ORIX Corporation · Shintaro Agata Corporate Executive Vice President, Head of the Treasury...

Copyright © 2012 ORIX Corporation All rights reserved.

ORIX Corporation(TSE: 8591; NYSE: IX)

Consolidated Financial Results

First Quarter Consolidated Financial Results

For the Three Month Period Ended April 1 – June 30, 2012

Haruyuki Urata Deputy President & CFO

Shintaro Agata Corporate Executive Vice President,

Head of the Treasury Headquarters

Takao Kato Corporate Senior Vice President,

Head of the Accounting Headquarters

Copyright © 2012 ORIX Corporation All rights reserved. 1

Disclaimer These materials have been prepared by ORIX Corporation (“ORIX” or the “Company”) solely for your information and are subject to

change without notice. The information contained in these materials has not been independently verified and its accuracy is not guaranteed. No representations, warranties or undertakings, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness, or completeness, or correctness of the information or the opinions presented or contained in these materials.

These materials contain forward-looking statements that reflect the Company‟s intent, belief and current expectations about future events and financial results. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “est imates,” “projects,” “intends,” or words of similar meaning. These forward-looking statements are not guarantees of future performance. They are based on a number of assumptions about the Company‟s operations and are subject to risks, uncertainties and other factorsbeyond the Company‟s control. Accordingly, actual results may differ materially from these forward-looking statements. Factors that could cause such differences 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 and under “Business Risk” of the securities report (yukashouken houkokusho) filed with the Director of the kanto local Finance Bureau.

Some of the financial information in these materials is unaudited.

These materials contain non-GAAP financial measures, including adjusted long-term and interest-bearing debt, adjusted total assets and adjusted ORIX Corporation shareholders„ equity, as well as adjusted segment profit and other measures and ratios calculated on the basis thereof. These non-GAAP financial measures should not be considered in isolation or as a substitute for the most directly comparable financial measures included in our consolidated financial statements and presented in accordance with U.S. GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures are included in these materials on pages 27 and 28.

The Company believes that it will be considered a “passive foreign investment company” for United States Federal income tax purpose in the year to which these consolidated financial results relate and for the foreseeable future by reason of the composition of its assets and the nature of its income. A U.S. holder of the shares or ADSs of the Company is therefore 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.

Nothing in this document shall be considered as an offer to sell or solicitation of an offer to buy any security, commodity or other instrument, including securities issued by the Company or any affiliate thereof.


Contents

I. Overview

II. Segment Performance

III. Topics

IV. Summary

Appendix

P. 3

P. 7

P.14

P.16

P.17


I. Overview

（JPY Bn）

Achieved 34.8bn in Net Income, a 1.5 fold year on year increase and 35% of the full year target

Net Income* and ROE

*Net Income refers to Net Income Attributable to ORIX Corporation


I. Overview

（JPY Bn）

Retail, Investment and Operation, and Corporate Financial Services segments significantly increased profits year on year

Trend in Segment Profits


I. Overview

Retail, Maintenance Leasing, and Corporate Financial Services segment assets increased

Trend in Segment Assets（JPY Bn）


I. Overview

Segment Asset ROA (After Tax)

Upward trend in ROA for all segments


II. Segment Performance 1. Corporate Financial Services

1Q Results

New business volume grew 1.6 fold YoY

Assets have bottomed out in the third

quarter of the previous fiscal year

Increased ROA

Topics

Executed large leasing contracts for incinerators, increased lease execution for construction equipment

Focus on solar panel distribution


II. Segment Performance 2. Maintenance Leasing

Rentec: Started tablet PC and industrial robot rentals

Auto: Opened a truck rental location in Ishinomaki City, Miyagi Prefecture

Increase in base profit due to an increase in

lease revenue and decrease in costs and

SGA

Continued high level of new business since

second half of previous fiscal year and

increase in assets since FY12.3 end

Further increase in ROA

1Q Results Topics


II. Segment Performance 3. Real Estate

Commenced construction of four large scale logistic centers

Strong revenues from Kyoto and Sumida aquariums

Base profit grew due to increased

operating business revenue

Increased profit despite YoY

increase in impairments

Continued steady asset reduction

1Q Results Topics


II. Segment Performance 4. Investment and Operation

PE Investment: Invested in KINREI

Energy and Environment: Entered into the mega solar business

Loan servicer recorded large

collection revenue

Robust revenues from existing

investments

Significant increase in ROA

1Q Results Topics


II. Segment Performance 5. Retail

Enhanced cooperation between ORIX Bank and ORIX Credit on card loan business

Reached 1.5 million life insurance policies in force

Recognized upfront costs for ORIX Bank

card loan

Recorded gains and increased assets

due to consolidation of ORIX Credit

Strong Life insurance premium and life

insurance related investment income

1Q Results Topics


II. Segment Performance 6. Overseas Business

China: Joint leasing company with a leading auto dealer Pang Da Group began operation

Aircraft Leasing: 27 aircraft joint investment with Varde Partners Inc.

