Fiscal Year ending October 31, 2008

Interim Financial Statements Bulletin
June 6, 2008

Listed Company Name

Kanamoto Company, Ltd.

Company Code Number 9678
Listing Exchanges

Tokyo Stock Exchange First Section, 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 submission of Semi-Annual Report:
July 25, 2008
Date for start of dividend payments:
July 14, 2008

1. Consolidated Operating Results for the Interim Period ended April 30, 2008
(November 1, 2007 - October 31, 2008)(1) Consolidated Operating Results
Revenues(Numbers less than one million yen have been rounded down)(Percentages show the change from the prior year)
Operating Income

Ordinary Income

Millions of yen%

Millions of yen%

Millions of yen%

Six months endedApril 30, 2008

37,236

2.8

2,918

−15.1

2,833

−17.2

Six months endedApril 30, 2007

36,230

5.0

3,438

19.7

3,422

22.2

Fiscal year ended
October 31, 2007

68,626Net Income

4,236

4,416

Net Income per Share ofCommon StockNet Income per Share on a
Fully Diluted Basis

Millions of yen%

Yen

Six months endedApril 30, 2008

1,476

−38.0

44.97

－

Six months endedApril 30, 2007

2,382

127.3

72.53

－

Fiscal year ended
October 31, 2007

3,035

94.40

－

Yen

Notes 1. Investment profit or loss accounted for by the equity method
Six months ended April 30, 2008－
Six months ended April 30, 2007－
Fiscal year ended October 31, 2007－

(2) Consolidated Financial Position
Total Assets

Six months endedApril 30, 2008
Six months endedApril 30, 2007
Fiscal year ended
October 31, 2007

Shareholders’EquityShareholders’Equity Ratio

Shareholders’ Equity
per Share

Millions of yen

Millions of yen%

Yen

91,75540,53643.8

1,224.56

90,86740,40044.3

1,225.81

85,15539,97346.9

1,216.98

Notes 1. Owners’ equity and valuation and translation adjustments: (Millions of yen)Six months ended April 30, 2008
40,220Six months ended April 30, 2007
40,272
Fiscal year ended October 31, 2007
39,973Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 1

(3) Consolidated Cash Flows
Cash Flow fromOperating Activities

Cash Flow from
Investing Activities

Balance of Cash andEquivalents at End
of Period

Cash Flow from
Financing Activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

5,134−2,64941

20,4206,774−1,105−1,601

22,465

4,479−1,427−4,237

17,213Year-end Dividend per
Share of Common
Stock

Full-year Dividend per
Share of Common
Stock

Yen

Yen

Six months endedApril 30, 2008
Six months endedApril 30, 2007
Fiscal year ended
October 31, 2007

2. Dividends
Interim Dividendper Share ofCommon StockYen
Fiscal year ended
October 31, 2007
Fiscal year ended
October 31, 2008

9.00

11.00

10.00

───

───

10.00

20.00

Fiscal year ending
October 31, 2008
(projected)

3. Projected Consolidated Operating Results for the Fiscal Year Ending October 31, 2008
(November 1, 2007 - October 31, 2008)(Percentages show the change from the prior year)

Millions of yen

Full year

71,600Net Income per

Operating

Revenues

Ordinary Income

Income% Millions of yen

4.3

3,600

Net Income

Share on a Fully
Diluted Basis% Millions of yen

−15.0

3,400

%

Yen

−50.6

45.67

% Millions of yen

−23.0

1,500

4. Other(1) Changes to material subsidiaries during the period (transfer of specified subsidiaries in conjunction withrevision to scope of consolidation)? Yes
Newly consolidated companies
3 (Kyushu Kensan Co., Ltd., Kensan Fukuoka Co., Ltd.,
Kensan Techno Co., Ltd.)(Note) For details, please refer to “Current Conditions of the Company’s Group” on page 12.
(2) Changes to accounting principles, procedures and reporting method pertaining to preparation of theinterim consolidated financial statements (matters described in the Changes in Important Matters Usedas the Basis for Preparation of the Interim Consolidated Financial Statements)(a) Changes accompanying revisions to accounting standards etc.? No(b) Changes other than those in (a)? No(3) Number of shares issued (common stock)(a) Number of shares issued and outstanding at end of period (including treasury stock)Six months ended April 30, 2008
32,872,241 shares
Six months ended April 30, 2007
32,872,241 sharesFiscal year ended October 31, 2007
32,872,241 shares(b) Number of shares of treasury stock at end of period
Six months ended April 30, 2008
27,407 shares
Six months ended April 30, 2007
18,670 sharesFiscal year ended October 31, 2007
25,725 shares(Note) For the number of shares used as the basis for calculation of interim period earnings per share(consolidated), please refer to “Per Share Information” on page 50.
(Reference) Summary of Company Interim Operating Results
Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 2

1. Operating Results for the Interim Period ended April 30, 2008
(November 1, 2007–April 30, 2008)(Numbers less than one million yen have been rounded down)(Percentages show the change from the prior year)(1) Operating Results
Revenues

Operating Income

Ordinary Income

Millions of yen%

Millions of yen%

Millions of yen%

32,127

−1.0

2,782

−9.4

2,734

−14.4

32,449

5.5

3,070

23.0

3,195

24.4

Six months endedApril 30, 2008
Six months endedApril 30, 2007
Fiscal year ended

4,012

61,576

October 31, 2007

4,372

Net Income per Share ofCommon StockNet Income

Yen

Millions of yen

%

1,435

−38.1

43.70

2,320

143.0

70.62

Six months endedApril 30, 2008
Six months endedApril 30, 2007
Fiscal year ended

104.44

3,431

October 31, 2007

(2) Financial Position
Total Assets

Shareholders’Shareholders’Shareholders’ Equity

EquityEquity Ratio

per Share

Millions of yen

Millions of yen%

Yen

85,98041,13347.8

1,252.35

87,406

40,62646.5

1,236.59

82,90240,78749.2

1,241.77

Six months endedApril 30, 2008
Six months endedApril 30, 2007
Fiscal year ended
October 31, 2007

Notes 1. Owners’ equity and valuation and translation adjustments: (Millions of yen)Six months ended April 30, 2008
41,133Six months ended April 30, 2007
40,626
Fiscal year ended October 31, 2007
40,787

2. Projected Operating Results for the Fiscal Year Ending October 31, 2008
(November 1, 2007 - October 31, 2008)(Percentages show the change from the prior year)

Full year

Net Income per

Operating

Revenues

Ordinary Income

IncomeMillions of yen%

Millions of yen

61,7000.2

3,600

Net Income

Share on a Fully
Diluted Basis

%

−10.3

Millions of yen

3,500

%

−19.9

Millions of yen

1,700

%

Yen

−50.5

51.76

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 thetime 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.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 3

1. Operating Results(1) Analysis of operating results① Summary of fiscal year interim period operating results
During the interim period under review, the effects from the subprime loan problem in the United States
rippled through the global economy. Japan’s economy was affected as well, as the stock market slumped
because of concerns of an economic slowdown in the U.S. and worries about the operating results of financial
institutions threw a shadow over the real economy. In addition, the management environment surrounding
firms generally deteriorated, as earnings in manufacturing and other sectors came under pressure from risingcosts for various raw materials, which originated in the sharp jump in oil prices and appreciation of the yen.
Individuals, on the other hand, were confronted by successive price hikes from the first of the year on basic
necessities such as fuel and food, which heightened anxiety concerning the future and the demands ofeveryday life. When added to pressures for resolution of confusing issues such as pension problems anddifficulties with the medical-care system for the elderly, the result caused personal consumption to cool visibly.
The broadening gap among the general population, from differences in wealth between the general public andmore affluent brackets and the economic disparity between major metropolitan areas and other regions,appeared both real and intractable.
In the construction industry that is the leading customer of the Kanamoto group, signs of improvement inconstruction demand were evident from the latter half of January 2008 in major metropolitan areas, where
are numerous large-scale project projects are underway. Such positive changes could be seen despite themarked delay in construction starts since last summer because of revision of the Building Standards Law.
Nevertheless, in regions where construction is heavily dependent on public works, demand was affected not
only by the delay in construction starts but also by a temporary suspension of work as the government
debated the provisional highway construction tax rate, and conditions generally remained unsatisfactory.
Viewed nationally, the environment was extremely severe, as evidenced by the rising trend in the number of
construction firm bankruptcies.
On the other hand, a recovery was noted in steel products sales from the second half of January 2008, eventhough large price increases continued after the start of the year, as construction was begun on projects that
had been delayed as noted above. In addition, used construction equipment sales were supported by vigorous
overseas demand, despite being affected by the strengthening of the yen, and exceeded the same period of
the previous consolidated fiscal year.
In light of this extremely challenging environment, the Kanamoto group, which has numerous bases
throughout Japan, zealously pursued improvements to its operations based on each measure outlined in
Kanamoto’s long-term management plan “Metamorphose.” The Company was unable to fully absorb theexternal causes of deterioration, such as of the temporary halt to construction work because of theprovisional highway construction tax rate problem, however, and the Kanamoto group’s rental revenues fell
below the plan target and was basically unchanged from the same period one year earlier. Used construction
equipment sales exceeded Kanamoto’s initial plan as described above, and total revenues increased comparedwith the same period of the previous consolidated fiscal year.
From an earnings perspective, operating income and ordinary income fell below the results for the interim
period of the previous consolidated fiscal year. Although Kanamoto achieved demonstrable results frommeasures outlined in the Company’s long-term management plan, including greater rental equipment
operating efficiency and a lower depreciation expense burden, this result reflected the fact rental revenues
were significantly below the initial plan. In addition, during the interim period of the previous consolidated
fiscal year Kanamoto posted extraordinary income from the sale of land, a one-time factor that was notrepeated during the interim period under review. Consequently net income for the interim period underreview fell substantially below the result for the same period of the previous consolidated fiscal year.
As a result, revenues for the interim period of the consolidated fiscal year ending October 31, 2008 rose 2.8%
Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 4

from the same period of the previous consolidated fiscal year to ¥37,236 million, operating income decreased
15.1% year-on-year to ¥2,918 million and ordinary income fell 17.2% compared with the same period one
year earlier to ¥2,833 million. Interim period net income declined 38.0% year-on-year to ¥1,476 million.
A summary of operating results for each of the Company’s businesses, and business development issues
deserving special mention, are described below.
〔 Fiscal Year ending October 31, 2008 Interim Operating Results 〕(Percentages show the change from the prior year)
Revenues

Consolidated

Mil.

Current FYInterim period
Prior FY Interim
PeriodNon-consolidated

Prior FY
Current FYInterim period
Prior FY Interim
PeriodPrior FY

of

yen

%

37,23636,230Operating income

Ordinary income

Mil.

Mil.

yen

%

2.8

2,918

−15.1

5.0

3,438

19.7

68,626

of

4,236

of

yen

Interim net income
%

yen

%

2,833 −17.2

1,476

−38.0

3,422

2,382 127.3

22.2

Mil.

of

4,416

3,035

32,127

−1.0

2,782

−9.4

2,734 −14.4

1,435

32,449

5.5

3,070

23.0

3,195

2,320 143.0

61,576

4,012

24.4

4,372

−38.1

3,431

② Summary of operating results by business segment[ Business related to the Construction Equipment Rental Division ]In the construction-related businesses of the entire Kanamoto group for the consolidated fiscal year interim
period under review, consolidated revenues increased 1.7% from the previous consolidated fiscal year to¥34,235 million, and operating income declined 13.3% year-on-year to ¥2,900 million.
< Kanamoto Co., Ltd. on a non-consolidated basis >Kanamoto strove tirelessly to secure projects in the civil engineering works sector where it excels.
Nevertheless, rental revenues fell below the same period of the previous year because of the tough conditions
facing the Company. This included a temporary suspension in construction works in some regions in April
because of the provisional highway construction tax rate problem, in addition to the negative factor of delays
in confirmation of construction permits in conjunction with revision of the Building Standards Law. On theother hand, because revenue from equipment sales exceeded the level in the interim period one year earlier,revenues as a whole were level with the same period of the previous fiscal year.
By region, non-consolidated construction equipment rental net revenues decreased 4.1% from the same
period of the previous year in the Hokkaido Region, despite efforts to capture new private sector demand, andalso fell 11.5% year-on-year in the Tohoku Region, reflecting the gradual decrease in projects and thesubstantial growth in market share achieved by the Company until the previous fiscal year. In the Kanto
Region, large-scale projects such as the Haneda Airport Expansion Project contributed significantly to a 3.6%
year-on-year increase. In the Kinki & Chubu Region, net revenues grew 3.6% year-on-year as revenues inboth the Tokai district and Kansai exceeded the levels during the interim period of the previous fiscal year. As
a result, rental revenues for Kanamoto’s construction equipment rental division decreased 3.8% from thesame period of the previous year to ¥21,240 million. The percentage of revenues accounted for by Hokkaido
and by Honshu and other regions was 32.0% and 68.0%, respectively.
Moreover, there was no change in vigorous overseas demand for used construction equipment, despite thenegative affect from appreciation of the yen, and sales increased 3.6% from the same period of the previous
year even though domestic sales were flat because fewer work sites. As a result, sales revenues on a nonFiscal Year Ending October 2008 Interim Accounting Bulletin

P. 5

consolidated basis edged up 0.9% year-on-year to ¥7,886 million. Total operating revenues for theConstruction Equipment Rental Division were ¥29,126 million, 2.5% lower than in the same period of theprevious fiscal year.
During the interim period under review, Kanamoto opened the two new bases shown below. The Company did
not close any bases. As a result, Kanamoto had 154 branches.
Opened: Mikasa Branch (Mikasa City, Hokkaido), Tobetsu Branch (Tobetsu-cho, Ishikari-gun, Hokkaido)
Closed: None
< Consolidated subsidiaries >Daiichi Kikai Co., Ltd. continued to face difficult conditions, including a decrease in public works and theend of disaster recovery work that had extended through the prior period. As the result of steady sales efforts,
however, the company increased revenues 1.6% from the same period of the previous fiscal year. Operating
income dropped substantially, however, falling 83.9% year-on-year because of a higher capital investmentload, reflecting new branch openings and an increased cost burden for replacement of rental assets.
Kanki Corporation, which is restructuring its management, zealously focused management resources on
securing construction equipment rental demand at factories because of the sharp drop in public works in
Hyogo Prefecture, but revenues were 12.4% lower than in the same period of the previous consolidated fiscal
year. The company posted an operating loss, reflecting the continuing cost burden from greatly enhancing its
rental equipment assets.
Kyushu Kensan Co., Ltd., Kensan Fukuoka Co., Ltd. and Kensan Techno Co., Ltd., the three membersof the Kyushu Kensan Group that is developing its business mainly in Fukuoka Prefecture in northern
Kyushu, cannot be compared to the same period of the previous consolidated fiscal year because the priorfiscal year was an irregular accounting period. The three companies reported higher earnings as the result ofgrowth in private construction work and demand for equipment such as large-scale cranes.
SRG Kanamoto Co., Ltd. was significantly affected by delays in project construction starts as a result ofrevision of the Building Standards Law, as demand for temporary scaffolding for condominium construction in
the Sapporo area declined. Revenues were down 17.7% from the same period of the previous consolidated
fiscal year, resulting in an operating loss of ¥21 million.
With the success of new business activities, Assist Co., Ltd. boosted revenues compared with the interim
period of the previous consolidated fiscal year. This did not absorb the increased burden caused by rental
asset purchases, however. Revenues rose 2.3% year-on-year, while operating income decreased 30.4% fromthe same period one year earlier.
Kanatech Co., Ltd. experienced a delay in its planned acquisition of a major customer, which resulted in a
temporary higher inventory burden. Revenues decreased 11.2% from the same period of the previous
consolidated fiscal year, while operating income shrank 94.8% year-on-year.
[Business related to the Steel Sales Division]
Following a slow start in steel products sales in Hokkaido in the first quarter because of the revision to the
Building Standards Law, construction on delayed building projects was begun in the second quarter. Revenues
expanded 16.4% from the same period of the previous consolidated fiscal year to ¥2,728 million. The
company posted an operating loss of ¥4 million.
[Business related to the Information Products Division and Other Businesses]
Rental revenues for the Information Products Division were up 14.8% compared with the same period of theprevious consolidated fiscal year, reflecting the success of aggressive efforts to develop new products andmeet short-term spot demand. Sales of used devices were excellent, jumping 177.5% from the same periodof the previous consolidated fiscal year. For the division as a whole, revenues increased 25.8% year-on-yearto ¥272 million, and operating income increased 92.9% from the same period one year earlier to ¥41 million.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 6

(2) Analysis of financial position① Summary of fiscal year interim period operating results
Interim Period Ended(Millions of yen)Interim Period Ended

April 2007

April 2008

(Prior Consolidated FY(Current Consolidated FYInterim Period)

Interim Period)

ChangeCash flow from operating activities

6,774

5,134

–1,640Cash flow from investing activities–1,105–2,649–1,544

Cash flow from financing activities–1,60141

1,643

Increase in cash and equivalents

4,067

2,526

–1,541

18,39817,213–1,184

22,465

20,420–2,045

Balance of cash and equivalents at
beginning of period
Balance of cash and equivalents at
end of interim period(Cash flow from operating activities)

Cash flow from operating activities was ¥5,134 million, a decrease of ¥1,640 million from the interim periodof the prior consolidated accounting fiscal year.
This mainly reflected an increase in expenditures for acquisition of rental assets and a smaller decrease inaccounts receivable, trade.
(Cash flow from investing activities)
Cash flow used in investing activities was ¥2,649 million, a change of ¥1,544 million from the interim periodof the prior consolidated accounting fiscal year.
This mainly reflected a decrease in cash provided from the sale of tangible fixed assets.
(Cash flow from financing activities)
Cash flow from financing activities was ¥41 million, a change of ¥1,643 million from the interim period of theprior consolidated accounting fiscal year.
This mainly reflected an increase in funds provided by long-term bank loans.
As a result of the above, and an increase in cash and cash equivalents resulting from newly consolidated
companies, the balance of cash and cash equivalents at the end of the consolidated fiscal year interim period
under review decreased ¥2,045 million compared with the interim period of the previous consolidated fiscal
year, to ¥20,420 million.
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)

FY Ended

FY Ended

FY Ended

FY Ended

October 2004

October 2005

October 2006

October 2007

Interim Period
Ended April 2008
(Current
Consolidated FYInterim Period)

36.7

40.8

43.7

46.9

43.9

18.1

26.6

32.0

41.3

23.6

6.3

3.3

3.5

6.4

6.4

13.4

24.5

21.0

11.9

22.6

(Notes)Shareholders’ equity ratio: Shareholders’ equity / Total assets
Shareholders’ equity ratio on a market capitalization basis: Shareholders’ equity on a market capitalization basis / Total
assetsYears to repay debt: Interest-bearing liabilities / Operating cash flow

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 7

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 ofshares 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 theConsolidated Balance Sheets. The amounts shown as interest expense on the Consolidated Statements of Cash Flows areused as interest payments.

