ORIX Corporation-2010 Annual Report

Creating Added Value in a Changing World

Annual Report 2010 Our Strengths

CONTENTS

1 Our Strengths 6 To Our Shareholders A Message from CEO Yoshihiko Miyauchi —Medium- and long-term management Our Strengths strategy 10 A Message from COO Yukio Yanase Results for the fiscal year ended March 31, 2010 About ORIX and management policies for the fiscal year ending March 31, 2011 ORIX is a financial services group that constantly seeks new 13 Special Feature business opportunities to provide advanced financial services ORIX’s unique strategies respond to the to corporations and individuals. changing operating environment —Domestic Strategy ORIX was established in 1964 as a pioneer of the leasing —Overseas Strategy industry in Japan, and has subsequently spread the leasing busi- —Corporate Activities ness throughout Asia since expanding into Hong Kong in 1971. 19 Segment Overview Today, ORIX operates in 27 countries and regions world- 20 ORIX at a Glance wide, developing diversified financial services centered on 22 Segment Profits, Assets and ROA leasing, lending, rentals, automobile leasing and rentals, life 23 Breakdown of Assets and Revenues insurance, trust and banking, and real estate. by Segment ORIX’s unique presence in the financial services industry is 24 Corporate Financial Services strongly recognized. ORIX is constantly anticipating market 26 Maintenance Leasing needs and working to contribute to society by developing 28 Real Estate leading financial services on a global scale and striving to 30 Investment Banking offer innovate products that create new value for customers.

32 Retail

34 Overseas Business 36 Management Organization —Corporate Philosophy / Management Policy / Trend in Net Income Attributable to Profit Distribution Policy ORIX Corporation 36 Management Team With the exception of a loss shortly after its foundation, ORIX has maintained 42 Corporate Governance profitability despite a volatile economic environment including two oil shocks, the 47 Risk Management collapse of Japan’s economic bubble and the bankruptcy of Lehman Brothers. 52 An Interview with CFO Haruyuki Urata 53 ORIX and Society (Billions of yen) 200

54 ORIX and the Environment Fiscal year ended Fiscal year ended 55 Financial Section March 31, 2002 March 31, 2009 Bursting of Collapse of Group Companies 64 150 the IT Bubble Lehman Brothers

66 Group Network Fiscal year ended Fiscal year ended March 31, Fiscal year ended Fiscal year ended September 30, 1979 1989 (Interim Results) March 31, 1998 March 31, 2010 Share Information 68 Second Oil Shock Asian Currency ¥37.8 billion

69 Corporate Information / Website Guide 100 Crisis

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ending September 30, 1974 September 30, 1988 March 31, 1993 March 31, 2011

Forward-Looking Statements First Oil Shock Black Monday Bursting of ¥57.0 billion This document may contain forward-looking statements about expected the Economic Bubble (Target) future events and financial results that involve risks and uncertainties. 50 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 and under “Business Risk” of the securities report (yukashoken houkokusho) filed with the 0 Director of the Kanto Local Finance Bureau. The Company makes available free of charge on or through its website (www.orix.co.jp) its annual report 1964 1975 1980 1985 1990 1995 2000 2005 2010 2011 on Form 20-F and other reports. Reference to fiscal years In this report, “fiscal 2009” refers to the fiscal year ended March 31, 2010.

ORIX Corporation — Annual Report 2010 Our Strengths Corporate Maintenance Leasing Financial Services Automobile leasing and rentals, Lending, leasing, commission car sharing, and precision business for the sale of nancial measuring equipment and products and environment- related business About ORIX IT-related equipment rentals and leasing Real Estate Business Structure Development and rentals of commercial real ORIX consists of six independent segments: estate, condominium development and sales, hotel, golf course, and training Corporate Financial Services, Maintenance facility operation, senior housing development and Leasing, Real Estate, Investment Banking, operation, REIT asset management, and real Blend of Group Retail and Overseas Business. ORIX capital- estate investment and advisory services Expertise Network izes on the superior expertise of its Group Client companies, its solid domestic and interna- Investment tional client base and its extensive Group Banking Real estate nance, Client network to promote “solutions with value- commercial real estate asset securitization, loan Base added services” to solve the business chal- servicing (asset recovery), principal investment, lenges faced by its clients. M&A advisory, venture P. 2~3 capital and securities brokerage Retail Life insurance, trust and Overseas Business banking business, card loan Leasing, lending, investment in business and online securities bonds, investment banking, real brokerage estate-related operations, and ship- and aircraft-related operations

(Billions of yen) 200 Fiscal year ended Fiscal year ended Gaining Speed for March 31, 2002 March 31, 2009 Bursting of Collapse of the IT Bubble Lehman Brothers Profit Recovery toward 150

Fiscal year ended Fiscal year ended March 31, Fiscal year ended Fiscal year ended September 30, 1979 1989 (Interim Results) March 31, 1998 March 31, 2010 the Next Stage Second Oil Shock Asian Currency ¥37.8 billion

100 Crisis

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ending September 30, 1974 September 30, 1988 March 31, 1993 March 31, 2011 First Oil Shock Black Monday Bursting of ¥57.0 billion ORIX aims for sound business and stable the Economic Bubble (Target) 50 profit growth with further sophistication of expertise, enhanced financial stability and strengthened risk management.

1964 1975 1980 1985 1990 1995 2000 2005 2010 2011 P. 6~18

ORIX Corporation — Annual Report 2010 Our Strengths

Our Growth Foundation

Strong individual businesses and networking are ORIX’s greatest strengths. ORIX aims for continuous growth through combining its diverse expertise with its solid client base.

Strong Individual Businesses and Networking Continuous growth blending specialist expertise from each business area and cross-segment synergies

ORIX strives to meet the diverse needs of its customers by

Maintenance constantly developing high quality services. Each business Leasing has established a secure position in each respective industry and has sufficient capacity to operate independently. Each segment has the ability to generate high Overseas Real Estate Business profitability and has the potential for growth. Also, all Corporate Financial segments are able to provide each other with products Services and services to meet any and all customer needs. ORIX is able to provide clients with services that have high added value by flexibly combining the specialist expertise accu- Investment Retail mulated in each business area with the products and Banking services developed by Group companies.

Client Base A solid client base in Japan and overseas together with diverse product and service proposals that meet client needs provide a competitive edge

ORIX’s strength is its ability to provide multiple products and services by capitalizing on its sales network founded Network on a solid client base consisting mainly of SMEs. Over- in Japan seas, ORIX is involved in diverse financial businesses utilizing its local partners to provide services to local 1,098 locations clients, and has established a secure position in the Overseas Network Asian region. ORIX aims to be a one-stop financial services provider by strengthening communication and cooperation through 26 countries and regions teamwork that extends beyond departments and regions locations 275 to provide valuable proposals to clients.

ORIX Corporation — Annual Report 2010 Our Growth Foundation

Corporate Value that Creates “Blended Knowledge and Teamwork”

ORIX aims to further increase corporate value by providing diverse financial services that meet the needs of clients and the market while constantly pursuing new business.

ORIX is able to discover new revenue opportunities by 1 maximizing synergies

ORIX is able to provide solutions with value-added services that 2 meet client needs

ORIX is able to steadily increase revenues from its widely-diversified 3 business portfolio

ORIX Corporation — Annual Report 2010 Our Strengths

Group Performance

Financial Highlights Years ended March 31 Millions of yen, unless otherwise stated

2006 2007 2008 2009 2010 % change Total revenues ¥ 906,944 ¥1,115,482 ¥1,135,338 ¥1,053,521 ¥ 932,841 (11)

Total expenses 694,589 834,830 949,784 1,000,166 903,270 (10)

Income before income taxes, discontinued operations 247,141 314,565 246,119 8,687 55,608 540 and extraordinary gain

Net income attributable to ORIX Corporation 166,388 196,506 169,597 21,924 37,757 72

ORIX Corporation shareholders’ equity 953,646 1,194,234 1,267,917 1,167,530 1,298,684 11

Total assets 7,242,455 8,207,187 8,994,970 8,369,736 7,739,800 (8)

ROE (%) 19.80 18.30 13.78 1.80 3.06

ROA (%) 2.50 2.54 1.97 0.25 0.47

ORIX Corporation shareholders’ equity ratio (%) 13.17 14.55 14.10 13.95 16.78

Debt/Equity ratio *1 (times) 4.79 4.22 4.57 4.50 3.40

Interest-bearing debt *2 ¥4,925,753 ¥5,483,922 ¥6,263,017 ¥5,919,639 ¥5,263,104 (11)

Per share for net income attributable to ORIX Corporation (yen)

(Basic) 1,883.89 2,177.10 1,860.63 246.59 370.52 50

(Diluted) 1,790.30 2,100.93 1,817.81 233.81 315.91 35

ORIX Corporation shareholders’ equity per share (yen) 10,608.97 13,089.83 14,010.62 13,059.59 12,082.56 (7)

Cash dividends *3 (yen) 90 130 260 70 75

Number of employees 15,067 16,662 18,702 18,920 17,725

* 1. Debt/Equity ratio: Interest-bearing debt except deposits / ORIX Corporation shareholders’ equity 2. Interest-bearing debt: Short- and long-term debt and deposits 3. Dividends applicable to the fiscal year

ROE Debt/Equity Ratio (%) (Times) 25 10 19.80 20 8 8.86 8.44 7.87 18.30 15 6 6.32 14.17 13.78 5.24 3.40 10 4 4.79 4.57 4.50 10.10 4.22 8.36 5 7.70 3.06 2 6.00 1.80 0 0 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3

Shareholders’Equity Ratio (%) 25

20 16.78

15 14.55 13.17 14.10 13.95 10 11.98 10.03 8.25 7.91 8.52 5

0 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3

ORIX Corporation — Annual Report 2010 Performance Highlights

Net Income Attributable to ORIX Corporation Increased 72% to ¥ 37.8 billion The initial forecast of ¥30 billion was surpassed by 26%

Achieved a Debt/Equity Ratio of 3.4 times Shareholders’ equity increased through a public offering and financial stability improved

Total Assets Decreased by ¥ 629.9 billion from ¥8,370 billion on March 31, 2009 Total assets decreased 7.5% over one year

Highlights for the Fiscal Year Ended March 31, 2010 (Month Announced)

May 2009 Sumitomo Mitsui Banking Corporation and ORIX Credit Corporation Join Forces

Fifty-one percent of ORIX Credit Corporation shares were transferred to Sumitomo Mitsui Banking Corporation (SMBC) to start a joint venture. The market for consumer loans is forecast to shrink due to revisions to the Money Lending Law and increased competition. Swiftly responding to the changing environment, a joint venture was formed with SMBC with the aim of future growth.

July 2009 Public Offering Joint press conference with Sumi- Based on the policy of “Fortification of Financial Stability” announced in early 2009, ORIX made its first public offering tomo Mitsui Banking Corporation in almost eight years (approx. ¥83.4 billion) to adapt to the global economic slowdown and credit crunch. ORIX announced that it would capitalize on its accumulated operating and client bases to focus on providing SME solutions, real estate-related business and diversification of its Asian operations.

Oct. 2009 Mone x Group and ORIX Announce a Merger of their Securities Subsidiaries and Capital Alliance

A capital alliance was concluded by way of share exchange where ORIX Securities Corporation was transferred

to Monex Group Inc. with ORIX taking a 22.5% stake in Monex Group Inc. Through this arrangement ORIX has Joint press conference with Monex, become the major shareholder of Monex Group, Inc., which has become an equity-method affiliate of ORIX. A Group, Inc. merger of Monex, Inc. and ORIX Securities Corporation was concluded in May 2010. Through this alliance, both companies are aiming to promote cooperation and steadily increase corporate value.

Jan. 2010 Chinese Headquarters Established

ORIX (China) Investment Co., Ltd. was established as a headquarters for ORIX operations in China. In addition to furthering the existing leasing and rental business, the Chinese Headquarters will also enhance diversified financial services such as automobile and aircraft leasing. ORIX (China) Investment Co., Ltd. will also begin full-scale Signing ceremony for the strategic partnership agreement with lending and investment activities and accelerate business expansion in China. Dalian City

ORIX Corporation — Annual Report 2010 To Our Shareholders—A Message from CEO Yoshihiko Miyauchi

Insight & Action Creating Added Value in a Changing World

Sustainable Growth through Increased Expertise and Risk Management ORIX responded to the unprecedented financial crisis with determination and a sense of urgency and made efforts toward “Strengthening the Corporate Structure” and “Opera- tional Realignment” to enhance our financial stability. Thanks to these actions we achieved steady results, managing to maintain profitability in fiscal 2008 and achieving earnings for fiscal 2009 that exceeded our initial forecasts. This is the result of ORIX’s long standing commitment to “Business and Funding Diversification,” a key practice since our foundation. Although the business outlook remains opaque, we will continue with our efforts to increase our expertise in all of our businesses and to cultivate new areas, as well as fortify financial stability and enhance risk management. Through these measures we expect to maintain sound businesses and steady growth.

Yoshihiko Miyauchi Chairman and CEO

Overview of Performance During Fiscal 2009 (the fiscal year ended March 31, 2010) Clear Signs of the Next Growth Stage ORIX’s net income for fiscal 2009 rose 72% from the previous fiscal year to ¥37.8 billion, exceeding our initial forecast of ¥30.0 billion by 26%. This bottom line figure indicates a significant recovery in terms of year-on-year performance and results versus forecast, but it still has not recovered to pre-crisis levels. Nevertheless, two consecutive years of solid profit is a significant achievement, the result of ORIX’s swift and proactive measures to address key issues in a difficult operating environment. Although we are far from satisfied with the current level of earnings, by scaling back total assets and lowering our debt/equity ratio as we outlined at the beginning of the fiscal year, we have succeeded in further enhancing financial stability throughout the year, and we saw clear signs that we are moving toward the next growth stage.

ORIX Corporation — Annual Report 2010 Insight & Action The Nature of ORIX’s Strengths Creating Added Value in a Changing World Business and Funding Diversification ORIX was established as a pioneer in Japan’s leasing business in 1964. We have proceeded to expand not only in terms of items that we lease, but also by developing expertise in related operations, including loan-related, operating leases and real estate-related businesses, as well as life insurance and banking operations. Through the steady growth of these individual operations we have diversified our business. We have also pursued regional expansion to areas including Asia, North America and the Middle East, and today we have offices in 27 countries and regions around the world. We have also diversified our funding sources. While the capital markets expanded, we have been careful not to rely too heavily on capital market funding, and instead maintained a roughly 50-50 balance between direct and indirect funding. Our indirect funding sources include more than 200 financial institutions. This is one of the reasons that we were able to weather the financial crisis. ORIX has faced numerous crises over its 46-year history, including two oil shocks, the collapse of Japan’s economic bubble, the Asian currency crisis, the collapse of the IT bubble and now the current financial crisis. However, even in the midst of such difficult operating environments, our diversified business portfolio and balanced funding have allowed us to overcome these challenges. Moreover, with the exception of one instance shortly after our establishment, ORIX has never once posted a loss, and has consistently achieved sustained growth.

Strong Individual Businesses and Mutual Networking ORIX has built its business portfolio over many years by expanding into related fields in which it had sufficient expertise, and through mergers and acquisitions with highly specialized businesses. As ORIX’s expertise and proficiency in each business evolved, the number of stand-alone businesses increased. As a result we now have a range of operations in business fields of differing characteristics, effectively providing risk diversification. Another characteristic of ORIX is that each individual business has basically established its own secure position, with a combination of solid profitability and growth. These businesses have grown by taking advantage of synergies, such as by providing each other with products and services. This combination of strong individual businesses and mutual networking is one of ORIX’s greatest strengths.

Proper Risk Management for the Macroeconomic Environment In addition to a strong business foundation, ORIX’s capacity for risk management allows prompt and bold action to keep it a step ahead of changes in the macroeconomic environment. We began to slow our asset expansion as early as December 2007, well before Lehman Brothers filed for bankruptcy. In fiscal 2009 we started to particularly scale back real estate assets and to enhance risk management. History teaches that no matter how strong a business foundation may be, continued expansion of leverage with no heed to financial conditions or demand trends does not improve financial stability. We will continue to focus on deepening risk management with the goal of achieving earnings growth. Another factor that we believe has allowed us to overcome the numerous difficulties over the years is our suitable control of business risks within the amount of shareholders’ equity in a changing environment.

ORIX Corporation — Annual Report 2010 To Our Shareholders—A Message from CEO Yoshihiko Miyauchi

Management Strategies for the Future Future Growth Areas Where should we seek the source of future growth? The simplest answer is through the growth of our existing businesses. We believe that each business has the potential for further growth. At the same time, we are also focusing on the following growth areas, growth regions and new areas. Growth areas, such as “Finance + Services,” are where ORIX is able to leverage its extensive experience and expertise. In these areas ORIX can cultivate new fee-based businesses in Japan and overseas, and broaden its stable earnings base over the short- to medium-term by providing added value without increasing asset levels. Next, in growth regions, we are focusing our efforts on Asia, where we can expand the diversified businesses we have developed in Japan. We are stepping up efforts to sow the seeds for business expansion in China and other major countries in the region, while diversifying risk by strengthening relationships with local partners. We expect these businesses in Asia to begin contributing to earnings within a relatively short time. Finally, there are new areas such as the environment and energy. ORIX has been involved in the environment-related business since the mid-1990s. This area allows ORIX to display its unique strengths, represented by our operation of Japan’s most advanced private-sector waste treatment facility. We expect to show achievements while making a long-term commitment in this area.

Sustainable Growth ORIX has concluded its crisis response measures, taking steps to regain a growth track, and we believe that fiscal 2010 will be critical for this transition. The macroeconomic environment behind our business activities gives us little cause for optimism. The global economy has emerged from the worst of the crisis, but employment, mainly in developed countries, and other factors remain opaque. Moreover, the potential remains for renewed financial instability as the European fiscal crisis has shown. That is to say, the financial and capital markets will not return to their previous state. We have learned much from the experience of the financial crisis. Considering that it is impossible to have complete faith in the functioning of the financial markets, proper corporate management in the future requires that earnings growth be achieved while maintaining financial stability and exercising thorough risk management. This is what can be called sustainable growth. As I mentioned earlier, ORIX plans to increase its expertise, fortify its financial stability and enhance its risk management with the aim of maintaining sound business operations and achieving steady growth. Accordingly, for the fiscal year ending March 2011 we are aiming for profitability in all segments, with a net income attributable to ORIX Corporation of ¥57.0 billion (up 50% year on year). We have also set a target for return on equity (ROE), one of the main management indicators, of 10% over the medium term.

Message to Shareholders Creating New Value ORIX has sought to create new value under our corporate slogan “ORIX, The Only Answer.” In essence, growth for ORIX will be based on satisfying society by providing the services and products that people have unconsciously desired. At the same time, we believe that our true contribution to society as a corporate group is to maintain our ability to provide services and products that add recognizable value.

ORIX Corporation — Annual Report 2010 ORIX Management Organization Progressive Corporate Governance As a corporate group, ORIX wants to be lauded for its progressive approach, not only in business but in corporate governance. ORIX has actively built and strengthened an organizational structure that clearly separates oversight functions from business execution. Since establishing an Advisory Board in 1997, we have introduced outside directors, adopted a “Company with Committees” board model, and established a Nominating Committee and Compensation Committee composed entirely of outside directors. All outside directors meet the requirements for independence established by ORIX’s Nominating Committee. This demonstrates how ORIX has stayed ahead of regulations on independent officers, which the Tokyo Stock Exchange started to require for all listed companies from the start of fiscal 2010.

Personnel Promoting the Concept of “Keep Mixed” We believe that our greatest driver for growth is our exceptional human resources and we seek to create a workplace in which all employees are able to utilize their talents and expertise to the fullest extent possible, regardless of age, gender, education or nationality under the concept of “Keep Mixed.” We will continue to strive to ensure that as many employees as possible feel that they made the right choice in joining ORIX, and derive sufficient sense of accomplishment by contributing to corporate growth, society and shareholders.

ORIX conducts its business with the aim of satisfying shareholders by increasing corporate value. To this end we will continue to leverage our expertise and teamwork built on originality and flexibility.

July 2010

Yoshihiko Miyauchi

Director, Representative Executive Officer Chairman and Chief Executive Officer

ORIX Corporation — Annual Report 2010 A Message from COO Yukio Yanase

Insight & Action Creating Added Value in a Changing World

Moving to the Next Stage Having Restored Trust I have two main missions as COO of ORIX. The first is to improve the sound- ness of operations while flexibly adapting to challenging economic conditions. The second is to identify and act upon important business opportunities, and to steadily incorporate them into our operating base as drivers to generate future sustainable growth. In fiscal 2009, we achieved increased profits that significantly surpassed our initial forecast while enhancing financial stability and strengthening our corporate structure. We will continue this momentum in fiscal 2010, and we also plan to focus our collective efforts on developing new earnings sources for the medium- to-long term to place ORIX firmly back on a growth trajectory.

Photograph: i-MiEV electric vehicle used for car sharing

Yukio Yanase President and COO

Review of Fiscal 2009 Enhanced Financial Stability, Strengthened Corporate Structure and all Numerical Targets Achieved We remained defensive in fiscal 2009, yet we achieved all of the numerical performance targets that we set at the start of the year in terms of profits, enhanced financial stability and strengthened risk management. The successes of the year have generated confidence leading into fiscal 2010. Against the backdrop of an unprecedented credit crunch said to be a once in a hundred years financial crisis, our main focus during fiscal 2009 was to thoroughly eliminate risk factors that could have affected our operating base, and to focus on enhancing our financial stability and strengthening the corporate structure to adapt to the tightening of credit. We accelerated initiatives to strengthen the balance sheet by reducing assets and liabilities, enhancing credit monitoring of major investee companies and mini- mizing the risk of major write-downs in our investment securities portfolio.

10 ORIX Corporation — Annual Report 2010 Initially we thought that it would take time for the financial and real estate markets to normalize and that the recession would become more apparent at the macroeconomic level. We announced specific performance targets for ORIX based on these assumptions and strove to restore trust in the company. As shown in the table below, we met all of our numerical targets in terms of reducing the debt/equity ratio, decreasing assets and controlling credit costs. We recorded a consolidated net income of ¥37.8 billion, a 72% increase year on year and 26% higher than our initial forecast. In terms of segment performance, four of the six segments recorded a profit in fiscal 2009. Two segments posted losses: the Corporate Financial Services segment, where we had to make significant provisions for doubtful receivables and probable loan losses, and the Investment Banking segment, which was affected by the bankruptcy filing of JOINT CORPORATION. In contrast, the Overseas Business segment delivered strong results in the United States and Asia, and the Retail segment recorded significantly higher profits than the initial forecast. Restored market confidence in ORIX is evidenced by a higher share price and lower yields on our corporate bonds. As COO, I am sincerely grateful to all ORIX executives and employees for their ability to respond quickly and for their exceptional hard work. I am extremely proud of ORIX’s underlying strength to maintain and expand our operating base, which allowed us to maintain ORIX’s untarnished record of delivering profits every year except for the year it was first established.

Key Financial Results for Fiscal 2009

Fiscal 2009 Fiscal 2009 Main Items Results (fiscal year end) (initial forecast)

① Net Income *1 ¥ 37.8 billion ¥ 30.0 billion Upward Revision

② Debt/Equity Ratio *2 3.4 times Below 4 times Achieved

③ Asset Reduction *3 ¥748.7 billion ¥ 432.7 billion Achieved

④ Reduction of Real Estate- ¥370.1 billion ¥ 291.2 billion Achieved *1. Net income attributable to Related Assets ORIX Corporation 2. Excluding deposits ⑤ Credit Cost ¥ 71.5 billion ¥ 78.0 billion Below Forecast 3. Total segment assets

Two Key Challenges in Fiscal 2010 Accelerating Continued Growth and the Creation of a New Revenue Base The critical issue for fiscal 2010 is to maintain the momentum we established in fiscal 2009 and demonstrate that the recovery in the performance of ORIX is genuine. Since we expect the business environment surrounding finance to remain severe both in Japan and overseas, we plan to achieve profit growth while continuing to enhance financial stability and strengthen risk management. We are acutely aware that the current earnings level is not satisfactory compared with the record high of ¥196.5 billion in net income in fiscal 2006. On the other hand, we face the reality that the operating environment has drastically changed. Therefore, in fiscal 2010 we are not merely aiming to achieve our performance targets: we will also focus on continuing to develop new revenue sources to underpin sustainable growth in fiscal 2011 and beyond. I see the year ahead as one in which we must return ORIX to a firm medium- to long-term growth trajectory.

ORIX Corporation — Annual Report 2010 11 A Message from COO Yukio Yanase

Seizing Business Opportunities Generated by Three Major Paradigm Shifts Capitalizing on a Strong Operating Base to take on Business Opportunities One Step Ahead of the Competition So what are these new sources of earnings? I believe the key to answering that question lies in three structural changes in the global economy. The first change is a shift in the drivers of global economic growth—specifically, the emergence of developing markets. Demand in developing markets led by China and India has already surpassed that of mature developed markets. Going forward, rapid economic growth is expected to continue within the developing world in what has been dubbed the Asian century. The second change is a shift within the finance industry of developed markets. The importance of value-added businesses is increasing. Large financial institutions are being forced to tackle the challenges of balance sheet reduction, recapitalization and new financial regulations. There is increasing demand for the finance business to evolve from a debt to an equity model and to shift towards “Finance + Services.” The third change is a shift in global economic growth itself—specifically, the emergence of eco-service businesses. Current times call for environmental protection, and many companies are seeking to develop profitable businesses addressing environmental problems. We believe that this momentous structural shift represents a major long-term business opportunity.

