ORIX (IX) 6-K 2022 Q2 Current report (foreign)

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE

13a-16

OR

15d-16

OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2022.

Commission File Number:

001-14856

ORIX Corporation

(Translation of Registrant’s Name into English)

World Trade Center Bldg., SOUTH TOWER,

2-4-1

Hamamatsu-cho,

Minato-ku,

Tokyo, JAPAN

(Address of Principal Executive Offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form

20-F

or Form

40-F.)

Form

20-F  ☒        Form

40-F  ☐

Indicate by check mark if the registrant is submitting the Form

6-K

in paper as permitted by Regulation

S-T

Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form

6-K

in paper as permitted by Regulation

S-T

Rule 101(b)(7):  ☐

Table of Document(s) Submitted

1. This is an English translation of ORIX Corporation’s quarterly financial report (shihanki houkokusho) as filed with the Kanto Financial Bureau in Japan on November 10, 2022, which includes unaudited consolidated financial information prepared in accordance with generally accepted accounting principles in the United States as of March 31, 2022 and September 30, 2022 and for the three and six months ended September 30, 2021 and 2022.

Exhibit 101	Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101	Inline XBRL Schema Document.
Exhibit 101	Inline XBRL Calculation Linkbase Document.
Exhibit 101	Inline XBRL Definition Linkbase Document.
Exhibit 101	Inline XBRL Labels Linkbase Document.
Exhibit 101	Inline XBRL Presentation Linkbase Document.
Exhibit 104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ORIX Corporation
Date: November 10, 2022	By	/s/ HITOMARO YANO
		Hitomaro Yano
		Executive Officer Head of Treasury and Accounting Headquarters
		ORIX Corporation

CONSOLIDATED FINANCIAL INFORMATION

Notes to Translation

1. The following is an English translation of ORIX Corporation’s quarterly financial report ( shihanki houkokusho ) as filed with the Kanto Financial Bureau in Japan on November 10, 2022, which includes unaudited consolidated financial information prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) as of March 31, 2022 and September 30, 2022 and for the three and six months ended September 30, 2021 and 2022.

2. Significant differences between U.S. GAAP and generally accepted accounting principles in Japan (“Japanese GAAP”) are stated in Note 1 “Overview of Accounting Principles Utilized” of the notes to Consolidated Financial Statements.

In preparing its consolidated financial information, ORIX Corporation (the “Company”) and its subsidiaries have complied with U.S. GAAP.

This document may contain forward-looking statements about expected future events and financial results that involve risks and uncertainties. Such statements are based on the Company’s 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 most recent annual report on Form

20-F

filed with the U.S. Securities and Exchange Commission.

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

– 1 –

1. Information on the Company and its Subsidiaries

(1) Consolidated Financial Highlights

	Millions of yen (except for per share amounts and ratios)
	Six months ended September 30, 2021			Six months ended September 30, 2022				Fiscal year ended March 31, 2022
Total revenues	¥	1,241,534		¥	1,364,816			¥	2,520,365
Income before income taxes		220,789			164,346				504,876
Net income attributable to ORIX Corporation shareholders		146,682			121,776				312,135
Comprehensive Income attributable to ORIX Corporation shareholders		171,510			171,831				382,219
ORIX Corporation shareholders’ equity		3,117,654			3,344,812				3,261,419
Total assets		13,834,678			14,786,006				14,270,672
Earnings per share for net income attributable to ORIX Corporation shareholders
Basic (yen)		121.12			102.52				259.37
Diluted (yen)		121.00			102.40				259.07
ORIX Corporation shareholders’ equity ratio (%)		22.5			22.6				22.9
Cash flows from operating activities		603,273			262,902		��		1,103,370
Cash flows from investing activities		(446,478	)		(440,563	)			(808,846	)
Cash flows from financing activities		(76,204	)		96,042				(306,618	)
Cash, Cash Equivalents and Restricted Cash at end of Period		1,161,892			1,046,021				1,091,812
Note: Consumption tax is excluded from the stated amount of total revenues.
	Millions of yen (except for per share amounts)
	Three months ended September 30, 2021			Three months ended September 30, 2022
Total revenues	¥	632,721		¥	707,003
Net income attributable to ORIX Corporation shareholders		81,466			59,914
Earnings per share for net income attributable to ORIX Corporation shareholders
Basic (yen)		67.51			50.60

Note: Consumption tax is excluded from the stated amount of total revenues

(2) Overview of Activities

During the six months ended September 30, 2022, no significant changes were made in the Company and its subsidiaries’ operations. Additionally, there were no changes of principal subsidiaries and affiliates.

– 2 –

2. Risk Factors

Investing in the Company’s securities involves risks. You should carefully consider the information described herein as well as the risks described under “Risk Factors” in our Form

20-F

for the fiscal year ended March 31, 2022 and the other information in that annual report, including, but not limited to, the Company’s consolidated financial statements and related notes and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” The Company’s business activities, financial condition and results of operations and the trading prices of the Company’s securities could be adversely affected by any of the factors or other factors.

3. Analysis of Financial Results and Condition

The following discussion provides management’s explanation of factors and events that have significantly affected the Company’s financial condition and results of operations. Also included is management’s assessment of factors and trends that could have a material effect on the Company’s financial condition and results of operations in the future. However, please be advised that financial conditions and results of operations in the future may also be affected by factors other than those discussed herein. These factors and trends regarding the future were assessed as of the issue date of this quarterly financial report

(shihanki houkokusho)

.

(1) Qualitative Information Regarding Consolidated Financial Results

Financial Highlights

Financial Results for the Six Months Ended September 30, 2022

Total revenues	¥1,364,816 million (Up 10% year on year)
Total expenses	¥1,215,683 million (Up 18% year on year)
Income before income taxes	¥164,346 million (Down 26% year on year)
Net income attributable to ORIX Corporation Shareholders	¥121,776 million (Down 17% year on year)
Earnings per share for net income attributable to ORIX Corporation Shareholders
(Basic)	¥102.52 (Down 15% year on year)
(Diluted)	¥102.40 (Down 15% year on year)
ROE (Annualized) *1	7.4% (9.5% during the same period in the previous fiscal year)
ROA (Annualized) *2	1.68% (2.14% during the same period in the previous fiscal year)

*1 ROE is the ratio of net income attributable to ORIX Corporation Shareholders for the period to average ORIX Corporation Shareholders’ Equity.

*2 ROA is the ratio of net income attributable to ORIX Corporation Shareholders for the period to average Total Assets.

Total revenues for the six months ended September 30, 2022 increased 10% to ¥1,364,816 million compared to ¥1,241,534 million during the same period of the previous fiscal year due to increases in services income, sales of goods and real estate and life insurance premiums and related investment income despite a decrease in gains (losses) on investment securities and dividends.

Total expenses increased 18% to ¥1,215,683 million compared to ¥1,032,617 million during the same period of the previous fiscal year due to increases in life insurance costs, services expense and costs of goods and real estate sold.

Equity in net income (loss) of affiliates increased 23% to ¥6,624 million compared to ¥5,399 million and gains on sales of subsidiaries and affiliates and liquidation losses, net increased 33% to ¥8,589 million compared to ¥6,473 million during the same period of the previous fiscal year.

Due to the above results, income before income taxes for the six months ended September 30, 2022 decreased 26% to ¥164,346 million compared to ¥220,789 million during the same period of the previous fiscal year and net income attributable to ORIX Corporation shareholders decreased 17% to ¥121,776 million compared to ¥146,682 million during the same period of the previous fiscal year.

– 3 –

Segment Information

Our operating segments, used by the chief operating decision maker to make decisions about resource allocations and assess performance, are organized into ten segments based on our business management organization which is classified by the nature of major products and services, customer base, regulations, and business areas. The ten segments are 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.

Since April 1, 2022, a portion of interest expenses and a portion of selling, general and administrative expenses, which were initially included in the difference between segment total profits and consolidated amounts, have been charged directly to their respective segments. As a result of these changes, segment data for the six months ended September 30, 2021 has been retrospectively restated.

Total revenues and profits by segment for the six months ended September 30, 2021 and 2022 are as follows:

	Millions of yen
	Six months ended September 30, 2021						Six months ended September 30, 2022					Change (revenues)						Change (profits)
	Segment Revenues			Segment Profits			Segment Revenues		Segment Profits			Amount			Percent (%)			Amount			Percent (%)
Corporate Financial Services and Maintenance Leasing	¥	230,275		¥	46,263		¥	211,427	¥	35,482		¥	(18,848	)		(8	)	¥	(10,781	)		(23	)
Real Estate		202,514			23,031			190,487		18,949			(12,027	)		(6	)		(4,082	)		(18	)
PE Investment and Concession		192,150			1,614			250,873		3,905			58,723			31			2,291			142
Environment and Energy		63,898			9,502			110,914		10,582			47,016			74			1,080			11
Insurance		235,088			32,322			265,870		13,007			30,782			13			(19,315	)		(60	)
Banking and Credit		43,097			20,909			40,944		15,215			(2,153	)		(5	)		(5,694	)		(27	)
Aircraft and Ships		17,748			369			28,496		10,649			10,748			61			10,280			—
ORIX USA		84,988			47,094			79,932		21,596			(5,056	)		(6	)		(25,498	)		(54	)
ORIX Europe		101,104			28,458			89,836		16,419			(11,268	)		(11	)		(12,039	)		(42	)
Asia and Australia		71,705			19,942			92,434		24,148			20,729			29			4,206			21
Total		1,242,567			229,504			1,361,213		169,952			118,646			10			(59,552	)		(26	)
Difference between Segment Total and Consolidated Amounts		(1,033	)		(8,715	)		3,603		(5,606	)		4,636			—			3,109			—
Total Consolidated Amounts	¥	1,241,534		¥	220,789		¥	1,364,816	¥	164,346		¥	123,282			10		¥	(56,443	)		(26	)

Total assets by segment as of March 31, 2022 and September 30, 2022 are as follows:

	Millions of yen
	March 31, 2022				September 30, 2022				Change
	Segment Assets		Composition Ratio (%)		Segment Assets		Composition Ratio (%)		Amount			Percent (%)
Corporate Financial Services and Maintenance Leasing	¥	1,516,795		11	¥	1,476,243		10	¥	(40,552	)		(3	)
Real Estate		910,101		6		907,859		6		(2,242	)		(0	)
PE Investment and Concession		353,581		2		370,091		3		16,510			5
Environment and Energy		703,608		5		772,944		5		69,336			10
Insurance		2,072,145		14		2,052,684		14		(19,461	)		(1	)
Banking and Credit		2,687,156		19		2,677,388		18		(9,768	)		(0	)
Aircraft and Ships		684,098		5		752,565		5		68,467			10
ORIX USA		1,364,142		10		1,624,316		11		260,174			19
ORIX Europe		401,869		3		409,463		3		7,594			2
Asia and Australia		1,306,089		9		1,399,094		9		93,005			7
Total		11,999,584		84		12,442,647		84		443,063			4
Difference between Segment Total and Consolidated Amounts		2,271,088		16		2,343,359		16		72,271			3
Total Consolidated Amounts	¥	14,270,672		100	¥	14,786,006		100	¥	515,334			4

– 4 –

Segment information for the six months ended September 30, 2022 is as follows:

Corporate Financial Services and Maintenance Leasing

:

Finance and fee business; leasing and rental of automobiles, electronic measuring instruments and

ICT-related

equipment

In corporate financial services, we are engaged in financial businesses with a focus on profitability, and fee businesses by providing life insurance and environment and energy-related products and services to domestic small and

medium-sized

enterprise customers, as well as business succession support and M&A broking. In the automobile-related businesses, we aim to increase market share in small and

medium-sized

enterprises and individual customers, as well as large corporate customers by enhancing our competitive advantages stemming from our industry-leading number of fleets under management and

one-stop

automobile-related services. In the rental business operated by ORIX Rentec Corporation, we are not only providing electronic measuring instruments and

ICT-related

equipment lending, but also developing new services relating to robots, drones, etc.

Segment profits decreased 23% to ¥35,482 million compared to the same period of the previous fiscal year due to the absence of gains on investment securities and dividends resulting from the listing of an investee recorded in the same period of the previous fiscal year, and a decrease in services income resulting from the sale of the business of Yayoi Co., Ltd. in the three months ended March 31, 2022.

Segment assets decreased 3% to ¥1,476,243 million compared to the end of the previous fiscal year due to decreases in net investment in leases and installment loans.

	Six months ended September 30, 2021		Six months ended September 30, 2022			Change
						Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	28,026	¥	30,264		¥	2,238			8
Gains on investment securities and dividends		10,804		(1,804	)		(12,608	)		—
Operating leases		127,003		128,564			1,561			1
Sales of goods and real estate		5,512		2,804			(2,708	)		(49	)
Services income		58,930		51,599			(7,331	)		(12	)
Total Segment Revenues		230,275		211,427			(18,848	)		(8	)
Segment Expenses:
Interest expense		2,963		2,870			(93	)		(3	)
Costs of operating leases		96,659		93,521			(3,138	)		(3	)
Costs of goods and real estate sold		3,855		1,980			(1,875	)		(49	)
Services expense		28,132		27,974			(158	)		(1	)
Selling, general and administrative expenses		43,737		40,961			(2,776	)		(6	)
Provision for credit losses, and write-downs of long-lived assets and securities		721		610			(111	)		(15	)
Other		7,996		8,446			450			6
Total Segment Expenses		184,063		176,362			(7,701	)		(4	)
Segment Operating Income		46,212		35,065			(11,147	)		(24	)
Equity in Net income (Loss) of Affiliates and others		51		417			366			718
Segment Profits	¥	46,263	¥	35,482		¥	(10,781	)		(23	)
	As of March 31, 2022		As of September 30, 2022			Change
						Amount			Percent (%)
	(Millions of yen, except percentage data)
Net investment in leases	¥	580,161	¥	562,882		¥	(17,279	)		(3	)
Installment loans		325,482		310,550			(14,932	)		(5	)
Investment in operating leases		517,233		512,524			(4,709	)		(1	)
Investment in securities		34,987		32,870			(2,117	)		(6	)
Property under facility operations		17,199		16,604			(595	)		(3	)
Inventories		594		483			(111	)		(19	)
Advances for finance lease and operating lease		1,800		680			(1,120	)		(62	)
Investment in affiliates		16,929		17,565			636			4
Goodwill, intangible assets acquired in business combinations		22,410		22,085			(325	)		(1	)
Total Segment Assets	¥	1,516,795	¥	1,476,243		¥	(40,552	)		(3	)

– 5 –

Real Estate

:

Real estate development, rental and management; facility operations; real estate asset management

In our real estate business, we aim to promote portfolio rebalancing by selling rental properties in favorable market conditions while investing in real estate development projects that can generate added value. We are also expanding our asset management business, which is less affected by volatility in the real estate market, and our housing-related business with a focus on residential condominiums. Our real estate business also operates hotels and Japanese inns, and we aim to improve profitability by attracting customers in response to diversifying customer needs. In the future, we will promote the innovation and the efficiency of our business through digital transformation, and develop businesses that take advantage of our strengths in a diverse value chain that includes real estate development and rental, asset management, facility operations, residential condominiums management, office building management, construction contracting, and real estate brokerage.

Segment profits decreased 18% to ¥18,949 million compared to the same period of the previous fiscal year. This decrease was due to a decrease in operating leases revenues resulting from sales of real estate under operating leases, and a decrease in sales of goods and real estate at DAIKYO INCORPORATED and its subsidiaries, partially offset by an increase in services income from operating facilities.

Segment assets totaled ¥907,859 million, remaining relatively unchanged compared to the end of the previous fiscal year due to a decrease in investment in operating leases, despite an increase in inventories.

	Six months ended September 30, 2021			Six months ended September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	2,747		¥	2,858		¥	111			4
Operating leases		30,878			27,449			(3,429	)		(11	)
Sales of goods and real estate		60,556			40,510			(20,046	)		(33	)
Services income		108,331			120,035			11,704			11
Other		2			(365	)		(367	)		—
Total Segment Revenues		202,514			190,487			(12,027	)		(6	)
Segment Expenses:
Interest expense		1,398			1,477			79			6
Costs of operating leases		12,251			12,343			92			1
Costs of goods and real estate sold		48,553			33,934			(14,619	)		(30	)
Services expense		102,147			107,234			5,087			5
Selling, general and administrative expenses		17,353			17,854			501			3
Provision for credit losses, and write-downs of long-lived assets and securities		11			204			193			—
Other		(1,280	)		(1,106	)		174			—
Total Segment Expenses		180,433			171,940			(8,493	)		(5	)
Segment Operating Income		22,081			18,547			(3,534	)		(16	)
Equity in Net income (Loss) of Affiliates and others		950			402			(548	)		(58	)
Segment Profits	¥	23,031		¥	18,949		¥	(4,082	)		(18	)
	As of March 31, 2022			As of September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Net investment in leases	¥	62,498		¥	60,315		¥	(2,183	)		(3	)
Investment in operating leases		300,460			285,051			(15,409	)		(5	)
Investment in securities		4,289			3,856			(433	)		(10	)
Property under facility operations		155,750			152,170			(3,580	)		(2	)
Inventories		97,667			109,684			12,017			12
Advances for finance lease and operating lease		112,309			111,538			(771	)		(1	)
Investment in affiliates		113,178			119,960			6,782			6
Advances for property under facility operations		6,857			9,241			2,384			35
Goodwill, intangible assets acquired in business combinations		57,093			56,044			(1,049	)		(2	)
Total Segment Assets	¥	910,101		¥	907,859		¥	(2,242	)		(0	)

– 6 –

PE Investment and Concession

:

Private equity investment; concession

In the private equity business, we aim to enhance the corporate value of investees and to earn sustainable gains on sales through rebalancing our portfolio. We aim to expand investment in focused industries and increase value through rollups and alliances with existing investees as a starting point. At the same time, we seek business opportunities created by changes in the industrial structure and explore diversified investment methods. In the concession business, we aim to strengthen our operations in the three airports in Kansai (Kansai International Airport, Osaka International Airport and Kobe Airport), and proactively engage in the operation of public infrastructures other than airports.

Segment profits increased 142% to ¥3,905 million compared to the same period of the previous fiscal year due to a decrease in equity in net loss of affiliates at our three airports in Kansai in our concession business.

Segment assets increased 5% to ¥370,091 million compared to the end of the previous fiscal year due to an increase in investment securities, goodwill and intangible assets acquired in business combinations resulting from the acquisition of a subsidiary, despite a decrease in property under facility operations at a certain investee.

	Six months ended September 30, 2021			Six months ended September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	124		¥	188		¥	64			52
Gains on investment securities and dividends		1,107			315			(792	)		(72	)
Operating leases		16,127			18,119			1,992			12
Sales of goods and real estate		161,106			216,680			55,574			34
Services income		13,686			15,571			1,885			14
Total Segment Revenues		192,150			250,873			58,723			31
Segment Expenses:
Interest expense		1,481			933			(548	)		(37	)
Costs of operating leases		11,767			11,840			73			1
Costs of goods and real estate sold		149,592			192,916			43,324			29
Services expense		9,188			9,800			612			7
Selling, general and administrative expenses		25,275			25,499			224			1
Provision for credit losses, and write-downs of long-lived assets and securities		951			124			(827	)		(87	)
Other		(13,710	)		623			14,333			—
Total Segment Expenses		184,544			241,735			57,191			31
Segment Operating Income		7,606			9,138			1,532			20
Equity in Net income (Loss) of Affiliates and others		(5,992	)		(5,233	)		759			—
Segment Profits	¥	1,614		¥	3,905		¥	2,291			142
	As of March 31, 2022			As of September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Net investment in leases	¥	1,689		¥	1,513		¥	(176	)		(10	)
Investment in operating leases		43,686			50,554			6,868			16
Investment in securities		12,129			17,727			5,598			46
Property under facility operations		40,725			33,238			(7,487	)		(18	)
Inventories		39,554			42,288			2,734			7
Investment in affiliates		43,498			39,035			(4,463	)		(10	)
Advances for property under facility operations		1,323			1,173			(150	)		(11	)
Goodwill, intangible assets acquired in business combinations		170,977			184,563			13,586			8
Total Segment Assets	¥	353,581		¥	370,091		¥	16,510			5

– 7 –

Environment and Energy

:

Domestic and overseas renewable energy; electric power retailing; ESCO services; sales of solar panels and battery energy storage system; recycling and waste management

In the environment and energy business, we aim to increase services revenue as a comprehensive energy service provider by promoting our renewable energy business and electric power retailing business. In our solar power generation business, we have owned and operated one of the largest solar power capacities in total in Japan. In the recycling and waste management business, we are making new investments in facilities with the aim of further expansion of business. We intend to accelerate our renewable energy business overseas by utilizing the expertise we have gained in the domestic market.

Segment profits increased 11% to ¥10,582 million compared to the same period of the previous fiscal year due to a profit contribution from a renewable energy business subsidiary in Spain.

Segment assets increased 10% to ¥772,944 million compared to the end of the previous fiscal year due to increases in investment in affiliates, advances for property under facility operations, and property under facility operations, primarily resulting from foreign exchange effects.

	Six months ended September 30, 2021			Six months ended September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	474		¥	558		¥	84			18
Services income		61,699			108,469			46,770			76
Other		1,725			1,887			162			9
Total Segment Revenues		63,898			110,914			47,016			74
Segment Expenses:
Interest expense		2,204			5,312			3,108			141
Services expense		47,075			84,110			37,035			79
Selling, general and administrative expenses		5,263			8,547			3,284			62
Provision for credit losses, and write-downs of long-lived assets and securities		(4	)		31			35			—
Other		388			1,512			1,124			290
Total Segment Expenses		54,926			99,512			44,586			81
Segment Operating Income		8,972			11,402			2,430			27
Equity in Net income (Loss) of Affiliates and others		530			(820	)		(1,350	)		—
Segment Profits	¥	9,502		¥	10,582		¥	1,080			11
	As of March 31, 2022			As of September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Net investment in leases	¥	7,910		¥	7,334		¥	(576	)		(7	)
Installment loans		711			779			68			10
Investment in operating leases		279			272			(7	)		(3	)
Investment in securities		961			1,251			290			30
Property under facility operations		330,598			343,837			13,239			4
Inventories		356			409			53			15
Advances for finance lease and operating lease		6			0			(6	)		—
Investment in affiliates		204,260			233,148			28,888			14
Advances for property under facility operations		57,520			73,143			15,623			27
Goodwill, intangible assets acquired in business combinations		101,007			112,771			11,764			12
Total Segment Assets	¥	703,608		¥	772,944		¥	69,336			10

– 8 –

Insurance

:

Life insurance

In the life insurance business, we sell life insurance through agents, banks and other financial institutions,

face-to-face

sales through our own consulting services, and online sales. With

“simple-to-understand”

and “providing reasonable guarantee at reasonable price” as the concepts of product development, we aim to expand the number of new life insurance contracts and increase life insurance premium income by constantly incorporating our customer needs while expanding the product lineup.

Segment profits decreased 60% to ¥13,007 million compared to the same period of the previous fiscal year due to an increase in life insurance costs as a result of increased payouts to policy holders, despite an increase in life insurance premiums and related investment income in line with an increase in insurance contracts.

Segment assets decreased 1% to ¥2,052,684 million compared to the end of the previous fiscal year due to decrease in investment in securities.

	Six months ended September 30, 2021			Six months ended September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	126		¥	149		¥	23			18
Life insurance premiums and related investment income		233,960			264,433			30,473			13
Other		1,002			1,288			286			29
Total Segment Revenues		235,088			265,870			30,782			13
Segment Expenses:
Interest expense		282			114			(168	)		(60	)
Life insurance costs		174,766			223,247			48,481			28
Selling, general and administrative expenses		27,814			29,502			1,688			6
Provision for credit losses, and write-downs of long-lived assets and securities		1			(0	)		(1	)		—
Other		(92	)		(1	)		91			—
Total Segment Expenses		202,771			252,862			50,091			25
Segment Operating Income		32,317			13,008			(19,309	)		(60	)
Equity in Net income (Loss) of Affiliates and others		5			(1	)		(6	)		—
Segment Profits	¥	32,322		¥	13,007		¥	(19,315	)		(60	)
	As of March 31, 2022			As of September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Installment loans	¥	17,983		¥	18,309		¥	326			2
Investment in operating leases		28,296			28,031			(265	)		(1	)
Investment in securities		2,021,134			2,001,635			(19,499	)		(1	)
Goodwill, intangible assets acquired in business combinations		4,732			4,709			(23	)		(0	)
Total Segment Assets	¥	2,072,145		¥	2,052,684		¥	(19,461	)		(1	)

– 9 –

Banking and Credit

:

Banking; consumer finance

In the banking business, we aim to increase finance revenues mainly by origination of real estate investment loans, which is the core of our banking business. In the consumer finance business, we aim to increase finance revenues by providing loans directly to our customers with our expertise in credit screening. We also aim to increase guarantee fees income by expanding guarantees against loans disbursed by other financial institutions. In the mortgage bank business, we aim to expand our market share by expanding our agency network and strengthening our product lineup.

Segment profits decreased 27% to ¥15,215 million compared to the same period of the previous fiscal year due to the absence of gains on investment securities and dividends at ORIX Bank Corporation recorded in the same period of the previous fiscal year, and an increase in advertising expenses at ORIX Credit Corporation recorded in the consolidated cumulative second quarter.

Segment assets totaled ¥2,677,388 million, remaining relatively unchanged compared to the end of the previous fiscal year.

	Six months ended September 30, 2021			Six months ended September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	38,795		¥	38,610		¥	(185	)		(0	)
Gains on investment securities and dividends		1,335			(1,163	)		(2,498	)		—
Services income		2,967			3,497			530			18
Total Segment Revenues		43,097			40,944			(2,153	)		(5	)
Segment Expenses:
Interest expense		2,620			2,755			135			5
Services expense		3,977			4,208			231			6
Selling, general and administrative expenses		13,719			16,559			2,840			21
Provision for credit losses, and write-downs of long-lived assets and securities		1,894			2,595			701			37
Other		(21	)		(388	)		(367	)		—
Total Segment Expenses		22,189			25,729			3,540			16
Segment Operating Income		20,908			15,215			(5,693	)		(27	)
Equity in Net income (Loss) of Affiliates and others		1			0			(1	)		—
Segment Profits	¥	20,909		¥	15,215		¥	(5,694	)		(27	)
	As of March 31, 2022			As of September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Installment loans	¥	2,397,532		¥	2,381,726		¥	(15,806	)		(1	)
Investment in securities		277,786			283,858			6,072			2
Investment in affiliates		67			33			(34	)		(51	)
Goodwill, intangible assets acquired in business combinations		11,771			11,771			0			—
Total Segment Assets	¥	2,687,156		¥	2,677,388		¥	(9,768	)		(0	)

– 10 –

Aircraft and Ships

:

Aircraft investment and management; ship-related finance and investment

In the aircraft-related business, we are focusing on a wide range of profit opportunities, including operating leases of owned aircraft, sale of aircraft to investors, and asset management services for aircraft owned by domestic and overseas investors. We aim for medium- and long-term growth by further enhancing our presence in the global aircraft-leasing market including through mutually complementary relationships with Avolon Holdings Limited. In the ship-related business, we flexibly replace assets while closely monitoring the market environment, and aim to achieve goals such as an increase of commission income by arranging investment in ships for domestic corporate investors. In the future, we aim to expand our business by collaborating with excellent partners based on our expertise in finance and investment.

Segment profits increased by ¥10,280 million to ¥10,649 million as compared to ¥369 million of segment profits in the same period of the previous fiscal year due to an increase in equity in net income (loss) of affiliates at Avolon Holdings Limited, and an increase in operating leases revenues in our ship-related businesses and aircraft-related business.

Segment assets increased 10% to ¥752,565 million compared to the end of the previous fiscal year due to an increase in investment in affiliates, primarily resulting from foreign exchange effects.

	Six months ended September 30, 2021			Six months ended September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	805		¥	2,419		¥	1,614			200
Operating leases		13,771			20,983			7,212			52
Services income		3,172			5,094			1,922			61
Total Segment Revenues		17,748			28,496			10,748			61
Segment Expenses:
Interest expense		6,045			7,680			1,635			27
Costs of operating leases		8,609			7,460			(1,149	)		(13	)
Services expense		481			690			209			43
Selling, general and administrative expenses		3,378			4,129			751			22
Provision for credit losses, and write-downs of long-lived assets and securities		(0	)		(0	)		0			—
Other		(2,734	)		360			3,094			—
Total Segment Expenses		15,779			20,319			4,540			29
Segment Operating Income		1,969			8,177			6,208			315
Equity in Net income (Loss) of Affiliates and others		(1,600	)		2,472			4,072			—
Segment Profits	¥	369		¥	10,649		¥	10,280			—
	As of March 31, 2022			As of September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Installment loans	¥	81,695		¥	91,083		¥	9,388			11
Investment in operating leases		271,910			263,096			(8,814	)		(3	)
Investment in securities		0			0			0			—
Inventories		113			0			(113	)		—
Investment in affiliates		320,058			385,119			65,061			20
Goodwill, intangible assets acquired in business combinations		10,322			13,267			2,945			29
Total Segment Assets	¥	684,098		¥	752,565		¥	68,467			10

– 11 –

ORIX USA

:

Finance, investment and asset management in the Americas

ORIX Corporation USA provides various types of finance services such as corporate finance, real estate finance, private equity investment, and investment in bonds to our clients in response to their needs. We aim to expand such asset businesses by making the most of our expertise in them. We are also engaged in expanding the function of our asset management and servicing platform to increase stable fee revenues. With the expansion of both principal investments and assets under management, we aim for the growth of profits along with improvement of capital efficiency.

Segment profits decreased 54% to ¥21,596 million compared to the same period of the previous fiscal year, primarily due to the absence of gains on investment securities and dividends resulting from the sales of investees recorded in the same period of the previous fiscal year.

Segment assets increased 19% to ¥1,624,316 million compared to the end of the previous fiscal year, primarily due to foreign exchange effects.

	Six months ended September 30, 2021			Six months ended September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	44,261		¥	49,631		¥	5,370			12
Gains on investment securities and dividends		27,085			9,504			(17,581	)		(65	)
Services income		12,052			19,387			7,335			61
Other		1,590			1,410			(180	)		(11	)
Total Segment Revenues		84,988			79,932			(5,056	)		(6	)
Segment Expenses:
Interest expense		8,249			16,637			8,388			102
Services expense		1,659			2,469			810			49
Selling, general and administrative expenses		35,775			42,837			7,062			20
Provision for credit losses, and write-downs of long-lived assets and securities		(1,500	)		(2,054	)		(554	)		—
Other		(382	)		2,759			3,141			—
Total Segment Expenses		43,801			62,648			18,847			43
Segment Operating Income		41,187			17,284			(23,903	)		(58	)
Equity in Net income (Loss) of Affiliates and others		5,907			4,312			(1,595	)		(27	)
Segment Profits	¥	47,094		¥	21,596		¥	(25,498	)		(54	)
	As of March 31, 2022			As of September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Net investment in leases	¥	475		¥	543		¥	68			14
Installment loans		717,183			863,881			146,698			20
Investment in operating leases		4,653			3,854			(799	)		(17	)
Investment in securities		367,190			430,849			63,659			17
Property under facility operations and servicing assets		79,000			90,255			11,255			14
Inventories		685			1,102			417			61
Advances for finance lease and operating lease		945			0			(945	)		—
Investment in affiliates		45,337			59,009			13,672			30
Goodwill, intangible assets acquired in business combinations		148,674			174,823			26,149			18
Total Segment Assets	¥	1,364,142		¥	1,624,316		¥	260,174			19

– 12 –

ORIX Europe

:

Asset management of global equity and fixed income

Under ORIX Corporation Europe N.V. (hereinafter, “OCE”) as the holding company, Robeco Institutional Asset Management B.V. (hereinafter, “Robeco”) and Transtrend B.V. headquartered in the Netherlands, Boston Partners Global Investors, Inc. and Harbor Capital Advisors, Inc. headquartered in the United States are engaged in the asset management business through investments in stocks, bonds, etc. In addition to the focus on expanding the existing businesses by leveraging the expertise of Robeco, a pioneer in sustainable investment, we aim to increase assets under management with expanding products and investment strategies through M&A activities. ORIX Europe is also engaged in capturing a wide range of business opportunities as the strategic business location of ORIX Group in Europe.

Segment profits decreased 42% to ¥16,419 million compared to the same period of the previous fiscal year due to a decrease in services income due to a decrease in the average amount of assets under management, and a decrease in gains on investment securities and dividends resulting from weaker market conditions.

Segment assets increased 2% to ¥409,463 million compared to the end of the previous fiscal year, primarily due to foreign exchange effects, despite a decrease in investment in securities.

	Six months ended September 30, 2021			Six months ended September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	7		¥	183		¥	176			—
Gains on investment securities and dividends		1,821			(8,761	)		(10,582	)		—
Services income		99,276			98,414			(862	)		(1	)
Total Segment Revenues		101,104			89,836			(11,268	)		(11	)
Segment Expenses:
Interest expense		(319	)		587			906			—
Services expense		26,466			24,847			(1,619	)		(6	)
Selling, general and administrative expenses		44,499			50,849			6,350			14
Other		1,476			(2,658	)		(4,134	)		—
Total Segment Expenses		72,122			73,625			1,503			2
Segment Operating Income		28,982			16,211			(12,771	)		(44	)
Equity in Net income (Loss) of Affiliates and others		(524	)		208			732			—
Segment Profits	¥	28,458		¥	16,419		¥	(12,039	)		(42	)
	As of March 31, 2022			As of September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen, except percentage data)
Investment in securities	¥	82,770		¥	80,562		¥	(2,208	)		(3	)
Investment in affiliates		2,221			2,636			415			19
Goodwill, intangible assets acquired in business combinations		316,878			326,265			9,387			3
Total Segment Assets	¥	401,869		¥	409,463		¥	7,594			2

– 13 –

Asia and Australia

:

Finance and investment businesses in Asia and Australia

Our overseas subsidiaries are well-versed in business practices and laws and regulations that vary from region to region, and are primarily engaged in financial services such as leasing and lending. Our overseas subsidiaries also invest in private equity in Asian countries, particularly in China. We will further enhance the functions of our overseas subsidiaries and further invest in targeted markets in order to expand our business with an emphasis on profitability.

Segment profits increased 21% to ¥24,148 million compared to the same period of the previous fiscal year due to an increase in operating leases revenues in South Korea and Australia, partially offset by a decrease in gains on investment securities and dividends.

Segment assets increased 7% to ¥1,399,094 million compared to the end of the previous fiscal year, primarily due to foreign exchange effects, despite a decrease in installment loans in Greater China.

	Six months ended September 30, 2021		Six months ended September 30, 2022			Change
						Amount			Percent (%)
	(Millions of yen, except percentage data)
Segment Revenues:
Finance revenues	¥	22,628	¥	29,025		¥	6,397			28
Gains on investment securities and dividends		3,530		1,158			(2,372	)		(67	)
Operating leases		38,694		51,571			12,877			33
Services income		6,825		10,022			3,197			47
Other		28		658			630			—
Total Segment Revenues		71,705		92,434			20,729			29
Segment Expenses:
Interest expense		9,729		13,895	��		4,166			43
Costs of operating leases		28,842		37,649			8,807			31
Services expense		4,617		6,591			1,974			43
Selling, general and administrative expenses		14,194		18,002			3,808			27
Provision for credit losses, and write-downs of long-lived assets and securities		183		497			314			172
Other		521		553			32			6
Total Segment Expenses		58,086		77,187			19,101			33
Segment Operating Income		13,619		15,247			1,628			12
Equity in Net income (Loss) of Affiliates and others		6,323		8,901			2,578			41
Segment Profits	¥	19,942	¥	24,148		¥	4,206			21
	As of March 31, 2022		As of September 30, 2022			Change
						Amount			Percent (%)
	(Millions of yen, except percentage data)
Net investment in leases	¥	405,043	¥	450,165		¥	45,122			11
Installment loans		321,994		313,883			(8,111	)		(3	)
Investment in operating leases		286,214		313,798			27,584			10
Investment in securities		48,052		55,510			7,458			16
Property under facility operations		1,084		1,176			92			8
Inventories		483		500			17			4
Advances for finance lease and operating lease		3,919		6,990			3,071			78
Investment in affiliates		232,471		249,756			17,285			7
Goodwill, intangible assets acquired in business combinations		6,829		7,316			487			7
Total Segment Assets	¥	1,306,089	¥	1,399,094		¥	93,005			7

– 14 –

(2) Financial Condition

	As of March 31, 2022			As of September 30, 2022			Change
							Amount			Percent (%)
	(Millions of yen except per share, ratios and percentages)
Total assets	¥	14,270,672		¥	14,786,006		¥	515,334			4
(Segment assets)		11,999,584			12,442,647			443,063			4
Total liabilities		10,899,271			11,333,820			434,549			4
(Short- and long-term debt)		4,866,685			5,410,385			543,700			11
(Deposits)		2,276,158			2,252,295			(23,863	)		(1	)
ORIX Corporation shareholders’ equity		3,261,419			3,344,812			83,393			3
ORIX Corporation shareholders’ equity per share (yen)*1		2,732.88			2,836.85			103.97			4
ORIX Corporation shareholders’ equity ratio*2		22.9	%		22.6	%		—			—
D/E ratio (Debt-to-equity ratio) (Short-and long-term debt (excluding deposits) / ORIX Corporation shareholders’ equity)		1.5x			1.6x			—			—

*1 ORIX Corporation shareholders’ equity per share is calculated using total ORIX Corporation shareholders’ equity.

*2 ORIX Corporation shareholders’ equity ratio is the ratio as of the period end of ORIX Corporation shareholders’ equity to total assets.

Total assets increased 4% to ¥14,786,006 million compared to the balance as of March 31, 2022 due to increases in other assets, installment loans and investments in affiliates, partially offset by a decrease in cash and cash equivalents. In addition, segment assets increased 4% to ¥12,442,647 million compared to the balance as of March 31, 2022.

Total liabilities increased 4% to ¥11,333,820 million compared to the balance as of March 31, 2022 due to increases in

short-and

long-term debt, policy liabilities and policy account balances, despite decreases in trade notes, accounts and other payable and current and deferred income taxes.

Shareholders’ equity increased 3% to ¥3,344,812 million compared to the balance as of March 31, 2022.

– 15 –

(3) Liquidity and Capital Resources

ORIX Group formulates funding policies that are designed to maintain and improve procurement stability and reduce liquidity risk. As a concrete measure to maintain and improve procurement stability while engaging in activities such as borrowing, capital market procurement and securitization of assets, we are diversifying our procurement methods and our country and investor base. To reduce liquidity risk, we are prolonging our borrowings from financial institutions and issuing long-term corporate bonds domestically and internationally with dispersed redemption periods. We are also holding cash and entering into committed credit facilities agreements. In order to maintain an appropriate level of liquidity at hand, we conduct stress tests from the perspective of both procurement stability and financial efficiency and review the necessary levels accordingly.

The Company continues to closely monitor the effects of

COVID-19,

the Russia-Ukraine crisis, increased inflation and increase in interest cost around the world on the liquidity and capital resources of the ORIX Group.

Our funding is comprised of borrowings from financial institutions, direct fund procurement from capital markets, and deposits. ORIX Group’s total funding including that from short-term and long-term debt and deposits on a consolidated basis was ¥7,662,680 million as of September 30, 2022. Borrowings are procured from a diverse range of financial institutions including major banks, regional banks, foreign banks and life and casualty insurance companies. The number of financial institutions from which we procured borrowings was about 200 as of September 30, 2022. Our debt from capital markets is mainly composed of bonds, MTNs, CP, and securitization of loans receivables and other assets. The majority of deposits are attributable to ORIX Bank Corporation.

