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SECURITIES AND EXCHANGE COMMISSION

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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 April, 2003.

ORIX Corporation

3-22-8 Shiba, Minato-Ku, Tokyo, JAPAN

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     (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F x		Form 40-F o

     (Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes o		No x

 

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SIGNATURES
Material Contained in this Report
Consolidated Financial Results from April 1, 2002 to March 31, 2003
Summary of Consolidated Financial Results
Segment Information
	Basis of presentation and significant accounting policies
Investment in Securities
Derivative Financial Instruments

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Table of Documents Filed

		Page
1.	ORIX’s Annual Consolidated Financial Results (April 1, 2002 – March 31, 2003) filed with the Tokyo Stock Exchange on Friday, April 25, 2003.

 

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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: April 28, 2003		By	/s/ Masaru Hattori Masaru Hattori Corporate Senior Vice President Head of the Accounting Department ORIX Corporation

 

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Consolidated Financial Results
April 1, 2002 — March 31, 2003

April 25, 2003

In preparing its consolidated financial information, ORIX Corporation and its subsidiaries have complied with accounting principles generally accepted in the United States of America, except as modified to account for stock splits in accordance with the usual practice in Japan.

U.S. Dollar amounts have been calculated at Yen 120.20 to $1.00, the approximate exchange rate prevailing at March 31, 2003.

These documents may contain forward-looking statements about expected future events and financial results that involve risks and uncertainties. Such statements are based on our current expectations and are subject to uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, those described under “Risk Factors” in the Company’s annual report on Form 20-F filed with the United States Securities and Exchange Commission.

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

For further Information please contact:

Corporate Communications ORIX Corporation 3-22-8 Shiba, Minato-ku, Tokyo 105-8683 JAPAN Tel: (03) 5419-5102  Fax: (03) 5419-5901 E-mail: leslie_hoy@orix.co.jp

 

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Material Contained in this Report

     The Company’s Financial information for the fiscal year from April 1, 2002 to March 31, 2003, filed with the Tokyo Stock Exchange and also made public by way of press release.

 

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Consolidated Financial Results from April 1, 2002 to March 31, 2003

Corporate Name:		ORIX Corporation
Listed Exchanges:		Tokyo Stock Exchange (Securities No. 8591) Osaka Securities Exchange Nagoya Stock Exchange New York Stock Exchange (Trading Symbol: IX)
Head Office:		Tokyo JAPAN Tel: (03)5419-5102 (URL http://www.orix.co.jp/ir_e/ir_index.htm)

Date Approved by Board of Directors:           April 25, 2003

1.  Performance Highlights for the Years Ended March 31, 2003 and 2002
(1) Performance Highlights — Operating Results

		Total				Year-on-Year				Operating				Year-on-Year				Income before				Year-on-Year
		Revenues				Change				Income				Change				Income Taxes				Change
		(millions of JPY)*1
March 31, 2003			683,645				3.8	%			38,083				(48.1	%)			46,288				(36.6	%)
March 31, 2002			658,462				12.3	%			73,369				28.4	%			73,039				23.3	%

										Basic				Diluted
						Year-on-Year				Earnings				Earnings				Return on				Return on				Operating
		Net Income				Change				Per Share				Per Share				Equity				Assets *2				Margin *3
March 31, 2003			30,243				(24.9	%)			361.44				340.95				6.0	%			0.8	%			6.8	%
March 31, 2002			40,269				17.9	%			489.19				467.11				8.4	%			1.2	%			11.1	%

1.		Equity in Net Income (Loss) of and Gain (Loss) on Sales of Affiliates was a net gain of JPY 8,205 million for the year ended March 31, 2003 and a net loss of JPY 330 million for the year ended March 31, 2002.
2.		The average number of shares was 83,672,434 for the year ended March 31, 2003 and 82,318,387 for the year ended March 31, 2002.
3.		Changes in Accounting Principles  Yes (x)     (new accounting adoption) No (  )

Note 1:		Unless otherwise stated, all amounts shown herein are in millions of Japanese yen or millions of U.S. dollars, except for Per Share amounts which are in single yen.
Note 2:		This figure has been calculated using Income Before Income Taxes in accordance with Tokyo Stock Exchange disclosure practice. The figure on following pages is calculated using Net Income.
Note 3:		In this context, Operating Margin is calculated by dividing Income Before Income Taxes by Total Revenues.

(2)  Performance Highlights — Financial Position

						Shareholders'				Shareholders'				Shareholders'
		Total Assets				Equity				Equity Ratio				Equity Per Share
March 31, 2003			5,931,067				505,458				8.5	%			6,039.43
March 31, 2002			6,350,219				502,508				7.9	%			6,007.52

1.

The number of shares outstanding (excluding treasury stock) was 83,693,009 as of March 31, 2003 and 83,646,466 as of March 31, 2002.

(3)  Performance Highlights — Cash Flows

		Cash Flows				Cash Flows				Cash Flows				Cash and Cash
		From Operating				From Investing				From Financing				Equivalents
		Activities				Activities				Activities				At End of Period
March 31, 2003			210,150				182,950				(542,040	)			204,677
March 31, 2002			257,635				(305,711	)			246,116				354,748

(4)  Number of Consolidated Subsidiaries and Affiliates

Consolidated Subsidiaries			198
Non-consolidated Subsidiaries			0
Affiliates			72	(Of which 72 are accounted for by the equity method)

(5)  Changes in Accounting Treatment

Additions to and deletions from consolidated subsidiaries and affiliates

Additions: Consolidated Subsidiaries 29, Affiliates 13

Deletions: Consolidated Subsidiaries 6, Affiliates 5

2.  Forecasts for the Year Ending March 31, 2004

Total

Income before

Fiscal Year

Revenues

Income Taxes

Net Income

March 31, 2004

730,000

87,000

48,000

Note:  Basic Earnings Per Share is forecasted to be JPY 573.52.

 

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Group Position

The ORIX group consists of ORIX Corporation, 198 subsidiaries and 72 affiliates, and is developing various operations. The main contents of each operation and the positioning of ORIX Corporation and its subsidiaries are given below. The following classification is the same as that used in the classification of information by segment.

Domestic Operations

(1)		Corporate finance
		This business centers on direct financing leases and installment loans, other than real estate loans, to corporate customers as well as the sale of a variety of financial products and other fee business.
		[Main related companies]

ORIX Corporation, ORIX Alpha Corporation, ORIX Auto Leasing Corporation, IFCO Inc., Nittetsu Lease Co., Ltd.

(2)		Equipment operating leases
		This business principally comprises the rental of precision measuring equipment and personal computers to corporate customers as well as automobile rental operations.
		[Main related companies]

ORIX Rentec Corporation, ORIX Rent-A-Car Corporation

(3)		Real estate-related finance
		This business encompasses real estate loans to corporate customers and housing loans to individuals. ORIX is also expanding its business involving loan servicing, commercial mortgage-backed securities (CMBS), and REITs.
		[Main related companies]

ORIX Corporation, ORIX Trust and Banking Corporation, ORIX Asset Management & Loan Services Corporation

(4)		Real Estate
		This business consists principally of condominium development and office rental activities as well as the operation of such facilities as hotels, employee dormitories, and training facilities.
		[Main related companies]

ORIX Corporation, ORIX Estate Corporation, ORIX Real Estate Corporation

(5)		Life insurance
		This segment consists of direct and agency life insurance sales and related activities conducted by ORIX Life Insurance.
		[Main related companies]

ORIX Life Insurance Corporation

(6)		Other
		The other segment encompasses securities transactions, venture capital operations, consumer card loan operations, and new businesses.
		[Main related companies]

ORIX Corporation, ORIX Credit Corporation, ORIX Capital Corporation, ORIX Securities Corporation, ORIX Baseball Club Co., Ltd., ORIX COMMODITIES Corporation, ORIX Club Corporation, ORIX Investment Corporation

Foreign Operations

(1)		The Americas
		Principal businesses in the Americas segment are direct financing leases, corporate lending, securities investment, commercial mortgage-backed securities (CMBS) related business, and real estate development.
		[Main related companies]

ORIX USA Corporation, ORIX Real Estate Equities, Inc., ORIX Financial Services, Inc., ORIX Capital Markets, LLC, Stockton Holdings Limited

(2)		Asia and Oceania
		Principal businesses in Asia and Oceania involve direct financing leases, operating leases for precision measuring equipment and transportation equipment, corporate lending, and securities investment.
		[Main related companies]

ORIX Investment and Management Private Limited, ORIX Asia Limited, ORIX Australia Corporation Limited, ORIX Taiwan Corporation, PT. ORIX Indonesia Finance, ORIX Leasing Malaysia Berhad, ORIX Leasing Pakistan Limited, ORIX Leasing Singapore Limited, INFRASTRUCTURE LEASING & FINANCIAL SERVICES LIMITED

(3)		Europe
		Principal businesses in Europe center or aircraft operating leases, corporate loans, and securities investments.
		[Main related companies]

ORIX Europe Limited, ORIX Ireland Limited, ORIX Aviation Systems Limited

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Group Structure

The structure of principal business of the ORIX group is as follows.

