Edgar Filing: ORIX CORP

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Form 6-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16 OF

THE SECURITIES EXCHANGE Act of 1934

For the month of November, 2005.

ORIX Corporation

(Translation of Registrant’s Name into English)

Mita NN Bldg., 4-1-23 Shiba, Minato-Ku,

Tokyo, 108-0014, JAPAN

(Address of Principal Executive Offices)

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

Form	20-F x Form 40-F ¨

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

Yes ¨ No x

Table of Documents Filed


		Page
1.	ORIX’s Interim Consolidated Financial Results (April 1 – September 30, 2005) filed with the Tokyo Stock Exchange on Tuesday, November 8, 2005.

SIGNATURES

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


	ORIX Corporation

Date: November 9, 2005	By	/s/ Shunsuke Takeda
		Shunsuke Takeda
		Director
		Vice Chairman and CFO
		ORIX Corporation

Consolidated Financial Results

April 1, 2005 – September 30, 2005

November 8, 2005

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

U.S. Dollar amounts have been calculated at Yen 113.19 to $1.00, the approximate exchange rate prevailing at September 30, 2005.

These documents may contain forward-looking statements about expected future events and financial results that involve risks and uncertainties. Such statements are based on our current expectations and are subject to uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, those described under “Risk Factors” in the Company’s annual report on Form 20-F filed with the United States Securities and Exchange Commission and those factors described under “5. Business Risk” of the “Financial Results” herein.

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

For further information please contact:

Corporate Communications

ORIX Corporation

Mita NN Bldg., 4-1-23 Shiba, Minato-ku, Tokyo 108-0014

JAPAN

Tel: +81-3-5419-5102 Fax: +81-3-5419-5901

E-mail: raymond_spencer@orix.co.jp

Consolidated Financial Results from April 1, 2005 to September 30, 2005

(U.S. GAAP Financial Information for ORIX Corporation and its Subsidiaries)


Corporate Name:		ORIX Corporation

Listed Exchanges:		Tokyo Stock Exchange (Securities No. 8591)
		Osaka Securities Exchange
		New York Stock Exchange (Trading Symbol : IX)

Head Office:		Tokyo JAPAN
		Tel: +81-3-5419-5102
		(URL http://www.orix.co.jp/grp/ir_e/ir_index.htm)

Date Approved by Board of Directors: November 8, 2005

1. Performance Highlights for the Six Months Ended September 30, 2005 and 2004, and the Year Ended March 31, 2005 (1) Performance Highlights - Operating Results (Unaudited)


								*(millions of JPY)1**

	Total Revenues	Year-on-Year Change		Operating Income	Year-on-Year Change		Income before Income Taxes*2	Year-on-Year Change
September 30, 2005	442,927	6.5	%	115,702	105.5	%	133,109	93.3	%
September 30, 2004	415,931	15.6	%	56,293	23.0	%	68,860	20.2	%
March 31, 2005	913,719	—		130,159	—		153,549	—


	Net Income	Year-on-Year Change		Basic Earnings Per Share	Diluted *Earnings Per Share3**
September 30, 2005	83,954	96.7	%	957.87	907.93
September 30, 2004	42,688	35.9	%	509.74	469.19
March 31, 2005	91,496	—		1,087.82	1,002.18


*Note 1:		Unless otherwise stated, all amounts shown herein are in millions of Japanese yen or millions of U.S. dollars, except for Per Share amounts which are in single yen.
*Note 2:		“Income before Income Taxes” as used throughout the report represents “Income before Discontinued Operations and Income Taxes.”
*Note 3:		The September 30, 2004 diluted earnings per share reflects retrospective application of accounting for the effect of contingently convertible instruments set forth in EITF Issue No.04-8.

(2) Performance Highlights - Financial Position (Unaudited)


	Total Assets	Shareholders’ Equity	Shareholders’ Equity Ratio		Shareholders’ Equity Per Share
September 30, 2005	6,333,055	821,420	13.0	%	9,333.32
September 30, 2004	5,724,771	619,249	10.8	%	7,389.48
March 31, 2005	6,068,953	727,333	12.0	%	8,322.96

1.	The number of outstanding shares was 88,009,397 as of September 30, 2005, 83,801,399 as of September 30, 2004 and 87,388,706 as of March 31, 2005.

(3) Performance Highlights - Cash Flows (Unaudited)


	Cash Flows from Operating Activities	Cash Flows from Investing Activities		Cash Flows from Financing Activities	Cash and Cash Equivalents at End of Period
September 30, 2005	112,157	(182,787	)	102,172	177,565
September 30, 2004	40,987	(95,526	)	23,747	121,891
March 31, 2005	126,467	(408,004	)	274,343	145,380

(4) Number of Consolidated Subsidiaries and Affiliates


Consolidated Subsidiaries	182
Non-consolidated Subsidiaries	0
Affiliates	81	(Of which 81 are accounted for by the equity method)

(5) Changes in Number of Consolidated Subsidiaries and Affiliates

Additions to and deletions from consolidated subsidiaries and affiliates for the six months ended September 30, 2005

Additions: Consolidated Subsidiaries 2, Affiliates 5

Deletions: Consolidated Subsidiaries 13, Affiliates 6

2. Forecasts for the Year Ending March 31, 2006 (Unaudited)


Fiscal Year	Total Revenues	Income before Income Taxes	Net Income
March 31, 2006	890,000	230,000	140,000


Note :		Basic Earnings Per Share is forecasted to be JPY 1,590.74.

Group Position

The main contents of each operation and the positioning of ORIX Corporation and its subsidiaries are given below.

The following classification is the same as that used in the classification of information by segment.

Operations in Japan

(1) Corporate Financial Services

This business centers on direct financing leases and installment loans, other than real estate loans, to corporate customers as well as the sale of a variety of financial products and other fee business.

[Main related companies]

ORIX Corporation, ORIX Alpha Corporation, Nittetsu Lease Co., Ltd.

(2) Automobile Operations

This business principally comprises automobile leasing operations and automobile rental operations.

[Main related companies]

ORIX Auto Corporation

(3) Rental Operations

This business principally comprises the rental and lease of precision measuring equipment, personal computers and other equipment to corporate customers.

[Main related companies]

ORIX Rentec Corporation

(4) Real Estate-Related Finance

This business encompasses real estate loans to corporate customers and housing loans to individuals. ORIX is also expanding its business involving loan servicing, commercial mortgage-backed securities (CMBS).

[Main related companies]

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

(5) Real Estate

This business consists principally of condominium development, office building development and sales, office rental activities, integrated facilities management as well as the operation of such facilities as hotels, employee dormitories and training facilities and asset management of Real Estate Investment Trust (REITs).

