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 October 2016

 

 

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  x        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  x

 

 

 


Table of Contents

Table of Documents Filed

 

          Page  

1.

  

ORIX’s Second Quarter Consolidated Financial Results (April 1, 2016 – September 30, 2016) filed with the Tokyo Stock Exchange on Wednesday October 26, 2016.

  

2.

  

English press release entitled, “Announcement Regarding Interim Dividend and Year End Dividend Forecast for the Fiscal Year Ending March 31, 2017”

  


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: October 26, 2016

 

By

 

/s/ Kazuo Kojima

   

Kazuo Kojima

   

Director

   

Deputy President & CFO

   

ORIX Corporation


Table of Contents

 

Consolidated Financial Results

April 1, 2016 – September 30, 2016

 

 

October 26, 2016

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

For further information please contact:

Investor Relations

ORIX Corporation

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

JAPAN

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

E-mail: chun.yang.ta@orix.jp

 

- 1 -


Table of Contents

Consolidated Financial Results from April 1, 2016 to September 30, 2016

(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 http://www.orix.co.jp/grp/en/ir/index.html)

1. Performance Highlights as of and for the Six Months Ended September 30, 2016

(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
 

September 30, 2016

    1,221,125        4.4     166,349        (8.8 %)      219,235        (12.6 %)      142,150        (11.9 %) 

September 30, 2015

    1,170,194        22.5     182,480        35.2     250,745        24.7     161,298        14.2

“Comprehensive Income Attributable to ORIX Corporation Shareholders” was ¥86,686 million for the six months ended September 30, 2016 (year-on-year change was a 38.8% decrease) and ¥141,697 million for the six months ended September 30, 2015 (year-on-year change was a 5.5% decrease).

 

     Basic
Earnings Per  Share
     Diluted
Earnings Per  Share
 

September 30, 2016

     108.57         108.47   

September 30, 2015

     123.23         123.11   

 

*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
 

September 30, 2016

     10,782,692         2,524,396         2,364,960         21.9

March 31, 2016

     10,992,918         2,472,819         2,310,431         21.0

 

*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, 2016

     —           22.00         —           23.75         45.75   

March 31, 2017

     —           23.00         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

March 31, 2017 (Est.)

     —           —           —           28.00         51.00   

3. Targets for the Year Ending March 31, 2017 (Unaudited)

In order to facilitate a better understanding on our medium- and long- term growth projection for our shareholders and potential investors, we disclose our medium-term management target in this document. For details, refer to “1. Summary of Consolidated Financial Results (3) Medium-Term Management Targets” 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 (    )    No ( x )   

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 1,324,058,828 as of September 30, 2016, and 1,324,058,828 as of March 31, 2016.

2. The number of treasury shares was 12,848,851 as of September 30, 2016, and 12,848,591 as of March 31, 2016.

3. The average number of outstanding shares was 1,309,302,129 for the six months ended September 30, 2016, and 1,308,920,421 for the six months ended September 30, 2015.

The Company’s shares held through the Board Incentive Plan Trust (2,489,951 shares as of September 30, 2016 and 1,696,217 shares as of March 31, 2016) 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.

 

- 2 -


Table of Contents

1. Summary of Consolidated Financial Results

(1) Analysis of Financial Highlights

Financial Results for the Six Months Ended September 30, 2016

 

        Six months
ended  September 30,
2015
     Six months
ended  September 30,
2016
     Change     Year  on
Year

Change
 

Total Revenues

  (millions of yen)     1,170,194         1,221,125         50,931        4

Total Expenses

  (millions of yen)     987,714         1,054,776         67,062        7

Income before Income Taxes

  (millions of yen)     250,745         219,235         (31,510     (13 )% 

Net Income Attributable to ORIX Corporation Shareholders

  (millions of yen)     161,298         142,150         (19,148     (12 )% 

Earnings Per Share (Basic)

  (yen)     123.23         108.57         (14.66     (12 )% 

                       (Diluted)

  (yen)     123.11         108.47         (14.64     (12 )% 

ROE (Annualized) *1

  (%)     14.7         12.2         (2.5     —     

ROA (Annualized) *2

  (%)     2.87         2.61         (0.26     —     

 

*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.

*Note 3:

Prior-year amounts have been adjusted for the retrospective application of Accounting Standards Update 2015-03 (“Simplifying the Presentation of Debt Issuance Costs”-ASC 835-30 (“Interest-Imputation of Interest”)) on April 1, 2016.