(3) Outlook for the fiscal year
Over the past several months, the economic environment surrounding Japan has deteriorated significantly,
even as the delay in construction work starts that resulted from revision of the Building Standards Law, which
had been regarded as an extremely short-term problem, is being eliminated after the software to meet theamended standards was finally made available in the spring. Negative factors include the steady appreciationof the yen, and the rapid jump in raw materials costs led by rising oil prices. In general, the sense of
uncertainty regarding the outlook for domestic business conditions has grown stronger.
Bankruptcies of small, medium and mid-sized building contractors, real estate firms and even developers andcondominium construction companies, driven not only by the emerging sense of a slowdown in the private
sector capital investment trend but also by the unbroken downward trend in public works, are beginning to beconspicuous. In the used construction equipment market, on the other hand, the demand for used equipment
remains vigorous globally, and market prices remain strong, but changes in overseas circumstances can be
abrupt, and whether the market can sustain its current robust conditions a while longer remains an open
question.
When we summarize these parameters and estimate the future domestic construction demand trend, we
believe the probability for a significant improvement in conditions over the intermediate term to be extremely
small. Because Kanamoto and its consolidated subsidiaries maintain branches in many local areas, we expect
the Kanamoto group to remain greatly affected by these factors. Kanamoto therefore has adopted an
extremely conservative full-year performance forecast and revised its earnings projection for the full year as
announced on May 27.
Although we have revised our initial projection, we believe the current severe management environment canalso be viewed as a major future opportunity for Kanamoto. The key factor is efforts to reorganize theindustry and the accelerating pace of reliance on rental equipment. Viewed on a nationwide scale, there aremany regions where Kanamoto has not yet developed business or branches, which present substantial roomfor expansion, particularly in the Tokyo metropolitan area where the maximum demand in Japan is
anticipated. In the future, Kanamoto will vigorously accelerate branch development including M&A. There areopportunities to increase earnings sufficiently through new responses to large-scale projects, such as ground
improvement, for example, that make the best use of Kanamoto’s size, and in the gradually expanding event
rental sector, and we will strive to develop our business in close cooperation with each affiliated company.
Furthermore, Shanghai Jinheyuan Equipment Rental Co., Ltd., which has begun construction equipment
rental operations in Shanghai, China, is demonstrating a strong start. In conjunction with our strong used
construction equipment sales, we will work to foster and expand our business overseas.
Kanamoto’s earnings projection for the Business Period ending October 2008 is shown in the table below.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 8

〔Projected Operating Results for the Consolidated Fiscal Year Ending October 31, 2008〕(November 1, 2007 - October 31, 2008)

Non-consolidated

Consolidated(Millions of yen, except for net income per share which is in yen)

Revenues

OperatingincomeOrdinary
incomeNet income

Net
income per
share

Full-year projected
results

71,600

3,600

3,400

1,500

45.67

Prior year results（FY Ended October 2007）

68,626

4,236

4,416

3,035

92.40

Full-year projected
results

61,700

3,600

3,500

1,700

51.76

Prior year results（FY Ended October 2007）

61,576

4,012

4,372

3,431

104.44[ Projected Financial Position for the Fiscal Year Ending October 31, 2008 ](November 1, 2007 - October 31, 2008)

Cash flow from operating activities
Cash flow provided from operating activities is expected to decrease compared with the prior consolidated
fiscal year, because expenditures for acquisition of rental assets will increase.
Cash flow from investing activities
Expenditures are projected to increase year-on-year, because of funds used for the acquisition of tangible
fixed assets will increase.
Cash flow from financing activities
Cash flow used in financing activities is expected to increase compared with the prior consolidated fiscal year,
because the Company will reduce funds provided by long-term bank loans.
As a result of the above, the balance of cash and equivalents at the end of the consolidated fiscal year is
projected to be basically unchanged from the balance at the end of the prior consolidated fiscal year.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 9

(4) Basic policies concerning distribution of earnings and current period dividends
As the basis of its earnings distribution policy, Kanamoto seeks to ensure a stable return of earnings to theextent possible, while taking into consideration its earnings level, payout ratio, and financial position from a
medium to long-term perspective. Kanamoto’s objective is to maintain a dividend payout ratio of at least 30%,
while giving consideration to earnings.
Although Kanamoto projects its operating results for the Business Period ending October 2008 will be below
its initial plan, based on the basic policy described above the Company plans to pay a regular dividend of ¥20
per share for the full year (interim and year-end dividend of ¥10 per share each).
The Company will utilize its internal reserves by allocating funds for capital investment, including the
introduction of rental equipment assets that will serve as the source of future earnings, and for enhancing
shareholders’ equity.
To enable the Company to flexibly implement its capital policy, Kanamoto has established a system formaking purchases of treasury stock.
(5) Special benefits plan for shareholders
To celebrate the tenth anniversary of the elevation of its stock to the First Section of the Tokyo Stock
Exchange, Kanamoto established a special benefits plan for shareholders. Shareholders owning at least 1,000
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 ofKanamoto, with a value equivalent to 3,000 yen. Shareholders will be able to choose their desired items froma catalog enclosed with Kanamoto’s annual report.
(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. Statements concerning
future matters are judgments made by the Company based on information available at the present point intime.
① Economic conditions
Because the construction-related businesses that are the main business of the Kanamoto group remain highly
dependent on public works, the stagnation of market growth and intensification of price competition resulting
from ongoing cutbacks in public works investment are continuing and the severity of the businessenvironment is expected to continue.
To minimize the affects from cutbacks in public works, the Kanamoto group is implementing various
management measures, such as shifting management resources to major metropolitan areas where private
sector demand is strong, and seeking to maintain and improve operating results. Nevertheless, there is apossibility future operating results including revenues will be negatively affected if further large reductions inpublic works or other changes affecting industry demand occur in the future.
② Seasonal changes 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).
③ 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 fluctuations on its externally borrowed funds, including transactions to fix the interest rates paid on
Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 10

borrowed funds to the extent possible, there is a possibility the operating results and financial position of theKanamoto group will be affected by future large changes in short-term interest rates.
④ 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 affect 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. Beginning from the previous consolidated fiscal year, the Company has adopted the
cash balance system, and the Company will seek stabilization of the projected benefit obligation and costs byoffsetting the change in the projected benefit obligation and costs as a result of the discount rate and change
in projected benefits amount.
⑤ Asset impairment accounting for fixed assets
Beginning from the business period ending in October 2006, the Kanamoto group will apply 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.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 11

2. Current Conditions of the Company’s GroupThe Kanamoto Company group (Kanamoto and its affiliated companies) has organized its principal businessactivities around “Businesses related to the Construction Equipment Rental Division” that are engaged in therental and sale of construction equipment and construction-related equipment parts, “Businesses related to
the Steel Sales Division” that sell materials for construction such as steel products, and “Business related to
the Information Products Division and Other Businesses” that rent and sell computers including workstations
and PC servers and computer peripheral equipment. The group is comprised of the parent company, eightconsolidated subsidiaries and seven 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 subsidiarycompany) and Kanki Corporation (a consolidated subsidiary company) are engaged in the rental and sale ofconstruction equipment and machines used for construction. These two subsidiary companies borrow rental
equipment assets from Kanamoto as needed in order to meet customer demand.
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 Fukuoka Co., Ltd. (aconsolidated subsidiary) rents and sells mainly portable generators, Kensan Techno Co., Ltd. (aconsolidated subsidiary) rents construction cranes and Center Corporation, Ltd. (a non-consolidated
subsidiary) mainly rents and sells small machines. Kyushu Kensan borrows rental equipment assets from
Kanamoto as needed in order to meet its customer demand.
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) and Asahikawa Fujisho Co., Ltd. (a non-consolidated subsidiary) rent and sell
temporary materials for construction use. Kanamoto borrows rental assets from these four companies asneeded to rent to other companies.
Kanatech Co., Ltd. (a consolidated subsidiary company) sells modular housing units for temporary use.
Flowtechno Co., Ltd. (a non-consolidated subsidiary), is engaged in the technical development,
manufacture and sale of construction equipment for ground improvement works. Kanamoto purchases
modular housing units for temporary use and construction equipment for ground improvement from these twocompanies as needed to rent to its own customers.
Shanghai Jinheyuan Equipment Rental Co., Ltd. (a non-consolidated subsidiary; Shanghai, China) and
SJ Rental, Inc. (a non-consolidated subsidiary; Territory of Guam, United States), which became asubsidiary company in April 2008, are engaged in the rental and sale of construction equipment and tools andthe import 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 has no subsidiaries or affiliated companies related to this division.

[ 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 engineeringrelated human resources to manufacturer research and development divisions and other entities.
Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 12

The companies and activities described above are shown in the following diagram illustrating their operating
businesses relationships.

Domestic Customers

Construction equipment rental

Kanamoto Company

Daiichi Kikai Co., Ltd.
Construction equipment rentals
and sales

Ltd.

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

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

Kanki Corporation
Construction equipment rentals
and sales

Construction
Kyushu Kensan Co., Ltd.

Construction equipment rentals
centered on basic equipment

Rental of construction related products

Equipment Rental

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

Division
Asahikawa Fujisho Co., Ltd.
Rental and sale of temporary
materials for construction use

Kensan Fukuoka Co., Ltd.

Generator rentals

Kensan Techno Co., Ltd.

Construction crane rentals

Steel Sales Division

Center Corporation Ltd.

Small equipment rentals

Supply of steel frames andconstruction materials

Information Products Division

Supply of modular housing units
Equipment supply,
technical assistanceDesign, manufacture and sale of related materials

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

Technical development, manufactureand sale of ground improvement
construction equipment

Users, trading
companies, etc.

Business cooperation,technical support

Other business
Kanamoto Engineering Co.,Ltd.
Engineer dispatch

Manufacturers, etc.

Overseas
Shanghai Jinheyuan
Equipment Rental Co., Ltd.
Construction materials
import and export
Construction equipment
SJ Rental，Inc.
Construction materials import andexport Construction equipment
rentals

Overseas users andtrading companies(Notes)① There are no companies that apply equity method accounting to non-consolidated subsidiaries.
② Consolidated subsidiaries are indicated by white boxes, and non-consolidated subsidiaries are shown in grey boxes.
Dotted lines indicated 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.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 13

3. Management Policies(1) Basic policies concerning the Company’s business management
The Kanamoto group believes that seeking innovation, maintaining a dynamic corporate culture andcontinually pushing businesses forward, by regarding “customers’ interests as Kanamoto’s interests,” is thebest way to meet the expectations of shareholders and group stakeholders and ensure earnings growth.
Through this philosophy, Kanamoto practices group management with the objective of being a corporategroup that can make a valuable and tangible contribution to society.
(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). The maintenance and growth of EBITDA+ in particular is recognized to be necessary andindispensable because it serves to complement future earnings.
In its initial plan Kanamoto projected higher revenues and earnings for the current business period ending
October 2008, the final fiscal year of Kanamoto’s long-term management plan (November 2003 - October2008). Because of the decrease in public works, as well as heightened concerns of cutbacks in private sector
capital investment as a result of record oil prices and sharply higher raw materials costs, which have been
rising daily since enforcement of the revised Building Standards Law, Kanamoto believes there is extremely
little room for a recovery in domestic construction demand during the remaining six months of its plan andrevised its earnings objective on May 27.

Consolidated
operating results

F i s c a l Ye a r E n d i n g

October 2008

October 2008

Initial objectives

Re v i s e d o b j e c t i v e s

Revenues

71,90071,600Ordinary income

4,400

3,400

Net income per share

70.02

45.67

61,70061,700Non-consolidated

Revenues

operating results

Ordinary income(Kanamoto)F i s c a l Ye a r E n d i n g

EBITDA+

4,100

3,500

19,435

18,661(Unit: Millions of yen, except for net income per share which is in yen)(3) Medium to long-term corporate management strategy
The Company has now entered the final five months of its long-range management plan “Metamorphose”(November 2003 - October 2008). While Kanamoto was ultimately compelled to make downward revisions in
the final year performance forecast for the business period ending October 2008, we remain proud of thesuccess we’ve achieved with regard to various management issues as a result of the measures implemented
based on the plan. At the same time, however, the problems confronting Kanamoto, such as the lack of major
progress pertaining to branch development in the Tokyo metropolitan area and hiring of skilled humanresources, which the Company must pursue as its number one priorities, are also still clear.
In the new long-term management plan (from November 2008) Kanamoto is now zealously preparing, we willcontinue to pursue a group management strategy that enables each group company to practice earningsfocused management, and focus on creating a corporate group that further increases operating results and isevaluated positively by the market, in order to resolve these various issues, which must be addressed as
quickly as possible.
① Create an earnings-focused rental equipment asset portfolio (asset optimization strategy)
The operating period for rental assets and time for selling used equipment differs depending on eachequipment model. To maximize and optimize period earnings, Kanamoto will work to increase profitability by
Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 14

improving the accuracy of its asset portfolio, utilizing models with strong margins.
② Expand bases in the Tokyo metropolitan area and advance into regions where Kanamoto does
not have branches
Kanamoto has placed top priority on establishing new branches in the Tokyo, Nagoya and Osaka metropolitan
areas, and will also aggressively pursue M&A in these areas. In regions where Kanamoto does not havebranches, the Company will pursue M&A, alliances, new branch establishment and business area expansion
more aggressively, while taking into consideration the local circumstances in areas where it will expand. In
the future as well, the Company will position M&A as a growth engine of the Kanamoto group.
③ Strengthen the activities of the Regional Special Procurement Sales Division
Kanamoto has been successful in responding to large-scale projects through coordinated sales by the
Regional Special Procurement Sales Division, which is responsible for Kanamoto’s support for large-scale
projects, and the Company will strengthen the activities of this division in the future.
④ Build a powerful marketing organization and alliance group where customers are always
Number One
While Kanamoto is gradually increasing the number of agreements with local governments to respond to
urgent requests following a disaster, the Company will not limit its efforts to countermeasures against naturalcalamities and will continue targeting firms with strong ties to their local communities. In addition toincreasing the synergistic effects through cooperation with Kanamoto group firms and alliance (tie-up)
partners throughout Japan from Hokkaido to Okinawa, Kanamoto will build a community-based sales andmarketing organization, including customer firms and municipalities, that takes maximum advantage of each
entity’s size.
⑤ Overseas development efforts
In addition to Shanghai Jinheyuan Equipment Rental Co., Ltd., which is off to a smooth start in China, projects
where construction equipment procured from Kanamoto is used are being carried out in various countries inregions such as Southeast Asia. Kanamoto will continue developing proactive sales in regions achieving
remarkable growth and work to create a decisive business base. Furthermore, because the sales of used
construction equipment implemented by Kanamoto’s each year enhance Kanamoto’s reputation in eachcountry and contribute substantially to business development in other countries, Kanamoto also will continue
to offer high-quality used construction equipment for sale.
⑥ Development of new rental products and new businesses
Product categories developed by Kanamoto’s New Products Office that offer proprietary improvements arelinked not only to the growth of Kanamoto’s of main business of construction equipment rentals, but also to
the development of new business sectors such as the event rental business. The Company will continue
developing this side support for its rental divisions.
(4) Issues to be addressed by the Company
The environment affecting the Company is one of unprecedented severity. In addition to ongoing cutbacks topublic works, firms are retreating from capital investment in the face of high oil prices and rising raw
materials costs. Kanamoto expects weaker firms to be forced out of the industry at an accelerating pace, as
the competition between construction equipment rental firms intensifies even further.
As a firm, Kanamoto will continue working to expand its business with the goal of nationwide development,
and build a strong sales and marketing organization by successfully addressing each of the following issues,
to ensure a robust earnings base.
① Enhance marketing capabilities and customer strategies
As the leading firm in the construction equipment rental industry, Kanamoto strives to foster employees who
possess appropriate knowledge and skills. The Company also is taking steps to cultivate a new range of
Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 15

customers, including sectors such as facilities maintenance, landscaping and gardening and events, by
diversifying the types of products it handles.
② Emphasize group management and strengthen alliances
Kanamoto will strengthen cooperation among Kanamoto group companies from an operating, business andasset management standpoint, increase alliances with firms in every region of Japan and seek mechanisms
aimed at the creation of mutual earnings opportunities.
③ Reinforce Kanamoto’s financial strategy
Kanamoto is taking steps to enhance 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, by reducing interest-bearing debt as much as possible while improving capital efficiency,
by incorporating measures such as the liquidation of assets.
④ 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.
⑤ Compliance and internal controls
To create an organization that is aligned with society’s demands, the Company has prepared ethical standards,
a code of conduct and a compliance manual. The Company works to ensure every individual is thoroughlyfamiliar with these guidelines, and manages its organization in accordance with these materials. Moreover, tomaintain reliable and trusted financial reporting, Kanamoto has also completed measures to reconfirm its
management processes, as well as operational tests of these new processes, and created the organization to
begin actual application from November 1, 2008.
Kanamoto is also preparing such systems at each company in the Kanamoto group, to enable appropriate
operation at the company level. We will continue this effort to build a uniform organization for compliancewith the law across the entire Kanamoto group.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 16