Short-term and long-term debt and deposits

(a) Short-term debt

	Millions of yen
	March 31, 2022		September 30, 2022
Borrowings from financial institutions	¥	399,589	¥	376,293
Commercial paper		40,050		85,380
Total short-term debt	¥	439,639	¥	461,673
Short-term debt as of September 30, 2022 was ¥461,673 million, which accounted for 9% of the total amount of short-term and long-term debt (excluding deposits) as compared to 9% as of March 31, 2022.
While the amount of short-term debt as of September 30, 2022 was ¥461,673 million, the sum of cash and cash equivalents and the unused amount of committed credit facilities as of September 30, 2022 was ¥1,483,169 million, maintaining a sufficient level of liquidity.
(b) Long-term debt
	Millions of yen
	March 31, 2022		September 30, 2022
Borrowings from financial institutions	¥	3,240,763	¥	3,523,205
Bonds		997,654		1,177,875
Medium-term notes		32,279		78,726
Payables under securitized loan receivables and other assets		156,350		168,906
Total long-term debt	¥	4,427,046	¥	4,948,712
The balance of long-term debt as of September 30, 2022 was ¥4,948,712 million, which accounted for 91% of the total amount of short-term and long-term debt (excluding deposits) as compared to 91% as of March 31, 2022.
(c) Deposits
	Millions of yen
	March 31, 2022		September 30, 2022
Deposits	¥	2,276,158	¥	2,252,295

Apart from the short-term and long-term debt noted above, ORIX Bank Corporation and ORIX Asia Limited accept deposits. These deposit-taking subsidiaries are regulated institutions, and loans from these subsidiaries to ORIX Group entities are subject to maximum regulatory limits.

– 16 –

(4) Summary of Cash Flows

Cash, cash equivalents and restricted cash as of September 30, 2022 decreased by ¥45,791 million to ¥1,046,021 million compared to March 31, 2022.

Cash flows provided by operating activities were ¥262,902 million in the six months ended September 30, 2022, down from ¥603,273 million during the same period of the previous fiscal year. This change resulted primarily from an increase in an increase in inventories, a decrease in a decrease in trade notes, accounts and other receivable, and an increase in payment of income taxes resulting from the sale of the business of Yayoi Co., Ltd. in the three months ended March 31, 2022, and other. Cash outflow resulting from payment of income taxes is included in other, net

Cash flows used in investing activities were ¥440,563 million in the six months ended September 30, 2022, down from ¥446,478 million during the same period of the previous fiscal year. This change resulted primarily from an increase in principal collected on installment loans, partially offset by an increase in purchases and a decrease in proceeds from redemption of

available-for-sale

debt securities

Cash flows provided by financing activities were ¥96,042 million in the six months ended September 30, 2022, compared to the outflow of ¥76,204 million during the same period of the previous fiscal year. This change resulted primarily from an increase in proceeds from debt with maturities longer than three months, partially offset by a change from an increase to a decrease in debt with maturities of three months or less.

(5) Management Policy and Strategy

There were no significant changes for the six months ended September 30, 2022.

(6) Challenges to be addressed on a priority basis

There were no significant changes for the six months ended September 30, 2022.

(7) Research and Development Activity

There were no significant changes in research and development activities for the six months ended September 30, 2022.

(8) Major Facilities

There were no significant changes in major facilities for the six months ended September 30, 2022.

4. Material Contracts

Not applicable.

– 17 –

5. Company Stock Information

(The following disclosure is provided for ORIX Corporation on a stand-alone basis and has been prepared based on Japanese GAAP.)

(1) Issued Shares, Common Stock and Capital Reserve

The number of issued shares, the amount of common stock and capital reserve for the three months ended September 30, 2022 is as follows:

In thousands		Millions of yen
Number of issued shares		Common stock		Capital reserve
Increase, net	September 30, 2022	Increase, net	September 30, 2022	Increase, net	September 30, 2022
0	1,258,277	¥0	¥221,111	¥0	¥248,290

(2) List of Major Shareholders

The following is a list of major shareholders based on our share registry as of September 30, 2022:

Name	Number of shares held (in thousands)		Percentage of total shares issued
Address
The Master Trust Bank of Japan, Ltd. (Trust Account) 2-11-3, Hamamatsu-cho, Minato-ku, Tokyo		243,041		20.56	%
Custody Bank of Japan, Ltd. (Trust Account) 1-8-12, Harumi, Chuo-ku, Tokyo		103,154		8.72
SSBTC Client Omnibus Account One Lincoln Street, Boston MA USA 02111		25,935		2.19
Citibank, N.A.-NY, As Depositary Bank For Depositary Share Holders 388 Greenwich Street New York, NY 10013 USA		23,547		1.99
JP Morgan Securities Inc. Tokyo Building, 2-7-3, Marunouchi, Chiyoda-ku, Tokyo		23,314		1.97
State Street Bank West Client-Treaty 505234 1776 Heritage Drive, North Quincy, MA 02171 USA		20,872		1.76
BNYM AS AGT/CLTS Non Treaty JASDEC 240 Greenwich Street, New York, NY 10286 USA		17,373		1.46
JP Morgan Chase Bank 385781 25 Bank Street, Canary Wharf, London, E14 5JP, United Kingdom		14,940		1.26
SMBC Nikko Securities Inc. 3-3-1, Marunouchi, Chiyoda-ku, Tokyo		14,009		1.18
Northern Trust Co. (AVFC) Sub A/C Non Treat 50 Bank Street Canary Wharf London E14 5NT, UK		13,945		1.17
		500,136		42.31	%

Notes:	1	The number of shares held in relation to a trust business may not be all inclusive and therefore is reported with reference to the names listed as shareholders.
:	2	In addition to the above, the Company has treasury stock shares of 76,368 thousand shares. The Company’s shares held through the Board Incentive Plan Trust (2,849 thousand shares) are not included in the number of treasury stock shares.

6. Directors and Executive Officers

Between the filing date of Form

20-F

for the fiscal year ended March 31, 2022 and September 30, 2022, there were no changes of directors and executive officers.

– 18 –

7. Financial Information

(1) Condensed Consolidated Balance Sheets (Unaudited)

		Millions of yen
Assets		March 31, 2022			September 30, 2022
Cash and Cash Equivalents		¥	954,827		¥	925,965
Restricted Cash			136,985			120,056
Net Investment in Leases			1,057,973			1,082,943
Installment Loans			3,862,604			3,980,231
The amounts which are measured at fair value by electing the fair value option are as follows:
March 31, 2022	¥151,601 million
September 30, 2022	¥215,774 million
Allowance for Credit Losses			(69,459	)		(66,975	)
Investment in Operating Leases			1,463,202			1,466,487
Investment in Securities			2,852,349			2,911,282
The amounts which are measured at fair value by electing the fair value option are as follows:
March 31, 2022	¥19,353 million
September 30, 2022	¥25,568 million
The amounts which are associated to available-for-sale debt securities are as follows:
March 31, 2022
Amortized Cost	¥2,276,425 million
Allowance for Credit Losses	¥(153) million
September 30, 2022
Amortized Cost	¥2,514,538 million
Allowance for Credit Losses	¥(172) million
Property under Facility Operations			561,846			564,655
Investment in Affiliates			978,033			1,106,570
Trade Notes, Accounts and Other Receivable			359,949			356,894
Inventories			139,563			154,565
Office Facilities			240,421			246,380
Other Assets			1,732,379			1,936,953
The amounts which are measured at fair value by electing the fair value option are as follows:
March 31, 2022	¥5,214 million
September 30, 2022	¥5,702 million
Total Assets		¥	14,270,672		¥	14,786,006

Note:    The assets of consolidated variable interest entities (VIEs) that can be used only to settle obligations of those VIEs are below:

	Millions of yen
	March 31, 2022		September 30, 2022
Cash and Cash Equivalents	¥	3,899	¥	4,554
Installment Loans (Net of Allowance for Credit Losses)		212,371		238,637
Investment in Operating Leases		101,881		72,675
Property under Facility Operations		210,307		165,362
Investment in Affiliates		51,877		51,561
Other		95,613		73,969
	¥	675,948	¥	606,758

– 19 –

		Millions of yen
Liabilities and Equity		March 31, 2022			September 30, 2022
Liabilities:
Short-Term Debt		¥	439,639		¥	461,673
Deposits			2,276,158			2,252,295
Trade Notes, Accounts and Other Payable			291,422			248,523
Policy Liabilities and Policy Account Balances			1,963,623			2,049,300
The amounts which are measured at fair value by electing the fair value option are as follows:
March 31, 2022	¥198,905 million
September 30, 2022	¥170,177 million
Current and Deferred Income Taxes			461,181			315,657
Long-Term Debt			4,427,046			4,948,712
Other Liabilities			1,040,202			1,057,660
Total Liabilities			10,899,271			11,333,820
Redeemable Noncontrolling Interests			0			965
Commitments and Contingent Liabilities
Equity:
Common Stock			221,111			221,111
Additional Paid-in Capital			260,479			260,880
Retained Earnings			2,909,317			2,975,389
Accumulated Other Comprehensive Income (Loss)			(16,041	)		34,014
Treasury Stock, at Cost			(113,447	)		(146,582	)
ORIX Corporation Shareholders’ Equity			3,261,419			3,344,812
Noncontrolling Interests			109,982			106,409
Total Equity			3,371,401			3,451,221
Total Liabilities and Equity		¥	14,270,672		¥	14,786,006

Note: The liabilities of consolidated VIEs for which creditors (or beneficial interest holders) do not have recourse to the general credit of the Company and its subsidiaries are below:

	Millions of yen
	March 31, 2022		September 30, 2022
Trade Notes, Accounts and Other Payable	¥	2,251	¥	1,846
Long-Term Debt		431,312		376,611
Other		38,891		27,715
	¥	472,454	¥	406,172

– 20 –

(2) Condensed Consolidated Statements of Income (Unaudited)

	Millions of yen
	Six months ended September 30, 2021			Six months ended September 30, 2022
Revenues:
Finance revenues	¥	137,191		¥	153,151
Gains (Losses) on investment securities and dividends		45,744			(746	)
Operating leases		227,933			249,144
Life insurance premiums and related investment income		232,797			263,211
Sales of goods and real estate		230,655			265,020
Services income		367,214			435,036
Total revenues		1,241,534			1,364,816
Expenses:
Interest expense		33,432			51,473
Costs of operating leases		159,578			164,841
Life insurance costs		174,215			222,493
Costs of goods and real estate sold		204,182			232,209
Services expense		223,630			267,774
Other (income) and expense		(10,558	)		6,941
Selling, general and administrative expenses		245,884			267,954
Provision for credit losses		2,106			1,674
Write-downs of long-lived assets		88			253
Write-downs of securities		60			71
Total expenses		1,032,617			1,215,683
Operating Income		208,917			149,133
Equity in Net Income of Affiliates		5,399			6,624
Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, net		6,473			8,589
Income before Income Taxes		220,789			164,346
Provision for Income Taxes		68,070			38,737
Net Income		152,719			125,609
Net Income Attributable to the Noncontrolling Interests		6,037			3,821
Net Income Attributable to the Redeemable Noncontrolling Interests		0			12
Net Income Attributable to ORIX Corporation Shareholders	¥	146,682		¥	121,776
	Yen
	Six months ended  September 30, 2021			Six months ended  September 30, 2022
Amounts per Share of Common Stock for Net Income Attributable to ORIX Corporation Shareholders:
Basic:	¥	121.12		¥	102.52
Diluted:		121.00			102.40

– 21 –

	Millions of yen
	Three months ended September 30, 2021			Three months ended September 30, 2022
Revenues:
Finance revenues	¥	68,889		¥	79,308
Gains on investment securities and dividends		21,615			4,894
Operating leases		114,467			122,945
Life insurance premiums and related investment income		124,699			136,934
Sales of goods and real estate		111,551			133,722
Services income		191,500			229,200
Total revenues		632,721			707,003
Expenses:
Interest expense		16,513			29,575
Costs of operating leases		79,824			82,953
Life insurance costs		94,452			120,927
Costs of goods and real estate sold		105,114			119,779
Services expense		117,734			145,237
Other (income) and expense		(14,069	)		5,211
Selling, general and administrative expenses		123,799			135,872
Provision for credit losses		2,361			1,426
Write-downs of long-lived assets		1			145
Write-downs of securities		54			38
Total expenses		525,783			641,163
Operating Income		106,938			65,840
Equity in Net Income of Affiliates		10,319			8,005
Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, net		3,476			5,486
Income before Income Taxes		120,733			79,331
Provision for Income Taxes		38,614			18,010
Net Income		82,119			61,321
Net Income Attributable to the Noncontrolling Interests		653			1,395
Net Income Attributable to the Redeemable Noncontrolling Interests		0			12
Net Income Attributable to ORIX Corporation Shareholders	¥	81,466		¥	59,914
	Yen
	Three months ended  September 30, 2021			Three months ended  September 30, 2022
Amounts per Share of Common Stock for Net Income Attributable to ORIX Corporation Shareholders:
Basic:	¥	67.51		¥	50.60
Diluted:		67.43			50.54

– 22 –

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

	Millions of yen
	Six months ended September 30, 2021			Six months ended September 30, 2022
Net Income	¥	152,719		¥	125,609
Other comprehensive income (loss), net of tax:
Net change of unrealized gains (losses) on investment in securities		8,320			(143,867	)
Net change of debt valuation adjustments		(61	)		60
Net change of defined benefit pension plans		149			(316	)
Net change of foreign currency translation adjustments		14,932			185,095
Net change of unrealized gains on derivative instruments		2,170			18,531
Total other comprehensive income		25,510			59,503
Comprehensive Income		178,229			185,112
Comprehensive Income Attributable to the Noncontrolling Interests		6,719			13,181
Comprehensive Income Attributable to the Redeemable Noncontrolling Interests		0			100
Comprehensive Income Attributable to ORIX Corporation Shareholders	¥	171,510		¥	171,831
	Millions of yen
	Three months ended  September 30, 2021			Three months ended  September 30, 2022
Net Income	¥	82,119		¥	61,321
Other comprehensive income (loss), net of tax:
Net change of unrealized gains (losses) on investment in securities		1,939			(62,494	)
Net change of debt valuation adjustments		(37	)		76
Net change of defined benefit pension plans		196			(151	)
Net change of foreign currency translation adjustments		5,891			70,976
Net change of unrealized gains on derivative instruments		1,278			7,600
Total other comprehensive income		9,267			16,007
Comprehensive Income		91,386			77,328
Comprehensive Income Attributable to the Noncontrolling Interests		1,169			3,615
Comprehensive Income Attributable to the Redeemable Noncontrolling Interests		0			62
Comprehensive Income Attributable to ORIX Corporation Shareholders	¥	90,217		¥	73,651

– 23 –

(4) Condensed Consolidated Statements of Changes in Equity (Unaudited)

Six months ended September 30, 2021

	Millions of yen
	ORIX Corporation Shareholders’ Equity
	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total ORIX Corporation Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at March 31, 2021	¥	221,111	¥	259,361		¥	2,744,588		¥	(84,650	)	¥	(111,954	)	¥	3,028,456		¥	74,688		¥	3,103,144
Cumulative effect of adopting Accounting Standards Update 2019-12							215									215			0			215
Balance at April 1, 2021	¥	221,111	¥	259,361		¥	2,744,803		¥	(84,650	)	¥	(111,954	)	¥	3,028,671		¥	74,688		¥	3,103,359
Contribution to subsidiaries																0			28,040			28,040
Transaction with noncontrolling interests				20												20			(5,733	)		(5,713	)
Comprehensive income, net of tax:
Net income							146,682									146,682			6,037			152,719
Other comprehensive income (loss)
Net change of unrealized gains on investment in securities										8,320						8,320			0			8,320
Net change of debt valuation adjustments										(61	)					(61	)		0			(61	)
Net change of defined benefit pension plans										150						150			(1	)		149
Net change of foreign currency translation adjustments										14,317						14,317			615			14,932
Net change of unrealized gains on derivative instruments										2,102						2,102			68			2,170
Total other comprehensive income																24,828			682			25,510
Total comprehensive income																171,510			6,719			178,229
Cash dividends							(52,438	)								(52,438	)		(12,869	)		(65,307	)
Acquisition of treasury stock													(30,547	)		(30,547	)		0			(30,547	)
Disposal of treasury stock				(12	)								18			6			0			6
Other, net				433									(1	)		432			0			432
Balance at September 30, 2021	¥	221,111	¥	259,802		¥	2,839,047		¥	(59,822	)	¥	(142,484	)	¥	3,117,654		¥	90,845		¥	3,208,499

Six months ended September 30, 2022

	Millions of yen
	ORIX Corporation Shareholders’ Equity
	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total ORIX Corporation Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at March 31, 2022	¥	221,111	¥	260,479		¥	2,909,317		¥	(16,041	)	¥	(113,447	)	¥	3,261,419		¥	109,982		¥	3,371,401
Contribution to subsidiaries																0			1,722			1,722
Transaction with noncontrolling interests				(14	)											(14	)		(3,421	)		(3,435	)
Comprehensive income, net of tax:
Net income							121,776									121,776			3,821			125,597
Other comprehensive income (loss)
Net change of unrealized gains (losses) on investment in securities										(143,867	)					(143,867	)		0			(143,867	)
Net change of debt valuation adjustments										60						60			0			60
Net change of defined benefit pension plans										(318	)					(318	)		2			(316	)
Net change of foreign currency translation adjustments										177,121						177,121			7,886			185,007
Net change of unrealized gains on derivative instruments										17,059						17,059			1,472			18,531
Total other comprehensive income																50,055			9,360			59,415
Total comprehensive income																171,831			13,181			185,012
Cash dividends							(55,704	)								(55,704	)		(15,055	)		(70,759	)
Acquisition of treasury stock													(33,151	)		(33,151	)		0			(33,151	)
Disposal of treasury stock				(29	)								16			(13	)		0			(13	)
Other, net				444												444			0			444
Balance at September 30, 2022	¥	221,111	¥	260,880		¥	2,975,389		¥	34,014		¥	(146,582	)	¥	3,344,812		¥	106,409		¥	3,451,221

Note: Changes in the redeemable noncontrolling interests are not included in this table. For further information, see Note 12 “Redeemable Noncontrolling Interests.”

– 24 –

Three months ended September 30, 2021

	Millions of yen
	ORIX Corporation Shareholders’ Equity
	Common Stock		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total ORIX Corporation Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at June 30, 2021	¥	221,111	¥	259,585		¥	2,757,581	¥	(68,573	)	¥	(122,172	)	¥	3,047,532		¥	67,719		¥	3,115,251
Contribution to subsidiaries															0			27,286			27,286
Transaction with noncontrolling interests															0			(4,599	)		(4,599	)
Comprehensive income, net of tax:
Net income							81,466								81,466			653			82,119
Other comprehensive income (loss)
Net change of unrealized gains on investment in securities									1,939						1,939			0			1,939
Net change of debt valuation adjustments									(37	)					(37	)		0			(37	)
Net change of defined benefit pension plans									196						196			0			196
Net change of foreign currency translation adjustments									5,414						5,414			477			5,891
Net change of unrealized gains on derivative instruments									1,239						1,239			39			1,278
Total other comprehensive income															8,751			516			9,267
Total comprehensive income															90,217			1,169			91,386
Cash dividends															0			(730	)		(730	)
Acquisition of treasury stock												(20,330	)		(20,330	)		0			(20,330	)
Disposal of treasury stock				(12	)							18			6			0			6
Other, net				229											229			0			229
Balance at September 30, 2021	¥	221,111	¥	259,802		¥	2,839,047	¥	(59,822	)	¥	(142,484	)	¥	3,117,654		¥	90,845		¥	3,208,499

Three months ended September 30, 2022

	Millions of yen
	ORIX Corporation Shareholders’ Equity
	Common Stock		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total ORIX Corporation Shareholders’ Equity			Noncontrolling Interests			Total Equity
Balance at June 30, 2022	¥	221,111	¥	260,653		¥	2,915,475	¥	20,277		¥	(123,790	)	¥	3,293,726		¥	109,759		¥	3,403,485
Contribution to subsidiaries															0			1,250			1,250
Transaction with noncontrolling interests															0			(1,242	)		(1,242	)
Comprehensive income, net of tax:
Net income							59,914								59,914			1,395			61,309
Other comprehensive income (loss)
Net change of unrealized gains (losses) on investment in securities									(62,494	)					(62,494	)		0			(62,494	)
Net change of debt valuation adjustments									76						76			0			76
Net change of defined benefit pension plans									(151	)					(151	)		0			(151	)
Net change of foreign currency translation adjustments									69,445						69,445			1,481			70,926
Net change of unrealized gains on derivative instruments									6,861						6,861			739			7,600
Total other comprehensive income															13,737			2,220			15,957
Total comprehensive income															73,651			3,615			77,266
Cash dividends															0			(6,973	)		(6,973	)
Acquisition of treasury stock												(22,808	)		(22,808	)		0			(22,808	)
Disposal of treasury stock				(29	)							16			(13	)		0			(13	)
Other, net				256											256			0			256
Balance at September 30, 2022	¥	221,111	¥	260,880		¥	2,975,389	¥	34,014		¥	(146,582	)	¥	3,344,812		¥	106,409		¥	3,451,221

Note: Changes in the redeemable noncontrolling interests are not included in this table. For further information, see Note 12 “Redeemable Noncontrolling Interests.”

– 25 –

(5) Condensed Consolidated Statements of Cash Flows (Unaudited)

	Millions of yen
	Six months ended September 30, 2021			Six months ended September 30, 2022
Cash Flows from Operating Activities:
Net income	¥	152,719		¥	125,609
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		164,237			167,284
Principal payments received under net investment in leases		223,891			246,557
Provision for credit losses		2,106			1,674
Equity in net income of affiliates (excluding interest on loans)		(4,760	)		(5,777	)
Gains on sales of subsidiaries and affiliates and liquidation losses, net		(6,473	)		(8,589	)
Gains on sales of securities other than trading		(13,017	)		(6,476	)
Gains on sales of operating lease assets		(26,238	)		(31,577	)
Write-downs of long-lived assets		88			253
Write-downs of securities		60			71
Decrease in trading securities		38,414			30,377
Increase in inventories		(211	)		(13,502	)
Decrease in trade notes, accounts and other receivable		31,665			19,260
Decrease in trade notes, accounts and other payable		(45,908	)		(35,647	)
Increase in policy liabilities and policy account balances		63,412			85,677
Other, net		23,288			(312,292	)
Net cash provided by operating activities		603,273			262,902
Cash Flows from Investing Activities:
Purchases of lease equipment		(436,752	)		(443,345	)
Installment loans made to customers		(586,801	)		(589,094	)
Principal collected on installment loans		580,149			664,246
Proceeds from sales of operating lease assets		88,398			142,067
Investment in affiliates, net		(13,881	)		(18,340	)
Proceeds from sales of investment in affiliates		17,734			17,766
Purchases of available-for-sale debt securities		(240,909	)		(299,368	)
Proceeds from sales of available-for-sale debt securities		179,630			156,589
Proceeds from redemption of available-for-sale debt securities		34,180			26,160
Purchases of equity securities other than trading		(30,450	)		(39,144	)
Proceeds from sales of equity securities other than trading		47,813			31,752
Purchases of property under facility operations		(12,799	)		(34,678	)
Acquisitions of subsidiaries, net of cash acquired		(90,090	)		(30,980	)
Sales of subsidiaries, net of cash disposed		4,143			(993	)
Other, net		13,157			(23,201	)
Net cash used in investing activities		(446,478	)		(440,563	)
Cash Flows from Financing Activities:
Net increase (decrease) in debt with maturities of three months or less		159,408			(14,943	)
Proceeds from debt with maturities longer than three months		475,898			873,820
Repayment of debt with maturities longer than three months		(591,890	)		(619,926	)
Net decrease in deposits due to customers		(31,813	)		(25,343	)
Cash dividends paid to ORIX Corporation shareholders		(52,438	)		(55,704	)
Acquisition of treasury stock		(30,547	)		(33,151	)
Contribution from noncontrolling interests		7,271			2,164
Purchases of shares of subsidiaries from noncontrolling interests		(1,289	)		(1,273	)
Net increase (decrease) in call money		2,500			(15,000	)
Other, net		(13,304	)		(14,602	)
Net cash provided by (used in) financing activities		(76,204	)		96,042
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash		1,726			35,828
Net increase (decrease) in Cash, Cash Equivalents and Restricted Cash		82,317			(45,791	)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period		1,079,575			1,091,812
Cash, Cash Equivalents and Restricted Cash at End of Period	¥	1,161,892		¥	1,046,021

Note: The following tables provide information about Cash, Cash Equivalents and Restricted Cash which are included in the Company’s consolidated balance sheets as of September 30, 2021 and September 30, 2022, respectively.

	Millions of yen
	September 30, 2021		September 30, 2022
Cash and Cash Equivalents	¥	1,030,893	¥	925,965
Restricted Cash		130,999		120,056
Cash, Cash Equivalents and Restricted Cash	¥	1,161,892	¥	1,046,021

– 26 –

Notes to Consolidated Financial Statements

1. Overview of Accounting Principles Utilized

In preparing the accompanying consolidated financial statements, ORIX Corporation (the “Company”) and its subsidiaries have complied with generally accepted accounting principles in the United States (“U.S. GAAP”).

These statements include all adjustments (consisting of normal recurring accruals) that we considered necessary to present a fair statement of our results of operations, financial position and cash flows. The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our March 31, 2022 consolidated financial statements on Form

20-F.

Since the Company listed on the New York Stock Exchange in September 1998, the Company has filed the annual report (Form

20-F)

including the consolidated financial statements with the Securities and Exchange Commission.

Significant differences between U.S. GAAP and generally accepted accounting principles in Japan (“Japanese GAAP”) are as follows:

(a) Initial direct costs

Under U.S. GAAP, initial direct costs of sales-type leases and direct financing leases are mainly being deferred and amortized as a yield adjustment over the life of the related lease using the interest method. Initial direct costs of operating leases are being deferred and amortized on a straight-line basis over the life of the related lease. Initial direct costs of loans are mainly being deferred and amortized over the term of the related loans using the interest method.

Under Japanese GAAP, those initial direct costs are recognized as expenses when they are incurred.

(b) Allowance for credit losses

Under U.S. GAAP, the allowance for credit losses to financial assets not individually evaluated is accounted for estimating all credit losses expected to occur in future over the remaining life. And for the credit losses over the remaining life resulting from

off-balance

sheet credit exposures, the allowance is recognized.

Under Japanese GAAP, the allowance for loan losses to financial receivables, etc. not individually evaluated is accounted for based on the prior

charge-off

experience to the outstanding balance of financial receivables at the reporting date.

(c) Operating leases

Under U.S. GAAP, revenues from operating leases are recognized on a straight-line basis over the contract terms. Operating lease assets are depreciated over their estimated useful lives mainly on a straight-line basis.

Japanese GAAP allows for operating lease assets to be depreciated using mainly either a declining-balance basis or a straight-line basis.

(d) Accounting for life insurance operations

Under U.S. GAAP, certain costs related directly to the successful acquisition of new (or renewal of) insurance contracts are deferred and amortized over the respective policy periods in proportion to anticipated premium revenue.

Under Japanese GAAP, such costs are recorded as expenses currently in earnings in each accounting period.

In addition, under U.S. GAAP, policy liabilities for future policy benefits are established using the net level premium method based on actuarial estimates of the amount of future policyholder benefits. Under Japanese GAAP, these are calculated by the methodology which relevant authorities accept.

– 27 –

(e) Accounting for goodwill and other intangible assets in business combinations

Under U.S. GAAP, goodwill and indefinite-lived intangible assets are not amortized, but assessed for impairment at least annually. Additionally, if events or changes in circumstances indicate that the asset might be impaired, the Company and its subsidiaries test for impairment when such events or changes occur.

Under Japanese GAAP, goodwill is amortized over an appropriate period up to 20 years.

(f) Accounting for pension plans

Under U.S. GAAP, the net actuarial gain (loss) is amortized using the corridor approach.

Under Japanese GAAP, the net actuarial gain (loss) is fully amortized over a certain term within the average remaining service period of employees.

(g) Partial sale of the parent’s ownership interest in subsidiaries

Under U.S. GAAP, in a transaction that results in the loss of control, the gain or loss recognized in income includes the realized gain or loss related to the portion of ownership interest sold and the gain or loss on the remeasurement to fair value of the interest retained.

Under Japanese GAAP, in a transaction that results in the loss of control, only the realized gain or loss related to the portion of ownership interest sold is recognized in income and the gain or loss on the remeasurement to fair value of the interest retained is not recognized.

(h) Consolidated statements of cash flows

Classification in the statements of cash flows under U.S. GAAP differs from that under Japanese GAAP. As significant differences, purchase of lease equipment, proceeds from sales of operating lease assets, installment loans made to customers and principal collected on installment loans (excluding issues and collections of loans held for sale) are included in “Cash Flows from Investing Activities” under U.S. GAAP while they are classified as “Cash Flows from Operating Activities” under Japanese GAAP.

Under U.S. GAAP, in addition, restricted cash is required to be added to the balance of cash and cash equivalents.

(i) Transfer of financial assets

Under U.S. GAAP, an entity is required to perform analysis to determine whether or not to consolidate trusts or special purpose companies, collectively called special purpose entities (“SPEs”) for securitization under the VIE’s consolidation rules. If it is determined from the analysis that the enterprise transferred financial assets in a securitization transaction to a SPE that needs to be consolidated, the transaction is not accounted for as a sale.

In addition, if the transferor transfers a portion of financial assets, the transaction is not accounted for as a sale but accounted for as a secured borrowing unless each interest held by the transferor and transferee meets the definition of a participating interest and the transfer of a portion of financial assets meets criteria for derecognition of transferred financial assets.

Under Japanese GAAP, a SPE that meets certain conditions may be considered not to be a subsidiary of the transferor. Therefore, if an enterprise transfers financial assets to this type of SPE in a securitization transaction, the transferee SPE is not required to be consolidated, and the enterprise accounts for the transaction as a sale and recognizes a gain or loss on the sale into earnings when control over the transferred assets is surrendered.

In addition, if the transferor transfers a portion of financial assets, the enterprise accounts for the transaction as a sale and recognizes a gain or loss on the sale into earnings when the transfer of a portion of financial assets meets criteria for derecognition of transferred financial assets.

(j) Investment in securities

Under U.S. GAAP, unrealized gains and losses from all equity securities are generally recognized in income. In addition, credit losses on

available-for-sale

debt securities are recognized in earnings through an allowance, and unrealized gains and losses on

available-for-sale

debt securities related to other factors than credit losses are recognized in other comprehensive income (loss), net of applicable income taxes.

Under Japanese GAAP, such unrealized gains and losses from securities other than trading or

held-to-maturity

are recognized in other comprehensive income (loss), net of applicable income taxes.

– 28 –

(k) Fair value option

Under U.S. GAAP, an entity is permitted to carry certain eligible financial assets and liabilities at fair value and to recognize changes in that item’s fair value in earnings through the election of the fair value option. The portion of the total change in the fair value of the financial liability that results from a change in the instrument-specific credit risk is to be recognized in other comprehensive income (loss), net of applicable income taxes.

Under Japanese GAAP, there is no accounting standard for fair value option.

(l) Lessee’s lease

Under U.S. GAAP,

right-of-use

(hereinafter, “ROU”) assets and lease liabilities from the lessee’s lease transaction are generally recognized on the balance sheet.

Under Japanese GAAP, operating leases from the lessee’s lease transaction are

off-balance

sheet.

– 29 –

2. Significant Accounting and Reporting Policies

(a) Principles of consolidation

The consolidated financial statements include the accounts of the Company and all of its subsidiaries. VIEs, for which the Company and its subsidiaries are the primary beneficiaries, are also included in the consolidated financial statements.

In a transaction that results in the loss of control, the gain or loss recognized in income includes the realized gain or loss related to the portion of ownership interest sold and the gain or loss on the remeasurement to fair value of the interest retained. On the other hand, additional acquisition of the parent’s ownership interest in subsidiaries and partial sale of such interest where the parent continues to retain control of the subsidiary are accounted for as equity transactions.

Investments in affiliates, of which the Company has 20% – 50% ownership or has the ability to exercise significant influence, are accounted for by using the equity method. When the Company holds majority voting interests of an entity but noncontrolling shareholders hold substantive participating rights to make decisions on activities that occur over the ordinary course of the business, the equity method is applied. Investments in affiliates are recorded at cost plus/minus the Company and its subsidiaries’ portion of equity in undistributed earnings. If the value of an investment has declined and is judged to be other-than-temporary, the investment is written down to its fair value.

When an affiliate issues stocks, which price per share is more or less than the Company and its subsidiaries’ average carrying amount per share, to unrelated third parties, the Company and its subsidiaries adjust the carrying amount of its investment in the affiliate and recognize the gain or loss in the consolidated statements of income in the year in which the change in ownership interest occurs.

A certain overseas subsidiary consolidates subsidiaries determined as investment companies under ASC 946 (“Financial Services – Investment Companies”). Investments held by the investment company subsidiaries are carried at fair value with changes in fair value recognized in earnings.

A lag period of up to three months is used on a consistent basis for recognizing the results of certain subsidiaries and affiliates.

All significant intercompany accounts and transactions have been eliminated in consolidation.

(b) Use of estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company has identified ten areas where it believes assumptions and estimates are particularly critical to the financial statements. The Company makes estimates and assumptions to the selection of valuation techniques and determination of assumptions used in fair value measurements, the determination and periodic reassessment of the unguaranteed residual value for finance leases and operating leases, the determination and reassessment of insurance policy liabilities and deferred policy acquisition costs, the determination of the allowance for credit losses (including the allowance for

off-balance

sheet credit exposures), the recognition and measurement of impairment of long-lived assets, the recognition and measurement of impairment of investment in securities, the determination of the valuation allowance for deferred tax assets and the evaluation of tax positions, the assessment and measurement of effectiveness in hedging relationship using derivative financial instruments, the determination of benefit obligation and net periodic pension cost and the recognition and measurement of impairment of goodwill and other intangible assets.

In addition, we carefully considered the future outlook regarding the spread of the

COVID-19

etc. As of September 30, 2022, there were no significant changes in the forecast assumed at the end of the previous fiscal year, and there was no significant impact on our accounting estimates. However, the outlook for future outbreaks of

COVID-19

etc. and the resulting global economic slowdown is uncertain and may change rapidly. Therefore, our accounting estimates may change over time.

(c) Foreign currencies translation

The Company and its subsidiaries maintain their accounting records in their functional currency. Transactions in foreign currencies are recorded in the entity’s functional currency based on the prevailing exchange rates on the transaction date. Monetary assets and liabilities in foreign currencies are recorded in the entity’s functional currency based on the prevailing exchange rates at the end of each fiscal year.

– 30 –

The financial statements of overseas subsidiaries and affiliates are translated into Japanese yen by applying the exchange rates in effect at the end of each fiscal year to all assets and liabilities. Income and expenses are translated at the average rates of exchange prevailing during the fiscal year. The currencies in which the operations of the overseas subsidiaries and affiliates are conducted are regarded as the functional currencies of these companies. Foreign currency translation adjustments reflected in other comprehensive income (loss), net of applicable income taxes, arise from the translation of foreign currency financial statements into Japanese yen.​​​​​​​

(d) Revenue recognition

The Company and its subsidiaries recognize revenues from only contracts with customers, such as sales of goods and real estate, and services income, revenues are recognized to depict the transfer of promised goods or services to customers in the amounts that reflect the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenues are recognized net of discount, incentives and estimated sales returns. In case that the Company and its subsidiaries receive payment from customers before satisfying performance obligations, the amounts are recognized as contract liabilities. In transactions that involve third parties, if the Company and its subsidiaries control the goods or services before they are transferred to the customers, revenue is recognized on gross amount as the principal.

Excluding the aforementioned policy, the policies as specifically described hereinafter are applied for each of revenue items.

Finance Revenues

—Finance revenues mainly include revenues from finance leases, installment loans, and financial guarantees.

(1) Revenues from finance leases

Lessor leases consist of leases for various equipment types, including office equipment, industrial machinery, transportation equipment and real estates. Net investment in leases includes sales-type leases and direct financing leases which are full-payout leases. Leases not qualifying as sales-type leases or direct financing leases are accounted for as operating leases. Interest income on net investment in leases is recognized over the life of each respective lease using the interest method. When lease payment is variable, it is accounted for as income in profit or loss in the period when the changes in facts and circumstances on which the variable payment is based occur. When providing leasing services, the Company and its subsidiaries simultaneously conduct supplementary businesses, such as handling taxes and paying insurance on leased assets on behalf of lessees. The compensations for those lessor costs received from lessees are recognized in revenues from finance leases and those costs are recognized in other (income) and expense. The estimated unguaranteed residual value represents estimated proceeds from the disposition of equipment at the time the lease is terminated. Estimates of residual values are determined based on market values of used equipment, estimates of when and the extent to which equipment will become obsolete and actual recovery being experienced for similar used equipment. Initial direct costs of sales-type leases and direct financing leases are being deferred and amortized as a yield adjustment over the life of the related lease by using interest method. The unamortized balance of initial direct costs of sales-type leases and direct financing leases is reflected as a component of net investment in leases.

(2) Revenues from installment loans

Interest income on installment loans is recognized on an accrual basis. Certain direct loan origination costs, net of origination fees, are being deferred and amortized over the contractual term of the loan as an adjustment of the related loan’s yield using the interest method. Interest payments received on loans other than purchased loans are recorded as interest income unless the collection of the remaining investment is doubtful at which time payments received are recorded as reductions of principal. For purchased loans, although the acquired assets may remain loans in legal form, collections on these loans often do not reflect the normal historical experience of collecting delinquent accounts, and the need to tailor individual collateral-realization strategies often makes it difficult to reliably estimate the amount, timing, or nature of collections. Accordingly, the Company and its subsidiaries use the cost recovery method of income recognition for such purchased loans.

(3) Revenues from financial guarantees

At the inception of a guarantee, fair value for the guarantee is recognized as a liability in the consolidated balance sheets. The Company and its subsidiaries recognize revenue mainly over the term of guarantee by a systematic and rational amortization method as the Company and the subsidiaries are released from the risk of the obligation.

– 31 –

(4)

Non-accrual

policy

In common with all classes, for net investment in leases and installment loans,

past-due

financing receivables are receivables for which principal or interest is

past-due

30 days or more. Loans whose terms have been modified are not classified as

past-due

financing receivables if the principal and interest is not

past-due

30 days or more in accordance with the modified terms. The Company and its subsidiaries suspend accruing revenues on

past-due

installment loans and net investment in leases when principal or interest is

past-due

90 days or more, or earlier, if management determines that their collections are doubtful based on factors such as individual debtors’ creditworthiness, historical loss experience, current delinquencies and delinquency trends. However, delinquencies during the relevant period of

past-due

financing receivables are out of the scope of the suspension of revenue recognition unless their collections are doubtful when the government issues a request for grace of repayment within a maximum of 6 months due to reasons that cannot be attributed to the obligor, such as a disaster, or when similar requests are made by public bodies. Accrued but uncollected interest is reclassified to net investment in leases or installment loans in the accompanying consolidated balance sheets and becomes subject to the allowance for credit losses process. Cash repayments received on

non-accrual

loans are applied first against past due interest and then any surpluses are applied to principal in view of the conditions of the contract and obligors. The Company and its subsidiaries return

non-accrual

loans and net investment in leases to accrual status when it becomes probable that the Company and its subsidiaries will be able to collect all amounts due according to the contractual terms of these loans and receivables, as evidenced by continual payments from the debtors. The period of such continual payments before returning to accrual status varies depending on factors that we consider are relevant in assessing the debtors’ creditworthiness, such as the debtors’ business characteristics and financial conditions as well as relevant economic conditions and trends.

Operating leases

—

Revenues from operating leases are recognized on a straight-line basis over the contract terms. When lease payment is variable, it is accounted for as income in profit or loss in the period when the changes in facts and circumstances on which the variable payment is based occur. In principle, any conditions changed from original lease agreement should be accounted for as a lease modification. However, if lessees applied for

COVID-19

related rent concessions and changes of lease payments do not result in a substantial increase to the rights of the lessor or the obligations of the lessee, the concessions are eligible to be applied for the practical expedient. The Company and its subsidiaries applied the practical expedient when accounting for eligible rent concessions mentioned above. Taking lessees’ future business performance into consideration, the Company and its subsidiaries applied the practical expedient by the following 3 approaches: recognize revenue under the original lease contract, recognize revenue under the conditions changed by rent concessions or only recognize revenue when receiving the lease payments.

