ORIX(IX) - 2022 Q2 - Quarterly Report

FORM 6-K Report Overview This section details the submission of ORIX Corporation's unaudited U.S. GAAP quarterly financial report and its official signatures Document Submission Details ORIX Corporation submitted its unaudited U.S. GAAP quarterly financial report to Japan's Kanto Financial Bureau - The report is an English translation of ORIX Corporation's quarterly financial report (shihanki houkokusho) filed in Japan on November 12, 2021[3] - Financial information is unaudited and prepared in accordance with U.S. GAAP[3] - The report covers consolidated financial information for periods ending March 31, 2021, and September 30, 2021, and for the three and six months ended September 30, 2020 and 2021[3] Signatures This section confirms the report's official authorization and submission by Shoji Taniguchi on November 12, 2021 - The report was signed on behalf of ORIX Corporation by Shoji Taniguchi, Member of the Board of Directors and Senior Managing Executive Officer[5][7] - The signing date was November 12, 2021[7] Consolidated Financial Information This section presents ORIX Corporation's unaudited consolidated financial statements and related disclosures Notes to Translation and Accounting Principles This section clarifies ORIX Corporation's U.S. GAAP adherence, forward-looking statements, and PFIC status - ORIX Corporation's consolidated financial information is prepared in accordance with U.S. GAAP[9][12] - The document contains forward-looking statements subject to risks and uncertainties, as detailed in the Company's Form 20-F[10] - The Company may be a 'passive foreign investment company' (PFIC) for U.S. federal income tax purposes, which could subject U.S. holders to special tax rules[11] - Significant differences between U.S. GAAP and Japanese GAAP are outlined in Note 1 of the Consolidated Financial Statements[12] Company and Subsidiaries Information This section provides consolidated financial highlights and confirms no significant operational changes Consolidated Financial Highlights (Six Months Ended September 30) | Metric | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Total revenues | ¥ 1,084,738 | ¥ 1,241,534 | | Income before income taxes | 134,174 | 220,789 | | Net income attributable to ORIX Corp. shareholders | 93,842 | 146,682 | | Comprehensive Income attributable to ORIX Corp. shareholders | 88,110 | 171,510 | | ORIX Corporation shareholders' equity | 2,979,684 | 3,117,654 | | Total assets | 13,168,070 | 13,834,678 | | Basic EPS (yen) | 75.22 | 121.12 | | Diluted EPS (yen) | 75.16 | 121.00 | | ORIX Corporation shareholders' equity ratio (%) | 22.6 | 22.5 | | Cash flows from operating activities | 519,772 | 593,156 | | Cash flows from investing activities | (420,148) | (436,361) | | Cash flows from financing activities | 72,145 | (76,204) | | Cash, Cash Equivalents and Restricted Cash at end of Period | 1,307,306 | 1,161,892 | Consolidated Financial Highlights (Three Months Ended September 30) | Metric | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Total revenues | ¥ 547,097 | ¥ 632,721 | | Net income attributable to ORIX Corp. shareholders | 43,794 | 81,466 | | Basic EPS (yen) | 35.15 | 67.51 | | Diluted EPS (yen) | 35.12 | 67.43 | - No significant changes in the Company and its subsidiaries' operations or principal subsidiaries and affiliates during the six months ended September 30, 2021[15] Risk Factors This section advises investors to consider risks, referencing the Form 20-F and monitoring COVID-19 impacts - Investing in the Company's securities involves risks, detailed in the 'Risk Factors' section of the Form 20-F annual report[17] - The Company continues to closely monitor the effects of COVID-19 on its business, financial condition, and results of operations, which could be adversely affected[17] Analysis of Financial Results and Condition This section analyzes ORIX Corporation's financial performance, condition, and future trends Consolidated Financial Results Highlights ORIX Corporation reported significant year-on-year growth in revenues, income, and EPS for the six months ended September 30, 2021 Financial Highlights (Six Months Ended September 30, 2021) | Metric | Amount (¥M) | Change YoY | | :--------------------------------------- | :--------------------- | :--------- | | Total revenues | ¥1,241,534 | Up 14% | | Total expenses | ¥1,032,617 | Up 7% | | Income before income taxes | ¥220,789 | Up 65% | | Net income attributable to ORIX Corp. Shareholders | ¥146,682 | Up 56% | | Basic EPS | ¥121.12 | Up 61% | | Diluted EPS | ¥121.00 | Up 61% | | ROE (Annualized) | 9.5% | Up from 6.3% | | ROA (Annualized) | 2.14% | Up from 1.43% | - Total revenues increased by 14% due to increases in services income, sales of goods and real estate, gains on investment securities and dividends, and operating leases revenues[20] - Total expenses increased by 7% due to increases in services expense, costs of goods and real estate sold, selling, general and administrative expenses, and costs of operating leases[21] - Equity in net income (loss) of affiliates increased by 136%, contributing to the rise in income before income taxes and net income[22][23] Segment Performance Analysis ORIX Corporation operates 10 segments, with most showing revenue growth and significant profit increases in H1 FY2022 - ORIX Group's operating segments are organized into 10 categories: Corporate Financial Services and Maintenance Leasing, Real Estate, PE Investment and Concession, Environment and Energy, Insurance, Banking and Credit, Aircraft and Ships, ORIX USA, ORIX Europe, and Asia and Australia[24] - Segment financial information for prior periods has been retrospectively restated due to changes in the allocation of interest expenses and selling, general and administrative expenses, and a business transfer within segments, effective April 1, 2021[25] Segment Revenues and Profits (Six Months Ended September 30, 2021 vs. 2020) | Segment | 2020 Revenues (¥M) | 2020 Profits (¥M) | 2021 Revenues (¥M) | 2021 Profits (¥M) | Revenue Change (%) | Profit Change (%) | | :--------------------------------------- | :----------------- | :---------------- | :----------------- | :---------------- | :----------------- | :---------------- | | Corporate Financial Services and Maintenance Leasing | 209,144 | 31,094 | 230,275 | 52,401 | 10 | 69 | | Real Estate | 167,276 | 11,009 | 202,514 | 23,860 | 21 | 117 | | PE Investment and Concession | 157,826 | 4,294 | 192,150 | 1,834 | 22 | (57) | | Environment and Energy | 70,865 | 13,599 | 63,898 | 9,663 | (10) | (29) | | Insurance | 235,754 | 35,308 | 235,088 | 33,009 | (0) | (7) | | Banking and Credit | 41,661 | 25,170 | 43,097 | 22,065 | 3 | (12) | | Aircraft and Ships | 14,876 | 5,527 | 17,748 | 618 | 19 | (89) | | ORIX USA | 57,859 | 9,881 | 84,988 | 47,614 | 47 | 382 | | ORIX Europe | 73,046 | 17,103 | 101,104 | 28,591 | 38 | 67 | | Asia and Australia | 58,962 | 3,791 | 71,705 | 20,485 | 22 | 440 | | Total Consolidated | 1,084,738 | 134,174 | 1,241,534 | 220,789 | 14 | 65 | Segment Assets (September 30, 2021 vs. March 31, 2021) | Segment | March 31, 2021 Assets (¥M) | September 30, 2021 Assets (¥M) | Change (%) | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Corporate Financial Services and Maintenance Leasing | 1,676,063 | 1,659,642 | (1) | | Real Estate | 872,095 | 878,068 | 1 | | PE Investment and Concession | 378,698 | 368,794 | (3) | | Environment and Energy | 489,174 | 695,445 | 42 | | Insurance | 1,959,521 | 1,962,961 | 0 | | Banking and Credit | 2,690,627 | 2,709,991 | 1 | | Aircraft and Ships | 601,762 | 615,640 | 2 | | ORIX USA | 1,220,081 | 1,188,438 | (3) | | ORIX Europe | 369,546 | 397,073 | 7 | | Asia and Australia | 1,084,222 | 1,125,430 | 4 | | Total Consolidated | 13,563,082 | 13,834,678 | 2 | Consolidated Financial Condition Total assets and liabilities increased by 2%, while shareholders' equity grew by 3% as of September 30, 2021 Consolidated Financial Condition (September 30, 2021 vs. March 31, 2021) | Metric | March 31, 2021 (¥M) | September 30, 2021 (¥M) | Change (%) | | :--------------------------------------- | :-------------------- | :---------------------- | :--------- | | Total assets | ¥13,563,082 | ¥13,834,678 | 2 | | Total liabilities | 10,459,938 | 10,626,179 | 2 | | ORIX Corporation shareholders' equity | 3,028,456 | 3,117,654 | 3 | | ORIX Corporation shareholders' equity per share (yen) | 2,487.77 | 2,593.96 | 4 | | ORIX Corporation shareholders' equity ratio (%) | 22.3 | 22.5 | — | | D/E ratio (x) | 1.6 | 1.6 | — | - Total assets increased mainly due to increases in property under facility operations, cash and cash equivalents, and other assets, despite a decrease in trade notes, accounts and other receivable[79] - Total liabilities increased due to increases in short-term debt and policy liabilities and policy account balances, partially offset by decreases in long-term debt, deposits, and trade notes, accounts and other payable[80] Liquidity and Capital Resources ORIX Group maintains robust liquidity through diversified funding, managing debt, and holding sufficient cash - ORIX Group's funding policies focus on maintaining and improving procurement stability and reducing liquidity risk through diversified methods and dispersed redemption periods[82] - Total funding, including short-term and long-term debt and deposits, was ¥7,131,552 million as of September 30, 2021, sourced from approximately 200 financial institutions[84] Debt and Deposits (September 30, 2021 vs. March 31, 2021) | Category | March 31, 2021 (¥M) | September 30, 2021 (¥M) | Change (¥M) | | :--------------------------------------- | :-------------------- | :---------------------- | :---------- | | Short-term debt | ¥307,269 | ¥493,976 | 186,707 | | Long-term debt | 4,416,833 | 4,351,494 | (65,339) | | Deposits | 2,317,785 | 2,286,082 | (31,703) | - Short-term debt increased to ¥493,976 million (10% of total debt excluding deposits), while long-term debt decreased to ¥4,351,494 million (90% of total debt excluding deposits)[86][88] - Sufficient liquidity is maintained with cash and cash equivalents plus unused committed credit facilities totaling ¥1,499,856 million as of September 30, 2021, against short-term debt of ¥493,976 million[87] Summary of Cash Flows Cash, cash equivalents, and restricted cash increased by ¥82,317 million, driven by operating activities - Cash, cash equivalents and restricted cash increased by ¥82,317 million to ¥1,161,892 million as of September 30, 2021[90] Cash Flow Summary (Six Months Ended September 30) | Cash Flow Type | 2020 (¥M) | 2021 (¥M) | Change (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | :---------- | | Operating activities | ¥519,772 | ¥593,156 | 73,384 | | Investing activities | (420,148) | (436,361) | (16,213) | | Financing activities | 72,145 | (76,204) | (148,349) | - Cash flows from operating activities increased primarily due to an increase in net income and a change from an increase to a decrease in trading securities[90] - Cash flows used in investing activities increased mainly due to an increase in purchases of lease equipment and acquisitions of subsidiaries[91] - Cash flows used in financing activities shifted from an inflow to an outflow, primarily due to an increase in repayment of debt and a decrease in deposits[92] Management Policy and Strategy No significant changes in the Company's management policy and strategy for the six months ended September 30, 2021 - No significant changes in management policy and strategy for the six months ended September 30, 2021[93] Challenges to be Addressed on a Priority Basis No significant changes in challenges to be addressed on a priority basis for the six months ended September 30, 2021 - No significant changes in challenges to be addressed on a priority basis for the six months ended September 30, 2021[94] Research and Development Activity No significant changes in research and development activities for the six months ended September 30, 2021 - No significant changes in research and development activities for the six months ended September 30, 2021[95] Major Facilities No significant changes in major facilities for the six months ended September 30, 2021 - No significant changes in major facilities for the six months ended September 30, 2021[96] Material Contracts This section states that there are no material contracts to report - Not applicable[97] Company Stock Information This section provides ORIX Corporation's stand-alone stock information and a list of major shareholders Issued Shares, Common Stock, and Capital Reserve (September 30, 2021) | Metric | Increase, net | September 30, 2021 (Thousands of yen) | | :-------------------- | :------------ | :------------------------------------ | | Number of issued shares | 0 | 1,285,724 | | Common stock | ¥0 | ¥221,111 | | Capital reserve | ¥0 | ¥248,290 | List of Major Shareholders (September 30, 2021) | Name | Number of shares held (in thousands) | Percentage of total shares issued | | :------------------------------------------------- | :--------------------------------- | :-------------------------------- | | The Master Trust Bank of Japan, Ltd. (Trust Account) | 175,714 | 14.59% | | Custody Bank of Japan, Ltd. (Trust Account) | 77,559 | 6.44% | | SSBTC Client Omnibus Account | 29,797 | 2.47% | | Custody Bank of Japan, Ltd. (Trust Account9) | 29,497 | 2.44% | | Custody Bank of Japan, Ltd. (Trust Account7) | 24,407 | 2.02% | | Citibank, N.A.