Fiscal Year ended October 31, 2008

Financial Statements Bulletin
December 5, 2008
Listed Company Name

Kanamoto Company, Ltd.

Company Code Number 9678
Listing Exchanges

Tokyo Stock Exchange, Sapporo Stock Exchange

Head Office Address

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

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

Representative

Kanchu Kanamoto

Inquiries

Nobuhito Utatsu

President

Director & Corporate Officer, Division Manager, Accounting Division
TEL 81-11-209-1600
Please send inquiries in English to takayama@kanamoto.co.jp.
Date for Regular General Meeting of the Shareholders: January 29, 2009
Date for start of dividend payments:
January 30, 2009
Date for submission of Annual Report:
January 29, 2009

1. Consolidated Operating Results for the Fiscal year ended October 31, 2008

(Nov. 1, 2007 – Oct. 31, 2008)(Numbers less than one million yen have been rounded down)(Percentages show the change from the prior year)(1) Consolidated Operating Results
Revenues

Operating Income

Millions of yen%

Ordinary Income

Millions of yen%

Millions of yen%

Fiscal year ended
October 31, 2008

69,411

1.1

2,227

-47.4

2,028

-54.1

Fiscal year ended
October 31, 2007

68,626

0.9

4,236

4.1

4,416

16.6

Net Income
Millions of yen%

Net Income per Share ofCommon StockYen

Net Income per Share on a Fully
Diluted Basis
Yen

Fiscal year ended
October 31, 2008

644

-78.8

19.61

－

Fiscal year ended
October 31, 2007

3,035

74.2

92.40

－

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

(2) Consolidated Financial Position
Total Assets

Fiscal year ended
October 31, 2008
Fiscal year ended
October 31, 2007

Shareholders’EquityShareholders’ Equity
per Share

Shareholders’Equity Ratio%

YenMillions of yen

Millions of yen

91,741

38,20241.4

1,155.47

85,15539,97346.9

1,216.98

Notes 1. Owners’ equity and valuation and translation adjustments: (Millions of yen)
Fiscal year ended October 31, 2008
¥37,947
Fiscal year ended October 31, 2007
¥39,973

Summary of Company Financial Statements, FY Ended October 31, 2008

P.1

(3) Consolidated Cash Flows
Cash Flow fromOperating Activities

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

Cash Flow from
Investing Activities

Millions of yen

Millions of yen

3,456- 4,125341

17,5664,479- 1,427- 4,237

17,213Year-end Dividendper Share ofCommon Stock

Full-year Dividendper Share ofCommon Stock

Fiscal year ended
October 31, 2008
Fiscal year ended
October 31, 2007

Millions of yen

Millions of yen

2. Dividends
Interim Dividendper Share ofCommon Stock
Yen

Yen

Yen

Fiscal year ended
October 31, 2007

9.00

11.00

20.00

Fiscal year ended
October 31, 2008

10.00

10.00

20.00

10.00

10.00

20.00

Fiscal year ending
October 31, 2009
(projected)
Fiscal year ended October 31, 2007 breakdown of dividend

special dividend 2.00Yen

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

Millions of yen

Net Income per

Operating

Revenues

Ordinary Income

IncomeNet Income

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

Yen

Interim period

34,900

-6.3

2,100

-28.0

1,900

-32.9

1,000

-32.3

30.45

Full year

68,200

-1.7

2,600

16.7

2,200

8.5

1,000

55.3

30.45

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
4 (Kyushu Kensan Co., Ltd., Kensan Fukuoka Co., Ltd.,
Kensan Techno Co., Ltd., Toyo Industry Co., Ltd.)(2) Changes to accounting principles, procedures and reporting method pertaining to preparation of theconsolidated financial statements (matters described in the Changes in Important Matters Used as theBasis for Preparation of the Consolidated Financial Statements)(a) Changes accompanying revisions to accounting standards etc.? 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)
Fiscal year ended October 31, 2008 32,872,241 sharesFiscal year ended October 31, 2007 32,872,241 shares(b) Number of shares of treasury stock at end of period
Fiscal year ended October 31, 2008
30,848 sharesFiscal year ended October 31, 2007
25,725 shares

Summary of Company Financial Statements, FY Ended October 31, 2008

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(Reference) Summary of Company Interim Operating Results

1. Operating Results for the Fiscal year ended October 31, 2008
(November 1, 2007–October 31, 2008)(1) Operating Results(Numbers less than one million yen have been rounded down)
Revenues

Operating Income

Millions of yen%

Ordinary Income

Millions of yen%

Millions of yen%

Fiscal year ended
October 31, 2008

60,473

-1.8

2,461

-38.7

2,369

-45.8

Fiscal year ended
October 31, 2007

61,576

1.4

4,012

8.0

4,372

16.9

Net Income
Millions of yen%

Net Income per Share ofCommon StockYen

Net Income per Share ofCommon Stock Fully Diluted
Yen

Fiscal year ended
October 31, 2008

183

-94.7

5.59

－

Fiscal year ended
October 31, 2007

3,431

99.5

104.44－(2) Financial Position
Total Assets

Shareholders’Shareholders’Shareholders’ Equity

EquityEquity Ratio

per Share

Millions of yen

Millions of yen

Fiscal year ended
October 31, 2008%

Yen

85,40038,44245.0

1,170.56

Fiscal year ended
October 31, 2007

82,90240,78749.2

1,241.77

Notes 1. Owners’ equity and valuation and translation adjustments: (Millions of yen)
Fiscal year ended October 31, 2008
¥38,442
Fiscal year ended October 31, 2007
¥40,787

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

Revenues
Millions of yen

Ordinary Income

Income% Millions of yen

Net Income per

Net Income

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

Yen

Interim period

29,700

-7.6

1,800

-35.3

1,600

-41.5

800

-44.3

24.36

Full year

58,600

-3.1

2,400

-2.5

2,100

-11.4

1,100

-499.6

33.49

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

Summary of Company Financial Statements, FY Ended October 31, 2008

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(1) Analysis of operating resultsa) Summary of consolidated fiscal year operating results
During the consolidated fiscal year under review, the global real economy continued to weaken as a result of
the sharp rise in oil prices and higher prices for raw materials. Additional blows were delivered by precipitous
drops in stock prices and the commodities markets, as well as the failures of financial institutions and sharp
decline in personal assets as the turmoil in the financial markets and contraction of credit triggered by the
subprime loan problem in the United States spread around the world. In Japan as well, market
countermeasures and steps to boost the economy produced little immediate effect, and stock prices continued
to slide significantly. The global economic slowdown and rapid appreciation of the yen also exerted theirpowerful affects on the operating results of export industries such as automobiles and electrical machinery,
which are leading sectors of Japan’s economy, and cast a pall over future capital investment and employment
conditions.
The environment surrounding individuals was disheartening as well. In addition to rising prices for foods,
beverages and utilities linked directly with peoples’ daily lives, personal consumption cooled considerably,reflecting rising concerns over employment insecurity that were exacerbated by pension difficulties andcancellations of informal hiring notices to new graduates. Even the Tokyo metropolitan area, home to Japan’s
most affluent individuals, was affected by the somber economic conditions.
A variety of factors, including delays in construction starts resulting from enforcement of the revised BuildingStandard Law and the sharp rise in oil and construction materials prices, created an extremely harshmanagement environment throughout the year that significantly hampered the construction-related
businesses that are Kanamoto’s main customers. This was particularly true for firms whose business bases are
in regions suffering from a dearth of orders because of public works spending cuts. In addition, the hesitantinvestment and financing stance among foreign capital investment funds and financial institutions had aserious affect on the operations of many mid-sized developers. For construction-related industries, the result
was an extremely severe management environment throughout the year that included a record number oflarge-scale bankruptcies.
In addition to strengthening efforts to capture rental equipment demand from large-scale projects in which it
already participates, the Kanamoto group went back to basics by aggressively launching a sales offensive forsmall-scale repair works, and anticipated higher revenues during the second half of the fiscal year whenconstruction equipment rental demand increases. Nevertheless, as Japan’s economy experienced a rapid
deceleration caused by turmoil in the financial markets that far surpassed initial expectations, and companies’
operating results deteriorated, group revenues were lackluster in regions where the volume of work from bothpublic and private sector demand fell in absolute terms.
Product sales, on the other hand, were boosted by steady results for both sales of used rental assets and salesof inventory. Steel products sales greatly exceeded the level of the previous consolidated fiscal year despite atough market, while used construction equipment sales were able to overcome the negative affects of usedmachines idled because of the global economic slowdown and appreciation of the yen.
From the standpoint of earnings, there were regional differences resulting from cutbacks in the volume of
construction works and a downward price trend, but operating income and ordinary income were affectedmost by the overall decline in rental revenues, and fell below the results of the previous consolidated fiscal year.
In addition, as announced on November 28, Kanamoto decided to reserve an appropriate amount during thebusiness period from a standpoint of conservative accounting practices for guarantees of the loans and debts
of certain consolidated subsidiaries, and recorded this as an extraordinary loss. Consequently net income wassubstantially lower than in the previous consolidated fiscal year.

Summary of Company Financial Statements, FY Ended October 31, 2008

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As a result of these factors, revenues for the consolidated fiscal year ended October 31, 2008 edged upward
1.1% from the previous consolidated fiscal year level to ¥69,411 million, operating income declined 47.4%
ear-on-year to ¥2,227 million and ordinary income fell 54.1% compared with the previous consolidated fiscal
year to ¥2,028 million. Net income decreased 78.8% year-on-year to ¥644 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 ended October 31, 2008 Operating Results ](Million yen; % change from prior year)
Revenues
Year underConsolidated

reviewPrior year
Year under

Non-consolidated

reviewPrior year

Operating income

Ordinary income

Net income

69,411

1.1％

2,227

-47．4％

2,028-54.1％

644-78.8％

68,626

0.9％

4,236

4.1％

4,416

16.6％

3,035

74.2％

60,473

-1.8％

2,461

-38.7％

2,369-45.8％

183-94.7％

61,576

1.4％

4,012

8.0％

4,372

16.9％

3,431

99.5％

b) Summary of consolidated fiscal year operating results by business segment[Business related to the Construction Equipment Rental Division]
In the construction-related businesses of the entire Kanamoto group, revenues and earnings were both lower.
For the consolidated fiscal year under review, consolidated revenues slipped 0.4% from the previous
consolidated fiscal year to ¥62,802 million, and operating income fell 46.4% year-on-year to ¥2,174 million.
< Kanamoto Co., Ltd. on a non-consolidated basis >Private sector capital was negatively affected by several factors, including delays for confirmation of building
permits following revision of the Building Standard Law, which had a major influence throughout the year, thedeterioration of corporate operating results and higher prices for construction materials. Investment declined
significantly, not only in local areas but in the Tokyo metropolitan area as well. At the same time, in regions
where the Company has many of its branches the business climate was affected by cuts in public works
expenditures, as government spending continued to fall because of fiscal reform measures and thedeterioration of regional finances, and an extremely severe business conditions prevailed.
In the Tokyo metropolitan area and Kansai Region, where numerous large-scale construction projects arebeing undertaken and Kanamoto has achieved synergistic effects from the wide-area marketing efforts thathave been its primary focus during the past several years, rental revenues rose compared with the previous
consolidated fiscal year. Nevertheless, this was insufficient to offset the drop in the volume of construction
work in other regions where the Company has zealously pursued concentrated sales efforts, and rental
revenues fell well below the level of the previous consolidated fiscal year. On the other hand, equipment sales
exceeded the level of the previous consolidated fiscal year as described earlier, and as a result, revenues as awhole were slightly higher than in the previous consolidated fiscal year.
On a non-consolidated basis, construction equipment rental revenues varied widely by region. In the Hokkaido
Region, the large reduction in public works put heavy downward pressure on revenues, which fell 8.0%
year-on-year despite efforts aimed at securing private sector demand. A similar situation existed in the Tohoku
Region, where private sector demand sufficient to offset cutbacks in public works was wanting and revenues
decreased 9.6% year-on-year, despite a slight recovery during the second half of the fiscal year. In the Kanto
Region, rental revenues rose 4.2% year-on-year even though general private sector construction works wereless than robust, thanks to large projects such as the Haneda Airport Expansion Project. In the Kinki & Chubu

Summary of Company Financial Statements, FY Ended October 31, 2008

P.5

Region, clouds gathered over the Tokai Region, which until now had exhibited steady growth, but thanks togrowth in the Kansai Region where large-scale projects are underway, rental revenues edged up slightly,
increasing 0.4% over the previous consolidated fiscal year. As a result, rental revenues for Kanamoto’s
construction equipment rental division decreased 5.1% from the previous consolidated fiscal year to ¥40,068
million. The percentage of revenues accounted for by Hokkaido and by Honshu and other regions was 34.6%
and 65.4%, respectively.
Non-consolidated revenues from sales grew 3.6% year-on-year, despite domestic weakness, as used
construction equipment sales until the previous period were supported by vigorous foreign demand. As aresult, total non-consolidated net sales for the Construction Equipment Rental Division eked out slight 0.1%
growth from the previous fiscal year, rising to ¥13,795 million. Total operating revenues for the Construction
Equipment Rental Division were ¥53,864 million, 3.9% lower than in the previous consolidated fiscal year.
During the consolidated fiscal year under review, Kanamoto opened four new branches including two in
Hokkaido Prefecture, one in Akita Prefecture and one in Aichi Prefecture, and closed one branch in Hokkaido.
As a result, at the end of the business period Kanamoto had 156 branches.
< Consolidated Subsidiaries >Daiichi Kikai Co., Ltd. faced difficulties in expanding construction equipment rental revenue because of large
reductions in public works, but was able to cover this with higher product sales. As a result, revenues increased
4.6% compared with the previous consolidated fiscal year. The company reported an operating loss, however,as its cost to sales ratio rose because of the burden from large replacements of rental assets.
At Kanki Corporation, which is restructuring its management, both public and private sector construction
demand in Hyogo Prefecture was weak. Operating results were also affected by a tightening of credit
standards. Revenues shrank 18.4% from the previous consolidated fiscal year. Efforts to slash costs were
inadequate to cover the downturn in sales, and the company booked an operating loss.
Kyushu Kensan Co., Ltd., Kensan Fukuoka Co., Ltd. and Kensan Techno Co., Ltd., the three companies
in the Kyushu Kensan Group, experienced slowing private sector construction demand in Fukuoka City,
where demand had been growing steadily, because of the credit contraction. Nevertheless, the three firms
succeeded in boosting earnings above their initial plan.
SRG Kanamoto Co., Ltd. faced increased competition in the Sapporo area because of delays as a result ofrevision of the Building Standards Law. Revenues were down 14.0% from the previous consolidated fiscal year.
The company’s operating loss also expanded greatly under the burden of additional investments in materials
resulting from overlapping construction periods.
Assist Co., Ltd. saw its revenues slip 1.6% year-on-year, despite steadily receiving new business, because of
the absolute drop in demand within Hokkaido. In addition, the company was unable to impute its higher costs
in rental unit prices, and its operating income declined 41.8% compared with the previous consolidated fiscal
year.
Kanatech Co., Ltd. turned its efforts to development of new segments such as custom orders and strove toexpand its sales channels, including the start of rentals of environmentally-friendly products that can be
expected to grow as a business. The company was unable to break away from the affects of the market
downturn, however, and revenues fell 5.6% year-on-year. Operating income was 19.1% lower.
[ Business related to the Steel Sales Division ]Steel products sales in Hokkaido were initially affected in the beginning of the fiscal year by the revision of the
Building Standard Law, but then benefited from an increase in orders that was aided by higher prices in thesteel materials market. Revenues increased 19.1% over the previous consolidated fiscal year to ¥6,098 million,
and operating income recovered to ¥33 million.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.6

[ Business related to the Information Products Division and Other Businesses ]Rental revenues for the Information Products Division were up 12.7% compared with the previous
consolidated fiscal year. This reflected short-term spot demand during exhibition periods, as well as successful
extensions of contract periods for rental contracts that were maturing. Sales of used devices were excellent,with sales of used PCs rising 76.7% from the previous consolidated fiscal year. For the division as a whole,revenues increased 17.8% year-on-year to ¥511 million, and operating income jumped 108.2% from theprevious consolidated fiscal year to ¥60 million.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.7

(2) Analysis concerning financial positiona) Summary of consolidated fiscal year operating results(Millions of yen)
FY Ended October 2007

FY Ended October 2008

(Previous Consolidated (Consolidated Fiscal Year
Fiscal Year)

Under Review)

Change fromprior year

Cash flow from operating activities

4,479

3,456

-1,023

Cash flow from investing activities-1,427-4,125-2,698Cash flow from financing activities-4,237341

4,578-1,184-327

856

18,39817,213-1,184

17,213

17,566352

Increase (decrease) in cash andequivalents
Balance of cash and equivalents at
beginning of period?
Balance of cash and equivalents at
end of the period?