[Main related companies]

ORIX Corporation, ORIX Real Estate Corporation, ORIX Facilities Corporation

(6) Life Insurance

This segment consists of direct and agency life insurance sales and related activities conducted by ORIX Life Insurance.

[Main related companies]

ORIX Life Insurance Corporation

(7) Other

The other segment encompasses securities brokerage, venture capital operations, consumer card loan operations, investment banking and new businesses.

[Main related companies]

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

ORIX COMMODITIES Corporation, ORIX Investment Corporation,

The Fuji Fire and Marine Insurance Company, Limited, DAIKYO INCORPORATED

Overseas Operations

(1) The Americas

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

[Main related companies]

ORIX USA Corporation

(2) Asia, Oceania and Europe

Principal businesses in Asia, Oceania and Europe involve direct financing leases, ship related operations, operating leases for transportation equipment, corporate lending and securities investment.

[Main related companies]

ORIX Asia Limited, ORIX Taiwan Corporation, ORIX Leasing Malaysia Berhad,

ORIX Investment and Management Private Limited, PT. ORIX Indonesia Finance, ORIX Australia Corporation Limited,

ORIX Aviation Systems Limited, Korea Life Insurance Co., Ltd., ORIX Leasing Singapore Limited,

INFRASTRUCTURE LEASING & FINANCIAL SERVICES LIMITED, ORIX Leasing Pakistan Limited

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Group Structure

LOGO

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[Management Policies]

1. Management Policy

The basic policy for management at ORIX is to fulfill our social responsibilities as a corporation by continuing to optimize growth in corporate value and shareholder value through unique and inventive business activities.

2. Profit Distribution Policy

ORIX’s profit distribution policy is to foster sustainable growth of the company and shareholder value through the optimal use of retained earnings in addition to steady distributions to investors.

ORIX is attempting to distribute profits to investors, upon consideration of the results of each earnings period, through a steady dividend over the long-term, while aiming to strengthen its financial position and increase its earnings capabilities through an efficient management structure.

In order to achieve a further increase in earnings, ORIX is planning to appropriate retained earnings to business fields that are expected to achieve high earnings.

3. Vision and Policy for Lowering Investment Units

ORIX believes that it is necessary to take appropriate measures in reviewing its policy regarding the minimum investment unit for trading on the stock exchange to allow for participation by a broader range of investors.

With regard to the above policy, ORIX plans to change the number of shares that constitute one unit from 100 to 10 on December 1, 2005.

4. Target Management Index

ORIX is building its business portfolio with a focus on balancing profitability, growth and stability of the company. To achieve this, we set ROE, ROA, and the shareholders’ equity ratio as important management indexes and continue to work to make improvements in these.

5. Mid- to Long-Term Corporate Management Strategy

ORIX is working to establish the following corporate image:

•

A company that can produce an economic impact by creating new standards of value highly appraised by the market, and engaging in business activities with “pride.”

•

A company with a high ability to meet various expectations from society including shareholders, customers and employees that practices modesty and is “trusted” by related parties.

•

A company that complies with social standards, has a superior corporate culture with fair and transparent business activities, maintains a harmonious balance with society and is widely “respected” around the world.

We continuously strive to provide new and inventive services that are both multidimensional and multinational in order to accomplish the above stated corporate image.

Additionally, we are working to further enhance our risk management and corporate governance to achieve sustainable growth of our corporate value.

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6. Challenges to be Addressed

ORIX is currently working on the following important challenges:

1) Bolstering the Solid and Steadily Growing Profit Base

2) Accelerating the Speed of Growth Businesses

3) Developing New Opportunities for Future Growth

4) Further Increasing the Rigor of Risk Management

1) Bolstering the Solid and Steadily Growing Profit Base

We consider three business segments in Japan—Corporate Financial Services; Rental Operations; and Life Insurance—and one overseas segment—Asia, Oceania and Europe—to constitute our stable profit base in light of their performances to date. We hope that we can further bolster this profit base by drawing on our accumulated expertise and the customer confidence we have earned to steadily augment earnings in each of these segments.

2) Accelerating the Speed of Growth Businesses

ORIX has steadily increased the sophistication of its business models through the accurate and timely response to opportunities associated with changes in macroeconomic conditions and customer needs. For example, we have already been: 1) shifting our emphasis from only lease financing to include services in the Automobile Operations segment, 2) expanding operations to include the development of condominium and office building projects in the Real Estate segment, and 3) broadening our scope of operations in the Real Estate-Related Finance segment to take advantage of relatively new opportunities such as securitization and other real-estate linked financial products. We believe these segments have many growth opportunities and we are proactively taking measures to expand these businesses.

3) Developing New Opportunities for Future Growth

Thus far, ORIX has pursued sustained growth by entering new business fields in areas where we can leverage our special strengths. The Other segment has numerous businesses that are well suited for the expansion of ORIX’s operations. Currently, the potential scope of business involving principal investments in financially troubled or bankrupt companies is steadily broadening, and this is likely to be an important new growth area for us. Rather than managing funds obtained from investors, our principal investment operations entail investing our own funds, taking steps to augment the value of the companies in which we invest within a specified period of time, and then earning profits on the sale of our investments. Having completed the restructuring of our operations in The Americas segment, we are considering it to also be a new growth segment ripe for dynamic redevelopment. We have already established a franchise in the business field related to CMBS (commercial mortgage-backed securities) and are aiming to complement our existing franchises by developing additional businesses in the United States where we hope to benefit from the experience of competing in the world’s most advanced and diverse financial market.

4) Further Increasing the Rigor of Risk Management

As we have expanded our operations, we have continually worked to strengthen our risk management systems. In evaluating credit risks associated with our mainstay lease and loan transactions in Japan, for example, we employ our own unique default probability model to quantify risks. We are thus able to use quantified risk indicators to allocate risk capital to individual business segments and then evaluate the profitability of these sectors based on their cost of capital. Consequently, we have created a highly sophisticated business portfolio management system that facilitates our strategic decision-making process. We believe our growth in the past has been supported by the sophistication and effectiveness of our risk management and portfolio management systems. Our future development can only be sustained if we strengthen these systems further.

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7. Corporate Governance Policy and Current Status of Implementation Measures

1) Corporate Governance Policy

To enable the promotion of business activities in line with its basic management policy (as previously described under “1. Management Policy”), ORIX believes it is important to build corporate governance systems that are sound and fair from the perspectives of various stakeholders.

2) Strengthening Corporate Governance

Progress in Strengthening Corporate Governance

Since the June 1997 establishment of an Advisory Board, which included experienced and resourceful individuals from outside the Company, ORIX has strengthened its corporate governance framework with the aim of objectively determining whether its business activities are emphasizing the interests of its shareholders. In June 1998, we introduced a Corporate Executive Officer system to help separate strategic decision-making functions from day-to-day administrative operations. In June 1999, ORIX reduced the number of members on its Board of Directors, arranged for three Advisory Board members to fill two positions as independent directors and one position as an advisor to the Board, and phased out the Advisory Board. In addition, the Nominating Committee and the Compensation Committee were established to operate as support units for the Board of Directors.

