FORM 6-K
Table of Contents

 

 

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 July 2018

 

 

ORIX Corporation

(Translation of Registrant’s Name into English)

 

 

World Trade Center Bldg., 2-4-1 Hamamatsu-cho, Minato-Ku, Tokyo, JAPAN

(Address of Principal Executive Offices)

 

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F  ☒        Form 40-F  ☐

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes  ☐        No  ☒

 

 

 


Table of Contents

Table of Documents Filed

 

          Page  

1.

   ORIX’s First Quarter Consolidated Financial Results (April 1, 2018 – June 30, 2018) filed with the Tokyo Stock Exchange on Monday July  30, 2018.   


Table of Contents

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: July 30, 2018

 

By

 

/s/ Hitomaro Yano

   

Hitomaro Yano

   

Executive Officer

   

ORIX Corporation


Table of Contents

 

Consolidated Financial Results

April 1, 2018 – June 30, 2018

 

 

July 30, 2018

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

These documents may contain forward-looking statements about expected future events and financial results that involve risks and uncertainties. Such statements are based on our current expectations and are subject to uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, those described under “Risk Factors” in the Company’s annual report on Form 20-F filed with the United States Securities and Exchange Commission.

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

For further information please contact:

Investor Relations

ORIX Corporation

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

JAPAN

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

E-mail: orix_corpcomm@orix.jp


Table of Contents

Consolidated Financial Results from April 1, 2018 to June 30, 2018

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

 

Corporate Name:

  

ORIX Corporation

Listed Exchanges:

  

Tokyo Stock Exchange (Securities No. 8591)

  

New York Stock Exchange (Trading Symbol : IX)

Head Office:

  

Tokyo JAPAN

  

Tel: +81-3-3435-3121

  

(URL https://www.orix.co.jp/grp/en/ir/)

1. Performance Highlights as of and for the Three Months Ended June 30, 2018

(1) Performance Highlights - Operating Results (Unaudited)

(millions of yen)*1

 

     Total
Revenues
     Year-on-Year
Change
    Operating
Income
     Year-on-Year
Change
    Income before
Income Taxes
     Year-on-Year
Change
    Net Income
Attributable to
ORIX  Corporation
Shareholders
     Year-on-Year
Change
 

June 30, 2018

     603,917        (23.8 %)      91,995        0.0     110,954        (18.2 %)      79,947        (10.9 %) 

June 30, 2017

     792,297        34.8     91,980        5.2     135,611        14.5     89,712        16.9

“Comprehensive Income Attributable to ORIX Corporation Shareholders” was ¥75,118 million for the three months ended June 30, 2018 (year-on-year change was a 20.3% decrease) and ¥94,298 million for the three months ended June 30, 2017 (year-on-year change was a 98.3% increase).

 

     Basic
Earnings Per  Share
     Diluted
Earnings Per  Share
 

June 30, 2018

     62.46        62.41  

June 30, 2017

     69.81        69.76  

 

*Note 1:

Unless otherwise stated, all amounts shown herein are in millions of Japanese yen, except for Per Share and dividend amounts which are in single yen.

(2) Performance Highlights - Financial Position (Unaudited)

 

     Total
Assets
     Total
Equity
     Shareholders’
Equity
     Shareholders’
Equity Ratio
 

June 30, 2018

     11,371,902        2,834,950        2,712,205        23.9

March 31, 2018

     11,425,982        2,798,874        2,682,424        23.5

 

*Note 2:

“Shareholders’ Equity” refers to “Total ORIX Corporation Shareholders’ Equity.”

“Shareholders’ Equity Ratio” is the ratio of “Total ORIX Corporation Shareholders’ Equity” to “Total Assets.”

2. Dividends (Unaudited)

 

     First
Quarter-end
     Second
Quarter-end
     Third
Quarter-end
     Year-end      Total  

March 31, 2018

     —          27.00        —          39.00        66.00  

March 31, 2019

     —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

March 31, 2019 (Est.)