Economic Environment

While the economy of the United States has been recovering moderately and the economy of Europe remains at flat area, the economies of emerging and resource-rich countries have bottomed out and the world economy as a whole has been unstable. Against the backdrop of monetary easing measures in several countries, interest rates remain low worldwide. In addition, there are political and geopolitical tensions in certain regions that need to be monitored carefully.

The Japanese economy remains at a standstill due primarily to low corporate earnings caused in part by the appreciation of the yen and weakening personal consumption.

Overview of Business Performance (April 1, 2016 to September 30, 2016)

Total revenues for the six months ended September 30, 2016 (hereinafter, “the second consolidated period”) increased 4% to ¥1,221,125 million compared to ¥1,170,194 million during the same period of the previous fiscal year. Life insurance premiums and related investment income increased mainly due to increases in insurance premiums and investment income in ORIX Life Insurance Corporation (hereinafter, “ORIX Life Insurance”), and an improvement in investment income from assets under variable annuity and variable life insurance contracts originally held by Hartford Life Insurance K.K. (hereinafter, “HLIKK”) compared to the same period of the previous fiscal year during which the investment income decreased with deterioration of market environment. HLIKK was merged into ORIX Life Insurance on July 1, 2015. In addition, sales of goods and real estate increased due primarily to revenues generated by subsidiaries in the principal investment business. On the other hand, gains on investment securities and dividends decreased due to a decrease in gains on investment securities. In addition, services income decreased due to the partial divestment of Houlihan Lokey Inc. (hereinafter, ‘‘HL’’) shares in connection with its initial public offering in the United States and its becoming an equity method affiliate in the previous fiscal year.

Total expenses increased 7% to ¥1,054,776 million compared to ¥987,714 million during the same period of the previous fiscal year. Life insurance costs increased due to a provision of liability reserve in line with the aforementioned improvement in investment income from assets under variable annuity and variable life insurance contracts. Costs of goods and real estate sold increased in line with the aforementioned revenue increase. On the other hand, selling, general and administrative expenses decreased compared to the same period of the previous fiscal year in line with HL becoming an equity method affiliate in the previous fiscal year as mentioned above.

 

- 3 -


Table of Contents

Gains on sales of subsidiaries and affiliates and liquidation losses, net decreased compared to the same period of the previous fiscal year due to a gain from the aforementioned partial divestment of HL shares and its becoming an equity method affiliate in the previous fiscal year.

As a result of the foregoing, income before income taxes for the second consolidated period decreased 13% to ¥219,235 million compared to ¥250,745 million during the same period of the previous fiscal year, and net income attributable to ORIX Corporation shareholders decreased 12% to ¥142,150 million compared to ¥161,298 million during the same period of the previous fiscal year.

Segment Information

Total segment profits for the second consolidated period decreased 13% to ¥214,034 million compared to ¥244,791 million during the same period of the previous fiscal year. While segment profits increased significantly in the Investment and Operation segment and secondarily in the Real Estate and Retail segments, segment profits for each of the other segments decreased.

Segment information for the second consolidated period is as follows:

Corporate Financial Services Segment: Lending, leasing and fee business

 

            Six months
ended  September 30,
2015
(millions of yen)
     Six months
ended  September 30,
2016
(millions of yen)
     Change  
           
                  Amount
(millions of  yen)
    Percent
(%)
 

Segment Revenues

        52,712         51,995         (717     (1

Segment Profits

        21,564         19,874         (1,690     (8
            As of
March  31,
2016
(millions of yen)
     As of
September  30,
2016
(millions of yen)
     Change  
           
                  Amount
(millions of yen)
    Percent
(%)
 

Segment Assets

        1,049,867         1,034,377         (15,490     (1

The Japanese economy remains at a standstill due to low corporate earnings caused in part by the appreciation of the yen and weakening personal consumption. The balance of outstanding loans at financial institutions continues to increase and interest rates on loans remain low levels.

Segment revenues decreased 1% to ¥51,995 million compared to ¥52,712 million during the same period of the previous fiscal year due to a decrease in gains on investment securities, and a decrease in finance revenues in line with the decreased average investment, despite an increase in services income resulting primarily from revenue generated by Yayoi Co., Ltd. and stable fee business to domestic small-and medium-sized enterprise customers.

Segment expenses increased due primarily to an increase in selling, general and administrative expenses compared to the same period of the previous fiscal year. As a result, segment profits decreased 8% to ¥19,874 million compared to ¥21,564 million during the same period of the previous fiscal year.