In providing leasing services, the Company and its subsidiaries simultaneously conduct supplementary businesses, such as handling taxes and paying insurance on leased assets on behalf of lessees. The compensations for those lessor costs received from lessees are recognized in operating lease revenues and those costs are recognized in costs of operating leases. Investment in operating leases is recorded at cost less accumulated depreciation, which was ¥819,839 million and ¥844,944 million as of March 31, 2022 and September 30, 2022, respectively. In addition, operating lease assets are depreciated over their estimated useful lives mainly on a straight-line basis. Depreciation expenses are included in costs of operating leases. Gains or losses arising from dispositions of operating lease assets are included in operating lease revenues.

Estimates of residual values are based on market values of used equipment, estimates of when and the extent to which equipment will become obsolete and actual recovery being experienced for similar used equipment. Initial direct costs of operating leases are being deferred and amortized as a straight-line basis over the life of the related lease. The unamortized balance of initial direct costs is reflected as investment in operating leases.

(e) Insurance and reinsurance transactions

Premium income from life insurance policies, net of premiums on reinsurance ceded, is recognized as earned premiums when due.

Life insurance benefits are recorded as expenses when they are incurred. Policy liabilities and policy account balances for future policy benefits are measured using the net level premium method, based on actuarial estimates of the amount of future policyholder benefits. The policies are characterized as long-duration policies and mainly consist of whole life, term life, endowments, medical insurance and individual annuity insurance contracts. For policies other than individual annuity insurance contracts, computation of policy liabilities necessarily includes assumptions about mortality, morbidity, lapse rates, future yields on related investments and other factors applicable at the time the policies are written. A certain subsidiary continually evaluates the potential for changes in the estimates and assumptions applied in determining policy liabilities, both positive and negative, and uses the results of these evaluations both to adjust recorded liabilities and to adjust underwriting criteria and product offerings.

– 32 –

The insurance contracts sold by the subsidiary include variable annuity, variable life and fixed annuity insurance contracts. The subsidiary manages investment assets on behalf of variable annuity and variable life policyholders, which consist of equity securities and are included in investment in securities in the consolidated balance sheets. These investment assets are measured at fair value with realized and unrealized gains or losses recognized in life insurance premiums and related investment income in the consolidated statements of income. The subsidiary elected the fair value option for the entire variable annuity and variable life insurance contracts with changes in the fair value recognized in life insurance costs.

The subsidiary provides minimum guarantees to variable annuity and variable life policyholders under which it is exposed to the risk of compensating losses incurred by the policyholders to the extent contractually required. To mitigate the risk, a portion of the minimum guarantee risk related to variable annuity and variable life insurance contracts is ceded to reinsurance companies and the remaining risk is economically hedged by entering into derivative contracts. The reinsurance contracts do not relieve the subsidiary from the obligation as the primary obligor to compensate certain losses incurred by the policyholders, and the default of the reinsurance companies may impose additional losses on the subsidiary. Certain subsidiaries have elected the fair value option for certain reinsurance contracts relating to variable annuity and variable life insurance contracts, which are included in other assets in the consolidated balance sheets.

Policy liabilities and policy account balances for fixed annuity insurance contracts are measured based on the single-premiums plus interest based on expected rate and fair value adjustments relating to the acquisition of the subsidiary, less withdrawals, expenses and other charges. The credited interest is recorded in life insurance costs in the consolidated statements of income.

Certain costs related directly to the successful acquisition of new or renewal insurance contracts, or deferred policy acquisition costs are deferred and amortized over the respective policy periods in proportion to anticipated premium revenue. These deferred policy acquisition costs consist primarily of agent commissions, except for recurring policy maintenance costs and certain variable costs and expenses for underwriting policies.

(f) Allowance for credit losses

The allowance for credit losses estimates all credit losses expected to occur in future over the remaining life of net investment in leases, financial assets measured at amortized cost, such as installment loans,

held-to-maturity

debt securities and other receivables, and is recognized adequately based on the management judgement. Expected prepayments are reflected in the remaining life. The allowance for credit losses is increased by provision charged to income and is decreased by charge-offs, net of recoveries mainly.

Developing the allowance for credit losses is subject to numerous estimates and judgments. In evaluating the appropriateness of the allowance, management considers various factors, including the business characteristics and financial conditions of the obligors, prior

charge-off

experience, current delinquencies and delinquency trends, value of underlying collateral and guarantees, current economic and business conditions and expected outlook in the future.

The Company and its subsidiaries estimate the allowance for credit losses by using various methods according to these estimates and judgments. When certain financial assets have similar risk characteristics to other financial assets, these financial assets are collectively evaluated as a pool. On the contrary, when financial assets do not have similar risk characteristics to other financial assets, the financial assets are evaluated individually. The Company and its subsidiaries select the most appropriate calculation method based on available information, such as the nature and related risk characteristics on financial assets, the prior

charge-off

experience and future forecast scenario with correlated economic indicators.

The Company and its subsidiaries charge off doubtful receivables when the likelihood of any future collection is believed to be minimal considering debtors’ creditworthiness and the liquidation status of collateral, etc.

In addition, if the entity has a present contractual obligation to extend the credit and the obligation is not unconditionally cancelable by the entity, credit losses related the loan commitments of card loans and installment loans and financial guarantees are in the scope of the allowance for credit losses. For the loan commitments of card loans and installment loans, credit losses are recognized on the loan commitments for the portion expected to be drawn. For financial guarantees, the allowance is recognized for the contingent obligation which generates credit risk exposures. These allowance for

off-balance

sheet credit exposures is measured using the same measurement objectives as the allowance for loans and net investment leases, considering quantitative and qualitative factors including historical loss experience, current economic and business conditions and reasonable and supportable forecasts. The allowance for

off-balance

sheet credit exposure is accounted for in other liabilities on the consolidated balance sheets.

– 33 –

(g) Impairment of long-lived assets

The Company and its subsidiaries perform a recoverability test for long-lived assets to be held and used in operations, including tangible assets and intangible assets being depreciated or amortized, consisting primarily of office buildings, condominiums, aircraft, ships, mega solar facilities and other properties under facility operations, whenever events or changes in circumstances indicated that the assets might be impaired. The assets are considered not recoverable when the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of those assets. The carrying amount of assets not recoverable is reduced to fair value if lower than the carrying amount. The Company and its subsidiaries determine the fair value using appraisals prepared by independent third party appraisers or our own staff of qualified appraisers, and others based on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flows methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate.

(h) Investment in securities

Equity securities are generally reported at fair value with unrealized gains and losses included in income. Equity securities without readily determinable fair values are recorded at fair value at its cost minus impairment, if any, plus or minus changes resulting from observable price changes under the election of the measurement alternative, except for investments which are valued at net asset value per share.

Equity securities elected to apply the measurement alternative are written down to its fair value with losses included in income if a qualitative assessment indicates that the investment is impaired and the fair value of the investment is less than its carrying value.

In addition, investments included in equity securities that are accounted for under the equity method are recorded at fair value with unrealized gains and losses included in income if certain subsidiaries elect the fair value option.

Trading debt securities are reported at fair value with unrealized gains and losses included in income.

Available-for-sale

debt securities are reported at fair value, and unrealized gains or losses are recorded in other comprehensive income (loss), net of applicable income taxes, except for investments which are recorded at fair value with unrealized gains and losses included in income by electing the fair value option.

For

available-for-sale

debt securities, if the fair value is less than the amortized cost, the debt securities are impaired. The Company and its subsidiaries identify per each impaired security whether the decline of fair value is due to credit losses component or

non-credit

losses component. Impairment related to credit losses is recognized in earnings through an allowance for credit losses. Impairment related to other factors than credit losses is recognized in other comprehensive income (loss), net of applicable income taxes. In estimating an allowance for credit losses, the Company and its subsidiaries consider that credit losses exist when the present value of estimated cash flows is less than the amortized cost basis. When the Company and its subsidiaries intend to sell the debt securities for which an allowance for credit losses is previously established or it is more likely than not that the Company and its subsidiaries will be required to sell the debt securities before recovery of the amortized cost basis, the allowance for credit losses is fully written off and the amortized cost is reduced to the fair value after recognizing additional impairment in earnings. In addition, the Company and its subsidiaries recognize in earnings the full difference between the amortized cost and the fair value of the debt securities by direct write-down, without any allowance for credit losses, if the debt securities are expected to be sold and the fair value is less than the amortized cost.

Held-to-maturity

debt securities are recorded at amortized cost.

Held-to-maturity

debt securities are in the scope of ASC 326 (“Financial Instruments—Credit Losses”) (hereinafter, “Credit Losses Standard”), see Note 2 “Significant Accounting and Reporting Policies (f) Allowance for credit losses.”

(i) Income taxes

The Company, in general, determines its provision for income taxes for quarterly periods by applying the current estimate of the effective tax rate for the full fiscal year to the actual

year-to-date

income before income taxes. The estimated effective tax rate is determined by dividing the estimated provision for income taxes for the full fiscal year by the estimated income before income taxes for the full fiscal year.

– 34 –

At the fiscal year end, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. The Company and its subsidiaries release to earnings stranded income tax effects in accumulated other comprehensive income (loss) resulting from changes in tax laws or rates or changes in judgment about realization of a valuation allowance on a specific identification basis when the individual items are completely sold or terminated. A valuation allowance is recognized if, based on the weight of available evidence, it is “more likely than not” that some portion or all of the deferred tax asset will not be realized.

The effective income tax rates for the six months ended September 30, 2021 and 2022 were approximately 30.8% and 23.6%, respectively. These rates are approximately 32.0% and 22.7% for the three months ended September 30, 2021 and 2022, respectively. For the six and three months ended September 30, 2021 and 2022, the Company and its subsidiaries in Japan were subject to a National Corporate tax of approximately 24%, an Inhabitant tax of approximately 4% and a deductible Enterprise tax of approximately 4%, which in the aggregate result in a statutory income tax rate of approximately 31.5%. The effective income tax rate is different from the statutory tax rate primarily because of certain nondeductible expenses for tax purposes,

non-taxable

income for tax purposes, changes in valuation allowance, the effect of lower tax rates on certain subsidiaries and the effect of investor taxes on earnings of subsidiaries. The Company and its certain subsidiaries have applied Japanese Group Relief System for National Corporation tax purposes.

The Company and its subsidiaries file tax returns in Japan and certain foreign tax jurisdictions and recognize the financial statement effects of a tax position taken or expected to be taken in a tax return when it is more likely than not, based on the technical merits, that the position will be sustained upon tax examination, including resolution of any related appeals or litigation processes, and measure tax positions that meet the recognition threshold at the largest amount of tax benefit that is greater than 50 percent likely to be realized upon settlement with the taxing authority. The Company and its subsidiaries present an unrecognized tax benefit as either a reduction of a deferred tax asset or a liability, based on the intended method of settlement. The Company and its subsidiaries classify penalties and interest expense related to income taxes as part of provision for income taxes in the consolidated statements of income.

(j) Securitized assets

The Company and its subsidiaries have securitized and sold to investors various financial assets such as lease receivables and loan receivables. In the securitization process, the assets to be securitized are sold to SPEs that issue asset-backed beneficial interests and securities to the investors.

SPEs used in securitization transactions are consolidated if the Company and its subsidiaries are the primary beneficiary of the SPEs, and the transfers of the financial assets to those consolidated SPEs are not accounted for as sales. Assets held by consolidated SPEs continue to be accounted for as lease receivables or loan receivables, as they were before the transfer, and asset-backed beneficial interests and securities issued to the investors are accounted for as debt. When the Company and its subsidiaries have transferred financial assets to a transferee that is not subject to consolidation, the Company and its subsidiaries account for the transfer as a sale if control over the transferred assets is surrendered.

The Company and certain subsidiaries originate and sell loans into the secondary market, while retaining the obligation to service those loans. In addition, a certain subsidiary undertakes obligations to service loans originated by others. The subsidiary recognizes servicing assets if it expects the benefit of servicing to more than adequately compensate it for performing the servicing or recognizes servicing liabilities if it expects the benefit of servicing to less than adequately compensate it. These servicing assets and liabilities are initially recognized at fair value and subsequently accounted for using the amortization method whereby the assets and liabilities are amortized in proportion to and over the period of estimated net servicing income or net servicing loss. On a quarterly basis, servicing assets and liabilities are evaluated for impairment or increased obligations. The fair value of servicing assets and liabilities is estimated using an internal valuation model, or by obtaining an opinion of value from an independent third-party vendor. Both methods are based on calculating the present value of estimated future net servicing cash flows, taking into consideration discount rates, prepayments and servicing costs. The internal valuation model is validated at least semiannually through third-party valuations.

– 35 –

(k) Derivative financial instruments

The Company and its subsidiaries recognize all derivatives on the consolidated balance sheets at fair value. The accounting treatment of subsequent changes in the fair value depends on their use, and whether they qualify as effective “hedges” for accounting purposes. Derivatives for the purpose of trading or economic hedge that are not qualified for hedge accounting are adjusted to fair value through the consolidated statements of income. If derivatives are qualified for hedge accounting, then depending on its nature, changes in its fair value will be either offset against changes in the fair value of hedged assets or liabilities through the consolidated statements of income, or recorded in other comprehensive income (loss), net of applicable income taxes.

If a derivative is held as a hedge of the variability of fair value related to a recognized asset or liability or an unrecognized firm commitment (“fair value” hedge), changes in the fair value of the derivative are recorded in earnings along with the changes in the fair value of the hedged item.

If a derivative is held as a hedge of the variability of cash flows related to a forecasted transaction or a recognized asset or liability (“cash flow” hedge), changes in the fair value of the derivative are recorded in other comprehensive income (loss), net of applicable income taxes, until earnings are affected by the variability in cash flows of the designated hedged item.

If a derivative is held as a hedge of a net investment in a foreign operation, changes in the fair value of the derivative are recorded in the foreign currency translation adjustments account within other comprehensive income (loss), net of applicable income taxes.

The Company and its subsidiaries select either the amortization approach or the fair value approach, depending on the type of hedging activity, for the initial value of the component excluded from the assessment of effectiveness, and recognize it through the consolidated statements of income. When the amortization approach is adopted, the change in fair value is recognized in earnings using a systematic and rational method over the life of the hedging instrument and then any difference between the change in fair value and the amount recognized in earnings is recognized in other comprehensive income (loss), net of applicable income taxes. When the fair value approach is adopted, the change in the fair value is immediately recognized through the consolidated statements of income.

For all hedging relationships that are designated and qualified for hedge accounting, at the inception of the hedge, the Company and its subsidiaries formally document the details of the hedging relationship and the hedging activity. The Company and its subsidiaries formally assess, both at the hedge’s inception and on an ongoing basis, the effectiveness of the hedge relationship. The Company and its subsidiaries cease hedge accounting prospectively when the derivative no longer qualifies for hedge accounting.

(l) Pension plans

The Company and certain subsidiaries have contributory and

non-contributory

pension plans covering substantially all of their employees. Among the plans, the costs of defined benefit pension plans are accrued based on amounts determined using actuarial methods, with assumptions of discount rate, rate of increase in compensation level, expected long-term rate of return on plan assets and others.

The Company and its subsidiaries also recognize the funded status of pension plans, measured as the difference between the fair value of plan assets and the benefit obligation, on the consolidated balance sheets. Changes in that funded status are recognized in the year in which the changes occur through other comprehensive income (loss), net of applicable income taxes.

(m) Stock-based compensation

In principle, the Company and its subsidiaries measure stock-based compensation expense as consideration for services provided by employees based on the fair value on the grant date. The costs are recognized over the requisite service period.

(n) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits placed with banks and short-term highly liquid investments with original maturities of three months or less.

(o) Installment loans

Certain loans, for which the Company and its subsidiaries have the intent and ability to sell to outside parties in the foreseeable future, are considered held for sale and are carried at the lower of cost or market value determined on an individual basis, except loans held for sale for which the fair value option was elected. A subsidiary elected the fair value option on its loans held for sale. The subsidiary enters into forward sale agreements to offset the change in the fair value of loans held for sale, and the election of the fair value option allows the subsidiary to recognize both the change in the fair value of the loans and the change in the fair value of the forward sale agreements due to changes in interest rates in the same accounting period.

– 36 –

Loans held for sale are included in installment loans, and the outstanding balances of these loans as of March 31, 2022 and September 30, 2022 were ¥155,680 million and ¥219,353 million, respectively. There were ¥151,601 million and ¥215,774 million of loans held for sale as of March 31, 2022 and September 30, 2022, respectively, measured at fair value by electing the fair value option.

(p) Property under facility operations

Property under facility operations consist primarily of operating facilities (including hotels and training facilities) and environmental assets (including mega solar facilities and

coal-biomass

co-fired

power plants), which are stated at cost less accumulated depreciation, and depreciation is calculated mainly on a straight-line basis over the estimated useful lives of the assets. Accumulated depreciation were ¥147,459 million and ¥162,475 million as of March 31, 2022 and September 30, 2022, respectively.

(q) Inventories

Inventories consist primarily of residential condominiums under development, completed residential condominiums (including those waiting to be delivered to buyers under the contract for sale), and merchandise for sale. Residential condominiums under development are carried at cost less any impairment losses, and completed residential condominiums and merchandise for sale are stated at the lower of cost or fair value less cost to sell. The cost of inventories that are unique and not interchangeable is determined on the specific identification method and the cost of other inventories is principally determined on the average method. As of March 31, 2022 and September 30, 2022, residential condominiums under development were ¥62,414 million and ¥77,274 million, respectively, and completed residential condominiums and merchandise for sale were ¥77,149 million and ¥77,291 million, respectively.

The Company and its subsidiaries recorded ¥9,914 million and ¥508 million of write-downs principally on completed residential condominiums and merchandise for sale for the six months ended September 30, 2021 and 2022, respectively, primarily resulting from a decrease in expected sales price. The amounts of such write-downs for the three months ended September 30, 2021 and 2022 were ¥9,870 million and ¥21 

million, respectively. These write-downs were recorded in costs of goods and real estate sold and included in Real Estate segment, PE Investment and Concession segment, and Environment and Energy segment.

(r) Office facilities

Office facilities are stated at cost less accumulated depreciation. Depreciation is calculated on a declining-balance basis or straight-line basis over the estimated useful lives of the assets. Accumulated depreciation was ¥73,063 million and ¥76,734 million as of March 31, 2022 and September 30, 2022, respectively.

(s)

Right-of-use

assets

The Company and its subsidiaries record the

Right-of-use

assets (hereinafter, “ROU assets”) recognized from the lessee’s lease transaction as investment in operating leases, property under facility operations and office facilities. Lease liabilities are included in other liabilities.

ROU assets are consisted of the amount of the initial measurement of the lease liability and any lease payments made to the lessor at or before the commencement date and stated at cost less accumulated amortization. The initial measurement of the lease liability is at the present value of the lease payments not yet paid, discounted using the lessee’s incremental borrowing rate at lease commencement. ROU assets of finance leases are amortized mainly on a straight-line basis over the lease term. ROU assets of operating leases are amortized over the lease term by the fixed term operating cost minus the interest cost. Amortization of ROU assets of finance leases and operating leases expenses are included in costs of operating leases, services expense and selling, general and administrative expenses.

(t) Other assets

Other assets consist primarily of goodwill and other intangible assets in acquisitions, reinsurance recoverables in relation to reinsurance contracts, deferred insurance policy acquisition costs which are amortized over the contract periods, leasehold deposits, advance payments made in relation to construction of real estate under operating leases and property under facility operations, prepaid benefit cost, prepaid expenses for property tax, maintenance fees and insurance premiums in relation to lease contracts, servicing assets, derivative assets, contract assets related to real estate contract works and deferred tax assets.

– 37 –

(u) Business combinations

The Company and its subsidiaries account for all business combinations using the acquisition method. The Company and its subsidiaries recognize intangible assets acquired in a business combination apart from goodwill if the intangible assets meet one of two criteria—either the contractual-legal criterion or the separately identifiable criterion. Goodwill is measured as an excess of the aggregate of consideration transferred and the fair value of noncontrolling interests over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed in the business combination measured at fair value. The Company and its subsidiaries would recognize a bargain purchase gain when the amount of recognized net assets exceeds the sum of consideration transferred and the fair value of noncontrolling interests. In a business combination achieved in stages, the Company and its subsidiaries remeasure their previously held equity interest at their acquisition-date fair value and recognize the resulting gain or loss, if any, in earnings.

(v) Goodwill and other intangible assets

The Company and its subsidiaries perform an impairment test for goodwill and any indefinite-lived intangible assets at least annually. Additionally, if events or changes in circumstances indicate that the asset might be impaired, the Company and its subsidiaries test for impairment whenever such events or changes occur.

The Company and its subsidiaries have the option to perform a qualitative assessment to determine whether to calculate the fair value of a reporting unit under the quantitative goodwill impairment test. The Company and its subsidiaries perform the qualitative assessment for some goodwill but bypass the qualitative assessment and proceed directly to the quantitative impairment test for other goodwill. For the goodwill for which the qualitative assessment is performed, if, after assessing the totality of events or circumstances, the Company and/or its subsidiaries determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company and/or its subsidiaries do not perform the quantitative goodwill impairment test. However, if the Company and/or its subsidiaries conclude otherwise or determine to bypass the qualitative assessment, the Company and/or its subsidiaries proceed to perform the quantitative goodwill impairment test. The quantitative goodwill impairment test calculates the fair value of the reporting unit and compares the fair value with the carrying amount of the reporting unit. If the fair value of the reporting unit falls below its carrying amount, an impairment loss is recognized in an amount equal to the difference. The Company and its subsidiaries test the goodwill either at the operating segment level or one level below the operating segments.

The Company and its subsidiaries have the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. The Company and its subsidiaries perform the qualitative assessment for some indefinite-lived intangible assets but bypass the qualitative assessment and perform the quantitative impairment test for other indefinite-lived intangible assets. For those indefinite-lived intangible assets for which the qualitative assessment is performed, if, after assessing the totality of events and circumstances, the Company and/or its subsidiaries conclude that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the Company and/or its subsidiaries do not perform the quantitative impairment test. However, if the Company and/or its subsidiaries conclude otherwise or determine to bypass the qualitative assessment, the Company and/or its subsidiaries calculate the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

Intangible assets with finite lives are amortized over their useful lives and tested for impairment. The Company and its subsidiaries perform a recoverability test for the intangible assets whenever events or changes in circumstances indicate that the assets might be impaired. The intangible assets are considered not recoverable when the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of those assets, and the net carrying amount of assets not recoverable is reduced to fair value if lower than the carrying amount.

The amount of goodwill was ¥488,856 million and ¥546,352 million as of March 31, 2022 and September 30, 2022, respectively.

The amount of other intangible assets was ¥403,621 million and ¥410,324 million as of March 31, 2022 and September 30, 2022, respectively.

(w) Other Liabilities

Other liabilities include primarily lease liabilities recognized from the lessee’s lease transaction, accrued expenses related to interest and bonus, accrued benefit liability, advances received from lessees in relation to lease contracts, deposits received from real estate transaction, contract liabilities mainly related to automobile maintenance services and software services, and derivative liabilities and allowance for credit losses on

off-balance

sheet credit exposures.

– 38 –

(x) Earnings per share

Basic earnings per share is computed by dividing net income attributable to ORIX Corporation shareholders by the weighted average number of shares of outstanding common stock in each period. Diluted earnings per share is calculated by reflecting the potential dilution that could occur if securities or other contracts issuing common stock were exercised or converted into common stock.

(y) Redeemable noncontrolling interests

Noncontrolling interests in a certain subsidiary are redeemable interests which are subject to call and put rights upon certain equity holder events. As redemption of the noncontrolling interest is not solely in the control of the subsidiary, it is recorded between liabilities and equity on the consolidated balance sheets at its estimated redemption value.

(z) New accounting pronouncements

In August 2018, Accounting Standards Update

2018-12

(“Targeted Improvements to the Accounting for Long-Duration Contracts”—ASC 944 (“Financial Services—Insurance”)) was issued, and the original effective date was deferred by two years by related amendments which were issued thereafter. These updates change the recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. These updates require an insurance entity to review and, if there is a change, update cash flow assumptions at least annually and to update discount rate used for liability for future policy benefits at each reporting date for nonparticipating traditional long-duration and limited-payment contracts. The effect of updating the discount rate is recognized in other comprehensive income (loss). These updates also require market risk benefits to be measured at fair value, and simplify amortization of deferred acquisition costs. Furthermore, these updates require additional disclosures for long-duration contracts. These updates are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early application is permitted. For the liability for future policy benefits and deferred acquisition costs, these updates are applied to contracts in force as of beginning of the earliest period presented (hereinafter, “the transition date” of these updates) on a modified retrospective basis, and an insurance entity may elect to apply retrospectively. For the market risk benefits, these updates are applied retrospectively at the transition date, and the difference between fair value and carrying value requires an adjustment to retained earnings at the transition date. The cumulative effect of changes in the instrument-specific credit risk between contract inception date and the transition date should be recognized in accumulated other comprehensive income at the transition date. The Company and its subsidiaries will adopt these updates on April 1, 2023. The Company and its subsidiaries are currently evaluating the effect that the adoption of these updates will have on the Company and its subsidiaries’ results of operations or financial position, as well as changes in disclosures required by these updates.

In March 2020, Accounting Standards Update

2020-04

(“Facilitation of the Effects of Reference Rate Reform on Financial Reporting”—ASC 848 (“Reference Rate Reform”)) was issued, and related amendments were issued thereafter. These updates provide companies with optional expedients and exceptions to contract, hedging relationships and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. These updates are effective as of March 12, 2020 through December 31, 2022. The Company and its subsidiaries adopted certain optional expedients to relevant contract modifications and hedge accounting relationships from the three months ended December 31, 2021, mainly in order to ease the administrative burden of accounting for contract modifications that replace a reference rate impacted by reference rate reform. The adoption of these updates had no material impact on the Company and its subsidiaries’ results of operations or financial position. Also, we do not expect a material impact in future reporting periods.

In July 2021, Accounting Standards Update

2021-05

(“Lessors—Certain Leases with Variable Lease Payments”—ASC 842 (“Leases”)) was issued as the amendments to ASC 842 (“Leases”). This update requires that lessors classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if classifying the lease as a sales-type lease or a direct financing lease would result in the recognition of a selling loss at lease commencement. The Company and its subsidiaries adopted this update on April 1, 2022 using the option to apply the amendments prospectively to leases that commence or are modified on or after the date that an entity first applies the amendments. The adoption of this update had no material effect on the Company and its subsidiaries’ results of operations or financial position.

In October 2021, Accounting Standards Update

2021-08

(“Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”—ASC 805 (“Business Combinations”)) was issued. This update requires us to apply ASC 606 (“Revenue from Contracts with Customers”) to recognize and measure contract assets and contract liabilities acquired in a business combination. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 and early adoption is permitted. This update is applied prospectively to business combinations occurring on or after the date that an entity first applies the amendments. The Company and its subsidiaries will adopt this update on April 1, 2023. The Company and its subsidiaries are currently evaluating the effect that the adoption of this update will have on the Company and its subsidiaries’ results of operations or financial position.

– 39 –

In November 2021, Accounting Standards Update

2021-10

(“Disclosures by Business Entities about Government Assistance”—ASC 832 (“Government Assistance”)) was issued. This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance. The annual disclosure shall include; (1) information about the nature of the transactions and the related accounting policy used to account for the transactions, (2) the line items on the consolidated balance sheet and consolidated income statement that are affected by the transactions, and the amounts applicable to each financial statement line item, and (3) significant terms and conditions of the transactions, including commitments and contingencies. This update is effective for fiscal years beginning after December 15, 2021, and early adoption is permitted. The Company and its subsidiaries adopted this update that require the annual disclosure on April 1 2022. Since this update relates to disclosure requirements, the adoption had no effect on the Company and its subsidiaries’ results of operations or financial position.

In March 2022, Accounting Standards Update

2022-02

(“Troubled Debt Restructurings and Vintage Disclosures”—ASC 326 (“Financial Instruments—Credit Losses”)) was issued. This update eliminates the recognition and measurement guidance on troubled debt restructuring (hereinafter, “TDR”) and, instead, requires that an entity evaluate whether certain modifications on contractual terms made to borrowers experiencing financial difficulty should be accounted for as a new loan or a continuation of an existing loan. Additionally, enhanced disclosures for certain modifications made to borrowers experiencing financial difficulty are newly required. In addition, this update also requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic

326-20

(“Financial Instruments—Credit Losses—Measured at Amortized Cost”) in the existing vintage disclosure, where an entity discloses the amortized cost basis by credit quality indicator and class of financing receivable by year of origination. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 and early adoption is permitted. This update should be applied prospectively from the beginning of the fiscal year of adoption, including interim periods, except for the optional transition method related to the recognition and measurement of TDRs for which an entity may elect to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company and its subsidiaries will adopt this update on April 1, 2023. The Company and its subsidiaries are currently evaluating the effect that the adoption of this update will have on the Company and its subsidiaries’ results of operations or financial position, as well as changes in disclosures required by this update.

In June 2022, Accounting Standards Update

2022-03

(“Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”—ASC 820 (“Fair Value Measurement”)) was issued. This update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value of an equity security. This update also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This update also requires new disclosures for equity securities subject to contractual sale restrictions. The new disclosure shall include; (1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, (2) the nature and remaining duration of the restrictions, and (3) the circumstances that could cause a lapse in the restrictions. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. This update should be applied prospectively for fair value measurement and disclosures from the adoption of the amendments. The Company and its subsidiaries will adopt this update on April 1, 2024. The Company and its subsidiaries are currently evaluating the effect that the adoption of this update will have on the Company and its subsidiaries’ results of operations or financial position, as well as changes in disclosures required by this update.

In September 2022, Accounting Standards Update

2022-04

(“Disclosure of Supplier Finance Program Obligations”—ASC

405-50

(“Liabilities—Supplier Finance Programs”)) was issued. This update requires that a buyer in a supplier finance program disclose sufficient information about the program in mainly annual disclosure, to allow a user of financial statements to understand the program’s nature, activities during the period, changes from period to period, and potential magnitude. The disclosure shall include (1) the key terms of the program and (2) the obligations that the buyer has confirmed as valid to the finance provider or intermediary. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company and its subsidiaries will adopt this update on April 1, 2023. Since this update relates to disclosure requirements, the adoption will not have an effect on the Company and its subsidiaries’ results of operations or financial position. The Company and its subsidiaries are currently evaluating the changes in disclosures required by this update.

– 40 –

3. Fair Value Measurements

The Company and its subsidiaries classify and prioritize inputs used in valuation techniques to measure fair value into the following three levels:

Level 1 —	Inputs of quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 —	Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.
Level 3 —	Unobservable inputs for the assets or liabilities.

The Company and its subsidiaries differentiate between those assets and liabilities required to be carried at fair value at every reporting period (“recurring”) and those assets and liabilities that are only required to be adjusted to fair value under certain circumstances (“nonrecurring”). The Company and its subsidiaries mainly measure certain loans held for sale, trading debt securities,

available-for-sale

debt securities, certain equity securities, derivatives, certain reinsurance recoverables, and variable annuity and variable life insurance contracts at fair value on a recurring basis.

– 41 –

The following tables present recorded amounts of major financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and September 30, 2022:

March 31, 2022

	Millions of yen
	Total Carrying Value in Consolidated Balance Sheets			Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Loans held for sale*1	¥	151,601		¥	0	¥	151,601	¥	0
Trading debt securities		2,503			0		2,503		0
Available-for-sale debt securities:		2,174,891			1,095		2,032,736		141,060
Japanese and foreign government bond securities*2		832,613			1,095		831,518		0
Japanese prefectural and foreign municipal bond securities		325,604			0		322,551		3,053
Corporate debt securities*3		849,560			0		848,863		697
CMBS and RMBS in the Americas		28,732			0		28,732		0
Other asset-backed securities and debt securities		138,382			0		1,072		137,310
Equity securities*4*5		385,271			112,200		160,099		112,972
Derivative assets:		51,366			292		46,214		4,860
Interest rate swap agreements		9,570			0		9,570		0
Options held/written and other		25,664			0		20,804		4,860
Futures, foreign exchange contracts		16,006			292		15,714		0
Foreign currency swap agreements		126			0		126		0
Netting*6		(20,333	)		0		0		0
Net derivative assets		31,033			0		0		0
Other assets:		5,214			0		0		5,214
Reinsurance recoverables*7		5,214			0		0		5,214
Total	¥	2,770,846		¥	113,587	¥	2,393,153	¥	264,106
Liabilities:
Derivative liabilities:	¥	105,705		¥	2,026	¥	95,047	¥	8,632
Interest rate swap agreements		8,182			0		8,182		0
Options held/written and other		21,562			0		12,930		8,632
Futures, foreign exchange contracts		71,443			2,026		69,417		0
Foreign currency swap agreements		4,518			0		4,518		0
Netting*6		(20,333	)		0		0		0
Net derivative Liabilities		85,372			0		0		0
Policy Liabilities and Policy Account Balances:		198,905			0		0		198,905
Variable annuity and variable life insurance contracts*8		198,905			0		0		198,905
Total	¥	304,610		¥	2,026	¥	95,047	¥	207,537

– 42 –

September 30, 2022

	Millions of yen
	Total Carrying Value in Consolidated Balance Sheets			Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Loans held for sale*1	¥	215,774		¥	0	¥	215,774	¥	0
Trading debt securities		2,948			0		2,948		0
Available-for-sale debt securities:		2,215,540			5,674		2,014,861		195,005
Japanese and foreign government bond securities*2		795,875			4,100		791,775		0
Japanese prefectural and foreign municipal bond securities		362,722			0		359,110		3,612
Corporate debt securities*3		821,666			1,574		819,742		350
CMBS and RMBS in the Americas		43,134			0		43,134		0
Other asset-backed securities and debt securities		192,143			0		1,100		191,043
Equity securities*4*5		362,265			98,885		133,008		130,372
Derivative assets:		124,540			2,898		113,594		8,048
Interest rate swap agreements		25,142			0		25,142		0
Options held/written and other		62,889			0		54,841		8,048
Futures, foreign exchange contracts		34,478			2,898		31,580		0
Foreign currency swap agreements		2,031			0		2,031		0
Netting*6		(35,089	)		0		0		0
Net derivative assets		89,451			0		0		0
Other assets:		5,702			0		0		5,702
Reinsurance recoverables*7		5,702			0		0		5,702
Total	¥	2,926,769		¥	107,457	¥	2,480,185	¥	339,127
Liabilities:
Derivative liabilities:	¥	120,079		¥	64	¥	87,128	¥	32,887
Interest rate swap agreements		2,557			0		2,557		0
Options held/written and other		56,456			0		23,569		32,887
Futures, foreign exchange contracts		59,191			64		59,127		0
Foreign currency swap agreements		1,871			0		1,871		0
Credit derivatives written		4			0		4		0
Netting*6		(35,089	)		0		0		0
Net derivative Liabilities		84,990			0		0		0
Policy Liabilities and Policy Account Balances:		170,177			0		0		170,177
Variable annuity and variable life insurance contracts*8		170,177			0		0		170,177
Total	¥	290,256		¥	64	¥	87,128	¥	203,064

– 43 –

*1 A certain subsidiary elected the fair value option on certain loans held for sale. These loans are multi-family and seniors housing loans and are sold to Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”) and institutional investors. Included in “Other (income) and expense” in the consolidated statements of income were a gain of ¥1,069 million and a loss of ¥3,508 million from the change in the fair value of the loans for the six months ended September 30, 2021 and 2022, respectively. Included in “Other (income) and expense” in the consolidated statements of income were a loss of ¥525 million and a gain of ¥191 million from the change in the fair value of the loans for the three months ended September 30, 2021 and 2022, respectively. No gains or losses were recognized in earnings during the six months ended September 30, 2021 and 2022 attributable to changes in instrument-specific credit risk. The amounts of aggregate unpaid principal balance and aggregate fair value of the loans held for sale as of March 31, 2022, were ¥151,672 million and ¥151,601 million, respectively, and the amount of the aggregate fair value was less than the amount of aggregate unpaid principal balance by ¥71 million. The amounts of aggregate unpaid principal balance and aggregate fair value of the loans held for sale as of September 30, 2022, were ¥219,811 million and ¥215,774 million, respectively, and the amount of the aggregate fair value was less than the amount of aggregate unpaid principal balance by ¥4,037 million. As of March 31, 2022 and September 30, 2022, there were no loans that are 90 days or more past due or, in non-accrual status.

*2 A certain subsidiary elected the fair value option for investments in foreign government bond securities included in available-for-sale debt securities. Included in “Gains on investment securities and dividends” in the consolidated statements of income were a gain of ¥51 million and a loss of ¥21 million from the change in the fair value of those investments for the six months ended September 30, 2021 and 2022, respectively. Included in “Gains on investment securities and dividends” in the consolidated statements of income were a gain of ¥20 million and a loss of ¥13 million from the change in the fair value of those investments for the three months ended September 30, 2021 and 2022, respectively. There were no such investments elected the fair value option as of September 30, 2021. The amount of aggregate fair value elected the fair value option was ¥263 million as of March 31, 2022.

*3 A certain subsidiary elected the fair value option for investments in foreign corporate debt securities included in available-for-sale debt securities. Included in “Gains on investment securities and dividends” in the consolidated statements of income were a gain of ¥24 million and a loss of ¥977 million from the change in the fair value of those investments for the six months ended September 30, 2021 and 2022, respectively. Included in “Gains on investment securities and dividends” in the consolidated statements of income were losses of ¥18 million and ¥325 million from the change in the fair value of those investments for the three months ended September 30, 2021 and 2022, respectively. The amounts of aggregate fair value elected the fair value option were ¥7,644 million and ¥10,591 million as of March 31, 2022 and September 30, 2022, respectively.

*4 Certain subsidiaries elected the fair value option for certain investments in investment funds, and others included in equity securities. Included in “Gains on investment securities and dividends” and “Life insurance premiums and related investment income” in the consolidated statements of income were gains of ¥585 million and ¥546 million from the change in the fair value of those investments for the six months ended September 30, 2021 and 2022, respectively. Included in “Gains on investment securities and dividends” and “Life insurance premiums and related investment income” in the consolidated statements of income were gains of ¥248 million and ¥6 million from the change in the fair value of those investments for the three months ended September 30, 2021 and 2022, respectively. The amounts of aggregate fair value elected the fair value option were ¥11,709 million and ¥14,714 million as of March 31, 2022 and September 30, 2022, respectively.

*5 The amounts of investment funds measured at net asset value per share which are not included in the above tables were ¥25,999 million and ¥47,936 million as of March 31, 2022 and September 30, 2022, respectively.

*6 It represents the amount offset under counterparty netting of derivative assets and liabilities.

*7 Certain subsidiaries elected the fair value option for certain reinsurance contracts held. The fair value of the reinsurance contracts elected for the fair value option in other assets were ¥5,214 million and ¥5,702 million as of March 31, 2022 and September 30, 2022, respectively. For the effect of changes in the fair value of those reinsurance contracts on earnings during the six and three months ended September 30, 2021 and 2022, see Note 17 “Life Insurance Operations.”

*8 Certain subsidiaries elected the fair value option for the entire variable annuity and variable life insurance contracts held. The fair value of the variable annuity and variable life insurance contracts elected for the fair value option in policy liabilities and policy account balances were ¥198,905 million and ¥170,177 million as of March 31, 2022 and September 30, 2022, respectively. For the effect of changes in the fair value of the variable annuity and variable life insurance contracts on earnings during the six and three months ended September 30, 2021 and 2022, see Note 17 “Life Insurance Operations.”

