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.
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ORIX Corporation
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Date: July 26, 2016
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By
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/s/ Kazuo Kojima
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Kazuo Kojima
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Director
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Deputy President & CFO
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ORIX Corporation
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Consolidated Financial Results
April 1, 2016
June 30, 2016
July 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 Companys 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 Companys 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 -
Consolidated Financial Results from April 1, 2016 to June 30, 2016
(U.S. GAAP Financial Information for ORIX Corporation and its Subsidiaries)
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Corporate Name:
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ORIX Corporation
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Listed Exchanges:
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Tokyo Stock Exchange (Securities No. 8591)
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New York Stock Exchange (Trading Symbol : IX)
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Head Office:
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Tokyo JAPAN
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Tel: +81-3-3435-3121
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(URL http://www.orix.co.jp/grp/en/ir/index.html)
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1. Performance Highlights as of and for the Three Months Ended June 30, 2016
(1) Performance Highlights - Operating Results (Unaudited)
(millions of yen)*1
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Total
Revenues
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Year-on-Year
Change
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Operating
Income
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Year-on-Year
Change
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Income before
Income
Taxes
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Year-on-Year
Change
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Net
Income
Attributable to
ORIX
Corporation
Shareholders
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Year-on-Year
Change
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June 30, 2016
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587,945
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(3.0
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%)
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87,423
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(19.4
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%)
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118,434
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(4.4
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%)
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76,769
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(5.8
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%)
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June 30, 2015
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606,124
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42.5
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%
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108,532
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35.0
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%
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123,916
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18.6
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%
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81,510
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23.6
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%
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Comprehensive Income Attributable to ORIX Corporation Shareholders was ¥47,557 million
for the three months ended June 30, 2016 (year-on-year change was a 41.8% decrease) and ¥81,691 million for the three months ended June 30, 2015 (year-on-year change was a 58.3% increase).
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Basic
Earnings Per
Share
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Diluted
Earnings Per
Share
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June 30, 2016
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58.62
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58.58
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June 30, 2015
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62.28
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62.22
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*Note 1:
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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.
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(2) Performance Highlights - Financial Position (Unaudited)
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Total
Assets
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Total
Equity
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Shareholders
Equity
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Shareholders
Equity
Ratio
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June 30, 2016
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10,762,882
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2,486,384
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2,326,969
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21.6
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%
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March 31, 2016
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10,992,918
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2,472,819
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2,310,431
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21.0
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%
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*Note 2:
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Shareholders Equity refers to Total ORIX Corporation Shareholders Equity.
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Shareholders Equity Ratio is the ratio of Total ORIX Corporation
Shareholders Equity to Total Assets.
2. Dividends (Unaudited)
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First
Quarter-end
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Second
Quarter-end
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Third
Quarter-end
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Year-end
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Total
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March 31, 2016
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22.00
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23.75
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45.75
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March 31, 2017
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March 31, 2017 (Est.)
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23.00
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*Note 3:
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Estimated dividend amount for the fiscal year ending March 31, 2017 has not yet been determined.
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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
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(1) Changes in Significant Consolidated Subsidiaries
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Yes ( ) No ( x )
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Addition - None
( )
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Exclusion - None
( )
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(2) Adoption of Simplified Accounting Method
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Yes ( ) No ( x )
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(3) Changes in Accounting Principles, Procedures and Disclosures
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1. Changes due to adoptions of new accounting standards
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Yes ( ) No ( x )
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2. Other than those above
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Yes ( ) No ( x )
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(4) Number of Issued Shares (Ordinary Shares)
1. The number of issued shares, including treasury stock, was 1,324,058,828 as of June 30, 2016, and 1,324,058,828 as of March 31, 2016.
2. The number of treasury shares was 12,848,781 as of June 30, 2016, and 12,848,591 as of March 31, 2016.
3. The average number of outstanding shares was 1,309,527,089 for the three months ended June 30, 2016, and 1,308,774,077 for the three
months ended June 30, 2015.