Segment assets decreased 1% to ¥1,034,377 million compared to the end of the previous fiscal year due primarily to decreases in installment loans and investment in securities.

 

- 4 -


Table of Contents

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

 

     Six months
ended  September 30,
2015
(millions of yen)
     Six months
ended  September 30,
2016
(millions of yen)
     Change  
          
            Amount
(millions of  yen)
    Percent
(%)
 

Segment Revenues

     135,924         134,820         (1,104     (1

Segment Profits

     23,117         19,655         (3,462     (15
     As of
March  31,
2016
(millions of yen)
     As of
September  30,
2016
(millions of yen)
     Change  
        
            Amount
(millions of yen)
    Percent
(%)
 

Segment Assets

     731,329         724,168         (7,161     (1

While demand in corporate capital investment is gradually increasing, concerns about decreasing profitability and uncertainty in the economic outlook interfere with new investment. The volume of new auto leases in Japan decreased slightly compared to the previous fiscal year.

Segment revenues decreased 1% to ¥134,820 million from ¥135,924 million during the same period of the previous fiscal year due to less gains on sales in operating leases revenues, despite an increase in rental revenues, which are also included in operating leases revenues.

Segment expenses increased due primarily to increases in costs of operating leases in line with increased average investment asset balance in the auto-business and selling, general and administrative expenses. Segment profits decreased 15% to ¥19,655 million compared to ¥23,117 million during the same period of the previous fiscal year.

Segment assets decreased 1% to ¥724,168 million compared to the end of the previous fiscal year primarily due to a decrease in leasing assets in line with the securitization, despite an increase in new auto-leases in the auto-business.

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

 

     Six months
ended  September 30,
2015
(millions of yen)
     Six months
ended  September 30,
2016
(millions of yen)
     Change  
          
            Amount
(millions of  yen)
    Percent
(%)
 

Segment Revenues

     109,047         104,084         (4,963     (5

Segment Profits

     33,717         35,447         1,730        5   
     As of
March  31,
2016
(millions of yen)
     As of
September  30,
2016
(millions of yen)
     Change  
        
            Amount
(millions of yen)
    Percent
(%)
 

Segment Assets

     739,592         705,062         (34,530     (5

 

- 5 -


Table of Contents

The real estate market has remained active due primarily to the quantitative easing policies implemented by the Bank of Japan, including the adoption of negative interest rates. Land prices remain high and vacancy rates in the Japanese office building market continue to show improvements especially in the Greater Tokyo Area. Furthermore, we are seeing increases in the occupancy rates and average daily rates of hotels and Japanese inns. Meanwhile, we are also seeing a trend where by sales prices of condominiums are no longer raising.

Segment revenues decreased 5% to ¥104,084 million compared to ¥109,047 million during the same period of the previous fiscal year primarily due to a decrease in financial revenues compared to the same period of the previous fiscal year during which the sale of large scale rental properties was recognized in finance revenues and also due to a decrease in sales of real estate, despite an increase in gains on sales of rental properties, which are included in operating leases revenues.

Segment expenses decreased compared to the same period of the previous fiscal year primarily due to decreases in costs of operating leases in line with a decrease in assets and the cost of sales of real estate.

As a result of the foregoing, segment profits increased 5% to ¥35,447 million compared to ¥33,717 million during the same period of the previous fiscal year.

Segment assets decreased 5% to ¥705,062 million compared to the end of the previous fiscal year primarily due to a decrease in investment in operating leases, which resulted from sales of rental properties.

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

 

     Six months
ended September 30,
2015

(millions of yen)
     Six months
ended September 30,
2016

(millions of yen)
     Change  
          
            Amount
(millions of  yen)
    Percent
(%)
 

Segment Revenues

     493,525         539,042         45,517        9   

Segment Profits

     36,450         52,041         15,591        43   
     As of
March  31,
2016
(millions of yen)
     As of
September  30,
2016
(millions of yen)
     Change  
        
            Amount
(millions of  yen)
    Percent
(%)
 

Segment Assets

     704,156         695,780         (8,376     (1

While the Japanese government is reassessing its renewable energy purchase program, the significance of renewable energy in the mid- to long- term is on the rise with investment targets expanding beyond solar power generation projects to include wind and geothermal power generation projects. In the capital markets, overseas markets for mergers and acquisitions (hereinafter “M&A”) have been sluggish, but the number of out bound cross-border M&A transactions by Japanese companies has increased.