4. Interim Consolidated Financial Statements
1.

Interim Consolidated Balance Sheets(Amounts have been rounded down to the nearest thousand yen)
PeriodPrior Consolidated

Current Consolidated Fiscal Year

Prior Fiscal Year Summary

Fiscal Year Interim Period

Interim Period

Consolidated Balance Sheet(As of April 30, 2007)(As of April 30, 2008)(As of October 31, 2007)

AmountCategory

Percent

AmountPercent

AmountPercent(Assets)
Current Assets
22,465,779

15,992,146

11,913,890

13,012,758

14,170,885

14,239,136－

4,600,000

5,300,000

685,271

626,840

533,600

1,132,334

966,238

1,010,645

Deferred tax assets

356,582

345,287

360,573

Other current assets

290,729539,297457,321-523,190-494,819-488,905

Cash and deposits
Notes and accounts receivable,
trade

*3

Negotiable securities
Inventory
Construction equipment

Allowance for
doubtful accounts

37,420,264

Total Current Assets

41.2

36,745,875

40.0

33,326,262

39.1

Fixed Assets
Tangible Fixed Assets
Rental equipment

37,038,152

Accumulated

27,227,145

depreciation

Buildings and structures

16,517,185

Accumulated

9,788,405

depreciation

Machinery, equipment anddepreciation

3,590,806

Land
Construction in progress

30,522,246

depreciation

836,431

11,310,664

28,044,139

10,485,378

784,609

3,771,827

9,523,031

17,151,855
6,521,209

10,480,334

4,501,251

6,671,521

4,415,336
729,423

3,665,003

750,333

26,264,162

28,545,131

26,268,316

87,065

307,063

46,172
1,115,602

1,126,846
255,80243,931,427

Total Tangible Fixed Assets

37,567,171

17,006,588
6,728,780

1,092,233

Other tangible fixed assets
Accumulated

9,811,007

4,375,415

delivery equipment
Accumulated

41,832,911

891,02848.4

235,81747,649,310

876,63851.9

238,963
43,498,339

51.1

Intangible Fixed Assets
357,249

946,127

275,797

Other intangible fixed assets

131,786

143,071

137,516

Total Intangible Fixed Assets

489,036

Goodwill*5

0.5

1,089,199

1.2

413,3140.5

Investments and Other Assets
Investment securities

7,753,593

4,052,247

6,610,180

Other assets

2,008,911

3,132,389

2,070,164-735,621-913,749-762,464

Allowance for
doubtful accounts
Total Investments and Other

9,026,884

9.9

6,270,887

6.9

7,917,880

9.3

Total Fixed Assets

53,447,348

58.8

55,009,398

60.0

51,829,534

60.9

Total Assets

90,867,612

100.0

91,755,273

100.0

85,155,797

100.0

AssetsFiscal Year Ending October 2008 Interim Accounting Bulletin

P. 17

(Amounts have been rounded down to the nearest thousand yen)
PeriodPrior Consolidated

Current Consolidated Fiscal Year

Prior Fiscal Year Summary

Fiscal Year Interim Period

Interim Period

Consolidated Balance Sheet(As of April 30, 2007)(As of April 30, 2008)(As of October 31, 2007)

AmountCategory

Percent

AmountPercent

AmountPercent(Liabilities)
Current Liabilities
Notes and accounts payable,
trade
Short-term bank loans
Long-term bank loans due
within one year
Corporate bonds redeemablewithin one year
Corporate taxes payable*3

13,224,826

12,671,172

11,292,635

390,000

379,634

330,000

9,772,856

9,130,130

8,972,356－

40,000－1,828,399

1,307,029

1,449,478

537,423

536,405

552,926

Accounts payable, other

2,968,714

3,534,338

2,346,872

Other current liabilities

713,158

665,091

642,568

Total Current Liabilities

29,435,377

Accrued bonuses to employees

32.4

28,263,801

30.8

25,586,836

30.1

Long-term Liabilities－

40,000－16,204,883

17,453,262

15,718,705

1,763,508

974,247

935,980

127,150

146,847

132,633

Long-term accrued expenses

2,485,270

3,799,342

2,486,318

Long-term deferred tax liability

440,671－－

Other long-term liabilities

10,727

540,880

321,805

Total Long-term Liabilities

21,032,211

23.1

22,954,579

25.0

19,595,442

23.0

Total Liabilities

50,467,589

55.5

51,218,381

55.8

45,182,279

53.1

Paid-in capital

9,696,717

10.7

9,696,717

10.6

9,696,717

11.4

Capital surplus

10,960,869

12.0

10,960,869

11.9

10,960,869

12.9

Earned surplus

16,976,821

18.7

18,311,281

20.0

17,333,642

20.4

Treasury stock-11,415-0.0-21,020-0.0-19,784-0.1

37,622,992

41.4

38,947,848

42.5

37,971,444

44.6

2,649,377

2.9

1,272,529

1.4

2,002,072

2.3

2,649,377

2.9

1,272,529

1.4

2,002,072

2.3

127,6530.2

316,5140.3－－

40,400,023

44.5

40,536,892

44.2

39,973,517

46.9

90,867,612

100.0

91,755,273

100.0

85,155,797

100.0

Corporate bonds
Long-term bank loans
Accrued employees retirement
benefits
Retirement allowances todirectors and auditors(Net Assets)
Owners’ equity

Total Owners’ Equity
Valuation and translation
adjustments
Valuation difference on otherinvestment securities
Total Valuation and Translation
Adjustments
Minority Interests
Total Net Assets
Total Liabilities and Net Assets

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 18

2. Interim Consolidated Statements of Income(Amounts have been rounded down to the nearest thousand yen)
PeriodPrior Consolidated

Current Consolidated

Prior Fiscal Year Summary

Fiscal Year Interim Period

Fiscal Year Interim Period

Consolidated Balance Sheet(From November 1, 2006

(From November 1, 2007

(From November 1, 2006

to April 30, 2007)

to April 30, 2008)

to October 31, 2007)

AmountCategory

Percent

AmountPercent

AmountPercent

Revenues from operations
Rental revenues

24,776,553

Sales

11,454,139

24,815,344
36,230,692

100.0

12,421,511

46,739,096
37,236,856

100.0

21,887,816

68,626,913

100.0

49,490,405

72.1

Cost of revenues fromoperations
Cost of rental revenues

16,708,757

Cost of goods sold

8,575,926

Gross profit
Selling, general andadministrative expenses*1

Operating income

17,247,717
25,284,683

69.8

10,946,008

8,947,516

33,260,225
26,195,233

70.3

16,230,180

30.2

11,041,622

29.7

19,136,507

27.9

7,507,667

20.7

8,123,028

21.8

14,899,972

21.7

3,438,340

9.5

2,918,593

7.9

4,236,534

6.2

712,627

1.0

532,891

0.8

4,416,270

6.4

1,800,836

2.6

Non-operating revenues
Interest revenue

11,80733,462

44,782

Dividend income

14,05917,632

51,715

4,312－

287,528

18,84344,55738,877

Rents received

43,41543,573

81,409Cash bonus received

101,816

4,013

105,737

Other

45,141Gain on sale of investment
securities
Insurance benefits

239,3960.7

57,418200,658

0.5

102,577

Non-operating expenses
Interest expense
Loss on sale of notes
receivable
Loss on sale of investment
securities

194,164

170,500

338,051－

43,71975,155－869－

61,176

Other
Ordinary income

255,3400.7

3,422,396

9.5

71,119286,208

0.8

2,833,043

7.6

119,684

Extraordinary profits
Gain on sale or retirement of
fixed assets
Valuation gain on investment
partnership
Gain on reversal of allowancefor doubtful accounts
Gain on bad debts recovered
Gain on reversal of accrued
employees retirement benefits
Other

*2

920,700

18,327921,056

4,946

－

8,333

20,99019,777

21,109

1,336

－

－

－

－

845,31959

948,033

2.6

5,045

43,1500.1

5,018

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 19

(Amounts have been rounded down to the nearest thousand yen)
PeriodPrior Consolidated

Current Consolidated

Prior Fiscal Year Summary

Fiscal Year Interim Period

Fiscal Year Interim Period

Consolidated Balance Sheet(From November 1, 2006

(From November 1, 2007

(From November 1, 2006

to April 30, 2007)

to April 30, 2008)

to October 31, 2007)

AmountCategory

Percent

AmountPercent

AmountPercent

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

*3

45,77442,96068,231

*4

890

490

890

－

5,873

11,016－－331,42549

19,859－－12,741－

Valuation loss on investment
securities
Amortization of goodwill
Valuation loss on investment
partnership
Valuation loss on merchandise
inventories
Other

*5

28,576

Income before taxes andadjustments
Corporate, local and business
taxes
Adjustment for corporate andother taxes
Minority interest in income
Net income

75,2890.2

4,295,140

11.9

1,778,552
98,18028,300110,2250.3

2,765,968

7.4

5.2

35,4932,382,914-37,814449,1610.6

5,767,945

8.4

2,697,033

3.9

2,286,833

1,264,075
1,876,732

37,5971,226,261

3.2

410,200

0.1

62,781

0.2

35,4930.1

6.6

1,476,926

4.0

3,035,418

4.4

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 20

3. Interim Consolidated Statement of Changes in Net Assets
Prior Consolidated Accounting Fiscal Year Interim Period (From November 1, 2006 to April 30, 2007)(Unit: Thousands of yen)
Owners’ equity
Paid-in capital
Balance at the end of the priorconsolidated accounting fiscal year
(October 31, 2006)

Capital surplus

9,696,717

Earned surplus

10,960,869

Treasury stock

14,889,638−6,303

Total owners’
equity35,540,922

Change of items during theconsolidated accounting fiscal year
interim period
Dividends from surplus−295,732−295,732

Net income

2,382,914

2,382,914

Purchase of treasury stock−5,112−5,112

Change of items other thanowners' equity during theinterim consolidated accounting
period (net amount)
Total changes of items during theconsolidated accounting fiscal year
interim period
Balance at the end of theconsolidated accounting fiscal
year interim period(April 30, 2007)－－

2,087,182−5,112

2,082,070

9,696,717

10,960,869

16,976,821−11,415

37,622,992

Valuation and translation adjustments
Valuation differenceon other investment
securities
Balance at the end of the priorconsolidated accounting fiscal year
(October 31, 2006)

2,418,684

Minority interests

Total valuation andtranslation
adjustments

2,418,684

92,159Total net assets

38,051,766

Change of items during theconsolidated accounting fiscal year
interim period
Dividends from surplus－−295,732

Net income－

2,382,914

Purchase of treasury stock－−5,112

Change of items other thanowners' equity during theinterim consolidated accounting
period (net amount)

230,693

230,693

35,493

266,186

Total changes of items during theconsolidated accounting fiscal year
interim period

230,693

230,693

35,493

2,348,256

2,649,377

2,649,377

127,653

40,400,023

Balance at the end of theconsolidated accounting fiscal
year interim period(April 30, 2007)

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 21

Current Consolidated Accounting Fiscal Year Interim Period (From November 1, 2007 to April 30, 2008)(Unit: Thousands of yen)
Owners’ equity
Paid-in capital
Balance at the end of the priorconsolidated accounting fiscal year
(October 31, 2007)

Capital surplus

9,696,717

Earned surplus

10,960,869

Treasury stock

17,333,642−19,784

Total owners’
equity37,971,444

Change of items during theconsolidated accounting fiscal year
interim period
Dividends from surplus−361,311−361,311

Net income

1,476,926

1,476,926

Decrease resulting from change
in scope of consolidation−137,975−137,975

Purchase of treasury stock−1,235−1,235

Change of items other thanowners' equity during theinterim consolidated accounting
period (net amount)
Total changes of items during theconsolidated accounting fiscal year
interim period
Balance at the end of theconsolidated accounting fiscal
year interim period(April 30, 2008)－－

977,638−1,235

976,4039,696,717

10,960,869

18,311,281−21,020

38,947,848

Valuation and translation adjustments
Valuation differenceon other investment
securities
Balance at the end of the priorconsolidated accounting fiscal year
(October 31, 2007)

2,002,072

Minority interests

Total valuation andtranslation
adjustments

2,002,072

Total net assets－

39,973,517

Change of items during theconsolidated accounting fiscal year
interim period
Dividends from surplus－−361,311

Net income－

1,476,926

Decrease resulting from change
in scope of consolidation－−137,975

Purchase of treasury stock－−1,235

Change of items other thanowners' equity during theinterim consolidated accounting
period (net amount)−729,542−729,542

316,514−413,028

Total changes of items during theconsolidated accounting fiscal year
interim period−729,542−729,542

316,514563,375

Balance at the end of theconsolidated accounting fiscal
year interim period(April 30, 2008)

1,272,529

1,272,529

316,51440,536,892

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 22

Prior Consolidated Accounting Fiscal Year (From November 1, 2006 to October 31, 2007)(Unit: Thousands of yen)
Owners’ equity
Paid-in capital
Balance at the end of the priorconsolidated fiscal year (October
31, 2006)

Capital surplus

9,696,717

Earned surplus

10,960,869

Treasury stock

14,889,638−6,303

Total owners’
equity35,540,922

Change of items during theconsolidated fiscal year
Dividends from surplus−591,414−591,414

Net income

3,035,418

3,035,418

Purchase of treasury stock−13,481−13,481

Change of items other thanshareholders’ equity during theconsolidated fiscal year (netamount)Total changes of items during theconsolidated accounting fiscal year－－

2,444,003−13,4812,430,522

Balance at the end of theconsolidated accounting fiscal year
(October 31, 2007)

9,696,717

10,960,869

17,333,642−19,784

37,971,444

Valuation and translation adjustments
Valuation differenceon other investment
securities
Balance at the end of the priorconsolidated fiscal year (October
31, 2006)

2,418,684

Minority interests

Total valuation andtranslation
adjustments
2,418,684

Total net assets

92,15938,051,766

Change of items during theconsolidated fiscal year
Dividends from surplus－−591,414

Net income－

3,035,418

Purchase of treasury stock－−13,481

Change of items other thanshareholders’ equity during theconsolidated fiscal year (netamount)−416,611−416,611−92,159−508,771

Total changes of items during theconsolidated accounting fiscal year

−416,611−416,611−92,159

1,921,750

Balance at the end of theconsolidated accounting fiscal year
(October 31, 2007)

2,002,072

2,002,072－

39,973,517

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 23

4. Interim Consolidated Statements of Cash Flows(Amounts have been rounded down to the nearest thousand yen)
PeriodCategory

Prior Consolidated

Current Consolidated

Fiscal Year Interim Period

Fiscal Year Interim Period(From November 1, 2006

(From November 1, 2007

to April 30, 2007)

to April 30, 2008)

