6-K 1 d24106d6k.htm FORM 6-K Form 6-K
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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 November 2020.

Commission File Number: 001-14856

 

 

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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


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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: November 13, 2020

 

By

 

/s/ SHOJI TANIGUCHI

   

Shoji Taniguchi

   

Member of the Board of Directors

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


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CONSOLIDATED FINANCIAL INFORMATION

Notes to Translation

 

1.

The following is an English translation of ORIX Corporation’s quarterly financial report (shihanki houkokusho) as filed with the Kanto Financial Bureau in Japan on November 13, 2020, which includes unaudited consolidated financial information prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) as of March 31, 2020 and September 30, 2020 and for the three and six months ended September 30, 2019 and 2020.

 

2.

Significant differences between U.S. GAAP and generally accepted accounting principles in Japan (“Japanese GAAP”) are stated in Note 1 “Overview of Accounting Principles Utilized” of the notes to Consolidated Financial Statements.

In preparing its consolidated financial information, ORIX Corporation (the “Company”) and its subsidiaries have complied with U.S. GAAP.

This document may contain forward-looking statements about expected future events and financial results that involve risks and uncertainties. Such statements are based on the Company’s 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 most recent annual report on Form 20-F filed with the U.S. 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.

 

– 1 –


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1.

Information on the Company and its Subsidiaries

(1) Consolidated Financial Highlights

 

     Millions of yen
(except for per share amounts and ratios)
 
     Six months
ended
September 30,
2019
    Six months
ended
September 30,
2020
    Fiscal year
ended
March 31,
2020
 

Total revenues

   ¥ 1,135,445     ¥ 1,084,738     ¥ 2,280,329  

Income before income taxes

     228,629       134,174       412,561  

Net income attributable to ORIX Corporation shareholders

     159,150       93,842       302,700  

Comprehensive Income attributable to ORIX Corporation shareholders

     123,365       88,110       245,509  

ORIX Corporation shareholders’ equity

     2,962,073       2,979,684       2,993,608  

Total assets

     12,511,073       13,168,070       13,067,528  

Earnings per share for net income attributable to ORIX Corporation shareholders

      

Basic (yen)

     124.34       75.22       237.38  

Diluted (yen)

     124.24       75.16       237.17  

ORIX Corporation shareholders’ equity ratio (%)

     23.7       22.6       22.9  

Cash flows from operating activities

     532,850       519,772       1,042,466  

Cash flows from investing activities

     (703,479     (420,148     (1,470,486

Cash flows from financing activities

     6,676       72,145       288,703  

Cash, Cash Equivalents and Restricted Cash at end of Period

     1,109,440       1,307,306       1,135,284  

 

Notes:

  

1.

  

Consumption tax is excluded from the stated amount of total revenues.

  

2.

  

Accounting Standards Update 2016-13 (“Measurement of Credit Losses on Financial Instruments”—ASC 326 (“Financial Instruments—Credit Losses”)) (hereinafter, “Credit Losses Standard”) has been adopted since April 1, 2020. For further information, see Note 2 “Significant Accounting and Reporting Policies (ah) New accounting pronouncements.”

 

     Millions of yen
(except for per share amounts)
                        
     Three months
ended
September 30,
2019
     Three months
ended
September 30,
2020
 

Total revenues

   ¥ 586,996      ¥ 547,097  

Net income attributable to ORIX Corporation shareholders

     89,940        43,794  

Earnings per share for net income attributable to ORIX Corporation shareholders

     

Basic (yen)

     70.27        35.15     

 

Notes:

  

1.

  

Consumption tax is excluded from the stated amount of total revenues.

  

2.

  

Credit Losses Standard has been adopted since April 1, 2020. For further information, see Note 2 “Significant Accounting and Reporting Policies (ah) New accounting pronouncements.”

(2) Overview of Activities

During the six months ended September 30, 2020, no significant changes were made in the Company and its subsidiaries’ operations. Additionally, there were no changes of principal subsidiaries and affiliates.

 

– 2 –


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2.

Risk Factors

Investing in the Company’s securities involves risks. You should carefully consider the information described herein as well as the risks described under “Risk Factors” in our Form 20-F for the fiscal year ended March 31, 2020 and the other information in that annual report, including, but not limited to, the Company’s consolidated financial statements and related notes and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” The Company continues to closely monitor the effects of COVID-19 on the business activities, financial condition and results of operations of the ORIX Group. The Company’s business activities, financial condition and results of operations and the trading prices of the Company’s securities could be adversely affected by any of the factors mentioned above or other factors.

 

3.

Analysis of Financial Results and Condition

The following discussion provides management’s explanation of factors and events that have significantly affected the Company’s financial condition and results of operations. Also included is management’s assessment of factors and trends that could have a material effect on the Company’s financial condition and results of operations in the future. However, please be advised that financial conditions and results of operations in the future may also be affected by factors other than those discussed herein. These factors and trends regarding the future were assessed as of the issue date of this quarterly financial report (shihanki houkokusho).

(1) Qualitative Information Regarding Consolidated Financial Results

Financial Highlights

Financial Results for the Six Months Ended September 30, 2020

Total revenues

   ¥1,084,738 million (Down 4% year on year)

Total expenses

   ¥964,899 million (Down 1% year on year)

Income before income taxes

   ¥134,174 million (Down 41% year on year)

Net income attributable to ORIX Corporation Shareholders

   ¥93,842 million (Down 41% year on year)

Earnings per share for net income attributable to ORIX Corporation Shareholders

  

(Basic)

   ¥75.22 (Down 40% year on year)

(Diluted)

   ¥75.16 (Down 40% year on year)

ROE (Annualized) *1

   6.3% (10.9% during the same period in the previous fiscal year)

ROA (Annualized) *2

   1.43% (2.58% during the same period in the previous fiscal year)

 

*1

ROE is the ratio of net income attributable to ORIX Corporation Shareholders for the period to average ORIX Corporation Shareholders’ Equity.

*2

ROA is the ratio of net income attributable to ORIX Corporation Shareholders for the period to average Total Assets.

Total revenues for the six months ended September 30, 2020 decreased 4% to ¥1,084,738 million compared to ¥1,135,445 million during the same period of the previous fiscal year due to decreases in services income, gains on investment securities and dividends, and operating leases revenues despite increases in life insurance premiums and related investment income, and sales of goods and real estate.

Total expenses decreased 1% to ¥964,899 million compared to ¥973,743 million during the same period of the previous fiscal year due to a decrease in services expense despite increases in life insurance costs, and costs of goods and real estate sold in line with the aforementioned revenue declines.

In addition, equity in net income of affiliates decreased 93% to ¥2,289 million compared to ¥32,617 million and gains on sales of subsidiaries and affiliates and liquidation losses, net decreased 77% to ¥7,681 million compared to ¥33,288 million during the same period of the previous fiscal year.

Due to the above results and the impact of COVID-19, income before income taxes for the six months ended September 30, 2020 decreased 41% to ¥134,174 million compared to ¥228,629 million during the same period of the previous fiscal year and net income attributable to ORIX Corporation shareholders decreased 41% to ¥93,842 million compared to ¥159,150 million during the same period of the previous fiscal year.

 

– 3 –


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Segment Information

Our operating segments used by the chief operating decision maker to make decisions about resource allocations and assess performance are organized into 10 segments based on our business management organization which is classified by the nature of major products and services, customer base, regulations and business areas. The 10 segments are Corporate Financial Services and Maintenance Leasing, Real Estate, PE Investment and Concession, Environment and Energy, Insurance, Banking and Credit, Aircraft and Ships, ORIX USA, ORIX Europe, and Asia and Australia. Since April 1, 2020, the reporting segments have been changed to the aforementioned segments. As a result of this change, segment data for the previous fiscal year has been retrospectively restated.

Since April 1, 2020, the selling, general and administrative expenses that should be borne by ORIX Group as a whole, which were initially charged directly to its respective segments, have been included in the difference between segment total profits and consolidated amounts. As a result of this change, segment data for the six months ended September 30, 2019 has been retrospectively restated.

Since April 1, 2020, Credit Losses Standard has been adopted, and the amounts of provision for doubtful receivables and probable loan losses have been reclassified to provision for credit losses. For further information, see Note 2 “Significant Accounting and Reporting Policies (ah) New accounting pronouncements.”

Total revenues and profits by segment for the six months ended September 30, 2019 and 2020 are as follows:

 

     Millions of yen  
     Six months ended
September 30, 2019
    Six months ended
September 30, 2020
    Change
(revenues)
    Change
(profits)
 
     Segment
Revenues
     Segment
Profits
    Segment
Revenues
    Segment
Profits
    Amount     Percent
(%)
    Amount     Percent
(%)
 

Corporate Financial Services and Maintenance Leasing

   ¥ 211,546      ¥ 32,581     ¥ 208,591     ¥ 24,948     ¥ (2,955     (1   ¥ (7,633     (23

Real Estate

     229,428        47,444       167,276       10,355       (62,152     (27     (37,089     (78

PE Investment and Concession

     143,844        19,649       157,826       4,077       13,982       10       (15,572     (79

Environment and Energy

     78,327        8,527       71,418       14,132       (6,909     (9     5,605       66  

Insurance

     184,200        25,926       235,754       34,716       51,554       28       8,790       34  

Banking and Credit

     41,788        18,769       41,661       24,239       (127     (0     5,470       29  

Aircraft and Ships

     29,434        16,842       14,876       4,713       (14,558     (49     (12,129     (72

ORIX USA

     65,922        35,894       57,859       11,414       (8,063     (12     (24,480     (68

ORIX Europe

     77,202        16,688       73,046       16,291       (4,156     (5     (397     (2

Asia and Australia

     72,752        19,187       58,962       4,635       (13,790     (19     (14,552     (76
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     1,134,443        241,507       1,087,269       149,520       (47,174     (4     (91,987     (38
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Difference between Segment Total and Consolidated Amounts