– 44 –

The following tables present the reconciliation of financial assets and liabilities (net) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended September 30, 2021 and 2022:

Six months ended September 30, 2021

	Millions of yen
	Balance at April 1, 2021		Gains or losses (realized/unrealized)									Purchases *3		Sales			Settlements *4			Transfers in and/ or out of Level 3 (net)		Balance at September 30, 2021		Change in unrealized gains or losses included in earnings for assets and liabilities still held at September 30, 2021 *1			Change in unrealized gains or losses included in other comprehensive income for assets and liabilities still held at September 30, 2021 *2
			Included in earnings *1			Included in other comprehensive income *2			Total
Available-for-sale debt securities	¥	133,457	¥	4,281		¥	1,827		¥	6,108		¥	22,270	¥	(7,485	)	¥	(17,114	)	¥	0	¥	137,236	¥	321		¥	1,904
Japanese prefectural and foreign municipal bond securities		2,761		0			30			30			0		0			0			0		2,791		0			30
Corporate debt securities		1,021		0			(0	)		(0	)		0		0			(212	)		0		809		0			(0	)
Other asset-backed securities and debt securities		129,675		4,281			1,797			6,078			22,270		(7,485	)		(16,902	)		0		133,636		321			1,874
Equity securities		91,410		12,735			1,018			13,753			13,691		(26,375	)		(471	)		0		92,008		1,528			1,008
Investment funds, and others		91,410		12,735			1,018			13,753			13,691		(26,375	)		(471	)		0		92,008		1,528			1,008
Derivative assets and liabilities (net)		13,790		1,618			197			1,815			0		0			0			0		15,605		1,618			197
Options held/written and other		13,790		1,618			197			1,815			0		0			0			0		15,605		1,618			197
Other asset		6,297		(1,277	)		0			(1,277	)		1,050		0			(506	)		0		5,564		(1,277	)		0
Reinsurance recoverables *5		6,297		(1,277	)		0			(1,277	)		1,050		0			(506	)		0		5,564		(1,277	)		0
Policy Liabilities and Policy Account Balances		266,422		(6,731	)		(84	)		(6,815	)		0		0			(47,016	)		0		226,221		(6,731	)		(84	)
Variable annuity and variable life insurance contracts *6		266,422		(6,731	)		(84	)		(6,815	)		0		0			(47,016	)		0		226,221		(6,731	)		(84	)

– 45 –

Six months ended September 30, 2022

	Millions of yen
	Balance at April 1, 2022			Gains or losses (realized/unrealized)									Purchases *3		Sales			Settlements *4			Transfers in and/ or out of Level 3 (net)		Balance at September 30, 2022			Change in unrealized gains or losses included in earnings for assets and liabilities still held at September 30, 2022 *1			Change in unrealized gains or losses included in other comprehensive income for assets and liabilities still held at September 30, 2022 *2
				Included in earnings *1			Included in other comprehensive income *2			Total
Available-for-sale debt securities	¥	141,060		¥	10,011		¥	5,711		¥	15,722		¥	47,361	¥	(5,678	)	¥	(3,460	)	¥	0	¥	195,005		¥	9,995		¥	6,090
Japanese prefectural and foreign municipal bond securities		3,053			0			559			559			0		0			0			0		3,612			0			559
Corporate debt securities		697			0			(1	)		(1	)		0		0			(346	)		0		350			0			(0	)
Other asset-backed securities and debt securities		137,310			10,011			5,153			15,164			47,361		(5,678	)		(3,114	)		0		191,043			9,995			5,531
Equity securities		112,972			3,874			19,692			23,566			2,500		(7,144	)		(1,522	)		0		130,372			3,155			19,688
Investment funds, and others		112,972			3,874			19,692			23,566			2,500		(7,144	)		(1,522	)		0		130,372			3,155			19,688
Derivative assets and liabilities (net)		(3,772	)		(18,486	)		(2,581	)		(21,067	)		0		0			0			0		(24,839	)		(18,486	)		(2,581	)
Options held/written and other		(3,772	)		(18,486	)		(2,581	)		(21,067	)		0		0			0			0		(24,839	)		(18,486	)		(2,581	)
Other asset		5,214			121			0			121			632		0			(265	)		0		5,702			121			0
Reinsurance recoverables *5		5,214			121			0			121			632		0			(265	)		0		5,702			121			0
Policy Liabilities and Policy Account Balances		198,905			11,679			83			11,762			0		0			(16,966	)		0		170,177			11,679			83
Variable annuity and variable life insurance contracts *6		198,905			11,679			83			11,762			0		0			(16,966	)		0		170,177			11,679			83

*1 Principally, gains and losses from available-for-sale debt securities are included in “Gains on investment securities and dividends”, “Write-downs of securities” or “Life insurance premiums and related investment income”; equity securities are included in “Gains on investment securities and dividends” and “Life insurance premiums and related investment income” and derivative assets and liabilities (net) are included in “Other (income) and expense” respectively. Additionally, for available-for-sale debt securities, amortization of interest recognized in finance revenues is included in these columns.

*2 Unrealized gains and losses from available-for-sale debt securities are included in “Net change of unrealized gains (losses) on investment in securities” and “Net change of foreign currency translation adjustments”, unrealized gains and losses from equity securities and derivative assets and liabilities (net) are included mainly in “Net change of foreign currency translation adjustments”, unrealized gains and losses from policy liabilities and policy account balances are included in “Net change of debt valuation adjustments.”

*3 Increases resulting from an acquisition of a subsidiary and insurance contracts ceded to reinsurance companies are included.

*4 Decreases resulting from the receipts of reimbursements for benefits, and decreases resulting from insurance payouts to variable annuity and variable life policyholders due to death, surrender and maturity of the investment period are included.

*5 “Included in earnings” in the above table includes changes in the fair value of reinsurance contracts recorded in “Life insurance costs” and reinsurance premiums, net of reinsurance benefits received, recorded in “Life insurance premiums and related investment income.”

*6 “Included in earnings” in the above table is recorded in “Life insurance costs” and includes changes in the fair value of policy liabilities and policy account balances resulting from gains or losses on the underlying investment assets managed on behalf of variable annuity and variable life policyholders, and the changes in the minimum guarantee risks relating to variable annuity and variable life insurance contracts as well as insurance costs recognized for insurance and annuity payouts as a result of insured events.

There were no transfers in or out of Level 3 in the six months ended September 30, 2021 and 2022.

– 46 –

The following tables present the reconciliation of financial assets and liabilities (net) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2021 and 2022:

Three months ended September 30, 2021

	Millions of yen
	Balance at June 30, 2021		Gains or losses (realized/unrealized)									Purchases *3		Sales			Settlements *4			Transfers in and/ or out of Level 3 (net)		Balance at September 30, 2021		Change in unrealized gains or losses included in earnings for assets and liabilities still held at September 30, 2021 *1			Change in unrealized gains or losses included in other comprehensive income for assets and liabilities still held at September 30, 2021 *2
			Included in earnings *1			Included in other comprehensive income *2			Total
Available-for-sale debt securities	¥	131,538	¥	4,291		¥	1,394		¥	5,685		¥	14,859	¥	(7,480	)	¥	(7,366	)	¥	0	¥	137,236	¥	285		¥	1,410
Japanese prefectural and foreign municipal bond securities		2,758		0			33			33			0		0			0			0		2,791		0			33
Corporate debt securities		901		0			0			0			0		0			(92	)		0		809		0			(0	)
Other asset-backed securities and debt securities		127,879		4,291			1,361			5,652			14,859		(7,480	)		(7,274	)		0		133,636		285			1,377
Equity securities		88,113		1,373			1,022			2,395			2,339		(496	)		(343	)		0		92,008		301			1,012
Investment funds, and others		88,113		1,373			1,022			2,395			2,339		(496	)		(343	)		0		92,008		301			1,012
Derivative assets and liabilities (net)		19,012		(3,590	)		183			(3,407	)		0		0			0			0		15,605		(3,590	)		183
Options held/written and other		19,012		(3,590	)		183			(3,407	)		0		0			0			0		15,605		(3,590	)		183
Other asset		5,878		(555	)		0			(555	)		481		0			(240	)		0		5,564		(555	)		0
Reinsurance recoverables *5		5,878		(555	)		0			(555	)		481		0			(240	)		0		5,564		(555	)		0
Policy Liabilities and Policy Account Balances		244,523		(3,172	)		(51	)		(3,223	)		0		0			(21,525	)		0		226,221		(3,172	)		(51	)
Variable annuity and variable life insurance contracts *6		244,523		(3,172	)		(51	)		(3,223	)		0		0			(21,525	)		0		226,221		(3,172	)		(51	)

– 47 –

Three months ended September 30, 2022

	Millions of yen
	Balance at June 30, 2022			Gains or losses (realized/unrealized)									Purchases *3		Sales			Settlements *4			Transfers in and/ or out of Level 3 (net)		Balance at September 30, 2022			Change in unrealized gains or losses included in earnings for assets and liabilities still held at September 30, 2022 *1			Change in unrealized gains or losses included in other comprehensive income for assets and liabilities still held at September 30, 2022 *2
				Included in earnings *1			Included in other comprehensive income *2			Total
Available-for-sale debt securities	¥	176,919		¥	4,393		¥	2,401		¥	6,794		¥	13,190	¥	0		¥	(1,898	)	¥	0	¥	195,005		¥	4,391		¥	2,558
Japanese prefectural and foreign municipal bond securities		3,409			0			203			203			0		0			0			0		3,612			0			203
Corporate debt securities		625			0			(0	)		(0	)		0		0			(275	)		0		350			0			0
Other asset-backed securities and debt securities		172,885			4,393			2,198			6,591			13,190		0			(1,623	)		0		191,043			4,391			2,355
Equity securities		124,735			2,539			6,881			9,420			621		(4,040	)		(364	)		0		130,372			2,336			6,880
Investment funds, and others		124,735			2,539			6,881			9,420			621		(4,040	)		(364	)		0		130,372			2,336			6,880
Derivative assets and liabilities (net)		(17,781	)		(5,681	)		(1,377	)		(7,058	)		0		0			0			0		(24,839	)		(5,681	)		(1,377	)
Options held/written and other		(17,781	)		(5,681	)		(1,377	)		(7,058	)		0		0			0			0		(24,839	)		(5,681	)		(1,377	)
Other asset		5,732			(216	)		0			(216	)		321		0			(135	)		0		5,702			(216	)		0
Reinsurance recoverables *5		5,732			(216	)		0			(216	)		321		0			(135	)		0		5,702			(216	)		0
Policy Liabilities and Policy Account Balances		180,791			2,204			106			2,310			0		0			(8,304	)		0		170,177			2,204			106
Variable annuity and variable life insurance contracts *6		180,791			2,204			106			2,310			0		0			(8,304	)		0		170,177			2,204			106

*1 Principally, gains and losses from available-for-sale debt securities are included in “Gains on investment securities and dividends”, “Write-downs of securities” or “Life insurance premiums and related investment income”; equity securities are included in “Gains on investment securities and dividends” and “Life insurance premiums and related investment income” and derivative assets and liabilities (net) are included in “Other (income) and expense” respectively. Additionally, for available-for-sale debt securities, amortization of interest recognized in finance revenues is included in these columns.

*2 Unrealized gains and losses from available-for-sale debt securities are included in “Net change of unrealized gains (losses) on investment in securities” and “Net change of foreign currency translation adjustments”, unrealized gains and losses from equity securities and derivative assets and liabilities (net) are included mainly in “Net change of foreign currency translation adjustments”, unrealized gains and losses from policy liabilities and policy account balances are included in “Net change of debt valuation adjustments.”

*3 Increases resulting from an acquisition of a subsidiary and insurance contracts ceded to reinsurance companies are included.

*4 Decreases resulting from the receipts of reimbursements for benefits, and decreases resulting from insurance payouts to variable annuity and variable life policyholders due to death, surrender and maturity of the investment period are included.

*5 “Included in earnings” in the above table includes changes in the fair value of reinsurance contracts recorded in “Life insurance costs” and reinsurance premiums, net of reinsurance benefits received, recorded in “Life insurance premiums and related investment income.”

*6 “Included in earnings” in the above table is recorded in “Life insurance costs” and includes changes in the fair value of policy liabilities and policy account balances resulting from gains or losses on the underlying investment assets managed on behalf of variable annuity and variable life policyholders, and the changes in the minimum guarantee risks relating to variable annuity and variable life insurance contracts as well as insurance costs recognized for insurance and annuity payouts as a result of insured events.

There were no transfers in or out of Level 3 in the three months ended September 30, 2021 and 2022.

– 48 –

The following tables present recorded amounts of assets measured at fair value on a nonrecurring basis during year ended March 31, 2022 and the six months ended September 30, 2022. These assets are measured at fair value on a nonrecurring basis mainly to recognize impairment:

Year ended March 31, 2022

	Millions of yen
	Total Carrying Value in Consolidated Balance Sheets		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Loans held for sale	¥	235	¥	0	¥	235	¥	0
Real estate collateral-dependent loans (net of allowance for credit losses)		6,972		0		0		6,972
Investment in operating leases, property under facility operations, office facilities and other assets		59,847		0		262		59,585
Certain equity securities		9,451		0		9,451		0
Certain investments in affiliates		2,846		0		0		2,846
Certain reporting units including goodwill		192		0		0		192
Certain intangible assets acquired in business combinations		98,014		0		0		98,014
	¥	177,557	¥	0	¥	9,948	¥	167,609
Six months ended September 30, 2022
	Millions of yen
	Total Carrying Value in Consolidated Balance Sheets		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Loans held for sale	¥	213	¥	0	¥	213	¥	0
Real estate collateral-dependent loans (net of allowance for credit losses)		2,048		0		0		2,048
Investment in operating leases, property under facility operations, office facilities and other assets		1,002		0		31		971
Certain equity securities		5,816		0		5,816		0
	¥	9,079	¥	0	¥	6,060	¥	3,019

The following is a description of the main valuation methodologies used for assets and liabilities measured at fair value.

Loans held for sale

Certain loans, which the Company and its subsidiaries have the intent and ability to sell to outside parties in the foreseeable future, are considered

held-for-sale.

The loans held for sale in the Americas are classified as Level 2, if the Company and its subsidiaries measure their fair value based on a market approach using inputs other than quoted prices that are observable for the assets such as treasury rate, swap rate and market spread. The loans held for sale in the Americas are classified as Level 3, if the Company and its subsidiaries measure their fair value based on discounted cash flow methodologies using inputs that are unobservable in the market.

– 49 –

Real estate collateral-dependent loans

The allowance for credit losses for large balance

non-homogeneous

loans is individually evaluated based on the present value of expected future cash flows, the loan’s observable market price or the fair value of the collateral securing the loans if the loans are collateral-dependent. According to ASC 820 (“Fair Value Measurement”), measurement for loans with deterioration in credit quality determined using a present value technique is not considered a fair value measurement. However, measurement for loans with deterioration in credit quality determined using the loan’s observable market price or the fair value of the collateral securing the collateral-dependent loans are fair value measurements and are subject to the disclosure requirements for nonrecurring fair value measurements.

The Company and its subsidiaries determine the fair value of the real estate collateral of real estate collateral-dependent loans using appraisals prepared by independent third party appraisers or our own staff of qualified appraisers based on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flows methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate. The Company and its subsidiaries generally obtain a new appraisal once a fiscal year. In addition, the Company and its subsidiaries periodically monitor circumstances of the real estate collateral and then obtain a new appraisal in situations involving a significant change in economic and/or physical conditions, which may materially affect the fair value of the collateral. Real estate collateral-dependent loans whose fair values are estimated using appraisals of the underlying collateral based on these valuation techniques are classified as Level 3 because such appraisals involve unobservable inputs. These unobservable inputs contain discount rates and cap rates as well as future cash flows estimated to be generated from real estate collateral. An increase (decrease) in the discount rate or cap rate and a decrease (increase) in the estimated future cash flows would result in a decrease (increase) in the fair value of real estate collateral-dependent loans.

Investment in operating leases, property under facility operations, office facilities and other assets, and land and buildings undeveloped or under construction

Investment in operating leases measured at fair value is mostly real estate. The Company and its subsidiaries determine the fair value of investment in operating leases, property under facility operations, office facilities and other assets, and land and buildings undeveloped or under construction using appraisals prepared by independent third party appraisers or the Company’s own staff of qualified appraisers, and others based on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flow methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate. The Company and its subsidiaries classified these assets as Level 3 because such appraisals involve unobservable inputs. These unobservable inputs contain discount rates as well as future cash flows estimated to be generated from the assets or projects. An increase (decrease) in the discount rate and a decrease (increase) in the estimated future cash flows would result in a decrease (increase) in the fair value of investment in operating leases and property under facility operations and land and buildings undeveloped or under construction.

Movable properties owned by a certain subsidiary are classified as Level 2, because fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets.

Trading debt securities and

available-for-sale

debt securities

If active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities are classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets and accordingly these securities are classified as Level 2. If market prices are not available and there are no observable inputs, then fair value is estimated by using valuation models such as discounted cash flow methodologies and broker quotes. Such securities are classified as Level 3, as the valuation models and broker quotes are based on inputs that are unobservable in the market. If fair value is based on broker quotes, the Company and its subsidiaries check the validity of received prices based on comparison to prices of other similar assets and market data such as relevant benchmark indices.

The Company and its subsidiaries classified CMBS and RMBS in the Americas and other asset-backed securities as Level 2 if the inputs such as trading price and/or bid price are observable. The Company and its subsidiaries classified CMBS and RMBS in the Americas and other asset-backed securities as Level 3 if the Company and subsidiaries evaluate the fair value based on the unobservable inputs. In determining whether the inputs are observable or unobservable, the Company and its subsidiaries evaluate various factors such as the lack of recent transactions, price quotations that are not based on current information or vary substantially over time or among market makers, a significant increase in implied risk premium, a wide

bid-ask

spread, significant decline in new issuances, little or no public information (e.g. a

principal-to-principal

market) and other factors. With respect to certain CMBS and RMBS in the Americas and other asset-backed securities, the Company and its subsidiaries classified these securities that were measured at fair value based on the observable inputs such as trading price and/or bit price as Level 2. But for those securities that lacked observable trades because they are older vintage or below investment grade securities, the Company and its subsidiaries limit the reliance on independent pricing service vendors and brokers. As a result, the Company and its subsidiaries established internally developed pricing models using valuation techniques such as discounted cash flow model using Level 3 inputs in order to estimate fair value of these debt securities and classified them as Level 3. Under the models, the Company and its subsidiaries use anticipated cash flows of the security, discounted at a risk-adjusted discount rate that incorporates our estimate of credit risk and liquidity risk that a market participant would consider. The cash flows are estimated based on a number of assumptions such as default rate and prepayment speed, as well as seniority of the security. An increase (decrease) in the discount rate or default rate would result in a decrease (increase) in the fair value of CMBS and RMBS in the Americas and other asset-backed securities.

– 50 –

Equity securities and investment in affiliates

If active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities are classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets and accordingly these securities are classified as Level 2. In addition, a certain Americas subsidiary measures its investments held by the investment companies which are owned by the subsidiary at fair value. These investment funds, certain equity securities and certain investments in affiliates are classified as Level 3, because fair value measurement is based on the combination of discounted cash flow methodologies and market multiple valuation methods, or broker quotes. Discounted cash flow methodologies use future cash flows to be generated from investees, weighted average cost of capital (WACC) and others. Market multiple valuation methods use earnings before interest, taxes, depreciation and amortization (EBITDA) multiples based on actual and projected cash flows, comparable peer companies, and comparable precedent transactions and others. Furthermore, certain subsidiaries elected the fair value option for investments in some funds. These investment funds for which the fair value option is elected are classified as level 3, because the subsidiaries measure their fair value using discounting to net asset value based on inputs that are unobservable in the market, or broker quotes.

Derivatives

For exchange-traded derivatives, fair value is based on quoted market prices, and accordingly, classified as Level 1. For

non-exchange

traded derivatives, fair value is based on commonly used models and discounted cash flow methodologies. If the inputs used for these measurements including yield curves and volatilities, are observable, the Company and its subsidiaries classify it as Level 2. If the inputs are not observable, the Company and its subsidiaries classify it as Level 3. These unobservable inputs contain discount rates. An increase (decrease) in the discount rate would result in a decrease (increase) in the fair value of derivatives.

Reinsurance recoverables

Certain subsidiaries have elected the fair value option for certain reinsurance contracts related to variable annuity and variable life insurance contracts to partially offset the changes in fair value recognized in earnings of the policy liabilities and policy account balances attributable to the changes in the minimum guarantee risks of the variable annuity and variable life insurance contracts. These reinsurance contracts for which the fair value option is elected are classified as Level 3 because the subsidiaries measure their fair value using discounted cash flow methodologies based on inputs that are unobservable in the market.

Variable annuity and variable life insurance contracts

A certain subsidiary has elected the fair value option for the entire variable annuity and variable life insurance contracts held in order to match earnings recognized for changes in fair value of policy liabilities and policy account balances with the earnings recognized for gains or losses from the investment assets managed on behalf of variable annuity and variable life policyholders, derivative contracts and changes in fair value of reinsurance contracts. The changes in fair value of the variable annuity and variable life insurance contracts are linked to the fair value of the investment in securities managed on behalf of variable annuity and variable life policyholders. These securities consist mainly of equity securities traded in the market. In addition, variable annuity and variable life insurance contracts are exposed to the minimum guarantee risk, and the subsidiary adjusts the fair value of the underlying investments by incorporating changes in fair value of the minimum guarantee risk in the evaluation of the fair value of the entire variable annuity and variable life insurance contracts. The variable annuity and variable life insurance contracts for which the fair value option is elected are classified as Level 3 because the subsidiary measures the fair value using discounted cash flow methodologies based on inputs that are unobservable in the market.

Reporting units including goodwill

Certain reporting units including goodwill are classified as level 3, because fair value measurement is based on discounted cash flow methodologies and business enterprise value multiples methodologies using inputs that are unobservable in the market. Discounted cash flow methodologies use future cash flows to be generated, weighted average cost of capital (WACC) and others. Business enterprise value multiples methodologies use earnings before interest, taxes, depreciation and amortization (EBITDA) multiples based on comparable peer companies, comparable precedent transactions and others.

Intangible assets acquired in business combinations

Certain intangible assets acquired in business combinations are classified as level 3, because fair value measurement is based on discounted cash flow methodologies using inputs that are unobservable in the market. Discounted cash flow methodologies use future cash flows, weighted average cost of capital (WACC) and others.

– 51 –

Information about Level 3 Fair Value Measurements

The following tables provide information about the valuation techniques and significant unobservable inputs used in the valuation of Level 3 assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and September 30, 2022.

	March 31, 2022
	Millions of yen
	Fair value		Valuation technique(s)	Significant unobservable inputs	Range (Weighted average)
Assets:
Available-for-sale debt securities:
Japanese prefectural and foreign municipal bond securities	¥	3,053	Appraisals/Broker quotes	—	—
Corporate debt securities		697	Discounted cash flows	Discount rate	0.4 % –  0.7 % ( 0.5 %)
Other asset-backed securities and debt securities		25,666	Discounted cash flows	Discount rate	0.1% – 51.2% (10.6%)
				Probability of default	1.9% (1.9%)
		111,644	Appraisals/Broker quotes	—	—
Equity securities:
Investment funds, and others		86,903	Discounted cash flows	WACC	11.9% – 18.6% (16.3%)
				EV/Terminal EBITDA multiple	8.3x-12.0x (9.9x)
			Market multiples	EV/Last twelve months EBITDA multiple	6.4x-12.6x (9.5x)
				EV/Forward EBITDA multiple	5.7x-12.5x (9.4x)
				EV/Precedent transaction last twelve months EBITDA multiple	7.6x-14.5x (10.3x)
		26,069	Appraisals/Broker quotes	—	—
Derivative assets:
Options held/written and other		4,792	Discounted cash flows	Discount rate	12.0% – 34.0% (14.9%)
		68	Appraisals/Broker quotes	—	—
Other assets:
Reinsurance recoverables		5,214	Discounted cash flows	Discount rate	(0.2)% – 0.7% (0.2%)
				Mortality rate	0.0% – 100.0% (2.1%)
				Lapse rate	1.5% – 14.0% (5.5%)
				Annuitization rate (guaranteed minimum annuity benefit)	0.0% – 100.0% (100.0%)
Total	¥	264,106
Liabilities:
Derivative liabilities:
Options held/written and other	¥	8,600	Discounted cash flows	Discount rate	12.0% – 34.0% (14.9%)
		32	Appraisals/Broker quotes	—	—
Policy liabilities and Policy Account Balances:
Variable annuity and variable life insurance contracts		198,905	Discounted cash flows	Discount rate	(0.2)% – 0.7% (0.2%)
				Mortality rate	0.0% – 100.0% (1.9%)
				Lapse rate	1.5% – 30.0% (6.2%)
				Annuitization rate (guaranteed minimum annuity benefit)	0.0% – 100.0% (71.8%)
Total	¥	207,537

– 52 –

	September 30, 2022
	Millions of yen
	Fair value		Valuation technique(s)	Significant unobservable inputs	Range (Weighted average)
Assets:
Available-for-sale debt securities:
Japanese prefectural and foreign municipal bond securities	¥	3,612	Appraisals/Broker quotes	—	—
Corporate debt securities		350	Discounted cash flows	Discount rate	0.4% (0.4%)
Other asset-backed securities and debt securities		32,064	Discounted cash flows	Discount rate	0.1% – 51.2% (10.4%)
				Probability of default	1.9% (1.9%)
		158,979	Appraisals/Broker quotes	—	—
Equity securities:
Investment funds, and others		111,844	Discounted cash flows	WACC	11.9% – 26.4% (17.3%)
				EV/Terminal EBITDA multiple	7.5x – 12.0x (9.8x)
			Market multiples	EV/Last twelve months EBITDA multiple	6.0x – 10.4x (8.4x)
				EV/Forward EBITDA multiple	4.9x – 10.6x (8.0x)
				EV/Precedent transaction last twelve months EBITDA multiple	7.5x – 14.5x
					(10.1x)
		18,528	Appraisals/Broker quotes	—	—
Derivative assets:
Options held/written and other		8,048	Discounted cash flows	Discount rate	12.0% – 32.0% (14.9%)
Other assets:
Reinsurance recoverables		5,702	Discounted cash flows	Discount rate	(0.2)% – 1.1% (0.3%)
				Mortality rate	0.0% – 100.0% (2.3%)
				Lapse rate	1.5% – 14.0% (5.1%)
				Annuitization rate (guaranteed minimum annuity benefit)	0.0% – 100.0% (100.0%)
Total	¥	339,127
Liabilities:
Derivative liabilities:
Options held/written and other	¥	32,863	Discounted cash flows	Discount rate	12.0% – 32.0% (14.9%)
		24	Appraisals/Broker quotes	—	—
Policy liabilities and Policy Account Balances:
Variable annuity and variable life insurance contracts		170,177	Discounted cash flows	Discount rate	(0.2)% – 1.1% (0.3%)
				Mortality rate	0.0% – 100.0% (2.0%)
				Lapse rate	1.5% – 30.0% (6.0%)
				Annuitization rate (guaranteed minimum annuity benefit)	0.0% – 100.0% (69.8%)
Total	¥	203,064

– 53 –

The following tables provide information about the valuation techniques and significant unobservable inputs used in the valuation of Level 3 assets measured at fair value on a nonrecurring basis during year ended March 31, 2022 and the six months ended September 30, 2021.

	Year ended March 31, 2022
	Millions of yen
	Fair value		Valuation technique(s)	Significant unobservable inputs	Range (Weighted average)
Assets:
Real estate collateral-dependent loans (net of allowance for credit losses)	¥	1,511	Direct capitalization	Capitalization rate	5.0% – 8.5% (6.1%)
		5,461	Appraisals	—	—
Investment in operating leases, property under facility operations, office facilities and other assets		32,328	Discounted cash flows	Discount rate	5.2% (5.2%)
		27,257	Appraisals	—	—
Certain investments in affiliates		2,846	Appraisals	—	—
Certain reporting units including goodwill		192	Discounted cash flows	Discount rate	10.7% (10.7%)
Certain intangible assets acquired in business combinations		98,014	Discounted cash flows	Discount rate	10.9% (10.9%)
	¥	167,609
	Six months ended September 30, 2022
	Millions of yen
	Fair value		Valuation technique(s)	Significant unobservable inputs	Range (Weighted average)
Assets:
Real estate collateral-dependent loans (net of allowance for credit losses)	¥	1,520	Direct capitalization	Capitalization rate	4.7% – 6.9% (5.9%)
		528	Appraisals	—	—
Investment in operating leases, property under facility operations, office facilities and other assets		330	Discounted cash flows	Discount rate	0.5% (0.5%)
		641	Appraisals	—	—
	¥	3,019

The Company and its subsidiaries generally use discounted cash flow methodologies or similar internally developed models to determine the fair value of Level 3 assets and liabilities. Use of these techniques requires determination of relevant inputs and assumptions, some of which represent significant unobservable inputs as indicated in the preceding table. Accordingly, changes in these unobservable inputs may have a significant impact on the fair value.

Certain of these unobservable inputs will have a directionally consistent impact on the fair value of the asset or liability for a given change in that input. Alternatively, the fair value of the asset or liability may move in an opposite direction for a given change in another input. Where multiple inputs are used within the valuation technique of an asset or liability, a change in one input in a certain direction may be offset by an opposite change in another input having a potentially muted impact to the overall fair value of that particular asset or liability. Additionally, a change in one unobservable input may result in a change to another unobservable input (that is, changes in certain inputs are interrelated to one another), which may counteract or magnify the fair value impact.

Unobservable inputs are weighted by the relative fair value of the asset or liability.

For more analysis of the uncertainty of each input, see the description of the main valuation methodologies used for assets and liabilities measured at fair value.

– 54 –

4. Acquisitions and Divestitures

(1) Acquisitions

There were no material acquisitions during the six months ended September 30, 2021 and 2022.

(2) Divestitures

Gains on sales of subsidiaries and affiliates and liquidation losses, net for the six months ended September 30, 2021 and 2022 amounted to ¥6,473 million and ¥8,589 million, respectively. Gains on sales of subsidiaries and affiliates and liquidation losses, net for the six months ended September 30, 2021 mainly consisted of ¥6,305 million in ORIX USA segment. Gains on sales of subsidiaries and affiliates and liquidation losses, net for the six months ended September 30, 2022 mainly consisted of ¥137 million in Real Estate segment, ¥4,048 million in ORIX USA segment and ¥4,420 million in Asia and Australia segment.

Gains on sales of subsidiaries and affiliates and liquidation losses, net for the three months ended September 30, 2021 and 2022 amounted to ¥3,476 million and ¥5,486 million, respectively. Gains on sales of subsidiaries and affiliates and liquidation losses, net for the three months ended September 30, 2021 mainly consisted of ¥3,397 million in ORIX USA segment. Gains on sales of subsidiaries and affiliates and liquidation losses, net for the three months ended September 30, 2022 mainly consisted of ¥137 million in Real Estate segment, ¥3,299 million in ORIX USA segment and ¥2,066 million in Asia and Australia segment.

– 55 –

5. Revenues from Contracts with Customers

The following table provides information about revenues from contracts with customers, and other sources of revenue for the six and three months ended September 30, 2021 and 2022 are as follows;

	Millions of yen		Millions of yen
	Six months ended September 30, 2021		Six months ended September 30, 2022
Revenues from contracts with customers	¥	595,111	¥	693,599
Other revenues *		646,423		671,217
Total revenues	¥	1,241,534	¥	1,364,816
	Millions of yen		Millions of yen
	Three months ended September 30, 2021		Three months ended September 30, 2022
Revenues from contracts with customers	¥	301,299	¥	359,235
Other revenues *		331,422		347,768
Total revenues	¥	632,721	¥	707,003

* Other revenues are not considered to be within the scope of revenue from contracts with customers, such as life insurance premiums and related investment income, operating leases, finance revenues that include interest income, and others.

The Company and its subsidiaries recognize revenues when control of the promised goods or services is transferred to our customers, in the amounts that reflect the consideration we expect to receive in exchange for those goods or services. Revenues are recognized net of discounts, incentives and estimated sales returns. Amount to be collected for third party is deducted from revenues. The Company and its subsidiaries evaluate whether we are principal or agent on distinctive goods or services. When a revenue transaction involves a third party, if the Company and its subsidiaries control the goods or services before they are transferred to customers, revenue is recognized on gross amount as the principal. There is no significant variability in considerations included in revenues, except for the performance fees regarding asset management business hereinafter, and there is no significant financing component in considerations on transactions.

For further information about breakdowns of revenues disaggregated by goods or services category and geographical location by segment, see Note 24 “Segment Information.”

– 56 –

Revenue recognition criteria on each goods or services category are mainly as follows:

Sales of goods

The Company and its subsidiaries sell various goods such as precious metals, medical equipment, business management software and other to customers. Revenues from sales of goods are recognized when there is a transfer of control of the product to customers. The Company and its subsidiaries determine transfer of control based on when the products are shipped or delivered to customers, or inspected by customers.

Real estate sales

Certain subsidiaries are involved in condominium business. Revenues from sales of detached houses and residential condominiums are recognized when the real estate is delivered to customers.

Asset management and servicing

Certain subsidiaries offer customers investment management services for their financial assets, asset management as well as maintenance and administrative services for their real estate properties. Furthermore, the Company and its subsidiaries perform servicing on behalf of customers. Revenues from asset management and servicing primarily include management fees, servicing fees, and performance fees. Management and servicing fees are recognized over the contract period with customers, since the customers simultaneously receive and consume all of the benefits provided by the subsidiaries as the subsidiaries perform. Management fees are calculated based on the predetermined percentages of the market value of the assets under management or net assets of the investment funds in accordance with contract terms. Servicing fees are calculated based on the predetermined percentages of the amount in assets under management in accordance with contract terms. Fees based on the performance of the assets under management are recognized when the performance obligations are satisfied, to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The performance fee is estimated by using the most likely amount method, in accordance with contract terms. Servicing fees related to financial assets that the Company and its subsidiaries had originated and transferred to investors, are not in the scope of revenue from contracts with customers. These fees are accounted for servicing assets under which the benefits of servicing are expected to more than adequately compensate for performing the servicing, or servicing liabilities under which the benefits of servicing are not expected to adequately compensate for performing the servicing.

Automobile related services

Certain subsidiaries mainly provide automobile maintenance services to customers, as automobile related services. In the service, since customers simultaneously receive and consume all of the benefits provided by the subsidiaries as the subsidiaries perform, revenues are recognized over the contract period with customers. For measurement of progress, the cost incurred is used, because that reasonably describes transfer of control of services to customers. The subsidiaries receive payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities.

Facilities operation

The Company and its subsidiaries are running hotels, Japanese inns, training facilities, a multipurpose dome and other facilities. Revenues from these operations are recognized over the customers’ usage period of the facilities, since customers simultaneously receive and consume all of the benefits provided by the Company and its subsidiaries as the Company and its subsidiaries perform. The value transferred to customers is directly measured based on the usage period. With respect to operation of a multipurpose dome, a certain subsidiary receives payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities. Gains on sale of property under facility operations included in services income are not within the scope of revenue from contracts with customers because these gains refer to transfers of

non-financial

assets to counterparties that are not considered to be our customers.

Environment and energy services

The Company and its subsidiaries offer services that provide electric power to business operators’ factories, office buildings and other facilities. Revenues from electric power supply by purchasing electricity or running power plants are recognized over the contracted distribution period with customers, since customers simultaneously receive and consume all of the benefits provided by the Company and its subsidiaries as the Company and its subsidiaries perform. The value transferred to customers is directly measured based on electricity usage by customers. Furthermore, certain subsidiaries are running waste processing facilities. Revenues from resources and waste processing business are primarily recognized over the service contract period with customers, since customers simultaneously receive and consume all of the benefits provided by the subsidiaries as the subsidiaries perform. The value transferred to customers is directly measured based on the amount of resources and waste to be processed.

– 57 –

Real estate management and brokerage

The Company and its subsidiaries mainly offer management of condominiums, office buildings, facilities and others, to customers, as real estate management and brokerage business. Since customers simultaneously receive and consume all of the benefits provided by the Company and its subsidiaries as the Company and its subsidiaries perform, revenues from these services are recognized over the contract period with customers. Direct measurement of the value transferred to customers based on time elapsed, is used as method of measuring progress. The Company and its subsidiaries receive payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities.

Real estate contract work

Certain subsidiaries offer repair and contract work for condominiums, office buildings, facilities and others, to customers. The work is held on the real estate where customers own or rent, and the subsidiaries’ performance creates the asset that the customers’ control as the asset is created or enhanced. Additionally, the performance does not create an asset with an alternative use to the subsidiaries, and the subsidiaries have a substantial enforceable right to payment for performance completed to date so that revenues are recognized over the contract work period. For measurement of progress, the cost incurred is used, because that reasonably describes transfer of control of services to customers. The subsidiaries recognize a part of its performance obligations that it performs as contract assets, and the amounts are reported under other assets on the consolidated balance sheet. Furthermore, the subsidiaries receive payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities.

Other

The Company and its subsidiaries have been developing a variety of businesses. Main revenue streams are as follows:

Maintenance services of software, measurement equipment and other:

Certain subsidiaries offer information system hardware, software maintenance services and support, and maintenance of measurement equipment to customers. Revenues from these services are recognized over the contract period with customers, since customers simultaneously receive and consume all of the benefits provided by the subsidiaries as the subsidiaries perform. For measurement of progress, the cost incurred is used, because that reasonably describes transfer of control of services to customers. The subsidiaries receive payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities.

Fee business:

The Company and its subsidiaries are involved in insurance policy referrals and other agency business. Commission revenues from these businesses are primarily recognized when the contract between our customers and their client is signed.

– 58 –

The following table provides information about balances from contracts with customers as of March 31, 2022 and September 30, 2022.

	Millions of yen
	March 31, 2022		September 30, 2022
Trade Notes, Accounts and Other Receivable	¥	174,667	¥	171,244
Contract assets (Included in Other Assets)		13,802		23,036
Contract liabilities (Included in Other Liabilities)		32,978		30,678

For the six and three months ended September 30, 2021 and 2022, there were no significant changes in contract assets and contract liabilities.

For the six months ended September 30, 2021 and 2022, revenues amounting to

¥25,631 million and ¥21,319 

million were included in contract liabilities as of the beginning of each fiscal year, respectively.

For the three months ended September 30, 2021 and 2022, revenues amounting to

 ¥6,468 million and ¥3,627 

million were included in contract liabilities as of the beginning of each fiscal year, respectively.

As of September 30, 2022, transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) is mainly related to automobile related services, real estate sales and amounted to ¥213,789 million. Remaining term for the obligations ranges up to 12 years. Furthermore, automobile related services primarily constitute the performance obligations that are unsatisfied (or partially unsatisfied) will be recognized as revenue over the next 10 years. The Company and its subsidiaries applied practical expedients in the disclosure, and performance obligations for contracts that have an original expected duration of one year or less and contracts under which the value transferred to a customer is directly measured and recognized as revenue by the amount it has a right to invoice to the customer are not included. The transaction price allocated to unsatisfied performance obligations does not include the estimate of material variable consideration.

– 59 –

6. Leases

Lessor

Lease income for the six and three months ended September 30, 2021 and 2022 are as follows:

	Millions of yen
	Six months ended  September 30, 2021		Six months ended  September 30, 2022
Lease income—net investment in leases
Interest income	¥	35,962	¥	39,936
Other		998		1,147
Lease income—operating leases *		227,933		249,144
Total lease income	¥	264,893	¥	290,227

* Gains from the disposition of real estate under operating leases included in operating lease revenues were ¥15,440 million and ¥12,487 million, and gains from the disposition of operating lease assets other than real estate included in operating lease revenues were ¥10,798 million and ¥19,090 million, for the six months ended September 30, 2021 and 2022, respectively.

	Millions of yen
	Three months ended  September 30, 2021		Three months ended  September 30, 2022
Lease income—net investment in leases
Interest income	¥	18,157	¥	20,256
Other		429		614
Lease income—operating leases *		114,467		122,945
Total lease income	¥	133,053	¥	143,815

* Gains from the disposition of real estate under operating leases included in operating lease revenues were ¥7,475 million and ¥2,766 million, and gains from the disposition of operating lease assets other than real estate included in operating lease revenues were ¥5,731 million and ¥9,320 million, for the three months ended September 30, 2021 and 2022, respectively.