     —          30.00        —          —          —    

 

*Note 3:

Estimated dividend amount for the fiscal year ending March 31, 2019 has not yet been determined.

3. Targets for the Year Ending March 31, 2019 (Unaudited)

In order to facilitate a better understanding of our medium- and long- term growth projections by our shareholders and potential investors, we decided to include our medium-term strategic directions in this document. For details, refer to “1. Summary of Consolidated Financial Results (3) Medium-Term Strategic Directions FY2019-2021” on page 9.

4. Other Information

 

(1) Changes in Significant Consolidated Subsidiaries      Yes (    )    No ( x )  

Addition - None (                                )

    

Exclusion - None (                                    )

 
(2) Adoption of Simplified Accounting Method      Yes (    )    No ( x )  
(3) Changes in Accounting Principles, Procedures and Disclosures

 

1. Changes due to adoptions of new accounting standards

     Yes ( x )    No (    )  

2. Other than those above

     Yes (    )    No ( x )  

(4) Number of Issued Shares (Ordinary Shares)

1. The number of issued shares, including treasury stock, was 1,324,629,128 as of June 30, 2018, and 1,324,495,728 as of March 31, 2018.

2. The number of treasury shares was 42,843,503 as of June 30, 2018, and 42,843,413 as of March 31, 2018.

3. The average number of outstanding shares was 1,280,053,507 for the three months ended June 30, 2018, and 1,285,000,634 for the three months ended June 30, 2017.

The Company’s shares held through the Board Incentive Plan Trust (1,651,443 shares as of June 30, 2018 and 1,651,443 shares as of March 31, 2018) are not included in the number of treasury stock shares as of the end of the periods, but are included in the average number of shares outstanding as treasury stock shares that are deducted from the basis of the calculation of per share data.

 

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Table of Contents

1. Summary of Consolidated Financial Results

(1) Financial Highlights

Financial Results for the Three Months Ended June 30, 2018

 

        Three  months
ended
June 30, 2017
     Three  months
ended
June 30, 2018
     Change  
         Amount     Percent  

Total Revenues

  (millions of yen)     792,297        603,917        (188,380     (24 )% 

Total Expenses

  (millions of yen)     700,317        511,922        (188,395     (27 )% 

Income before Income Taxes

  (millions of yen)     135,611        110,954        (24,657     (18 )% 

Net Income Attributable to ORIX Corporation Shareholders

  (millions of yen)     89,712        79,947        (9,765     (11 )% 

Earnings Per Share (Basic)

  (yen)     69.81        62.46        (7.35     (11 )% 

(Diluted)

  (yen)     69.76        62.41        (7.35     (11 )% 

ROE (Annualized) *1

  (%)     14.3        11.9        (2.4     —    

ROA (Annualized) *2

  (%)     3.18        2.81        (0.37     —    

 

*Note 1:

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

*Note 2:

ROA is calculated based on Net Income Attributable to ORIX Corporation Shareholders.

Overview of Business Performance (April 1, 2018 to June 30, 2018)

Total revenues for the three months ended June 30, 2018 (hereinafter, “the first consolidated period”) decreased 24% to ¥603,917 million compared to ¥792,297 million during the same period of the previous fiscal year. Despite an increase in life insurance premiums in line with an increase in in-force policies, life insurance premiums and related investment income in the life insurance business decreased due to a decrease in investment income from assets under variable annuity and variable life insurance contracts, as compared to the same period of the previous fiscal year during which period market conditions had improved significantly. In addition, sales of goods and real estate decreased due primarily to decreasing revenues generated by subsidiaries in the principal investment business. On the other hand, services income increased due primarily to large gains from sales of property under facility operations, and increasing revenues generated by subsidiaries in the principal investment business.

Total expenses decreased 27% to ¥511,922 million compared to ¥700,317 million during the same period of the previous fiscal year. Costs of goods and real estate sold and life insurance costs decreased in line with the aforementioned decreased revenues. In addition, services expense increased in line with the aforementioned increased revenues.