     1,002        (12,878     (2,531     (15,346     (3,533     —         (2,468     —    
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Consolidated Amounts

   ¥ 1,135,445      ¥ 228,629     ¥ 1,084,738     ¥ 134,174     ¥ (50,707     (4   ¥ (94,455     (41
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

– 4 –


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Total assets by segment as of March 31, 2020 and September 30, 2020 are as follows:

 

     Millions of yen  
     March 31, 2020      September 30, 2020      Change  
     Segment
Assets
     Composition
Ratio (%)
     Segment
Assets
     Composition
Ratio (%)
     Amount     Percent
(%)
 

Corporate Financial Services and Maintenance Leasing

   ¥ 1,789,693        14      ¥ 1,709,878        13      ¥ (79,815     (4

Real Estate

     821,194        6        827,330        6        6,136       1  

PE Investment and Concession

     322,522        2        322,588        3        66       0  

Environment and Energy

     478,796        4        478,167        4        (629     (0

Insurance

     1,580,158        12        1,710,425        13        130,267       8  

Banking and Credit

     2,603,736        20        2,676,617        20        72,881       3  

Aircraft and Ships

     585,304        4        568,866        4        (16,438     (3

ORIX USA

     1,374,027        11        1,294,184        10        (79,843     (6

ORIX Europe

     317,847        2        318,682        2        835       0  

Asia and Australia

     1,010,268        8        992,937        8        (17,331     (2
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     10,883,545        83        10,899,674        83        16,129       0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Difference between Segment Total and Consolidated Amounts

     2,183,983        17        2,268,396        17        84,413       4  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total Consolidated Amounts

   ¥ 13,067,528        100      ¥ 13,168,070        100      ¥ 100,542       1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Segment information for the six months ended September 30, 2020 is as follows:

Corporate Financial Services and Maintenance Leasing: Finance and fee business; leasing and rental of automobiles, electronic measuring instruments and IT-related equipment; Yayoi

In corporate financial services, we are engaged in leasing and lending businesses with a focus on profitability. We also focus on fee businesses by providing life insurance and environment and energy-related products and services to domestic small and medium-sized enterprise customers, as well as business succession support in domestic regions. In the automobile-related businesses, we aim to increase market share in small and medium-sized enterprises and individual customers, as well as large corporate customers by enhancing our competitive advantages stemming from our industry-leading number of fleets under management and one-stop automobile-related services. In the rental business operated by ORIX Rentec Corporation, we are strengthening our engineering solution businesses by not only providing electronic measuring instruments and IT-related equipment leasing and lending, but also developing new services relating to robots and drones.

Segment revenues decreased 1% to ¥208,591 million compared to the same period of the previous fiscal year. This decrease was primarily due to lower finance revenues resulting from a decrease in financial assets and lower operating leases revenues resulting from a decrease in revenues from our car rental business, despite an increase in services income from investees in our corporate financial services business.

Due to the above-mentioned reasons as well as increases in costs of operating leases and services expense, and the absence of bargain purchase gains recorded in relation to companies acquired in our corporate financial services business during the six months ended September 30, 2019, segment profits decreased 23% to ¥24,948 million compared to the same period of the previous fiscal year.

Segment assets decreased 4% to ¥1,709,878 million compared to the end of the previous fiscal year. This decrease was mainly due to decreases in net investment in leases, installment loans, and investment in operating leases.

Asset efficiency declined compared to the same period of the previous fiscal year.

 

– 5 –


Table of Contents
                                                                                                                                           
     Six months
ended September 30,
2019
    Six months
ended September 30,
2020
    Change  
    Amount     Percent
(%)
 
     (Millions of yen, except percentage data)  

Segment Revenues:

        

Finance revenues

   ¥ 30,386     ¥ 28,252     ¥ (2,134     (7

Gains on investment securities and dividends

     672       1,168       496       74  

Operating leases

     121,571        120,034        (1,537     (1

Sales of goods and real estate

     6,024       4,661       (1,363     (23

Services income

     52,893       54,476       1,583       3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

     211,546       208,591       (2,955     (1
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Expenses:

        

Interest expense

     3,187       2,833       (354     (11

Costs of operating leases

     96,110       99,350       3,240       3  

Costs of goods and real estate sold

     3,687       2,942       (745     (20

Services expense

     24,949       27,160       2,211       9  

Selling, general and administrative expenses

     42,977       42,699       (278     (1

Provision for doubtful receivables and probable loan losses and write-downs of long-lived assets and securities

     488       0       (488     —    

Provision for credit losses and write-downs of long-lived assets and securities

     0       627       627       —    

Other

     9,131       8,092       (1,039     (11
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Expenses

     180,529       183,703       3,174       2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     31,017       24,888       (6,129     (20
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     1,564       60       (1,504     (96
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Profits

   ¥ 32,581     ¥ 24,948     ¥ (7,633     (23
  

 

 

   

 

 

   

 

 

   

 

 

 
     As of
March 31,
2020
    As of
September 30,
2020
    Change  
    Amount     Percent
(%)
 
     (Millions of yen, except percentage data)  

Net investment in leases

   ¥ 648,627     ¥ 613,938     ¥ (34,689     (5

Installment loans

     379,541       348,085       (31,456     (8

Investment in operating leases

     572,492       559,919       (12,573     (2

Investment in securities

     28,616       29,442       826       3  

Property under facility operations

     19,992       19,314       (678     (3

Inventories

     736       676       (60     (8

Advances for finance lease and operating lease

     293       603       310       106  

Investment in affiliates

     18,347       18,323       (24     (0

Advances for property under facility operations

     760       760       0       0  

Goodwill, intangible assets acquired in business combinations

     120,289       118,818       (1,471     (1
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Assets

   ¥ 1,789,693     ¥ 1,709,878     ¥ (79,815)       (4
  

 

 

   

 

 

   

 

 

   

 

 

 

 

– 6 –


Table of Contents

Real Estate: Real estate development, rental and management; facility operations; real estate asset management

In real estate business, we aim to promote portfolio rebalancing by selling rental properties in favorable market conditions while investing in real estate development projects that can generate added value. We are also building a revenue base that is less affected by volatility in the real estate market by expanding the scale of our asset management business, such as REIT and real estate investment advisory services. We aim to enhance mutually complementary aspects of the DAIKYO INCORPORATED (“DAIKYO”) and ORIX real estate businesses, to gain stable profits by accumulating expertise through the operation of various facilities such as hotels and Japanese inns, and to develop new businesses by taking advantage of our value chain of real estate development and rental, asset management, facility operations, residential management, office building management, construction contracting, and real estate brokerage.

Our operating facilities have faced temporary closure and low occupancy rates during the six months ended September 30, 2020 due to the impact of the COVID-19 pandemic. Consequently, services income from our facility operations business declined. We also experienced a decline in gains on sales of real estate under operating leases. In addition, DAIKYO’s revenues from real estate contract work decreased due to the dissipation of increased last-minute demand before the consumption tax hike in Japan during the same period of the previous year. As a result, segment revenues decreased 27% to ¥167,276 million compared to the same period of the previous fiscal year.

Due to the above-mentioned reasons as well as the absence of gains on the sale of a subsidiary which operates senior housings, which had been recorded during the six months ended September 30, 2019, segment profits decreased 78% to ¥10,355 million compared to the same period of the previous fiscal year despite a decrease in services expense from our facility operations business.

Investment in operating leases declined due to the sales of real estate under operating leases. However, this decline was offset by increases in investment in affiliates and advances for finance lease and operating lease. As a result, segment assets increased 1% to ¥827,330 million compared to the end of the previous fiscal year.

Asset efficiency declined compared to the same period of the previous fiscal year.

 

                                                                                                                                           
     Six months
ended September 30,
2019
    Six months
ended September 30,
2020
    Change  
    Amount            Percent       
(%)
 
     (Millions of yen, except percentage data)  

Segment Revenues:

        

Finance revenues

   ¥ 3,431     ¥ 3,113     ¥ (318     (9

Operating leases

     35,322       28,111        (7,211     (20

Sales of goods and real estate

     47,481       40,293       (7,188     (15

Services income

     143,288       95,749       (47,539     (33

Other

     (94     10       104       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

     229,428       167,276       (62,152     (27
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Expenses:

        

Interest expense

     904       1,171       267       30  

Costs of operating leases

     13,480       12,526       (954     (7

Costs of goods and real estate sold

     43,951       34,826       (9,125     (21

Services expense

     121,265       93,178       (28,087     (23

Selling, general and administrative expenses

     19,508       17,804       (1,704     (9

Provision for doubtful receivables and probable loan losses and write-downs of long-lived assets and securities

     217       0       (217     —    

Provision for credit losses and write-downs of long-lived assets and securities

     0       413       413       —    

Other

     1,060       (1,594     (2,654     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Expenses

     200,385       158,324       (42,061     (21
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     29,043       8,952       (20,091     (69
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     18,401       1,403       (16,998     (92
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Profits

   ¥   47,444     ¥   10,355     ¥ (37,089     (78
  

 

 

   

 

 

   

 

 

   

 

 

 

 

– 7 –


Table of Contents
                                                                                                                                           
     As of
         March 31,        
2020
    As of
      September 30,      
2020
    Change  
    Amount            Percent       
(%)
 
     (Millions of yen, except percentage data)  

Net investment in leases

   ¥ 73,279      ¥ 70,493      ¥ (2,786     (4

Investment in operating leases

     319,550       292,746       (26,804     (8

Investment in securities

     7,274       8,048       774       11  

Property under facility operations

     140,416       138,228       (2,188     (2

Inventories

     82,762       91,594       8,832       11  

Advances for finance lease and operating lease

     37,272       47,055       9,783       26  

Investment in affiliates

     91,835       105,439       13,604       15  

Advances for property under facility operations

     7,327       13,297       5,970       81  

Goodwill, intangible assets acquired in business combinations

     61,479       60,430       (1,049     (2
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Assets

   ¥ 821,194     ¥ 827,330     ¥ 6,136       1  
  

 

 

   

 

 

   

 

 

   

 

 

 

PE Investment and Concession: Private equity investment and concession

In the private equity business, we aim to earn stable profits from investees and sustainable gains on sales by rebalancing our portfolio. We aim to expand investment in focused industries and increase value through rollups and alliances with existing investees as a starting point. At the same time, we seek business opportunities created by changes in the industrial structure and explore diversified investment methods. In the concession business, we aim to strengthen our operations in the three airports (Kansai International Airport, Osaka International Airport and Kobe Airport), and proactively engage in the operation of public infrastructures other than airports.

