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 May 2020

 

 

ORIX Corporation

(Translation of Registrant’s Name into English)

 

 

World Trade Center Bldg., 2-4-1 Hamamatsu-cho, 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  ☒        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  ☒

 

 

 

Table of Contents

Material Contained in this Report

 

				Page
1.		ORIX’s Consolidated Financial Results for the fiscal year ended March  31, 2020 (April 1, 2019 – March 31, 2020) filed with the Tokyo Stock Exchange on Thursday May 21, 2020.
2.		English press release entitled, “Announcement Regarding Dividend for the Fiscal Year Ended March 31, 2020 and Interim Dividend Forecast for the Fiscal Year Ending March 31, 2021”
3.		English press release entitled, “Announcement Regarding Candidates for Member of the Board of Directors and Member Composition of the Three Committees of ORIX Corporation”.
4.		English press release entitled, “Announcement Regarding Management Changes”.

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: May 21, 2020		By		/s/ SHOJI TANIGUCHI
				Shoji Taniguchi
				Member of the Board of Directors and Senior Managing Executive Officer Responsible for Treasury and Accounting Headquarters Responsible for Enterprise Risk Management Headquarters Responsible for Corporate Planning Department Responsible for Corporate Communications Department Assistant to CEO ORIX Corporation

 

Consolidated Financial Results

April 1, 2019 – March 31, 2020

 

 

May 21, 2020

In preparing its consolidated financial information, ORIX Corporation (the “Company”) and its subsidiaries have complied with generally accepted accounting principles in the United States of America.

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.

The Company believes that it may have been a “passive foreign investment company” for U.S. federal income tax purposes in the year to which these consolidated financial results relate by reason of the composition of its assets and the nature of its income. In addition, the Company may be a PFIC for the foreseeable future. Assuming that the Company is a PFIC, a U.S. holder of the shares or ADSs of the Company will be subject to special rules generally intended to eliminate any benefits from the deferral of U.S. federal income tax that a holder could derive from investing in a foreign corporation that does not distribute all of its earnings on a current basis. 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:

Investor Relations

ORIX Corporation

World Trade Center Building, 2-4-1 Hamamatsu-cho, Minato-ku, Tokyo 105-6135

JAPAN

Tel: +81-3-3435-3121 Fax: +81-3-3435-3154

E-mail: orix_corpcomm@orix.jp

Consolidated Financial Results from April 1, 2019 to March 31, 2020

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

 

Corporate Name:		ORIX Corporation
Listed Exchanges:		Tokyo Stock Exchange (Securities No. 8591)
		New York Stock Exchange (Trading Symbol : IX)
Head Office:		Tokyo JAPAN
		Tel: +81-3-3435-3121
		(URL https://www.orix.co.jp/grp/en/ir/)

1. Performance Highlights as of and for the Year Ended March 31, 2020

(1) Performance Highlights - Operating Results (Unaudited)

 

																														(millions of yen)*1
		Total Revenues				Year-on-Year Change				Operating Income				Year-on-Year Change				Income before Income Taxes				Year-on-Year Change				Net Income Attributable to ORIX Corporation Shareholders				Year-on-Year Change
March 31, 2020			2,280,329				(6.3	%)			269,681				(18.1	%)			412,561				4.3	%			302,700				(6.5	%)
March 31, 2019			2,434,864				(14.9	%)			329,438				(2.0	%)			395,730				(9.1	%)			323,745				3.4	%

“Comprehensive Income Attributable to ORIX Corporation Shareholders” was ¥245,509 million for the fiscal year ended March 31, 2020 (year-on-year change was a 21.1% decrease) and ¥310,970 million for the fiscal year ended March 31, 2019 (year-on-year change was a 7.9% increase).

 

		Basic Earnings Per Share				Diluted Earnings Per Share				Return on Equity				Return on Assets*2				Operating Margin
March 31, 2020			237.38				237.17				10.3	%			3.3	%			11.8	%
March 31, 2019			252.92				252.70				11.6	%			3.4	%			13.5	%

“Equity in Net Income of Affiliates” was a net gain of ¥67,924 million for the fiscal year ended March 31, 2020 and a net gain of ¥32,978 million for the fiscal year ended March 31, 2019.

 

*Note 1:		Unless otherwise stated, all amounts shown herein are in millions of Japanese yen, except for per share and dividend amounts which are in single yen.
*Note 2:		“Return on Assets” is calculated based on “Income before Income Taxes.”

(2) Performance Highlights - Financial Position (Unaudited)

 

		Total Assets				Total Equity				Shareholders’ Equity				Shareholders’ Equity Ratio				Shareholders’ Equity Per Share
March 31, 2020			13,067,528				3,065,835				2,993,608				22.9	%			2,386.35
March 31, 2019			12,174,917				2,953,201				2,897,074				23.8	%			2,263.41

 

*Note 3:		“Shareholders’ Equity” refers to “Total ORIX Corporation Shareholders’ Equity.”
		“Shareholders’ Equity Ratio” is the ratio of “Total ORIX Corporation Shareholders’ Equity” to “Total Assets.”
		“Shareholders’ Equity Per Share” is calculated based on “Total ORIX Corporation Shareholders’ Equity.”