Equity in net income of affiliates decreased mainly due to the recognition of significant gains on sales of investments in real estate joint ventures compared to the same period of the previous fiscal year.

As a result of the foregoing, income before income taxes for the first consolidated period decreased 18% to ¥110,954 million compared to ¥135,611 million during the same period of the previous fiscal year, and net income attributable to ORIX Corporation shareholders decreased 11% to ¥79,947 million compared to ¥89,712 million during the same period of the previous fiscal year.

 

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Segment Information

Total segment profits for the first consolidated period decreased 16% to ¥113,431 million compared to ¥134,422 million during the same period of the previous fiscal year.

Segment information for the first consolidated period is as follows:

Corporate Financial Services Segment: Loan, leasing and fee business

 

     Three months ended
June 30, 2017
(millions of yen)
     Three months  ended
June 30, 2018
(millions of yen)
     Change  
     Amount
(millions of  yen)
    Percent
(%)
 

Segment Revenues

          25,456             25,004        (452     (2

Segment Profits

     10,225        7,820            (2,405     (24
     As of March 31, 2018
(millions of yen)
     As of June 30, 2018
(millions of yen)
     Change  
     Amount
(millions of yen)
    Percent
(%)
 

Segment Assets

        991,818           976,117            (15,701       (2

Segment revenues decreased 2% to ¥25,004 million compared to ¥25,456 million during the same period of the previous fiscal year due to a decrease in finance revenues from decreases in average investment balance in direct financing leases and installment loans despite an increase in services income resulting from our stable fee businesses provided to domestic small- and medium-sized enterprise customers.

Segment expenses decreased due to a decrease in selling, general and administrative expenses.

As a result of the foregoing and due to the recognition of gains on sales of subsidiaries and affiliates during the same period of the previous fiscal year, segment profits decreased 24% to ¥7,820 million compared to ¥10,225 million during the same period of the previous fiscal year.

Segment assets decreased 2% to ¥976,117 million compared to the end of the previous fiscal year due to decreases in investment in direct financing leases and installment loans.

 

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

 

     Three months ended
June 30, 2017
(millions of yen)
     Three months  ended
June 30, 2018
(millions of yen)
     Change  
         Amount
(millions of  yen)
    Percent
(%)
 

Segment Revenues

          68,346             69,858             1,512        2  

Segment Profits

     9,894        9,696        (198     (2
     As of March 31, 2018
(millions of yen)
     As of June 30, 2018
(millions of yen)
     Change  
         Amount
(millions of yen)
    Percent
(%)
 

Segment Assets

        847,190           855,286            8,096          1   

Segment revenues increased 2% to ¥69,858 million compared to ¥68,346 million during the same period of the previous fiscal year due to an increase in operating leases revenues.

Segment expenses increased in line with the aforementioned revenue increases.

As a result of the foregoing, segment profits decreased 2% to ¥9,696 million compared to ¥9,894 million during the same period of the previous fiscal year.

Segment assets increased 1% to ¥855,286 million compared to the end of the previous fiscal year due to an increase of new executions in investment in operating leases.

Real Estate Segment: Real estate development and rental, facility operation, REIT asset management, and real estate investment and advisory services

 

     Three months  ended
June 30, 2017
(millions of yen)
     Three months  ended
June 30, 2018
(millions of yen)
     Change  
         Amount
(millions of  yen)
    Percent
(%)
 

Segment Revenues

          46,520             54,524             8,004        17  

Segment Profits

     32,833        22,219        (10,614     (32
     As of March 31, 2018
(millions of yen)
     As of June 30, 2018
(millions of yen)
     Change  
         Amount
(millions of yen)
    Percent
(%)
 

Segment Assets

        620,238           598,140        (22,098     (4

 

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Segment revenues increased 17% to ¥54,524 million compared to ¥46,520 million during the same period of the previous fiscal year due to an increase in services income from facilities operations which resulted from sales of property under facility operations.

Segment expenses decreased compared to the same period of the previous fiscal year.