Nominal GDP Shift in Japan, the United States and China (Billions of USD) 15,000

12,000

9,000 Japan 6,000 United States 3,000 China

0 Source: IMF 1985 1990 1995 2000 2005 2010 Forecast

These three structural changes in the economy provide ORIX with major business opportunities. The first opportunity is in Asia. In December 2009, we established a headquarters in Dalian for ORIX’s Chinese operations to capture profitable business opportunities arising from the growth of Asia, and China in particular. The second opportunity is our ongoing development of “Finance + Services.” Rather than just supplying financial functions, we aim to promote high value-added services based on the specialist expertise and know-how that we have acquired across a range of business areas. The third opportunity is in new business areas such as the environment and energy. For instance, we are seeing new shoots of growth such as the car sharing business and the sale of electric power across all our business segments. At ORIX, we have the business base we need to firmly grasp these opportunities and increase their scale as businesses. We plan to make full use of this base to build new revenues sources that will lead to sustainable growth.

July 2010

Yukio Yanase

Director, Representative Executive Officer President and Chief Operating Officer

12 ORIX Corporation — Annual Report 2010 Special feature

Creating a New Strategy ORIX’s Unique Strategies Respond to the Changing Operating Environment

Domestic Strategy From “Finance” to “Finance plus”, and entry into 1 “new areas such as the environment and energy” Creating new products and services in addition to its finance business based on the policy of enhancing the synergies and expertise of business areas in which ORIX excels.

Overseas Strategy “Localization and Partnership” 2 Expanding operations in China and other Asian countries that show high growth potential based on the policy of promoting strategic business alliances with ORIX’s prominent local partners.

ORIX Corporation — Annual Report 2010 13 Special feature

Domestic Strategy

From “Finance” to “Finance plus”, and entry into “new areas such as the environment and energy”

Latent Demand is a Goldmine for ORIX ORIX will achieve sustainable growth not only by providing customers with what they want now, but also by creating new services and businesses that they will want.

Hiroaki Nishina Director, Deputy President, Group Corporate Sales, Investment Banking, Group Osaka Representative, Chairman, ORIX Real Estate Corporation, President, ORIX Baseball Club Co., Ltd.

The worst seems to have passed for the company vehicles, including arranging for insurance, mainte- domestic operating environment surrounding nance, issuing cards for fuel and the ETC (electronic toll collec- ORIX. Do you still feel that you cannot be tion) system, as well as assessing fuel efficiency and other optimistic toward the future outlook? aspects of environmentally-friendly driving. We provide these services and have commercialized them. The business climate is clearly a tough one for lending and ORIX Rentec, which provides rental services for IT equip- other forms of finance. In the finance business, where compet- ment and precision measuring equipment, is also highly itiveness is based on the ability to get funding and reduce regarded for providing additional services ranging from user funding cost, I don’t think that the demand for funding in Japan support to equipment calibration that really meets our clients’ has recovered sufficiently to allow for adequate growth in the needs. Today, ORIX Rentec has the largest market share in the financial industry excluding banks. industry, with 675,000 pieces of rental equipment. However, ORIX’s position is basically different from that of One example of “Finance plus” easily visible to individual major financial institutions and other players in the finance customers is the aquarium operation business performed by industry. ORIX has utilized its nationwide sales network of 1,098 ORIX Real Estate. In 2004 we renovated the aging Enoshima locations to focus on business with major SMEs throughout Aquarium utilizing a private finance initiative (PFI) scheme. As a Japan. Only a minority of our clients want us to simply provide result of in-depth market research, we successfully revitalized financing. The majority appreciate the extras that they cannot the facility into a new usually get from major banks, such as services, business manage- popular aquarium that ment, and related expertise. I see these extras as the lifeline of combines elements of the ORIX Group—a veritable gold mine that will be the source education and enter- of our sustainable growth going forward. Looking at the oper- tainment. ating environment in terms of this “Finance plus” concept, I think that there is unlimited demand that is waiting to be met.

ORIX Rentec Tokyo Technology Center Can you go into more detail about this “Finance plus” concept? Where will you develop the next “Finance plus” additional services? Probably the clearest example is ORIX Auto’s Automobile Management Outsourcing. Through this business we provide One example is logistics. It is not widely known that ORIX Real not just vehicle leasing, but all conceivable related services for Estate is in fact one of the industry’s major investors in logistics

14 ORIX Corporation — Annual Report 2010 facilities. The company draws on the site selection capabilities matter how great the awareness, it is useless if information it has acquired through the residential housing development cannot be acquired smoothly, and that information is not and other businesses to place tenants best suited to a particular passed along to key functions of each business. region or that fit with local needs, following a “local production In order to avoid this, ORIX integrated its sales headquar- for local consumption” format. We will continue to develop ters in January 2009, which had previously been separated extremely efficient logistics facilities throughout Japan. along regional lines such as Tokyo, Kinki and other areas, into For logistics, commercial facilities and other areas of the a single Domestic Sales Administrative Headquarters. This leasing business, the ability to place tenants is the factor that consolidation has created a framework for central manage- has the greatest influence on future earnings. ORIX differenti- ment of information obtained from each field, and for chan- ates itself from major investment banks and pure real estate neling such information to the business unit that has the ability firms by having dedicated tenant promotion teams within its to utilize it most effectively. This system is now up and running. sales departments and we will adopt an integrated, cross- Looking ahead, we plan to expand the role of the Domestic functional sales approach that connects this high-level exper- Sales Administrative Headquarters to the greatest extent tise with our domestic sales network. possible, making it a sales hub and platform for acquiring revenues for Group companies. What are the important factors involved in Other areas where ORIX is focusing on future growth are accelerating the spread of the “Finance plus” new areas such as the environment and energy. We have been concept? Also, what measures are you taking involved in the environment-related business since the mid- to accommodate it? 1990s, and today are nurturing many new young and growing businesses such as car sharing and sales of electricity. We will The two most important factors are reforming awareness and integrate businesses in these new areas across the organiza- improving the framework for conveying information. As you tion as quickly as possible. have probably surmised, the “plus” component of “Finance Simply responding to what the customer wants is not plus” is ultimately additional services and businesses. The enough for us to differentiate ourselves. ORIX intends to expertise and skills in particular fields that are vital to devel- provide services and businesses that customers may not have oping such services and businesses already exist within ORIX. been aware of, but will find useful and be appreciative of. Such However, while certain areas have been exploited, some areas demand may represent niche businesses individually, but when are still dormant. In this sense, it is first of all important to combined they can become something huge, and this is a reform awareness by uncovering these capabilities. Also, no goldmine for ORIX.

Capitalizing on ORIX’s Sales Network to Propose the “Best Match” Retail Store Development and Promotion Department, Domestic Sales Administrative Headquarters

ORIX’s construction and leasing of retail facili- promote the business were well received and ties is one example of “Finance plus”. ORIX ORIX took charge of planning, tenant selection capitalizes on its nationwide sales network for and invitation, and negotiating layout changes real estate information to propose sites that with existing tenants. The facility opened for suitably match the client’s needs. business in May 2009. The combination of a One example is the O2-Park Commercial prime location along a major highway in addi- Complex in the Inage ward of Chiba city. This tion to synergies between the tenant compa- project got off the ground when the Energy and nies has resulted in a bustling shopping center. Eco Services Department contacted the Retail ORIX aims to increase revenues by creating “O2-Park” Commercial Complex in Inage ward, Chiba city (Opened in May 2009) Store Development and Promotion Department unique services through this combination of O2-Park is a leased commercial complex consisting with the information that a major corporation corporate credit, financial and legal know-how of a K’s Denki electronic store, GEO Multimedia with which it was dealing was having difficulty accumulated in the finance industry with rental store, Gokurakuyu Bath & Spa, Sega Game Center, Daiichi Kosho Karaoke and four restau- developing a retail facility on property that it expertise in location and business evaluation, rants including a Saizeriya Italian Restaurant. Floor owned. Both ORIX’s proposal and its ability to planning, and tenant invitation. space: 30,712m2, Parking lot: 400 parking spaces.

ORIX Corporation — Annual Report 2010 15 Special feature

Overseas Strategy

“Localization and Partnership”

ORIX will capitalize on growth in Asia while maintaining its traditional overseas business platform with a main focus on China.

Makoto Inoue Director, Deputy President Global Business & Alternative Investment Headquarters

Why are you focusing on Asia now?

We aren’t looking to expand business simply because of the high economic growth in Asia in recent years. We have aimed for overseas expansion when the company was established in 1964, and we entered into Hong Kong in 1971, less than 10 years after ORIX’s foundation. Since then, we have mainly developed the leasing business with local partners in ASEAN Local management of ORIX METRO Leasing and Finance Corporation in the Philippines. and other Asian countries. Over the last 40 years, we have responded to differences in regulations, culture and client needs, and have built a solid revenues base by focusing on our strategy of providing financial services to local clients with local partners and local management. As the global presence of What challenges does ORIX face in Asia? China and other Asian countries is dramatically increasing, ORIX will capitalize on this large potential to expand business. ORIX’s business in Asia was severely impacted by the Asian Currency Crisis during the late 1990s. Although many Japanese What is your basic policy of Asian business financial institutions withdrew from Asia, we managed to main- expansion? tain the majority of our operations. As a result, we became strong enough to maintain a stable revenue base even during As I have just mentioned, there is potential, but this alone is not the current financial crisis and global recession. Presently, our a reason to increase investment in the region. We need to current operating base in Asia focuses on small-scale finance. exploit this potential by using the expertise we have accumu- Although we intend to organically capitalize on the economic lated in Japan to differentiate our financial services and equity growth of Asian countries, there is a limit to the growth possible investments after thoroughly considering the risks. Furthermore, only by conventional small-scale finance. In order to fully capi- Asia is a difficult market to enter from the outside and start a talize on economic growth in Asia, we need to shift from business from both a regulatory and business practice stand- finance to equity investment and change our focus from small– point. Our “inside approach” using local partners and local scale businesses with an investment size of several hundred management for each business in each region is key for business million yen to medium-scale businesses with an investment expansion that matches the distinct identity of each country. size of several billion yen.

16 ORIX Corporation — Annual Report 2010 How will you address these challenges? How will you expand business in Asia going forward? I would like to start by explaining what we have achieved so far. Korea is a good example. Korea and Japan have similar systems Regionally speaking, China will be the top priority, followed by and this is partly why we have had successful investments such India, Indonesia and Vietnam. We need to prepare for new as our investment in Korea Life Insurance. Our investment in business opportunities including financial services and equity Korea Life Insurance gained ORIX recognition in Korea as one of investments in India and Indonesia, where we already have the major players in the principal investment business field. We a leasing base, in addition to Vietnam, which is a new region will continue to make achievements in other regions, but it will of focus. not be easy as each country has a different legal system. We Business in Asian countries will not be successful unless need to capitalize on our existing business network in each local people play a central role. In fact, Korean staff played a region to cultivate reliable business partners who have a deep central role in the equity investments that have shown a understanding of the local market movements. measure of success in Korea. The market in Asia holds unlimited business opportunities. Our top-class human resources What is your strategy in China? have accumulated knowledge of the leasing business in each country, and we will build a system to capitalize on new busi- We established our Chinese Headquarters in Dalian at the end ness opportunities by training them to shift to financial services of 2009, which has since become a holding company. As a and equity investments. holding company, it has improved credibility as it is a local company and the ability to raise funds in Chinese Renminbi has increased significantly. China is now opening its doors to the outside world and there are many opportunities where we can capitalize on our expertise such as leasing, ship- and aircraft- related finance, equity investment and the environment. However, we do not intend to conduct business 100% by ourselves since we as foreigners cannot handle everything alone when considering the risks involved. On that premise, we are currently in discussions with potential partners who are major players in each business area.

Putting Localization into Practice Global Business & Alternative Investment Headquarters, Corporate Finance Group, Korea Team

The Korea Team was inaugurated in January control of the Head of the Global Business & 2008 and is made up of four Korean nationals. Alternative Investment Headquarters and its The hallmark of this team is its specialization in greatest strengths are quick decision-making Principal Investment. It was ORIX’s investment and flexibility. The team’s achievements are a in Korea Life Insurance that raised the compa- direct result of the comprehensive strength of ny’s visibility in the principal investment field. the team members who are familiar with local ORIX and the Hanwha Group made a joint business practices and regulations, and who investment in the failed Korea Life Insurance in are working to expand the business based on

December 2002 and made an exit after reha- an understanding of ORIX’s organization and Global Business & Alternative Investment bilitating the company. ORIX’s presence in the business strategies. These achievements have Headquarters, Corporate Finance Group industry has since increased with new transac- created a positive cycle that leads to the next From Left: Manager Park Jong Sun tions coming through various channels, leading investment opportunity. ORIX aims to capi- Managing Director Lee Jong Chol to the investment achievement in the STX talize on this unique positioning to undertake Senior Vice President Kim Shinwan Group. The Korea team is under the direct distinctive investment opportunities in Korea. Assistant Manager Kim Najeong

ORIX Corporation — Annual Report 2010 17 Special feature

Corporate Activities

The following is a summary of recent corporate activities by segment (April 2009–June 2010). Please visit the ORIX website for additional press releases (http://www.orix.co.jp/grp/prs_e/).

Segment Date Announced Details

Corporate Financial June 4, 2010 ORIX acquired 95% of Tsukuba Lease Co., Ltd. shares Services May 7, 2010 ORIX established “ORIX Electric Power” P. 25

February 15, 2010 ORIX formed an alliance with Mercer Japan, Ltd. for the corporate pension business

1 October 1, 2009 Concluded distributor contract with Salesforce.com, Co., Ltd.

Maintenance Leasing May 20, 2010 ORIX Auto car sharing members exceed 10,000 P. 27

ORIX Auto entered into a car sharing collaboration with convenience store chain December 21, 2009 FamilyMart Co., Ltd.

September 30, 2009 ORIX Auto started “Auto Bid” service for corporate sales of automobiles

ORIX Rentec and ORIX Eco Services launched “Eco-Rental” service business with April 30, 2009 2 Hewlett–Packard Japan, Ltd.

Real Estate June 1, 2010 Operations began for ORIX Real Estate’s Minato Mirai Center Building P. 29

Construction began for advanced development of the Osaka Station North Yard March 31, 2010 project by ORIX Real Estate ORIX Real Estate announced the “Sumida Aquarium” (tentative name), December 15, 2009 P. 29 an urban aquarium in the Tokyo Sky Tree® complex

3 July 29, 2009 ORIX Real Estate announced the full-scale operation of the Sakai Logistics Center

Announcement Regarding Capital and Business Alliance between ORIX and The Tokyo Investment Banking June 23, 2010 Star Bank, Limited Standard and Poor’s maintained “Strong” rating for ORIX Asset Management & Loan Master Primary Special March 23, 2010 Servicer Servicer Servicer Services commercial loan primary, master and special servicers Merger of three condominium maintenance companies in which ORIX had invested May 22, 2009 (New name: Global Community Co., Ltd.) Strong 4 April 16, 2009 Collaboration with The Akita Bank, Ltd. to guarantee loans with cars as collateral

Retail June 10, 2010 ORIX Life Insurance launched new family support insurance “Keep”

January 25, 2010 ORIX Life Insurance launched new cancer insurance “Believe” P. 33

December 10, 2009 ORIX Trust and Banking announced “Education” and “General Purpose” loans

5 May 18, 2009 ORIX Trust and Banking began “Corporate eDirect Term Deposits”

DI Asian Industrial Fund L.P., a fund targeting promising companies in Vietnam, Overseas Business June 8, 2010 began operation

May 10, 2010 ORIX USA purchase of RED Capital Group, a major U.S. loan servicing company P. 35

Strategic alliance in the environment field with the Chinese Academy of April 12, 2010 Science announced Business matching contract concluded between ORIX China and October 7, 2009 6 the Tokyo Branch of China Construction Bank Corporation

1 ORIX Electric Power website 2 Car sharing station in front of a FamilyMart convenience store 3 South Building, Sakai Logistics Center 4 ORIX Asset Management & Loan Services ratings 5 Cancer insurance “Believe” logo 6 Signing ceremony for the conference document promoting a strategic alliance with the Chinese Academy of Science

18 ORIX Corporation — Annual Report 2010 Segment Overview

Segment Overview

20 ORIX at a Glance

22 Segment Profits, Assets and ROA

23 Breakdown of Assets and Revenues by Segment

24 Corporate Financial Services

26 Maintenance Leasing

28 Real Estate

30 Investment Banking

32 Retail

34 Overseas Business

ORIX Corporation — Annual Report 2010 19 Segment Overview

ORIX at a Glance

Corporate Main Business Main Group Companies Number of Overview of Operation Lending, leasing, commission business • ORIX Employees The Corporate Financial Services segment has its origin in the leasing busi- central point of contact for the entire ORIX Group in responding to needs of other Financial Services for the sale of financial products and • ORIX Eco Services 2,616 ness developed at the time of ORIX’s establishment in 1964, and even today segments, including business succession and overseas business development. environment-related business • NS Lease this segment serves as the foundation for the entire ORIX Group. During the year, ORIX established new specialty departments within this Operating through a nationwide network of 82 offices, ORIX provides capital segment to connect and promote sales throughout the Group, and these new • ORIX Environmental Resources through loans and leasing for capital investment and other needs to its core departments have started activities that are expected to become the foundation Management customer base of domestic small and medium enterprises (“SMEs”). In order to for new revenues in the areas of development and promotion of retail facilities, maximize synergies, the Corporate Financial Services segment functions as the domestic and overseas sales, in addition to the environment and energy business.

Maintenance Main Business Main Group Companies Number of Overview of Operation Automobile leasing and rentals, • ORIX Auto Employees This segment consists of ORIX’s automobile and rental operations. wide range of services to address the vehicle needs of both corporate Leasing car sharing, and precision measuring • ORIX Rentec 3,335 The automobile operations began with automobile leasing in 1973, and individual clients. equipment and IT-related equipment and expanded to automobile rental in 1985. Since 2002, the ORIX Group ORIX entered the rental business in 1976 with leasing of precision rentals and leasing has also operated a car sharing business. Automobile leasing opera- measuring equipment to corporate clients. Today, the rental business tions started by offering to corporate clients leases that included main- covers a broad range of services, including IT-related equipment rentals, tenance services, and today provides a complete range of specialized technical support, calibration and asset management. vehicle management outsourcing services. The segment also offers a

Main Business Main Group Companies Number of Overview of Operation Real Estate Employees Development and rentals of commer- • ORIX The Real Estate segment began with corporate dormitory rental opera- commercial facilities; residential condominium development; develop- cial real estate, condominium devel- • ORIX Real Estate 3,704 tions in 1986, and started developing residential condominiums in 1993. ment and operation of hotels, golf courses, training facilities and senior opment and sales, hotel, golf course, • ORIX Asset Management Real estate operations gained momentum in 1999 with the establish- housing; and asset management and administration, including Japanese ment of ORIX Real Estate Corporation. Today, the ORIX Group is involved real estate investment trusts. and training facility operation, senior • ORIX Golf Management housing development and operation, in development and leasing of properties, such as office buildings and • ORIX Living REIT asset management, and real estate • ORIX Real Estate Investment Advisors investment and advisory services

Investment Banking Main Business Main Group Companies Number of Overview of Operation Real estate finance, commercial real • ORIX Employees This segment consists principally of the real estate-related finance busi- business that invests in non-performing loans and CMBS management estate asset securitization, loan • ORIX Capital 2,011 ness and the investment banking business that ORIX began developing and collection; a principal investment business initiated in 2000; a secu- servicing (asset recovery), principal • ORIX Investment during the late 1990s and early 2000s. Operations include a venture ritization business; and a mergers and acquisitions and financial advisory investment, M&A advisory, venture capital business established in 1983; a real estate-related finance busi- business established in 2003. • ORIX Asset Management & Loan Services capital and securities brokerage ness, including non-recourse loans, established in 1999; a loan servicing • ORIX M&A Solutions • ORIX Wholesale Securities

Retail Main Business Main Group Companies Number of Overview of Operation Life insurance, trust and banking busi- • ORIX Life Insurance Employees This segment consists of four businesses that primarily serve individual started with ORIX Credit in 1979 and is currently being managed as a ness, card loan business and online • ORIX Trust and Banking 1,170 customers. The four businesses are the life insurance business, handled joint venture with Sumitomo Mitsui Banking Corporation pursuant to an securities brokerage • ORIX Credit by ORIX Life Insurance, which was founded in 1991 and operates mainly alliance established in July 2009; and the securities business, which we through representative and mail-order sales; the trust and banking busi- entered by bringing ORIX Securities into the ORIX Group in 1986 and ness, handled by ORIX Trust and Banking, which is centered on the which now centers on online securities brokerage operations. ORIX housing loan business started by ORIX in 1980 and is also engaged in Securities merged with Monex, Inc. in May 2010 after a share exchange corporate lending and other services; the card loan business, which was between ORIX and Monex Group, Inc. in January 2010.

Overseas Business Main Business Main Group Companies Number of Overview of Operation Leasing, lending, investment in bonds, • ORIX Employees This segment consists of leasing, lending, investment in bonds, invest- Middle East, North Africa and Europe. Its main operations include investment banking, real estate- • ORIX USA 3,209 ment banking, real estate-related operations, and ship- and aircraft- equipment leasing, automobile leasing, corporate financial services, and related operations, and ship- and • ORIX Australia related operations in the United States, Asia and the Pacific, and Europe. ship- and aircraft-related operations. Recently, ORIX has also expanded aircraft-related operations Since expanding to Hong Kong in 1971, ORIX has built a broad over- into principal investment, investments in non-performing loans and • ORIX Asia seas network spanning the United States, Asia and the Pacific, the M&A advisory services. • ORIX Leasing Malaysia Berhad • PT. ORIX Indonesia Finance

20 ORIX Corporation — Annual Report 2010 Corporate Main Business Main Group Companies Number of Overview of Operation Lending, leasing, commission business • ORIX Employees The Corporate Financial Services segment has its origin in the leasing busi- central point of contact for the entire ORIX Group in responding to needs of other Financial Services for the sale of financial products and • ORIX Eco Services 2,616 ness developed at the time of ORIX’s establishment in 1964, and even today segments, including business succession and overseas business development. environment-related business • NS Lease this segment serves as the foundation for the entire ORIX Group. During the year, ORIX established new specialty departments within this Operating through a nationwide network of 82 offices, ORIX provides capital segment to connect and promote sales throughout the Group, and these new • ORIX Environmental Resources through loans and leasing for capital investment and other needs to its core departments have started activities that are expected to become the foundation Management customer base of domestic small and medium enterprises (“SMEs”). In order to for new revenues in the areas of development and promotion of retail facilities, maximize synergies, the Corporate Financial Services segment functions as the domestic and overseas sales, in addition to the environment and energy business.

ORIX Corporation — Annual Report 2010 21 Segment Overview

Segment Profits, Assets and ROA (Years ended March 31)

Segment Profits (left) Segment Assets (right) ROA

Corporate Finan- Maintenance Investment Overseas Real Estate Retail cial Services Leasing Banking Business

Fiscal Year Ended Billions Billions ( of yen ) ( of yen ) March 31, 2010 100 2,000 Segment Performance

The Overseas Business and Retail 1,578.8 segments significantly surpassed 75 1,500

initial forecasts and four of the six 1,236.9 1,166.7 segments recorded profits. Provi- 1,079.3 sions for doubtful receivables and 50 1,000 860.8 probable loan losses remained 37.1 31.1 high in the Corporate Financial 561.5 Services segment and the bank- 25 3.6% 4.1% 500 ruptcy of an investee company in 9.4 2.0% the Investment Banking segment 0.8% 21.7 resulted in losses. 0 0

–1.2% –1.0% –12.0 –17.6 –25

Fiscal Year Ended Billions Billions March 31, 2009 ( of yen ) ( of yen ) 100 2,000 Segment Performance Profits significantly decreased in all 1,583.6 1,554.0 six segments resulting from the 75 1,500 impact of tightened credit in the 1,321.5 1,175.4 global financial and capital markets. 50.5 Especially, the Corporate Financial 50 949.9 1,000 Services and Investment Banking segments recorded losses due to 648.3 25.6 increased provisions for doubtful 25 3.9% 4.5% 201 500 receivables and probable loan losses 9.6 2.0% and losses on investments. While –63.4 Overseas Business segment profits 0 0 0.6% decreased, operations in the U.S., –10.5 –0.6% which were at the epicenter of the –4.2% financial crisis, remained profitable. –75

Fiscal Year Ended Billions Billions March 31, 2008 ( of yen ) ( of yen ) 1,993.4 100 2,000 Segment Performance

Gains on sales of real estate under 83.1 1,698.5

operating leases and profits from 75 1,450.2 1,500 the condominium business in the Real Estate segment made signifi- 57.9 1,077.6 cant profit contributions. Profits 1,037.3 50 47.5 1,000 were recorded from exits on 8.4% 37.2 corporate investments, sales of 35.4 649.8 5.3% real estate and the ship-related 27.5 25 5.8% 500 business in the Asia and Pacific 3.1% region of the Overseas Business segment, resulting from a focus on 1.8% 1.9% 0 0 business diversification.

Note: Segment profit appearing in “Segment Overview” pages 22–35 is segment income before income taxes.

22 ORIX Corporation — Annual Report 2010 Breakdown of Assets and Revenues by Segment (Fiscal Year Ended March 31, 2010)

(Billions of yen)

Corporate Finan- Maintenance Investment Overseas Real Estate Retail Total cial Services Leasing Banking Business

Segment Assets 1,237 561 1,079 1,167 1,579 861 6,484

Investment in direct financing leases 308 229 13 0 29 178 756

Installment loans 826 0 1 553 821 262 2,462

Investment in operating leases 27 329 549 137 45 126 1,212

Investment in securities 15 1 4 384 517 179 1,099

Other operating assets 18 1 131 30 0 6 186

Inventories 18 0 106 9 0 21 153

Advances for investment in 7 0 194 0 0 3 204 operating leases

Investment in affiliates 19 1 81 55 167 87 410

Segment Revenues 114 223 190 90 156 186 958

Direct financing leases 20 14 2 0 0 15 51

Interest on loans and investment 34 0 0 41 34 26 135 securities

Operating leases 26 148 50 7 0 53 284

Brokerage commissions and net gains 1 0 0 1 4 18 23 (losses) on investment securities

Life insurance premiums and related 0 0 0 0 116 0 116 investment income

Real estate sales 0 0 41 0 0 0 41

Gains on sales of real estate under 0 0 17 0 0 0 18 operating leases

Other operating revenues 34 61 79 40 2 74 290

Notes: 1. Figures in the table above may vary from figures reported in the consolidated statements of income and the consolidated balance sheets because items considered as corporate assets and revenues are not included. 2. The figures in the above table are in billions and may not add up to the totals in the consolidated financial statements due to rounding.

