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TRANSCRIPT
ORIX Corporation
Analysis of Consolidated Financial Results
For the Period April 1-June 30, 2002
(July 30, 2002)
•Safe Harbor StatementThese documents may contain forward-looking statements about expected future events and financial results that involve risks and uncertainties. Such statements are based on our current expectations and are subject to uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, those described under “Risk Factors”in the Company’s annual report on Form 20-F filed with the Unites States Securities and Exchange Commission.
•U.S. HoldersThe Company expects that it will be a "passive foreign investment company" (PFIC) under the U.S. Internal Revenue Code. A U.S. holder of the shares of the Company is therefore subject to special rules of taxation in respect of certain dividend, gain or other income on such. Investors should consult their tax advisors with respect to such rules, which are summarized in the Company's annual report.
Disclaimer
Slide #(1) Financial Summary ……………………………………………….. 1
Net Income & ROE (Graph and Table)……………………………....2Total Assets & ROA (Graph)…………………………………..…… 3Shareholders’ Equity & Shareholders’ Equity Ratio (Graph)…...….. 4Total Debt & Debt-to-Equity Ratio (Graph)…………………………5 Forecasts for Year Ending March 31, 2003 (Graph)…..….………… 6
(2) Key Financial Data ……………………………………..……….…7Direct Financing LeasesDirect Financing Leases: New Equipment Acquisitions (Graph)..…. 7Investment in Direct Financing Leases (Graph) ………………….… 8Investment in Direct Financing Leases by Equip.Category (Table)... 9Direct Financing Lease Revenues (Graph)………………………….10Operating LeasesOperating Leases: New Equipment Acquisitions (Graph)….………11Investment in Operating Leases (Graph) ..………….…………….. 12Investment in Operating Leases by Category (Table) …………….. 13Operating Lease Revenues (Graph)………………………………...14Interest on Loans & Investment SecuritiesInstallment Loans: New Loans Added (Graph)……..…….………..15Installment Loans (Graph) ………………………...…..………….. 16Installment Loans by Borrower Category (Table) ………....……… 17Investment in Securities: New Securities Added (Graph) …….….. 18Investment in Securities (Graph)……………….…..……………… 19Investment in Securities by Security Category (Table) …………… 20 Interest on Loans (Graph)…………………..….……………………21Interest on Investment Securities (Graph)…………………………..22Brokerage Commissions & Gains on Investment Securities (Graph)……………………………………………………………...23
Slide #Life Insurance Premiums & Related Investment Income (Graph and Table)…………………………………………...…...…24Other Operating Revenues & AssetsOther Operating Assets: New Assets Added (Graph)……..….…… 25Other Operating Assets (Graph)………………….…………………26Other Operating Revenues (Graph)………………………….……. 27Allowance for Doubtful Receivables on Direct Financing Leases & Possible Loan Losses (Graph & Table)….………………….…. 28Equity in Net Income (Loss) of & Gain (Loss) on Sales of Affiliates (Graph)………………………….………………………..29Funding …………………….…………………………………….. 30Direct Funding by Funding Source (Graph)….……………….…… 31Composition of Debt (Table)……………………….………………32Direct Funding & Direct Funding Ratio (Table)……….………….. 33ORIX’s Domestic CP & Bond Issuance (Table)………….………. 34Principal Credit Ratings………………………………….…………35Segment Information…………………………………………….. 36Corporate Finance (Graph)………………………….………..…… 36Equipment Operating Leases (Graph)…..……………..…….……. 37Real Estate -Related Finance (Graph)…….………………………….38Real Estate (Graph)…………………………….……………………39Life Insurance (Graph)……………………………………..……… 40Other (Graph)…………………………………..……………...……41The Americas (Graph)…………….……………………………….. 42Asia and Oceania (Graph)………..……………………………...… 43Europe (Graph)…………………………………………………….. 44
