ORIX Corporation (NYSE: IX; TSE: 8591) Analysis of ...

[Pages:17]ORIX Corporation (NYSE: IX; TSE: 8591)

Analysis of Consolidated Financial Results for the Three- and Nine-Month Periods October 1-December 31, 2003 (3Q) and April 1-December 31, 2003

(February 5, 2004)

Contents

Summary New Business Volumes Operating Assets New Business Volumes & Operating Assets (Quarterly Data) Revenues Expenses Income before Income Taxes and Net Income Revenues, Expenses & Income (Quarterly Data) Segment Information (Summary) Segment Revenues, Segment Profits (Losses), Segment Assets Segment Information (Quarterly Data) Funding and Asset Quality Summary Funding Additional Information (1) Additional Information (2)

Page

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

This document has been prepared based upon quarterly financial information. For annual and more historical data please access our web site. A list of major disclosure materials is given below.

ORIX Web Site:

URL:

IR Web Site:

URL:

Financial Reports:

URL:

1. Annual Reports since Fiscal 1998

2. Investors' Guide (Data Book of Major Financial Data Covering the Past Five Years)

3. Five-Year Excel Data of Major Financial Data

4. Annual Report Filed with the United States Securities and Exc hange Commission (SEC) on Form 20-F

If you would like us to send you a hard copy of our Annual Report or Investors' Guide, or be included on our e-mail list for major news announcements, please send your request to the address below.

ORIX Corporation Corporate Communications 3-22-8 Shiba, Minato-ku, Tokyo 105-8683, Japan Tel: +81-3-5419-5102; Fax: +81-3-5419-5901 E-mail: orixir@orix.co.jp

Disclaimer

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 expects that it will be a "passive foreign investment company" (PFIC) under the U.S. Internal Revenue Code. A U.S. holder of the shares of the Company is therefore subject to special rules of taxation in respect of certain dividend, gain or other income on such. Investors should consult their tax advisors with respect to such rules, which are summarized in the Company's annual report.

Summary

(Unaudited)

Consolidated Financial Results for the Three- and Nine-Month Periods

October 1-December 31, 2003 (3Q) and April 1-December 31, 2003

(JPY million except as noted)

3Q

Change on

9 Months

Change on

2003.10-12 2002.10-12 2003.4-12

2002.4-12

Revenues

175,056

Up 7%

520,927

Up 5%

Income before Income Taxes (IBIT)*

26,863

Up 15%

85,119

Up 39%

Net Income

14,473

Up 16%

45,892

Up 30%

Basic Earnings Per Share (yen)

172.94

Up 16%

548.36

Up 30%

Diluted Earnings Per Share (yen)

162.91

Up 16%

516.58

Up 30%

Operating Assets Total Assets

2003.12

4,910,845 5,672,032

Change on 2003.9 Down 1% 0%

Change on 2003.6 Down 6% Down 4%

Change on 2003.3 Down 5% Down 4%

D/E Ratio (Times)** Shareholders' Equity Ratio

2003.12 7.1

9.7%

2003.9 7.4

9.5%

2003.6 8.0

8.9%

2003.3 8.4

8.5%

2003.4-12

2002.4-12 2002.4-2003.3

ROE (Annualized)

11.6%

9.3%

6.0%

ROA (Annualized)

1.05%

0.76%

0.49%

Yen/Dollar

Average Rate: (2003.4-12) 115.19 JPY; (2002.4-12) 123.07 JPY (6.4% JPY appreciation)

Exchange Rate Period End Rate: (2003.12) 107.13 JPY; (2003.3) 120.20 JPY (10.9% JPY appreciation)

IBIT and Net Income

Operating Assets and Total Assets

40,000

(JPY million)

20,000

0

-20,000

3Q 02.10-12

4Q 03.1-3

IBIT

1Q 03.4-6

Net Income

2Q 03.7-9

3Q 03.10-12

IBIT Net Income

3Q 02.10-12

23,302

12,449

4Q 03.1-3 (15,010)

