) Unrecognized transitional obligation(5) Unrecognized actuarial differences(6) Unrecognized past years’ service obligation (change
in liability)(7) Net liability shown on the consolidated balance
sheets (3) + (4) + (5) +(6)(8) Prepaid pension expense(9) Accrued employees retirement benefits (7) -(8)(Note)The Company’s consolidated companies have adopted the simple method for calculating the accrued employees’
retirement benefit.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 49

3. Details of accrued employees retirement benefit expense(Unit: Thousands of yen)
Prior Consolidated
Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)

Current Consolidated
Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)(1) Service costs (Note 1)

309,788339,169(2) Interest costs

82,06586,989(3) Expected return on plan investments（reduction）

128,218

90,087－－39,828146,127－－(7) Amortization of transitional obligation

20,031

20,962(8) Employees retirement benefit expense

323,495

503,161(4) Amortization of prior service cost (Note 2)(5) Write-off of expense for actuarial based difference(6) Amortization of net transition obligation(Notes) 1. The employees retirement benefit expenses at consolidated subsidiary companies that have adopted the simple
method are included in service costs.

4. Matters related to the basis for accounting for the accrued employees retirement benefit andother items
Prior consolidated
accounting fiscal year

Current consolidated
accounting fiscal year

(As of October 31, 2008)(As of October 31, 2009)(1) Discount rate (%)

2.00

2.00

(2) Expected rate of return on plan investments (%)

4.00

4.00

(3) Method of allocating projected benefits to periods

Service period fixedService period fixed

benefit basis

benefit basis－－

10 years beginning from the

10 years beginning from thenext consolidated accounting

next consolidated accounting

fiscal year

fiscal year－－of service(4) Amortization period of past years’ service liability(5) Amortization period for actuarial differences(6) Number of years for amortization of one-timevaluation difference for change in accounting
standards

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 50

(Notes Related to Tax Effect Accounting)(Unit: Thousands of yen)
Prior consolidated accounting fiscal year

Current consolidated accounting fiscal year

(As of October 31, 2008)(As of October 31, 2009)

1. Principal items accounted for as deferred tax assets and1. Principal items accounted for as deferred tax assets anddeferred tax liabilities

deferred tax liabilities

Deferred tax assets
Amount in excess of limit forinclusion in allowance for doubtful
accounts
Disallowance of deferred business
taxes
Excess accrued employees
retirement benefit
Amount in excess of limit for
retirement benefit
Amount in excess of limit for
accrued bonuses to employees
Disallowance of excess
depreciation
Impairment loss

Deferred tax assets
Amount in excess of limit forinclusion in allowance for doubtful
accounts
Disallowance of deferred business
taxes
Excess accrued employees
retirement benefit
Amount in excess of limit for
retirement benefit
Amount in excess of limit for
accrued bonuses to employees
Amount in excess of limit forallowance for investment loss
Loss on valuation of investment
securities
Disallowance of excess
depreciation
Impairment loss

276,183
13,105436,265
70,628222,192
286,162
240,572

Amount of loss carried forward

1,660,294

Others348,746815,357689
531,611
89,181
187,712263,870
246,863367,734
264,452

Deferred tax assets subtotal

3,554,152

Valuation reserve

Amount of loss carried forward-2,110,879

OthersTotal deferred tax assets

1,443,272

Deferred tax assets subtotal

4,524,548

Valuation reserve-2,816,371

Total deferred tax assets

1,708,177

Deferred tax liability
Valuation difference on otherinvestment securities
Net deferred tax assets

131,496
1,311,776

1,441,113
315,959

Deferred tax liability
Valuation difference on otherinvestment securities
Net deferred tax assets

159,796
1,548,380

Disclosure item:

Disclosure item:
Current assets - Deferred tax assets

256,893

Current assets - Deferred tax assets

261,523

Fixed assets - Deferred tax assets

1,054,883

Fixed assets - Deferred tax assets

1,548,380

2. Causes of principal differences between the statutory

2. Causes of principal differences between the statutory

tax rate and burden ratio for corporate and other taxes

tax rate and burden ratio for corporate and other taxes

following application of tax effect accounting by major

following application of tax effect accounting by major

category.

category.

Statutory corporate tax rate

40.4 ％The Company has omitted the description of these
items because it reported a net loss before taxes and(Adjustment)
Local tax equalization
Items not included permanently in losses
such as expense accountAffect from application of asset
impairment accounting for fixed assets

5.3

％

2.3

％

0.0

％

Goodwill amortization amount excluded
from expenses

4.1％

Consolidated subsidiary losses

8.1

％

Other
Burden ratio for corporate and othertaxes after application of tax effectaccounting

1.1

％

61.3

％

adjustments.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 51

(Business Segment Information)
1. Segment Information by Type of BusinessPrior consolidated accounting fiscal year (From November 1, 2007 to October 31, 2008)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