AmountAmountPrior Fiscal Year Summary
Consolidated Statement of Cash
Flows
(From November 1, 2006
to October 31, 2007)
AmountCash flow from operating activities
Incomebeforeadjustments
Depreciation
andexpense

taxes

and

4,295,140

2,765,968

5,767,945

2,176,707

2,525,135

4,648,677

890

490

890

73,859127,298

395,108−920,700−18,327−921,056

45,77442,96068,231－－−845,319

56,72844,67897,069

8,609

2,910

25,597210,073

259,063

397,062−1,168,121−1,855,062−2,095,742

3,516

5,873

11,016

Gain on sale of investment securities−4,312－−287,528

Loss on sale of investment securities

－

869

－

60,284

91,333

52,842

25,686−23,764

41,189−5,500－−5,50081,78937,774

99,580−2,063

13,042

3,419−25,867−51,094−96,497

20,85648,143

43,182

194,164

170,500

338,051

1,946,567

1,213,602

720,189−124,438

18,047−27,730

805,489

316,068−1,126,702

546,673

1,276,065−76,564

Other, net−12,693−292,539−257,663

Subtotal

8,289,113

6,719,039

6,969,749

amortization

Impairment loss
Amortization of goodwill
Gain on sale of fixed assets
Loss on sale or retirement of fixed
assetsGainonreversalofaccruedemployees retirement benefits
Installment purchases of assets forsmall-value rentals
Reclassification of cost of sales
associatedwithdisposalofconstruction equipment
Reclassification of cost of sales
associated with disposal of rental
assetsExpenditures for acquisition of rental
assetsValuationloss
oninvestment
securities

Increase in allowance for doubtful
accounts
Increase (decrease) in accrued
bonuses to employees
Decrease in accrued bonuses todirectors and auditors
Increase in accrued employees
retirement benefits
Increase (decrease) in retirement
allowances to directors and auditors
Interest
revenueanddividend
incomeInterest expense on installment
purchases of rental assets
Interest expense
Decrease in accounts receivable,
trade
Decrease(Increase) in inventory
assetsIncrease (decrease) in accounts
payable, trade
Increase (decrease) in accounts
payable, other

Interest and dividends received
Interest expense
Payment
taxes

ofcorporate

and

other

Cash flow from operating activities

25,86751,26090,470−224,521−227,445−377,448−1,315,632−1,408,219−2,202,835

6,774,826

5,134,634

4,479,936

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 24

(Amounts have been rounded down to the nearest thousand yen)
PeriodCategory

Prior Consolidated

Current Consolidated

Fiscal Year Interim Period

Fiscal Year Interim Period(From November 1, 2006

(From November 1, 2007

to April 30, 2007)

to April 30, 2008)

AmountAmountPrior Fiscal Year Summary
Consolidated Statement of Cash
Flows
(From November 1, 2006
to October 31, 2007)
AmountCash flow from investing activities
Disbursements for investments interm deposits
Revenue from redemption of term
deposits
Funds used for the purchase ofinvestment securities
Funds provided from the sale ofinvestment securities
Funds used for establishment ofaffiliated company
Funds used for the purchase of
tangible fixed assets
Funds provided from the sale oftangible fixed assets
Funds used for the purchase ofintangible fixed assets
Funds used for the purchase of
consolidated subsidiary stock
Funds used for the purchase of nonconsolidated subsidiary stock
Other, net
Cash flow from investing activities－−46,698－－

124,340－−68,933−10,031−123,716

153,208

28,701

527,674−34,778−100,000−34,778−1,771,801−2,466,017−2,059,416

1,846,880

142,139

1,875,374−40,866−21,656−64,781－−50−367,450−1,199,992−303,711−1,199,992

10,807

3,028

20,077−1,105,476−2,649,955−1,427,009−107,704−60,365−167,704

5,350,000

6,860,000

9,550,000−5,480,868−5,138,446−10,967,546－−20,000－−1,062,467−1,236,930−2,047,202−5,112−1,235−13,481−295,732−361,311−591,414−1,601,883

41,710−4,237,348

4,067,466

2,526,390−1,184,421

18,398,312

17,213,890

18,398,312－

680,339－

22,465,779

20,420,620

17,213,890

Cash flow from financing activities
Decrease in short-term bank loans
Funds provided by long-term bankloans
Funds used to repay long-term bankloans
Funds used to redeem corporate
bonds
Funds used for repayment of
installment obligations
Funds used for the purchase oftreasury stock
Payment of dividends to parent
company
Cash flow from financing activities
Increase (decrease) in cash and cash
equivalents
Balance of cash and cash equivalents at
beginning of period
Increase in cash and cash equivalents
due to newly consolidated subsidiaries
Balance of cash and cash equivalents at
end of the interim period (consolidated
fiscal year)

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 25

5. Significant Accounting Policies for the Consolidated Financial Statements
PeriodCategory
1. Companies included in
the consolidation

Prior Consolidated Fiscal
Year Interim Period(From November 1, 2006
to April 30, 2007)(1) Number of consolidated

Current Consolidated Fiscal
Year Interim Period(From November 1, 2007
to April 30, 2008)(1) Number of consolidated

Prior Consolidated Fiscal Year
(From November 1, 2006
to October 31, 2007)(1) Number of consolidated

companies: 5companies: 8companies: 5

Consolidated company

Consolidated company

Consolidated company

name:

name:

name:

Assist Co., Ltd.

Assist Co., Ltd.

Assist Co., Ltd.

SRG Kanamoto Co., Ltd.

SRG Kanamoto Co., Ltd.

SRG Kanamoto Co., Ltd.

Kanatech Co., Ltd.

Kanatech Co., Ltd.

Kanatech Co., Ltd.

Daiichi Kikai Co., Ltd.

Daiichi Kikai Co., Ltd.

Daiichi Kikai Co., Ltd.

Kanki Corporation

Kanki Corporation

Kanki Corporation

Kyushu Kensan Co., Ltd.
Kensan Fukuoka Co., Ltd.
Kensan Techno Co., Ltd.
Beginningfrominterimconsolidated

theaccounting period underreview, Kyushu Kensan
Co.,

Ltd.,

KensanFukuoka Co., Ltd. and
Kensan Techno Co., Ltd.
are included in the scopeof consolidation because
the importance of thesecompanies

toKanamoto’s

operations

has increased.
(2)

Main

non-consolidated

(2)

Main

non-consolidated(2) Main non-consolidated

subsidiaries

subsidiaries

subsidiaries

Non-consolidated subsidiaryNon-consolidated subsidiaryNon-consolidated subsidiarycompany name:company name:company name:Comsupply Co., Ltd.

Comsupply Co., Ltd.

Comsupply Co., Ltd.

Flowtechno Corporation

Flowtechno Corporation

Flowtechno Corporation

Kyusyu Kensan Co., Ltd.

Center Corporation, Ltd.

Kyusyu Kensan Co., Ltd.

Kensan Fukuoka Co., Ltd.

ShanghaiKensan Fukuoka Co., Ltd.

Kensan Techno Co., Ltd.

Equipment

Center Corporation, Ltd.

Ltd.

Jinheyuan
RentalCo.,

FujishoCo.,

Kensan Techno Co., Ltd.
Center Corporation, Ltd.

AsahikawaLtd.

SJ Rental, Inc.
Kanamoto(Reasonfor

exclusionfrom consolidation)
The

size

of

Co., Ltd.
(ReasonEngineeringforexclusionfrom consolidation)

the

non-

The

size

of

the

non-

(Reasonfor

exclusionfrom consolidation)
The size of thenon-consolidated subsidiaries is

consolidated subsidiaries is

consolidated subsidiaries issmall and their net assets,

small and their net assets,

small and their net assets,

sales and interim period

sales and interim period

sales and fiscal year profit

profitprofit

or

or

loss

corresponding
andtoretained(amount
equity)earnings

orloss

corresponding
andtoretained(amount
equity)earnings

loss

corresponding
andretained(amount
toequity)earnings(amount corresponding to(amount corresponding to(amount corresponding toequity) are small in size

equity) are small in size

equity) are small in sizeand do not have a material

and do not have a material

and do not have a material

effectinterimeffectinterimeffect on the consolidated

financialconsolidated

financialfinancial statements.

onconsolidated
statements.

the

on

the

statements.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 26

2. Matters pertaining toSix

non-consolidated

Seven

non-consolidated

Six

non-consolidated

application of equity

subsidiaries(Comsupply

subsidiaries(Comsupply

subsidiaries

andmethod accounting

Co.,

Ltd.,

Flowtechno

Co.,

Ltd.,

Flowtechno

affiliatedcompanies

Corporation,(Active

Technology

KyushuCorporation,

CenterKensan Co., Ltd., Kensan

Corporation,

Ltd.,

Fukuoka Co., Ltd., Kensan

ShanghaiTechnoEquipment

Co.,

Ltd.

and

Center Corporation, Ltd.)

Ltd.,

and

Jinheyuan
RentalAsahikawaCo.,
Fujisho

Corporation and Shanghai
Jinheyuan
RentalEquipmentCo.,affiliatedCo., Ltd., SJ Rental, Inc.

which

(Activeand Kanamoto Engineering

accounting

Technology

CorporationCo.,becauseand

ShanghaiEquipment

Jinheyuan

Rental

Co.,

Ltd.)

have

omitted

from

which

equity

been

items

to

equitymethodisappliedtheirrespective

effect on consolidated net
income orisappliedcorresponding to minority
interest) and consolidated

accounting

from items to which equity

becausetheirrespective

methodaccounting

effectoninterimappliedbecause

their

have

methodLtd.) have been omitted
is

Ltd.)

been omitted from items tocompanies

two

two

capitalloss (amountsurplus(amount

consolidated net income orcorresponding to minority

respective

effectonloss(amount

interest) is immaterial andconsolidated

interimnet

corresponding to minority

none of the companies isinterest)

interimimportantcapitalCompany’s(amount

operations.

incomeorloss(amount

andcorresponding to minority

consolidated

interest)

interimsurpluscapitalcorresponding to minority

andconsolidated
surplus(amount

interest) is immaterial andcorresponding to minority

none of the companies isinterest) is immaterial andimportantnone of the companies is

Company’s

importantoperations.

to

the

Company’s

overall

operations.

to

to

the
overalltheoverall

Kanamoto transferred allof the stock held in Active
Technology Corporation toa third party on December
10, 2007.

3. Matters pertaining toTheinterimperiod-end

Theinterimperiod-end

The fiscal year closing

the interim period-end

closing date for all of theclosing date for all of thedate(fiscalconsolidated

consolidated

consolidated

year-end)

consolidated
subsidiaries

forsubsidiaries

subsidiaries

for

all

of

the

subsidiaries

except Kanki Corporation

except Kanki Corporation

except Kanki Corporation

is February 28.

is February 29.

is August 31.

When

preparinginterimtheWhenconsolidated

interimpreparingtheconsolidated

When

preparingconsolidatedthefinancialfinancialstatements,

thefinancialstatements,

thestatements the Company

CompanyusedtheCompany

used

the

used

subsidiaries’

financialsubsidiaries’

financialthesubsidiaries'

financial statements as ofstatements as of February

statements as of February

August28, and made adjustments

29, and made adjustments

significant

for significant transactions

for significant transactions

that occurred between the

that

that

subsidiaries’

occurred

betweenoccurred

between31,

adjustedfortransactions
fiscalyear-

March 1, 2007 and the

March 1, 2008 and theend and the consolidationinteriminterimconsolidated

date that have a material

accounting date on April

consolidated

accounting date on April

effect on the consolidated

30,

30,

financial results.

2007

that

were

2008

that

were

deemed to have a material

deemed to have a material

effectinterimeffectfinancialconsolidatedon

consolidated
results.

the

on

the

interimfinancialresults.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 27

4.

Accounting

principles

and standards used fornormalaccounting

treatment(1)

Appraisal

standards

andappraisal

methods for principal
assetsa. Negotiable securities
Other negotiable securities

a. Negotiable securities
Other negotiable securities

a. Negotiable securities
Other negotiable securities

Securities with a market
price

Securities with a market
price

Securities with a market
price

The

Company

hasSame as at left

The

Companyhasadopted the market value

adopted the market value

method (the full amount ofmethod (the full amount of

the valuation difference isthe valuation difference ischarged to equity using thechargeddirect transfer to capitalthemethod, with the disposal

capital method, with thecost

determinedusing

transfer

todisposal

cost

by

the

movingaveragebased on the market pricemethod)

based

on

the

on

consolidated

market

price

on

the

fiscalconsolidated

accounting

theequitymoving average method)
the

by

to

directyear

determinedaccounting

interim period closing datefiscal year closing date oror similar prices.

similar prices.

Securities without market
pricesThe

Companyhasadopted the cost method,

Securities without market

Securities without market

pricespricesSame as at left

Same as at leftb. Construction equipment
Same as at leftb. Construction equipment
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

cost being determined bythemovingaveragemethod.
b. Construction equipment
Amount after deductionofdepreciation

expensecalculated according to thedeclining-balancemethodfrom the original prices, byseparate

fiscalyearofpurchase.
c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Lower of cost or market
based on the Last-in,
First-out method.
(ii) Supplies
The Latest Purchase Cost
method(ii) Supplies
Same as at left(ii) Supplies
Same as at left

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 28

(2) Depreciation methods
for principal
depreciable assets

a. Tangible fixed assets
The
Companyhasadoptedthea. Tangible fixed assets
Same as at left

a. Tangible fixed assets
Same as at left

b. Intangible fixed assets
Same as at left

b. Intangible fixed assets

a. Reserve for doubtful
accounts

a. Reserve for doubtful
accounts

Same as at left

Same as at leftb. Accrued bonuses to
employees
Same as at leftb. Accrued bonuses to
employees

declining-balance method. Buildings
on

land

that

is

leasedunder a fixed-term landlease agreement, however,are depreciated using thestraight-line method using
the remaining period of the
fixed-term

lease

as

the

depreciable life and zero
residual value. For certain
consolidated

subsidiaries,

the Company has adopted
thestraight-line

methodfor buildings and structuresacquired on or after April
1,

1998

but

excluding

fixtures and equipment.
The

depreciable

mainly

used

lives

by

the

Company are as follows.
Rental assets 5-10 years
Buildings
10-34 years
b. Intangible fixed assets
The
Companyhasadoptedthestraight-line

Same as at left

method.
Software for use withintheCompany

depreciated

is

using

the

straight-line method basedon the assumed useful life
for internal use (5 years).
(3) Accounting standards
for principal allowancesand reserves

a. Reserve for doubtful
accounts
To provide for losses on
doubtful accounts such asaccounts

receivable,

theCompany

chargestoincome an amount basedon actual loss experience
for normal accounts, plus
an amount for projected
unrecoverable

amounts

based on assessments ofindividual accounts.
b. Accrued bonuses to
employees
To fully provide
expenditures

of

for

Same as at left

bonusesthe Company will pay toemployees, an amount isappropriated to the reserve
during
upon

the
a

year

salarybased

estimate

amount.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 29

c. Accrued employees
retirement benefit
The Company provides
foremployees’

accruedc. Accrued employees
retirement benefit
Same as at leftc. Accrued employees
retirement benefit
The Company provides
foremployees’

accruedretirement benefits based

retirement benefits based

upon

upon

the

projected

theprojected

amounts of the liability for

amounts of the liability for

accruedaccruedemployees

employees

retirement benefits and theretirement benefits and thevalue of pension assets atvalue of pension assets at

the end of the consolidated

the end of the consolidated

fiscal year. At the end of

fiscal year. At the end ofinterimconsolidated

consolidated

accounting

period,thefiscal year, the Company

Company appropriates anappropriates an amount toamount to the reserve tothe reserve to provide forprovidetheforrecognizedtheliability

duringtheaccounting

liability

recognized

during the period.
The difference based on

period.
The difference based onan actuarial calculation isan actuarial calculation ischargedchargedbeginningintheconsolidated

accounting

accounting

fiscal year

toincomebeginninginconsolidated
fiscal

year

year

in

following

the

year

in

to

incomethefollowing

which

the

incurred,

incurred,with the amounts allocatedwith the amounts allocatedproportionately using the

proportionately using thestraight-line

straight-line

method,based

specified

number

based

which

on

a

on
of

method,aspecified

years

(10

(10

years) that is less than theyears) that is less than the

average remaining period

average remaining periodofof

employees at the time thenumberofyears

employment

for

employees at the time theemployment

fordifference arises.

difference arises.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 30

(Supplemental information)
During the consolidated
accounting
underfiscalyear

review,theCompany

revisedits

retirement benefits systemand transferred its defined
benefit corporate pension
plan(fund-type)toa

defined benefit corporate
pensionplan(contract-type), and simultaneously
introduced a cash balancesystem.
withIn

conjunction

thischangetheCompany has applied the
Accounting for the Transfer
BetweenRetirement

Benefit

Plans(Financial

AccountingStandards

Implementation

Guidance

No. 1).
In addition, during theconsolidated

accounting

fiscal year under review
certainconsolidated

subsidiaries

revisedretirement
systems

theirbenefits

andtransferred

their termination allowance
plans

to

a

definedcontribution
pensioncorporateplan

termination

andallowance

plan, and have applied the
Accounting for the Transfer
BetweenRetirement

Benefit

Plans(Financial

AccountingStandards

Implementation

Guidance

No. 1).
The Company accounted
for

the

¥845,319,000

affect from these transfers
in extraordinary profits as
a

"gain

on

accruedd. Retirement allowances todirectors and auditors
The Company provides

d. Retirement allowances todirectors and auditors
Same as at left

reversalof

employees

retirement benefits"
d. Retirement allowances todirectors and auditors
The Company provides

for retirement allowances

for retirement allowances

to directors and auditors

to directors and auditors

based upon pertinent rules

based upon pertinent rules

and appropriatedtheand appropriated to theaccount proportionately at

account proportionately atthethe end of the consolidated

end

of

consolidated

the

to

interimaccounting

accounting

period based upon length

basedof service.

service.

upon

fiscalyear

lengthofFiscal Year Ending October 2008 Interim Accounting Bulletin

P. 31

(4) Lease transactions

Forfinancetransactions
leaseslease

exceptthat

Same as at left

Same as at left

a. Hedge transactions

a. Hedge transactions

Same as at left

Same as at left

b. Hedge methods andhedged transactions

b. Hedge methods andhedged transactions

Same as at left

Same as at leftfortransferownership of the property
tothelessee,rent

expenses are charged toincome as payments are(5) Hedge accounting forprincipal hedging
methods

made.
a. Hedge transactions
The Company accounts
for

hedge

transactions

using allocations based on
accounting

standards

foreignforcurrency-

denominated transactions,and special rule accounting
based

on

standards

accountingforfinancial

products.
b. Hedge methods andhedged transactions
The
Company
uses
currency

swaps

and

forwardtransactions

inorder to avoid the currency
fluctuation risk related totheCompany’s

foreigncurrency-denominatedstraight

bonds

liabilities

forimportandpayments.