(4,969)

1Q 03.4-6

25,920 14,098

2Q 03.7-9

32,336

17,321

3Q 03.10-12

26,863

14,473

8,000,000 6,000,000 4,000,000 2,000,000

0

(JPY million)

3Q

4Q

1Q

02.12

03.3

03.6

Operating Assets

2Q

3Q

03.9

03.12

Total Assets

Operating Assets

Total Assets

3Q 02.12 5,301,801

6,025,781

4Q 03.3 5,168,307 5,931,067

1Q 03.6 5,201,976

5,923,307

2Q 03.9 4,937,086

5,684,598

3Q 03.12 4,910,845

5,672,032

Shareholders' Equity and Shareholders' Equity Ratio Forecasts for Fiscal Year Ending March 31, 2004

600,000

(JPY million)

10.0%

400,000

9.0%

200,000

8.0%

0

3Q

4Q

02.12

03.3

Shareholders' Equity

1Q

2Q

03.6

03.9

3Q 03.12

7.0%

Shareholders' Equity Ratio

100,000 80,000 60,000 40,000 20,000

0

00.3

IBIT

(JPY million)

01.3

02.3

03.3

Net Income

800,000

600,000

400,000

200,000

0

04.3***

Forecast Revenues

Shareholders' Equity

Shareholders' Equity Ratio

3Q 02.12 506,605

8.4%

4Q 03.3 505,458

8.5%

1Q 03.6 526,547

8.9%

2Q

3Q

03.9 03.12

541,078 551,768

9.5% 9.7%

Revenues (right scale) IBIT (left scale) Net Income (left scale)

00.3 616,513 52,048 30,642

01.3 586,149 59,236 34,157

02.3 658,462 73,039 40,269

03.3 04.3 * * * 683,645 730,000 46,288 98,000 30,243 53,000

*IBIT represents "Income before Extraordinary Gain, Cumulative Effect of a Change in Accounting Principle and Income Taxes."

**D/E Ratio=Short- and Long-Term Debt and Deposits/Shareholders' Equity.

1

New Business Volumes

(Unaudited)

2,000,000

(JPY million)

1,955,243

1,000,000

564,781

578,390

0

2002.10-12

2003.10-12

2002.4-12

3Q

3Q

9 months

Note: Direct financing leases refer to new equipment acquisitions.

1,683,768

2003.4-12

9 months

Direct Financing Leases: New equipment acquisitions

Installment Loans: New loans added

Operating Leases: New equipment acqusitions

Investment in Securities: New securities added

Other Operating Assets: New assets added

(JPY million)

Direct Financing Leases: New receivables added Japan Overseas

Direct Financing Leases: New equipment acquisitions Japan Overseas

Installment Loans: New loans added Japan Overseas

Operating Leases: New equipment acquisitions Japan Overseas

Investment in Securities: New securities added Japan Overseas

Other Operating Assets: New assets added Japan Overseas

2002.10-12 2003.10-12

YoY Change

2002.4-12 2003.4-12

YoY Change

3Q

3Q Amount

%

9 months 9 months Amount

%

213,620 215,975 2,355

1% 777,216 614,520 (162,696) -21%

149,193 172,006 22,813

15% 597,031 470,151 (126,880) -21%

64,427 43,969 (20,458) -32% 180,185 144,369 (35,816) -20%

187,555 192,336 4,781

3% 695,496 547,264 (148,232) -21%

128,093 151,787 23,694

18% 531,038 412,229 (118,809) -22%

59,462 40,549 (18,913) -32% 164,458 135,035 (29,423) -18%

295,622 293,556 (2,066)

-1% 970,830 822,979 (147,851) -15%

261,815 247,284 (14,531)

-6% 836,645 695,641 (141,004) -17%

33,807 46,272 12,465

37% 134,185 127,338 (6,847)