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Summary of Consolidated Financial Results

Management Policies

Objectives

     ORIX has continued to provide value-added financial products and services to meet its customers’ needs. As the services that customers demand have diversified, we have increased the number and quality of the financial solutions that we provide. As a result, ORIX’s financial services have expanded from leasing, rentals and lending to include life insurance, real estate finance and investment banking activities. As new business opportunities arise in the future, we plan to build on our accumulated knowledge and experience to continue to provide creative and innovative value-added financial solutions.

     ORIX aims to achieve the optimum growth in long-term shareholder value and contribute to society by taking the lead in discovering customers’ needs in order to provide new value-added financial services. This is the basis of ORIX’s management philosophy and we will further strive to focus on areas that fully utilize the specialization of the entire ORIX Group in order to meet our customers’ needs.

     ORIX has placed the utmost importance on profitability by carefully selecting businesses and concentrating its resources to achieve maximum growth in shareholder value. However, in the Japanese financial market, it is quite difficult to achieve a level of risk-adjusted return that is comparable to the global standards. In light of this fact, ORIX is striving to increase the efficiency of its asset-based business and is concentrating more of its resources on investment banking activities with the goal of increasing profitability without increasing assets.

Dividend Policy

     Dividends for the fiscal year ended March 31, 2003 are expected to be 25 yen per common share (15 yen for fiscal year ended March 31, 2002), pending passage of a resolution at the-40th General Annual Meeting of Shareholders scheduled for June 25, 2003. The dividend was increased to address the long downward trend in the dividend payout ratio. ORIX continues to believe that the Company should strive to maximize the return to shareholders by increasing corporate value. There is no change in the basic policy of using retained earnings to invest in highly profitable areas to achieve continued growth.

Unit Shares

     ORIX’s basic policy is to periodically review the number of common shares that make up one trading unit in order to promote a broad participation by investors. With regards to the number of shares that make one unit, ORIX will consider demands from the market and weigh the costs and benefits associated with any changes to the present trading unit.

Corporate Governance

     ORIX has strengthened its corporate governance structure in order to more objectively ensure that business activities are being carried out to maximize shareholder value. For example, ORIX established an Advisory Board in 1997, introduced a Corporate Executive Officer system in 1998, and welcomed independent directors to the Board and set up the Executive Nomination and Compensation Committee in 1999. In addition, ORIX believes that compliance is a foundation of strong corporate governance and continues to strengthen its compliance based on the spirit of EC21, which is our guide to continue to be an “Excellent Company” in the 21st Century. We are actively promoting our Corporate Action Principles and Employee Action Principles as part of compliance. In order to take further steps to strengthen its corporate governance structure, ORIX’s Board of Directors will propose to shareholders at the upcoming 40th Annual General Meeting of Shareholders that ORIX adopt a “Company with Committees” system, which became possible on April 1, 2003 as a result of revisions to the Japanese Commercial Code.

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Financial Results

1.  Fiscal Year Ended March 31, 2003

Economic Environment

     Although the world economy experienced a slight recovery at the beginning of the fiscal year, growth slowed again later in the fiscal year due to greater deflationary pressures. The U.S. economy was able to continue its positive growth, but experienced uncertainty against the backdrop of the war in Iraq and concerns regarding employment. Capital expenditures in Europe were stagnant and resulted in a marked deceleration in the economy. Despite the recovery of the Asian economy, personal consumption and the expansion of exports peaked out and overall economic growth slowed. Japan was equally affected by the events in the world economy. In the first half, a rise in exports and recovery in production led to an improvement in certain areas, however, uncertainty surrounding the future of the world economy and stagnation of the stock market caused a slowdown in the Japanese economy. Furthermore, deflationary pressures continued throughout the fiscal year.

Financial Highlights

	Income before Income Taxes Net Income Earnings Per Share (Basic) Earnings Per Share (Diluted) Shareholders’ Equity Per Share ROE ROA		46,288 million yen (Down 37% year on year) 30,243 million yen (Down 25% year on year) 361.44 yen (Down 26% year on year) 340.95 yen (Down 27% year on year) 6,039.43 yen (Up 1% year on year) 6.0% (March 31, 2002: 8.4%) 0.49% (March 31, 2002: 0.67%)

		Revenues: 683,645 million yen (Up 4% year on year)
		In addition to increases in “residential condominium sales,” “other operating revenues” grew as a result of contributions from new businesses and companies in which investments were made as part of ORIX’s corporate restructuring business. While there was a 9% decrease in revenues in the life insurance business owing to a change in business strategy emphasizing profitability, overall revenues were up 4% year on year to 683,645 million yen.
		Expenses: 645,562 million yen (Up 10% year on year)
		Lower “interest expense” and a drop in “life insurance costs” in line with lower life insurance revenues, reduced expenses. However, increased “costs of residential condominium sales” that accompanied the growth in revenues from condominium development, and the increase in “selling, general and administrative expenses” due to expansion of our business led to higher costs. In addition, the write-down of a golf course in the second quarter and other properties including rental office buildings, hotels, and golf courses in the fourth quarter that were recorded as “write-downs of long-lived assets” totaled 50,682 million yen. Furthermore, an increase in the “provision for doubtful receivables and possible loan losses” was made in light of the deterioration of the airline industry in North America. These factors contributed to an increase in overall expenses of 10% year on year to 645,562 million yen.
		Net Income: 30,243 million yen (Down 25% year on year)
		Although operating income fell 48% year on year, net income only decreased 25% to 30,243 million yen owing to a marked gain in “equity in net income (loss) of and gain (loss) on sales of affiliates,” an extraordinary gain from the excess of the proportionate fair value of the net assets over the purchase price paid by the Company, “negative goodwill,” for an affiliate accounted for by the equity method, and

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		the “cumulative effect of a change in accounting principle” relating to negative goodwill arising from prior acquisitions.
		Operating Assets: 5,168 billion yen (Down 7% year on year)
		New business volumes in areas related to corporate real estate-related finance and the consumer card loan operations, in addition to direct financing leases as a result of acquisitions continued to be strong. However, some direct financing lease and loan assets were securitized, and some investment in securities were liquidated in the life insurance operations. In addition, “other operating assets” declined due to the listing and sale of units of a J-REIT in the first quarter. As a result, operating assets were 5,168 billion yen, down 7% on March 31, 2002.

Segment Information (“Profits” refer to income before income taxes)

Domestic Operations

     Corporate Finance: Operating assets increased as a result of acquisitions, while segment assets at the end of March were down year on year as a result of the securitization of direct financing leases. Total segment profits fell 8%, or 3,908 million yen, year on year to 44,158 million yen as a result of a lower level of gains from securitizations.

     Equipment Operating Leases: The automobile rental operations performed well, but the precision measuring equipment rental business, which makes up the majority of this segment, continued to suffer due to weak demand in the IT sector. In addition, a provision of 2,360 million yen was made for investments in aircraft leasing. As a result, segment profits decreased to 4,402 million yen from 9,906 million yen in the same period of the previous fiscal year.

     Real Estate-Related Finance: Segment profits jumped more than three-fold to 19,572 million yen from 5,654 million yen in the previous fiscal year. The segment saw a continued strong contribution from consumer housing loans—including those purchased in the second half of the previous fiscal year—and corporate non-recourse loans. Proceeds from the listing and sale of a J-REIT in the first quarter and gains from the sale of real estate-related assets in the fourth quarter also contributed to profits.

     Real Estate: The condominium development business continued to perform well. Segment revenues also included gains from the sales of some office buildings, and revenues from rental properties and building maintenance operations. However, this segment recorded a loss of 39,441 million yen compared with a profit of 5,842 million yen in the previous fiscal year due to 50,682 million yen (2,716 million yen in the previous fiscal year) in write-downs of certain real estate assets.

     Life Insurance: A shift in strategy away from savings-type to insurance-only life insurance products was implemented to increase profitability, but the worsening economic environment led to a decrease in life insurance related investment income. As a result, segment profits decreased 973 million yen to 4,791 million yen compared to 5,764 million yen in the previous fiscal year.

     Other: Segment profits rose sharply to 8,452 million yen compared to 4,941 million yen in the previous fiscal year thanks to an increase in interest on consumer card loans as well as a contribution from the securitization of loans in the card loan business.

