ORIX CorporationORIX CorporationORIX CorporationORIX Corporation(TSE: 8591; NYSE: IX)(TSE: 8591; NYSE: IX)
Consolidated Financial Results
First Quarter Consolidated Financial ResultsFor the Three Month Period Ended April 1 – June 30, 2012
Copyright © 2012 ORIX Corporation All rights reserved.
DisclaimerO C (“O “C ) f f 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,” “estimates,” “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 recentcould 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 theseReconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures are included in these materials on pages 35 and 36.
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 rulesits 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
Copyright © 2012 ORIX Corporation All rights reserved. 1
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 P. 3
II. Segment Performance
III T i
P. 8
P 15III. Topics
IV. Real Estate Segment
P.15
P.17IV. Real Estate Segment
V. Provisions and Impairments
P.17
P.19
VI. Funding
VII S
P.20
VII. Summary
Appendix
P.24
P 25
Copyright © 2012 ORIX Corporation All rights reserved. 2
Appendix P.25
I. Overview
Achieved 34.8bn in Net Income, a 1.5 fold year on year increase and 35% of the full year target
(JPY Bn) Net Income* and ROE
Copyright © 2012 ORIX Corporation All rights reserved. 3
*Net Income refers to Net Income Attributable to ORIX Corporation
I. Overview Retail, Investment and Operation, and Corporate Financial
Services segments significantly increased profits year on year
(JPY Bn)Trend in Segment Profits
Copyright © 2012 ORIX Corporation All rights reserved. 4
I. Overview Retail, Maintenance Leasing, and Corporate Financial Services
segment assets increased
Trend in Segment Assets(JPY Bn)
Copyright © 2012 ORIX Corporation All rights reserved. 5
I. Overview Upward trend in ROA for all segments
Segment Asset ROA (After Tax)
Copyright © 2012 ORIX Corporation All rights reserved. 6
I. Overview Stable base profit
Increasing trend in base profit yield
Quarterly Trend in Base Profit and Base Profit Yield
g p y
(JPY Bn)
Copyright © 2012 ORIX Corporation All rights reserved. 7
II. Segment Performance 1. Corporate Financial Services
1Q Results Topics1Q Results
New business volume grew 1.6 fold YoY Assets have bottomed out in the third
Topics
Executed large leasing contracts for incinerators, increased lease
i f iquarter of the previous fiscal year Increased ROA
execution for construction equipment
Focus on solar panel distribution
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II. Segment Performance 2. Maintenance Leasing
1Q Results Topics
Rentec: Started tablet PC and industrial robot rentals
Increase in base profit due to an increase in lease revenue and decrease in costs and SGA
1Q Results Topics
Auto: Opened a truck rental location in Ishinomaki City, Miyagi Prefecture
SGA Continued high level of new business since
second half of previous fiscal year and increase in assets since FY12 3 end
Copyright © 2012 ORIX Corporation All rights reserved. 9
increase in assets since FY12.3 end Further increase in ROA
II. Segment Performance 3. Real Estate
1Q Results Topics
Commenced construction of four large scale logistic centers
Base profit grew due to increased operating business revenue
1Q Results Topics
Strong revenues from Kyoto and Sumida aquariums
p g Increased profit despite YoY
increase in impairments Continued steady asset reduction
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II. Segment Performance 4. Investment and Operation
1Q Results Topics
PE Investment: Invested in KINREI
Energy and Environment: Entered Loan servicer recorded large
collection revenue
1Q Results Topics
Energy and Environment: Entered into the mega solar business Robust revenues from existing
investments Significant increase in ROA
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II. Segment Performance 5. Retail
1Q Results Topics
Enhanced cooperation between ORIX Bank and ORIX Credit on
d l b i
Recognized upfront costs for ORIX Bank card loan
1Q Results Topics
card loan business
Reached 1.5 million life insurance policies in force
Recorded gains and increased assets due to consolidation of ORIX Credit
Strong Life insurance premium and life i l t d i t t i
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insurance related investment income
II. Segment Performance 6. Overseas Business
1Q Results Topics
China: Joint leasing company with a leading auto dealer Pang Da G b i
YoY decrease of gains from municipal bond trading in the U.S.