62,802,266

6,098,099

511,389

69,411,755－

69,411,755

－

－

－

－

－

－

Eliminations
or entire
Consolidated
company

Total

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

62,802,266

6,098,099

511,389

69,411,755－

69,411,755

Operating expenses

60,628,109

6,064,501

450,852

67,143,464

40,437

67,183,901

Operating income

Total

2,174,156

33,59760,5372,268,291-40,437

2,227,853

II. Assets, depreciation expenseand capital disbursements
Assets63,420,264

2,139,776

579,916

66,139,958

25,601,341

91,741,299

Depreciation expense

5,371,994

3,718

－

5,375,712

198,071

5,573,783

490

－

－

490

－

490

11,302,346

2,640

－

11,304,987

75,134

11,380,121

Capital disbursements
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 and peripheral devices, telecommunications-related
equipment

3. The total amount for assets that were eliminated or included in the categories for all companies was ¥25,601,341
thousand and represents primarily idle working capital (cash, deposits and negotiable securities) long-term
investment funds (investment securities) and assets used in administrative departments at the parent
company.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 52

Consolidated fiscal year under review (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

Capital disbursements

312

－

－

312

－

312

11,266,098

469－

11,266,567

1,038,184

12,304,751

Operating income

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 and peripheral devices, telecommunications-related
equipment

3. The total amount for assets that were eliminated or included in the categories for all companies was ¥23,076,638
thousand and represents primarily idle working capital (cash, deposits and negotiable securities) long-term
investment funds (investment securities) and assets used in administrative departments at the parent
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 declining-balance method to the straight-line method as
described in 4. (1) b. 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
business increased by ¥74,180 thousand 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) 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 ¥2,760,115 thousand compared with what it otherwise would havebeen had the accounting standard used in prior fiscal years been applied.
5. Supplemental information

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 53

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)b 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 ¥1,143,563 thousand compared with what it otherwise would have been had the accounting
standard used in prior fiscal years been applied.

2. Segment information by location
The Company does not report segment information by location because the Company did not have any
consolidated subsidiaries or important offices located in countries or regions outside of Japan during theprior consolidated fiscal year and the current consolidated fiscal year.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 54

3. Foreign sales
Prior consolidated accounting fiscal year (From November 1, 2007 to October 31, 2008)
The Company has omitted a description of foreign sales because foreign sales are less than 10% ofconsolidated revenues.
Current consolidated accounting fiscal year (From November 1, 2008 to October 31, 2009)
The Company has omitted a description of foreign sales because foreign sales are less than 10% ofconsolidated revenues.

(Per Share Information)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)
Net assets per share¥1,155.47

Net income (loss) per share ofcommon stock¥19.61

Current Consolidated Accounting Fiscal Year
(From November 1, 2008
to October 31, 2009)
Net assets per share¥1102.51

Net income (loss) per share ofcommon stock-¥35.28

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 does not have any potential shares thatshares because it does not have any potential shares thatwould have a dilution effect.

would have a dilution effect.

(Note) The basis for calculating consolidated fiscal year earnings per share and earnings per share after adjustment forpotential ordinary shares is as follows.
(Unit: Thousands of yen)
Prior Consolidated Accounting
Fiscal Year
(From November 1, 2007
to October 31, 2008)

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

644,038-1,158,497－－

644,038-1,158,497

32,844,319

32,838,970

Net income (loss)
Amount not attributed to common stock
shareholders
Net income related to common stock
Average number of outstanding shares
during the fiscal year

(Material Events after the Close of the Consolidated Fiscal Year)
The Company had no material items to report.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 55

5

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

Notes

Prior Fiscal Year(As of October 31, 2008)

Current Fiscal Year(As of October 31, 2009)

AmountAmount(Assets)
Current assets
Cash and deposits

12,189,646

10,728,117

2,106,194

2,273,263

Accounts receivable, trade

10,537,290

9,771,824

Negotiable securities

3,700,000

1,800,000

Merchandise inventory

259,968－－

248,457

Work in process

147,054

38,326

Construction equipment

616,935

753,499

Supplies

72,526－

Prepaid expenses

221,130

251,002

Deferred tax assets

235,290

199,932

Income taxes receivable

94,272

337,075

Consumption taxes receivable

267,463

29,786－306,390

85,21985,952-411,379-350,548

30,121,614

26,551,740

36,099,146

41,046,227

Accumulated depreciation-25,160,882-24,953,646

Net rental equipment

10,938,263

16,092,580

12,425,311

14,078,535

Accumulated depreciation-6,998,151-7,426,988

Net buildings

5,427,160

6,651,547

4,338,834

4,749,778

Accumulated depreciation-3,321,397-3,507,956

Net structures

1,017,436

1,241,822

4,299,801

4,523,311-3,574,404-3,703,999

725,396

819,311

Notes receivable, trade*4

Merchandise and finished goods

Short-term loans receivable
Other
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, 2009
P. 56