Segment revenues increased 10% to ¥157,826 million compared to the same period of the previous fiscal year. This increase was primarily due to the increase in sales of goods by our investees, despite a decrease in services income resulting from the sale of a subsidiary during the nine months ended December 31, 2019.

Due to the impact of COVID-19, the number of passengers and flights at our three airports in Kansai decreased substantially, resulting in a decrease in equity in net income of affiliates in our concession business. Also, due to the absence of gains on the sale of a subsidiary, which had been recorded during the six months ended September 30, 2019, in our private equity business, segment profits decreased 79% to ¥4,077 million compared to the same period of the previous fiscal year.

Segment assets totaled ¥322,588 million, remaining substantially unchanged compared to the end of the previous fiscal year. This was mainly due to an increase in advances for property under facility operations and an increase in intangible assets resulting from the allocation of acquisition costs of a subsidiary acquired during the three months ended March 31, 2020, offset by a decrease in investment in affiliates.

Asset efficiency declined compared to the same period of the previous fiscal year.

 

– 8 –


Table of Contents
                                                                                                                                           
     Six months
ended September 30,
2019
    Six months
ended September 30,
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Segment Revenues:

        

Finance revenues

   ¥ 60     ¥ 80     ¥ 20       33  

Gains on investment securities and dividends

     1,130       542       (588     (52

Sales of goods and real estate

     123,701       144,417       20,716       17  

Services income

     18,953       9,551       (9,402     (50

Other

     0       3,236       3,236       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

     143,844       157,826       13,982       10  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Expenses:

        

Interest expense

     601       877       276       46  

Costs of goods and real estate sold

     106,684       123,508       16,824       16  

Services expense

     12,897       6,827       (6,070     (47

Selling, general and administrative expenses

     16,885       17,133       248                 1  

Provision for doubtful receivables and probable loan losses and write-downs of long-lived assets and securities

     66       0       (66     —    

Provision for credit losses and write-downs of long-lived assets and securities

     0       13       13       —    

Other

     (244     1,455       1,699       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Expenses

     136,889       149,813       12,924       9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     6,955       8,013       1,058       15  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     12,694       (3,936     (16,630     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Profits

   ¥ 19,649     ¥ 4,077     ¥ (15,572     (79
  

 

 

   

 

 

   

 

 

   

 

 

 
     As of
March 31,
2020
    As of
September 30,
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Net investment in leases

   ¥ 141     ¥ 128     ¥ (13     (9

Investment in operating leases

     9,367       10,843       1,476       16  

Investment in securities

     17,916       14,976       (2,940     (16

Property under facility operations

     43,735       44,594       859       2  

Inventories

     40,263       41,303       1,040       3  

Investment in affiliates

     68,603       60,713       (7,890     (12

Advances for property under facility operations

     245       5,532       5,287       —    

Goodwill, intangible assets acquired in business combinations

     142,252       144,499       2,247       2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Assets

   ¥ 322,522     ¥ 322,588     ¥ 66       0  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

– 9 –


Table of Contents

Environment and Energy: Domestic and overseas renewable energy; electric power retailing; ESCO services; sales of solar panels and electricity storage system; recycling and waste management

In the environment and energy business, we aim to increase services revenue as a comprehensive energy service provider by promoting our renewable energy business and electric power retailing business. In our solar power generation business, we have secured top solar power production capacity in Japan and we are gradually proceeding with operations. In the renewable energy business and electricity storage system business, we aim to design new business models based on the anticipated future business environment. In the recycling and waste management business, we are making new investments in facilities, with the aim of further expansion of business. We intend to accelerate our renewable energy business overseas by capitalizing on the expertise we have gained in the domestic market.

Segment revenues decreased 9% to ¥71,418 million compared to the same period of the previous fiscal year due to a decrease in services income resulting from the decrease in electricity sales.

Segment profits increased 66% to ¥14,132 million compared to the same period of the previous fiscal year. This increase was primarily due to the recognition of bargain purchase gains that resulted from the conversion of an investee involved in wind power generation business in India, into a wholly owned subsidiary.

Segment assets totaled ¥478,167 million, remaining substantially unchanged compared to the end of the previous fiscal year.

Asset efficiency improved compared to the same period of the previous fiscal year.

 

                                                                                                                                           
     Six months
ended September 30,
2019
    Six months
ended September 30,
2020
     Change  
     Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Segment Revenues:

         

Finance revenues

   ¥ 847     ¥ 1,156      ¥ 309       36  

Services income

     75,216       68,796        (6,420     (9

Other

     2,264       1,466        (798     (35
  

 

 

   

 

 

    

 

 

   

 

 

 

Total Segment Revenues

     78,327       71,418        (6,909     (9
  

 

 

   

 

 

    

 

 

   

 

 

 

Segment Expenses:

         

Interest expense

     3,152       5,589        2,437       77  

Services expense

     58,601       48,076        (10,525     (18

Selling, general and administrative expenses

     6,100       5,862        (238     (4

Provision for doubtful receivables and probable loan losses and write-downs of long-lived assets and securities

     (1     0        1       —    

Provision for credit losses and write-downs of long-lived assets and securities

     0       475        475      
—  
 
 

Other

     1,986       1,230        (756     (38
  

 

 

   

 

 

    

 

 

   

 

 

 

Total Segment Expenses

     69,838       61,232        (8,606     (12
  

 

 

   

 

 

    

 

 

   

 

 

 

Segment Operating Income

     8,489       10,186        1,697       20  
  

 

 

   

 

 

    

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     38       3,946        3,908       —    
  

 

 

   

 

 

    

 

 

   

 

 

 

Segment Profits

   ¥   8,527     ¥   14,132      ¥ 5,605       66  
  

 

 

   

 

 

    

 

 

   

 

 

 

 

– 10 –


Table of Contents
                                                                                                                                           
     As of
         March 31,        

2020
    As of
      September 30,      
2020
     Change  
     Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Net investment in leases

   ¥ 25,355      ¥ 25,372      ¥ 17       0  

Investment in operating leases

     1,958       2,092            134       7  

Investment in securities

     191       28        (163     (85

Property under facility operations

     338,695       342,425        3,730       1  

Inventories

     394       338        (56     (14

Advances for finance lease and operating lease

     1,861       56        (1,805     (97

Investment in affiliates

     82,253       80,947        (1,306     (2

Advances for property under facility operations

     12,229       15,256            3,027       25  

Goodwill, intangible assets acquired in business combinations

     15,860       11,653        (4,207     (27
  

 

 

   

 

 

    

 

 

   

 

 

 

Total Segment Assets

   ¥ 478,796     ¥ 478,167      ¥ (629)       (0
  

 

 

   

 

 

    

 

 

   

 

 

 

Insurance: Life insurance

In the life insurance business, we sell life insurance policies through sales agencies and online. With “simple-to-understand” and “providing reasonable guarantee at reasonable price” as the concepts of product development, we aim to expand the number of new life insurance contracts and increase life insurance premium income by constantly incorporating our customer needs while expanding the product lineup.

Segment revenues increased 28% to ¥235,754 million compared to the same period of the previous fiscal year. This increase was due to an increase in life insurance premiums in line with an increase in new insurance contracts, as well as an increase in life insurance related investment income from variable life insurance contracts.

Due to the above-mentioned reasons as well as the reversal of policy liability reserves related to variable life insurance contracts and fixed annuity insurance contracts, segment profits increased 34% to ¥34,716 million compared to the same period of the previous fiscal year.

Segment assets increased 8% to ¥1,710,425 million compared to the end of the previous fiscal year due to an increase in investment in securities.

Asset efficiency improved compared to the same period of the previous fiscal year.

 

– 11 –


Table of Contents
                                                                                                                                           
     Six months
ended September 30,
2019
    Six months
ended September 30,
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Segment Revenues:

        

Finance revenues

   ¥ 105     ¥ 117     ¥ 12       11  

Life insurance premiums and related investment income

     183,571       234,857       51,286       28  

Other

     524       780       256       49  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

     184,200       235,754       51,554       28  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Expenses:

        

Life insurance costs

     131,916       172,940       41,024       31  

Selling, general and administrative expenses

     25,953       27,917       1,964       8  

Provision for doubtful receivables and probable loan losses and write-downs of long-lived assets and securities

     (1     0       1       —    

Provision for credit losses and write-downs of long-lived assets and securities

     0       (1     (1     —    

Other

     406       186       (220     (54
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Expenses

     158,274       201,042       42,768       27  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     25,926       34,712       8,786       34  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     0       4       4       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Profits

   ¥ 25,926     ¥ 34,716     ¥ 8,790       34  
  

 

 

   

 

 

   

 

 

   

 

 

 
     As of
March 31,
2020
    As of
September 30,
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Installment loans

   ¥ 17,720     ¥ 17,761     ¥ 41       0  

Investment in operating leases

     29,271       29,055       (216     (1

Investment in securities

     1,528,042       1,658,437       130,395       9  

Goodwill, intangible assets acquired in business combinations

     5,125       5,172       47       1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Assets

   ¥ 1,580,158     ¥ 1,710,425     ¥ 130,267       8  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

– 12 –


Table of Contents

Banking and Credit: Banking and consumer finance

In the banking business, we aim to increase finance revenues by increasing the balance of outstanding real estate investment loans, which is the core of our banking business. In the consumer finance business, we aim to increase finance revenues by providing loans directly to our customers with our expertise in credit screening. We also aim to increase guarantee fees income by expanding guarantees against loans disbursed by other financial institutions. In the mortgage bank business, we aim to expand our market share by expanding our agency network and strengthening our product lineup.