The Companys shares held through the Board Incentive Plan Trust (1,643,551 shares as of June
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 -
1. Summary of Consolidated Financial Results
(1) Analysis of Financial Highlights
Financial Results for the Three Months Ended June
30, 2016
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Three months
ended June
30,
2015
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Three months
ended June
30,
2016
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Change
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Year
on
Year
Change
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Total Revenues
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(millions of yen)
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606,124
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587,945
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(18,179
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)
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(3
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)%
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Total Expenses
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(millions of yen)
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497,592
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500,522
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2,930
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1
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%
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Income before Income Taxes
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(millions of yen)
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123,916
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118,434
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(5,482
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(4
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)%
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Net Income Attributable to ORIX Corporation Shareholders
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(millions of yen)
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81,510
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76,769
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(4,741
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)
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(6
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)%
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Earnings Per Share (Basic)
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(yen)
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62.28
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58.62
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(3.66
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(6
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)%
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(Diluted)
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(yen)
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62.22
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58.58
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(3.64
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)
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(6
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)%
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ROE (Annualized) *1
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(%)
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15.0
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13.2
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(1.8
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)
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ROA (Annualized) *2
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(%)
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2.87
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2.82
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(0.05
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)
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*Note 1:
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ROE is the ratio of Net Income Attributable to ORIX Corporation Shareholders for the period to average ORIX Corporation Shareholders Equity.
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*Note 2:
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ROA is calculated based on Net Income Attributable to ORIX Corporation Shareholders.
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Economic Environment
In the world economy, while the curbs on economic
slowdown are seen mainly in emerging and resource rich countries, concerns over the United Kingdoms recent vote to exit the European Union has caused turbulence in political situation and financial markets and has interfered with recovery in
economic growth. Against the backdrop of the monetary easing measures and capital flight in respective countries, long-term interest rates have been decreasing worldwide. In addition, there are political and geopolitical tensions in certain regions
that need to be monitored carefully.
The Japanese economic outlook is becoming increasingly unclear due to the appreciation
of the yen, falling stock prices and decrease in long-term interest rates which are affected by the increasing uncertainty in the overseas economy.
Overview of Business Performance (April 1, 2016 to June 30, 2016)
Total
revenues for the three months ended June 30, 2016 (hereinafter, the first consolidated period) decreased 3% to ¥587,945 million compared to ¥606,124 million during the same period of the previous fiscal year. Operating lease
revenues increased due primarily to gains on sales of large-scale rental properties in Japan. In addition, sales of goods and real estate increased due primarily to revenues generated by subsidiaries in the principal investment business. Gains on
investment securities and dividends decreased due to a decrease in gains on investment securities. Life insurance premiums and related investment income decreased due mainly because investment income from the assets under variable annuity and
variable life insurance contracts held by Hartford Life Insurance K.K. (hereinafter, HLIKK) decreased significantly compared to the same period of the previous fiscal year during which the investment had better performed reflecting a
significant improvement in the capital market conditions. HLIKK was merged into ORIX Life Insurance Corporation (hereinafter, ORIX Life Insurance) on July 1, 2015. 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 1% to ¥500,522 million compared to ¥497,592 million during the same period of the previous fiscal year.
Costs of goods and real estate sold increased in line with the aforementioned revenue increase. On the other hand, life insurance costs decreased due to a reversal of liability reserve in line with the aforementioned decrease in investment income
from the assets under variable annuity and variable life insurance contracts.
- 3 -
Gains on sales of subsidiaries and affiliates and liquidation losses, net increased due
primarily to the increase in a gain on sale of shares of affiliates in Investment and Operation segment.
As a result of the
foregoing, income before income taxes for the first consolidate period decreased 4% to ¥118,434 million compared to ¥123,916 million during the same period of the previous fiscal year, and net income attributable to ORIX Corporation
shareholders decreased 6% to ¥76,769 million compared to ¥81,510 million during the same period of the previous fiscal year.
Segment Information
Total segment profits for the first consolidated period decreased 5% to ¥115,342 million compared to ¥120,779 million during the
same period of the previous fiscal year. While profits from Real Estate segment and Investment and Operation segment increased, profits from each of the other segments decreased.