Vehicles and delivery
equipment

30,916

56,686

Accumulated depreciation-29,165-50,108

Net vehicles and delivery
equipment

1,750

6,578

1,046,723

1,164,366

Accumulated depreciation-837,986-883,803

Net tools, furnishings andfixtures208,736

280,562

27,999,448

28,041,096

683,294－

47,001,488

53,133,499

Goodwill

21,60014,400Software80,714205,131

Telephone subscription rights

40,431

42,469Total Intangible Fixed Assets

142,746

262,000

Investment securities

2,272,537

2,568,472

Stock of affiliated companies

3,510,688

3,945,528

8,107

8,107

1,386,742

1,941,287

Claims in bankruptcy, claims inreorganization and other similar
claims326,114233,866

Long-term prepaid expenses

67,12953,8501,233,325

1,236,636

Insurance reserve

32,496

17,528Long-term guaranty money
deposited971,125

877,818

Other

18,53818,178

Allowance for doubtful accounts-1,285,210-1,656,326

Reserve for investment losses-406,663-653,144

Total investments and otherassets8,134,931

8,591,802

Total Fixed Assets

55,279,166

61,987,302

85,400,780

88,539,042

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, 2009
P. 57

Classification

Notes

Prior Fiscal Year(As of October 31, 2008)

Current Fiscal Year(As of October 31, 2009)

AmountAmount(Liabilities)
Current liabilities
Notes payable, trade

8,492,680

8,926,198

Accounts payable, trade

2,298,699

2,440,169

Long-term bank loans due
within one year

9,251,000

9,930,000

Accounts payable, other

2,684,135

3,384,855

Accrued expenses

256,870258,538

Deposits

39,44841,069Accrued bonuses to employees

487,359

192,468

619,130

192,468

123,738

75,56924,253,064

25,639,004

Long-term bank loans

18,334,000

19,686,000

Long-term accrued expenses

2,891,152

4,861,786

Accrued employees retirement
benefits

1,001,191

1,209,868

Retirement allowances todirectors and auditors

101,376

140,833

Provision for loss on guarantees

377,216

206,622

22,704,937

26,105,111

46,958,001

51,744,115

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

19,601

19,601

15,631,684

15,631,684

617,502-1,099,417

17,644,075

15,927,156

Equipment notes payable
Other
Total Current Liabilities*5*5Long-term liabilities

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

Earned surplus
Earned legal reserve
Other earned surplus
Reserve for advanced
depreciation of fixed assets
General reserve
Earned surplus brought
forward
Total earned surplus

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 58

Treasury stock-22,729-23,917

38,278,933

36,560,825

Valuation difference on otherinvestment securities

163,845

234,101

Total valuation and translation
adjustments

163,845

234,101

Total Net Assets

38,442,779

36,794,927

Total Liabilities and Net Assets

85,400,780

88,539,042

Total Shareholders’ Equity
Valuation and translation
adjustments

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 59

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

Notes

Prior fiscal year

Current fiscal year

(From November 1, 2007
to October 31, 2008)(From November 1, 2008
to October 31, 2009)

AmountAmountOperating revenues
Rental revenues

40,519,332

38,260,952

Sales

19,954,648

16,186,922

Total sales

60,473,981

54,447,875

30,373,396

28,233,776

227,690259,968

14,015,942

12,131,319

514,766

648,395

14,758,399

13,039,683

259,968

248,457－

1,528

Total goods sold

14,498,430

12,792,754

Total cost of revenues

44,871,826

41,026,530

15,602,154

13,421,344

Freight-out

64,86869,622

Vehicle fuel expense

188,473

141,389

Advertising and public relations
expense169,514137,223

Transfer to allowance for
doubtful accounts

271,120

89,608

Director compensation

83,197

69,833

5,261,471

5,366,895

Bonuses730,245628,172

Transfer to accrued bonuses to
employees

487,359

390,137

Transfer to retirement
allowances to directors andauditors

11,99013,643

Employees retirement benefit
expense257,289433,747

Cost of revenues
Cost of rental revenues
Cost of goods sold
Balance of merchandise
inventory at beginning of
periodMerchandise inventory
purchases
Merchandise received fromother accounts
Total
Balance of merchandise atend of period
Valuation loss on goods

Gross profit*2

Selling, general andadministrative expenses

Salary allowance

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 60

Travel and transportation
expenses

313,275

261,481Entertainment expenses

85,27973,244

Insurance premiums

107,957

136,987

Communications expense

332,083

320,706

Maintenance and repairs

97,513

94,637

Consumables expense

324,138

286,214

Utilities

257,618

243,725

Taxes and public charge

381,818

396,045

Welfare expenses

884,300

884,513

Depreciation expense

729,513874,939

1,552,391

1,561,583

549,358

529,824

13,140,777

13,004,176

2,461,376

417,168

Interest revenue

38,51328,513

Interest revenue on negotiablesecurities

31,36919,852

Dividend income

68,57340,852967－

182,396

156,811

Insurance benefits

25,54435,700Cash bonus received

4,462

5,372

104,995

138,128

456,810425,231

Interest expense

347,058

403,314

Loss on sale of notes receivable

74,96853,098

Other

126,964

213,924

Total non-operating expense

548,991

670,337

2,369,196

172,062

5,354

89

－

170,594

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

Gain on sale of investment
securities
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