As a result of the foregoing and due to a decrease in equity in net income of affiliates which recognized significant gains on sales of investments in real estate joint ventures during the same period of the previous fiscal year, segment profits decreased 32% to ¥22,219 million compared to ¥32,833 million during the same period of the previous fiscal year.

Segment assets decreased 4% to ¥598,140 million compared to the end of the previous fiscal year due primarily to sales of property under facility operations and rental properties.

Investment and Operation Segment: Environment and energy, principal investment, loan servicing (asset recovery), and concession

 

     Three months  ended
June 30, 2017
(millions of yen)
     Three months ended
June 30, 2018
(millions of yen)
     Change  
     Amount
(millions of yen)
    Percent
(%)
 

Segment Revenues

        422,557           234,518        (188,039     (45

Segment Profits

     16,657        11,905        (4,752     (29
     As of March 31, 2018
(millions of yen)
     As of June 30, 2018
(millions of yen)
     Change  
     Amount
(millions of  yen)
    Percent
(%)
 

Segment Assets

        856,348           876,811           20,463           2   

Segment revenues decreased 45% to ¥234,518 million compared to ¥422,557 million during the same period of the previous fiscal year due to decreases in sales of goods in subsidiaries in the principal investment business which recognized significant demand during the same period of the previous fiscal year and in real estate sales resulting from the decrease in number of condominiums delivered.

Segment expenses decreased compared to the same period of the previous fiscal year in line with the aforementioned revenues decreases.

As a result of the foregoing, segment profits decreased 29% to ¥11,905 million compared to ¥16,657 million during the same period of the previous fiscal year.

Segment assets increased 2% to ¥876,811 million compared to the end of the previous fiscal year due primarily to increases in inventories and advances for property under facility operations in the environment and energy business.

 

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Retail Segment: Life insurance, banking and card loan

 

     Three months ended
June 30, 2017
(millions of yen)
     Three months ended
June 30, 2018
(millions of yen)
     Change  
   Amount
(millions of yen)
    Percent
(%)
 

Segment Revenues

        112,597           102,815        (9,782     (9

Segment Profits

     22,014        21,785        (229     (1
     As of March 31, 2018
(millions of yen)
     As of June 30, 2018
(millions of yen)
     Change  
   Amount
(millions of  yen)
    Percent
(%)
 

Segment Assets

     3,174,505        3,236,630           62,125           2   

Segment revenues decreased 9% to ¥102,815 million compared to ¥112,597 million during the same period of the previous fiscal year mainly due to a decrease in investment income from assets under variable annuity and variable life insurance contracts because of the significant market improvement that had occurred during the same period of the previous fiscal year, despite an increase in life insurance premiums in line with an increase in in-force policies.

Segment expenses decreased compared to the same period of the previous fiscal year in line with the aforementioned decreased revenues.

As a result of the foregoing, segment profits decreased 1% to ¥21,785 million compared to ¥22,014 million during the same period of the previous fiscal year.

Segment assets increased 2% to ¥3,236,630 million compared to the end of the previous fiscal year due primarily to an increase in investment in securities in the life insurance business and an increase in installment loans in the banking business, despite the surrender of variable annuity and variable life insurance contracts.

 

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Overseas Business Segment: Leasing, loan, bond investment, asset management and aircraft- and ship-related operations

 

     Three months ended
June 30, 2017
(millions of yen)
     Three months ended
June 30, 2018
(millions of yen)
     Change  
   Amount
(millions of yen)
    Percent
(%)
 

Segment Revenues

     117,032        118,479        1,447       1  

Segment Profits

     42,799        40,006        (2,793     (7
     As of March 31, 2018
(millions of yen)
     As of June 30, 2018
(millions of yen)
     Change  
   Amount
(millions of  yen)
    Percent
(%)
 

Segment Assets

     2,608,819        2,574,171        (34,648     (1

Segment revenues increased 1% to ¥118,479 million compared to ¥117,032 million during the same period of the previous fiscal year due to increases in operating leases revenues in our aircraft-related operations including gains on sales of aircraft and services income in the asset management business.