Segment revenues increased 9% to ¥539,042 million compared to ¥493,525 million during the same period of the previous fiscal year due to increases in sales of goods and services income generated by subsidiaries in the principal investment business and environment and energy-related business.

Segment expenses increased compared to the same period of the previous fiscal year due to an increase in expenses in line with the aforementioned revenues expansion and recognition of write-downs of securities.

As a result of the foregoing and the recognition of gains on sales of shares of subsidiaries and affiliates and the recognition of a bargain purchase gain from the acquisition of a subsidiary, segment profits increased 43% to ¥52,041 million compared to ¥36,450 million during the same period of the previous fiscal year.

 

- 6 -


Table of Contents

Segment assets decreased 1% to ¥695,780 million compared to the end of the previous fiscal year primarily due to a decrease in investment in affiliates, despite increases in inventories and property under facility operations in the environment and energy-related business.

Retail Segment: Life insurance, banking and card loan business

 

     Six months
ended September 30,
2015

(millions of yen)
     Six months
ended September 30,
2016

(millions of yen)
     Change  
        
            Amount
(millions of  yen)
    Percent
(%)
 

Segment Revenues

     102,401         151,095         48,694        48   

Segment Profits

     32,062         35,507         3,445        11   
     As of
March 31,
2016

(millions of yen)
     As of
September 30,
2016

(millions of yen)
     Change  
        
            Amount
(millions of yen)
    Percent
(%)
 

Segment Assets

     3,462,772         3,325,370         (137,402     (4

The life insurance business in Japan is currently affected by macroeconomic factors such as domestic population decline, we are seeing increasing numbers of companies develop new products in response to the rising demand for medical insurance. On the other hand, we are seeing suspensions of the sales of certain products and an increase in insurance premiums on new contracts due to the Bank of Japan’s adoption of negative interest rate policy. In the consumer finance sector, banks and other lenders are expanding their assets to further secure new revenue streams, and competition in the lending business continues to intensify in the current low interest rate environment.

Segment revenues increased 48% to ¥151,095 million compared to ¥102,401 million during the same period of the previous fiscal year due to increases in insurance premiums and investment income in ORIX Life Insurance, and an improvement in investment income from assets under variable annuity and variable life insurance contracts originally held by HLIKK compared to the same period of the previous fiscal year during which the investment income decreased with deterioration of market environment.

Segment expenses increased compared to the same period of the previous fiscal year due to a provision of liability reserve in line with the aforementioned improvement in investment income from assets under variable annuity and variable life insurance contracts.

As a result of the foregoing, segment profits increased 11% to ¥35,507 million compared to ¥32,062 million during the same period of the previous fiscal year.

Segment assets decreased 4% to ¥3,325,370 million compared to the end of the previous fiscal year due primarily to a large decrease in investment in securities held by HLIKK, offsetting an increase in installment loans in the banking business.

 

- 7 -


Table of Contents

Overseas Business Segment: Leasing, lending, investment in bonds, asset management and ship- and aircraft-related operations

 

     Six months
ended September 30,
2015

(millions of yen)
     Six months
ended September 30,
2016

(millions of yen)
     Change  
          
            Amount
(millions of  yen)
    Percent
(%)
 

Segment Revenues

     277,843         240,643         (37,200     (13

Segment Profits

     97,881         51,510         (46,371     (47
     As of
March  31,
2016
(millions of yen)
     As of
September  30,
2016
(millions of yen)
     Change  
        
            Amount
(millions of  yen)
    Percent
(%)
 

Segment Assets

     2,284,733         2,051,463         (233,270     (10

While the economy of the United States has been recovering moderately and the economy of Europe remains at flat area, the economies of emerging and resource-rich countries have bottomed out and the world economy as a whole has been unstable. Against the backdrop of monetary easing measures in several countries, interest rates remain low worldwide. In addition, there are political and geopolitical tensions in certain regions that need to be monitored carefully.

Segment revenues decreased 13% to ¥240,643 million compared to ¥277,843 million during the same period of the previous fiscal year due to decreases in gains on investment securities and services income resulting primarily from the deconsolidation of HL as well as the recent appreciation of the yen, despite an increase in sales of goods in the Americas.

Segment expenses decreased compared to the same period of the previous fiscal year primarily due to the deconsolidation of HL and the recent appreciation of the yen.

As a result of the foregoing and due to the recognition of a gain on the partial divestment of HL shares during the same period of previous fiscal year, segment profits decreased 47% to ¥51,510 million compared to ¥97,881 million during the same period of the previous fiscal year.