Segment revenues totaled ¥41,661 million, remaining substantially unchanged compared to the same period of the previous fiscal year. This was primarily due to increased services income generated from the mortgage bank business of ORIX Credit and increased finance revenues derived from real estate investment loans in our banking business offset by a decline in finance revenues of ORIX Credit.

Segment profits increased 29% to ¥24,239 million compared to the same period of the previous fiscal year resulting from a decrease in provision for credit losses during the six months ended September 30, 2020, which was primarily due to the impacts of a decrease in new executions as well as low default rates in ORIX Credit.

Segment assets increased 3% to ¥2,676,617 million compared to the end of the previous fiscal year due to an increase in the balance of real estate investment loans in our banking business.

Asset efficiency improved compared to the same period of the previous fiscal year.

 

                                                                                                                                           
     Six months
ended September 30,
2019
     Six months
ended September 30,
2020
     Change  
     Amount     Percent
(%)
 
     (Millions of yen, except percentage data)  

Segment Revenues:

          

Finance revenues

   ¥ 40,012      ¥ 39,264      ¥ (748     (2

Other

     1,776        2,397        621       35  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Segment Revenues

     41,788        41,661        (127     (0
  

 

 

    

 

 

    

 

 

   

 

 

 

Segment Expenses:

          

Interest expense

     2,101        2,479        378       18  

Selling, general and administrative expenses

     11,237        11,397        160       1  

Provision for doubtful receivables and probable loan losses and write-downs of long-lived assets and securities

     6,716        0        (6,716     —    

Provision for credit losses and write-downs of long-lived assets and securities

     0        222        222       —    

Other

     2,967        3,325        358       12  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Segment Expenses

     23,021        17,423        (5,598     (24
  

 

 

    

 

 

    

 

 

   

 

 

 

Segment Operating Income

     18,767        24,238        5,471       29  
  

 

 

    

 

 

    

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     2        1        (1     (50
  

 

 

    

 

 

    

 

 

   

 

 

 

Segment Profits

   ¥ 18,769      ¥ 24,239      ¥ 5,470       29  
  

 

 

    

 

 

    

 

 

   

 

 

 
     As of
March  31,
2020
     As of
September 30,
2020
     Change  
     Amount     Percent
(%)
 
     (Millions of yen, except percentage data)  

Installment loans

   ¥ 2,318,347      ¥ 2,392,439      ¥ 74,092       3  

Investment in securities

     273,218        272,107        (1,111     (0

Investment in affiliates

     400        300        (100     (25

Goodwill, intangible assets acquired in business combinations

     11,771        11,771        0       —    
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Segment Assets

   ¥ 2,603,736      ¥ 2,676,617      ¥ 72,881       3  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

– 13 –


Table of Contents

Aircraft and Ships: Aircraft leasing and management; ship-related finance and investment

In the aircraft leasing business, we are focusing on a wide range of profit opportunities, including operating leases of owned aircraft, sale of aircraft to investors, and asset management services for aircraft owned by domestic and overseas investors. We aim for medium-and long-term growth by further enhancing our presence in the global aircraft-leasing market through mutually complementary relationships with Avolon Holdings Limited (“Avolon”). In the ship-related business, we flexibly replace assets while closely monitoring the market environment, and aim to achieve goals such as increasing commission income by arranging investment in ships for domestic corporate investors. In the future, we aim to expand our business by collaborating with excellent partners based on our expertise in finance and investment.

Segment revenues decreased 49% to ¥14,876 million compared to the same period of the previous fiscal year. This was due to a decline in operating leases revenues resulting from declines in both the number of aircraft owned and the number of aircraft sold, a decline in fee income resulting from the decline in the number of aircraft sold to investors in our aircraft leasing business, and the absence of gains on sales of ships, which had been recorded during the six months ended September 30, 2019.

With the above-mentioned reasons and a decrease in equity in net income of affiliates from Avolon, segment profits decreased 72% to ¥4,713 million compared to the same period of the previous fiscal year.

Segment assets decreased 3% to ¥568,866 million compared to the end of the previous fiscal year. The decrease was mainly due to a decline in installment loans in our ship-related business and a decline in investment in affiliates in our aircraft leasing business.

Asset efficiency declined compared to the same period of the previous fiscal year.

 

                                                                                                                                           
     Six months
ended September 30,
2019
     Six months
ended September 30,
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Segment Revenues:

         

Finance revenues

   ¥ 1,384      ¥ 567     ¥ (817     (59

Operating leases

     21,329        12,804       (8,525     (40

Services income

     4,056        1,505       (2,551     (63

Other

     2,665        0       (2,665     —    
  

 

 

    

 

 

   

 

 

   

 

 

 

Total Segment Revenues

       29,434          14,876       (14,558     (49
  

 

 

    

 

 

   

 

 

   

 

 

 

Segment Expenses:

         

Interest expense

     9,402        7,519       (1,883     (20

Costs of operating leases

     7,210        6,873       (337     (5

Services expense

     1,903        128       (1,775     (93

Selling, general and administrative expenses

     4,469        3,513       (956     (21

Provision for credit losses and write-downs of long-lived assets and securities

     0        (160     (160     —    

Other

     1,323        483       (840     (63
  

 

 

    

 

 

   

 

 

   

 

 

 

Total Segment Expenses

     24,307        18,356       (5,951     (24
  

 

 

    

 

 

   

 

 

   

 

 

 

Segment Operating Income

     5,127        (3,480     (8,607     —    
  

 

 

    

 

 

   

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     11,715        8,193       (3,522     (30
  

 

 

    

 

 

   

 

 

   

 

 

 

Segment Profits

   ¥ 16,842      ¥ 4,713     ¥ (12,129     (72
  

 

 

    

 

 

   

 

 

   

 

 

 

 

– 14 –


Table of Contents
                                                                                                                                           
     As of
         March 31,        
2020
    As of
      September 30,      
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Net investment in leases

   ¥ 1,839      ¥ 4,637      ¥ 2,798       152  

Installment loans

     24,088       13,428       (10,660     (44

Investment in operating leases

     253,717       254,042       325       0  

Advances for finance lease and operating lease

     4,990       3,876       (1,114     (22

Investment in affiliates

     284,453       278,952       (5,501     (2

Goodwill, intangible assets acquired in business combinations

     16,217       13,931       (2,286     (14
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Assets

   ¥ 585,304     ¥ 568,866     ¥ (16,438     (3
  

 

 

   

 

 

   

 

 

   

 

 

 

ORIX USA: Finance, investment and asset management in the Americas

ORIX Corporation USA provides various types of finance services such as corporate finance, real estate finance, private equity investment, and investment in bonds to our clients in response to their needs. We aim to expand such asset businesses by utilizing our expertise in them. We are also engaged in expanding the function of our asset management and servicing platform to increase stable fee revenues. With the expansion of both principle investments and assets under management, we aim for profit growth along with capital efficiency improvement.

Segment revenues decreased 12% to ¥57,859 million compared to the same period of the previous fiscal year. The decline was primarily due to decreased services income and a decline in gains on investment securities and dividends.

Due to the above-mentioned reasons as well as the absence of gains on sales of Houlihan Lokey, Inc., which had been recorded during the six months ended September 30, 2019, the recording of write-downs of securities, and increases in selling, general and administrative expenses and provision for credit losses, segment profits decreased 68% to ¥11,414 million compared to the same period of the previous fiscal year.

Segment assets decreased 6% to ¥1,294,184 million compared to the end of the previous fiscal year due to decreases in installment loans and investment in securities.

Asset efficiency declined compared to the same period of the previous fiscal year.

 

– 15 –


Table of Contents
                                                                                                                                           
     Six months
ended September 30,
2019
     Six months
ended September 30,
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Segment Revenues:

         

Finance revenues

   ¥ 38,823      ¥ 40,665     ¥ 1,842       5  

Gains on investment securities and dividends

     9,048        4,102       (4,946     (55

Services income

     16,678        10,854       (5,824     (35

Other

     1,373        2,238       865       63  
  

 

 

    

 

 

   

 

 

   

 

 

 

Total Segment Revenues

     65,922        57,859       (8,063     (12
  

 

 

    

 

 

   

 

 

   

 

 

 

Segment Expenses:

         

Interest expense

     13,058        9,415       (3,643     (28

Services expense

     1,842        750       (1,092     (59

Selling, general and administrative expenses

     27,954        33,327       5,373       19  

Provision for doubtful receivables and probable loan losses and write-downs of long-lived assets and securities

     1,483        0       (1,483     —    

Provision for credit losses and write-downs of long-lived assets and securities

     0        7,705       7,705       —    

Other

     260        (1,502     (1,762     —    
  

 

 

    

 

 

   

 

 

   

 

 

 

Total Segment Expenses

     44,597        49,695       5,098       11  
  

 

 

    

 

 

   

 

 

   

 

 

 

Segment Operating Income

     21,325        8,164       (13,161     (62
  

 

 

    

 

 

   

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     14,569        3,250       (11,319     (78
  

 

 

    

 

 

   

 

 

   

 

 

 

Segment Profits

   ¥ 35,894      ¥ 11,414     ¥ (24,480     (68
  

 

 

    

 

 

   

 

 

   

 

 

 
     As of
March 31,
2020
     As of
September 30,
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Net investment in leases

   ¥ 1,172      ¥ 450     ¥ (722     (62

Installment loans

     778,249        733,331       (44,918     (6

Investment in operating leases

     9,148        7,270       (1,878     (21

Investment in securities

     320,217        302,944       (17,273     (5

Property under facility operations and servicing assets

     66,416        65,876       (540     (1

Inventories

     1,442        825       (617     (43

Advances for finance lease and operating lease

     1,259        680       (579     (46

Investment in affiliates

     52,361        49,164       (3,197     (6

Goodwill, intangible assets acquired in business combinations

     143,763        133,644       (10,119     (7
  

 

 

    

 

 

   

 

 

   

 

 

 

Total Segment Assets

   ¥ 1,374,027      ¥ 1,294,184     ¥ (79,843     (6
  

 

 

    

 

 

   

 

 

   

 

 

 

 

– 16 –


Table of Contents

ORIX Europe: Equity and fixed income asset management

Under ORIX Corporation Europe as the holding company, Robeco Institutional Asset Management B.V. and Transtrend B.V. headquartered in the Netherlands, Boston Partners Global Investors, Inc. and Harbor Capital Advisors, Inc. headquartered in the United States, and Canara Robeco Asset Management Company Ltd. located in India are engaged in asset management business through investment in stocks, bonds, and so on. In addition to the focus on expanding the existing businesses, we aim to increase assets under management with expanding products and investment strategies through M&As. ORIX Europe is also engaged in capturing a wide range of business opportunities as the strategic business location of ORIX Group in Europe.

