Form 6-K
Table of Contents

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 6-K

 


 

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16 OF

THE SECURITIES EXCHANGE Act of 1934

 

For the month of April, 2005.

 


 

ORIX Corporation

(Translation of Registrant’s Name into English)

 


 

3-22-8 Shiba, Minato-Ku, Tokyo, JAPAN

(Address of Principal Executive Offices)

 


 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

 

Form 20-F x        Form 40-F ¨

 

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

 

Yes ¨        No x

 



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Table of Documents Filed

 

         Page

1.      

  ORIX’s Annual Consolidated Financial Results (April 1, 2004 – March 31, 2005) filed with the Tokyo Stock Exchange on Tuesday, April 26, 2005.     

 


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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

        ORIX Corporation

Date: April 27, 2005

     

By

 

/s/ Shunsuke Takeda

               

Shunsuke Takeda

               

Director

               

Vice Chairman and CFO

               

ORIX Corporation

 


Table of Contents

 

Consolidated Financial Results

April 1, 2004 – March 31, 2005

 


 

April 26, 2005

 

In preparing its consolidated financial information, ORIX Corporation and its subsidiaries have complied with accounting principles generally accepted in the United States of America, except as modified to account for stock splits in accordance with the usual practice in Japan.

 

U.S. Dollar amounts have been calculated at Yen 107.39 to $1.00, the approximate exchange rate prevailing at March 31, 2005.

 

These documents may contain forward-looking statements about expected future events and financial results that involve risks and uncertainties. Such statements are based on our current expectations and are subject to uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, those described under “Risk Factors” in the Company’s annual report on Form 20-F filed with the United States Securities and Exchange Commission and those factors described under “5. Business Risk” of the “Financial Results” herein.

 

The Company expects that it will be a “passive foreign investment company” under the U.S. Internal Revenue Code. A U.S. holder of the shares of the Company is therefore subject to special rules of taxation in respect of certain dividend, gain or other income on such shares. Investors should consult their tax advisors with respect to such rules, which are summarized in the Company’s annual report.

 

For further information please contact:

 

Corporate Communications

ORIX Corporation

Mita NN Bldg., 4-1-23 Shiba, Minato-ku, Tokyo 108-0014

JAPAN

Tel: (03) 5419-5102 Fax: (03) 5419-5901

E-mail: raymond_spencer@orix.co.jp

 


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Material Contained in this Report

 

The Company’s Financial information for the fiscal year from April 1, 2004 to March 31, 2005, filed with the Tokyo Stock Exchange and also made public by way of a press release.

 


Table of Contents

Consolidated Financial Results from April 1, 2004 to March 31, 2005

(U.S. GAAP Financial Information for ORIX Corporation and its Subsidiaries)

 

Corporate Name:

   ORIX Corporation

Listed Exchanges:

   Tokyo Stock Exchange (Securities No. 8591)
     Osaka Securities Exchange
     New York Stock Exchange (Trading Symbol : IX)

Head Office:

   Tokyo JAPAN
     Tel:(03)5419-5102
     (URL http://www.orix.co.jp/grp/ir_e/ir_index.htm)

 

Date Approved by Board of Directors:

   April 26, 2005

 

1. Performance Highlights for the Years Ended March 31, 2005 and 2004

 

(1) Performance Highlights - Operating Results (Unaudited)

 

     (millions of JPY)*1

 
     Total
Revenues


   Year-on-Year
Change


    Operating
Income


   Year-on-Year
Change


    Income before
Income Taxes *2


   Year-on-Year
Change


 

March 31, 2005

   916,950    21.2 %   130,957    54.8 %   154,347    51.4 %

March 31, 2004

   756,670    5.3 %   84,572    127.5 %   101,954    124.6 %
     Net Income

   Year-on-Year
Change


    Basic
Earnings Per Share


   Diluted
Earnings Per Share*3


   Return on
Equity


    Return on
Assets *4


    Operating
Margin *5


 

March 31, 2005

   91,496    69.4 %   1,087.82    1,002.18    14.2 %   2.6 %   16.8 %

March 31, 2004

   54,020    78.6 %   645.52    601.46    10.1 %   1.8 %   13.5 %

1. Equity in Net Income of Affiliates was a net gain of JPY 20,043 million for the year ended March 31, 2005 and a net gain of JPY 17,924 million for the year ended March 31, 2004.
2. The average number of shares was 84,110,243 for the year ended March 31, 2005 and 83,685,449 for the year ended March 31, 2004.
3. Changes in Accounting Principles     Yes (    ) No ( x ) (except for adoptions of new accounting principles)

 

*Note 1:

  Unless otherwise stated, all amounts shown herein are in millions of Japanese yen or millions of U.S. dollars, except for Per Share amounts which are in single yen.

*Note 2:

  “Income before Income Taxes” as used throughout the report represents “Income before Discontinued Operations, Extraordinary Gain and Income Taxes.”

*Note 3:

  In accordance with the requirements of EITF 04-8, diluted earnings per share for the year ended March 31, 2004 is revised retroactively.

*Note 4:

  This figure has been calculated using Income Before Income Taxes in accordance with Tokyo Stock Exchange disclosure practice. The figure on following pages is calculated using Net Income.

*Note 5:

  In this context, Operating Margin is calculated by dividing Income Before Income Taxes by Total Revenues.

 

(2) Performance Highlights - Financial Position (Unaudited)

 

     Total Assets

   Shareholders’
Equity


   Shareholders’
Equity Ratio


    Shareholders’
Equity Per Share


March 31, 2005

   6,068,953    727,333    12.0 %   8,322.96

March 31, 2004

   5,624,957    564,047    10.0 %   6,739.64

 

1. The number of outstanding shares was 87,388,706 as of March 31, 2005 and 83,691,007 as of March 31, 2004.

 

(3) Performance Highlights - Cash Flows (Unaudited)

 

     Cash Flows
from Operating Activities


   Cash Flows
from Investing Activities


    Cash Flows
from Financing Activities


    Cash and Cash Equivalents
at End of Period


March 31, 2005

   126,467    (408,004 )   274,343     145,380

March 31, 2004

   152,812    123,978     (328,284 )   152,235

 

(4) Number of Consolidated Subsidiaries and Affiliates

 

Consolidated Subsidiaries

   193

Non-consolidated Subsidiaries

   0

Affiliates

   82 (Of which 82 are accounted for by the equity method)

 

(5) Changes in Accounting Treatment

 

Additions to and deletions from consolidated subsidiaries and affiliates

Additions: Consolidated Subsidiaries 14, Affiliates 14

Deletions: Consolidated Subsidiaries 21, Affiliates 6

 

2. Forecasts for the Year Ending March 31, 2006 (Unaudited)

 

Fiscal Year


   Total
Revenues


   Income before
Income Taxes


   Net Income

March 31, 2006

   880,000    162,000    96,000

 

Note:     Basic Earnings Per Share is forecasted to be JPY 1,098.54.

 

In addition, ORIX has delisted from the Nagoya Stock Exchange on October 23, 2004.

 


Table of Contents

Group Position

 

The main contents of each operation and the positioning of ORIX Corporation and its subsidiaries are given below. The following classification is the same as that used in the classification of information by segment.

 

Operations in Japan

 

(1) Corporate Financial Services

 

This business centers on direct financing leases and installment loans, other than real estate loans, to corporate customers as well as the sale of a variety of financial products and other fee business.

 

[Main related companies]

 

ORIX Corporation, ORIX Alpha Corporation, Nittetsu Lease Co., Ltd.

 

(2) Automobile Operations

 

This business principally comprises automobile leasing operations and automobile rental operations.

 

[Main related companies]

 

ORIX Auto Corporation

 

(3) Rental Operations

 

This business principally comprises the rental and lease of precision measuring equipment, personal computers and other equipment to corporate customers.

 

[Main related companies]

 

ORIX Rentec Corporation

 

(4) Real Estate-Related Finance

 

This business encompasses real estate loans to corporate customers and housing loans to individuals. ORIX is also expanding its business involving loan servicing, commercial mortgage-backed securities (CMBS) and REITs.

 

[Main related companies]

 

ORIX Corporation, ORIX Trust and Banking Corporation, ORIX Asset Management & Loan Services Corporation

 

(5) Real Estate

 

This business consists principally of condominium development, office building development and sales, office rental activities, building maintenance services as well as the operation of such facilities as hotels, employee dormitories and training facilities.

 

[Main related companies]

 

ORIX Corporation, ORIX Real Estate Corporation, ORIX Facilities Corporation

 

(6) Life Insurance

 

This segment consists of direct and agency life insurance sales and related activities conducted by ORIX Life Insurance.

 

[Main related companies]

 

ORIX Life Insurance Corporation

 

(7) Other

 

The other segment encompasses securities business, venture capital operations, consumer card loan operations, investment banking and new businesses.

 

[Main related companies]

 

ORIX Corporation, ORIX Credit Corporation, ORIX Capital Corporation, ORIX Securities Corporation, ORIX Baseball Club Co., Ltd., ORIX COMMODITIES Corporation, ORIX Investment Corporation

 

Overseas Operations

 

(1) The Americas

 

Principal businesses in the Americas segment are direct financing leases, corporate lending, securities investment, commercial mortgage-backed securities (CMBS) related business, real estate development, futures trading and reinsurance.

 

[Main related companies]

 

ORIX USA Corporation, Stockton Holdings Limited

 

(2) Asia, Oceania and Europe

 

Principal businesses in Asia, Oceania and Europe involve direct financing leases, operating leases for precision measuring equipment, transportation equipment and aircraft, corporate lending and securities investment.

 

[Main related companies]

 

ORIX Asia Limited, ORIX Taiwan Corporation, ORIX Leasing Malaysia Berhad,

ORIX Investment and Management Private Limited, ORIX Leasing Singapore Limited, PT. ORIX Indonesia Finance,

INFRASTRUCTURE LEASING & FINANCIAL SERVICES LIMITED, ORIX Leasing Pakistan Limited,

ORIX Australia Corporation Limited, ORIX Aviation Systems Limited

 

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Group Structure

 

The structure of principal business of the ORIX Group is as follows.

 

LOGO

 

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[Management Policies]

 

1. Management Policy

 

The basic policy for management at ORIX is to fulfill our social responsibilities as a corporation by continuing to optimize growth in corporate and shareholder value through unique and inventive business activities.

 

2. Profit Distribution Policy

 

The basic policy for profit distribution at ORIX is to foster sustainable growth of the company and shareholder value through the optimal use of retained earnings in addition to steady distributions to investors.

 

3. Vision and Policy for Lowering Investment Units

 

ORIX believes that it is necessary to take appropriate measures in reviewing its policy regarding the minimum investment unit for trading on the stock exchange to allow for participation by a broader range of investors.

 

With regard to lowering investment units, our policy is that we will take certain factors such as market demand into account, and analyze the costs and benefits of adopting such demands while we address this issue.

 

4. Target Management Index

 

ORIX is building its business portfolio with a focus on balancing profitability, growth and soundness of the company. To achieve this, we set ROE, ROA, and the shareholders’ equity ratio as important management indexes and continue to work to make improvements in these.

 

5. Mid- to Long-Term Corporate Management Strategy

 

ORIX is working to establish the following corporate image:

 

    A company that can produce an economic impact by creating new standards of value highly appraised by the market, and engaging in business activities with “pride.”

 

    A company with a high ability to meet various expectations from society including shareholders, customers and employees that practices modesty and is “trusted” by related parties.

 

    A company that complies with social standards, has a superior corporate culture with fair and transparent business activities, maintains a harmonious balance with society and is widely “respected” around the world.

 

We continuously strive to provide new and inventive services that are both multidimensional and multinational in order to accomplish the above stated corporate image.

 

Additionally, we are working to further enhance our risk management and corporate governance to achieve sustainable growth of our corporate value.

 

6. Challenges to be Addressed

 

ORIX is currently working on the following important challenges:

 

1) Further Expansion of our Existing Franchises

 

2) Cultivating New Franchises

 

3) New Overseas Business Development

 

4) Reinforcement of Risk Management Policies

 

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1) Further Expansion of our Existing Franchises

 

ORIX has established a solid operating foundation by cross-selling a wide range of financial products such as leases, loans, life insurance policies and investment products mainly to small and medium-sized companies, as well as providing solutions related to corporate restructuring and helping companies improve their financial positions.