Segment information for the first consolidated period is as follows:
Corporate Financial Services Segment
:
Lending, leasing and fee business
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Three months
ended
June 30,
2015
(millions of yen)
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Three months
ended
June 30,
2016
(millions of yen)
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Change
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Amount
(millions of
yen)
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Percent
(%)
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Segment Revenues
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27,558
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24,990
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(2,568
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)
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(9
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Segment Profits
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12,377
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8,494
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(3,883
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)
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(31
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As of
March
31,
2016
(millions of yen)
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As of
June
30,
2016
(millions of yen)
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Change
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Amount
(millions of
yen)
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Percent
(%)
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Segment Assets
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1,049,867
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1,033,214
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(16,653
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)
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(2
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The Japanese economic outlook is becoming increasingly unclear due to yen appreciation, falling stock
prices and decreases in long-term interest rates, which are affected by increasing uncertainty in the overseas economy. The balance of outstanding loans at financial institutions continues to increase and interest rates on loans remain at low
levels.
Segment revenues decreased 9% to ¥24,990 million compared to ¥27,558 million during the same period of the
previous fiscal year due to a decrease in gains on investment securities, 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.
In addition, segment expenses increased due to an increase in selling, general and administrative expenses
compared to the same period of the previous fiscal year and segment profits decreased 31% to ¥8,494 million compared to ¥12,377 million during the same period of the previous fiscal year.
Segment assets decreased 2% to ¥1,033,214 million compared to the end of the previous fiscal year due primarily to decreases in
investment in direct financing leases, installment loans, and investment in securities.
- 4 -
Maintenance Leasing Segment
:
Automobile leasing and rentals, car
sharing, and test and measurement instruments and IT-related equipment rentals and leasing
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Three months
ended June 30,
2015
(millions of yen)
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Three months
ended June 30,
2016
(millions of yen)
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Change
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Amount
(millions of
yen)
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Percent
(%)
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Segment Revenues
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67,520
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67,199
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(321
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)
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Segment Profits
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11,687
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9,892
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(1,795
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)
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(15
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)
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As of
March
31,
2016
(millions of yen)
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As of
June
30,
2016
(millions of yen)
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Change
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Amount
(millions of yen)
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Percent
(%)
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Segment Assets
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731,329
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700,427
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(30,902
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)
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(4
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)
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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 of ¥67,199 million remained at approximately the same level as the same period of the previous fiscal year due to an
increase in services income derived from value-added services, offset by a decrease in operating leases revenues resulting from less gains on sale.
Segment expenses increased due to increases in the costs of operating leases in line with an increase in the average balance of operating lease assets and selling, general, and administrative expenses.
As a result, segment profits decreased 15% to ¥9,892 million compared to ¥11,687 million during the same period of
the previous fiscal year.
Segment assets decreased 4% to ¥700,427 million compared to the end of the previous fiscal year
primarily due to a decrease in leasing assets mainly in the automobile business in line with the securitizations.
Real
Estate Segment
:
Real estate development, rental facility operation, REIT asset management; and real estate investment and advisory services
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|
Three months
ended June 30,
2015
(millions of yen)
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Three months
ended June 30,
2016
(millions of yen)
|
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|
Change
|
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|
Amount
(millions of
yen)
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Percent
(%)
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|
Segment Revenues
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|
50,349
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57,338
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6,989
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14
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Segment Profits
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14,451
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23,603
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|
9,152
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63
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|
|
|
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|
As of
March
31,
2016
(millions of yen)
|
|
|
As of
June
30,
2016
(millions of yen)
|
|
|
Change
|
|
|
|
|
|
|
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|
Amount
(millions of yen)
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|
Percent
(%)
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Segment Assets
|
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|
739,592
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705,617
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(33,975
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)
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(5
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)
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- 5 -
The real estate market has remained active due primarily to the quantitative easing policies
of the Bank of Japan, including the adoption of negative interest rates. Land prices remain high and office rents and vacancy rates in the Japanese office building market continue to show improvements especially in the Greater Tokyo Area.
Furthermore, due to an increase in the number of tourists from abroad, 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 sales prices of condominiums
stopped rising.
Segment revenues increased 14% to ¥57,338 million compared to ¥50,349 million during the same period
of the previous fiscal year primarily due to an increase in gains on sales of rental properties, which are included in operating leases revenues, despite a decrease in rental revenues, which are also included in operating leases revenues, in line
with a decrease in the balance of real estate assets.
Segment expenses decreased compared to the same period of the previous
fiscal year primarily due to decreases in interest expense and costs of operating leases in line with the decrease in assets.
As a result of the foregoing, segment profits increased 63% to ¥23,603 million compared to ¥14,451 million during the same period
of the previous fiscal year.