Foreign Operations

     The Americas: While the costs associated with restructuring of our truck and construction equipment leasing business declined compared to the previous fiscal year, the commercial mortgage-backed securities operations experienced lower earnings. Against the backdrop of a weak American economy, “provision for doubtful receivables and possible loan losses” and “write-downs of securities” were recorded, but segment

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profits increased to 1,332 million yen compared to 810 million yen in the previous fiscal year.

     Asia and Oceania: Strong performance of the corporate lending and automobile leasing operations of each company in the region and contribution from equity method affiliates resulted in an increase in segment profits to 9,765 million yen compared to 5,433 million yen in the previous fiscal year.

     Europe: While the sale of investment securities contributed to profits in the previous fiscal year, no particular contributions were made this fiscal year, resulting in a segment loss of 736 million yen compared to a segment profit of 600 million yen in the previous fiscal year.

2.  Summary of Cash Flows (Fiscal Year Ended March 31, 2003)

     “Cash and cash equivalents” decreased by 42.3% or 150,071 million yen to 204,677 million yen compared to March 31, 2002.

     “Cash flows from operating activities” decreased 18.4% to 210,150 million yen, due mainly to an 85.6% decline in the growth of policy liabilities as a result of the shift away from savings-type products and an increase in other operating assets held for sale, including advance payments.

     “Cash flows from investing activities” were 182,950 million yen, compared to a net outflow of 305,711 million yen in the previous fiscal year. The change was primarily due to a considerably lower level of other operating assets purchased (119,700 million yen in previous fiscal year), a decrease in the amount of securities purchased compared to the previous fiscal year, proceeds from a decrease in other operating assets and the sales of securities.

     “Cash flows from financing activities,” were a net outflow of 542,040 million yen, compared to a net inflow of 246,116 million yen in the previous fiscal year due to the repayment of commercial paper and debt.

3.  Summary of Fourth Quarter (Three Months Ended March 31, 2003)

     In the fourth quarter, revenues increased 7,921 million yen. “Interest on loans and investment securities,” and “other operating revenues” both increased while “brokerage commissions and gains on investment securities” decreased. The 36,017 million yen in “write-downs of long-lived assets” recorded in the fourth quarter was the main factor contributing to a 45,267 million yen increase in expenses compared to the fourth quarter of the previous fiscal year. As a result, there was an operating loss of 17,539 million yen, down 37,346 million yen compared to the fourth quarter of the previous fiscal year. Income before income taxes was a loss of 15,010 million yen and the net loss for the fourth quarter was held to 4,969 million yen due primarily to an extraordinary gain from the recognition of negative goodwill from an affiliate accounted for by the equity method.

4.  Outlook and Forecasts for the Fiscal Year Ending March 31, 2004

     In light of concerns of a worldwide recession, it is still uncertain how the world economy will be affected. Corporate earnings and personal consumption are expected to remain sluggish in Japan.

     Despite the difficulties in the economic environment, for the fiscal year ending March 31, 2004, we forecast “revenues” of 730,000 million yen (up 7% compared with the fiscal year ended March 31, 2003), “income before income taxes” of 87,000 million yen (up 88%), and “net income” of 48,000 million yen (up 59%).

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Consolidated Financial Highlights
(For the Years Ended March 31, 2003 and 2002)

				Year ended				Year-on-Year				Year ended				Year-on-Year
				March 31, 2003				Change				March 31, 2002				Change
				(millions of JPY, except for per share data)
Operating Assets
Investment in Direct Financing Leases					1,572,308				95	%			1,658,669				100	%
Installment Loans					2,288,039				101	%			2,273,280				123	%
Investment in Operating Leases					529,044				111	%			474,491				105	%
Investment in Securities					677,435				79	%			861,336				91	%
Other Operating Assets					101,481				39	%			260,373				197	%
Total					5,168,307				93	%			5,528,149				110	%
Operating Results
Total Revenues					683,645				104	%			658,462				112	%
Income before Income Taxes					46,288				63	%			73,039				123	%
Net Income					30,243				75	%			40,269				118	%
Earnings Per Share
	Income before Extraordinary Gain and Cumulative
	Effect of a Change in Accounting Principle
		Basic			299.88				62	%			487.57				117	%
		Diluted			283.04				61	%			465.57				116	%
	Net Income
		Basic			361.44				74	%			489.19				117	%
		Diluted			340.95				73	%			467.11				116	%
Shareholders’ Equity Per Share					6,039.43				101	%			6,007.52				106	%
Financial Position
Shareholders’ Equity					505,458				101	%			502,508				109	%
Number of Shares (‘000) (excluding treasury stock)					83,693				100	%			83,646				102	%
Long-and Short-Term Debt and Deposits					4,239,514				91	%			4,679,566				115	%
Total Assets					5,931,067				93	%			6,350,219				114	%
Shareholders’ Equity Ratio					8.5	%			108	%			7.9	%			95	%
Return on Equity					6.0	%			71	%			8.4	%			109	%
New Business Volumes
Direct Financing Leases
		New Receivables Added			1,000,896				92	%			1,083,070				129	%
		New Equipment Acquisitions			895,848				91	%			980,379				136	%
Installment Loans					1,268,170				95	%			1,340,400				181	%
Operating Leases					173,567				119	%			146,203				102	%
Investment in Securities					231,294				66	%			348,347				88	%
Other Operating Assets					116,736				57	%			204,121				158	%

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Condensed Consolidated Statements of Income
(For the Years Ended March 31, 2003 and 2002)

		Year ended				Year-on-Year				Year ended				Year-on-Year				U.S. dollars
		March 31, 2003				Change (%)				March 31, 2002				Change (%)				March 31, 2003
		(millions of JPY, millions of US$)
Total Revenues:			683,645				104				658,462				112				5,688
Direct Financing Leases			122,928				101				121,914				100				1,023
Operating Leases			127,608				106				120,807				106				1,062
Interest on Loans and Investment Securities			131,590				108				121,962				111				1,095
Brokerage Commissions and Gains on Investment Securities			10,857				59				18,367				152				90
Life Insurance Premiums and Related Investment Income			138,511				91				152,333				96				1,152
Residential Condominium Sales			71,165				123				58,078				157				592
Interest Income on Deposits			526				38				1,374				55				4
Other Operating Revenues			80,460				126				63,627				203				670
Total Expenses:			645,562				110				585,093				111				5,371
Interest Expense			71,990				80				90,348				83				599
Depreciation — Operating Leases			80,565				105				77,047				113				670
Life Insurance Costs			125,684				90				139,786				97				1,046
Costs of Residential Condominium Sales			60,769				123				49,517				154				506
Other Operating Expenses			41,359				140				29,614				257				344
Selling, General and Administrative Expenses			144,271				114				126,316				125				1,200
Provision for Doubtful Receivables and Possible Loan Losses			54,706				107				51,367				115				455
Write-downs of Long-Lived Assets			50,682				1,866				2,716				66				422
Write-downs of Securities			14,325				73				19,742				182				119
Foreign Currency Transaction Loss (Gain), Net			1,211				—				(1,360	)			—				10
Operating Income			38,083				52				73,369				128				317
Equity in Net Income (Loss) of and Gain (Loss) on Sales of Affiliates			8,205				—				(330	)			—				68
Income before Income Taxes			46,288				63				73,039				123				385
Income Taxes Provision			21,196				64				32,903				131				176
Income before Extraordinary Gain and Cumulative Effect of a Change in Accounting Principle			25,092				63				40,136				118				209
Extraordinary Gain			3,214				—				—				—				27
Cumulative Effect of a Change in Accounting Principle			1,937				1,456				133				—				16
Net Income			30,243				75				40,269				118				252

Note:		1.		The Company recognized an extraordinary gain due to the excess of the proportionate fair value of the net assets over the purchase price of The Fuji Fire and Marine Insurance Company Limited paid by the Company (“Negative Goodwill”).
		2.		On April 1, 2002, as a result of the adoption of FASB Statement No. 141 (“Business Combinations”), the Company and its subsidiaries recorded a transition gain arising from the write-off of “Negative Goodwill” of JPY1,937 million (US$16 million) as of March 31, 2002 as the “Cumulative Effect of a Change in Accounting Principle.”
		3.		As of the beginning of the previous fiscal year ended March 31, 2002, a transition adjustment of JPY 133 million as a result of the adoption of FASB Statement No.133 (“Accounting for Derivative Instruments and Hedging Activities”) was recorded as “Cumulative Effect of a Change in Accounting Principle”
		4.		“Residential Condominium Sales” and “Costs of Residential Condominium Sales” were reclassified from “Other Operating Revenues” and “Other Operating Expenses,” respectively.