(3) Performance Highlights - Cash Flows (Unaudited)

 

		Cash Flows from Operating Activities				Cash Flows from Investing Activities				Cash Flows from Financing  Activities				Cash, Cash Equivalents and Restricted Cash at End of Year
March 31, 2020			1,042,466				(1,470,486	)			288,703				1,135,284
March 31, 2019			587,678				(873,951	)			166,647				1,283,580

 

*Note 4:		Accounting Standards Update 2016-02 (ASC 842 (“Leases”)) (hereinafter, “New Lease Standard”) has been adopted since April 1, 2019.

2. Dividends (Unaudited)

 

		First Quarter-end				Second Quarter-end				Third Quarter-end				Year-end				Total				Total Dividends Paid				Dividend Payout Ratio (Consolidated base)				Dividends on Equity (Consolidated base)
March 31, 2019			—				30.00				—				46.00				76.00				97,415				30.0	%			3.5	%
March 31, 2020			—				35.00				—				41.00				76.00				96,356				32.0	%			3.3	%
March 31, 2021 (Est.)			—				35.00				—				—				—				—				50.0	%			—

 

*Note 5:		The amount of Year-end dividends for the fiscal year ending March 31, 2021 has not yet been determined.
*Note 6:		The dividend payout ratio for the fiscal year ending March 31, 2021 is targeted at 50.0%. This is only for the fiscal year ending March 31, 2021.
*Note 7:		Total dividends paid include dividends paid to the Board Incentive Plan Trust (¥138 million for the fiscal year ended March 31, 2019 and ¥123 million for the fiscal year ended March 31, 2020).

3. Targets for the Year Ending March 31, 2021

Business outlook remains difficult to assess due to the global economic slowdown caused by the spread of the new coronavirus outbreak (COVID-19). Under the circumstances, there are many uncertain factors affecting our business results, making it difficult for us to reasonably forecast our consolidated business performance for the next fiscal year. Therefore, the targets for the fiscal year ending March 31, 2021 have yet to be determined.

4. Other Information

 

(1) Changes in Significant Consolidated Subsidiaries		Yes (    )    No ( x )
Addition - None (                                    )                 Exclusion - None (                                              )

 

(2) Changes in Accounting Principles, Procedures and Disclosures
1. Changes due to adoptions of new accounting standards		Yes ( x )    No (    )
2. Other than those above		Yes (    )    No ( x )

 

*Note 8:		For details, please refer to “3. Financial Information (9) Changes in Significant Basis of Preparation of Consolidated Financial Statements” on page 18.

(3) Number of Issued Shares (Ordinary Shares)

1. The number of issued shares, including treasury stock, was 1,324,629,128 as of March 31, 2020, and 1,324,629,128 as of March 31, 2019.

2. The number of treasury stock was 68,680,644 as of March 31, 2020, and 42,843,783 as of March 31, 2019.

3. The average number of outstanding shares was 1,275,165,730 for the fiscal year ended March 31, 2020, and 1,280,020,396 for the fiscal year ended March 31, 2019.

The Company’s shares held through the Board Incentive Plan Trust (1,476,828 shares as of March 31, 2020 and 1,823,993 shares as of March 31, 2019) are not included in the number of treasury stock as of the end of the periods, but are included in the average number of shares outstanding as treasury stock that are deducted from the basis of the calculation of per share data.

 

- 1 -

1. Summary of Consolidated Financial Results

(1) Summary of Financial Highlights

Financial Results for the Fiscal Year Ended March 31, 2020

 

						Fiscal Year ended March 31, 2019				Fiscal Year ended March 31, 2020				Change
														Amount				Percent
Total Revenues				(millions of yen)			2,434,864				2,280,329				(154,535	)			(6	)%
Total Expenses				(millions of yen)			2,105,426				2,010,648				(94,778	)			(5	)%
Income before Income Taxes				(millions of yen)			395,730				412,561				16,831				4	%
Net Income Attributable to ORIX Corporation Shareholders				(millions of yen)			323,745				302,700				(21,045	)			(7	)%
Earnings Per Share		(Basic)		(yen)			252.92				237.38				(15.54	)			(6	)%
		(Diluted)		(yen)			252.70				237.17				(15.53	)			(6	)%
ROE*1				(%)			11.6				10.3				(1.3	)			—
ROA*2				(%)			2.74				2.40				(0.34	)			—

 

*Note 1:		ROE is the ratio of Net Income Attributable to ORIX Corporation Shareholders for the period to average ORIX Corporation Shareholders’ Equity.
*Note 2:		ROA is calculated based on Net Income Attributable to ORIX Corporation Shareholders.

Overview of Business Performance (April 1, 2019 to March 31, 2020)

Total revenues for the consolidated fiscal year ended March 31, 2020 (hereinafter, “the fiscal year”) decreased 6% to ¥2,280,329 million compared to the previous fiscal year due to a decrease in sales of goods and real estate.