-NY, As Depositary Bank For Depositary Share Holders | 23,672 | 1.96% | | State Street Bank West Client-Treaty 505234 | 21,263 | 1.76% | | JP Morgan Securities Inc. | 20,930 | 1.73% | | Northern Trust Co. (AVFC) Sub A/C Non Treaty | 19,157 | 1.59% | | SMBC Nikko Securities Inc. | 18,283 | 1.51% | | Total (Top 10) | 440,283 | 36.56% | - The Company holds 81,692 thousand shares of treasury stock, excluding shares held through the Board Incentive Plan Trust[102] Directors and Executive Officers No changes in directors and executive officers between the Form 20-F filing date and September 30, 2021 - No changes in directors and executive officers between the Form 20-F filing date (March 31, 2021) and September 30, 2021[102] Financial Information (Unaudited) This section presents ORIX Corporation's unaudited condensed consolidated financial statements for reported periods Condensed Consolidated Balance Sheets Total assets increased by 2% to ¥13,834,678 million, and equity grew by 3% as of September 30, 2021 Condensed Consolidated Balance Sheets (Selected Items) | Item | March 31, 2021 (¥M) | September 30, 2021 (¥M) | | :--------------------------------------- | :------------------------------- | :----------------------------------- | | Assets: | | | | Cash and Cash Equivalents | ¥951,242 | ¥1,030,893 | | Restricted Cash | 128,333 | 130,999 | | Net Investment in Leases | 1,029,518 | 1,033,684 | | Installment Loans | 3,670,784 | 3,672,574 | | Allowance for Credit Losses | (78,945) | (77,571) | | Investment in Operating Leases | 1,408,189 | 1,426,860 | | Investment in Securities | 2,660,443 | 2,701,122 | | Property under Facility Operations | 491,855 | 602,432 | | Investment in Affiliates | 887,764 | 908,340 | | Trade Notes, Accounts and Other Receivable | 354,334 | 288,311 | | Inventories | 142,156 | 132,891 | | Office Facilities | 246,399 | 244,040 | | Other Assets | 1,671,010 | 1,740,103 | | Total Assets | ¥13,563,082 | ¥13,834,678 | | Liabilities: | | | | Short-Term Debt | ¥307,269 | ¥493,976 | | Deposits | 2,317,785 | 2,286,082 | | Trade Notes, Accounts and Other Payable | 260,712 | 230,282 | | Policy Liabilities and Policy Account Balances | 1,822,422 | 1,885,834 | | Current and Deferred Income Taxes | 363,460 | 412,267 | | Long-Term Debt | 4,416,833 | 4,351,494 | | Other Liabilities | 971,457 | 966,244 | | Total Liabilities | ¥10,459,938 | ¥10,626,179 | | Equity: | | | | ORIX Corporation Shareholders' Equity | 3,028,456 | 3,117,654 | | Noncontrolling Interests | 74,688 | 90,845 | | Total Equity | ¥3,103,144 | ¥3,208,499 | | Total Liabilities and Equity | ¥13,563,082 | ¥13,834,678 | - Assets of consolidated variable interest entities (VIEs) that can only be used to settle VIE obligations totaled ¥697,607 million as of September 30, 2021[103] - Liabilities of consolidated VIEs for which creditors have no recourse to the general credit of the Company totaled ¥464,408 million as of September 30, 2021[105] Condensed Consolidated Statements of Income Total revenues increased by 14% to ¥1,241,534 million, and net income rose by 56% for the six months Condensed Consolidated Statements of Income (Six Months Ended September 30) | Item | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Revenues: | | | | Finance revenues | ¥131,904 | ¥137,191 | | Gains on investment securities and dividends | 12,832 | 45,744 | | Operating leases | 197,961 | 227,933 | | Life insurance premiums and related investment income | 233,751 | 232,797 | | Sales of goods and real estate | 192,653 | 230,655 | | Services income | 315,637 | 367,214 | | Total revenues | 1,084,738 | 1,241,534 | | Expenses: | | | | Interest expense | 42,161 | 33,432 | | Costs of operating leases | 145,810 | 159,578 | | Life insurance costs | 173,025 | 174,215 | | Costs of goods and real estate sold | 163,538 | 204,182 | | Services expense | 202,118 | 223,630 | | Other (income) and expense | 7,833 | (10,558) | | Selling, general and administrative expenses | 218,619 | 245,884 | | Provision for credit losses | 7,336 | 2,106 | | Write-downs of long-lived assets | 583 | 88 | | Write-downs of securities | 3,876 | 60 | | Total expenses | 964,899 | 1,032,617 | | Operating Income | 119,839 | 208,917 | | Equity in Net Income (Loss) of Affiliates | 2,289 | 5,399 | | Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, net | 7,681 | 6,473 | | Bargain Purchase Gain | 4,365 | 0 | | Income before Income Taxes | 134,174 | 220,789 | | Provision for Income Taxes | 38,682 | 68,070 | | Net Income | 95,492 | 152,719 | | Net Income Attributable to ORIX Corporation Shareholders | ¥93,842 | ¥146,682 | | Basic EPS (Yen) | 75.22 | 121.12 | | Diluted EPS (Yen) | 75.16 | 121.00 | Condensed Consolidated Statements of Income (Three Months Ended September 30) | Item | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Revenues: | | | | Finance revenues | ¥66,473 | ¥68,889 | | Gains on investment securities and dividends | 10,463 | 21,615 | | Operating leases | 103,015 | 114,467 | | Life insurance premiums and related investment income | 117,628 | 124,699 | | Sales of goods and real estate | 84,288 | 111,551 | | Services income | 165,230 | 191,500 | | Total revenues | 547,097 | 632,721 | | Expenses: | | | | Interest expense | 19,480 | 16,513 | | Costs of operating leases | 74,218 | 79,824 | | Life insurance costs | 87,380 | 94,452 | | Costs of goods and real estate sold | 70,669 | 105,114 | | Services expense | 104,519 | 117,734 | | Other (income) and expense | 2,728 | (14,069) | | Selling, general and administrative expenses | 110,252 | 123,799 | | Provision for credit losses | 931 | 2,361 | | Write-downs of long-lived assets | 326 | 1 | | Write-downs of securities | 2,271 | 54 | | Total expenses | 472,774 | 525,783 | | Operating Income | 74,323 | 106,938 | | Equity in Net Income (Loss) of Affiliates | (10,141) | 10,319 | | Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, net | 2,361 | 3,476 | | Income before Income Taxes | 66,543 | 120,733 | | Provision for Income Taxes | 21,506 | 38,614 | | Net Income | 45,037 | 82,119 | | Net Income Attributable to ORIX Corporation Shareholders | ¥43,794 | ¥81,466 | | Basic EPS (Yen) | 35.15 | 67.51 | | Diluted EPS (Yen) | 35.12 | 67.43 | Condensed Consolidated Statements of Comprehensive Income Comprehensive income attributable to shareholders significantly increased to ¥171,510 million for the six months Condensed Consolidated Statements of Comprehensive Income (Six Months Ended September 30) | Item | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Net Income | ¥95,492 | ¥152,719 | | Other comprehensive income (loss), net of tax: | | | | Net change of unrealized gains (losses) on investment in securities | 1,879 | 8,320 | | Net change of debt valuation adjustments | (534) | (61) | | Net change of defined benefit pension plans | 125 | 149 | | Net change of foreign currency translation adjustments | (8,749) | 14,932 | | Net change of unrealized gains (losses) on derivative instruments | (520) | 2,170 | | Total other comprehensive income (loss) | (7,799) | 25,510 | | Comprehensive Income | 87,693 | 178,229 | | Comprehensive Income Attributable to ORIX Corporation Shareholders | ¥88,110 | ¥171,510 | Condensed Consolidated Statements of Comprehensive