YoY decrease of gains from municipal bond trading in the U.S.

Steady increase of lease assets in Asia

Maintained high level of ROA

1Q Results Topics


By Region

Segment Total

Asia/Australia and Other are increasing, excluding the exchange rate effect

(USD Mil)

II. Segment Performance 6. Overseas Business


III. Topics 1. Solar Panel Related Business

Entry into the mega solar business

(1) Mega solar business

• Expect to invest 100MW/30bn yen in the next 3 years

• Also look into raising nonrecourse loans and structuring fund

(2) Rooftop solar power generation business

• Install in factories and warehouses owned by customers, or ORIX‟s

facilities

• Expect 100MW/24bn yen in the next 3 years

Enhancement of Solar Panel Distribution business

• Aimed toward power plants. ORIX will purchase the panels, arrange design

and installation with engineering companies, and arrange finance

• Surge in inquiries from sales locations nationwide


III. Topics 2. Aircraft Leasing Business

15

Joint investment with the leading U.S. asset manager Varde Partners Inc.Acquire 27 aircraft, provide leasing to leading airlines in China and LCC in the U.S.

Currently own and manage130 aircraft, customer base of 65 airlines

in 30 different countries

Aim for 200 aircraft and 100 airline companies

Ranked by S&P for servicing, asset management earned top ranking of “Strong”

Aircraft Leasing Value Chain

Accounting

& Tax

Marketing

Aircraft

Ownership

IT

Systems

Aircraft

Technical

Service

Lease

Admin

Investment

Banking/

Advisory

Legal &

Contractual

Services

Global Aircraft

Growth of Aircraft Leasing Market

Source: Ascend


Achieved 34.8bn in net income, 35% of the full year target

IV. Summary

Segment asset ROA increased to 2.3%

and ROE increased to 10.0%

Segment assets are on an increasing trend


Appendix


（JPY Bn）

Appendix(1) Trend in Performance

*1 Net Income Attributable to ORIX Corporation

*2 Performance indicators shown are Non-GAAP financial measures. For a qualitative reconciliation of the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, please see pages 27 and 28.


Appendix(2) Profit by Segment

* Income from discontinued operations (before applicable tax effect), net income attributable to noncontrolling interests and net income attributable to redeemable noncontrolling interests are included

（JPY Bn）


Appendix(3) Assets by Segment & Region

（JPY Bn）

Overseas Business Segment Assets by Region


Appendix(4) Funding

（JPY Bn）


Appendix(5) Liquidity

（JPY Bn）

*1 Marketable Short-term Debt is the total of bonds and MTN expected to reach maturity within 1 year and the balance of CP.

*2 Performance indicator is a Non-GAAP financial measure. For a qualitative reconciliation of the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, please see pages 27 and 28.


（JPY Bn）

Appendix(6) Real Estate Portfolio

NOI Yield and Vacancy Rate Trends

Gain on Sales of Real Estate Under Operating Lease Trend

*67.1bn of NRL/specified bonds held by domestic Group companies not included (12/6)

*

Trend in Real Estate Segment Assets by Type


（JPY Bn）

Appendix(7) Real Estate Portfolio

Rental Property Assets by Region (12.6)

Rental Property Assets by Type (12.6)


Appendix(8) Asset Quality

（JPY Bn）

Trend in Provisions and Provisioning Rate

* Provisions (Average Investment in Direct Financing Leases + Average Investment in Installment Loans)

*The above exclude the effects of adopting the new accounting standards regarding the consolidation of VIEs.

*Of the 227.2bn in loans

individually evaluated for

impairment, 143.5bn is

fully covered by collaterals

such as real estate.

Including 67.3bn in

provisions, 92.8% is fully

covered

Asset Quality

*


Appendix(9) Reconciliation Table of Non-GAAP Financial Measurement

These materials include certain financial measures presented on a basis not in accordance with U.S. GAAP, or non-GAAP measures, including total assets and long-term liabilities excluding liabilities in line with securitized transactions (ABS, CMBS), as well as other measures or ratios calculated based thereon, presented on an adjusted basis, which excludes payables under securitized leases, loan receivables and investment in securities and reverses the cumulative effect on retained earnings of applying the new accounting standards for the consolidation of VIEs, effective April 1, 2010.

(1) Our management believes these non-GAAP financial measures may provide investors with additional meaningful comparisons between our financial condition as of June 30, 2012, as compared to prior periods. Effective April 1, 2010, we adopted ASU 2009-16 and ASU 2009-17, which changed the circumstances under which we are required to consolidate certain VIEs. Our adoption of these new accounting standards caused a significant increase in our consolidated assets and liabilities and a decrease in our retained earnings without affecting the net cash flow and economic effects of our investments in such consolidated VIEs. Accordingly, our management believes that providing financial measures that exclude assets and liabilities attributable to consolidated VIEs as a supplement to financial information calculated in accordance with U.S. GAAP enhances the overall picture of our current financial position and enables investors to evaluate our historical financial and business trends without the large balance sheet fluctuation caused by our adoption of these new accounting standards.