Concerning the Breakdown of Assets and Revenues by Segment Operating revenues such as “Direct Financing Leases,” “Interest on Loans and Investment Securities” and “Operating Leases” are recorded according to the operating transactions in “Investment in Direct Financing Leases,” “Installment Loans,” “Investment in Operating Leases” and “Investment in Securities.” Life Insurance business assets are included in each item of segment assets. Gains (Losses) from these assets are included as related investment income under “Life Insurance Premiums and Related Investment Income.” Revenues from “Real Estate Sales” are derived from assets held under the consolidated balance sheet item “Inventories.” “Gains on Sales of Real Estate under Operating Leases” includes gains on sales of all leased real estate assets in “Investment in Operating Leases.”

ORIX Corporation — Annual Report 2010 23 segment overview

Corporate Financial Services

Kazuo Kojima Katsutoshi Kadowaki Katsunobu Kamei Corporate Executive Executive Officer Executive Officer Vice President Domestic Sales Domestic Sales Administrative Domestic Sales Administrative Headquarters: Headquarters: Head of Kinki Sales Administrative Headquarters Head of District Sales Group Osaka Deputy Representative

Segment Performance and other measures aimed at increasing markets by concen- Segment revenues were down 17% to ¥113.7 billion compared trating investment to create an eco-friendly society. to the previous fiscal year as a result of restrictions placed on new transactions and asset reductions, particularly loans to Operating Strategy real estate companies. Sales personnel in the Corporate Financial Services segment The segment recorded a loss of ¥17.6 billion compared to a develop and deliver optimal solutions based on a deep under- loss of ¥10.5 billion in the previous fiscal year due to a continued standing of its customers, their specific needs and their high level of provisions for doubtful receivables and probable management issues, gained through day-to-day transactions, loan losses. and supported where necessary by team efforts centered Segment assets decreased 22% compared to March 31, around the ORIX Group’s high levels of expertise. 2009 to ¥1,236.9 billion due to a decline in the balances of Moving forward, this segment will seek to expand and investment in direct financing leases and installment loans. accelerate the provision of “Finance + Services” as a sales platform for the ORIX Group and to broaden its client base by Operating Environment strengthening cooperation among Group companies in order There is lingering uncertainty toward the business environment to leverage ORIX’s specialized expertise in areas such as the of SMEs, the segment’s core client base. Against the backdrop automobile and rental businesses. The automobile and rental of a generally stagnant economy, the Japanese government businesses have accumulated know-how through business implemented economic stimulus policies, including funding diversification and are currently providing high value-added support for SMEs, which contributed to a decrease in the services to their customers in the areas of vehicle and IT asset number of corporate bankruptcies in the second half of 2009. management. By capitalizing on this specialized expertise, this Even though large companies have seen improvement in their segment will endeavor to fulfill the needs of various industries fund raising opportunities, the severe operating environment and uncover new business opportunities with a broader poten- surrounding SMEs has continued due to a conservative approach tial client base. to lending by domestic financial institutions. In addition, as an offshoot to this segment’s leasing busi- Meanwhile, the Japanese government is emphasizing the ness, which includes the collection and disposal of end-of- environment and energy as growth areas to be driven by lease assets, ORIX has been involved in the environment and Japan’s strengths in its “New Growth Strategy”, with the objec- energy-related business for more than ten years. The ORIX tive of creating over ¥50 trillion in new markets and approxi- Group will focus on making propositions with regards to the mately 1.4 million new jobs within these growth areas by 2020. usage of energy-saving measures and renewable energy in The main policies include the expansion of renewable energy addition to proposals related to waste disposal and recycling, and turning homes and offices into zero-emissions structures, which have already been established.

24 ORIX Corporation — Annual Report 2010 Overview of Business Strategies Segment Results (Billions of yen) Expand “Finance + Services” 2008/3 2009/3 2010/3

Expand the client base by enhancing cooperation Segment revenues 139.9 137.7 113.7 with ORIX Auto and ORIX Rentec Segment profits 35.4 (10.5) (17.6) Capitalize on expertise to exploit the needs of various industries and uncover new business Segment assets 1,993.4 1,583.6 1,236.9 opportunities ROA (%) 1.8 (0.6) (1.2)

This segment has focused on credit management and will Diffusion Index* (DI) work to maintain asset quality while aiming to build a healthy 60.0 base of small and diversified assets through detailed and 50.0 prompt measures and close monitoring. 40.0

30.0

20.0

10.0

0.0 05/4 06/4 07/4 08/4 09/4 10/4

Source: Cabinet Of ce Economy Watchers Survey (released on May 13, 2010） * Respondents rate the economic outlook on a 1–5 scale ranging from“better” to“worse.”Responses are assigned points from 0 to 1 and the diffusion index is calculated by multiplying the points by the component ratio of each category.

LNG satellite tank installed at a pharmaceutical company production plant by an LNG fuel conversion ESCO business.

Establishment of new company“ ORIX Electric Power Corporation”

ORIX and DAIKYO Incorporated established “ORIX Electric Power” the customer does not need to worry about complicated paperwork (OEP) through a joint investment in May 2010. or fees. OEP also measures electricity usage, bills for electricity and OEP is developing services that decrease the cost of electricity handles customer inquiries. through bulk discount by contracting an entire building to receive The implementation of this service is under consideration for newly power from the electric company instead of the building management developed ORIX Real Estate and DAIKYO condominiums. OEP will association or each resident contracting individually. OEP handles all look to expand environmentally conscious services such as the instal- aspects of design, construction, administration and maintenance, so lation of solar panels on condominiums and smart-grid capability.

ORIX Electric Power Electric Company Bulk contract for inexpensive, (Electric Power Supplier) high voltage electricity

ORIX Corporation — Annual Report 2010 25 segment overview

Maintenance Leasing

Eiji Mitani Keiji Ito Group Senior Vice President Group Executive President, ORIX Auto President, ORIX Rentec Corporation Corporation

Segment Performance As a result, the competitive landscape in the domestic Despite the severe operating environment, this segment has measuring equipment rental market has been relatively stable. maintained relatively stable revenues by capitalizing on ORIX’s However, decreased capital expenditures resulting from the position as industry leader in terms of market share and by economic downturn has suppressed demand for rentals, providing high value-added services. Segment revenues decreased particularly among the major electronics manufacturers. 6% to ¥223.0 billion compared to the previous fiscal year. With respect to the market for IT equipment rentals, going Segment profits decreased 15% to ¥21.7 billion compared to forward, the cloud computing market is expected to grow due ¥25.6 billion during the previous fiscal year due to increased depre- to lower running costs and system flexibility. IT investments by ciation expenses caused by conservative residual value estimates client companies will shift from hardware ownership to hard- reflecting a stagnant secondary auto market, despite a decrease in ware use as a part of IT service. As a result, growing demand is segment expenses from reduced selling, general and administra- expected for IT rental companies to provide IT services that can tive expenses resulting from internal cost reduction programs. lead to improvements in operating efficiency and the reduction Segment assets were down 13% compared to March 31, 2009 of costs by clients, particularly in the information security area. at ¥561.5 billion due to a decrease in new transactions from weakening demand and the sales of low performing assets. Operating Strategy The Maintenance Leasing segment will promote Group-wide Operating Environment measures to further expand its high value–added services and In corporate automobile leasing operations, demand is slug- augment its fee-businesses such as “Comprehensive Auto gish due to decreased automobile investment and pressure to Management Service” in the automobile operations and “IT Asset reduce costs. The secondary market is also stagnant. Management Service”. At the same time, the segment will capi- On the other hand, companies have increased their needs talize on know-how acquired in Japan and enhance the provision for vehicle cost reductions and improvement of fleet operating of value-added services overseas with the aim of improved efficiency and their interest in areas such as compliance and performance in the Asian market, particularly in China. safety. Furthermore, ORIX expects that heightened awareness In the automobile leasing business, the segment will utilize the of environmental issues will stimulate demand for leasing networks of the Corporate Financial Services segment and Group services for hybrid and electric vehicles. An increase is also companies to promote services that combine leasing, automobile expected in the number of car sharing participants. rental, and car sharing to provide optimal and low-cost vehicle The precision measuring equipment rental industry has solutions to current and potential clients. As of March 31, 2010, comparatively high entry barriers because of significant initial automobiles under management totaled approximately 835,000. investment requirements and the difficulty of recruiting and The corporate automobile leasing operation aims to maintain retaining personnel with the requisite specialist knowledge. profitability and clients by addressing all aspects of outsourcing

26 ORIX Corporation — Annual Report 2010 Overview of Business Strategies Segment Results (Billions of yen) Promote Group-wide cross-functional 2008/3 2009/3 2010/3 collaboration, target further expansion Segment revenues 236.4 236.0 223.0 Venture into Asia while actively promoting ORIX Auto’s “Comprehensive Auto Management Segment profits 37.2 25.6 21.7

Service” and ORIX Rentec’s “IT Asset Management Segment assets 649.8 648.3 561.5 Service” ROA (%) 5.8 3.9 3.6

needs related to vehicle management. Also, ORIX is responding than 675,000 units of equipment spanning about 22,000 types. to the increasingly specialized and complex needs of its clients by ORIX will also work to expand its rental operations of IT strengthening its consulting services for the needs of legal compli- equipment to cover pre-installed information security counter- ance, environmental services, and vehicle management-related measures and further develop its fee-business from technical risk management (such as accidents and legal restrictions). ORIX support services such as the operation and management of IT will also continue to create business frameworks that deliver high equipment. ORIX will also seek continued growth in its used added value for clients, such as sophisticated vehicle manage- rental equipment resale business. ment and adjustment of administrative operations, through which *Total volume under management including leasing, automobile rental, car sharing and automobiles for which ORIX provides telematics. ORIX expects to differentiate itself from its competitors. In leasing automobiles to individual clients, ORIX will Car Sharing Membership (Number of people) continue to promote products such as My Car Lease and Car 18,000 Car sharing members in Japan *1 16,177 Sharing. Especially in the car sharing business, ORIX will seek to 15,000 ORIX Auto car sharing members *2 create a new business platform by strengthening relationships 12,000 9,000 with local authorities and public transportation systems. 9,000 6,396 ORIX will continue to expand the types of equipment it 6,000 4,350 3,245 2,512 handles in the rental business, while working to enhance ancil- 3,000 1,712 2,000 862 1,000 lary services such as IT equipment asset management. In addi- 0 2006 2007 2008 2009 2010 tion, ORIX expects to maintain its large market share and *1. Source: Foundation for Promoting Personal Mobility and Ecological Transportation efficiently turnover assets with the aim of generating stable (January of each year) 2. Total ORIX Auto members (March 31 of each year) growth. As of March 31, 2010, the rental business owned more Note: ORIX Auto car sharing members exceeded 10,000 as of May 1, 2010

ORIX Rentec Technology Center

The Tokyo and Kobe Technology Centers are the back- to client requests in a prompt and precise manner. bone of ORIX Rentec’s high level of quality control and Since its beginning as Japan’s first precision technical service. ORIX Rentec has an overwhelmingly measuring equipment rental company in 1976, ORIX industry-leading rental equipment lineup consisting of Rentec has created new added value from its unsur- 675,000 pieces of equipment spanning 22,000 types passed expertise acquired in the rental business. that are individually managed at Japan’s largest ORIX Rentec provides calibration services, measure- automated warehouse. Sales branches nationwide ment consulting, technical services and asset

can track rental equipment inventory, shipping and management services that contribute to the creation Automated Warehouse, Tokyo expected delivery information in real-time to respond of new corporate value for client companies. Technology Center

ORIX Corporation — Annual Report 2010 27 segment overview

Real Estate

Yoshiyuki Yamaya Tetsuo Matsumoto Corporate Executive Vice President Group Senior Vice President Real Estate Headquarters Real Estate Headquarters President, ORIX Real Estate Corporation Deputy President Chairman, ORIX Golf Management ORIX Real Estate Corporation Corporation

Segment Performance metropolitan area in 2009. Additionally, a favorable environment Segment revenues decreased 30% year on year to ¥189.5 for revived demand has been developing due to government billion compared to the previous fiscal year due to decreases policies encouraging home buying including an expansion of tax in real estate sales and gains on sales of real estate under deductions on housing loans, an increased gift tax exemption operating leases. for loans to certain family members that are used to purchase Segment profits were down 81% to ¥9.4 billion compared to a residence and an “eco-point” system for energy-efficient ¥50.5 billion during the previous fiscal year chiefly due to a housing and fixtures, as part of broader economic measures, as significant decline in equity in net income (loss) of affiliates well as falling purchase prices due to lower construction costs. related to condominium joint ventures The facilities operation business, which includes the opera- Segment assets decreased 8% compared to March 31, 2009 tion of hotels, golf courses and training facilities, faces difficult to ¥1,079.3 billion mainly resulting from decreases in invento- conditions due to corporate cost cutting and waning consumer ries related to the condominium development business. confidence. However, facilities that can provide high quality service meeting the needs of end users shows strong demand Operating Environment from domestic and overseas clients. Despite the dramatic downturn in the domestic real estate market in the wake of the global financial crisis, liquidity has Operating Strategy been improving as demonstrated by a resumption of public Even in a sluggish real estate market, ORIX expects to secure offerings and issuances of investment corporation bonds by stable revenue sources by managing and reducing business risks, REITs. Accordingly, real estate transactions have shown green through capitalizing on its expertise in the areas of diversified shoots of recovery, for example, stabilization of expected small and medium-sized property investment, cash flow focus investor capitalization rates. and risk sharing with business partners through joint ventures. However, office vacancy continues to hover at a high rate, The strengths of this segment are its real estate value chain reflecting the continuing economic stagnation. Competition to functions, including leasing, asset management and property attract tenants is intensifying and rent levels continue to be ad management, as well as the ORIX Group’s client base. ORIX justed. In light of these circumstances, in order to succeed, real will aim to maintain and improve the value of its real estate estate companies will need to demonstrate strong leasing capa- assets and promote the turnover of properties in its portfolio bilities crucial to maintaining property value as well as the exper- by capitalizing on these strengths. tise and capability to develop environmentally-friendly properties. In the real estate development and rental business, ORIX In the residential condominium market, some positive signs will strive to improve the occupancy rates and rental income by have emerged, such as improvement in contract completion leveraging the characteristics of its small and diversified rental rates nearing the key benchmark level of 70% in the Tokyo property portfolio and its leasing capabilities. Although real

28 ORIX Corporation — Annual Report 2010 Overview of Business Strategies Segment Results (Billions of yen) Capitalize on leasing expertise to make use of 2008/3 2009/3 2010/3 the distinctive small and diversified rental property Segment revenues 288.8 270.0 189.5 portfolio to increase occupancy and yields Seek various exit strategies, promote asset turnover Segment profits 83.1 50.5 9.4 Increase fee-income by expanding the asset Segment assets 1,077.6 1,175.4 1,079.3 management business ROA (%) 8.4 4.5 0.8 Create new value by promoting large projects

estate transactions have not seen a full-scale recovery, ORIX customer base and increase profitability by setting a clear will pursue various exit strategies to promote asset turnover. customer target and concept for each facility. For its residential condominium development business, ORIX Real Estate Investment Advisors is expanding its asset ORIX can flexibly respond to changes in the business environ- management business, targeting increased fee-based revenue. ment as it outsources the sales of its residential condominiums In addition to managing Group assets, ORIX will also address to other companies. Since the second half of 2007, ORIX has the asset management needs outside the Group by forming been reducing its condominium supply ahead of its competi- private real estate funds to win large-scale property projects. tors; however, since late 2009 ORIX has steadily resumed the Moreover, ORIX will create new value by promoting large- development of suspended projects and new land purchases scale projects such as the North Yard, a redevelopment project in response to recovery in consumer demand. After thorough next to Osaka Station. market research, ORIX will supply condominiums mainly within a price range that meets consumer needs. In its facilities operation business, ORIX will establish a unique position in the market by providing a wide range of services in response to diversified needs and aging customers. ORIX has seen an increase in opportunities to invest in Japa- nese inns and golf courses with strong brand recognition, as achievement from investments in operating facilities have Left: Minato Mirai Center Building opened in June 2010 been well received. Specifically, ORIX expects to diversify its Right: T-soleil daylight system naturally lights the interior

Aquarium Business Introduction

ORIX Real Estate has operated the Enoshima Aquarium, but there are plans to open the “Sumida Aquarium, a Private Finance Initiative with the Aquarium” (tentative name) in the Tokyo Sky Tree® Kanagawa Prefectural Government, since April complex in the spring of 2012, and the “Kyoto 2004. This community-based aquarium is gaining Aquarium” (tentative name) in Kyoto’s Umekouji Park. popularity by actively hosting events, shows and ORIX will use the operating know-how from the hands-on learning programs. Enoshima Aquarium to provide a center for a new The renovated aquarium opened in 2004 with a lifestyle for the local populace emphasizing record yearly attendance of 1.8 million, 6 times that of the “culture, interaction and recreation” in addition to previous year. Visitor numbers continue to be strong. a place for “environmental education” that extends Currently, ORIX only operates the Enoshima beyond the classroom. Sumida Aquarium (Artistic Rendering)

ORIX Corporation — Annual Report 2010 29 segment overview

Investment Banking

Mitsuo Nishiumi Hisayuki Kitayama Hiroshi Yasuda Corporate Senior Vice President Executive Officer Executive Officer Investment Banking Headquarters Investment Banking Headquarters Investment Banking Securitization and Capital President, ORIX Asset Management Headquarters Markets Office and Loan Services Corporation President, ORIX Capital President, ORIX Wholesale Securi- Corporation ties Corporation

Segment Performance Moreover, a large amount of CMBS loans in Japan will reach Segment revenues decreased 5% to ¥89.6 billion compared to maturity in 2010 and involved parties are currently seeking the previous fiscal year as a result of asset reductions and possible measures upon maturity, such as refinancing or collec- limited new transactions in the real estate finance business. tion through the sales of collateralized properties. The segment recorded a loss of ¥12.0 billion compared to a Opportunities for investment in non-performing loans are loss of ¥63.4 billion during the previous fiscal year due to an limited as financial institutions continue to reduce their increase in provisions for doubtful receivables and probable disposals of large-scale assets. However, investment opportu- loan losses mainly from non-recourse loans and the recogni- nities are expected to arise as foreign corporations withdraw tion of write-downs of securities, despite an improvement in from Japan, funds are divested and the selection and concen- the amount of loss recorded for equity in net income (loss) of tration of companies accelerates. affiliates compared to the previous fiscal year. The domestic M&A market has seen a contraction in the Segment assets decreased 12% compared to March 31, number of transactions, reflecting the uncertain economic 2009 to ¥1,166.7 billion due to a decrease in the balances of outlook and the impact of the financial crisis; however, such installment loans and investment securities. trend is starting to subside. As listed companies are under- taking restructuring and engaging in strategic de-listing of Operating Environment subsidiaries and, as SMEs are undergoing business succession, The global financial crisis triggered a significant change in the the use of M&A as a corporate management strategy has operating environment surrounding the Investment Banking become increasingly widespread in Japan. ORIX sees this as an segment. Japan’s economic recovery has been slow and uncer- opportunity to promote its financial advisory services and tainties in the financial and capital markets are expected to other corporate advisory services. continue. Investments need to be stringently selected as signs of improvement in liquidity are yet to be seen. Operating Strategy The risk tolerance of investors decreased in the wake of The Investment Banking segment is focusing on preserving and the global recession precipitated by the Lehman Brothers enhancing the value of existing loans and portfolio companies bankruptcy in September 2008, which lead to a dramatic while taking advantage of investment opportunities presented decline in the volume of real estate transactions and a by the changing environment. contraction in the domestic real estate related non-recourse In Japan, ORIX believes there are business opportunities loan market. Although liquidity provided by financial institu- related to CMBS loans reaching maturity. In particular, ORIX tions is essential for market recovery, their conservative sees this as a great opportunity for its Investment Banking approach to lending has not changed despite improvements segment, which has accumulated knowledge and expertise in seen in the market. arranging loan refinancing as well as loan servicing to expand its

30 ORIX Corporation — Annual Report 2010 Overview of Business Strategies Segment Results (Billions of yen) Capitalize on the high-rated servicer function 2008/3 2009/3 2010/3 with a large market share for CMBS-related Segment revenues 127.2 94.6 89.6 profit opportunities and strengthen the corporate rehabilitation business Segment profits 47.5 (63.4) (12.0)

Actively pursue selective equity investment Segment assets 1,698.5 1,321.5 1,166.7

ROA (%) 3.1 (4.2) (1.0)

fee-based business. ORIX Asset Management & Loan Services For the real estate finance business, in light of the significant Corporation (OAMLS), the first Japanese servicer to simultane- changes in the real estate market, ORIX will deal with each ously receive all three servicer ratings (master, primary and transaction individually and cautiously. ORIX is monitoring the special servicer), in addition to receiving the highest rating terms of individual transactions as well as the condition of (Strong) from S&P, has expertise in CMBS servicing and a wide underlying assets, and otherwise strive to maximize collections information network for CMBS through its real estate-related while continuously reducing asset balances. ORIX believes that finance business. Capitalizing on these strengths, ORIX will under the current real estate market conditions, there are cases expand its fee-based business by acting as intermediary in the where revenues can be maximized from a mid- to long-term sales of collateralized properties and as a special servicer while perspective by holding acquired real estate as rental proper- seeking investment opportunities. This segment is also expected ties, in which case, revenues and risk can be controlled. There- to arrange co-investments and serve as an investment platform fore, ORIX will aim to maximize profit and focus on increasing among its relations with domestic and international investors. the value of acquired real estate with capitalization of group For the investment banking business, this segment will synergy by collaborating with other segments, mainly the Real provide management support such as business succession and Estate segment, until the market sees a full-scale recovery. corporate rehabilitation (restructuring, transfer and funding Capitalizing on its network of partner financial institutions, arrangement). ORIX will also be actively involved in developing ORIX will also seek opportunities for new fee-based busi- promising businesses as an investor. nesses such as providing credit evaluation and servicing.

Business Rehabilitation

Financial Institutions ORIX ORIX is involved in the corporate rehabilitation business. ORIX Transfer of credit obligation increases corporate value by providing various management 1 support services capitalizing on its high level of acquired expertise. Rehabilitation Loan 3 M&A Advisory Support Example of Management Support Services This service mainly centers on ORIX Asset Management & Loan Services, which arranges the optimal capital structure for the disposal or assignment of loans held by financial institutions. ORIX Company to be Rehabilitated Rehabilitated Company then proposes a plan to increase core business profitability, imple- Business transfer Core Business Core Business ments the plan and assists in the sale of non-core businesses.

ORIX arranges finance such as syndicated loans for a company under- Non-core Business going rehabilitation. ORIX may also acquire a stake or participate as →Divestiture an investor in the rehabilitating company. Financial Institutions 2 Finance Arrangement This service mainly centers on ORIX M&A Solutions and supports ORIX corporate divestitures, transfers and sponsor company invitations.

ORIX Corporation — Annual Report 2010 31 segment overview

Retail

Izumi Mizumori Masatoshi Kemmochi Akio Ushio Group Senior Vice President Group Executive President, ORIX Trust and President, ORIX Life Insurance President, ORIX Credit Banking Corporation Corporation Corporation

Segment Performance units, a key engine behind the housing loan business, which Segment revenues declined 15% to ¥155.9 billion compared to the continues to perform strongly. previous fiscal year due to the change in status of the card loan In the card loan market, consumer finance companies are and securities brokerage businesses as equity method affiliates. finding it difficult to maintain their conventional high-margin Segment profits more than tripled to ¥31.1 billion compared business models as the upper limit on interest rates has been to ¥9.6 billion during the previous fiscal year due to contribu- lowered and a ceiling on total debt has been created. As a tions from gains on sales of subsidiaries and decreased result, the industry has been undergoing restructuring, with expenses such as life insurance costs and provisions for large firms forming alliances with banks. doubtful receivables and probable loan losses. The securities market regained some stability due to successful Segment assets increased 2% to ¥1,578.8 billion compared financial and economic policies implemented by economic to March 31, 2009 due to increased assets in the trust and powers. Due to heightened expectations for improved company banking and life insurance businesses, although the balance of performance, Japan’s securities market has been on the recovery installment loans from the card loan business decreased. trend and retail investor confidence is expected to improve.