Income (Three Months Ended September 30) | Item | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Net Income | ¥45,037 | ¥82,119 | | Other comprehensive income (loss), net of tax: | | | | Net change of unrealized gains (losses) on investment in securities | 3,285 | 1,939 | | Net change of debt valuation adjustments | (102) | (37) | | Net change of defined benefit pension plans | 28 | 196 | | Net change of foreign currency translation adjustments | (7,476) | 5,891 | | Net change of unrealized gains (losses) on derivative instruments | 865 | 1,278 | | Total other comprehensive income (loss) | (3,400) | 9,267 | | Comprehensive Income | 41,637 | 91,386 | | Comprehensive Income Attributable to ORIX Corporation Shareholders | ¥42,234 | ¥90,217 | Condensed Consolidated Statements of Changes in Equity ORIX Corporation shareholders' equity increased to ¥3,117,654 million, driven by net income and other comprehensive income - ORIX Corporation Shareholders' Equity increased from ¥3,028,456 million at March 31, 2021, to ¥3,117,654 million at September 30, 2021[110] - Key drivers for the increase in equity include net income of ¥146,682 million and total other comprehensive income of ¥24,828 million for the six months ended September 30, 2021[110] - Offsetting factors included cash dividends of ¥52,438 million and acquisition of treasury stock amounting to ¥30,547 million during the six months ended September 30, 2021[110] Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased, while investing and financing activities resulted in outflows Condensed Consolidated Statements of Cash Flows (Six Months Ended September 30) | Cash Flow Type | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Net cash provided by operating activities | ¥519,772 | ¥593,156 | | Net cash used in investing activities | (420,148) | (436,361) | | Net cash provided by (used in) financing activities | 72,145 | (76,204) | | Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash | 253 | 1,726 | | Net increase in Cash, Cash Equivalents and Restricted Cash | 172,022 | 82,317 | | Cash, Cash Equivalents and Restricted Cash at End of Period | ¥1,307,306 | ¥1,161,892 | - Net cash provided by operating activities increased due to higher net income and a change from an increase to a decrease in trading securities[113] - Net cash used in investing activities increased primarily due to higher purchases of lease equipment and acquisitions of subsidiaries[113] - Net cash used in financing activities was an outflow, mainly from increased repayment of debt and a decrease in deposits[113] Notes to Consolidated Financial Statements This section provides detailed notes on ORIX Corporation's accounting principles, policies, and financial disclosures Overview of Accounting Principles Utilized This section outlines ORIX Corporation's U.S. GAAP adherence and key differences from Japanese GAAP - Consolidated financial statements comply with U.S. GAAP, except for stock splits accounting[115] - Significant differences between U.S. GAAP and Japanese GAAP exist in areas such as initial direct costs, allowance for credit losses, operating leases, life insurance operations, goodwill and intangible assets, pension plans, partial sale of ownership interest, cash flow classification, transfer of financial assets, investment in securities, fair value option, and lessee's lease[117][119][121][122][124][126][127][129][131][135][137][139] Significant Accounting and Reporting Policies This section details ORIX Corporation's policies for consolidation, revenue recognition, credit losses, and derivatives - Consolidated financial statements include the Company and all subsidiaries, including Variable Interest Entities (VIEs) where the Company is the primary beneficiary[141] - Investments in affiliates (20%-50% ownership or significant influence) are accounted for using the equity method[142] - Revenue recognition follows a five-step model for contracts with customers, with specific policies for finance revenues (leases, installment loans, guarantees), investment gains, and operating leases[151][153][159][160] - Allowance for credit losses estimates all expected future credit losses over the remaining life of financial assets, considering obligor characteristics, historical experience, economic conditions, and collateral[170][171] - Equity securities are generally reported at fair value with unrealized gains/losses in income, while available-for-sale debt securities recognize unrealized gains/losses in other comprehensive income (loss), net of tax[176][179] - All derivatives are recognized on the consolidated balance sheets at fair value, with accounting treatment depending on their designation as cash flow, fair value, or net investment hedges, or as non-designated instruments[190] New Accounting Pronouncements This section details recent accounting standards updates and their expected impact on ORIX Corporation - ASC 2018-12 (Long-Duration Contracts) is effective for fiscal years beginning after December 15, 2022 (ORIX adoption: April 1, 2023), requiring annual review of cash flow assumptions, updated discount rates, fair value measurement for market risk benefits, and simplified deferred acquisition cost amortization[231] - ASC 2019-12 (Income Taxes) was adopted on April 1, 2021, resulting in a ¥215 million decrease in current and deferred income taxes and a corresponding increase in retained earnings, with no material effect on results of operations[232] - ASC 2020-01 (Equity Securities, Equity Method, and Derivatives) was adopted on April 1, 2021, with no material effect on results of operations or financial position[233] - ASC 2020-04 (Reference Rate Reform) provides optional expedients for LIBOR-related transactions; ORIX expects to adopt during the transition period and is evaluating its potential effect[234] - ASC 2021-05 (Lessors—Variable Lease Payments) is effective for fiscal years beginning after December 15, 2021 (ORIX adoption: April 1, 2022), requiring lessors to classify certain variable payment leases as operating leases if a sales-type or direct financing lease would result in a selling loss[236] - ASC 2021-08 (Contract Assets and Liabilities from Contracts with Customers) is effective for fiscal years beginning after December 15, 2022 (ORIX adoption: April 1, 2023), requiring the application of ASC 606 to recognize and measure contract assets and liabilities acquired in business combinations[237] Fair Value Measurements This section details ORIX Corporation's fair value measurement practices, classifying inputs into three levels - Fair value measurements are classified into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[239] Major Financial Assets and Liabilities Measured at Fair Value (September 30, 2021) | Item | Total Carrying Value (¥M) | Level 1 (¥M) | Level 2 (¥M) | Level 3 (¥M) | | :--------------------------------------- | :------------------------ | :----------- | :----------- | :----------- | | Assets: | | | | | | Loans held for sale | 73,857 | 0 | 73,857 | 0 | | Trading debt securities | 2,483 | 0 | 2,483 | 0 | | Available-for-sale debt securities | 2,051,245 | 8,581 | 1,905,428 | 137,236 | | Equity securities | 390,965 | 114,346 | 184,611 | 92,008 | | Derivative assets (net) | 22,007 | 0 | 0 | 0 | | Other assets (Reinsurance recoverables) | 5,564 | 0 | 0 | 5,564 | | Total Assets | 2,550,807 | 123,743 | 2,176,619 | 250,445 | | Liabilities: | | | | | | Derivative liabilities (net) | 46,584 | 0 | 0 | 0 | | Policy Liabilities and Policy Account Balances (Variable annuity and variable life insurance contracts) | 226,221 | 0 | 0 | 226,221 | | Total Liabilities | 277,491 | 6 | 51,232 | 226,253 | - Level 3 assets and liabilities, which rely on significant unobservable inputs, include certain available-for-sale debt securities, equity securities (investment funds), derivatives, reinsurance recoverables, and variable annuity/life insurance contracts[241][272][273] - Valuation methodologies for Level 3 assets often involve discounted cash flow methodologies, market multiple valuation methods, or broker quotes, with key unobservable inputs such as discount rates, WACC, EBITDA multiples, probability of default, mortality rates, and lapse rates[260][266][267][268][269][270][272][273] Acquisitions and Divestitures No material acquisitions were reported, but gains on sales of subsidiaries and affiliates decreased year-on-year - No material acquisitions during the six months ended September 30, 2020 and 2021[278] - A bargain purchase gain of ¥4,365 million was recognized in the six months ended September 30, 2020, from the acquisition of wind power generation businesses in India, with no such gain in 2021[279] Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, Net (Six Months Ended September 30) | Period | Amount (¥M) | | :--------------------------------------- | :----------------------- | | Six months ended September 30, 2020 | ¥7,681 | | Six months ended September 30, 2021 | ¥6,473 | - For the six months ended September 30, 2021, gains on sales of subsidiaries and affiliates were mainly from the ORIX USA segment (¥6,305 million)[280] Revenues from Contracts with Customers Revenues from contracts with customers increased to ¥595,111 million for the six months ended September 30, 2021 Revenues from Contracts with Customers and Other Revenues (Six Months Ended September 30) | Revenue Type | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Revenues from contracts with customers | ¥505,743 | ¥595,111 | | Other revenues | 578,995 | 646,423 | | Total revenues | ¥1,084,738 | ¥1,241,534 | - Revenue is recognized when control of promised goods or services is transferred to customers, reflecting the consideration expected, net of discounts, incentives, and estimated sales returns[284] - Other revenues include life insurance premiums and related investment income, operating leases, and finance revenues (interest income), which are not within the scope of revenue from contracts with customers[283] - As of September 30, 2021, the transaction price allocated to unsatisfied performance obligations, mainly related to automobile services and real estate sales, amounted to ¥139,993 million, with remaining terms up to 13 years[300] Leases (Lessor) Total lease income increased to ¥264,893 million, primarily from operating leases, for the six months ended September 30, 2021 Lease Income (Six Months Ended September 30) | Lease Income Type | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Lease income—net investment in leases (Interest income) | ¥34,313 | ¥35,962 | | Lease income—net investment in leases (Other) | 865 | 998 | | Lease income—operating leases | 197,961 | 227,933 | | Total lease income | ¥233,139 | ¥264,893 | - Gains from the disposition of real estate under operating leases were ¥15,440 million for the six months ended September 30, 2021 (up from ¥12,754 million in 2020)[302] - Gains from the disposition of operating lease assets other than real estate were ¥10,798 million for the six months ended September 30, 2021 (up from ¥3,134 million in 2020)[302] Credit Quality and Allowance for Credit Losses This section details credit quality, allowance for credit losses, and troubled debt restructurings - The allowance for credit losses is estimated for all expected future credit losses over the remaining life of financial assets, based on management judgment and considering various factors like obligor characteristics, economic conditions, and collateral[315] Allowance for Credit Losses (Six Months Ended September 30, 2021) | Portfolio Segment | Beginning Balance (¥M) | Provision (Reversal) (¥M) | Charge-offs (¥M) | Recoveries (¥M) | Ending Balance (¥M) | | :--------------------------------------- | :--------------------- | :------------------------ | :--------------- | :-------------- | :------------------ | | Consumer loans | ¥29,010 | ¥2,786 | (3,025) | 22 | ¥28,809 | | Corporate non-recourse loans | 3,482 | (545) | 0 | 0 | 2,973 | | Corporate other than non-recourse loans | 23,141 | 698 | (1,495) | 50 | 22,513 | | Purchased loans | 1,835 | (86) | (1,811) | 9 | 1,702 | | Net investment in leases | 16,522 | 672 | (998) | 10 | 16,243 | | Other financial assets | 6,005 | 1,587 | (573) | 11 | 7,044 | | Total | ¥79,995 | ¥5,112 | (7,902) | 102 | ¥79,284 | - Financial assets are classified as performing or non-performing, with non-performing assets including those with debtors in insolvency, suspended bank transactions, dishonored bills, or payments 90 days or more past-due[316] Past-Due Financial Assets (September 30, 2021) | Portfolio Segment | 30-89 days past-due (¥M) | 90 days or more past-due (¥M) | Total past-due (¥M) | | :--------------------------------------- | :----------------------- | :---------------------------- | :------------------ | | Consumer borrowers | ¥3,980 | ¥11,098 | ¥15,078 | | Corporate borrowers | 8,490 | 19,313 | 27,803 | | Net investment in leases | 10,473 | 16,765 | 27,238 | | Total | ¥22,943 | ¥47,176 | ¥70,119 | Troubled Debt Restructurings (Six Months Ended September 30, 2021) | Portfolio Segment | Pre-modification outstanding recorded investment (¥M) | Post-modification outstanding recorded investment (¥M) | | :--------------------------------------- | :-------------------------------------------------- | :--------------------------------------------------- | | Consumer borrowers | ¥4,047 | ¥3,061 | | Corporate borrowers | 4,996 | 4,866 | | Total | ¥9,043 | ¥7,927 | Investment in Securities Total investment in securities was ¥2,701,122 million, with details on debt and equity securities Investment in Securities (September 30, 2021 vs. March 31, 2021) | Security Type | March 31, 2021 (¥M) | September 30, 2021 (¥M) | | :--------------------------------------- | :------------------------------- | :----------------------------------- | | Equity