Segment expenses remained at the same level as the same period of the previous fiscal year.

As a result of the foregoing and due to a decrease in equity in net income of affiliates, segment profits decreased 7% to ¥40,006 million compared to ¥42,799 million in the same period of the previous fiscal year.

Segment assets decreased 1% to ¥2,574,171 million compared to the end of the previous fiscal year due primarily to decreases in investment in affiliates, and investment in securities in the Americas.

 

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(2) Consolidated Financial Condition

Summary of Assets, Liabilities, Shareholders’ Equity

 

           As of March 31,
2018
     As of June 30,
2018
     Change  
           Amount     Percent  

Total Assets

     (millions of yen)       11,425,982        11,371,902        (54,080     (0 )% 

(Segment Assets)

       9,098,918        9,117,155        18,237       0

Total Liabilities

     (millions of yen)       8,619,688        8,529,479        (90,209     (1 )% 

(Long- and Short-term Debt)

       4,133,258        4,000,795        (132,463     (3 )% 

(Deposits)

       1,757,462        1,790,695        33,233       2

Shareholders’ Equity

     (millions of yen)       2,682,424        2,712,205        29,781       1

Shareholders’ Equity Per Share

     (yen)       2,095.64        2,118.69        23.05       1

 

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

Total assets remained flat at ¥11,371,902 million compared to the end of the previous fiscal year. Investment in securities increased due primarily to the purchase of investment in securities in the life insurance business. On the other hand, investment in direct financing leases decreased due primarily to repayment from customers. In addition, segment assets remained flat at ¥9,117,155 million compared to the end of the previous fiscal year.

We manage the balance of interest-bearing liabilities at an appropriate level taking into account the condition of assets and liquidity on-hand as well as the domestic and overseas financial environment. As a result, long-term debt and short-term debt decreased, and deposits increased compared to the end of the previous fiscal year.

Shareholders’ equity increased 1% to ¥2,712,205 million compared to the end of the previous fiscal year due primarily to an increase in retained earnings.

(3) Medium-Term Strategic Directions FY2019-2021

ORIX Group manages its business portfolio by dividing it into six segments: Corporate Financial Services, Maintenance Leasing, Real Estate, Investment and Operation, Retail, and Overseas Business. Furthermore, taking risk and capital requirements into account, ORIX Group categorizes these six segments into three categories: “Finance,” “Operation” and “Investment” to describe its mid-term strategic directions.

The “Finance” business is ORIX Group’s customer base and source of information. However, given that the low interest rate environment makes growth difficult in the financial business, ORIX Group will continue to focus on “Operation” and “Investment” to grow stable earnings and will proactively enter new markets to nurture its next core businesses.

The “Operation” business for which operational risk is taken by ORIX Group is positioned as ORIX Group’s growth driver and source for new and stable earnings. ORIX Group will engage in M&A and expand new investment with a focus on the environment and energy business, asset management business, concession business and life insurance business as well as other new business areas coming from the change in society and the market.

The “Investment” business provides ORIX Group with opportunities to develop new businesses. ORIX Group focuses mainly on private equity businesses in Japan and overseas, aircraft- and ship-related operations and will expand the scale of those businesses.

From the fiscal year ending March 31, 2019, ORIX Group aims to achieve annual net income attributable to ORIX Corporation shareholders growth of between 4% and 8%, and to maintain ROE above 11%.

