Six-month Consolidated Financial Reportfor the Fiscal Year ending October 31, 2009
June 5, 2009
Company name: Kanamoto Company, Ltd.
Code number:9678
URL

Stock Change Listing: Tokyo, Sapporo

http://www.kanamoto.co.jp

Representative

Kanchu Kanamoto President

Inquiries

Nobuhito Utatsu
Director & Corporate Officer, Division Manager, Accounting Division
TEL +81-11-209-1631

1. Operating Results for the Six-month of the Fiscal Year Ending October 31, 2009
(November 1, 2008 - April 30, 2009)(1) Consolidated Operating Results(Numbers less than one million yen have been rounded down)

Revenues
Millions of yen％

Operating income

Ordinary income

Millions of yen

Millions of yen％

Fiscal Year Ending October 31,
2009: Second Quarter

32,590

－

921

－

793

Fiscal Year Ended October 31,
2008: Second Quarter

37,236( 2.8 )

2,918

( -15.1 )2,833

Net Income
per Share

Net income
Millions of yen％％－( -17.2 )Diluted Net Income
per Share
Yen

Yen

Fiscal Year Ending October 31,
2009: Second Quarter

-143

－

-4.38

－

Fiscal Year Ended October 31,
2008: Second Quarter

1,476( -38.0 )

44.97

－

(2) Consolidated Financial Position(Numbers less than one million yen have been rounded down)

Total Assets

Net Assets

Millions of yen

CapitalAdequacy Ratio

Millions of yen％

Net Assets
per Share
Yen

Fiscal Year Ending October
97,78437,82238.3
1,140.50
31, 2009: Second Quarter
Fiscal Year Ended October
91,741
38,20241.4
1,155.47
31, 2008(Reference) Shareholder’s equity Fiscal Year Ending October 31, 2009 second Quarter: 37,452 million yen
Fiscal Year Ended October 31, 2008: 37,947 million yen
2. Dividends(Record date)

End of 1Q
Yen

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

Fiscal Year ended October 31,2008
10.00
Fiscal Year ending October 31,2009
10.00
Fiscal Year ending October 31,2009(Projected)(Note) Revision of dividend project for the current quarter: No

YenFull year

Yen

Yen

-

10.00

20.00

-

10.00

20.00

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.1

3. Projected Consolidated Operating Results for the Fiscal Year Ending October 2009
(November 1, 2008 - October 31, 2009)(Percentages show the change from the prior year)

Full year

Revenues

Operating
IncomeOrdinary
IncomeMillions of yen% Millions of yen% Millions of yen

64,850

-6.6

320

-85.6

40

Net Income
per Share

Net Income% Millions of yen

-98.0

-990

%

－

Yen

-30.15(Note) Revision of Projected Consolidated Operating Results for the current quarter: No
4. Other(1) Changes to material subsidiaries during the period (transfer of specified subsidiaries in conjunction
with revision to scope of consolidation)? : No
(2) Has the Company adopted simplified methods for accounting treatment? :No(3) Changes in accounting principles, procedures, or representation methods relating to preparation of theconsolidated quarterly financial statements (Matters stated in the Change to the Basis for presentationof the Consolidated Quarterly Financial Statements)(a) Changes in accordance with revisions to accounting standards: Yes(b) Changes other than the above: Yes(Note) For details, see “4. Other matters” on Page 5 (Qualitative information and financial statements).
(4) Number of shares issued (Common stock)(a)Number of shares outstanding at the end of period (including treasury stock):
Fiscal Year Ending October 31, 2009 Second Quarter: 32,872,241 sharesFiscal Year Ended October 31, 2008: 32,872,241 shares(b)Number of shares of treasury stock at the end of period
Fiscal Year Ending October 31, 2009 Second Quarter: 33,989 sharesFiscal Year Ended October 31, 2008: 30,848 shares(c)Average number of shares during the period (Consolidated cumulative period)
Fiscal Year Ending October 31, 2009 Second Quarter: 32,839,730 sharesFiscal Year Ended October 31, 2008 Second Quarter: 32,845,359 shares
Note: Explanation concerning appropriate use of the projected operating results and other items to note
(1) The projections above represent an outlook for the future and assumptions about uncertain factorsthat might affect future results, based on information available as of the date of the announcement of
this document. Actual results may differ from the projections as a result of factors arising in the
future.
(2) Commencing the current fiscal year, the Company is applying the Accounting Standard for Quarterly
Financial Reporting (Accounting Standards Board of Japan Statement No.12) and Guidance on
Accounting Standard for Quarterly Financial Reporting (ASBJ Guidance No.14). Quarterly
consolidated financial statements are prepared under the Rules for Quarterly Consolidated Financial
Statements.