Segment assets decreased 5% to ¥705,617 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
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|
|
|
|
|
|
|
|
|
|
|
Three
months
ended June 30,
2015
(millions of yen)
|
|
|
Three months
ended June 30,
2016
(millions of yen)
|
|
|
Change
|
|
|
|
|
|
|
|
|
Amount
(millions of
yen)
|
|
|
Percent
(%)
|
|
Segment Revenues
|
|
|
229,187
|
|
|
|
258,002
|
|
|
|
28,815
|
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13
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Segment Profits
|
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|
26,159
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|
|
|
30,955
|
|
|
|
4,796
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|
|
|
18
|
|
|
|
|
|
|
|
As of
March
31,
2016
(millions of yen)
|
|
|
As of
June
30,
2016
(millions of yen)
|
|
|
Change
|
|
|
|
|
|
|
|
|
Amount
(millions of yen)
|
|
|
Percent
(%)
|
|
Segment Assets
|
|
|
704,156
|
|
|
|
678,570
|
|
|
|
(25,586
|
)
|
|
|
(4
|
)
|
In Japan, while the 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 market, the size of merger and acquisition
(hereinafter M&A) transactions appear to have decreased despite an increase in the total number of M&A transactions closed since January 2016 compared to the year 2015 in which several large cross-border M&A transactions took
place.
Segment revenues increased 13% to ¥258,002 million compared to ¥229,187 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.
As a result of the foregoing and the recognition of gains on sales of shares of affiliates
and the recognition of a bargain purchase gain from the acquisition of a subsidiary, segment profits increased 18% to ¥30,955 million compared to ¥26,159 million during the same period of the previous fiscal year.
- 6 -
Segment assets decreased 4% to ¥678,570 million compared to the end of the previous
fiscal year primarily due to a decrease in investment in affiliates, despite increases in inventories and in property under facility operations in the environment and energy-related business.
Retail Segment
:
Life insurance, banking and card loan business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended June
30,
2015
(millions of yen)
|
|
|
Three months
ended June
30,
2016
(millions of yen)
|
|
|
Change
|
|
|
|
|
|
|
|
|
Amount
(millions of
yen)
|
|
|
Percent
(%)
|
|
Segment Revenues
|
|
|
83,811
|
|
|
|
54,006
|
|
|
|
(29,805
|
)
|
|
|
(36
|
)
|
Segment Profits
|
|
|
21,619
|
|
|
|
12,532
|
|
|
|
(9,087
|
)
|
|
|
(42
|
)
|
|
|
|
|
|
|
As of
March
31,
2016
(millions of yen)
|
|
|
As of
June
30,
2016
(millions of yen)
|
|
|
Change
|
|
|
|
|
|
|
|
|
Amount
(millions of
yen)
|
|
|
Percent
(%)
|
|
Segment Assets
|
|
|
3,462,772
|
|
|
|
3,384,540
|
|
|
|
(78,232
|
)
|
|
|
(2
|
)
|
Although the life insurance business in Japan is being affected by macroeconomic factors such as domestic
population decline, we are seeing increasing numbers of companies developing 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 of new contracts due to the 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 decreased 36% to ¥54,006
million compared to ¥83,811 million during the same period of the previous fiscal year due to a significant decrease in investment income from assets under variable annuity and variable life insurance contracts originally held by HLIKK, despite
stable increases in insurance premiums in ORIX Life Insurance and finance revenues in the banking business.
Segment expenses
decreased compared to the same period of the previous fiscal year due to a reversal of liability reserve in line with the aforementioned decrease in investment income from the assets under variable annuity and variable life insurance contracts.
As a result of the foregoing, segment profits decreased 42% to ¥12,532 million compared to ¥21,619 million during the
same period of the previous fiscal year.
Segment assets decreased 2% to ¥3,384,540 million compared to the end of the
previous fiscal year due to a large decrease in investment in securities held by HLIKK, offsetting an increase in installment loans in the banking business.