To ensure the more effective separation of roles and responsibilities between the decision-making and monitoring functions of the Board of Directors and the executive function of management, ORIX adopted a “Company with Committees” board model in June 2003, following the April 2003 implementation of revisions to the Commercial Code of Japan that permit this model. In line with the new board model, nominating, audit, and compensation committees were set up under the Board of Directors.

In June 2004, ORIX added another outside director to its Board, thus bringing the total number of outside directors to five. Including seven internal directors, the board then had a total of 12 members. From June 2005, the board structure consisted of five outside directors and seven internal directors, and a decision was made to change the membership composition of the nominating, audit, and compensation committees by increasing the ratio of outside directors on those committees in order to promote increased management transparency and objectivity. In September 2005, one internal director retired and presently the Board of Directors consists of five outside directors and six internal directors for a total of 11 members.

A flow chart of ORIX’s corporate governance system is shown below.

As of November 8, 2005

LOGO

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Board of Directors

The Board of Directors includes 11 members, of which five are outside directors. In accordance with the Commercial Code, the Board of Directors makes important business decisions for ORIX, supervises the operational execution activities of directors and executive officers, and receives operational progress reports from executive officers.

Nominating Committee

The Nominating Committee has four members of which three are outside directors and one is an internal director. As stipulated in the Commercial Code, the Nominating Committee is authorized to nominate director candidates for approval at the annual general meeting of shareholders as well as to participate in the selection of executive officers.

Audit Committee

The Audit Committee has three members, all of which are outside directors. The Audit Committee receives quarterly performance reports from the executive officer responsible for the Accounting Department, reports from the independent public accountant concerning audits, and business summary reports from the COO.

It also receives internal audit report results and other reports related to internal control systems from the executive officer responsible for the Internal Audit Department and reports from executive officers on the units for which they are responsible. These reports are used to evaluate the execution of the operational duties of executive officers and the functioning of internal control systems. The Audit Committee Secretariat supports the execution of the duties of the Audit Committee. The Audit Committee Secretariat, which receives instructions and requests from the Audit Committee, makes reports to the Audit Committee based upon instructions and requests that it makes to the Internal Audit Department upon conducting audits. The Audit Committee undertakes monitoring activities using these reports with the objective of further improving and strengthening internal control systems.

Compensation Committee

The Compensation Committee has four members, all of which are outside directors. As stipulated in the Commercial Code, the Compensation Committee is authorized to determine policies regarding the compensation of directors and executive officers as well as the monetary remuneration of each individual director and executive officer.

Disclosure Committee

ORIX believes that disclosure control occupies an important position within the overall scheme of corporate governance. We have set up an information disclosure system with the Disclosure Committee playing a central role in facilitating the appropriate and timely disclosure of information to investors. The Disclosure Committee, which plays a key role in our disclosure control, consists of executive officers who are in charge of departments such as corporate communications, accounting, treasury and internal control. Upon receiving material information from each department, the committee discusses, as needed, necessary actions to be taken to evaluate whether or not any timely disclosure is needed and to ensure appropriate and timely disclosure of such information.

Strengthening Compliance

ORIX believes that compliance is a crucial foundation for sound corporate governance and it proactively implements rigorous compliance programs. In April 1989, when we changed our name from Orient Leasing Co., Ltd., to ORIX Corporation, we introduced an ORIX Group Corporate Identity program that specified Group Ideals, Group Management Goals, and Group Action Principles. This is the conceptual root of our compliance programs.

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As we neared the 21st century, we articulated three concepts in April 1998 that would characterize our identity and operations in the new century—pride, trust, and respect—thereby extending the conceptual scope of the ideals, management goals, and action principles of the corporate identity program. To foster pride, trust, and respect throughout our operations, we drafted our Corporate Action Principles and Employee Action Principles.

These concepts and principles together form the basis of EC21, which is a program designed to ensure that ORIX strives to be an “Excellent Company” in the 21st century. EC21 is the base of ORIX’s compliance system. To effectively instill the ideals articulated in EC21 throughout its operations, ORIX established units specializing in compliance promotion and, in February 2002, prepared a compliance manual. This manual includes action guidelines that explain the spirit of EC21 in concrete and specific terms. At the same time, ORIX organized training and other programs to promote greater awareness of, and more attention to, compliance among all the ORIX Group’s employees.

In fiscal 2003, ORIX began a Compliance Program containing specific compliance performance measures that continue to be drafted and implemented by officers and employees throughout the Group each year. To quickly discover compliance violations and prevent scandals before they occur, we have established a “Compliance Help Line,” to which individuals can call anonymously, and prepared a manual entitled Rules Related to the Compliance Help Line to help ensure the service is effective.

3) Risk Management System

We consider management of a variety of risks essential to conducting our businesses and to increasing our corporate value. Accordingly, through the development of a credible information network we have designed our risk management system in a manner that permits us to identify, measure, analyze and evaluate our risks, and to set appropriate policies and limits to manage and mitigate such risks. We attempt to control these risks by utilizing a risk management system that manages both overall risk as well as specific risks associated with individual transactions, businesses and overseas geographical regions.

New Components of Risk Management

As part of our efforts to improve profitability, in recent years we have developed new business lines, such as real estate-related businesses and investment banking-related businesses, in addition to our traditional businesses, such as leasing and lending, which are in essence the provision of debt finance. In order to more effectively allocate management resources in light of our diversified business models and the consequent changes in our risk profiles, we are incorporating new components into our risk management system, focusing in particular on the strengthening of risk monitoring.

Risk is monitored for each business and for each type of risk. Our monitoring includes details of where capital is used, comparisons of performance with basic guidelines, analysis of changes over time and deviation from initial plans, and evaluation of profitability with respect to risk capital. Based on individual risks, the monitoring also includes progress reports on particular projects and investments, including the status of exit strategies, comprehensive comparative analyses of projections and actual performance, and analyses of changes over time in important targets. The results of our monitoring are reported to top management on a quarterly basis and are part of the fundamental data used to make strategic decisions and allocate capital to various businesses.

In order to measure risk, different methods have been adopted in accordance with the characteristics of the assets and operations associated with each business. We make changes in the methods used to measure risk as a result of changes in business models or the business environment.

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Systems and Functions Supporting Risk Assessment

The systems and functions supporting ORIX’s risk assessment are shown below.

LOGO

ORIX’s business activities involve various risk factors, and the principal risks vary for each business line. Our risk management system comprises four principal levels.