Operating Environment Operating Strategy In the life insurance market, demand for distinctive “third In this segment, ORIX expects to maintain its policy of devel- sector” (medical and cancer insurance) products has been oping new markets for individuals by offering products and increasing most likely due to Japan’s low birthrate and rela- services that provide a high level of customer satisfaction and by tively high longevity. The introduction of “third sector” products increasing its unique expertise and efficiency in niche markets. has intensified competition. Moreover, sales channels have ORIX Life Insurance, which concentrates mainly on devel- diversified with the expansion into retail stores by major joint oping and selling products for individuals, has experienced a agencies, availability of complete clearance of insurance sales substantial increase in the number of policies in force. ORIX has at bank counters and the arrival of pure-Internet-play insur- focused on expanding products such as its medical insurance ance companies. “Cure”, as well as its cancer insurance “Believe”, which were As individual funds continue to flow into deposits instead of originally introduced to the individual market in September investment, ORIX Trust and Banking has steadily expanded its 2006 and March 2010 respectively. As other companies have deposits. Separately, opportunities for corporate lending busi- entered the market with similar products, competition has ness have also expanded as the value of indirect corporate grown increasingly fierce. ORIX Life Insurance will continue to financing, such as increased support for SME funding, has been develop products that meet the needs of its customers and revaluated. Even in a stagnated real estate market, demand enhance its product lineup. Moreover, ORIX Life Insurance will remains firm in the market for investment rental condominium expand its customer base by strengthening agent sales channels,

32 ORIX Corporation — Annual Report 2010 Overview of Business Strategies Segment Results (Billions of yen) Life Insurance: Expand business by developing 2008/3 2009/3 2010/3 distinctive “third sector” (medical and cancer insur- Segment revenues 198.9 183.3 155.9 ance) products and enhancing the agencies channel Trust and Banking: Continue to expand corporate Segment profits 27.5 9.6 31.1

lending Segment assets 1,450.2 1,554.0 1,578.8 Capitalize on strong partner platforms to expand ROA (%) 1.9 0.6 2.0 the Card Loan business and online Securities Brokerage business

and achieve stable revenue growth. The importance of the Group network and greater diversification in its fundraising insurance business to the overall ORIX Group has been dramat- options, based on its major product, the VIP Loan Card. ically increasing, and ORIX will aim to realize profit growth. The combined Monex, Inc. and ORIX Securities became one In line with this growth in individual oriented business, ORIX of the largest Internet based securities companies in Japan Trust and Banking began handling deposits via the Internet for through the joint venture between ORIX and Monex Group, Inc. corporate customers in May 2009. On the investment side, in The new company will further strengthen the bases of both addition to its housing loan business, ORIX seeks to establish corporate groups and continue to expand its products and a well-balanced portfolio of lending by focusing on corporate services for customers. lending, cultivating a new customer base and strengthening its Trend in ORIX Trust and Banking Loan and relationship with trusted clients. As the business grows, ORIX Deposit Balances will also work to strengthen risk management and internal (Billions of yen) 1,000 control structure. Deposit Balance Loan Balance 841.7 736.4 750 In the card loan business and online securities brokerage 667.2 605.3 business, ORIX has recently formed alliances with trusted busi- 518.5 500 439.2 445.4 461.5 470.4 ness partners under the policy of “Operational Realignment”. 352.7

With investment from the Sumitomo Mitsui Banking Corpo- 250 ration, ORIX Credit will target a stable and increased operating 0 base by attracting different types of customers via the ORIX 06/3 07/3 08/3 09/3 10/3

ORIX Life Insurance: Combining organizational power to continuously create differentiated products

The development concept of ORIX Life Insurance diagnosis of cancer. The product is already favor- is “simplicity”. ORIX Life Insurance develops simple ably received, as the premium is more reasonable products that are easy for customers to under- than indemnity insurance. stand. The flagship product “Medical Insurance ORIX Life Insurance products can be purchased Cure” embodies this concept and is well received through insurance agencies and allied bank tellers by customers and professionals alike. It was such as Sumitomo Mitsui Banking Corporation, as ranked the No. 1 “Medical Insurance the Pros well as direct sales via the Internet from the ORIX Want” by a special March 20, 2010 edition of a Life Insurance website. ORIX Life Insurance will Japanese weekly magazine. In March 2010, a new continuously develop and provide distinguished product “Cancer Insurance Believe” was released, products that meet customer needs. featuring a generous lump-sum payment upon a

ORIX Corporation — Annual Report 2010 33 segment overview

Overseas Business

Makoto Inoue Yuki Oshima Hideo Ichida James R. Thompson Deputy President Executive Officer Executive Officer President and CEO, Global Business & Chairman, ORIX Global Business & ORIX USA Corporation Alternative Investment USA Corporation Alternative Investment Headquarters Headquarters

Segment Performance In Asia and the Middle East, where ORIX has extensive busi- Segment revenues increased 11% to ¥185.9 billion as a result of ness operations, the economies of emerging countries have realized gains on investment securities and increased fee recovered rapidly despite the effects of the global financial income from Houlihan Lokey Howard & Zukin (Houlihan Lokey) crisis. As a result of high economic growth in recent years, in the United States, despite decreased operating and direct Asia’s economy has reached the stage where it consumes a financing lease revenues in Asia and the Pacific from stringent wide range of business, products and services from developed transaction selection during the first half of the fiscal year. countries such as Japan, which should lead to various business Segment profits increased 85% to ¥37.1 billion compared to opportunities. China is a particularly attractive country in terms ¥20.1 billion during the previous fiscal year mainly due to of economic scale and has garnered global attention as a profits recognized in the principal investment business in Asia. promising market despite structural problems such as inflation Segment assets decreased 9% to ¥860.8 billion compared and increasing domestic economic disparities. to March 31, 2009 as a result of decreased investment in direct financing leases and installment loans. Operating Strategy In the United States, ORIX is engaged in investment and financing Operating Environment operations, such as corporate finance and investments in CMBS In the United States, a succession of bankruptcies, including and other marketable securities, and investment banking opera- the collapse of the prominent investment bank Lehman tions, including advisory services in the areas of mergers and Brothers and the realignment of other major financial institu- acquisitions, corporate financial restructuring and enterprise tions, dealt a tremendous blow to the world’s financial and valuation. Although the United States was the epicenter of the capital markets. The ensuing deterioration in global financial financial crisis, the expertise ORIX has been able to accumulate liquidity triggered a sharp contraction in credit, leading to a there has allowed it to expand its profits even under the turmoil significant decline in the operating environment. Despite a of the current economy. Going forward, ORIX aims to focus on slow economic recovery in the United States, unemployment cultivating opportunities to expand “Finance + Services” based levels have remained high and recovery in consumer spending on its expertise. For example, in May 2010, ORIX USA acquired and the housing market still faces challenges. The U.S. finan- RED Capital Group, a company that arranges specialty loans for cial market continues to de-leverage as regional financial insti- real estate companies and obtains fees through loan servicing. tutions are still facing a severe operating environment and This is a typical example of acquiring fee-based revenue without with decreased lending capacity. There is also concern that using the balance sheet. the impending implementation of financial regulations may Investment banking operations are carried out by Houlihan further impact the operating environment. Lokey, which has maintained a strong reputation in the United States for decades in financial advisory services, financial opinion

34 ORIX Corporation — Annual Report 2010 Overview of Business Strategies Segment Results (Billions of yen) United States: Expand “Finance + Services” 2008/3 2009/3 2010/3 based on accumulated high expertise and Segment revenues 218.2 167.6 185.9 aggressively expand operations, including future M&As Segment profits 57.9 20.1 37.1

Asia: Embrace growth in Asia. Seek out Segment assets 1,037.3 949.9 860.8 high-profit initiatives, especially in China led Makoto Inoue Yuki Oshima Hideo Ichida James R. Thompson by the Chinese headquarters in Dalian ROA (%) 5.3 2.0 4.1 Deputy President Executive Officer Executive Officer President and CEO, Global Business & Chairman, ORIX Global Business & ORIX USA Corporation Alternative Investment USA Corporation Alternative Investment Headquarters Headquarters

services and financial restructuring services. In the midst of the areas, ORIX will further expand its client and business partner global recession, Houlihan Lokey has increased earnings opportu- network, which already spans numerous countries. Moreover, nities in its corporate financial restructuring advisory operations. ORIX is working to enhance its resources for supporting Japa- In Asia, the Pacific, the Middle East and Europe, ORIX con- nese companies looking to move into overseas markets, as tinues to focus on leasing, lending and other financial services well as foreign companies entering Japan. closely tied to local communities. ORIX believes that it can

expect stable growth in its existing leasing operations, particu- Financial Restructuring Advisory Operations larly in Asia. ORIX will embrace growth of the Asian region by Houlihan Lokey has been commended for its No 1. financial restruc- increasing earnings through adding value to existing financial turing advisory in each area including global, the United States and services, while capitalizing on its expertise such as mainte- Europe / Middle East and Africa. Source: Thomson Reuters nance leasing developed in Japan. Five Largest Bankruptcies from 2000 to 2009 ORIX will strengthen investment and financing operations in Contracted four advisory operations not including Washington Mutual, Inc. the fields of financial related, automobile, ships and aircraft Total pre-bankruptcy assets Failed firm especially in China. As a part of this, ORIX established its (Billions of dollars) Chinese Headquarters in Dalian in December 2009 and inte- $691 Lehman Brothers Holdings, Inc. grated existing businesses under a holding company structure. $328 Washington Mutual, Inc.

ORIX is aiming to cultivate trusted clients in China. For other $104 WorldCom, Inc.

$ 91 General Motors Corporation

$ 80 CIT Group Inc. The Purchase of RED Capital Group Source: BankruptcyData.com ORIX USA Corporation (OUC), a U.S. subsidiary of ORIX acquired RED Capital Group in May 2010. M&A Advisory Operations RED Capital Group arranges specialty loans for commercial real M&A Advisory Ranking (2009: US)

estate developers to develop multifamily and senior living proj- Transaction amount: Under $3 billion ects, sells the loans to a public entity (such as Fannie Mae) and Ranking Advisory Number of cases obtains fee-based revenues through loan servicing. RED Capital 1 Houlihan Lokey 71 Group has a high market share and has been ranked in the top 10 in terms of amount of yearly loan structuring since 1998. 2 Goldman Sachs Group 70 OUC has a long history of providing servicing for securitized 3 Bank of America Merrill Lynch 66 commercial real estate loans, and the purchase of RED Capital Group will allow OUC to capitalize on both companies’ servicing 4 JP Morgan 62 know-how to expand its profit base in the United States. 5 Morgan Stanley 59

Source: Thomson Reuters

ORIX Corporation — Annual Report 2010 35 Management organization—Management team

Management Team

(As of June 22, 2010)

Corporate Philosophy ORIX is constantly anticipating market needs and working to contribute to society by developing leading financial services on a global scale and striving to offer innovative products that create new value for customers.

Management Policy

ORIX strives to meet the diverse needs of its customers and to deepen trust by constantly developing superior services. ORIX aims to strengthen its base of operations and achieve sustained growth by integrating ORIX’s resources to promote synergies amongst different units. ORIX makes efforts to maintain a corporate culture that encourages a sense of fulfillment and pride by developing personnel resources through corporate programs and promoting professional development. ORIX aims to attain stable medium- and long-term growth in shareholder value by implementing these initiatives.

Profit Distribution Policy ORIX believes that securing profits from its businesses primarily as retained earnings, and utilizing them for strengthening its base of operations and making investments for growth, assists in sustaining profit growth while maintaining financial stability, and leading to increased shareholder value.

Regarding dividends, ORIX responds to shareholder expectations through increasing shareholder value through mid- to long-term growth and steady distribution of profit.

36 ORIX Corporation — Annual Report 2010 Directors

1 Yoshihiko Miyauchi 6 Kazuo Kojima 11 Eiko Tsujiyama 12 8 9 13 2 Yukio Yanase 7 Yoshiyuki Yamaya 12 Robert Feldman 10 11 5 3 1 6 2 4 7 3 Hiroaki Nishina 8 Yoshinori Yokoyama 13 Takeshi Niinami 4 Haruyuki Urata 9 Hirotaka Takeuchi 5 Makoto Inoue 10 Takeshi Sasaki

Directors and Executive Officers Committees Yoshihiko Miyauchi Makoto Inoue Board of Directors Representative Executive Officer, Deputy President Chairman and Chief Executive Officer Global Business & Alternative Investment (6 Outside Directors / 7 Internal Directors) *Chairperson Headquarters Yukio Yanase Nominating Audit Committee Compensation Representative Executive Officer, Kazuo Kojima Committee (3 members) Committee President and Chief Operating Officer Corporate Executive Vice President (5 members) (5 members) Hiroaki Nishina Domestic Sales Administrative Headquarters Takeshi Sasaki* Eiko Tsujiyama* Yoshinori Yokoyama* Deputy President Yoshiyuki Yamaya Group Corporate Sales Corporate Executive Vice President Yoshinori Yokoyama Yoshinori Yokoyama Hirotaka Takeuchi Investment Banking Real Estate Headquarters Group Osaka Representative President, ORIX Real Estate Corporation Hirotaka Takeuchi Takeshi Sasaki Takeshi Sasaki Chairman, ORIX Real Estate Corporation Chairman, ORIX Golf Management Corporation President, ORIX Baseball Club Co., Ltd. Robert Feldman Eiko Tsujiyama Haruyuki Urata Takeshi Niinami Takeshi Niinami Deputy President and Chief Financial Officer Corporate Planning Department, Corporate Note: Each of ORIX’s three committees is currently composed entirely by Communications Department outside directors. Financial Control Headquarters

ORIX Corporation — Annual Report 2010 37 Management organization—Management team

Introduction of ORIX Outside Directors

Yoshinori Yokoyama obtained an MBA from the Sloan School of Management at Yoshinori Yokoyama MIT in 1975 and joined McKinsey & Company, Inc. where he served as Director Chairperson of the Compensation from 1987 to 2002. Yokoyama also served as Senior Fellow at the Research Institute Committee of Economy, Trade and Industry, IAI from 2002 to 2004. Outside Director, Sumitomo Mitsui Financial Group, Inc. Yokoyama first became a member of ORIX Corporation’s Advisory Board in 1997 Outside Director, Sumitomo Mitsui before becoming a Director in June 2002. He has a wealth of experience and knowl- Banking Corporation edge as a business consultant, and is independent from the management engaged in operations. As Chairperson of the Compensation Committee, he currently contributes to the Company by leading discussions and deliberations on compensation structures and compensation levels for Directors and Executive Officers which are designated to enhance incentives for mid- to long-term growth.

Hirotaka Takeuchi joined McCann-Erickson Advertising Co., Ltd. in 1969 before Hirotaka Takeuchi taking a position as Research Assistant at the Graduate School of Business Admin-

istration at the University of California, Berkeley and then becoming a Lecturer and Professor, Harvard Business School Assistant Professor at the Graduate School of Business Administration at Harvard Outside Director, Trend Micro, Inc. University. In 1987, he became Professor at Hitotsubashi University’s School of Commerce. He served as Dean at the Graduate School of International Corporate Strategy from 1998 to March 2010. Takeuchi became an Outside Auditor of ORIX Corporation in June 2000, resigned in June 2003, and was then appointed Outside Director in 2004. He has profound knowledge of corporate strategy, and is independent from the management engaged in operations. As Chairperson of the Nominating Committee until June 2010, he contributed to the Company by leading discussions and deliberations on members of the Board of Directors and Executive Officers suitable for the Compa- ny’s operations. In discussions of the Board of Directors and committees, he provides comments from an overall strategic perspective.

Takeshi Sasaki became a research assistant at The University of Tokyo Faculty of Takeshi Sasaki Law in 1965 after graduating from the same faculty and held several positions Chairperson of the Nominating within the university until he was appointed president in April 2001 where he Committee presided until March 2005. In June 2003, as Chairperson of the Japan Association Professor, Gakushuin University, Faculty of Law, Department of Political Studies of National Universities, Sasaki was involved as the person in charge of the incor- Outside Director, East Japan Railway poration of national universities. In December 2004, Sasaki was selected as a Company Outside Director, Toshiba Corporation member of The Advisory Council on the Imperial House Law. Sasaki was made an advisor to ORIX Corporation in July 2005 and was appointed Outside Director in June 2006. He has a wealth of experience in university reform, is knowledgeable in a wide range of issues in politics and society in general that affect the company’s management, and is independent from the management engaged in operations. He contributes to the Company by pointing out major issues of the Company management at the meetings of the Board of Directors and other committees.

38 ORIX Corporation — Annual Report 2010 Eiko Tsujiyama became an Assistant Professor at Ibaraki University (Faculty of Eiko Tsujiyama Humanities) in August 1980. She later became an Assistant Professor at Musashi Chairperson of the Audit Committee University (Faculty of Economics), and was appointed Dean of Musashi University’s New Director Faculty of Economics and Chairperson of the Graduate School of Economics in April Professor, Waseda University Faculty of Commerce and 1996. In April 2003, Tsujiyama became a Professor at Waseda University Faculty of Graduate School of Commerce Commerce and Graduate School of Commerce. In June 2004, Tsujiyama became Outside Auditor, Mitsubishi Corporation Chairperson of the National Tax Council. Tsujiyama has served on review committees of governments and other organizations in Japan and overseas related to financial accounting. Tsujiyama was appointed as an Outside Director of ORIX Corporation in June 2010 based on her previous experience, in-depth knowledge as an expert in accounting and independence from the management engaged in operations. ORIX expects Eiko Tsujiyama to lead discussions as Chairperson of the Audit Committee based on her wealth of experience and standpoint as a specialist.

Robert Feldman joined Nomura Research Institute, Ltd. in 1973. In 1981 he became Robert Feldman a Visiting Scholar at the Bank of Japan (now the Bank of Japan Institute for Monetary New Director and Economic Studies), followed by Economist at the International Monetary Fund. Managing Director, Head of Japan In 1990 Feldman became Chief Economist at Solomon Brothers Asia Limited (now Economic Research Morgan Stanley MUFG Securities Co., Ltd. Citigroup Global Markets Japan Inc.). Feldman joined Morgan Stanley Japan Securi- ties Co., Ltd. (now Morgan Stanley MUFG Securities Co., Ltd.) in 1998 as Managing Director and Chief Economist Japan and currently serves as Managing Director and Head of Japan Economic Research. Feldman was appointed as an Outside Director of ORIX Corporation in June 2010 based on his in-depth knowledge as an economist of the environment and events in Japan and overseas that affect the corporate business environment and his independence from the management engaged in operations. ORIX expects Robert Feldman to supervise and provide advice to the Company’s management from a broader point of view based on his wealth of experience.

Takeshi Niinami joined Mitsubishi Corporation in 1981. In 1995 he was appointed Takeshi Niinami President of Sodex Corporation (now Leoc Japan Co., Ltd.). Niinami was named New Director Unit Manager of Lawson Business and Mitsubishi’s Dining Logistical Planning Team, President and CEO, Lawson, Inc. Consumer Industry Division, Mitsubishi Corporation in 2001. Niinami became Outside Director, ACCESS CO., LTD. President and Chief Executive Officer of Lawson, Inc. in 2002, before assuming the role of President and CEO in 2005. Niinami became a Director at ACCESS CO., LTD. in 2006. Niinami was appointed as an Outside Director of ORIX Corporation in June 2010 based on his broad knowledge of corporate management and his independence from the management engaged in operations. ORIX expects Takeshi Niinami to direct and advise management with his experienced business judgment.

ORIX Corporation — Annual Report 2010 39 Management organization—Management team

Executive Officers

Corporate Executive Vice Corporate Senior Vice Executive Officer Executive Officer Executive Officer President President

Tamio Umaki Mitsuo Nishiumi Yuki Oshima Katsutoshi Kadowaki Hisayuki Kitayama Chief Information Officer, Investment Banking Headquarters Chairman, ORIX USA Domestic Sales Administrative Investment Banking Headquarters, Human Resources & Corporate Securitization and Capital Markets Corporation Headquarters: Head of President, ORIX Asset Manage- Administration Headquarters, Office, President, ORIX Capital District Sales ment & Loan Services Corporation IT Planning Office Corporation President, ORIX Wholesale Securities Corporation

Executive Officer Executive Officer Executive Officer Executive Officer Executive Officer

Hiroshi Yasuda Katsunobu Kamei Kenichi Miyauchi Yuichi Nishigori Takao Kato Investment Banking Domestic Sales Administrative Risk Management Financial Control Financial Control Headquarters Headquarters: Head of Kinki Headquarters Headquarters Headquarters, Sales, Group Osaka President, ORIX Management Deputy Representative Information Center Corporation

Executive Officer Executive Officer Executive Officer

Kazutaka Shimoura Komei Ikebukuro Hideo Ichida Risk Management Legal and Compliance Global Business & Alternative Headquarters Department, Internal Audit Investment Headquarters Department

40 ORIX Corporation — Annual Report 2010 Group Executives

Group Senior Vice Group Senior Vice Group Senior Vice President President President

Eiji Mitani Tetsuo Matsumoto Izumi Mizumori President, ORIX Auto Real Estate Headquarters, President, ORIX Life Insurance Corporation Deputy President, ORIX Real Corporation Estate Corporation

Group Executive Group Executive Group Executive

Yoshitaka Fujisawa Masatoshi Kemmochi Keiji Ito President, ORIX Computer President, ORIX Credit President, ORIX Rentec Systems Corporation Corporation Corporation

ORIX Corporation — Annual Report 2010 41 Management Organization—Corporate Governance

Corporate Governance

1. Basic Policy and Progress in Strengthening Corporate Governance

(1) Basic Corporate Governance Policy Audit, and Compensation committees were set up. When the Companies ORIX considers corporate governance to be important to enable the promo- Act took effect on May 1, 2006, ORIX became a company with a revised tion of business activities in line with its management policy (See P.36). While “Company with Committees” board model under that law. examining best practices in Japan and worldwide, ORIX aims to construct a There are six outside directors after the June 22, 2010 General Meeting corporate governance system with a high degree of transparency. of Shareholders. All five seats on the Nominating Committee have been filled by outside directors since June 2007. As a result, all three committees (2) Strengthening Corporate Governance including the Nominating, Audit, and Compensation committees are cur Progress in Strengthening Corporate Governance rently composed entirely of outside directors. The Nominating Committee Since the establishment in June 1997 of an Advisory Board, which included determines the conditions necessary for director independence. Presently, experienced and resourceful individuals from outside the Company, ORIX all outside directors meet such conditions. Additionally, all outside direc- has strengthened its corporate governance framework with the aim of tors are designated independent directors as required by the Tokyo Stock objectively determining whether its business activities are emphasizing the Exchange to ensure general shareholder protection. ORIX believes that interests of its shareholders. opinions from outside directors based on his/her expertise and having no In June 1998, ORIX introduced a Corporate Executive Officer system to material interest with ORIX, will promote increased management transpar- help separate strategic decision-making functions from day-to-day admin- ency and objectivity. istrative operations. In June 1999, ORIX reduced the number of members on its Board of Directors, arranged for three Advisory Board members to Corporate Governance System fill two positions as independent directors and one position as an advisor The Corporate Governance System after the June 22, 2010 General Meeting to the Board, and phased out the Advisory Board. In addition, the Nomi- of Shareholders is as follows. nating Committee and the Compensation Committee were established to operate as support units for the Board of Directors. (a) Business Execution Bodies To ensure the more effective separation and speedy execution of the Board of Directors: The Board of Directors makes decisions regarding items decision-making and monitoring functions of the Board of Directors and that cannot, under legislation and the Articles of Incorporation, be delegated the executive function of management, ORIX adopted a “Company with to executive officers, as well as items stipulated by Regulations of the Board Committees” board model in June 2003, following the April 2003 imple- of Directors as important to ORIX. The Board of Directors is responsible for mentation of revisions to the former Commercial Code of Japan that approving and monitoring on a regular basis ORIX’s policies which includes permitted this model. In line with the new board model, Nominating, corporate planning such as capital management, fund procurement and

Corporate Governance System Flowchart (As of June 22, 2010)

General Meeting of Shareholders

Board of Directors Executive Of cers

Reporting Directors CEO, COO, CFO Supervision 6 Outside Directors 7 Internal Directors Reporting Investment and Credit Committee Disclosure Group Executive Of cers Committee Committee Monthly Strategy Meeting Disclosure Management Informatization Committee Control 17 Executive Of cers Nominating Committee: 5 Members (Outside: 5) Instructions 6 Group Executives (Excluding CEO, COO, and CFO) Reporting

Audit Committee: 3 Members (Outside: 3) Internal Control-Related Operations

Instructions/ s

Audit Committee r t s e t n t n r

Requests e Secretariat l e a e s o c s t m u r s r t m t n n

Compensation Committee: 5 Members (Outside: 5) q e t r e i a n r e t d i a t l r n o a a m n p a a p c e p t e e u l p r e H Reporting m a a q D m t m o D t n p d n t r r o t C i a e e r e a C d e t d d

Instructions/ o p m g u n H n p p i e e d n A a u g i s p r Requests e D r l l t a o e u e l r a n a a o S h l a t g a t n G i e s S r e r M O n e L e

Independent Public Accountants l t k o a n s i Reporting / Supervision Financial Auditing S I M R

42 ORIX Corporation — Annual Report 2010 personnel strategies. Aside from such items, the Board of Directors dele- Information Technology Management Committee gates decision making regarding operational execution to Representative The Information Technology Management Committee includes members of Executive Officers. The Board of Directors also receives reports from execu- the top management and the executive officer in charge of information tech- tive officers and committees regarding the status of business execution. nology (“IT”) systems, and meets once a month to deliberate and approve From April 1, 2009 through March 31, 2010, the Board of Directors met important matters concerning fundamental policies for IT operations and IT eight times. The attendance rate of directors for these meetings was 97%. systems. The committee determines the needs of and priorities for IT invest- The Board of Directors includes 13 members, six of whom are outside ment based on the ORIX Group’s fundamental IT strategies. This method directors. enables ORIX to ensure that IT decisions are consistent with its business Executive Officers: Certain important business execution decisions specified strategies. Furthermore, this enables ORIX to pursue its goal of making IT by internal rules are made by Representative Executive Officers based on investments that contribute to business growth and help reduce risk. deliberations of the Investment and Credit Committee and other groups. Disclosure Committee The executive officers execute operations in accordance with the decisions The Disclosure Committee, which plays a key role in ORIX’s disclosure of the Board of Directors, the business execution decisions of the Represen- control, is chaired by the CFO and consists of the executive officers in tative Executive Officers, and various internal rules. The following units charge of various departments, including: Corporate Planning Department handle important decision making processes, monitoring, discussion, and The Financial Control Headquarters, Risk Management Headquarters, Legal information sharing related to operational execution. and Compliance Department, Human Resources and Corporate Administra- Investment and Credit Committee tion Headquarters, and Corporate Communication Department. Upon The ICC, which includes members of the top management and the execu- receiving material information from an executive officer of ORIX, or the tive officer in charge of investment and credit meets on average three times person in charge of an ORIX company department, the committee discusses a month primarily to deliberate and decide on credit transactions and whether or not any timely disclosure is necessary, and takes steps to investments that exceed certain specified investment or credit amounts, provide appropriate disclosure of such information. important matters related to management of the Company and matters that have been entrusted to executive officers by the board of directors. (b) Decision-Making Functions for Nominating, Audit, and Matters considered crucial to our operations are decided on by the ICC Compensation Issues and reported to the board of directors as appropriate. Nominating Committee: The Nominating Committee is authorized to Group Executive Officer Meetings propose the slate of director appointments or dismissals to be submitted Group Executive Officer Meetings, in which executive officers and group to the annual general meeting of Shareholders. Directors shall be elected executives of the Company participate, are held on a monthly basis to share and dismissed by a resolution of the annual general meeting of Share- important information related to the business execution of the ORIX Group. holders. In addition, the Nominating Committee deliberates on the Monthly Strategy Meetings appointment or dismissal of executive officers and Group executives, The monthly strategy meetings include meetings between top manage- although this is not required under the Companies Act. ment and the individuals in charge of individual departments and business From April 1, 2009 through March 31, 2010, the Nominating Committee units to discuss matter such as the state of achievement of strategic targets met five times. The attendance rate of these meetings was 88%. and changes in the business environment. The meetings are held in prin- Following the annual general meeting of Shareholders held on June 22, ciple monthly depending on the nature of the business. Matters of key 2010, the Nominating Committee’s five members include Takeshi Sasaki importance are decided by the ICC and reported to the Board of Directors (Chairman), Yoshinori Yokoyama, Hirotaka Takeuchi, Robert Feldman and as necessary. Takeshi Niinami. All five members are outside directors.