(3) Description of Quarterly Results……………………………...45-51(4) Additional Data…………………………….……………………….52
Table of Contents
1
(1) Financial Summary
Revenues 161.0 JPY billion (down 10% on 2001/6)Expenses 136.3 JPY billion (down 13% on 2001/6)Income before Income Taxes 26.3 JPY billion (up 25% on 2001/6)Net Income 16.9 JPY billion (up 62% on 2001/6)Operating Assets 5,327.8 JPY billion (down 4% on 2002/3) Total Assets 6,091.1 JPY billion (down 4% on 2002/3)ROE 13.5% (annualized) (March 31, 2002: 8.4%)ROA 1.09% (annualized) (March 31, 2002: 0.67%)D/E Ratio 9.0 Times (March 31, 2002: 9.3 Times)Shareholders’ Equity Ratio 8.2% (March 31, 2002: 7.9%)
*Unless otherwise stated all figures are in Japanese yen (JPY)
Yen/Dollar Exchange RateAverage Rate: 02/6 = 126.14 JPY; 01/6= JPY 123.22 (2.4% depreciation)Period End Rate: 02/6 = 119.50 JPY; 02/3= JPY 133.25 (10% appreciation)
For the Three Month Period April 1-June 30, 2002
2
Net Income & ROE
16.9
25.630.6
34.2
40.313.5%
8.4%7.7%8.1%8.0%
99/3 00/3 01/3 02/3 02/6
Net Income (JPY billion) ROE (%)
01/4-6 01/7-9 01/10-12 02/1-3 02/4-6Net Income 10,442 9,594 9,262 10,971 16,885
(JPY million)(1Q)
(annualized)
3
Total Assets & ROA
6,350.25,591.35,341.55,347.6
6,091.1
99/3 00/3 01/3 02/3 02/6Total Assets (JPY billion) ROA (%) (1Q)
0.47% 0.57%0.62% 0.67%
1.09%(annualized)
4
Shareholders’ Equity & Shareholders’ Equity Ratio
498.7502.5461.3
425.7
327.8
8.3%8.0%
6.1%
8.2%7.9%
99/3 00/3 01/3 02/3 02/6
Shareholders' Equity (JPY billion) Shareholders' Equity Ratio (%) (1Q)
5
Total Debt & Debt to Equity Ratio
99/3 00/3 01/3 02/3 02/6
Long-Term Debt
Short-Term Debt
Deposits
Debt-to-Equity Ratio (Times)
4,274.34,010.5 4,070.5
(JPY billion)
4,679.6
13.0
9.4 8.8 9.3
(1Q)
9.0
4,489.6
* D/E Ratio = (Long Term Debt + Short Term Debt + Deposits)/Shareholders’ Equity
6
Forecasts for Year Ending March 31, 2003
27.3
52.059.2
80.073.0
25.630.6 34.2
40.346.0
593.9 616.5586.1
658.5 680.0
99/3 00/3 01/3 02/3 03/3
Income before Income Taxes Net Income Total RevenuesForecast
(JPY billion)
7
(2) Key Financial DataDirect Financing Leases: New Equipment Acquisitions
798.7
289.7 274.7
203.5
181.7
151.1
519.8631.2623.5
126.4
59.833.0
0
300
600
900
1,200
99/3 00/3 01/3 01/6 02/3 02/6
913.2 905.9
723.3
(JPY billion)
980.4
159.3
(1Q)
210.8
(1Q)OverseasJapan
8
Investment in Direct Financing Leases
472.3426.9 464.4 431.9 403.1 363.4
1,283.61,255.51,191.01,193.31,318.01,480.5
0
500
1,000
1,500
2,000
2,500
99/3 00/3 01/3 01/6 02/3 02/6
1,952.81,745.0 1,657.7
(JPY billion)
1,658.71,623.0
(1Q)(1Q)
1,646.9
OverseasJapan
9
Investment in Direct Financing Leases by Equipment Category
1,952,842
(236,293)
29,374
58,827
2,100,934
99/3
1,744,953
(220,278)
26,042
57,900
1,881,289
00/3
1,657,709
(195,098)
24,616
56,566
1,771,625
01/3
1,658,669
(172,490)
23,224
80,206
1,727,729
02/3
(166,593)Unearned Lease Income
Total
Initial Direct Costs
Estimated Residual Value
Minimum Lease Payments Receivable
1,646,932
23,443
78,257
1,711,825
02/6
332,287319,245342,123383,761377,110Other
590,895603,843415,246398,521414,093Transportation Equipment
Total
Commercial Services Equipment
Industrial Equipment
Information-Related & Office Equipment
1,646,9321,658,6691,657,7091,744,9531,952,842
187,626186,115193,624194,809224,080
264,323286,942372,542394,581444,261
271,801262,524334,174373,281493,298
02/602/301/300/399/3
(JPY million)
10
Direct Financing Lease Revenues
96.9 86.9 77.4
19.1
84.2
22.0
46.343.9
44.6
10.5
37.8
8.8
0
50
100
150
200
99/3 00/3 01/3 01/6 02/3 02/6
143.2130.8
122.0
(JPY billion)
121.9
(1Q)(1Q)
29.6 30.7
OverseasJapan
11
Operating Leases: New Equipment Acquisitions
66.5 70.4
114.8
41.3
116.9
14.1
25.730.6
28.4
6.6
29.3
6.7
0
50
100
150
99/3 00/3 01/3 01/6 02/3 02/6
92.3
47.9
101.0
143.2