 

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

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

 

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Table of Contents

2. Financial Information

(1) Condensed Consolidated Balance Sheets (Unaudited)

(millions of yen)

Assets

   As of March 31,
2018
    As of June 30,
2018
 

Cash and Cash Equivalents

     1,321,241       1,228,846  

Restricted Cash

     83,876       98,087  

Investment in Direct Financing Leases

     1,194,888       1,177,749  

Installment Loans

     2,823,769       2,824,840  

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

    

March 31, 2018

   ¥17,260 million     

June 30, 2018

   ¥28,112 million                                                   

Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses

     (54,672     (56,960

Investment in Operating Leases

     1,344,926       1,339,458  

Investment in Securities

     1,729,455       1,761,823  

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

    

March 31, 2018

   ¥37,631 million     

June 30, 2018

   ¥18,465 million     

Property under Facility Operations

     434,786       438,637  

Investment in Affiliates

     591,363       581,025  

Trade Notes, Accounts and Other Receivable

     294,773       305,110  

Inventories

     111,001       122,907  

Office Facilities

     112,962       112,509  

Other Assets

     1,437,614       1,437,871  

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

    

March 31, 2018

   ¥15,008 million     

June 30, 2018

   ¥13,565 million     
        

 

 

   

 

 

 

Total Assets

     11,425,982       11,371,902  
  

 

 

   

 

 

 

Liabilities and Equity

            

Short-Term Debt

     306,754       238,177  

Deposits

     1,757,462       1,790,695  

Trade Notes, Accounts and Other Payable

     262,301       265,813  

Policy Liabilities and Policy Account Balances

     1,511,246       1,510,693  

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

    

March 31, 2018

   ¥444,010 million     

June 30, 2018

   ¥419,455 million     

Current and Deferred Income Taxes

     366,947       374,557  

Long-Term Debt

     3,826,504       3,762,618  

Other Liabilities

     588,474       586,926  
  

 

 

   

 

 

 

Total Liabilities

     8,619,688       8,529,479  
  

 

 

   

 

 

 

Redeemable Noncontrolling Interests

     7,420       7,473  
  

 

 

   

 

 

 

Commitments and Contingent Liabilities

    

Common Stock

     220,961       221,111  

Additional Paid-in Capital

     267,291       267,613  

Retained Earnings

     2,315,283       2,352,321  

Accumulated Other Comprehensive Income (Loss)

     (45,566     (53,295

Treasury Stock, at Cost

     (75,545     (75,545
  

 

 

   

 

 

 

Total ORIX Corporation Shareholders’ Equity

     2,682,424       2,712,205  

Noncontrolling Interests

     116,450       122,745  
  

 

 

   

 

 

 

Total Equity

     2,798,874       2,834,950  
  

 

 

   

 

 

 

Total Liabilities and Equity

     11,425,982       11,371,902  
  

 

 

   

 

 

 

 

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Table of Contents
Note:

Breakdowns of Accumulated Other Comprehensive Income (Loss)

 

     As of March 31,
2018
    As of June 30,
2018
 

Accumulated Other Comprehensive Income (Loss)

                                                  

Net unrealized gains on investment in securities

     10,465       7,453  

Net change in debt valuation adjustments

     0       348  

Defined benefit pension plans

     (20,487     (20,500

Foreign currency translation adjustments

     (31,806     (36,821

Net unrealized losses on derivative instruments

     (3,738     (3,775
  

 

 

   

 

 

 

Total

     (45,566     (53,295
  

 

 

   

 

 

 

 

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Table of Contents

(2) Condensed Consolidated Statements of Income (Unaudited)

(millions of yen)

     Three months
ended
June  30, 2017
     Three months
ended
June  30, 2018
 

Revenues :

                                                   

Finance revenues

     57,363        56,559   

Gains on investment securities and dividends

     10,281        7,507  

Operating leases

     96,679        95,279  

Life insurance premiums and related investment income

     93,654        82,859  

Sales of goods and real estate

     347,115        154,455  

Services income

     187,205        207,258  
  

 

 

    

 

 

 

Total Revenues

     792,297        603,917  
  

 

 

    

 

 

 

Expenses :

     

Interest expense

     19,099        20,149  

Costs of operating leases

     61,738        62,737  

Life insurance costs

     67,773        57,013  

Costs of goods and real estate sold

     327,045        142,721  

Services expense

     112,469        118,111  

Other (income) and expense, net

     327        1,063  

Selling, general and administrative expenses

     105,962        105,156  

Provision for doubtful receivables and probable loan losses

     4,639        4,946  

Write-downs of long-lived assets

     1,085        26  

Write-downs of securities

     180        0  
  

 