The balance of cash and cash equivalents (“cash”) on a consolidated basis at the end of the consolidated fiscal
year under review increased ¥352 million from the previous consolidated fiscal year, to ¥17,566 million. Cashflows for the consolidated fiscal year under review are discussed below.
(Cash flow from operating activities)
Cash generated as a result of operating activities was ¥3,456 million, a decrease of ¥1,023 million from theprevious consolidated fiscal year.
This mainly reflected the large decrease in income before taxes and adjustments and an increase in
expenditures for acquisition of rental assets, and factors such as an increase in payment of corporate andother taxes.
(Cash flow from investing activities)
Cash flow used in investing activities was ¥4,125 million, an increase of ¥2,698 million from the previous
consolidated fiscal year.
This mainly reflected an increase of funds used for the purchase of tangible fixed assets and a decrease infunds provided from the sale of tangible fixed assets.
(Cash flow from financing activities)
Cash flow provided as a result of financing activities was ¥341 million, compared with cash flow used infinancing activities in the previous consolidated fiscal year of ¥4,237 million.
This mainly reflected an increase in funds provided by long-term bank loans.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.8

The cash flow indicator trends for the Kanamoto group are provided below.
FY Ended October

FY Ended October

FY Ended October

FY Ended October

2005

2006

2007

2008

40.8

43.7

46.9

41.4

26.6

32.0

41.3

11.2

3.3

3.5

6.4

10.2

24.5

21.0

11.9

7.1

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

Shareholders’ equity / Total assets

market capitalization basis:

Shareholders’ equity on a market capital basis / Total assets

Years to repay debt:

Interest-bearing liabilities / Cash flow from operating activities

Interest coverage ratio:

Operating cash flow / Interest payments

Shareholders’ equity ratio on a-

All indicators are calculated using financial values on a consolidated basis.
Total market capitalization is calculated by multiplying the closing share price at the end of the term by the
number of shares outstanding (after deducting treasury stock) at the end of the term.

-

Cash flow from operating activities shown on the Consolidated Statements of Cash Flows is used as operating
cash flow. Interest-bearing liabilities include all liabilities on which the Company pays interest that are
accounted for on the Consolidated Balance Sheets. The amounts shown as interest expense on theConsolidated Statements of Cash Flows are used as interest payments.

(3) Outlook for the next fiscal year (Business Period ending October 2009)
Japan’s economy currently is in a downturn phase, and is predicted to experience negative growth in 2009 asa result of the turmoil and contraction of credit in financial markets that has spread around the world.
Numerous issues connected directly with peoples’ lives remain to be addressed, including problems related topensions, insurance and employment, and the predicament of local economies that increasingly face hard
economic times. With uncertainty concerning the domestic economic outlook stronger than anticipated, thedownturn is likely to be prolonged. In addition, under conditions in which financial instability is yet to beeliminated, the various factors linked to the recession – including appreciation of the yen, the plunge in stock
prices and the price trends for oil and raw materials – are expected to strike at companies’ operating results
and peoples’ lives more directly than they have thus far.
For the domestic construction industry in particular, which is related closely to the key business of theKanamoto group, there has been no change to the negative trend in public works, while private sector capital
investment is also being curtailed as corporate operating results deteriorate. Under such conditions, small andmedium-sized and middle-market construction companies, developers and property-related firms continue tofile for bankruptcy, a trend that is expected to remain unabated next year. Yet given the limits on stimulus
measures that can be expected to have an immediate effect on the economy, and weak expectations in both
the government and private sectors of a recovery in domestic construction demand, the extremely severerecessionary phase environment is expected to continue.
In the used construction equipment market, on the other hand, idle stock can be noted in some inventories
because of the financial crisis and unstable foreign exchange markets, and market prices are expected to besoft in the immediate future period, despite the existence of worldwide demand, as inventories move much
more slowly off the lot.
Given such stark conditions, in the year ahead domestic construction demand is expected to exhibit a declining
trend. The shakeout among domestic construction companies and rental equipment firms is forecast tocontinue, and intensive competition and extreme softness in equipment rental prices will be unavoidable
during this period. Kanamoto’s consolidated subsidiaries with branches in local areas in particular will becompelled to maintain strict management practices, and the Company projects full-year consolidated
operating performance will face acute pressure.
Summary of Company Financial Statements, FY Ended October 31, 2008

P.9

Compared with its competitors, however, Kanamoto still has ample room for advancing into the Tokyo
metropolitan area and other key urban markets. Therefore the Company will vigorously pursue participation inlarge-scale projects that take maximum advantage of Kanamoto’s size, and strive to secure and expand its
absolute market share through new business development based on area expansion in existing markets
through M&A and cooperation with affiliated companies.
Kanamoto also is steadily expanding operations at Shanghai Jinheyuan Equipment Rental Co., Ltd., which has
begun rental operations in Shanghai, China, and at SJ Rental in the U.S. Territory of Guam. Both entities arebeing managed as part of Kanamoto’s overseas strategy, and the Company will work to expand its overseas
operations including these firms in the future.
The Company’s earnings projection for the fiscal year ending October 2009 is shown in the table below.
Fiscal year ending October 2009 Projected Operating Results (November 1, 2008 -October 31, 2009)(Millions of yen)
Revenues

Consolidated

Non-consolidated

Operating

Ordinary

incomeincomeNet income

Net income
per share ofcommon stock

Full year(Projected)

68,200

2,600

2,200

1,000

30.45

Current period results(FY Ended Oct. 2008)

69,411

2,227

2,028

644

19.61

Full year(Projected)

58,600

2,400

2,100

1,100

33.49

Current period results(FY Ended Oct. 2008)

60,473

2,461

2,369

183

5.59

Fiscal year ending October 2009 Projected Financial Position (November 1, 2008 -October 31, 2009)(Cash flow from operating activities)
Cash flow from operating activities is projected to be approximately identical to the amount in the consolidated
fiscal year under review because there are no factors that will result in material changes.
(Cash flow from investing activities)
Cash flow used in investing activities is projected to be greater than in the consolidated fiscal year underreview because of an increase in funds used for the purchase of tangible fixed assets.
(Cash flow from financing activities)
Cash flow from financing activities is projected to increase compared with the consolidated fiscal year underreview because of an increase in funds provided by long-term bank loans.
As a result of the above, the balance of cash and cash equivalents at the end of the next consolidated fiscal
year is projected to approximately the same as the balance at the end of the consolidated fiscal year underreview.

Summary of Company Financial Statements, FY Ended October 31, 2008

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(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. The Company sets its dividend payout ratio at 30% or higher, depending on
earnings.
The Company will utilize its internal reserves by allocating funds for capital investment, including the
introduction of rental equipment assets that will serve as the source of future earnings, and for enhancing
shareholders’ equity. To enable the Company to flexibly implement its capital policy, Kanamoto also has
established a system for using internal reserves to make purchases of treasury stock.
For the Business Period ended October 2008, the Company plans to pay a regular dividend of ¥20 per share forthe full year, consisting of an interim dividend of ¥10 per share and a year-end dividend of ¥10 per share(subject to approval of a resolution at the regular Board of Directors meeting on December 26, 2008).
For the Business Period ending October 2009, Kanamoto will maintain its basic policy of a stable return of
earnings to shareholders as described above, even though the earnings environment during the next Business
Period is expected to be severe, and plans to pay a regular dividend of ¥20 per share for the full year (interim
and year-end dividend of ¥10 per share each).

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

(6) Business and other risks
The following risks are included among the business and accounting matters described in the Accounting
Bulletin (Consolidated) that might have an important influence on investors’ decisions. Statements concerning
future matters are judgments made by the Company based on information available at the present point intime.
a) Economic conditions
Earnings in the construction-related businesses that are the main business of the Kanamoto group are affectedsignificantly by the trend in domestic construction investment, regardless of whether such investment is basedon public or private sector demand. Consequently there is a possibility future operating results including
revenues will be negatively affected if further large reductions in public works or other changes affecting
industry demand occur in the future.
b) 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 exhibit a trend in which the busy season during each business period extends fromabout 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 be concentrated
in the Company’s interim accounting period (the six-month period from November through the following
April).
c) Interest rate fluctuations
The Kanamoto group allocates internal capital and procures funding from outside sources to meet its need forfunds to purchase rental equipment and other assets, make branch-related capital investments and provide
working capital for business activities. Although the Company takes steps to mitigate the affect of interest rate
fluctuations on its externally borrowed funds, including transactions to fix the interest rates paid on borrowed

Summary of Company Financial Statements, FY Ended October 31, 2008

P.11

funds to the extent possible, there is a possibility the operating results and financial position of the Kanamotogroup will be affected by future large changes in short-term interest rates.
d) Projected benefit obligation
The projected employee benefit obligation and costs of the Kanamoto group are calculated mainly using 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 and financial
position of the Kanamoto group. There is a possibility the operating results and financial position of theKanamoto group might be negatively affected if the discount rate declines further or the yield on investments
deteriorates. The Company has adopted the cash balance system, and the Company will seek stabilization of
the projected benefit obligation and costs by offsetting the change in the projected benefit obligation and costs
as a result of the discount rate and change in projected benefits amount.
e) Asset impairment accounting for fixed assets
Beginning from the business period ending in October 2006, the Kanamoto group has applied the AccountingStandard for Impairment of Fixed Assets. There is a possibility the operating results and financial position of
the Kanamoto group might be negatively affected if the profitability of fixed assets declines because of factors
such as a marked deterioration in the Company’s business environment in the future.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.12

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, nine
consolidated 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 subsidiary),
Kanki Corporation (a consolidated subsidiary), Toyo Industry Co., Ltd. (a consolidated subsidiary) andKyokuto Lease Co., Ltd. (a non-consolidated subsidiary) are engaged in the rental and sale of construction
equipment and machines used for construction. These three subsidiary companies borrow rental equipment
assets from the Company as needed in order to meet customer demand. In addition, the Company borrows
rental assets from Kanki Corporation and Kyokuto Lease Co., Ltd. as needed to rent to other companies.
Assist Co., Ltd. (a consolidated subsidiary) and Comsupply Co., Ltd. (a non-consolidated subsidiary) areengaged in the rental and sale of furniture and fixtures and safety products, and SRG Kanamoto Co., Ltd. (aconsolidated subsidiary) rents and sells temporary materials for construction use. The Company borrows
rental assets from these three companies as needed to rent to other companies. Asahikawa Fujisho Co., Ltd.
(a non-consolidated subsidiary), was merged with and absorbed by SRG Kanamoto Co., Ltd. on September 1,
2008.
Kanatech Co., Ltd. (a consolidated subsidiary) sells modular housing units for temporary use. FlowtechnoCo., Ltd. (a non-consolidated subsidiary), is engaged in the technical development, manufacture and sale ofconstruction equipment for ground improvement works. Kanamoto purchases modular housing units for
temporary use and construction equipment for ground improvement from these two companies as needed torent to its own customers.
The Kyushu Kensan Group is engaged in the rental and sale of construction equipment. Kyushu Kensan Co.,
Ltd. (a consolidated subsidiary) rents and sells mainly foundation equipment, Kensan 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.
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), are engaged in the rental
and sale of construction equipment and tools and the 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 business.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.13

[ 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.
(anon-consolidated

subsidiary)

manages

specifiedworkerdispatchingundertakings

todispatchengineering-related research and development employees to manufacturers and other entities.
The companies and activities described above are shown in the following diagram illustrating their operating
businesses relationships.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.14

Domestic Customers

Construction equipment rental

Kanamoto Co., Ltd.

Rental of construction-related products

Daiichi Kikai Co., Ltd.

Assist Co., Ltd.

Construction equipment rentals
and sales

Rental and sale of furniture, fixturesand safety products

Comsupply Co., Ltd.

Kanki Corporation
Construction equipment rentals
and sales

Rental and sale of furniture, fixturesand safety products

Construction
Equipment Rental

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

SRG Kanamoto Co., Ltd.

Division

Rental and sale of temporary
materials for construction use

Kensan Fukuoka Co., Ltd.
Generator rentals

Overseas

Kensan Techno Co., Ltd.
Construction crane rentals

Center Corporation
Small equipment rentals

Steel Sales Division

Shanghai Jinheyuan
Equipment Rental Co., Ltd.

Information Products
Division

SJ Rental, Inc.

Construction materials import andexport business and construction
equipment rentals

Construction materials import andexport business and construction
equipment rentals

Toyo Industry Co., Ltd.
Shield tunneling method-related
peripheral equipment rentals andsales

Supply of modular housing units

Supply of steel frames andKyokuto Lease Co., Ltd.
Construction equipment rentals
and sales

construction materials
Businesscooperation

andtechnical support

Overseas customers andtrading companies

Design, manufacture and sale of related products

Kanatech Co., Ltd.
Design and sale of modular
housing units

Provision and exchange of market
information

Other business
Flowtechno Corporation
Technical development, manufactureand sale of ground improvement
construction equipment

Customers, trading

Kanamoto Engineering Co., Ltd.
Dispatch of engineering-related R&D
employees (Specified Worker
Dispatching Undertakings)

Manufacturers, etc.

companies, etc.

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

Summary of Company Financial Statements, FY Ended October 31, 2008

P.15

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

(2) Management indicators established as objectives
The construction equipment rental businesses managed by the Kanamoto group involve a substantial capital
investment burden, which necessitates a profit and loss outlook extending over several years. The Kanamotogroup has always positioned growth in EBITDA+ (earnings before interest, taxes, depreciation andamortization) as its most important management indicator, while also taking into consideration ROI (return on
investment). EBITDA+ in particular complements future earnings, and Kanamoto recognizes that maintaining
and expanding EBITDA+ is absolutely critical to its future success.
Although it prepared a new long-term management plan for implementation beginning in the Business Period
ending October 2009, based on business conditions of unprecedented uncertainty the Company judged thateven if it establishes and releases long-term objectives, it cannot provide its stakeholders with materials thatwill enable them to make correct judgments. Consequently, the Company has decided to prepare a one-year
short-term plan for the Business Period ending October 2009, and a new long-term management plan for theBusiness Period ending October 2010 through the Business Period ending October 2014, as plans for external
release.
As the numerical objectives framework for the new long-term management plan, however, the Company is
studying preparation of a plan to achieve consolidated revenues of ¥100 billion and consolidated operating
income of ¥7 billion as of the end of the Business Period ending October 2014.