-5%

27,513 44,102 16,589

60% 89,039 118,634 29,595

33%

20,667 38,392 17,725

86% 68,312 88,626 20,314

30%

6,846 5,710 (1,136) -17% 20,727 30,008 9,281

45%

25,894 19,980 (5,914) -23% 121,122 89,457 (31,665) -26%

23,520 6,051 (17,469) -74% 106,670 70,906 (35,764) -34%

2,374 13,929 11,555 487% 14,452 18,551 4,099

28%

28,197 28,416

219

1% 78,756 105,434 26,678

34%

23,504 28,416 4,912

21% 68,382 105,372 36,990

54%

4,693

- (4,693)

- 10,374

62 (10,312) -99%

? Direct Financing Leases: In Japan, although new receivables were down in the first nine months of this fiscal year due to the cautious selection of new assets and the absence of acquisitions (approximately 120 billion yen due to the acquisition of Nittetsu Lease in 2Q of the previous fiscal year), they were up in 3Q as a result of an increase in automobile leases. Overseas was down mainly due to an effort to hold down growth of new assets in the U.S.

? Installment Loans: In Japan, new receivables were down due to the careful selectio n of new loans to corporate customers and an effort to hold down growth of new card loans. Overseas saw an increase in the U.S. in 3Q, however new loans added were down in the first nine months of this fiscal year as an acquisition of receivables in Asia added to assets in 1Q of the previous fiscal year, while no such acquisition took place this fiscal year.

? Operating Leases: Japan increased due to the purchase of real estate and the 3Q acquisition of JAPAREN (a car rental company). Overseas saw increases in both real estate and automobile leases for the first nine months of this fiscal year.

? Investment in Securities: In Japan, the decrease was due mainly to a replacement of some assets in the portfolio at ORIX Life Insurance (from securities to installment loans and other investments). Overseas increased due to a higher investment in securities in the U.S.

? Other Operating Assets: In Japan, the increase was due to the increase in assets associated with the condominium development business.

Note: For quarterly data on "New Business Volumes" please refer to page 4 of this document.

2

(JPY million)

6,000,000

5,168,307

4,000,000

Operating Assets

4,937,086

(Unaudited) 4,910,845

2,000,000

0 2003.3

2003.9

2003.12

(JPY million)

Investment in Direct Financing Leases Japan Overseas

Installment Loans Japan Overseas

Investment in Operating Leases Japan Overseas

Investment in Securities Japan Overseas

Other Operating Assets Japan Overseas

Total Operating Assets

2003.3

2003.9

1,572,308 1,542,172

1,237,141 1,237,347

335,167 304,825

2,288,039 2,224,486

1,954,640 1,922,105

333,399 302,381

529,044 487,613

369,489 333,527

159,555 154,086

677,435 589,918

497,829 440,598

179,606 149,320

101,481 92,897

91,851 84,695

9,630

8,202

5,168,307 4,937,086

2003.12

1,545,853 1,255,453

290,400 2,224,670 1,943,624

281,046 496,570 346,064 150,506 544,021 394,784 149,237 99,731 92,183

7,548 4,910,845

Change on 2003.3

Amount

%

(26,455)

-2%

18,312

1%

(44,767)

-13%

(63,369)

-3%

(11,016)

-1%

(52,353)

-16%

(32,474)

-6%

(23,425)

-6%

(9,049)

-6%

(133,414)

-20%

(103,045)

-21%

(30,369)

-17%

(1,750)

-2%

332

0%

(2,082)

-22%

(257,462)

-5%

Change on 2003.9

Amount

%

3,681

0%

18,106

1%

(14,425)

-5%

184

0%

21,519

1%

(21,335)

-7%

8,957

2%

12,537

4%

(3,580)

-2%

(45,897)

-8%

(45,814)

-10%

(83)

0%

6,834

7%

7,488

9%

(654)

-8%

(26,241)

-1%

? Direct Financing Leases: Assets were flat in Japan compared with March 31, 2003 due to a careful selection of new assets and the absence of major acquisitions or securitization. Overseas, assets declined mainly due to the appreciation of the yen against the dollar and as a result of a decline in leasing assets in the U.S.