- 7 -
Overseas Business Segment
:
Leasing, lending, investment in bonds, asset
management and ship- and aircraft-related operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended June
30,
2015
(millions of yen)
|
|
|
Three months
ended June
30,
2016
(millions of yen)
|
|
|
Change
|
|
|
|
|
|
|
|
|
Amount
(millions of
yen)
|
|
|
Percent
(%)
|
|
Segment Revenues
|
|
|
147,173
|
|
|
|
125,821
|
|
|
|
(21,352
|
)
|
|
|
(15
|
)
|
Segment Profits
|
|
|
34,486
|
|
|
|
29,866
|
|
|
|
(4,620
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
As of
March
31,
2016
(millions of yen)
|
|
|
As of
June
30,
2016
(millions of yen)
|
|
|
Change
|
|
|
|
|
|
|
|
|
Amount
(millions
of yen)
|
|
|
Percent
(%)
|
|
Segment Assets
|
|
|
2,284,733
|
|
|
|
2,067,813
|
|
|
|
(216,920
|
)
|
|
|
(9
|
)
|
In the world economy, while the curbs on economic slowdown are seen mainly in emerging and resource rich
countries, concerns over the United Kingdoms recent vote to exit the European Union has caused turbulence in political situation and financial markets and has interfered with the recovery in economic growth. Against the backdrop of the
monetary easing measures and capital flight in respective countries, long-term interest rates have been decreasing worldwide. In addition, there are political and geopolitical tensions in certain regions that need to be monitored carefully.
Segment revenues decreased 15% to ¥125,821 million compared to ¥147,173 million during the same period of the
previous fiscal year due to a decrease in gains on investment securities, the deconsolidation of HL and recent appreciation of the yen, despite increases in sales of goods in the Americas and in operating lease revenues in aircraft-related
operations in line with increases in gains on sales and the average balance of operating lease assets.
Segment expenses
decreased compared to the same period of the previous fiscal year primarily due to the deconsolidation of HL and recent appreciation of the yen.
As a result of the foregoing, segment profits decreased 13% to ¥29,866 million compared to ¥34,486 million during the same period of the previous fiscal year.
Segment assets decreased 9% to ¥2,067,813 million compared to the end of the previous fiscal year due to decreases in investment in
securities in the Americas, and investment in operating leases of aircraft-related operations, and yen appreciation, despite an increase in installment loans in the Americas.
- 8 -
(2) Analysis of Consolidated Financial Condition
Financial Condition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
March 31,
2016
|
|
|
As
of
June 30,
2016
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
Percent
|
|
Total Assets
|
|
(millions of yen)
|
|
|
10,992,918
|
|
|
|
10,762,882
|
|
|
|
(230,036
|
)
|
|
|
(2
|
)%
|
(Segment Assets)
|
|
|
|
|
8,972,449
|
|
|
|
8,570,181
|
|
|
|
(402,268
|
)
|
|
|
(4
|
)%
|
Total Liabilities
|
|
(millions of yen)
|
|
|
8,512,632
|
|
|
|
8,269,617
|
|
|
|
(243,015
|
)
|
|
|
(3
|
)%
|
(Long- and Short-term Debt)
|
|
|
|
|
4,286,542
|
|
|
|
4,136,228
|
|
|
|
(150,314
|
)
|
|
|
(4
|
)%
|
(Deposits)
|
|
|
|
|
1,398,472
|
|
|
|
1,428,232
|
|
|
|
29,760
|
|
|
|
2
|
%
|
Shareholders Equity
|
|
(millions of yen)
|
|
|
2,310,431
|
|
|
|
2,326,969
|
|
|
|
16,538
|
|
|
|
1
|
%
|
Shareholders Equity Per Share
|
|
(yen)
|
|
|
1,764.34
|
|
|
|
1,776.90
|
|
|
|
12.56
|
|
|
|
1
|
%
|
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 ¥10,762,882 million compared to ¥10,992,918 million at the end of the previous fiscal year. Investment in operating leases decreased due primarily to sales of aircraft in Overseas Business segment and sales of real estate for operating
leases in Japan, and investment in securities decreased due primarily to the sales of assets held by HLIKK. In addition, investment in affiliates decreased due primarily to sales of shares of affiliates in Investment and Operation segment. Segment
assets decreased 4% to ¥8,570,181 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 cancelation of variable annuity and variable life insurance contracts held by HLIKK.