 

Furthermore, based on this core business model discussed above, we have developed a number of unique business operations in peripheral areas. For example, we are proactively working to raise our profitability by focusing on businesses such as automobile maintenance leases in our “Automobile Operations” segment and precision measuring and other equipment rentals in our “Rental Operations” segment, both of which are more service-oriented than the general field of financial services. We will continuously strive to increase our profitability and expand our existing franchises.

 

2) Cultivating New Franchises

 

In recent years, ORIX has been developing new businesses by taking advantage of opportunities resulting from changes occurring in the macro-economy as well as structural changes taking place in the Japanese financial system. We are planning to further strengthen our position in such businesses through the development of new franchises.

 

For example, the impact of this transformation is starting to be seen in the areas of real estate-related finance and investment banking operations including principal investment businesses, both of which have seen enormous growth in Japan’s financial sector. We hope to continue to develop new franchises in these areas.

 

3) New Overseas Business Development

 

ORIX currently operates its business outside of Japan primarily focused on financial services through a total of 42 corporations located in 23 countries overseas. Since the establishment of our first overseas office in Hong Kong in 1971, our overseas network has grown over the last 34 years and now covers Asia, Oceania, the Middle East, Africa, Europe and North America. By sharing business knowledge within our network, our goal is to continuously develop new businesses overseas to boost ORIX’s overall performance.

 

4) Reinforcement of Risk Management Policies

 

ORIX believes that it is necessary to appropriately manage the various risks associated with the diversification of our business. We have established risk management systems company-wide to periodically monitor multiple risk factors; diversify and hedge against risks; and manage such risks accordingly. As we continue to expand our business, we are improving both risk control mechanisms and their level of sophistication.

 

7. Corporate Governance Vision and the Current Status of Implementation Measures

 

1) Vision for Corporate Governance

 

ORIX’s basic management policy is to fulfill its social responsibility through sustainable growth of our corporate value. In order to accomplish this goal, we believe that it is important to employ corporate governance that takes into consideration the perspective of various stakeholders. For this reason, we aim to establish a system of corporate governance that is both transparent and reflects global standards.

 

2) Status of Our Corporate Governance System

 

[Progress Towards an Enhanced Corporate Governance System]

 

ORIX established an Advisory Board in 1997 made up of experienced individuals from outside the Company, introduced a Corporate Executive Officer system in 1998, and welcomed outside directors to the Board and set up the Executive Nomination and Compensation Committee in 1999.

 

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In order to further strengthen its corporate governance structure, ORIX received approval from shareholders at the 40th Annual General Meeting of Shareholders in June 2003 to adopt a “Company with Committees” board model.

 

[Current Status of Corporate Governance]

  As of April 26, 2005

 

LOGO

 

<Board of Directors>

 

The board of directors consists of 12 directors of which five are outside directors. The board of directors decides management policies and supervises the performance of executive officers.

 

<Audit Committee>

 

The Audit Committee consists of three directors of which two are outside directors. The Audit Committee receives quarterly results reports from the executive officer who is in charge of the accounting department; accounting audit reports from the independent public accountants; and business summary reports regarding business affairs of the company from the Group COO.

 

In addition, the Audit Committee receives reports of internal audit results and an overview of internal control systems from the executive officer who is in charge of the Internal Audit Department; reports from the standing auditor; and business reports from each executive officer of the departments for which each such executive officer is in charge of supervising. The committee reviews such reports and evaluates the business performance by executive officers as well as internal control systems.

 

<Nominating Committee>

 

The Nominating Committee consists of six directors of which four are outside directors. As stipulated in the Commercial Code, the Nominating Committee is authorized to nominate candidates for the director position to be submitted to the general shareholder meetings as well as to discuss the selection of executive officers.

 

<Compensation Committee>

 

The Compensation Committee consists of six directors of which four are outside directors. As stipulated in the Commercial Code, the Compensation Committee is authorized to determine policies regarding the remuneration of directors and executive officers as well as the monetary remuneration of each individual director and executive officer.

 

<Disclosure Committee>

 

ORIX believes that disclosure control occupies an important position within the overall scheme of corporate governance. We have set up an information disclosure system with the Disclosure Committee playing a central role in facilitating the appropriate and timely disclosure of information to investors.

 

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The Disclosure Committee, which plays a key role in our disclosure control, consists of executive officers who are in charge of departments such as corporate communications, accounting, treasury and internal control. Upon receiving material information from each department, the committee discusses, as needed, necessary actions to be taken to evaluate whether or not any timely disclosure is needed and to materialize, and ensure, appropriate and timely disclosure of such information.

 

[Current Status of Compliance Efforts]

 

At ORIX, we believe that compliance is the foundation for sound corporate governance. We have established the Compliance Department and are proactively promoting compliance based on our “Business Conduct Principles” and “Employee Conduct Principles” set fourth by the board of directors.

 

3) Status of Implementation Regarding Efforts Made Toward Sound Corporate Governance During This Fiscal Year

 

<Board of Directors>

 

Board of directors meetings were held seven times in total during this fiscal year (from April 1, 2004-March 31, 2005). The attendance rate of directors for all seven board of directors meetings was 95%.

 

<Audit Committee>

 

Audit committee meetings were held six times in total during this fiscal year. The attendance rate of committee members for all six committee meetings was 100%.

 

<Nominating Committee>

 

Nominating committee meetings were held four times in total during this fiscal year during which time decisions on the selection process for directors were discussed including the selection process for executive officers. The attendance rate of committee members for all four committee meetings was 91%.

 

<Compensation Committee>

 

Compensation committee meetings were held eight times in total during this past fiscal year during which time decisions were made on policies determining the remuneration of directors and executive officers, as well as the amount of monetary remuneration of each individual director and executive officer. The attendance rate of committee members for all eight committee meetings was 89%.

 

The policies determining the remuneration of directors and executive officers decided by the Compensation Committee are shown below.

 

Policies Determining the Remuneration of Directors and Executive Officers

 

ORIX’s business objective is to increase mid- to long-term growth in shareholder value. In addition, in that regard we believe in the importance of team play in order to ensure the continuous overall growth of ORIX as well as each director and executive officer responsibly performing their duties.

 

The Compensation Committee at ORIX believes that in order to accomplish such business objectives, directors and executive officers should place emphasis not only on the performance during the current fiscal year, but also on mid- to long-term results. Accordingly, we take such factors into account when making decisions regarding the compensation system and compensation levels for our directors and executive officers, under the basic policy that compensation should provide effective incentives.

 

1) Compensation Policy for Directors

 

The compensation policy for directors (who are not also executive officers) aims for a level and composition of compensation that is effective in maintaining supervisory and oversight functions of business operations, which is the main duty of directors.

 

Specifically, while aiming to maintain competitive compensation standards, our compensation structure consists of a fixed compensation component based on duties performed and a component linked to mid- to long-term stock prices.

 

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2) Compensation Policy for Executive Officers

 

The compensation policy for executive officers (including those who are also directors) aims for a level of compensation that is effective in maintaining business operation functions, while incorporating in its composition a component that is linked to current period business performance.

 

Specifically, while aiming to maintain competitive compensation standards, our compensation structure consists of a fixed component based on positions and duties performed, a performance-linked component linked to business performance in the current fiscal year, and a component linked to mid- to long-term stock prices.

 

Regarding “7 Corporate Governance Vision and the Current Status of Implementation Measures,” additional information will be included in “Additions to Consolidated Financial Results for Fiscal 2005” when it becomes available.

 

8. Matters Related to the Parent Company

 

We do not have a parent company.

 

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Financial Results

 

1. The Fiscal Year Ended March 31, 2005

 

Economic Environment

The world economy showed signs of recovery throughout this fiscal year led by the United States and China. In the U.S. economy, employment continued to improve and consumer confidence remained high. Capital expenditures continued to show upward expansion, but the pace of growth slowed as a result of higher interest rates and the steep rise of crude oil prices. Among Asian economies, China showed significant expansion, and growth rates of other Asian countries were also above levels of the previous year. However, after the summer period, exports in IT and digital industries slowed, and the rate of economic expansion declined in Korea and Taiwan. In the European economy, domestic demand that experienced a slow recovery started to show positive signs with gradual expansion.

 

On the other hand, the Japanese economy showed signs of expansion in the first half due to growth in exports and capital expenditures, but it started to show indications of economic downturns due to sluggish growth in the world economy and inventory adjustments, which took place after the summer period. However, over the long-term it appears that the Japanese economy has bottomed out as major financial institutions have made progress with the disposal of their non-performing loans.

 

Financial Highlights

 

Revenues

  

916,950 million yen (Up 21% year on year)

Operating Income

  

130,957 million yen (Up 55% year on year)

Income before Income Taxes*

  

154,347 million yen (Up 51% year on year)

Net Income

  

91,496 million yen (Up 69% year on year)

Operating Assets

  

5,129,098 million yen (Up 6% year on year)

Earnings Per Share (Basic)

  

1,087.82 yen (Up 69% year on year)

Earnings Per Share (Diluted)

  

1,002.18 yen (Up 67% year on year)

Shareholders’ Equity Per Share

  

8,322.96 yen (Up 23% year on year)

ROE

  

14.2% (March 31, 2004: 10.1%)

ROA

  

1.56% (March 31, 2004: 0.93%)


* “Income before Income Taxes” refers to “Income before Discontinued Operations, Extraordinary Gain and Income Taxes.”

 

Revenues: 916,950 million yen (Up 21% year on year)

Although revenues from “gains on sales of real estate under operating leases” decreased year on year, revenues from “direct financing leases,” “operating leases,” “interest on loans and investment securities,” “brokerage commissions and net gains on investment securities,” “life insurance premiums and related investment income,” “real estate sales” and “other operating revenues” were up compared to the previous fiscal year. As a result, revenues increased 21% to 916,950 million yen compared with the previous fiscal year.

 

In Japan, revenues from “direct financing leases” were up 4% year on year. The automobile leasing operations performed steadily and gains were recorded from the securitization of direct financing leases other than those associated with the automobile leasing operations. Overseas, although the leasing operations in the Asia, Oceania and Europe regions expanded, revenues were down 8% year on year due to the reduction of assets in the U.S. and the appreciation of the yen against the dollar. As a result, overall revenues from “direct financing leases” increased 1% to 113,514 million yen compared with the previous fiscal year.

 

In Japan, revenues from “operating leases” increased 11% year on year. Although the precision measuring and other equipment rental operations were down year on year, the automobile operating lease operations performed steadily along with the acquisition of JAPAREN Co., Ltd. (merged into

 

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ORIX Auto Corporation on January 1, 2005) in October 2003, which contributed from the beginning of this fiscal year. Overseas, revenues were up 5% year on year due to the steady performance of the automobile operating lease operations. As a result, overall revenues from “operating leases” increased 9% to 181,808 million yen due to the increases in Japan and overseas.

 

Furthermore, various expenses (insurance, property tax and other) that were netted against revenues from “operating leases” have been included in “costs of operating leases” from the fourth quarter of this fiscal year (Please refer to the note of the Condensed Consolidated Statements of Income on page 18).

 

In Japan, “interest on loans and investment securities” increased 22% year on year. Although revenues were down at our card loan operations as a result of a lower balance of loans due to a more strict credit screening process, an increase in loans to corporate customers, including non-recourse loans, and the loan servicing operations contributed to the higher revenues. Overseas, although revenues were higher in the U.S. compared to the previous fiscal year, the appreciation of the yen against the dollar resulted in a 2% decrease year on year. As a result, overall revenues from “interest on loans and investment securities” increased 17% to 136,035 million yen compared with the previous fiscal year.

 

Brokerage commissions increased 14% year on year due to the high trading volume on the stock market. Net gains on investment securities increased 33% year on year due to the sale of securities mainly associated with our venture capital and other operations in Japan and securities investment operations in the U.S. As a result, “brokerage commissions and net gains on investment securities” increased 30% to 33,906 million yen compared with the previous fiscal year.

 

“Life insurance premiums and related investment income” increased 2% to 137,004 million yen compared with the previous fiscal year due to an increase in new contracts and our continued focus on more profitable life insurance products.

 

“Real estate sales” increased 26% year on year to 123,162 million yen. While there was a reduction in the number of condominiums sold to buyers and many of the residential condominiums developed through certain joint ventures were accounted for by the equity method and were included as a net of revenues and selling costs in “equity in net income of affiliates,” the revenues associated with the sale of office buildings and other real estate developments made a contribution. The revenues from the aforementioned joint ventures were 12,464 million yen.