(JPY billion)
146.2
(1Q)(1Q)
20.9
OverseasJapan
12
Investment in Operating Leases
261.4 274.5 320.6 335.8 338.7 327.4
149.8 123.1130.5 128.4 135.8 123.6
0
200
400
600
99/3 00/3 01/3 01/6 02/3 02/6
411.2464.3
397.6451.2
(JPY billion)
474.5
(1Q)(1Q)
451.0
OverseasJapan
13
Investment in Operating Leases by Category
Total
Real Estate and Other
Measuring Equipment and Personal Computers
Transportation Equipment
451,012474,491451,171397,576411,156
208,711215,359208,145179,597170,718
69,25771,52777,80858,43158,552
173,044187,605165,218159,548181,886
02/602/301/300/399/3
(JPY million)
14
Operating Lease Revenues
60.8 71.1 83.6
20.4
87.7
22.0
31.629.5
29.9
7.9
33.1
8.5
0
30
60
90
120
99/3 00/3 01/3 01/6 02/3 02/6
92.4100.5
113.5
(JPY billion)120.8
(1Q)(1Q)
28.4 30.5
OverseasJapan
15
Installment Loans: New Loans Added
572.0 654.2 658.2
201.6 273.9
134.8
67.967.3
1,144.7
195.7
153.3 82.4
0
500
1,000
1,500
99/3 00/3 01/3 01/6 02/3 02/6
706.8
269.5
807.5740.6
(JPY billion)
1,340.4
(1Q)(1Q)
341.1
OverseasJapan
16
Installment Loans
1,393.2 1,453.7 1,489.1 1,511.91,898.1
368.7 337.8 357.4 406.5
429.2
1,840.3
433.0
0
1,000
2,000
3,000
99/3 00/3 01/3 01/6 02/3 02/6
1,761.91,918.4
1,791.4 1,846.5
(JPY billion)
2,273.3
(1Q)(1Q)
2,327.4
OverseasJapan
17
Installment Loans by Borrower Category
1,761,887
16,928
368,661
803,073
188,085
614,988
573,225
43,663
411,215
118,347
99/3
1,791,439
18,312
337,754
860,892
203,537
657,355
574,481
56,461
396,748
121,272
00/3
1,846,511
20,925
357,446
850,070
222,818
627,252
618,070
43,959
392,896
181,215
01/3
2,273,280
21,463
432,771
986,398
278,367
708,031
832,648
44,829
557,461
230,358
02/3
21,495Loan Origination Costs, Net
430,745Foreign Borrowers
1,015,879Sub-total
281,509
734,370
Domestic Commercial
Real Estate Related
Commercial & Industrial Companies
Total
Sub-total
Other
Domestic Consumer
Housing Loans
Card Loans
2,327,354
859,235
43,042
553,134
263,059
02/6
(JPY million)
18
Investment in Securities: New Securities Added
235.5
315.6
77.1
304.2
38.3
66.5 108.8
81.644.1
224.5
10.611.5
0
100
200
300
400
99/3 00/3 01/3 01/6 02/3 02/6
302.0
88.7
333.2
397.2(JPY billion)
348.3
(1Q)(1Q)
48.9
OverseasJapan
19
Investment in Securities
596.3731.4 758.1
651.7 565.4
121.4
162.0
210.7 205.4209.6
194.0
454.8
0
200
400
600
800
1,000
99/3 00/3 01/3 01/6 02/3 02/6
758.4
576.2
963.5942.2
(JPY billion)
861.3
(1Q)(1Q)
759.4
OverseasJapan
20
Investment in Securities by Security Category
576,206
51,740
16,542
507,510
414
99/3
758,381
56,949
11,404
689,638
390
00/3
942,158
87,163
13,005
841,409
581
01/3
861,336
125,530
16,008
718,919
879
02/3
13,182Held-to-Maturity Securities
Total
Other Securities
Available-for-Sale Securities
Trading Securities
759,406
116,046
624,449
5,729
02/6
(JPY million)
21
Interest on Loans
51.1 53.0 58.1
15.2
70.1
19.8
36.9 30.4 27.3
7.6 6.4
29.6
0
20
40
60
80
100
99/3 00/3 01/3 01/6 02/3 02/6
88.0
22.9
83.3 85.4
(JPY billion)99.7
(1Q)(1Q)
26.2
OverseasJapan
22
Interest on Investment Securities
3.5
10.9 12.8
18.918.7
5.14.9 4.2
0
10
20
30
99/3 00/3 01/3 01/6 02/3 02/6
1.6 0.31.3 1.1
12.5
6.0
14.1
24.0
(JPY billion)
22.2
(1Q)(1Q)
4.6
OverseasJapan
23
Brokerage Commissions & Gains on Investment Securities
6.2
16.6
8.8
3.1
15.4
4.4
1.2
3.1
3.3
0.9
2.9
0.8
0
5
10
15
20
99/3 00/3 01/3 01/6 02/3 02/6
Gains on Investment Securities Brokerage Commissions
7.4
4.0
19.7
12.1
(JPY billion)
18.4
(1Q)(1Q)
5.1
24
Life Insurance Premiums & Related Investment Income
186.6 190.8141.5
35.3
135.5
28.7
16.8 16.9
4.24.9
15.19.6
0
50
100
150
200
250
99/3 00/3 01/3 01/6 02/3 02/6
Premiums Related Investment Income
196.3
40.3
205.8
158.3
99/3 00/3 01/3 01/6 02/3 02/6Life Insurance Premiums & Related Investment Income 196,259 205,829 158,314 40,287 152,333 32,946Life Insurance Costs 186,775 193,664 143,709 36,123 139,786 29,649Net 9,484 12,165 14,605 4,164 12,547 3,297