The first level consists of the sales and marketing departments. Our sales and marketing staff are responsible for a range of risk management functions, including implementing an initial credit analysis and evaluation with respect to potential transactions, and monitoring risks and managing and collecting problem assets with respect to originated transactions.

At the second level, we have four specialized groups responsible for risk management, consisting principally of the Risk Management Headquarters, which is responsible for evaluating and monitoring transactions proposed by our sales and marketing departments and for monitoring operating assets and quantifying risk, the Treasury Department, which is in charge of risk related to procurement of funds, the Legal Department, which is in charge of legal risk, and the Compliance Department, which promotes compliance.

The third level of our risk management system is our Investment and Credit Committee, or ICC, which comprises top management, including the CEO, COO, CFO and the executive officer in charge of investment and credit. The ICC meets on average three times a month primarily to review and approve or reject individual credit transactions and investments that exceed certain specified credit or investment amounts.

Our monthly strategy meetings add a fourth level to our risk management system. These meetings perform a particularly important role in the monitoring and control of the various businesses in which we are involved. Separate meetings are held by top management with the executives in charge of individual departments or business units to discuss matters such as the state of achievement of targets and changes in the business environment. Matters considered vitally important to our operations are decided on by the ICC and reported to the board of directors as appropriate.

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Financial Results

1. Six Months Ended September 30, 2005

Economic Environment

The world economy has generally continued to recover over the last six-month period. The U.S. economy showed signs of expansion despite concerns regarding employment and deterioration of consumer confidence due to the effects of hurricanes and the resulting higher energy costs. The European economy was able to maintain mild growth on the back of a recovery in exports despite the lag in improvement in employment. The Asian economy achieved mild growth overall. While the Chinese economy continued to achieve high growth and the Korean and Taiwanese economies recovered, the ASEAN economy experienced a slowdown as a result of the prevailing high crude oil prices.

On the other hand, the Japanese economy continued to recover in the first half of this fiscal year due to the steady growth in consumer spending and capital expenditures and improvements in corporate earnings and employment. Considering the present state of the Japanese economy, an end to deflation is expected.

Financial Highlights


Income before Income Taxes*		133,109 million yen (Up 93% year on year)
Net Income		83,954 million yen (Up 97% year on year)
Earnings Per Share (Basic)		957.87 yen (Up 88% year on year)
Earnings Per Share (Diluted)		907.93 yen (Up 94% year on year)
Shareholders’ Equity Per Share		9,333.32 yen (Up 12% on March 31, 2005)
ROE (Annualized)		21.7% (September 30, 2004: 14.4%)
ROA (Annualized)		2.71% (September 30, 2004: 1.50%)

*	“Income before income taxes” refers to “income before discontinued operations and income taxes.”

Revenues: 442,927 million yen (Up 6% year on year)

Revenues increased 6% to 442,927 million yen in the first half of this fiscal year compared with the same period of the previous fiscal year. Although “real estate sales” decreased year on year, revenues from “direct financing leases,” “operating leases,” “interest on loans and investment securities,” “brokerage commissions and net gains on investment securities,” “life insurance premiums and related investment income,” “gains on sales of real estate under operating leases” and “other operating revenues” were up compared to the same period of the previous fiscal year.

Furthermore, “transportation revenues,” which were recorded in the previous fiscal year, are recorded as “equity in net income of affiliates” during this fiscal year as shown in the (Note) on Page 10.

Revenues from “direct financing leases” increased 10% to 61,035 million yen compared to the same period of the previous fiscal year. In Japan, revenues from “direct financing leases” were up 10% year on year. The automobile leasing operations performed steadily. In addition, revenues from direct financing leases were also up due to the operations of ORIX Kitakanto Corporation, which entered the ORIX Group during the previous fiscal year, and contributed to the increase in revenues from the beginning of this fiscal year and due to the contribution from the securitization of direct financing leases. Overseas, revenues were up 7% year on year. Although there were lower revenues as a result of a reduction of operating assets associated with the leasing operations in The Americas segment compared to the same period of the previous fiscal year, the expansion of the leasing operations in the Asia, Oceania and Europe segment resulted in the higher revenues.

Revenues from “operating leases” increased 13% to 99,778 million yen compared to the same period of the previous fiscal year. In Japan, although revenues from the precision measuring and other equipment rental operations were down year on year, there was an increase in real estate and automobile operating leases that contributed to a 9% increase year on year. Overseas, revenues were up 26% year on year due mainly to the expansion centering on automobile and other operating leases.

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Revenues from “interest on loans and investment securities” increased 17% to 77,198 million yen compared to the same period of the previous fiscal year. In Japan, “interest on loans and investment securities” increased 16% year on year. Although the balance of card loans was down year on year, an increase in loans to corporate customers, including non-recourse loans, and an expansion of the loan servicing operations contributed to the higher earnings. Overseas, revenues were up 21% year on year, with increases in both The Americas segment and Asia, Oceania and Europe segment.

Revenues from “brokerage commissions and net gains on investment securities” increased 56% to 20,416 million yen compared to the same period of the previous fiscal year. Brokerage commissions were up 49% year on year due to an increase in the level of trading volume on the stock market in Japan. Net gains on investment securities were up 57% year on year due to the sale of securities mainly associated with our venture capital operations and corporate rehabilitation fund investments in Japan and securities investments in The Americas segment.

“Life insurance premiums and related investment income” were up 3% year on year to 68,470 million yen. Life insurance premiums were flat year on year, while life insurance related investment income improved year on year.

“Real estate sales” decreased 25% year on year to 31,376 million yen. Although revenues associated with the sales of condominiums to buyers were flat compared to the same period of the previous fiscal year, there was no sale of office buildings and other real estate developments in the first half of this fiscal year that was recorded in the same period of the previous fiscal year. Furthermore, residential condominiums developed through certain joint ventures were accounted for by the equity method, and are included as a net of revenues and selling costs in “equity in net income of affiliates.” The revenues from the aforementioned joint ventures were 1,108 million yen.

“Gains on sales of real estate under operating leases” were up more than seven-fold year on year to 9,445 million yen due to the higher revenues associated with the sales of rental purpose office buildings and other real estate.

“Other operating revenues” increased 32% to 75,209 million yen due to the contribution from companies in which we invested as part of our corporate rehabilitation business in the previous fiscal year that were included from the beginning of this fiscal year and an increase in revenues associated with our integrated facilities management and related service operations.