Lease income from net investment in leases is included in finance revenues in the consolidated statements of income. Gains and losses from the disposition of net investment in leases were not material for the six and three months ended September 30, 2021 and 2022.

– 60 –

7. Credit Quality of Financial Assets and the Allowance for Credit Losses

The Company and its subsidiaries provide the following information disaggregated by portfolio segment and class of financial assets.

Allowance for credit losses

Credit quality of financial assets

• Credit quality indicators

• Past-due financing receivables

• Non-accrual

Information about troubled debt restructurings

A portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. The Company and its subsidiaries classify our portfolio segments by instruments of loans, net investment in leases and other financial assets measured at amortized cost. Classes of financial assets are determined based on the initial measurement attribute, risk characteristics of the financing receivables and the method for monitoring and assessing obligors’ credit risk and are defined as the level of detail necessary for a financial statement user to understand the risks inherent in the financial assets. Classes of financial assets generally are a disaggregation of a portfolio segment, and the Company and its subsidiaries disaggregate our portfolio segments into classes by regions, instruments or industries of our debtors.

– 61 –

The following table provides information about the allowance for credit losses for installment loans, net investment in leases and other financial assets measured at amortized cost as of March 31, 2022, and for the six and three months ended September 30, 2021 and 2022:

	Six months ended September 30, 2021
	Millions of yen
	Beginning balance		Provision (Reversal) *3			Allowance of purchased loans during the reporting period		Charge-offs *4			Recoveries		Other *5			Ending balance *3		Collective (pool) assessment		Individual assessment
Allowance for credit losses :
Installment loans to consumer borrowers:
Real estate loans
Japan	¥	5,922	¥	63		¥	0	¥	(74	)	¥	12	¥	(1	)	¥	5,922	¥	5,384	¥	538
Overseas		470		(35	)		0		0			3		(15	)		423		423		0
Card loans
Japan		12,984		(122	)		0		(443	)		3		1			12,423		11,722		701
Other
Japan		8,359		2,675			0		(2,094	)		4		0			8,944		6,186		2,758
Overseas		1,275		205			0		(414	)		0		31			1,097		896		201
Installment loans to corporate borrowers:
Non-recourse loans
Japan		32		14			0		0			0		(1	)		45		45		0
The Americas		3,450		(559	)		0		0			0		37			2,928		2,694		234
Real estate companies
Japan		901		84			0		(3	)		14		0			996		740		256
Overseas		1,539		(438	)		0		0			0		8			1,109		1,109		0
Commercial, industrial companies
Japan		1,938		(64	)		0		(147	)		7		1			1,735		574		1,161
Overseas		18,763		1,116			0		(1,345	)		29		110			18,673		14,093		4,580
Purchased loans *1		1,835		(86	)		1,752		(1,811	)		9		3			1,702		639		1,063
Net investment in leases:		16,522		672			0		(998	)		10		37			16,243		12,758		3,485
Subtotal		73,990		3,525			1,752		(7,329	)		91		211			72,240		57,263		14,977
Other financial assets measured at amortized cost *2		6,005		1,587			0		(573	)		11		14			7,044		638		6,406
Total	¥	79,995	¥	5,112		¥	1,752	¥	(7,902	)	¥	102	¥	225		¥	79,284	¥	57,901	¥	21,383

– 62 –

	Three months ended September 30, 2021
	Millions of yen
	Beginning balance		Provision (Reversal) *3			Allowance of purchased loans during the reporting period		Charge-offs *4			Recoveries		Other *5			Ending balance *3		Collective (pool) assessment		Individual assessment
Allowance for credit losses :
Installment loans to consumer borrowers:
Real estate loans
Japan	¥	5,877	¥	82		¥	0	¥	(41	)	¥	5	¥	(1	)	¥	5,922	¥	5,384	¥	538
Overseas		487		(50	)		0		0			0		(14	)		423		423		0
Card loans
Japan		12,562		61			0		(202	)		2		0			12,423		11,722		701
Other
Japan		8,850		1,134			0		(1,042	)		2		0			8,944		6,186		2,758
Overseas		1,187		103			0		(224	)		0		31			1,097		896		201
Installment loans to corporate borrowers:
Non-recourse loans
Japan		31		15			0		0			0		(1	)		45		45		0
The Americas		2,951		(65	)		0		0			0		42			2,928		2,694		234
Real estate companies
Japan		905		86			0		(1	)		6		0			996		740		256
Overseas		1,416		(316	)		0		0			0		9			1,109		1,109		0
Commercial, industrial companies
Japan		1,795		80			0		(145	)		4		1			1,735		574		1,161
Overseas		19,112		557			0		(1,135	)		3		136			18,673		14,093		4,580
Purchased loans *1		1,815		(66	)		1,537		(1,589	)		7		(2	)		1,702		639		1,063
Net investment in leases:		16,335		399			0		(521	)		8		22			16,243		12,758		3,485
Subtotal		73,323		2,020			1,537		(4,900	)		37		223			72,240		57,263		14,977
Other financial assets measured at amortized cost *2		6,216		866			0		(54	)		7		9			7,044		638		6,406
Total	¥	79,539	¥	2,886		¥	1,537	¥	(4,954	)	¥	44	¥	232		¥	79,284	¥	57,901	¥	21,383

– 63 –

	March 31, 2022
	Millions of yen
	Ending balance *3		Collective (pool) assessment		Individual assessment
Allowance for credit losses :
Installment loans to consumer borrowers:
Real estate loans
Japan	¥	5,716	¥	5,211	¥	505
Overseas		455		455		0
Card loans
Japan		10,019		9,423		596
Other
Japan		5,204		2,946		2,258
Overseas		1,105		961		144
Installment loans to corporate borrowers:
Non-recourse loans
Japan		81		81		0
The Americas		2,691		1,836		855
Real estate companies
Japan		617		490		127
Overseas		735		735		0
Commercial, industrial companies
Japan		1,337		505		832
Overseas		18,296		13,367		4,929
Purchased loans *1		1,575		608		967
Net investment in leases:		16,303		12,480		3,823
Subtotal		64,134		49,098		15,036
Other financial assets measured at amortized cost *2		7,282		562		6,720
Total	¥	71,416	¥	49,660	¥	21,756

– 64 –

	Six months ended September 30, 2022
	Millions of yen
	Beginning balance		Provision (Reversal) *3			Allowance of purchased loans during the reporting period		Charge-offs *4			Recoveries		Other *5		Ending balance *3		Collective (pool) assessment		Individual assessment
Allowance for credit losses :
Installment loans to consumer borrowers:
Real estate loans
Japan	¥	5,716	¥	(0	)	¥	0	¥	(82	)	¥	13	¥	1	¥	5,648	¥	5,153	¥	495
Overseas		455		(2	)		0		0			0		3		456		456		0
Card loans
Japan		10,019		228			0		(265	)		4		0		9,986		9,357		629
Other
Japan		5,204		2,152			0		(865	)		4		0		6,495		4,167		2,328
Overseas		1,105		286			0		(206	)		0		137		1,322		1,187		135
Installment loans to corporate borrowers:
Non-recourse loans
Japan		81		1			0		0			0		0		82		82		0
The Americas		2,691		(944	)		0		0			0		122		1,869		857		1,012
Real estate companies
Japan		617		(21	)		0		0			13		1		610		489		121
Overseas		735		(98	)		0		(14	)		0		57		680		680		0
Commercial, industrial companies
Japan		1,337		256			0		(277	)		7		0		1,323		475		848
Overseas		18,296		114			0		(1,825	)		310		3,144		20,039		16,169		3,870
Purchased loans *1		1,575		(242	)		2,095		(2,309	)		56		12		1,187		563		624
Net investment in leases:		16,303		582			0		(1,430	)		25		760		16,240		12,030		4,210
Subtotal		64,134		2,312			2,095		(7,273	)		432		4,237		65,937		51,665		14,272
Other financial assets measured at amortized cost *2		7,282		157			0		(4,567	)		15		334		3,221		629		2,592
Total	¥	71,416	¥	2,469		¥	2,095	¥	(11,840	)	¥	447	¥	4,571	¥	69,158	¥	52,294	¥	16,864

– 65 –

	Three months ended September 30, 2022
	Millions of yen
	Beginning balance		Provision (Reversal) *3			Allowance of purchased loans during the reporting period		Charge-offs *4			Recoveries			Other *5			Ending balance *3		Collective (pool) assessment		Individual assessment
Allowance for credit losses :
Installment loans to consumer borrowers:
Real estate loans
Japan	¥	5,725	¥	(80	)	¥	0	¥	(3	)	¥	5		¥	1		¥	5,648	¥	5,153	¥	495
Overseas		471		1			0		0			0			(16	)		456		456		0
Card loans
Japan		9,933		209			0		(158	)		2			0			9,986		9,357		629
Other
Japan		5,915		1,038			0		(460	)		2			0			6,495		4,167		2,328
Overseas		1,164		242			0		(140	)		0			56			1,322		1,187		135
Installment loans to corporate borrowers:
Non-recourse loans
Japan		65		17			0		0			0			0			82		82		0
The Americas		2,235		(218	)		0		0			0			(148	)		1,869		857		1,012
Real estate companies
Japan		600		4			0		0			5			1			610		489		121
Overseas		630		54			0		(14	)		0			10			680		680		0
Commercial, industrial companies
Japan		1,206		220			0		(107	)		4			0			1,323		475		848
Overseas		18,720		78			0		(190	)		281			1,150			20,039		16,169		3,870
Purchased loans *1		1,546		(214	)		2,067		(2,261	)		56			(7	)		1,187		563		624
Net investment in leases:		16,665		123			0		(650	)		18			84			16,240		12,030		4,210
Subtotal		64,875		1,474			2,067		(3,983	)		373			1,131			65,937		51,665		14,272
Other financial assets measured at amortized cost *2		2,976		161			0		(31	)		(12	)		127			3,221		629		2,592
Total	¥	67,851	¥	1,635		¥	2,067	¥	(4,014	)	¥	361		¥	1,258		¥	69,158	¥	52,294	¥	16,864

Notes:	1.	Loans held for sale and policy loan receivables of an insurance entity are not scope to allowance for credit losses.
	2.	Held-to-maturity debt securities held by the Company and subsidiaries consist of Japanese government bonds (JGBs) and other securities secured by JGBs. There was no allowance for credit losses on these held-to-maturity debt securities. And there is no delinquency or on non-accrual status on held-to-maturity debt securities.

– 66 –

*1 Purchased loans represent loans with evidence of deterioration of credit quality since origination and for which it is probable at acquisition that collection of all contractually required payments from the debtors is unlikely.

*2 The allowance for other financial assets measured at amortized cost includes the allowance for credit losses on financial receivables, such as loans to affiliates and accounts receivable. Other financial assets measured at amortized cost are mainly “Trade notes, accounts and other receivables”, and loans to affiliates included in “Investment in affiliates” on the consolidated balance sheets.

*3 “Provision for credit losses” in the consolidated statements of income amounted to provisions of  ¥2,106  million and  ¥1,674  million during the six months ended September 30, 2021 and 2022, provisions of  ¥2,361  million and  ¥1,426 million during the three months ended September 30, 2021 and 2022, respectively. “Allowance for credit losses” on the consolidated balance sheets amounted to ¥69,459 million and ¥66,975 million as of March 31, 2022 and September 30, 2022, respectively. The reconciliation between the above table and the amounts reported on the consolidated financial statements during the six and three months ended September 30, 2021 and 2022, and as of March 31, 2022 and September 30, 2022 are as follows:

	Millions of yen
	Six months ended September 30, 2021			Three months ended September 30, 2021			March 31, 2022			Six months ended September 30, 2022			Three months ended September 30, 2022			September 30, 2022
Net investment in leases	¥	672		¥	399		¥	16,303		¥	582		¥	123		¥	16,240
Installment loans		2,853			1,621			47,831			1,730			1,351			49,697
Subtotal in the above table		3,525			2,020			64,134			2,312			1,474			65,937
Other financial assets measured at amortized cost		1,587			866			7,282			157			161			3,221
Total in the above table		5,112			2,886			71,416			2,469			1,635			69,158
Off-balance sheet credit exposures *3(a)		(2,369	)		(468	)		0			(868	)		(225	)		0
Available-for-sale debt securities *3(b)		0			0			0			(5	)		0			0
Less: Loans to affiliates *3(c)		(637	)		(57	)		(1,957	)		78			16			(2,183	)
Amount reported on the consolidated financial statements	¥	2,106		¥	2,361		¥	69,459		¥	1,674		¥	1,426		¥	66,975

*3(a) The allowance for off-balance sheet credit exposure were ¥22,120 million and ¥22,023 million as of March 31, 2022 and September 30, 2022, respectively, and the amounts are recorded in “Other liabilities” on the consolidated balance sheets. For further information, see Note 23 “Commitments, Guarantees and Contingent Liabilities.”

*3(b) The allowance for available-for-sale debt securities were ¥153 million and ¥172 million as of March 31, 2022 and September 30, 2022, respectively, and the amounts are recorded as a reduction in “Investments in securities” on the consolidated balance sheets. For further information, see Note 8 “Investment in Securities.”

*3(c) The provision for credit losses on loans to affiliates were a provision of  ¥637  million and a reversal of  ¥78  million during the six months ended September 30, 2021 and 2022, a provision of ¥57  million and a reversal of  ¥16 million during the three months ended September 30, 2021 and 2022, respectively, and the amounts are recorded in “Equity in net income (loss) of affiliates” in the consolidated statements of income. The allowance for credit losses on loans to affiliates were ¥1,957 million and ¥2,183 million as of March 31, 2022 and September 30, 2022, respectively, and the amounts are recorded as a reduction in “Investments in affiliates” on the consolidated balance sheets.

*4 Included in Charge-off in write-offs of purchased loans at acquisition date were  ¥1,752 million and ¥2,095  million during the six months ended September 30, 2021 and 2022, ¥1,537 million and ¥2,067  million during the three months ended September 30, 2021 and 2022, respectively.

*5 Other mainly includes foreign currency translation adjustments and increases or decreases in allowance due to consolidation or deconsolidation of subsidiaries.

– 67 –

The following table provides information about purchased loans which were acquired for the six and three months ended September 30, 2021 and 2022:

	Millions of yen
	Six months ended September 30, 2021		Six months ended September 30, 2022
Purchase price	¥	1,420	¥	1,940
Allowance for credit losses at acquisition date		1,752		2,095
Discount or premium attributable to other factors		122		226
Par value	¥	3,294	¥	4,261
	Millions of yen
	Three months ended September 30, 2021		Three months ended September 30, 2022
Purchase price	¥	460	¥	1,537
Allowance for credit losses at acquisition date		1,537		2,067
Discount or premium attributable to other factors		30		208
Par value	¥	2,027	¥	3,812

The Company and its subsidiaries estimate an allowance for credit losses for all credit losses expected to occur in future over the remaining life of financial assets, and recognize the allowance adequately based on management judgement. In developing the allowance for credit losses, the Company and its subsidiaries consider, among other things, the following factors in collective assessment and individual assessment by each portfolio:

• business characteristics and financial conditions of obligors;

• prior charge-off experience;

• current delinquencies and delinquency trends;

• value of underlying collateral and guarantees; and

• current economic and business conditions and expected outlook in future.

The Company and its subsidiaries manage credit risk using various indicators specific to the region, industry, and types of assets, in accordance with the group risk management policy. For credit transactions, the basic group policy is to obtain sufficient collateral and guarantees, and to diversify industries and borrowers, and the Company and its subsidiaries comprehensively evaluate and monitor the financial condition and cash flows of borrowers, underlying collateral and guarantees, and profitability. The Company and its subsidiaries also manage exposure to potentially high-risk markets by establishing appropriate credit limits through portfolio analysis.

Due to the diversity of assets and risk indicators held by the Company and its subsidiaries, the Company and its subsidiaries monitor the credit quality indicators as performing and

non-performing

assets as indicators that are common across all classes. The category of

non-performing

assets includes financing receivables for debtors who have filed for insolvency proceedings, whose bank transactions are suspended, whose bills are dishonored, whose businesses have deteriorated, whose repayment is

past-due

90 days or more, financing receivables modified as troubled debt restructurings, and performing assets include all other financing receivables. Regarding purchased loans, they are classified as

non-performing

assets when it is probable that the acquisition cost of purchased loans cannot be collected, while all the other purchased loans are included in the category of performing assets.

When certain performing financial assets mainly have similar risk characteristics to other financial assets, the performing financial assets are collectively evaluated as a pool. On the contrary, when financial assets do not have similar risk characteristics to other financial assets, the financial assets are evaluated individually.

Loans to consumer borrowers

Loans to consumer borrowers mainly consist of real estate loans and card loans.

The credit quality of real estate loans is affected by the cash flows derived from the property and its collateral value.

– 68 –

The credit quality of card loans is affected by the repayment ability of customers such as customer credit standing or payment history.

The Company and its subsidiaries use these factors to estimate the allowance for credit losses because they are reflected in the probability of default and loss given default in each portfolio.

Loans to corporate borrowers

Loans to corporate borrowers are classified into

non-recourse

loans and loans other than

non-recourse

loans.

The credit quality of

non-recourse

loans for which cash flows from real estate are the source of repayment depends mainly on the real estate collateral value.

Loans other than

non-recourse

loans are classified into either real estate companies or commercial, industrial and other companies, each of which are further divided into Japan and overseas.

The credit quality of real estate companies is affected by mainly Japanese and Americas real estate markets and trends.

The credit quality of commercial, industrial and other companies, which consist of various industries, is affected mainly by broader financial and economic conditions and trends in Japan, the Americas and Asian countries.

The allowance for credit losses for loans to corporate borrowers is estimated by considering, among others, debtors’ situation, as well as economic conditions and trends in its industries, the value of underlying collateral and guarantees, and probability of default and loss given default.

Net investment in leases

Net investment in leases consists of leases of various equipment types, including office equipment, industrial machinery, transportation equipment and real estate properties. The allowance for credit losses for net investment in leases is estimated based on the value of the underlying leased assets, debtors’ situation, economic conditions and trends in its industries, and probability of default and loss given default.

In common with portfolio segments, the forecasted future economic indicators correlated with the prior

charge-off

experience are reflected to the estimate of the allowance for credit losses. Economic indicators correlated with prior

charge-off

experience are determined over the reasonable and supportable forecasted period. Economic indicators include GDP growth rates, consumer price indices, unemployment rates, and government bond interest rates. It also considers forward-looking scenarios of how the selected economic indicators will change in the future. The Company and its subsidiaries use the latest economic forecasts available from the economic reports published by the government and the Financial Services Agency, the Bank of Japan and third-party information providers as economic indicators. For the impact of the spread of

COVID-19,

the Company and its subsidiaries revise forward-looking scenarios, as necessary, with a quantitative adjustment based on the analysis of impact to the portfolios and the referenced economic indicators.

On the other hand, for periods beyond which the Company and its subsidiaries are able to make or obtain reasonable and supportable forecasts of future economic indicators of the entire life of the financial asset, expected credit losses are estimated for the remaining life mainly using an appropriate reversion approach, mainly immediate reversion to historical credit loss information.

There have been no significant changes during the six months ended September 30, 2022 to methodologies and economic indicators used to estimate the allowance for Credit Losses.

When

non-performing

financial assets with deteriorated credit quality have similar risk characteristics to other financial assets, the allowance for credit losses is collectively evaluated based on mainly loss given default. On the other hand, if the

non-performing

financial assets do not have similar risk characteristics to other financial assets, the allowance for credit losses is individually evaluated.

In the individual assessment the allowance for credit losses is estimated individually based on the present value of expected future cash flows, the observable market price or the fair value of the collateral securing the financial receivables if the financial receivables are collateral-dependent.

– 69 –

The collateral-dependent financial receivables are defined as the finance receivables, which a debtor would be in financial difficulty and the collection significantly depend on the collateral. These financial receivables are mainly

non-recourse

loans and purchased loans for which cash flows from underlying real estate is the source of repayment.

For

non-recourse

loans, their collection depends on the real estate collateral value, which may decline as a result of a decrease in liquidity of the real estate market, a rise in vacancy rate of rental properties, a fall in rents and other factors.

For purchased loans, their collection may decrease due to a decline in the real estate collateral value and debtors’ creditworthiness. Thus, the changes in these risks affect the amount of the allowance for credit losses.

In common with all portfolio segments, the Company and its subsidiaries charge off doubtful receivables when the likelihood of any future collection is believed to be minimal, mainly based upon an evaluation of the relevant debtors’ creditworthiness and the liquidation status of collateral.

– 70 –

The following table provides information about the origination years of financial assets as of March 31, 2022 and September 30, 2022. Card loans to consumer borrowers with a revolving repayment feature that cannot be classified into the origination year are excluded from the table.

March 31, 2022
Millions of yen
Portfolio segment	Origination year (years ended March 31)
Class
Credit Quality	2022		2021		2020		2019		2018		Prior		Total
Consumer borrowers:
Performing	¥	322,924	¥	314,935	¥	387,988	¥	314,163	¥	202,309	¥	595,321	¥	2,137,640
Non-Performing		8,282		4,595		3,852		2,098		961		11,915	¥	31,703
Real estate loans
Performing		302,695		309,893		382,612		311,959		198,974		594,612	¥	2,100,745
Non-Performing		26		94		489		380		222		11,474	¥	12,685
Other*
Performing		20,229		5,042		5,376		2,204		3,335		709	¥	36,895
Non-Performing		8,256		4,501		3,363		1,718		739		441	¥	19,018
Corporate borrowers:
Performing		487,433		188,634		283,950		127,128		96,851		111,640	¥	1,295,636
Non-Performing		412		3,184		4,138		4,747		14,562		21,000	¥	48,043
Non-recourse loans
Japan
Performing		26,991		6,686		24,244		5,256		2,750		8,158	¥	74,085
The Americas
Performing		0		5,547		51,467		11,744		7,721		1,397	¥	77,876
Non-Performing		0		64		0		1,587		0		1,391	¥	3,042
Other than non-recourse loans
Real estate companies in Japan
Performing		102,719		48,420		37,845		28,727		24,481		34,111	¥	276,303
Non-Performing		0		245		938		71		0		1,050	¥	2,304
Real estate companies in overseas
Performing		24,104		26,751		41,644		2,256		5,478		740	¥	100,973
Non-Performing		0		0		0		371		12,790		7,717	¥	20,878
Commercial, industrial and other companies in Japan
Performing		75,273		24,808		26,748		13,746		6,457		13,806	¥	160,838
Non-Performing		156		457		1,392		124		392		773	¥	3,294
Commercial, industrial and other companies in overseas
Performing		258,346		76,422		102,002		65,399		49,964		53,428	¥	605,561
Non-Performing		256		2,418		1,808		2,594		1,380		10,069	¥	18,525
Purchased loans:
Performing		0		0		24		281		1,072		10,885	¥	12,262
Non-Performing		0		0		0		0		0		1,485	¥	1,485
Net investment in leases:
Performing		328,428		249,106		190,125		113,190		77,683		80,217	¥	1,038,749
Non-Performing		2,608		2,899		3,474		2,787		2,178		5,278	¥	19,224
Japan
Performing		119,538		154,757		133,589		91,691		68,087		78,283	¥	645,945
Non-Performing		402		605		1,044		1,103		1,247		2,109	¥	6,510
Overseas
Performing		208,890		94,349		56,536		21,499		9,596		1,934	¥	392,804
Non-Performing		2,206		2,294		2,430		1,684		931		3,169	¥	12,714
Other financial assets measured at amortized cost
Performing		14,287		2,220		345		0		817		17,743	¥	35,412
Non-Performing		0		0		58		0		1,586		0	¥	1,644
Total (excluding revolving repayment card loans)
Performing	¥	1,153,072	¥	754,895	¥	862,432	¥	554,762	¥	378,732	¥	815,806	¥	4,519,699
Non-Performing	¥	11,302	¥	10,678	¥	11,522	¥	9,632	¥	19,287	¥	39,678	¥	102,099

– 71 –

September 30, 2022
Millions of yen
Portfolio segment	Origination year (years ended March 31)													Total
Class
Credit Quality	2023		2022		2021			2020		2019		Prior
Consumer borrowers:
Performing	¥	199,452	¥	235,815	¥	300,255		¥	376,894	¥	304,989	¥	718,803	¥	2,136,208
Non-Performing		6,128		6,361		3,649			3,167		1,542		13,164	¥	34,011
Real estate loans
Performing		182,957		219,738		296,600			373,800		303,520		715,494	¥	2,092,109
Non-Performing		3		71		171			700		290		12,383	¥	13,618
Other*
Performing		16,495		16,077		3,655			3,094		1,469		3,309	¥	44,099
Non-Performing		6,125		6,290		3,478			2,467		1,252		781	¥	20,393
Corporate borrowers:
Performing		222,517		432,629		155,614			231,115		135,561		175,726	¥	1,353,162
Non-Performing		245		6,830		4,135			3,401		2,683		29,721	¥	47,015
Non-recourse loans
Japan
Performing		9,936		19,468		6,695			24,152		5,230		7,903	¥	73,384
The Americas
Performing		1,795		0		5,611			32,998		13,899		1,372	¥	55,675
Non-Performing		0		0		75			0		0		3,715	¥	3,790
Other than non-recourse loans
Real estate companies in Japan
Performing		60,825		66,814		40,333			30,886		24,834		52,311	¥	276,003
Non-Performing		0		233		0			987		68		1,189	¥	2,477
Real estate companies in overseas
Performing		30,490		15,249		9,450			11,751		2,558		1,300	¥	70,798
Non-Performing		0		0		803	��		0		439		13,825	¥	15,067
Commercial, industrial and other companies in Japan
Performing		35,852		45,863		19,727			22,291		11,618		16,822	¥	152,173
Non-Performing		226		126		449			554		166		619	¥	2,140
Commercial, industrial and other companies in overseas
Performing		83,619		285,235		73,798			109,037		77,422		96,018	¥	725,129
Non-Performing		19		6,471		2,808			1,860		2,010		10,373	¥	23,541
Purchased loans:
Performing		0		399		0			23		573		12,257	¥	13,252
Non-Performing		0		0		0			0		0		1,066	¥	1,066
Net investment in leases:
Performing		239,698		331,966		179,392			138,148		74,088		99,260	¥	1,062,552
Non-Performing		1,855		3,933		2,866			2,869		2,480		6,388	¥	20,391
Japan
Performing		99,873		157,370		116,101			99,783		60,709		92,728	¥	626,564
Non-Performing		36		475		643			941		880		2,695	¥	5,670
Overseas
Performing		139,825		174,596		63,291			38,365		13,379		6,532	¥	435,988
Non-Performing		1,819		3,458		2,223			1,928		1,600		3,693	¥	14,721
Other financial assets measured at amortized cost
Performing		2,830		0		2,091			316		0		33,859	¥	39,096
Non-Performing		0		0		0			0		0		1,876	¥	1,876
Total (excluding revolving repayment card loans)
Performing	¥	664,497	¥	1,000,809	¥	637,352		¥	746,496	¥	515,211	¥	1,039,905	¥	4,604,270
Non-Performing		8,228		17,124		10,650			9,437		6,705		52,215	¥	104,359

Note: Loans held for sale and policy loan receivables of an insurance entity are not included in the table above.

* Other in loans to consumer borrowers includes claims receivable arising from payments on guarantee of consumer loans. For further information, see Note 23 “Commitments, Guarantees and Contingent Liabilities”.

– 72 –

The information about card loans to consumer borrowers with a revolving repayment feature that cannot be classified into the origination year as of March 31, 2022 and September 30, 2022 are as follows:

		March 31, 2022
		Millions of yen
Portfolio segment		Revolving repayment card loans		Modification of collection condition by relief of contract condition		Total—revolving repayment card loans		Total— origination year (excluding revolving repayment card loans)		Total— financial assets measured at amortized cost
Credit quality
Consumer borrowers:
Performing		¥	169,601	¥	0	¥	169,601	¥	4,519,699	¥	4,689,300
Non-Performing			671		3,415		4,086		102,099	¥	106,185
		September 30, 2022
		Millions of yen
Portfolio segment		Revolving repayment card loans		Modification of collection condition by relief of contract condition		Total—revolving repayment card loans		Total— origination year (excluding revolving repayment card loans)		Total— financial assets measured at amortized cost
Credit quality	��
Consumer borrowers:
Performing		¥	164,652	¥	0	¥	164,652	¥	4,604,270	¥	4,768,922
Non-Performing			1,054		3,473		4,527		104,359	¥	108,886

Of

non-performing

assets, the Company and its subsidiaries consider smaller balance homogeneous loans (including real estate loans and card loans, among others, which are not restructured) and net investment in leases as the 90 days or more

past-due

financing receivables not individually evaluated, and consider all others as the loans individually evaluated. After the Company and its subsidiaries have set aside a provision for those

non-performing

assets, the Company and its subsidiaries continue to monitor at least on a quarterly basis the quality of any underlying collateral, the business conditions of the debtors and other important factors in order to report to management and develop additional provision for credit losses as necessary.

– 73 –

The following table provides information about the

past-due

financial assets as of March 31, 2022 and September 30, 2022:

	March 31, 2022
		Millions of yen
		Past-due financing assets
Portfolio segment	Class	30-89 days past-due		90 days or more past-due		Total past-due		Total financing receivables
Consumer borrowers		¥	4,183	¥	5,637	¥	9,820	¥	2,343,030
	Real estate loans		1,473		2,262		3,735		2,113,430
	Card loans		371		503		874		173,687
	Other		2,339		2,872		5,211		55,913
Corporate borrowers			20,840		31,935		52,775		1,343,679
Non-recourse loans	Japan		0		0		0		74,085
	The Americas		514		3,042		3,556		80,918
Other than Non-recourse loans	Real estate companies in Japan		578		350		928		278,607
	Real estate companies in overseas		16,113		20,879		36,992		121,851
	Commercial, industrial and other companies in Japan		1,243		1,268		2,511		164,132
	Commercial, industrial and other companies in overseas		2,392		6,396		8,788		624,086
Net investment in leases			9,322		17,746		27,068		1,057,973
	Japan		2,252		5,782		8,034		652,455
	Overseas		7,070		11,964		19,034		405,518
Total		¥	34,345	¥	55,318	¥	89,663	¥	4,744,682
	September 30, 2022
		Millions of yen
		Past-due financing assets
Portfolio segment	Class	30-89 days past-due		90 days or more past-due		Total past-due		Total financing receivables
Consumer borrowers		¥	3,492	¥	7,916	¥	11,408	¥	2,339,398
	Real estate loans		961		2,459		3,420		2,105,727
	Card loans		428		905		1,333		169,179
	Other		2,103		4,552		6,655		64,492
Corporate borrowers			5,202		23,377		28,579		1,400,177
Non-recourse loans	Japan		0		0		0		73,384
	The Americas		0		1,722		1,722		59,465
Other than Non-recourse loans	Real estate companies in Japan		194		291		485		278,480
	Real estate companies in overseas		0		15,067		15,067		85,865
	Commercial, industrial and other companies in Japan		1,448		1,323		2,771		154,313
	Commercial, industrial and other companies in overseas		3,560		4,974		8,534		748,670
Net investment in leases			14,836		19,043		33,879		1,082,943
	Japan		3,698		4,930		8,628		632,234
	Overseas		11,138		14,113		25,251		450,709
Total		¥	23,530	¥	50,336	¥	73,866	¥	4,822,518

Note: Loans held for sale, policy loans receivable of an insurance entity and purchased loans are not included in the table above.

In common with all classes, the Company and its subsidiaries consider financial assets as

past-due

financial assets when principal or interest is

past-due

30 days or more. Loans whose terms have been modified are not classified as

past-due

financial assets if the principals and interests are not

past-due

30 days or more in accordance with the modified terms.

– 74 –

The following table provides information about

non-accrual

of financial assets as of March 31, 2022 and September 30, 2022:

		March 31, 2022
		Millions of yen
		Beginning balance		Ending balance		Interest income recognized during the reporting period		Balance not associated allowance for credit losses among financial assets measured at amortized cost, which is suspending recognition of income
Non-accrual of financial assets:
Installment loans to consumer borrowers:
Real estate loans
	Japan	¥	1,976	¥	1,824	¥	193	¥	21
	Overseas		570		475		0		129
Card loans	Japan		1,115		503		35		0
Other
	Japan		5,970		2,391		208		0
	Overseas		691		519		0		39
Installment loans to corporate borrowers:
Non-recourse loans	The Americas		10,148		8,787		0		0
Real estate companies
	Japan		778		351		51		61
	Overseas		14,505		20,879		0		0
Commercial, industrial companies and other
	Japan		1,993		1,267		91		28
	Overseas		26,396		18,634		112		4,018
Net investment in leases			17,166		17,771		0		0
Total		¥	81,308	¥	73,401	¥	690	¥	4,296

– 75 –

		September 30, 2022
		Millions of yen
		Beginning balance		Ending balance		Interest income recognized during the reporting period		Balance not associated allowance for credit losses among financial assets measured at amortized cost, which is suspending recognition of income
Non-accrual of financial assets:
Installment loans to consumer borrowers:
Real estate loans
	Japan	¥	1,824	¥	2,013	¥	116	¥	225
	Overseas		475		498		0		153
Card loans	Japan		503		907		16		0
Other
	Japan		2,391		4,043		94		11
	Overseas		519		551		0		0
Installment loans to corporate borrowers:
Non-recourse loans	The Americas		8,787		3,156		0		0
Real estate companies
	Japan		351		291		31		76
	Overseas		20,879		15,067		0		0
Commercial, industrial companies and other
	Japan		1,267		1,323		25		72
	Overseas		18,634		24,255		0		2,320
Net investment in leases			17,771		20,487		0		0
Total		¥	73,401	¥	72,591	¥	282	¥	2,857

The Company and its subsidiaries suspend accruing interest on

past-due

installment loans and net investment in leases when principal or interest is

past-due

90 days or more, or earlier, if management determines that their collections are doubtful based on factors such as individual debtors’ creditworthiness, historical loss experience, current delinquencies and delinquency trends. Cash repayments received on

non-accrual

loans are applied first against past due interest and then any surpluses are applied to principal in view of the conditions of the contract and obligors. The Company and its subsidiaries return to accrual status

non-accrual

loans and net investment in leases when it becomes probable that the Company and its subsidiaries will be able to collect all amounts due according to the contractual terms of these loans and lease receivables, as evidenced by continual payments from the debtors. The period of such continual payments before returning to accrual status varies depending on factors that are considered relevant in assessing the debtor’s creditworthiness, such as the debtor’s business characteristics and financial conditions as well as relevant economic conditions and trends.

– 76 –

The following table provides information about troubled debt restructurings of financing receivables that occurred during the six and three months ended September 30, 2021 and 2022:

Six months ended September 30, 2021
		Millions of yen
Portfolio segment	Class	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Consumer borrowers		¥	4,047	¥	3,061
	Real estate loans		4		1
	Card loans		691		528
	Other		3,352		2,532
Corporate borrowers			4,996		4,866
Other than Non-recourse loans	Commercial, industrial and other companies in overseas		4,996		4,866
Total		¥	9,043	¥	7,927
Six months ended September 30, 2022
		Millions of yen
Portfolio segment	Class	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Consumer borrowers		¥	3,979	¥	3,175
	Real estate loans		5		3
	Card loans		713		619
	Other		3,261		2,553
Corporate borrowers			8,213		8,212
Other than Non-recourse loans	Commercial, industrial and other companies in overseas		8,213		8,212
Total		¥	12,192	¥	11,387

– 77 –

Three months ended September 30, 2021
		Millions of yen
Portfolio segment	Class	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Consumer borrowers		¥	1,903	¥	1,389
	Real estate loans		4		1
	Card loans		339		257
	Other		1,560		1,131
Corporate borrowers			4,988		4,862
Other than Non-recourse loans	Commercial, industrial and other companies in overseas		4,988		4,862
Total		¥	6,891	¥	6,251
Three months ended September 30, 2022
		Millions of yen
Portfolio segment	Class	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Consumer borrowers		¥	1,938	¥	1,527
	Real estate loans		5		3
	Card loans		332		284
	Other		1,601		1,240
Corporate borrowers			2,582		2,582
Other than Non-recourse loans	Commercial, industrial and other companies in overseas		2,582		2,582
Total		¥	4,520	¥	4,109

A troubled debt restructuring is defined as a restructuring of a financing receivable in which the creditor grants a concession to the debtor for economic or other reasons related to the debtor’s financial difficulties.

The Company and its subsidiaries offer various types of concessions to our debtors to protect as much of the investment as possible in troubled debt restructurings. For the debtors of all financing receivables, the Company and its subsidiaries offer concessions including an extension of the maturity date at an interest rate lower than the current market rate for a debt with similar risk characteristics. In addition, for the debtors of all financing receivables other than

non-recourse

loans, the Company and its subsidiaries also offer concessions such as a reduction of the loan principal or a temporary reduction in the interest payments. Furthermore, the Company and its subsidiaries may acquire collateral assets from the debtors in troubled debt restructurings to satisfy fully or partially the loan principal or past due interest.

In common with all portfolio segments, financing receivables modified as troubled debt restructurings are recognized as impaired and are individually evaluated for allowance for credit losses. In most cases, these financing receivables have already been considered impaired and individually evaluated for allowance for credit losses prior to the restructurings. However, as a result of the restructuring, the Company and its subsidiaries may recognize additional allowance for credit losses for the restructured receivables.

For the three months ended September 30, 2021 and 2022, while there are financial assets for which the payments were deferred other than those in the troubled debt restructuring stated above due to the spread of

COVID-19,

the payment deferrals, which are determined not to meet the definition of a troubled debt restructuring are not included in the troubled debt restructuring stated the above.

– 78 –

The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from September 30, 2021 and for which there was a payment default during the six and three months ended September 30, 2021:

Six months ended September 30, 2021
		Millions of yen
Portfolio segment	Class	Recorded investment
Consumer borrowers		¥	329
	Card loans		4
	Other		325
Total		¥	329
Three months ended September 30, 2021
		Millions of yen
Portfolio segment	Class	Recorded investment
Consumer borrowers		¥	19
	Card loans		2
	Other		17
Total		¥	19
The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from September 30, 2022 and for which there was a payment default during the six and three months ended September 30, 2022:
Six months ended September 30, 2022
		Millions of yen
Portfolio segment	Class	Recorded investment
Consumer borrowers		¥	395
	Card loans		7
	Other		388
Corporate borrowers			1,671
Other than Non-recourse loans	Commercial,industrialandothercompaniesinoverseas		1,671
Total		¥	2,066
Three months ended September 30, 2022
		Millions of yen
Portfolio segment	Class	Recorded investment
Consumer borrowers		¥	208
	Card loans		3
	Other		205
Corporate borrowers		¥	1,671
Other than Non-recourse loans	Commercial,industrialandothercompaniesinoverseas		1,671
Total		¥	1,879

The Company and its subsidiaries consider financing receivables whose terms have been modified in a restructuring as defaulted receivables when principal or interest is

past-due

90 days or more in accordance with the modified terms.

In common with all portfolio segments, the Company and its subsidiaries suspend accruing interest and may recognize additional allowance for credit losses as necessary for the defaulted financing receivables.

As of March 31, 2022 and September 30, 2022, there were no foreclosed residential real estate properties. The carrying amounts of installment loans in consumer real estate loans collateralized by residential real estate property that are in the process of foreclosure were

¥162 million and ¥171 million as of March 31, 2022 and September 30, 2022, respectively.

– 79 –

8. Investment in Securities

Investment in securities as of March 31, 2022 and September 30, 2022 consists of the following:

	Millions of yen
	March 31, 2022		September 30, 2022
Equity securities *	¥	560,643	¥	577,333
Trading debt securities		2,503		2,948
Available-for-sale debt securities		2,174,891		2,215,540
Held-to-maturity debt securities		114,312		115,461
Total	¥	2,852,349	¥	2,911,282

* The amount of assets under management of variable annuity and variable life insurance contracts included in equity securities were ¥185,115 million and ¥154,984 million as of March 31, 2022 and September 30, 2022, respectively. The amount of investment funds that are accounted for under the equity method included in equity securities were ¥90,650 million and ¥96,836 million as of March 31, 2022 and September 30, 2022, respectively. The amount of investment funds elected for the fair value option included in equity securities, and others were ¥11,709 million and ¥14,714 million as of March 31, 2022 and September 30, 2022, respectively.