The

Company

also uses interest swaps to
avoid

interest

rate

fluctuation risk related tointerestonbankborrowing.
c. Hedging policies
The Company’s use ofc. Hedging policies
Same as at left

c. Hedging policies
Same as at leftderivative transactions islimitedtohedgingrisk

within the scope of theCompany’s

assetsandliabilities subject to market
fluctuation risk.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 32

d. Method for evaluating theeffectiveness of hedges
The Company does not

d. Method for evaluating theeffectiveness of hedges

d. Method for evaluating theeffectiveness of hedges

Same as at left

Same as at left

evaluate the effectivenessof its hedge transactions
because it can assume thatits

currencytransactions

swap

and

forwardoffsetmarkettransactions
completely

will

fluctuations or changes incash flow from the timehedge begins until it isterminated.
theIn

addition,

Company’s

interest

swap transactions fulfill therequirementsforspecialrule accounting, and theCompany has elected touse this in place of an(6) Other material
matters pertaining topreparation of theinterim consolidated
financial statements(consolidated
financial statements)

evaluation of effectiveness.
Accounting treatment ofconsumption tax
Consumption tax is taken

Accounting treatment ofconsumption tax
Same as at left

Accounting treatment ofconsumption tax
Same as at left

out of all Statement of
Income items and Balance
Sheet items, except mainlyforreceivables

andpayables.
5.

Items included in cash

Cash on hand, deposits

and equivalents on thethat can be withdrawn on

Interimdemand and highly liquid

Consolidated

Statements
Flows

Cash

(Consolidated

Statements
Flows)

of
of

Cash

short-termSame as at left

Same as at left

investmentsthat mature within threemonths

of

the

date

of

acquisition and which canbe easily converted into
cash

and

that

have

minimal risk of a change inprice.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 33

Change in Reporting Method
Prior Consolidated Fiscal Year Interim Period(From November 1, 2006
to April 30, 2007)

Current Consolidated Fiscal Year Interim Period(From November 1, 2007
to April 30, 2008)(Interim Consolidated Statements of Income)(Interim Consolidated Statements of Income)

Until the prior consolidated accounting fiscal year
interimperiod,theCompany

reported

cash

Until the prior consolidated accounting fiscal year, thebonusCompany reported bill liquidation charges in “Interest

received as a separate category in “Other” under non-

expense.” To disclose this item more clearly, beginning

operating revenues. The Company has reported this itemfrom the consolidated accounting fiscal year under

separately because the amount exceeded 10% of total

review the Company will report this item in “Loss on salenon-operating revenues.

of notes receivable.”

The amount of “cash bonus received” in the interim

The amount of the “loss on sale of notes receivable” inperiod of the prior consolidated accounting fiscal year

thewas ¥29,552,000.

accounting year was ¥41,066,000.

(Interim Consolidated Statements of Cash Flows)
Beginning

from

the

current

interimconsolidated

interimperiodoftheprevious

consolidated(Interim Consolidated Statements of Cash Flows)──────

accounting period, the goodwill amortization expensepreviously reported in “Depreciation and amortization
expense” (¥16,000,000 for the interim period of theprior consolidated accounting fiscal year) will be included
in “Amortization of goodwill,” based on the revisedinterim consolidated financial statements rules. Also,
beginning

from

the

current

interimconsolidated

accounting period the amount reported in the past as“amortization of consolidation adjustment account” will
be included in “Amortization of goodwill.”

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 34

6. Notes to the Interim Financial Statements(Notes to the Interim Consolidated Balance Sheets)(Unit: Thousands of yen)
Prior Consolidated
Fiscal Year

Current Consolidated Fiscal Year
Interim Period

Prior Consolidated Fiscal Year
Interim Period(As of October 31, 2007)(As of April 30, 2008)(As of April 30, 2007)
1. Guarantees

1. Guarantees

Joint and several guaranteesof

1. Guarantees

Joint and several guarantees

employee bank loansofemployee bank loans

Joint and several guarantees

27,76323,023(Bank of Tokyo-Mitsubishi UFJ,

(Bank

of

of

employee bank loans

Tokyo-Mitsubishi

UFJ,23,144(Bank of Tokyo-Mitsubishi UFJ,

Ltd., others)Ltd., others)Ltd., others)

Guarantee of debt for long-term

Guarantee of debt for long-term

Guarantee of debt for long-termbank loan to Flowtechnobank loan to Flowtechnobank loan to Flowtechno

Corporation, a non-consolidated

Corporation, a non-consolidated

Corporation, a non-consolidated

subsidiarysubsidiarysubsidiary
100,000

100,000

100,000(Fukuoka Bank)
Total

127,763

Guarantee of borrowing liabilities of

Guarantee of borrowing liabilities of

Shanghai Jinheyuan Equipment

Shanghai Jinheyuan Equipment

Rental Co., Ltd., a non-consolidated

Rental Co., Ltd., an affiliatedsubsidiarycompany
168,960

1,373,035
Guarantee of finance lease liabilities

Guarantee of finance leaseof Shanghai Jinheyuan Equipment

liabilities of Shanghai Jinheyuan

Rental Co., Ltd., a non-consolidated

Equipment Rental Co., Ltd., an

subsidiaryaffiliated company
70,973200,292
Total
2. Discount on notes receivable,

2.

trade

trade

1,696,350

Discount

on

notes

receivable,

theinterim2. Discount on notes receivable,

273,298

3. Notes and bills maturing at theof

363,078

trade

293,597end

Total

307,034

─────

─────

period(consolidated fiscal year)
Notes and bills maturing on thelast day of the interim period aresettled and processed on the noteand bill clearing date. Because thelast day of the Company’s current
consolidated

fiscalyear

interimaccounting period was a financial
institution holiday, notes and bills
maturing on the final day of thefollowing
periodconsolidatedareconsolidated

interimincludedinfiscalinterimyear

theaccounting period balance.
Notes receivable,

39,698

trade
Notes payable,

1,542,050

trade4.Contingent liabilities
The

Company

receivables

based

4.Contingent liabilities
liquidates
on

a

bill
notes

The

Company

receivables

based

4.Contingent liabilities
liquidates
on

a

bill
notes

The

Company

receivables

basedliquidates
onareceivables transfer program.

receivables transfer program.

receivables transfer program.

Notes receivable,

Notes receivable,

Notes receivable,

trade

7,492,647

trade

5,866,653

trade

bill
notes

4,971,036

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 35

Liquidated claims bearing a right

Liquidated claims bearing a right

Liquidated claims bearing a rightof recourse to the Company andof recourse to the Company andof recourse to the Company andincluded in the balance of notes

included in the balance of notes

included in the balance of notes

receivable, trade transferred total

receivable, trade transferred total

receivable, trade transferred total

1,549,803.

1,279,783.

1,017,362.

5.

Intangible

fixed

assetsandgoodwill
Intangible

5.

Intangible

fixed

assetsandgoodwill
fixedassetsandIntangible

5.

Intangible

fixed

assetsfixed

assetsandgoodwill
fixedassetsandIntangible

andgoodwill include negative goodwill

goodwill include negative goodwill of

goodwill include negative goodwillof 891 and goodwill of 81,600.

78,469 and goodwill of 87,966.

of 594 and goodwill of 60,800.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 36

(Notes to the Interim Consolidated Statements of Income)(Unit: Thousands of yen)
Prior Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)*1. Major expense categories andCurrent Consolidated Fiscal Year
Interim Period(From November 1, 2007
to April 30, 2008)*1. Major expense categories and*1. Major expense categories andamounts included in selling,amounts included in selling,amounts included in selling,

general and administrative

general and administrative

general and administrative

expenses

expenses

expenses

Employee salaries andwages
Depreciation expense
Rents
Transfer to allowancefor doubtful accounts
Transfer to accrued
bonuses to employees

2,924,849
393,138
782,282
83,891
535,553

Employee salaries andwages
Depreciation expense
Rents
Transfer to allowancefor doubtful accounts
Transfer to accrued
bonuses to employees

3,241,819
369,913931,544
124,806
536,092

Prior Consolidated Fiscal Year
(From November 1, 2006
to October 31, 2007)

Employee salaries andwages
Depreciation expense
Rents
Transfer to allowancefor doubtful accounts
Transfer to accrued
bonuses to employees

5,854,852
833,686
1,551,266
166,598
552,610

Employees retirement
benefit expense

163,365

Employees retirement
benefit expense

143,545

Employees retirement
benefit expense

283,831Transfer to retirement
allowances to directors
and auditors

9,424Transfer to retirement
allowances to directors
and auditors

13,042

Transfer to retirement
allowances todirectors and auditors

18,460

Amortization of
goodwill

73,859Amortization of
goodwill

127,298

Amortization of
goodwill

63,682*2. Gain on sale of fixed assets*2. Gain on sale of fixed assets

Land

906,198

Buildings and structures

Buildings and structures

14,413

Machinery, equipment andMachinery, equipment and88

delivery equipment
Total

920,700*3. Loss on sale or retirement of fixed
assets.

26,859Other

420

delivery equipment
Others120

Total

18,327*3. Loss on sale or retirement of fixed

Rental equipment

9,025

Buildings and structures

7,402

Total

337

906,198

Buildings and structures

14,413

Others444

Total

921,056*3. Loss on sale or retirement of fixed(Loss on sale of fixed assets)

Rental equipment

8,907

Land

26,859Buildings and structures

15,592

Other

420

delivery equipment(Loss on retirement of fixed assets)Land

assets.

Machinery, equipment and

Other

387

(Loss on retirement of fixed assets)

Land

delivery equipment

17,818assets.

(Loss on sale of fixed assets)

Machinery, equipment and*2. Gain on sale of fixed assets

2,966

Leases12,607

Other

2,887

Total

42,960(Loss on retirement of fixed assets)
Rental equipment

17,489Buildings and structures

8,902

Machinery, equipment anddelivery equipment
Other

Total

9,195
5,364
68,231

1,728
45,774

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 37

Prior Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)*4.

Current Consolidated Fiscal Year
Interim Period(From November 1, 2007
to April 30, 2008)

Impairment loss

*4.

Impairment loss

Prior Consolidated Fiscal Year
(From November 1, 2006
to October 31, 2007)*4.

Impairment loss

During the consolidated fiscal year

During the consolidated fiscal year

interim period, the Kanamoto groupinterim period, the Kanamoto groupaccounting fiscal year the Kanamoto

incurred an impairment loss on the

incurred an impairment loss on thegroup incurred an impairment loss

following asset group.

following asset group.

on the following asset group.

Location

Use

Tomakomai City,

Dormant

Hokkaido

asset

Asset

Asset

groupings

Land

used

by

the

Location

Use

Tomakomai City,

Dormant

Hokkaido

asset

Asset

DuringAssetgroupings

Land

used

by

the

this

consolidated

Location

Use

Tomakomai City,

Dormant

Hokkaido

asset

Asset

Asset

groupings

Land

used

by

the

Company to apply asset impairment

Company to apply asset impairment

Company to apply asset impairment

accounting

accounting

accounting

are

based

on

the

are

based

on

the

are

based

on

the

smallest unit for which profitability

smallest unit for which profitability

smallest unit for which profitability

can

can

can

be

Specifically,

determined
dormant

regularly.
assetsarebeSpecifically,

determined
dormant

regularly.
assetsarebeSpecifically,

determined
dormant

regularly.
assetsaregrouped using the assets for eachgrouped using the assets for eachgrouped using the assets for each

property.

property.

property.

For certain dormant assets for

For certain dormant assets for

For certain dormant assets forwhich the asset value was less thanwhich the asset value was less thanwhich the asset value was less thanbook value, the Company reduced

book value, the Company reduced

book value, the Company reduced

book value to the recoverable value,

book value to the recoverable value,

book value to the recoverable value,

and accounted for the reduction as

and accounted for the reduction as

and accounted for the reduction as

an

an

an

impairment

under

loss

extraordinary(¥890,000)
losses.

This¥890,000 was for land.
The

recoverable

value

impairment

under

loss

extraordinary(¥490,000)
losses.

This¥490,000 was for land.
for

this

The

recoverable

value

impairment

under

loss

extraordinary(¥890,000)
losses.

This¥890,000 was for land.
for

this

The

recoverable

value

for

this

asset group is measured according

asset group is measured according

asset group is measured according

to net sales price, and the land isto net sales price, and the land isto net sales price, and the land isevaluated using the inheritance tax

evaluated using the inheritance tax

evaluated using the inheritance tax

assessment value based on the landassessment value based on the landassessment value based on the land

tax

tax

tax

assessment

value

or

other

assessment

value

or

other

assessment

value

amount as a base.

amount as a base.

amount as a base.