Total expenses decreased 5% to ¥2,010,648 million compared to the previous fiscal year due to a decrease in costs of goods and real estate sold in line with the aforementioned decreased revenues.

Income before income taxes for the fiscal year increased 4% to ¥412,561 million compared to the previous fiscal year as a result of increases in equity in net income of affiliates and gains on sales of subsidiaries and affiliates and liquidation losses, net. On the other hand, net income attributable to ORIX Corporation shareholders decreased 7% to ¥302,700 million compared to the previous fiscal year as a result of a decrease in provision for income taxes during the previous fiscal year due to the reversal of the deferred tax liabilities previously recorded for undistributed earnings of DAIKYO INCORPORATED.

There was no significant impact on the business performance for the fiscal year due to the spread of the COVID-19 virus.

 

- 2 -

Segment Information

Total segment profits for the fiscal year increased 4% to ¥417,727 million compared to the previous fiscal year. Segment profits increased in Investment and Operation and Overseas Business segments while segment profits in Corporate Financial Services, Maintenance Leasing, Real Estate and Retail segments decreased.

The Company and its subsidiaries adopted the New Lease Standard on April 1, 2019. This adoption has resulted in a gross up of right-of-use (hereinafter, “ROU”) assets related to operating leases of land, office and equipment, where the Company is the lessee, as segment assets in all of our segments except for Retail segment. In addition, segment revenues and segment expenses mainly in Corporate Financial Service segment and Maintenance Leasing segment increased as a result of a gross up of revenues and expenses of certain lessor costs. For further information, see “(9) Changes in Significant Basis of Preparation of Consolidated Financial Statements - Significant Accounting Policies - (Adoption of New Accounting Standards).”

Segment information for the fiscal year is as follows:

Corporate Financial Services Segment: Finance and fee business

 

		Year ended March 31, 2019				Year ended March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Revenues			95,212				97,007				1,795				2
Segment Profits			25,482				14,611				(10,871	)			(43	)
		As of March 31, 2019				As of March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Assets			959,725				948,268				(11,457	)			(1	)

Segment revenues increased 2% to ¥97,007 million compared to the previous fiscal year due to an increase in services income of companies acquired in the previous fiscal year, an increase in revenues from finance leases as a result of our adoption of the New Lease Standard, and increases in services income and sales of goods of Yayoi Co., Ltd.

Segment profits decreased 43% to ¥14,611 million compared to the previous fiscal year due to a decrease in fee income related to life insurance.

Although there was an increase in investment in operating leases as a result of our adoption of the New Lease Standard described above, segment assets decreased 1% to ¥948,268 million compared to the end of the previous fiscal year due to decreases in net investment in leases and installment loans.

 

- 3 -

Maintenance Leasing Segment: Automobile leasing and rentals, car-sharing; test and measurement instruments and IT-related equipment rentals and leasing

 

		Year ended March 31, 2019				Year ended March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Revenues			288,211				336,438				48,227				17
Segment Profits			38,841				33,724				(5,117	)			(13	)
		As of March 31, 2019				As of March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Assets			873,775				889,615				15,840				2

Segment revenues increased 17% to ¥336,438 million compared to the previous fiscal year due to increases in operating leases revenues and revenues from finance leases as a result of our adoption of the New Lease Standard.

Segment profits decreased 13% to ¥33,724 million compared to the previous fiscal year due to an increase in selling, general and administrative expenses.

Segment assets increased 2% to ¥889,615 million compared to the end of the previous fiscal year due to an increase in investment in operating leases.

Real Estate Segment: Real estate development, rental and management; facility operation; real estate investment management

 

		Year ended March 31, 2019				Year ended March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Revenues			529,064				466,639				(62,425	)			(12	)
Segment Profits			89,247				76,857				(12,390	)			(14	)
		As of March 31, 2019				As of March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Assets			720,221				749,694				29,473				4

Segment revenues decreased 12% to ¥466,639 million compared to the previous fiscal year due to a decrease in services income, from which significant gains were recognized on a sale of property under facility operations during the previous fiscal year, as well as a decrease in sales of real estate.

Although there was a recognition of gains on sales of shares of a subsidiary, segment profits decreased 14% to ¥76,857 million compared to the previous fiscal year due to the above reasons.

Segment assets increased 4% to ¥749,694 million compared to the end of the previous fiscal year due to an increase in investment in operating leases as a result of our adoption of the New Lease Standard described above.

 

- 4 -

Investment and Operation Segment: Environment and energy, private equity and concession

 

		Year ended March 31, 2019				Year ended March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Revenues			615,151				451,197				(163,954	)			(27	)
Segment Profits			38,170				55,715				17,545				46
		As of March 31, 2019				As of March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Assets			733,612				847,082				113,470				15

Segment revenues decreased 27% to ¥451,197 million compared to the previous fiscal year due to a decrease in sales of goods.

Segment profits increased 46% to ¥55,715 million compared to the previous fiscal year due to the recognition of gains on sales of shares of subsidiaries.