Gains and losses realized from the sale of equity securities and net unrealized holding gains (losses) on equity securities are included in gains on investment securities and dividends, life insurance premiums and related investment income, and write-downs of securities. For further information, see Note 17 “Life Insurance Operations.” Net unrealized holding gains (losses) on equity securities held as of September 30, 2021 were gains of ¥31,919 million and ¥16,059 million for the six and three months ended September 30, 2021, respectively. Net unrealized holding gains (losses) on equity securities held as of September 30, 2022 were losses of ¥15,645 million and ¥949 

million for the six and three months ended September 30, 2022, respectively, which did not include net unrealized holding gains (losses) on both investment funds above mentioned.

Equity securities include

non-marketable

equity securities and preferred equity securities, etc. elected for the measurement alternative. Upward or downward adjustments resulting from observable price changes are included in gains on investment securities and dividends and life insurance premiums and related investment income. Impairments are included in write-downs of securities. The following tables provide information about impairment and upward or downward adjustments resulting from observable price changes as of March 31, 2022 and September 30, 2022, and for the six and three months ended September 30, 2021 and 2022.

	Millions of yen
	March 31, 2022							Six months ended September 30, 2021					Three months ended September 30, 2021
	Carrying value		Accumulated impairments and downward adjustments			Accumulated upward adjustments		Impairments and downward adjustments			Upward adjustments		Impairments and downward adjustments			Upward adjustments
Equity securities measured using the measurement alternative	¥	58,723	¥	(13,880	)	¥	401	¥	(19	)	¥	48	¥	(19	)	¥	12
	Millions of yen
	September 30, 2022							Six months ended September 30, 2022					Three months ended September 30, 2022
	Carrying value		Accumulated impairments and downward adjustments			Accumulated upward adjustments		Impairments and downward adjustments			Upward adjustments		Impairments and downward adjustments			Upward adjustments
Equity securities measured using the measurement alternative	¥	70,296	¥	(13,737	)	¥	1,328	¥	(368	)	¥	896	¥	(278	)	¥	27

– 80 –

Gains and losses realized from the sale of trading debt securities and net unrealized holding gains (losses) on trading debt securities are included in gains on investment securities and dividends. Net unrealized holding gains (losses) on trading debt securities held as of September 30, 2021 were gains of ¥88 million and ¥27 million, respectively, for the six and three months ended September 30, 2021. Net unrealized holding gains (losses) on trading debt securities held as of September 30, 2022 were gains of ¥198 million and ¥104 million, respectively, for the six and three months ended September 30, 2022.

Certain subsidiaries elected the fair value option for certain investments in investment funds, and others included in equity securities whose net asset values do not represent the fair value of investments due to the illiquid nature of these investments. The subsidiaries manage these investments on a fair value basis and the election of the fair value option enables the subsidiaries to reflect more appropriate assumptions to measure the fair value of these investments. As of March 31, 2022 and September 30, 2022, these investments were fair valued at ¥11,709 million and ¥14,714 million, respectively.

A certain subsidiary elected the fair value option for investments in foreign government bond securities included in

available-for-sale

debt securities to mitigate volatility in the consolidated statements of income caused by the difference in recognition of gain or loss that would otherwise exist between the foreign government bond securities and the derivatives used to reduce the risks of fluctuations in market interest rates and exchange rates on these foreign government bond securities. As of March 31, 2022, there were no such investments. As of September 30, 2022, these investments were fair valued at ¥263 million.

A certain subsidiary elected the fair value option for investments in foreign corporate debt securities included in

available-for-sale

debt securities to mitigate volatility in the consolidated statements of income caused by the difference in recognition of gain or loss that would otherwise exist between the foreign corporate debt securities and the derivatives used to reduce the risks of fluctuations in market interest rates and exchange rates on these foreign corporate debt securities. As of March 31, 2022 and September 30, 2022, these investments were fair valued at ¥7,644 million and ¥10,591 million, respectively.

– 81 –

The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of

available-for-sale

debt securities and

held-to-maturity

debt securities in each major security type as of March 31, 2022 and September 30, 2022 are as follows:

March 31, 2022

	Millions of yen
	Amortized cost		Allowance for credit losses			Gross unrealized gains		Gross unrealized losses			Fair value
Available-for-sale debt securities:
Japanese and foreign government bond securities	¥	905,004	¥	0		¥	5,178	¥	(77,569	)	¥	832,613
Japanese prefectural and foreign municipal bond securities		333,449		(132	)		2,482		(10,195	)		325,604
Corporate debt securities		873,178		0			10,014		(33,632	)		849,560
CMBS and RMBS in the Americas		29,349		0			112		(729	)		28,732
Other asset-backed securities and debt securities		135,445		(21	)		5,456		(2,498	)		138,382
		2,276,425		(153	)		23,242		(124,623	)		2,174,891
Held-to-maturity debt securities:
Japanese government bond securities and other		114,312		0			21,129		0			135,441
	¥	2,390,737	¥	(153	)	¥	44,371	¥	(124,623	)	¥	2,310,332
September 30, 2022
	Millions of yen
	Amortized cost		Allowance for credit losses			Gross unrealized gains		Gross unrealized losses			Fair value
Available-for-sale debt securities:
Japanese and foreign government bond securities	¥	986,444	¥	0		¥	3,476	¥	(194,045	)	¥	795,875
Japanese prefectural and foreign municipal bond securities		388,286		(156	)		736		(26,144	)		362,722
Corporate debt securities		895,483		0			12,131		(85,948	)		821,666
CMBS and RMBS in the Americas		45,298		0			29		(2,193	)		43,134
Other asset-backed securities and debt securities		199,027		(16	)		5,581		(12,449	)		192,143
		2,514,538		(172	)		21,953		(320,779	)		2,215,540
Held-to-maturity debt securities:
Japanese government bond securities and other		115,461		0			15,525		(104	)		130,882
	¥	2,629,999	¥	(172	)	¥	37,478	¥	(320,883	)	¥	2,346,422

– 82 –

The following table presents a rollforward of the allowance for credit losses for the six months ended September 30, 2021 and 2022:

	Millions of yen
	Six months ended September 30, 2021
	Foreign municipal bond securities		Total
Beginning	¥	120	¥	120
Increase (Decrease) from the effects of changes in foreign exchange rates		1		1
Ending	¥	121	¥	121

	Millions of yen
	Six months ended September 30, 2022
	Foreign municipal bond securities		Japanese other asset-   backed securities and   debt securities			Total
Beginning	¥	132	¥	21		¥	153
Additional increases (decreases) to the allowance for credit losses on AFS debt securities that had an allowance recorded in a previous period, net		0		(5	)		(5	)
Increase (Decrease) from the effects of changes in foreign exchange rates		24		0			24
Ending	¥	156	¥	16		¥	172

The following table presents a rollforward of the allowance for credit losses for the three months ended September 30, 2021 and 2022:

	Millions of yen
	Three months ended September 30, 2021
	Foreign municipal bond securities		Total
Beginning	¥	120	¥	120
Increase (Decrease) from the effects of changes in foreign exchange rates		1		1
Ending	¥	121	¥	121

	Millions of yen
	Three months ended September 30, 2022
	Foreign municipal bond securities		Japanese other asset-   backed securities and   debt securities		Total
Beginning	¥	147	¥	16	¥	163
Increase (Decrease) from the effects of changes in foreign exchange rates		9		0		9
Ending	¥	156	¥	16	¥	172

– 83 –

The following tables provide information about

available-for-sale

debt securities with gross unrealized losses (including allowance for credit losses) and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2022 and September 30, 2022, respectively:

March 31, 2022

	Millions of yen
	Less than 12 months					12 months or more					Total
	Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses
Available-for-sale debt securities:
Japanese and foreign government bond securities	¥	217,457	¥	(16,117	)	¥	521,633	¥	(61,452	)	¥	739,090	¥	(77,569	)
Japanese prefectural and foreign municipal bond securities		190,081		(6,509	)		46,391		(3,818	)		236,472		(10,327	)
Corporate debt securities		373,506		(19,340	)		156,687		(14,292	)		530,193		(33,632	)
CMBS and RMBS in the Americas		6,458		(98	)		17,542		(631	)		24,000		(729	)
Other asset-backed securities and debt securities		66,543		(995	)		37,432		(1,524	)		103,975		(2,519	)
	¥	854,045	¥	(43,059	)	¥	779,685	¥	(81,717	)	¥	1,633,730	¥	(124,776	)
September 30, 2022
	Millions of yen
	Less than 12 months					12 months or more					Total
	Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses
Available-for-sale debt securities:
Japanese and foreign government bond securities	¥	235,080	¥	(55,161	)	¥	505,054	¥	(138,884	)	¥	740,134	¥	(194,045	)
Japanese prefectural and foreign municipal bond securities		255,170		(17,989	)		60,292		(8,311	)		315,462		(26,300	)
Corporate debt securities		407,682		(45,126	)		195,657		(40,822	)		603,339		(85,948	)
CMBS and RMBS in the Americas		28,609		(1,326	)		13,206		(867	)		41,815		(2,193	)
Other asset-backed securities and debt securities		106,329		(5,921	)		41,913		(6,544	)		148,242		(12,465	)
	¥	1,032,870	¥	(125,523	)	¥	816,122	¥	(195,428	)	¥	1,848,992	¥	(320,951	)

– 84 –

The following table provides information about

available-for-sale

debt securities with gross unrealized losses for which allowance for credit losses were not recorded and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2022 and September 30, 2022, respectively:

March 31, 2022

	Millions of yen
	Less than 12 months					12 months or more					Total
	Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses
Available-for-sale debt securities:
Japanese and foreign government bond securities	¥	217,457	¥	(16,117	)	¥	521,633	¥	(61,452	)	¥	739,090	¥	(77,569	)
Japanese prefectural and foreign municipal bond securities		190,081		(6,509	)		43,338		(3,686	)		233,419		(10,195	)
Corporate debt securities		373,506		(19,340	)		156,687		(14,292	)		530,193		(33,632	)
CMBS and RMBS in the Americas		6,458		(98	)		17,542		(631	)		24,000		(729	)
Other asset-backed securities and debt securities		66,489		(974	)		37,432		(1,524	)		103,921		(2,498	)
	¥	853,991	¥	(43,038	)	¥	776,632	¥	(81,585	)	¥	1,630,623	¥	(124,623	)
September 30, 2022
	Millions of yen
	Less than 12 months					12 months or more					Total
	Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses
Available-for-sale debt securities:
Japanese and foreign government bond securities	¥	235,080	¥	(55,161	)	¥	505,054	¥	(138,884	)	¥	740,134	¥	(194,045	)
Japanese prefectural and foreign municipal bond securities		255,170		(17,989	)		56,680		(8,155	)		311,850		(26,144	)
Corporate debt securities		407,682		(45,126	)		195,657		(40,822	)		603,339		(85,948	)
CMBS and RMBS in the Americas		28,609		(1,326	)		13,206		(867	)		41,815		(2,193	)
Other asset-backed securities and debt securities		106,270		(5,905	)		41,913		(6,544	)		148,183		(12,449	)
	¥	1,032,811	¥	(125,507	)	¥	812,510	¥	(195,272	)	¥	1,845,321	¥	(320,779	)

The number of investment securities that were in an unrealized loss position as of March 31, 2022 and September 30, 2022 were 963 and 1,199, respectively. The gross unrealized losses on these debt securities are attributable to a number of factors including changes in interest rates, credit spreads and market trends.

As of March 31, 2022 and September 30, 2022, the amount of accrued revenues on

available-for-sale

debt securities were ¥8,798 million and ¥11,738 million, respectively, which were included in other assets. The Company and its subsidiaries estimate credit losses and develop an allowance for credit losses for accrued interest receivables. There was no

allowance for credit losses for accrued interest receivables as of March 31, 2022 and September 30, 2022.

For

available-for-sale

debt securities, if the fair value is less than the amortized cost, the debt securities are impaired. The Company and its subsidiaries identify per each impaired security whether the decline of fair value is due to credit losses component or

non-credit

losses component. Impairment related to credit losses is recognized in earning through an allowance for credit losses. Impairment related to other factors than credit losses is recognized in other comprehensive income (loss), net of applicable income taxes. In estimating an allowance of credit losses, the Company and its subsidiaries consider the existence of credit losses if the present value of estimated cash flows is less than the amortized cost basis. When the Company and its subsidiaries intend to sell the debt securities for which an allowance for credit losses is previously established or it is more likely than not that the Company and its subsidiaries will be required to sell the debt securities before recovery of the amortized cost basis, the allowance for credit losses is fully

written-off

and the amortized cost is reduced to the fair value after recognizing additional impairment in earnings. In addition, the Company and its subsidiaries recognize in earnings the full difference between the amortized cost and the fair value of the debt securities by direct write-down, without any allowance for credit losses, if the debt securities are expected to be sold and the fair value is less than the amortized cost.

– 85 –

There were no credit losses related to available-for-sale debt securities recognized for the six months ended September 30, 2021. Reversals of credit losses related to available-for-sale debt securities recognized for the six months ended September 30, 2022 were resulting from Japanese other asset-backed securities and debt securities due to the reduced credit risk by postponement of maturity date. The evaluation of credit losses with available-for-sale debt securities is compared to the amortized cost of debt securities with the present value of cash flows estimated based on a number of overall conditions, including estimated fair value of the underlying receivables and the repayment priority of the securities. Because the Company and its subsidiaries do not intend to sell the debt security or it is more likely than not that the Company and its subsidiaries will be required to sell the debt security before recovery of its amortized cost basis, the Company and its subsidiaries recognized the allowance for credit losses.

Unrealized losses on

available-for-sale

debt securities mainly result from changes in market interest rates and foreign exchange rates, and changes in risk premiums. In order to evaluate the recoverability of the

available-for-sale

debt securities, the Company and its subsidiaries utilize all available information such as issuer’s financial condition and business outlook. The fair value of Japanese and foreign government bond securities, Japanese prefectural and foreign municipal bond, and corporate debt securities is mainly estimated based on prices for similar assets. If there are no prices for similar assets available, the fair value of these securities is estimated by using discounted cash flow methodologies and broker quotes. The fair value of CMBS and RMBS in the Americas and other asset-backed securities and debt securities refers to prices from independent pricing service vendors and brokers, such as trading prices and bit prices. If the Company and its subsidiaries cannot rely on such prices, the fair value is calculated by using discounted cash flow methodologies and broker quotes. In discounted cash flow methodologies, future cash flows estimated based on a number of assumptions such as default rate, prepayment rate, and seniority are discounted by discount rate adjusted for credit risk and liquidity risk.

There were no

available-for-sale

debt securities accounted for as purchased credit deterioration financial assets acquired for the six months ended September 30, 2021 and 2022.

– 86 –

9. Transfer of Financial Assets

The Company and its subsidiaries have securitized and transferred financial assets such as installment loans (commercial mortgage loans, housing loans and other).

In the securitization process, these financial assets are transferred to SPEs that issue beneficial interests of the securitization trusts and securities backed by the financial assets to investors. The cash flows collected from these assets transferred to the SPEs are then used to repay these asset-backed beneficial interests and securities. As the transferred assets are isolated from the Company and its subsidiaries, the investors and the SPEs have no recourse to other assets of the Company and its subsidiaries in cases where the debtors or the issuers of the transferred financial assets fail to perform under the original terms of those financial assets.

The Company and its subsidiaries often have continuing involvement with transferred financial assets by retaining the servicing arrangements and the interests in the SPEs in the form of the beneficial interest of the securitization trusts. Those interests that continue to be held include interests in the transferred assets and are often subordinate to other tranche(s) of the securitization. Those beneficial interests that continue to be held by the Company and its subsidiaries are subject to credit risk, interest rate risk and prepayment risk on the securitized financial assets. With regards to these subordinated interests that the Company and its subsidiaries retain, they are subordinated to the senior investments and are exposed to different credit and prepayment risks, since they first absorb the risk of the decline in the cash flows from the financial assets transferred to the SPEs for defaults and prepayment of the transferred assets. If there is any excess cash remaining in the SPEs after payment to investors in the securitization of the contractual rate of returns, most of such excess cash is distributed to the Company and its subsidiaries for payments of the subordinated interests. SPEs used in securitization transactions have been consolidated if the Company and its subsidiaries are the primary beneficiary of the SPEs.

When the Company and its subsidiaries have transferred financial assets to a transferee that is not subject to consolidation, the Company and its subsidiaries account for the transfer as a sale if control over the transferred assets is surrendered.

For the six months ended September 30, 2021 and 2022, the amount of installment loans that has been derecognized due to new securitization and transfer of loans were ¥608,122 million and ¥512,156 million, respectively. For the six months ended September 30, 2021 and 2022, gains (losses) from the securitization and transfer of loans were ¥18,637 million and ¥11,156 million, respectively, which is included in finance revenues in the consolidated statements of income.

For the three months ended September 30, 2021 and 2022, the amount of installment loans that has been derecognized due to new securitization and transfer of loans were ¥316,281 million and ¥285,760 million, respectively. For the three months ended September 30, 2021 and 2022, gains (losses) from the securitization and transfer of loans were ¥9,585 million and ¥5,744 million, respectively, which is included in finance revenues in the consolidated statements of income.

A certain subsidiary originates and sells loans into the secondary market while retaining the obligation to service those loans. In addition, the subsidiary undertakes obligations to service loans originated by others. The servicing assets related to those servicing activities are included in other assets in the consolidated balance sheets and roll-forwards of the amount of the servicing assets for the six and three months ended September 30, 2021 and 2022 are as follows:

	Millions of yen
	Six months ended September 30, 2021			Six months ended September 30, 2022			Three months ended September 30, 2021			Three months ended September 30, 2022
Beginning balance	¥	63,754		¥	70,254		¥	63,725		¥	77,199
Increase mainly from loans sold with servicing retained		7,138			5,426			3,624			2,546
Decrease mainly from amortization		(6,362	)		(8,146	)		(2,894	)		(4,079	)
Increase from the effects of changes in foreign exchange rates		708			12,656			783			4,524
Ending balance	¥	65,238		¥	80,190		¥	65,238		¥	80,190

The fair value of the servicing assets as of March 31, 2022 and September 30, 2022 are as follows:
	Millions of yen
	March 31, 2022		September 30, 2022
Beginning balance	¥	74,135	¥	83,732
Ending balance	¥	83,732	¥	97,725

– 87 –

10. Variable Interest Entities

The Company and its subsidiaries use SPEs in the ordinary course of business.

These SPEs are not always controlled by voting rights, and there are cases where voting rights do not exist for these SPEs. The Company and its subsidiaries determine a variable interest entity (hereinafter, “VIE”) among those SPEs when (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including the equity holders or (b) as a group, the holders of the equity investment at risk do not have (1) the ability to make decisions about an entity’s activities that most significantly impact the entity’s economic performance through voting rights or similar rights, (2) the obligation to absorb the expected losses of the entity or (3) the right to receive the expected residual returns of the entity.

The Company and its subsidiaries perform a qualitative analysis to identify the primary beneficiary of VIEs. An enterprise that has both of the following characteristics is considered to be the primary beneficiary and therefore results in the consolidation of the VIE:

• the power to direct the activities of a VIE that most significantly impact the entity’s economic performance; and

• the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.

All facts and circumstances are taken into consideration when determining whether the Company and its subsidiaries have variable interests that would deem it the primary beneficiary and therefore require consolidation of the VIE. The Company and its subsidiaries make ongoing reassessment of whether they are the primary beneficiaries of a VIE.

The following are the factors that the Company and its subsidiaries are considering in a qualitative assessment:

• which activities most significantly impact the economic performance of the VIE and who has the power to direct such activities;

• characteristics of the Company and its subsidiaries’ variable interest or interests and other involvements (including involvement of related parties and de facto agents);

• involvement of other variable interest holders; and

• the entity’s purpose and design, including the risks that the entity was designed to create and pass through to its variable interest holders.

The Company and its subsidiaries generally consider the following types of involvement to be significant when determining the primary beneficiary:

• designing the structuring of a transaction;

• providing an equity investment and debt financing;

• being the investment manager, asset manager or servicer and receiving variable fees; and

• providing liquidity and other financial support.

The Company and its subsidiaries do not have the power to direct activities of a VIE that most significantly impact the VIE’s economic performance if that power is shared among multiple unrelated parties, and accordingly do not consolidate such VIE.

– 88 –

Information about VIEs (consolidated and

non-consolidated)

for the Company and its subsidiaries are as follows:

1. Consolidated VIEs

March 31, 2022

	Millions of yen
Types of VIEs	Total assets *1		Total liabilities *1		Assets which are pledged as collateral *2		Commitments *3
(a) VIEs for liquidating customer assets	¥	0	¥	0	¥	0	¥	0
(b) VIEs for acquisition of real estate and real estate development projects for customers		1,988		0		0		0
(c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business		60,762		12,576		16,241		0
(d) VIEs for corporate rehabilitation support business		214		5		0		0
(e) VIEs for investment in securities		132,805		302		0		45,241
(f) VIEs for securitizing financial assets such as finance lease receivable and loan receivable		223,807		160,434		223,807		0
(g) VIEs for securitization of loan receivable originated by third parties		542		1,093		542		0
(h) VIEs for power generation projects		278,660		219,476		260,551		42,742
(i) Other VIEs		199,186		89,672		174,807		0
Total	¥	897,964	¥	483,558	¥	675,948	¥	87,983
September 30, 2022
	Millions of yen
Types of VIEs	Total assets *1		Total liabilities *1		Assets which are pledged as collateral *2		Commitments *3
(a) VIEs for liquidating customer assets	¥	0	¥	0	¥	0	¥	0
(b) VIEs for acquisition of real estate and real estate development projects for customers		2,111		0		0		0
(c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business		56,134		13,048		16,141		0
(d) VIEs for corporate rehabilitation support business		655		4		0		0
(e) VIEs for investment in securities		163,792		399		0		70,125
(f) VIEs for securitizing financial assets such as finance lease receivable and loan receivable		247,605		173,607		247,605		0
(g) VIEs for securitization of loan receivable originated by third parties		636		1,285		636		0
(h) VIEs for power generation projects		283,670		175,596		197,180		38,078
(i) Other VIEs		179,254		71,805		145,196		0
Total	¥	933,857	¥	435,744	¥	606,758	¥	108,203

*1 The assets of most VIEs are used only to repay the liabilities of the VIEs, and the creditors of the liabilities of most VIEs have no recourse to other assets of the Company and its subsidiaries.

*2 The assets are pledged as collateral by VIE for financing of the VIE.

*3 This item represents remaining balance of commitments that could require the Company and its subsidiaries to provide investments or loans to the VIE.

– 89 –

2. Non-consolidated VIEs

March 31, 2022

	Millions of yen
			Carrying amount of the variable interests in the VIEs held by the Company and its subsidiaries				Maximum exposure to loss *
Types of VIEs	Total assets		Non-recourse loans		Investments
(a) VIEs for liquidating customer assets	¥	13,391	¥	405	¥	991	¥	1,396
(b) VIEs for acquisition of real estate and real estate development projects for customers		546,953		8,134		9,119		18,735
(c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business		0		0		0		0
(d) VIEs for corporate rehabilitation support business		0		0		0		0
(e) VIEs for investment in securities		6,901,686		0		79,050		123,674
(f) VIEs for securitizing financial assets such as finance lease receivable and loan receivable		154		0		2		2
(g) VIEs for securitization of loan receivable originated by third parties		1,231,246		0		15,254		15,254
(h) VIEs for power generation projects		9,103		0		402		402
(i) Other VIEs		914,801		3,140		15,098		32,123
Total	¥	9,617,334	¥	11,679	¥	119,916	¥	191,586
September 30, 2022
	Millions of yen
			Carrying amount of the variable interests in the VIEs held by the Company and its subsidiaries				Maximum exposure to loss *
Types of VIEs	Total assets		Non-recourse loans		Investments
(a) VIEs for liquidating customer assets	¥	109,573	¥	101	¥	991	¥	1,092
(b) VIEs for acquisition of real estate and real estate development projects for customers		639,689		8,203		9,385		19,070
(c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business		0		0		0		0
(d) VIEs for corporate rehabilitation support business		0		0		0		0
(e) VIEs for investment in securities		8,995,923		0		95,395		161,752
(f) VIEs for securitizing financial assets such as finance lease receivable and loan receivable		0		0		0		0
(g) VIEs for securitization of loan receivable originated by third parties		1,058,236		0		13,870		13,870
(h) VIEs for power generation projects		9,091		0		575		4,905
(i) Other VIEs		1,473,488		5,070		25,795		43,652
Total	¥	12,286,000	¥	13,374	¥	146,011	¥	244,341

* Maximum exposure to loss includes remaining balance of commitments that could require the Company and its subsidiaries to provide investments or loans to the VIE.

– 90 –

(a) VIEs for liquidating customer assets

The Company and its subsidiaries may use VIEs in structuring financing for customers to liquidate specific customer assets. The VIEs are typically used to provide a structure that is bankruptcy remote with respect to the customer and the use of VIE structure is requested by such customer. Such VIEs typically acquire assets to be liquidated from the customer, borrow

non-recourse

loans from financial institutions and have an equity investment made by the customer. The Company and its subsidiaries provide

non-recourse

loans to such VIEs and make investments in them. By using cash flows from the liquidated assets, these VIEs repay the loan and pay dividends to equity investors if sufficient funds exist.

With respect to variable interests of

non-consolidated

VIEs held by the Company and its subsidiaries,

non-recourse

loans are included in installment loans, and investments are mainly included in other assets in the Company’s consolidated balance sheets.

(b) VIEs for acquisition of real estate and real estate development projects for customers

Customers, and the Company and its subsidiaries, are involved with VIEs formed to acquire real estate and/or develop real estate projects. In each case, a customer establishes and makes an equity investment in a VIE that is designed to be bankruptcy remote from the customer. The VIEs acquire real estate and/or develop real estate projects.

The Company and its subsidiaries provide

non-recourse

loans to such VIEs and hold specified bonds issued by them and/or make investments in them. The Company and its subsidiaries have consolidated certain VIEs because the Company or its subsidiary effectively controls the VIEs by acting as the asset manager of the VIEs.

In the Company’s consolidated balance sheets, assets of consolidated VIEs are mainly included in cash and cash equivalents and investment in affiliates.

With respect to variable interests of

non-consolidated

VIEs held by the Company and its subsidiaries,

non-recourse

loans are included in installment loans, and investments are mainly included in investment in securities, investment in affiliates and other assets in the Company’s consolidated balance sheets. The Company and its subsidiaries concluded that the VIEs are not consolidated because the power to direct these VIEs is held by unrelated parties. In some cases, the Company and its subsidiaries concluded that the VIEs are not consolidated because the power to direct these VIEs is shared among multiple unrelated parties. Certain subsidiaries have commitment agreements by which the Company and its subsidiaries may be required to make additional investment in certain such

non-consolidated

VIEs.

(c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business

The Company and its subsidiaries establish VIEs and acquire real estate to borrow

non-recourse

loans from financial institutions and simplify the administration activities necessary for the real estate.

The Company and its subsidiaries consolidate such VIEs even though the Company and its subsidiaries may not have voting rights if substantially all of such VIEs’ subordinated interests are issued to the Company and its subsidiaries, and therefore the VIEs are controlled by and for the benefit of the Company and its subsidiaries.

In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in cash and cash equivalents, restricted cash, investment in operating leases, investment in securities, property under facility operations and other assets, and liabilities of those consolidated VIEs are mainly included in short-term debt, long-term debt and other liabilities.

(d) VIEs for corporate rehabilitation support business

Financial institutions, the Company and its subsidiaries are involved with VIEs established for the corporate rehabilitation support business. VIEs receive the funds from investors including the financial institutions, the Company and the subsidiary, and purchase loan receivables due from borrowers which have financial problems, but are deemed to have the potential to recover in the future. The servicing operations for the VIEs are conducted by the subsidiary.

The Company and its subsidiaries consolidated such VIEs since the Company and its subsidiaries have the majority of the investment share of such VIEs, and have the power to direct the activities of the VIEs that most significantly impact the entities’ economic performance through the servicing operations.

In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in installment loans, and liabilities of those consolidated VIEs are mainly included in other liabilities.

– 91 –

(e) VIEs for investment in securities

The Company and its subsidiaries have interests in VIEs that are investment funds and mainly invest in equity and debt securities. Such VIEs are managed by certain subsidiaries or fund management companies that are independent of the Company and its subsidiaries.

Certain subsidiaries consolidated certain such VIEs since the subsidiaries have the majority of the investment share of them, and have the power to direct the activities of those VIEs that most significantly impact the entities’ economic performance through involvement with the design of the VIEs or other means.

In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in investment in securities and investment in affiliates, and liabilities of those consolidated VIEs are mainly included in other liabilities. The Company and certain subsidiaries have commitment agreements by which the Company and the subsidiaries may be required to make additional investment or execute loans in certain such consolidated VIEs.

Variable interests of

non-consolidated

VIEs, which the Company and its subsidiaries have, are included in investment in securities in the Company’s consolidated balance sheets. The Company and its subsidiaries have commitment agreements by which the Company and its subsidiaries may be required to make additional investment in certain such

non-consolidated

VIEs.

(f) VIEs for securitizing financial assets such as finance lease receivable and loan receivable

The Company and its subsidiaries use VIEs to securitize financial assets such as loan receivables. In the securitization process, these financial assets are transferred to SPEs, and the SPEs issue beneficial interests or securities backed by the transferred financial assets to investors. After the securitization, the Company and its subsidiaries continue to hold a subordinated part of the securities and act as a servicer.

The Company and its subsidiaries consolidated such VIEs since the Company and its subsidiaries have the power to direct the activities that most significantly impact the entity’s economic performance by designing the securitization scheme and conducting servicing activities, and have a responsibility to absorb losses of the VIEs that could potentially be significant to the entities by retaining the subordinated part of the securities.

In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in restricted cash and installment loans, and liabilities of those consolidated VIEs are mainly included in long-term debt.

Variable interests of

non-consolidated

VIEs, which the Company and its subsidiaries have, are included in other assets in the Company’s consolidated balance sheets.

(g) VIEs for securitization of loan receivable originated by third parties

The Company and its subsidiaries invest in CMBS, RMBS and other asset-backed securities originated by third parties. In some cases of such securitization, certain subsidiaries hold the subordinated portion and the subsidiaries act as a special-servicer of the securitization transaction. As the special servicer, the subsidiaries have rights to dispose of real estate collateral related to the securitized commercial mortgage loans.

The subsidiaries consolidate certain of these VIEs when the subsidiaries have the power to direct the activities of the VIEs that most significantly impact the entities’ economic performance through its role as special-servicer, including the right to dispose of the collateral, and have a responsibility to absorb losses of the VIEs that could potentially be significant to the entities by holding the subordinated part of the securities.

In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in installment loans, and liabilities of those consolidated VIEs are mainly included in long-term debt.

Variable interests of

non-consolidated

VIEs, which the Company and its subsidiaries have, are included in investment in securities in the Company’s consolidated balance sheets.

(h) VIEs for power generation projects

The Company and its subsidiaries may use VIEs in power generation projects. VIEs receive the funds from the Company and its subsidiaries, construct solar power stations and coal-biomass

co-fired

power plants on acquired or leased lands, and sell the generated power to electric power companies. The Company and its subsidiaries have consolidated certain VIEs because the Company and its subsidiaries have the majority of the investment shares of such VIEs and effectively control the VIEs by acting as the asset manager of the VIEs.

– 92 –

In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in cash and cash equivalents, restricted cash, property under facility operations and other assets, and liabilities of those consolidated VIEs are mainly included in long-term debt, and other liabilities. The Company and certain subsidiaries have commitment agreements by which the Company and the subsidiaries may be required to make additional investment or execute loans in certain such consolidated VIEs.

Variable interests of

non-consolidated

VIEs, which the Company has, are included in investment in affiliates in the Company’s consolidated balance sheets. The Company has commitment agreements by which the Company may be required to make additional investment in certain such non-consolidated VIEs.

(i) Other VIEs

The Company and its subsidiaries are involved with other types of VIEs for various purposes. Consolidated and

non-consolidated

VIEs of this category are mainly kumiai structures. In addition, certain subsidiaries have consolidated VIEs that are not included in the categories (a) through (h) above, because the subsidiaries hold the subordinated portion of the VIEs and the VIEs are effectively controlled by the subsidiaries.

In Japan, certain subsidiaries provide investment products to their customers that employ a contractual mechanism known as a kumiai, which in part result in the subsidiaries forming a type of SPE. As a way to finance the purchase of aircraft or other large-ticket items to be leased to third parties, the Company and its subsidiaries arrange and market kumiai products to investors, who invest a portion of the funds necessary into the kumiai structure. The remainder of the purchase funds is borrowed by the kumiai structure in the form of a

non-recourse

loan from one or more financial institutions. The kumiai investors (and any lenders to the kumiai structure) retain all of the economic risks and rewards in connection with purchasing and leasing activities of the kumiai structure, and all related gains or losses are recorded on the financial statements of the investors in the kumiai. The Company and its subsidiaries are responsible for the arrangement and marketing of these products and may act as servicer or administrator in kumiai transactions. The fee income for the arrangement and administration of these transactions is recognized in the Company’s consolidated statements of income. In some cases, the Company and its subsidiaries make investments in the kumiai or its related SPE, and these VIEs are consolidated because the Company and its subsidiaries have a responsibility to absorb any significant potential loss through the investments and have the power to direct the activities that most significantly impact their economic performance. In other cases, the Company and its subsidiaries are not considered to be the primary beneficiary of the VIEs or kumiais because the Company and its subsidiaries did not make significant investments or guarantee or otherwise undertake any significant financial commitments or exposure with respect to the kumiai or its related SPE.

The Company may use VIEs for financing. The Company transfers its own held assets to SPEs, which borrow

non-recourse

loan from financial institutions and effectively pledge such assets as collateral. The Company continually holds subordinated interests in the SPEs and performs administrative work of such assets. The Company consolidates such SPEs because the Company has a right to direct the activities of them that most significantly impact their economic performance by setting up the scheme and performing administrative work of the assets and has the obligation to absorb expected losses of them by holding the subordinated interests.

In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in investment in operating leases, investment in affiliates, office facilities and other assets, and liabilities of those consolidated VIEs are mainly included in long-term debt and other liabilities.

With respect to variable interests of

non-consolidated

VIEs held by the Company and its subsidiaries,

non-recourse

loans are included in installment loans, and investments are mainly included in investment in securities and investment in affiliates in the Company’s consolidated balance sheets. Certain subsidiaries have commitment agreements by which the Company and its subsidiaries may be required to make additional investment in certain such

non-consolidated

VIEs.

– 93 –

11. Investment in Affiliates

Investment in affiliates at March 31, 2022 and September 30, 2022 consists of the following:

	Millions of yen
	March 31, 2022		September 30, 2022
Shares	¥	943,090	¥	1,067,957
Loans and others		34,943		38,613
	¥	978,033	¥	1,106,570

12. Redeemable Noncontrolling Interests

Changes in redeemable noncontrolling interests for the six months ended September 30, 2021 and 2022 are as follows:

	Millions of yen
	Six months ended September 30, 2021		Six months ended September 30, 2022
Beginning balance	¥	0	¥	0
Transaction with noncontrolling interests		0		865
Comprehensive income
Net income		0		12
Other comprehensive income
Net change of foreign currency translation adjustments		0		88
Total other comprehensive income		0		88
Comprehensive income		0		100
Ending balance	¥	0	¥	965

– 94 –

13. Accumulated Other Comprehensive Income (Loss)

Changes in each component of accumulated other comprehensive income (loss) attributable to ORIX Corporation Shareholders for the six months ended September 30, 2021 and 2022, are as follows:

	Six months ended September 30, 2021
	Millions of yen
	Net unrealized gains (losses) on investment in securities			Debt valuation adjustments			Defined benefit pension plans			Foreign currency translation adjustments			Net unrealized gains (losses) on derivative instruments			Accumulated other comprehensive income (loss)
Balance at March 31, 2021	¥	(16,208	)	¥	558		¥	(21,073	)	¥	(36,456	)	¥	(11,471	)	¥	(84,650	)
Net unrealized gains (losses) on investment in securities, net of tax of ¥(4,353) million		12,378															12,378
Reclassification adjustment included in net income, net of tax of ¥1,204 million		(4,058	)														(4,058	)
Debt valuation adjustments, net of tax of ¥17 million					(46	)											(46	)
Reclassification adjustment included in net income, net of tax of ¥6 million					(15	)											(15	)
Defined benefit pension plans, net of tax of ¥24 million								(38	)								(38	)
Reclassification adjustment included in net income, net of tax of ¥(74) million								187									187
Foreign currency translation adjustments, net of tax of ¥(1,341) million											14,380						14,380
Reclassification adjustment included in net income, net of tax of ¥(267) million											552						552
Net unrealized gains (losses) on derivative instruments, net of tax of ¥(64) million														348			348
Reclassification adjustment included in net income, net of tax of ¥(593) million														1,822			1,822
Total other comprehensive income (loss)		8,320			(61	)		149			14,932			2,170			25,510
Less: Other Comprehensive Income (loss) Attributable to the Noncontrolling Interests		0			0			(1	)		615			68			682
Balance at September 30, 2021 *	¥	(7,888	)	¥	497		¥	(20,923	)	¥	(22,139	)	¥	(9,369	)	¥	(59,822	)

* As of September 30, 2021, there were no net unrealized gains (losses) on investment in securities related to available-for-sale debt securities with allowance for credit losses.

– 95 –

	Six months ended September 30, 2022
	Millions of yen
	Net unrealized gains (losses) on investment in securities			Debt valuation adjustments			Defined benefit pension plans			Foreign currency translation adjustments		Net unrealized gains (losses) on derivative instruments		Accumulated other comprehensive income (loss)
Balance at March 31, 2022	¥	(72,892	)	¥	221		¥	(8,072	)	¥	61,914	¥	2,788	¥	(16,041	)
Net unrealized gains (losses) on investment in securities, net of tax of ¥54,025 million		(142,995	)												(142,995	)
Reclassification adjustment included in net income, net of tax of ¥292 million		(872	)												(872	)
Debt valuation adjustments, net of tax of ¥(25) million					66										66
Reclassification adjustment included in net income, net of tax of ¥2 million					(6	)									(6	)
Defined benefit pension plans, net of tax of ¥81 million								(225	)						(225	)
Reclassification adjustment included in net income, net of tax of ¥33 million								(91	)						(91	)
Foreign currency translation adjustments, net of tax of ¥27,143 million											184,993				184,993
Reclassification adjustment included in net income, net of tax of ¥(12) million											102				102
Net unrealized gains (losses) on derivative instruments, net of tax of ¥(4,707) million													17,082		17,082
Reclassification adjustment included in net income, net of tax of ¥(436) million													1,449		1,449
Total other comprehensive income (loss)		(143,867	)		60			(316	)		185,095		18,531		59,503
Less: Other Comprehensive Income Attributable to the Noncontrolling Interests		0			0			2			7,886		1,472		9,360
Less: Other Comprehensive Income Attributable to the Redeemable Noncontrolling Interests		0			0			0			88		0		88
Balance at September 30, 2022 *	¥	(216,759	)	¥	281		¥	(8,390	)	¥	239,035	¥	19,847	¥	34,014

* As of September 30, 2022, there were no net unrealized gains (losses) on investment in securities related to available-for-sale debt securities with allowance for credit losses.