Despite an increase in gains on investment securities and dividends, segment revenues decreased 5% to ¥73,046 million compared to the same period of the previous fiscal year due to a decrease in services income, which was associated with pervasive price declines in the equity markets during the three months ended March 31, 2020, resulting in a lower average amount of assets under management during the six months ended September 30, 2020, compared to the same period of the previous fiscal year.

Despite a decrease in selling, general and administrative expenses such as personnel expenses, segment profits decreased 2% to ¥16,291 million compared to the same period of the previous fiscal year due to the above reason.

Segment assets totaled ¥318,682 million, remaining substantially unchanged compared to the end of the previous fiscal year. This was mainly due to a decrease in investment in securities offset by increases in goodwill and intangible assets acquired in business combinations due to the effect of changes in foreign exchange rates.

Asset efficiency improved compared to the same period of the previous fiscal year.

 

                                                                                                                                           
     Six months
ended September 30,
2019
    Six months
ended September 30,
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Segment Revenues:

        

Finance revenues

   ¥ 230     ¥ 46     ¥ (184     (80

Gains on investment securities and dividends

     1,589       6,046       4,457       280  

Services income

     75,383       66,954       (8,429     (11
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Revenues

     77,202       73,046       (4,156     (5
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Expenses:

        

Interest expense

     548       708       160       29  

Services expense

     18,008       17,838       (170     (1

Selling, general and administrative expenses

     40,284       33,695       (6,589     (16

Provision for doubtful receivables and probable loan losses and write-downs of long-lived assets and securities

     (17     0       17        

Other

     1,481       3,647       2,166       146  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Expenses

          60,304         55,888       (4,416     (7
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income

     16,898       17,158       260       2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     (210     (867     (657      
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Profits

   ¥ 16,688     ¥ 16,291     ¥ (397     (2
  

 

 

   

 

 

   

 

 

   

 

 

 
     As of
March 31,
2020
    As of
September 30,
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Investment in securities

   ¥ 38,057     ¥ 29,360     ¥ (8,697     (23

Investment in affiliates

     1,495       1,540       45       3  

Goodwill, intangible assets acquired in business combinations

     278,295       287,782       9,487       3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Segment Assets

   ¥   317,847     ¥   318,682     ¥ 835       0  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

– 17 –


Table of Contents

Asia and Australia: Finance and investment businesses in Asia and Australia

Our overseas subsidiaries are well-versed in business practices and laws and regulations that vary from region to region, and are primarily engaged in financial services such as leasing and lending. Our overseas subsidiaries also invest in private equity in Asian countries, particularly in China. We will further enhance the functions of our overseas subsidiaries and further invest in targeted markets in order to expand our business with an emphasis on profitability.

Segment revenues decreased 19% to ¥58,962 million compared to the same period of the previous fiscal year. The decrease was due to the absence of gains on investment securities of an investee in Asia recorded during the six months ended September 30, 2019, and decreases in services income and finance revenues.

In addition to the above-mentioned reasons, despite the recognition of gains on sales of subsidiaries and affiliates in Asia, equity in net income of affiliates declined due to the recording of an impairment loss on an investment in an affiliate. As a result, segment profits decreased 76% to ¥4,635 million compared to the same period of the previous fiscal year.

Segment assets decreased 2% to ¥992,937 million compared to the end of the previous fiscal year due to decreases in investment in affiliates and net investment in leases.

Asset efficiency declined compared to the same period of the previous fiscal year.

 

                                                                                                                                           
     Six months
ended September 30,
2019
     Six months
ended September 30,
2020
     Change  
     Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Segment Revenues:

          

Finance revenues

   ¥ 21,508      ¥ 19,666      ¥ (1,842     (9

Gains on investment securities and dividends

     8,290        731        (7,559     (91

Operating leases

     33,311        32,529        (782     (2

Services income

     9,509        5,979        (3,530     (37

Other

     134        57        (77     (57
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Segment Revenues

     72,752        58,962        (13,790     (19
  

 

 

    

 

 

    

 

 

   

 

 

 

Segment Expenses:

          

Interest expense

     11,842        9,632        (2,210     (19

Costs of operating leases

     24,707        24,571        (136     (1

Services expense

     6,829        4,268        (2,561     (38

Selling, general and administrative expenses

     13,607        12,826        (781     (6

Provision for doubtful receivables and probable loan losses and write-downs of long-lived assets and securities

     1,696        0        (1,696     —    

Provision for credit losses and write-downs of long-lived assets and securities

     0        2,496        2,496       —    

Other

     505        651        146       29  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Segment Expenses

          59,186          54,444        (4,742     (8
  

 

 

    

 

 

    

 

 

   

 

 

 

Segment Operating Income

     13,566        4,518        (9,048     (67
  

 

 

    

 

 

    

 

 

   

 

 

 

Equity in Net income (Loss) of Affiliates, and others

     5,621        117        (5,504     (98
  

 

 

    

 

 

    

 

 

   

 

 

 

Segment Profits

   ¥ 19,187      ¥ 4,635      ¥ (14,552     (76
  

 

 

    

 

 

    

 

 

   

 

 

 

 

– 18 –


Table of Contents
                                                                                                                                           
     As of
         March 31,        
2020
     As of
      September 30,      
     Change  
     2020      Amount     Percent (%)  
     (Millions of yen, except percentage data)  

Net investment in leases

   ¥ 330,346      ¥ 318,756      ¥ (11,590     (4

Installment loans

     222,465        227,195        4,730       2  

Investment in operating leases

     195,660        209,862        14,202       7  

Investment in securities

     29,248        29,385        137       0  

Property under facility operations

     2,600        1,683        (917     (35

Inventories

     242        341        99       41  

Advances for finance lease and operating lease

     1,742        1,479        (263     (15

Investment in affiliates

     221,853        198,085        (23,768     (11

Goodwill, intangible assets acquired in business combinations

     6,112        6,151        39       1  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Segment Assets

   ¥    1,010,268      ¥ 992,937      ¥ (17,331     (2
  

 

 

    

 

 

    

 

 

   

 

 

 

 

– 19 –


Table of Contents

(2) Financial Condition

 

                                                                                                                                   
     As of
         March 31,        
2020
    As of
      September 30,      
2020
    Change  
    Amount     Percent (%)  
     (Millions of yen except per share, ratios and percentages)  

Total assets

   ¥ 13,067,528     ¥ 13,168,070     ¥ 100,542       1  

(Segment assets)

     10,883,545       10,899,674       16,129       0  

Total liabilities

     9,991,362       10,127,385       136,023       1  

(Short- and long-term debt)

     4,616,186       4,624,986       8,800       0  

(Deposits)

     2,231,703       2,321,840       90,137       4  

ORIX Corporation shareholders’ equity

     2,993,608       2,979,684       (13,924     (0

ORIX Corporation shareholders’ equity per share (yen)*1

     2,386.35       2,392.31       5.96       0  

ORIX Corporation shareholders’ equity ratio*2

     22.9     22.6     —         —    

D/E ratio (Debt-to-equity ratio) (Short-and long-term debt (excluding deposits) / ORIX Corporation shareholders’ equity)

     1.5x       1.6x       —         —    

 

 

*1

ORIX Corporation shareholders’ equity per share is calculated using total ORIX Corporation shareholders’ equity.

*2

ORIX Corporation shareholders’ equity ratio is the ratio as of the period end of ORIX Corporation shareholders’ equity to total assets.

Total assets increased 1% to ¥13,168,070 million compared to the balance as of March 31, 2020 due to an increase in investment in securities despite decreases in net investment in leases and investment in operating leases, and furthermore, an increase in allowance for credit losses compared to allowance for doubtful receivables on finance leases and probable loan losses as of the end of the previous fiscal year as a result of the adoption the Credit Losses Standard. In addition, segment assets remained flat at ¥10,899,674 million compared to the balance as of March 31, 2020.

Total liabilities increased 1% to ¥10,127,385 million compared to the balance as of March 31, 2020 due to a decrease in trade notes, accounts and other payable despite increases in deposits, and policy liabilities and policy account balances.

Shareholders’ equity remained flat at ¥2,979,684 million compared to the balance as of March 31, 2020.

 

– 20 –


Table of Contents

(3) Liquidity and Capital Resources

ORIX Group formulates funding policies that are designed to improve procurement efficiency and reduce liquidity risk. As a concrete measure to stabilize procurement efficiency while engaging in activities such as borrowing, capital market procurement and securitization of assets, we are diversifying our procurement methods and our country and investor base. To reduce liquidity risk we are prolonging our borrowings from financial institutions and issuing long-term corporate bonds domestically and internationally with dispersed redemption periods. We are also holding cash and entering into committed credit facilities agreements. In order to maintain an appropriate level of liquidity at hand, we conduct stress tests from the perspective of both funding stability and financial efficiency and review the necessary levels accordingly.

The Company continues to closely monitor the effects of COVID-19 on the liquidity and capital resources of the ORIX Group.