Segment assets increased 15% to ¥847,082 million compared to the end of the previous fiscal year due to an increase in property under facility operations as a result of making investees engaged in wind power generation into our subsidiaries and adoption of the New Lease Standard described above.

Retail Segment: Life insurance, banking and card loan

 

		Year ended March 31, 2019				Year ended March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Revenues			428,904				454,751				25,847				6
Segment Profits			84,211				80,387				(3,824	)			(5	)
		As of March 31, 2019				As of March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Assets			3,571,437				4,183,894				612,457				17

Segment revenues increased 6% to ¥454,751 million compared to the previous fiscal year due to an increase in life insurance premiums in line with an increase in new insurance contracts.

Segment profits decreased 5% to ¥80,387 million compared to the previous fiscal year due to a decrease in investment return of our life insurance business, which is associated with significant gains recognized on a sale of real estate property during the previous fiscal year.

Segment assets increased 17% to ¥4,183,894 million compared to the end of the previous fiscal year due to increases in investment in securities and installment loans.

 

- 5 -

Overseas Business Segment: Asset management, aircraft- and ship-related operations, private equity and finance

 

		Year ended March 31, 2019				Year ended March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Revenues			490,730				486,328				(4,402	)			(1	)
Segment Profits			125,444				156,433				30,989				25
		As of March 31, 2019				As of March 31, 2020				Change
		(millions of yen)				(millions of yen)				Amount (millions of yen)				Percent (%)
Segment Assets			3,138,928				3,287,445				148,517				5

Segment revenues decreased 1% to ¥486,328 million compared to the previous fiscal year due to decreases in services income and operating leases revenues despite increases in finance revenues and gains on investment securities.

Segment profits increased 25% to ¥156,433 million compared to the previous fiscal year due to increases in equity in net income of affiliates and gains on sales of subsidiaries and affiliates.

Segment assets increased 5% to ¥3,287,445 million compared to the end of the previous fiscal year due to an increase in installment loans.

Outlook and Forecast

The spread of COVID-19 virus has had a major impact on the world economy. Although it depends on when COVID-19 impact stabilizes, ORIX believes that a cautious management approach is merited based on the recognition that conditions will continue to be challenging for the foreseeable future.

However, ORIX has sufficient liquidity and our funding has a high long-term debt ratio. Thus, ORIX would like to continue to seek new investments.

Although forward-looking statements in this document are attributable to current information available to ORIX Corporation and are based on assumptions deemed reasonable by ORIX Corporation, actual financial results may differ materially due to various factors. Readers are urged not to place undue reliance on such forward-looking statements.

Factors causing a result that differs from forward-looking statements include, but are not limited to, those described under “Risk Factors” in our Form 20-F submitted to the U.S. Securities and Exchange Commission.

 

- 6 -

(2) Summary of Consolidated Financial Condition

Summary of Assets, Liabilities, Shareholders’ Equity

 

				As of March 31, 2019				As of March 31, 2020				Change
												Amount				Percent
Total Assets		(millions of yen)			12,174,917				13,067,528				892,611				7	%
(Segment Assets)					9,997,698				10,905,998				908,300				9	%
Total Liabilities		(millions of yen)			9,211,936				9,991,362				779,426				8	%
(Long- and Short-term Debt)					4,495,771				4,616,186				120,415				3	%
(Deposits)					1,927,741				2,231,703				303,962				16	%
Shareholders’ Equity		(millions of yen)			2,897,074				2,993,608				96,534				3	%
Shareholders’ Equity Per Share		(yen)			2,263.41				2,386.35				122.94				5	%

 

Note 1		Shareholders’ Equity refers to ORIX Corporation Shareholders’ Equity based on U.S. GAAP.
2		Shareholders’ Equity Per Share is calculated using total ORIX Corporation Shareholders’ Equity.

Total assets increased 7% to ¥13,067,528 million compared to the end of the previous fiscal year due to not only increases in installment loans, investment in securities, but also increases in investment in operating leases, property under facility operations and office facilities as a result of our adoption of the New Lease Standard. In addition, segment assets increased 9% to ¥10,905,998 million compared to the end of the previous fiscal year.

Total liabilities increased 8% to ¥9,991,362 million compared to the end of the previous fiscal year due to not only increases in long-term debt and deposits, but also an increase in other liabilities as a result of our adoption of the New Lease Standard.

Shareholders’ equity increased 3% to ¥2,993,608 million compared to the end of the previous fiscal year due primarily to an increase in retained earnings.

Summary of Cash Flows

Cash, cash equivalents and restricted cash decreased by ¥148,296 million to ¥1,135,284 million compared to the end of the previous fiscal year. The New Lease Standard has been adopted since April 1, 2019. For further information, see “(9) Changes in Significant Basis of Preparation of Consolidated Financial Statements—Significant Accounting Policies—(Adoption of New Accounting Standards).”