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Condensed Consolidated Statements of Income
(For the Three Months Ended March 31, 2003 and 2002)

		Three Months								Three Months
		ended				Year-on-Year				ended				U.S. dollars
		March 31, 2003				Change (%)				March 31, 2002				March 31, 2003
		(millions of JPY, millions of US$)
Total Revenues:			185,748				104				177,827				1,545
Direct Financing Leases			29,569				93				31,942				246
Operating Leases			35,854				118				30,429				298
Interest on Loans and Investment Securities			36,154				106				34,085				301
Brokerage Commissions and Gains on Investment Securities			1,575				24				6,605				13
Life Insurance Premiums and Related Investment Income			38,358				105				36,673				319
Residential Condominium Sales			19,441				110				17,639				162
Interest Income on Deposits			116				97				120				1
Other Operating Revenues			24,681				121				20,334				205
Total Expenses:			203,287				129				158,020				1,691
Interest Expense			17,731				95				18,677				148
Depreciation — Operating Leases			21,968				109				20,234				183
Life Insurance Costs			34,468				105				32,855				287
Costs of Residential Condominium Sales			17,461				113				15,519				145
Other Operating Expenses			13,096				151				8,653				109
Selling, General and Administrative Expenses			39,172				110				35,763				325
Provision for Doubtful Receivables and Possible Loan Losses			17,318				89				19,426				144
Write-downs of Long-Lived Assets			36,017				2,708				1,330				300
Write-downs of Securities			6,409				96				6,688				53
Foreign Currency Transaction Gain			(353	)			31				(1,125	)			(3	)
Operating Income (Loss)			(17,539	)			—				19,807				(146	)
Equity in Net Income (Loss) of and Gain (Loss) on Sales of Affiliates			2,529				—				(419	)			21
Income (Loss) before Income Taxes			(15,010	)			—				19,388				(125	)
Income Taxes Provision (Benefit)			(6,827	)			—				8,417				(57	)
Income (Loss) before Extraordinary Gain and Cumulative Effect of a Change in Accounting Principle			(8,183	)			—				10,971				(68	)
Extraordinary Gain			3,214				—				—				27
Cumulative Effect of a Change in Accounting Principle			—				—				—				—
Net Income (Loss)			(4,969	)			—				10,971				(41	)

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Condensed Consolidated Balance Sheets
(As of March 31, 2003 and 2002)

										U.S. dollars
		March 31, 2003				March 31, 2002				March 31, 2003
		(millions of JPY, millions of US$)
Assets
Cash and Cash Equivalents			204,677				354,748				1,703
Restricted Cash and Cash Equivalents			18,671				20,189				155
Time Deposits			1,184				1,050				10
Investment in Direct Financing Leases			1,572,308				1,658,669				13,081
Installment Loans			2,288,039				2,273,280				19,035
Allowance for Doubtful Receivables on Direct Financing Leases and Possible Loan Losses			(133,146	)			(152,887	)			(1,108	)
Investment in Operating Leases			529,044				474,491				4,401
Investment in Securities			677,435				861,336				5,636
Other Operating Assets			101,481				260,373				844
Investment in Affiliates			144,974				86,346				1,206
Other Receivables			146,650				124,022				1,220
Advances			119,645				158,089				995
Prepaid Expenses			41,494				37,406				345
Office Facilities			77,043				76,987				641
Other Assets			141,568				116,120				1,179
Total			5,931,067				6,350,219				49,343
Liabilities and Shareholders’ Equity
Short-Term Debt			1,120,434				1,644,462				9,321
Deposits			262,467				225,243				2,184
Trade Notes, Accounts Payable and Other Liabilities			252,453				244,871				2,100
Accrued Expenses			82,012				92,266				682
Policy Liabilities			608,553				602,664				5,063
Current and Deferred Income Taxes			163,711				153,076				1,362
Deposits from Lessees			79,366				75,268				660
Long-Term Debt			2,856,613				2,809,861				23,766
Total Liabilities			5,425,609				5,847,711				45,138
Common Stock			52,067				51,854				433
Additional Paid-in Capital			70,002				69,823				582
Legal Reserve			2,220				2,220				18
Retained Earnings			429,163				400,175				3,571
Accumulated Other Comprehensive Loss			(39,747	)			(13,440	)			(330	)
Treasury Stock			(8,247	)			(8,124	)			(69	)
Shareholders’ Equity			505,458				502,508				4,205
Total			5,931,067				6,350,219				49,343

																		U.S. dollars
										March 31, 2003				March 31, 2002				March 31, 2003
Note:			1.			Accumulated Other Comprehensive Income (Loss)
						Net unrealized gains on investment in securities					1,917				14,756				16
						Minimum pension liability adjustments					(4,182	)			(6,834	)			(35	)
						Cumulative translation adjustments					(29,919	)			(14,800	)			(248	)
						Net unrealized losses on derivative instruments					(7,563	)			(6,562	)			(63	)
			2.			“Current and Deferred Income Taxes” was combined “Income Taxes: Current” and “Income Taxes: Deferred” from the second quarter.

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Condensed Consolidated Statements of Shareholders’ Equity
(For the Years Ended March 31, 2003 and 2002)

			Year ended				Year ended				U.S. dollars
			March 31, 2003				March 31, 2002				March 31, 2003
			(millions of JPY, millions of US$)
Common Stock:
	Beginning balance			51,854				41,820				431
	Issuance during the year			213				10,034				2
	Ending balance			52,067				51,854				433
Additional Paid-in Capital:
	Beginning balance			69,823				59,885				581
	Issuance during the year and other increase, net			179				9,938				1
	Ending balance			70,002				69,823				582
Legal Reserve:
	Beginning balance			2,220				2,090				18
	Transfer from retained earnings			—				130				—
	Ending balance			2,220				2,220				18
Retained Earnings:
	Beginning balance			400,175				361,262				3,329
	Cash dividends			(1,255	)			(1,226	)			(10	)
	Transfer to legal reserve			—				(130	)			—
	Net income			30,243				40,269				252
	Ending balance			429,163				400,175				3,571
Accumulated Other Comprehensive Loss:
	Beginning balance			(13,440	)			4,552				(111	)
	Net decrease in net unrealized gains on investment in securities			(12,839	)			(19,588	)			(107	)
	Net (increase) decrease in minimum pension liability adjustments			2,652				(2,150	)			22
	Net (increase) decrease in cumulative translation adjustments			(15,119	)			10,308				(126	)
	Net increase in net unrealized losses on derivative instruments			(1,001	)			(6,562	)			(8	)
	Ending balance			(39,747	)			(13,440	)			(330	)
Treasury Stock:
	Beginning balance			(8,124	)			(8,286	)			(68	)
	(Increase) decrease, net			(123	)			162				(1	)
	Ending balance			(8,247	)			(8,124	)			(69	)
Total Shareholders’ Equity:
	Beginning balance			502,508				461,323				4,180
	Increase, net			2,950				41,185				25
	Ending balance			505,458				502,508				4,205
Summary of Comprehensive Income:
	Net income			30,243				40,269				252
	Other comprehensive loss			(26,307	)			(17,992	)			(219	)
	Comprehensive income			3,936				22,277				33

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Condensed Consolidated Statements of Cash Flows
(For the Years Ended March 31, 2003 and 2002)