 

Revenues from the sales of residential condominiums and office buildings and other real estate developments were previously included in “residential condominium sales” and “other operating revenues” respectively and from the fourth quarter of this fiscal year have been included in “real estate sales.” Revenues from office buildings and other real estate developments that were sold in the fiscal year ended March 31, 2005 amounted to 49,569 million yen. (Please refer to the note of the Condensed Consolidated Statements of Income on page 18).

 

“Gains on sales of real estate under operating leases” were down 83% year on year to 1,554 million yen due to lower revenues associated with the sales of rental purpose office buildings and other real estate and the reclassification of those sales to “discontinued operations.”

 

“Transportation revenues” were 55,339 million yen in the fiscal year ended March 31, 2005. Revenues associated with the operations of Footwork Express Co., Ltd., which is undergoing corporate rehabilitation, were included in “other operating revenues” up to the first half of this fiscal year, and have been included in “transportation revenues,” from the second half of this fiscal year. Furthermore, although “transportation revenues” were recorded from January 2004 upon the acquisition of net assets in December 2003 that constituted a business of reorganization company, Footwork Logistics Corporation (previously reorganization company, Footwork Express Co., Ltd.), “transportation revenues” were not recorded in the previous fiscal year due to the recording of income on a three months lag basis as permitted under U.S. GAAP.

 

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In addition, ORIX’s share in Footwork Express Co., Ltd. was reduced in December 2004 due to an increase in capital whereby the substantive participating rights of minority shareholders were increased. As a result, ORIX no longer has a controlling financial interest in Footwork Express Co., Ltd. and accounted for this company as an equity method affiliate at the end of the fiscal year ended March 31, 2005. Instead of recording “transportation revenues” and “costs of transportation revenues,” ORIX will record its proportionate share of net income or loss of the company by the equity method from the fiscal year ending March 31, 2006 due to the fact that ORIX consistently applies a three months lag basis in reporting.

 

“Other operating revenues” increased 44% to 134,628 million yen due to the increase in revenues associated with our building maintenance operations and fee businesses (mainly loan servicing fees and arrangement fees). In addition, companies in which we invested as part of our corporate rehabilitation business in the second half of the previous fiscal year and this fiscal year made larger contributions compared to the previous fiscal year.

 

Expenses: 785,993 million yen (Up 17% year on year)

Although “interest expense,” “provision for doubtful receivables and probable loan losses,” “write-downs of long-lived assets,” “write-downs of securities” and “foreign currency transaction loss, net” were down, “costs of operating leases,” “life insurance costs,” “costs of real estate sales,” “other operating expenses” and “selling, general and administrative expenses” increased year on year. As a result, expenses were up 17% to 785,993 million yen compared with the previous fiscal year.

 

“Interest expense” was down 6% year on year to 56,562 million yen due mainly to the lower average debt levels overseas and the appreciation of the yen against the dollar.

 

“Costs of operating leases” increased 3% year on year to 124,658 million yen due to the increase in operating assets compared to the previous fiscal year.

 

In addition, as previously indicated, depreciation and various expenses associated with operating lease assets have been included in “costs of operating leases” from the fourth quarter of this fiscal year (Please refer to revenues from “operating leases” on page 9 and to the note of the Condensed Consolidated Statements of Income on page 18).

 

“Life insurance costs” increased 3% year on year to 122,896 million yen in line with the rise in life insurance premiums.

 

“Costs of real estate sales” were up 28% year on year to 113,830 million yen in line with the increase in “real estate sales.” Furthermore, 10,846 million yen in selling costs were accounted for by the equity method.

 

The costs related to the sale of residential condominiums, which were included in “costs of residential condominium sales” and the costs of office buildings and other real estate developments that were included in “other operating expenses” have been included in “costs of real estate sales” from the fourth quarter of this fiscal year. The costs of office building and other real estate developments that were sold in the fiscal year ended March 31, 2005 amounted to 46,323 million yen (Please refer to the note of the Condensed Consolidated Statements of Income on page 18).

 

“Costs of transportation revenues” were 46,594 million yen in the fiscal year ended March 31, 2005. “Costs of transportation revenues” represent the cost corresponding to “transportation revenues” and were included in “other operating expenses” up to the first half of this fiscal year.

 

“Other operating expenses” were up 58% year on year to 82,833 million yen along with the increase in “other operating revenues.”

 

“Selling, general and administrative expenses” were up 12% year on year to 181,620 million yen due to the costs, which were included from the beginning of this fiscal year, associated with an increase in consolidated companies in the second half of the previous fiscal year and the further costs associated with the increase in consolidated companies in this fiscal year.

 

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“Provision for doubtful receivables and probable loan losses” was down 20% year on year to 39,574 million yen due to a lower level of non-performing assets despite the rise in operating assets.

 

“Write-downs of long-lived assets” were down 5% year on year to 11,713 million yen. The majority of the “write-downs of long-lived assets” in the fiscal year ended March 31, 2005 were associated with a building in Japan and a rental property in the U.S. The building in Japan was reclassified from “office facilities” to rental purpose after it was decided that the building would be rebuilt. We tested for impairment for the purpose of rental asset use and consequently wrote the building down by 7,705 million yen to its fair value. In addition, the rental property in the U.S. was written down by 1,879 million yen.

 

“Write-downs of securities” were down 6% year on year to 4,930 million yen as we recorded write-downs mainly associated with investments in stocks in our venture capital operations in Japan and securities investment operations in the U.S.

 

Net Income: 91,496 million yen (Up 69% year on year)

“Operating income” was up 55% year on year to 130,957 million yen. “Equity in net income of affiliates” was up 12% to 20,043 million yen compared to the previous fiscal year (while “equity in net income of affiliates” in the fiscal year ended March 31, 2004 included our proportionate interest in the recognition of deferred tax assets of 5,380 million yen for Korea Life Insurance Co., Ltd. (KLI) attributable to a change in tax rules in Korea, this fiscal year only included the contribution from KLI’s regular operations). “Income before discontinued operations, extraordinary gain and income taxes” increased 51% year on year to 154,347 million yen with contributions from the “gains on sales of affiliates” of 3,347 million yen.

 

“Discontinued operations, net of applicable tax effect” were 5,975 million yen. “Income from discontinued operations, net” of 10,037 million yen and “gains on sales of real estate under operating leases” of 1,554 million yen totaled 11,591 million yen, a decrease of 2,441 million yen compared to the previous fiscal year.

 

“Net income” increased 69% year on year to 91,496 million yen.

 

Operating Assets: 5,129,098 million yen (Up 6% on March 31, 2004)

Operating assets were up 6% on March 31, 2004 to 5,129,098 million yen. Although the “investment in direct financing leases” was flat on March 31, 2004, “installment loans,” “investment in operating leases,” “investment in securities” and “other operating assets” were all up.

 

Segment Information (“Segment Profits” refer to income before income taxes)

 

Segment profits increased year on year for all nine segments.

 

Operations in Japan

 

Corporate Financial Services:

Segment revenues were up 9% year on year to 87,708 million yen as loans to corporate customers expanded and direct financing leases, in which we continued to carefully select new assets and focus on the profitability of each transaction, also made a contribution due to the recognition of gains from securitization.

 

Segment profits increased 62% to 43,848 million yen compared to 27,150 million yen in the previous fiscal year thanks in part to the lower “provision for doubtful receivables and probable loan losses” as a result of a reduction in the level of non-performing assets.

 

Segment assets increased 6% on March 31, 2004 to 1,506,311 million yen due mainly to the increase in loans to corporate customers and the direct financing leases associated with ORIX Kitakanto Corporation (ORIX acquired all issued shares in Kitakanto Lease held by the Ashikaga Financial Group in January 2005. The company was subsequently renamed ORIX Kitakanto Corporation in April 2005).

 

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The automobile leasing operations, which have been included in the “Corporate Financial Services” segment, were included in a new segment called “Automobile Operations” from the fourth quarter of this fiscal year. The “Corporate Financial Services” segment includes direct financing leases and installment loans as well as fee businesses that include the sale of financial products to corporate customers (Please refer to the note of the Segment Information on page 23).

 

Automobile Operations:

Segment revenues performed steadily centering on maintenance leases for the automobile leasing operations. In addition, operating leases for automobiles also expanded along with the acquisition in October 2003 of JAPAREN Co., Ltd. (merged into ORIX Auto Corporation on January 1, 2005), which contributed from the beginning of this fiscal year. As a result, segment revenues were up 23% year on year to 89,404 million yen.

 

Segment profits increased 18% to 21,088 million yen compared to 17,921 million yen in the previous fiscal year.

 

Segment assets increased 8% on March 31, 2004 to 451,715 million yen.

 

The automobile leasing operations, which have been included in the “Corporate Financial Services” segment and the automobile rental operations that have been included in the “Rental Operations” segment were included in the “Automobile Operations” segment from the fourth quarter of this fiscal year (Please refer to the note of the Segment Information on page 23).

 

Rental Operations:

The “Rental Operations” segment represents the operations of ORIX Rentec Corporation. The operations of this company mainly include the rental of precision measuring and other equipment and a portion of its business activities cover direct financing leases for IT-related equipment. (Please refer to the note of the Segment Information on page 23).

 

Segment revenues were down 7% year on year to 68,447 million yen due to the increase in the ratio of direct financing lease transactions, which are recorded as net amounts, compared with operating lease transactions in which revenues and expenses are recorded separately.

 

Segment profits increased 16% to 9,384 million yen compared to 8,058 million yen in the previous fiscal year as IT-related equipment direct financing lease transactions were steady.

 

Segment assets were down 1% on March 31, 2004 to 118,427 million yen.

 

The automobile rental operations, which have been included in the “Rental Operations” segment, were included in the “Automobile Operations” segment from the fourth quarter of this fiscal year. (Please refer to the note of the Segment Information on page 23).

 

Real Estate-Related Finance:

Revenues associated with corporate loans, including non-recourse loans, and housing loans increased and the loan servicing operations, which include servicing fees, also made a larger contribution to revenues compared to the previous fiscal year. As a result, segment revenues increased 77% year on year to 100,567 million yen.

 

Segment profits increased 23% to 22,269 million yen compared to 18,102 million yen in the previous fiscal year even though a portion of non-performing assets were sold off to accelerate charge-offs, which resulted in an increase in the “provision for doubtful receivables and probable loan losses.”

 

Segment assets increased 22% on March 31, 2004 to 1,106,548 million yen.

 

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Real Estate:

Segment revenues increased 17% year on year to 172,728 million yen. While sales of residential condominiums declined year on year due to the lower number of condominiums sold to buyers, the sale of office buildings and other real estate developments and revenues associated with our building maintenance operations increased.

 

Segment profits increased 149% to 15,546 million yen compared to 6,244 million yen in the previous fiscal year due in part to the lower “write-downs of long-lived assets.”

 

Segment assets increased 13% on March 31, 2004 to 350,254 million yen.

 

Life Insurance:

Segment revenues increased 3% year on year to 136,857 million yen due to a continued shift to more profitable life insurance products and an increase in the number of new contracts.

 

Segment profits, which included the recognition of “gains on sales of affiliates,” increased 34% to 7,223 million yen compared to 5,382 million yen in the previous fiscal year.

 

Segment assets were down 3% on March 31, 2004 to 567,023 million yen.

 

Other:

Segment revenues increased 94% year on year to 143,754 million yen. The contribution from the consumer card loan operations decreased year on year as a result of a stricter credit screening process that led to a lower average loan balance and subsequent lower interest on loans. However, net gains on investment securities were up at our venture capital operations and brokerage commissions at our securities brokerage expanded due to the high trading volume on the stock market.

 

Segment profits increased 108% to 20,970 million yen compared to 10,079 million yen in the previous fiscal year as “provision for doubtful receivables and probable loan losses” associated with our card loan operations decreased, while “equity in net income of affiliates” and “gains on sales of affiliates” increased year on year.

 

Segment assets increased by 19% on March 31, 2004 to 489,758 million yen. Here the level of loans associated with our card loan operations declined, while investment in equity method affiliates including DAIKYO INCORPORATED increased.

 

Overseas Operations

 

The Americas:

Segment revenues were up 5% year on year to 53,084 million yen as net gains on investment securities increased due to the sale of CMBS (commercial mortgage-backed securities) and gains on the sales of real estate were also recorded, even though revenues from “direct financing leases” and interest on loans to corporate customers were down, owing in part to the appreciation of the yen against the dollar.