Reversal of allowance for
doubtful accounts

19,258

Reversal of allowance forinvestment loss

158,757360

41,416

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 61

OtherTotal extraordinary income

3,602

10,806

186,973

223,265

Extraordinary losses
Loss on sale or disposal fixed
assets*4

60,10373,668

Impairment loss

*5

490

312

Valuation loss on investment
securities

54,978435,945

Management loss on
investment partnershipenterprise

21,221

4,215

Reversal of provision for loss on
guarantees of subsidiaries andaffiliates

377,216－－

287,897

Transfer to reserve for doubtful
accounts for affiliated company
stock

761,175

478,631

Other

40,812

47,111

1,315,999

1,327,782

1,240,170-932,454

Corporate, local and business
taxes

983,680

143,244

Adjustment for corporate andother taxes

73,021-15,575

Total income taxes

1,056,702

127,668

Net income (loss)

183,467-1,060,122

Reversal of allowance forinvestment loss

Total extraordinary losses
Income before taxes

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 62

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

Notes

Prior Fiscal Year

Current Fiscal Year

From November 1, 2007
to October 31, 2008

From November 1, 2008
to October 31, 2009

AmountAmountPercent

Percent

Rent

16,748,491

55.1

15,089,135

53.4

Repair expense

2,927,336

9.6

2,790,681

9.9

Freight charges

5,044,634

16.6

4,728,983

16.8

3,908,613

12.9

3,409,168

12.1

685,457

2.3

945,496

3.3

1,058,863

3.5

1,270,311

4.5

30,373,396

100.0

28,233,776

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¥3,755,059 thousand and construction
equipment depreciation expense of¥153,553 thousand.

The Company posted rental equipment
asset
depreciation
expenseof¥3,326,471 thousand and construction
equipment depreciation expense of¥82,696 thousand.

Note *3

Other costs consisted mainly of taxes
and public charges of ¥429,888
thousand, insurance premiums of¥528,654 thousand and interest of¥45,711 thousand related to installment
payment purchases of rental equipment
assets.

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

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 63

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

Prior Fiscal Year

Current Fiscal Year

From November 1, 2007
to October 31, 2008

From November 1, 2008
to October 31, 2009

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, 2009
P. 64

Reserve for advanced
depreciation of noncurrent
assetsBalance at beginning of year

19,601

19,601－－

19,601

19,601

12,931,684

15,631,684

Provision of generalreserve

2,700,000－

Total changes of items
during the year

2,700,000－

15,631,684

15,631,684

3,823,794

617,502-2,700,000－

Dividends from surplus-689,760-656,796

Net income (loss)

183,467-1,060,122-3,206,292-1,716,919

617,502-1,099,417

18,150,368

17,644,075－－

Dividends from surplus-689,760-656,796

Net income (loss)

183,467-1,060,122

Total changes of items
during the year

-506,292-1,716,919.

17,644,075

15,927,156-19,784-22,729

Purchase of treasury stock-2,944-1,188

Total changes of items during
the year-2,944-1,188-22,729-23,917

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

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

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, 2009
P. 65

Total shareholders’ capital
Balance at beginning of year

36,788,170

38,278,933

Dividends from surplus-689,760-656,796

Net income (loss)

183,467-1,060,122-2,944-1,188-509,237-1,718,107

38,278,933

36,560,825

1,999,735

163,845

Net changes of items otherthan shareholders’ equity-1,835,889

70,255

Total changes of items
during the year

-1,835,889

70,255

163,845

234,101

1,999,735

163,845

Net changes of items otherthan shareholders’ equity-1,835,889

70,255

Total changes of items
during the year

-1,835,889

70,255

163,845

234,101

40,787,905

38,442,779

Dividends from surplus-689,760-656,796

Net income (loss)

183,467-1,060,122

Purchase of treasury stock-2,944-1,188Net changes of items otherthan shareholders’ equity-1,835,889

70,255

Total changes of items during
the year-2,345,126-1,647,852

38,442,779

36,794,927

Changes of items during the year

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

Balance at end of year

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 66

Events or conditions that create significant doubt concerning the assumption of going concern
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, 2007
to October 31, 2008

From November 1, 2008
to October 31, 2009

Common stock of subsidiaries andaffiliated companies
The Company has adopted the cost
method based upon the moving
average method
Other negotiable securities
Negotiable securities with a market on asecurities exchange
The Company has adopted theCommon stock of subsidiaries andaffiliated companies
Same as at left

Other negotiable securities
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