													U.S. dollars
					Year ended				Year ended				Year ended
					March 31, 2003				March 31, 2002				March 31, 2003
					(millions of JPY, millions of US$)
Cash Flows from Operating Activities:
	Net income					30,243				40,269				252
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization				118,097				117,019				983
		Provision for doubtful receivables and possible loan losses				54,706				51,367				455
		Increase in policy liabilities				5,889				40,777				49
		Gains from securitization transactions				(9,649	)			(9,235	)			(80	)
		Equity in net (income) loss of and (gain) loss on sales of affiliates				(8,205	)			330				(68	)
		Gains on sales of available-for-sale securities				(7,588	)			(13,795	)			(63	)
		Write-downs of long-lived assets				50,682				2,716				422
		Write-downs of securities				14,325				19,742				119
		Decrease (increase) in restricted cash and cash equivalents				1,195				(2,865	)			10
		Decrease (increase) in other operating assets held for sales, including advance payments				(21,894	)			2,133				(182	)
		Increase in prepaid expenses				(2,975	)			(9,255	)			(25	)
		Increase (decrease) in accrued expenses				(2,370	)			223				(20	)
		Increase in deposit from lessees				4,303				8,464				36
		Other, net				(16,609	)			9,745				(140	)
			Net cash provided by operating activities			210,150				257,635				1,748
Cash Flows from Investing Activities:
		Purchases of lease equipment, including advance payments				(923,483	)			(838,105	)			(7,683	)
		Principal payments received under direct financing leases				742,183				768,923				6,175
		Net proceeds from securitization of lease and loan receivables				239,050				258,926				1,989
		Installment loans made to customers				(1,214,672	)			(1,334,532	)			(10,105	)
		Principal collected on installment loans				1,071,841				865,598				8,917
		Proceeds from sales of operating lease assets				62,323				39,921				518
		Investment in and dividends received from affiliates, net				(23,208	)			(20,457	)			(193	)
		Purchases of available-for-sale securities				(193,580	)			(289,055	)			(1,610	)
		Proceeds from sales of available-for-sale securities				264,021				325,758				2,197
		Maturities of available-for-sale securities				95,187				67,290				792
		Purchases of other securities				(23,674	)			(50,243	)			(197	)
		Proceeds from sales of other securities				21,413				6,717				178
		Payment for increase in other operating assets				(2,847	)			(119,700	)			(24	)
		Proceeds from decrease in other operating assets				63,596				1,841				529
		Net decrease in call loans				—				9,500				—
		Acquisitions of subsidiaries, net of cash acquired				(13,669	)			3,846				(114	)
		Sales of subsidiaries, net of cash disposed				36,469				552				303
		Other, net				(18,000	)			(2,491	)			(150	)
			Net cash provided by (used in) in investing activities			182,950				(305,711	)			1,522
Cash Flows from Financing Activities:
		Repayment of short-term debt, net				(122,365	)			(171,114	)			(1,018	)
		Proceeds from (Repayment of) commercial paper, net				(485,288	)			101,279				(4,037	)
		Proceeds from long-term debt				811,334				975,220				6,750
		Repayment of long-term debt				(776,959	)			(729,593	)			(6,463	)
		Net increase in deposits due to customers				37,224				46,929				310
		Issuance of common stock				392				19,315				3
		Dividends paid				(1,255	)			(1,226	)			(10	)
		Net increase (decrease) in call money				(5,000	)			5,000				(42	)
		Other, net				(123	)			306				(1	)
			Net cash provided by (used in) financing activities			(542,040	)			246,116				(4,509	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents						(1,131	)			1,297				(9	)
Net Increase (Decrease) in Cash and Cash Equivalents						(150,071	)			199,337				(1,248	)
Cash and Cash Equivalents at Beginning of Period						354,748				155,411				2,951
Cash and Cash Equivalents at End of Period						204,677				354,748				1,703

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Segment Information
(For the Years Ended March 31, 2003 and 2002)

			Year ended March 31, 2003												Year ended March 31, 2002
							Income (Loss)												Income (Loss)
							before				Operating								before				Operating
			Revenues				Income Taxes				Assets				Revenues				Income Taxes				Assets
			(millions of JPY)
Domestic Operations
	Corporate Finance			125,560				44,158				1,893,422				118,794				48,066				1,960,380
	Equipment Operating Leases			67,655				4,402				144,397				67,319				9,906				147,444
	Real Estate-Related Finance			51,589				19,572				931,513				31,582				5,654				1,012,896
	Real Estate			104,454				(39,441	)			303,838				85,516				5,842				326,473
	Life Insurance			138,511				4,791				579,805				154,296				5,764				543,738
	Other			61,238				8,452				387,978				49,139				4,941				352,433
	Sub-Total			549,007				41,934				4,240,953				506,646				80,173				4,343,364
Foreign Operations
	The Americas			57,909				1,332				618,148				75,195				810				794,330
	Asia and Oceania			55,425				9,765				437,874				56,677				5,433				435,093
	Europe			13,311				(736	)			75,207				14,716				600				113,844
	Sub-Total			126,645				10,361				1,131,229				146,588				6,843				1,343,267
Segment Total				675,652				52,295				5,372,182				653,234				87,016				5,686,631
Difference between Segment totals and Consolidated Amounts				7,993				(6,007	)			(203,875	)			5,228				(13,977	)			(158,482	)
Consolidated Amounts				683,645				46,288				5,168,307				658,462				73,039				5,528,149

			U.S. dollars
			Year ended March 31, 2003
							Income (Loss)
							before				Operating
			Revenues				Income Taxes				Assets
			(millions of US$)
Domestic Operations
	Corporate Finance			1,045				367				15,752
	Equipment Operating Leases			563				37				1,201
	Real Estate-Related Finance			429				163				7,750
	Real Estate			869				(328	)			2,528
	Life Insurance			1,152				40				4,824
	Other			509				70				3,227
	Sub-Total			4,567				349				35,282
Foreign Operations
	The Americas			482				11				5,143
	Asia and Oceania			461				81				3,643
	Europe			111				(6	)			626
	Sub-Total			1,054				86				9,412
Segment Total				5,621				435				44,694
Difference between Segment totals and Consolidated Amounts				67				(50	)			(1,697	)
Consolidated Amounts				5,688				385				42,997

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Basis of presentation and significant accounting policies

In preparing the accompanying consolidated financial statements, ORIX Corporation (the Company) and its subsidiaries have followed with accounting principles generally accepted in the United States of America, except as modified to account for stock splits in accordance with the usual practice in Japan.

The significant differences between U.S. and Japanese accounting policies and practices are as follows: Accounting for direct financing leases, accounting for the impairment of long-lived assets and long-lived assets to be disposed of, the use of the straight-line method of depreciation for operating lease equipment, deferral of life insurance policy acquisition costs and the calculation of policy liabilities, accounting for derivative instruments and hedging activities, accounting for goodwill and intangible assets resulting from business combinations, accounting for pension plans, and a reflection of the income tax effect on such adjustments. Segment information is prepared in accordance with FASB Statement No.131. The basis of presentation and significant accounting policies are as follows.

1.   Consolidated subsidiaries

The accompanying consolidated financial statements include the accounts of the Company, 113 domestic subsidiaries and 85 foreign subsidiaries (all 198 subsidiaries). Major subsidiaries are ORIX Auto Leasing Corporation, ORIX USA Corporation and others.

2.   Affiliates accounted for by the equity method

Investment in 47 domestic affiliates and 25 foreign affiliates (all 72 affiliates) are accounted for by using equity method. Major affiliates are The Fuji Fire and Marine Insurance Company Limited, Stockton Holdings Limited and others.

3.   The date of subsidiaries fiscal closing

Certain subsidiaries have a year-end that differs from that of the Company. However, these subsidiaries close their books and make necessary adjustments for consolidation purposes as of the Company’s fiscal year end.

4.   Accounting policies

(1)   Use of estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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.

(2)   Recognition of revenues

Direct financing leases—The excess of aggregate lease rentals plus the estimated unguaranteed residual value over the cost of the leased equipment constitutes the unearned lease income to be taken into income over the lease term using the interest method. Certain direct lease origination costs are being deferred and amortized over the lease term as a yield adjustment.

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Operating leases—Operating lease assets are recorded at cost and are depreciated over their estimated useful lives mainly on a straight-line basis.

Insurance premium and expenses—Premium income from life insurance policies are recognized as earned premiums when due. Life insurance benefits are recorded as expenses when they are incurred. Policy liabilities for future policy benefits are established for by the net level premium method, based on actuarial estimates of the amount of future policyholder benefits. Certain costs associated with writing insurance are deferred and amortized over the respective policy periods in proportion to anticipated premium revenue.

(3)   Investment in securities

Trading securities are reported at fair value with unrealized gains and losses included in income. Available-for-sale securities are reported at fair value, and unrealized gains or losses are recorded through accumulated other comprehensive income (loss), net of applicable income taxes. However, the Company and its subsidiaries recognize losses related to securities for which the market price has been below the acquisition cost and not considered temporary in nature. Held-to-maturity securities are recorded at amortized cost.

(4)   Impairment of long-lived assets

Long-lived assets and certain identifiable intangibles to be held and used by the Company and its subsidiaries are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the sum of undiscounted future cash flows expected to be generated by the assets is less than the carrying amount of the assets, impairment losses are recognized based on the fair value of the assets.

(5)   Allowance for doubtful receivables on direct financing leases and possible loan losses

The allowance for doubtful receivables on direct financing leases and possible loan losses is maintained at a level which, in the judgment of management, is adequate to provide for potential losses on lease and loan portfolios that can be reasonably anticipated.

(6)   Prepaid benefit cost (Accrued benefit liability)

The Company and its subsidiaries follow FASB Statement No.87 (“Employer’s Accounting for Pensions”).

(7)   Significant 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. The financial statements of foreign 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.

(8)   Hedge accounting

The Company and its subsidiaries follow FASB Statement No.133 (“Accounting for Derivative Instruments and Hedging Activities”), as amended by FASB Statement No.138 (“Accounting for Certain Derivative Instruments and Certain Hedging Activities—an amendment of FASB Statement No.133”). All derivatives are recorded on the balance sheet at fair value.