 

Segment profits increased 106% to 15,621 million yen compared to 7,601 million yen in the previous fiscal year, despite the loss associated with an equity method affiliate, thanks to a decrease in the “provision for doubtful receivables and probable loan losses” due to the lower level of non-performing assets.

 

Segment assets were down 15% on March 31, 2004 to 403,399 million yen due to the decrease in the balance of direct financing leases and loans to corporate customers.

 

Asia, Oceania and Europe:

Segment revenues were up 3% year on year to 73,089 million yen. Automobile leasing and corporate lending of a number of companies in the region performed steadily, while the ship-related operations expanded.

 

Segment profits increased 33% to 22,133 million yen compared to 16,596 million yen in the previous fiscal year despite the decrease in “equity in net income of affiliates” as the previous fiscal

 

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year included, in addition to the contribution from the regular operations of KLI, our proportionate interest in the recognition of deferred tax assets of 5,380 million yen for KLI attributable to a change in tax rules in Korea.

 

Segment assets increased 6% on March 31, 2004 to 498,855 million yen.

 

The “Europe” segment and the “Asia and Oceania” segment have been combined and from the fourth quarter of this fiscal year the new segment is shown as the “Asia, Oceania and Europe” segment (Please refer to the note of the Segment Information on page 23).

 

2. Summary of Cash Flows (Fiscal Year Ended March 31, 2005)

 

Cash and cash equivalents decreased by 6,855 million yen to 145,380 million yen compared to March 31, 2004.

 

“Cash flows from operating activities” decreased by 26,345 million yen and provided 126,467 million yen this fiscal year due to inflows associated with the increase in “net income” and “increase in deposits from lessees,” which offset the outflows associated with the “decrease in policy liabilities” related to the payments corresponding to the maturity of single premium endowment insurance and “increase in trading securities.”

 

“Cash flows from investing activities” used 408,004 million yen this fiscal year, while “cash flows from investing activities” provided 123,978 million yen in the previous fiscal year. This was due to the increase in “installment loans made to customers” as a result of the expansion of loans to corporate customers, including non-recourse loans, as well as the increase of “purchases of available-for-sale securities.”

 

“Cash flows from financing activities” provided 274,343 million yen this fiscal year, an increase of 602,627 million yen compared to the previous fiscal year due to the increase in debt as a result of the increase in operating assets.

 

3. Summary of Fourth Quarter (Three Months Ended March 31, 2005)

 

In the fourth quarter revenues increased 68,534 million yen year on year. Revenues from “direct financing leases” were up compared to the fourth quarter of the previous fiscal year due to the contribution from gains on securitization. Revenues from “operating leases” were up in line with the increase in operating assets. “Interest on loans and investment securities” were up due to the increase in loans to corporate customers, including non-recourse loans. “Brokerage commissions and net gains on investment securities” were up as brokerage commissions in Japan and net gains on the sale of investment securities in the U.S. were higher compared to the fourth quarter of the previous fiscal year. “Life insurance premiums and related investment income” were at about the same level compared to the previous fiscal year. “Real estate sales” increased year on year due to the contribution from the sale of office buildings and other real estate developments despite the reduction in the number of condominiums sold to buyers. “Gains on sales of real estate under operating leases” increased year on year despite the fact that a majority of revenues associated with the sales of rental purpose office buildings and other real estate were reclassified in “discontinued operations.” “Transportation revenues” were 15,624 million yen in the fourth quarter of this fiscal year. “Other operating revenues” were up year on year due to the increase in revenues associated with companies in which we invested as part of our corporate rehabilitation business mainly from the fourth quarter of the previous fiscal year, and the expansion of the building maintenance operations and increase in revenues associated with fee businesses.

 

On the other hand, expenses were up 46,814 million yen compared to the fourth quarter of the previous fiscal year. “Interest expense” increased year on year mainly as a result of the increase in operating assets. “Costs of operating leases” were flat year on year due to the reduction in various costs. “Life insurance costs” were flat in line with revenues compared with the same period of the previous fiscal year. “Costs of real estate sales” and “other operating expenses” increased in line with the increase in associated revenues in the fourth quarter of this fiscal year. “Costs of transportation revenues” were 12,543 million yen in the fourth quarter of this fiscal year. “Selling, general and administrative expenses” were up year on year due in part to the costs associated with the increase in

 

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the number of consolidated companies from the fourth quarter of the previous fiscal year. Although operating assets were up year on year, “provision for doubtful receivables and probable loan losses” was down compared to the fourth quarter of the previous fiscal year. “Write-downs of long-lived assets” and “write-downs of securities” were down year on year.

 

This resulted in an increase in “operating income” by 21,720 million yen to 38,790 million yen compared with the fourth quarter of the previous fiscal year.

 

“Equity in net income of affiliates” was down year on year and “losses on sales of affiliates” were recorded. “Income before discontinued operations, extraordinary gain and income taxes” increased by 20,476 million yen compared to the fourth quarter of the previous fiscal year to 40,830 million yen.

 

“Discontinued operations, net of applicable tax effect” added 1,313 million yen and “net income” in the fourth quarter of this fiscal year rose by 15,650 million yen to 23,778 million yen compared with a “net income” of 8,128 million yen in the fourth quarter of the previous fiscal year.

 

4. Outlook and Forecasts for the Fiscal Year Ending March 31, 2006

 

For the fiscal year ending March 31, 2006, we forecast “revenues” of 880,000 million yen (down 4% compared with the fiscal year ended March 31, 2005), “income before income taxes” of 162,000 million yen (up 5%) and “net income” of 96,000 million yen (up 5%). Furthermore, as previously mentioned, Footwork Express Co., Ltd. will be treated as an equity method affiliate from the fiscal year ending March 31, 2006. As a result, ORIX’s overall revenues will not include “transportation revenues” (Transportation revenues for the fiscal year ended March 31, 2005 were 55,339 million yen).

 

5. Business Risk

 

Our business, operating results and financial condition may be materially adversely affected by any of the factors discussed below or other factors. The risk factors listed below are taken from the Annual Financial Report (Yukashoken houkokusho) for the fiscal year ended March 31, 2004 that was submitted in June 2004.

 

    Our business may continue to be adversely affected by economic conditions in Japan.

 

    Continued deflation in Japan or other deterioration of the real estate market may adversely affect the value of our long-lived assets or collateral of our loans.

 

    Our credit losses on loans to Japanese real estate-related companies and construction companies may exceed our allowances for these loans.

 

    Changes in market interest rates and currency exchange rates could adversely affect our assets and our financial condition and results of operations.

 

    We may lose market share or suffer reduced interest margins if our competitors compete with us on pricing and other terms.

 

    Our access to liquidity and capital may be restricted by economic conditions, instability in the financial markets or potential credit rating downgrades.

 

    Our business has in the past been, and may again be, adversely affected by adverse economic conditions in the United States.

 

    Adverse developments affecting other Asian economies may adversely affect our business.

 

    We may suffer losses on our investment portfolio and derivative instruments.

 

    We may suffer losses if we are unable to remarket leased equipment returned to us.

 

    Our allowance for doubtful receivables on direct financing leases and probable loan losses may be insufficient.

 

    Our credit related costs may increase.

 

    Poor performance or failure of affiliates accounted for using the equity method, which include investments in companies as part of our corporate rehabilitation business, or consolidated companies in which we have invested as part of our corporate rehabilitation business, will have an adverse affect on our results of operations and financial condition.

 

    Our business may be adversely affected by adverse conditions in the airline industry.

 

    Inadequate or failed processes or systems, human factors or external events or factors may adversely affect our results of operations, liquidity or reputation.

 

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    We will be exposed to increased risks as we expand the range of our products and services.

 

    We may not be able to hire or retain human resources to achieve our strategic goals.

 

    Our results of operations and financial condition may be materially adversely affected by unpredictable events.

 

    Our failure to comply with regulations to which many of our businesses are subject could result in sanctions or penalties, harm our reputation and adversely affect our results of operations.

 

    Changes in law and regulations may materially affect our business, results of operations and financial condition.

 

    Changes in tax laws or accounting principles may affect our sales of structured financial products.

 

    Litigation and regulatory investigations may adversely affect our financial results.

 

    Our wholly-owned life insurance company, ORIX Life Insurance, is subject to risks particular to its business.

 

    A significant downgrade of our credit ratings could have a negative effect on our derivative transactions.

 

    We may not be able to manage our risks successfully through derivatives.

 

    Our real estate investments may be uninsured or under-insured for certain losses.

 

    There is a risk of avoidance and fraudulent conveyance in relation to real estate purchased from insolvent entities.

 

    Dispositions of the Shares, particularly by major shareholders, may adversely affect market prices for the Shares.

 

Details on risks related to our business are disclosed in our Annual Financial Report (Yukashoken houkokusho) each year. The Annual Financial Report (Yukashoken houkokusho) for the fiscal year ended March 31, 2005 is scheduled to be submitted by June 30, 2005.

 

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Consolidated Financial Highlights

(For the Years Ended March 31, 2005 and 2004)

(Unaudited)

 

     (millions of JPY, except for per share data)

 
    

Year

ended
March 31,
2005


   

Year

-on-

year
Change


   

Year

ended
March 31,
2004


   

Year

-on-year
Change


 

Operating Assets

                        

Investment in Direct Financing Leases

   1,451,574     100 %   1,453,575     92 %

Installment Loans

   2,386,597     107 %   2,234,940     98 %

Investment in Operating Leases

   619,005     115 %   536,702     101 %

Investment in Securities

   589,271     107 %   551,928     81 %

Other Operating Assets

   82,651     115 %   72,049     94 %
    

 

 

 

Total

   5,129,098     106 %   4,849,194     94 %

Operating Results

                        

Total Revenues

   916,950     121 %   756,670     105 %

Income before Discontinued Operations, Extraordinary Gain and Income Taxes

   154,347     151 %   101,954     225 %

Net Income

   91,496     169 %   54,020     179 %

Earnings Per Share

                        

Net Income

                        

Basic

   1,087.82     169 %   645.52     179 %

Diluted

   1,002.18     167 %   601.46     176 %

Shareholders’ Equity Per Share

   8,322.96     123 %   6,739.64     112 %

Financial Position

                        

Shareholders’ Equity

   727,333     129 %   564,047     112 %

Number of Outstanding Shares (‘000)

   87,389     104 %   83,691     100 %

Long-and Short-Term Debt and Deposits

   4,146,322     107 %   3,859,180     91 %

Total Assets

   6,068,953     108 %   5,624,957     95 %

Shareholders’ Equity Ratio

   12.0 %   —       10.0 %   —    

Return on Equity

   14.2 %   —       10.1 %   —    

Return on Assets

   1.56 %   —       0.93 %   —    

New Business Volumes

                        

Direct Financing Leases

                        

New Receivables Added

   863,137     108 %   801,787     80 %

New Equipment Acquisitions

   767,672     108 %   713,240     80 %

Installment Loans

   1,545,517     137 %   1,124,276     89 %

Operating Leases

   248,327     131 %   189,737     109 %

Investment in Securities

   244,600     200 %   122,066     53 %

Other Operating Transactions

   129,604     70 %   186,265     160 %

 

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Condensed Consolidated Statements of Income

(For the Years Ended March 31, 2005 and 2004)

(Unaudited)

 

     (millions of JPY, millions of US$)

 
    

Year

ended
March 31,
2005


   

Year

-on-

year
Change
(%)


  

Year

ended
March 31,
2004


   

Year

-on-

year
Change
(%)


   U.S. dollars
March 31,
2005


 

Total Revenues :

   916,950     121    756,670     105    8,539  
    

 
  

 
  

Direct Financing Leases

   113,514     101    112,372     91    1,057  

Operating Leases

   181,808     109    166,587     104    1,693  

Interest on Loans and Investment Securities

   136,035     117    116,744     89    1,267  

Brokerage Commissions and Net Gains on Investment Securities

   33,906     130    26,025     240    316  

Life Insurance Premiums and Related Investment Income

   137,004     102    134,154     97    1,276  

Real Estate Sales

   123,162     126    98,034     138    1,147  

Gains on Sales of Real Estate under Operating Leases

   1,554     17    9,116     280    14  

Transportation Revenues

   55,339     —      —       —      515  

Other Operating Revenues

   134,628     144    93,638     116    1,254  
    

 
  

 
  

Total Expenses :

   785,993     117    672,098     99    7,320  
    

 
  

 
  