Cash flows provided by operating activities were ¥1,042,466 million during the fiscal year, up from ¥587,678 million during the previous fiscal year, primarily because the classification of cash flows from principal payments received under net investment in leases changed from cash flows from investing activities to cash flows from operating activities, starting from this fiscal year.

Cash flows used in investing activities were ¥1,470,486 million during the fiscal year, up from ¥873,951 million during the previous fiscal year, primarily because the classification of cash flows from principal payments received under net investment in leases changed from cash flows from investing activities to cash flows from operating activities, starting from this fiscal year.

Cash flows provided by financing activities were ¥288,703 million during the fiscal year, up from ¥166,647 million during the previous fiscal year. This change resulted primarily from an increase in deposit taking.

 

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(3) Profit Distribution Policy and Dividends for the Fiscal Year Ended March 31, 2020 and the Fiscal Year Ending March 31, 2021

ORIX aims to increase shareholder value by utilizing profits earned from business activities that were secured primarily as retained earnings, to strengthen its business foundation and make investments for future growth. At the same time, ORIX strives to make stable and sustainable distribution of dividends at a level in line with its business performance. In addition, with regards to the decision of whether to buy back shares, ORIX aims to act with swiftness while considering various factors such as the adequate level of the Company’s retained earnings, the soundness of its financial condition and external factors such as changes in the business environment, share price and its trend and target performance indicators.

Based on this fundamental policy, the annual dividend for the fiscal year ended March 31, 2020 has been decided at 76.00 yen per share (interim dividend paid was 35.00 yen per share and year-end dividend has been decided at 41.00 yen per share) as well as 76.00 yen per share in the previous fiscal year ended March 31, 2019. The payout ratio for the fiscal year ended March 31,2020 was 32.0%, up 2% from the previous fiscal year. The interim dividend for the next fiscal year ending March 31, 2021 is forecasted at 35.00 yen per share. The dividend payout ratio for the next fiscal year ending March 31, 2021 is targeted at 50.0%. This is only for the next fiscal year. The year-end dividend for the next fiscal year ending March 31, 2021 is to be determined.

In addition, the details of share repurchase for the fiscal year ended March 31, 2020 pursuant to the resolution at the Board of Directors meeting held on October 28, 2019 are as follows. Total purchase price of shares repurchased pursuant to the resolution is ¥55.8 billion including shares acquired subsequent to the balance sheet date. Total purchase price of shares was originally set at ¥100.0 billion, and the process expired as scheduled on May 8, 2020 without any extension period from the viewpoint of liquidity management. For further information of share repurchase acquired subsequent to the balance sheet date, see “(10) Notes to Consolidated Financial Statements”.

 

•  Class of shares repurchased		Common shares
•  Total number of shares repurchased		25,836,400 shares
•  Total purchase price of shares repurchased		¥45,719,372,400
•  Repurchase period		November 1, 2019 – March 31, 2020
•  Method of share repurchase		Market purchases based on the discretionary dealing contract regarding repurchase of own shares

(4) Risk Factors

The spread of COVID-19 virus may affect our business performance and financial condition in addition to the items concerning “Risk Factors” as stated in our latest Form 20-F submitted to the U.S. Securities and Exchange Commission June 28, 2019.

2. Consideration in the Selection of Accounting Standard

We have been preparing our financial statements in accordance with U.S. GAAP. We believe that U.S. GAAP is the accounting standard that most appropriately reflects our business activities in our financial reporting.

Reporting in U.S. GAAP enables us to maintain consistency and comparability with past financial results and we believe that is beneficial to our stakeholders.

 

- 8 -

3. Financial Information

(1) Condensed Consolidated Balance Sheets (Unaudited)

 

				(millions of yen)
Assets				As of March 31, 2019				As of March 31, 2020
Cash and Cash Equivalents					1,161,032				982,666
Restricted Cash					122,548				152,618
Investment in Direct Financing Leases					1,155,632				0
Net Investment in Leases					0				1,080,964
Installment Loans					3,277,670				3,740,486
The amounts which are measured at fair value by electing the fair value option are as follows:
March 31, 2019		¥38,671 million
March 31, 2020		¥90,893 million
Allowance for Doubtful Receivables on Finance Leases and Probable Loan Losses					(58,011	)			(56,836	)
Investment in Operating Leases					1,335,959				1,400,001
Investment in Securities					1,928,916				2,245,323
The amounts which are measured at fair value by electing the fair value option are as follows:
March 31, 2019		¥27,367 million
March 31, 2020		¥25,295 million
Property under Facility Operations					441,632				562,485
Investment in Affiliates					842,760				821,662
Trade Notes, Accounts and Other Receivable					280,590				312,744
Inventories					115,695				126,013
Office Facilities					108,390				203,930
Other Assets					1,462,104				1,495,472
The amounts which are measured at fair value by electing the fair value option are as follows:
March 31, 2019		¥12,449 million
March 31, 2020		¥18,206 million
Total Assets					12,174,917				13,067,528
Liabilities and Equity
Short-term Debt					309,549				336,832
Deposits					1,927,741				2,231,703
Trade Notes, Accounts and Other Payable					293,480				282,727
Policy Liabilities and Policy Account Balances					1,521,355				1,591,475
The amounts which are measured at fair value by electing the fair value option are as follows:
March 31, 2019		¥360,198 million
March 31, 2020		¥300,739 million
Current and Deferred Income Taxes					355,843				356,350
Long-term Debt					4,186,222				4,279,354
Other Liabilities					617,746				912,921
Total Liabilities					9,211,936				9,991,362
Redeemable Noncontrolling Interests					9,780				10,331
Commitments and Contingent Liabilities
Common Stock					221,111				221,111
Additional Paid-in Capital					257,625				257,638
Retained Earnings					2,555,585				2,754,461
Accumulated Other Comprehensive Income (Loss)					(61,343	)			(118,532	)
Treasury Stock, at Cost					(75,904	)			(121,070	)
Total ORIX Corporation Shareholders’ Equity					2,897,074				2,993,608
Noncontrolling Interests					56,127				72,227
Total Equity					2,953,201				3,065,835
Total Liabilities and Equity					12,174,917				13,067,528