Other negotiable securities without a

The Company has adopted the cost
method based upon the moving
average method

Same as at left

market price

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 67

2. Appraisal standards andappraisal method forconstruction equipment

Amount after deduction of depreciation
expense calculated according to thedeclining-balance method from theoriginal prices, by separate fiscal year ofpurchaseAmount after deduction of depreciation
expense calculated according to thestraight-line method from the original
prices, by separate fiscal year ofpurchase(Change in accounting method)
Traditionally, the Company valued
construction
equipmentusing
theamount after deduction of depreciation
expense calculated according to thedeclining-balance method from theoriginal prices, by separate fiscal year ofpurchase. Beginning from the fiscal year
under review, the Company will calculatetheamountafter
deductionofdepreciation expense according to thestraight-line method from the original
prices, by separate fiscal year ofpurchase.
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
withthechangeofdepreciation
methodforrentalequipment from the declining balancemethod to the straight-line method fromthe fiscal year under review to similarly
recognize
a
fixed
cost
amountcorresponding to earnings, achieve a
correspondence between costs andearnings and calculate accounting period
profits and losses more properly forconstruction equipment that contributes
to the acquisition of rental earnings.
As a result, for the fiscal year underreview the cost of revenues fromoperations
decreasedby¥54,258
thousand, and gross profit and operating
income and ordinary income increasedby the same amount, respectively, andloss 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.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 68

3. Appraisal standards and(1) Merchandise inventories

appraisal method for

Lower of cost or market based on themerchandise inventories

last-in, first-out method

and supplies(2) Work in process
The Company has adopted the cost
method, cost being determined by the
specific identification method(3) Supplies
The Latest purchase cost method(1) Merchandise inventories
The Company has adopted the cost
method, cost being determined based on
the Last-in, First-out method (amounts
shown on the balance sheet arecalculated by determining write-downs ofbook value based on the decline inprofitability).
(Change in accounting method)
Beginning from the fiscal year underreview, the Company has adopted the
Accounting Standard for Measurement of
Inventories(AccountingStandards
Board of Japan Accounting Standard
Statement No. 9 dated July 5, 2006).
The affect of this change on earnings is
not material.
(2) Work in process
Same as at left

(3) Supplies
Same as at left

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 69

4. Depreciation method for(1) Tangible fixed assets

fixed assets
The Company has adopted thedeclining-balance method. Buildings onland that is leased under a fixed-term
land lease agreement, however, aredepreciated using the straight-line
method using the remaining period of
the fixed-term lease as the depreciable
life and zero residual value.
The depreciable lives mainly used by
the Company are as follows.
Rental assets 5-10 years
Buildings
31-34 years(1) Tangible fixed assets (excluding leaseassets)The

Companyhasadoptedthestraight-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
2-60 years(Change in accounting method)
Traditionally,theCompany
depreciated rental assets using thedeclining-balance method. Beginningfrom the fiscal year under review, theCompany has changed its depreciation
method to the straight-line method.
Because rental earnings obtained
from rental equipment are generated
on average over the period during
which the rental equipment is used,
the Company has made this change asaresultofinvestingamore

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,
expensetorecognize

amounta

fixed

correspondingtoearnings, achieve a correspondence
between expenses and earnings andcalculate accounting period profits andlosses more properly.
As a result, for the fiscal year underreview the cost of revenues fromoperations decreased by ¥2,442,469
thousand, and gross profit, operating
income and ordinary income increasedby the same amount 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.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 70

(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 and ordinary income
were ¥1,118,961 thousand higher,
and

the

loss

beforetaxes

was¥1,118,961 thousand lower, than they
otherwise would have been had theaccounting standards used in past
periods been applied.
(2) Intangible fixed assets
Software for use within the Company
is depreciated using the straight-line
method based on the assumed usefullife for internal use (5 years).
――――――(2) Intangible fixed assets (excluding
lease assets)
Same as at left

(3) Lease assets
The

Companyhasadoptedthestraight-line method using the leaseterm as the depreciable life and zero
residual value. The Company accounts
for finance lease transactions except
for leases that transfer ownership of
the property for which the lease startdate is before October 31, 2008 by
applying accounting treatment basedon the method applied for ordinary
rental transactions.
(4) Long-term prepaid expenses(4) Long-term prepaid expenses
The
Companyhasstraight-line depreciation.
5. Standard for conversion offoreigncurrency-denominatedassets or liabilities into
Japanese yen

6. Accounting standards for

adoptedThe Company converts monetaryclaimsandmonetary
liabilities
denominated in foreign currencies into
Japanese yen at the exchange market
spot rate on the fiscal year settlement
date, and charges the translationdifference to income as a gain or loss.
(1) Allowance for doubtful accounts

Same as at left
Same as at left

(1) Allowance for doubtful accounts

allowances and reserves
To provide for losses on doubtful
accounts such as accounts receivable,
the Company charges to income anamountbasedonactualloss
experience for normal accounts, plus
an amount for projected unrecoverable
amounts based on assessments ofindividual accounts.

Same as at left

Summary of Company Financial Statements, FY Ended October 31, 2009P. 71

(2) Accrued bonuses to employees(2) Accrued bonuses to employees

To fully provide for expenditures ofbonuses the Company will pay toemployees, an amount is appropriatedto the reserve during the fiscal year
based upon a salary estimate amount.