securities | ¥540,082 | ¥533,599 | | Trading debt securities | 2,654 | 2,483 | | Available-for-sale debt securities | 2,003,917 | 2,051,245 | | Held-to-maturity debt securities | 113,790 | 113,795 | | Total | ¥2,660,443 | ¥2,701,122 | - Net unrealized holding gains on equity securities held as of September 30, 2021, were ¥31,919 million for the six months and ¥16,059 million for the three months[357] Available-for-Sale Debt Securities (September 30, 2021) | Security Type | Amortized cost (¥M) | Allowance for credit losses (¥M) | Gross unrealized gains (¥M) | Gross unrealized losses (¥M) | Fair value (¥M) | | :--------------------------------------- | :------------------ | :----------------------------- | :-------------------------- | :--------------------------- | :-------------- | | Japanese and foreign government bond securities | ¥812,688 | 0 | ¥6,173 | ¥(28,659) | ¥790,202 | | Japanese prefectural and foreign municipal bond securities | 286,338 | (121) | 5,037 | (2,082) | 289,172 | | Corporate debt securities | 801,102 | 0 | 12,883 | (8,332) | 805,653 | | CMBS and RMBS in the Americas | 32,826 | 0 | 445 | (789) | 32,482 | | Other asset-backed securities and debt securities | 129,651 | 0 | 5,019 | (934) | 133,736 | | Total | ¥2,062,605 | ¥(121) | ¥29,557 | ¥(40,796) | ¥2,051,245 | - Unrealized losses on available-for-sale debt securities are mainly due to changes in market interest rates, foreign exchange rates, and risk premiums[375] - The allowance for credit losses for available-for-sale debt securities was ¥121 million as of September 30, 2021[367] Transfer of Financial Assets ORIX securitized ¥608,122 million in installment loans, generating ¥18,637 million in gains for the six months - ORIX securitizes and transfers financial assets, such as installment loans, to SPEs, retaining servicing arrangements and subordinated interests[377][379] Securitization and Transfer of Loans (Six Months Ended September 30) | Metric | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Installment loans derecognized | ¥552,905 | ¥608,122 | | Gains (losses) from securitization | 16,045 | 18,637 | Servicing Assets (Six Months Ended September 30) | Metric | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Beginning balance | ¥57,705 | ¥63,754 | | Increase from loans sold with servicing retained | 6,962 | 7,138 | | Decrease from amortization | (5,345) | (6,362) | | Effect of foreign exchange rates | 708 | (1,621) | | Ending balance | ¥57,701 | ¥65,238 | Variable Interest Entities (VIEs) ORIX identifies and consolidates VIEs based on power and benefits, with detailed assets and liabilities - ORIX identifies VIEs based on insufficient equity at risk or lack of equity holders' ability to direct activities, absorb losses, or receive residual returns[386] - The Company consolidates VIEs where it has both the power to direct significant activities and the obligation to absorb losses or right to receive benefits[387] Consolidated VIEs (September 30, 2021) | Type of VIE | Total assets (¥M) | Total liabilities (¥M) | Assets pledged as collateral (¥M) | Commitments (¥M) | | :--------------------------------------- | :---------------- | :------------------- | :-------------------------- | :--------------- | | For acquisition of real estate for the Company's real estate-related business | 63,342 | 13,160 | 16,377 | 0 | | For investment in securities | 98,490 | 257 | 0 | 45,136 | | For securitizing financial assets | 222,949 | 152,142 | 222,949 | 0 | | For power generation projects | 305,556 | 222,328 | 287,023 | 36,532 | | Total | ¥890,807 | ¥473,365 | ¥697,607 | ¥81,668 | Non-Consolidated VIEs (September 30, 2021) | Type of VIE | Total assets (¥M) | Carrying amount of variable interests (Non-recourse loans) (¥M) | Carrying amount of variable interests (Investments) (¥M) | Maximum exposure to loss (¥M) | | :--------------------------------------- | :---------------- | :------------------------------------------------------------- | :------------------------------------------------------- | :-------------------------- | | For liquidating customer assets | ¥28,357 | ¥2,923 | ¥991 | ¥3,914 | | For acquisition of real estate and real estate development projects for customers | 262,333 | 6,849 | 4,789 | 11,638 | | For investment in securities | 5,933,548 | 0 | 63,318 | 93,712 | | For securitization of loan receivable originated by third parties | 1,192,909 | 0 | 16,787 | 16,790 | | Other VIEs | 503,945 | 2,973 | 12,782 | 22,849 | | Total | ¥7,931,248 | ¥12,745 | ¥99,146 | ¥149,382 | Investment in Affiliates Total investment in affiliates amounted to ¥908,340 million, primarily consisting of shares Investment in Affiliates (September 30, 2021 vs. March 31, 2021) | Item | March 31, 2021 (¥M) | September 30, 2021 (¥M) | | :--------------------------------------- | :------------------------------- | :----------------------------------- | | Shares | ¥853,937 | ¥873,281 | | Loans and others | 33,827 | 35,059 | | Total | ¥887,764 | ¥908,340 | Redeemable Noncontrolling Interests The ending balance for redeemable noncontrolling interests was ¥0, indicating full settlement in the prior year Changes in Redeemable Noncontrolling Interests (Six Months Ended September 30) | Item | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Beginning balance | ¥10,331 | ¥0 | | Transaction with noncontrolling interests | (10,028) | 0 | | Comprehensive income (loss) | (303) | 0 | | Ending balance | ¥0 | ¥0 | Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income improved to ¥(59,822) million, driven by investment gains and currency adjustments - Accumulated other comprehensive income (loss) attributable to ORIX Corporation Shareholders improved from ¥(84,650) million at March 31, 2021, to ¥(59,822) million at September 30, 2021[433] Components of Accumulated Other Comprehensive Income (Loss) (Six Months Ended September 30, 2021) | Component | Balance at March 31, 2021 (¥M) | Total other comprehensive income (loss) (¥M) | Balance at September 30, 2021 (¥M) | | :--------------------------------------- | :------------------------------- | :----------------------------------- | :------------------------------- | | Net unrealized gains (losses) on investment in securities | ¥(16,208) | ¥8,320 | ¥(7,888) | | Debt valuation adjustments | 558 | (61) | 497 | | Defined benefit pension plans | (21,073) | 149 | (20,923) | | Foreign currency translation adjustments | (36,456) | 14,932 | (22,139) | | Net unrealized gains (losses) on derivative instruments | (11,471) | 2,170 | (9,369) | | Total | ¥(84,650) | ¥25,510 | ¥(59,822) | - Reclassification adjustments to net income for the six months ended September 30, 2021, included ¥4,058 million from net unrealized gains on investment in securities and ¥(1,822) million from net unrealized gains (losses) on derivative instruments[440] ORIX Corporation Shareholders' Equity (Dividends) ORIX