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(9)   Income taxes

Deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. Deferred income tax assets have been recognized on the net operating loss carry forwards of certain subsidiaries.

5.   Cash and cash equivalents in the accompanying consolidated statements of cash flows

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.

6.   Other notes to consolidated financial statements

In March 2002, the Company acquired an approximately 22% interest in The Fuji Fire and Marine Insurance Company Limited (“Fuji”) for JPY18,105 million (US$151 million). In July 2002, the Company acquired a 90% interest in Nittetsu Lease Co., Ltd. (“Nittetsu”) for JPY5,002 million (US$42 million). The Company has recorded its share of earnings of Fuji by the equity method and has consolidated Nittetsu from their respective acquisition dates forward. In December 2002, the Company acquired an interest in Korea Life Insurance Co., Ltd. (“KLI”) for approximately Won 275 billion (US$220 million).

Revenues from foreign customers

Revenues from foreign customers are as follows.

March 31, 2003

		The				Asia and
		Americas				Oceania				Europe				Total
		(Millions of JPY)
Revenues from foreign customers			58,592				57,467				14,748				130,807
Total consolidated revenues															683,645
Ratio of revenues from foreign customers to total consolidated revenues			8.5	%			8.4	%			2.2	%			19.1	%

March 31, 2003

		The				Asia and
		Americas				Oceania				Europe				Total
		(Millions of U.S. dollars)
Revenues from foreign customers			487				478				123				1,088
Total consolidated revenues															5,688
Ratio of revenues from foreign customers to total consolidated revenues			8.5	%			8.4	%			2.2	%			19.1	%

This information was not prepared at March 31, 2002.

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Investment in Securities

Investment in securities at March 31, 2003 and 2002 consists of the following:

		March 31, 2003				March 31, 2002				March 31, 2003
										(Millions of
		(Millions of JPY)								U.S. dollars)
Trading securities			12,154				879				101
Available-for-sale securities			537,888				718,919				4,475
Held-to-maturity securities			10,638				16,008				89
Other securities			116,755				125,530				971
			677,435				861,336				5,636

For fiscal 2003 and 2002, net unrealized holding gains and losses on trading securities are losses of JPY1,610 million (US$13 million) and gains of JPY98 million, respectively. During fiscal 2003 and 2002, the Company and its subsidiaries sold available-for-sale securities for aggregate proceeds of JPY264,021 million (US$2,197 million) and JPY325,758 million, respectively, resulting in gross realized gains of JPY9,822 million (US$82 million) and JPY18,147 million, respectively, and gross realized losses of JPY2,234 million (US$19 million) and JPY4,352 million, respectively. The cost of the securities sold was based on the average cost of each such security held at the time of the sale.

Other securities consist mainly of non-marketable equity securities, preferred subscription certificates carried at cost and investment funds accounted for under the equity method.

The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale and held-to-maturity securities in each major security type at March 31, 2003 and 2002 are as follows:

March 31, 2003

							Gross				Gross
			Amortized				unrealized				unrealized
			cost				gains				losses				Fair Value
			(Millions of JPY)
Available-for-sale:
	Japanese and foreign government bond securities			41,466				173				(100	)			41,539
	Japanese prefectural and foreign municipal bond securities			13,826				91				(51	)			13,866
	Corporate debt securities			309,551				2,281				(4,633	)			307,199
	Mortgage-backed and other asset-backed securities			133,812				5,344				(3,355	)			135,801
	Funds in trust			4,606				—				(942	)			3,664
	Equity securities			25,476				12,956				(2,613	)			35,819
				528,737				20,845				(11,694	)			537,888
Held-to-maturity:
	Asset-backed securities			10,638				—				—				10,638
				10,638				—				—				10,638

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March 31, 2002

							Gross				Gross
			Amortized				unrealized				unrealized
			cost				gains				losses				Fair Value
			(Millions of JPY)
Available-for-sale:
	Japanese and foreign government bond securities			25,061				256				(9	)			25,308
	Japanese prefectural and foreign municipal bond securities			24,256				582				(464	)			24,374
	Corporate debt securities			501,380				7,010				(10,552	)			497,838
	Mortgage-backed and other asset-backed securities			109,528				6,152				(2,789	)			112,891
	Funds in trust			5,452				—				(465	)			4,987
	Equity securities			27,619				27,992				(2,090	)			53,521
				693,296				41,992				(16,369	)			718,919
Held-to-maturity:
	Japanese and foreign government bond securities			183				22				—				205
	Asset-backed securities			15,825				1,990				(302	)			17,513
				16,008				2,012				(302	)			17,718

March 31, 2003

							Gross				Gross
			Amortized				unrealized				unrealized
			cost				gains				losses				Fair Value
			(Millions of U.S. dollars)
Available-for-sale:
	Japanese and foreign government bond securities			345				1				(0	)			346
	Japanese prefectural and foreign municipal bond securities			114				1				(0	)			115
	Corporate debt securities			2,576				19				(39	)			2,556
	Mortgage-backed and other asset-backed securities			1,114				44				(28	)			1,130
	Funds in trust			38				—				(8	)			30
	Equity securities			212				108				(22	)			298
				4,399				173				(97	)			4,475
Held-to-maturity:
	Asset-backed securities			89				—				—				89
				89				—				—				89

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Derivative Financial Instruments

The Company and its subsidiaries are parties to derivative financial instruments that they use in the normal course of business to reduce exposure to fluctuations in interest and foreign currency rates.

(a)   Cash flow hedges

The Company and its subsidiaries designate interest rate swap agreements as cash flow hedges for variability of cash flows originated from floating rate borrowings.

(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. The Company and its subsidiaries designate foreign currency swap agreements and foreign exchange forward contracts to minimize foreign currency exposures on operating assets including lease receivables, loan receivables and borrowings. One subsidiary hedges a portion of the interest rate exposure of the fair values of certain asset-backed securities using sales of future contracts and forward contracts on treasury securities. The Company’s subsidiaries, which issued medium-term notes, use interest rate swap contracts to hedge interest rate exposure of the fair values of these medium-term notes. In case that medium-term notes were denominated in other than the subsidiaries’ local currency, foreign currency swap agreements are used to hedge foreign exchange rate exposure.

(c)   Hedges of net investment in foreign operations

The Company uses foreign exchange forward contracts, foreign currency swap agreements and borrowings denominated in the subsidiaries’ local currencies to hedge the foreign currency exposure of the net investment in foreign subsidiaries.

(d)   Trading and other derivatives

Certain of the Company’s subsidiaries engage in trading activities with various future contracts. For risk management purposes, the Company and certain subsidiaries entered into interest rate swap agreements, caps and collars, which do not qualify for hedge accounting under FASB Statement No. 133. In accordance with FASB Statement No. 133, conversion options were bifurcated from the Company and certain subsidiaries’ convertible bonds, and are recorded as stand-alone derivative contracts. At March 31, 2003 and March 31, 2002, the total face amount was JPY8,200 million (US$68 million) and JPY127,572 million, respectively and the fair value of conversion option was JPY187 million (US$2 million) and JPY2,195 million, respectively.

The following table provides notional amount, carrying amount and estimated fair value information about trading and other derivative instruments as of March 31, 2003 and 2002.

March 31, 2003

			Notional				Carrying				Estimated
			amount				amount				fair value
			(Millions of JPY)
Interest rate risk management:
	Interest rate swap agreements			459,208				(14,431	)			(14,431	)
	Options, caps, floors and collars held			30,462				(18	)			(18	)
	Forward contracts			75,726				(1,084	)			(1,084	)
Foreign exchange risk management:
	Foreign exchange forward contracts			88,436				(256	)			(256	)
	Foreign currency swap agreements			303,051				(2,659	)			(2,659	)
Trading activities:
	Futures			95,121				73				73
	Interest rate swap agreements			2,000				1				1
	Options, caps, floors and collars held			6,278				153				153
	Options, caps, floors and collars written			5,361				(43	)			(43	)
	Foreign exchange forward contracts			1,876				2				2

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March 31, 2002

			Notional				Carrying				Estimated
			amount				amount				fair value
			(Millions of JPY)
Interest rate risk management:
	Interest rate swap agreements			482,130				(9,326	)			(9,326	)
	Options, caps, floors and collars held			31,258				(29	)			(29	)
	Futures			89,371				2,325				2,325
Foreign exchange risk management:
	Foreign exchange forward contracts			95,410				(1,915	)			(1,915	)
	Foreign currency swap agreements			385,759				(30,529	)			(30,529	)
Trading activities:
	Futures			143,518				196				196
	Interest rate swap agreements			2,000				8				8
	Options, caps, floors and collars held			10,188				8				8
	Options, caps, floors and collars written			7,598				(5	)			(5	)
	Foreign exchange forward contracts			2,015				6				6