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Fiscal year ending October 31, 2009
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Qualitative Information and Financial Statements
1. Qualitative information concerning consolidated operating results< Management Environment > (From November 1, 2008 to April 30, 2009)
During the Kanamoto Group’s first and second quarters, the economic environment deteriorated rapidly inthe wake of the simultaneous global economic slowdown. The recessionary mood was heightened asconcerns over job insecurity spread rapidly, driven by corporate production cutbacks and workforce
adjustments. Furthermore, despite the appearance of some bright spots resulting from ongoing progress ininventory adjustments centered on major enterprises that laid the groundwork for supplying new products,
and emerging signs that economic stimulus policies are gradually having an effect, the downward trend ofJapan’s domestic economy remained unchanged during the second quarter, and a recovery in employment
and private sector capital investment remained distant, as the economy exhibited the worst GDP growth rateever recorded. In the construction industry in particular, the extremely severe management environment
continued. Similar to the first quarter, when construction demand declined at an accelerating pace, there
was still no recovery in construction demand during the second quarter, as leading local firms and housing
construction companies continued to file for bankruptcy, and as construction activity in the Tokyo
metropolitan area and other major urban centers, which had remained steady, began to slow.
< Fiscal Year Interim Period Consolidated Operating Results > (From November 1, 2008 to April 30, 2009)
Although the government enacted two supplementary budgets in the prior fiscal year as a domestic
economic stimulus package, and drafted a new fiscal year budget and budgetary process incorporating adomestic demand expansion plan, these public works are not expected to have a broad effect until after thelatter half of the fourth quarter of the fiscal year. Through the second quarter, the results were not very
apparent. Despite such conditions, the Company was able to increase interim period consolidated net sales
slightly above the revised operating results projection released on March 9, as a result of efforts tostrengthen sales and marketing across the entire Kanamoto Group, even though competition in theconstruction equipment rental business in various regions has intensified because of an absolute decline inconstruction demand and rental unit prices are exhibiting a downward trend centered on models affected bya collapse in the balance of demand-and-supply. The Company judges it also was able to expand its market
share in scattered regions.
As a result, consolidated revenues for the interim period of the fiscal year ending in October 2009 were¥32,590 million.
Operating income and ordinary income were slightly higher than the revised operating results forecast,reflecting a rental equipment cost depletion effect and reductions in overhead. Consolidated operating
income was ¥921 million, and consolidated ordinary income was ¥793 million. As final net earnings, theCompany posted an interim period consolidated net loss of ¥143 million. This reflected losses on valuationof investment securities recorded in both the first and second quarters totaling ¥586 million, which wererecorded as extraordinary losses.
A summary of operating results for each of the Company’s business segments is described below.
< Business related to the Construction Equipment Rental Division >By region, compared with the same period of the previous consolidated fiscal year net sales for construction
equipment rentals decreased 9.3% in the Hokkaido Region, fell 8.8% in the Tohoku Region, increased 2.7%
in the Kanto Region, declined 7.3% in the Kinki & Chubu Region and slipped 0.7% in the Kyushu andOkinawa Region. This result realistically reflected the fact that while Kanamoto was able to expand its shareof available sales in various regions, construction demand continued to fall throughout Japan andcompetition for the remaining small volume of rental demand has intensified, and the fact the downward
trend in rental unit prices is unabated.
The Kanto Region was the sole area where Kanamoto achieved year-on-year growth in consolidated net
sales. Although a drop in construction demand by both the public and private sectors was evident, similar toother regions, Kanamoto’s performance reflected the ongoing works for large-scale projects such as theTokyo International Airport (Haneda) Expansion Project, and demonstrated the synergistic effect among
each company in the Kanamoto Group.
Revenues from sales of used construction equipment for the consolidated interim period under review
decreased 29.1% year-on-year. The decline was the result of lower sales in the domestic market, which
exhibited the same pattern as equipment rentals and expanded greatly in the Kanto Region while declining
in other areas, and limits on the number of used machines sold in the overseas market, in accordance with
the Company’s initial plan, in light of the used equipment market trend and direction of exchange rates.
As a result of these factors, in the construction-related businesses of the entire Kanamoto Group, revenues
for the interim period of the consolidated accounting fiscal year were ¥30,025 million and operating income
was ¥936 million.
< Business related to the Steel Sales Division >In the steel products sales business, the Doo Block in Hokkaido where building demand had been expected
did not enjoy a recovery. For the interim period of the consolidated fiscal year under review, revenues fell
14.3% from the same period of the previous consolidated fiscal year to ¥2,338 million. The operating loss
was ¥3 million.