*5. Amortization of goodwill─────

*5. Amortization of goodwill─────

*5. Amortization of goodwill

or

other

During the consolidated accounting
fiscal year, the Company amortized
the portion of goodwill generated inpast fiscal years pertaining to the
reduction of excess profitability.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 38

(Notes to the Interim Consolidated Statement of Changes in Net Assets)
Prior consolidated accounting fiscal year interim period (From November 1, 2006 to April 30, 2007)
1. Class of shares issued and number of shares, 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 the priorof shares during the of shares during theconsolidated

current consolidated current consolidated

end of the current
consolidated

accounting fiscal

accounting year

accounting year

accounting year

year

interim periodinterim periodinterim period

32,872－－32,87232,872－－32,872

13

5

－

18

13

5

－

18

Number of shares issued
Common stock
Total
Treasury stock
Common stock (Note)
Total(Note) The number of treasury stock shares of common stock increased by 5,000 shares through purchases ofshares 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
Class of stock

Total dividend(‘000 yen)

Dividend pershare (yen)Regular General Meeting Common stock

295,732

9.0

Resolution

Date of record

Payment date

October 31, 2006

January 29, 2007

January 26, 2007of the Shareholders(2) Dividends for which the date of record falls in the current consolidated accounting fiscal year interim
period and the dividend payment date is after the close of the current consolidated accounting fiscal
year interim period
Resolution
June 8, 2007 Boardof Directors meeting

Class of stocks

Common stock

Total dividend Source of funds(‘000 yen)for dividend

295,682

Earned surplus

Dividend pershare (yen)Date of record

Payment date

9.0

April 30, 2007

July 17, 2007

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 39

Current consolidated accounting fiscal year interim period (From November 1, 2007 to April 30,
2008)
1. Class of shares issued and number of shares, 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 the priorof shares during the of shares during theend of the current

consolidated

current consolidated current consolidated

consolidated

accounting fiscal

accounting year

accounting year

accounting year

year

interim periodinterim periodinterim period

32,872－－32,87232,872－－32,872

25

2

－

27

25

2

－

27

Number of shares issued
Common stock
Total
Treasury stock
Common stock (Note)
Total(Note) The number of treasury stock shares of common stock increased by 2,000 shares through purchases ofshares 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
Class of stock

Total dividend(‘000 yen)

Dividend pershare (yen)Regular General Meeting Common stock

361,311

11.0

Resolution

Date of record

Payment date

October 31, 2007

January 30, 2008

January 29, 2008of the Shareholders(2) Dividends for which the date of record falls in the current consolidated accounting fiscal year interim
period and the dividend payment date is after the close of the current consolidated accounting fiscal
year interim period
Resolution
June 6,2008 Boardof Directors meeting

Class of stocks

Common stock

Total dividend Source of funds(‘000 yen)for dividend

328,448

Earned surplus

Dividend pershare (yen)Date of record

Payment date

10.0

April 30, 2008

July 14, 2008

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 40

Prior consolidated accounting fiscal year (From November 1, 2006 to October 31, 2007)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)
Number of shares at Increase in number Decrease in number Number of shares atof shares during the of shares during theend of the priorend of theconsolidated

consolidated

consolidated

consolidated

accounting fiscal

accounting fiscal

accounting fiscal

accounting fiscal

year

year

year

year

Number of shares issued
Common stockTotal

32,872－－32,87232,872－－32,872

13

12

－

25

13

12

－

25

Treasury stock
Common stock (Note)
Total(Note) The number of treasury stock shares of common stock increased by 12,000 shares through purchases ofshares 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

295,732

Common stock

295,682

Date of record

Payment date

9.0

October 31, 2006

January 29, 2007

9.0

April 30, 2007

July 17, 2007

January 26, 2007
Regular General
Meeting of the
Shareholders
June 8, 2007
Board of Directors(2) Dividends for which the date of record falls in the current consolidated accounting fiscal year and thedividend payment date is in the following fiscal year
Resolution

Class of stocks

Total dividend(‘000 yen)

Source offunds fordividend

Dividend pershare (yen)Date of record

Payment date

January 29, 2008
Regular General

CommonMeeting of thestock

361,311

Earnedsurplus

11.0

October 31, 2007 January 30, 2008

Shareholders

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 41

(Notes to the Interim Consolidated Statements of Cash Flows)(Unit: Thousands of yen)
Prior Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)
Relationships

betweenCurrent Consolidated Fiscal Year
Interim Period(From November 1, 2007
to April 30, 2008)

interim

Relationships

betweeninterimPrior Consolidated Fiscal Year
(From November 1, 2006
to October 31, 2007)
Relationships between fiscal year

period ending balance for cash andperiod ending balance for cash andendingequivalents and amounts for items

equivalents and amounts for items

equivalents and amounts for items

shown on the interim consolidated

shown on the interim consolidated

shownbalance sheet

balance sheet

consolidated balance sheet(As of April 30, 2007)
Cash and equivalents

22,465,779

Term deposits with amaturity longer than 3months－

Items considered to be
cash and equivalents

22,465,779(As of April 30, 2008)

balance
on

the

for

cash
fiscalandyear(As of October 31, 2007)

Cash and equivalents

15,992,146

Cash and equivalents

11,913,890

Negotiable securities

4,600,000

Negotiable securities

5,300,000

Term deposits with amaturity longer than 3months−171,526

Items considered to be
cash and equivalents

17,213,890

Items considered to be
cash and equivalents

20,420,620

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 42

(Lease Transactions)(Unit: Thousands of yen)
Prior Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Current Consolidated Fiscal Year
Interim Period(From November 1, 2007
to April 30, 2008)

Prior Consolidated Fiscal Year
(From November 1, 2006
to October 31, 2007)

1. Finance lease transactions except

1. Finance lease transactions except

1. Finance lease transactions except

for leases that transfer ownershipfor leases that transfer ownershipfor leases that transfer ownershippropertyacquisition

accumulated

prices,depreciationof the property to the lessee.

of the property to the lessee.

of the property to the lessee.
(1) Amounts corresponding to leaseand(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

and(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

andoutstanding balance at the end

outstanding balance at the end

outstanding balance at the endof the interim periodof the interim periodof the fiscal year accounting
periodPlease refer to Annex B

Please refer to Annex C(2) Outstanding balance of future(2) Outstanding balance of future(2) Outstanding balance of futurelease payments at the end oflease payments at the end oflease payments at the end of

the interim period

the interim period

the period

Please refer to Annex A

Within one year

6,609,317

Within one year

7,146,657

Within one year

7,485,431

After one year

18,914,851

After one year

17,373,507

After one year

18,550,608

Total

25,524,168

Total

24,520,164

Total

26,036,039(3) Amount of lease payments,(3) Amount of lease payments,(3) Amount of lease payments,

depreciation expense anddepreciation expense anddepreciation expense andinterest expenseinterest expenseinterest expense

Lease payments

4,229,927

Lease payments

3,689,790

Lease payments

7,880,775

Depreciation expense

3,633,687

Depreciation expense

3,261,553

Depreciation expense

6,822,747

Interest expense

401,923(4) Accounting method for amount341,290

Interest expense(4) Accounting method for amount

744,755

Interest expense(4) Accounting method for amountequivalent to depreciationequivalent to depreciationequivalent to depreciation

expenseexpenseexpenseSame as at left

Same as at left

(5) Accounting method for amount(5) Accounting method for amount(5) Accounting method for amountequivalent to interest expenseequivalent to interest expenseequivalent to interest expense

Same as at left

Same as at left

Straight-line depreciation
using the lease term as thedepreciable life and zero
residual value.

Interest method using thedifference between total lease
payments and the acquisition
price of the lease property,
allocated to each year.
2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

Within one year

1,961,312

Within one year

2,265,910

Within one year

1,857,756

After one year

4,625,495

After one year

4,001,325

After one year

4,153,706

Total

6,586,807

Total

6,267,235

Total

6,011,462

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 43

AnnexA
Acquisition
price（¥’000）43,482,821

17,665,036

25,817,785

Other assets

226,728

152,441

74,28643,709,550

17,817,478

25,892,072

B

Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

43,592,303

19,144,399

24,447,904

Other assets

167,557

114,038

53,51843,759,861

19,258,438

24,501,423

Total

Annex

Outstandingbalance（¥’000）Rental assets

Total

Annex

Accumulated
depreciation（¥’000）C
Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

45,501,035

19,202,671

26,298,363

Other assets

255,555

192,203

63,35145,756,590

19,394,875

26,361,715

Total

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 44

Notes Related to Negotiable Securities
Prior consolidated accounting fiscal year interim period (As of April 30, 2007)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Thousands of yen)
Prior consolidated accounting fiscal year interim period (As of April 30, 2007)
Balance on the interim
consolidated balance sheet

Acquisition price(1) Stock

Difference

1,610,278

6,076,077

4,465,799

a. Government bonds

－

－

－

b. Corporate bonds

－

－

－

c. Other－－－(3) Other negotiable securities

103,000

85,132－17,867

Subtotal

1,713,278

6,161,210

4,447,931(2) Bonds

2. Details of other negotiable securities that do not have a market value(Unit: Thousands of yen)
Prior consolidated accounting fiscal year interim period(As of April 30, 2007)
Amount shown on the interim consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter
stocks)Other

211,400
73,186

Consolidated accounting fiscal year interim period under review (As of April 30, 2008)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Thousands of yen)
Consolidated accounting fiscal year interim period under review(As of April 30, 2008)
Balance on the interim
Acquisition priceDifference
consolidated balance sheet(1) Stock

1,560,259

3,728,370

2,168,111

a. Government bonds

－

－

－

b. Corporate bonds

－

－

－

c. Other－－－(2) Bonds(3) Other negotiable securities

103,000

71,115－31,885

Subtotal

1,663,259

3,799,485

2,136,226

2. Details of other negotiable securities that do not have a market value(Unit: Thousands of yen)
Consolidated accounting fiscal year interim period under review(As of April 30, 2008)
Amount shown on the interim consolidated balance sheet
Other negotiable securities
Unlisted stocks (excluding over-the-counter
stocks)
Negotiable certificates of deposit
Other

213,900
4,600,000
38,861

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 45

Prior consolidated accounting fiscal year (As of October 31, 2007)
Negotiable securities
1. Other negotiable securities with market prices(Unit: Thousands of yen)
Prior consolidated accounting fiscal year (As of October 31, 2007)
Acquisition price(1) Stock

Balance on the
consolidated balance sheet

Difference

1,566,311

4,943,957

3,377,645

a. Government bonds

－

－

－

b. Corporate bonds

－

－

－

c. Other－－－(3) Other negotiable securities

103,000

87,203-15,796

Subtotal

1,669,311

5,031,160

3,361,849(2) Bonds

2. Details of other negotiable securities that do not have a market value(Unit: Thousands of yen)
Prior consolidated accountingTypefiscal year
(As of October 31, 2007)
Amount shown on the consolidated balance sheet

Other negotiable securities
Unlisted stocks (excluding over-the-counter stocks)
Negotiable certificates of deposit
Other

211,400
5,300,000
59,822

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 46

Notes Related to Derivative Transactions
Prior consolidated fiscal year interim period (As of April 30, 2007)
Because it applies hedge accounting, the Company had no material items to report.

Consolidated fiscal year interim period under review (As of April 30, 2008)
Because it applies hedge accounting, the Company had no material items to report.

Prior consolidated fiscal year (As of October 31, 2007)
Because it applies hedge accounting, the Company had no material items to report.

Notes Related to Stock Options
Prior consolidated fiscal year interim period (From November 1, 2006 to April 30, 2007)
The Company had no material items to report

Consolidated fiscal year interim period under review (From November 1, 2007 to April
30, 2008)
The Company had no material items to report

Prior consolidated fiscal year (From November 1, 2006 to October 31, 2007)
The Company had no material items to report

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 47

Business Segment Information(Segment Information by Type of Business)
Prior consolidated accounting fiscal year interim period (From November 1, 2006 to April 30, 2007)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Sales to outside customers

33,668,481

2,345,274

216,936

36,230,692(2) Sales or transfers between
related segments

－

－

－

－

Total

33,668,481

2,345,274

216,936

36,230,692－ 36,230,692

Operating expenses

30,332,027

2,358,915

195,498

32,876,440-84,089 32,792,351

Operating income

3,346,454-13,640

21,4373,354,251

84,089Total

Eliminations
or entire Consolidated
company

Revenues－ 36,230,692－－

3,438,340(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the type of labor and products,
the nature of the business and the business markets.
2. Principal products, by businessBusiness

Principal products

Construction equipment
rentals

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

Steel sales

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

Information products andother businesses

Computers and peripheral devices

Consolidated accounting fiscal year interim period under review (From November 1, 2007 to April 30, 2008)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses(1) Sales to outside customers

34,235,077

2,728,971

272,808

37,236,856－

37,236,856(2) Sales or transfers between
related segments

－

－

－

－

－

－

Total

34,235,077

2,728,971

272,808

37,236,856－

37,236,856

Operating expenses

31,334,549

2,733,212

231,465

34,299,227

19,03434,318,262

Operating income

2,900,527-4,241

41,342

2,937,628-19,034

2,918,593

Total

Eliminations
or entire Consolidated
company

Revenues(Notes) 1. Method of business classification
Businesses are classified based on consideration of similarities such as the type of labor and products,
the nature of the business and the business markets.
2. Principal products, by businessBusiness
Construction equipment
rentals
Steel sales
Information products andother businesses

Principal products
Construction equipment such as hydraulic shovels, generators,
temporary construction materials, construction safety equipment,
temporary modular housing units
Steel bar, sheet steel, steel products such as round bar, steel scrap
Computers and peripheral devices

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 48

Prior consolidated accounting fiscal year (From November 1, 2006 to October 31, 2007)(Unit: Thousands of yen)
Steel sales
business

Information
products
businessand otherbusinesses

Total

63,072,214

5,120,674

434,024

68,626,913－

68,626,913

－

－

－

－

－

－

Total

63,072,214

5,120,674

434,024

68,626,913－

68,626,913

Operating expenses

59,017,423

5,130,682

402,403

64,550,509-160,130

64,390,378

Operating income

4,054,791-10,008

31,621

4,076,403

160,130

4,236,534

Construction
equipment
rentalbusiness(1) Sales to outside customers(2) Sales or transfers between
related segments

Eliminations
or entire Consolidated
company

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

Principal products

Construction equipment
rentals

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

Steel sales

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

Information products andother businesses

Computers and peripheral devices(Segment information by location)
The Company does not report segment information by location because the Company did not haveany consolidated subsidiaries or important offices located in countries or regions outside of Japan
during the prior consolidated accounting fiscal year interim period, the consolidated accounting
fiscal year interim period under review and the prior consolidated accounting fiscal year.

(Foreign sales)
Prior consolidated accounting fiscal year interim period (From November 1, 2006 to April
30, 2007)
There are no pertinent items to report because the Company did not have any foreign sales.
Consolidated accounting fiscal year interim period under review (From November 1, 2007
to April 30, 2008)
The Company has omitted a description of foreign sales because foreign sales are less than 10% ofconsolidated revenues.
Prior consolidated fiscal year (From November 1, 2006 to October 31, 2007)
The Company has omitted a description of foreign sales because foreign sales are less than 10% ofconsolidated revenues.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 49

(Per Share Information)
Prior Consolidated Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)
Net assets per share

Current Consolidated Fiscal Year
Interim Period(From November 1, 2007
to April 30, 2008)

Prior Consolidated Fiscal Year
(From November 1, 2006
to October 31, 2007)

Net assets per share¥1,225.81

Interim period net income per share

Net assets per share¥1,224.56¥1,216.98

Interim period net income per share¥72.53Fiscal year net income per share¥44.97Same as at left

The Company has not reported
interim net income per share ofcommon stock after adjustment forpotential ordinary shares because it
does not have any potential sharesthat would have a dilution effect.

¥92.40
The Company has not reported
net income per share of common
stock after adjustment for potential
ordinary shares because it does nothave any potential shares thatwould have a dilution effect.

(Note) The basis for calculating interim period (fiscal year) earnings per share is as follows.
PeriodCategory
Interim period (fiscal year)
net income (¥ ‘000)
Amountnotcommonstock

attributed

Prior Consolidated Fiscal
Year Interim Period(From November 1, 2006
to April 30, 2007)

Current Consolidated
Prior Consolidated Fiscal
Fiscal Year Interim Period
Year(From November 1, 2007 (From November 1, 2006
to April 30, 2008)
to October 31, 2007)

2,382,914

1,476,926

3,035,418－－－

2,382,914

1,476,926

3,035,418

32,856,401

32,845,359

32,852,040

toshareholders(¥ ‘000)
Interim period (fiscal year)
net

incomerelatedtocommon stock (¥ ‘000)
Averagenumberofoutstanding shares during theperiodMaterial Events after the Close of the Consolidated Fiscal Year Interim Period
The Company had no material items to report.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 50

5.