Compensation of Directors and Executive Officers during Fiscal 2009

Directors Notes: 1. During fiscal 2009, 4 executive officers were newly appointed and 5 executive officers retired, for a total Executive Officers (Outside Directors) of 11 directors and 19 executive officers as of March 31, 2010. Figures for the number of officers remunerated and the remuneration amount include figures for the 1 director and 5 executive officers that retired Number of Amount paid Number of Amount paid during fiscal 2009. people (Millions of yen) people (Millions of yen) 2. In fiscal 2009 no persons serving concurrently as directors and executive officers were remunerated as directors. The total remuneration figure for the 6 persons serving concurrently as directors and executive 6 67 Fixed compensation 24 768 officers is shown in the executive officer column/line. (5) (59) 3. Stock compensation indicated on the left is the amount for the 2 outside directors and 4 executive officers that retired during fiscal 2009 or by the end of the General Meeting of Shareholders held on June 23, 2010. Performance-linked ̶ ̶ 22 95 Stock compensation values are determined by points that are assigned to each executive officer based on internally determined standards. The compensation value paid at the time of retirement is calculated by multiplying the stock price on the retirement date by the number of accumulated points. This system 6 10 Stock options 24 103 requires the post-tax value of compensation paid to be used to purchase ORIX stock at the market price (5) (8) on the retirement date. 4. The Company did not provide stock options in the form of stock acquisition rights during fiscal 2009. The 2 6 Stock compensation 4 58 stock options indicated on the left are the expenses recognized during fiscal 2009 for new stock acquisi- (2) (6) tion rights provided until fiscal 2008. 5. Compensation of Group executives for fiscal year 2009 was determined based on the Company’s execu- 84 Total ̶ ̶ 1,026 tive officer compensation policies, and total fixed compensation amounted to ¥226 million for 10 Group (74) executives, the total of performance-linked compensation amounted to ¥39 million, ¥33 million in stock option expenses were recognized, and stock compensation for the two people who retired amounted to ¥21 million. 6. Figures shown are rounded downward by discarding figures of less than ¥1 million.

ORIX Corporation — Annual Report 2010 43 Management Organization—Corporate Governance

The Nominating Committee determines whether the conditions neces- The Audit Committee met eight times from April 1, 2009 through March sary for director independence have been met based on its appointment 31, 2010. The attendance rate at these meetings was 91%. Following the criteria for directors. Presently, all outside directors meet the necessary Annual General Meeting of Shareholders held on June 22, 2010, Eiko Tsuji- conditions which are as follows. yama (Chairman), Yoshinori Yokoyama, and Takeshi Sasaki comprise the Audit Committee. All three members are outside directors. Conditions for Director Independence Eiko Tsujiyama is qualified as a certified public accountant and has exten- • No individuals, or any of their family members*, may receive a compen- sive knowledge in finance and accounting as a professional accountant. sation of more than ¥10 million annually excluding compensation as an Compensation Committee: The Compensation Committee determines employee for family members, and excluding the individual’s compensa- policies regarding the compensation of individual directors and executive tion as outside directors, from ORIX or its subsidiaries. officers, as well as the monetary remuneration, etc., of each individual • No individuals, or any of their family members*, may be a major shareholder of ORIX (more than 10% of issued shares) or represent the inter- director and executive officer. The Compensation Committee has deter- ests of major shareholder. mined the following policies. • No individuals may have served as an executive officer or an employee of ORIX or its subsidiaries within the past five years. None of their family Policies of Determining Compensation of Directors and members* may have served as an executive officer of ORIX or its subsid- Executive Officers iaries within the past five years. ORIX’s business objective is to increase shareholder value over the medium • There must be no concurrent directorship relationship between the and long term. ORIX believes in each director and executive officer respon- company for which the individual is serving as executive office and sibly performing his or her duties and in the importance of cooperation among ORIX, defined as being a relationship in which the company for which different business units in order to achieve continued growth of ORIX. the individual is serving as an executive officer has a director that is also The Compensation Committee at ORIX believes that in order to accom- an executive officer of ORIX or its subsidiaries. plish such business objectives, directors and executive officers should • There must be no material conflict of interest or any possible conflict of place emphasis not only on performance during recent fiscal years, but interest that might influence the individual’s judgment in performing also on medium- to long-term results. their duties as an outside director. Accordingly, under the basic policy that compensation should provide effective incentives, ORIX takes such factors into account when making * Family members include a spouse, those related within the second degree by decisions regarding the compensation system and compensation levels consanguinity or affinity, or other kin living with the outside director. for its directors and executive officers. Taking into consideration this basic policy, the following policies regarding

Audit Committee: The Audit Committee supervises the execution of duties the compensation of directors and executive officers have been adopted. by directors and executive officers, and creates auditing reports. The Audit Compensation Policy for Directors: The compensation policy for directors who are not also executive officers aims for a level and composition Committee also has the right to propose the appointment or dismissal, or of compensation that is effective in maintaining supervisory and oversight to pass resolutions for refusing reappointment of the Company’s indepen- functions of executive officers’ performance in business operations, which dent certified public accountants at the annual general meeting of share- is the main duty of directors. holders. ORIX has established the Audit Committee Secretariat to assist Specifically, while aiming to maintain competitive compensation standards, the Audit Committee with the execution of its duties. ORIX’s compensation structure consists of a fixed compensation component, The Audit Committee decides the person responsible in each depart- based on duties performed, and a shares component of compensation*. ment who will report to the Audit Committee, and by capitalizing on the Compensation Policy for Executive Officers: The compensation policy for executive officers including those who are also directors aims for a high degree of independence as outside directors, it evaluates the admin- level of compensation that is effective in maintaining business operation istration of executive officers and internal controls of the Company by functions while incorporating in its composition a component that is considering the following five points: First, the Audit Committee confirms linked to the current period business performance. the report related to the results of the audit and items indicated for Specifically, while aiming to maintain competitive compensation standards, improvement prepared by the executive officer responsible for the corpo- ORIX’s compensation structure consists of a fixed compensation component rate audit. Second, the Audit Committee engages in discussions, which are based on positions and duties performed, a performance-linked component, the basis of ORIX’s business strategy, after receives explanations from the and a shares component of compensation as described on P43.

heads of each business department and presidents of Group companies * Stock compensation values are determined by points that are assigned to each that focus, in particular, on risk control. Third, the Audit Committee executive officer based on internally determined standards. The compensation value paid at the time of retirement is calculated by multiplying the stock price confirms the business environment through reports, which it receives from on the retirement date by the number of accumulated points. This system requires the post-tax value of compensation paid to be used to purchase ORIX the executive officer responsible for the accounting department, which stock at the market price on the retirement date. covers the revenue composition of each department and any problem areas related to the business. Fourth, the Audit Committee confirms the The Compensation Committee met four times from April 1, 2009 through quarterly reports regarding the direction of the Company and the execu- March 31, 2010. The attendance rate of these meetings was 88%. tion of important business matters that it receives from the representative Following the Annual General Meeting of Shareholders held on June 22, executive officer. Fifth, the Audit Committee confirms the reports that it 2010, the Compensation Committee’s five members include Yoshinori receives from the independent certified public accountants regarding Yokoyama (Chairman), Hirotaka Takeuchi, Takeshi Sasaki, Eiko Tsujiyama, whether there are any material items relating to the audit. and Takeshi Niinami. All five members are outside directors.

44 ORIX Corporation — Annual Report 2010 (3) Fundamental Policy Regarding Those Controlling recently introduced defensive measures designed to control the acquisi- Decisions on Financial and Business Policies tion of its stock. The Company plans to proceed with prudent consider- ORIX does not currently have a fundamental policy with regard to ation of this issue in light of changes in relevant laws and regulations and measures in response to shareholders with sufficient voting rights to give in the operating environment, with the intent of taking related measures, them control over corporate management. Moreover, ORIX has not if necessary.

2. Internal Control System Condition

(1) Internal Control System Concept • Group companies shall report operations upon a request from a ORIX believes that an internal control system is vital to achieving business selected member of the Audit Committee. objectives. An internal control framework has been constructed and is (d) Framework to Ensure Efficacy of Other Audits by the managed for sound business management and appropriate and efficient Audit Committee operation toward the achievement of business objectives. Furthermore, • When conducting an internal audit, the Internal Audit Department (34 ORIX is actively striving to revise and improve its internal control frame- members) shall originate an audit plan and receive an approval of the work to adapt to the changing business environment and the expansion Audit Committee. and diversification of the Company’s business. • The Internal Audit Department shall report internal audit results with an Audit Result Report to the Audit Committee. The Internal Audit Resolution of the Board of Directors Regarding the Internal Department shall also report to the Audit Committee on the status of Control System specified items that need improvement through such measures as a 1) Overview of the Resolution of the Board of Directors Regarding follow-up audit of the necessary measures to be implemented. Those Necessary for the Execution of the Duties of the Audit • The Internal Audit Department shall continually cooperate with the Committee Audit Committee and comprehensively comply with an inquiry from an (a) Directors and Employees Assisting Execution of the Audit Audit Committee member when necessary. Committee Duties • The Audit Committee is able to use appropriate outside advisors, An Audit Committee Secretariat (2 members) has been established to lawyers and other experts in order to execute its duties. assist executing the duties of the Audit Committee. A member of the Audit Committee delegates the duties of assisting 2) Overview of the Resolution of the Board of Directors Regarding the the Audit Committee to the Audit Committee Secretariat, when it is Development of Systems Necessary to Ensure that the Execution necessary to execute the duties. of Duties by Executive Officers Complies with Laws and Regula- (b) Independence of Directors and Employees in aforementioned (a) tions and the Articles of Incorporation, and Other Systems Neces- above from Executive Officers sary to Ensure the Properness of Operations of a Stock Company The appointment, evaluation, transfer and disciplinary action of the (a) Systems Necessary to Ensure that the Execution of Duties by Execu- Audit Committee Secretariat are undertaken with the agreement of the tive Officers Complies with Laws and Regulations and the Articles of Audit Committee. Incorporation (c) Framework for Executive Officers, Employees and Others to Report to • An Internal Audit Department has been established which monitors the Audit Committee the Internal Control System. • When an executive officer or employee becomes aware of operations • A Risk Management Headquarters has been established which checks that constitute a gross violation of the law and/or articles of incorpora- transaction and product compliance through measures such as credit tion, wrongdoing, or facts that may incur significant damage to the and investment screening and monitoring. Company, he or she shall report to the Audit Committee. • A Legal and Compliance Department has been established which • When an executive officer or employee becomes aware of material viola- checks the operations to comply with laws, promotes the compliance tion of legislations or company regulations, or violation of commonly system and aims to maintain internal control. accepted norms he or she shall report to and consults with the compli- • Compliance Regulations and a Compliance Manual are established, and ance helpline. The helpline official, when the matter reported and con rules and standards of behavior are outlined for officers and employees to sulted is determined to be material, shall report to the Audit Committee. act according to laws, company regulations and socially accepted norms. An executive officer or employee shall report to the Audit Committee ORIX Company Business Conduct Principles, which are included in the or an Audit member nominated by the Audit Committee for matters Compliance Regulations and Compliance Manual, declare a rejection of concerning accounting, accounting internal controls and auditing. the involvement or association with unlawful or antisocial organizations. • An executive officer or employee shall report and explain its execution • A Compliance Helpline has been established to receive reports and of duties responding to a request from a selected member of the Audit provide consultation on legal violations, acts that violate company Committee. regulations and socially accepted norms. This is expected to lead to

ORIX Corporation — Annual Report 2010 45 Management Organization—Corporate Governance

early discovery of such violations and acts, which makes it possible to of information technology (“IT”) systems, and meets once a month to prevent misconduct and take necessary measures for improvements deliberate and approve important matters concerning fundamental whereby strengthening the stability of the Company. policies for IT operations and IT systems. (b) Framework for the Storage and Management of Information in the • In order for top management to monitor whether or not the operations Exercise of Executive Function are in line with the initially established business plan, Monthly Strategy • ORIX is pursuing a framework aiming for the effective information utiliza- Meetings are held in principle once a month by individual departments tion and to maintain confidentiality, by setting up rules for management, and business units to discuss matters such as the state of achievement storage and disposal of classified information based on separately of strategic targets, changes in the business environment and the outlined regulations. necessary changes in strategy are made. (c) Framework and Company Regulation for Managing the Risk of Loss • Group Executive Officer Meetings, in which executive officers and • ORIX accurately understands the risks associated with changes and group executives of the Company participate, are held on a monthly diversification in line with the changing operating environment and basis with the aim of improving the efficiency of overall ORIX Group business expansion. In response to these risks, the Risk Management operations through the exchange of important information related to System (to be hereinafter described) has been established. the business execution of the ORIX Group. (d) Framework to Ensure Efficient Execution of Executive Officer Duties (e) System Necessary to Ensure the Properness of Operation of ORIX and • ORIX has selected a “Company with Committees” system, and strives Group Companies that Constitute the ORIX Group for efficient and swift operations through the resolution of the Board of • In principal, the Company ensures the properness of operation, adminis- Directors to delegate decision on the execution of the operations to tration and other matters of Group companies that constitute the ORIX executive officers within a scope of laws and regulations. Group by specifying an individual for approval, consultation and reporting. • Upon the administrative authority and decision-making rule, based on • ORIX has specified its corporate philosophy, policy, and action guidelines. separately outlined company regulations, the Investment and Credit • In principal, the Company’s internal control-related department in (a) Committee, which includes members of the top management and above administers and supports not only sales-related departments of executive officer in charge of investment and credit meets on average ORIX but also Group companies. three times a month to deliberate and decide credit transactions and • The Disclosure Committee is established as a framework for the investments that exceed certain specified investment or credit amounts, proper communication and administration in the case of material infor- important matters related to management of the Company and matters mation that will impact ORIX’s operations and finances, and for appro- that have been entrusted to executive officers by the Board of Directors. priate and timely disclosure of such information based on the For other matters, the Investment and Credit Committee specifies applicable laws and regulations. the person responsible for approval in accordance to the importance of • ORIX has established a framework for effective internal control over the issue, and outlines the necessary operations to proceed efficiently. financial reporting based on separately outlined company regulations • The Information Technology Management Committee includes to ensure the credibility of the Company’s financial reporting. members of the top management and the executive officer in charge

The New York Stock Exchange Corporate Governance Listing Standards

ORIX’s ADRs have been listed on the New York Stock Exchange (NYSE) required to compose its committees exclusively from outside directors. since 1998. ORIX is therefore required to comply with the NYSE’s new Six of ORIX’s 13 directors are considered outside directors. Under the corporate governance listing standards, Section 303A.11, approved by the Commercial Code of Japan, an outside director is a director SEC in November 2003. (i) who does not execute the company’s business, (ii) who has not before However, as a foreign issuer, ORIX is not required to follow several of the executed the business of the company or its subsidiaries in the capacity NYSE listing standards. ORIX’s corporate governance practices differ in certain of director, executive officer (shikkou-yaku), manager, or employee, and significant respects from those that U.S. companies must adopt to maintain a (iii) who does not execute the business of any subsidiary of the company NYSE listing and, in accordance with Section 303A.11 of the NYSE’s Listed in the capacity of director or executive officer of such subsidiary or in the Company Manual, ORIX provides a brief, general summary of such differences. capacity of manager or any other employee of the company or any of its The composition of ORIX’s Board of Directors and committees of ORIX’s subsidiaries. In addition to differences in composition requirements for Board differs significantly in terms of independence from the composition ORIX’s Board, ORIX is not required to: requirements for boards and committees that U.S. companies must satisfy • Make publicly available one or more documents that summarize all to maintain a NYSE listing. ORIX is not required to meet the NYSE’s inde- aspects of its corporate governance guidelines or prepare a written pendence requirements for individuals on its Board of Directors or its code that states the objectives, responsibilities, and performance evalu- Nominating, Audit, and Compensation committees. Under Japanese law, ation criteria of Nominating, Audit and Compensation Committees in a a majority of the membership on ORIX’s committees must be “outside manner that satisfies the NYSE’s requirements or directors” — a Japanese legal concept that shares similarities with the U. • Adopt a code of business conduct and ethics for its directors, officers, S. concept of “independent director.” However, ORIX is not required to and employees that addresses fully the topics necessary to satisfy the include on its Board of Directors a majority of outside directors, nor is it NYSE’s requirements.

46 ORIX Corporation — Annual Report 2010 Management organization—risk Management

Risk Management

1. Overview

ORIX allocates management resources by taking into account Group-wide the operating environment and cash flow are monitored after execution. risk preference based on management strategies as well as the strategy of For new transactions requiring monitoring, transactions exceeding a individual business units. Its board of directors and executives regularly certain monetary amount or transactions for which there has been a review the performance of each business unit, evaluate the progress and major change in circumstance or strategy, the responsible department profitability of each unit’s plan being carried out based on their respective head, may, in his discretion, report the transaction to the appropriate strategy, and take responsive measures they deem appropriate or neces- executive committee. sary in light thereof. This process enables ORIX to control the balance In analyzing a total portfolio, the following characteristics are monitored: sheet and to allocate more management resources to business units client tier, region, transaction type, risk type, debt status and concentration viewed as having greater growth potential. of major debtors. Some of these are scrutinized and analyzed by each oper- ORIX, in addition to the unit monitoring, also monitors risk on an indi- ating department according to its industry characteristics and some are vidual transaction and total portfolio basis. analyzed from a group perspective by the Risk Management Headquarters. For individual transactions, the operating environment, strategy, risk Monitoring results are regularly reported to the executive committee, and and profitability are evaluated prior to the transaction, and changes to measures are taken to rapidly understand and minimize all types of risk.

2. Main Risk Management

ORIX views credit risk, market risk, business risk, risk related to fund Under the current business environment, taking prompt corrective procurement, legal risk and other operational risk as the main risks facing action for the management of problem assets is the most important task. ORIX. Each risk is managed according to its individual characteristics. ORIX seeks to identify problem assets quickly, and ORIX responds promptly based on various conditions of each transaction. Problem assets (1) Risk Management by Risk Type include debtors who have petitioned for bankruptcy or civil rehabilitation, (a) Credit Risk Management or other insolvency proceedings, whose bank transactions are suspended, ORIX defines credit risk as uncertainty in future investment recovery whose bills are dishonored, whose debts are not collected for three caused by the fluctuation of cash flow from debtors and investees. As its months or more, and whose businesses have deteriorated or who are main business is financial services, ORIX manages credit risk in almost all involved in fraud. of its business segments, in particular Corporate Financial Services, Invest- In making collections, ORIX believes an early response is extremely ment Banking and Overseas Business. important. When information is received regarding the emergence of Credit Risk Management mainly consists of (i) credit evaluation for each problem assets, the relevant sales and marketing departments, in coopera- transaction, (ii) portfolio management and (iii) implementation of correc- tion with the Risk Management Headquarters, take steps to secure collateral tive actions for the management of problem assets. or other guarantees and to begin the collection process. The Risk Manage- Credit evaluation for each transaction is performed by periodically moni- ment Headquarters plays an important role in the collection process by toring such elements as performance, collateral and progress of collection. drawing on its accumulated experience and by working closely with its As risk management of individual debtors is especially important, ORIX also sales and marketing departments. The accumulated experience is reflected emphasizes credit evaluation at the beginning of each transaction and in its evaluation criteria of each credit transaction and portfolio analysis. continuous risk monitoring of individual credit after the transaction has been made, with a focus on sufficiency of collateral and guarantees, liquida- (b) Market Risk Management tion of debt and the distribution of debtors and their business fields. ORIX defines market risk as the risk of negative impact on its portfolio or In connection with each credit transaction, the relevant sales and on the market value of its financial assets caused by variation in market marketing department and the Risk Management Headquarters each conditions, such as interest rates, exchange rates, stock prices, product performs a comprehensive customer credit evaluation based on the relevant prices or credit spreads. For a further discussion regarding interest rate customer’s business performance, financial position and projected cash risks and exchange rate risks related to fund procurement, please see “— flow. The evaluation also covers the collateral or guarantees, terms and Risk Management Relating to Fund Procurement—Interest Rate Risk and conditions and potential profitability of the transaction. The profitability is Exchange Rate Risk Management” below. ORIX manages market risks in based on the corporate value contribution spread (calculated from invest- the following segments: ment yield, default rates, preservation situation, funding cost, capital cost • Investment Banking: Private equity investment, venture capital invest- and administrative cost), which helps ORIX to evaluate risk quantitatively. ment, proprietary investment; and Regular evaluation of individual debtors, and of its comprehensive port- • Retail: Investment in securities in its life insurance business; and folio, as well as measures to set credit line limits, allow ORIX to control • Overseas Business: Investment in securities in the United States, exposures to the markets with potentially high risks. private equity investment.

ORIX Corporation — Annual Report 2010 47 Management organization—risk Management

ORIX monitors risks in its portfolio by quantifying risks based on market Liquidity Risk Management fluctuations and defining acceptable risk levels. Risks are quantified based Liquidity risk is the risk that ORIX will be unable to obtain the necessary on statistical methods, qualitative scenario analyses, stress tests and funds to meet its commitments and obligations, or be forced to procure sensitivity analyses. funds at unusually high interest rates, due to market turmoil or deteriora- As non-trading assets are mainly impacted by credit risk, ORIX sets tion in its financial condition. The important objective of its liquidity risk appropriate market risk parameters based on types of assets or on specific management is to create a liquidity structure that matches asset size and business portfolios and evaluate the impact of market fluctuation. structure to its management’s goals. In order to achieve this, ORIX places In connection with investments in securities by ORIX Life Insurance in Japan emphasis on maintaining a highly flexible balance sheet. At the same time, and ORIX USA in the United States, its investment departments regularly ORIX seeks to diversify funding sources to reduce refinancing risks, which monitor interest rate policies, economic conditions and securities and may be caused by large market fluctuations. Specifically, ORIX monitors financial market trends. ORIX also analyzes on a daily basis price move- liquidity by projecting future cash flow from the maturity of assets and ments of securities, profits and losses on each investment and financial liabilities, conducting liquidity risk analysis including future trends and conditions of companies in which ORIX invest, as well as other factors. Its assuming such environmental stresses as financial market turmoil and a risk management departments review and compare daily reports against reduction of ORIX’s credit ratings. Measures ORIX uses to manage liquidity internal guidelines and macro- and microeconomic conditions. risk include diversifying funding sources, establishing committed credit lines with financial institutions and adjusting the balance of short-term and (c) Business Risk Management long-term debt, taking into account prevailing market conditions. Various risks are inherent to its daily business, such as the risks associated with its judgment in its investments, its selection of new products for Interest Rate Risk and Exchange Rate Risk Management development and its competitors’ marketing strategies or pricing. ORIX Interest rate risk represents its exposure to assets and liabilities whose defines business risk as risks related to entry into the market, uncertainty values fluctuate with interest rates. For example, ORIX may incur a loss if of future business performance caused by changes in business and the fair value of its assets and liabilities declines due to a change in interest competitive environment and market fluctuation risks in the used car and rates, or earnings may decline if an increase in interest rates causes interest real estate markets. expenses to increase by an amount greater than the increase in interest ORIX monitors the scenario analyses and stress tests for each of its received. ORIX analyzes these risks from a variety of perspectives, including business risks. The evaluation and verification of the cost of withdrawal basis point value, slope point value, value at risk (“VaR”), as well as the from a business is also subject to monitoring. potential effect on income for a given period. After making quantitative ORIX manages market risks in the Maintenance Leasing and Real Estate and qualitative assessments of interest rate risk, ORIX manages its busi- segments. A principal risk relating to operating leases in the Maintenance ness to keep the overall amount of interest rate risk within a fixed range. Leasing segment is the risk of fluctuation in the residual value of the leased ORIX manages exchange rate risk by using foreign currency loans, properties. In order to control fluctuations in residual value, ORIX monitors foreign exchange contracts, currency swaps and other instruments to its inventories of leased items, market environments and the overall busi- hedge the exchange rate fluctuation risks that arise in connection with its ness environment. ORIX primarily limits its ship and aircraft operating business transactions in foreign currencies and overseas investments. For leases to general-purpose ships and aircraft that are comparatively easy to unhedged foreign currency-denominated assets and investments to over- re-lease, as these operating lease items have high residual value risks. seas subsidiaries, ORIX monitors and manage exchange rate risks as in ORIX monitors the market values of these ships and aircraft and sell assets managing interest rate risks, in addition to utilizing VaR and other metrics. as necessary or desirable to reduce its exposure to downward trends in the market or take advantage of upward trends. Derivative Risk Management The automobile industry has a well-established market for used cars, so ORIX may use derivatives as hedges if ORIX decides to hedge interest rate most of its vehicles are able to be sold. ORIX keeps current on trends in the risk and exchange rate risk after consulting its ALM rules. ORIX uses deriva- used car market by continuously monitoring the ratio of residual value to tives to mitigate or offset changes in cash flow or the fair value of assets purchase cost, selling price trends and other indicators, thereby adjusting and liabilities due to interest rate fluctuations. Derivatives used to hedge estimated residual value in new transactions. interest rate risk include interest rate swaps and caps. To hedge exchange rate risk accompanying its business transactions in foreign currencies and (d) Risk Management Relating to Fund Procurement overseas investments, ORIX employs currency swaps, foreign exchange ORIX views liquidity risks, interest rate risks and exchange rate risks as contracts and other derivatives. ORIX also uses foreign currency borrow- significant risks associated with fund procurement. ORIX establishes ALM ings to hedge these exchange rate risks. rules so that ORIX can maintain an accurate understanding of these risks The use of derivatives exposes ORIX to credit risk on such derivative and appropriately respond to them. ORIX analyzes and understands the transactions. ORIX monitors the notional principal amounts, current risk management situation, and, Financial Control Headquarters reports prices, transaction types and other variables for each counterparty on a the results to the CFO and executive officers for taking necessary actions. regular basis.