 

- 9 -

Note 1:

Breakdowns of Accumulated Other Comprehensive Income (Loss)

 

				As of March31, 2019				As of March 31, 2020
Accumulated Other Comprehensive Income (Loss)
Net unrealized gains on investment in securities					17,389				(5,001	)
Debt valuation adjustments					582				1,457
Defined benefit pension plans					(27,902	)			(26,375	)
Foreign currency translation adjustments					(43,558	)			(72,471	)
Net unrealized losses on derivative instruments					(7,854	)			(16,142	)
Total					(61,343	)			(118,532	)

 

Note 2:

The New Lease Standard has been adopted since April 1, 2019, and the amounts of investment in direct financing leases have been reclassified to net investment in leases. For further information, see “(9) Changes in Significant Basis of Preparation of Consolidated Financial Statements—Significant Accounting Policies—(Adoption of New Accounting Standards)”.

 

- 10 -

(2) Condensed Consolidated Statements of Income (Unaudited)

 

						(millions of yen)
		Year ended March 31, 2019				Year ended March 31, 2020
Revenues :
Finance revenues			242,893				276,864
Gains on investment securities and dividends			15,958				22,499
Operating leases			413,918				430,665
Life insurance premiums and related investment income			347,136				367,778
Sales of goods and real estate			596,165				406,511
Services income			818,794				776,012
Total Revenues			2,434,864				2,280,329
Expenses :
Interest expense			93,337				99,138
Costs of operating leases			257,321				289,604
Life insurance costs			246,533				269,425
Costs of goods and real estate sold			535,261				354,006
Services expense			508,320				483,914
Other (income) and expense			1,301				14,925
Selling, general and administrative expenses			437,028				460,199
Provision for doubtful receivables and probable loan losses			22,525				24,425
Write-downs of long-lived assets			2,418				3,043
Write-downs of securities			1,382				11,969
Total Expenses			2,105,426				2,010,648
Operating Income			329,438				269,681
Equity in Net Income of Affiliates			32,978				67,924
Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, Net			33,314				74,001
Bargain Purchase Gain			0				955
Income before Income Taxes			395,730				412,561
Provision for Income Taxes			68,691				105,837
Net Income			327,039				306,724
Net Income Attributable to the Noncontrolling Interests			2,890				3,640
Net Income Attributable to the Redeemable Noncontrolling Interests			404				384
Net Income Attributable to ORIX Corporation Shareholders			323,745				302,700

 

 

	Note:			The New Lease Standard has been adopted since April 1, 2019, and the certain lessor costs of finance lease, such as the property taxes and insurance costs previously had been deducted from “Finance revenues”, but it has changed to be included in “Other (income) and expense.” And the certain lessor costs of operating lease previously had been deducted from Revenue of “Operating leases”, but it has changed to be included in “Costs of operating leases”. In addition, the presented amounts in the consolidated statements of income for the prior to the previous fiscal year have not been changed retrospectively to conform to the presentation for fiscal 2020 because they are not applicable to the New Lease Standard. For further information, see “(9) Changes in Significant Basis of Preparation of Consolidated Financial Statements—Significant Accounting Policies—(Adoption of New Accounting Standards)”.

 

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(3) Condensed Consolidated Statements of Comprehensive Income (Unaudited)

 

						(millions of yen)
		Year Ended March 31, 2019				Year Ended March 31, 2020
Net Income :			327,039				306,724
Other comprehensive income (loss), net of tax:
Net change of unrealized gains (losses) on investment in securities			10,215				(22,456	)
Net change of debt valuation adjustments			231				875
Net change of defined benefit pension plans			(7,346	)			1,529
Net change of foreign currency translation adjustments			(11,537	)			(31,664	)
Net change of unrealized gains (losses) on derivative instruments			(4,118	)			(8,556	)
Total other comprehensive income (loss)			(12,555	)			(60,272	)
Comprehensive Income			314,484				246,452
Comprehensive Income Attributable to the Noncontrolling Interests			2,784				756
Comprehensive Income Attributable to the Redeemable Noncontrolling Interests			730				187
Comprehensive Income Attributable to ORIX Corporation Shareholders			310,970				245,509