(3) Medium to long-term corporate management strategy
As indicated above, the new long-term management plan Kanamoto will implement after Metamorphose will
be a five-year plan beginning from the Business Period ending October 2010. For its business the Company
seeks to devise strategies and management policies for achieving its numerical objectives rationally andefficiently, giving adequate consideration to the management environment and industry trends while
continuing along the path established under Metamorphose. Additionally, over the six-year period combining
a short-term plan for the Business Period ending October 2009 with the long-term management plan for theBusiness Period ending October 2010 through the Business Period ending October, 2014, the Company
fundamentally will seek to further expand group operating results and forge a corporate group that isevaluated positively by the market, based on group management and strategic thinking that will enable eachgroup company to practice earnings-focused management. The basic Metamorphose strategies we will follow
are described below.
a) Maintain an earnings-focused rental equipment asset portfolio (asset optimization strategy)
Revisions to lease accounting have created conditions in which Kanamoto must further improve the accuracyof the methods it uses to introduce rental assets. At the same time, however, Kanamoto’s customers are
reducing the quantity of equipment they own themselves, thereby increasing the occasions when they must
utilize construction equipment rentals. Moreover, because prices for used construction equipment are

Summary of Company Financial Statements, FY Ended October 31, 2008

P.16

expected to weaken as a result of the global economic slowdown, the Company must further boost its earnings
from domestic construction equipment rentals. To maximize earnings during the rental asset operating period,
the Company will seek to increase the accuracy of its asset portfolio and improve operating margins, based onhigh-profit models.
b) Add bases in the Tokyo metropolitan area and expand into areas currently not served by groupbranches
The Company is placing its greatest priority on establishing new branches in the Tokyo, Nagoya and Osaka
metropolitan areas and actively pursuing M&A in these areas as well. In addition, in regions where it currently
does not have branches, Kanamoto will endeavor to expand its market area through alliance tie-ups while
reviewing local circumstances. The Company will also position M&A as a growth engine for the Kanamotogroup in the future.
c) Strengthen the activities of the Regional Special Procurement Sales Division
Because the coordinated activities of the Regional Special Procurement Sales Division have proven successful
for responding to opportunities such as large-scale projects, Kanamoto will strengthen this division and work
to expand coordinated activities across group firms in the future.
d) Build a powerful marketing organization and alliance group where customers are always
Number One
Kanamoto is gradually increasing the number of agreements with local governments to respond to urgent
requests following a disaster. Because such agreements can be expected to increase demand in the future byproviding opportunities for new construction equipment rental inquiries, Kanamoto will seek to conclude moreagreements for support following a natural disaster. Kanamoto also will seek to increase synergistic effects
through cooperation with Kanamoto group firms throughout Japan, and build a community-based sales andmarketing organization including customer firms and municipalities that takes maximum advantage of each
entity’s size.
e) Overseas development efforts
Shanghai Jinheyuan Equipment Rental Co., Ltd. and SJ Rental Inc. are expanding their operating
results steadily, and growth in construction equipment rental demand is expected in both company’s markets
in the future. Shanghai Jinheyuan Equipment rental in particular is renting equipment not only for
infrastructure works, but also is receiving orders for large-scale developments by Shanghai’s municipal
government. In addition, projects where construction equipment procured from Kanamoto is used are being
carried out in various countries in regions such as Southeast Asia, and Kanamoto will continue to develop
proactive sales and create a solid business base in regions exhibiting remarkable growth.
Because the sales of high-quality used construction equipment implemented by Kanamoto each year enhance
the Company’s reputation, and contribute substantially to business development in other countries, Kanamoto
also will continue to offer high-quality used construction equipment for sale, despite a sense of uncertainty
among buyers created by the current global economic weakness.
f) Development of new rental products and new businesses
For Kanamoto’s main business of construction equipment rentals, the product categories supplied by
Kanamoto’s New Products Office and offering proprietary improvements serve as a new equipment rental tool.
Such products are also linked to the development of new business sectors such as the event rental business,and the Company will continue developing this side support for its rental divisions.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.17

(4) Issues to be addressed by the Company
Because the Company is developing rental services whose leading customers are construction companies, theearnings of the Kanamoto group are easily affected by domestic construction and capital equipment trends.
Although it expects the current unprecedented economic severity to continue, Kanamoto will work to further
expand its scale, ensure a solid earnings base that is less susceptible to swings in the construction market andbuild a strong sales and marketing organization, by successfully addressing each of the following issues.
a) Strengthen human resources training and the Kanamoto group and alliance
The industry shakeout resulting from increasingly severe competition among firms is expected to continue. As
the leading firm in the construction equipment rental industry, Kanamoto strives to foster employees who
possess appropriate knowledge and skills to meet this challenge, and will work to generate earning byenhancing collaboration among Kanamoto group firms and broadening the number of alliance tie-up firms in
different market areas.
b) Reinforce Kanamoto’s financial strategy
Kanamoto is taking steps to enhance funds procurement flexibility, while giving consideration to equipment
plans including its 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.
c) Continuous cost reductions
The Company will strive to maintain asset value, by introducing assets based on the thorough use ofbenchmarks and optimizing asset maintenance costs based on its rental assets operating policies.
d) Compliance and internal controls
To create an organization that is aligned with society’s demands, the Company has prepared ethical guidelines
to serve as a compliance standard, established a Compliance Committee headed by Kanamoto’s president andtaken steps to strengthen company-wide observance of laws and ethics regulations. The Company works toensure every individual is thoroughly familiar with its guidelines, and manages its organization in accordancewith these compliance materials. In addition, to respond appropriately and take measures to prevent a
recurrence if unforeseen circumstances that will have a serious affect on the Company’s operations haveoccurred or if there is concern such circumstances might occur, the Company has prepared an Emergency
Response Manual (Contingency Plan).
Kanamoto activated new operating processes based on its internal controls system on November 1, 2008. The
Company has established an Internal Control Promotion Office under the direct control of Kanamoto’s
president, and is preparing systems and operations at each group company that are aligned with those at
Kanamoto, and will work to ensure the effectiveness of group-wide internal controls and the effectiveness ofeach process.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.18

IV

Consolidated Financial Statements(1) Consolidated Balance Sheets(Unit: Thousands of yen)
Prior Consolidated Accounting
Fiscal Year(As of October 31, 2007)
Classification

Notes

AmountPercent

Current Consolidated Accounting
Fiscal Year(As of October 31, 2008)
AmountPercent(Assets)
I

Current assets
1. Cash and deposits

11,913,890

14,070,345

14,239,136

15,297,757

5,300,000

3,700,000

533,600

956,322

5. Construction equipment

1,010,645

874,680

6. Income taxes receivable－

110,491

7. Consumption taxes
receivable－282,196

8. Deferred tax assets

360,573

256,893

9. Other

457,321534,758- 488,905-526,414

2. Notes and accounts
receivable, trade*4

3. Negotiable securities
4. Inventory

Allowance for doubtful
accounts
Total Current Assets
II33,326,262

39.1

35,557,032

38.8

Fixed assets

1. Tangible fixed assets(1) Rental equipment assets

37,567,171

Accumulated depreciation

28,044,139(2) Buildings and structures

17,151,855

Accumulated depreciation

10,480,334(3) Machinery, equipment,
vehicles and delivery
equipment

4,415,336

Accumulated depreciation

3,665,003(4) Land(5) Construction in progress(6) Other

43,694,544
9,523,031

31,437,026
17,869,527

6,671,521

10,968,596

876,638

Total Tangible Fixed Assets

6,900,931

4,622,991
750,333

3,854,409

768,582

26,268,316

29,075,816

46,172

683,294

1,115,602

Accumulated depreciation

12,257,517

1,163,486
238,963
43,498,339

930,59751.1

232,889
49,919,031

54.4

2. Intangible fixed assets(1) Goodwill

275,797557,260(2) Other137,516

170,056

Total Intangible Fixed Assets

413,314*5

0.5

727,3160.8

3. Investments and otherassetsSummary of Company Financial Statements, FY Ended October 31, 2008

P.19

(1) Investment securities*1

6,610,180

2,847,982(2) Long term guarantee
deposits－

1,139,493(3) Deferred tax receivable－

1,054,883

2,070,164

1,413,301- 762,464-917,742(4) Other
Allowance for doubtful
accounts
Total Investments andOther Assets

7,917,880

9.3

5,537,917

6.0

Total Fixed Assets

51,829,534

60.9

56,184,266

61.2

Total Assets

85,155,797

100.0

91,741,299

100.0

Prior Consolidated Accounting
Fiscal Year(As of October 31, 2007)
Classification

Notes

AmountPercent

Current Consolidated Accounting
Fiscal Year(As of October 31, 2008)
AmountPercent(Liabilities)
I

Current liabilities
1. Notes and accounts
payable, trade

11,292,635

13,675,929

2. Short-term bank loans

330,000

338,521

3. Long-term bank loans
due within one year

8,972,356

9,599,494

4. Current portion of bonds－

62,0005. Corporate taxes payable

1,449,478

149,932

552,926

549,9812,346,872

3,325,933

642,568

693,081

6. Accrued bonuses to
employees
7. Accounts payable, other
8. Other
Total Current Liabilities
II

25,586,836

30.1

28,394,874

31.0Long-term liabilities－

86,00015,718,705

19,379,661

3. Accrued employees
retirement benefits

935,980

1,080,005

4. Retirement allowances todirectors and auditors

132,633

174,824

2,486,318

3,935,016

321,805

488,612

1. Bonds
2. Long-term bank loans

5. Long-term accrued
expenses
6. Other
Total Long-term Liabilities
Total Liabilities

19,595,442

23.0

25,144,119

27.4

45,182,279

53.1

53,538,994

58.4(Net Assets)

Summary of Company Financial Statements, FY Ended October 31, 2008

P.20

I

Owners’ equity
1 Paid-in capital

9,696,717

11.4

9,696,717

10.6

2 Capital surplus

10,960,869

12.9

10,960,869

11.9

3 Earned surplus

17,333,642

20.4

17,149,945

18.7

4 Treasury stock- 19,784- 0.1-22,729-0.0

37,971,444

44.6

37,784,803

41.2

1 Valuation difference onother investment
securities

2,002,072

2.3

162,358

0.2

Total Valuation andTranslation Adjustments

2,002,072

2.3

162,358

0.2

Minority Interests－－

255,143

0.2

Total Net Assets

39,973,517

46.9

38,202,305

41.6

Total Liabilities andNet Assets

85,155,797

100.0

91,741,299

100.0

Total Owners’ Equity
II

III

Valuation and translation
adjustments

Summary of Company Financial Statements, FY Ended October 31, 2008P.21

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

Notes

Prior Consolidated Accounting
Fiscal Year

Current Consolidated Accounting
Fiscal Year

From November 1, 2006
to October 31, 2007

From November 1, 2007
to October 31, 2008

AmountPercent

AmountPercent

Revenues from operations
1. Rental revenues

46,739,096

2. Sales

21,887,816

II

46,295,930
68,626,913

100.0 23,115,824 69,441,755

100.0

Cost of revenues fromoperations

1. Cost of rental revenues

33,260,225

2. Cost of goods sold16,230,180

Gross profit
III Selling, general andadministrative expenses*1

Operating income

33,158,452
49,490,405

72.1 17,645,122 50,803,574

73.2

19,136,507

27.9

18,608,180

26.8

14,899,972

21.7

16,380,327

23.6

4,236,534

6.2

2,227,853

3.2

410,193

0.6

609,9180.9

2,028,128

2.9

IV Non-operating revenues
1. Interest revenue

44,782

69,5402. Dividend income

51,715

68,1103. Gain on sale ofinvestment securities

287,528－

4. Insurance benefits

38,87770,528

5. Rents received

81,40971,105

6. Cash bonus received

105,737

7,204

7. Other

102,577V

712,627

1.0

123,703

Non-operating expenses

1. Interest expense

338,051

375,799

2. Loss on sale of notes
receivable

75,15580,074

3. Other

119,684

Ordinary income
VI532,891

0.8

4,416,270

6.4

154,043

Extraordinary profits

1. Gain on sale of fixed
assets*2

921,056

23,0312. Management gain on
investment partnershipenterprise

8,333

1,927

3. Gain on reversal of
allowance for doubtful
accounts

21,10944,384

4. Gain on reversal of
accrued employees
retirement benefits

845,319－

Summary of Company Financial Statements, FY Ended October 31, 2008

P.22

5,0185. Other
VIII

1,800,836

2.6

4,053

73,3970.1

223,2870.3

1,878,238

2.7

1,151,510

1.7

Extraordinary losses

1. Loss on sale or retirementof fixed assets*3

68,231

81,837

2. Impairment loss

*4

890

490

3. Valuation loss on
investment securities

11,01654,978

4. Amortization of goodwill

331,425－

5. Other

37,597

Income before taxes andadjustments
Corporate, local and business
taxes

2,286,833

Adjustment for corporate andother taxes

410,200

Minority interest in income
Net income

449,1610.6

5,767,945

8.4

85,9801,159,368
2,697,033

3.9-7,85835,4930.1

82,6890.1

3,035,418

4.4

644,038

0.9

Summary of Company Financial Statements, FY Ended October 31, 2008

P.23

(3) Consolidated Statement of Changes in Net Assets
Prior Consolidated Accounting Fiscal Year (From November 1, 2006 to October 31, 2007)(Unit: Thousands of yen)
Owners’ equity

Balance at the end of theprevious consolidated
accounting fiscal year
(October 31, 2006)

Paid-in capital

Capital surplus

Earned surplus

Treasury stock

9,696,717

10,960,869

14,889,638-6,303

Total owners’
equity35,540,922

Change of items during theconsolidated accounting fiscal
year under review
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 thanowners’ equity during theconsolidated accounting
fiscal year (net amount)-

Total changes of items during
the consolidated accounting
fiscal year under review－－

2,444,003-13,4812,430,522

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

9,696,717

10,960,869

17,333,642-19,784

37,971,444

Valuation and translation adjustments

Balance at the end of theprevious consolidated
accounting fiscal year
(October 31, 2006)

Valuation differenceon other investment
securities

Total valuation andtranslation
adjustments

2,418,684

2,418,684

Minority interests

Total net assets

92,15938,051,766

Change of items during theconsolidated accounting fiscal
year under review
Dividends from surplus－-591,414

Net income－

3,035,418

Purchase of treasury stock－-13,481

Change of items other thanowners’ equity during theconsolidated accounting
fiscal year (net amount)-416,611-416,611-92,159-508,771

Total changes of items during
the consolidated accounting
fiscal year under review-416,611-416,611-92,159

1,921,750

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

2,002,072

2,002,072－

39,973,517

Summary of Company Financial Statements, FY Ended October 31, 2008

P.24

Current Consolidated Accounting Fiscal Year (From November 1, 2007 to October 31, 2008)(Unit: Thousands of yen)
Owners’ equity

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

Paid-in capital

Capital surplus

Earned surplus

Treasury stock

9,696,717

10,960,869

17,333,642-19,784

Total owners’
equity37,971,444

Change of items during theconsolidated accounting fiscal
year under review
Dividends from surplus-689,760-689,760

Net income

644,038

644,038

Decrease resulting fromchange in scope of
consolidation-137,975-137,975

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

Change of items other thanowners’ equity during theconsolidated accounting
fiscal year (net amount)
Total changes of items during
the consolidated accounting
fiscal year under review－－-183,696-2,944-186,641

Balance at the end of theconsolidated accounting fiscal
year under review(October 31, 2008)

9,696,717

10,960,869

17,149,945-22,729

37,784,803

Valuation and translation adjustments

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

Valuation differenceon other investment
securities

Total valuation andtranslation
adjustments

2,002,072

2,002,072

Minority interests

Total net assets－

39,973,517

Change of items during theconsolidated accounting fiscal
year under review
Dividends from surplus－-689,760

Net income－

644,038

Decrease resulting fromchange in scope of
consolidation－-137,975

Purchase of treasury stock-2,944

Change of items other thanowners’ equity during theconsolidated accounting
fiscal year (net amount)-1,839,714-1,839,714

255,143-1,584,570

Total changes of items during
the consolidated accounting
fiscal year under review-1,839,714-1,839,714