March 31, 2003

			Notional				Carrying				Estimated
			amount				amount				fair value
			(Millions of U.S. dollars)
Interest rate risk management:
	Interest rate swap agreements			3,820				(120	)			(120	)
	Options, caps, floors and collars held			253				(0	)			(0	)
	Forward contracts			630				(9	)			(9	)
Foreign exchange risk management:
	Foreign exchange forward contracts			736				(2	)			(2	)
	Foreign currency swap agreements			2,521				(22	)			(22	)
Trading activities:
	Futures			791				1				1
	Interest rate swap agreements			17				0				0
	Options, caps, floors and collars held			52				1				1
	Options, caps, floors and collars written			45				(0	)			(0	)
	Foreign exchange forward contracts			16				0				0

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Table of Contents

Key Quarterly Financial Data (Unaudited)

			Fiscal 2002																Fiscal 2003
Balance Sheet Data			Q1 (01/4-6)				Q2 (01/7-9)				Q3 (01/10-12)				Q4 (02/1-3)				Q1 (02/4-6)				Q2 (02/7-9)				Q3 (02/10-12)				Q4 (03/1-3)
			(millions of JPY)
1) Investment in Direct Financing Leases				1,622,953				1,821,868				1,839,899				1,658,669				1,646,932				1,669,623				1,634,494				1,572,308
	Domestic			1,191,040				1,423,710				1,410,859				1,255,537				1,283,552				1,305,846				1,278,175				1,237,141
	Foreign			431,913				398,158				429,040				403,132				363,380				363,777				356,319				335,167
2) Installment Loans				1,918,389				1,996,542				2,274,515				2,273,280				2,327,354				2,326,189				2,374,664				2,288,039
	Domestic			1,511,925				1,585,267				1,840,077				1,840,289				1,898,108				1,932,184				1,986,182				1,954,640
	Foreign			406,464				411,275				434,438				432,991				429,246				394,005				388,482				333,399
3) Investment in Operating Leases				464,276				468,841				488,662				474,491				451,012				460,103				454,468				529,044
	Domestic			335,833				347,725				357,459				338,719				327,391				339,403				340,997				369,489
	Foreign			128,443				121,116				131,203				135,772				123,621				120,700				113,471				159,555
4) Investment in Securities				963,493				972,816				972,581				861,336				759,406				717,500				695,319				677,435
	Domestic			758,065				762,063				753,028				651,702				565,409				520,005				505,995				497,829
	Foreign			205,428				210,753				219,553				209,634				193,997				197,495				189,324				179,606
5) Other Operating Assets				132,822				130,409				187,654				260,373				143,064				129,311				142,856				101,481
	Domestic			107,666				106,557				175,144				248,216				132,217				118,558				132,847				91,851
	Foreign			25,156				23,852				12,510				12,157				10,847				10,753				10,009				9,630
Total Operating Assets				5,101,933				5,390,476				5,763,311				5,528,149				5,327,768				5,302,726				5,301,801				5,168,307
Allowance for Doubtful Receivables on Direct Financing Leases and Possible Loan Losses				(141,663	)			(145,856	)			(150,100	)			(152,887	)			(150,264	)			(136,961	)			(136,833	)			(133,146	)
Allowance/Investment in Direct Financing Leases and Installment Loans				4.0	%			3.8	%			3.6	%			3.9	%			3.8	%			3.4	%			3.4	%			3.4	%
Total Assets				5,693,269				6,002,015				6,365,717				6,350,219				6,091,100				6,050,290				6,025,781				5,931,067
Short-Term Debt, Long-Term Debt and Deposits				4,143,990				4,409,036				4,732,736				4,679,566				4,489,605				4,425,331				4,393,599				4,239,514
Policy Liabilities				579,612				598,871				597,412				602,664				600,144				601,815				598,832				608,553
Total Liabilities				5,225,390				5,546,868				5,874,530				5,847,711				5,592,427				5,550,564				5,519,176				5,425,609
Shareholders’ Equity				467,879				455,147				491,187				502,508				498,673				499,726				506,605				505,458
Total Liabilities & Shareholders’ Equity				5,693,269				6,002,015				6,365,717				6,350,219				6,091,100				6,050,290				6,025,781				5,931,607
Income Statement Data			Q1 (01/4-6)				Q2 (01/7-9)				Q3 (01/10-12)				Q4 (02/1-3)				Q1 (02/4-6)				Q2 (02/7-9)				Q3 (02/10-12)				Q4 (03/1-3)
Revenues
1) Direct Financing Leases				29,611				28,916				31,445				31,942				30,742				32,737				29,880				29,569
	Domestic			19,145				19,500				22,583				22,923				21,987				24,854				22,503				22,099
	Foreign			10,466				9,416				8,862				9,019				8,755				7,883				7,377				7,470
2) Operating Leases				28,354				30,289				31,735				30,429				30,534				30,545				30,675				35,854
	Domestic			20,419				22,672				22,851				21,790				22,012				21,808				21,321				22,511
	Foreign			7,935				7,617				8,884				8,639				8,522				8,737				9,354				13,343
3) Interest on Loans and Investment Securities				28,898				27,860				31,119				34,085				30,757				33,284				31,395				36,154
	Interest on loans			22,861				22,572				25,575				28,724				26,203				29,323				27,634				32,450
	Domestic			15,218				14,814				17,561				22,542				19,795				22,089				21,506				25,678
	Foreign			7,643				7,758				8,014				6,182				6,408				7,234				6,128				6,772
	Interest on investment securities			6,037				5,288				5,544				5,361				4,554				3,961				3,761				3,704
	Domestic			1,105				1,000				641				787				319				162				180				205
	Foreign			4,932				4,288				4,903				4,574				4,235				3,799				3,581				3,499
4) Brokerage Commissions and Gains on Investment Securities				4,045				4,451				3,266				6,605				5,127				2,800				1,355				1,575
	Brokerage commissions			903				726				740				571				774				569				536				521
	Gains on investment securities			3,142				3,725				2,526				6,034				4,353				2,231				819				1,054
5) Life Insurance Premiums and Related Investment Income				40,287				45,625				29,748				36,673				32,946				38,886				28,321				38,358
	Life insurance premiums			35,345				42,347				26,652				31,135				28,745				34,503				25,184				34,531
	Related investment income			4,942				3,278				3,096				5,538				4,201				4,383				3,137				3,827
6) Residential Condominium Sales				28,290				4,729				7,420				17,639				11,666				18,076				21,982				19,441
	Domestic			28,290				4,729				7,420				17,639				11,666				18,076				21,982				19,441
	Foreign			—				—				—				—				—				—				—				—
7) Interest Income on Deposits				473				537				244				120				177				135				98				116
8) Other Operating Revenues				19,409				10,769				13,115				20,334				19,008				17,308				19,463				24,681
	Domestic			17,381				6,254				10,443				17,574				17,015				14,867				16,243				22,420
	Foreign			2,028				4,515				2,672				2,760				1,993				2,441				3,220				2,261
Total Revenues				179,367				153,176				148,092				177,827				160,957				173,771				163,169				185,748