Shareholders equity increased 1% to ¥2,326,969 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 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 -
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 -
3. Financial Information
(1) Condensed Consolidated Balance Sheets
(As of March 31, 2016 and June
30, 2016)
(Unaudited)
|
|
|
|
|
|
|
|
|
(millions of yen)
|
|
|
|
|
Assets
|
|
As of
March 31,
2016
|
|
|
As of
June 30,
2016
|
|
|
|
Cash and Cash Equivalents
|
|
|
730,420
|
|
|
|
842,171
|
|
Restricted Cash
|
|
|
80,979
|
|
|
|
81,388
|
|
Investment in Direct Financing Leases
|
|
|
1,190,136
|
|
|
|
1,146,198
|
|
Installment Loans
|
|
|
2,592,233
|
|
|
|
2,577,472
|
|
(The amounts of ¥20,673 million as of March 31, 2016 and ¥13,773 million as of June 30, 2016 are measured at fair value
by electing the fair value option under ASC 825.)
|
|
|
|
|
|
|
|
|
Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses
|
|
|
(60,071
|
)
|
|
|
(58,507
|
)
|
Investment in Operating Leases
|
|
|
1,349,199
|
|
|
|
1,278,397
|
|
Investment in Securities
|
|
|
2,344,792
|
|
|
|
2,151,161
|
|
(The amounts of ¥27,367 million as of March 31, 2016 and ¥24,684 million as of June 30, 2016 are measured at fair value
by electing the fair value option under ASC 825.)
|
|
|
|
|
|
|
|
|
Property under Facility Operations
|
|
|
327,016
|
|
|
|
348,125
|
|
Investment in Affiliates
|
|
|
530,667
|
|
|
|
480,238
|
|
Trade Notes, Accounts and Other Receivable
|
|
|
294,638
|
|
|
|
278,810
|
|
Inventories
|
|
|
139,950
|
|
|
|
143,723
|
|
Office Facilities
|
|
|
120,173
|
|
|
|
120,785
|
|
Other Assets
|
|
|
1,352,786
|
|
|
|
1,372,921
|
|
(The amounts of ¥37,855 million as of March 31, 2016 and ¥45,217 million as of June 30, 2016 are measured at fair value
by electing the fair value option under ASC 825.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
10,992,918
|
|
|
|
10,762,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Short-Term Debt
|
|
|
349,624
|
|
|
|
242,509
|
|
Deposits
|
|
|
1,398,472
|
|
|
|
1,428,232
|
|
Trade Notes, Accounts and Other Payable
|
|
|
266,216
|
|
|
|
197,689
|
|
Policy Liabilities and Policy Account Balances
|
|
|
1,668,636
|
|
|
|
1,634,591
|
|
(The amounts of ¥795,001 million as of March 31, 2016 and ¥750,915 million as of June 30, 2016 are measured at fair value
by electing the fair value option under ASC 825.)
|
|
|
|
|
|
|
|
|
Current and Deferred Income Taxes
|
|
|
358,758
|
|
|
|
363,773
|
|
Long-Term Debt
|
|
|
3,936,918
|
|
|
|
3,893,719
|
|
Other Liabilities
|
|
|
534,008
|
|
|
|
509,104
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
8,512,632
|
|
|
|
8,269,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Noncontrolling Interests
|
|
|
7,467
|
|
|
|
6,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingent Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
220,469
|
|
|
|
220,469
|
|
Additional Paid-in Capital
|
|
|
257,629
|
|
|
|
257,667
|
|
Retained Earnings
|
|
|
1,864,241
|
|
|
|
1,909,869
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
(6,222
|
)
|
|
|
(35,434
|
)
|
Treasury Stock, at Cost
|
|
|
(25,686
|
)
|
|
|
(25,602
|
)
|
|
|
|
|
|
|
|
|
|
Total ORIX Corporation Shareholders Equity
|
|
|
2,310,431
|
|
|
|
2,326,969
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling Interests
|
|
|
162,388
|
|
|
|
159,415
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
|
2,472,819
|
|
|
|
2,486,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
|
10,992,918
|
|
|
|
10,762,882
|
|
|
|
|
|
|
|
|
|
|
- 11 -
Note 1
:
|
Breakdowns of Accumulated Other Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
As of
March 31,
2016
|
|
|
As of
June
30,
2016
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
Net unrealized gains on investment in securities
|
|
|
47,185
|
|
|
|
54,013
|
|
Defined benefit pension plans
|
|
|
(23,884
|
)
|
|
|
(22,704
|
)
|
Foreign currency translation adjustments
|
|
|
(24,766
|
)
|
|
|
(60,175
|
)
|