Segment assets decreased 10% to ¥2,051,463 million compared to the end of the previous fiscal year due to a decrease in investment in operating leases of aircraft-related operations and yen appreciation.

 

- 8 -


Table of Contents

(2) Analysis of Consolidated Financial Condition

Financial Condition

 

         As of
March  31,

2016
     As of
September  30,

2016
     Change  
            
             Amount     Percent  

Total Assets

   (millions of yen)     10,992,918         10,782,692         (210,226     (2 )% 

(Segment Assets)

       8,972,449         8,536,220         (436,229     (5 )% 

Total Liabilities

   (millions of yen)     8,512,632         8,251,453         (261,179     (3 )% 

(Long- and Short-term Debt)

       4,286,542         4,013,914         (272,628     (6 )% 

(Deposits)

       1,398,472         1,490,216         91,744        7

Shareholders’ Equity

   (millions of yen)     2,310,431         2,364,960         54,529        2

Shareholders’ Equity Per Share

   (yen)     1,764.34         1,807.08         42.74        2

 

Note 1: Shareholders’ Equity refers to ORIX Corporation Shareholders’ Equity based on US-GAAP. Shareholders’ Equity Per Share is calculated using total ORIX Corporation Shareholders’ Equity.
Note 2: Prior-year amounts have been adjusted for the retrospective application of Accounting Standards Update 2015-03 (“Simplifying the Presentation of Debt Issuance Costs”-ASC 835-30 (“Interest-Imputation of Interest”)) on April 1, 2016.

Total assets decreased 2% to ¥10,782,692 million compared to ¥10,992,918 million at the end of the previous fiscal year. In addition to the recent appreciation of the yen, investment in operating leases decreased primarily due to sales of aircraft in the Overseas Business segment and sales of real estate in Japan, and investment in securities decreased primarily due to sales of assets held by HLIKK. In addition, investment in affiliates decreased primarily due to sales of shares of affiliates in the Investment and Operation segment. Segment assets decreased 5% to ¥8,536,220 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- and short-term debt decreased and deposits increased compared to the end of the previous fiscal year. In addition, policy liabilities and policy account balances decreased due to the surrender of variable annuity and variable life insurance contracts held by HLIKK.

Shareholders’ equity increased 2% to ¥2,364,960 million compared to the end of the previous fiscal year primarily due to an increase in retained earnings, despite a decrease in foreign currency translation adjustments included in accumulated other comprehensive income in line with the appreciation of the yen.

(3) Medium-Term Management Targets

In addition to sustainable growth of our existing business operations, we believe that there are new growth opportunities in all business segments and we strive to achieve sustainable profit growth by capitalizing on these profit opportunities going forward.

Our mid-term strategy “Expansion in Non-Finance Business” consists of “Organic growth” and “Investment in key areas.” With these principles, we will pursue new business opportunities arising from the changing business environment.

“Organic growth”: Deepen our strengths and expertise to further expand our existing operations both in Japan and abroad. Those in Japan include fee business, automobile-related business, facility operation business, and life insurance business. Those abroad include automobile-related business, and further diversification towards non-finance business.

“New investment in key areas”: Continue to pursue new investment opportunities in key areas identified as the environment and energy-related business and principal investment in Japan and abroad, the network in Asia, global asset management, and the concession business.

The Company aims to achieve ¥300 billion in net income and ROE around 11% to 12% for the fiscal year ending March 31, 2018.

 

- 9 -


Table of Contents

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, including, but not limited to, those described under “Risk Factors” in our Form 20-F submitted to the U.S. Securities and Exchange Commission. Readers are urged not to place undue reliance on such forward-looking statements.

2. Others

(1) Changes in Significant Consolidated Subsidiaries

There is no corresponding item.

(2) Adoption of Simplified Accounting Method

There is no corresponding item.

(3) Changes in Accounting Principles, Procedures and Disclosures

There is no significant change from the description in Form 20-F filed on June 23, 2016.