48 ORIX Corporation — Annual Report 2010 ORIX sets derivative transaction management rules and guidelines for (f) Other Operational Risk Management each of its group companies based on Group-wide policies, and ORIX has As its business has expanded in recent years, operational risk manage- a system of internal controls for derivative transactions. ment has become a significant component of its overall risk management. Operational risk is defined as the risk of loss resulting from inadequate or (e) Legal Risk Management failed internal processes, people and systems, or from external events. As Transactional legal risk is a major type of legal risk that ORIX faces in its part of operational risk management, ORIX is also continually seeking to business. Transactional legal risk includes the risk that the contracts into strengthen its internal control and compliance functions. which ORIX enters contain unintended conditions, are not legally effective The Risk Management Headquarters conducts quantitative and qualita- or the contemplated transactions cannot be carried out as stipulated in tive evaluation and regular monitoring of risk. ORIX Computer Systems the contract, or that the transactions in which ORIX participates involve works to reduce operational risk by the maintenance and operational activities that violate, or are not in strict compliance with, applicable laws. administration of internal systems. The Internal Audit Department moni- When ORIX considers a new transaction, new product development or tors the effectiveness and efficiency and compliance with applicable rules other new business activities, its risk management system requires an and regulations by its various operations; the status of improvements to examination of these types of legal risks. and compliance with its internal rules; and the status of each department’s In an attempt to prevent and mitigate such legal risks, in Japan ORIX self-examinations based on an annual internal audit plan that focuses on requires, in principle, that the Legal and Compliance Department and the material risks. As a result of monitoring, ORIX evaluates the current status Risk Management Headquarters be involved in transactions from initial of internal controls and make improvements as necessary. consideration through the documentation process in which transaction- Additionally, in order to raise awareness of compliance issues among related contracts are prepared for internal review and final approval. employees, the Legal and Compliance Department has produced a Contracts may not be approved internally unless they follow its prescribed compliance manual and distributed it to all employees in Japan. The rules and guidelines. The Legal and Compliance Department and the Risk department also plans and executes a compliance improvement plan for Management Headquarters are also involved in the process for the approval each Group company in accordance with their respective business of such contracts in accordance with its internal rules. Depending on the profiles, which plans are based on annual Group-wide compliance poli- size and importance of a given transaction, ORIX may also utilize the exper- cies. ORIX considers the results to improve the effectiveness of its compli- tise of outside lawyers. To ensure that proper legal procedures are followed ance systems. in connection with legal disputes and litigation, ORIX requires that the Regarding natural disaster risk, ORIX has established Natural Disaster Legal and Compliance Department and the Risk Management Headquar- Risk Management Regulations. ORIX has developed a system in which the ters be involved in such disputes and litigation, including lawsuits that have Human Resources and Corporate Administration Headquarters supervises been, or are expected to be, brought against ORIX and lawsuits that ORIX the coordination of recovery activities after the occurrence of a natural brings, or expect to brings, against third parties. The status of any lawsuits disaster in Japan, while the Global Business and Alternative Investment is reported to the Group Executive Officer meetings regularly. Headquarters handles the overseas function. By distributing a natural In addition to establishing internal regulations necessary to observe disaster manual to all its employees in Japan and carrying out disaster applicable laws, ORIX also monitors potential changes in relevant laws, as drills in accordance with these regulations, ORIX maintains a framework to new information becomes available. As necessary or appropriate, ORIX respond appropriately to a natural disaster. may also initiate preparatory measures to address the requirements of new laws that are expected to take effect in the future and implement (2) Individual Business Risk Management steps to ensure that ORIX is, and continues to be, in compliance with new ORIX has a large portfolio, including financial service operations, and ORIX laws as they take effect. performs complete and transparent monitoring and control according to Overseas, each Group company works to avoid, prevent and mitigate the characteristics of each operation. The risk situation for each business risks through an in-house lawyer and, when necessary, with the involve- unit is analyzed both quantitatively and qualitatively on both the individual ment of outside lawyers and others. transaction and portfolio levels, and the necessary measures to minimize In addition, the Legal and Compliance Department and the Risk Manage- changes in profitability are implemented. Contents of individual business ment Headquarters conduct monitoring activities to prevent the violation unit level analyses are shared throughout the Group, and risk related to of intellectual property rights, and to quickly take necessary measures if decreased profitability is controlled by capitalizing on a diverse business and when violations are discovered. portfolio through measures including managing risk through intra business unit cooperation.

ORIX Corporation — Annual Report 2010 49 Management organization—risk Management

Corporate Financial Services Segment ORIX monitors occupancy rates and rates of return and focuses on Credit risk is the main risk of the Corporate Financial Services segment. creating manuals and educating employees in order to minimize business ORIX reduces risk by diversifying borrowers and industries and by and operational risk in its operating asset business. emphasizing credit screening at the beginning of each transaction. After a transaction has been made, the sales departments regularly monitor the Investment Banking Segment performance, collateral and progress of collection of customers whose ORIX recognizes market risk and credit risk as the major risks to the real balance exceeds a certain level. The Risk Management Headquarters regu- estate finance business under a normal operating environment. larly checks customers with large credit balances. Because of this, in its non-recourse loan business ORIX monitors the ORIX analyzes the current condition and outlook for specific indus- loan-to-value ratio, the debt-service coverage ratio and other terms and tries and sectors, and also analyzes the potential impact on the debtor conditions such as equity provided by other companies, interest reserve while making decisions about future transactions in that specific industry and guarantees, in addition to controlling risk through swift response to or sector. changes in the market. However, in a stress-case such as a significant drop ORIX takes appropriate actions by thoroughly analyzing the condi- in market liquidity, ORIX diligently monitors the cash flow from the proper- tion of each problem asset. Specifically, in transactions collateralized by ties to improve the terms and conditions of its loans. In addition, capital- real estate, ORIX takes various measures such as capitalizing on the izing on its real estate expertise, ORIX can flexibly respond to the changing networks of its real estate related departments to sell properties or business environment by taking on business risk as a profitable operation introduce tenants. through the acquisition and holding of the collateral. Credit risk and market risk are the main risks of the principal invest- Maintenance Leasing Segment ment business conducted by the Investment Banking segment, which The main risk of the Maintenance Leasing segment is business risk. varies according to the stage of development. Credit risk is high for For instance, this segment has commodity market fluctuation risks for companies for which ORIX is raising corporate value due to the focus on property under operating leases. ORIX continuously monitors market envi- cash flow. Market risk increases as time for collection nears, due to ronments and fluctuation in the resale value of leased property, and adjusts measuring the corporate value by referencing the corporate values of residual value estimates of leased items in new transactions accordingly. similar industries. Cost fluctuation (prime cost) is the main risk of providing various services When making its initial investment decision, ORIX does a credit evalua- such as outsourcing. ORIX analyzes initial preconditions and performance, tion, analyzing the company’s credit risk and assessing its cash flow. Also, monitor future forecasts, and control costs at an appropriate level. ORIX performs a multi-faceted evaluation, engaging administrative depart- Additionally, there is the risk that the quality level of its services may fall ments such as the accounting and legal departments to consider the below the required level due to changes in the operating environment or characteristics of the operation and investment scheme. Specifically, ORIX changes and diversification of client needs. ORIX monitors its service analyzes the operating environment, corporate strategy and method for quality level quantitatively and qualitatively, and continuously strive to increasing corporate value, and verify the adequacy of profitability, esti- improve its level of service according to the operating environment. mated investment timeline and exit strategy scenarios. ORIX also conducts credit monitoring on individual transactions to After an investment has been made, each transaction is monitored for address credit risks. deviations in cash flow, increased corporate value, exit strategy, corporate strategy, and business environment from the original scenario. The Real Estate Segment frequency of monitoring has been increased during these times of rapid The main risk of the Real Estate segment is business risk. changes in the business environment, and ORIX is simultaneously verifying ORIX focuses on cash flow when making investments or project deci- the adequacy of investment scenarios and swiftly taking the necessary sions. ORIX reduces risk related to real estate price fluctuations by actions. ORIX is working to enhance the management of investments that comparing cash flow performance to the initial plan and by improving the have a significant impact on the profitability of ORIX through such measures occupancy rate. as the dispatch of management personnel. ORIX invests mainly in small properties, and diversifies risk by investing in large properties through joint ventures with partners. Retail Segment Furthermore, emphasis is placed on monitoring investment strategies Credit risk is the main risk of the trust and banking business. and schedules. The strategy is reevaluated in the case of a major diver- The housing loan business (for the purchase of properties for self-occu- gence from the initial forecast. pancy and investment purposes, and apartments) manages individual The following factors are considered for condominiums: development screenings, each of which consists of a comprehensive evaluation including and sales schedule, unit sales progress, and rate of return. the cash flows that can be derived from the property, collateral value and The following factors are considered in the case of development and the client’s potential to repay. rental properties: development and retention schedule and NOI yield. Decision making for corporate loans is based on a detailed investigation ORIX capitalizes on the Group’s network in order to improve occupancy of client performance, business plan, purpose of the loan, source of repay- rates and promote sales. ment as well as industry trends. In addition to individual screenings when

50 ORIX Corporation — Annual Report 2010 loans are arranged, ORIX also reduce risks by diversifying the industry and Regarding market risk, ORIX monitors on a daily basis the market value products of its portfolio. and mark-to-market valuation of its investments and loans. In addition, The main business risk in the life insurance business is risk associated ORIX proactively manages risk by referring to the credit risk information for with accepting insurance contracts. each investment and loan that ORIX acquired during the credit risk Before finalizing insurance contracts, ORIX Life Insurance takes thorough management process and by conducting early exits to secure profits or measures to prevent the acceptance of fraudulent contracts by rigorously minimize losses. examining health condition declarations and medical examination reports Regarding operational risk, finance provider and manager are separated. as well as by taking steps to check the status of other insurance contracts. Each acts independently according to the financing process manual. Also, These measures promote the fair and equitable treatment of policyholders the internal audit department regularly inspects the performance of its and, because they are important determinants of future insurance-related investing and lending operations. profitability, ORIX Life Insurance promotes their effective execution by The main risk of Houlihan Lokey, which handles its investment banking ensuring the hiring of sufficient staff and encouraging staff to acquire business in the United States, is operational risk. specialized knowhow. ORIX Life Insurance also educates and instructs Houlihan Lokey complies with operating standards set forth by representative branch staff and agents to enhance compliance regarding authorities responsible for overseeing the investment banking business the prevention of personal information leaks and regarding the solicitation such as the U.S. Financial Industry Regulatory Authority (FINRA) and U.K. of insurance. Financial Services Authority (FSA). It is vital that the advice and evaluation forms provided as a part of the investment banking business maintain Overseas Business Segment quality and operational methods that meet these standards. In order for Operations in Asia and the Pacific Houlihan Lokey to provide high-quality advisory and evaluation services Credit risk is the main risk of the leasing and loan businesses operated by according to the appropriate methods, operational risk is managed local subsidiaries mainly in Asia. through such methods as an internal quality control committee. When making a transaction, ORIX emphasizes credit evaluation and require adequate guarantees and collateral, in addition to diversifying small transactions. ORIX monitors the portfolio by industry, location and type of collateral. ORIX regularly monitors the performance of major credit exposure. In addition, ORIX takes appropriate actions for problem assets by thoroughly analyzing condition of each asset. The Risk Management Headquarters monitors the country risk of the overseas portfolio. In addition, it shares information regarding the portfolios of local subsidiaries, performance of major clients, condition of problem assets, and clients of particular concern. Risk management in the principal investment business, which is mainly in Asia, is conducted in a similar manner as the Investment Banking segment. The main risk for ship- and aircraft-related business is the high volatility in the residual value of operating lease assets. To address this risk, in addition to restricting the lease to ships and aircrafts with general versatility, ORIX constantly monitors the valuation of its portfolio and considers the possibility of selling each vessel based on prevailing market conditions.

U.S. Operations The main risks for the investment and finance business in the United States are credit risk, market risk and operational risk. At the time of origination, ORIX assigns an internal credit rating for each investment and loan taking into consideration the credit status of the borrower or company in which ORIX is investing and the collateral for the transaction. For investments and loans with a rating requiring attention, ORIX produces an objective evaluation regarding the possibility of collection of such investments and loans, and decides management policies such as provisions and impairments.

ORIX Corporation — Annual Report 2010 51 Management organization—An Interview with CFO Haruyuki Urata

An Interview with CFO Haruyuki Urata

As we understand each transaction individually, we were able to consider multiple approaches from different angles, and quickly implement the best strategy to respond to the business environment. ORIX is involved in many different businesses and as such we were able to apply such resources as expertise and knowledge. The business environment changed at a dizzying pace during the financial crisis. The most notable was the volatility of the capital markets, which we responded to with carefully controlled liquidity. The scenario was promptly changed and the balance sheet was controlled by swift response to the new scenario. While our methods of managing each kind of risk were important, I feel that we Haruyuki Urata Deputy President and CFO also largely relied on our organizational will and ability to take action. We surpassed the profit and financial stability targets that were announced at the beginning of fiscal What makes ORIX’s risk management 2009 by showing the true strength of our substantive risk unique? management capability that balances both quantitative ORIX is said to be a company without peers, even on the and qualitative elements. We have demonstrated our global level. I believe that this is an indication of the risk ability to control the balance sheet as we see fit, and this culture that we have cultivated since our establishment. experience will become a driver for future growth. Our risk culture is characterized both by a thorough examination of each risk and our flexibility. A thorough How will you manage risk specifically in examination leads to an accurate assessment of risk, which the future? has allowed us to actively take good risks. As a result, we Going forward, ORIX will focus on “Finance + Services” and have established a broad-ranging portfolio consisting of further develop the value-added services it provides to its slightly different risk profiles. The ability to assess risk and clients. This development will require us to enhance both respond flexibly has allowed us to act swiftly and without operational efficiency and quality control of the services hesitation under any business environment, and has proven that we provide. Risk will diversify as both client needs and to be a key factor of growth. This risk culture will inevitably parties involved with each transaction diversify. The global continue to support the growth of ORIX. expansion of our services will require us to create an infrastructure that fully responds to the culture and business As CFO, what has been reaffirmed by practices of each region. Although we will face different the current financial crisis? risks than we had in the past, the management of these At ORIX, the top management shares even the smallest new risks is the key to sustainable growth. There is no details concerning individual transactions. Even during the absolute answer for risk management; rather, one must financial crisis, it was our method of thoroughly under- manage as one sees fit. We must ask ourselves questions standing each transaction that allowed us to assess the such as, ‘What is our aim as a corporate group?’ ‘What risks involved and to take the appropriate action. The daily risks should we take to achieve this?’ and ‘How will we exchange of information also allowed us to take swift control these risks?’ By considering and responding to each action. It isn’t easy for top management to make this level of these questions individually, we can further reinforce of commitment, but the financial crisis reaffirmed both the proper risk management. ORIX will achieve steady growth necessity and efficacy of our culture (method) of thoroughly by refining our ability to assess risk, taking risks befitting looking at each transaction. ORIX and maintaining our flexibility.

52 ORIX Corporation — Annual Report 2010 ORIX AND SOCIETY

ORIX and Society

Assistance Activities through the ORIX Social Fund

Assistance Activities through the ORIX Social Fund Environmental Protection & Children and Youth Support ORIX promotes its business with the aim of responding to Children Invited to Participate in the Project to Save society’s need for new value and the environment. ORIX the Coral Reefs of Okinawa and Build Stands for the established the ORIX Social Fund in April 2006 with the goal Coral Transplants of continued contribution to society in areas not reached by ORIX Real Estate has been inviting Okinawan children to partic- its business activities including social welfare, support for ipate in the Project to Save the Coral Reefs of Okinawa since children and youth, music and the arts, environmental protec- 2009. Fifteen children partici- tion and international cooperation to contribute to a truly pated in the program on March affluent society. 27, 2010 by trying their hands at ORIX and its employees will continue their support and building stands for the coral participation in assistance activities. transplants and learning about

the ocean, sea life and coral Project to Save the Coral Reefs of Okinawa / Kid’s Program Activities During Fiscal 2009 of Okinawa. Social Welfare Donation of Assistive Vehicles to Centers for Disabled International Cooperation & Children and Youth Support Children ORIX FOUNDATION SCHOLARSHIP Grants Scholar- ORIX donated assistive vehicles to the Aomori Prefectural ships to Elementary and Junior High School Students Hamanasu Rehabilitation Center in January 2010 and to the in Thailand Through Miswritten Postcards Akita Prefectural Children’s Rehabilitation Center (currently the ORIX, in cooperation with the international NGO Minsai Center Akita Prefectural Rehabilitation and Nursery Center) in February built and donated an ORIX Education Development Center 2010. With the arrival of the vehicles, the children were able to (library, computer lab) at two schools (Ban Huay Salao and enjoy taking new routes on the way to and from the facilities. Ban Na Kae schools) in northeast Thailand in fiscal 2007 and Donations have been 2008, respectively, as a part of international cooperation and made to 23 facilities since supporting youth who are the bearers of the future. the program started in ORIX started collecting miswritten postcards in February fiscal 2006. ORIX will 2010 and will use the cash amount of collected postcards continue donations in the along with a matching contribution to grant scholarships coming year. through the ORIX FOUNDATION SCHOLARSHIP to an estimated 12 children in summer 2010.

Presentation of a ceremonial key to an assistive Culture and Social Welfare vehicle Cooperation with an Art Exhibition for Children and Child and Youth Support People with Disabilities Invitation of Children in Foster Care to Baseball Games ORIX participates in an art exhibition for children and people ORIX invites children in foster care facilities to baseball games. with disabilities as a part of its activities supporting those with The children can experience the thrill of the sport and a sense societal disabilities. Each year the ORIX Award is presented to of togetherness by cheering with their friends. Employee volun- two entries from approximately 800 submissions. The 2009 teers participate, further engaging with the children. Participa- ORIX Award recipients are shown below. tion was limited to approximately 300 children during fiscal 2009 due to the H1N1 flu, however, participation in previous years reached around 500 children.

The 2009 "ORIX Award" Winning Entries

ORIX Corporation — Annual Report 2010 53 ORIX and the Environment

ORIX and the Environment

Environmental Policy and Environmental Initiatives

[Aims for March 2012] Fundamental Policy • Reduce CO2 emissions from ORIX Group business operations and ORIX is promoting ECORIX2012, an environmental policy that business activities by 10% compared to the fiscal year ended March 31, 2008 will guide its efforts through the year ending March 2012. ORIX • Establish targets and promote activities tailored to each division Group companies are also developing initiatives to contribute (Promote activities in line with voluntary action plans in related to environmental protection. industries where available) • Reduce paper usage by 30% compared to the fiscal year ended March 31, 2008 ORIX Group Environmental Policy (Drafted September 25, 2008) For the sake of our newest stakeholders, that means future ORIX’s Environmental Initiatives generations, we aim to become a corporate group that encour- Golf Course Activities to Save Coral Reefs ages greater carbon efficiency by: ORIX Golf Management collects unwanted and lost golf balls Contributing to the emergence of a low carbon society at all the golf courses and driving ranges it manages nationwide Helping customers achieve low carbon operations and donates the proceeds from the sale of these balls for coral Promoting initiatives to lower our own carbon emissions planting activities. ECORIX2012 Action Targets Professional Baseball Environmental Initiatives Toward a low carbon society • The ORIX Buffaloes held Eco Days at Kyocera Dome Osaka in April and July 2009. A visitor participation carbon offset

program offsets CO2 emissions from the electricity used for

Providing services that help lighting during the game. customers achieve low carbon operations • ORIX Buffaloes team banners and uniforms were remade and Converting services offered sold as eco-friendly bags. The proceeds from the sale of the by ORIX into low carbon services bags were used for elementary Promoting low carbon emissions in ORIX operations school tree-planting activities,

Enhancing awareness among each and every employee which ORIX Buffaloes players took part in with pupils in

Contributing to the emergence of a low carbon society January 2010. As members of society, each ORIX Group employee takes every available opportunity to reduce environmental impact. Eco-friendly bags remade from ORIX Buffaloes team banners and uniforms [Aims for March 2012] • Strive to develop new services for helping customers achieve low carbon operations SRI Index Inclusion • Raise environmental awareness and knowledge among employees ORIX has been selected for inclusion in the Dow Jones through environmental seminars and other training courses Sustainability Index (DSI Japan 40) global socially responsible • Actively take part in activities that promote low carbon house- holds and communities investment (SRI) index and the Morningstar Socially Responsible Helping customers achieve low carbon operations Investment Index (MS-SRI), Japan’s first domestic SRI index. We support efforts by customers to reduce their environmental impact and achieve low carbon operations through ORIX Group services and products. [Aims for March 2012]

• Provide customers with CO2 emissions data pertaining to services ORIX aims to become an “Eco Services Integrator” that comprehensively and products to the maximum extent possible provides all the functions necessary to use eco products supplied by • Provide information on the effectiveness of services and product manufacturers in line with customer needs. Please refer to the Environ- usage in reducing CO2 emissions mental Report 2009–2010 for more detail: Promoting initiatives to lower our own carbon footprint Environmental Report 2009–2010 We are taking steps to reduce CO2 generated by ORIX Group http://www.orix.co.jp/grp/co_e/environment/index.htm activities in order to achieve low carbon operations.