255,143-1,771,212

Balance at the end of theconsolidated accounting fiscal
year under review(October 31, 2008)

162,358

162,358

255,143

38,202,305

Summary of Company Financial Statements, FY Ended October 31, 2008P.25

(4) Consolidated Statements of Cash Flows(Unit: Thousands of yen)
Prior Consolidated
Current Consolidated
Accounting Fiscal Year
Accounting Fiscal Year
(From November 1, 2006 (From November 1, 2007
to October 31, 2007)
to October 31, 2008)
Classification

Change fromprior year

Notes

I Cash flow from operating activities
Income before taxes and adjustments

5,767,945

1,878,238-3,889,706

Depreciation and amortization expense

4,648,677

5,573,783

925,105

890

490

-400

Amortization of goodwill

395,108

253,914-141,193

Gain on sale of fixed assets-921,056-23,031

898,025

Loss on sale or retirement of fixed assets

68,231

81,837

13,605Gain on reversal of accrued employees
retirement benefits-845,319－

845,319

Installment purchases of assets forsmall-value rentals

97,06949,871-47,198

Reclassification of cost of sales
associated with disposal of construction
equipment

25,597

5,598-19,999

Reclassification of cost of sales
associated with disposal of rental assets

397,062

662,011

264,949-2,095,742-3,345,941-1,250,199

Valuation loss on investment securities

11,01654,97843,961Gain on sale of investment securities-287,528－

287,528

Loss on sales of investment securities

－

349

349

Increase in allowance for doubtful
accounts

52,842

108,936

56,093

Increase (decrease) in accrued bonuses
to employees

41,189-18,277-59,466

Decrease in accrued bonuses todirectors and auditors-5,500－5,500

Increase in accrued employees
retirement benefits

99,58088,657-10,922

Increase in retirement allowances todirectors and auditors

3,419

41,01937,599Interest revenue and dividend income-96,497-137,650-41,153

Interest expense on installment
purchases of rental assets

43,182

99,49456,312

Interest expense

338,051

375,799

37,748Decrease in accounts receivable, trade

720,189492,557-227,631

Increase in inventory-27,730-162,961-135,230-1,126,702

991,555

2,118,257

Impairment loss

Expenditures for acquisition of rental
assetsIncrease (decrease) in accounts
payable, trade

Summary of Company Financial Statements, FY Ended October 31, 2008

P.26

Increase (decrease) in accounts
payable, other-76,564

25,604102,168

Other-257,663-723,791-466,127

Subtotal

6,969,749

6,373,045-596,703

90,470138,787

48,317-377,448-484,373-106,925-2,202,835-2,571,015-368,180

4,479,936

3,456,444-1,023,492

Interest and dividends received
Interest expense
Payment of corporate and other taxes
Cash flow from operating activities

Prior Consolidated
Current Consolidated
Accounting Fiscal Year
Accounting Fiscal Year
(From November 1, 2006 (From November 1, 2007 Change fromprior year
to October 31, 2007)
to October 31, 2008)
Classification

Notes

II Cash flow from investing activities
Disbursements for investments in term
deposits－-148,877-148,877

Revenue from redemption of term
deposits－

277,908

277,908

Funds used for the purchase of tangible
fixed assets- 2,059,416-3,524,233-1,464,816

Funds provided from the sale of tangible
fixed assets

1,875,374

171,712-1,703,662

Funds used for the purchase ofintangible fixed assets-64,781-51,653

13,127

Funds used for the purchase ofinvestment securities-123,716-223,395-99,678

Funds provided from sale of investment
securities

527,674

56,324-471,350

Funds used for the purchase of
consolidated subsidiary stock-367,450-62,714304,736

Funds used for the purchase ofnon-consolidated subsidiary stock-1,199,992-313,711

886,281

－

5,000

5,000

-34,778-100,000-65,221－-231,931-231,931

20,077

20,333256-1,427,009-4,125,236-2,698,226

Decrease in short-term bank loans-167,704-136,478

31,225

Funds provided by long-term bank loans

9,550,000

13,960,000

4,410,000-10,967,546-10,223,652

743,894

Funds provided from non-consolidated
subsidiary stock
Funds used for establishment ofaffiliated company
Funds used for the purchase ofinvestments in subsidiaries resulting inchange in scope of consolidation
Other
Cash flow from investing activities
III Cash flow from financing activities

Funds used to repay long-term bankloans

Summary of Company Financial Statements, FY Ended October 31, 2008

P.27

Funds used to redeem corporate bonds－

40,000-40,000

Funds used for repayment of installment
obligations-2,047,202-2,524,901-477,698

Funds used for the purchase of treasury
stock-13,481-2,944

10,536

Payment of dividends to parent
company-591,414-689,760-98,345

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

Cash flow from financing activities-4,237,348

341,2574,578,605

IV Decrease in cash and equivalents-1,184,421-327,534

856,886

V Balance of cash and equivalents at
beginning of period

18,398,312

17,213,890-1,184,421－

680,339

680,339

17,213,890

17,566,695

352,805

VI Increase in cash and cash equivalents
due to newly consolidated subsidiaries
VI Balance of cash and equivalents at endof the period*１

Summary of Company Financial Statements, FY Ended October 31, 2008

P.28

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

Summary of Company Financial Statements, FY Ended October 31, 2008

P.29

Significant Accounting Policies for the Consolidated Financial Statements
Prior Consolidated Accounting Fiscal Year Current Consolidated Accounting Fiscal Year
(From November 1, 2006
(From November 1, 2006
to October 31, 2007)
to October 31, 2007)
1. Companies included in the(1) Number of consolidated companies: 5(1) Number of consolidated companies: 9

consolidation
Assist Co., Ltd.

Assist Co., Ltd.

SRG Kanamoto Co., Ltd.

SRG Kanamoto Co., Ltd.

Kanatech Co., Ltd.

Kanatech Co., Ltd.
Daiichi Kikai Co., Ltd.

Daiichi Kikai Co., Ltd.

Kanki Corporation

Kanki Corporation

Kyushu Kensan Co., Ltd.
Kensan Fukuoka Co., Ltd.
Kensan Techno Co., Ltd.
Toyo Industry Co., Ltd.
Beginning

from

the

interimconsolidated accounting period underreview,

KyushuKensan

Co.,

Ltd.,

Kensan Fukuoka Co., Ltd. and Kensan
Techno Co., Ltd. are included in thescope of consolidation because theimportance of these companies toKanamoto’s operations has increased.
Ending of the consolidated accounting
fiscal year under review, Toyo Industry
Co., Ltd. is included within the scope of
consolidation because the Company
acquired all of that company’s stock.
(2) Number of non-consolidated(2) Number of non-consolidated
companies: 6companies: 8

Non-consolidated subsidiary company

Non-consolidated subsidiary company

name:

name:

Comsupply Co., Ltd.

Comsupply Co., Ltd.

Flowtechno Corporation

Flowtechno Corporation

Kyushu Kensan Co., Ltd.

Center Corporation Ltd.

Kensan Fukuoka Co., Ltd.

Shanghai Jinheyuan Equipment

Kensan Techno Co., Ltd.

Rental Co., Ltd.

Center Corporation Ltd.

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

(Reason for exclusion from scope of(Reason for exclusion from scope of

consolidation)

consolidation)

The size of the non-consolidated

The size of the non-consolidated

subsidiaries is small and their total

subsidiaries is small and their total

assets, sales and fiscal year profit orassets, sales and fiscal year profit orloss (amount corresponding to equity)

loss (amount corresponding to equity)

and

and

retainedearnings(amount

retainedearnings(amount

corresponding to equity) are small incorresponding to equity) are small insize and do not have a material effectsize and do not have a material effect

on

on

the

statements.

consolidated

financialtheconsolidated

financialstatements.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.30

2. Matters pertaining to

subsidiaries

Eight non-consolidated subsidiaries

application of equity

and two affiliated companies (ActiveSix

non-consolidated

have been omitted from items tomethod accounting

Technology Corporation and Shanghai

which equity method accounting is

Jinheyuan Equipment Rental Co., Ltd.)applied because their respective effecthave been omitted from items toon consolidated net income or loss

which equity method accounting is(amount corresponding to minority

applied because their respective effectinterest)

andon consolidated net income or loss

surplus(amount(amount corresponding to minority

minority interest) is immaterial andinterest)andnone of the companies is important tosurplus(amount

consolidated

earnedcorresponding

tominority interest) is immaterial andconsolidated

earnedcorrespondingtothe Company's overall operations.
Kanamoto transferred all of thenone of the companies is important to

stock

held

in

Activethe Company's overall operations.

CorporationtoaTechnology

third

party

on

December 10, 2007.
3. Matters pertaining to the

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

consolidated subsidiaries

Kanki Corporation is August 31.

Same as at left

When preparing the consolidated
financialusedstatements

the

the

Company

subsidiaries'

financialstatements as of August 31, adjusted
forsignificant

transactions

thatoccurred between the subsidiaries'
fiscal year-end and the consolidation
date that have a material effect on the
consolidated financial results.
4. Accounting principles andstandards used for normal
accounting treatment(1) Appraisal standards andappraisal methods forprincipal assets

a. Negotiable securities

a. Negotiable securities

Other negotiable securities

Other negotiable securities

Securities with a market price
The

CompanyhasadoptedSecurities with a market pricetheSame as at left

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

determined

by

the

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

Securities without market prices

The Company has adopted the cost

Same as at left

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

deduction

depreciation

expenseaccordingthetob. Construction equipmentofSame as at left

calculated

declining-balancemethod from the original prices, byseparate fiscal year of purchase.
c. Merchandise inventories and suppliesc. Merchandise inventories and supplies(i) Merchandise inventories(i) Merchandise inventories

Lower of cost or market based on

Same as at left

the Last-in, First-out method

Summary of Company Financial Statements, FY Ended October 31, 2008

P.31

(ii) Work in process―――――

The Company has adopted the cost
method, cost being determined by the
specific identification method(iii) Supplies(iii) Supplies

The Latest Purchase Cost method(2) Depreciation methods forprincipal depreciable
assetsSame as at left

a. Tangible fixed assets
The

Companya. Tangible fixed assets

has

adoptedtheSame as at left

declining-balance method. Buildings
on

land

that

fixed-term

is

land

leased
lease

under

a

agreement,

however, are depreciated using thestraight-line

methodusing

theremaining period of the fixed-termlease as the depreciable life and zero
residualvalue.

consolidated
CompanyForcertainsubsidiaries,
have

adoptedthethestraight-line method for buildings andstructures acquired on or after April 1,
2000

but

excluding

fixturesandequipment.
The depreciable lives mainly used by
the Company are as follows.
Rental assets
5-10 years
Buildings
10-34 years
b. Intangible fixed assets

b. Intangible fixed assets
The

CompanyhasadoptedthewithintheSame as at left

straight-line method.
Softwareforuse

Company is depreciated using thestraight-line method based on theassumed useful life for internal use (5years)(3) Accounting standards forprincipal allowances andreserves

a. Reserve for doubtful accounts

a. Reserve for doubtful accounts

To provide for losses on doubtfulSame as at left

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

experience for normal accounts, plusanamountunrecoverableforamounts

projected
based

on

assessments of individual accounts.
b. Accrued bonuses to employees
To fully provide for expenditures ofb. Accrued bonuses to employees
Same as at left

bonuses the Company will pay toemployees, an amount is appropriatedto the reserve during the year based
upon a salary estimate amount.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.32

c. Accrued employees retirement benefit
The

Company

employees’

providesaccruedforc. Accrued employees retirement benefit
Same as at left

retirement

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

in which incurred, with theamounts

allocated

proportionately

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

During the consolidated accounting
fiscal year under review, the Company
revised its retirement benefits systemand transferred its defined benefit
corporate pension plan (fund-type) toa defined benefit corporate pension
plan(contract-type)simultaneously

andintroduced

a

cash

balance system. In conjunction withthis change, the Company has appliedthe“Accounting

for

the

Transfer

Between Retirement Benefit Plans”(Financial

AccountingStandards

Implementation Guidance No. 1).
In addition, during the consolidated
accounting fiscal year under review,certainconsolidated

revisedtheirsystems

andtermination

subsidiaries

retirement

benefits

transferredallowance

plans

their
to

a

defined contribution corporate pension
plan and termination allowance plan,and have applied the “Accounting fortheTransfer

BetweenRetirement

Benefit Plans” (Financial AccountingStandards Implementation GuidanceNo. 1).
The Company accounted for the¥845,319 thousands affect from thesetransfers in extraordinary profits as again on reversal of accrued employees
retirement benefits.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.33

d. Retirement allowances to directors andauditors

d. Retirement allowances to directors andauditors

The

Company

providesfor

Same as at left

retirement allowances to directors andauditors based upon pertinent rules
andappropriated

to

the

account

proportionately at the end of theconsolidated accounting fiscal year(4) Standard for conversionof foreign
currency-denominatedassets or liabilities into
Japanese yen

based upon length of service.
──────

The
claimsCompany
andconverts

monetarymoney
liabilities

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

(5) Lease transactions

Forfinance

exceptfor

leaseleasestransactions
that

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

a. Hedge transactions

The Company accounts for hedge

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

standards

forfinancial

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

The Company uses currency swaps

Same as at left

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

foreigncurrency-denominated straight bonds
and liabilities for import payments.
The Company also uses interest swaps
to avoid interest rate fluctuation risk
related to interest on bank borrowing.
c. Hedging policies

c. Hedging policies

The Company’s use of derivative

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

Summary of Company Financial Statements, FY Ended October 31, 2008

P.34

The Company does not evaluate theSame as at left

effectiveness of its hedge transactions
becauseitcurrency

swap

can

assumethattransactions

its
and

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

until

it

is

terminated.

In

addition, the Company’s interest swap
transactions fulfill the requirements
for special rule accounting, and theCompany has elected to use this inplace of an evaluation of effectiveness.
(7) Accounting standards for
consumption tax

Consumption tax is taken out of all
StatementofIncomeitems

Same as at left

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

The

Companyhasadoptedthesubsidiary assets andmarket value appraisal method for theliabilities

evaluation of assets and liabilities ofSame as at left

consolidated subsidiaries.
6. Amortization of goodwill

The remainder is amortized over fiveand negative goodwill

years using level amortization, except

Same as at left

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

and equivalents on theInterim
Consolidated
Statements of Cash
Flows
(Consolidated
Statements of Cash
Flows)Cash on hand, deposits that canbe withdrawn on demand andhighlyliquidshort-term
investments that mature within
three months of the date ofacquisition and which can beeasily converted into cash andthat have minimal risk of a change
in price.

Same as at left

Summary of Company Financial Statements, FY Ended October 31, 2008

P.35

Change in Presentation Method
Prior Consolidated Accounting Fiscal Year
(From November 1, 2006
to October 31, 2007)

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

Until the previous consolidated accounting fiscal year,
the Company reported long-term guarantee deposits in“Other” under investments and other assets. For the
consolidated fiscal accounting year under review, theCompany has reported this item separately because theamount exceeded 1% of total assets.
The amount of long-term guarantee deposits at the endof the previous consolidated accounting fiscal year was¥1,091,554,000.
(Consolidated Statements of Income)──────

1. Until the previous consolidated accounting fiscal year,
the Company reported cash bonus received as aseparate category in “Other” under non-operating
revenues. For the consolidated fiscal accounting year
under review, the Company has reported this item
separately because the amount exceeded 10% of total
non-operating revenues.
The amount of “cash bonus received” at the end of
the previous consolidated accounting fiscal year was¥30,584 thousands.
2. Until the previous consolidated accounting fiscal year,
the Company reported loss on sale of notes receivable
in “Interest expense” under non-operating expenses.
For the consolidated fiscal accounting year underreview, the Company has reported this item separately
becausetheamountexceeded

10%

of

total

non-operating expenses.
The amount of the “loss on sale of notes receivable”
at the end of the previous consolidated accounting
fiscal year was ¥40,716 thousands.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.36

Notes to the Financial Statements(Notes to the Consolidated Balance Sheets)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year(As of October 31, 2007)

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

1. Matters related to non-consolidated subsidiaries and

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

affiliated companies are as follows.
1,307,796

2. Guarantees

Investment securities (stocks)

519,966

2. Guarantees

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

23,144

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

32,145

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

100,000

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

100,000

168,960

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

33,014

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

1,253,670

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

1,632,416

Guarantee of borrowing liabilitiesof Shanghai Jinheyuan
Equipment Rental Co., Ltd., anaffiliated company
Guarantee of finance leaseliabilities of Shanghai Jinheyuan
Equipment Rental Co., Ltd., anaffiliated company
Total

70,973363,078

Total
3. Discount on notes receivable, trade

307,034

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

3. Discount on notes receivable, trade

3,051,246
185,756

4. Liquidation of receivables based on receivablestransfer facility

4,971,036

Notes receivable, trade5,135,881

Liquidated claims bearing a right of recourse to the

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

Company and included in the balance of notes

receivable, trade transferred total ¥1,017,362

receivable, trade transferred total ¥1,164,588

thousands.

thousands.