Interest Expense

   56,562     94    60,060     84    527  

Costs of Operating Leases

   124,658     103    120,566     103    1,161  

Life Insurance Costs

   122,896     103    119,653     95    1,144  

Costs of Real Estate Sales

   113,830     128    88,679     146    1,060  

Costs of Transportation Revenues

   46,594     —      —       —      434  

Other Operating Expenses

   82,833     158    52,551     127    771  

Selling, General and Administrative Expenses

   181,620     112    161,835     112    1,692  

Provision for Doubtful Receivables and Probable Loan Losses

   39,574     80    49,592     91    369  

Write-downs of Long-Lived Assets

   11,713     95    12,345     24    109  

Write-downs of Securities

   4,930     94    5,240     37    46  

Foreign Currency Transaction Loss, Net

   783     50    1,577     130    7  
    

 
  

 
  

Operating Income

   130,957     155    84,572     227    1,219  
    

 
  

 
  

Equity in Net Income of Affiliates

   20,043     112    17,924     289    187  

Gains (Losses) on Sales of Affiliates

   3,347     —      (542 )   —      31  
    

 
  

 
  

Income before Discontinued Operations, Extraordinary Gain and Income Taxes

   154,347     151    101,954     225    1,437  
    

 
  

 
  

Provision for Income Taxes

   68,826     134    51,444     247    641  
    

 
  

 
  

Income from Continuing Operations

   85,521     169    50,510     206    796  
    

 
  

 
  

Discontinued Operations

                            

Income from Discontinued Operations, Net

   10,037          4,916          93  

Provision for Income Taxes

   (4,062 )        (2,015 )        (37 )
    

 
  

 
  

Discontinued Operations, Net of Applicable Tax Effect

   5,975     206    2,901     564    56  
    

 
  

 
  

Extraordinary Gain, Net of Applicable Tax Effect

   —       —      609     19    —    
    

 
  

 
  

Net Income

   91,496     169    54,020     179    852  
    

 
  

 
  

 

Note:    1. The Company recognized an “Extraordinary Gain, Net of Applicable Tax Effect” in the previous fiscal year due to the excess of the proportionate fair value of the net assets over the purchase price of the affiliate paid by the Company (“Negative Goodwill”).
     2. Costs related to operating leases, which had been included in revenues of “Operating Leases,” were reclassified into an item of expenses with depreciation cost of operating leases from this fiscal year. Along with this reclassification, “Depreciation-Operating Leases” was renamed “Costs of Operating Leases.” In addition, these amounts in previous years have been reclassified retroactively.
     3. From this fiscal year, revenues and costs of office buildings sales were recorded with revenues and costs of condominium sales. Accordingly, “Residential Condominiums Sales” and “Costs of Residential Condominium Sales” were renamed “Real Estate Sales” and “Costs of Real Estate Sales,” respectively.
     4. “Interest Income on Deposits” had been disclosed separately until the previous fiscal year. Starting from this fiscal year, “Interest Income on Deposits” was included in “Other Operating Revenues” because it became insignificant.
     5. Net income from real estate under operating leases considered to be discontinued operations were reclassified as “Discontinued Operations.” Accordingly, certain amounts in previous year have been reclassified to conform to the presentation for this fiscal year.

 

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Condensed Consolidated Statements of Income

(For the Three Months Ended March 31, 2005 and 2004)

(Unaudited)

 

     (millions of JPY, millions of US$)

 
    

Three Months
ended

March 31,
2005


   

Year

-on-

year
Change
(%)


   Three Months
ended
March 31,
2004


   

Year

-on-

year
Change
(%)


   U.S. dollars
March 31,
2005


 

Total Revenues :

   281,995     132    213,461     109    2,626  
    

 
  

 
  

Direct Financing Leases

   30,133     108    28,004     95    281  

Operating Leases

   47,561     107    44,362     100    443  

Interest on Loans and Investment Securities

   37,062     126    29,307     81    345  

Brokerage Commissions and Net Gains on Investment Securities

   13,317     112    11,861     753    124  

Life Insurance Premiums and Related Investment Income

   39,959     99    40,556     106    372  

Real Estate Sales

   54,965     188    29,170     150    512  

Gains on Sales of Real Estate under Operating Leases

   468     463    101     5    4  

Transportation Revenues

   15,624     —      —       —      145  

Other Operating Revenues

   42,906     143    30,100     122    400  
    

 
  

 
  

Total Expenses :

   243,205     124    196,391     92    2,265  
    

 
  

 
  

Interest Expense

   14,992     108    13,847     79    140  

Costs of Operating Leases

   31,744     100    31,625     98    296  

Life Insurance Costs

   35,838     98    36,518     106    334  

Costs of Real Estate Sales

   52,028     196    26,543     152    484  

Costs of Transportation Revenues

   12,543     —      —       —      117  

Other Operating Expenses

   29,097     161    18,032     138    271  

Selling, General and Administrative Expenses

   51,010     114    44,814     114    473  

Provision for Doubtful Receivables and Probable Loan Losses

   12,520     84    14,910     86    117  

Write-downs of Long-Lived Assets

   2,548     31    8,143     23    24  

Write-downs of Securities

   931     74    1,253     20    9  

Foreign Currency Transaction Loss (Gain), Net

   (46 )   —      706     —      (0 )
    

 
  

 
  

Operating Income

   38,790     227    17,070     —      361  
    

 
  

 
  

Equity in Net Income of Affiliates

   2,240     68    3,294     623    21  

Gains (Losses) on Sales of Affiliates

   (200 )   —      (10 )   —      (2 )
    

 
  

 
  

Income before Discontinued Operations, Extraordinary Gain and Income Taxes

   40,830     201    20,354     —      380  
    

 
  

 
  

Provision for Income Taxes

   18,365     137    13,421     —      171  
    

 
  

 
  

Income from Continuing Operations

   22,465     324    6,933     —      209  
    

 
  

 
  

Discontinued Operations

                            

Income from Discontinued Operations, Net

   2,206          1,397          21  

Provision for Income Taxes

   (893 )        (568 )        (9 )
    

 
  

 
  

Discontinued Operations, Net of Applicable Tax Effect

   1,313     158    829     —      12  
    

 
  

 
  

Extraordinary Gain, Net of Applicable Tax Effect

   —       —      366     11    —    
    

 
  

 
  

Net Income

   23,778     293    8,128     —      221  
    

 
  

 
  

 

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Table of Contents

Condensed Consolidated Balance Sheets

(As of March 31, 2005 and 2004)

(Unaudited)

 

     (millions of JPY, millions of US$)

 
     March 31,
2005


    March 31,
2004


    U.S. dollars
March 31,
2005


 

Assets

                  

Cash and Cash Equivalents

   145,380     152,235     1,354  

Restricted Cash

   53,193     35,621     495  

Time Deposits

   8,678     677     81  

Investment in Direct Financing Leases

   1,451,574     1,453,575     13,517  

Installment Loans

   2,386,597     2,234,940     22,224  

Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses

   (115,250 )   (128,020 )   (1,073 )

Investment in Operating Leases

   619,005     536,702     5,764  

Investment in Securities

   589,271     551,928     5,487  

Other Operating Assets

   82,651     72,049     770  

Investment in Affiliates

   274,486     157,196     2,556  

Other Receivables

   160,263     142,711     1,492  

Inventories

   113,203     121,441     1,054  

Prepaid Expenses

   45,082     44,139     420  

Office Facilities

   65,410     71,196     609  

Other Assets

   189,410     178,567     1,763  
    

 

 

Total Assets

   6,068,953     5,624,957     56,513  
    

 

 

Liabilities and Shareholders’ Equity

                  

Short-Term Debt

   947,871     903,916     8,826  

Deposits

   336,588     292,545     3,134  

Trade Notes, Accounts Payable and Other Liabilities

   270,737     279,852     2,521  

Accrued Expenses

   95,407     96,668     888  

Policy Liabilities

   550,880     592,782     5,130  

Current and Deferred Income Taxes

   179,859     153,937     1,675  

Deposits from Lessees

   98,415     78,491     917  

Long-Term Debt

   2,861,863     2,662,719     26,649  
    

 

 

Total Liabilities

   5,341,620     5,060,910     49,740  
    

 

 

Common Stock

   73,100     52,068     681  

Additional Paid-in Capital

   91,045     70,015     848  

Retained Earnings:

                  

Legal Reserve

   2,220     2,220     21  

Retained Earnings

   570,494     481,091     5,312  

Accumulated Other Comprehensive Loss

   (1,873 )   (33,141 )   (17 )

Treasury Stock, at Cost

   (7,653 )   (8,206 )   (72 )
    

 

 

Total Shareholders’ Equity

   727,333     564,047     6,773  
    

 

 

Total Liabilities and Shareholders’ Equity

   6,068,953     5,624,957     56,513  
    

 

 

    

March

31, 2005


   

March

31, 2004


   

U.S. dollars

March

31, 2005


 

Note : Accumulated Other Comprehensive Loss

                  

  Net unrealized gains on investment in securities

   40,150     25,048     374  

  Minimum pension liability adjustments

   (1,090 )   (7,967 )   (10 )

  Foreign currency translation adjustments

   (39,610 )   (45,629 )   (369 )

  Net unrealized losses on derivative instruments

   (1,323 )   (4,593 )   (12 )

 

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Table of Contents

Condensed Consolidated Statements of Shareholders’ Equity

(For the Year Ended March 31, 2005 and 2004)

(Unaudited)

 

     (millions of JPY, millions of US$)

 
    

Year ended

March 31,
2005


   

Year ended

March 31,
2004


   

U.S. dollars

March 31,
2005


 

Common Stock:

                  

Beginning balance

   52,068     52,067     485  

Issuance during the year

   21,032     1     196  
    

 

 

Ending balance

   73,100     52,068     681  
    

 

 

Additional Paid-in Capital:

                  

Beginning balance

   70,015     70,002     652  

Issuance during the year and other, net

   21,030     13     196  
    

 

 

Ending balance

   91,045     70,015     848  
    

 

 

Legal Reserve:

                  

Beginning balance

   2,220     2,220     21  
    

 

 

Ending balance

   2,220     2,220     21  
    

 

 

Retained Earnings:

                  

Beginning balance

   481,091     429,163     4,480  

Cash dividends

   (2,093 )   (2,092 )   (20 )

Net income

   91,496     54,020     852  
    

 

 

Ending balance

   570,494     481,091     5,312  
    

 

 

Accumulated Other Comprehensive Loss:

                  

Beginning balance

   (33,141 )   (39,747 )   (308 )

Net change of unrealized gains on investment in securities

   15,102     23,131     141  

Net change of minimum pension liability adjustments

   6,877     (3,785 )   64  

Net change of foreign currency translation adjustments

   6,019     (15,710 )   56  

Net change of unrealized losses on derivative instruments

   3,270     2,970     30  
    

 

 

Ending balance

   (1,873 )   (33,141 )   (17 )
    

 

 

Treasury Stock:

                  

Beginning balance

   (8,206 )   (8,247 )   (77 )

Decrease, net

   553     41     5  
    

 

 

Ending balance

   (7,653 )   (8,206 )   (72 )
    

 

 

Total Shareholders’ Equity:

                  

Beginning balance

   564,047     505,458     5,253  

Increase, net

   163,286     58,589     1,520  
    

 

 

Ending balance

   727,333     564,047     6,773  
    

 

 

Summary of Comprehensive Income :

                  

Net income

   91,496     54,020     852  

Other comprehensive income

   31,268     6,606     291  
    

 

 

Comprehensive income

   122,764     60,626     1,143  
    

 

 

 

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Table of Contents

Condensed Consolidated Statements of Cash Flows

(For the Years Ended March 31, 2005 and 2004)

(Unaudited)

 

     (millions of JPY, millions of US$)

 
    

Year ended
March

31, 2005


   

Year ended
March

31, 2004


   

U.S. dollars
Year ended
March

31, 2005


 

Cash Flows from Operating Activities:

                  

Net income

   91,496     54,020     852  

Adjustments to reconcile net income to net cash provided by operating activities:

                  

Depreciation and amortization

   132,158     121,530     1,231  

Provision for doubtful receivables and probable loan losses

   39,574     49,592     369  

Decrease in policy liabilities

   (41,902 )   (15,771 )   (390 )

Gains from securitization transactions

   (12,520 )   (446 )   (117 )

Equity in net income of affiliates

   (20,043 )   (17,924 )   (187 )

(Gains) losses on sales of affiliates

   (3,347 )   542     (31 )