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.3

< Information Products Division-related businesses and other business >In the Company’s information and telecommunications-related division, there was no change in thetendency of customers to lower spending because of the sharp economic downturn. Revenues for the interim
period of the consolidated fiscal year under review were ¥227 million, down 16.7% compared with the same
period one year earlier, and operating income was ¥16 million.
[ Business development issues deserving special mention and status of branch office changes ]During the second quarter, the Company closed its Kohoku Branch (Kohoku Ward, Yokohama) and the
Yokohama Equipment Center (Aoba-ku, Yokohama). In addition, Kensan Fukuoka Co., Ltd., a subsidiary of
Kyushu Kensan Co., Ltd. was merged into Kyushu Kensan. This change was implemented to improve theefficiency of sales and administration.

2. Qualitative information concerning consolidated financial position(1) Assets, liabilities and net assets
Compared with the end of the prior consolidated accounting fiscal year, total assets at the end of the interim
period under review increased by ¥6,043 million to ¥97,784 million. This change was mainly an increase inrental equipment assets of ¥5,397 million.
Total liabilities were ¥59,962 million, an increase of ¥6,423 million compared with the end of priorconsolidated accounting fiscal year. This was largely the result of an increase in long-term bank loans of¥3,512 million, including long-term bank loans due within one year, compared with the end of priorconsolidated accounting fiscal year, and higher long-term accrued expenses, which increased ¥1,993 million
compared with the end of prior consolidated accounting fiscal year.
Total net assets were ¥37,822 million, ¥379 million lower than at the end of prior consolidated accounting
fiscal year. The main factor was a decrease in earned surplus of ¥472 million.
(2) Cash flows
Cash flow from operating activities was ¥2,647 million, a decrease of ¥2,487 million from the interim periodof the prior consolidated accounting fiscal year. Although cash flow produced by the reduction in accounts
receivable, trade was higher than in the same period one year earlier, factors that resulted in lower cash flowfrom operating activities included lower income before taxes and adjustments and a reduction in accounts
payable, trade.
Cash flow used in investing activities was ¥2,287 million, ¥362 million less than in the interim period of theprior consolidated accounting fiscal year. This mainly reflected a smaller amount of funds used for thepurchase of tangible fixed assets. The largest increase in outlays was an increase in funds used for thepurchase of investment securities.
Cash flow from financing activities was ¥587 million, a year-on-year increase of ¥546 million. This mainlyreflected an increase in funds provided by long-term bank loans, offset somewhat by higher funds used for
repayment of installment obligations.
As a result of the above, the balance of cash and cash equivalents at the end of the consolidated fiscal year
interim period under review was ¥18,538 million. Together with an increase in cash and equivalents of ¥24
million in conjunction with the merger of an unconsolidated subsidiary, the balance of cash and cash
equivalent increased by ¥971 million compared with the end of the prior consolidated accounting fiscal year.