(2) Our management believes that in comparing segment information as of June 30, 2012 as compared to prior periods, the provision of the non-GAAP financial measure of base profit that excludes capital gains, allowance for doubtful receivables and probable loan losses, and impairments may provide investors with additional meaningful insight regarding segment profit trends.

We provide these non-GAAP financial measures as supplemental information to our consolidated financial statements prepared in accordance with U.S. GAAP, and they should not be considered in isolation or as a substitute for the most directly comparable U.S. GAAP measures. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures presented in accordance with U.S. GAAP as reflected in our consolidated financial statements for the periods provided, are included in page 27 and 28.



（JPY Bn）



*1 (a) Base Profit = Segment Profit – (b) Capital Gains – (c) Provisions – (d) Impairments

*2 Brokerage commissions and net gains (losses) on investment securities, real estate sales (net of cost), gains (losses) on sales of real estate under

operating leases, gains (losses) on sales of subsidiaries and affiliates and liquidation Losses, net, and equivalent amount of real estate joint-venture equity

method profit for equity in net income (loss) of affiliates.

*3 Impairment losses for write-downs of long-lived assets, write-downs of securities, and equivalent amount of costs of real estate sales and equity in net

income (loss) of affiliates.

（JPY Bn）


Reference Data


Stock Market

Source: Bloomberg

Performance of Major Stock Markets since June 2008(June 30, 2008 =100)

0

50

100

150

200

08.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06

Nikkei (Japan) Dow Jones (US) Hang Seng (HK)

CSI 300 (China) SENSEX (India)


Source: Bloomberg

Interest Rate Trend of Major Currencies since June 2008

0.0

2.0

4.0

6.0

08.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06

1 year Inter-Bank Deposit Rate in Japan

1 year Inter-Bank Deposit Rate in U.S.

1 year RMB Deposit Rate by Bank of China

Interest Rate Trend


Macro Economic Indicators

Real GDP Growth (QoQ Change)

National CPI (Ex Fresh Food) (YoY Change)

(% Change)(% Change)

Source: Bloomberg Source: Bloomberg

-10.0

-5.0

0.0

5.0

10.0

15.0

08.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06

Japan USA CHINA

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

08.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06

Japan USA CHINA


Japanese Corporate Indices

Tankan Corporate

Diffusion Index

(JPY Tril)

Corporate Bankruptcies(Quarter)

Source: Ministry of Finance Source: Bank of Japan

-20

-10

0

10

20

08.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06

Large Middle Small

2,500

3,000

3,500

4,000

4,500

0.0

2.0

4.0

6.0

8.0

08.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06

Liabilities (lhs) Bankruptcies (rhs)

(# cases)


Japanese Real Estate Indicators

Japan TSE REIT Index

Source: Tokyo Stock Exchange

Office Rental Rates

(Yen per 3.3㎡)

Source: CBRE

0

500

1,000

1,500

08.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

02.06 04.06 06.06 08.06 10.06 12.06

Tokyo Ag. Rent Osaka Avg. Rent


Domestic Lease Business Indicators

Private Equipment Investment New Car Sales

Source: Japan Leasing Association Source: Japan Automotive Leasing Association

(,000)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2000 2002 2004 2006 2008 2010

Private Equipment Inv. Share of Lease

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2000 2002 2004 2006 2008 2010

New Car Sales Share of Lease


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Consumer Finance Loan(100 mil Yen)

0

50,000

100,000

150,000

200,000

250,000

2000 2002 2004 2006 2008 2010

Retail Life Insurance Premiums

36

Other Domestic Indicators

Consumer Finance LoansRetail Life Insurance

Source: Japan Statistics Bureau Source: Japan Financial Services Agency

(100 mil yen)(100 mil yen)


For annual and more historical data please access our website. A list of major

disclosure materials is given below.

ORIX Website: URL: http://www.orix.co.jp/grp/en/

IR Website: URL: http://www.orix.co.jp/grp/en/ir/

Financial Reports: URL: http://www.orix.co.jp/grp/en/ir/library/

Five Year Financial Data: URL: http://www.orix.co.jp/grp/en/ir/financial_highlight/

If you would like to be included on our e-mail list for major news announcements,

please send your request to the address below.

Additional Information

ORIX Corporation Corporate Planning Department

Mita NN Bldg., 4-1-23 Shiba, Minato-ku, Tokyo 108-0014, JapanTel: +81-3-5419-5042 Fax: +81-3-5419-5901

[email protected][email protected]

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