(JPY million)
(JPY billion)
152.3
(1Q)(1Q)
32.9
25
Other Operating Assets: New Assets Added
16.4 32.1 16.4
180.9
15.5
38.3
42.6
23.2
86.45.35.823.4
0
50
100
150
200
250
99/3 00/3 01/3 01/6 02/3 02/6
70.4
39.722.2
129.0
(JPY billion)
204.1
(1Q)(1Q)
20.8
OverseasJapan
26
Other Operating Assets
25.2
68.7 62.8106.8 107.7
248.2
132.2
10.8
4.7 9.6
25.2
12.2
0
50
100
150
200
250
300
99/3 00/3 01/3 01/6 02/3 02/6
132.8
73.3 72.5
132.0
(JPY billion)
260.4
(1Q)(1Q)
143.1
OverseasJapan
27
Other Operating Revenues
44.9 51.4 59.1 45.7
109.7
28.7
2.02.0
9.3
12.0
7.02.7
0
50
100
150
99/3 00/3 01/3 01/6 02/3 02/6Japan Overseas
47.5 47.758.468.3
(JPY billion)
121.7
(1Q)(1Q)
30.7
28
0
40
80
120
160
99/3 00/3 01/3 02/3 02/6
Allowance for Doubtful Receivables on Direct Financing Leases & Possible Loan Losses
99/3 00/3 01/3 02/3 02/6Beginning Balance 145,741 132,606 136,939 141,077 152,887Provisions Charged to Income 51,845 45,573 44,584 51,367 12,803Charge-Offs (Net) (70,306) (37,343) (46,306) (49,340) (12,694)Other 5,326 (3,897) 5,860 9,783 (2,732)Ending Balance 132,606 136,939 141,077 152,887 150,264
(JPY million)
(JPY billion)
132.6 136.9 141.1 152.9
(1Q)
150.3
29
Equity in Net Income (Loss) of & Gain (Loss) on Sales of Affiliates
1.6
-0.3-0.9
2.1
-0.8
-3.7
-6
-3
0
3
699/3 00/3 01/3 01/6 02/3 02/6
(JPY billion) (1Q)(1Q)
30
Funding
ØBalance between Direct and Indirect Funding§Total funding: JPY 4,489.6 billion (including deposits); down JPY 190.0 billion on 2002/3
§Direct funding ratio: 52.5%, down 0.2 percentage points on 2002/3
ØLiquidityTo sustain a high degree of liquidity, ORIX has been increasing the weight of long-term debt and securing commitment lines for itself. §Commitment lines at 2002/6
•Consolidated total including overseas companies: JPY 868.0 billion (Available: JPY 806.3), down JPY 65.6 billion on 2002/3
§Share of long-term debt: 65.2%, up 2.1 percentage points on 2002/3
31
Direct Funding by Funding Source
52.7% 52.5%48.9%
56.8% 56.7%
0
500
1,000
1,500
2,000
2,500
3,000
99/3 00/3 01/3 02/3 02/6
CP
ABS (Long-term)
Bonds
MTN
Deposits
Direct FundingRatio
2,277.92,088.3
2,310.0
(JPY billion)
2,466.0
(1Q)
2,358.7
32
Composition of Debt
4,274,280
53,269
2,036,028
1,014,416
574,790
252,579
194,243
2,184,983
1,171,582
1,013,401
99/3
4,010,468
154,923
1,942,784
797,276
761,253
328,221
56,034
1,912,761
935,326
977,435
00/3
4,070,545
178,314
2,330,159
1,113,071
795,500
349,378
72,210
1,562,072
647,461
914,611
01/3
4,679,566
225,243
2,809,861
1,582,074
862,687
324,369
40,731
1,644,462
631,529
1,012,933
02/3
2,764,217Long-Term Debt
249,525*Deposits
1,505,692
913,599
314,160
30,766
Borrowings from Financial Institutions
*Bonds
*Medium-Term Notes
*Asset-Backed Securities
Total Debt
Short-Term Debt
Borrowings from Financial Institutions
*Commercial Paper
4,489,605
1,475,863
625,260
850,603
02/6
*Direct Funding
(JPY million)
33
Direct Funding & Direct Funding Ratio
4,555,064
52.0%
2,369,066
280,784
48.9%
2,088,282
99/3
4,421,579
60.8 %
2,688,977
411,111
56.8%
2,277,866
00/3
4,472,154
60.6%
2,711,622
401,609
56.7 %
2,310,013
01/3
56.8%57.3%Direct Funding Ratio
(including off-balance funding)
2,800,8942,968,749Direct Funding
(including off-balance funding)
442,241502,786Off-balance funding
52.5%52.7%Direct Funding Ratio
4,931,8465,182,352Total Debt
(including off-balance funding)
Direct Funding
(“*” on slide 32)
2,465,963
02/3
2,358,653
02/6
(JPY million)
34
ORIX’s Domestic CP Issuance
544,800533,300585,300610,500558,400Direct Paper Issued in Japan
53%
1,005,300
02/3
68%
827,100
99/3
72%
851,500
00/3
64%
914,300
01/3
847,800Total CP Issuance in Japan
Share of Direct Paper in Japan 64%
02/6