 

- 10 -


Table of Contents

3. Financial Information

(1) Condensed Consolidated Balance Sheets

(As of March 31, 2016 and September 30, 2016)

(Unaudited)

 

(millions of yen)  
      As of
March 31,
2016
    As of
September 30,
2016
 

Assets

    

Cash and Cash Equivalents

     730,420        961,830   

Restricted Cash

     80,979        83,917   

Investment in Direct Financing Leases

     1,190,136        1,154,239   

Installment Loans

     2,592,233        2,643,455   

The amounts which are measured at fair value by electing the fair value option under ASC 825 are as follows:

    

March 31, 2016

  

¥20,673 million

    

September 30, 2016

  

¥23,188 million

    

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

     (60,071     (55,788

Investment in Operating Leases

     1,349,199        1,272,737   

Investment in Securities

     2,344,792        2,049,704   

The amounts which are measured at fair value by electing the fair value option under ASC 825 are as follows:

    

March 31, 2016

  

¥27,367 million

    

September 30, 2016

  

¥24,466 million

    

Property under Facility Operations

     327,016        360,561   

Investment in Affiliates

     530,667        458,330   

Trade Notes, Accounts and Other Receivable

     294,638        262,487   

Inventories

     139,950        149,795   

Office Facilities

     120,173        120,534   

Other Assets

     1,352,786        1,320,891   

The amounts which are measured at fair value by electing the fair value option under ASC 825 are as follows:

    

March 31, 2016

  

¥37,855 million

    

September 30, 2016

  

¥37,554 million

    
     

 

 

   

 

 

 

Total Assets

     10,992,918        10,782,692   
     

 

 

   

 

 

 

Liabilities and Equity

            

Short-Term Debt

     349,624        208,816   

Deposits

     1,398,472        1,490,216   

Trade Notes, Accounts and Other Payable

     266,216        208,198   

Policy Liabilities and Policy Account Balances

     1,668,636        1,618,851   

The amounts which are measured at fair value by electing the fair value option under ASC 825 are as follows:

    

March 31, 2016

  

¥795,001 million

    

September 30, 2016

  

¥715,434 million

    

Current and Deferred Income Taxes

     358,758        386,614   

Long-Term Debt

     3,936,918        3,805,098   

Other Liabilities

     534,008        533,660   
     

 

 

   

 

 

 

Total Liabilities

     8,512,632        8,251,453   
     

 

 

   

 

 

 

Redeemable Noncontrolling Interests

     7,467        6,843   
     

 

 

   

 

 

 

Commitments and Contingent Liabilities

    

Common Stock

     220,469        220,469   

Additional Paid-in Capital

     257,629        257,765   

Retained Earnings

     1,864,241        1,975,249   

Accumulated Other Comprehensive Income (Loss)

     (6,222     (61,686

Treasury Stock, at Cost

     (25,686     (26,837
  

 

 

   

 

 

 

Total ORIX Corporation Shareholders’ Equity

     2,310,431        2,364,960   

Noncontrolling Interests

     162,388        159,436   
  

 

 

   

 

 

 

Total Equity

     2,472,819        2,524,396   
  

 

 

   

 

 

 

Total Liabilities and Equity

     10,992,918        10,782,692   
  

 

 

   

 

 

 

 

- 11 -


Table of Contents
Note 1: Breakdowns of Accumulated Other Comprehensive Income (Loss)
     As of
March  31,

2016
    As of
September 30,
2016
 

Accumulated Other Comprehensive Income (Loss)

    

Net unrealized gains on investment in securities

     47,185        44,387   

Defined benefit pension plans

     (23,884     (22,523

Foreign currency translation adjustments

     (24,766     (77,080

Net unrealized losses on derivative instruments

     (4,757     (6,470
  

 

 

   

 

 

 

Total

     (6,222     (61,686
  

 

 

   

 

 

 

 

Note 2: Prior-year amounts have been adjusted for the retrospective application of Accounting Standards Update 2015-03 (“Simplifying the Presentation of Debt Issuance Costs”-ASC 835-30 (“Interest-Imputation of Interest”)) on April 1, 2016.

 

- 12 -


Table of Contents

(2) Condensed Consolidated Statements of Income

(For the Six Months Ended September 30, 2015 and 2016)

(Unaudited)

 

(millions of yen)  
     Six Months
ended
September  30, 2015
     Six Months
ended
September  30, 2016
 

Revenues :

     

Finance revenues

     101,244         96,582   

Gains on investment securities and dividends

     31,317         15,207   

Operating leases

     191,330         196,072   

Life insurance premiums and related investment income

     70,492         115,736   

Sales of goods and real estate

     395,426         433,526   

Services income

     380,385         364,002   
  

 

 

    

 

 

 

Total Revenues

     1,170,194         1,221,125   
  

 

 

    

 

 

 

Expenses :

     