Company Financial Statements (Non-consolidated)

1. Comparative Balance Sheets(Unit: Thousands of yen)
PeriodPrior Fiscal Year Interim Period(As of April 30, 2007)

AmountCategory

Percent

Current Fiscal Year Interim Period(As of April 30, 2008)

AmountPercent

Prior Fiscal Year Summary Balance
Sheet(As of October 31, 2007)
AmountPercent(Assets)
Ⅰ Current Assets
Cash and deposits
Notes receivable, trade*4

Accounts receivable, trade

21,759,757

14,502,202

11,115,248

2,190,318

1,978,033

2,255,833

9,140,579

9,581,162

10,825,811－

4,600,000

5,300,000

383,258

369,777

295,013

Other current assets

1,457,777

1,418,838

1,534,599

Allowance for doubtful
accounts-453,442-392,323-435,092

Negotiable securities
Inventory

Total Current Assets

34,478,248

39.4

32,057,690

37.3

30,891,414

37.3

Ⅱ Fixed Assets(1) Tangible Fixed Assets*1
9,562,596

Rental equipment

9,297,639

9,719,185

5,527,658

5,324,228

5,502,751

Land

*3

25,992,268

27,995,930

25,996,422

Other tangible fixed
assets*3

2,068,034

2,075,634

1,957,673

Buildings

Total Tangible Fixed
Assets(2) Intangible Fixed Assets

43,150,558

45,114,979

42,754,487

159,176

134,170

148,235

Investments and Other(3)
AssetsInvestment securities

6,390,840

4,001,024

5,249,609

Other assets

4,225,942

5,758,783

4,854,927-433,076-520,839-430,758-565,171-565,171-565,171

Allowance for doubtful
accounts
Reserve for investment
lossesTotal Investments andOther Assets

8,673,796

9,618,535

9,108,607

Total Fixed Assets

52,928,270

60.6

53,922,945

62.7

52,011,330

62.7

Total Assets

87,406,519

100.0

85,980,636

100.0

82,902,745

100.0

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 51

(Unit: Thousands of yen)
PeriodPrior Fiscal Year Interim Period(As of April 30, 2007)

AmountCategory

Percent

Current Fiscal Year Interim Period(As of April 30, 2008)

AmountPercent

Prior Fiscal Year Summary Balance
Sheet(As of October 31, 2007)
AmountPercent(Liabilities)
ⅠCurrent Liabilities*4

9,672,407

8,255,086

7,660,014

Accounts payable, trade

1,752,979

2,164,744

2,456,499

Short-term bank loans

9,608,000

8,896,000

8,818,000

Accounts payable, other

2,838,598

2,841,397

2,211,522

Corporate taxes payable

1,705,394

1,165,750

1,406,425

Accrued bonuses to
employees

481,288

470,924

499,457

Equipment notes payable

443,039

322,064

175,331

Other current liabilities

582,902524,216

531,331

Notes payable, trade

Total Current Liabilities

27,084,610

31.0

24,640,183

28.7

23,758,582

28.7

Ⅱ Long-term Liabilities
Long-term bank loans
Long-term accrued
expensesLong-term deferred tax
liability
Accrued employees
retirement benefits
Retirement allowance todirectors and auditors

15,335,000

16,547,000

14,926,000

2,359,944

2,598,061

2,353,188

168,511－58,726

1,747,844

966,925

928,956

84,07995,381

89,386

Total Long-term Liabilities

19,695,379

22.5

20,207,368

23.5

18,356,256

22.1

Total Liabilities

46,779,990

53.5

44,847,551

52.2

42,114,839

50.8

9,696,717

11.1

9,696,717

11.3

9,696,717

11.7

10,960,869

13.2

22.3

18,150,368

21.9(Net Assets)
I

Owners’ equity
1

Paid-in capital

2

Capital surplus(1)Capital reserve(2)Other capital surpluses

10,817,389

10,817,389

10,817,389

143,480

143,480

143,480

Total capital surplus

10,960,869

12.6

10,960,869

12.7

3．Earned surplus(1)Legal retained earnings

1,375,287

1,375,287

1,375,287

19,601

19,601

19,601

General reserve

12,931,684

15,631,684

12,931,684

Earned surplus
brought forward

3,008,865

2,197,831

3,823,794(2)Other retained earnings
Reserve for advanced
depreciation of fixed
assetsTotal earned surplus

19.8

19,224,405-11,415-0.0-21,020-0.0-19,784-0.0

37,981,611

43.5

39,860,972

46.3

38,788,170

46.8

１．Valuation difference onother investment
securities

2,644,918

3.0

1,272,112

1.5

1,999,735

2.4

Total Valuation andTranslation Adjustments

2,644,918

3.0

1,272,112

1.5

1,999,735

2.4

Total Net Assets

40,626,529

46.5

41,133,084

47.8

40,787,905

49.2

Total Liabilities and Net
Assets87,406,519

100.0

85,980,636

100.0

82,902,745

100.0

4．Treasury stock
Total Owners’ Equity
Ⅱ17,335,439

Valuation and translation
adjustments

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 52

2. Comparative Statements of Income(Unit: Thousands of yen)
PeriodPrior Fiscal Year Interim Period(From November 1, 2006
to April 30, 2007)
AmountCategory

Percent

Current Fiscal Year Interim Period(From November 1, 2007
to April 30, 2008)
AmountPercent

Prior Fiscal Year Summary Statementof Income(From November 1, 2006
to October 31, 2007)
AmountPercent

Ⅰ

Operating revenues

32,449,130

100.0

32,127,823

100.0

61,576,788

100.0

Ⅱ

Cost of revenues

22,940,982

70.7

22,849,349

71.1

44,713,746

72.6

9,508,147

29.3

9,278,473

28.9

16,863,041

27.4

Ⅲ

Selling, generaladministrative
expenses

6,438,102

19.8

6,495,868

20.2

12,850,084

20.9

3,070,045

9.5

2,782,605

8.7

4,012,957

6.5*1

361,591

1.1

211,4150.6

852,9301.4*2

235,652

0.7

259,7260.8

492,985

0.8

3,195,983

9.9

2,734,294

8.5

4,372,901

7.1

Gross profit
andOperating income
ⅣⅤ

Non-operating
revenues
Non-operating
expenses
Ordinary income

Ⅵ

Extraordinary profits*3

946,377

2.9

24,0810.1

1,796,528

2.9

ⅦExtraordinary losses*4,5

68,2390.2

92,394

0.3

115,6260.2

4,074,120

12.6

2,665,980

8.3

6,053,803

9.8

2,622,787

4.2

3,431,016

5.6

Income before taxes
Corporate, local andbusiness taxes
Adjustment for corporate
and other taxes
Net income

1,655,508
98,2062,203,734

1,124,088
1,753,715

5.4

2,320,405

7.2

106,543

1,230,632

3.8

1,435,348

4.5

419,052

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 53

3. Statement of Changes in Net Assets
Statement of Changes in Net Assets
Prior Fiscal Year Interim Period (From November 1, 2006 to April 30, 2007)(Unit: Thousands of yen)
Owners’ equity
Capital surplus

Earned surplus
Other earned surplus

Paid-in
capitalCapital legal
reserve

October 31, 2006 balance

9,696,717

10,817,389

Othercapitalsurplus

Total capital Earned legal Fixed assets
surplusreserve
Reserve for

143,480

10,960,869

advanceddepreciation
1,375,287

19,601

EarnedTotal earned
surplusGeneralreserve

surplusbrought
forward

11,831,684

2,084,192

15,310,766

1,100,000-1,100,000－

Changes of items during the fiscal
year interim period
Transfer to general reserve－

Dividends from surplus－-295,732-295,732

Net income－

2,320,405

2,320,405

Purchase of treasury stock－－

Net changes of items otherthan owners’ equity during the
fiscal year interim period
Total changes of items during the
fiscal year interim period
April 30, 2007 balance

－

－

－

－

－

－

1,100,000

924,673

2,024,673

9,696,717

10,817,389

143,480

10,960,869

1,375,287

19,601

12,931,684

3,008,865

17,335,439

Valuation and translation
adjustments

Owners’ equity

Total net assets

Total owners’ equity

Valuation differenceon other investment
securities

Total valuation andtranslation
adjustments

35,962,049

2,414,062

2,414,062

38,376,112

－

－

－

Dividends from surplus-295,732－-295,732

Net income

2,320,405－

2,320,405-5,112－-5,112230,855

230,855

230,855

Treasury stock
October 31, 2006 balance-6,303

Changes of items during the fiscal
year interim period
Transfer to general reserve

Purchase of treasury stock-5,112

Net changes of items otherthan owners’ equity during the
fiscal year interim period
Total changes of items during the
fiscal year interim period-5,112

2,019,561

230,855

230,855

2,250,416

April 30, 2007 balance-11,415

37,981,611

2,644,918

2,644,918

40,626,529

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 54

Current Fiscal Year Interim Period (From November 1, 2007 to April 30, 2008)(Unit: Thousands of yen)
Owners’ equity
Capital surplus

Earned surplus
Other earned surplus

Paid-in
capitalOctober 31, 2007 balance

Capital legal
reserve

9,696,717

10,817,389

Othercapitalsurplus

Total capital Earned legal Fixed assets
surplusreserve
Reserve for

143,480

10,960,869

advanceddepreciation
1,375,287

19,601

Generalreserve

Earnedsurplusbrought
forward

Total earned
surplus12,931,684

3,823,794

18,150,368

2,700,000-2,700,000－

Changes of items during the fiscal
year interim period
Transfer to general reserve－

Dividends from surplus－-361,311-361,311

Net income－

1,435,348

1,435,348

Purchase of treasury stock－－

Net changes of items otherthan owners’ equity during the
fiscal year interim period
Total changes of items during the
fiscal year interim period
April 30, 2008 balance

－

－

－

－

－

－

2,700,000-1,625,963

1,074,036

9,696,717

10,817,389

143,480

10,960,869

1,375,287

19,601

15,631,684

2,197,831

19,224,405

Valuation and translation
adjustments

Owners’ equity

Total net assets

Total owners’ equity

Valuation differenceon other investment
securities

Total valuation andtranslation
adjustments

38,788,170

1,999,735

1,999,735

40,787,905

－

－

－

Dividends from surplus-361,311－-361,311

Net income

1,435,348－

1,435,348-1,235－-1,235-727,622-727,622-727,622

Treasury stock
October 31, 2007 balance-19,784

Changes of items during the fiscal
year interim period
Transfer to general reserve

Purchase of treasury stock-1,235

Net changes of items otherthan owners’ equity during the
fiscal year interim period
Total changes of items during the
fiscal year interim period-1,235

1,072,801-727,622-727,622

345,178

April 30, 2008 balance-21,020

39,860,972

1,272,112

1,272,112

41,133,084

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 55

Prior Fiscal Year (From November 1, 2006 to October 31, 2007)(Unit: Thousands of yen)
Owners’ equity
Capital surplus

Earned surplus
Other earned surplus

Paid-in
capitalOctober 31, 2006 balance

Capital legal
reserve

9,696,717

Othercapitalsurplus10,817,389

Total capital Earned legal Fixed assets
surplusreserve
Reserve foradvanceddepreciation

143,480

10,960,869

1,375,287

19,601

Generalreserve

Earnedsurplusbrought
forward

Total earned
surplus11,831,684

2,084,192

15,310,766

1,100,000-1,100,000－

Changes of items during the fiscal
year
Transfer to general reserve－

Dividends from surplus－-591,414-591,414

Net income－

3,431,016

3,431,016

Purchase of treasury stock－－

Net changes of items otherthan owners’ equity during the
fiscal year
Total changes of items during the
fiscal year
October 31, 2007 balance

－

－

－

－

－

－

1,100,000

1,739,602

2,839,602

9,696,717

10,817,389

143,480

10,960,869

1,375,287

19,601

12,931,684

3,823,794

18,150,368

Valuation and translation
adjustments

Owners’ equity

Treasury stock

35,962,049

Valuation differenceon other investment
securities
2,414,062

Total net assets

Total valuation andtranslation
adjustments
2,414,062

38,376,112

－

－

－

Dividends from surplus-591,414－-591,414

Net income

3,431,016－

3,431,016-13,481－-13,481-414,327-414,327-414,327

October 31, 2006 balance-6,303

Total owners’ equity

Changes of items during the fiscal
year
Transfer to general reserve

Purchase of treasury stock-13,481

Net changes of items otherthan owners’ equity during the
fiscal year
Total changes of items during the
fiscal year

-13,4812,826,120-414,327-414,327

2,411,793

October 31, 2007 balance-19,784

38,788,170

1,999,735

1,999,735

40,787,905

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 56

Notes to the Interim Financial Statements and Significant Accounting Policies

PeriodCategory(1)

Appraisal

standards

and appraisal methods
for principal assets

Prior Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Current Fiscal Year
Interim Period(From November 1, 2007
to April 30, 2008)

Prior Fiscal Year
(From November 1, 2006
to October 31, 2007)

a. Negotiable securities
Commonstockofsubsidiaries and affiliatedcompanies
The
Company
hasa. Negotiable securities
Commonstockofsubsidiaries and affiliatedcompanies
Same as at left

a. Negotiable securities
Commonstockofsubsidiaries and affiliatedcompanies
Same as at left

Other negotiable securities
Securities with a market
price

Other negotiable securities
Securities with a market
priceadopted the cost method
based

upon

the

movingaverage method.
Other negotiable securities
Securities with a market
price
The

Company

hasSame as at left

The

Companyhasadopted the market value

adopted the market value

method (the full amount ofmethod (the full amount of

the valuation difference isthe valuation difference ischarged to equity using thecharged to equity using thedirect transfer to capital

direct transfer to capitalmethod, with the disposal

method, with the disposal

cost

cost

determined

by

the

determined

by

the

moving average method)moving average method)

based on the market pricebased on the market priceonperiodonsimilaryear closing date or similartheclosing

interimdateorprices.

theaccounting

fiscalprices.

Securities without market
pricesThe

Companyhasadopted the cost method,

Securities without market

Securities without market

pricespricesSame as at left

Same as at leftb. Construction equipment
Same as at leftb. Construction equipment
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Same as at left

cost being determined bythemovingaveragemethod.
b. Construction equipment
Amount after deductionofdepreciation

expensecalculated according to thedeclining-balancemethodfrom the original prices, byseparate

fiscalyearofpurchase.
c. Merchandise inventories
and supplies(i)
Merchandise
inventories
Lower of cost or market
based on the Last-in,
First-out method(ii) Supplies
The Latest Purchase Cost
method(ii) Supplies
Same as at left(ii) Supplies
Same as at left

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 57

(2) Depreciation methods
forprincipal

depreciable assets

a. Tangible fixed assets
The
Companyhasadoptedthea. Tangible fixed assets
Same as at left

a. Tangible fixed assets
Same as at left

b. Intangible fixed assets
Same as at left

b. Intangible fixed assets

c. Long-term prepaid
expensesSame as at left

c. Long-term prepaid
expensesSame as at left

a. Reserve for doubtful
accounts

a. Reserve for doubtful
accounts

Same as at left

Same as at leftb. Accrued bonuses to
employees
Same as at leftb. Accrued bonuses to
employeesTofully
providedeclining-balance method. Buildings
on

land

under

that

a

is

leasedfixed-term

landlease agreement, however,are depreciated using thestraight-line method using
the remaining period of the
fixed-term

lease

as

the

depreciable life and zero
residual value.
The

depreciable

mainly

used

lives

by

the

Company are as follows.
Rental assets
5-10
years
Buildings
31-34
years
b. Intangible fixed assets
The
CompanyhasadoptedtheSame as at left

straight-line

method.
Software for use withintheCompany

depreciated

is

using

the

straight-line method basedon the assumed useful life
for internal use (5 years).
c. Long-term prepaid
expensesThe
Companyhasadoptedstraight-line

depreciation.
(3) Accounting standards
forallowances
reserves

principal
anda. Reserve for doubtful
accounts
To provide for losses on
doubtful accounts such asaccounts

receivable,

theCompany

chargestoincome an amount basedon actual loss experience
for normal accounts, plus
an amount for projected
unrecoverable

amounts

based on assessments ofindividual accounts.
b. Accrued bonuses to
employees
To fully provide
expenditures

of

for

bonuses

expenditures

of

for

bonusesthe Company will pay to

the Company will pay toemployees, an amount is

employees, an amount isappropriated to the reserve

appropriated to the reserve

during the interim period

during the fiscal year based

based

upon

upon

a

estimate amount.

salaryasalaryestimate

amount.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 58

c. Accrued employees
retirement benefit
The Company provides
foremployees’

accruedc. Accrued employees
retirement benefit
Same as at leftc. Accrued employees
retirement benefit
The Company provides
foremployees’

accruedretirement benefits based

retirement benefits based

upon

upon

the

projected

theprojected

amounts of the liability for

amounts of the liability for

accruedaccruedemployees

employees

retirement benefits and theretirement benefits and thevalue of pension assets atvalue of pension assets at

the end of the fiscal year.

the end of the fiscal year.

At the end of each interim

At the end of each fiscal

period,

year,

the

CompanytheCompany

appropriates an amount toappropriates an amount to

the reserve to provide forthe reserve to provide for

the

the

liability

recognized

during the period.

liability

recognized

during the period.

The difference based on

The difference based onan actuarial calculation isan actuarial calculation ischargedchargedtoincometoincomebeginning in the fiscal year

beginning in the fiscal year

following the year in which

following the year in which

incurred, with the amounts

incurred, with the amounts

allocatedallocatedusing

proportionatelythemethod,straight-line

based

on

a

using

proportionatelythemethod,straight-line

based

on

a

specified number of years

specified number of years(10 years) that is less than

(10 years) that is less than

the

the

averageremaining

averageremaining

period of employment forperiod of employment for

employees at the time theemployees at the time thedifference arises.

difference arises.
(Supplemental information)
Duringthefiscalyear

under review, the Company
revisedits

benefits

systemtransferredretirement
itsanddefinedbenefit corporate pension
plan(fund-type)toa

definedbenefitcorporate

pensionplan(contract-type), and simultaneously
introduced a cash balancesystem. In conjunction withthis change, the Company
has applied the Accounting
for the Transfer Between
Retirement(Financial

Benefit

Plans

AccountingStandards Implementation
Guidance No. 1).
The Company accounted
for the ¥845,319,000 affect
from

these

transfers

inextraordinary profits as a“gain
accruedonreversalof

employees

retirement benefits.”