Net unrealized losses on derivative instruments
|
|
|
(4,757
|
)
|
|
|
(6,568
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(6,222
|
)
|
|
|
(35,434
|
)
|
|
|
|
|
|
|
|
|
|
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 -
(2) Condensed Consolidated Statements of Income
(For the Three Months Ended June 30, 2015 and 2016)
(Unaudited)
|
|
|
|
|
|
|
|
|
(millions of yen)
|
|
|
|
|
|
|
Three Months
ended
June 30,
2015
|
|
|
Three Months
ended
June 30,
2016
|
|
Revenues :
|
|
|
|
|
|
|
|
|
Finance revenues
|
|
|
49,627
|
|
|
|
48,056
|
|
Gains on investment securities and dividends
|
|
|
22,933
|
|
|
|
4,006
|
|
Operating leases
|
|
|
95,429
|
|
|
|
104,890
|
|
Life insurance premiums and related investment income
|
|
|
68,314
|
|
|
|
36,772
|
|
Sales of goods and real estate
|
|
|
176,576
|
|
|
|
215,886
|
|
Services income
|
|
|
193,245
|
|
|
|
178,335
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
606,124
|
|
|
|
587,945
|
|
|
|
|
|
|
|
|
|
|
Expenses :
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
18,023
|
|
|
|
18,062
|
|
Costs of operating leases
|
|
|
60,008
|
|
|
|
60,072
|
|
Life insurance costs
|
|
|
43,056
|
|
|
|
20,238
|
|
Costs of goods and real estate sold
|
|
|
154,781
|
|
|
|
192,366
|
|
Services expense
|
|
|
106,213
|
|
|
|
105,318
|
|
Other (income) and expense, net
|
|
|
(2,241
|
)
|
|
|
(1,399
|
)
|
Selling, general and administrative expenses
|
|
|
114,370
|
|
|
|
102,602
|
|
Provision for doubtful receivables and probable loan losses
|
|
|
611
|
|
|
|
2,694
|
|
Write-downs of long-lived assets
|
|
|
822
|
|
|
|
564
|
|
Write-downs of securities
|
|
|
1,949
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
497,592
|
|
|
|
500,522
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
108,532
|
|
|
|
87,423
|
|
|
|
|
|
|
|
|
|
|
Equity in Net Income of Affiliates
|
|
|
6,166
|
|
|
|
6,236
|
|
Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, net
|
|
|
9,218
|
|
|
|
20,488
|
|
Bargain Purchase Gain
|
|
|
|
|
|
|
4,287
|
|
|
|
|
|
|
|
|
|
|
Income before Income Taxes
|
|
|
123,916
|
|
|
|
118,434
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
|
|
|
39,157
|
|
|
|
39,022
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
84,759
|
|
|
|
79,412
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to the Noncontrolling Interests
|
|
|
2,188
|
|
|
|
2,578
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to the Redeemable Noncontrolling Interests
|
|
|
1,061
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to ORIX Corporation Shareholders
|
|
|
81,510
|
|
|
|
76,769
|
|
|
|
|
|
|
|
|
|
|
- 13 -
(3) Condensed Consolidated Statements of Comprehensive Income
(For the Three Months Ended June 30, 2015 and 2016)
(Unaudited)
|
|
|
|
|
|
|
|
|
(millions of yen)
|
|
|
|
|
|
|
Three Months
ended
June
30, 2015
|
|
|
Three Months
ended
June
30, 2016
|
|
Net Income :
|
|
|
84,759
|
|
|
|
79,412
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
Net change of unrealized gains (losses) on investment in securities
|
|
|
(7,281
|
)
|
|
|
6,772
|
|
Net change of defined benefit pension plans
|
|
|
(900
|
)
|
|
|
1,297
|
|
Net change of foreign currency translation adjustments
|
|
|
10,996
|
|
|
|
(41,204
|
)
|
Net change of unrealized gains (losses) on derivative instruments
|
|
|
117
|
|
|
|
(1,932
|
)
|
Total other comprehensive income (loss)
|
|
|
2,932
|
|
|
|
(35,067
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
87,691
|
|
|
|
44,345
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income (Loss) Attributable to the Noncontrolling Interests
|
|
|
3,514
|
|
|
|
(2,626
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive Income (Loss) Attributable to the Redeemable Noncontrolling Interests
|
|
|
2,486
|
|
|
|
(586
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive Income Attributable to ORIX Corporation Shareholders
|
|
|
81,691
|
|
|
|
47,557
|
|
|
|
|
|
|
|
|
|
|
(4) Assumptions for Going Concern
There is no corresponding item.