Extraordinary gain

   —       (609 )   —    

Gains on sales of available-for-sale securities

   (14,761 )   (8,728 )   (137 )

Gains on sales of real estate under operating leases

   (1,554 )   (9,116 )   (14 )

Gains on sales of operating lease assets other than real estate

   (4,746 )   (2,783 )   (44 )

Write-downs of long-lived assets

   11,713     12,345     109  

Write-downs of securities

   4,930     5,240     46  

Increase in restricted cash

   (17,517 )   (17,393 )   (163 )

Increase in trading securities

   (21,430 )   (4,831 )   (200 )

Increase in inventories

   (21,906 )   (18,197 )   (204 )

Increase in prepaid expenses

   (975 )   (1,974 )   (9 )

Increase in accrued expenses

   8,255     7,481     77  

Increase in deposits from lessees

   19,567     683     182  

Other, net

   (20,525 )   (849 )   (192 )
    

 

 

Net cash provided by operating activities

   126,467     152,812     1,178  
    

 

 

Cash Flows from Investing Activities:

                  

Purchases of lease equipment

   (942,489 )   (873,248 )   (8,777 )

Principal payments received under direct financing leases

   633,724     731,702     5,901  

Net proceeds from securitization of lease receivables, loan receivables and securities

   191,976     35,704     1,788  

Installment loans made to customers

   (1,545,297 )   (1,130,986 )   (14,390 )

Principal collected on installment loans

   1,287,144     1,092,698     11,986  

Proceeds from sales of operating lease assets

   73,928     116,531     688  

Investment in and dividends received from affiliates, net

   (48,257 )   5,822     (449 )

Purchases of available-for-sale securities

   (219,890 )   (90,527 )   (2,048 )

Proceeds from sales of available-for-sale securities

   127,452     164,860     1,187  

Maturities of available-for-sale securities

   82,373     88,601     767  

Purchases of other securities

   (24,283 )   (32,707 )   (226 )

Proceeds from sales of other securities

   11,456     12,648     107  

Purchases of other operating assets

   (9,216 )   (8,966 )   (86 )

Proceeds from sales of other operating assets

   3,539     10,468     33  

Acquisitions of subsidiaries, net of cash acquired

   (12,506 )   (8,861 )   (116 )

Sales of subsidiaries, net of cash disposed

   —       24     —    

Other, net

   (17,658 )   10,215     (164 )
    

 

 

Net cash provided by (used in) investing activities

   (408,004 )   123,978     (3,799 )
    

 

 

Cash Flows from Financing Activities:

                  

Net increase (decrease) in debt with maturities of three months or less

   (34,227 )   50,109     (319 )

Proceeds from debt with maturities longer than three months

   1,934,048     1,640,244     18,010  

Repayment of debt with maturities longer than three months

   (1,665,050 )   (2,051,777 )   (15,505 )

Net increase in deposits due to customers

   44,043     30,078     410  

Issuance of common stock

   2,052     8     19  

Dividends paid

   (2,093 )   (2,092 )   (19 )

Net increase (decrease) in call money

   (5,000 )   5,000     (46 )

Other, net

   570     146     5  
    

 

 

Net cash provided by (used in) financing activities

   274,343     (328,284 )   2,555  
    

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

   339     (948 )   2  
    

 

 

Net Decrease in Cash and Cash Equivalents

   (6,855 )   (52,442 )   (64 )

Cash and Cash Equivalents at Beginning of Period

   152,235     204,677     1,418  
    

 

 

Cash and Cash Equivalents at End of Period

   145,380     152,235     1,354  
    

 

 

 

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Table of Contents

Segment Information

(For the Years Ended March 31, 2005 and 2004)

(Unaudited)

 

     (millions of JPY)

 
     Year ended March 31, 2005

    Year ended March 31, 2004

 
     Revenues

    Income (Loss)
before
Income
Taxes*1


    Operating
Assets


    Revenues

   

Income (Loss)
before
Income

Taxes


    Operating
Assets


 

Operations in Japan

                                    

Corporate Financial Services

   87,708     43,848     1,506,311     80,418     27,150     1,416,117  

Automobile Operations

   89,404     21,088     451,715     72,614     17,921     418,412  

Rental Operations

   68,447     9,384     118,427     73,235     8,058     119,388  

Real Estate-Related Finance

   100,567     22,269     1,106,548     56,804     18,102     909,019  

Real Estate

   172,728     15,546     350,254     148,217     6,244     309,558  

Life Insurance

   136,857     7,223     567,023     133,391     5,382     582,473  

Other

   143,754     20,970     489,758     73,987     10,079     412,505  
    

 

 

 

 

 

Sub-Total

   799,465     140,328     4,590,036     638,666     92,936     4,167,472  

Overseas Operations

                                    

The Americas

   53,084     15,621     403,399     50,373     7,601     472,595  

Asia, Oceania and Europe

   73,089     22,133     498,855     71,176     16,596     469,675  
    

 

 

 

 

 

Sub-Total

   126,173     37,754     902,254     121,549     24,197     942,270  
    

 

 

 

 

 

Segment Total

   925,638     178,082     5,492,290     760,215     117,133     5,109,742  
    

 

 

 

 

 

Difference between Segment totals and Consolidated Amounts

   (8,688 )   (23,735 )   (363,192 )   (3,545 )   (15,179 )   (260,548 )
    

 

 

 

 

 

Consolidated Amounts

   916,950     154,347     5,129,098     756,670     101,954     4,849,194  
    

 

 

 

 

 

 

     (millions of US$)

 
     U.S. dollars March 31, 2005

 
     Revenues

   

Income (Loss)
before
Income

Taxes


    Operating
Assets


 

Operations in Japan

                  

Corporate Financial Services

   817     408     14,027  

Automobile Operations

   833     196     4,206  

Rental Operations

   637     87     1,103  

Real Estate-Related Finance

   936     207     10,304  

Real Estate

   1,608     145     3,262  

Life Insurance

   1,274     67     5,280  

Other

   1,340     197     4,560  
    

 

 

Sub-Total

   7,445     1,307     42,742  

Overseas Operations

                  

The Americas

   494     145     3,756  

Asia, Oceania and Europe

   681     206     4,645  
    

 

 

Sub-Total

   1,175     351     8,401  
    

 

 

Segment Total

   8,620     1,658     51,143  
    

 

 

Difference between Segment totals and Consolidated Amounts

   (81 )   (221 )   (3,382 )
    

 

 

Consolidated Amounts

   8,539     1,437     47,761  
    

 

 

 

*Note 1:    Effective January 1, 2005, the Company integrated seven group companies, which were involved in automobile leasing and rental operations, into ORIX Auto Corporation, in order to control and manage the overall automobile operations under one company. The automobile leasing operations, which had been included in the “Corporate Financial Services” segment and the automobile rental operations that had been included in the “Rental Operations” segment were included in the “Automobile Operations” segment from this fiscal year. The “Rental Operations” segment now includes only the rental operations of precision measuring and other equipment. The Company changed the management of its overseas operations, whereby the “Europe” segment and the “Asia and Oceania” segment have been combined and from this fiscal year the new segment is shown as the “Asia, Oceania and Europe” segment. Accordingly, certain amounts in previous year have been reclassified retroactively.
*Note 2:    “Income (Loss) before Income Taxes” represents “Income (Loss) before Discontinued Operations, Extraordinary Gain and Income Taxes.
*Note 3:    Results of discontinued operation are included in “Revenues” and “Income (Loss) before Income Taxes” of each segment, if any.

 

Such amounts are eliminated in “Difference between Segment totals and Consolidated Amounts.”

 

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Table of Contents

Basis of presentation and significant accounting policies

 

In preparing the accompanying consolidated financial statements, ORIX Corporation (the Company) and its subsidiaries have followed accounting principles generally accepted in the United States of America, except as modified to account for stock splits in accordance with the usual practice in Japan.

 

Some areas of potential significant differences between U.S. and Japanese accounting policies and practices are as follows: Accounting for direct financing leases, accounting for the impairment of long-lived assets and long-lived assets to be disposed of, the use of the straight-line method of depreciation for operating lease equipment, deferral of life insurance policy acquisition costs and the calculation of policy liabilities, accounting for derivative instruments and hedging activities, accounting for goodwill and intangible assets resulting from business combinations, accounting for pension plans, and a reflection of the income tax effect on such adjustments. Segment information is prepared in accordance with FASB Statement No. 131. The basis of presentation and significant accounting policies are as follows.

 

1. Consolidated subsidiaries

 

The accompanying consolidated financial statements include the accounts of the Company, 109 domestic subsidiaries and 84 overseas subsidiaries (total of 193 subsidiaries).

 

The consolidated financial statements also include variable interest entities to which the Company and its subsidiaries are primary beneficiaries pursuant to FASB Interpretation No.46 (revised December 2003) (FIN46(R) (“Consolidation of Variable Interest Entities”)).

 

Major subsidiaries are ORIX Auto Corporation, ORIX USA Corporation and others.

 

2. Affiliates accounted for by the equity method

 

Investment in 58 domestic affiliates and 24 overseas affiliates (total of 82 affiliates) are accounted for by using the equity method. Major affiliates are The Fuji Fire and Marine Insurance Company Limited, Stockton Holdings Limited, Korea Life Insurance Co., Ltd., and others.

 

3. The date of subsidiaries fiscal closing

 

Certain subsidiaries have a year-end that differs from that of the Company. However, these subsidiaries close their books and make necessary adjustments for consolidation purposes as of the Company’s fiscal year end. For certain subsidiaries whose fiscal periods end at a date that is less than three months from our consolidated fiscal periods, we use the most recent fiscal period end of those subsidiaries in our consolidated financial results.

 

- 24 -


Table of Contents

4. Accounting policies

 

(1) Use of estimates

 

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

(2) Recognition of revenues

 

Direct financing leases—The excess of aggregate lease rentals plus the estimated unguaranteed residual value over the cost of the leased equipment constitutes the unearned lease income to be taken into income over the lease term using the interest method. Certain direct lease origination costs are being deferred and amortized over the lease term as a yield adjustment.

 

Operating leases—Revenues from operating leases are recognized on a straight-line basis over the contract terms. Operating lease assets are recorded at cost and are depreciated over their estimated useful lives mainly on a straight-line basis.

 

Insurance premium and expenses— Premium income from life insurance policies are recognized as earned premiums when due. Life insurance benefits are recorded as expenses when they are incurred. Policy liabilities for future policy benefits are established by the net level premium method, based on actuarial estimates of the amount of future policyholder benefits. Certain costs associated with writing insurance are deferred and amortized over the respective policy periods in proportion to anticipated premium revenue.

 

(3) Investment in securities

 

Trading securities are reported at fair value with unrealized gains and losses included in income.

 

Available-for-sale securities are reported at fair value, and unrealized gains or losses are recorded through accumulated other comprehensive income (loss), net of applicable income taxes. However, the Company and its subsidiaries recognize losses related to securities for which the market price has been significantly below the acquisition cost and not considered temporary in nature. Held-to-maturity securities are recorded at amortized cost.

 

(4) Inventories

 

Inventories include advance and/or progress payments for development of residential condominiums for sale and completed residential condominiums.

 

Advances and/or progress payments for sales are carried at cost less any impairment losses and finished goods are stated at the lower cost or market.

 

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Table of Contents

(5) Impairment of long-lived assets

 

Long-lived assets and certain identifiable intangibles to be held and used by the Company and its subsidiaries are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the sum of undiscounted future cash flows expected to be generated by the assets is less than the carrying amount of the assets, impairment losses are recognized based on the fair value of the assets.

 

(6) Allowance for doubtful receivables on direct financing leases and probable loan losses

 

The allowance for doubtful receivables on direct financing leases and probable loan losses is maintained at a level which, in the judgment of management, is adequate to provide for probable losses on lease and loan portfolios that can be reasonably anticipated.

 

(7) Prepaid benefit cost (Accrued benefit liability)

 

The Company and its subsidiaries adopt FASB Statement No. 87 (“Employer’s Accounting for Pensions”), and the costs of pension plans are accrued based on amounts determined using actuarial methods.

 

(8) Foreign currencies translation

 

The Company and its subsidiaries maintain their accounting records in their functional currency. Transactions in foreign currencies are recorded in the entity’s functional currency based on the prevailing exchange rates on the transaction date.

 

The financial statements of overseas subsidiaries and affiliates are translated into Japanese yen by applying the exchange rates in effect at the end of each fiscal year to all assets and liabilities. Income and expenses are translated at the average rates of exchange prevailing during the fiscal year.