5. Intangible fixed assets and goodwill includes negative

5. Intangible fixed assets and goodwill includes negative

goodwill of ¥594 thousands and goodwill of ¥60,800

goodwill of ¥330,905 thousand and goodwill of ¥58,266

thousands.

thousands.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.37

(Notes to the Consolidated Statements of Income)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2006
to October 31, 2007)

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

1. Major expense categories and amounts included in

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

selling, general and administrative expenses

Employee salaries and wages

Employee salaries and wages

5,854,852

Depreciation expense

833,686

Rents

1,551,266

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

166,598
552,610
283,831
18,46063,682

2. Gain on sale or retirement of fixed assets

Depreciation expense
Rents

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

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

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

194,714

2. Gain on sale or retirement of fixed assets

Land

906,198

Land

Buildings and structures

14,413

Buildings and structures

18,094

Machinery, equipment and

3,866

Other

444

Total

921,056

949

delivery equipment
Other

120

Total
3. Loss on sale or retirement of fixed assets

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

Land

26,859

Other

420

Buildings and structures
Machinery,equipment

and

Total

701

Rental equipment

20,134

Buildings and structures

38,751

8,902

Machinery, equipment and

5,901

9,195

delivery equipment
Other

delivery equipment
Other

Buildings and structures(Loss on retirement of fixed assets)

17,489(Loss on retirement of fixed assets)
Rental equipment

23,031

5,364

Total

16,34981,836

68,231

Summary of Company Financial Statements, FY Ended October 31, 2008

P.38

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

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

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

Kanamoto Group incurred an impairment loss on the

Kanamoto Group incurred an impairment loss on thefollowing asset groups.

following asset groups.

Location
Tomakomai City,
Hokkaido

Use
Dormant assets

Asset

Location
Tomakomai City,

Land

Hokkaido

Use

Asset

Dormant assets

Land

Asset groupings used by the Kanamoto Group to

Asset groupings used by the Kanamoto Group to

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

profitability can be determined regularly by business.

profitability can be determined regularly by business.

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

generate independent cash flow.

For certain dormant assets for which the asset value

For certain dormant assets for which the asset value

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

reduction as an impairment loss (¥890 thousands)

reduction as an impairment loss (¥490 thousands)

under extraordinary losses. This ¥890 thousands wasunder extraordinary losses. This ¥490 thousands wasfor land.

for land.

The recoverable value for this asset group is

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

evaluated using the inheritance tax assessment value

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

amount as a base.

5. Amortization of goodwill──────

During the consolidated accounting fiscal year, theCompany amortized the portion of goodwill generated
in past fiscal years pertaining to the reduction of excess
profitability.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.39

(Notes to the Consolidated Statement of Changes in Net Assets)
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)
Increase in number Decrease in number Number of shares at
Number of shares atof shares during the of shares during thethe end of thethe end of priorcurrent
current
current
consolidated
consolidated
consolidated
consolidated
accounting fiscal
accounting fiscal
accounting fiscal
accounting fiscal
year
year
year
year
Number of shares issued
Common stock (Note)
Total

32,872－－32,87232,872－－32,872

13

12

－

25

13

12

－

25

Treasury stock
Common stock (Note)
Total(Notes) The number of treasury stock shares of common stock increased by 12 thousand shares throughpurchases of shares comprising less than one investment unit.
2. Matters pertaining to subscription rights and treasury stock subscription rights
The Company had no material items to report.
3. Dividends(1) Dividends paid
Resolution

Class of stock

Total dividend(‘000 yen)

Dividend pershare (yen)Common stock

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 andthe dividend payment date is in the following fiscal year
Resolution

Class of stock

Total dividend Source of funds Dividend per(‘000 yen)for dividend
share (yen)Date of record

Payment date

January 29, 2008
Regular General
Meeting of theCommon stock

361,311

Earnedsurplus

11.0

October 31, 2007 January 30, 2008

Shareholders

Summary of Company Financial Statements, FY Ended October 31, 2008

P.40

Current consolidated accounting fiscal year (From November 1, 2007 to October 31, 2008)
1. Class of shares issued and number of shares, treasury stock and number of shares(Thousands of shares)
Increase in number Decrease in number Number of shares at
Number of shares atof shares during the of shares during thethe end of thethe end of priorcurrent
current
current
consolidated
consolidated
consolidated
consolidated
accounting fiscal
accounting fiscal
accounting fiscal
accounting fiscal
year
year
year
year
Number of shares issued
Common stock (Note)
Total

32,872－－32,87232,872－－32,872

25

5

－

30

25

5

－

30

Treasury stock
Common stock (Note)
Total(Notes) The number of treasury stock shares of common stock increased by 5 thousand shares throughpurchases of shares comprising less than one investment unit.
2. Matters pertaining to subscription rights and treasury stock subscription rights
The Company had no material items to report.
3. Dividends(1) Dividends paid
Resolution

Class of stock

Total dividend(‘000 yen)

Dividend pershare (yen)Common stock

361,311

Common stock

328,448

Date of record

Payment date

11.0

October 31, 2007

January 30, 2008

10.0

April 30, 2008

July 14, 2008

January 29, 2008
Regular General
Meeting of the
Shareholders
June 6, 2008
Board of Directors(2) Dividends for which the date of record falls in the current consolidated accounting fiscal year andthe dividend payment date is in the following fiscal year
Resolution

Class of stock

Total dividend Source of funds Dividend per(‘000 yen)for dividend
share (yen)Date of record

Payment date

January 29, 2009
Regular General
Meeting of theCommon stock

328,413

Earnedsurplus

10.0

October 31, 2008 January 30, 2009

Shareholders

Summary of Company Financial Statements, FY Ended October 31, 2008

P.41

(Notes to the Consolidated Statements of Cash Flows)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2006
to October 31, 2007)

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

1. Relationships between fiscal year-end balance for cash

1. Relationships between fiscal year-end balance for cash

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

consolidated accounting fiscal year balance sheet

consolidated accounting fiscal year balance sheet

Cash and deposits account

11,913,890

Cash and deposits account

Negotiable securities

5,300,000

Time deposits with a maturity

Cash and cash equivalents

17,213,890

longer than 3 months

14,070,345-203,650

Negotiable securities

3,700,000

Cash and cash equivalents

17,566,695

2. Main assets and liabilities of company converted to a
new consolidated subsidiary through an acquisition ofsharesCurrent assets

949,444

Fixed assets

732,930

Current liabilities-661,600

Long-term liabilities-363,623

Goodwill (negative goodwill)-244,642

Toyo Industry Co., Ltd. acquisition

412,510

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

cash equivalents
Balance: Expenditure for acquisition

231,931of Toyo Industry Co., Ltd.
3. Details of major non-cash transactions

3. Details of major non-cash transactions

The amount of assets and liabilities related to

The amount of assets and liabilities related to

installment transactions that are newly accounted for

installment transactions that are newly accounted for

during this consolidated accounting fiscal year isduring this consolidated accounting fiscal year is¥2,119,697 thousands respectively.

¥3,410,178 thousands respectively.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.42

(Notes for Leasing Transactions)(Unit: Thousands of yen)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2006
to October 31, 2007)
1. Finance lease transactions except for leases that

Current Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)
1. Finance lease transactions except for leases thattransfer ownership of the property to the lessee.

transfer ownership of the property to the lessee.

(1) Amounts corresponding to lease property(1) Amounts corresponding to lease property

acquisition price, accumulated depreciation andacquisition price, accumulated depreciation andoutstanding balances at the end of the consolidated

outstanding balances at the end of the consolidated

fiscal year accounting period

fiscal year accounting period

Acquisition
price

Acquisition
price

Outstandingbalance

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

Acquisition
price

Acquisition
price

Outstandingbalance

Rental assets

36,374,887

14,912,927

21,461,960

Other assets

116,048

90,04326,00436,490,935

15,002,970

21,487,965

Total(2) Outstanding balance of future lease payments at(2) Outstanding balance of future lease payments at

the end of the consolidated accounting fiscal year

the end of the consolidated accounting fiscal year

Within one year

7,485,431

Within one year

5,746,234

After one year

18,550,608

After one year

15,155,241

Total

26,036,039(3) Amount of lease payments, depreciation expense
and interest expense

Total

20,901,475(3) Amount of lease payments, depreciation expense
and interest expense

Lease payments

7,880,775

Lease payments

6,449,191

Depreciation expense

6,822,747

Depreciation expense

5,178,161

Interest expense

744,755(4) Accounting method for amount equivalent todepreciation expense

Interest expense

585,267(4) Accounting method for amount equivalent todepreciation expense

Straight-line depreciation using the lease term

Same as at left

as the depreciable life and zero residual value.
(5) Accounting method for amount equivalent tointerest expense(5) Accounting method for amount equivalent tointerest expense
Same as at left

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

2. Operating leases

Future lease payments
Within one year
After one year
Total

Future lease payments
1,857,756

Within one year

4,153,706

After one year

6,011,462

Total

2,068,320
3,412,748
5,481,069

Summary of Company Financial Statements, FY Ended October 31, 2008

P.43

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

Type

Negotiablesecurities
whosebalance ontheconsolidatedbalancesheet
exceeds theacquisition
price
Negotiablesecurities
whosebalance ontheconsolidatedbalancesheet is lessthan theacquisition
price(1) Stocks(Unit: Thousands of yen)

Prior consolidated accounting fiscal year

Current consolidated fiscal year

(As of October 31, 2007)(As of October 31, 2008)

Acquisition
price

Amountreported ontheconsolidatedbalance sheet

Valuation
profit or loss

Acquisition
price

Amountreported ontheconsolidatedbalance sheet

Valuation
profit or loss

1,527,075

4,908,799

3,381,723

1,160,156

1,485,642

325,485

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

1,527,075

4,908,799

3,381,723

1,160,156

1,485,642

325,485(2) Bonds
a. Government
bonds
b. Corporatebondc. Other(3) Othernegotiablesecurities
Subtotal(1) Stocks

39,23635,158- 4,078

606,790

556,482-50,307(2) Bonds
a. Government
bonds
b. Corporate
bond

－

－

－

－

－

－

－

－

－

－

－

－

c. Other

－

－

－

－

－

－

(3) Othernegotiablesecurities

103,000

87,203- 15,796

53,89553,895－

Subtotal

142,236

122,361- 19,874

660,685

610,377-50,307

1,669,311

5,031,160

3,361,849

1,820,842

2,096,020

275,177

Total

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

(Unit: Thousands of yen)

Prior Consolidated Accounting Fiscal Year

Current Consolidated Accounting Fiscal Year

(From November 1, 2006

(From November 1, 2007

to October 31, 2007)

to October 31, 2008)

Selling amount

Total gain on sale

Total loss on sale

287,528－

523,733

Selling amount

Total gain on sale

Total loss on sale

989

1,339

44,168

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

Prior consolidated accounting fiscal year

Current consolidated fiscal year

(As of October 31, 2007)(As of October 31, 2008)

Amount shown on the consolidatedbalance sheet

Amount shown on the consolidatedbalance sheet

Other negotiable securities
Unlisted stocks
Negotiable certificates ofdeposit
Other

211,400

211,400

5,300,000

3,700,000

59,822

20,595

Summary of Company Financial Statements, FY Ended October 31, 2008

P.44

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

Current consolidated fiscal year

(As of October 31, 2007)(As of October 31, 2008)

Type
Withinone year(1) Bonds
a. Government
bonds

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

Withinone year

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

－

－

－

－

－

－

－

－

b. Corporate bonds

－

－

－

－

－

－

－

－

c. Other

－

－

－

－

－

－

－

－

(2) Other negotiablesecurities

－

－

－

87,203－－－53,895

Total

－

－

－

87,203－－－53,895

Summary of Company Financial Statements, FY Ended October 31, 2008

P.45

(Notes related to Derivative Transactions)
1. Notes related to transaction conditions
Prior Consolidated Accounting Fiscal Year
(From November 1, 2006
to October 31, 2007)

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

a. Contents and purpose of derivative transactions

a. Contents and purpose of derivative transactions

The

Kanamoto

agreements

and

Group

uses

currency

forwardswap

exchangetransactions

Same as at leftfor

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

The Kanamoto Group has adopted a policy of using

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

Summary of Company Financial Statements, FY Ended October 31, 2008

P.46

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

Current Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)c. Transaction-related risksc. Transaction-related risksSame as at left

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

d. Transaction risk management system
Same as at left

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

transaction market prices

Forward agreements and currency swap transactions

Same as at left

accounted for on the Company’s financial statements
throughconversion

currency-denominatedliabilities

by

being

of

the

money

relevant

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

2. Notes related to transaction market prices etc.
Prior consolidated accounting fiscal year (As of October 31, 2007)
The Company had no material items to report.
Current consolidated accounting fiscal year (As of October 31, 2008)
The Company had no material items to report.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.47

（Notes related to accrued employees retirement benefit）
1. Summary of the employees retirement benefit system adopted by the Company
The Company and certain consolidated subsidiaries have established a defined-benefit pension system(cash balance system) and defined contribution pension system. In addition, when an employee retires orleaves the Company, in some cases the Company pays an additional retirement amount that is notcovered by the reserve for accrued employees retirement benefit when using actuarial accounting basedon retirement benefit accounting. Certain consolidated subsidiaries have adopted a termination
allowance plan and tax qualified pension plan system, or have joined the Kobe Machinery and Metal Firms
Employees Pension Fund as a welfare pension fund system.
The items concerning multi-employer pension plans that account for required contribution amounts as
employee retirement benefit costs are described below.
(1) Items concerning funded status of the pension plans (As of March 31, 2008)
Pension assets¥30,556,685 thousands

Benefit obligations under pension funding calculation¥38,417,719 thousands

Difference-¥7,861,033 thousands(2) Ratio of consolidated subsidiary contributions to total contributions
to the plans (From April 1, 2007 to March 31, 2008)

1.490%(Supplemental information)
Beginning from the consolidated accounting fiscal year under review, the Company has adopted thePartial Amendments to Accounting Standard for Retirement Benefits (Part 2) (Accounting Standards
Board of Japan Accounting Standard Statement No. 14 dated May 15, 2007).
2. Details of the Company’s liability for accrued employees retirement benefit(Unit: Thousands of yen)
Prior consolidated accounting
fiscal year
(As of October 31, 2007)

Current consolidated
accounting fiscal year
(As of October 31, 2008)(1) Liability for accrued employees retirement benefit-4,205,807-4,519,281(2) Pension assets

3,277,759

2,317,053-928,048-2,202,227－－-7,932-1,122,221－－-935,980-1,080,005－－-935,980-1,080,005(3) Liability for unreserved accrued employees
retirement benefit (1) ＋(2)(4) Unrecognized transitional obligation(5) Unrecognized actuarial differences(6) Unrecognized past years’ service obligation (change
in liability)(7) Net liability shown on the consolidated balance
sheets (3) + (4) + (5) +(6)(8) Prepaid pension expense(9) Accrued employees retirement benefits (7) -(8)(Note)The Company’s consolidated companies have adopted the simple method for calculating the accrued employees’
retirement benefit.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.48

3. Details of accrued employees retirement benefit expense(Unit: Thousands of yen)
Prior Consolidated Accounting
Fiscal Year
(From November 1, 2006
to October 31, 2007)

Current Consolidated
Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)(1) Service costs (Note 1)

306,260

309,788(2) Interest costs

83,47582,065(3) Expected return on plan investments（reduction）

122,562

128,218(4) Amortization of prior service cost (Note 2)-845,319－

16,65839,828(6) Amortization of net transition obligation－－(7) Amortization of transitional obligation－

20,031(8) Employees retirement benefit expense-561,487

323,495(5) Write-off of expense for actuarial based difference(Notes) 1. The employees retirement benefit expenses at consolidated subsidiary companies that have adopted the simple
method are included in service costs.
2.When it transferred its defined benefit corporate pension plan (fund-type) to a defined benefit corporate pension
plan (contract-type) and introduced a cash balance system, the Company recognized a liability for past service
obligation (amount of reduction in liability).
The Company accounted for the ¥845,319 thousands expensed portion of past service obligation in extraordinary
profits.