– 96 –

Changes in each component of accumulated other comprehensive income (loss) attributable to ORIX Corporation Shareholders for the three months ended September 30, 2021 and 2022, are as follows:

	Three months ended September 30, 2021
	Millions of yen
	Net unrealized gains (losses) on investment in securities			Debt valuation adjustments			Defined benefit pension plans			Foreign currency translation adjustments			Net unrealized gains (losses) on derivative instruments			Accumulated other comprehensive income (loss)
Balance at June 30, 2021	¥	(9,827	)	¥	534		¥	(21,119	)	¥	(27,553	)	¥	(10,608	)	¥	(68,573	)
Net unrealized gains (losses) on investment in securities, net of tax of ¥(1,713) million		5,856															5,856
Reclassification adjustment included in net income, net of tax of ¥1,173 million		(3,917	)														(3,917	)
Debt valuation adjustments, net of tax of ¥11 million					(29	)											(29	)
Reclassification adjustment included in net income, net of tax of ¥3 million					(8	)											(8	)
Defined benefit pension plans, net of tax of ¥(22) million								106									106
Reclassification adjustment included in net income, net of tax of ¥(34) million								90									90
Foreign currency translation adjustments, net of tax of ¥1,996 million											5,635						5,635
Reclassification adjustment included in net income, net of tax of ¥(113) million											256						256
Net unrealized gains (losses) on derivative instruments, net of tax of ¥(51) million														66			66
Reclassification adjustment included in net income, net of tax of ¥(394) million														1,212			1,212
Total other comprehensive income (loss)		1,939			(37	)		196			5,891			1,278			9,267
Less: Other Comprehensive Income Attributable to the Noncontrolling Interests		0			0			0			477			39			516
Balance at September 30, 2021 *	¥	(7,888	)	¥	497		¥	(20,923	)	¥	(22,139	)	¥	(9,369	)	¥	(59,822	)

* As of September 30, 2021, there were no net unrealized gains (losses) on investment in securities related to available-for-sale debt securities with allowance for credit losses.

– 97 –

	Three months ended September 30, 2022
	Millions of yen
	Net unrealized gains (losses) on investment in securities			Debt valuation adjustments			Defined benefit pension plans			Foreign currency translation adjustments		Net unrealized gains (losses) on derivative instruments			Accumulated other comprehensive income (loss)
Balance at June 30, 2022	¥	(154,265	)	¥	205		¥	(8,239	)	¥	169,590	¥	12,986		¥	20,277
Net unrealized gains (losses) on investment in securities, net of tax of ¥23,591 million		(62,396	)													(62,396	)
Reclassification adjustment included in net income, net of tax of ¥10 million		(98	)													(98	)
Debt valuation adjustments, net of tax of ¥(31) million					80											80
Reclassification adjustment included in net income, net of tax of ¥1 million					(4	)										(4	)
Defined benefit pension plans, net of tax of ¥45 million								(105	)							(105	)
Reclassification adjustment included in net income, net of tax of ¥17 million								(46	)							(46	)
Foreign currency translation adjustments, net of tax of ¥3,827 million											70,964					70,964
Reclassification adjustment included in net income, net of tax of ¥(3) million											12					12
Net unrealized gains (losses) on derivative instruments, net of tax of ¥(3,069) million													8,763			8,763
Reclassification adjustment included in net income, net of tax of ¥399 million													(1,163	)		(1,163	)
Total other comprehensive income (loss)		(62,494	)		76			(151	)		70,976		7,600			16,007
Less: Other Comprehensive Income Attributable to the Noncontrolling Interests		0			0			0			1,481		739			2,220
Less: Other Comprehensive Income Attributable to the Redeemable Noncontrolling Interests		0			0			0			50		0			50
Balance at September 30, 2022 *	¥	(216,759	)	¥	281		¥	(8,390	)	¥	239,035	¥	19,847		¥	34,014

* As of September 30, 202 2 , there were no net unrealized gains (losses) on investment in securities related to available-for-sale debt securities with allowance for credit losses.

– 98 –

Amounts reclassified to net income from accumulated other comprehensive income (loss) in the six months ended September 30, 2021 and 2022 are as follows:

	Six months ended September 30, 2021
Details about accumulated other comprehensive income components	Reclassification adjustment included in net income
	Millions of yen			Consolidated statements of income caption
Net unrealized gains (losses) on investment in securities
Sales of debt securities	¥	4,177		Gains on investment securities and dividends
Sales of debt securities		1,415		Life insurance premiums and related investment income
Amortization of debt securities		58		Finance revenues
Amortization of debt securities		(347	)	Life insurance premiums and related investment income
Others		(41	)	Write-downs of securities
		5,262		Total before income tax
		(1,204	)	Income tax (expense) or benefit
	¥	4,058		Net of tax
Debt valuation adjustments
Fulfillment of policy liabilities and amortization of policy account balances	¥	21		Life insurance costs
		21		Total before income tax
		(6	)	Income tax (expense) or benefit
	¥	15		Net of tax
Defined benefit pension plans
Amortization of prior service credit	¥	201		See Note 16 “Pension Plans”
Amortization of net actuarial loss		(461	)	See Note 16 “Pension Plans”
Amortization of transition obligation		(1	)	See Note 16 “Pension Plans”
		(261	)	Total before income tax
		74		Income tax (expense) or benefit
	¥	(187	)	Net of tax
Foreign currency translation adjustments
Foreign exchange contracts	¥	(898	)	Gains on sales of subsidiaries and affiliates and liquidation losses, net/Interest expense/Other (income) and expense
Sales or liquidation		79		Gains on sales of subsidiaries and affiliates and liquidation losses, net
		(819	)	Total before income tax
		267		Income tax (expense) or benefit
	¥	(552	)	Net of tax
Net unrealized gains (losses) on derivative instruments
Interest rate swap agreements	¥	(542	)	Interest expense
Foreign exchange contracts		(124	)	Interest expense/Other (income) and expense
Foreign currency swap agreements		(1,749	)	Interest expense/Other (income) and expense
		(2,415	)	Total before income tax
		593		Income tax (expense) or benefit
	¥	(1,822	)	Net of tax

– 99 –

	Six months ended September 30, 2022
Details about accumulated other comprehensive income components	Reclassification adjustment included in net income
	Millions of yen			Consolidated statements of income caption
Net unrealized gains (losses) on investment in securities
Sales of debt securities	¥	17		Gains on investment securities and dividends
Sales of debt securities		811		Life insurance premiums and related investment income
Amortization of debt securities		162		Finance revenues
Amortization of debt securities		174		Life insurance premiums and related investment income
		1,164		Total before income tax
		(292	)	Income tax (expense) or benefit
	¥	872		Net of tax
Debt valuation adjustments
Fulfillment of policy liabilities and amortization of policy account balances	¥	8		Life insurance costs
		8		Total before income tax
		(2	)	Income tax (expense) or benefit
	¥	6		Net of tax
Defined benefit pension plans
Amortization of prior service credit	¥	170		See Note 16 “Pension Plans”
Amortization of net actuarial loss		(45	)	See Note 16 “Pension Plans”
Amortization of transition obligation		(1	)	See Note 16 “Pension Plans”
		124		Total before income tax
		(33	)	Income tax (expense) or benefit
	¥	91		Net of tax
Foreign currency translation adjustments
Foreign exchange contracts	¥	(1,653	)	Gains on sales of subsidiaries and affiliates and liquidation losses, net/Interest expense/Other (income) and expense
Sales or liquidation		1,539		Gains on sales of subsidiaries and affiliates and liquidation losses, net
		(114	)	Total before income tax
		12		Income tax (expense) or benefit
	¥	(102	)	Net of tax
Net unrealized gains (losses) on derivative instruments
Interest rate swap agreements	¥	(157	)	Interest expense
Foreign exchange contracts		(164	)	Interest expense/Other (income) and expense
Foreign currency swap agreements		(1,564	)	Interest expense/Other (income) and expense
		(1,885	)	Total before income tax
		436		Income tax (expense) or benefit
	¥	(1,449	)	Net of tax

– 100 –

Amounts reclassified to net income from accumulated other comprehensive income (loss) in the three months ended September 30, 2021 and 2022 are as follows:

Details about accumulated other comprehensive income components	Three months ended September 30, 2021
	Reclassification adjustment included in net income			Consolidated statements of income caption
	Millions of yen
Net unrealized gains (losses) on investment in securities
Sales of debt securities	¥	3,964		Gains on investment securities and dividends
Sales of debt securities		1,319		Life insurance premiums and related investment income
Amortization of debt securities		27		Finance revenues
Amortization of debt securities		(185	)	Life insurance premiums and related investment income
Others		(35	)	Write-downs of securities and other
		5,090		Total before income tax
		(1,173	)	Income tax (expense) or benefit
	¥	3,917		Net of tax
Debt valuation adjustments
Fulfillment of policy liabilities and amortization of policy account balances	¥	11		Life insurance costs
		11		Total before income tax
		(3	)	Income tax (expense) or benefit
	¥	8		Net of tax
Defined benefit pension plans
Amortization of prior service credit	¥	101		See Note 16 “Pension Plans”
Amortization of net actuarial loss		(224	)	See Note 16 “Pension Plans”
Amortization of transition obligation		(1	)	See Note 16 “Pension Plans”
		(124	)	Total before income tax
		34		Income tax (expense) or benefit
	¥	(90	)	Net of tax
Foreign currency translation adjustments
Foreign exchange contracts	¥	(404	)	Gains on sales of subsidiaries and affiliates and liquidation losses, net/Interest expense
Sales or liquidation		35		Gains on sales of subsidiaries and affiliates and liquidation losses, net
		(369	)	Total before income tax
		113		Income tax (expense) or benefit
	¥	(256	)	Net of tax
Net unrealized gains (losses) on derivative instruments
Interest rate swap agreements	¥	(266	)	Interest expense
Foreign exchange contracts		(75	)	Interest expense/Other (income) and expense
Foreign currency swap agreements		(1,265	)	Interest expense/Other (income) and expense
		(1,606	)	Total before income tax
		394		Income tax (expense) or benefit
	¥	(1,212	)	Net of tax

– 101 –

	Three months ended September 30, 2022
Details about accumulated other comprehensive income components	Reclassification adjustment included in net income			Consolidated statements of income caption
	Millions of yen
Net unrealized gains (losses) on investment in securities
Sales of debt securities	¥	1		Gains on investment securities and dividends
Sales of debt securities		(143	)	Life insurance premiums and related investment income
Amortization of debt securities		50		Finance revenues
Amortization of debt securities		200		Life insurance premiums and related investment income
		108		Total before income tax
		(10	)	Income tax (expense) or benefit
	¥	98		Net of tax
Debt valuation adjustments
Fulfillment of policy liabilities and amortization of policy account balances	¥	5		Life insurance costs
		5		Total before income tax
		(1	)	Income tax (expense) or benefit
	¥	4		Net of tax
Defined benefit pension plans
Amortization of prior service credit	¥	86		See Note 16 “Pension Plans”
Amortization of net actuarial loss		(22	)	See Note 16 “Pension Plans”
Amortization of transition obligation		(1	)	See Note 16 “Pension Plans”
		63		Total before income tax
		(17	)	Income tax (expense) or benefit
	¥	46		Net of tax
Foreign currency translation adjustments
Foreign exchange contracts	¥	(1,171	)	Gains on sales of subsidiaries and affiliates and liquidation losses, net/Interest expense
Sales or liquidation	¥	1,156		Gains on sales of subsidiaries and affiliates and liquidation losses, net
		(15	)	Total before income tax
		3		Income tax (expense) or benefit
	¥	(12	)	Net of tax
Net unrealized gains (losses) on derivative instruments
Interest rate swap agreements	¥	63		Interest expense
Foreign exchange contracts		(84	)	Interest expense/Other (income) and expense
Foreign currency swap agreements		1,583		Interest expense/Other (income) and expense
		1,562		Total before income tax
		(399	)	Income tax (expense) or benefit
	¥	1,163		Net of tax

– 102 –

14. ORIX Corporation Shareholders�� Equity

Information about ORIX Corporation Shareholders’ Equity for the six months ended September 30, 2021 and 2022 are as follows:

(1) Dividend payments

	Six months ended September 30, 2021	Six months ended September 30, 2022
Resolution	The board of directors on May 20, 2021	The board of directors on May 18, 2022
Type of shares	Common stock	Common stock
Total dividends paid	¥52,438 million	¥55,704 million
Dividend per share	¥43.00	¥46.60
Date of record for dividend	March 31, 2021	March 31, 2022
Effective date for dividend	June 7, 2021	June 3, 2022
Dividend resource	Retained earnings	Retained earnings

Total dividends paid by resolution of the board of directors on May 20, 2021 include ¥92 million of dividends paid to the Board Incentive Plan Trust for the six months ended September 30, 2021. Total dividends paid by resolution of the board of directors on May 18, 2022 include ¥91 million of dividends paid to the Board Incentive Plan Trust for the six months ended September 30, 2022.

(2) Applicable dividends for which the date of record was in the six months ended September 30, 2021 and 2022, and for which the effective date was after September 30, 2021 and 2022

	Six months ended September 30, 2021	Six months ended September 30, 2022
Resolution	The board of directors on November 4, 2021	The board of directors on November 7, 2022
Type of shares	Common stock	Common stock
Total dividends paid	¥46,957 million	¥50,586 million
Dividend per share	¥39.00	¥42.80
Date of record for dividend	September 30, 2021	September 30, 2022
Effective date for dividend	December 9, 2021	December 6, 2022
Dividend resource	Retained earnings	Retained earnings

Total dividends to be paid by resolution of the board of directors on November 4, 2021 include ¥83 million of dividends to be paid to the Board Incentive Plan Trust for the six months ended September 30, 2021. Total dividends to be paid by resolution of the board of directors on November 

7

, 2022 include ¥122 million of dividends to be paid to the Board Incentive Plan Trust for the six months ended September 30, 2022.

– 103 –

15. Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended September 30, 2021 and 2022 are as follows:

	Millions of yen
	Six months ended September 30, 2021		Six months ended September 30, 2022
Personnel expenses	¥	144,462	¥	154,100
Selling expenses		32,209		41,251
Administrative expenses		64,774		68,253
Depreciation of office facilities		4,439		4,350
Total	¥	245,884	¥	267,954
Selling, general and administrative expenses for the three months ended September 30, 2021 and 2022 are as follows:
	Millions of yen
	Three months ended September 30, 2021		Three months ended September 30, 2022
Personnel expenses	¥	71,969	¥	77,513
Selling expenses		16,432		21,725
Administrative expenses		33,341		34,456
Depreciation of office facilities		2,057		2,178
Total	¥	123,799	¥	135,872

– 104 –

16. Pension Plans

The Company and certain subsidiaries have contributory and

non-contributory

pension plans covering substantially all of their employees. Those contributory funded pension plans include defined benefit pension plans and defined contribution pension plans. Under the plans, employees are entitled to

lump-sum

payments at the time of termination of their employment or pension payments. Defined benefit pension plans consist of a plan of which the amounts of such payments are determined on the basis of length of service and remuneration at the time of termination and a cash balance plan.

The Company and certain subsidiaries’ funding policy is to contribute annually the amounts actuarially determined. Assets of the plans are invested primarily in debt securities and marketable equity securities.

Net periodic pension cost for the six months ended September 30, 2021 and 2022 consists of the following:

	Millions of yen
	Six months ended September 30, 2021			Six months ended September 30, 2022
Japanese plans:
Service cost	¥	3,023		¥	2,825
Interest cost		419			347
Expected return on plan assets		(1,331	)		(1,362	)
Amortization of prior service credit		(33	)		(13	)
Amortization of net actuarial loss		206			38
Net periodic pension cost	¥	2,284		¥	1,835
	Millions of yen
	Six months ended September 30, 2021			Six months ended September 30, 2022
Overseas plans:
Service cost	¥	1,974		¥	1,813
Interest cost		659			1,010
Expected return on plan assets		(2,093	)		(2,348	)
Amortization of prior service credit		(168	)		(157	)
Amortization of net actuarial loss		255			7
Amortization of transition obligation		1			1
Net periodic pension cost	¥	628		¥	326

Note: Net periodic pension cost is charged in personnel expenses, which is included in selling, general and administrative expenses in the consolidated statements of income.

– 105 –

Net periodic pension cost for the three months ended September 30, 2021 and 2022 consists of the following:

	Millions of yen
	Three months ended September 30, 2021			Three months ended September 30, 2022
Japanese plans:
Service cost	¥	1,517		¥	1,413
Interest cost		198			174
Expected return on plan assets		(665	)		(681	)
Amortization of prior service credit		(17	)		(7	)
Amortization of net actuarial loss		97			19
Net periodic pension cost	¥	1,130		¥	918
	Millions of yen
	Three months ended September 30, 2021			Three months ended September 30, 2022
Overseas plans:
Service cost	¥	976		¥	908
Interest cost		328			508
Expected return on plan assets		(1,041	)		(1,180	)
Amortization of prior service credit		(84	)		(79	)
Amortization of net actuarial loss		127			3
Amortization of transition obligation		1			1
Net periodic pension cost	¥	307		¥	161

Note: Net periodic pension cost is charged in personnel expenses, which is included in selling, general and administrative expenses in the consolidated statements of income.

– 106 –

17. Life Insurance Operations

Life insurance premiums and related investment income for the six and three months ended September 30, 2021 and 2022 consist of the following:

	Millions of yen
	Six months ended September 30, 2021		Six months ended September 30, 2022
Life insurance premiums	¥	208,475	¥	220,762
Life insurance related investment income*		24,322		42,449
	¥	232,797	¥	263,211

* Life insurance related investment income for the six months ended September 30, 2021 and 2022 include net unrealized holding a gain of ¥9,689  million and a loss of  ¥9,465 million on equity securities held as of September 30, 2021 and 2022, respectively.

	Millions of yen
	Three months ended September 30, 2021		Three months ended September 30, 2022
Life insurance premiums	¥	110,822	¥	117,752
Life insurance related investment income*		13,877		19,182
	¥	124,699	¥	136,934

* Life insurance related investment income for the three months ended September 30, 2021 and 2022 include net unrealized holding a gain of ¥5,543  million and a loss of ¥1,222 million on equity securities held as of September 30, 2021 and 2022, respectively. 

Life insurance premiums include reinsurance benefits, net of reinsurance premiums. For the six and three months ended September 30, 2021 and 2022, reinsurance benefits and reinsurance premiums included in life insurance premiums are as follows:

	Millions of yen
	Six months ended September 30, 2021			Six months ended September 30, 2022
Reinsurance benefits	¥	852		¥	657
Reinsurance premiums		(2,226	)		(2,390	)
	Millions of yen
	Three months ended September 30, 2021			Three months ended September 30, 2022
Reinsurance benefits	¥	507		¥	344
Reinsurance premiums		(1,097	)		(1,199	)

The benefits and expenses of life insurance operations included in life insurance costs in the consolidated statements of income are recognized so as to associate with earned premiums over the life of contracts. This association is accomplished by means of the provision for future policy benefits and the deferral and subsequent amortization of policy acquisition costs (principally commissions and certain other expenses directly relating to policy issuance and underwriting). Amortization charged to income for the six months ended September 30, 2021 and 2022 amounted to ¥11,339 million and ¥7,884 million, respectively. In addition, amortization charged to income for the three months ended September 30, 2021 and 2022 amounted to ¥6,144 million and ¥5,305 million, respectively.

Life insurance premiums and related investment income include net realized and unrealized gains or losses from investment assets under management on behalf of variable annuity and variable life policyholders, and net gains or losses from derivative contracts, which consist of gains or losses from futures and foreign exchange contracts, entered to economically hedge a portion of the minimum guarantee risk relating to variable annuity and variable life insurance contracts. In addition, the fair value option was elected for the entire variable annuity and variable life insurance contracts to offset earnings recognized for gains or losses from the investment assets managed on behalf of variable annuity and variable life policyholders, derivative contracts and the changes in the fair value of reinsurance contracts. Life insurance costs include the net amount of the changes in fair value of the variable annuity and variable life insurance contracts for which the fair value option was elected and insurance costs recognized for insurance and annuity payouts as a result of insured events. Certain subsidiaries have elected the fair value option for certain reinsurance contracts to partially offset the changes in fair value recognized in earnings of the policy liabilities and policy account balances attributable to the changes in the minimum guarantee risks of the variable annuity and variable life insurance contracts, and the changes in the fair value of the reinsurance contracts were recorded in life insurance costs.

– 107 –

The portion of the total change in the fair value of variable annuity and variable life insurance contracts that results from a change in the instrument-specific credit risk is recognized in other comprehensive income (loss), net of applicable income taxes.

The above mentioned gains or losses relating to variable annuity and variable life insurance contracts for the six and three months ended September 30, 2021 and 2022 are mainly as

follows:

	Millions of yen
	Six months ended September 30, 2021			Six months ended September 30, 2022
Life insurance premiums and related investment income :
Net realized and unrealized gains or losses from investment assets	¥	10,863		¥	(11,820	)
Net gains or losses from derivative contracts :		(1,161	)		252
Futures		(1,123	)		852
Foreign exchange contracts		(38	)		(600	)
Life insurance costs :
Changes in the fair value of the policy liabilities and policy account balances	¥	(40,285	)	¥	(28,645	)
Insurance costs recognized for insurance and annuity payouts as a result of insured events		47,016			16,966
Changes in the fair value of the reinsurance contracts		733			(488	)
	Millions of yen
	Three months ended September 30, 2021			Three months ended September 30, 2022
Life insurance premiums and related investment income :
Net realized and unrealized gains or losses from investment assets	¥	5,592		¥	(1,259	)
Net gains or losses from derivative contracts :		(878	)		(1	)
Futures		(863	)		173
Foreign exchange contracts		(15	)		(174	)
Life insurance costs :
Changes in the fair value of the policy liabilities and policy account balances	¥	(18,353	)	¥	(10,508	)
Insurance costs recognized for insurance and annuity payouts as a result of insured events		21,525			8,304
Changes in the fair value of the reinsurance contracts		314			30

– 108 –

18. Write-Downs of Long-Lived Assets

The Company and its subsidiaries perform tests for recoverability on long-lived assets classified as held and used for which events or changes in circumstances indicated that the assets might be impaired. The Company and its subsidiaries consider an asset’s carrying amount as not recoverable when such carrying amount exceeds the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset. The net carrying amount of assets not recoverable is reduced to fair value if lower than the carrying amount.

As of March 31, 2022 and September 30, 2022, the long-lived assets and liabilities associated with those assets classified as held for sale in the accompanying consolidated balance sheets are as follows.

	Millions of yen
	As of March 31, 2022		As of September 30, 2022
Investment in operating leases	¥	35,061	¥	9,912
Property under facility operations		8,376		0
Office facilities		1,375		0
Other assets		1,556		0
Other liabilities		1,761		0

The long-lived assets classified as held for sale as of March 31, 2022 are included in Corporate Financial Services and Maintenance Leasing segment, Real Estate segment, PE Investment and Concession segment, Aircraft and Ships segment and ORIX USA segment. The long-lived assets classified as held for sale as of September 30, 2022 are included in Corporate Financial Services and Maintenance Leasing segment, Real Estate segment, Aircraft and Ships segment, and ORIX USA segment.

The Company and its subsidiaries determine the fair value using appraisals prepared by independent third party appraisers or our own staff of qualified appraisers, and othersbased on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flows methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate.

For the six months ended September 30, 2021 and 2022, the Company and its subsidiaries recognized impairment losses for the difference between carrying amounts and fair values in the amount of ¥88 million and ¥253 million, respectively, which are reflected as write-downs of long-lived assets. Breakdowns of these amounts are as

follows.

	Six months ended September 30, 2021				Six months ended September 30, 2022
	Amount (Millions of yen)		The number of properties		Amount (Millions of yen)		The number of properties
Write-downs of the assets held for sale:
Condominiums	¥	1		1	¥	0		—
Others*		0		—		56		—
Total	¥	1		—	¥	56		—
	Six months ended September 30, 2021				Six months ended September 30, 2022
	Amount (Millions of yen)		The number of properties		Amount (Millions of yen)		The number of properties
Write-downs due to decline in estimated future cash flows:
Commercial facilities other than office buildings	¥	11		1	¥	51		2
Condominiums		1		1		3		3
Others*		75		—		143		—
Total	¥	87		—	¥	197		—

* For “Others,” the number of properties is omitted.

Losses

 

of ¥12 million in Real Estate segment, ¥1 million in PE Investment and Concession segment, ¥71 million in ORIX USA segment and ¥4 million in Asia and Australia segment were recorded for the six months ended September 30, 2021. Losses of ¥174 million in Real Estate segment, ¥39 million in PE Investment and Concession segment, ¥39 million in Environment and Energy segment and ¥1 million in Asia and Australia segment were recorded for the six months ended September 30, 2022.

– 109 –

For the three months ended September 30, 2021 and 202

2

, the Company and its subsidiaries recognized impairment losses for the difference between carrying amounts and fair values in the amount of ¥1 million and ¥145 million, respectively, which are reflected as write-downs of long-lived assets. Breakdowns of these amounts are as

follows.

	Three months ended September 30, 2021				Three months ended September 30, 2022
	Amount (Millions of yen)		The number of properties		Amount (Millions of yen)		The number of properties
Write-downs of the assets held for sale:
Condominiums	¥	1		1	¥	0		0
Total	¥	1		—	¥	0		—

	Three months ended September 30, 2021				Three months ended September 30, 2022
	Amount (Millions of yen)		The number of properties		Amount (Millions of yen)		The number of properties
Write-downs due to decline in estimated future cash flows:
Commercial facilities other than office buildings	¥	0		0	¥	51		2
Others*		0		—		94		—
Total	¥	0		—	¥	145		—

* For “Others,” the number of properties is omitted.

A loss 

of ¥1 

million in PE Investment and Concession segment was recorded for the three months ended September 30, 2021. Losses

 of ¥106 million in Real Estate segment, ¥39 

million in PE Investment and Concession segment were recorded for the three months ended September 30, 2022. 

– 110 –

19. Per Share Data

Reconciliation of the differences between basic and diluted earnings per share (EPS) in the six and three months ended September 30, 2021 and 2022 is as follows:

During the six and three months ended September 30, 2021 and 2022, there was no stock compensation which was antidilutive.

	Millions of yen
	Six months ended September 30, 2021		Six months ended September 30, 2022
Net Income attributable to ORIX Corporation shareholders	¥	146,682	¥	121,776
	Millions of yen
	Three months ended September 30, 2021		Three months ended September 30, 2022
Net Income attributable to ORIX Corporation shareholders	¥	81,466	¥	59,914
	Thousands of Shares
	Six months ended September 30, 2021		Six months ended September 30, 2022
Weighted-average shares		1,211,058		1,187,885
Effect of dilutive securities—
Stock compensation		1,202		1,365
Weighted-average shares for diluted EPS computation		1,212,260		1,189,250
	Thousands of Shares
	Three months ended September 30, 2021		Three months ended September 30, 2022
Weighted-average shares		1,206,784		1,184,070
Effect of dilutive securities—
Stock compensation		1,341		1,498
Weighted-average shares for diluted EPS computation		1,208,125		1,185,568
	Yen
	Six months ended September 30, 2021		Six months ended September 30, 2022
Earnings per share for net income attributable to ORIX Corporation shareholders:
Basic	¥	121.12	¥	102.52
Diluted		121.00		102.40
	Yen
	Three months ended September 30, 2021		Three months ended September 30, 2022
Earnings per share for net income attributable to ORIX Corporation shareholders:
Basic	¥	67.51	¥	50.60
Diluted		67.43		50.54

Note: The Company’s shares held through the Board Incentive Plan Trust are included in the number of treasury stock to be deducted in calculation of the weighted-average shares for EPS computation. (2,149,105 and 2,215,068 shares for the six months ended September 30, 2021 and 2022, 2,145,248 and 2,403,907 shares for the three months ended September 30, 2021 and 2022)

– 111 –

20. Derivative Financial Instruments and Hedging

Risk management policy

The Company and its subsidiaries manage interest rate risk through asset-liability management (“ALM”). The Company and its subsidiaries use derivative financial instruments to hedge interest rate risk and avoid changes in interest rates that could have a significant adverse effect on the Company’s results of operations. As a result of interest rate changes, the fair value and/or cash flow of interest sensitive assets and liabilities will fluctuate. However, such fluctuation will generally be offset by using derivative financial instruments as hedging instruments. Derivative financial instruments that the Company and its subsidiaries use as part of the interest risk management include interest rate swaps.

The Company and its subsidiaries utilize foreign currency borrowings, foreign exchange contracts and foreign currency swap agreements to hedge exchange rate risk that are associated with certain transactions and investments denominated in foreign currencies. Similarly, overseas subsidiaries generally structure their liabilities to match the currency-denomination of assets in each region. A certain subsidiary holds futures and foreign exchange contracts for the purpose of economic hedges against minimum guarantee risk of variable annuity and variable life insurance contracts.

By using derivative instruments, the Company and its subsidiaries are exposed to credit risk in the event of nonperformance by counterparties. The Company and its subsidiaries attempt to manage the credit risk by carefully evaluating the content of transactions and the quality of counterparties in advance and regularly monitoring the amount of notional principal, fair value, type of transaction and other factors pertaining to each counterparty.

The Company and its subsidiaries have no derivative instruments with credit-risk-related contingent features as of March 31, 2022 and September 30, 2022.

(a) Cash flow hedges

The Company and its subsidiaries designate interest rate swap agreements, foreign currency swap agreements and foreign exchange contracts as cash flow hedges for variability of cash flows originating from floating rate borrowings and forecasted transactions and for exchange fluctuations.

(b) Fair value hedges

The Company and its subsidiaries use financial instruments designated as fair value hedges to hedge their exposure to interest rate risk and foreign currency exchange risk. A certain subsidiary designates foreign exchange contracts to minimize foreign currency exposures on bonds in foreign currencies in the insurance business. The subsidiary also uses interest rate swap agreements to hedge interest rate exposure of the fair values of bonds in foreign currencies in the insurance business

(c) Hedges of net investment in foreign operations

The Company and its subsidiaries use foreign exchange contracts and borrowings and bonds denominated in foreign currencies to hedge the foreign currency exposure of the net investment in overseas subsidiaries and affiliates.

(d) Derivatives not designated as hedging instruments

The Company and its subsidiaries entered into interest rate swap agreements, futures and foreign exchange contracts for risk management purposes which are not qualified for hedge accounting. A certain subsidiary holds futures and foreign exchange contracts for the purpose of economic hedges against minimum guarantee risk of variable annuity and variable life insurance contracts.

– 112 –

The effect of derivative instruments on the consolidated statements of income,

pre-tax,

for the six months ended September 30, 2021 is as follows.

(1) Cash flow hedges

	Millions of yen
	Gains (losses) recognized in other comprehensive     income on derivative			Gains (losses) reclassified from other comprehensive income (loss) into income
				Interest expense			Other (income) and    expense
Interest rate swap agreements	¥	1,150		¥	542		¥	0
Foreign exchange contracts		(171	)		(54	)		178
Foreign currency swap agreements		(567	)		290			1,459

(2) Fair value hedges

	Millions of yen
	Gains (losses) recognized in income on derivative and other					Gains (losses) recognized in income on hedged item
	Life insurance premiums and related investment income			Other (income) and expense		Life insurance premiums and related investment income		Other (income) and expense
Interest rate swap agreements	¥	(921	)	¥	0	¥	1,031	¥	0
Foreign exchange contracts		(4,627	)		98		4,667		(75	)

(3) Hedges of net investment in foreign operations

	Millions of yen
	Gains (losses) recognized in other comprehensive     income on derivative     and others			Gains (losses) reclassified from other comprehensive income (loss) into income
				Gains on sales of subsidiaries and affiliates and liquidation losses, net			Interest expense		Other (income) and expense
Foreign exchange contracts	¥	(544	)	¥	(104	)	¥	789	¥	5
Borrowings and bonds in foreign currencies		(6,399	)		0			0		0

(4) Derivatives not designated as hedging instruments

	Millions of yen
	Gains (losses) recognized in income on derivative
	Life insurance premiums and related investment income*			Interest expense		Other (income) and    expense
Interest rate swap agreements	¥	0		¥	3	¥	(21	)
Futures		(1,123	)		0		733
Foreign exchange contracts		3,746			718		2,415
Credit derivatives held		0			0		(1	)
Options held/written and other		0			0		759

* Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for the six months ended September 30, 2021 (see Note 17 “Life Insurance Operations”).

– 113 –

The effect of derivative instruments on the consolidated statements of income,

pre-tax,

for the six months ended September 30, 2022 is as follows.

(1) Cash flow hedges

	Millions of yen
	Gains (losses) recognized in other comprehensive     income on derivative			Gains (losses) reclassified from other comprehensive income (loss) into income
				Interest expense		Other (income) and    expense
Interest rate swap agreements	¥	22,506		¥	157	¥	0
Foreign exchange contracts		(172	)		17		147
Foreign currency swap agreements		(545	)		302		1,262

(2) Fair value hedges

	Millions of yen
	Gains (losses) recognized in income on derivative and other						Gains (losses) recognized in income on hedged item
	Life insurance premiums and related investment income			Other (income) and expense			Life insurance premiums and related investment income			Other (income) and expense
Interest rate swap agreements	¥	3,173		¥	0		¥	(3,058	)	¥	0
Foreign exchange contracts		(78,667	)		(449	)		78,817			399

(3) Hedges of net investment in foreign operations

									��
	Millions of yen
	Gains (losses) recognized in other comprehensive income on derivative and others			Gains (losses) reclassified from other comprehensive income (loss) into income
				Gains on sales of subsidiaries and affiliates and liquidation losses, net		Interest expense		Other (income) and expense
Foreign exchange contracts	¥	(24,595	)	¥	51	¥	1,956	¥	(252	)
Borrowings and bonds in foreign currencies		(122,739	)		0		0		0

(4) Derivatives not designated as hedging instruments

	Millions of yen
	Gains (losses) recognized in income on derivative
	Life insurance premiums and related investment income*		Interest expense		Other (income) and    expense
Interest rate swap agreements	¥	0	¥	3	¥	(139	)
Futures		852		0		(4,105	)
Foreign exchange contracts		34,472		1,950		51,589
Credit derivatives written		0		0		4
Options held/written and other		0		0		(886	)

* Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for the six months ended September 30, 2022 (see Note 17 “Life Insurance Operations”).

– 114 –

The effect of derivative instruments on the consolidated statements of income,

pre-tax,

for the three months ended September 30, 2021 is as follows.

(1) Cash flow hedges

	Millions of yen
	Gains (losses) recognized in other comprehensive     income on derivative			Gains (losses) reclassified from other comprehensive income (loss) into income
				Interest expense			Other (income) and expense
Interest rate swap agreements	¥	1,007		¥	266		¥	0
Foreign exchange contracts		(110	)		(12	)		87
Foreign currency swap agreements		(780	)		94			1,171

(2) Fair value hedges

	Millions of yen
	Gains (losses) recognized in income on derivative and other						Gains (losses) recognized in income on hedged item
	Life insurance premiums and related investment income			Other (income) and expense			Life insurance premiums and related investment income			Other (income) and expense
Interest rate swap agreements	¥	299		¥	0		¥	(321	)	¥	0
Foreign exchange contracts		(4,146	)		(27	)		4,187			42

(3) Hedges of net investment in foreign operations

	Millions of yen
	Gains (losses) recognized in other comprehensive     income on derivative     and others			Gains (losses) reclassified from other comprehensive income (loss) into income
				Gains on sales of subsidiaries and affiliates and liquidation losses, net			Interest expense
Foreign exchange contracts	¥	2,755		¥	(86	)	¥	318
Borrowings and bonds in foreign currencies		(6,552	)		0			0

(4) Derivatives not designated as hedging instruments

	Millions of yen
	Gains (losses) recognized in income on derivative
	Life insurance premiums and related investment income*			Interest expense		Other (income) and    expense
Interest rate swap agreements	¥	0		¥	2	¥	(12	)
Futures		(863	)		0		(422	)
Foreign exchange contracts		2,938			203		(2,831	)
Options held/written and other		0			0		246

* Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for the three months ended September 30, 2021 (see Note 17 “Life Insurance Operations”).

– 115 –

The effect of derivative instruments on the consolidated statements of income,

pre-tax,

for the three months ended September 30, 2022 is as follows.

(1) Cash flow hedges

	Millions of yen
	Gains (losses) recognized in other comprehensive income on derivative			Gains (losses) reclassified from other comprehensive income (loss) into income
				Interest expense			Other (income) and expense
Interest rate swap agreements	¥	10,230		¥	(63	)	¥	0
Foreign exchange contracts		(186	)		(155	)		239
Foreign currency swap agreements		1,788			180			(1,763	)

(2) Fair value hedges

	Millions of yen
	Gains (losses) recognized in income on derivative and other						Gains (losses) recognized in income on hedged item
	Life insurance premiums and related investment income			Other (income) and expense			Life insurance premiums and related investment income			Other (income) and expense
Interest rate swap agreements	¥	1,305		¥	0		¥	(1,309	)	¥	0
Foreign exchange contracts		(29,199	)		(314	)		29,275			218

(3) Hedges of net investment in foreign operations

	Millions of yen
	Gains (losses) recognized in other comprehensive     income on derivative     and others			Gains (losses) reclassified from other comprehensive income (loss) into income
				Gains on sales of subsidiaries and affiliates and liquidation losses, net			Interest expense
Foreign exchange contracts	¥	(2,042	)	¥	(5	)	¥	1,166
Borrowings and bonds in foreign currencies		(42,929	)		0			0

(4) Derivatives not designated as hedging instruments

	Millions of yen
	Gains (losses) recognized in income on derivative
	Life insurance premiums and related investment income*		Interest expense		Other (income) and expense
Interest rate swap agreements	¥	0	¥	2	¥	(70	)
Futures		173		0		(1,424	)
Foreign exchange contracts		13,332		1,696		14,519
Credit derivatives written		0		0		4
Options held/written and other		0		0		(170	)

* Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for the three months ended September 30, 2022 (see Note 17 “Life Insurance Operations”).

– 116 –

The effect of the components excluded from the assessment of hedge effectiveness on the consolidated statements of income,

pre-tax,

for the six months ended September 30, 2021 is as follows.

Fair value hedges

	Millions of yen
	Gains (losses) recognized in income
	Life insurance premiums and related investment income			Interest expense		Other (income) and expense
Foreign exchange contracts	¥	(697	)	¥	2	¥	0
Options held/written and other		0			0		14

The effect of the components excluded from the assessment of hedge effectiveness on the consolidated statements of income,

pre-tax,

for the three months ended September 30, 2021 is as follows.

Fair value hedges

	Millions of yen
	Gains (losses) recognized in income
	Life insurance premiums and related investment income			Interest expense		Other (income) and expense
Foreign exchange contracts	¥	(282	)	¥	1	¥	0
Options held/written and other		0			0		7

The carrying amount of hedged assets and liabilities recognized in balance sheets in fair value hedges and the cumulative amount of fair value hedging adjustments included in the carrying amount at March 31, 2022 is as follows.

Assets as hedged items in fair value hedges					Liabilities as hedged items in fair value hedges
	Millions of yen					Millions of yen
Consolidated balance sheets location	Carrying amount		The cumulative amount of fair value hedging adjustments included in the carrying amount		Consolidated balance sheets location	Carrying amount		The cumulative amount of fair value hedging adjustments included in the carrying amount
Investment in Securities	¥	422,938	¥	1,147	—	¥	0	¥	0
Installment Loans		28,836		55	—		0		0

– 117 –

The effect of the components excluded from the assessment of hedge effectiveness on the consolidated statements of income,

pre-tax,

for the six months ended September 30, 2022 is as follows.

Fair value hedges

	Millions of yen
	Gains (losses) recognized in income
	Life insurance premiums and related investment income			Interest expense		Other (income) and expense
Foreign exchange contracts	¥	(1,474	)	¥	14	¥	0
Options held/written and other		0			0		27

The effect of the components excluded from the assessment of hedge effectiveness on the consolidated statements of income,

pre-tax,

for the three months ended September 30, 2022 is as follows.

Fair value hedges

	Millions of yen
	Gains (losses) recognized in income
	Life insurance premiums and related investment income			Interest expense		Other (income) and expense
Foreign exchange contracts	¥	(2,155	)	¥	7	¥	0
Options held/written and other		0			0		14

The carrying amount of hedged assets and liabilities recognized in balance sheets in fair value hedges and the cumulative amount of fair value hedging adjustments included in the carrying amount at September 30, 2022 is as follows.