 

- 12 -

(4) Condensed Consolidated Statements of Changes in Equity (Unaudited)

 

		(millions of yen)
		ORIX Corporation Shareholders’ Equity
		Common Stock				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Treasury Stock				Total ORIX Corporation Shareholders’ Equity				Noncontrolling Interests				Total Equity
Balance at March 31, 2018			220,961				267,291				2,315,283				(45,566	)			(75,545	)			2,682,424				116,450				2,798,874
Cumulative effect of adopting Accounting Standards Update 2014-09											405												405				354				759
Cumulative effect of adopting Accounting Standards Update 2016-01											2,899				(2,899	)							0				0				0
Cumulative effect of adopting Accounting Standards Update 2016-16											3,772												3,772				0				3,772
Balance at April 1, 2018			220,961				267,291				2,322,359				(48,465	)			(75,545	)			2,686,601				116,804				2,803,405
Contribution to subsidiaries																							0				7,680				7,680
Transaction with noncontrolling interests							(10,033	)							(103	)							(10,136	)			(60,347	)			(70,483	)
Comprehensive income, net of tax:
Net income											323,745												323,745				2,890				326,635
Other comprehensive income (loss)
Net change of unrealized gains (losses) on investment in securities															10,174								10,174				41				10,215
Net change of debt valuation adjustments															231								231				0				231
Net change of defined benefit pension plans															(7,289	)							(7,289	)			(57	)			(7,346	)
Net change of foreign currency translation adjustments															(11,775	)							(11,775	)			(88	)			(11,863	)
Net change of unrealized gains (losses) on derivative instruments															(4,116	)							(4,116	)			(2	)			(4,118	)
Total other comprehensive income (loss)																							(12,775	)			(106	)			(12,881	)
Total comprehensive income																							310,970				2,784				313,754
Cash dividends											(88,438	)											(88,438	)			(10,794	)			(99,232	)
Exercise of stock options			150				75																225				0				225
Acquisition of treasury stock																			(707	)			(707	)			0				(707	)
Disposal of treasury stock							(233	)											348				115				0				115
Adjustment of redeemable noncontrolling interests to redemption value											(2,131	)											(2,131	)			0				(2,131	)
Other, net							525				50												575				0				575
Balance at March 31, 2019			221,111				257,625				2,555,585				(61,343	)			(75,904	)			2,897,074				56,127				2,953,201
Contribution to subsidiaries																							0				17,047				17,047
Transaction with noncontrolling interests							241								2								243				1,340				1,583
Comprehensive income, net of tax:
Net income											302,700												302,700				3,640				306,340
Other comprehensive income (loss)
Net change of unrealized gains (losses) on investment in securities															(22,390	)							(22,390	)			(66	)			(22,456	)
Net change of debt valuation adjustments															875								875				0				875
Net change of defined benefit pension plans															1,527								1,527				2				1,529
Net change of foreign currency translation adjustments															(28,917	)							(28,917	)			(2,550	)			(31,467	)
Net change of unrealized gains (losses) on derivative instruments															(8,286	)							(8,286	)			(270	)			(8,556	)
Total other comprehensive income (loss)																							(57,191	)			(2,884	)			(60,075	)
Total comprehensive income																							245,509				756				246,265
Cash dividends											(103,824	)											(103,824	)			(3,043	)			(106,867	)
Acquisition of treasury stock																			(45,720	)			(45,720	)			0				(45,720	)
Disposal of treasury stock							(334	)											554				220				0				220
Other, net							106																106				0				106
Balance at March 31, 2020			221,111				257,638				2,754,461				(118,532	)			(121,070	)			2,993,608				72,227				3,065,835

 

	Note:			Changes in the redeemable noncontrolling interests are not included in the table.

 

- 13 -

(5) Condensed Consolidated Statements of Cash Flows (Unaudited)

 