1Q Results Topics
Group began operation
Aircraft Leasing: 27 aircraft joint investment with Varde Partners Inc.
Steady increase of lease assets in Asia
Maintained high level of ROA
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Maintained high level of ROA
II. Segment Performance 6. Overseas Business
S l
Asia/Australia and Other are increasing, excluding the exchange rate effect
Segment Total
By Region
(USD Mil)
Copyright © 2012 ORIX Corporation All rights reserved. 14
III. Topics 1. Solar Panel Related Business
Entry into the Mega Solar Business
(1) 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• 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’sInstall 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
d i t ll ti ith i i i d fiand installation with engineering companies, and arrange finance
• Surge in inquiries from sales locations nationwide
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III. Topics 2. Aircraft Leasing Business
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
Aircraft Leasing Value Chain Growth of Aircraft Leasing MarketAircraft Leasing Value Chain
IT Systems Investment
Banking/
Global Aircraft
Growth of Aircraft Leasing Market
Accounting & Tax
Marketing
Aircraft Ownership
Lease Ad i
Banking/ Advisory
Legal & Contractual
Services
Ranked by S&P for servicing, asset management earned top ranking of “Strong”
Aircraft Technical Service
Admin
Copyright © 2012 ORIX Corporation All rights reserved. 16
Source: Ascend
IV. Real Estate Segment Steadily continued asset reduction
Real Estate represents a smaller proportion of all segment assetsp p p g
Breakdown of Real Estate Segment Assets
(JPN Bn)
Proportion of Real Estate Segment within Total Segment Assets
(JPN Bn)
2010/3 2012/6
1,677.4
1 310 3 / /
21%27%
1,310.3
Copyright © 2012 ORIX Corporation All rights reserved. 17
IV. Real Estate Segment Base profit yield increased, stable contributions from rental
properties and operating facilities
Maintained low vacancy rate and stable NOI yield
Trend in Base Profit Trend in NOI Yield and Vacancy R t f R t l P ti(JPN Bn) Rate of Rental Properties
21%27%
Copyright © 2012 ORIX Corporation All rights reserved. 18
V. Provisions Provisioning rate remains low
Loans individually evaluated for impairment 93% covered by collateraly p y
Trend in Provisions and Provisioning Rate
(JPN Bn)
Coverage Ratio of Loans Individually Evaluated for Impairment
( )(JPN Bn) (As of June 30, 2012)
*Provisions ÷ (Average Investment in Direct Financing Lease + Average Investment in Installment Loans)
Copyright © 2012 ORIX Corporation All rights reserved. 19
Both provisions and the provisioning rate exclude the effects of adopting the new accounting standards regarding the consolidation of VIEs
VI. Funding Funding Policy
Balanced funding structure Balanced funding structure(Balanced borrowing, deposits and capital market funding)
Lengthened terms and smoothed maturity ladder
Diversified funding sources (Expanded sources and regions)(Expanded sources and regions)
Liquidity Control Liquidity Control
Copyright © 2012 ORIX Corporation All rights reserved. 20
VI. Funding Funding Structure
Diversified funding sources, financial institutions, bonds and deposits
Lengthened maturities for each funding source, achieved stabilityg g , y
Trend in Provisions and Provisioning Ratio
Trend in Long-Term Debt Share and Funding Cost
CP 2.00%90%
(As of June 30, 2012 / Excluding ABS, CMBS)
21%27%
DepositBorrowings from Financial
1.75%85%
Bonds / MTN
from FinancialInstitutions
1.25%
1.50%
75%
80%
/
1.00%70%08/3 09/3 10/3 11/3 12/3 12/6
Share of Long-Term Debt(left)
Copyright © 2012 ORIX Corporation All rights reserved. 21
g ( )Funding Cost(right)
VI. Funding Bond Issuances and Maturity
(JPN Bn) 21%27%Straight Bond Maturity Ladder (as of June 30, 2012)
( )
Copyright © 2012 ORIX Corporation All rights reserved. 22
VI. Funding Liquidity On-hand
Continue to maintain ample liquidity on-hand
Liquidity vs. Short-term Liabilities(JPN Bn)
21%27%
Copyright © 2012 ORIX Corporation All rights reserved. 23
VII.Summary
A hi d 34 8b i t i 35% f th f ll t tAchieved 34.8bn in net income, 35% of the full year target
Segment asset ROA increased to 2.3%, stable base profitg , p
Balanced funding structure, maintained ample liquidity on-hand p q y
Copyright © 2012 ORIX Corporation All rights reserved. 24
Appendixpp
Copyright © 2012 ORIX Corporation All rights reserved. 25
Appendix(1) Trend in Performance
(JPY Bn)
*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 35 and 36.