(Note)

“Transportation revenues” and “costs of transportation revenues” associated with the operations of Footwork Express Co., Ltd. in which we invested as part of our corporate rehabilitation business, were included in the same period of the previous fiscal year based on a three-month lag basis as permitted under U.S. GAAP. However, ORIX’s share in Footwork Express Co., Ltd. was reduced in December 2004 due to an increase in capital whereby the substantive participating right of a minority shareholder was increased. As a result, ORIX no longer has a controlling financial interest in the company and accounted for this company as an equity method affiliate at the end of the fiscal year ended March 31, 2005. ORIX has started recording its proportionate share of net income or loss of the company by the equity method from the fiscal year ending March 31, 2006 instead of recording “transportation revenues” and “costs of transportation revenues.”

Expenses: 327,225 million yen (Down 9% year on year)

Expenses were down 9% to 327,225 million yen compared with the same period of the previous fiscal year. Although “interest expense,” “costs of operating leases,” “other operating expenses,” and “selling, general and administrative expenses” increased, “life insurance costs,” “costs of real estate sales,” “provision for doubtful receivables and probable loan losses,” “write-downs of long-lived assets,” and “write-downs of securities” were down year on year. For details on “costs of transportation revenues,” please see the (Note) shown above.

- 10 -

“Interest expense” was up 10% year on year to 30,573 million yen due to the higher average debt levels in Japan and higher interest rates overseas despite the lower average debt levels.

“Costs of operating leases” were up 9% year on year to 66,815 million yen accompanying the increase in revenues from “operating leases.”

“Life insurance costs” decreased 3% year on year to 58,239 million yen due mainly to lower insurance payments.

“Costs of real estate sales” were down 29% year on year to 27,765 million yen accompanying the decrease in “real estate sales.” Furthermore, 3,042 million yen in selling costs associated with residential condominiums developed through certain joint ventures were accounted for by the equity method.

“Other operating expenses” were up 42% year on year to 44,817 million yen accompanying the increase in “other operating revenues.”

“Selling, general and administrative expenses” were up 2% year on year to 89,509 million yen. Although there were no expenses associated with Footwork Express Co., Ltd., which became an equity method affiliate (refer to the (Note) on Page 10 for details), an increase in costs, which were included from the beginning of this fiscal year, associated with an increase in consolidated companies in the previous fiscal year, led to the higher expenses.

Despite an increase in operating assets, “provision for doubtful receivables and probable loan losses” was down 59% year on year to 6,877 million yen due to a lower level of non-performing assets.

“Write-downs of long-lived assets” were down year on year to 521 million yen.

“Write-downs of securities” were down 3% year on year to 2,668 million yen as we recorded write-downs associated mainly with equity investments made by our venture capital operations in Japan.

Net Income: 83,954 million yen (Up 97% year on year)

“Operating income” was up 106% year on year to 115,702 million yen.

“Equity in net income of affiliates” was up 60% to 15,607 million yen compared to the same period of the previous fiscal year due mainly to the contribution from overseas equity method affiliates. Included in “equity in net income of affiliates” are earnings on investments in operating companies accounted for by the equity method and earnings on investments in residential condominiums developed through certain joint ventures, which are also accounted for by the equity method. The “equity in net income of affiliates” associated with residential condominium joint ventures was a loss of 1,934 million yen, which is primarily attributable to the upfront recognition of advertising expenses, associated with some large-scale condominium development projects, preceding the revenue recognition of completed sales upon title transfer to buyers.

“Gains on sales of subsidiaries and affiliates and liquidation loss” were down 36% year on year to 1,800 million yen.

“Income before discontinued operations and income taxes” increased 93% year on year to 133,109 million yen.

“Discontinued operations, net of applicable tax effect” were up 38% year on year to 5,462 million yen.

As a result, “net income” increased 97% year on year to 83,954 million yen.

Operating Assets: 5,262,765 million yen (Up 3% on March 31, 2005)

Operating assets were up 3% on March 31, 2005 to 5,262,765 million yen. Although “investment in operating leases” was down on March 31, 2005 due to the sale of some rental purpose office buildings and a reclassification of some office buildings to “office facilities” upon a change in their use, “investment in direct financing leases,” “installment loans,” “investment in securities” and “other operating assets” were up.

- 11 -

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

Segment profits were up year on year for all nine segments.

The results of the reported segments from April 1, 2005 reflect the revised operating structure following the reorganization of the Company. Accordingly, the real estate-related equity investment operations and the REIT asset management operations, which had been included in the “Real Estate-Related Finance” segment, were included in the “Real Estate” segment from the first quarter of this fiscal year (Please refer to the Note on page 24 of the Segment Information).

Operations in Japan

Corporate Financial Services Segment:

Segment revenues were up 17% year on year to 47,662 million yen due to the expansion of loans to corporate customers, a similar level of contribution from direct financing leases compared to the same period of the previous fiscal year, and due to the recognition of gains from securitization.

Segment profits increased 38% to 23,824 million yen compared to 17,273 million yen in the same period of the previous fiscal year due to the increase in segment revenues and the lower “provision for doubtful receivables and probable loan losses” as a result of a reduction in the level of non-performing assets.

Segment assets increased 6% on March 31, 2005 to 1,602,587 million yen due to an increase in loans to corporate customers despite the lower level of direct financing leases as a result of securitization.

Automobile Operations Segment:

Segment revenues increased 11% year on year to 48,911 million yen. Although the automobile rental operations were slightly lower compared to the same period of the previous fiscal year, the automobile leasing operations expanded.

Segment profits increased 23% to 13,425 million yen in line with the increase in segment revenues compared to 10,916 million yen in the same period of the previous fiscal year.

Segment assets increased 8% on March 31, 2005 to 489,313 million yen due to the expansion of the automobile leasing operations.

Rental Operations Segment:

Segment revenues were down 4% year on year to 33,638 million yen as the precision measuring and other equipment rental operations had fewer orders from electronics and communications equipment manufacturers despite an increase in revenues from transactions being accounted for as direct financing leases.

Segment profits increased 5% to 5,292 million yen compared to 5,044 million yen in the same period of the previous fiscal year. Although segment revenues were lower, the recognition of gains on investment securities contributed to the higher profits.

Segment assets were down 1% on March 31, 2005 to 116,982 million yen.

Real Estate-Related Finance Segment:

Segment revenues increased 31% year on year to 34,865 million yen due to the expansion of revenues associated with corporate loans, including non-recourse loans, the loan servicing operations, and gains on investment securities.

Segment profits increased 99% to 20,318 million yen compared to 10,216 million yen in the same period of the previous fiscal year due to the increase in segment revenues and reduction in non-performing assets, which resulted in a lower “provision for doubtful receivables and probable loan losses.”

Segment assets increased 1% on March 31, 2005 to 961,049 million yen due mainly to the increase in corporate loans.

- 12 -

Real Estate Segment:

Segment revenues increased 15% year on year to 98,018 million yen. Lower “real estate sales” were recorded as there were no revenues associated with the sale of real estate developments, such as office buildings, in the first half of this fiscal year that were recorded in the same period of the previous fiscal year, while revenues associated with the sales of residential condominiums were flat year on year. On the other hand, gains associated with sales of real estate under operating leases increased and revenues associated with our integrated facilities management and related service operations also expanded.