4. Matters related to the basis for accounting for the accrued employees retirement benefit andother items
Prior consolidated accounting Current consolidated accounting
fiscal year
fiscal year
(As of October 31, 2007)(As of October 31, 2008)(1) Discount rate (%)

2.00

2.00

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

4.00

4.00

(3) Method of allocating projected benefits to periods

Service period fixedService period fixed

benefit basis

benefit basis－－of service(4) Amortization period of past years’ service liability(5) Amortization period for actuarial differences

10 years beginning from the

10 years beginning from thenext consolidated accounting

next consolidated accounting

fiscal year

fiscal year－－(6) Number of years for amortization of one-timevaluation difference for change in accounting
standards

Summary of Company Financial Statements, FY Ended October 31, 2008

P.49

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

Current consolidated accounting fiscal year

(As of October 31, 2007)(As of October 31, 2008)

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

deferred tax liabilities

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

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

150,159
110,081
377,849
53,584
223,382
267,690
240,565

Amount of loss carried forward
Deferred tax assets subtotal
Valuation reserve
Total deferred tax assets

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

Amount of loss carried forward

1,409,813

Others276,183

1,660,294

Others391,272

348,746

3,224,399

Deferred tax assets subtotal

3,554,152-1,823,543

Valuation reserve-2,110,879

1,400,855

Total deferred tax assets

1,443,272

Deferred tax liability
Valuation difference on otherinvestment securities

Deferred tax liability
Valuation difference on otherinvestment securities

1,358,187

Net deferred tax assets

42,668Net deferred tax assets

Disclosure item:

131,496
1,311,776

Disclosure item:

Current assets - Deferred tax assets

360,573

Current assets - Deferred tax assets

256,893

Fixed liabilities – other-317,904

Fixed assets - Deferred tax assets

1,054,883

2. Causes of principal differences between the statutory

2. Causes of principal differences between the statutory

tax rate and burden ratio for corporate and other taxes

tax rate and burden ratio for corporate and other taxes

following application of tax effect accounting by major

following application of tax effect accounting by major

category.

category.

Statutory corporate tax rate

40.4 ％（Adjustment）

Statutory corporate tax rate

40.4 ％（Adjustment）

Local tax equalization
Items not included permanently in losses
such as expense accountAffect from application of asset
impairment accounting for fixed assets

1.6％

Local tax equalization
Items not included permanently in losses
such as expense accountAffect from application of asset
impairment accounting for fixed assets

0.6

％

5.3

％

2.3

％

0.0

％

0.0

％

Goodwill amortization amount excluded
from expenses

2.3％

Goodwill amortization amount excluded
from expenses

4.1％

Consolidated subsidiary losses

1.1％

Consolidated subsidiary losses

8.1

％

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

0.8

％

％

％

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

1.1

46.8

61.3

％

Summary of Company Financial Statements, FY Ended October 31, 2008

P.50

(Business Segment Information)
1. Segment Information by Type of BusinessPrior consolidated accounting fiscal year (From November 1, 2006 to October 31, 2007)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

63,072,214

5,120,674

434,024

68,626,913－

68,626,913

－

－

－

－

－

－

Eliminations
or entire
Consolidated
company

Total

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

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

Total

4,054,791- 10,008

31,621

4,076,403

160,130

4,236,534

II. Assets, depreciation expenseand capital disbursements
Assets52,362,530

1,403,383

750,501

54,516,415

30,639,382

85,155,797

Depreciation expense

4,615,601

3,154

10,096

4,628,852

19,825

4,648,677

890

－

－

890

－

890

4,689,313

22,059－4,711,373

1,481,060

6,192,434

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

Principal products

Construction equipment
rentals

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

Steel sales

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

Information products andother businesses

Computers and peripheral devices, telecommunications-related
equipment

3. The total amount for assets that were eliminated or included in the categories for all companies was ¥30,639,382
thousands and represents primarily idle working capital (cash, deposits and negotiable securities) long-term
investment funds (investment securities) and assets used in administrative departments at the parent
company.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.51

Consolidated fiscal year under review (From November 1, 2007 to October 31, 2008)(Unit: Thousands of yen)
Construction
equipment
rentalbusiness

Steel sales
business

Information
products
businessand otherbusinesses

62,802,266

6,098,099

511,389

69,411,755－

69,411,755

－

－

－

－

－

－

Eliminations
or entire
Consolidated
company

Total

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

62,802,266

6,098,099

511,389

69,411,755－

69,411,755

Operating expenses

60,628,109

6,064,501

450,852

67,143,464

40,437

67,183,901

Operating income

Total

2,174,156

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

2,227,853

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

2,139,776

579,916

66,139,958

25,601,341

91,741,299

Depreciation expense

5,371,994

3,718

－

5,375,712

198,071

5,573,783

Capital disbursements

490

－

－

490

－

490

11,302,346

2,640

－

11,304,987

75,134

11,380,121

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

Principal products

Construction equipment
rentals

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

Steel sales

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

Information products andother businesses

Computers and peripheral devices, telecommunications-related
equipment

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

2. Segment information by location
The Company does not report segment information by location because the Company did not have any
consolidated subsidiaries or important offices located in countries or regions outside of Japan during theprior consolidated fiscal year and the current consolidated fiscal year.
3. Foreign sales
Prior consolidated accounting 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.
Current consolidated accounting fiscal year (From November 1, 2007 to October 31, 2008)
The Company has omitted a description of foreign sales because foreign sales are less than 10% ofconsolidated revenues.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.52

Related party disclosures
Prior consolidated accounting fiscal year (From November 1, 2006 to October 31, 2007)(1) Directors and individual large shareholders, etc.
Balance at end

Relationship
Capital or
funding
Attribute

Name

Address(Thousandyen)Line ofbusiness orPercentage ofTransactionofvoting rights

Details ofamountconsolidated

transaction(Thousandowned (Indirect)

position(%)

Concurrently
serving as
director etc.

Business

Accountyen)relationshipfiscal year
(Thousandyen)

Kanamoto’s

Company for

President andwhich directors

close relatives

and relatives
own theKanamoto

Chuo-ku,majority of

Capital Co., Ltd.

Sapporo, Japan

52,006voting rights inReal estate

directly own

leasing85.25% andagreement

indirectly own

Selling,
2

GroundLease of land

lease

for branch

1,200

－
administrati
ve expenses

2.79% of total

equitygeneral andoutstanding

calculation

shares
Notes andKanamoto’s

Company for

Purchase,

Purchase, sale,sale, repair,

repair andand importimport andand export

export of steel

of products

materials

which directors

Purchase,

directors andand relatives

sale, repair

close relatives

and importdirectly own

and export

100.00% of

voting rights inof steeltotal

Groundequitymaterials

outstanding

lease

own theKanasteel Co.,

Muroran,majority ofLtd.

Hokkaido

30,000accounts
receivable,

2,643

trade
Notes and
60,594accounts
payable,31,549trade
1

sharescalculation

415,042

Purchaseand sale of
byproducts

Selling,

Lease of landfor branch

2,686

officegeneral and－administrati
ve expenses
Non-operati

Sale of steel
scrap

2,126

ng
－
revenues,
other

Kanamoto’s

Company forwhich directors

Sale, repair,and relatives
own theKanax Co., Ltd.

majority of

Muroran,
Hokkaido

and rental of
10,000steel sheet
floor plates

voting rights in

etc.

equitydirectors anddirectly own
100.00% of

sharesKanamoto’s
Sale, repair,own theKanarentem

Muroran,majority ofLtd.

Hokkaido

voting rights inand rental of
5,000

steel sheet
floor plates
etc.

equity1of products

directors andPurchase,close relatives
directly own
100.00% of

and importand export

outstanding

Company for

and relatives

sale, repair,totalcalculation

which directors

Purchase,close relatives

sale, repair,1

total
outstanding

and importand exportof products

Notes and

Sale, repair,and rental ofsteel sheet floor

69,608accounts
payable,plates etc.

tradeSale, repair,Notes andand rental ofsteel sheet floor

17,106

plates etc.

accounts
payable,36,177

6,018

trade

sharescalculation

Notes: 1. The transaction amounts shown in (1) above do not include consumption tax; consumption tax is included in thefiscal year-end balance.
2. Terms of the transactions and the Company’s policy for deciding terms of the translations(1) Prices for the sales transactions to the Company indicated above are determined by referring to market prices,and the payment terms are identical to the terms for other normal transactions.
(2) The Company makes its decisions on land leases and land sales based on assessed values by a real estateappraiser and the price level of nearby similar properties.
Summary of Company Financial Statements, FY Ended October 31, 2008

P.53

Current consolidated accounting fiscal year (From November 1, 2007 to October 31, 2008)(1) Directors and individual large shareholders, etc.
Balance at end

Relationship
Percentage of

Capital or
funding
Attribute

Name

Address(Thousandyen)Line ofvoting rights

business orowned (Indirect)

position(%)

Concurrently
serving as
director etc.

Business

TransactionofDetails ofamountconsolidated

transaction(ThousandAccountyen)relationshipfiscal year
(Thousandyen)

Kanamoto’s

Company for

President andwhich directors

close relatives

and relatives
own theKanamoto

Chuo-ku,majority of

Capital Co., Ltd.

Sapporo, Japan

52,006voting rights inReal estate

directly own

leasing85.25% andagreement

indirectly own

Selling,
2

GroundLease of land

lease

for branch

1,200

－
administrati
ve expenses

2.79% of total

equitygeneral andoutstanding

calculation

shares
Notes andKanamoto’s

Company for

Purchase,

Purchase, sale,sale, repair,

repair andand importimport andand export

export of steel

of products

materials

which directors

Purchase,

directors andand relatives

sale, repair

close relatives

and importdirectly own

and export

100.00% of

voting rights inof steeltotal

Groundequitymaterials

outstanding

lease

own theKanasteel Co.,

Muroran,majority ofLtd.

Hokkaido

30,000accounts
receivable,

1,248

trade
Notes and
70,972

accounts
payable,44,085

trade
1

sharescalculation

511,637

Purchaseand sale of
byproducts

Selling,

Lease of landfor branch

2,686

officegeneral and－administrati
ve expenses
Non-operati

Sale of steel
scrap

9,176

ng
－
revenues,
other

Kanamoto’s

Company forwhich directors

Sale, repair,and relatives
own theKanax Co., Ltd.

majority of

Muroran,
Hokkaido

and rental of
10,000steel sheet
floor plates

voting rights in

etc.

equitydirectors anddirectly own
100.00% of

sharesKanamoto’s
Sale, repair,own theKanarentem

Muroran,majority ofLtd.

Hokkaido

voting rights inand rental of
5,000

steel sheet
floor plates
etc.

equity1of products

directors andPurchase,close relatives
directly own
100.00% of

and importand export

outstanding

Company for

and relatives

sale, repair,totalcalculation

which directors

Purchase,close relatives

sale, repair,1

total
outstanding

and importand exportof products

Notes and

Sale, repair,and rental ofsteel sheet floor

70,330accounts
payable,plates etc.

tradeSale, repair,Notes andand rental ofsteel sheet floor

21,370plates etc.

accounts
payable,37,462

13,415

trade

sharescalculation

Notes: 1. The transaction amounts shown in (1) above do not include consumption tax; consumption tax is included in thefiscal year-end balance.
2. Terms of the transactions and the Company’s policy for deciding terms of the translations(1) Prices for the sales transactions to the Company indicated above are determined by referring to market prices,and the payment terms are identical to the terms for other normal transactions.
(2) The Company makes its decisions on land leases and land sales based on assessed values by a real estateappraiser and the price level of nearby similar properties.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.54

(Per Share Information)
Prior Consolidated Accounting Fiscal Year
(From November 1, 2006
to October 31, 2007)
Net assets per share

Current Consolidated Accounting Fiscal Year
(From November 1, 2007
to October 31, 2008)¥1,216.98

Net income per share of common stock
Net income per share of common
stock after adjustment for potential
ordinary shares¥92.40－Net assets per share¥1,155.47

Net income per share of common stock
Net income per share of common
stock after adjustment for potential
ordinary shares¥19.61－The Company has not reported net income per share of

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

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

would have a dilution effect.