Our funding is comprised of borrowings from financial institutions, direct fund procurement from capital markets, and deposits. ORIX Group’s total funding including that from short-and long-term debt and deposits on a consolidated basis was ¥6,946,826 million as of September 30, 2020. Borrowings are procured from a diverse range of financial institutions including major banks, regional banks, foreign banks and life and casualty insurance companies. The number of financial institutions from which we procured borrowings was about 200 as of September 30, 2020. Our debt from capital markets is mainly composed of bonds, MTNs, CP, and securitization of loans receivables and other assets (including asset backed securities). The majority of deposits are attributable to ORIX Bank Corporation.

Short-term and long-term debt and deposits

(a) Short-term debt

 

     Millions of yen  
     March 31, 2020      September 30, 2020  

Borrowings from financial institutions

   ¥ 319,122      ¥ 348,526  

Commercial paper

       17,710        12,999  
  

 

 

    

 

 

 

Total short-term debt

   ¥    336,832      ¥ 361,525  
  

 

 

    

 

 

 

Short-term debt as of September 30, 2020 was ¥361,525 million, which accounted for 8% of the total amount of short and long-term debt (excluding deposits) as compared to 7% as of March 31, 2020.

While the amount of short-term debt as of September 30, 2020 was ¥361,525 million, the sum of cash and cash equivalents and the unused amount of committed credit facilities as of September 30, 2020 was ¥1,619,355 million.

(b) Long-term debt

 

     Millions of yen  
     March 31, 2020      September 30, 2020  

Borrowings from financial institutions

   ¥ 3,094,474      ¥ 3,122,871  

Bonds

     845,938        835,622  

Medium-term notes

     176,802        138,055  

Payables under securitized loan receivables and other assets

     162,140        166,913  
  

 

 

    

 

 

 

Total long-term debt

   ¥ 4,279,354      ¥ 4,263,461  
  

 

 

    

 

 

 

The balance of long-term debt as of September 30, 2020 was ¥4,263,461 million, which accounted for 92% of the total amount of short and long-term debt (excluding deposits) as compared to 93% as of March 31, 2020.

(c) Deposits

 

     Millions of yen  
     March 31, 2020      September 30, 2020  

Deposits

   ¥ 2,231,703      ¥ 2,321,840  

Apart from the short-term and long-term debt noted above, ORIX Bank Corporation and ORIX Asia Limited accept deposits. These deposit-taking subsidiaries are regulated institutions, and loans from these subsidiaries to ORIX Group entities are subject to maximum regulatory limits.

 

– 21 –


Table of Contents

(4) Summary of Cash Flows

Cash, cash equivalents and restricted cash as of September 30, 2020 increased by ¥172,022 million to ¥1,307,306 million compared to March 31, 2020.

Cash flows provided by operating activities were ¥519,772 million in the six months ended September 30, 2020, down from ¥532,850 million during the same period of the previous fiscal year, primarily resulting from a decrease in net income.

Cash flows used in investing activities were ¥420,148 million in the six months ended September 30, 2020, down from ¥703,479 million during the same period of the previous fiscal year, primarily resulting from a decrease in installment loans made to customers.

Cash flows provided by financing activities were ¥72,145 million in the six months ended September 30, 2020, up from ¥6,676 million during the same period of the previous fiscal year, primarily from a change from a decrease to an increase in debt with maturities of three months or less.

(5) Management Policy and Strategy

We expect the impact of COVID-19 to remain to some extent during the fiscal year ending March 31, 2022. Some of our business segments have been impacted by COVID-19, but our ¥13 trillion portfolio is well diversified and should allow us to maintain a sound asset mix. For the ORIX Life Insurance and ORIX Bank, even if COVID-19 continues, we reconfirm that the impact will be limited.

As we judge that the environment surrounding ORIX has begun to stabilize, we will continue to proactively consider new investments which will produce stable earnings and contribute to future growth from the second half of the fiscal year ending March 31, 2021 and beyond.

Target Performance Indicators

In pursuit of sustainable growth, ORIX Group uses the following performance indicators: net income attributable to ORIX Corporation shareholders to measure profitability, ROE to measure capital efficiency, and credit ratings to measure financial soundness.

When results for the fiscal year ended March 31, 2020 were announced, we faced difficulty in formulating estimates of COVID-19 impact for both the spread of contagion and the rapid global economic slump. We outlined the following two scenarios for the fiscal year ending March 31, 2021: (1) if the situation gradually normalizes by the end of Q3, net income is estimated at about ¥180.0 ~¥200.0 billion, (2) the situation persists until the end of this fiscal year, net income is estimated at about ¥80.0 ~ ¥120.0 billion.

Although it is still challenging to get a clear view on this, we announced interim financial results featuring a full-year net income estimate of ¥190 billion, as we see the latter scenario (net income of ¥80.0~ ¥120.0 billion) as unlikely.

Performance indicators for the fiscal years ended March 31, 2018, 2019 and 2020 and for the six months ended September 30, 2020 are as follows.

 

     Year ended
March 31,
2018
     Year ended
March 31,
2019
     Year ended
March 31,
2020
     Six months ended
September 30,
2020
 

Net Income Attributable to ORIX Corporation Shareholders (millions of yen)

     313,135        323,745        302,700        93,842  

ROE*1 (%)

     12.1        11.6        10.3        6.3 *2  

Credit Ratings

           

R&I Long-Term Debt

     A + (Stable)        A + (Positive)         AA - (Stable)         AA - Stable)  

S&P Long-Term Debt

     A - (Stable)        A - (Negative)        A - (Negative)        A - (Negative)  

Fitch Long-Term Debt

     A - (Stable)        A - (Stable)        A - (Negative)        A - (Negative)  

Moody’s Long-Term Debt

     Baa1 (Positive)        A3 (Stable)        A3 (Stable)        A3 (Negative)  

 

*1

ROE is the ratio of Net Income Attributable to ORIX Corporation Shareholders for the period to average ORIX Corporation Shareholders’ Equity.

*2

Annualized.

 

– 22 –


Table of Contents

(6) Challenges to be addressed on a priority basis

There were no significant changes for the six months ended September 30, 2020.

(7) Research and Development Activity

There were no significant changes in research and development activities for the six months ended September 30, 2020.

(8) Major Facilities

There were no significant changes in major facilities for the six months ended September 30, 2020.

 

4.

Material Contracts

Not applicable.

 

5.

Company Stock Information

(The following disclosure is provided for ORIX Corporation on a stand-alone basis and has been prepared based on Japanese GAAP.)

(1) Issued Shares, Common Stock and Capital Reserve

The number of issued shares, the amount of common stock and capital reserve for the three months ended September 30, 2020 is as follows:

 

In thousands     Millions of yen  
Number of issued shares     Common stock     Capital reserve  
Increase, net   September 30, 2020     Increase, net     September 30, 2020     Increase, net     September 30, 2020  
0     1,313,954     ¥ 0     ¥ 221,111     ¥ 0     ¥ 248,290  

(2) List of Major Shareholders

The following is a list of major shareholders based on our share registry as of September 30, 2020:

 

Name

   Number of
shares held
(in thousands)
     Percentage of
total shares
issued
 

Address

The Master Trust Bank of Japan, Ltd. (Trust Account)

     107,986        8.65

2-11-3, Hamamatsu-cho, Minato-ku, Tokyo

Custody Bank of Japan, Ltd. (Trust Account)

     88,005        7.05  

1-8-12, Harumi, Chuo-ku, Tokyo

Custody Bank of Japan, Ltd. (Trust Account7)

     27,737        2.22  

1-8-12, Harumi, Chuo-ku, Tokyo

Custody Bank of Japan, Ltd. (Trust Account5)

     25,513        2.04  

1-8-12, Harumi, Chuo-ku, Tokyo

SSBTC Client Omnibus Account

     24,772        1.99  

One Lincoln Street, Boston MA USA 02111

Citibank, N.A.-NY, As Depositary Bank For Depositary Share Holders

     23,420        1.88  

388 Greenwich Street New York, NY 10013 USA

Northern Trust Co. (AVFC) Sub A/C Non Treaty

     21,512        1.72  

50 Bank Street Canary Wharf London E14 5Nt, UK

SMBC Nikko Securities Inc.

     21,375        1.71  

3-3-1, Marunouchi, Chiyoda-ku, Tokyo

JP Morgan Securities Inc.

     21,162        1.70  

Tokyo Building, 2-7-3, Marunouchi, Chiyoda-ku, Tokyo

JP Morgan Chase Bank 385781

     20,649        1.65  

25 Bank Street, Canary Wharf, London, E14 5JP, United Kingdom

  

 

 

    

 

 

 
     382,133        30.63
  

 

 

    

 

 

 

 

– 23 –


Table of Contents

 

 

Notes 1:

 

The number of shares held in relation to a trust business may not be all inclusive and therefore is reported with reference to the names listed as shareholders.

          2:

 

In addition to the above, the Company has treasury stock shares of 66,231 thousand shares. The Company’s shares held through the Board Incentive Plan Trust (2,197 thousand shares) are not included in the number of treasury stock shares.

          3:

 

On May 12, 2020, Asset Management One Co., Ltd. and Asset Management One International Ltd. jointly filed a large shareholding report (an alteration report), as required under Japanese regulations, that shows their shareholdings of the Company as of April 30, 2020 as follows. The following information is not included in the List of Major Shareholders above because we were unable to confirm our share registry as of September 30, 2020 with regard to the reported number of shares held.

 

Name

   Number of
shares held
(in thousands)
     Percentage of
total shares
issued
 

Asset Management One Co., Ltd.

     55,281        4.17

Asset Management One International Ltd.

     1,652        0.12  
  

 

 

    

 

 

 

Total

     56,933        4.30
  

 

 

    

 

 

 
     

 

          4:

 

On July 20, 2020, Nomura Asset Management Co., Ltd. filed a large shareholding report (an alteration report), as required under Japanese regulations, that shows their shareholdings of the Company as of July 15, 2020 as follows. The following information is not included in the List of Major Shareholders above because we were unable to confirm our share registry as of September 30, 2020 with regard to the reported number of shares held.