Segment profits increased 64% to 20,562 million yen compared to 12,505 million yen in the same period of the previous fiscal year due to the increase in gains associated with the sales of real estate under operating leases.

Segment assets increased 4% on March 31, 2005 to 520,730 million yen due to the purchase of some rental purpose real estate despite the reclassification of some assets to “office facilities” upon a change in their use.

Life Insurance Segment:

Segment revenues were up 3% year on year to 68,178 million yen. Although life insurance premiums were flat year on year, life insurance related investment income improved year on year.

Segment profits increased 94% year on year to 7,753 million yen compared to 3,992 million yen in the same period of the previous fiscal year due to the increase in segment revenues and lower insurance payments.

Segment assets were down 8% on March 31, 2005 to 521,022 million yen due to a reclassification of some assets as a result of a change in their use to “office facilities” and a decrease in the investment portfolio associated with the maturity of some endowment insurance policies.

Other Segment:

Segment revenues decreased 26% year on year to 49,919 million yen. Although there were contributions to revenues from companies that we invested in the previous fiscal year, as part of our corporate rehabilitation business, from the beginning of this fiscal year, and from the securities operations and gains on investment securities, the change in the accounting treatment of “transportation revenues” to “equity in net income of affiliates,” as previously described on the (Note) on page 10, led to the lower revenues.

Segment profits increased 38% to 16,259 million yen compared to 11,800 million yen in the same period of the previous fiscal year due to the aforementioned contributing factors to segment revenues and the lower “provision for doubtful receivables and probable loan losses” associated with the card loan operations.

Segment assets were up 6% on March 31, 2005 to 519,727 million yen.

Overseas Operations

The Americas Segment:

Segment revenues were up 10% year on year to 26,493 million yen. Although there was a decrease in revenues associated with direct financing leases and operating leases due to the lower average balances compared to the same period of the previous fiscal year, revenues from interest on loans to corporate customers and sales on real estate increased year on year.

Segment profits were up approximately three-fold to 14,070 million yen compared to 4,725 million yen in the same period of the previous fiscal year due to the increase in segment revenues and improvement in “equity in net income of affiliates.”

Segment assets were down 1% on March 31, 2005 to 398,936 million yen. Although there was an increase in operating asset, excluding “investment in operating leases,” such as an increase in direct financing leases on March 31, 2005 and the effect of a depreciation of the yen against the dollar, segment assets were down due to the withdrawal from an investment in an affiliate accompanying its termination.

- 13 -

Asia, Oceania and Europe Segment:

Segment revenues were up 26% year on year to 43,834 million yen as corporate lending and automobile leasing of a number of companies in the region performed steadily, while revenues from the ship-related operations also increased.

Segment profits increased 81% to 19,747 million yen compared to 10,933 million yen in the same period of the previous fiscal year due to an increase in segment revenues, the steady performance of “equity in net income of affiliates,” and the contribution from the gain on the sale of an affiliate.

Segment assets were up 6% on March 31, 2005 to 527,255 million yen due mainly to the increase in “investment in direct financing leases” and the depreciation of the yen against the dollar.

2. Summary of Cash Flows (Six Months Ended September 30, 2005)

Cash and cash equivalents increased by 32,185 million yen to 177,565 million yen compared to March 31, 2005.

“Cash flows from operating activities” provided 112,157 million yen in the first half of this fiscal year and provided 40,987 million yen in the same period of the previous fiscal year due primarily to inflows associated with the increase in net income, “increase in deposits from lessees” and increase in inflows associated with the collection of accounts receivable related to real estate sales.

“Cash flows from investing activities” used 182,787 million yen in the first half of this fiscal year, compared to 95,526 million yen in the same period of the previous fiscal year. Although inflows associated with “net proceeds from securitization of lease receivables, loan receivables and securities” were higher compared to the same period of the previous fiscal year, there was an increase in outflows associated with the increase in “installment loans made to customers” mainly as a result of the expansion of loans to corporate customers, including non-recourse loans.

“Cash flows from financing activities” provided 102,172 million yen in the first half of this fiscal year, compared to 23,747 million yen in the same period of the previous fiscal year, due to the increase in debt accompanying the increase in operating assets.

3. Summary of Second Quarter (Three Months Ended September 30, 2005)

In the second quarter revenues increased 16,764 million yen year on year. Revenues from “direct financing leases” were up compared to the second quarter of the previous fiscal year due to the increase in the average balance of direct financing leases and the contribution from gains on securitization. Revenues from “operating leases” and “interest on loans and investment securities” were up in line with the increase in operating assets. “Brokerage commissions and net gains on investment securities” were up due mainly to the increase in brokerage commissions and revenues from corporate rehabilitation fund investments. “Life insurance premiums and related investment income” were up compared to the same period of the previous fiscal year as the life insurance related investment income increased despite the slightly lower life insurance premiums. “Real estate sales” decreased year on year due to the reduction in the number of condominiums sold to buyers. “Gains on sales of real estate under operating leases,” associated with office buildings that are not accounted for under discontinued operations increased. “Other operating revenues” were up year on year due mainly to the contribution to revenues associated with companies in which we invested as part of our corporate rehabilitation business mainly from the third quarter of the previous fiscal year.

- 14 -

On the other hand, expenses were down 24,041 million yen compared to the second quarter of the previous fiscal year. “Interest expense” increased year on year as a result of the increase in the average balance of operating assets. “Costs of operating leases” were up year on year in line with the increase in revenues from operating leases. “Life insurance costs” were down compared with the same period of the previous fiscal year due to the lower insurance payments. “Costs of real estate sales” decreased in line with the lower “real estate sales.” “Other operating expenses” increased in line with the increase in associated revenues in the second quarter of this fiscal year. “Selling, general and administrative expenses” were down year on year despite the recording of costs associated with the increase in the number of consolidated companies from the third quarter of the previous fiscal year, as Footwork Express Co., Ltd. (please refer to the (Note) on Page 10 for details) went from being accounted for as a consolidated company to an equity method affiliate and due to lower advertising costs. The “provision for doubtful receivables and probable loan losses” was down compared to the second quarter of the previous fiscal year due to a lower level of non-performing assets. “Write-downs of long-lived assets” and “write-downs of securities” were also down year on year.

This resulted in an increase in “operating income” by 40,805 million yen to 66,085 million yen compared with the second quarter of the previous fiscal year.

“Equity in net income of affiliates” was up year on year due mainly to the contribution of overseas equity method affiliates and “gains on sales of subsidiaries and affiliates and liquidation loss” were recorded. “Income before discontinued operations and income taxes” increased by 42,516 million yen compared to the second quarter of the previous fiscal year to 74,770 million yen.