Assets as hedged items in fair value hedges						Liabilities as hedged items in fair value hedges
	Millions of yen						Millions of yen
Consolidated balance sheets location	Carrying amount		The cumulative amount of fair value hedging adjustments included in the carrying amount			Consolidated balance sheets location	Carrying amount		The cumulative amount of fair value hedging adjustments included in the carrying amount
Investment in Securities	¥	511,490	¥	(1,954	)	—	¥	0	¥	0
Installment Loans		15,152		0		—		0		0

– 118 –

Notional amounts of derivative instruments and other, fair values of derivative instruments and other before offsetting at March 31, 2022 and September 30, 2022 are as follows.

March 31, 2022

			Derivative assets			Derivative liabilities
	Notional amount		Fair value		Consolidated balance sheets location	Fair value		Consolidated balance sheets location
	Millions of yen		Millions of yen			Millions of yen
Derivatives designated as hedging instruments and other:
Interest rate swap agreements	¥	511,224	¥	9,570	Other Assets	¥	8,170	Other Liabilities
Options held/written and other		847		11	Other Assets		0	—
Futures, foreign exchange contracts		944,282		445	Other Assets		51,953	Other Liabilities
Foreign currency swap agreements		78,445		126	Other Assets		4,518	Other Liabilities
Foreign currency long-term debt		690,381		0	—		0	—
Derivatives not designated as hedging instruments:
Interest rate swap agreements	¥	432	¥	0	—	¥	12	Other Liabilities
Options held/written and other		794,774		25,653	Other Assets		21,562	Other Liabilities
Futures, foreign exchange contracts *		725,685		15,561	Other Assets		19,490	Other Liabilities

* The notional amounts of futures and foreign exchange contracts in the above table include futures contracts of ¥15,088 million and foreign exchange contracts of ¥7,415 million to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts at March 31, 2022, respectively. Derivative assets in the above table include fair value of the futures and foreign exchange contracts before offsetting of ¥79 million and ¥57 million and derivative liabilities include fair value of the futures and foreign exchange contracts before offsetting of ¥1,325 million and ¥378 million at March 31, 2022, respectively.

September 30, 2022

			Derivative assets			Derivative liabilities
	Notional amount		Fair value		Consolidated balance sheets location	Fair value		Consolidated balance sheets location
	Millions of yen		Millions of yen			Millions of yen
Derivatives designated as hedging instruments and other:
Interest rate swap agreements	¥	518,907	¥	25,142	Other Assets	¥	2,549	Other Liabilities
Options held/written and other		863		14	Other Assets		0	—
Futures, foreign exchange contracts		1,014,351		2,038	Other Assets		53,468	Other Liabilities
Foreign currency swap agreements		92,395		2,031	Other Assets		1,871	Other Liabilities
Foreign currency long-term debt		838,051		0	—		0	—
Derivatives not designated as hedging instruments:
Interest rate swap agreements	¥	406	¥	0	—	¥	8	Other Liabilities
Options held/written and other		813,319		62,875	Other Assets		56,456	Other Liabilities
Futures, foreign exchange contracts *		663,236		32,440	Other Assets		5,723	Other Liabilities
Credit derivatives written		1,000		0	—		4	Other Liabilities

* The notional amounts of futures and foreign exchange contracts in the above table include futures contracts of ¥17,701 million and foreign exchange contracts of ¥6,494 million to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts at September 30, 2022, respectively. Derivative assets in the above table include fair value of the futures and foreign exchange contracts before offsetting of ¥728 million and ¥46 million and derivative liabilities include fair value of futures and foreign exchange contracts before offsetting of ¥4 million and ¥429 million at September 30, 2022, respectively.

– 119 –

The Company and its subsidiaries have contracted credit derivatives for the purpose of trading. Details of credit derivatives written as of September 30, 2022 are as follows and there are

no

credit derivatives written as of March 31, 2022.

Types of derivatives	The events or circumstances that would require the seller to perform under the credit derivative	Maximum potential amount of future payment under the credit derivative		Approximate remaining term of the credit derivative		Fair value of the credit derivative
		Millions of yen				Millions of yen
Credit default swap	In case of credit event (bankruptcy, failure to pay, restructuring) occurring in underlying reference company *	¥	1,000		Less than five years	¥	(4	)

* Underlying reference company’s credit ratings are A1 or better rated by rating agencies as of September 30, 2022.

– 120 –

21. Offsetting Assets and Liabilities

The gross amounts recognized, gross amounts offset, and net amounts presented in the consolidated balance sheets regarding derivative assets and liabilities as of March 31, 2022 and September 30, 2022 are as follows.

March 31, 2022

	Millions of yen
	Gross amounts recognized		Gross amounts offset in the consolidated balance sheets			Net amounts presented in the consolidated balance sheets		Gross amounts not offset in the consolidated balance sheets *						Net amount
								Financial instruments			Collateral received/pledged
Derivative assets	¥	51,366	¥	(20,333	)	¥	31,033	¥	0		¥	(1,060	)	¥	29,973
Total assets	¥	51,366	¥	(20,333	)	¥	31,033	¥	0		¥	(1,060	)	¥	29,973
Derivative liabilities	¥	105,705	¥	(20,333	)	¥	85,372	¥	(15,409	)	¥	0		¥	69,963
Total liabilities	¥	105,705	¥	(20,333	)	¥	85,372	¥	(15,409	)	¥	0		¥	69,963

September 30, 2022

	Millions of yen
	Gross amounts recognized		Gross amounts offset in the consolidated balance sheets			Net amounts presented in the consolidated balance sheets		Gross amounts not offset in the consolidated balance sheets *						Net amount
								Financial instruments			Collateral received/pledged
Derivative assets	¥	124,540	¥	(35,089	)	¥	89,451	¥	0		¥	(5,257	)	¥	84,194
Total assets	¥	124,540	¥	(35,089	)	¥	89,451	¥	0		¥	(5,257	)	¥	84,194
Derivative liabilities	¥	120,079	¥	(35,089	)	¥	84,990	¥	(13,171	)	¥	0		¥	71,819
Total liabilities	¥	120,079	¥	(35,089	)	¥	84,990	¥	(13,171	)	¥	0		¥	71,819

* The balances related to enforceable master netting agreements or similar agreements which were not offset in the consolidated balance sheets.

– 121 –

22. Estimated Fair Value of Financial Instruments

The following information is provided to help readers gain an understanding of the relationship between carrying amounts of financial instruments reported in the Company’s consolidated balance sheets and the related market or fair value. The disclosures do not include net investment in leases, investment in affiliates, pension obligations and insurance contracts and reinsurance contracts except for those classified as investment contracts.

March 31, 2022

	Millions of yen
	Carrying amount		Estimated fair value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	¥	954,827	¥	954,827	¥	954,827	¥	0	¥	0
Restricted cash		136,985		136,985		136,985		0		0
Installment loans (net of allowance for credit losses)		3,814,773		3,806,552		0		261,031		3,545,521
Equity securities*1		385,271		385,271		112,200		160,099		112,972
Trading debt securities		2,503		2,503		0		2,503		0
Available-for-sale debt securities		2,174,891		2,174,891		1,095		2,032,736		141,060
Held-to-maturity debt securities		114,312		135,441		0		112,678		22,763
Other Assets:
Time deposits		4,197		4,197		0		4,197		0
Derivative assets*2		31,033		31,033		0		0		0
Reinsurance recoverables (Investment contracts)		6,216		6,049		0		0		6,049
Liabilities:
Short-term debt	¥	439,639	¥	439,639	¥	0	¥	439,639	¥	0
Deposits		2,106,900		2,108,169		0		2,108,169		0
Policy liabilities and Policy account balances (Investment contracts)		178,170		178,159		0		0		178,159
Long-term debt		4,427,046		4,426,629		0		1,456,822		2,969,807
Other Liabilities:
Derivative liabilities*2		85,372		85,372		0		0		0

*1 The amount of ¥25,999 million of investment funds measured at net asset value per share is not included.

*2 It represents the amount after offset under counterparty netting of derivative assets and liabilities. For the information of input level before netting, see Note 3 “Fair Value Measurements.”

– 122 –

September 30, 2022

	Millions of yen
	Carrying amount		Estimated fair value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	¥	925,965	¥	925,965	¥	925,965	¥	0	¥	0
Restricted cash		120,056		120,056		120,056		0		0
Installment loans (net of allowance for credit losses)		3,930,534		3,897,327		0		356,411		3,540,916
Equity securities*1		362,265		362,265		98,885		133,008		130,372
Trading debt securities		2,948		2,948		0		2,948		0
Available-for-sale debt securities		2,215,540		2,215,540		5,674		2,014,861		195,005
Held-to-maturity debt securities		115,461		130,882		0		109,443		21,439
Other Assets:
Time deposits		5,544		5,544		0		5,544		0
Derivative assets*2		89,451		89,451		0		0		0
Reinsurance recoverables (Investment contracts)		5,772		5,551		0		0		5,551
Liabilities:
Short-term debt	¥	461,673	¥	461,673	¥	0	¥	461,673	¥	0
Deposits		2,098,724		2,099,855		0		2,099,855		0
Policy liabilities and Policy account balances (Investment contracts)		169,380		169,339		0		0		169,339
Long-term debt		4,948,712		4,895,318		0		1,709,834		3,185,484
Other Liabilities:
Derivative liabilities*2		84,990		84,990		0		0		0

*1 The amount of ¥47,936 million of investment funds measured at net asset value per share is not included.

*2 It represents the amount after offset under counterparty netting of derivative assets and liabilities. For the information of input level before netting, see Note 3 “Fair Value Measurements.”

Input level of fair value measurement

If active market prices are available, fair value measurement is based on quoted active market prices and classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1 such as quoted market prices of similar assets and classified as Level 2. If market prices are not available and there are no observable inputs, then fair value is estimated by using valuation models including discounted cash flow methodologies, commonly used option-pricing models and broker quotes and classified as Level 3, as the valuation models and broker quotes are based on inputs that are unobservable in the market.

– 123 –

23. Commitments, Guarantees and Contingent Liabilities

Commitments

—The Company and certain subsidiaries have commitments for the purchase of equipment to be leased, having a cost of ¥3,475 million and ¥3,475 million as of March 31, 2022 and September 30, 2022, respectively.

Certain computer systems of the Company and certain subsidiaries have been operated and maintained under

non-cancelable

contracts with third-party service providers. For such services, the Company and certain subsidiaries made payments totaling ¥3,906 million and ¥4,138 million for the six months ended September 30, 2021 and 2022, respectively, and ¥1,256 million and ¥2,055 million for the three months ended September 30, 2021 and 2022, respectively. As of March 31, 2022 and September 30, 2022, the amounts due are as follows:

	Millions of yen
	March 31, 2022		September 30, 2022
Within one year	¥	5,205	¥	5,333
More than one year		5,569		7,747
Total	¥	10,774	¥	13,080

The Company and certain subsidiaries have commitments to fund estimated construction costs and so forth to complete ongoing real estate development projects and other commitments, totaling ¥128,449 million and ¥142,224 million as of March 31, 2022 and September 30, 2022, respectively.

The Company and certain subsidiaries have agreements to commit to execute loans for customers, and to invest in funds, as long as the agreed-upon terms are met. The total unused credit and capital amount available are ¥436,784 million and ¥487,335 million as of March 31, 2022 and September 30, 2022, respectively.

– 124 –

Guarantees

—At the inception of a guarantee, the Company and its subsidiaries recognize a liability in the consolidated balance sheets at fair value for the guarantee within the scope of ASC 460 (“Guarantees”). Some of these guarantees, whose contractual obligations cannot be unconditionally cancelled, are in the scope of the Credit Losses Standard and are recognized as other liabilities in the consolidated balance sheets. The following table represents the summary of potential future payments, book value recorded as guarantee liabilities of the guarantee contracts outstanding and maturity of the longest guarantee contracts as of March 31, 2022 and September 30, 2022:

	March 31, 2022						September 30, 2022
	Millions of yen				Fiscal year		Millions of yen				Fiscal year
Guarantees	Potential future payment		Book value of guarantee   liabilities		Maturity of the longest contract		Potential future payment		Book value of guarantee   liabilities		Maturity of the longest contract
Corporate loans	¥	436,414	¥	4,895		2027	¥	473,961	¥	5,018		2028
Transferred loans		417,587		4,103		2062		478,152		3,569		2062
Consumer loans		284,891		47,461		2033		284,499		47,862		2033
Real estate loans		12,087		3,953		2048		7,860		2,599		2048
Other		2,294		46		2035		2,745		55		2035
Total	¥	1,153,273	¥	60,458		—	¥	1,247,217	¥	59,103		—

Guarantee of corporate loans:

The Company and certain subsidiaries mainly guarantee corporate loans issued by financial institutions for customers. The Company and the subsidiaries are obliged to pay the outstanding loans when the guaranteed customers fail to pay principal and/or interest in accordance with the contract terms. In some cases, the corporate loans are secured by the guaranteed customers’ assets. Once the Company and the subsidiaries assume the guaranteed customers’ obligation, the Company and the subsidiaries obtain a right to claim the collateral assets. In other cases, certain contracts that guarantee corporate loans issued by financial institutions for customers include contracts that the amounts of performance guarantee are limited to a certain range of guarantee commissions. As of March 31, 2022 and September 30, 2022, total notional amount of the loans subject to such guarantees are ¥563,000 million and ¥563,000 million, respectively, and book value of guarantee liabilities are ¥2,317 million and ¥2,393 million, respectively. The potential future payment amounts for these guarantees are limited to a certain range of the guarantee commissions, which are less than the total notional amounts of the loans subject to these guarantees. The potential future payment amounts for the contract period are calculated from the guarantee limit which is arranged by financial institutions in advance as to contracts that the amounts of performance guarantee are unlimited to a certain range of guarantee commissions. For this reason, the potential future payment amounts for these guarantees include the amount of the guarantee which may occur in the future, which is larger than the balance of guarantee executed as of the end of fiscal year or the end of interim period. The executed guarantee balance includes defrayment by financial institutions which we bear temporarily at the time of execution, and credit risk for financial institutions until liquidation of this guarantee. Our substantial amounts of performance guarantee except credit risk for financial institutions are limited to our defrayment which is arranged by financial institutions in advance.

Payment or performance risk of the guarantees is considered based on the historical experience of credit events. There have been no significant changes in the payment or performance risk of the guarantees for the six months ended September 30, 2022.

Guarantee of transferred loans:

A subsidiary in the United States is authorized to underwrite, originate, fund, and service multi-family and seniors housing loans without prior approval mainly from Fannie Mae under the Delegated Underwriting and Servicing program and Freddie Mac under the Delegated Underwriting Initiative program. As part of these programs, Fannie Mae and Freddie Mac provide a commitment to purchase the loans.

Under these programs, the subsidiary guarantees the performance of the loans transferred to Fannie Mae and Freddie Mac and has the payment or performance risk of the guarantees to absorb some of the losses when losses arise from the transferred loans. There were no significant changes in the payment or performance risk of these guarantees for the six months ended September 30, 2022.

As of March 31, 2022 and September 30, 2022, the total outstanding principal amount of loans transferred under the Delegated Underwriting and Servicing program, for which the subsidiary guarantees to absorb some of the losses, were ¥2,121,074 million and ¥2,424,888 million, respectively.

– 125 –

Guarantee of consumer loans:

A certain subsidiary guarantees consumer loans, typically card loans, issued by Japanese financial institutions. The subsidiary is obligated to pay the outstanding obligations when these loans become delinquent generally three months or more.

Payment or performance risk of the guarantees is considered based on the historical experience of credit events. There were no significant changes in the payment or performance risk of the guarantees for the six months ended September 30, 2022.

Guarantee of real estate loans:

The Company and certain subsidiaries guarantee real estate loans for consumer issued by Japanese financial institutions to third party individuals. The Company and the subsidiaries are typically obliged to pay the outstanding loans when these loans become delinquent three months or more. The real estate loans are usually secured by the real properties. Once the Company and the subsidiaries assume the guaranteed parties’ obligation, the Company and the subsidiaries obtain a right to claim the collateral assets.

Payment or performance risk of the guarantees is considered based on the historical experience of credit events. There were no significant changes in the payment or performance risk of the guarantees for the six months ended September 30, 2022.

Other guarantees:

Other guarantees include the guarantees to financial institutions and the guarantees derived from collection agency agreements. Pursuant to the contracts of the guarantees to financial institutions, a certain subsidiary pays to the financial institutions when customers of the financial institutions become debtors and default on the debts. Pursuant to the agreements of the guarantees derived from collection agency agreements, the Company and certain subsidiaries collect third parties’ debt and pay the uncovered amounts.

Allowance for

off-balance

sheet credit exposures—

If the entity has a present contractual obligation to extend the credit and the obligation is not unconditionally cancelable by the entity, credit losses related the loan commitments of card loans and installment loans and financial guarantees are in the scope of the allowance for credit losses. For the loan commitments of card loans and installment loans, credit losses are recognized on the loan commitments for the portion expected to be drawn. For financial guarantees, the allowance is recognized for the contingent obligation which generates credit risk exposures. These allowance for

off-balance

sheet credit exposures is measured using the same measurement objectives as the allowance for loans and net investment leases, considering quantitative and qualitative factors including historical loss experience, current conditions and reasonable and supportable forecasts. The allowance for

off-balance

sheet credit exposure is recorded as other liabilities in the consolidated balance sheets and the allowance were ¥22,120 million and ¥22,023 million as of March 31 and September 30, 2022, respectively. Additionally, for the six months ended September 30, 2021 and 2022, provision for credit losses for

off-balance

sheet credit exposure were reversals of ¥2,369 million and ¥868 

million, respectively, which was mainly due to improved macroeconomic forecast in the Americas. For the three months ended September 30, 2021 and 2022, provision for credit losses for

off-balance

sheet credit exposure were reversals

of ¥468 million and ¥225 

million, respectively, which was mainly due to improved macroeconomic forecast in the Americas.

Contingencies—

The Company and certain subsidiaries are involved in legal proceedings and claims in the ordinary course of business. In the opinion of management, none of such proceedings and claims will have a significant impact on the Company’s financial position or results of operations.

Collateral—

Other than the assets of the consolidated VIEs pledged as collateral for financing described in Note 10 “Variable Interest Entities”, the Company and certain subsidiaries provide the following assets as collateral for the short-term and long-term debt payables to financial institutions as of March 31, 2022 and September 30, 2022:

	Millions of yen
	March 31, 2022		September 30, 2022
Lease payments, loans and investment in operating leases	¥	106,699	¥	140,945
Investment in securities		175,912		177,986
Property under facility operations		112,730		127,032
Other assets and other		27,784		38,685
Total	¥	423,125	¥	484,648

As of March 31, 2022 and September 30, 2022, debt liabilities were secured by shares of subsidiaries, which were eliminated through consolidation adjustment, of ¥147,428 million and ¥147,873 million, respectively, and debt liabilities of affiliates were secured by investment in affiliates of ¥38,399 million and ¥33,933 million, respectively. As of March 31, 2022 and September 30, 2022, and debt liabilities were secured by loans to subsidiaries, which were eliminated through consolidation adjustment, of ¥10,531 million and ¥10,138 million, respectively. In addition, ¥74,334 million and ¥92,239 million, respectively, were pledged primarily by investment in securities for collateral deposits and deposit for real estate transaction as of March 31, 2022 and September 30, 2022.

Under loan agreements relating to short-term and long-term debt from commercial banks and certain insurance companies, the Company and certain subsidiaries are required to provide collateral against these debts at any time if requested by the lenders. The Company and the subsidiaries did not receive any such requests from the lenders as of September 30, 2022.

– 126 –

24. Segment Information

Financial information about the operating segments reported below is available by segment and evaluated regularly by the chief operating decision maker to make decisions about resource allocations and assess performance.

An overview of operations for each of the ten segments follows below.

Corporate Financial Services and Maintenance Leasing	:	Finance and fee business; leasing and rental of automobiles, electronic measuring instruments and ICT-related equipment
Real Estate	:	Real estate development, rental and management; facility operations; real estate asset management
PE Investment and Concession	:	Private equity investment; concession
Environment and Energy	:	Domestic and overseas renewable energy; electric power retailing; ESCO services; sales of solar panels and battery energy storage system; recycling and waste management
Insurance	:	Life insurance
Banking and Credit	:	Banking; consumer finance
Aircraft and Ships	:	Aircraft investment and management; ship-related finance and investment
ORIX USA	:	Finance, investment and asset management in the Americas
ORIX Europe	:	Asset management of global equity and fixed income
Asia and Australia	:	Finance and investment businesses in Asia and Australia

Since April 1, 2022, a portion of interest expenses and a portion of selling, general and administrative expenses, which were initially included in the difference between segment total profits and consolidated amounts, have been charged directly to their respective segments. As a result of these changes, segment data for the three and six months ended September 30, 2021 has been retrospectively restated.

Financial information of the segments for the six months ended September 30, 2021 and 2022, and segment assets information as of March 31, 2022 and September 30, 2022 are as follows:

	Millions of yen
	Six months ended September 30, 2021				Six months ended September 30, 2022				March 31, 2022		September 30, 2022
	Segment revenues		Segment profits		Segment revenues		Segment profits		Segment assets		Segment assets
Corporate Financial Services and Maintenance Leasing	¥	230,275	¥	46,263	¥	211,427	¥	35,482	¥	1,516,795	¥	1,476,243
Real Estate		202,514		23,031		190,487		18,949		910,101		907,859
PE Investment and Concession		192,150		1,614		250,873		3,905		353,581		370,091
Environment and Energy		63,898		9,502		110,914		10,582		703,608		772,944
Insurance		235,088		32,322		265,870		13,007		2,072,145		2,052,684
Banking and Credit		43,097		20,909		40,944		15,215		2,687,156		2,677,388
Aircraft and Ships		17,748		369		28,496		10,649		684,098		752,565
ORIX USA		84,988		47,094		79,932		21,596		1,364,142		1,624,316
ORIX Europe		101,104		28,458		89,836		16,419		401,869		409,463
Asia and Australia		71,705		19,942		92,434		24,148		1,306,089		1,399,094
Total	¥	1,242,567	¥	229,504	¥	1,361,213	¥	169,952	¥	11,999,584	¥	12,442,647

– 127 –

Financial information of the segments for the three months ended September 30, 2021 and 2022 are as follows:

	Millions of yen
	Three months ended September 30, 2021				Three months ended September 30, 2022
	Segment revenues		Segment profits		Segment revenues		Segment profits
Corporate Financial Services and Maintenance Leasing	¥	120,483	¥	29,061	¥	107,302	¥	19,757
Real Estate		105,752		12,439		93,622		7,011
PE Investment and Concession		92,526		1,456		129,095		1,718
Environment and Energy		34,569		5,159		64,113		5,990
Insurance		125,907		17,175		138,328		2,117
Banking and Credit		20,271		8,729		20,903		7,979
Aircraft and Ships		9,285		5,323		13,932		5,233
ORIX USA		37,294		22,194		44,350		15,557
ORIX Europe		50,648		15,062		46,139		7,118
Asia and Australia		37,057		11,430		47,433		11,531
Total	¥	633,792	¥	128,028	¥	705,217	¥	84,011

The accounting policies of the segments are almost the same as those described in Note 2 “Significant Accounting and Reporting Policies” except for the treatment of income tax expenses, net income attributable to the noncontrolling interests, net income attributable to the redeemable noncontrolling interests. Net income attributable to noncontrolling interests and redeemable noncontrolling interests are not included in segment profits or losses because the management evaluates segments’ performance based on profits or losses

(pre-tax)

attributable to ORIX Corporation Shareholders. Income taxes are not included in segment profits or losses because the management evaluates segments’ performance on a

pre-tax

basis. Most of selling, general and administrative expenses, including compensation costs that are directly related to the revenue generating activities of each segment and excluding the expenses that should be borne by ORIX Group as a whole, have been accumulated by and charged to each segment. Gains and losses that management does not consider for evaluating the performance of the segments, such as write-downs of certain long-lived assets and certain foreign exchange gains or losses (included in other (income) and expense) are excluded from the segment profits or losses, and are regarded as corporate items.

Assets attributed to each segment are net investment in the leases, installment loans, investment in operating leases, investment in securities, property under facility operations, investment in affiliates, inventories, advances for finance lease and operating lease (included in other assets), advances for property under facility operations (included in other assets), goodwill, intangible assets acquired in business combinations (included in other assets) and servicing assets (included in other assets). This has resulted in the depreciation of office facilities being included in each segment’s profit or loss while the carrying amounts of corresponding assets are not allocated to each segment’s assets. However, the effect resulting from this allocation is not significant.

– 128 –

The reconciliation of segment totals to consolidated financial statement amounts is as follows:

Significant items to be reconciled are segment revenues, segment profits and segment assets. Other items do not have a significant difference between segment amounts and consolidated amounts.

	Millions of yen
	Six months ended September 30, 2021			Six months ended September 30, 2022
Segment revenues:
Total revenues for segments	¥	1,242,567		¥	1,361,213
Revenues related to corporate assets		8,580			12,652
Revenues from inter-segment transactions		(9,613	)		(9,049	)
Total consolidated revenues	¥	1,241,534		¥	1,364,816
Segment profits:
Total profits for segments	¥	229,504		¥	169,952
Corporate profits (losses)		(14,934	)		(10,176	)
Net income attributable to the noncontrolling interests and net income attributable to the redeemable noncontrolling interests		6,219			4,570
Total consolidated income before income taxes	¥	220,789		¥	164,346
	Millions of yen
	Three months ended September 30, 2021			Three months ended September 30, 2022
Segment revenues:
Total revenues for segments	¥	633,792		¥	705,217
Revenues related to corporate assets		5,616			6,354
Revenues from inter-segment transactions		(6,687	)		(4,568	)
Total consolidated revenues	¥	632,721		¥	707,003
Segment profits:
Total profits for segments	¥	128,028		¥	84,011
Corporate profits (losses)		(7,898	)		(6,330	)
Net income attributable to the noncontrolling interests and net income attributable to the redeemable noncontrolling interests		603			1,650
Total consolidated income before income taxes	¥	120,733		¥	79,331
	Millions of yen
	March 31, 2022			September 30, 2022
Segment assets:
Total assets for segments	¥	11,999,584		¥	12,442,647
Cash and cash equivalents, restricted cash		1,091,812			1,046,021
Allowance for credit losses		(69,459	)		(66,975	)
Trade notes, accounts and other receivable		359,949			356,894
Other corporate assets		888,786			1,007,419
Total consolidated assets	¥	14,270,672		¥	14,786,006

– 129 –

The following information represents geographical revenues and income before income taxes, which are attributed to geographic areas, based on the country location of the Company and its subsidiaries for the six months ended September 30, 2021 and 2022.

For the six months ended September 30, 2021

	Millions of yen
	Six months ended September 30, 2021
	Japan		The Americas *1		Other *2		Total
Total Revenues	¥	964,192	¥	123,687	¥	153,655	¥	1,241,534
Income before Income Taxes		118,925		60,057		41,807		220,789

For the six months ended September 30, 2022

	Millions of yen
	Six months ended September 30, 2022
	Japan		The Americas *1		Other *2		Total
Total Revenues	¥	1,065,266	¥	109,392	¥	190,158	¥	1,364,816
Income before Income Taxes		85,684		24,916		53,746		164,346

The following information represents geographical revenues and income before income taxes, which are attributed to geographic areas, based on the country location of the Company and its subsidiaries for the three months ended September 30, 2021 and 2022.

For the three months ended September 30, 2021

	Millions of yen
	Three months ended September 30, 2021
	Japan		The Americas *1		Other *2		Total
Total Revenues	¥	497,902	¥	56,246	¥	78,573	¥	632,721
Income before Income Taxes		66,184		26,190		28,359		120,733

For the three months ended September 30, 2022

	Millions of yen
	Three months ended September 30, 2022
	Japan		The Americas *1		Other *2		Total
Total Revenues	¥	549,794	¥	60,575	¥	96,634	¥	707,003
Income before Income Taxes		35,235		16,791		27,305		79,331

*1	Mainly the United States
*2	Mainly Asia, Europe, Australasia and Middle East

– 130 –

The following information represents disaggregation of revenues for revenues from contracts with customers, by goods and services category and geographical location for the six months ended September 30, 2021 and 2022.

For the six months ended September 30, 2021

	Millions of yen
	Six months ended September 30, 2021
	Reportable segments
	Corporate Financial Services and Maintenance Leasing		Real Estate		PE Investment and Concession		Environment and Energy		Insurance			Banking and Credit		Aircraft and Ships
Goods or services category
Sales of goods	¥	5,512	¥	1,446	¥	161,106	¥	1,688	¥	0		¥	0	¥	0
Real estate sales		0		59,110		0		0		0			0		0
Asset management and servicing		160		3,117		12		0		0			145		15
Automobile related services		31,332		0		0		101		0			0		0
Facilities operation		0		13,004		0		0		0			0		0
Environment and energy services		1,561		0		44		61,166		0			0		0
Real estate management and brokerage		0		51,685		0		0		0			0		0
Real estate contract work		0		39,371		0		0		0			0		0
Other		25,877		717		13,630		432		1,002			2,822		3,157
Total revenues from contracts with customers		64,442		168,450		174,792		63,387		1,002			2,967		3,172
Geographical location
Japan		63,975		168,450		174,792		63,387		1,002			2,967		2,180
The Americas		0		0		0		0		0			0		0
Other		467		0		0		0		0			0		992
Total revenues from contracts with customers		64,442		168,450		174,792		63,387		1,002			2,967		3,172
Other revenues *		165,833		34,064		17,358		511		234,086			40,130		14,576
Segment revenues/Total revenues	¥	230,275	¥	202,514	¥	192,150	¥	63,898	¥	235,088		¥	43,097	¥	17,748
	Millions of yen
	Six months ended September 30, 2021
	Reportable segments								Corporate revenue and intersegment transactions			Total revenues
	ORIX USA		ORIX Europe		Asia and Australia		Total
Goods or services category
Sales of goods	¥	1,066	¥	0	¥	28	¥	170,846	¥	632		¥	171,478
Real estate sales		67		0		0		59,177		0			59,177
Asset management and servicing		7,806		99,238		0		110,493		(31	)		110,462
Automobile related services		0		0		6,371		37,804		(6	)		37,798
Facilities operation		0		0		0		13,004		308			13,312
Environment and energy services		681		0		0		63,452		(1,014	)		62,438
Real estate management and brokerage		0		0		0		51,685		(1,480	)		50,205
Real estate contract work		0		0		0		39,371		(108	)		39,263
Other		1,302		38		396		49,373		1,605			50,978
Total revenues from contracts with customers		10,922		99,276		6,795		595,205		(94	)		595,111
Geographical location
Japan		0		0		0		476,753		(72	)		476,681
The Americas		10,922		37,587		0		48,509		0			48,509
Other		0		61,689		6,795		69,943		(22	)		69,921
Total revenues from contracts with customers		10,922		99,276		6,795		595,205		(94	)		595,111
Other revenues *		74,066	��	1,828		64,910		647,362		(939	)		646,423
Segment revenues/Total revenues	¥	84,988	¥	101,104	¥	71,705	¥	1,242,567	¥	(1,033	)	¥	1,241,534

– 131 –

For the six months ended September 30, 2022

	Millions of yen
	Six months ended September 30, 2022
	Reportable segments
	Corporate Financial Services and Maintenance Leasing		Real Estate			PE Investment and Concession		Environment and Energy			Insurance			Banking and Credit		Aircraft and Ships
Goods or services category
Sales of goods	¥	2,804	¥	1,446		¥	216,680	¥	1,832		¥	0		¥	0	¥	0
Real estate sales		0		39,064			0		0			0			0		0
Asset management and servicing		161		3,173			0		136			0			223		34
Automobile related services		30,919		0			0		151			0			0		0
Facilities operation		0		24,609			0		0			0			0		0
Environment and energy services		1,749		24			40		107,095			0			0		0
Real estate management and brokerage		0		50,103			0		0	��		0			0		0
Real estate contract work		0		40,912			0		0			0			0		0
Other		18,770		779			15,531		538			1,288			3,274		5,060
Total revenues from contracts with customers		54,403		160,110			232,251		109,752			1,288			3,497		5,094
Geographical location
Japan		54,403		160,110			232,251		99,135			1,288			3,497		1,439
The Americas		0		0			0		0			0			0		0
Other		0		0			0		10,617			0			0		3,655
Total revenues from contracts with customers		54,403		160,110			232,251		109,752			1,288			3,497		5,094
Other revenues *		157,024		30,377			18,622		1,162			264,582			37,447		23,402
Segment revenues/Total revenues	¥	211,427	¥	190,487		¥	250,873	¥	110,914		¥	265,870		¥	40,944	¥	28,496
	Millions of yen
	Six months ended September 30, 2022
	Reportable segments										Corporate revenue and intersegment transactions			Total revenues
	ORIX USA		ORIX Europe			Asia and Australia		Total
Goods or services category
Sales of goods	¥	1,267	¥	0		¥	658	¥	224,687		¥	1,260		¥	225,947
Real estate sales		9		0			0		39,073			0			39,073
Asset management and servicing		10,226		98,373			0		112,326			(19	)		112,307
Automobile related services		0		0			8,935		40,005			1			40,006
Facilities operation		0		0			0		24,609			388			24,997
Environment and energy services		914		0			0		109,822			(953	)		108,869
Real estate management and brokerage		0		0			0		50,103			(750	)		49,353
Real estate contract work		0		0			0		40,912			21			40,933
Other		2,793		41			1,069		49,143			2,971			52,114
Total revenues from contracts with customers		15,209		98,414			10,662		690,680			2,919			693,599
Geographical location
Japan		0		0			0		552,123			3,257			555,380
The Americas		15,209		36,694			0		51,903			0			51,903
Other		0		61,720			10,662		86,654			(338	)		86,316
Total revenues from contracts with customers		15,209		98,414			10,662		690,680			2,919			693,599
Other revenues *		64,723		(8,578	)		81,772		670,533			684			671,217
Segment revenues/Total revenues	¥	79,932	¥	89,836		¥	92,434	¥	1,361,213		¥	3,603		¥	1,364,816

– 132 –

The following information represents disaggregation of revenues for revenues from contracts with customers, by goods and services category and geographical location for the three months ended September 30, 2021 and 2022.

For the three months ended September 30, 2021

	Millions of yen
	Three months ended September 30, 2021
	Reportable segments
	Corporate Financial Services and Maintenance Leasing		Real Estate			PE Investment and Concession		Environment and Energy		Insurance			Banking and Credit		Aircraft and Ships
Goods or services category
Sales of goods	¥	2,251	¥	836		¥	76,664	¥	920	¥	0		¥	0	¥	0
Real estate sales		0		29,864			0		0		0			0		0
Asset management and servicing		89		1,387			3		0		0			77		9
Automobile related services		14,897		0			0		51		0			0		0
Facilities operation		0		7,927			0		0		0			0		0
Environment and energy services		806		0			44		33,170		0			0		0
Real estate management and brokerage		0		26,217			0		0		0			0		0
Real estate contract work		0		22,567			0		0		0			0		0
Other		13,395		377			6,838		178		515			1,436		1,872
Total revenues from contracts with customers		31,438		89,175			83,549		34,319		515			1,513		1,881
Geographical location
Japan		31,273		89,175			83,549		34,319		515			1,513		1,432
The Americas		0		0			0		0		0			0		0
Other		165		0			0		0		0			0		449
Total revenues from contracts with customers		31,438		89,175			83,549		34,319		515			1,513		1,881
Other revenues *		89,045		16,577			8,977		250		125,392			18,758		7,404
Segment revenues/Total revenues	¥	120,483	¥	105,752		¥	92,526	¥	34,569	¥	125,907		¥	20,271	¥	9,285
	Millions of yen
	Three months ended September 30, 2021
	Reportable segments									Corporate revenue and intersegment transactions			Total revenues
	ORIX USA		ORIX Europe			Asia and Australia		Total
Goods or services category
Sales of goods	¥	552	¥	0		¥	27	¥	81,250	¥	404		¥	81,654
Real estate sales		33		0			0		29,897		0			29,897
Asset management and servicing		3,328		50,700			0		55,593		(13	)		55,580
Automobile related services		0		0			3,297		18,245		(7	)		18,238
Facilities operation		0		0			0		7,927		166			8,093
Environment and energy services		424		0			0		34,444		(573	)		33,871
Real estate management and brokerage		0		0			0		26,217		(1,094	)		25,123
Real estate contract work		0		0			0		22,567		(114	)		22,453
Other		962		22			221		25,816		574			26,390
Total revenues from contracts with customers		5,299		50,722			3,545		301,956		(657	)		301,299
Geographical location
Japan		0		0			0		241,776		(647	)		241,129
The Americas		5,299		19,116			0		24,415		0			24,415
Other		0		31,606			3,545		35,765		(10	)		35,755
Total revenues from contracts with customers		5,299		50,722			3,545		301,956		(657	)		301,299
Other revenues *		31,995		(74	)		33,512		331,836		(414	)		331,422
Segment revenues/Total revenues	¥	37,294	¥	50,648		¥	37,057	¥	633,792	¥	(1,071	)	¥	632,721

– 133 –

For the three months ended September 30, 2022

	Millions of yen
	Three months ended September 30, 2022
	Reportable segments
	Corporate Financial Services and Maintenance Leasing		Real Estate			PE Investment and Concession		Environment and Energy		Insurance			Banking and Credit		Aircraft and Ships
Goods or services category
Sales of goods	¥	1,445	¥	781		¥	111,496	¥	1,107	¥	0		¥	0	¥	0
Real estate sales		0		17,387			0		0		0			0		0
Asset management and servicing		90		1,342			0		100		0			118		17
Automobile related services		15,145		0			0		64		0			0		0
Facilities operation		0		14,064			0		0		0			0		0
Environment and energy services		878		11			26		62,310		0			0		0
Real estate management and brokerage		0		25,185			0		0		0			0		0
Real estate contract work		0		22,816			0		0		0			0		0
Other		9,295		473			7,956		200		652			1,636		2,625
Total revenues from contracts with customers		26,853		82,059			119,478		63,781		652			1,754		2,642
Geographical location
Japan		26,853		82,059			119,478		57,763		652			1,754		568
The Americas		0		0			0		0		0			0		0
Other		0		0			0		6,018		0			0		2,074
Total revenues from contracts with customers		26,853		82,059			119,478		63,781		652			1,754		2,642
Other revenues *		80,449		11,563			9,617		332		137,676			19,149		11,290
Segment revenues/Total revenues	¥	107,302	¥	93,622		¥	129,095	¥	64,113	¥	138,328		¥	20,903	¥	13,932
	Millions of yen
	Three months ended September 30, 2022
	Reportable segments									Corporate revenue and intersegment transactions			Total revenues
	ORIX USA		ORIX Europe			Asia and Australia		Total
Goods or services category
Sales of goods	¥	564	¥	0		¥	213	¥	115,606	¥	719		¥	116,325
Real estate sales		10		0			0		17,397		0			17,397
Asset management and servicing		4,607		48,586			0		54,860		(10	)		54,850
Automobile related services		0		0			4,679		19,888		4			19,892
Facilities operation		0		0			0		14,064		173			14,237
Environment and energy services		510		0			0		63,735		(514	)		63,221
Real estate management and brokerage		0		0			0		25,185		(352	)		24,833
Real estate contract work		0		0			0		22,816		(31	)		22,785
Other		763		23			805		24,428		1,267			25,695
Total revenues from contracts with customers		6,454		48,609			5,697		357,979		1,256			359,235
Geographical location
Japan		0		0			0		289,127		1,384			290,511
The Americas		6,454		18,267			0		24,721		0			24,721
Other		0		30,342			5,697		44,131		(128	)		44,003
Total revenues from contracts with customers		6,454		48,609			5,697		357,979		1,256			359,235
Other revenues *		37,896		(2,470	)		41,736		347,238		530			347,768
Segment revenues/Total revenues	¥	44,350	¥	46,139		¥	47,433	¥	705,217	¥	1,786		¥	707,003

* Other revenues include revenues that are not in the scope of revenue from contracts with customers, such as life insurance premiums and related investment income, operating leases, finance revenues that include interest income, and others.

– 134 –

25. Subsequent Events

There are no material subsequent events.

– 135 –