3. Qualitative information concerning projected consolidated operating results
These projected consolidated operating results were prepared using projections based on information
available to the Company as of the date this material was released and forecasts of the future economic,
environment, and include various risks and uncertainty factors. The Company released its “Notification
Concerning Revision of Interim Period Operating Results and Projected Full-Year Operating Results for theBusiness Period Ending October 2009” on Friday, May 29. Because many of the Company’s subsidiaries havenot experienced a business recovery, however, non-consolidated and consolidated projected operating
results for the full year have diverged from the projection.
In addition, as described above in the “Qualitative information concerning consolidated operating results,”
although the government hammered out a rapid succession of domestic demand expansion measures toaddress the domestic economic slump, at present the Company believes circumstances are extremely fluidand does not expect these programs to affect Kanamoto’s operating results until the latter half of the fourth
quarter. Consequently it is difficult to anticipate a large positive economic stimulus effect from thesemeasures, and the Company has not actively incorporated them into its latest operating results forecast.
With regard to dividends, the Company plans to pay an interim dividend of ¥10 per share, and will decide theamount of its year-end dividend after considering the future trend in operating results, which are subject tochange. Furthermore, there is a possibility the Company’s actual consolidated operating results will differ
from the projected amounts shown above as a result of various future factors, including but not limited toeconomic conditions surrounding the Kanamoto Group, market trends, and competitive conditions.

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Fiscal year ending October 31, 2009
P.4

4. Other matters(1) Changes in material subsidiaries during the period under review (changes in specific subsidiaries in
conjunction with a change in the scope of consolidation)
The Company had no material items to report.
(2) Application of simplified accounting method and special accounting method in the preparation ofquarterly consolidated financial statements
The Company had no material items to report.
(3) Changes in accounting principles, procedures and presentation methods pertaining to preparation of thequarterly consolidated financial statementsa) Beginning from this consolidated accounting fiscal year, the Company has adopted the “AccountingStandard for Quarterly Financial Reporting” (Accounting Standards Board of Japan Statement No. 12) andthe “Guidance on Accounting Standard for Quarterly Financial Reporting” (Accounting Standards Board ofJapan Implementation Guidance No. 14). In addition, the quarterly consolidated financial report has been
prepared in accordance with the “Regulation for Quarterly Consolidated Financial Statements.”b) Changes in appraisal standards and appraisal methods for principal assets
Inventory assets
Traditionally the Company has valued merchandise inventories held by the Company for normal sales
purposes at cost, with cost being determined by the lower of cost or market based on the Last-in, First-out
method. Beginning from the first quarter consolidated accounting fiscal period under review, the Company
will apply the “Accounting Standard for Measurement of Inventories” (Accounting Standards Board of Japan
Statement No. 9, issued July 5, 2006) and will value inventories based on the original cost method, with cost
being determined mainly by the Last-in, First-out method (amounts shown on Balance Sheets will the
reduced book value based on decline in profitability).
The affect of this change on earnings is not material.
Construction equipment
Traditionally, the Company and its domestic consolidated subsidiaries valued construction equipment using
the amount after deduction of depreciation expense as calculated according to the declining-balance methodfrom the original prices, by separate fiscal year of purchase. Beginning from the first quarter consolidated
accounting period under review, the Company will calculate the amount after deduction of depreciation
expense as calculated according to the straight-line method from the original prices, by separate fiscal yearof purchase.
Because rental earnings obtained from construction equipment are generated on average over the period
during which the construction equipment is used, the Company has made this change in conjunction with thechange of depreciation method for rental equipment from the declining balance method to the straight-line
depreciation method from the first quarter consolidated accounting period under review, in order to similarly
recognize a fixed expense amount corresponding to earnings, achieve a correspondence between expenses
and earnings and more properly calculate accounting period profits and losses for construction equipmentthat contributes to the acquisition of rental earnings.
As a result, the cost of revenues from operations decreased by ¥34 million, and gross profit, operating
income, ordinary income and income before taxes and adjustments increased by the same amount,respectively, compared to what they otherwise would have been had the accounting standards used in past
periods been applied.
The affect of this change on the Company’s information by segment is described in the relevant section.
c) Changes in accounting standards used for normal accounting treatment
Application of accounting standards for lease transactions(Lessor side)
The Company traditionally accounted for finance lease transactions other than leases that transfer
ownership of the property by applying accounting treatment based on the method applied for ordinary rental
transactions. For quarterly consolidated financial statements pertaining to the consolidated fiscal year thatbegins on or after April 1, 2008, however, corporations will be able to apply the “Accounting Standard forLease Transactions” (Accounting Standards Board of Japan Statement No. 13 (issued June 17, 1993
(Business Accounting Council, First Subcommittee), revised March 30, 2007)) and the “Guidance on
Accounting Standard for Lease Transactions” (Accounting Standards Board of Japan Implementation
Guidance No. 16 (issued January 18, 1994 (The Japanese Institute of Certified Public Accountants,
Accounting System Committee), revised March 30, 2007)), and beginning from the first quarter
consolidated accounting period under review, the Company will apply these standards and account for suchtransactions using a method similar to that used for ordinary sale and purchase transactions. In addition, fordepreciation for lease assets related to finance lease transactions other than leases that transfer ownershipof the property, the Company has adopted the straight-line depreciation method, using the term of the leaseas the depreciable life and a residual value of zero.
For finance lease transactions other than leases that transfer ownership of the property for which the leasetransaction starting date predates the beginning of the first year in which the lease accounting standard willSix-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.5