Same as at left

(3) Accrued employees retirement(3) Accrued employees retirement

benefits

benefits

The Company provides for accrued
employees retirement benefits based
upon the projected amounts of theliabilityforaccruedemployees
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.
Pastyears’ service liabilities are
fully written off in the year incurred.
The difference based on an actuarial
calculation is charged to income
beginning 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.

――――――(4) Retirement allowances to directors(4) Retirement allowances to directors

and auditors

and auditors

The
Company
providesfor
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
The Company provides for losses
from 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 thattake into consideration subsidiarycompany operating results and asset
quality.
(6) Provision for loss on guarantees
To provide for losses resulting fromthe future execution of liability
guarantees, the Company charges toincome a reasonably estimated loss
amount based on the outstanding
amount of guarantees.

Same as at left

(5) Reserve for investment losses
Same as at left

(6) Provision for loss on guarantees
To provide for losses resulting fromthe future execution of liability
guarantees, the Company charges toincome a reasonably estimated loss
amount based on the outstanding
amount of guarantees.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 72

(Supplemental information)
Because the probability of incurring aloss on guarantees of affiliated company
bank loans increased, during the fiscal
year under review the Company charged¥377,216 thousand to the provision forloss on guarantees for subsidiaries andaffiliates in extraordinary losses andposted an identical amount to theprovision for loss on guarantees reported
under long-term liabilities. As a result,income before taxes and adjustments
decreased by ¥377,216 thousand.

――――――

7. Lease transactions

For finance lease transactions except
for leases that transfer ownership of theproperty to the lessee, rent expenses arecharged to income as payments are
made.

――――――

8. Hedge transactions(1) Hedge transactions
The Company accounts for hedge(1) Hedge transactions
Same as at lefttransactions using allocations based on
accounting standards for foreign
currency-denominated transactions,and special rule accounting based on
accounting standards for financial
products.
(2) Hedge methods and hedgedtransactions
The Company uses currency swaps
and forward transactions in order toavoid the currency fluctuation risk
related to the Company’s foreign
currency-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 derivativetransactions 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
The Company does not evaluate theeffectiveness of its hedge transactions
because it can assume that its currency
swap
transactions
andforwardtransactions will completely offset
market fluctuations or changes in cash
flow from the time the hedge begins
until it is terminated. In addition, theCompany’s interest swap transactions
fulfill the requirements for special ruleaccounting, and the Company has
elected to use this in place of anevaluation of effectiveness.

(2) Hedge methods and hedgedtransactions
Same as at left

(3) Hedging policies
Same as at left

(4) Method for evaluating theeffectiveness of hedges
Same as at left

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 73

9. Other significant mattersfor preparation of the fiscal
year financial statements

Accounting treatment of consumption tax

Accounting treatment of consumption tax

Consumption tax is taken out of all
Statement of Income items andBalance Sheet items, except mainly forreceivables and payables.

Same as at left

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 74

Change in Presentation Method
Prior fiscal year
From November 1, 2007
to October 31, 2008――――――

Current fiscal year
From November 1, 2008
to October 31, 2009
(Accounting Standard for Lease Transactions)
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 AccountingStandard 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 for leasetransactions 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.

Prior fiscal year
From November 1, 2007
to October 31, 2008――――――

Current 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 thousand and ¥72,526
thousand, respectively.

Summary of Company Financial Statements, FY Ended October 31, 2009P. 75

Notes to the Financial Statements(Notes to the Balance Sheets)(Unit: Thousands of yen)
Prior Fiscal Year(As of October 31, 2008)

Current Fiscal Year(As of October 31, 2009)*1. Reduction to book value*1. Reduction to book value
Amounts for assets acquired for which accumulated

Amounts for assets acquired for which accumulated

book values were reduced by government subsidies

book values were reduced by government subsidies

Machinery and equipment

5,044

Machinery and equipment

3,569

Land

Land
Total

8,613

Total

5,044
3,569
8,613

*2. Affiliated companies――――――

Amounts classified as liabilities owed to affiliates

3. Contingent liabilities

Current assets

494,482

Current liabilities

661,222

3. Contingent liabilities

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

32,145

Guarantee of consolidated
subsidiary debt (Kanatech Co.,Ltd.)

150,000

Guarantee of consolidated
subsidiary debt (Kanki
Corporation)

756,000

Guarantee of non-consolidated
subsidiary debt (Flowtechno
Corporation)

100,000

Guarantee of non-consolidated
subsidiary installment payments(SJ Rental, Inc.)

33,014

Guarantee of non-consolidated
subsidiary debt (Shanghai
Jinheyuan Equipment Rental Co.,Ltd.)