(Note) The basis for calculating consolidated fiscal year earnings per share and earnings per share after adjustment forpotential ordinary shares is as follows.
(Unit: Thousands of yen)
Prior Consolidated Accounting
Fiscal Year
(From November 1, 2006
to October 31, 2007)

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

3,035,418

644,038－－

Net income related to common stock

3,035,418

644,038

Average number of outstanding shares
during the fiscal year

32,852,040

32,844,319

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

Summary of Company Financial Statements, FY Ended October 31, 2008

P.55

Company Financial StatementsV

1. Comparative Balance Sheets(Unit: Thousands of yen)
Prior Fiscal Year(As of October 31, 2007)
Classification

Notes

AmountCurrent Fiscal Year(As of October 31, 2008)

Percent

AmountPercent(Assets)
I

Current assets
11,115,248

12,189,646

2,255,833

2,106,194

3. Accounts receivable, trade

10,825,811

10,537,290

4. Negotiable securities

5,300,000

3,700,000

5. Merchandise inventory

227,690259,968

6. Construction equipment

770,099

616,935－

147,054

8. Supplies

67,32372,526

9. Prepaid expenses

229,844

221,130

10. Deferred tax assets

355,902235,290

11. Income taxes receivable－

94,272

12. Consumption taxes
receivable－

267,463

178,753

85,219-435,092-411,379

1. Cash and deposits
2. Notes receivable, trade*4

7. Work in process

13. Other
Allowance for doubtful
accounts
Total Current Assets
II

30,891,414

30,121,614

37.3

35.3

Fixed assets(1) Tangible Fixed Assets
1. Rental equipment
Accumulated depreciation

26,315,583

2. Buildings

6,663,211

3. Structures

3,214,825*1

Accumulated depreciation

5,502,751

5. Vehicles and delivery
equipment

952,093

36,584

6. Tools, furnishings andfixtures729,096

817,784*1

3,321,397

1,017,436

3,574,404

725,396

30,9162,403

1,045,691

Accumulated depreciation

5,427,160

4,299,801

38,988

Accumulated depreciation

6,998,151
4,338,834

4,222,490
3,493,394

25,160,882 10,938,263
12,425,311

4,166,919

Accumulated depreciation

7. Land

9,297,639

12,165,963

Accumulated depreciation

4. Machinery and equipment

36,009,146

35,613,223

29,1651,750

1,046,723
227,907
25,996,422

837,986

208,736
27,999,448

Summary of Company Financial Statements, FY Ended October 31, 2008

P.56

8. Construction in progress

46,172

Total Tangible Fixed Assets

42,754,487

683,294
51.5

47,001,488

55.0(2) Intangible Fixed Assets
1. Goodwill

60,80021,6002. Software

46,92380,714

3. Telephone subscription
rights40,51240,431

Total Intangible Fixed
Assets148,2350.2

142,746

0.2(3) Investments and Other
Assets
1. Investment securities

5,249,609

2,272,537

2. Stock of affiliatedcompanies

2,649,554

3,510,688

8,107

8,107

4. Long-term loan toaffiliated company

900,000

1,386,742

5. Claims in bankruptcy,
claims in reorganizationand other similar claims

252,556

326,114

6. Long-term prepaid
expenses

52,935

67,1297. Deferred tax assets－

1,233,325

8. Insurance reserve

30,92132,496

9. Long-term guaranty
money deposited

960,852

971,125－

18,538

Allowance for doubtful
accounts-430,758-1,285,210

Reserve for investment
losses-565,171-406,663

Total investments andother assets

9,108,607

11.0

8,134,931

9.5

Total Fixed Assets

52,011,330

62.7

55,279,166

64.7

Total Assets

82,902,745

100.0

85,400,780

100.0

3. Advances

10. OtherSummary of Company Financial Statements, FY Ended October 31, 2008

P.57

Prior Fiscal Year(As of October 31, 2007)
Classification

Notes

AmountPercent

Current Fiscal Year(As of October 31, 2008)
AmountPercent(Liabilities)
I

Current liabilities
1. Notes payable, trade*2

7,660,014

8,492,680

2. Accounts payable, trade*2

2,456,499

2,298,699

3. Long-term bank loans due
within one year

8,818,000

9,251,000

4. Accounts payable, other

2,211,522

2,684,135

246,693

256,870

6. Corporate taxes payable

1,406,425－

7. Consumption and othertaxes

137,908－

8. Deposits

37,84439,4489. Accrued bonuses to
employees

499,457

487,359

10. Equipment notes payable

175,331

619,130

12. Other

108,885

123,738

5. Accrued expenses

Total Current Liabilities
II

23,758,582

28.7

24,253,064

28.4

Long-term liabilities

1. Long-term bank loans

14,926,000

18,334,000

2. Long-term accrued
expenses

2,353,188

2,891,152

3. Accrued employees
retirement benefits

928,956

1,001,191

4. Retirement allowances todirectors and auditors

89,386

101,376－

377,216

58,726－

5. Provision for loss on
guarantees
6. Long-term deferred tax
liability
Total long-term liabilities
Total Liabilities

18,356,256

22.1

22,704,937

26.6

42,114,839

50.8

46,958,001

55.0

Summary of Company Financial Statements, FY Ended October 31, 2008

P.58

Prior Fiscal Year(As of October 31, 2007)
Classification

Notes

AmountCurrent Fiscal Year(As of October 31, 2008)

Percent

AmountPercent(Net Assets)
I

Owners’ equity
1

Paid-in capital

2

Capital surplus

9,696,717

11.7(1) Capital legal reserve

10,817,389

10,817,389(2) Other capital surplus

143,480

143,480

Total capital surplus
310,960,869

13.2

9,696,717

11.3

10,960,869

12.8

Earned surplus(1) Earned legal reserve

1,375,287

1,375,287

19,601

19,601

General reserve

12,931,684

15,631,684

Earned surplus brought
forward3,823,794

617,502(2) Other earned surplus
Reserve for advanced
depreciation of fixed
assetsTotal earned surplus
4Treasury stock
Total Owners’ Equity

II

Valuation and translation
adjustments

1

Valuation difference onother investment
securities
Total valuation andtranslation adjustments

18,150,368

21.9

17,644,075

20.7-19,784-0.0-22,729-0.0

38,788,170

46.8

38,278,933

44.8

1,999,735

163,845

1,999,735

2.4

163,845

0.2

Total Net Assets

40,787,905

49.2

38,442,779

45.0

Total Liabilities and Net
Assets82,902,745

100.0

85,400,780

100.0

Summary of Company Financial Statements, FY Ended October 31, 2008

P.59

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

Notes

Prior fiscal year

Current fiscal year

(From November 1, 2006
to October 31, 2007)(From November 1, 2007
to October 31, 2008)

AmountPercent

AmountOperating revenues
40,519,332

1. Rental revenues

42,633,799

2. Sales

18,942,988 61,576,788

100.0 19,954,648 60,473,981

30,953,269

30,373,396

II

Percent

100.0

Cost of revenues

1. Cost of rental revenues
2. Cost of goods sold
Balance of merchandise
inventory at beginningof period

259,214227,690

Merchandise inventory
purchases

13,197,038

14,015,942

531,914514,766

13,988,167

14,758,399

Merchandise received
from other accounts
Total
Balance of merchandise
at end of period*2

227,690 13,760,477

259,968 14,498,430

Total cost of revenues

44,713,746

72.6

44,871,826

74.2

Gross profit

16,863,041

27.4

15,602,154

25.8

III Selling, general andadministrative expenses
1. Freight-out

57,01064,868

2. Vehicle fuel expense

152,135

188,473

3. Advertising and public
relations expense

134,953

169,514

4. Transfer to allowancefor doubtful accounts

123,403271,120

5. Director compensation

83,157

83,197

5,018,232

5,261,471

7. Bonuses

958,082

730,245

8. Transfer to accrued
bonuses to employees

499,457

487,359

9. Transfer to retirement
allowances to directors
and auditors

10,613

11,99010. Employees retirement
benefit expense

271,007257,289

11. Travel andtransportation
expenses309,882

313,275

6. Salary allowance

Summary of Company Financial Statements, FY Ended October 31, 2008

P.60

12. Entertainment
expenses

66,90285,27913. Insurance premiums

89,579107,957

14. Communications
expense333,882

332,083

15. Maintenance andrepairs

102,797

97,513

16. Consumables expense

305,307324,138

17. Utilities

241,721257,618

18. Taxes and publiccharge427,374

381,818

19. Welfare expenses

848,085

884,300

20. Depreciation expense

768,998

729,513

1,478,443

1,552,391

21. Rent
22. Other expenses

569,054 12,850,084

20.9

549,358 13,140,777

21.7

4,012,957

6.5

2,461,376

4.1

456,8100.8

548,9910.9

2,369,196

4.0

Operating income
IV Non-operating
revenues
1. Interest revenue

36,50238,513

2. Interest revenue onnegotiable securities

15,28531,369

3. Dividend income

50,74568,573

4. Gain on sale ofinvestment securities

287,528967

195,809

182,396

6. Insurance benefits

38,87725,544

7. Cash bonus received

104,680

4,462

5. Rents received

8. Other*1*1

123,499852,930

1.4

104,995

V Non-operating
expenses
1. Interest expense

312,601

347,058

2. Loss on sale of notes
receivable

68,66974,968

3. Other111,714

Ordinary income
VI492,9850.8

4,372,901

7.1

126,964

Extraordinary profits

1. Gain on disposal of fixed
assets*3

920,700

5,354

2. Valuation gain on
investment enterprisepartnership

8,128

－

3. Reversal of allowancefor doubtful accounts

19,53819,258

4. Reversal of allowance
for investment loss－

158,757

Summary of Company Financial Statements, FY Ended October 31, 2008

P.61

5. Gain on reversal of
accrued employees
retirement benefits

845,319

6. Other
VII

2,841

－
1,796,528

2.9

3,602

186,9730.3

1,315,999

2.2

1,240,170

2.1

1,056,702

1.8

183,467

0.3

Extraordinary losses

1. Loss on sale or disposal
fixed assets*4

63,90860,103

2. Impairment loss

*5

890

490

3. Valuation loss on
investment securities

11,01654,9784. Management loss on
investment partnershipenterprise

11,641

21,221

5. Reversal of provision forloss on guarantees ofsubsidiaries andaffiliates－

377,216

6. Transfer to reserve for
doubtful accounts foraffiliated company
stock

8,311

761,175

7. Other

19,858

Income before taxes
Corporate, local andbusiness taxes

2,203,734

Adjustment forcorporate and othertaxes

419,052

Net income

115,6260.2

6,053,803

9.8

40,812

983,680

2,622,787

4.2

3,431,016

5.6

73,021

Summary of Company Financial Statements, FY Ended October 31, 2008

P.62

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

Notes

Prior Fiscal Year

Current Fiscal Year

From November 1, 2006
to October 31, 2007

From November 1, 2007
to October 31, 2008

AmountPercent

AmountPercent

Rent

17,398,229

56.2

16,748,491

55.1

Repair expense

2,860,409

9.3

2,927,336

9.6

Freight charges

5,219,204

16.9

5,044,634

16.6

3,659,317

11.8

3,908,613

12.9

751,987

2.4

685,457

2.3

1,064,121

3.4

1,058,863

3.5

30,953,269

100.0

30,373,396

100.0

Depreciation expense*2

Consumables expense
Other costs

*3

Total

Note *1

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

Same as at left

Note *2

The Company posted rental equipment
asset
depreciation
expenseof¥3,460,445 thousands and construction
equipment depreciation expense of¥198,871 thousands.

The Company posted rental equipment
asset
depreciation
expenseof¥3,755,059 thousands and construction
equipment depreciation expense of¥153,553 thousands.

Note *3

Other costs consisted mainly of taxes
and public charges of ¥437,506
thousands, insurance premiums of¥566,629 thousands and interest of¥37,340thousands
relatedtoinstallment payment purchases of rental
equipment assets.

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

Summary of Company Financial Statements, FY Ended October 31, 2008

P.63

3. Statement of Changes in Net Assets
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
capitalCapitallegal
reserve

Other
capitalsurplus

Total capitalsurplus

Fixed

Legal
earnedsurplusassetsReserve foradvanced

GeneralreservedepreciationOctober 31, 2006 balance

9,696,717 10,817,389

143,480

10,960,869 1,375,287

19,601 11,831,684

Earnedsurplusbrought
forwardTotal
earnedsurplus2,084,192 15,310,766

Total
Owners’EquityTreasurystock-6,303 35,962,049

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

Dividends from surplus－

1,100,000-1,100,000-591,414-591,414-591,414

Net income－

3,431,016

3,431,016

3,431,016

Purchase of treasury stock

－

－

－

－

- 13,481-13,4812,839,602-13,4812,826,120

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

－

－

－

9,696,717 10,817,389

143,480－

10,960,869 1,375,287

Valuation and translation
adjustments
Valuation difference
Total valuation andon other investment
translation
securities
adjustments
October 31, 2006 balance

2,414,062－－

1,100,000

19,601 12,931,684

1,739,602

3,823,794 18,150,368-19,784 38,788,170

Total net assets

2,414,062

38,376,112

Transfer to general reserve－－

Dividends from surplus－-591,414

Net income－

3,431,016

Purchase of treasury stock－-13,481

Changes of items during the
fiscal year

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

-414,327-414,327-414,327

Total changes of items during
the fiscal year

-414,327-414,327

2,411,793

October 31, 2007 balance

1,999,735

1,999,735

40,787,905

Summary of Company Financial Statements, FY Ended October 31, 2008

P.64

Current fiscal year (From November 1, 2007 to October 31, 2008)(Unit: Thousands of yen)
Owners’ equity
Capital surplus

Earned surplus
Other earned surplus

Paid-in
capitalCapitallegal
reserve

Other
capitalsurplus

Total capitalsurplus

Fixed

Legal
earnedsurplusassetsReserve foradvanced

GeneralreservedepreciationOctober 31, 2007 balance

9,696,717 10,817,389

143,480

10,960,869 1,375,287

19,601 12,931,684

Earnedsurplusbrought
forwardTotal
earnedsurplus3,823,794 18,150,368

Treasury
stock

Total
Owners’Equity-19,784 38,788,170

Changes of items during the
fiscal year
Transfer to general reserve－-2,700,000－－

Dividends from surplus－

2,700,000-689,760-689,760-689,760

Net income－

183,467

183,467

183,467

Purchase of treasury stock－－-2,944-2,944-506,292-2,944-509,237

Net changes of items otherthan owners’ equity during the
fiscal year
Total changes of items during
the fiscal year
October 31, 2008 balance

－

－

－

9,696,717 10,817,389

143,480－

10,960,869 1,375,287

Valuation and translation
adjustments
Valuation difference
Total valuation andon other investment
translation
securities
adjustments
October 31, 2007 balance

1,999,735－－

2,700,000 -3,206,292

19,601 15,631,684

617,502 17,644,075-22,279 38,278,933

Total net assets

1,999,735

40,787,905

Transfer to general reserve－－

Dividends from surplus－-689,760

Net income－

183,467

Purchase of treasury stock－- 2,944

Changes of items during the
fiscal year

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

-1,835,889-1,835,889-1,835,889

Total changes of items during
the fiscal year

-1,835,889-1,835,889-2,345,126

163,845

163,845

38,442,779

October 31, 2008 balance

Summary of Company Financial Statements, FY Ended October 31, 2008

P.65

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

Summary of Company Financial Statements, FY Ended October 31, 2008

P.66

Significant accounting policies
Item
1. Valuation standards andvaluation methods fornegotiable securities

Prior fiscal year

Current fiscal year

From November 1, 2006
to October 31, 2007

From November 1, 2007
to October 31, 2008

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

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

market value method (the full amountof the valuation difference is charged to
net assets using the direct transfer tocapital method, with the disposal cost
determined by the moving averagemethod) based on the market price on
the fiscal year closing date or similar
prices

2. Appraisal standards andappraisal method forconstruction equipment

3. Appraisal standards andOther negotiable securities without amarket price

Other negotiable securities without a

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

Same as at left

Amount after deduction of depreciation
expense calculated according to thedeclining-balance method from theoriginal prices, by separate fiscal year ofpurchase

Same as at left

(1) Merchandise inventories

appraisal method for

Lower of cost or market based on themerchandise inventories

last-in, first-out methodmarket price(1) Merchandise inventories
Same as at left

and supplies――――――(2) Work in process
The Company has adopted the cost
method, cost being determined by the
specific identification method(3) Supplies(3) Supplies
The Latest purchase cost method
4. Depreciation method for
fixed assets(1) Tangible fixed assets
The Company has adopted thedeclining-balance method. Buildings onland that is leased under a fixed-term
land lease agreement, however, aredepreciated using the straight-line
method using the remaining period of
the fixed-term lease as the depreciable
life and zero residual value.
The depreciable lives mainly used by
the Company are as follows.

Same as at left
(1) Tangible fixed assets
Same as at left

Rental assets 5-10 years
Buildings
31-34 years(2) Intangible fixed assets(2) Intangible fixed assets

Summary of Company Financial Statements, FY Ended October 31, 2008

P.67

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

5. Standard for conversion ofThe
Companyhasstraight-line depreciation.
――――――

adoptedforeigncurrency-denominatedassets or liabilities into
Japanese yen

6. Accounting standards for(1) Allowance for doubtful accounts

Same as at left

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

allowances and reserves
To provide for losses on doubtful
accounts such as accounts receivable,
the Company charges to income anamountbasedonactualloss
experience for normal accounts, plus
an amount for projected unrecoverable
amounts based on assessments ofindividual accounts.
(2) Accrued bonuses to employees
To fully provide for expenditures ofbonuses the Company will pay toemployees, an amount is appropriatedto the reserve during the fiscal year
based upon a salary estimate amount.
(3) Accrued employees retirement
benefits
The Company provides for
accruedemployees
retirement
benefits based upon the projectedamounts of the liability for accrued
employees retirement benefits andthe value of pension assets at theend of the fiscal year.
At the end of each fiscal year, theCompany appropriates an amount to
the reserve to provide for the liability
recognized during the period.
Past years’ service liabilities are
fully written off in the year incurred.
The difference based on an
actuarial calculation is charged toincome beginning in the fiscal year
following
the year in which
incurred, with theamounts
allocated proportionately using thestraight-line method, based on a
specified number of years (10years) that is less than the averageremaining period of employment for
employees at the time the difference
arises.