be applied, the Company will continue to apply the accounting practices based on the method for ordinary
rental transactions.
The affect of this change on earnings is not material.
Change in depreciation methods for principal depreciable assets
Tangible fixed assets
Traditionally, the Company and its domestic consolidated subsidiaries have applied the declining balancemethod for depreciation of rental equipment. Beginning from the first quarter consolidated accounting
period under review, the Company and its domestic subsidiaries have adopted the straight-line depreciation
method.
Because rental earnings obtained from rental equipment are generated on average over the period during
which the rental equipment is used, the Company has made this change as a result of investigating a more
appropriate method for allocation of expenses, following an increase in the size of purchases and increase in
the monetary importance of rental equipment as a result of changing its method for acquisition of rental
equipment from leasing agreements to purchases, in order to recognize a fixed expense amountcorresponding to earnings, achieve a correspondence between expenses and earnings and more properly
calculate accounting period profits and losses.
As a result, the cost of revenues from operations decreased by ¥1,129 million, and gross profit, operating
income, ordinary income and income before taxes and adjustments increased by the same amount,respectively, compared to what they otherwise would have been had the accounting standards used in past
periods been applied.
The affect of this change on the Company’s information by segment is described in the relevant section.

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Fiscal year ending October 31, 2009
P.6

5. Consolidated Financial Statements(1)Consolidated Quarterly Balance Sheets(Unit: Thousands of yen)
As of April 30, 2009

As of October 31,2008

Cash and deposits

14,371,013

14,070,345

Notes and accounts receivable-trade

13,924,435

15,297,757

Short-term investment securities

4,250,000

3,700,000

80,973147,054

Merchandise and finished goods

535,569

662,924

Raw materials and supplies

143,061

146,343

construction machine parts

994,792

874,680

Deferred tax assets

231,017

256,893

Other

528,729

927,446

Allowance for doubtful accounts-535,794-526,414

34,523,797

35,557,032

52,920,609

43,694,544

accumulated depreciation-35,265,772-31,437,026

rental equipment, net

17,654,837

12,257,517

19,792,902

17,869,527-11,944,072-10,968,596

7,848,829

6,900,931

AssetsCurrent assets

Costs on uncompleted construction
contracts

Total current assets
Noncurrent assets
Property, plant and equipment
rental equipment

Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles

5,060,895

4,622,991

Accumulated depreciation-4,213,578-3,854,409

847,316

768,582

29,446,265

29,075,816

830,595

683,294

1,221,292

1,163,486-979,533-930,597

Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net

241,758

232,889

56,869,603

49,919,031

Goodwill

618,999557,260

Other

234,167

170,056

Total intangible assets

853,167

727,316

Investment securities

2,739,467

2,847,982

Deferred tax assets

1,278,389

1,054,883

Other

2,607,401

2,552,794

Allowance for doubtful accounts-1,086,919-917,742

Total investments and other assets

5,538,339

5,537,917

63,261,109

56,184,266

97,784,907

91,741,299

Total property, plant and equipment
Intangible assets

Investments and other assets

Total noncurrent assets
Total assets

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.7

(Unit: Thousands of yen)
As of April 30, 2009

As of October 31,2008

Notes and accounts payable-trade

11,995,482

12,878,993

Short-term loans payable

1,368,510

338,521

10,511,647

9,599,494

Current portion of bonds

62,00062,000

Income taxes payable

434,929

149,932

Liabilities
Current liabilities

Current portion of long-term loans
payableProvision for bonuses

413,348549,981

Accounts payable-other

3,760,652

3,325,933

Other

1,575,558

1,490,017

Total current liabilities

30,122,129

28,394,874

55,00086,000Long-term loans payable

21,980,216

19,379,661

Provision for retirement benefits

1,249,674

1,080,005

177,462

174,824

5,928,416

3,935,016

449,183

488,61229,839,954

25,144,119

59,962,083

53,538,994

Noncurrent liabilities
Bonds payable

Provision for directors' retirement
benefits
Long-term accounts payable-other
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock

9,696,717

9,696,717

Capital surplus

10,960,869

10,960,869

Retained earnings

16,677,545

17,149,945

Treasury stock
Total shareholders' equity-23,757-22,729

37,311,374

37,784,803

140,687

162,358

140,687

162,358

370,761

255,143

37,822,823

38,202,305

97,784,907

91,741,299

Valuation and translation adjustments
Valuation difference on
available-for-sale securities
Total valuation and translation
adjustments
Minority interests
Total net assets
Total liabilities and net assets

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.8

(2)Consolidated Quarterly Statement of Income(Unit: Thousands of yen)
6 months FY2009(November 1, 2008
-April 30, 2009)
Net sales

32,590,313

Cost of sales

23,241,760

Gross profit

9,348,552

Selling, general and administrative expenses

8,427,012

Operating income

921,539

Non-operating income
Interest income

27,006

Dividends income

7,937

Insurance income

22,012Rent income

22,590A receipt bonus

2,405

Amortization of negative goodwill

34,916

Other

66,617

Total non-operating income

183,486

Non-operating expenses
Interest expenses

199,722

Loss on sales of notes receivable

34,469Other

77,064

Total non-operating expenses

311,257

Ordinary income

793,768

Extraordinary income
Reversal of allowance for doubtful accounts

3,749

Reversal of provision for retirement benefits

16,310

Other

9,522

Total extraordinary income

29,582Extraordinary loss
Loss on sales and retirement of noncurrent
assetsImpairment loss

29,809312

Loss on valuation of investment securities

586,336

Other

38,716

Total extraordinary losses

655,175

Income before income taxes and minority
interests

168,176

Income taxes-current

402,548

Income taxes-deferred-183,469

Total income taxes

219,079

Minority interests in income

93,084

Net loss-143,986

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.9

(3) Consolidated Quarterly Statements of Cash Flows(Unit: Thousands of yen)
6 months FY2009(November 1, 2008
-April 30, 2009)
Net cash provided by (used in) operating activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Amortization of goodwill
Loss on sales and retirement of noncurrent assets
The amount of assets buy on the installment planpurchase for small rentals
The amount of cost price transfer with theconstruction machine parts sale
The amount of cost price transfer with asset sell-off
for rentals
Expenditure by the assets acquisition for rentals
Loss on valuation of investment securities
Loss on sales of investment securities
Increase in allowance for doubtful accounts
Decrease in provision for bonuses
Increase in provision for retirement benefits
Decrease in provision for directors' retirement
benefits
Interest and dividends income
Assets buy on the installment plan purchase
payment interest for rentals
Interest expenses
Decrease in notes and accounts receivable-trade
Decrease in inventories
Decrease in notes and accounts payable-trade
Increase in accounts payable-other
Other, net
SubtotalInterest and dividends income received

168,176
2,230,638
312
85,31529,80917,637
12,750331,115-2,234,037
586,336
2,086
118,268-148,633
94,839-5,423-34,944
81,632
199,7222,061,630
210,246-1,352,782
352,445
112,548
2,919,690
36,334

Interest expenses paid
Income taxes paid

-297,581-11,338

Net cash provided by (used in) operating activities

2,647,106

Net cash provided by (used in) investment activities
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Purchase of investments in subsidiaries
Payments for Establishment of Subdiaries
Other, net
Net cash provided by (used in) investment activities

121,123-1,696,035
16,788-29,805-515,008
51,808-169,304-46,000-21,664260-2,287,838

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Fiscal year ending October 31, 2009P.10

(Unit: Thousands of yen)
6 months FY2009(November 1, 2008
-April 30, 2009)
Net cash provided by (used in) financing activities
Net increase in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Repayments of installment payables
Purchase of treasury stock
Cash dividends paid
Net cash provided by (used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting frommerger with unconsolidated subsidiaries
Cash and cash equivalents at end of period

137,988
8,000,000-5,391,542-31,000-1,800,065-1,028-326,459
587,893
947,161
17,566,695
24,62918,538,486