paid ¥52,438 million in dividends and declared ¥46,957 million for the period ended September 30, 2021 Dividend Payments (Six Months Ended September 30, 2021) | Metric | Details | | :--------------------------------------- | :--------------------------------------- | | Resolution | The board of directors on May 20, 2021 | | Type of shares | Common stock | | Total dividends paid | ¥52,438 million | | Dividend per share | ¥43.00 | | Date of record for dividend | March 31, 2021 | | Effective date for dividend | June 7, 2021 | | Dividend resource | Retained earnings | Applicable Dividends Declared (Six Months Ended September 30, 2021) | Metric | Details | | :--------------------------------------- | :--------------------------------------- | | Resolution | The board of directors on November 4, 2021 | | Type of shares | Common stock | | Total dividends paid | ¥46,957 million | | Dividend per share | ¥39.00 | | Date of record for dividend | September 30, 2021 | | Effective date for dividend | December 9, 2021 | | Dividend resource | Retained earnings | Selling, General and Administrative Expenses Total SG&A expenses increased to ¥245,884 million, driven by higher personnel and administrative costs Selling, General and Administrative Expenses (Six Months Ended September 30) | Expense Category | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Personnel expenses | ¥128,129 | ¥144,462 | | Selling expenses | 28,613 | 32,209 | | Administrative expenses | 57,801 | 64,774 | | Depreciation of office facilities | 4,076 | 4,439 | | Total | ¥218,619 | ¥245,884 | Selling, General and Administrative Expenses (Three Months Ended September 30) | Expense Category | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Personnel expenses | ¥64,511 | ¥71,969 | | Selling expenses | 14,052 | 16,432 | | Administrative expenses | 29,565 | 33,341 | | Depreciation of office facilities | 2,124 | 2,057 | | Total | ¥110,252 | ¥123,799 | Pension Plans ORIX operates defined benefit and contribution pension plans, with net periodic pension costs detailed for Japanese and overseas plans - ORIX Corporation operates contributory and non-contributory defined benefit and defined contribution pension plans for its employees[447] Net Periodic Pension Cost (Six Months Ended September 30) | Component | Japanese Plans 2020 (¥M) | Japanese Plans 2021 (¥M) | Overseas Plans 2020 (¥M) | Overseas Plans 2021 (¥M) | | :--------------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Service cost | ¥2,829 | ¥3,023 | ¥1,626 | ¥1,974 | | Interest cost | 346 | 419 | 827 | 659 | | Expected return on plan assets | (1,213) | (1,331) | (1,773) | (2,093) | | Amortization of prior service credit | (89) | (33) | (147) | (168) | | Amortization of net actuarial loss | 660 | 206 | 137 | 255 | | Amortization of transition obligation | 0 | 0 | 1 | 1 | | Net periodic pension cost | ¥2,533 | ¥2,284 | ¥671 | ¥628 | - The components of net periodic pension cost, excluding service cost, are included in personnel expenses within selling, general and administrative expenses[449][451] Life Insurance Operations Life insurance premiums were ¥208,475 million, with related investment income of ¥24,322 million for the six months Life Insurance Premiums and Related Investment Income (Six Months Ended September 30) | Item | 2020 (¥M) | 2021 (¥M) | | :--------------------------------------- | :--------------------- | :--------------------- | | Life insurance premiums | ¥191,000 | ¥208,475 | | Life insurance related investment income | 42,751 | 24,322 | | Total | ¥233,751 | ¥232,797 | - Life insurance related investment income for the six months ended September 30, 2021, included net unrealized holding gains of ¥9,689 million on equity securities[453] - Amortization of deferred policy acquisition costs charged to income was ¥11,339 million for the six months ended September 30, 2021[455] - The fair value option is elected for variable annuity and variable life insurance contracts and related derivatives to offset earnings volatility from investment assets and minimum guarantee risks[456] Gains/Losses Relating to Variable Annuity and Life Insurance Contracts (Six Months Ended September 30, 2021) | Item | Amount (¥M) | | :--------------------------------------- | :----------------------- | | Net realized and unrealized gains or losses from investment assets | ¥10,863 | | Net gains or losses from derivative contracts | (1,161) | | Changes in the fair value of the policy liabilities and policy account balances | (40,285) | | Insurance costs recognized for insurance and annuity payouts | 47,016 | | Changes in the fair value of the reinsurance contracts | 733 | Write-Downs of Long-Lived Assets Impairment losses decreased significantly to ¥88 million, primarily affecting real estate and other assets - Impairment tests are performed for long-lived assets when events or changes indicate potential impairment, reducing carrying amounts to fair value if not recoverable[459] Write-Downs of Long-Lived Assets (Six Months Ended September 30) | Item | 2020 Amount (¥M) | 2021 Amount (¥M) | | :--------------------------------------- | :---------------------------- | :---------------------------- | | Write-downs of assets held for sale (Condominiums) | ¥0 | ¥1 | | Write-downs due to decline in estimated future cash flows (Commercial facilities, Condominiums, Land, Others) | 583 | 87 | | Total Impairment Losses | ¥583 | ¥88 | - For the six months ended September 30, 2021, losses were recorded in Real Estate (¥12 million), PE Investment and Concession (¥1 million), ORIX USA (¥71 million), and Asia and Australia (¥4 million)[465] Per Share Data Basic EPS was ¥121.12 and diluted EPS was ¥121.00, both showing significant increases from the prior year Earnings Per Share (Six Months Ended September 30) | Metric | 2020 (Yen) | 2021 (Yen) | | :--------------------------------------- | :--------- | :--------- | | Basic EPS | ¥75.22 | ¥121.12 | | Diluted EPS | 75.16 | 121.00 | Weighted-Average Shares (Six Months Ended September 30) | Metric | 2020 (Thousands of Shares) | 2021 (Thousands of Shares) | | :--------------------------------------- | :------------------------- | :------------------------- | | Weighted-average shares | 1,247,495 | 1,211,058 | | Effect of dilutive securities—Stock compensation | 1,006 | 1,202 | | Weighted-average shares for diluted EPS computation | 1,248,501 | 1,212,260 | - No stock compensation was antidilutive during the reported periods[471] Derivative Financial Instruments and Hedging ORIX uses derivatives to manage interest rate and exchange rate risks, designated as hedges or for economic purposes - ORIX uses derivative financial instruments (e.g., interest rate swaps, foreign currency borrowings, foreign exchange contracts, foreign currency swap agreements) to manage interest rate and exchange rate risks[473][474] - Derivatives are designated as cash flow hedges, fair value