Same as at left

(2) Accrued bonuses to employees
Same as at left

(3) Accrued employees retirement
benefits---------

Summary of Company Financial Statements, FY Ended October 31, 2008

P.68

(Supplemental information)
During the fiscal year under review,
the Company revised its retirement
benefits system and transferred its
defined benefit corporate pension
plan(fund-type)to a defined benefit corporate
pension plan(contract-type)and simultaneously
introduced acash balance system. In conjunction
with this change, the Company has
applied the “Accounting
for theTransfer
BetweenRetirement
Benefit Plans” (Financial AccountingStandards Implementation GuidanceNo. 1).
The Company accounted for the¥845,319 thousands affect fromthese transfers in extraordinary
profits as a "gain on reversal of
accruedemployees
retirement
benefits"(4) Retirement allowances to directors(4) Retirement allowances to directors

and auditors

and auditors

The
Company
providesfor
retirement allowances to directors andauditors based upon pertinent rules
and appropriated to the account at theend of the fiscal year proportionately
based upon length of service.
(5) Reserve for investment losses
The Company provides for losses
from the decline in real prices of assets
such as the stock of subsidiarycompanies that are subject to asset
impairment accounting by applying
internally established standards thattake into consideration subsidiarycompany operating results and asset
quality.
――――――

Same as at left

(5) Reserve for investment losses
Same as at left

(6) Provision for loss on guarantees
To provide for losses resulting from thefuture execution of liability guarantees,
the Company charges to income areasonably estimated loss amount basedontheoutstanding
amountofguarantees.

7. Lease transactions

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

Same as at left

Summary of Company Financial Statements, FY Ended October 31, 2008

P.69

8. Hedge transactions(1) Hedge transactions
The Company accounts for hedge(1) Hedge transactions
Same as at lefttransactions using allocations based on
accounting standards for foreign
currency-denominated transactions,and special rule accounting based on
accounting standards for financial
products.
(2) Hedge methods and hedgedtransactions
The Company uses currency swaps
and forward transactions in order toavoid the currency fluctuation risk
related to the Company’s foreign
currency-denominated straight bonds
and liabilities for import payments. The
Company also uses interest swaps to
avoid interest rate fluctuation risk
related to interest on bank borrowing.
(3) Hedging policies
The Company’s use of derivativetransactions is limited to hedging risk
within the scope of the Company’s
assets and liabilities subject to market
fluctuation risk.
(4) Method for evaluating theeffectiveness of hedges
The Company does not evaluate theeffectiveness of its hedge transactions
because it can assume that its currency
swap
transactions
andforwardtransactions will completely offset
market fluctuations or changes in cash
flow from the time the hedge begins
until it is terminated. In addition, theCompany’s interest swap transactions
fulfill the requirements for special ruleaccounting, and the Company has
elected to use this in place of anevaluation of effectiveness.
9. Other significant mattersfor preparation of the fiscal
year financial statements(2) Hedge methods and hedgedtransactions
Same as at left

(3) Hedging policies
Same as at left

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

Accounting treatment of consumption tax

Accounting treatment of consumption tax

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

Same as at left

Summary of Company Financial Statements, FY Ended October 31, 2008

P.70

Change in Presentation Method
Prior fiscal year
From November 1, 2006
to October 31, 2007

Current fiscal year
From November 1, 2007
to October 31, 2008

(Company Statements of Income)――――――

1. Until the previous fiscal year, the Company reported
cash bonus received as a separate category in “Other”
under non-operating revenues. For the fiscal year
under review, the Company has reported this item
separately because the amount exceeded 10% of total
non-operating revenues.
The amount of "cash bonus received" at the end of
the previous fiscal year was ¥29,909 thousands.
2. Until the previous fiscal year, the Company reported
loss on sale of notes receivable in “Interest expense”
under non-operating expenses. For the fiscal year
under review, the Company has reported this item
separately because the amount exceeded 10% of total
non-operating expenses.
The amount of the “loss on sale of notes receivable”
at the end of the previous fiscal year was ¥33,967
thousands.
3. Until the previous fiscal year, the Company reported
management

loss

on

investment

partnershipenterprise as a separate category in “Other” under
extraordinary losses. For the fiscal year under review,
the Company has reported this item separately
becausetheamountexceeded

10%

of

total

extraordinary losses.
The amount of the “management loss on investment
partnership enterprise” at the end of the previous fiscal
year was ¥18,303 thousands.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.71

Notes to the Financial Statements(Notes to the Balance Sheets)(Unit: Thousands of yen)
Prior Fiscal Year(As of October 31, 2007)

Current Fiscal Year(As of October 31, 2008)*1. Reduction to book value*1. Reduction to book value
Amounts for assets acquired for which accumulated

Amounts for assets acquired for which accumulated

book values were reduced by government subsidies

book values were reduced by government subsidies

Machinery and equipment

5,044

Machinery and equipment

3,569

Land

Land
Total

8,613

*2. Affiliated companies

5,044
3,569

Total

8,613

*2. Affiliated companies

Amounts classified as liabilities owed to affiliates

Amounts classified as liabilities owed to affiliates

Current liabilities

Current liabilities

Notes and accounts payable,

597,709trade
3. Contingent liabilities

Notes and accounts payable,

542,006trade
3. Contingent liabilities

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

23,144

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

32,145

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

150,000

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

150,000

Guarantee of consolidated
subsidiary debt (Kanki
Corporation)

882,000

Guarantee of consolidated
subsidiary debt (Kanki
Corporation)

756,000

Guarantee of non-consolidated
subsidiary debt (Flowtechno
Corporation)

100,000

Guarantee of non-consolidated
subsidiary debt (Flowtechno
Corporation)

100,000

Guarantee of affiliated company
debt (Shanghai Jinheyuan
Equipment Rental Co., Ltd.)

168,960

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

33,01470,973

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

1,253,670

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

Guarantee of affiliated company
finance lease liabilities(Shanghai Jinheyuan Equipment
Rental Co., Ltd.)*4. Liquidation of receivables based on receivables*4. Liquidation of receivables based on receivablestransfer facility

transfer facility
The Company liquidates receivables based on a

The Company liquidates receivables based on areceivables transfer facility.

receivables transfer facility.
Notes receivable, trade

4,971,036

Notes receivable, trade5,135,881

Liquidated claims bearing a right of recourse to the

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

Company and included in the balance of notes

receivable,

receivable,

thousands.

trade

transferred

total¥1,244,278

tradetransferred

total¥1,164,588

thousands.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.72

(Notes to the Statements of Income)(Unit: Thousands of yen)
Current fiscal year
(From November 1, 2007
to October 31, 2008)

Prior fiscal year
(From November 1, 2006
to October 31, 2007)*1. Transactions with affiliates*1. Transactions with affiliates

Seconded employees’ salaries

53,928

Seconded employees’ salaries

22,446

Rents received

114,400

Rents received

118,681*2. Balance in other accounts transferred to cost ofrentalequipment

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

assetsandconstruction

equipment soldequipment sold
Rental equipment assets

506,579

Rental equipment assets

513,791

Construction equipment

25,334

Construction equipment

975

Total

531,914*3. Gain on sale or retirement of fixed assets

Total*3. Gain on sale or retirement of fixed assets

Land

906,198

Land

Building

14,413

Building

Machinery and equipment
Total

514,766

88
920,700*4. Loss on sale or retirement of fixed assets

949
926

Machinery and equipment

3,478

Total

5,354

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

Buildings

312(Loss on retirement of fixed assets)

Other

75

Rental equipment assets

15,627(Loss on retirement of fixed assets)

Buildings

6,613

Rental equipment assets

15,914Structures

1,385

Buildings

25,268

Machinery and equipment

8,501

Structures

9,597

Tools, furnishings and fixtures

4,203

Machinery and equipment

5,056

Land

Other
Total

26,859716
63,908

Vehicles and delivery equipment403

Tools, furnishings and fixtures

3,194

Other
Total

279
60,103

Summary of Company Financial Statements, FY Ended October 31, 2008

P.73

Current fiscal year
(From November 1, 2007
to October 31, 2008)

Prior fiscal year
(From November 1, 2006
to October 31, 2007)*5. Impairment loss

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

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

Location

Use

Asset

Location

Use

Asset

Tomakomai City,
Hokkaido

Dormant assets

Land

Tomakomai City,
Hokkaido

Dormant assets

Land

Asset groupings used by the Kanamoto Group to

Asset groupings used by the Kanamoto Group to

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

profitability

profitability

can

be

determined

regularly

by

can

be

determined

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

as units that generate independent cash flow.

as units that generate independent cash flow.

For certain dormant assets for which the asset

For certain dormant assets for which the asset

value was less than book value, the Company

value was less than book value, the Company

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

accounted for the reduction as an impairment loss(¥890 thousands) under extraordinary losses. This(¥490 thousands) under extraordinary losses. This

¥890 thousands was for land.

¥490 thousands was for land.

The recoverable value for this asset group is

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

is evaluated using the inheritance tax assessment

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

other amount as a base.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.74

(Statements of Changes in Net Assets)
Prior fiscal year (From November 1, 2006 to October 31, 2007)
Class of treasury stock and number of shares(Thousands of shares)
Number of shares at Increase in number Decrease in number Number of shares at
end of prior fiscal of shares during the of shares during the end of the current
current fiscal year
year
current fiscal year
fiscal year
Treasury stock
Common stock(Note)

Total

13

12

－

25

13

12

－

25

(Note) The number of treasury stock shares of common stock increased by 12 thousand shares throughpurchases of shares comprising less than one investment unit.
Current fiscal year (From November 1, 2007 to October 31, 2008)
Class of treasury stock and number of shares(Thousands of shares)
Number of shares at Increase in number Decrease in number Number of shares at
end of prior fiscal of shares during the of shares during the end of the current
current fiscal year
year
current fiscal year
fiscal year
Treasury stock
Common stock(Note)

Total

25

5

－

30

25

5

－

30

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

Summary of Company Financial Statements, FY Ended October 31, 2008

P.75

(Notes to Leasing Transactions)(Unit: Thousands of yen)
Prior fiscal year
(From November 1, 2006
to October 31, 2007)

Current fiscal year
(From November 1, 2007
to October 31, 2008)

1. Finance lease transactions except for leases that

1. Finance lease transactions except for leases thattransfer ownership of the property to the lessee.

transfer ownership of the property to the lessee.

(1)

(1)

Amounts

corresponding

to

lease

property

Amounts

corresponding

to

lease

propertyacquisition price, accumulated depreciation andacquisition price, accumulated depreciation andoutstanding balances at the end of the fiscal year

outstanding balances at the end of the fiscal year

Acquisition
price

Accumulated Outstanding
depreciation
balance

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(2) Outstanding balance of future lease payments at
the end of the fiscal year

Acquisition
price

Accumulated Outstanding
depreciation
balance

Rental assets

31,613,741

12,858,642

18,755,098

Other assets

116,048

90,04326,00431,729,789

12,984,685

18,781,103

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

Within one year

6,773,121

Within one year

5,033,636

After one year

15,876,130

After one year

13,121,268

Total

22,649,251(3) Amount of lease payments, depreciation expense
and interest expense

18,154,905

Total(3) Amount of lease payments, depreciation expense
and interest expense

Lease payments

7,058,248

Lease payments

5,556,569

Depreciation expense

6,087,072

Depreciation expense

4,389,069

Interest expense

640,634(4) Accounting method for amount equivalent todepreciation expense

Interest expense

483,702(4) Accounting method for amount equivalent todepreciation expense

Straight-line depreciation using the lease term as

Same as at left

the depreciable life and zero residual value.
(5) Accounting method for amount equivalent tointerest expense(5) Accounting method for amount equivalent tointerest expense
Same as at left

Interest method using the difference between totallease payments and the acquisition price of thelease property, allocated to each year.
2. Operating leases

2. Operating leases

Future lease payments

Future lease payments

Within one year

1,660,523

Within one year

1,928,442

After one year

3,766,563

After one year

3,251,827

Total

5,427,086

Total

5,180,270（Negotiable Securities）
For the prior fiscal year (as of October 31, 2007) and this fiscal year (as of October 31, 2008), thestock of the Company’s subsidiary companies and affiliated companies did not have a market price.

Summary of Company Financial Statements, FY Ended October 31, 2008

P.76

(Notes Related to Tax Effect Accounting)(Unit: Thousands of yen)
Prior fiscal year
(As of October 31, 2007)

Current fiscal year
(As of October 31, 2008)

1. Major factors creating deferred tax assets and deferred

1. Major factors creating deferred tax assets and deferred

tax liabilities

tax liabilities
Deferred tax assets

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

124,770

Disallowance of reserve forinvestment losses
Other

228,329

Deferred tax assets subtotal

1,893,266

Valuation difference on negotiablesecurities-240,565

Total deferred tax assets

1,652,701

110,081375,298
36,111
201,780
261,445
240,565

314,883

Deferred tax liability
Valuation difference on otherinvestment securities

1,355,525

Net deferred tax assets

297,176

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

3,435
404,481
40,955
196,893
270,488
240,572
164,292
152,395
267,824Deferred tax assets subtotal

2,269,180

Valuation difference on negotiablesecurities-670,830

Total deferred tax assets

1,598,350

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

Disclosure classifications:

527,840

129,733
1,468,616

Disclosure classifications:
Current assets

355,902

Current assets

235,290

Property and equipment-58,726

Fixed assets

1,233,325

2. Causes of principal differences between the statutory

2. Causes of principal differences between the statutory

tax rate and burden ratio for corporate and other taxes

tax rate and burden ratio for corporate and other taxes

following application of tax effect accounting by major

following application of tax effect accounting by major

category.

category.

Statutory corporate tax rate

40.4

％

Statutory corporate tax rate

Local tax equalization
Items not included permanently in
losses such as expense accountAffect from application of asset
impairment accounting for fixed
assets
Other

1.4

％

0.6

％

0.0

％

Burden ratio for corporate and othertaxes after application of tax effectaccounting

43.3

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

40.4

％

7.6

％

3.3

％

0.0

％

11.9

％

22.8

％

-0.8

%

85.2

％

（Adjustment）

0.9 %
％

Burden ratio for corporate and othertaxes after application of tax effectaccounting

Summary of Company Financial Statements, FY Ended October 31, 2008

P.77

(Per Share Information)
Current fiscal year
(From November 1, 2007
to October 31, 2008)

Prior fiscal year
(From November 1, 2006
to October 31, 2007)
Net assets per share
Net income per share of common
stock
Net income per share of common
stock after adjustment for potential
ordinary shares

1,241.77 Yen
104.44 Yen－

The Company has not reported net income per share

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

1,170.56 Yen
5.59 Yen－

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

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

would have a dilution effect.

Note: The basis for calculating net income per share and net income per share on a fully diluted basis is provided below.
(Unit: Thousands of yen)
Current fiscal year
(From November 1, 2006
to October 31, 2007)

Prior fiscal year
(From November 1, 2006
to October 31, 2007)
Fiscal year net income
Amountnotattributable

to

major

shareholders
Fiscal year net income related to common
stock
Average number of shares outstanding
during the fiscal year

3,431,016

183,467－－

3,431,016

183,467

32,852,040

32,844,319(Material Events after the Close of the Consolidated Fiscal Year)
The Company had no material items to report.

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

Summary of Company Financial Statements, FY Ended October 31, 2008

P.78