1,253,670

Guarantee of non-consolidated
subsidiary finance lease liabilities(Shanghai Jinheyuan Equipment
Rental Co., Ltd.)1,632,416

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 borrowing liabilities
of Flowtechno Corporation, a
non-consolidated subsidiarycompany

100,000

Guarantee of installment
payment liabilities of SJ Rental,
Inc., a non-consolidated
subsidiary company

177,884

Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Equipment Rental Co., Ltd., an
non-consolidated subsidiarycompany

133,900

Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Equipment Rental Co., Ltd., an
non-consolidated subsidiarycompany

1,580,468

Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., an non-consolidated
subsidiary company

773,942

Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Engineering Construction Co.,
Ltd., an non-consolidated
subsidiary company

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

66,439

Summary of Company Financial Statements, FY Ended October 31, 2009P. 76

*4. Liquidation of receivables based on receivables*4. Liquidation of receivables based on receivablestransfer facility

transfer facility
The Company liquidates receivables based on aNotes receivable, trade

The Company liquidates receivables based on areceivables transfer facility.

receivables transfer facility.
5,135,881

Notes receivable, trade5,126,484

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 ¥1,164,588.

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

――――――*5. Notes and bills maturing at the end of the fiscal year
Notes and bills maturing on the last day of the fiscal
year are settled and processed on the note and billclearing date. Because the last day of the Company’s
current fiscal year was a financial institution holiday,
notes and bills maturing on the final day of thefollowing fiscal year are included in the fiscal year
interim accounting period balance.
Notes receivable, trade
Notes payable, trade
Equipment notes payable

26,162
1,410,626
11,658

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 77

(Notes to the Statements of Income)(Unit: Thousands of yen)
Current fiscal year
(From November 1, 2008
to October 31, 2009)

Prior fiscal year
(From November 1, 2007
to October 31, 2008)*1. Transactions with affiliates*1. Transactions with affiliates

Seconded employees’ salaries

22,446

Seconded employees’ salaries

46,301

Rents received

118,681

Rents received

123,441*2. Balance in other accounts transferred to cost ofrentalequipment

assetsandconstruction*2. Balance in other accounts transferred to cost ofrentalequipment

assetsandconstruction

equipment soldequipment sold
Rental equipment assets

513,791

Rental equipment assets

648,082

Construction equipment

975

Construction equipment

312

Total

514,766*3. Gain on sale or retirement of fixed assets
Land
Building
Machinery and equipment

648,395*3. Gain on sale or retirement of fixed assets
949

Building

25

926

Tools, furniture and fixtures

64

3,478

Total

Total

Total

89

5,354

*4. Loss on sale or retirement of fixed assets*4. Loss on sale or retirement of fixed assets(Loss on sale of fixed assets)(Loss on sale of fixed assets)
Buildings

312

Machinery and equipment

39

Other

75

Land

40

(Loss on retirement of fixed assets)(Loss on retirement of fixed assets)
Rental equipment assets

15,914

Rental equipment assets

11,246

Buildings

25,268

Buildings

43,232

Structures

9,597

Structures

5,714

Machinery and equipment

5,056

Machinery and equipment

3,692

Vehicles and delivery equipment
Tools, furnishings and fixtures
Other
Total

403

Vehicles and delivery equipment

339

3,194

Tools, furnishings and fixtures

1,603

279
60,103

Other
Total

7,759
73,668

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 78

Current fiscal year
(From November 1, 2008
to October 31, 2009)

Prior fiscal year
(From November 1, 2007
to October 31, 2008)*5. Impairment loss

*5. Impairment loss
During this fiscal year the Kanamoto Group incurred
an impairment loss on the following asset groups.

During this fiscal year the Kanamoto Group incurred
an impairment loss on the following asset groups.

Location

Use

Asset

Location

Use

Asset

Tomakomai City,
Hokkaido

Dormant assets

Land

Tomakomai City,
Hokkaido

Dormant assets

Land

Asset groupings used by the Kanamoto Group to

Asset groupings used by the Kanamoto Group to

apply asset impairment accounting are based on theapply asset impairment accounting are based on theblock classified as the smallest segment for whichblock classified as the smallest segment for which

profitability

profitability

can

be

determined

regularly

by

can

be

determined

regularlybybusiness. Specifically, dormant assets are groupedbusiness. Specifically, dormant assets are grouped

as units that generate independent cash flow.

as units that generate independent cash flow.

For certain dormant assets for which the asset

For certain dormant assets for which the asset

value was less than book value, the Company

value was less than book value, the Company

reduced book value to the recoverable value, andreduced book value to the recoverable value, andaccounted for the reduction as an impairment loss

accounted for the reduction as an impairment loss(¥490 thousand) under extraordinary losses. This(¥312 thousand) under extraordinary losses. This

¥490 thousand was for land.

¥312 thousand was for land.

The recoverable value for this asset group is

The recoverable value for this asset group ismeasured according to net sales price, and the landmeasured according to net sales price, and the landis evaluated using the inheritance tax assessment

is evaluated using the inheritance tax assessment

value based on the land tax assessment value orvalue based on the land tax assessment value orother amount as a base.

other amount as a base.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 79

(Statements of Changes in Net Assets)
Prior fiscal year (From November 1, 2007 to October 31, 2008)
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

25

5

－

30

25

5

－

30

(Note) The number of treasury stock shares of common stock increased by 5 thousand shares throughpurchases of shares comprising less than one investment unit.
Current 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 thousand shares throughpurchases of shares comprising less than one investment unit.