		(millions of yen)
		Year ended March 31, 2019				Year ended March 31, 2020
Cash Flows from Operating Activities:
Net income			327,039				306,724
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			295,589				304,204
Principal payments received under net investment in leases			0				474,110
Provision for doubtful receivables and probable loan losses			22,525				24,425
Equity in net income of affiliates (excluding interest on loans)			(29,674	)			(65,764	)
Gains on sales of subsidiaries and affiliates and liquidation losses, net			(33,314	)			(74,001	)
Bargain purchase gain			0				(955	)
Gains on sales of securities other than trading			(10,182	)			(18,886	)
Gains on sales of operating lease assets			(62,883	)			(51,072	)
Write-downs of long-lived assets			2,418				3,043
Write-downs of securities			1,382				11,969
Decrease in trading securities			95,370				63,681
Decrease in inventories			6,852				11,938
Decrease (Increase) in trade notes, accounts and other receivable			(5,576	)			12,348
Decrease (Increase) in trade notes, accounts and other payable			10,990				(3,853	)
Increase in policy liabilities and policy account balances			10,109				70,120
Other, net			(42,967	)			(25,565	)
Net cash provided by operating activities			587,678				1,042,466
Cash Flows from Investing Activities:
Purchases of lease equipment			(998,073	)			(948,445	)
Principal payments received under direct financing leases			469,262				0
Installment loans made to customers			(1,460,336	)			(1,527,000	)
Principal collected on installment loans			1,239,385				1,134,142
Proceeds from sales of operating lease assets			429,295				339,504
Investment in affiliates, net			(278,027	)			(44,140	)
Proceeds from sales of investment in affiliates			56,423				79,950
Purchases of available-for-sale debt securities			(556,213	)			(711,973	)
Proceeds from sales of available-for-sale debt securities			221,824				249,427
Proceeds from redemption of available-for-sale debt securities			73,156				82,754
Purchases of equity securities other than trading			(66,959	)			(53,616	)
Proceeds from sales of equity securities other than trading			83,261				34,145
Purchases of property under facility operations			(62,221	)			(44,466	)
Acquisitions of subsidiaries, net of cash acquired			(119,105	)			(134,894	)
Sales of subsidiaries, net of cash disposed			56,584				91,835
Other, net			37,793				(17,709	)
Net cash used in investing activities			(873,951	)			(1,470,486	)
Cash Flows from Financing Activities:
Net increase (decrease) in debt with maturities of three months or less			(50,881	)			16,182
Proceeds from debt with maturities longer than three months			1,123,923				924,779
Repayment of debt with maturities longer than three months			(932,676	)			(832,881	)
Net increase in deposits due to customers			169,830				304,182
Cash dividends paid to ORIX Corporation shareholders			(88,438	)			(103,824	)
Acquisition of treasury stock			(707	)			(45,720	)
Contribution from noncontrolling interests			22,760				23,994
Purchases of shares of subsidiaries from noncontrolling interests			(86,165	)			(4,501	)
Net increase in call money			20,000				10,000
Other, net			(10,999	)			(3,508	)
Net cash provided by financing activities			166,647				288,703
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash			(1,911	)			(8,979	)
Net decrease in Cash, Cash Equivalents and Restricted Cash			(121,537	)			(148,296	)
Cash, Cash Equivalents and Restricted Cash at Beginning of Year			1,405,117				1,283,580
Cash, Cash Equivalents and Restricted Cash at End of Year			1,283,580				1,135,284

 

	Note:			The New Lease Standard has been adopted since April 1, 2019, and the amounts of investment in direct financing leases have been reclassified to net investment in leases. For further information, see “(9) Changes in Significant Basis of Preparation of Consolidated Financial Statements—Significant Accounting Policies—(Adoption of New Accounting Standards)”.

 

- 14 -

(6) Assumptions for Going Concern

There is no corresponding item.

(7) Segment Information (Unaudited)

Segment Information by Sector

 

																						(millions of yen)
		Year ended March 31, 2019								Year ended March 31, 2020								March 31, 2019				March 31, 2020
		Segment Revenues				Segment Profits				Segment Revenues				Segment Profits				Segment Assets				Segment Assets
Corporate Financial Services			95,212				25,482				97,007				14,611				959,725				948,268
Maintenance Leasing			288,211				38,841				336,438				33,724				873,775				889,615
Real Estate			529,064				89,247				466,639				76,857				720,221				749,694
Investment and Operation			615,151				38,170				451,197				55,715				733,612				847,082
Retail			428,904				84,211				454,751				80,387				3,571,437				4,183,894
Overseas Business			490,730				125,444				486,328				156,433				3,138,928				3,287,445
Segment Total			2,447,272				401,395				2,292,360				417,727				9,997,698				10,905,998
Difference between Segment Total and Consolidated Amounts			(12,408	)			(5,665	)			(12,031	)			(5,166	)			2,177,219				2,161,530
Consolidated Amounts			2,434,864				395,730				2,280,329				412,561				12,174,917				13,067,528

 

Note 1:

The Company evaluates the performance of segments based on income before income taxes, adjusted for net income attributable to the noncontrolling interests and net income attributable to the redeemable noncontrolling interests before applicable tax effect. Tax expenses are not included in segment profits.

 

Note 2:

The Company and its subsidiaries adopted the New Lease Standard on April 1, 2019. The impact of the adoption has resulted in gross up of ROU assets related to operating leases of land, office and equipment, where the Company is the lessee, as segment assets in all of our segments except for Retail segment. In addition, segment revenues and segment expenses mainly in Corporate Financial Service segment and Maintenance Leasing segment increased as a result of a gross up of revenues and expenses of certain lessor costs. For further information, see “(9) Changes in Significant Basis of Preparation of Consolidated Financial Statements—Significant Accounting Policies—(Adoption of New Accounting Standards)”.

 

Note 3:

Inter-segment transactions are included in segment revenues, and eliminations of inter-segment transactions are included in difference between segment total and consolidated amounts.

 

- 15 -