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 59

d. Retirement allowances todirectors and auditors
The Company provides

d. Retirement allowances todirectors and auditors
Same as at left

d. Retirement allowances todirectors and auditors
The Company provides

for retirement allowances

for retirement allowances

to directors and auditors

to directors and auditors

based upon pertinent rules

based upon pertinent rules

and

and

appropriated

to

the

appropriated

to

the

account proportionately at

account proportionately atthethe end of the fiscal year

end

of

the

interimperiod based upon length

basedof service.
e. Reserve for investment
lossesThe Company provides

service.
e. Reserve for investment
lossese. Reserve for investment
lossesuponlengthSame as at left

Same as at left

Same as at left

Same as at left

a. Hedge transactions

a. Hedge transactions

Same as at left

Same as at left

b. Hedge methods andhedged transactions

b. Hedge methods andhedged transactions

Same as at left

Same as at leftof

for losses from the decline
in

real

such

prices

as

of

the

assetsstockofsubsidiary companies thataresubject

to

asset

impairment accounting byapplying

internallyestablished standards that
take

into

consideration

subsidiarycompany

operating results and asset
quality.
(4) Lease transactions

Forfinancetransactions
leaseslease

exceptthatfortransferownership of the property
tothelessee,rent

expenses are charged toincome as payments aremade.
(5) Hedge accounting forprincipal hedging
methodsa. Hedge transactions
The Company accounts
for

hedge

transactions

using allocations based on
accounting

standards

foreignforcurrency-

denominated transactions,and special rule accounting
based

on

standards

accountingforfinancial

products.
b. Hedge methods andhedged transactions
The
Company
uses
currency

swaps

and

forwardtransactions

inorder to avoid the currency
fluctuation risk related totheCompany’s

foreigncurrency-denominatedstraight

bonds

liabilities

forimportandpayments.

The

Company

also uses interest swaps to
avoid

interest

rate

fluctuation risk related tointerestonbankborrowing.
Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 60

c. Hedging policies
The Company’s use ofderivative
limitedtransactions

tohedgingc. Hedging policies

c. Hedging policies

Same as at left

Same as at left

d. Method for evaluating theeffectiveness of hedges

d. Method for evaluating theeffectiveness of hedges

Same as at left

Same as at left

is

risk

within the scope of theCompany’s

assetsandliabilities subject to market
fluctuation risk.
d. Method for evaluating theeffectiveness of hedges
The Company does notevaluate the effectivenessof its hedge transactions
because it can assume thatits

currencytransactions

swap

and

forwardtransactions will completely
offset market fluctuations
or changes in cash flow
from

the

beginstime

terminated.
the

hedge

until

it

is

In

addition,

Company’s

interest

swap transactions fulfill therequirementsforspecialrule accounting, and theCompany has elected touse this in place of anevaluation of effectiveness.
(6) Other significant
matters for
preparation of the

Accounting treatment ofconsumption tax
Consumption tax is taken

Accounting treatment ofconsumption tax
Same as at left

Accounting treatment ofconsumption tax
Consumption tax is takenout of all Statement ofoutinterim period (fiscal

Income items and Balance

Income items and Balanceyear) financial

Sheet items, except mainly

Sheet items, except mainly

statements

for

for

receivables

andpayables.
The
for

of

all

Statement

receivables

of

and

payables.

suspense

accounts

consumption

tax

receipts and consumption
tax payable are included in"otherbecausecurrent

liabilities"thefinancial

importance is minimal after
the amounts are offset.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 61

6. Notes to the Interim Financial Statements
Notes to the Interim Balance Sheets(Unit: Thousands of yen)
PeriodItem

Prior Fiscal Year

Prior Fiscal Year
Interim Period(As of April 30, 2007)

Current Fiscal Year
Interim Period(As of April 30, 2008)

40,173,994

39,925,098

40,541,384

27,76323,02323,144(As of October 31, 2007)

1. Totalaccumulated
depreciation for
tangible fixed
assets
2. Contingent
liabilities
Joint and several
guarantee

ofemployee bankloans
Guarantees ofborrowed
indebtedness of
subsidiarycompanies(Kanatech Co., Ltd.,
Kanki Corporation)and nonconsolidated
subsidiary

Company

Guaranteed

Kanatech Co.,
Ltd.
Kanki
Corporation
Flowtechno
Corporation
Total

AmountCompany
Kanatech Co.,

220,000
955,500
100,000
1,275,500

companies(Flowtechno
Corporation,

Ltd.
Kanki
Corporation
Flowtechno
Corporation
Shanghai
Jinheyuan
Equipment
Rental
Co.,
Ltd.
Total

Shanghai Jinheyuan

Guaranteed
Amount180,000

Company
Kanatech Co.,Ltd.

819,000
100,000

1,373,035

2,472,035

Kanki
Corporation
Flowtechno
Corporation
Shanghai
Jinheyuan
Equipment
Rental
Co.,
Ltd.
Total

Guaranteed
Amount150,000
882,000
100,000

168,960

1,300,960

Equipment Rental
Co., Ltd.)
Guarantee forfinance lease

Company-------

liabilities of Shanghai
Jinheyuan

consolidated

Shanghai
Jinheyuan
Equipment
RentalCo.,Ltd.

subsidiary company

Total

Equipment Rental
Co., Ltd., a non-

3. Reduction to bookvalue

Guaranteed
AmountGuaranteed
Amount200,292

Shanghai
Jinheyuan
Equipment
RentalCo.,
Ltd.

70,973200,292

Total

70,973

Amounts for assets acquired
in prior fiscal years for whichaccumulated book values werereducedbygovernment
subsidiesAmounts for assets acquired
in prior fiscal years for whichaccumulated book values werereducedbygovernment
subsidies

Machinery andMachinery

5,044

Company

5,044

Amountsforassetsacquired in prior fiscal years
for which accumulated bookvalues were reduced bygovernment subsidies
Machinery and5,044

equipment

and

Land

3,569

equipment
Land

3,569

Land

3,569

Total

8,613

Total

8,613

Total

8,613

equipment

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 62

4.Notes and bills
maturing at the endof the interim period(fiscal year)

Notes and bills maturing on
the last day of the interim
periodaresettledandprocessed on the note and billclearing date.
Because the last day of theCompany's current fiscal year
interim period was a financial
institution holiday, notes andbills maturing on the final dayof the following interim period
are included in the fiscal year
interim period balance.

----------------

Notes receivable, trade
31,169Notes payable, trade
1,410,677
5. Contingent
liabilities

The Company liquidates bill

The Company liquidates bill

The Company liquidates

receivables based on a notes

receivables based on a notes

bill receivables based on areceivables transfer program.

receivables transfer program.

notes receivables transfer

Notes receivable, trade

Notes receivable ,trade

Notes receivable, Trade

program.
7,492,647

5,866,653

4,971,036

Theamountofnotes
receivable, trade with a rightof recourse to the Company
included in the balance ofnotes receivable, trade is1,549,803.

Theamountofnotes
receivable, trade with a rightof recourse to the Company
included in the balance ofnotes receivable, trade is
1,279,783.

The amount of notes
receivable, trade with aright of recourse to theCompany included in thebalance of notes receivable,
trade is 1,017,362.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 63

Notes to the Interim Period Statements of Income(Unit: Thousands of yen)
PeriodItem

Prior Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Current Fiscal Year
Interim Period(From November 1, 2007
to April 30, 2008)

Prior Fiscal Year
(From November 1, 2006
to October 31, 2007)

1. Principal items included in nonoperating revenues
Interest received

15,053

18,23636,502

4,312

448

287,528

Rents received

128,551

97,942

195,809

Insurance benefits

18,843

11,56838,877

Cash bonus received

101,816

3,595

104,680

177,623

156,648

312,601

920

1,875

920,700－－

845,319

－

－

8,311

890

490

890

43,74528,051

63,908－12,741－Gain on sale of investment
securities

2. Principal items included in nonoperating expenses
Interest expense
3.

Principal

items

includedinextraordinary profits
Gain on sale of fixed assets
Gain on reversal of accrued
employees retirement benefits
4.

Principal

items

includedinextraordinary profits
Transfer to allowance for
doubtful accounts to affiliatedcompanies
Impairment loss
Loss on sale or retirement of
fixed assets
Valuation loss on merchandise
inventories

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 64

5. Impairment loss

Duringtheinterimperiod, the Company
incurred an impairment
loss on the following
asset group.
Location

Use

Tomakomai,

Dormant

Hokkaido

asset

Asset
Land

Asset groupings usedby the Company toapply asset impairment
accounting are based on
the smallest unit for
which profitability can be
determined
regularly.
Specifically,dormant
assets are grouped using
the assets for each
property.
For certain dormant
assets for which theasset value was lessthan book value, theCompany reduced bookvalue to its recoverable
value, and accounted forthe reduction as an
impairment loss (890)
underextraordinary
losses. This 890 was for
land.
Furthermore,therecoverable value for
this
asset
group
is
measured according to
net sales price, and theland is evaluated usingtheinheritancetax
assessment value based
on
the
land
tax
assessment
value
orother amount as a base.

Duringtheinterimperiod, the Company
incurred an impairment
loss on the following
asset group.
Location

Use

Tomakomai,

Dormant

Hokkaido

asset

Asset
Land

Asset groupings usedby the Company toapply asset impairment
accounting are based on
the smallest unit for
which profitability can be
determined
regularly.
Specifically,dormant
assets are grouped using
the assets for each
property.
For certain dormant
assets for which theasset value was lessthan book value, theCompany reduced bookvalue to its recoverable
value, and accounted forthe reduction as an
impairment loss (490)
underextraordinary
losses. This 490 was for
land.
Furthermore,therecoverable value for
this
asset
group
is
measured according to
net sales price, and theland is evaluated usingtheinheritancetax
assessment value based
on
the
land
tax
assessment
value
orother amount as a base.

During the fiscal year,
the Company incurred
an impairment loss onthefollowing
asset
group.
Location

Use

Tomakomai,

Dormant

Hokkaido

asset

Asset
Land

Asset groupings usedby the Company toapply asset impairment
accounting are based on
the smallest unit for
which profitability can be
determined
regularly.
Specifically,dormant
assetsaregroupedusing the assets for each
property.
For certain dormant
assets for which theasset value was lessthan book value, theCompany reduced bookvalue to its recoverable
value, and accounted forthe reduction as an
impairment loss (890)
underextraordinary
losses. This 890 was for
land.
Furthermore,therecoverable value forthis asset group ismeasured according to
net sales price, and theland is evaluated usingtheinheritancetax
assessment value based
on
the
land
tax
assessment
value
orother amount as a base.

6. Depreciation and amortization
Tangible fixed assets
Intangible fixed assets

1,967,557

1,966,048

4,229,444

28,27128,01559,025

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 65

Notes to the Interim Non-Consolidated Statement of Changes in Net Assets
Prior fiscal year interim period (From November 1, 2006 to April 30, 2007)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)

Common stock (Note)
Total

Number of sharesat end of thecurrent fiscal year
interim accounting
periodNumber of sharesat end of priorfiscal year

Increase in
number of shares
during the current
fiscal year interim
accounting period

Decrease in
number of shares
during the current
fiscal year interim
accounting period

13

5

－

18

13

5

－

18

(Note) The number of treasury stock shares of common stock increased by 5,000 shares throughpurchases of shares comprising less than one investment unit.
Current fiscal year interim period (From November 1, 2007 to April 30, 2008)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)

Common stock (Note)
Total

Number of sharesat end of priorfiscal year

Increase in
number of shares
during the current
fiscal year interim
accounting period

Decrease in
number of shares
during the current
fiscal year interim
accounting period

Number of sharesat end of thecurrent fiscal year
interim accounting
period

25

2

－

27

25

2

－

27

(Note) The number of treasury stock shares of common stock increased by 2,000 shares throughpurchases of shares comprising less than one investment unit.
Prior fiscal year (From November 1, 2006 to October 31, 2007)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)
Number of sharesat end of the priorfiscal year

Increase in
number of shares
during the fiscal
year

Decrease in
number of shares
during the fiscal
year

Number of sharesat end of the fiscal
year

13

12

－

25

13

12

－

25

Number of shares issued
Common stock (Note)
Total(Note) The number of treasury stock shares of common stock increased by 12,000 shares throughpurchases of shares comprising less than one investment unit.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 66

Lease Transactions(Unit: Thousands of yen)
Prior Fiscal Year Interim Period(From November 1, 2006
to April 30, 2007)

Current Fiscal Year Interim Period(From November 1, 2007
to April 30, 2008)

Prior Fiscal Year
(From November 1, 2006
to October 31, 2007)

1. Finance lease transactions except

1. Finance lease transactions except

1. Finance lease transactions except

for leases that transfer ownershipfor leases that transfer ownershipfor leases that transfer ownershippropertyacquisition

accumulated

prices,depreciationof the property to the lessee.

of the property to the lessee.

of the property to the lessee.
(1) Amounts corresponding to leaseand(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

and(1) Amounts corresponding to leasepropertyacquisition

accumulated

prices,depreciation

andoutstanding balance at the end

outstanding balance at the end

outstanding balance at the endof the interim periodof the interim periodof the fiscal year accounting
periodPlease refer to Annex B

Please refer to Annex C(2) Outstanding balance of future(2) Outstanding balance of future(2) Outstanding balance of futurelease payments at the end oflease payments at the end oflease payments at the end of

the interim period

the interim period

the period

Please refer to Annex A

Within one year

5,974,383

Within one year

6,380,256

Within one year

6,773,121

After one year

16,576,068

After one year

14,729,994

After one year

15,876,130

Total

22,550,452

Total

21,110,250

Total

22,649,251(3) Amount of lease payments,(3) Amount of lease payments,(3) Amount of lease payments,

depreciation expense anddepreciation expense anddepreciation expense andinterest expenseinterest expenseinterest expense

Lease payments

3,874,509

Lease payments

3,257,203

Lease payments

7,058,248

Depreciation expense

3,315,420

Depreciation expense

2,876,761

Depreciation expense

6,087,072

Interest expense

357,421(4) Accounting method for amountInterest expense

287,795(4) Accounting method for amountInterest expense

640,634(4) Accounting method for amountequivalent to depreciationequivalent to depreciationequivalent to depreciation

expenseexpenseexpenseSame as at left

Same as at left

(5) Accounting method for amount(5) Accounting method for amount(5) Accounting method for amountequivalent to interest expenseequivalent to interest expenseequivalent to interest expense

Same as at left

Same as at left

Straight-line depreciation
using the lease term as thedepreciable life and zero
residual value.

Interest method using thedifference between total lease
payments and the acquisition
price of the lease property,
allocated to each year.
2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

2. Operating leases
Future lease payments

Within one year

1,662,164

Within one year

2,027,079

Within one year

1,660,523

After one year

3,831,074

After one year

3,617,004

After one year

3,766,563

Total

5,493,239

Total

5,644,083

Total

5,427,086

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 67

AnnexA
Acquisition
price（¥’000）39,391,466

16,481,474

22,909,991

Other assets

212,328

147,51764,81039,603,794

16,628,992

22,974,802

B

Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

38,434,131

17,352,200

21,081,931

Other assets

167,557

114,038

53,51838,601,689

17,466,239

21,135,450

Total

Annex

Outstandingbalance（¥’000）Rental assets

Total

Annex

Accumulated
depreciation（¥’000）C
Acquisition
price（¥’000）

Accumulated
depreciation（¥’000）

Outstandingbalance（¥’000）Rental assets

40,639,357

17,673,899

22,965,457

Other assets

255,555

192,203

63,35140,894,913

17,866,103

23,028,809

Total

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 68

Notes Related to Negotiable Securities
For the prior fiscal year interim period, the current fiscal year interim period and the prior fiscal year,
the stock of the Company’s subsidiary companies and affiliated companies did not have a stock
price.
(Per Share Information)
Prior Fiscal Year Interim Period(From November 1, 2006
to April 30, 2007)
Net assets per share

Current Fiscal Year Interim Period(From November 1, 2007
to April 30, 2008)
Net assets per share

Prior Fiscal Year
(From November 1, 2006
to October 31, 2007)
Net assets per share¥1,236.59¥1,252.35¥1,241.77

Interim period net income per

Interim period net income per

Fiscal year net income per share

share

share
¥104.44¥43.70¥70.62The Company has not reported
net income per share of common
stock after adjustment for potential
ordinary shares because it does nothave any potential shares thatwould have a dilution effect.

Same as at left

The Company has not reported
net income per share of common
stock after adjustment for potential
ordinary shares because it does nothave any potential shares thatwould have a dilution effect.

(Note) The basis for calculating interim period (fiscal year) earnings per share is as follows.
PeriodCategory
Interim period (fiscal year)
net income (¥ ‘000)
Amountnotcommonstock

attributed

Prior Fiscal Year
Interim Period(From November 1, 2006
to April 30, 2007)

Current Fiscal Year
Interim Period(From November 1, 2007
to April 30, 2008)

Prior Fiscal Year
(From November 1, 2006
to October 31, 2007)

2,320,405

1,435,348

3,431,016－－－

2,320,405

1,435,348

3,431,016

32,856,401

32,845,359

32,852,040

toshareholders(¥ ‘000)
Interim period (fiscal year)
net

incomerelatedtocommon stock (¥ ‘000)
Averagenumberofoutstanding shares during theperiodMaterial Events after the Close of the Interim Period (Fiscal Year)
The Company had no material items to report.

Fiscal Year Ending October 2008 Interim Accounting Bulletin

P. 69