（Negotiable Securities）
For the prior fiscal year (as of October 31, 2008) and this fiscal year (as of October 31, 2009), thestock of the Company’s subsidiary companies and affiliated companies did not have a market price.

Summary of Company Financial Statements, FY Ended October 31, 2009P. 80

(Notes Related to Tax Effect Accounting)(Unit: Thousands of yen)
Prior fiscal year
(As of October 31, 2008)

Current fiscal year
(As of October 31, 2009)

1. Major factors creating deferred tax assets and deferred

1. Major factors creating deferred tax assets and deferred

tax liabilities

tax liabilities
Deferred tax assets

Deferred tax assets
Amount in excess of limit forinclusion in allowance for doubtful
accounts
Excess accrued employees
retirement benefit
Disallowance of retirement benefit
directors and auditors
Disallowance of accrued bonuses
to employees
Disallowance of excess
depreciation
Impairment loss
Disallowance of reserve forinvestment losses
Disallowance of provision for loss
on guarantees
Other

527,840

404,481
40,955
196,893
270,488
240,572
164,292
152,395
271,260

Deferred tax assets subtotal

2,269,180

Valuation difference on negotiablesecurities-670,830

Total deferred tax assets

1,598,350

Deferred tax liability
Valuation difference on otherinvestment securities
Net deferred tax assets

129,733
1,468,616

Amount in excess of limit forinclusion in allowance for doubtful
accounts
Excess accrued employees
retirement benefit
Disallowance of retirement benefit
directors and auditors
Disallowance of accrued bonuses
to employees
Disallowance of excess
depreciation
Impairment loss

681,423

488,786
56,896
157,615
322,524
240,698

Disallowance of reserve forinvestment losses
Disallowance of provision for loss
on guarantees
Loss on valuation of investment
securities
Other

263,870
83,475228,039
158,354

Deferred tax assets subtotal

2,681,685

Valuation difference on negotiablesecurities-1,086,430

Total deferred tax assets

1,595,255

Deferred tax liability
Valuation difference on otherinvestment securities
Net deferred tax assets

Disclosure classifications:

158,685
1,436,569

Disclosure classifications:
Current assets

235,290

Current assets

199,932

Fixed assets

1,233,325

Fixed assets

1,236,636

2. Causes of principal differences between the statutory

2. Causes of principal differences between the statutory

tax rate and burden ratio for corporate and other taxes

tax rate and burden ratio for corporate and other taxes

following application of tax effect accounting by major

following application of tax effect accounting by major

category.

category.

Statutory corporate tax rate

40.4

％

(Adjustment)
Local tax equalization
Items not included permanently in
losses such as expense accountAffect from application of asset
impairment accounting for fixed
assetsAffect from application of allowance
for investment loss
Affect from application of allowancefor doubtful accounts
Other
Burden ratio for corporate and othertaxes after application of tax effectaccounting

The Company has omitted the description of these
items because it reported a net loss before taxes and

7.6

％

3.3

％

0.0

％

11.9

％

22.8

％

-0.8

%

85.2

％

adjustments.

Summary of Company Financial Statements, FY Ended October 31, 2009
P. 81

(Per Share Information)
Current fiscal year
(From November 1, 2008
to October 31, 2009)

Prior fiscal year
(From November 1, 2007
to October 31, 2008)
Net assets per share
Net income per share of common
stock
Net income per share of common
stock after adjustment for potential
ordinary shares

1,170.56 Yen
5.59 Yen

Net assets per share
Net loss per share of common stock
Net income per share of common
stock after adjustment for potential
ordinary shares－

The Company has not reported net income per share

1,120.50 Yen-32.28 Yen－

The Company has not reported net income per share ofof common stock after adjustment for potential ordinarycommon stock after adjustment for potential ordinary

shares because it does not have any potential shares thatshares because it does not have any potential shares thatwould have a dilution effect.

would have a dilution effect.

Note: The basis for calculating net income per share and net income per share on a fully diluted basis is provided below.
(Unit: Thousands of yen)
Current fiscal year
(From November 1, 2008
to October 31, 2009)

Prior fiscal year
(From November 1, 2007
to October 31, 2008)
Fiscal year net income (loss)
Amountnotattributable

to183,467-1,060,122－－

183,467-1,060,122

32,844,319

32,838,970

major

shareholders
Fiscal year net income (loss) related tocommon stock
Average number of shares outstanding
during the fiscal year

(Material Events after the Close of the Fiscal Year)
The Company had no material items to report.

6. Others(1) Changes to Directors
There are no pertinent items.
(2) Other
There are no pertinent items.

Summary of Company Financial Statements, FY Ended October 31, 2009P. 82