54 ORIX Corporation — Annual Report 2010 financial section

Financial Section

56 Eleven-Year Summary

58 Consolidated Balance Sheets

60 Consolidated Statements of Income

61 Consolidated Statements of Changes in Equity

62 Consolidated Statements of Cash Flows

63 Guide to ORIX’s Financial Statements

This annual report presents an abridged version of ORIX’s financial information. For more details, see ORIX’s Form 20-F filed with the United States Securities and Exchange Commission. Investor Relations IR Library US SEC Form 20-F URL: http://www.orix.co.jp/grp/ir_e/library/20f.htm

ORIX Corporation — Annual Report 2010 55 Financial Section

Eleven-Year Summary ORIX Corporation and Subsidiaries Years Ended March 31 Millions of yen

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Financial Position Investment in Direct Financing Leases ¥1,744,953 ¥1,657,709 ¥1,658,669 ¥1,572,308 ¥1,453,575 ¥1,451,574 ¥1,437,491 ¥1,258,404 ¥1,098,128 ¥ 914,444 ¥ 756,481 Installment Loans 1,791,439 1,846,511 2,273,280 2,288,039 2,234,940 2,386,597 2,926,036 3,490,326 3,766,310 3,304,101 2,464,251 Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses (136,939) (141,077) (152,887) (133,146) (128,020) (115,250) (97,002) (89,508) (102,007) (158,544) (157,523) Allowance/Investment in Direct Financing Leases and Installment Loans 3.9% 4.0% 3.9% 3.4% 3.5% 3.0% 2.2% 1.9% 2.1% 3.8% 4.9% Investment in Operating Leases 397,576 451,171 474,491 529,044 536,702 619,005 720,096 862,049 1,019,956 1,226,624 1,213,223 Investment in Securities 758,381 942,158 861,336 677,435 551,928 589,271 682,798 875,581 1,121,784 926,140 1,104,158 Other Operating Assets 68,943 98,175 245,897 76,343 72,049 82,651 91,856 152,106 197,295 189,560 186,396 Total Assets ¥5,341,542 ¥5,591,311 ¥6,350,219 ¥5,931,067 ¥5,624,957 ¥6,068,953 ¥7,242,455 ¥8,207,187 ¥8,994,970 ¥8,369,736 ¥7,739,800 Short-Term Debt, Long-Term Debt and Deposits ¥4,010,468 ¥4,070,545 ¥4,679,566 ¥4,239,514 ¥3,859,180 ¥4,146,322 ¥4,925,753 ¥5,483,922 ¥6,263,017 ¥5,919,639 ¥5,263,104 ORIX Corporation Shareholders’ Equity ¥ 425,671 ¥ 461,323 ¥ 502,508 ¥ 505,458 ¥ 564,047 ¥ 727,333 ¥ 953,646 ¥1,194,234 ¥1,267,917 ¥1,167,530 ¥1,298,684 Revenues and Expenses Total Revenues ¥ 651,425 ¥ 617,758 ¥ 704,945 ¥ 732,873 ¥ 760,487 ¥ 880,734 ¥ 906,944 ¥1,115,482 ¥1,135,338 ¥1,053,521 ¥ 932,841 Total Expenses 560,457 524,547 633,457 693,824 672,568 750,827 694,589 834,830 949,784 1,000,166 903,270 Provision for Doubtful Receivables and Probable Loan Losses 45,567 44,572 51,249 52,781 47,511 39,332 16,216 13,805 33,226 77,027 71,532 Income before Income Taxes, Discontinued Operations, Extraordinary Gain and Cumulative Effect of a Change in Accounting Principle 50,679 56,473 71,158 47,254 105,301 152,926 247,141 314,565 246,119 8,687 55,608 Income from Continuing Operations 29,876 32,422 39,149 26,842 52,967 85,715 151,071 188,772 148,448 11,362 32,255 Net Income Attributable to ORIX Corporation 30,642 34,157 40,269 30,243 54,020 91,496 166,388 196,506 169,597 21,924 37,757 ROA 0.57% 0.62% 0.67% 0.49% 0.93% 1.56% 2.50% 2.54% 1.97% 0.25% 0.47% ROE 8.13% 7.70% 8.36% 6.00% 10.10% 14.17% 19.80% 18.30% 13.78% 1.80% 3.06% Per Share Data: (yen) Net income attributable to ORIX Corporation (basic earnings per share) ¥ 385.27 ¥ 417.77 ¥ 489.19 ¥ 361.44 ¥ 645.52 ¥ 1,087.82 ¥ 1,883.89 ¥ 2,177.10 ¥ 1,860.63 ¥ 246.59 ¥ 370.52 Net income attributable to ORIX Corporation (diluted earnings per share) ¥ 377.02 ¥ 400.99 ¥ 467.11 ¥ 340.95 ¥ 601.46 ¥ 1,002.18 ¥ 1,790.30 ¥ 2,100.93 ¥ 1,817.81 ¥ 233.81 ¥ 315.91 ORIX Corporation shareholders’ equity per share ¥ 5,199.12 ¥ 5,646.11 ¥ 6,007.52 ¥ 6,039.43 ¥ 6,739.64 ¥ 8,322.96 ¥10,608.97 ¥13,089.83 ¥14,010.62 ¥13,059.59 ¥12,082.56 Operations Direct Financing Leases: New equipment acquisitions ¥ 905,898 ¥ 723,330 ¥ 980,379 ¥ 895,848 ¥ 713,240 ¥ 767,672 ¥ 800,802 ¥ 636,723 ¥ 574,859 ¥ 364,734 ¥ 232,629 Installment Loans: New loans added ¥ 807,477 ¥ 740,639 ¥1,340,400 ¥1,268,170 ¥1,124,276 ¥1,545,517 ¥1,834,192 ¥2,226,282 ¥2,331,331 ¥1,055,014 ¥ 598,046 Operating Leases: New equipment acquisitions ¥ 101,020 ¥ 143,158 ¥ 146,203 ¥ 173,567 ¥ 189,737 ¥ 248,327 ¥ 317,645 ¥ 348,561 ¥ 465,909 ¥ 426,715 ¥ 189,915 Investment in Securities: New securities added ¥ 333,249 ¥ 397,218 ¥ 348,347 ¥ 231,294 ¥ 122,066 ¥ 244,600 ¥ 235,932 ¥ 331,055 ¥ 688,148 ¥ 374,614 ¥ 519,769 Other Operating Transactions: New assets added ¥ 70,443 ¥ 128,984 ¥ 204,121 ¥ 116,736 ¥ 186,265 ¥ 129,604 ¥ 132,017 ¥ 215,409 ¥ 152,480 ¥ 76,269 ¥ 24,186 Number of Employees 9,503 9,529 11,271 11,833 12,481 13,734 15,067 16,662 18,702 18,920 17,725

Notes: 1. In fiscal 2002, new equipment acquisitions of direct financing leases, new loans added and new securities added included increases of ¥252,436 million, ¥5,841 million and ¥1,042 million, respectively, as a result of the acquisition of IFCO Inc. (merge into ORIX Auto Corp.). In addition, new loans added included ¥132,127 million in housing loans that were purchased from Asahi Mutual Life Insurance Company in fiscal 2002. In fiscal 2003, new equipment acquisitions of direct financing leases included an increase of ¥112,605 million as a result of the acquisition of Nittetsu Lease Co., Ltd. (currently NS Lease Co., Ltd.). 2. In fiscal 2001, the Company implemented a 1.2-for-1 stock split on May 19, 2000. Per share data have been adjusted for this stock split retroactively. 3. As a result of the recording of “Discontinued Operations” in accordance with FASB Accounting Standards Codification 205-20 (“Presentation of Financial Statements—Discontinued Operations”), the results of operations which meet the criteria for discontinued operations are reported as a separate component of income, and those related amounts that had been previously reported are reclassified. 4. Pursuant to FASB Accounting Standards Codification 810-10-65-1 (“Consolidation—Noncontrolling Interests in Consolidated Financial Statements”), net income was reclassified into net income attributable to ORIX Corporation.

56 ORIX Corporation — Annual Report 2010 Millions of yen

ORIX Corporation — Annual Report 2010 57 Financial Section

Consolidated Balance Sheets ORIX Corporation and Subsidiaries As of March 31, 2009 and 2010 Millions of Millions of yen U.S. dollars* 2009 2010 2010

ASSETS

Cash and Cash Equivalents ¥ 459,969 ¥ 639,087 $ 6,869

Restricted Cash 128,056 77,486 833

Time Deposits 680 548 6

Investment in Direct Financing Leases 914,444 756,481 8,131

Installment Loans 3,304,101 2,464,251 26,486

Allowance for Doubtful Receivables on Direct Financing Leases (158,544) (157,523) (1,693) and Probable Loan Losses

Investment in Operating Leases 1,226,624 1,213,223 13,040

Investment in Securities 926,140 1,104,158 11,868

Other Operating Assets 189,560 186,396 2,003

Investment in Affiliates 264,695 409,711 4,404

(The amount of ¥10,245 million of investment in affiliates at March 31, 2009 is measured at fair value by electing the fair value option under FASB Accounting Standards Codification 825 -10.)

Other Receivables 228,581 210,521 2,263

Inventories 197,960 153,256 1,647

Prepaid Expenses 34,571 45,420 488

Office Facilities 86,945 96,831 1,041

Other Assets 565,954 539,954 5,802

Total Assets ¥8,369,736 ¥7,739,800 $83,188

* The translations of the Japanese yen amounts into U.S. dollars are included solely using the prevailing exchange rate at March 31, 2010, which was ¥93.04 to $1.00.

58 ORIX Corporation — Annual Report 2010 Millions of Millions of yen U.S. dollars* 2009 2010 2010 LIABILITIES Short-Term Debt ¥ 798,167 ¥ 573,565 $ 6,165 Deposits 667,627 853,269 9,171 Trade Notes, Accounts Payable and Other Liabilities 370,310 311,113 3,344 Accrued Expenses 96,662 101,917 1,095 Policy Liabilities 442,884 409,957 4,406 Income Taxes: Current 9,119 22,769 245 Deferred 151,239 160,905 1,729 Security Deposits 168,890 125,479 1,349 Long-Term Debt 4,453,845 3,836,270 41,233 Total Liabilities 7,158,743 6,395,244 68,737

Redeemable Noncontrolling Interests 25,396 28,095 302 Commitments and Contingent Liabilities EQUITY Common stock: Authorized 259,000,000 shares Issued 92,217,067 shares in 2009 and 110,229,948 shares in 2010 102,216 143,939 1,547 Additional paid-in capital 136,313 178,661 1,920 Retained Earnings 1,071,919 1,104,779 11,874 Accumulated Other Comprehensive Income (Loss) Net unrealized gains (losses) on investment in securities (5,615) 7,495 81 Defined benefit pension plans (16,221) (9,092) (98) Foreign currency translation adjustments (71,791) (77,651) (835) Net unrealized gains (losses) on derivative instruments 1,243 (211) (2) (92,384) (79,459) (854) Treasury Stock, at Cost: 2,816,847 shares in 2009 and 2,745,701 shares in 2010 (50,534) (49,236) (529) Total ORIX Corporation Shareholders’ Equity 1,167,530 1,298,684 13,958 Noncontrolling Interests 18,067 17,777 191 Total Equity 1,185,597 1,316,461 14,149 Total Liabilities and Equity ¥8,369,736 ¥7,739,800 $83,188

ORIX Corporation — Annual Report 2010 59 Financial Section

Consolidated Statements of Income ORIX Corporation and Subsidiaries For the Years Ended March 31, 2008, 2009 and 2010 Millions of Millions of yen U.S. dollars* 2008 2009 2010 2010 Revenues: Direct financing leases ¥ 78,197 ¥ 63,349 ¥ 50,115 $ 539 Operating leases 284,064 285,384 277,217 2,980 Interest on loans and investment securities 226,577 196,164 135,167 1,453 Brokerage commissions and net gains (losses) on investment securities 23,520 (12,330) 23,317 251 Life insurance premiums and related investment income 128,616 117,751 115,598 1,242 Real estate sales 88,445 71,088 40,669 437 Gains on sales of real estate under operating leases 16,756 24,346 6,841 74 Other operating revenues 289,163 307,769 283,917 3,050 Total revenues 1,135,338 1,053,521 932,841 10,026 Expenses: Interest expense 105,254 102,522 82,503 887 Costs of operating leases 182,144 194,216 192,678 2,071 Life insurance costs 112,869 105,899 92,348 993 Costs of real estate sales 81,057 79,058 46,757 503 Other operating expenses 172,405 185,121 162,839 1,750 Selling, general and administrative expenses 252,885 235,328 223,061 2,397 Provision for doubtful receivables and probable loan losses 33,226 77,027 71,532 769 Write-downs of long-lived assets 1,741 3,673 6,977 75 Write-downs of securities 8,290 18,631 23,637 254 Foreign currency transaction loss (gain), net (87) (1,309) 938 9 Total expenses 949,784 1,000,166 903,270 9,708 Operating Income 185,554 53,355 29,571 318 Equity in Net Income (Loss) of Affiliates 48,343 (42,937) 8,550 92 Gains (Losses) on Sales of Subsidiaries and Affiliates and Liquidation Losses, net 12,222 (1,731) 17,487 188 Income before Income Taxes, Discontinued Operations and Extraordinary Gain 246,119 8,687 55,608 598 Provision for Income Taxes 97,671 (2,675) 23,353 251 Income from Continuing Operations 148,448 11,362 32,255 347 Discontinued Operations: Income from discontinued operations, net 40,062 21,231 13,438 144 Provision for income taxes (15,944) (8,796) (4,756) (51) Discontinued operations, net of applicable tax effect 24,118 12,435 8,682 93 Income before Extraordinary Gain 172,566 23,797 40,937 440 Extraordinary Gain, net of applicable tax effect 933 — — — Net Income ¥ 173,499 ¥ 23,797 ¥ 40,937 $ 440 Net Income Attributable to Noncontrolling Interests 1,952 1,175 704 8 Net Income Attributable to Redeemable Noncontrolling Interests 1,950 698 2,476 26 Net Income Attributable to ORIX Corporation ¥ 169,597 ¥ 21,924 ¥ 37,757 $ 406

Yen U.S. dollars* Amounts per Share of Common Stock: Basic: Income from continuing operations ¥1,585.94 ¥107.61 ¥283.26 $3.04 Discontinued operations 264.45 138.98 87.26 0.94 Extraordinary gain 10.24 — — — Net income attributable to ORIX Corporation 1,860.63 246.59 370.52 3.98 Diluted: Income from continuing operations 1,551.38 104.35 244.00 2.62 Discontinued operations 256.50 129.46 71.91 0.77 Extraordinary gain 9.93 — — — Net income attributable to ORIX Corporation 1,817.81 233.81 315.91 3.40 Cash Dividends 130.00 260.00 70.00 0.75

* The translations of the Japanese yen amounts into U.S. dollars are included solely using the prevailing exchange rate at March 31, 2010, which was ¥93.04 to $1.00.

60 ORIX Corporation — Annual Report 2010 Consolidated Statements of Changes in Equity ORIX Corporation and Subsidiaries For the Years Ended March 31, 2008, 2009 and 2010

Millions of yen ORIX Corporation Shareholders' Equity Total ORIX Accumulated Corporation Noncontrolling Additional Retained Total Equity Common Stock Other Comprehen- Treasury Stock Shareholders’ Interests Paid-in Capital Earnings sive Income (Loss) Equity Balance at March 31, 2007 ¥ 98,755 ¥ 119,402 ¥ 924,043 ¥ 55,253 ¥ (3,219) ¥ 1,194,234 ¥14,485 ¥ 1,208,719 Contribution to subsidiaries — 8,494 8,494 Transaction with noncontrolling interests — (3,910) (3,910) Comprehensive income (loss), net of tax: Net income 169,597 169,597 1,952 171,549 Other comprehensive income (loss) Net change of unrealized gains (losses) on investment in securities (36,708) (36,708) — (36,708) Net change of defined benefit pension plans (7,727) (7,727) — (7,727) Net change of foreign currency translation adjustments (31,182) (31,182) 105 (31,077) Net change of unrealized gains (losses) on derivative instruments 1,069 1,069 — 1,069 Total other comprehensive income (loss) (74,548) 105 (74,443) Total comprehensive income (loss) 95,049 2,057 97,106 Cash dividends (11,863) (11,863) (3,897) (15,760) Conversion of convertible bond 2,361 1,848 4,209 — 4,209 Capital transactions of equity-method investee 1,641 1,641 — 1,641 Exercise of stock options 991 986 1,977 — 1,977 Compensation cost of stock options 2,150 2,150 — 2,150 Share swap merger 10,215 10,215 — 10,215 Acquisition of treasury stock (30,749) (30,749) — (30,749) Disposal of treasury stock 190 190 — 190 Other, net 558 21 285 864 — 864 Balance at March 31, 2008 ¥102,107 ¥135,159 ¥1,083,439 ¥(19,295) ¥(33,493) ¥1,267,917 ¥17,229 ¥1,285,146 Contribution to subsidiaries — 2,162 2,162 Transaction with noncontrolling interests — (1,426) (1,426) Comprehensive income (loss), net of tax: Net income 21,924 21,924 1,175 23,099 Other comprehensive income (loss) Net change of unrealized gains (losses) on investment in securities (41,901) (41,901) (5) (41,906) Net change of defined benefit pension plans (12,098) (12,098) — (12,098) Net change of foreign currency translation adjustments (17,989) (17,989) (11) (18,000) Net change of unrealized gains (losses) on derivative instruments (1,101) (1,101) — (1,101) Total other comprehensive income (loss) (73,089) (16) (73,105) Total comprehensive income (loss) (51,165) 1,159 (50,006) Cash dividends (23,529) (23,529) (1,057) (24,586) Exercise of stock options 109 108 217 — 217 Compensation cost of stock options 1,370 1,370 — 1,370 Acquisition of treasury stock (29,294) (29,294) — (29,294) Disposal of treasury stock (533) (9,915) 12,043 1,595 — 1,595 Other, net 209 210 419 — 419 Balance at March 31, 2009 ¥ 102,216 ¥ 136,313 ¥ 1,071,919 ¥ (92,384) ¥ (50,534) ¥ 1,167,530 ¥ 18,067 ¥ 1,185,597 Cumulative effect of applying accounting for 1,758 1,758 — 1,758 “Contracts in entity's own equity” Balance at April 1, 2009 ¥ 102,216 ¥ 136,313 ¥ 1,073,677 ¥ (92,384) ¥ (50,534) ¥ 1,169,288 ¥ 18,067 ¥ 1,187,355 Issuance of common stock 41,677 41,347 83,024 — 83,024 Contribution to subsidiaries — 2,473 2,473 Transaction with noncontrolling interests (32) (387) (419) 60 (359) Comprehensive income (loss), net of tax: Net income 37,757 37,757 704 38,461 Other comprehensive income (loss) Net change of unrealized gains (losses) on investment in securities 13,497 13,497 2 13,499 Net change of defined benefit pension plans 7,129 7,129 (4) 7,125 Net change of foreign currency translation adjustments (5,860) (5,860) (1,002) (6,862) Net change of unrealized gains (losses) on derivative instruments (1,454) (1,454) (6) (1,460) Total other comprehensive income (loss) 13,312 (1,010) 12,302 Total comprehensive income (loss) 51,069 (306) 50,763 Cash dividends (6,261) (6,261) (2,517) (8,778) Conversion of convertible bond 7 7 14 — 14 Exercise of stock options 39 38 77 — 77 Compensation cost of stock options 611 611 — 611 Acquisition of treasury stock (3) (3) — (3) Disposal of treasury stock (531) 822 291 — 291 Other, net 377 137 479 993 — 993 Balance at March 31, 2010 ¥143,939 ¥178,661 ¥1,104,779 ¥(79,459) ¥(49,236) ¥1,298,684 ¥17,777 ¥1,316,461

Note: Changes in the redeemable noncontrolling interests are not included in the table.

ORIX Corporation — Annual Report 2010 61 Financial Section

Consolidated Statements of Cash Flows ORIX Corporation and Subsidiaries For the Years Ended March 31, 2008, 2009 and 2010 Millions of Millions of yen U.S. dollars* 2008 2009 2010 2010 Cash Flows from Operating Activities: Net income ¥ 173,499 ¥ 23,797 ¥ 40,937 $ 440 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 168,767 189,215 167,266 1,798 Provision for doubtful receivables and probable loan losses 33,226 77,027 71,532 769 Decrease in policy liabilities (5,567) (43,495) (32,927) (354) Deferred tax benefit (10,472) (43,583) (27,814) (299) (Gains) losses from securitization transactions (3,481) 233 (331) (4) Equity in net (income) loss of affiliates (excluding interest on loans) (48,343) 42,937 (6,682) (72) (Gains) losses on sales of subsidiaries and affiliates and liquidation losses, net (12,222) 1,731 (17,487) (188) Extraordinary gain (933) — — — Gains on sales of available-for-sale securities (7,563) (3,334) (6,907) (74) Gains on sales of real estate under operating leases (16,756) (24,346) (6,841) (74) Gains on sales of operating lease assets other than real estate (15,217) (11,426) (7,552) (81) Write-downs of long-lived assets 1,741 3,673 6,977 75 Write-downs of securities 8,290 18,631 23,637 254 Decrease (increase) in restricted cash (23,219) 23,661 4,520 49 Decrease (increase) in loans held for sale (23,721) 8,740 1,052 11 Decrease (increase) in trading securities 3,275 20,048 (29,725) (319) Decrease (increase) in inventories (19,606) 9,332 39,061 420 Decrease (increase) in other receivables (53,975) 54,931 (518) (6) Increase (decrease) in trade notes, accounts payable and other liabilities 26,990 (36,185) (35,011) (376) Other, net 18,426 (2,808) 26,124 281 Net cash provided by operating activities 156,287 308,779 209,311 2,250 Cash Flows from Investing Activities: Purchases of lease equipment (1,088,237) (857,126) (389,413) (4,185) Principal payments received under direct financing leases 546,964 431,984 352,316 3,787 Net proceeds from securitization of lease receivables, loan receivables and securities 174,922 30,859 28,305 304 Installment loans made to customers (2,267,527) (1,038,625) (589,814) (6,339) Principal collected on installment loans 1,893,172 1,469,672 937,895 10,080 Proceeds from sales of operating lease assets 229,065 161,645 162,988 1,752 Investment in affiliates, net (30,350) (17,919) (28,256) (304) Proceeds from sales of investment in affiliates 102,383 1,936 12,532 134 Purchases of available-for-sale securities (595,445) (301,030) (456,364) (4,905) Proceeds from sales of available-for-sale securities 187,095 242,702 181,033 1,946 Proceeds from redemption of available-for-sale securities 127,084 128,669 162,292 1,744 Purchase of held-to-maturity securities — — (43,748) (470) Purchases of other securities (90,088) (73,578) (19,656) (211) Proceeds from sales of other securities 46,964 36,378 26,034 280 Purchases of other operating assets (38,922) (14,615) (4,898) (53) Proceeds from sales of other operating assets 1,324 12,727 1,767 19 Acquisitions of subsidiaries, net of cash acquired (15,220) (752) (10,218) (110) Sales of subsidiaries, net of cash disposed 3,948 28 123,613 1,329 Other, net (25,463) (41,772) (13,620) (146) Net cash provided by (used in) investing activities (838,331) 171,183 432,788 4,652 Cash Flows from Financing Activities: Net decrease in debt with maturities of three months or less (69,644) (237,544) (121,399) (1,305) Proceeds from debt with maturities longer than three months 2,777,541 2,091,575 1,083,310 11,643 Repayment of debt with maturities longer than three months (1,920,865) (2,343,124) (1,678,649) (18,042) Net increase in deposits due to customers 24,695 196,973 185,076 1,989 Issuance of common stock 1,977 217 83,101 893 Dividends paid (11,863) (23,529) (6,261) (67) Net increase (decrease) in call money 21,500 9,900 (13,400) (144) Acquisition of treasury stock (30,749) (29,294) (3) (0) Other, net 374 239 1,301 14 Net cash provided by (used in) financing activities 792,966 (334,587) (466,924) (5,019) Effect of Exchange Rate Changes on Cash and Cash Equivalents (5,430) (6,061) 3,943 42 Net Increase in Cash and Cash Equivalents 105,492 139,314 179,118 1,925 Cash and Cash Equivalents at Beginning of Year 215,163 320,655 459,969 4,944 Cash and Cash Equivalents at End of Year ¥ 320,655 ¥ 459,969 ¥ 639,087 $ 6,869

* The translations of the Japanese yen amounts into U.S. dollars are included solely using the prevailing exchange rate at March 31, 2010, which was ¥93.04 to $1.00.

62 ORIX Corporation — Annual Report 2010 Guide to ORIX’s Financial Statements

ORIX’s revenues are classified to reflect the diverse nature of business development and the characteristics of transactions. ORIX provides detailed consolidated statements of income for investors as required under U.S. GAAP, but, because the items are numerous, the analysis of ORIX’s consolidated statements of income can become quite complex. One approach to analyzing the consolidated financial statements is to look first at the three major items of ORIX’s statements of income. Of course, this is not intended to be a substitute for the consolidated statements of income under U.S. GAAP, but it may provide an aid in analyzing ORIX’s consolidated statements of income.

1. Contributions to earnings from revenues, investment in affiliates, and others (colored light blue in the following examples) 2. Deductions from earnings for expenses, income taxes, and others Three Major Items (colored dark blue in the following examples) 3. Operating income, income before income taxes, net income and net income attributable to ORIX Corporation, and others (colored gray in the following examples)

Simplified Consolidated Statements of Income Five-step process to calculate net income attributable to (Millions of yen) ORIX Corporation Deduction(s) for Expenses Corresponding Directly to Revenues Direct Financing Leases ¥ 50,115 STEP Revenue items from the consolidated Start with “Revenues, Net of statements of income minus expenses Operating Leases 277,217 + ❶ Corresponding Expenses” items that correspond to particular Costs of Operating Leases (192,678) 1 revenues Interest on Loans and Investment Securities 135,167 Directly from the consolidated Brokerage Commissions and Net Gains (Losses) ❷ Subtract “Interest Expense” 23,317 statements of income on Investment Securities

Directly from the consolidated Life Insurance Premiums and Related Investment Subtract “SG&A Expenses” 115,598 STEP ❸ statements of income ❶ Income

－ Total of“ Provision for Doubtful Life Insurance Costs (92,348) 2 Receivables and Probable Loan Losses, Subtract “Provision for Doubtful ” Real Estate Sales 40,669 “Write-downs of Long-lived Assets,” Receivables and Probable Loan ❹ “Write-downs of Securities,” and Costs of Real Estate Sales (46,757) Losses, Write-downs, etc.” “Foreign Currency Transaction Loss (Gain), net” Gains on Sales of Real Estate under Operating Leases 6,841 Other Operating Revenues 283,917 The same figure as the consolidated Other Operating Expenses (162,839) = ❺ Operating Income statements of income Operating Income less Expenses ¥ 438,219 STEP Add (Subtract) “Investment in “Equity in Net Income (Loss) of Affiliates” ❷ Interest Expense 82,503 + ❻ and“ Gains (Losses) on Sales of Subsidiaries 3 Affiliates, net” and Affiliates and Liquidation Losses, net* ❸ Selling, General and Administrative Expenses 223,061 Provision for Doubtful Receivables and 71,532 Income before Income Taxes, Probable Loan Losses The same figure as the consolidated Write-downs of Long-lived Assets 6,977 = ❼ Discontinued Operations and statements of income Extraordinary Gain ❹ Write-downs of Securities 23,637 Foreign Currency Transaction Loss (Gain), net 938 Subtract "Provision for Income Directly from the consolidated － ❽ statements of income Provision for Doubtful Receivables and STEP Taxes" 103,084 Probable Loan Losses, Write-downs, etc. Add (Subtract) “Discontinued 4 Directly from the consolidated ❺ Operating Income 29,571 + ❾ Operations, net of applicable statements of income tax effect” Equity in Net Income (Loss) of Affiliates 8,550 Gains (Losses) on Sales of Subsidiaries and 17,487 ❻ Affiliates and Liquidation Losses, net = 10 Net Income Gains (Losses) on Investment in Affiliates 26,037 Income before Income Taxes, Discontinued Add (Subtract)“ Net Income ❼ 55,608 Directly from the consolidated Operations and Extraordinary Gain Attributable to Noncontrolling 11 statements of income STEP Provision for Income Taxes 23,353 Interests” ❽ － 5 Add (Subtract)“ Net Income Income from Continuing Operations 32,255 Directly from the consolidated Discontinued Operations, net of applicable 12 Attributable to Redeemable 8,682 statements of income ❾ tax effect Noncontrolling Interests” 10 Net Income 40,937 Net Income Attributable to = 13 11 Net Income Attributable to Noncontrolling Interests 704 ORIX Corporation Net Income Attributable to Redeemable 2,476 12 Noncontrolling Interests 13 Net Income Attributable to ORIX Corporation 37,757

ORIX Corporation — Annual Report 2010 63 Group Companies (As of March 31, 2010)