hedges, or hedges of net investment in foreign operations, or are used for economic hedges not designated for hedge accounting[477][478][479][480] - The Company manages credit risk by evaluating counterparties and monitoring transaction details[475] Notional Amounts and Fair Values of Derivative Instruments (September 30, 2021) | Derivative Type | Notional Amount (¥M) | Derivative Assets Fair Value (¥M) | Derivative Liabilities Fair Value (¥M) | | :--------------------------------------- | :-------------------------------- | :--------------------------------------------- | :---------------------------------------------- | | Designated as hedging instruments: | | | | | Interest rate swap agreements | ¥500,146 | ¥1,706 | ¥19,564 | | Futures, foreign exchange contracts | 823,934 | 830 | 10,898 | | Foreign currency swap agreements | 75,379 | 1,060 | 1,507 | | Not designated as hedging instruments: | | | | | Interest rate swap agreements | ¥3,479 | ¥0 | ¥30 | | Options held/written and other | 787,724 | 18,678 | 16,996 | | Futures, foreign exchange contracts | 556,597 | 4,398 | 2,275 | Offsetting Assets and Liabilities Gross derivative assets were ¥26,693 million and liabilities ¥51,270 million, with net amounts after offsetting Offsetting Derivative Assets and Liabilities (September 30, 2021) | Item | Gross amounts recognized (¥M) | Gross amounts offset in the consolidated balance sheets (¥M) | Net amounts presented in the consolidated balance sheets (¥M) | Gross amounts not offset (Financial instruments) (¥M) | Gross amounts not offset (Collateral received/pledged) (¥M) | Net amount (¥M) | | :--------------------------------------- | :-------------------------- | :--------------------------------------------------------- | :-------------------------------------------------------- | :----------------------------------------------------- | :---------------------------------------------------- | :-------------- | | Derivative assets | ¥26,693 | ¥(4,686) | ¥22,007 | ¥0 | ¥(398) | ¥21,609 | | Derivative liabilities | ¥51,270 | ¥(4,686) | ¥46,584 | ¥(7,492) | ¥0 | ¥39,092 | - The balances related to enforceable master netting agreements or similar agreements were not offset in the consolidated balance sheets[520] Estimated Fair Value of Financial Instruments Total estimated fair value of assets was ¥7,358,745 million and liabilities ¥7,051,651 million Estimated Fair Value of Financial Instruments (September 30, 2021) | Item | Carrying amount (¥M) | Estimated fair value (¥M) | Level 1 (¥M) | Level 2 (¥M) | Level 3 (¥M) | | :--------------------------------------- | :------------------- | :------------------------ | :----------- | :----------- | :----------- | | Assets: | | | | | | | Cash and cash equivalents | ¥1,030,893 | ¥1,030,893 | ¥1,030,893 | ¥0 | ¥0 | | Restricted cash | 130,999 | 130,999 | 130,999 | 0 | 0 | | Installment loans (net of allowance for credit losses) | 3,616,577 | 3,610,206 | 0 | 171,230 | 3,438,976 | | Equity securities | 390,965 | 390,965 | 114,346 | 184,611 | 92,008 | | Trading debt securities | 2,483 | 2,483 | 0 | 2,483 | 0 | | Available-for-sale debt securities | 2,051,245 | 2,051,245 | 8,581 | 1,905,428 | 137,236 | | Held-to-maturity debt securities | 113,795 | 139,517 | 0 | 115,875 | 23,642 | | Other Assets (Time deposits) | 4,435 | 4,435 | 0 | 4,435 | 0 | | Other Assets (Derivative assets) | 22,007 | 22,007 | 0 | 0 | 0 | | Other Assets (Reinsurance recoverables) | 6,758 | 6,907 | 0 | 0 | 6,907 | | Liabilities: | | | | | | | Short-term debt | ¥493,976 | ¥493,976 | ¥0 | ¥493,976 | ¥0 | | Deposits | 2,129,531 | 2,131,750 | 0 | 2,131,750 | 0 | | Policy liabilities and Policy account balances (Investment contracts) | 201,272 | 201,344 | 0 | 0 | 201,344 | | Long-term debt | 4,351,494 | 4,377,341 | 0 | 1,299,274 | 3,078,067 | | Other Liabilities (Derivative liabilities) | 46,584 | 46,584 | 0 | 0 | 0 | - Fair value measurements are categorized into Level 1 (active market prices), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs from valuation models and broker quotes)[524] Commitments, Guarantees and Contingent Liabilities Commitments, guarantees totaling ¥1,152,839 million, and contingent liabilities are detailed Commitments (September 30, 2021 vs. March 31, 2021) | Commitment Type | March 31, 2021 (¥M) | September 30, 2021 (¥M) | | :--------------------------------------- | :------------------------------- | :----------------------------------- | | Equipment to be leased | ¥1,573 | ¥90 | | Computer systems operation/maintenance | 7,788 | 10,532 | | Real estate development projects | 69,235 | 110,307 | | Unused credit and capital amount available | 393,634 | 394,730 | Guarantees (September 30, 2021 vs. March 31, 2021) | Guarantee Type | March 31, 2021 Potential future payment (¥M) | March 31, 2021 Book value of guarantee liabilities (¥M) | September 30, 2021 Potential future payment (¥M) | September 30, 2021 Book value of guarantee liabilities (¥M) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------ | :------------------------------------------------ | | Corporate loans | ¥469,377 | ¥4,768 | ¥467,131 | ¥4,795 | | Transferred loans | 365,546 | 5,827 | 379,892 | 4,601 | | Consumer loans | 294,250 | 49,025 | 284,050 | 47,098 | | Real estate loans | 17,621 | 4,119 | 13,236 | 4,034 | | Other | 598 | 104 | 8,530 | 147 | | Total | ¥1,147,392 | ¥63,843 | ¥1,152,839 | ¥60,675 | - The allowance for off-balance sheet credit exposures was ¥23,723 million as of September 30, 2021, with a reversal of ¥2,369 million in provision for credit losses for the six months ended September 30, 2021[539] - The Company provides various assets as collateral for short-term and long-term debt, totaling ¥416,384 million as of September 30, 2021[542] Segment Information This section details financial information for ORIX Corporation's 10 operating segments and disaggregates revenues - ORIX operates 10 segments: Corporate Financial Services and Maintenance Leasing, Real Estate, PE Investment and Concession, Environment and Energy, Insurance, Banking and Credit, Aircraft and Ships, ORIX USA, ORIX Europe, and Asia and Australia[547][548] - Segment financial information for prior periods has been retrospectively restated due to changes in expense allocation and business transfers, effective April 1, 2021[548] Segment Revenues, Profits, and Assets (September 30, 2021) | Segment | Revenues (¥M) | Profits (¥M) | Assets (¥M) | | :--------------------------------------- | :------------ | :----------- | :---------- | | Corporate Financial Services and Maintenance Leasing | ¥230,275 | ¥52,401 | ¥1,659,642 | | Real Estate | 202,514 | 23,860 | 878,068 | | PE Investment and Concession | 192,150 | 1,834 | 368,794 | | Environment and Energy | 63,898 | 9,663 | 695,445 | | Insurance | 235,088 | 33,009 | 1,962,961 | | Banking and Credit | 43,097 | 22,065 | 2,709,991 | | Aircraft and Ships | 17,748 | 618 | 615,640 | | ORI