? Installment Loans: Assets were flat in Japan due to a careful selection of new assets and the absence of major acquisitions or securitization. Overseas, assets declined mainly due to the appreciation of the yen against the dollar.

? Operating Leases: Assets declined in Japan compared with March 31, 2003 due to the sale of real estate assets, however, they increased compared with September 30, 2003 due to the purchase of real estate and the acquisition of JAPAREN (a car rental company). Overseas, assets declined mainly due to the appreciation of the yen against the dollar.

? Investment in Securities: Assets fell primarily due to a change in the portfolio of ORIX Life Insurance (from securities to installment loans and other investments). Overseas, assets declined compared with March 31, 2003 as we sold off securities and due to the appreciation of the yen against the dollar.

Note: For quarterly data on "Operating Assets" please refer to page 4 of this document.

3

New Business Volumes & Operating Assets (Quarterly Data) (Unaudited)

(JPY million)

New Business Volumes (Quarterly Data)

2002.1-3 2002.4-6 2002.7-9 2002.10-12 2003.1-3 2003.4-6 2003.7-9 2003.10-12

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

Direct Financing Leases: New receivables added Japan Overseas

228,683 175,567

53,116

237,779 172,957

64,822

325,817 274,881

50,936

213,620 149,193

64,427

223,680 161,755

61,925

212,175 158,176

53,999

186,370 139,969

46,401

215,975 172,006

43,969

Direct Financing Leases: New equipment acquisitions Japan Overseas

Installment Loans: New loans added Japan

216,576 167,821

48,755 326,699 291,529

210,819 151,062

59,757 341,138 273,867

297,122 251,883

45,239 334,070 300,963

187,555 128,093

59,462 295,622 261,815

200,352 144,525

55,827 297,340 264,242

188,194 138,479

49,715 270,959 225,042

166,734 121,963

44,771 258,464 223,315

192,336 151,787

40,549 293,556 247,284

Overseas Operating Leases: New equipment acquisitions

Japan

35,170 18,376 11,012

67,271 20,870 14,128

33,107 40,656 33,517

33,807 27,513 20,667

33,098 84,528 74,688

45,917 40,810 29,880

35,149 33,722 20,354

46,272 44,102 38,392

Overseas Investment in Securities: New securities added

Japan Overseas Other Operating Assets: New assets added

7,364 77,599 74,195 3,404 82,687

6,742 48,907 38,346 10,561 20,768

7,139 46,321 44,804

1,517 29,791

6,846 25,894 23,520

2,374 28,197

9,840 110,172 107,807

2,365 37,980

10,930 57,370 53,835 3,535 28,655

13,368 12,107 11,020

1,087 48,363

5,710 19,980

6,051 13,929 28,416

Japan Overseas

75,982 6,705

15,475 5,293

29,403 388

23,504 4,693

30,948 7,032

28,655 -

48,301 62

28,416 -

Operating Assets (Quarterly Data)