Established Direct/Indirect Principal Business (Acquired) Investment Corporate Financial Services ORIX Corporation Apr. 1964 Domestic Sales Administrative Headquarters Leasing, Lending, Other Financial Services ORIX Eco Services Corporation Waste Recycling Consultation, Environmental Management Support Apr. 1998 100% Services ORIX Insurance Planning Corporation Agency Sales & Development of Non-Life Insurance Products Sep. 1999 50% Momiji Lease Corporation Leasing (Mar. 2002) 95% NS Lease Co., Ltd. Leasing, Lending, Other Financial Services (Jul. 2002) 100% ORIX Environmental Resources Management Waste Recycling Sep. 2002 100% Corporation ORIX Kitakanto Corporation Leasing, Lending, Other Financial Services (Jan. 2005) 95% ORIX Tokushima Corporation Leasing, Lending, Other Financial Services (Oct. 2005) 95% Internet Research Institute, Inc. Consulting and Investment Business centered on IP Technology (Nov. 2007) 100% Funabashi Eco Services Corporation Waste Disposal (Mar. 2008) 100% Maintenance Leasing ORIX Auto Corporation Automobile Leasing, Rentals & Car Sharing Jun. 1973 100% ORIX Rentec Corporation Rentals and Leasing of Test, Measurement and IT-Related Equipment Sep. 1976 100% ORIX Rentec (Singapore) Pte. Limited (Singapore) Oct. 1995 100% ORIX Rentec (Korea) Corporation (South Korea) Apr. 2001 100% ORIX Rentec (Tianjin) Corporation (China) Aug. 2004 100% Real Estate ORIX Corporation Development and Rentals of Commercial Real Estate, Condominium Apr. 1964 Real Estate Business Headquarters Development and Sales BlueWave Corporation Training Facility & Hotel Management Aug. 1991 100% ORIX Interior Corporation Real Estate Rentals, Manufacture & Sale of Interior Furnishings, Interior Oct. 1998 100% Design & Installation, Driving School Management ORIX Real Estate Corporation Real Estate Development & Management Mar. 1999 100%

ORIX Asset Management Corporation REIT Asset Management Sep. 2000 100% ORIX Golf Management Corporation Golf Course Management (Nov. 2004) 100% ORIX Living Corporation Senior Housing Management Apr. 2005 75% CROSS HOTELS Corporation Management of CROSS HOTELS (Mar. 2006) 100% ORIX Real Estate Investment Advisors Corporation Real Estate Investment and Advisory Services Sep. 2007 100% Investment Banking ORIX Corporation Apr. 1964 Investment Banking Headquarters Real Estate Finance, Commercial Real Estate Asset Securitization, Principal Investment ORIX Capital Corporation Venture Capital Oct. 1983 100% ORIX Investment Corporation Alternative Investment Jan. 1990 100% ORIX Asset Management & Loan Services Corporation Loan Servicing Apr. 1999 100% ORIX M&A Solutions Corporation M&A & Corporate Restructuring Advisory Services Feb. 2003 100% ORIX Loan Business Center Corporation Provide Personal Loan Related Asset Management, Customer Relations May 2009 100% ORIX Wholesale Securities Corporation Sale of Financial Products Feb. 2010 100% Retail ORIX Credit Corporation Consumer Finance Services Jun. 1979 49% ORIX Life Insurance Corporation Life Insurance Apr. 1991 100% ORIX Trust and Banking Corporation Trust & Banking Services (Apr. 1998) 100% ORIX Headquarter Functions (Not included in Segment Financial Information) ORIX Insurance Services Corporation Casualty & Life Insurance Agency Sep. 1976 100% ORIX Computer Systems Corporation Software Engineering & Systems Management Mar. 1984 100% ORIX Baseball Club Co., Ltd. Professional Baseball Team Management (Oct. 1988) 100% ORIX Management Information Center Corporation Accounting & Administration Services Oct. 1999 100% ORIX Callcenter Corporation Call Center Nov. 1999 100% ORIX Human Resources Corporation Outplacement Services Feb. 2002 100% ORIX Business Support Corporation Business Support Services Apr. 2007 100%

64 ORIX Corporation — Annual Report 2010 Established Direct/Indirect Country Principal Business (Acquired) Investment Overseas Business ORIX Corporation Apr. 1964 Global Business and Alternative Investment Japan Administration of Overseas Activities Ship-Related Services, Headquarters* Aircraft-Related Services, Alternative Investment ORIX Maritime Corporation* Japan Ship Charter & Ship Broker Service Nov. 1977 100%

ORIX Aircraft Corporation* Japan Aircraft Leasing May 1986 100% ORIX USA Corporation USA Corporate Finance, Investment Banking, Real Estate Aug. 1981 100% (Debt Investment, Development) ORIX Asia Limited Hong Kong Leasing, Automobile Leasing, Hire Purchase, Lending Sep. 1971 100%

ORIX China Corporation China Leasing Aug. 2005 98%

CHINA RAILWAY LEASING CO., LTD. China Railway-Related Leasing (Jan. 2006) 25%

ORIX (China) Investment Co., Ltd. China Leasing, Equity Investment, Other Financial Services Dec. 2009 100%

ORIX Leasing Singapore Limited Singapore Leasing, Hire Purchase, Lending Sep. 1972 50%

ORIX Investment and Management Private Limited Singapore Equity Investment May 1981 100%

ORIX CAR RENTALS PTE. LTD. Singapore Automobile Leasing & Rentals, Leasing Sep. 1981 45%

ORIX Capital Resources Limited Singapore Ship Finance Nov. 1997 100%

ORIX Ship Resources Private Limited Singapore Ship Finance Nov. 1997 100%

ORIX Leasing Malaysia Berhad Malaysia Leasing, Lending, Hire Purchase Sep. 1973 100%

ORIX Car Rentals Sdn. Bhd. Malaysia Automobile Rentals Feb. 1989 35%

ORIX Auto Leasing Malaysia Sdn. Bhd. Malaysia Automobile Leasing Oct. 2000 100%

PT. ORIX Indonesia Finance Indonesia Leasing, Automobile Leasing Apr. 1975 96%

ORIX METRO Leasing and Finance Corporation Philippines Leasing, Automobile Leasing, Lending Jun. 1977 40%

ORIX Auto Leasing Philippines Corporation Philippines Automobile Leasing Sep. 1989 40%

Thai ORIX Leasing Co., Ltd. Thailand Leasing Jun. 1978 49%

ORIX Auto Leasing (Thailand) Co., Ltd. Thailand Automobile Leasing & Rentals (Aug. 2001) 85%

Acap Advisory Public Co., Ltd. Thailand Investment Banking, Asset Management, Loan Servicing (Nov. 2007) 20%

Lanka ORIX Leasing Company PLC. Sri Lanka Leasing, Automobile Leasing, Hire Purchase, Lending Mar. 1980 30%

ORIX Taiwan Corporation Taiwan Leasing, Hire Purchase, NPL Investment Sep. 1982 95%

ORIX Auto Leasing Taiwan Corporation Taiwan Automobile Leasing Mar. 1998 100%

ORIX Taiwan Asset Management Company Taiwan Loan Servicing Oct. 2004 95%

ORIX Leasing Pakistan Limited Pakistan Leasing, Automobile Leasing Jul. 1986 50%

ORIX Properties Pakistan Private Ltd. Pakistan Real Estate Development and Management Aug. 2007 67%

ORIX Australia Corporation Limited Australia Automobile Leasing & Truck Rentals Jul. 1986 100%

ORIX Ireland Limited Ireland Corporate Finance, Accounting & Administrative Services May 1988 100%

ORIX Aviation Systems Limited Ireland Aircraft Leasing Mar. 1991 100%

ORIX New Zealand Limited New Zealand Leasing, Automobile Leasing & Rentals Dec. 1988 100% INFRASTRUCTURE LEASING & FINANCIAL India Commercialization of Infrastructure Projects, Investment (Mar. 1993) 23% SERVICES LIMITED Banking, Corporate Finance ORIX Auto Infrastructure Services Limited India Automobile Leasing Mar. 1995 42%

Oman ORIX Leasing Company SAOG Oman Automobile Leasing, Hire Purchase, Factoring Aug. 1994 24%

ORIX Polska S.A. Poland Leasing, Automobile Leasing, Hire Purchase, Lending Oct. 1995 100%

ORIX Leasing Egypt SAE Egypt Leasing Jun. 1997 34%

Saudi ORIX Leasing Company Saudi Arabia Leasing, Automobile Leasing Jan. 2001 25%

MAF ORIX Finance PJSC UAE Leasing Apr. 2002 38%

ORIX Capital Korea Corporation South Korea Automobile Leasing, Leasing, Hire Purchase, Lending Feb. 2004 100%

BTA ORIX Leasing JSC Kazakhstan Leasing (Jun. 2005) 40%

* ORIX Corporation's Global Business and Alternative Investment Headquarters as well as ORIX Maritime Corporation and ORIX Aircraft Corporation are based in Japan and are engaged in business activities centered on the Asia, Oceania and Europe region.

ORIX Corporation — Annual Report 2010 65 group Network (As of March 31, 2010)

Network In Japan ORIX‘s extensive network in Japan includes 1,098 locations. The number of offices in each region is indicated in parentheses.

1 1 Hokkaido (60) ORIX (1) ORIX Auto (55) ORIX Rentec (1) BlueWave (1) Cross Hotels (1) ORIX Life Insurance (1) 2 2 Tohoku (73) ORIX (6) ORIX Auto (64) ORIX Rentec (1) ORIX Real Estate (1) 5 4 ORIX Life Insurance (1)

3 7 Tokyo (128) 6 3 ORIX (12) ORIX Eco Services (2) 8 NS Lease (1) 9 ORIX Environmental Resources Management (1) Internet Research Institute (1) 9 Funabashi Eco Services (1) ORIX Auto (69) ORIX Rentec (4) BlueWave (5) ORIX Interior (1) 4 Kanto (275) 6 Kinki (143) 7 Chugoku (62) ORIX Real Estate (1) ORIX (6) ORIX (11) ORIX (4) ORIX Asset Management (1) ORIX Environmental Resources ORIX Eco Services (1) Momiji Lease (2) ORIX Golf Management (1) Management (1) NS Lease (1) ORIX Auto (48) ORIX Living (3) ORIX Eco Services (1) ORIX Auto (83) ORIX Rentec (1) Cross Hotels (1) ORIX Kitakanto (4) ORIX Rentec (2) BlueWave (1) ORIX Real Estate Investment Funabashi Eco Services (1) BlueWave (3) ORIX Golf Management (4) Advisors (1) ORIX Auto (231) ORIX Interior (3) ORIX Life Insurance (2) ORIX Capital (1) ORIX Rentec (5) ORIX Real Estate (1) 8 Shikoku (35) ORIX Investment (1) BlueWave (2) ORIX Golf Management (11) ORIX Asset Management & Loan ORIX Golf Management (15) ORIX Living (10) ORIX (3) Services (1) ORIX Living (6) Cross Hotels (1) ORIX Tokushima (1) ORIX M&A Solutions (1) ORIX Life Insurance (3) ORIX Asset Management & Loan ORIX Auto (30) ORIX Wholesale Securities (1) Services (2) ORIX Life Insurance (1) 5 ORIX Life Insurance (5) Chubu (146) ORIX Loan Business Center (1) 9 Kyushu/Okinawa (176) ORIX Trust and Banking (2) ORIX (13) ORIX Life Insurance (4) ORIX (8) ORIX Insurance Services (1) ORIX Auto (117) ORIX Trust and Banking (1) ORIX Auto (150) ORIX Computer Systems (1) ORIX Rentec (3) ORIX Baseball Club (6) ORIX Rentec (2) ORIX Management Information BlueWave (1) ORIX Human Resources (1) BlueWave (2) Center (3) ORIX Real Estate (1) ORIX Business Support (1) ORIX Golf Management (5) ORIX Human Resources (1) ORIX Golf Management (8) ORIX Asset Management & Loan ORIX Business Support (2) ORIX Life Insurance (3) Services (3) ORIX Maritime (1) ORIX Life Insurance (2) ORIX Aircraft (1) ORIX Trust and Banking (2) ORIX USA Corporation (1) ORIX Callcenter (2)

66 ORIX Corporation — Annual Report 2010 Overseas Network ORIX has a global network outside of Japan that spans 26 countries and regions worldwide. ORIX has 275 locations throughout the United States, Asia, the Pacific, the Middle East, Europe, and Northern Africa. The number of offices in each region is indicated in parentheses and includes both subsidiaries and affiliates.

2 5 1 4 10 3 19 26 20 11 6 7 18 8 12 21 9 15 22 17

13 14 16 23

1 Ireland (2) 12 India (27) 19 China (14) ORIX Ireland Limited (1) INFRASTRUCTURE LEASING & ORIX Rentec (Tianjin) Corporation (6) ORIX Aviation Systems Limited (1) FINANCIAL SERVICES LIMITED (5) ORIX China Corporation (5) ORIX Auto Infrastructure Services Limited (22) CHINA RAILWAY LEASING CO., LTD. (2) 2 United Kingdom (1) ORIX (China) Investment Co., Ltd. (1) ORIX USA Corporation (1) 13 Sri Lanka (26) Lanka ORIX Leasing Company Limited (26) 20 South Korea (4) 3 France (1) ORIX Rentec (Korea) Corporation (2) 14 Malaysia (20) ORIX USA Corporation (1) ORIX Capital Korea Corporation (2) ORIX Leasing Malaysia Berhad (15) 4 Germany (1) ORIX Car Rentals Sdn. Bhd. (4) 21 Taiwan (7) ORIX USA Corporation (1) ORIX Auto Leasing Malaysia Sdn. Bhd. (1) ORIX Taiwan Corporation (3) ORIX Auto Leasing Taiwan Corporation (3) 5 Poland (8) 15 Thailand (5) ORIX Taiwan Asset ORIX Polska S.A. (8) Thai ORIX Leasing Co., Ltd. (1) Management Company (1) ORIX Auto Leasing (Thailand) Co., Ltd. (3) 6 Egypt (2) Acap Advisory Public Company Limited (1) 22 Philippines (42) ORIX Leasing Egypt SAE (2) ORIX METRO Leasing and 16 Singapore (6) 7 Saudi Arabia (4) Finance Corporation (33) ORIX Leasing Singapore Limited (1) ORIX Auto Leasing Philippines Corporation (9) Saudi ORIX Leasing Company (4) ORIX Investment and Management Private 23 Indonesia (8) 8 United Arab Emirates (3) Limited (1) ORIX CAR RENTALS PTE. LTD. (1) PT. ORIX Indonesia Finance (8) MAF ORIX Finance PJSC (3) ORIX Rentec (Singapore) Pte. Limited (1) 24 Australia (14) 9 Oman (6) ORIX Capital Resources Limited (1) ORIX Australia Corporation Limited (14) Oman ORIX Leasing Company SAOG (6) ORIX Ship Resources Private Limited (1) 25 New Zealand (5) 10 Kazakhstan (11) 17 Vietnam (1) ORIX New Zealand Limited (5) BTA ORIX Leasing JSC (11) ORIX Investment and Management Private Limited (1) 26 USA (15) 11 Pakistan (41) 18 Hong Kong (1) ORIX USA Corporation (15) ORIX Leasing Pakistan Limited (40) ORIX Properties Pakistan Private Ltd. (1) ORIX Asia Limited (1)

ORIX Corporation — Annual Report 2010 67 SHARE Information (As of March 31, 2010)

Number of Shares Transfer Agent for Common Shares Total Number of Shares Authorized 259,000,000 shares Mitsubishi UFJ Trust and Banking Corporation Total Number of Shares Issued and Tel: 0120-232-711 (toll-free in Japan) Outstanding 110,229,948 shares Number of Shareholders 43,505 Depositary Bank for ADRs

Major Shareholders (Thousands) (%) Citibank, N.A. Shareholder Services, P.O. Box 43077, Number of Percentage of Total Providence, Rhode Island 02940-3077, U.S.A. Name Shares Held Shares in Issue Tel: 1-877-248-4237 (toll-free in the USA) Japan Trustee Services Bank, Ltd. (Trust Account) 11,718 10.63 Fax: 1-201-324-3284 The Master Trust Bank of Japan, Ltd. (Trust Account) 10,869 9.86 E-mail: [email protected] The Chase Manhattan Bank 385036 4,694 4.25 Ratio 1 ADR = 0.5 common shares

Japan Trustee Services Bank, Ltd. (Trust Account 9) 4,123 3.74 NYSE: IX

State Street Bank and Trust Company 2,952 2.67

OD 05 Omnibus China Trinity 808150 2,162 1.96 Stock Exchange Listings Tokyo Stock Exchange First Section Nats Cumco 2,032 1.84 Osaka Securities Exchange First Section Mizuho Corporate Bank, Ltd. 1,500 1.36 Securities Code: 8591 Northern Trust Co. AVFC Re Fidelity Funds 1,459 1.32 New York Stock Exchange Trading Symbol: IX Nippon Life Insurance Company 1,385 1.25

Note: In addition to the above, ORIX Corporation holds 2,745 thousand shares of treasury stock.

Composition of Shareholders Trend in Number of Shareholders Trend in Cash Dividends per Share Individuals Others* (Shareholders) (Yen) 6.5% 3.3% 70,000 300 59,313 260 60,000 250 50,000 43,505 200 Financial 40,000 Institutions 29,094 150 130 30,000 Overseas 39.7% 100 90 20,000 17,315 70 75 Corporations 12,897 50 50.5% 10,000 0 0 06/3 07/3 08/3 09/3 10/3 06/3 07/3 08/3 09/3 10/3 * Includes 2,745 thousand shares of treasury stock. Note: Fiscal Year Dividends after Net Pro t Distribution

Monthly Share Price Range (Tokyo Stock Exchange)

(Stock price) (Yen) 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 06/3 07/3 08/3 09/3 10/3 11/3

(Monthly trading volume) (Thousands of shares) 140,000

120,000

100,000

80,000

60,000

40,000

20,000

0 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 06/3 07/3 08/3 09/3 10/3 11/3

68 ORIX Corporation — Annual Report 2010 Corporate Information / Website Guide

Corporate Information (As of March 31, 2010) Company Name ORIX Corporation Shareholders’ Equity (Consolidated) ¥1,298,684 million Established April 17, 1964 Fiscal Year-End March 31 Head Office 4-1-23 Shiba, Minato-ku, Tokyo, Consolidated Companies 798 108-0014, Japan Subsidiaries and Affiliates 104 Tel: +81-3-5419-5000 Fax: +81-3-5419-5903 Number of Employees (Consolidated) 17,725

Website Guide

ORIX‘s website is divided into three main sections that include: 1. About ORIX; 2. Investor Relations; and 3. News Releases. “About ORIX” and “Investor Relations” are shown below.

About ORIX: http://www.orix.co.jp/grp/co_e/index.htm

Our History A short review of the development of ORIX covering the last 46 years Financial Data Recent financial data for your examination Management An introduction to the Company’s directors, executive officers and group executives Corporate Network Descriptions and contact information for ORIX Group companies in Japan and overseas Corporate Governance Efforts taken in recent years to strengthen corporate governance systems and charts explaining those Compliance Outline of ORIX’s Compliance Policy and Conduct Principles under EC21 Environmental Report Outline of ORIX's reports on environment and environment-related data

Investor Relations: http://www.orix.co.jp/grp/ir_e/ir_index.htm

CEO Message An introduction of ORIX’s CEO message from the current annual report Who is ORIX? An overview of ORIX’s business segments and financial statements designed to answer the questions of potential investors in ORIX’s stock IR Events Schedule of future results briefings, etc., and video archive of previous briefings IR Library The following materials are available Annual Report Includes CEO’s message, overviews of operations and performance, financial data, and other information (The Fiscal 2009 Annual Report is available in electronic book format) US SEC Form 20-F Annual report filed with the United States Securities and Exchange Commission Quarterly Financial Results Quarterly financial information, with outline of quarterly results and consolidated financial statements Quarterly Financial Results Information provided quarterly as a supplement to “Quarterly Supplementary Information Supplementay Information Financial Results” Meeting of Shareholders Information related to the meeting of shareholders Back Numbers Archive of previous editions of various materials Latest Financial Results Information on the most recent consolidated accounting period Financial Data Overview of performance in the past five fiscal years Stock & Bond Information The following materials are available Stock Information Basic stock-related information and other kinds of data Stock Price Current prices can be viewed Analyst Coverage Listing of analysts who cover ORIX Corporate Bonds Information on the performance of the Company’s bond issues Annual report available (Billions of yen) as an electronic book 200 Corporate Ratings Credit ratings of the Company’s bond issues Management Profiles An introduction to the Company’s directors, executive officers and group executives Fiscal year ended Fiscal year ended FAQ March 3FAQ1, 20 covering02 stock, corporateM andarch financial31, 2009 data Contact ORIX IR BurstinContactg of information and informationCollap srequeste of form

150 the IT Bubble Lehman Brothers

Fiscal year ended Fiscal year ended March 31, Fiscal year ended Fiscal year ended Passive Foreign Investment Company Rules September 30, 1979 1989 (Interim Results) March 31, 1998 March 31, 2010 If, as expected, we are a PFIC for any year during a U.S. Holder’s holding period of the Shares or ADSs, and the U.S. to make a mark-to-market election that would result in tax treatment different from the general tax treatment for PFICs Second Oil Shock Holder has not madeA stheia mark-to-marketn Curren celectiony for the Shares or ADSs, as described below, the holder¥3 will7. 8be bsubjectillio ndescribed above. The Shares or ADSs will be treated as “regularly traded” in any calendar year in which more than a de to special rules generallyCris iintendeds to eliminate any benefits from the deferral of U.S. federal income tax that a holder minimis quantity of the Shares or ADSs are traded on a qualified exchange on at least 15 days during each calendar quarter. 100 could derive from investing in a foreign corporation that does not distribute all of its earnings on a current basis. Upon a A “qualified exchange” includes the NYSE on which our ADSs are traded and a foreign exchange that is regulated by a disposition of Shares or ADSs (including under certain circumstances, a pledge, and under proposed Treasury regulations, governmental authority in which the exchange is located and with respect to which certain other requirements are met. The Fiscal year ended Fiscal year ended Fiscaal dispositionyear end pursuanted to an otherwise tax-free reorganization) gain recognized by a U.S. Holder wouldF beis callocatedal year enInternalding Revenue Service (“IRS”) has not yet identified specific foreign exchanges that are “qualified” for this purpose. Under September 30, 1974 September 30, 1988 Marcratablyh 31, over199 its3 holding period for the Shares or ADSs. The amounts allocated to the taxable year of theM salear corh other31, 20current11 law, the mark-to market election may be available to holders of ADSs because the ADSs will be listed on the NYSE, exchange and to any year before the Company became a PFIC would be taxed as ordinary income. The amount allocated although there can be no assurance that the ADSs will be “regularly traded” for purposes of the mark-to-market election. First Oil Shock Black Monday Burstot ieachng otherof taxable year would be subject to tax at the highest rate in effect for individuals or corporations¥57 for.0 suchbi llio n If a U.S. Holder is eligible and makes the mark-to-market election, the U.S. Holder will include each year, as ordinary year, as appropriate, and an interest charge would be imposed on the tax liability allocated to such taxable year. Similar(T argincome,et) the excess, if any, of the fair market value of the Shares or ADSs at the end of the taxable year over their 50 the Economic Bubble rules would apply to any distribution in respect of Shares or ADSs to the extent it exceeds 125 percent of the average of adjusted basis, and will be permitted an ordinary loss in respect of the excess, if any, of the adjusted basis of the Shares the annual distributions on Shares or ADSs received during the preceding three years or the U.S. Holder’s holding period, or ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously whichever is shorter. Any loss realized on a disposition of Shares or ADSs will be capital loss, and will be long-term capital included income as a result of the mark-to-market election). If a U.S. Holder validly makes the election, the holder’s basis loss if the U.S. Holder held the Shares or ADSs for more than one year. The amount of the loss will equal the difference in the Shares or ADSs will be adjusted to reflect any such income or loss amounts. Any gain recognized on the sale or between the U.S. Holder’s tax basis in the Shares or ADSs disposed of and the amount realized on the disposition, in each other disposition of Shares or ADSs in a year when the Company is a PFIC will be treated as ordinary income. case as determined in U.S. dollars. Such loss will generally be US-source loss for foreign tax credit purposes. We do not intend to comply with the requirements necessary for a U.S. Holder to make a different election (the quali- If we are a PFIC for any year during which a U.S. Holder holds Shares or ADSs, we generally will continue to be treated fied electing fund election), which is sometimes available to shareholders of a PFIC. 0 as a PFIC with respect to the U.S. Holder for all succeeding years during which the U.S. Holder holds Shares or ADSs, even if Special rules apply to determine the foreign tax credit with respect to withholding taxes imposed on distributions on we cease to meet the threshold requirements for PFIC status. Under certain attribution rules, if we are a PFIC, U.S. Holders shares in a PFIC. 1964 1975 1980 1985 1990 will be deemed1995 to own their proportionate2000 shares of our subsidiaries that2005 are PFICs and will be subject2010 to 2011U.S. federal If a U.S. Holder owns Shares or ADSs during any year in which we are a PFIC, the U.S. Holder must generally file an income tax according to the rules described above on (i) certain distributions by subsidiary PFICs and (ii) a disposition of annual report with respect to us, with the holder’s federal income tax return for that year. shares of a subsidiary PFIC, even though they have not received the proceeds of those distributions or dispositions directly. We urge U.S. Holders to consult their tax advisors concerning our status as a PFIC and the tax considerations relevant to If the Shares or ADSs are “regularly traded” on a “qualified exchange,” a U.S. Holder of Shares or ADSs would be eligible an investment in a PFIC, including the availability and consequences of making the mark-to-market election discussed above.

ORIX Corporation — Annual Report 2010 69 ORIX Corporation Corporate Planning Department, Investor Relations 4-1-23 Shiba, Minato-ku, Tokyo, 108-0014, Japan Tel: +81-3-5419-5042 Fax: +81-3-5419-5901 http://www.orix.co.jp/grp/ir_e/ir_index.htm

For inquiries about this annual report, please contact us at the address above. Printed in Japan