 

Name

   Number of
shares held
(in thousands)
     Percentage of
total shares
issued
 

Nomura Asset Management Co., Ltd.

     66,918        5.09
  

 

 

    

 

 

 

Total

     66,918        5.09
  

 

 

    

 

 

 

 

6.

Directors and Executive Officers

Between the filing date of Form 20-F for the fiscal year ended March 31, 2020 and September 30, 2020, there were no changes of directors and executive officers.

 

– 24 –


Table of Contents
7.

Financial Information

(1) Condensed Consolidated Balance Sheets (Unaudited)

 

     Millions of yen  
Assets    March 31, 2020     September 30, 2020  

Cash and Cash Equivalents

   ¥ 982,666     ¥ 1,182,557  

Restricted Cash

     152,618       124,749  

Net Investment in Leases

     1,080,964       1,033,980  

Installment Loans

     3,740,486       3,732,261  

The amounts which are measured at fair value by electing the fair value option are as follows:

    

March 31, 2020

   ¥90,893 million     

September 30, 2020

   ¥94,885 million     

Allowance for Doubtful Receivables on Finance Leases and Probable Loan Losses

     (56,836     0  

Allowance for Credit Losses

     0       (85,761

Investment in Operating Leases

     1,400,001       1,375,958  

Investment in Securities

     2,245,323       2,347,344  

The amounts which are measured at fair value by electing the fair value option are as follows:

    

March 31, 2020

   ¥25,295 million     

September 30, 2020

   ¥7,263 million     

The amounts which are associated to available-for-sale debt securities are as follows:

    

September 30, 2020

    

Amortized Cost

   ¥1,724,180 million     

Allowance for Credit Losses

   ¥0 million     

Property under Facility Operations

     562,485       562,612  

Investment in Affiliates

     821,662       793,506  

Trade Notes, Accounts and Other Receivable

     312,744       254,220  

Inventories

     126,013       135,234  

Office Facilities

     203,930       195,577  

Other Assets

     1,495,472       1,515,833  

The amounts which are measured at fair value by electing the fair value option are as follows:

    

March 31, 2020

   ¥18,206 million     

September 30, 2020

   ¥9,062 million     
     

 

 

   

 

 

 

Total Assets

   ¥          13,067,528     ¥          13,168,070  
  

 

 

   

 

 

 

 

Notes:

  

1.

  

Accounting Standards Update 2016-13 (“Measurement of Credit Losses on Financial Instruments”—ASC 326 (“Financial Instruments—Credit Losses”)) (hereinafter, “Credit Losses Standard”) has been adopted since April 1, 2020 and the amounts of allowance for doubtful receivables on finance leases and probable loan losses have been reclassified to allowance for credit losses. For further information, see Note 2 “Significant Accounting and Reporting Policies (ah) New accounting pronouncements.”

  

2.

  

Allowance for credit losses of loans to affiliates are recorded in investment in affiliates since the second quarter of fiscal 2021. Before fiscal 2020, there were no allowance for doubtful receivables on loans to affiliates.

  

3.

  

The assets of consolidated variable interest entities (VIEs) that can be used only to settle obligations of those VIEs are below:

 

          Millions of yen  
          March 31, 2020     September 30, 2020  

Cash and Cash Equivalents

      ¥ 7,117      ¥ 4,392   

Net Investment in Leases (Net of Allowance for Doubtful Receivables on Finance Leases and Probable Loan Losses / Allowance for Credit Losses)

     3,377       1,358  

Installment Loans (Net of Allowance for Doubtful Receivables on Finance Leases and Probable Loan Losses / Allowance for Credit Losses)

     218,268       250,114  

Investment in Operating Leases

     75,904       73,447  

Property under Facility Operations

     296,208       300,360  

Investment in Affiliates

     51,456       51,170  

Other

     136,641       108,787  
     

 

 

   

 

 

 
      ¥               788,971     ¥               789,628  
     

 

 

   

 

 

 

 

– 25 –


Table of Contents
     Millions of yen  
Liabilities and Equity    March 31, 2020     September 30, 2020  

Liabilities:

    

Short-Term Debt

   ¥ 336,832     ¥ 361,525  

Deposits

     2,231,703       2,321,840  

Trade Notes, Accounts and Other Payable

     282,727       197,062  

Policy Liabilities and Policy Account Balances

     1,591,475       1,727,963  

The amounts which are measured at fair value by electing the fair value option are as follows:

    

March 31, 2020            ¥300,739 million

    

September 30, 2020     ¥296,810 million

    

Current and Deferred Income Taxes

     356,350       354,184  

Long-Term Debt

     4,279,354       4,263,461  

Other Liabilities

     912,921       901,350  
  

 

 

   

 

 

 

Total Liabilities

     9,991,362       10,127,385  
  

 

 

   

 

 

 

Redeemable Noncontrolling Interests

     10,331       0  
  

 

 

   

 

 

 

Commitments and Contingent Liabilities

    

Equity:

    

Common Stock

     221,111       221,111  

Additional Paid-in Capital

     257,638       243,061  

Retained Earnings

     2,754,461       2,753,954  

Accumulated Other Comprehensive Income (Loss)

     (118,532     (124,264

Treasury Stock, at Cost

     (121,070     (114,178
  

 

 

   

 

 

 

ORIX Corporation Shareholders’ Equity

     2,993,608       2,979,684  

Noncontrolling Interests

     72,227       61,001  
  

 

 

   

 

 

 

Total Equity

     3,065,835       3,040,685  
  

 

 

   

 

 

 

Total Liabilities and Equity

   ¥          13,067,528     ¥          13,168,070  
  

 

 

   

 

 

 

 

Notes:

  

1.

  

Credit Losses Standard has been adopted since April 1, 2020. For further information, see Note 2 “Significant Accounting and Reporting Policies (ah) New accounting pronouncements.”

  

2.

  

The liabilities of consolidated VIEs for which creditors (or beneficial interest holders) do not have recourse to the general credit of the Company and its subsidiaries are below:

 

     Millions of yen  
     March 31, 2020     September 30, 2020  

Short-Term Debt

   ¥ 6,030      ¥ 5,942   

Trade Notes, Accounts and Other Payable

     3,140       3,667  

Long-Term Debt

     464,904       457,013  

Other

     45,671       44,194  
  

 

 

   

 

 

 
   ¥               519,745     ¥               510,816  
  

 

 

   

 

 

 

 

– 26 –


Table of Contents

(2) Condensed Consolidated Statements of Income (Unaudited)

 

     Millions of yen  
     Six months ended
September 30, 2019
    Six months ended
September 30, 2020
 

Revenues:

    

Finance revenues

   ¥ 136,372     ¥ 131,904  

Gains on investment securities and dividends

     20,381       12,832  

Operating leases

     214,925       197,961  

Life insurance premiums and related investment income

     182,468       233,751  

Sales of goods and real estate

     184,494       192,653  

Services income

     396,805       315,637  
  

 

 

   

 

 

 

Total revenues

     1,135,445       1,084,738  
  

 

 

   

 

 

 

Expenses:

    

Interest expense

     50,243       42,161  

Costs of operating leases

     143,440       145,810  

Life insurance costs

     130,960       173,025  

Costs of goods and real estate sold

     160,042       163,538  

Services expense

     247,749       202,118  

Other (income) and expense

     9,473       7,833  

Selling, general and administrative expenses

     221,191       218,619  

Provision for doubtful receivables and probable loan losses

     10,573        0  

Provision for credit losses

     0       7,336  

Write-downs of long-lived assets

     36       583  

Write-downs of securities

     36       3,876  
  

 

 

   

 

 

 

Total expenses

     973,743       964,899  
  

 

 

   

 

 

 

Operating Income

     161,702       119,839  

Equity in Net Income of Affiliates

     32,617       2,289  

Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, net

     33,288       7,681  

Bargain Purchase Gain

     1,022       4,365  
  

 

 

   

 

 

 

Income before Income Taxes

     228,629       134,174  

Provision for Income Taxes

     66,965       38,682  
  

 

 

   

 

 

 

Net Income

     161,664       95,492  
  

 

 

   

 

 

 

Net Income Attributable to the Noncontrolling Interests

     2,192       1,673  
  

 

 

   

 

 

 

Net Income (Loss) Attributable to the Redeemable Noncontrolling Interests

     322       (23
  

 

 

   

 

 

 

Net Income Attributable to ORIX Corporation Shareholders

   ¥                159,150     ¥                  93,842  
  

 

 

   

 

 

 

 

Note:

  

1.

  

Credit Losses Standard has been adopted since April 1, 2020 and the amounts of provision for doubtful receivables and probable loan losses have been reclassified to provision for credit losses. For further information, see Note 2 “Significant Accounting and Reporting Policies (ah) New accounting pronouncements.”

  

2.

  

Provision for credit losses of loans to affiliates are recorded in equity in net income of affiliates since the second quarter of fiscal 2021.