- 14 -
(5) Segment Information (Unaudited)
1. Segment Information by Sector
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of yen)
|
|
|
|
|
|
|
|
|
Three Months ended
June 30,
2015
|
|
|
Three Months ended
June 30,
2016
|
|
|
March 31,
2016
|
|
|
June 30,
2016
|
|
|
|
Segment
Revenues
|
|
|
Segment
Profits
|
|
|
Segment
Revenues
|
|
|
Segment
Profits
|
|
|
Segment
Assets
|
|
|
Segment
Assets
|
|
Corporate Financial Services
|
|
|
27,558
|
|
|
|
12,377
|
|
|
|
24,990
|
|
|
|
8,494
|
|
|
|
1,049,867
|
|
|
|
1,033,214
|
|
Maintenance Leasing
|
|
|
67,520
|
|
|
|
11,687
|
|
|
|
67,199
|
|
|
|
9,892
|
|
|
|
731,329
|
|
|
|
700,427
|
|
Real Estate
|
|
|
50,349
|
|
|
|
14,451
|
|
|
|
57,338
|
|
|
|
23,603
|
|
|
|
739,592
|
|
|
|
705,617
|
|
Investment and Operation
|
|
|
229,187
|
|
|
|
26,159
|
|
|
|
258,002
|
|
|
|
30,955
|
|
|
|
704,156
|
|
|
|
678,570
|
|
Retail
|
|
|
83,811
|
|
|
|
21,619
|
|
|
|
54,006
|
|
|
|
12,532
|
|
|
|
3,462,772
|
|
|
|
3,384,540
|
|
Overseas Business
|
|
|
147,173
|
|
|
|
34,486
|
|
|
|
125,821
|
|
|
|
29,866
|
|
|
|
2,284,733
|
|
|
|
2,067,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Total
|
|
|
605,598
|
|
|
|
120,779
|
|
|
|
587,356
|
|
|
|
115,342
|
|
|
|
8,972,449
|
|
|
|
8,570,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Difference between Segment Total and Consolidated Amounts
|
|
|
526
|
|
|
|
3,137
|
|
|
|
589
|
|
|
|
3,092
|
|
|
|
2,020,469
|
|
|
|
2,192,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Amounts
|
|
|
606,124
|
|
|
|
123,916
|
|
|
|
587,945
|
|
|
|
118,434
|
|
|
|
10,992,918
|
|
|
|
10,762,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 VIEs 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)
|
|
|
|
|
|
Three Months Ended June 30, 2015
|
|
|
|
Japan
|
|
|
The
Americas*1
|
|
|
Other*2
|
|
|
Consolidated
Amounts
|
|
Total Revenues
|
|
|
454,742
|
|
|
|
61,015
|
|
|
|
90,367
|
|
|
|
606,124
|
|
Income before Income Taxes
|
|
|
89,142
|
|
|
|
10,744
|
|
|
|
24,030
|
|
|
|
123,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of yen)
|
|
|
|
|
|
Three Months Ended June 30, 2016
|
|
|
|
Japan
|
|
|
The
Americas*1
|
|
|
Other*2
|
|
|
Consolidated
Amounts
|
|
Total Revenues
|
|
|
455,689
|
|
|
|
45,381
|
|
|
|
86,875
|
|
|
|
587,945
|
|
Income before Income Taxes
|
|
|
87,685
|
|
|
|
9,663
|
|
|
|
21,086
|
|
|
|
118,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Note 1:
|
|
Mainly the United States
|
*Note 2:
|
|
Mainly Asia, Europe, Australasia and Middle East
|
Note 3:
|
|
Robeco, one of the Companys 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 three months ended June 30, 2015 and 2016. The revenues of
Robeco aggregated on a legal entity basis were ¥29,015 million in the Americas and ¥19,759 million in Other for the three months ended June 30, 2015, and ¥24,397 million in the Americas and ¥19,772 million in Other for the three
months ended June 30, 2016.
|
- 15 -
(6) Significant Changes in Shareholders Equity
There is no corresponding item.
(7) Subsequent Events
There are no material subsequent events.
- 16 -