“Discontinued operations, net of applicable tax effect” added 2,084 million yen and “net income” in the second quarter of this fiscal year rose by 27,004 million yen to 46,165 million yen compared with a “net income” of 19,161 million yen in the second quarter of the previous fiscal year.

4. Outlook and Forecasts for the Fiscal Year Ending March 31, 2006

For the fiscal year ending March 31, 2006 we have revised our original forecast as follows. “Revenues” 890,000 million yen (down 3% compared with the fiscal year ended March 31, 2005), “income before income taxes” of 230,000 million yen (up 50%), and “net income” of 140,000 million yen (up 53%).


	Millions of Yen

	Total Revenues	Income before Income Taxes*	Net Income
Previous Forecast (A)	880,000	162,000	96,000
New Forecast (B)	890,000	230,000	140,000
Change (B-A)	10,000	68,000	44,000
Change (%)	1.1	42.0	45.8
(Reference) Fiscal 2005 Results	913,719	153,549	91,496
* Income before income taxes” refers to “income before discontinued operations and income taxes.”

- 15 -

5. Business Risk

Our business, operating results and financial condition may be materially adversely affected by any of the factors discussed below or other factors. The risk factors listed below are taken from the Annual Financial Report (Yukashoken houkokusho) for the fiscal year ended March 31, 2005 that was submitted in Japan in June 2005.

•

Our business may continue to be adversely affected by economic conditions in Japan

•

Deflation, deterioration in market demand for real estate, natural disasters or environmental hazards may adversely affect the value of our long-lived assets or collateral of our loans

•

Our credit losses on loans to Japanese real estate-related companies and construction companies may exceed our allowances for these loans

•

Changes in market interest rates and currency exchange rates could adversely affect our assets and our financial condition and results of operations

•

We may lose market share or suffer reduced interest margins if our competitors compete with us on pricing and other terms

•

Our access to liquidity and capital may be restricted by economic conditions, instability in the financial markets or potential credit rating downgrades

•

Our business has in the past been, and may again be, adversely affected by adverse economic conditions in the United States

•

Adverse developments affecting other Asian economies may adversely affect our business

•

We may suffer losses on our investment portfolio and derivative instruments

•

We may suffer losses if we are unable to remarket leased equipment returned to us

•

Our allowance for doubtful receivables on direct financing leases and probable loan losses may be insufficient

•

Our credit-related costs might increase

•

Poor performance or failure of affiliates accounted for using the equity method, which include investments in companies as part of our corporate rehabilitation business, or consolidated companies in which we have invested as part of our corporate rehabilitation business, will have an adverse affect on our results of operations and financial condition

•

Our business may be adversely affected by adverse conditions in the airline industry

•

Inadequate or failed processes or systems, human factors or external events or factors may adversely affect our results of operations, liquidity or reputation

•

We may be exposed to increased risks as we expand or reduce the range of our products and services, or acquire companies or assets, including as part of our corporate rehabilitation business

•

We may not be able to hire or retain human resources to achieve our strategic goals

•

Our results of operations and financial condition may be materially adversely affected by unpredictable events

•

A failure to comply with regulations to which many of our businesses are subject could result in sanctions or penalties, harm our reputation and adversely affect our results of operations

•

Changes in law and regulations may materially affect our business, results of operations and financial condition

•

Changes in tax laws or accounting rules may affect our sales of structured financial products

•

Litigation and regulatory investigations may adversely affect our financial results

•

Our life insurance subsidiary is subject to risks that are specific to its business

•

A downgrade of our credit ratings could have a negative effect on our derivative transactions

•

We may not be able to manage our risks successfully through derivatives

•

Our real estate investments may be uninsured or under-insured for certain losses

•

Dispositions of the Shares, particularly by major shareholders, may adversely affect market prices for the Shares

- 16 -

•

The departure of top management could adversely affect us

•

Change of listed sections and delisting of Shares could adversely affect the liquidity and price of the Shares

•

Holding a professional baseball team entails reputation risks

•

There is a risk that our risk management will not be effective

Details on risks related to our business are disclosed in our Annual Financial Report (Yukashoken houkokusho) each year.

- 17 -

Consolidated Financial Highlights

(For the Six Months Ended September 30, 2005 and 2004, and the Year Ended March 31, 2005)

(Unaudited)


	(millions of JPY, except for per share data)

	September 30, 2005		Change from March 31, 2005		Year -on- year Change		September 30, 2004		Year -on- year Change		March 31, 2005		Year -on- year Change
Operating Assets

Investment in Direct Financing Leases	1,462,354		101	%	100	%	1,465,856		95	%	1,451,574		100	%
Installment Loans	2,491,927		104	%	111	%	2,254,387		101	%	2,386,597		107	%
Investment in Operating Leases	591,056		95	%	110	%	536,489		110	%	619,005		115	%
Investment in Securities	618,688		105	%	105	%	591,714		100	%	589,271		107	%
Other Operating Assets	98,740		119	%	135	%	72,932		101	%	82,651		115	%

Total	5,262,765		103	%	107	%	4,921,378		100	%	5,129,098		106	%

Operating Results

Total Revenues	442,927		—		106	%	415,931		116	%	913,719		121	%
Income before Discontinued Operations and Income Taxes	133,109		—		193	%	68,860		120	%	153,549		148	%

Net Income	83,954		—		197	%	42,688		136	%	91,496		169	%
Earnings Per Share
Net Income
Basic	957.87		—		188	%	509.74		136	%	1,087.82		169	%
Diluted	907.93		—		194	%	469.19		134	%	1,002.18		167	%
Shareholders’ Equity Per Share	9,333.32		112	%	126	%	7,389.48		114	%	8,322.96		123	%

Financial Position

Shareholders’ Equity	821,420		113	%	133	%	619,249		114	%	727,333		129	%
Number of Outstanding Shares (’000)	88,009		101	%	105	%	83,801		100	%	87,389		104	%
Long-and Short-Term Debt and Deposits	4,269,728		103	%	109	%	3,912,797		98	%	4,146,322		107	%
Total Assets	6,333,055		104	%	111	%	5,724,771		101	%	6,068,953		108	%
Shareholders’ Equity Ratio	13.0	%	—		—		10.8	%	—		12.0	%	—
Return on Equity (annualized)	21.7	%	—		—		14.4	%	—		14.2	%	—
Return on Assets (annualized)	2.71	%	—		—		1.50	%	—		1.56	%	—