 

    

 

 

 

Total Expenses

     700,317        511,922  
  

 

 

    

 

 

 

Operating Income

     91,980        91,995  

Equity in Net Income of Affiliates

     29,133        5,173  

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

     14,498        13,786  
  

 

 

    

 

 

 

Income before Income Taxes

     135,611        110,954  

Provision for Income Taxes

     44,670        30,922  
  

 

 

    

 

 

 

Net Income

     90,941        80,032  
  

 

 

    

 

 

 

Net Income Attributable to the Noncontrolling Interests

     1,179        34  
  

 

 

    

 

 

 

Net Income Attributable to the Redeemable Noncontrolling Interests

     50        51  
  

 

 

    

 

 

 

Net Income Attributable to ORIX Corporation Shareholders

     89,712        79,947  
  

 

 

    

 

 

 

 

Note :

Revenues from guarantees in the consolidated statements of income have been reclassified from “Services income” to “Finance revenues” starting from the three months period ended June 30, 2018. The change aims to reflect revenue structure of the Company and its subsidiaries more appropriately accompanying the adoption of ASC606 (“Revenue from Contracts with Customers”). Corresponding to the change, the presented amounts in the consolidated statements of income for the previous fiscal year have been reclassified retrospectively to conform to the presentation for the three months period ended June 30, 2018.

 

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Table of Contents

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

 

(millions of yen)  
     Three months
ended
June  30, 2017
    Three months
ended
June  30, 2018
 

Net Income :

     90,941       80,032  
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax:

                                                  

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

     (1,956     238  

Net change in debt valuation adjustments

     0       (3

Net change of defined benefit pension plans

     (257     (13

Net change of foreign currency translation adjustments

     5,614       (4,736

Net change of unrealized gains (losses) on derivative instruments

     145       (30

Total other comprehensive income (loss)

     3,546       (4,544
  

 

 

   

 

 

 

Comprehensive Income

     94,487       75,488  
  

 

 

   

 

 

 

Comprehensive Income Attributable to the Noncontrolling Interests

     150       23  
  

 

 

   

 

 

 

Comprehensive Income Attributable to the Redeemable Noncontrolling Interests

     39       347  
  

 

 

   

 

 

 

Comprehensive Income Attributable to ORIX Corporation Shareholders

     94,298       75,118  
  

 

 

   

 

 

 

(4) Assumptions for Going Concern

There is no corresponding item.

(5) Significant Changes in Shareholders’ Equity

There is no corresponding item.

 

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Table of Contents

(6) Changes in Accounting Policies

(Adoption of New Accounting Standards)

In May 2014, Accounting Standards Update 2014-09 (“Revenue from Contracts with Customers”—ASC 606 (“Revenue from Contracts with Customers”)) was issued, and related amendments were issued thereafter. The core principle of these Updates requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company and its subsidiaries adopted these Updates on April 1, 2018, using the cumulative-effect method, for only those contracts that are not completed at the date of initial adoption. The adoption primarily resulted in changes in the timing of revenue recognition for performance fees received from customers regarding asset management business, and certain project-based orders in real estate business for which the Company and its subsidiaries currently apply the percentage-of-completion or completed contract method. The effect of adopting these Updates on the Company and its subsidiaries’ financial position at the adoption was mainly an increase of ¥405 million in retained earnings in the condensed consolidated balance sheets.