Copyright © 2012 ORIX Corporation All rights reserved. 26
Appendix(2) Profit by Segment
(JPY Bn)
* I f di ti d ti (b f li bl t ff t) t i tt ib t bl t* Income from discontinued operations (before applicable tax effect), net income attributable to noncontrolling interests and net income attributable to redeemable noncontrolling interests are included
Copyright © 2012 ORIX Corporation All rights reserved. 27
Appendix(3) Assets by Segment & Region
(JPY Bn)
Overseas Business Segment Assets by Region
Copyright © 2012 ORIX Corporation All rights reserved. 28
Appendix(4) Funding
(JPY Bn)
Copyright © 2012 ORIX Corporation All rights reserved. 29
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 P f i di t i N GAAP fi i l F lit ti ili ti f th t di tl bl*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 35 and 36.
Copyright © 2012 ORIX Corporation All rights reserved. 30
Appendix(6) Real Estate Portfolio(JPY Bn) Trend in Real Estate Segment Assets by Type
*67.1bn of NRL/specified bonds held by domestic Group companies not included (12/6)
*
NOI Yield and Vacancy Rate Trends
Gain on Sales of Real Estate Under Operating Lease Trend
Copyright © 2012 ORIX Corporation All rights reserved. 31
Appendix(7) Real Estate Portfolio(JPY Bn) Rental Property Assets by Type (12.6)
Rental Property Assets by Region (12.6)
Copyright © 2012 ORIX Corporation All rights reserved. 32
Appendix(8) Asset Quality(JPY Bn) Asset Quality
*Of the 227.2bn in loans individually evaluated for impairment, 143.5bn is fully covered by collaterals
*
fully covered by collaterals such as real estate. Including 67.3bn in provisions, 92.8% is fully covered
Trend in Provisions and Provisioning Rate
* Provisions (Average Investment in Direct Financing Leases + Average Investment in Installment Loans)
Copyright © 2012 ORIX Corporation All rights reserved. 33
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.
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 onpayables 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, wecomparisons 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 ppaccordance 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 doubtfulthe 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 statementsWe 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 35 and 36.
Copyright © 2012 ORIX Corporation All rights reserved. 34
Appendix(10) Reconciliation Table of Non-GAAP Financial Measurement(JPY Bn)
Copyright © 2012 ORIX Corporation All rights reserved. 35
Appendix(11) Reconciliation Table of Non-GAAP Financial Measurement(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
Copyright © 2012 ORIX Corporation All rights reserved. 36
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.
Reference Datae e e ce ata
Copyright © 2012 ORIX Corporation All rights reserved. 37
Stock Market Performance of Major Stock Markets since June 2008
(June 30, 2008 =100)
200
150
200
150
100
50Nikkei (Japan) Dow Jones (US) Hang Seng (HK)
008.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06
CSI 300 (China) SENSEX (India)
Copyright © 2012 ORIX Corporation All rights reserved. 38
Source: Bloomberg
Interest Rate TrendInterest Rate Trend of Major Currencies since June 2008
6 0(%)
6.01 year Inter-Bank Deposit Rate in Japan
1 year Inter-Bank Deposit Rate in U.S.