Interest expense

     35,858         35,348   

Costs of operating leases

     122,440         121,266   

Life insurance costs

     31,800         71,423   

Costs of goods and real estate sold

     351,461         390,364   

Services expense

     217,880         218,993   

Other (income) and expense, net

     4,555         (681

Selling, general and administrative expenses

     216,344         203,699   

Provision for doubtful receivables and probable loan losses

     2,948         6,743   

Write-downs of long-lived assets

     946         1,409   

Write-downs of securities

     3,482         6,212   
  

 

 

    

 

 

 

Total Expenses

     987,714         1,054,776   
  

 

 

    

 

 

 

Operating Income

     182,480         166,349   
  

 

 

    

 

 

 

Equity in Net Income of Affiliates

     11,856         15,765   

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

     56,409         32,834   

Bargain Purchase Gain

     —           4,287   
  

 

 

    

 

 

 

Income before Income Taxes

     250,745         219,235   
  

 

 

    

 

 

 

Provision for Income Taxes

     82,636         72,296   
  

 

 

    

 

 

 

Net Income

     168,109         146,939   
  

 

 

    

 

 

 

Net Income Attributable to the Noncontrolling Interests

     5,546         4,641   
  

 

 

    

 

 

 

Net Income Attributable to the Redeemable Noncontrolling Interests

     1,265         148   
  

 

 

    

 

 

 

Net Income Attributable to ORIX Corporation Shareholders

     161,298         142,150   
  

 

 

    

 

 

 

 

- 13 -


Table of Contents

(3) Condensed Consolidated Statements of Comprehensive Income

(For the Six Months Ended September 30, 2015 and 2016)

(Unaudited)

 

      (millions of yen)  
     Six Months
ended
September 30, 2015
    Six Months
ended
September 30, 2016
 

Net Income :

     168,109        146,939   
  

 

 

   

 

 

 

Other comprehensive income (loss), net of tax:

    

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

     (13,814     (2,853

Net change of defined benefit pension plans

     (461     1,499   

Net change of foreign currency translation adjustments

     (3,140     (59,512

Net change of unrealized gains (losses) on derivative instruments

     12        (1,800

Total other comprehensive loss

     (17,403     (62,666
  

 

 

   

 

 

 

Comprehensive Income

     150,706        84,273   
  

 

 

   

 

 

 

Comprehensive Income (Loss) Attributable to the Noncontrolling Interests

     6,586        (1,789
  

 

 

   

 

 

 

Comprehensive Income (Loss) Attributable to the Redeemable Noncontrolling Interests

     2,423        (624
  

 

 

   

 

 

 

Comprehensive Income Attributable to ORIX Corporation Shareholders

     141,697        86,686   
  

 

 

   

 

 

 

(4) Assumptions for Going Concern

There is no corresponding item.

 

- 14 -


Table of Contents

(5) Segment Information (Unaudited)

1. Segment Information by Sector

 

     (millions of yen)  
     Six Months  ended
September 30, 2015
     Six Months  ended
September 30, 2016
     March 31,
2016
     September 30,
2016
 
     Segment
Revenues
    Segment
Profits
     Segment
Revenues
    Segment
Profits
     Segment
Assets
     Segment
Assets
 

Corporate Financial Services

     52,712        21,564         51,995        19,874         1,049,867         1,034,377   

Maintenance Leasing

     135,924        23,117         134,820        19,655         731,329         724,168   

Real Estate

     109,047        33,717         104,084        35,447         739,592         705,062   

Investment and Operation

     493,525        36,450         539,042        52,041         704,156         695,780   

Retail

     102,401        32,062         151,095        35,507         3,462,772         3,325,370   

Overseas Business

     277,843        97,881         240,643        51,510         2,284,733         2,051,463   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Segment Total

     1,171,452        244,791         1,221,679        214,034         8,972,449         8,536,220   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Difference between Segment Total and Consolidated Amounts

     (1,258     5,954         (554     5,201         2,020,469         2,246,472   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Consolidated Amounts

     1,170,194        250,745         1,221,125        219,235         10,992,918         10,782,692   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

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:   

For those VIEs that are used for securitization and are consolidated in accordance with ASC 810 (“Consolidation”), for which the VIE’s assets can be used only to settle related obligations of those VIEs and the creditors (or beneficial interest holders) do not have recourse to other assets of the Company or its subsidiaries, segment assets are measured based on the amount of the Company and its subsidiaries’ net investments in the VIEs, which is different from the amount of total assets of the VIEs, and accordingly, segment revenues are also measured at a net amount representing the revenues earned on the net investments in the VIEs. Certain gains or losses related to assets and liabilities of consolidated VIEs, which are not ultimately attributable to the Company and its subsidiaries, are excluded from segment profits.