 

     Yen  
     Six months ended
September 30, 2019
    Six months ended
September 30, 2020
 

Amounts per Share of Common Stock for Net Income Attributable to ORIX Corporation Shareholders:

    

Basic:

   ¥                  124.34      ¥                    75.22   

Diluted:

   ¥ 124.24     ¥ 75.16  

 

– 27 –


Table of Contents
     Millions of yen  
     Three months ended
September 30, 2019
    Three months ended
September 30, 2020
 

Revenues:

    

Finance revenues

   ¥ 68,584     ¥ 66,473  

Gains on investment securities and dividends

     6,838       10,463  

Operating leases

     113,156       103,015  

Life insurance premiums and related investment income

     94,778       117,628  

Sales of goods and real estate

     97,342       84,288  

Services income

     206,298       165,230  
  

 

 

   

 

 

 

Total revenues

     586,996       547,097  
  

 

 

   

 

 

 

Expenses:

    

Interest expense

     24,077        19,480  

Costs of operating leases

     72,166       74,218  

Life insurance costs

     69,199       87,380  

Costs of goods and real estate sold

     84,610       70,669  

Services expense

     130,423       104,519  

Other (income) and expense

     4,778       2,728  

Selling, general and administrative expenses

     109,783       110,252  

Provision for doubtful receivables and probable loan losses

     5,857       0  

Provision for credit losses

     0       931  

Write-downs of long-lived assets

     16       326  

Write-downs of securities

     36       2,271  
  

 

 

   

 

 

 

Total expenses

     500,945       472,774  
  

 

 

   

 

 

 

Operating Income

     86,051       74,323  

Equity in Net Income of Affiliates

     19,634       (10,141

Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, net

     24,084       2,361  
  

 

 

   

 

 

 

Income before Income Taxes

     129,769       66,543  

Provision for Income Taxes

     38,009       21,506  
  

 

 

   

 

 

 

Net Income

     91,760       45,037  
  

 

 

   

 

 

 

Net Income Attributable to the Noncontrolling Interests

     1,807       1,243  
  

 

 

   

 

 

 

Net Income Attributable to the Redeemable Noncontrolling Interests

     13       0  
  

 

 

   

 

 

 

Net Income Attributable to ORIX Corporation Shareholders

   ¥                  89,940     ¥                  43,794  
  

 

 

   

 

 

 

 

Note:

  

1.

  

Credit Losses Standard has been adopted since April 1, 2020 and the amounts of provision for doubtful receivables and probable loan losses have been reclassified to provision for credit losses. For further information, see Note 2 “Significant Accounting and Reporting Policies (ah) New accounting pronouncements.”

  

2.

  

Provision for credit losses of loans to affiliates are recorded in equity in net income of affiliates since the second quarter of fiscal 2021.

 

     Yen  
     Three months ended
September 30, 2019
    Three months ended
September 30, 2020
 

Amounts per Share of Common Stock for Net Income Attributable to ORIX Corporation Shareholders:

    

Basic:

   ¥                    70.27      ¥                    35.15   

Diluted:

   ¥ 70.21     ¥ 35.12  

 

– 28 –


Table of Contents

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

 

     Millions of yen  
     Six months ended
September 30, 2019
    Six months ended
September 30, 2020
 

Net Income

   ¥ 161,664     ¥ 95,492  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax:

    

Net change of unrealized gains (losses) on investment in securities

     4,904       1,879  

Net change of debt valuation adjustments

     204       (534

Net change of defined benefit pension plans

     786       125  

Net change of foreign currency translation adjustments

     (38,045     (8,749

Net change of unrealized gains (losses) on derivative instruments

     (5,728     (520
  

 

 

   

 

 

 

Total other comprehensive income (loss)

     (37,879     (7,799
  

 

 

   

 

 

 

Comprehensive Income

     123,785       87,693  
  

 

 

   

 

 

 

Comprehensive Income (Loss) Attributable to the Noncontrolling Interests

     373       (114
  

 

 

   

 

 

 

Comprehensive Income (Loss) Attributable to the Redeemable Noncontrolling Interests

     47       (303
  

 

 

   

 

 

 

Comprehensive Income Attributable to ORIX Corporation Shareholders

   ¥                123,365     ¥                  88,110  
  

 

 

   

 

 

 
     Millions of yen  
     Three months ended
September 30, 2019
    Three months ended
September 30, 2020
 

Net Income

   ¥ 91,760     ¥ 45,037  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax:

    

Net change of unrealized gains (losses) on investment in securities

     (331     3,285  

Net change of debt valuation adjustments

     72       (102

Net change of defined benefit pension plans

     447       28  

Net change of foreign currency translation adjustments

     (14,105     (7,476

Net change of unrealized gains (losses) on derivative instruments

     (1,849     865  
  

 

 

   

 

 

 

Total other comprehensive income (loss)

     (15,766     (3,400
  

 

 

   

 

 

 

Comprehensive Income

     75,994       41,637  
  

 

 

   

 

 

 

Comprehensive Income (Loss) Attributable to the Noncontrolling Interests

     1,276       (421
  

 

 

   

 

 

 

Comprehensive Income (Loss) Attributable to the Redeemable Noncontrolling Interests

     25       (176
  

 

 

   

 

 

 

Comprehensive Income Attributable to ORIX Corporation Shareholders

   ¥ 74,693     ¥ 42,234  
  

 

 

   

 

 

 

 

– 29 –


Table of Contents

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

Six months ended September 30, 2019

 

    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, 2019

  ¥ 221,111     ¥ 257,625     ¥ 2,555,585     ¥ (61,343    ¥ (75,904   ¥ 2,897,074     ¥ 56,127     ¥ 2,953,201  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contribution to subsidiaries

              0       11,812       11,812  

Transaction with noncontrolling interests

      188             188       (1,654     (1,466

Comprehensive income, net of tax:

               

Net income

        159,150           159,150       2,192       161,342  

Other comprehensive income (loss)

               

Net change of unrealized gains (losses) on investment in securities

          4,911         4,911       (7     4,904  

Net change of debt valuation adjustments

          204         204       0       204  

Net change of defined benefit pension plans

          786         786       0       786  

Net change of foreign currency translation adjustments

          (36,029       (36,029     (1,741     (37,770

Net change of unrealized gains (losses) on derivative instruments

          (5,657       (5,657     (71     (5,728
           

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

              (35,785     (1,819     (37,604
           

 

 

   

 

 

   

 

 

 

Total comprehensive income

              123,365       373       123,738  
           

 

 

   

 

 

   

 

 

 

Cash dividends

        (58,962         (58,962     (1,015     (59,977

Acquisition of treasury stock

            (0     (0     0       (0

Disposal of treasury stock

      (29         43       14       0       14  

Other, net

      394             394       0       394  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2019

  ¥ 221,111     ¥ 258,178     ¥ 2,655,773     ¥ (97,128   ¥ (75,861   ¥ 2,962,073     ¥ 65,643     ¥ 3,027,716  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Six months ended September 30, 2020

 

    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, 2020

  ¥ 221,111     ¥ 257,638     ¥ 2,754,461     ¥ (118,532   ¥ (121,070   ¥ 2,993,608     ¥ 72,227     ¥ 3,065,835  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative effect of adopting Accounting Standards Update 2016-13

        (42,855         (42,855     (71     (42,926
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at April 1, 2020

  ¥ 221,111     ¥ 257,638     ¥ 2,711,606     ¥ (118,532   ¥ (121,070   ¥ 2,950,753     ¥ 72,156     ¥ 3,022,909  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contribution to subsidiaries

              0       3,825       3,825  

Transaction with noncontrolling interests

      3,152             3,152       (8,312     (5,160

Comprehensive income (loss), net of tax:

               

Net income

        93,842           93,842       1,673       95,515  

Other comprehensive income (loss)

               

Net change of unrealized gains (losses) on investment in securities

          1,871         1,871       8       1,879  

Net change of debt valuation adjustments

          (534       (534     0       (534

Net change of defined benefit pension plans

          127         127       (2     125  

Net change of foreign currency translation adjustments

          (6,671       (6,671     (1,798     (8,469

Net change of unrealized gains (losses) on derivative instruments

          (525       (525     5       (520
           

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

              (5,732     (1,787     (7,519
           

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss)

              88,110       (114     87,996  
           

 

 

   

 

 

   

 

 

 

Cash dividends

        (51,493         (51,493     (6,554     (58,047

Acquisition of treasury stock

            (11,243     (11,243     0       (11,243

Disposal of treasury stock

      (183         257       74       0       74  

Cancellation of treasury stock

      (17,877         17,877       0       0       0  

Other, net

      331       (1       1       331       0       331  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2020

  ¥ 221,111     ¥ 243,061     ¥ 2,753,954     ¥ (124,264   ¥ (114,178   ¥ 2,979,684     ¥ 61,001     ¥ 3,040,685  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Note:  

Changes in the redeemable noncontrolling interests are not included in this table. For further information, see Note 13 “Redeemable Noncontrolling Interests.”

 

– 30 –


Table of Contents

Three months ended September 30, 2019

 

    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 June 30, 2019

  ¥ 221,111     ¥ 257,911     ¥ 2,565,833     ¥ (81,881    ¥ (75,904   ¥ 2,887,070     ¥ 58,893     ¥ 2,945,963  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contribution to subsidiaries

              0       6,464       6,464  

Transaction with noncontrolling interests

      114             114       (500     (386

Comprehensive income, net of tax:

               

Net income

        89,940            89,940       1,807       91,747  

Other comprehensive income (loss)

               

Net change of unrealized gains (losses) on investment in securities

          (327       (327     (4     (331

Net change of debt valuation adjustments

          72         72       0       72  

Net change of defined benefit pension plans

          447         447       0       447  

Net change of foreign currency translation adjustments

          (13,647       (13,647     (470     (14,117

Net change of unrealized gains (losses) on derivative instruments

          (1,792       (1,792     (57     (1,849
           

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

              (15,247     (531     (15,778
           

 

 

   

 

 

   

 

 

 

Total comprehensive income

              74,693       1,276       75,969  
           

 

 

   

 

 

   

 

 

 

Cash dividends

              0       (490     (490

Acquisition of treasury stock

            (0     (0     0       (0

Disposal of treasury stock

      (29         43       14       0       14  

Other, net

      182             182       0       182  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2019

  ¥ 221,111     ¥ 258,178     ¥ 2,655,773     ¥ (97,128   ¥ (75,861   ¥ 2,962,073     ¥ 65,643     ¥ 3,027,716  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Three months ended September 30, 2020

 

    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 June 30, 2020

  ¥ 221,111     ¥ 239,888     ¥ 2,710,160     ¥ (122,704   ¥ (113,281   ¥ 2,935,174     ¥ 70,378     ¥ 3,005,552