ORIX’s Domestic Bond Issuance (Excluding Convertible Bonds)
390,000420,000355,000320,000280,000Bonds to Individuals in Japan
53%
794,100
02/3
49%
797,100
02/6
50%
560,200
99/3
45%
713,700
00/3
47%
755,500
01/3
Total Bond Issuance in Japan
Share of Bonds to Individuals
(JPY million)
(JPY million)
35
Principal Credit Ratings
J-1+a-1+Short-Term Debt (CP)
Long-Term Debt Baa3BBBAA-AA-
Moody’sS&PJCRR&I
36
1 Corporate Finance: Direct financing leases and lending operations other than real estate lending
31.527.4
118.8113.1121.4122.6
10.4
48.1
11.4
44.440.935.2
2,008.21,960.41,895.01,889.51,968.62,046.5
99/3 00/3 01/3 01/6 02/3 02/6
Revenues Segment Profit (Loss) Segment Assets
Domestic Operations
(JPY billion)
(1Q)(1Q)
37
2Equipment Operating Leases: Includes precision measuring equipment, information related equipment, and automobile leases
16.216.9
67.361.753.051.0
1.39.9
2.711.27.86.9
141.9147.4136.5134.3
113.4109.8
99/3 00/3 01/3 01/6 02/3 02/6
Revenues Segment Profit (Loss) Segment Assets(1Q)(1Q)
(JPY billion)
38
3Real Estate Related Finance: Corporate real estate related finance and consumer housing loans
14.06.9
31.624.3
17.317.7
6.15.70.31.9
-3.4
-11.0
906.21,012.9
573.8 627.4597.3 606.8
99/3 00/3 01/3 01/6 02/3 02/6
Revenues Segment Profit (Loss) Segment Assets
(1Q)(1Q)(JPY billion)
39
4Real Estate: Residential subdivision developments, and rental and management of office buildings, hotels, training centers and golf courses
33.2
85.5
48.444.939.1
19.0
2.75.84.6
-4.6-8.2-2.2
326.5316.6310.3276.5273.5
293.2
99/3 00/3 01/3 01/6 02/3 02/6
Revenues Segment Profit (Loss) Segment Assets
(1Q)(1Q)(JPY billion)
40
5Life Insurance: Direct/agency life insurance sales and related activities
195.5 204.7
157.6 154.3
41.2 32.9
3.46.05.53.8 5.8 1.3
334.8425.3
543.9 557.4 543.7 497.6
99/3 00/3 01/3 01/6 02/3 02/6
Revenues Segment Profit (Loss) Segment Assets(1Q)(1Q)
(JPY billion)
41
6 Other: Includes securities transactions, venture capital operations, consumer card loan operations and new businesses
12.8
22.730.9
36.2
49.1
11.02.6
-4.3 -1.0
1.0 0.84.9
389.6
248.9 242.3284.8 308.2
352.4
99/3 00/3 01/3 01/6 02/3 02/6
Revenues Segment Profit (Loss) Segment Assets
(1Q)(1Q)(JPY billion)
42
7 The Americas
14.7
68.8 74.5 79.4 75.2
17.720.6 18.88.9
-1.1 0.8 1.2
634.1 691.4
804.1 808.2 794.3695.4
99/3 00/3 01/3 01/6 02/3 02/6
Revenues Segment Profit (Loss) Segment Assets
Foreign Operations
(1Q)(1Q)(JPY billion)
43
8 Asia and Oceania
13.7
51.2 49.7 48.756.7
17.8
1.7
-11.7
3.4 1.2 0.8 5.4
467.5440.9
369.5402.7 415.8 435.1
99/3 00/3 01/3 01/6 02/3 02/6
Revenues Segment Profit (Loss) Segment Assets
(1Q)(1Q)(JPY billion)
44
9 Europe
3.1
23.818.3
15.2 14.7
4.0
-0.50.3 0.3 0.7 1.2 0.6
98.2
178.6159.6 158.6 149.1
113.8
99/3 00/3 01/3 01/6 02/3 02/6
Revenues Segment Profit (Loss) Segment Assets
(1Q)(1Q)(JPY billion)
(3) Description of Quarterly Results New Business VolumesJPY Million
Q1 Q1 YOY
2001.4-6 2002.4-6 Change (%)
Direct Financing Leases: New receivables added 186,123 237,779 28%
Japan 147,350 172,957 17%
Overseas 38,773 64,822 67%
Direct Financing Leases: New equipment acquisitions 159,348 210,819 32%
Japan 126,350 151,062 20%
Overseas 32,998 59,757 81%
Installment Loans: New loans added 269,524 341,138 27%
Japan 201,626 273,867 36%
Overseas 67,898 67,271 -1%
Operating Leases: New equipment acquisitions 47,872 20,870 -56%
Japan 41,310 14,128 -66%
Overseas 6,562 6,742 3%
Investment in Securities: New securities added 88,666 48,907 -45%
Japan 77,125 38,346 -50%
Overseas 11,541 10,561 -8%
Other Operating Assets: New assets added 22,226 20,768 -7%
Japan 16,428 15,475 -6%
Overseas 5,798 5,293 -9%
Memo
Notes
Increased in Japan due to automobile leases and overseas as a result of M&A activities in Asia.