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.

Note 4:   

Prior-year amounts have been adjusted for the retrospective application of Accounting Standards Update 2015-03 (“Simplifying the Presentation of Debt Issuance Costs”-ASC 835-30 (“Interest-Imputation of Interest”)) on April 1, 2016.

2. Geographic Information

 

     (millions of yen)  
     Six Months Ended September 30, 2015  
     Japan      The
Americas*1
     Other*2      Consolidated
Amounts
 

Total Revenues

     885,283         102,876         182,035         1,170,194   

Income before Income Taxes

     153,554         51,310         45,881         250,745   
  

 

 

    

 

 

    

 

 

    

 

 

 
     (millions of yen)  
     Six Months Ended September 30, 2016  
     Japan      The
Americas*1
     Other*2      Consolidated
Amounts
 

Total Revenues

     967,471         87,298         166,356         1,221,125   

Income before Income Taxes

     166,471         16,032         36,732         219,235   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*Note 1:   

Mainly the United States

*Note 2:   

Mainly Asia, Europe, Australasia and Middle East

  Note 3:   

Robeco, one of the Company’s subsidiaries domiciled in the Netherlands, conducts principally an asset management business. Due to the integrated nature of such business with its customer base spread across the world, “Other” locations include the total revenues and the income before income taxes of Robeco, respectively, for the six months ended September 30, 2015 and 2016. The revenues of Robeco aggregated on a legal entity basis were ¥56,927 million in the Americas and ¥38,993 million in Other for the six months ended September 30, 2015, and ¥47,184 million in the Americas and ¥36,867 million in Other for the six months ended September 30, 2016.

 

- 15 -


Table of Contents

(6) Significant Changes in Shareholders’ Equity

There is no corresponding item.

(7) Subsequent Events

There are no material subsequent events.

 

- 16 -


Table of Contents

LOGO

Announcement Regarding Interim Dividend and Year End Dividend Forecast for the Fiscal Year Ending March 31, 2017

TOKYO, Japan — October 26, 2016 — ORIX Corporation, a leading integrated financial services group, announced that a resolution has been formally reached at a meeting of the Board of Directors held today with regards to the interim dividend for the fiscal year ending March 31, 2017 (“FY2017.3”). The year-end dividend forecast for FY2017.3 is also included in this announcement as below.

1. Interim Dividend Detail for the FY2017.3

 

     Amount Decided    Previous Dividend
Forecast

(Announced on
May 10, 2016)
   Dividend Paid for the
Previous Year
(FY2016.3)

Record Date

   September 30, 2016    September 30, 2016    September 30, 2015

Dividend Per Share

   23.00 yen    23.00 yen    22.00 yen

Total Dividend Amount

   30,157 million yen    —      28,846 million yen

Effective Date

   December 2, 2016    —      December 2, 2015

Source of Dividend

   Retained earnings    —      Retained earnings

2. Basic Profit Distribution Policy

The year-end dividend forecast for the FY2017.3 has been determined following consideration of the optimal balance between securing capital for investment in future profit growth and return to the shareholders.

3. Year-End Dividend Forecast for the FY2017.3

The year-end dividend for FY2017.3 is forecasted at 28 yen per share.

Reference:

 

     Dividend Per Share
     Interim    Fiscal Year End    Full Year

Dividend Forecast

   —      28 yen    51 yen

FY2017.3

   23 yen    —      —  

FY2016.3

   22 yen    23.75 yen    45.75 yen


Table of Contents

Contact Information:

ORIX Corporation

Corporate Planning Department

Tel: +81-3-3435-3121

About ORIX:

ORIX Corporation (TSE: 8591; NYSE: IX) is an opportunistic, diversified, innovation-driven global powerhouse with a proven track record of profitability. Established in 1964, ORIX at present operates a diverse portfolio of businesses in the operations, financial services, and investment spaces. ORIX’s highly complementary business activities span industries including: energy, private equity, infrastructure, automotive, ship and aircraft, real estate and retail financial services. ORIX has also spread its business globally by establishing locations in a total of 37 countries and regions across the world. Through its business activities, ORIX has long been committed to corporate citizenship and environmental sustainability. For more details, please visit our website: http://www.orix.co.jp/grp/en/

Caution Concerning Forward Looking Statements:

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 and under “4. Risk Factors” of the “Summary of Consolidated Financial Results” of the “Consolidated Financial Results April 1, 2015 – March 31, 2016.”