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Fiscal year ending October 31, 2009
P.11

Beginning from this consolidated accounting fiscal year, the Company has adopted the “AccountingStandard for Quarterly Financial Reporting” (Accounting Standards Board of Japan Statement No. 12) andthe “Guidance on Accounting Standard for Quarterly Financial Reporting” (Accounting Standards Board ofJapan Implementation Guidance No. 14). In addition, the quarterly consolidated financial report has been
prepared in accordance with the “Regulation for Quarterly Consolidated Financial Statements.”(4) Notes relating to the going concern assumption
The Company had no material items to report.
(5) Business Segment Information[Segment information by type of business]
Current quarter (From November 1, 2008 to April 30, 2009)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

30,025,003

2,338,077

227,231－－30,025,003

936,771

Eliminations
or entirecompany

Consolidated

32,590,313－

32,590,313

－

－

－

－

2,338,077

227,231

32,590,313－

32,590,313-3,252

16,320949,838-28,298

921,539

Total

Revenues(1)Revenues from
customers(2)Intersegment revenue

Total

Operating income

Changes in accounting method
1. Changes in appraisal methods for principal assets
As described in Section 4. (3) b) under Qualitative Information and Financial Statements, the Company andits domestic consolidated subsidiaries traditionally valued construction equipment using the amount after
deduction of depreciation expense as calculated according to the declining-balance method from the original
prices, by separate fiscal year of purchase. Beginning from the first quarter consolidated accounting period
under review, the Company will calculate the amount after deduction of depreciation expense as calculated
according to the straight-line method from the original prices, by separate fiscal year of purchase.
In conjunction with this change, the operating income of the Company’s construction-related businessincreased by ¥34,192 thousands compared with what it otherwise would have been had the accounting
standard used in past periods been applied.
2. Change in depreciation method for depreciable assets
As described in Section 4. (3) c) under Qualitative Information and Financial Statements, beginning from thefirst quarter consolidated accounting period under review the Company and its domestic subsidiaries havechanged the method for depreciation of rental equipment from the declining balance method to thestraight-line depreciation method.
In conjunction with this change, the operating income of the Company’s construction-related businessincreased by ¥1,129,912 thousands compared with what it otherwise would have been had the accounting
standard used in past periods been applied.
[Segment information by location]
Second quarter consolidated year-to-date (from November 1, 2008 to April 30, 2009)
The Company had no material items to report because the Company did not have any consolidated
subsidiaries or important offices located in countries or regions outside of Japan.

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.12

[Foreign sales]
Second quarter consolidated year-to-date (from November 1, 2008 to April 30, 2009)
The Company has omitted a description of foreign sales because foreign sales are less than 10% ofconsolidated revenues.
(6) Note on significant changes to shareholders’ equity
The Company had no material items to report.

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.13

(Reference) Financial Statements for the Previous Fiscal Year
(1) (Summary) Consolidated statements of income(Unit: Thousands of yen)
Prior FY Quarter
6 months FY Quarter
Period(Second Quarter of theConsolidated Accounting

Item

Fiscal Year Ended October
31, 2008)

AmountI Revenues

37,236,856

II Cost of revenues from operations

26,195,233

Gross profit
III Selling, general and administrative expenses
Operating incomeIV

2,918,593

Non-operating revenues
33,462

2.Dividend income

17,632

3.Insurance benefits

44,557

4.Rents received

43,573

5.Cash bonus received

4,013

6.Other

57,418200,658

Non-operating expenses
1. Interest expense

170,500

2. Loss on sale of notes receivable

43,7193. Valuation loss on investment securities
4. Other
Total non-operating expenses
Ordinary incomeVI8,123,028

1.Interest revenue

Total non-operating revenues
V

11,041,622

Extraordinary profits
1.Gain on sale of fixed assets
Gain on reversal of allowance for doubtful
2.
accounts
3.Other
Total extraordinary profits

869
71,119286,208
2,833,043
18,327
19,777
5,045
43,150VII Extraordinary losses
1.Loss on sale or retirement of fixed assets
2.Impairment loss