As above.
Consumer card loans and housing loans as well as corporate installment loans were strong in Japan.
In the same period of the previous fiscal year, there were acquisitions in Japan that included the purchase of Nihon Jisho, however, no such acquisitions were made in the first quarter of this fiscal year, resulting in a decline.
In Japan, a sharp decrease at ORIX Life Insurance due to a change in portfolio management away from investment securities to include more loans.
Remained roughly the same as the previous fiscal year because there were no large changes in purchases of land for condominium developments or other assets included in "Other Operating Assets."
45
Operating Assets
JPY MillionChange on
2002.3 (%)
Investment in Direct Financing Leases 1,658,669 1,646,932 -1%
Japan 1,255,537 1,283,552 2%
Overseas 403,132 363,380 -10%
Installment Loans 2,273,280 2,327,354 2%
Japan 1,840,289 1,898,108 3%
Overseas 432,991 429,246 -1%
Investment in Operating Leases 474,491 451,012 -5%
Japan 338,719 327,391 -3%
Overseas 135,772 123,621 -9%
Investment in Securities 861,336 759,406 -12%
Japan 651,702 565,409 -13%
Overseas 209,634 193,997 -7%
Other Operating Assets 260,373 143,064 -45%
Japan 248,216 132,217 -47%
Overseas 12,157 10,847 -11%
Operating Assets 5,528,149 5,327,768 -4%
Memo
In Japan, the balance dropped as a result of a changes in the portfolio of ORIX Life Insurance (from securities to loans). The decline overseas stemmed from the appreciation of the yen.
In Japan, the listing and sale of shares in a REIT in June 2002 resulted in a decline of about 100 billion yen of assets, while the decline overseas was a result of the appreciation of yen.
Notes
A decline in leasing assets at a U.S. subsidiary and the appreciation of the yen resulted in the decline.
In Japan, consumer card loans and installment loans to corporate customers increased. Overseas, loans increased in local currency terms, but declined slightly due to the appreciation of the yen, resulting in little change in yen terms.
In Japan, the purchase of new measuring equipment was held down, resulting in the decline, while the appreciation of the yen resulted in the decline of overseas assets.
2002.3 2002.6
46
RevenuesJPY Million
Q1 Q1 YOY
2001.4-6 2002.4-6 Change (%)
Direct financing leases 29,611 30,742 4%
Japan 19,145 21,987 15%
Overseas 10,466 8,755 -16%
Operating leases 28,354 30,534 8%
Japan 20,419 22,012 8%
Overseas 7,935 8,522 7%
Interest on loans and investment securities 28,898 30,757 6%
Interest on loans 22,861 26,203 15%
Japan 15,218 19,795 30%
Overseas 7,643 6,408 -16%
Interest on investment securities 6,037 4,554 -25%
Japan 1,105 319 -71%
Overseas 4,932 4,235 -14%Brokerage commissions and gains on investment securities
4,045 5,127 27%
Brokerage commissions 903 774 -14%
Gains on investment securities 3,142 4,353 39%Life insurance premiums and related investment income
40,287 32,946 -18%
Life insurance premiums 35,345 28,745 -19%
Related investment income 4,942 4,201 -15%
Interest income on deposits 473 177 -63%
Other operating revenues 47,699 30,674 -36%
Japan 45,671 28,681 -37%
Overseas 2,028 1,993 -2%
Total Revenues 179,367 160,957 -10%
Notes
Automobile leases performed strongly in Japan, aided in part by acquisitions made in the previous fiscal year. A lower balance of leasing assets in the U.S. leasing operations resulted in the decline in revenues from overseas.