 

(9) Hedge accounting

 

The Company and its subsidiaries adopt FASB Statement No. 133 (“Accounting for Derivative Instruments and Hedging Activities”), as amended by FASB Statement No. 138 (“Accounting for Certain Derivative Instruments and Certain Hedging Activities—an amendment of FASB Statement No. 133”) and FASB Statement No. 149 (“Amendment of Statement 133 on Derivative Instruments and Hedging Activities”). All derivatives are recorded on the balance sheet at fair value.

 

(10) Goodwill and intangible assets resulting from business combinations

 

Goodwill and intangible assets that have indefinite useful lives are not amortized. Impairment tests are required on an annual basis and between annual tests whenever events or circumstances indicate a potential impairment might exist.

 

(11) Income taxes

 

Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to

 

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Table of Contents

differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if, based on the weight of available evidence, it is “more likely than not” that some portion or all of the deferred tax asset will not be realized.

 

5. Cash and cash equivalents in the accompanying consolidated statements of cash flows

 

Cash and cash equivalents include cash on hand, deposits placed with banks and short-term highly liquid investments with original maturities of three months or less.

 

Revenues from overseas customers

 

Revenues from overseas customers are as follows.

 

March 31, 2005

 

     Millions of JPY

 
     The
Americas


    Asia, Oceania
and Europe


    Total

 

Overseas revenue

   48,647     77,627     126,274  
    

 

 

Consolidated revenue

               916,950  
    

 

 

The rate of the overseas revenues to consolidated revenue

   5.3 %   8.5 %   13.8 %
    

 

 

March 31, 2004

                  
     Millions of JPY

 
     The
Americas


    Asia, Oceania
and Europe


    Total

 

Overseas revenue

   46,898     75,234     122,132  
    

 

 

Consolidated revenue

               756,670  
    

 

 

The rate of the overseas revenues to consolidated revenue

   6.2 %   9.9 %   16.1 %
    

 

 

March 31, 2005

                  
     Millions of U.S. dollars

 
     The
Americas


    Asia, Oceania
and Europe


    Total

 

Overseas revenue

   453     723     1,176  
    

 

 

Consolidated revenue

               8,539  
    

 

 

The rate of the overseas revenues to consolidated revenue

   5.3 %   8.5 %   13.8 %
    

 

 

 

- 27 -


Table of Contents

Investment in Securities

 

Investment in securities at March 31, 2005 and 2004 consists of the following:

 

     Millions of JPY

   Millions of
U.S. dollars


     March 31,
2005


   March 31,
2004


   March 31,
2005


Trading securities

   47,784    26,354    445

Available-for-sale securities

   390,542    386,797    3,637

Other securities

   150,945    138,777    1,405
    
  
  
     589,271    551,928    5,487
    
  
  

 

For fiscal 2005 and 2004, net unrealized holding gains and losses on trading securities are losses of JPY764 million (US$7 million) and gains of JPY1,977 million, respectively. During fiscal 2005 and 2004, the Company and its subsidiaries sold available-for-sale securities for aggregate proceeds of JPY158,740 million (US$1,478 million) and JPY164,860 million, respectively, resulting in gross realized gains of JPY23,036 million (US$215 million) and JPY10,910 million, respectively, and gross realized losses of JPY1,747 million (US$16 million) and JPY2,182 million, respectively. The cost of the securities sold was based on the average cost of each such security held at the time of the sale.

 

Other securities consist mainly of non-marketable equity securities and preferred capital shares carried at cost and investment funds accounted for under the equity method.

 

The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale securities in each major security type at March 31, 2005 and 2004 are as follows:

 

March 31, 2005

                    
     Millions of JPY

     Amortized
cost


   Gross
unrealized
gains


   Gross
unrealized
losses


    Fair Value

Available-for-sale:

                    

Japanese and foreign government bond securities

   4,498    78    (215 )   4,361

Japanese prefectural and foreign municipal bond securities

   16,941    68    (138 )   16,871

Corporate debt securities

   238,096    2,159    (1,332 )   238,923

Mortgage-backed and other asset-backed securities

   65,192    13,460    (2,314 )   76,338

Equity securities

   18,912    35,862    (725 )   54,049
    
  
  

 
     343,639    51,627    (4,724 )   390,542
    
  
  

 

 

- 28 -


Table of Contents

March 31, 2004

 

     Millions of JPY

     Amortized
cost


   Gross
unrealized
gains


   Gross
unrealized
losses


    Fair Value

Available-for-sale:

                    

Japanese and foreign government bond securities

   14,520    87    (146 )   14,461

Japanese prefectural and foreign municipal bond securities

   16,761    20    (115 )   16,666

Corporate debt securities

   174,398    2,524    (2,977 )   173,945

Mortgage-backed and other asset-backed securities

   124,398    5,169    (3,387 )   126,180

Equity securities

   17,562    39,030    (1,047 )   55,545
    
  
  

 
     347,639    46,830    (7,672 )   386,797
    
  
  

 

 

March 31, 2005

 

     Millions of U.S. dollars

     Amortized
cost


   Gross
unrealized
gains


   Gross
unrealized
losses


    Fair Value

Available-for-sale:

                    

Japanese and foreign government bond securities

   42    1    (2 )   41

Japanese prefectural and foreign municipal bond securities

   158    1    (1 )   158

Corporate debt securities

   2,217    20    (13 )   2,224

Mortgage-backed and other asset-backed securities

   607    125    (22 )   710

Equity securities

   176    334    (6 )   504
    
  
  

 
     3,200    481    (44 )   3,637
    
  
  

 

 

- 29 -


Table of Contents

The following is a summary of the contractual maturities of debt securities classified as available-for-sale securities held at March 31, 2005:

 

     Millions of JPY

   Millions of U.S. dollars

     Amortized
cost


   Fair value

   Amortized
cost


   Fair value

Due within one year

   44,831    44,981    417    419

Due after one to five years

   156,995    158,276    1,462    1,474

Due after five to ten years

   83,115    86,440    774    805

Due after ten years

   39,786    46,796    371    435
    
  
  
  
     324,727    336,493    3,024    3,133
    
  
  
  

 

Securities not due at a single maturity date, such as mortgage-backed securities, are included in the above table based on their final maturities.

 

Certain borrowers may have the right to call or prepay obligations. This right may cause actual maturities to differ from the contractual maturities summarized above.

 

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Table of Contents

Key Quarterly Financial Data (Unaudited)

 

     (millions of JPY)

 
     Fiscal 2004

    Fiscal 2005

 

Balance Sheet Data


   Q1 (03/4-6)

    Q2 (03/7-9)

    Q3 (03/10-12)

    Q4 (04/1-3)

    Q1 (04/4-6)

    Q2 (04/7-9)

    Q3 (04/10-12)

    Q4 (05/1-3)

 

1) Investment in Direct Financing Leases

   1,582,153     1,542,172     1,545,853     1,453,575     1,454,461     1,465,856     1,480,526     1,451,574  

Japan

   1,242,600     1,237,347     1,255,453     1,183,187     1,183,421     1,187,595     1,212,340     1,183,791  

Overseas

   339,553     304,825     290,400     270,388     271,040     278,261     268,186     267,783  

2) Installment Loans

   2,302,005     2,224,486     2,224,670     2,234,940     2,221,554     2,254,387     2,328,427     2,386,597  

Japan

   1,969,694     1,922,105     1,943,624     1,984,416     1,997,881     2,019,718     2,100,661     2,153,949  

Overseas

   332,311     302,381     281,046     250,524     223,673     234,669     227,766     232,648  

3) Investment in Operating Leases

   523,413     487,613     496,570     536,702     529,078     536,489     576,621     619,005  

Japan

   358,596     333,527     346,064     388,452     385,532     380,550     425,178     466,489  

Overseas

   164,817     154,086     150,506     148,250     143,546     155,939     151,443     152,516  

4) Investment in Securities

   697,926     589,918     544,021     551,928     579,193     591,714     605,511     589,271  

Japan

   528,184     440,598     394,784     399,463     423,111     446,026     466,607     467,562  

Overseas

   169,742     149,320     149,237     152,465     156,082     145,688     138,904     121,709  

5) Other Operating Assets

   75,065     72,502     70,556     72,049     68,004     72,932     81,885     82,651  

Japan

   65,803     64,300     63,008     64,993     61,071     64,772     74,538     75,156  

Overseas

   9,262     8,202     7,548     7,056     6,933     8,160     7,347     7,495  
    

 

 

 

 

 

 

 

Total Operating Assets

   5,180,562     4,916,691     4,881,670     4,849,194     4,852,290     4,921,378     5,072,970     5,129,098  
    

 

 

 

 

 

 

 

Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses

   (134,740 )   (130,015 )   (130,851 )   (128,020 )   (128,726 )   (125,309 )   (120,508 )   (115,250 )

Allowance/Investment in Direct Financing Leases and Installment Loans

   3.5 %   3.5 %   3.5 %   3.5 %   3.5 %   3.4 %   3.2 %   3.0 %
    

 

 

 

 

 

 

 

Total Assets

   5,923,307     5,684,598     5,672,032     5,624,957     5,651,018     5,724,771     5,873,033     6,068,953  
    

 

 

 

 

 

 

 

Short-Term Debt, Long-Term Debt and Deposits

   4,232,175     3,977,021     3,941,826     3,859,180     3,876,782     3,912,797     4,060,447     4,146,322  

Policy Liabilities

   604,830     607,591     600,281     592,782     577,024     559,815     554,161     550,880  
    

 

 

 

 

 

 

 

Total Liabilities

   5,396,760     5,143,520     5,120,264     5,060,910     5,056,239     5,105,522     5,231,701     5,341,620  
    

 

 

 

 

 

 

 

Shareholders’ Equity

   526,547     541,078     551,768     564,047     594,779     619,249     641,332     727,333  
    

 

 

 

 

 

 

 

Total Liabilities & Shareholders’ Equity

   5,923,307     5,684,598     5,672,032     5,624,957     5,651,018     5,724,771     5,873,033     6,068,953  
    

 

 

 

 

 

 

 

New Business Volumes


   Q1 (03/4-6)

    Q2 (03/7-9)

    Q3 (03/10-12)

    Q4 (04/1-3)

    Q1 (04/4-6)

    Q2 (04/7-9)

    Q3 (04/10-12)

    Q4 (05/1-3)

 

Direct Financing Leases: New receivables added

   212,175     186,370     215,975     187,267     188,262     210,689     202,826     261,360  

Japan

   158,176     139,969     172,006     148,301     150,035     169,583     160,378     220,748  

Overseas

   53,999     46,401     43,969     38,966     38,227     41,106     42,448     40,612  

Direct Financing Leases: New equipment acquisitions

   188,194     166,734     192,336     165,976     166,937     188,911     180,174     231,650  

Japan

   138,479     121,963     151,787     129,688     130,715     148,909     139,736     187,930  

Overseas

   49,715     44,771     40,549     36,288     36,222     40,002     40,438     43,720  

Installment Loans: New loans added

   270,959     258,464     293,556     301,297     307,530     396,510     394,231     447,246  

Japan

   225,042     223,315     247,284     262,005     273,289     352,816     351,053     417,336  

Overseas

   45,917     35,149     46,272     39,292     34,241     43,694     43,178     29,910  

Operating Leases: New equipment acquisitions

   40,810     33,722     44,102     71,103     40,737     55,077     81,786     70,727  

Japan

   29,880     20,354     38,392     55,714     33,195     35,750     70,626     62,193  

Overseas

   10,930     13,368     5,710     15,389     7,542     19,327     11,160     8,534  

Investment in Securities: New securities added

   57,370     12,107     19,980     32,609     45,486     60,092     60,167     78,855  

Japan

   53,835     11,020     6,051     30,006     38,795     56,822     58,932     76,261  

Overseas

   3,535     1,087     13,929     2,603     6,691     3,270     1,235     2,594  

Other Operating Transactions: New assets added

   28,655     48,363     28,416     80,831     29,354     26,429     45,563     28,258  

Japan

   28,655     48,301     28,416     80,831     29,354     25,017     45,386     27,888  

Overseas

   —       62     —       —       —       1,412     177     370  

 

- 31 -


Table of Contents
     (millions of JPY)

 
     Fiscal 2004

    Fiscal 2005

 

Income Statement Data


   Q1 (03/4-6)

    Q2 (03/7-9)

    Q3 (03/10-12)

    Q4 (04/1-3)