4.0 1 year RMB Deposit Rate by Bank of China
2.0
0.008.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06
Copyright © 2012 ORIX Corporation All rights reserved. 39
Source: Bloomberg
Macro Economic Indicators
Real GDP Growth National CPI (Ex Fresh Food) (QoQ Change) (YoY Change)
(% Change)(% Change)
15.0 8.0
5.0
10.0
2 0
4.0
6.0
-5.0
0.0
-2.0
0.0
2.0
Source: Bloomberg Source: Bloomberg
-10.008.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06
Japan USA CHINA
-4.008.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06
Japan USA CHINA
Source: Bloomberg Source: Bloomberg
Copyright © 2012 ORIX Corporation All rights reserved. 40
Japanese Corporate Indices
Tankan Corporate Corporate Bankruptcies(Q ) Diffusion Index
(JPY Tril)
(Quarter)
(# cases)
4,5008.0 20
3 500
4,000
4 0
6.0
0
10
3,000
3,500
2.0
4.0
-10
0
2,5000.008.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06
Liabilities (lhs) Bankruptcies (rhs)
-2008.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06
Large Middle Small
Source: Ministry of Finance Source: Bank of Japan
Copyright © 2012 ORIX Corporation All rights reserved. 41
Japanese Real Estate Indicators
Japan TSE REIT Index Office Rental Ratesp(Yen per 3.3㎡)
1,50014,000
16,000
1,0008,000
10,000
12,000
14,000
500
2,000
4,000
6,000
S T k St k E h
008.06 08.12 09.06 09.12 10.06 10.12 11.06 11.12 12.06
002.06 04.06 06.06 08.06 10.06 12.06
Tokyo Ag. Rent Osaka Avg. Rent
Source: Tokyo Stock Exchange Source: CBRE
Copyright © 2012 ORIX Corporation All rights reserved. 42
Domestic Lease Business Indicators
Private Equipment Investment New Car SalesPrivate Equipment Investment New Car Sales(,000)
12.0%
800 000
900,000 14.0%7,000
6.0%
8.0%
10.0%
400 000
500,000
600,000
700,000
800,000
6 0%
8.0%
10.0%
12.0%
3 000
4,000
5,000
6,000
0.0%
2.0%
4.0%
0
100,000
200,000
300,000
400,000
0 0%
2.0%
4.0%
6.0%
0
1,000
2,000
3,000
Source: Japan Leasing Association Source: Japan Automotive Leasing Association
2000 2002 2004 2006 2008 2010
Private Equipment Inv. Share of Lease
0.0%02000 2002 2004 2006 2008 2010
New Car Sales Share of Lease
Copyright © 2012 ORIX Corporation All rights reserved. 43
Other Domestic Indicators
Consumer Finance LoansRetail Life Insurance
140,000250,000
Consumer Finance Loans
(100 mil yen)(100 mil yen)
80,000
100,000
120,000
150,000
200,000
20 000
40,000
60,000
50,000
100,000
0
20,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Consumer Finance Loan(100 mil Yen)
02000 2002 2004 2006 2008 2010
Retail Life Insurance PremiumsSource: Japan Statistics Bureau Source: Japan Financial Services Agency
Copyright © 2012 ORIX Corporation All rights reserved. 44
Additional InformationFor 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/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 announcementsIf you would like to be included on our e-mail list for major news announcements, please send your request to the address below.
ORIX CorporationORIX Corporation Corporate Planning Department
Mita NN Bldg., 4-1-23 Shiba, Minato-ku, Tokyo 108-0014, Japan
Tel: +81-3-5419-5042 Fax: +81-3-5419-5901
[email protected] yamada@orix co jp
Copyright © 2012 ORIX Corporation All rights reserved. 45
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