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			Fiscal 2002																Fiscal 2003
Income Statement Data			Q1 (01/4-6)				Q2 (01/7-9)				Q3 (01/10-12)				Q4 (02/1-3)				Q1 (02/4-6)				Q2 (02/7-9)				Q3 (02/10-12)				Q4 (03/1-3)
			(millions of JPY)
Expenses
1) Interest Expense				26,128				23,848				21,695				18,677				18,974				17,730				17,555				17,731
2) Depreciation—Operating Leases				18,692				18,691				19,430				20,234				19,429				19,424				19,744				21,968
3) Life Insurance Costs				36,123				42,806				28,002				32,855				29,649				34,775				26,792				34,468
4) Costs of Residential Condominium Sales				23,277				4,259				6,462				15,519				9,985				15,727				17,596				17,461
5) Other Operating Expenses				10,729				3,575				6,657				8,653				8,379				9,770				10,114				13,096
6) Selling, General and Administrative Expenses				29,591				28,668				32,294				35,763				34,163				35,666				35,270				39,172
7) Provision for Doubtful Receivables and Possible Loan Losses				9,634				10,554				11,753				19,426				12,803				12,164				12,421				17,318
8) Write-downs of Long-Lived Assets				—				1,386				—				1,330				—				14,665				—				36,017
9) Write-downs of Securities				2,132				5,119				5,803				6,688				2,166				3,576				2,174				6,409
10) Foreign Currency Transaction Loss (Gain), Net				1,142				(1,439	)			62				(1,125	)			710				338				516				(353	)
Total Expenses				157,448				137,467				132,158				158,020				136,258				163,835				142,182				203,287
Operating Income (Loss)				21,919				15,709				15,934				19,807				24,699				9,936				20,987				(17,539	)
Equity in Net Income (Loss) of and Gain (Loss) on Sales of Affiliates				(870	)			442				517				(419	)			1,623				1,738				2,315				2,529
Income (Loss) before Income Taxes				21,049				16,151				16,451				19,388				26,322				11,674				23,302				(15,010	)
Income Taxes Provision (Benefit)				10,740				6,557				7,189				8,417				11,374				5,796				10,853				(6,827	)
Income (Loss) before Extraordinary Gain and Cumulative Effect of a Change in Accounting Principle				10,309				9,594				9,262				10,971				14,948				5,878				12,449				(8,183	)
Extraordinary Gain — equity income at acquisition				—				—				—				—				—				—				—				3,214
Cumulative Effect of a Change in Accounting Principle				133				—				—				—				1,937				—				—				—
Net Income (Loss)				10,442				9,594				9,262				10,971				16,885				5,878				12,449				(4,969	)
New Business Volumes			Q1 (01/4-6)				Q2 (01/7-9)				Q3 (01/10-12)				Q4 (02/1-3)				Q1 (02/4-6)				Q2 (02/7-9)				Q3 (02/10-12)				Q4 (03/1-3)
Direct Financing Leases: New receivables added				186,123				455,256				213,008				228,683				237,779				325,817				213,620				223,680
	Domestic			147,350				402,643				152,409				175,567				172,957				274,881				149,193				161,755
	Foreign			38,773				52,613				60,599				53,116				64,822				50,936				64,427				61,925
Direct Financing Leases: New equipment acquisitions				159,348				418,665				185,790				216,576				210,819				297,122				187,555				200,352
	Domestic			126,350				373,740				130,801				167,821				151,062				251,883				128,093				144,525
	Foreign			32,998				44,925				54,989				48,755				59,757				45,239				59,462				55,827
Installment Loans: New loans added				269,524				271,280				472,897				326,699				341,138				334,070				295,622				297,340
	Domestic			201,626				226,464				425,048				291,529				273,867				300,963				261,815				264,242
	Foreign			67,898				44,816				47,849				35,170				67,271				33,107				33,807				33,098
Operating Leases: New equipment acquisitions				47,872				37,336				42,619				18,376				20,870				40,656				27,513				84,528
	Domestic			41,310				28,301				36,310				11,012				14,128				33,517				20,667				74,688
	Foreign			6,562				9,035				6,309				7,364				6,742				7,139				6,846				9,840
Investment in Securities: New securities added				88,666				101,526				80,556				77,599				48,907				46,321				25,894				110,172
	Domestic			77,125				75,703				77,225				74,195				38,346				44,804				23,520				107,807
	Foreign			11,541				25,823				3,331				3,404				10,561				1,517				2,374				2,365
Other Operating Assets: New assets added				22,226				18,002				81,206				82,687				20,768				29,791				28,197				37,980
	Domestic			16,428				12,206				76,287				75,982				15,475				29,403				23,504				30,948
	Foreign			5,798				5,796				4,919				6,705				5,293				388				4,693				7,032
Key Ratios, Per Share Data, and Employees			Q1 (01/4-6)				Q2 (01/7-9)				Q3 (01/10-12)				Q4 (02/1-3)				Q1 (02/4-6)				Q2 (02/7-9)				Q3 (02/10-12)				Q4 (03/1-3)
Return on Equity (ROE)*				9.0	%			8.3	%			7.8	%			8.8	%			13.5	%			4.7	%			9.9	%			(3.9	%)
Return on Assets (ROA)*				0.74	%			0.66	%			0.60	%			0.69	%			1.09	%			0.39	%			0.82	%			(0.33	%)
Shareholders’ Equity Ratio				8.2	%			7.6	%			7.7	%			7.9	%			8.2	%			8.3	%			8.4	%			8.5	%
Debt-to-Equity Ratio (times)				8.9				9.7				9.6				9.3				9.0				8.9				8.7				8.4
Shareholders’ Equity Per Share (yen)				5,724.89				5,567.69				5,874.75				6,007.52				5,961.30				5,973.44				6,053.07				6,039.43
Basic EPS (yen)				127.78				117.38				112.63				131.20				201.85				70.27				148.76				(59.38	)
Diluted EPS (yen)				122.71				112.79				107.71				123.54				189.95				66.32				140.18				(59.38	)
Number of Employees				10,209				11,359				11,307				11,271				11,820				11,859				11,977				11,833

---

*

annualized

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Table of Contents

			Fiscal 2002																Fiscal 2003
Segment Information			Q1 (01/4-6)				Q2 (01/7-9)				Q3 (01/10-12)				Q4 (02/1-3)				Q1 (02/4-6)				Q2 (02/7-9)				Q3 (02/10-12)				Q4 (03/1-3)
			(millions of JPY)
Domestic Operations
	Corporate Finance			27,420				26,897				31,459				33,018				31,465				33,079				31,147				29,869
	Equipment Operating Leases			16,854				17,269				16,574				16,622				16,233				16,734				16,899				17,789
	Real Estate-Related Finance			6,898				5,955				7,399				11,330				13,995				11,708				11,252				14,634
	Real Estate			33,160				9,239				14,994				28,123				18,983				26,331				30,305				28,835
	Life Insurance			41,181				46,123				30,419				36,573				32,946				38,886				28,321				38,358
	Other			10,975				11,546				11,396				15,222				12,773				14,386				15,000				19,079
	Sub-Total			136,488				117,029				112,241				140,888				126,395				141,124				132,924				148,564
Foreign Operations
	The Americas			17,747				19,891				18,523				19,034				14,739				12,536				13,012				17,622
	Asia and Oceania			17,838				12,512				12,685				13,642				13,741				13,838				13,802				14,044
	Europe			4,041				4,528				3,569				2,578				3,091				2,742				3,760				3,718
	Sub-Total			39,626				36,931				34,777				35,254				31,571				29,116				30,574				35,384
Total Segment Revenues				176,114				153,960				147,018				176,142				157,966				170,240				163,498				183,948
Domestic Operations
	Corporate Finance			11,403				12,441				11,602				12,620				10,411				14,089				11,562				8,096
	Equipment Operating Leases			2,655				2,704				2,128				2,419				1,271				1,708				1,593				(170	)
	Real Estate-Related Finance			323				80				1,752				3,499				6,106				3,804				2,754				6,908
	Real Estate			4,587				(1,154	)			870				1,539				2,735				(11,542	)			4,341				(34,975	)
	Life Insurance			3,397				839				(347	)			1,875				1,282				1,694				(27	)			1,842
	Other			800				1,705				739				1,697				2,554				4,372				3,229				(1,703	)
	Sub-Total			23,165				16,615				16,744				23,649				24,359				14,125				23,452				(20,002	)
Foreign Operations
	The Americas			(1,100	)			1,010				(248	)			1,148				1,229				(2,256	)			437				1,922
	Asia and Oceania			798				2,700				998				937				1,673				2,641				1,545				3,906
	Europe			1,153				368				(47	)			(874	)			(545	)			(65	)			(112	)			(14	)
	Sub-Total			851				4,078				703				1,211				2,357				320				1,870				5,814
Total Segment Profits (Income (Loss) before Income Taxes)				24,016				20,693				17,447				24,860				26,716				14,445				25,322				(14,188	)
Domestic Operations
	Corporate Finance			1,894,988				2,158,006				2,185,994				1,960,380				2,008,152				1,981,237				1,963,548				1,893,422
	Equipment Operating Leases			136,531				136,713				145,626				147,444				141,905				142,964				145,234				144,397
	Real Estate-Related Finance			627,352				647,889				935,426				1,012,896				906,193				908,115				908,821				931,513
	Real Estate			316,625				333,394				324,973				326,473				293,189				289,919				307,599				303,838
	Life Insurance			557,393				583,579				574,403				543,738				497,593				570,983				578,744				579,805
	Other			308,235				322,082				350,161				352,433				389,605				372,273				398,435				387,978
	Sub-Total			3,841,124				4,181,663				4,516,583				4,343,364				4,236,637				4,265,491				4,302,381				4,240,953
Foreign Operations
	The Americas			808,165				777,428				818,723				794,330				695,351				713,300				691,100				618,148
	Asia and Oceania			415,803				400,978				441,432				435,093				467,456				431,966				454,123				437,874
	Europe			149,070				136,441				126,348				113,844				98,200				86,024				78,376				75,207
	Sub-Total			1,373,038				1,314,847				1,386,503				1,343,267				1,261,007				1,231,290				1,223,599				1,131,229
Total Segment Assets				5,214,162				5,496,510				5,903,086				5,686,631				5,497,644				5,496,781				5,525,980				5,372,182

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