Investment in Direct Financing Leases Japan Overseas

Installment Loans Japan Overseas

Investment in Operating Leases Japan Overseas

Investment in Securities Japan Overseas

Other Operating Assets Japan Overseas

Operating Assets Total

2002.3 2002.6 2002.9 2002.12 2003.3 2003.6 2003.9 2003.12

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

1,658,669 1,646,932 1,669,623 1,634,494 1,572,308 1,582,153 1,542,172 1,545,853

1,255,537 1,283,552 1,305,846 1,278,175 1,237,141 1,242,600 1,237,347 1,255,453

403,132 363,380 363,777 356,319 335,167 339,553 304,825 290,400

2,273,280 2,327,354 2,326,189 2,374,664 2,288,039 2,302,005 2,224,486 2,224,670

1,840,289 1,898,108 1,932,184 1,986,182 1,954,640 1,969,694 1,922,105 1,943,624

432,991 429,246 394,005 388,482 333,399 332,311 302,381 281,046

474,491 451,012 460,103 454,468 529,044 523,413 487,613 496,570

338,719 327,391 339,403 340,997 369,489 358,596 333,527 346,064

135,772 123,621 120,700 113,471 159,555 164,817 154,086 150,506

861,336 759,406 717,500 695,319 677,435 697,926 589,918 544,021

651,702 565,409 520,005 505,995 497,829 528,184 440,598 394,784

209,634 193,997 197,495 189,324 179,606 169,742 149,320 149,237

260,373 143,064 129,311 142,856 101,481 96,479 92,897 99,731

248,216 132,217 118,558 132,847 91,851 87,217 84,695 92,183

12,157 10,847 10,753 10,009

9,630

9,262

8,202 7,548

5,528,149 5,327,768 5,302,726 5,301,801 5,168,307 5,201,976 4,937,086 4,910,845

4

600,000 (JPY million)

400,000 200,000

163,169

Revenues

497,897 175,056

(Unaudited) 520,927

0 2002.10-12

3Q

2003.10-12

3Q

2002.4-12

9 months

2003.4-12

9 months

(JPY million) Direct Financing Leases

2002.10-12 2003.10-12

YoY Change

2002.4-12 2003.4-12

YoY Change

3Q

3Q Amount

%

9 months 9 months Amount

%

29,880 27,503 (2,377)

-8% 93,359 84,368 (8,991) -10%

Japan Overseas Operating Leases Japan

22,503 7,377

30,675 21,321

21,462 6,041

36,576 26,717

(1,041) (1,336)

5,901 5,396

-5% -18% 19% 25%

69,344 24,015 91,754 65,141

65,233 19,135 108,817 78,570

(4,111) (4,880) 17,063 13,429

-6% -20% 19% 21%

Overseas Interest on Loans and Investment Securities

Interest on Loans

9,354 9,859

505

5% 26,613 30,247 3,634

14%

31,395 27,860 (3,535) -11% 95,436 87,437 (7,999)

-8%

27,634 25,820 (1,814)

-7% 83,160 80,550 (2,610)

-3%

Japan Overseas Interest on Investment Securities

21,506 6,128 3,761

21,706 4,114 2,040

200 (2,014) (1,721)

1% -33% -46%

63,390 19,770 12,276

66,746 13,804

6,887

3,356 (5,966) (5,389)

5% -30% -44%

Japan Overseas Brokerage Commissions and Net Gains on Investment Securities Brokerage Commissions Net Gains on Investment Securities

180 3,581

1,355

536 819

165 1,875

6,595

1,006 5,589

(15) (1,706)

5,240

470 4,770

-8% -48%

387%

88% 582%

661 11,615

9,282

1,879 7,403

633 6,254

14,164

2,864 11,300

(28) (5,361)

4,882

985 3,897

-4% -46%

53%

52% 53%

Life Insurance Premiums and Related Investment Income Life Insurance Premiums Related Investment Income

28,321 28,480

159

1% 100,153 93,633 (6,520)

-7%

25,184 24,231 (953)

-4% 88,432 82,869 (5,563)

-6%

3,137 4,249 1,112

35% 11,721 10,764 (957)

-8%

Residential Condominium Sales Interest Income on Deposits Other Operating Revenues

21,982 26,329 4,347

20% 51,724 68,864 17,140

33%

98

260

162 165%

410

523

113

28%

19,463 21,453 1,990

10% 55,779 63,121 7,342

13%

Japan Overseas Total Revenues

16,243 18,811 2,568

16% 48,125 55,461 7,336

15%

3,220 2,642 (578) -18% 7,654 7,660

6

0%

163,169 175,056 11,887

7% 497,897 520,927 23,030

5%

? Direct Financing Leases: Revenues fell in Japan and overseas due to the lower average balance of assets. In addition, no gains from securitization were made (2.8 billion yen from securitization was recorded in first nine months of the previous fiscal year).