While rentals of precision measuring equipment declined, the sale of some real estate assets as well as increases in automobile rentals aided by acquisitions made in the previous fiscal year resulted in increased revenues in Japan. Overseas, automobile leasing operations in Australia and Thailand performed strongly.
Memo
Interest on loans: Increased due to larger consumer card loan and housing loan balances in Japan, with decreases overseas due to lower interest rates.
Lower brokerage fees were recorded at ORIX Securities due to the sluggish stock market in Japan. Some increases in gains on investment securities were seen in venture capital and gains from investment funds.
A shift in product mix in the life insurance business from savings-type products to guarantee-type products resulted in lower premiums. Lower gains on the sale of securities resulted in a drop in related investment income.
The condominium business in Japan remained strong, but revenues were lower than the previous fiscal year when revenues were concentrated in the first quarter as a result of government tax incentives on new housing.
47
ExpensesJPY Million
Q1 Q1 YOY
2001.4-6 2002.4-6 Change (%)
Interest expense 26,128 18,974 -27%
Depreciation—operating leases 18,692 19,429 4%
Life insurance costs 36,123 29,649 -18%
Other operating expenses 34,006 18,364 -46%
Selling, general and administrative expenses
29,591 34,163 15%
Provision for doubtful receivables and possible loan losses
9,634 12,803 33%
Write-downs of long-lived assets - - -
Write-downs of securities 2,132 2,166 2%
Foreign currency transaction loss (gain), net
1,142 710 -38%
Total Operating Assets 157,448 136,258 -13%
Notes
Dropped due to lower market interest rates and efficient fund procurement from the capital markets.
Remained essentially unchanged as the balance of operating leases also remained unchanged.
Increase due to higher average operating assets, including increases as a result of acquisitions.
Dropped in line with life insurance premiums as a result of a shift in product mix in the life insurance business from savings-type products to guarantee-type products.
Decreased in line with drop in other operating revenues.
Increased personnel expenses as a result of an increase in the number of consolidated companies.
Memo
0.9 billion yen for high yield bonds in the U.S., 0.4 billion yen for WorldCom, with the remainder coming from equity and other securities in Japan.
48
Segment ProfitJPY Million
Q1 Q1 YOY
2001.4-6 2002.4-6 Change (%)Domestic Segments Corporate Finance 11,403 10,411 -9%
Equipment Operating Leases 2,655 1,271 -52%
Real Estate-Related Finance 323 6,106 1790%
Real Estate 4,587 2,735 -40%
Life Insurance 3,397 1,282 -62%
Other 800 2,554 219%
Sub-Total 23,165 24,359 5%
Overseas Segments The Americas (1,100) 1,229 -
Asia and Oceania 798 1,673 110%
Europe 1,153 (545) -
Sub-Total 851 2,357 177%
Segment Income before Income Taxes 24,016 26,716 11%
Reconciliation of Segment Totals to Consolidated Amounts
(2,967) (394) -
Consolidated Amounts 21,049 26,322 25%
Notes
The commercial mortgage-backed securities and related businesses continued to perform strongly. Improvements in the leasing business and an equity-method affiliate aided the recovery.
Lending and automobile leasing operations performed well, while currency gains were made this quarter compared with losses in the Indonesian rupiah in the same period last fiscal year.
Decline due to losses associated with investment securities.
Memo
Continued steady performance in direct financing leases, in particular automobile leases, and corporate lending, but lower fee income and an increase in provisions resulted in a slight decline.
Decline due to lower utilization rates for rentals of precision measuring and other equipment.
Increased due to gains from the listing of a REIT, along with strong performance of non-recourse loans and housing loans.
The condominium business continued to perform strongly this quarter, but gains were concentrated in the first quarter of the previous fiscal year.
Gains on the sale of securities were concentrated in the first quarter of last fiscal year.
Contributions from consumer card loan and venture capital operations resulted in the increase.
49
Segment Revenues
JPY MillionQ1 Q1 YOY
2001.4-6 2002.4-6 Change (%)Domestic Segments Corporate Finance 27,420 31,465 15%
Equipment Operating Leases 16,854 16,233 -4%
Real Estate-Related Finance 6,898 13,995 103%
Real Estate 33,160 18,983 -43%
Life Insurance 41,181 32,946 -20%
Other 10,975 12,773 16%
Sub-Total 136,488 126,395 -7%
Overseas Segments The Americas 17,747 14,739 -17%
Asia and Oceania 17,838 13,741 -23%
Europe 4,041 3,091 -24%
Sub-Total 39,626 31,571 -20%
Segment Revenues 176,114 157,966 -10%
Reconciliation of Segment Totals to Consolidated Amounts
3,253 2,991 -8%
Consolidated Amounts 179,367 160,957 -10%
Memo
Increased due to contributions from M&A made last fiscal year.