In January 2016, Accounting Standards Update 2016-01 (“Recognition and Measurement of Financial Assets and Financial Liabilities”—ASC 825-10 (“Financial Instruments—Overall”)) was issued. This Update requires an entity to measure equity investments at fair value, and requires recognizing the changes in fair value through earnings or using alternative method that requires carrying value to be adjusted by subsequent observable transactions. Additionally, this Update revises the presentation of certain fair value changes for financial liabilities measured at fair value. The Company and its subsidiaries adopted this Update on April 1, 2018. The effect of adopting this Update on the Company and its subsidiaries’ financial position at the adoption date was mainly a decrease of ¥2,899 million in accumulated other comprehensive income and an increase of ¥2,899 million in retained earnings in the condensed consolidated balance sheets, due to reclassification of unrealized changes in fair value of equity investments from accumulated other comprehensive income to retained earnings, and reclassification of changes in fair value of financial liabilities resulting from a change in the instrument-specific credit risk when the Company and its subsidiaries have elected to measure the liabilities at fair value in accordance with the fair value option, from retained earnings to accumulated other comprehensive income.

In October 2016, Accounting Standards Update 2016-16 (“Intra-Entity Transfers of Assets Other Than Inventory”—ASC 740 (“Income Taxes”)) was issued. This Update eliminates the exception to defer the income tax consequences of intra-entity transfers of assets other than inventory until the assets are ultimately sold to an outside party and requires the recognition of the current and deferred tax consequences when those transfers occur. The Company and its subsidiaries adopted this Update on April 1, 2018. The effect of adopting this Update on the Company and its subsidiaries’ financial position at the adoption date was mainly an increase of ¥3,772 million in retained earnings in the condensed consolidated balance sheets.

 

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Table of Contents

(7) Segment Information (Unaudited)

1. Segment Information by Sector

 

     (millions of yen)  
     Three Months ended
June 30, 2017
     Three Months ended
June 30, 2018
    March 31,
2018
     June 30,
2018
 
     Segment
Revenues
    Segment
Profits
     Segment
Revenues
    Segment
Profits
    Segment
Assets
     Segment
Assets
 

Corporate Financial Services

     25,456       10,225        25,004       7,820       991,818        976,117  

Maintenance Leasing

     68,346       9,894        69,858       9,696       847,190        855,286  

Real Estate

     46,520       32,833        54,524       22,219       620,238        598,140  

Investment and Operation

     422,557       16,657        234,518       11,905       856,348        876,811  

Retail

     112,597       22,014        102,815       21,785       3,174,505        3,236,630  

Overseas Business

     117,032       42,799        118,479       40,006       2,608,819        2,574,171  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Segment Total

     792,508       134,422        605,198       113,431       9,098,918        9,117,155  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Difference between Segment Total and Consolidated Amounts

     (211     1,189        (1,281     (2,477     2,327,064        2,254,747  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Consolidated Amounts

     792,297       135,611        603,917       110,954       11,425,982        11,371,902  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

Note 1:   

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

Note 2:   

From the three months period ended June 30, 2018, VIEs for securitizing financial assets such as direct financing lease receivable and loan receivable is included in each segment of segment revenues, segment profits and segment assets, and previous fiscal year’s statement have been reclassified as a result of this change.

Note 3:   

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

2. Geographic Information

 

     (millions of yen)  
     Three Months Ended June 30, 2017  
     Japan      The Americas*1      Other*2      Consolidated
Amounts
 

Total Revenues

     670,711        54,784        66,802        792,297  

Income before Income Taxes

     92,398        19,314        23,899        135,611  
  

 

 

    

 

 

    

 

 

    

 

 

 
     (millions of yen)  
     Three Months Ended June 30, 2018  
     Japan      The Americas*1      Other*2      Consolidated
Amounts
 

Total Revenues

     485,406        48,590        69,921        603,917  

Income before Income Taxes

     70,263        28,868        11,823        110,954  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*Note 1:   

Mainly the United States

*Note 2:   

Mainly Asia, Europe, Australasia and Middle East

*Note 3:   

From the three months period ended June 30, 2018, regarding ORIX Corporation Europe N. V., both total revenues and the income before income taxes, previously disclosed in Others, are disclosed separately in the above areas, and previous fiscal year’s statement have been reclassified as a result of this change.

(8) Subsequent Events

There are no material subsequent events.

 

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