? Operating Leases: Revenues were up in Japan due to gains on the sale of real estate assets and the recovery of the precision measuring equipment rental business. Overseas, revenues were up mainly due to the higher average balance of assets and gains on the sale of real estate assets.

? Installment Loans: In Japan, interest on loans was up due to the higher average balance of loan assets and an increase in profitability. Overseas, the decrease was due to the lower balance of assets and lower market rates in the U.S.

? Interest on Investment Securities: Overseas, interest was down due to the lower average balance of investment securities (particularly in the U.S.) and lower market interest rates.

? Brokerage Commissions and Net Gains on Investment Securities: The recovery of the stock market in Japan supported an increase in both brokerage commissions and net gains on investment securities (refer to page 15 of this document for a breakdown of gains on investment securities).

? Life Insurance Premiums and Related Investment Income: Premiums were down due to a continued focus on insuranceonly-type products, which produce lower revenues than savings-type products. In addition, related investment income was down in the first nine months of this fiscal year as a result of a decrease in gains on the sale of investment securities.

? Residential Condominium Sales: Large increase due to the rise in the number of condominiums sold to buyers.

? Other Operating Revenues: Increased in Japan mainly due to revenues from companies in which we invested as part of our corporate rehabilitation business and increased revenues from building maintenance operations.

Note: For quarterly data on "Revenues" please refer to page 8 of this document.

5

600,000 (JPY million)

400,000

Expenses

442,275

(Unaudited) 446,906

200,000

142,182

150,764

0

2002.10-12

3Q

2003.10-12

3Q

2002.4-12

9 months

2003.4-12

9 months

(JPY million) Interest Expense Depreciation--Operating Leases

2002.10-12 2003.10-12

YoY Change

3Q

3Q

Amount

%

2002.4-12 2003.4-12

YoY Change

9 months 9 months Amount

%

17,555 14,894 (2,661) -15% 54,259 46,759 (7,500) -14%

19,744 21,016

1,272

6% 58,597 62,585 3,988

7%

Life Insurance Costs Costs of Residential Condominium Sales Other Operating Expenses Selling, General and Administrative Expenses

26,792 24,892 (1,900)

-7% 91,216 83,135 (8,081)

-9%

17,596 24,463

6,867

39% 43,308 62,136 18,828

43%

10,114 12,782

2,668

26% 28,263 34,528 6,265

22%

35,270 39,551

4,281

12% 105,099 117,021 11,922

11%

Provision for Doubtful Receivables and Probable Loan Losses 12,421 10,839 (1,582) -13% 37,388 34,682 (2,706)

-7%

Write-downs of Long-Lived Assets Write-downs of Securities

2,174

1,930

(244)

-11%

14,665 7,916

4,202 (10,463) 3,987 (3,929)

-71% -50%

Foreign Currency Transaction Loss (Gain), Net Total Expenses

516

397

142,182 150,764

(119) 8,582

-23% 1,564

871

6% 442,275 449,906

(693) 7,631

-44% 2%

? Interest Expense: Down due to the lower level of operating assets in Japan and overseas, and the resulting lower level of debt.

? Selling, General and Administrative Expenses: Increased mainly due to the increase in the number of consolidated companies.

? Provisions for Doubtful Receivables and Probable Loan Losses: Decreased due to the lower level of operating assets and the improvement in asset quality.

? Write-downs of Long-Lived Assets: While there were write-downs recorded in 2Q in Japan, the total was much lower than the same period of the previous fiscal year.

? Write-downs of Securities: Decreased as a result of the recovery in the stock market in Japan and overseas.

Note: For quarterly data on "Expenses" please refer to page 8 of this document.

6

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