    Q1 (04/4-6)

    Q2 (04/7-9)

    Q3 (04/10-12)

    Q4 (05/1-3)

 

Revenues

                                                

1) Direct Financing Leases

   28,516     28,349     27,503     28,004     27,399     28,262     27,720     30,133  

Japan

   21,906     21,865     21,462     21,695     21,698     22,268     21,915     24,260  

Overseas

   6,610     6,484     6,041     6,309     5,701     5,994     5,805     5,873  

2) Operating Leases

   39,471     40,296     42,458     44,362     45,817     43,649     44,781     47,561  

Japan

   29,196     28,994     31,431     33,578     35,129     32,638     32,847     35,644  

Overseas

   10,275     11,302     11,027     10,784     10,688     11,011     11,934     11,917  

3) Interest on Loans and Investment Securities

   28,314     31,263     27,860     29,307     29,904     35,950     33,119     37,062  

Interest on loans

   25,729     29,001     25,820     26,940     27,204     33,371     30,711     34,612  

Japan

   21,082     23,958     21,706     22,549     23,383     29,195     26,591     29,537  

Overseas

   4,647     5,043     4,114     4,391     3,821     4,176     4,120     5,075  

Interest on investment securities

   2,585     2,262     2,040     2,367     2,700     2,579     2,408     2,450  

Japan

   173     295     165     252     264     313     268     336  

Overseas

   2,412     1,967     1,875     2,115     2,436     2,266     2,140     2,114  

4) Brokerage Commissions and Net Gains on Investment Securities

   3,246     4,323     6,595     11,861     5,160     7,927     7,502     13,317  

Brokerage commissions

   691     1,167     1,006     1,103     1,226     1,001     997     1,292  

Net gains on investment securities

   2,555     3,156     5,589     10,758     3,934     6,926     6,505     12,025  

5) Life Insurance Premiums and Related Investment Income

   30,583     34,552     28,463     40,556     30,208     36,133     30,704     39,959  

Life insurance premiums

   27,524     31,114     24,231     36,589     28,007     33,676     26,966     37,157  

Related investment income

   3,059     3,438     4,232     3,967     2,201     2,457     3,738     2,802  

6) Real Estate Sales

   23,176     19,359     26,329     29,170     21,840     20,059     26,298     54,965  

Japan

   23,176     19,359     26,329     29,170     21,840     20,059     26,298     54,965  

Overseas

   —       —       —       —       —       —       —       —    

7) Gains (Losses) on Sales of Real Estate under Operating Leases

   5,549     2,345     1,121     101     1,198     83     (195 )   468  

Japan

   5,464     2,317     981     109     1,198     83     (195 )   468  

Overseas

   85     28     140     (8 )   —       —       —       —    

8) Transportation Revenues

   —       —       —       —       12,775     14,152     12,788     15,624  

Japan

   —       —       —       —       12,775     14,152     12,788     15,624  

Overseas

   —       —       —       —       —       —       —       —    

9) Other Operating Revenues

   19,161     22,699     21,678     30,100     28,524     28,459     34,739     42,906  

Japan

   17,033     19,710     18,852     27,688     25,471     25,958     32,088     40,425  

Overseas

   2,128     2,989     2,826     2,412     3,053     2,501     2,651     2,481  
    

 

 

 

 

 

 

 

Total Revenues

   178,016     183,186     182,007     213,461     202,825     214,674     217,456     281,995  
    

 

 

 

 

 

 

 

Expenses

                                                

1) Interest Expense

   16,079     15,412     14,722     13,847     14,045     14,070     13,455     14,992  

2) Costs of Operating Leases

   29,226     30,342     29,373     31,625     33,177     28,869     30,868     31,744  

3) Life Insurance Costs

   29,326     28,917     24,892     36,518     27,965     31,954     27,139     35,838  

4) Costs of Real Estate Sales

   20,372     17,301     24,463     26,543     20,543     18,719     22,540     52,028  

5) Costs of Transportation Revenues

   —       —       —       —       11,714     11,685     10,652     12,543  

6) Other Operating Expenses

   10,214     11,526     12,779     18,032     15,156     16,624     21,956     29,097  

7) Selling, General and Administrative Expenses

   37,489     39,981     39,551     44,814     39,074     48,397     43,139     51,010  

8) Provision for Doubtful Receivables and Probable Loan Losses

   11,968     11,875     10,839     14,910     8,795     7,892     10,367     12,520  

9) Write-downs of Long-Lived Assets

   —       4,202     —       8,143     —       9,165     —       2,548  

10) Write-downs of Securities

   1,506     551     1,930     1,253     1,468     1,295     1,236     931  

11) Foreign Currency Transaction (Gain) Loss, Net

   548     (74 )   397     706     (172 )   531     470     (46 )
    

 

 

 

 

 

 

 

Total Expenses

   156,728     160,033     158,946     196,391     171,765     189,201     181,822     243,205  
    

 

 

 

 

 

 

 

Operating Income

   21,288     23,153     23,061     17,070     31,060     25,473     35,634     38,790  

Equity in Net Income of Affiliates

   3,384     8,539     2,707     3,294     4,754     5,011     8,038     2,240  

Gains (Losses) on Sales of Affiliates

   —       (396 )   (136 )   (10 )   839     1,963     745     (200 )

Income before Discontinued Operations, Extraordinary Gain and Income Taxes

   24,672     31,296     25,632     20,354     36,653     32,447     44,417     40,830  

Provision for Income Taxes

   11,310     14,832     11,881     13,421     16,099     14,149     20,213     18,365  

Income from Continuing Operations

   13,362     16,464     13,751     6,933     20,554     18,298     24,204     22,465  

Discontinued Operations, Net of Applicable Tax Effect

   736     614     722     829     2,973     863     826     1,313  

Extraordinary Gain, Net of Applicable Tax Effect

   —       243     —       366     —       —       —       —    
    

 

 

 

 

 

 

 

Net Income

   14,098     17,321     14,473     8,128     23,527     19,161     25,030     23,778  
    

 

 

 

 

 

 

 

Key Ratios, Per Share Data, and
Employees


   Q1 (03/4-6)

    Q2 (03/7-9)

    Q3 (03/10-12)

    Q4 (04/1-3)

    Q1 (04/4-6)

    Q2 (04/7-9)

    Q3 (04/10-12)

    Q4 (05/1-3)

 

Return on Equity (ROE)*

   10.9 %   13.0 %   10.6 %   5.8 %   16.2 %   12.6 %   15.9 %   13.9 %

Return on Assets (ROA)*

   0.95 %   1.19 %   1.02 %   0.58 %   1.67 %   1.35 %   1.73 %   1.59 %

Shareholders’ Equity Ratio

   8.9 %   9.5 %   9.7 %   10.0 %   10.5 %   10.8 %   10.9 %   12.0 %

Debt-to-Equity Ratio (times)

   8.0     7.4     7.1     6.8     6.5     6.3     6.3     5.7  

Shareholders’ Equity Per Share (yen)

   6,291.50     6,465.22     6,594.86     6,739.64     7,104.39     7,389.48     7,642.86     8,322.96  

Basic EPS (yen)

   168.45     206.96     172.94     97.14     281.05     228.73     298.51     280.13  

Diluted EPS (yen)

   157.07     192.06     160.72     91.33     258.14     211.02     270.41     255.48  

Number of Employees

   11,621     11,723     12,698     12,481     14,917     15,184     15,699     13,734  

* annualized

 

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Table of Contents
     (millions of JPY)

     Fiscal 2004

    Fiscal 2005

Segment Information


   Q1 (03/4-6)

    Q2 (03/7-9)

    Q3 (03/10-12)

   Q4 (04/1-3)

    Q1 (04/4-6)

   Q2 (04/7-9)

   Q3 (04/10-12)

   Q4 (05/1-3)

Operations in Japan

                                          

Corporate Financial Services

   19,244     21,001     19,047    21,126     19,355    21,419    20,253    26,681

Automobile Operations

   16,613     17,852     19,114    19,035     21,379    22,697    22,679    22,649

Rental Operations

   17,426     17,847     17,782    20,180     19,623    15,358    15,712    17,754

Real Estate-Related Finance

   11,326     13,737     15,041    16,700     16,918    21,322    24,641    37,686

Real Estate

   38,747     31,647     35,569    42,254     38,760    34,586    36,330    63,052

Life Insurance

   30,590     33,973     27,978    40,850     30,260    36,046    30,721    39,830

Other

   16,231     16,398     18,614    22,744     32,786    34,664    35,147    41,157
    

 

 
  

 
  
  
  

Sub-Total

   150,177     152,455     153,145    182,889     179,081    186,092    185,483    248,809
    

 

 
  

 
  
  
  

Overseas Operations

                                          

The Americas

   11,992     12,686     11,331    14,364     11,172    12,848    12,760    16,304

Asia, Oceania and Europe

   17,074     18,174     17,717    18,211     17,058    17,714    19,237    19,080
    

 

 
  

 
  
  
  

Sub-Total

   29,066     30,860     29,048    32,575     28,230    30,562    31,997    35,384
    

 

 
  

 
  
  
  

Total Segment Revenues

   179,243     183,315     182,193    215,464     207,311    216,654    217,480    284,193
    

 

 
  

 
  
  
  

Operations in Japan

                                          

Corporate Financial Services

   4,765     8,138     7,756    6,491     7,909    9,364    11,283    15,292

Automobile Operations

   4,497     4,829     4,087    4,508     5,022    5,894    5,331    4,841

Rental Operations

   1,603     1,543     1,821    3,091     2,411    2,633    2,270    2,070

Real Estate-Related Finance

   3,018     6,101     4,412    4,571     4,906    9,804    5,056    2,503

Real Estate

   8,160     (1,831 )   1,722    (1,807 )   6,515    1,496    4,510    3,025

Life Insurance

   (392 )   2,899     1,834    1,041     1,879    2,113    1,773    1,458

Other

   1,177     1,651     2,253    4,998     6,374    5,426    4,486    4,684
    

 

 
  

 
  
  
  

Sub-Total

   22,828     23,330     23,885    22,893     35,016    36,730    34,709    33,873
    

 

 
  

 
  
  
  

Overseas Operations

                                          

The Americas

   2,131     1,781     2,123    1,566     1,210    3,515    7,482    3,414

Asia, Oceania and Europe

   3,946     8,094     2,900    1,656     5,934    4,999    6,584    4,616
    

 

 
  

 
  
  
  

Sub-Total

   6,077     9,875     5,023    3,222     7,144    8,514    14,066    8,030
    

 

 
  

 
  
  
  

Total Segment Profits (Income before Income Taxes*)

   28,905     33,205     28,908    26,115     42,160    45,244    48,775    41,903
    

 

 
  

 
  
  
  

Operations in Japan

                                          

Corporate Financial Services

   1,542,371     1,473,369     1,501,060    1,416,117     1,441,748    1,467,823    1,532,659    1,506,311

Automobile Operations

   385,092     389,565     402,727    418,412     426,706    441,202    453,153    451,715

Rental Operations

   125,151     123,304     116,939    119,388     116,020    117,741    117,599    118,427

Real Estate-Related Finance

   932,999     879,964     901,501    909,019     929,378    944,867    1,045,373    1,106,548

Real Estate

   295,663     275,967     283,227    309,558     315,257    321,126    337,892    350,254

Life Insurance

   592,987     570,013     533,708    582,473     561,819    565,021    572,742    567,023

Other

   395,184     406,076     412,459    412,505     419,110    421,744    416,146    489,758
    

 

 
  

 
  
  
  

Sub-Total

   4,269,447     4,118,258     4,151,621    4,167,472     4,210,038    4,279,524    4,475,564    4,590,036
    

 

 
  

 
  
  
  

Overseas Operations

                                          

The Americas

   604,167     541,036     517,134    472,595     451,032    446,231    427,689    403,399

Asia, Oceania and Europe

   532,002     499,108     477,073    469,675     467,721    499,426    487,579    498,855
    

 

 
  

 
  
  
  

Sub-Total

   1,136,169     1,040,144     994,207    942,270     918,753    945,657    915,268    902,254
    

 

 
  

 
  
  
  

Total Segment Assets

   5,405,616     5,158,402     5,145,828    5,109,742     5,128,791    5,225,181    5,390,832    5,492,290
    

 

 
  

 
  
  
  

 

* Note: “Income before Income Taxes” represents “Income before Discontinued Operations, Extraordinary Gain and Income Taxes.”

 

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