42,960490

3.Valuation loss on investment securities

5,873

4.Loss on investments in partnership

19,8595.Loss on valuation of goods

12,741

6.Other

28,300Total extraordinary losses

110,225

Income before taxes and adjustments

2,765,968

Corporate, local and business taxes

1,264,075

Adjustment for corporate and other taxes-37,814

Minority interest in income

62,781

Net income

1,476,926

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.14

(2) (Summary) Consolidated quarterly statements of cash flows

PeriodItem(Unit: Thousands of yen)
Prior FY Quarter
6 months FY Quarter(Second Quarter of theConsolidated Accounting
Fiscal Year Ended October
31, 2008)

AmountⅠ Cash flow from operating activities
Income before taxes and adjustments

2,765,968

Depreciation and amortization expense

2,525,135

Impairment loss

490

Amortization of goodwill

127,298

Gain on sale of fixed assets-18,327

Loss on sale or retirement of fixed assets
Installment purchases of assets for small-value
rentals
Reclassification of cost of sales associated withdisposal of construction equipment
Reclassification of cost of sales associated withdisposal of rental assets
Expenditures for acquisition of rental assets

42,96044,6782,910
259,063-1,855,062

Valuation loss on investment securities

5,873

Loss on sale of investment securities

869

Increase in allowance for doubtful accounts

91,333

Decrease in accrued bonuses to employees-23,764

Increase in accrued employees retirement benefits
Increase in retirement allowances to directors andauditors
Interest revenue and dividend income
Interest expense on installment purchases ofrental assets
Interest expense

37,774

Decrease in accounts receivable, trade

13,042-51,094
48,143
170,500
1,213,602

Increase in inventory assets

18,047

Increase in accounts payable, trade

316,068

Increase in accounts payable, other

1,276,065

Other-292,539

Subtotal

6,719,039

Interest and dividends received
Interest expense

51,260-227,445

Payment of corporate and other taxes-1,408,219

Cash flow from operating activities

5,134,634

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009
P.15

Period(Unit: Thousands of yen)
Prior FY Quarter
6 months FY Quarter(Second Quarter of theConsolidated Accounting
Fiscal Year Ended October
31, 2008)

Item

AmountII Cash flow from investing activities
Funds used for investment in term deposits-46,698

Funds provided from redemption of term deposits

124,340

Funds used for the purchase of investment
securities-10,031

Funds provided from sell of investment securities

28,701

Funds used for establishment of affiliated company
Funds used for the purchase of tangible fixed
assetsFunds provided from the sale of tangible fixed
assetsFunds used for the purchase of intangible fixed
assetsFunds used for the purchase of consolidated
subsidiary stock
Funds used for the purchase of non-consolidated
subsidiary stock-100,000

Other
Cash flow from investing activities-2,466,017
142,139-21,656-50-303,711
3,028-2,649,955

III Cash flow from financing activities
Decrease in short-term bank loans-60,365

Funds provided by long-term bank loans

6,860,000

Funds used to repay long-term bank loans-5,138,446

Funds used for redemption of bonds
Funds used for repayment of installment
obligations
Funds used for the purchase of treasury stock
Payment of dividends to parent company-20,000-1,236,930-1,235-361,311

Cash flow from financing activities

41,710IV

Increase in cash and equivalents

2,526,390

V

Balance of cash and equivalents at beginning of
period17,213,890

VI

Increase in cash and equivalents resulting fromnewly consolidated subsidiaries

680,339

VII

Balance of cash and equivalents at end of theperiod20,420,620

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.16

(3)Business Segment Information[Segment information by type of business]
6 months FY2008 (From November 1, 2007 to April 30, 2008)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

Revenues

34,235,077

2,728,971

272,808

Operatingexpenses

31,334,549

2,733,212

Operatingincome2,900,527-4,241Eliminations
or entirecompany

Consolidated

37,236,856－

37,236,856

231,465

34,299,227

19,03434,318,262

41,342

2,937,628-19,034

2,918,593

Total[Segment information by location]
Second quarter consolidated year-to-date (From November 1, 2007 to April 30, 2008)
The Company had no material items to report because the Company did not have any consolidated
subsidiaries or important offices located in countries or regions outside of Japan.
[Foreign sales]
Second quarter consolidated year-to-date (From November 1, 2007 to April 30, 2008)
There are no pertinent items to report because the Company did not have any foreign sales.

Six-month Consolidated Financial Report for the
Fiscal year ending October 31, 2009P.17