Car rentals increased, aided by acquisitions made in the previous fiscal year, but lower utilization rates of precision measuring equipment resulted in the decline.
Strong increase as a result of contributions from non-recourse loans, housing loans and the listing of a REIT.
The condominium business continued to perform well, but gains were concentrated in the first quarter of the previous fiscal year.
Declined due to a shift from savings-type products to guarantee-type products.
Increased due to contributions from the consumer card loan operations.
Notes
Declined due to lower direct financing lease revenues.
The previous fiscal year included the sale of a ship.
Drop in interest income as a result of decline in assets.
50
Segment Assets
JPY MillionChange on
2002.3 2002.6 2002.3 (%)Domestic Segments Corporate Finance 1,960,380 2,008,152 2%
Equipment Operating Leases 147,444 141,905 -4%
Real Estate-Related Finance 1,012,896 906,193 -11%
Real Estate 326,473 293,189 -10%
Life Insurance 543,738 497,593 -8%
Other 352,433 389,605 11%
Sub-Total 4,343,364 4,236,637 -2%
Overseas Segments The Americas 794,330 695,351 -12%
Asia and Oceania 435,093 467,456 7%
Europe 113,844 98,200 -14%
Sub-Total 1,343,267 1,261,007 -6%
Segment Assets 5,686,631 5,497,644 -3%
Reconciliation of Segment Totals to Consolidated Amounts
(158,482) (169,876) 7%
Consolidated Amounts 5,528,149 5,327,768 -4%
Memo
Increases in installment loans and automobile leases.
Slight decrease in precision measuring equipment.
Drop in REIT-related assets due to the listing of a REIT.
Decreased due to drop in land used for condominium development and the sale of an office building.
Decline due to drop in life insurance premiums.
Increase in card loan balance of about 30 billion yen.
Notes
Declined due to appreciation of the yen.
While the appreciation of the yen led to some declines, acquisitions resulted in increases in direct financing leases and installment loans.
Declined due to drop in investment securities and the appreciation of the yen.
51
(4) Additional Data
Available-for-sale securities 2001.3 2002.3 2002.6ORIX Life Insurance 532,670 438,523 377,191ORIX 86,045 65,093 52,638Venture Capital 3,624 5,374 3,361CMBS 84,452 109,930 105,168High Yield bonds 59,073 45,649 44,302Others 75,545 54,350 47,568Total 841,409 718,919 630,228Note: High Yield bonds include trading securities.
Gross unrealized gains (losses) 2001.3 2002.3 2002.6ORIX Life Insurance 19,338 1,288 (534)ORIX 29,466 20,702 19,873 Venture Capital 1,903 3,735 1,829 CMBS 5,373 948 2,284 High Yield bonds (3,545) (3,318) (3,953)Others 4,484 2,268 2,019 Total 57,019 25,623 21,518
Gains on investment securities 2001.3 2002.3 2002.6ORIX 1,961 2,842 376Venture Capital 542 3,626 1,125CMBS 2,424 1,356 0High Yield bonds 194 329 526Others 3,682 7,274 2,326Total 8,803 15,427 4,353
Investments by ORIX Life Insurance 2001.3 2002.3 2002.6Fixed-income securities 519,995 433,463 372,460Marketable equity securities 7,167 73 62Other securities 9,975 23,596 29,359Total investment in securities 537,137 457,132 401,881Other investments 6,749 86,606 95,712Total 543,886 543,738 497,593
Breakdown of life insurance related investment income2001.3 2002.3 2002.6Life insurance related investment income 16,786 16,854 4,201 Gains on investment securities, net 3,505 7,318 1,467 Interest on investment securities and others 13,281 9,536 2,734
Selling, general and administrative expenses 2001.3 2002.3 2002.6Personnel expenses 41,464 57,115 16,415Selling Expenses 17,934 21,197 5,329Administrative expenses 39,299 45,310 11,718Depreciation, amortization and other expenses 2,459 2,694 701Total 101,156 126,316 34,163
Residential apartment business 2001.3 2002.3 2002.6Proceeds on sales of residential apartments 36,928 58,078 11,666 Costs for sales of residential apartments 32,078 49,517 9,985 Net 4,850 8,561 1,681
Direct financing leases (DFL) 90+ days overdue 2001.3 2002.3 2002.6 Japan 29,572 33,175 33,047 Overseas 23,943 34,749 29,343Total 53,515 67,924 62,390General loans 90+ days overdue 84,827 74,199 68,186Impaired loans (FASB 114) 120,090 113,000 109,463
Provisions and charge-offs for 2002/6DFL General FASB114 Total
Beginning balance 50,837 56,188 45,862 152,887Provisions charged to income 4,141 5,908 2,754 12,803Charge-offs (5,157) (6,167) (1,370) (12,694)Other (1,575) (513) (644) (2,732)Ending balance 48,246 55,416 46,602 150,264
52
Loans