New Business Volumes

Direct Financing Leases
New Receivables Added	415,435		—		104	%	398,951		100	%	863,137		108	%
New Equipment Acquisitions	368,961		—		104	%	355,848		100	%	767,672		108	%
Installment Loans	783,614		—		111	%	704,040		133	%	1,545,517		137	%
Operating Leases	111,911		—		117	%	95,814		129	%	248,327		131	%
Investment in Securities	111,710		—		106	%	105,578		152	%	244,600		200	%
Other Operating Transactions	55,565		—		100	%	55,783		72	%	129,604		70	%

- 18 -

Condensed Consolidated Statements of Income

(For the Six Months Ended September 30, 2005 and 2004, and the Year Ended March 31, 2005)

(Unaudited)


	(millions of JPY, millions of US$)

	Six Months ended September 30, 2005		Year -on- year Change (%)	Six Months ended September 30, 2004		Year -on- year Change (%)	Year ended March 31, 2005		Year -on- year Change (%)	U.S. dollars September 30, 2005
Total Revenues :	442,927		106	415,931		116	913,719		121	3,913

Direct Financing Leases	61,035		110	55,661		98	113,514		101	539
Operating Leases	99,778		113	88,118		112	178,977		109	882
Interest on Loans and Investment Securities	77,198		117	65,852		111	136,035		117	682
Brokerage Commissions and Net Gains on Investment Securities	20,416		156	13,087		173	33,906		130	180
Life Insurance Premiums and Related Investment Income	68,470		103	66,341		102	137,004		102	605
Real Estate Sales	31,376		75	41,899		99	123,162		126	277
Gains on Sales of Real Estate under Operating Leases	9,445		737	1,281		16	1,554		17	83
Transportation Revenues	—		—	26,927		—	55,339		—	—
Other Operating Revenues	75,209		132	56,765		136	134,228		144	665

Total Expenses :	327,225		91	359,638		114	783,560		117	2,891

Interest Expense	30,573		110	27,812		89	56,126		94	270
Costs of Operating Leases	66,815		109	61,261		104	123,067		103	590
Life Insurance Costs	58,239		97	59,919		103	122,896		103	515
Costs of Real Estate Sales	27,765		71	39,262		104	113,830		128	245
Costs of Transportation Revenues	—		—	23,399		—	46,594		—	—
Other Operating Expenses	44,817		142	31,594		145	82,449		158	396
Selling, General and Administrative Expenses	89,509		102	87,417		113	181,522		113	790
Provision for Doubtful Receivables and Probable Loan Losses	6,877		41	16,687		74	39,650		83	61
Write-downs of Long-Lived Assets	521		6	9,165		218	11,713		95	5
Write-downs of Securities	2,668		97	2,763		134	4,930		94	24
Foreign Currency Transaction Loss (Gain), Net	(559	)	—	359		76	783		50	(5	)

Operating Income	115,702		206	56,293		123	130,159		150	1,022

Equity in Net Income of Affiliates	15,607		160	9,765		82	20,043		112	138
Gains on Sales of Subsidiaries and Affiliates and Liquidation Loss	1,800		64	2,802		—	3,347		—	16

Income before Discontinued Operations and Income Taxes	133,109		193	68,860		120	153,549		148	1,176

Provision for Income Taxes	54,617		181	30,127		116	68,490		134	483

Income from Continuing Operations	78,492		203	38,733		124	85,059		161	693

Discontinued Operations:
Income from Discontinued Operations, Net	9,185			6,687			10,835			81
Provision for Income Taxes	(3,723	)		(2,732	)		(4,398	)		(32	)

Discontinued Operations, Net of Applicable Tax Effect	5,462		138	3,955		—	6,437		885	49

Net Income	83,954		197	42,688		136	91,496		169	742


Note:		1. Pursuant to FASB Statement No. 144 (“Accounting for the Impairment or Disposal of Long-Lived Assets”), 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.
		2. In the previous fiscal year, “Transportation Revenues” and “Costs of Transportation Revenues” were disclosed separately. However, as the logistics subsidiary became an affiliate, the proportionate share of the net income (loss) was recorded in “Equity in Net Income of Affiliates” by the equity method.

- 19 -

Condensed Consolidated Statements of Income

(For the Three Months Ended September 30, 2005 and 2004)

(Unaudited)


	(millions of JPY, millions of US$)

	Three Months ended September 30, 2005		Year -on- year Change (%)	Three Months ended September 30, 2004		Year -on- year Change (%)	U.S. dollars September 30, 2005
Total Revenues :	230,603		108	213,839		117	2,037

Direct Financing Leases	32,313		114	28,262		100	285
Operating Leases	51,968		121	42,923		108	459
Interest on Loans and Investment Securities	40,978		114	35,949		115	362
Brokerage Commissions and Net Gains on Investment Securities	11,973		151	7,927		183	106
Life Insurance Premiums and Related Investment Income	38,241		106	36,133		105	338
Real Estate Sales	12,162		61	20,059		104	107
Gains on Sales of Real Estate under Operating Leases	3,625		—	83		4	32
Transportation Revenues	—		—	14,152		—	—
Other Operating Revenues	39,343		139	28,351		125	348

Total Expenses :	164,518		87	188,559		119	1,453

Interest Expense	15,881		114	13,940		91	140
Costs of Operating Leases	33,332		117	28,476		95	294
Life Insurance Costs	31,000		97	31,954		111	274
Costs of Real Estate Sales	11,101		59	18,719		108	97
Costs of Transportation Revenues	—		—	11,685		—	—
Other Operating Expenses	23,431		142	16,518		143	207
Selling, General and Administrative Expenses	46,155		95	48,384		121	408
Provision for Doubtful Receivables and Probable Loan Losses	2,145		27	7,892		74	19
Write-downs of Long-Lived Assets	521		6	9,165		218	5
Write-downs of Securities	868		67	1,295		235	8
Foreign Currency Transaction Loss (Gain), Net	84		16	531		—	1

Operating Income	66,085		261	25,280		104	584

Equity in Net Income of Affiliates	8,344		167	5,011		59	74
Gains on Sales of Subsidiaries and Affiliates and Liquidation Loss	341		17	1,963		—	3

Income before Discontinued Operations and Income Taxes	74,770		232	32,254		99	661

Provision for Income Taxes	30,689		218	14,066		95	271

Income from Continuing Operations	44,081		242	18,188		102	390

Discontinued Operations
Income from Discontinued Operations, Net	3,517			1,649			31
Provision for Income Taxes	(1,433	)		(676	)		(13	)

Discontinued Operations, Net of Applicable Tax Effect	2,084		214	973		—	18

Net Income	46,165		241	19,161		111	408

- 20 -

Condensed Consolidated Balance Sheets

(As of September 30, 2005 and 2004, and March 31, 2005)

(Unaudited)


	(millions of JPY, millions of US$)

	September 30, 2005		September 30, 2004		March 31, 2005		U.S. dollars September 30, 2005
Assets

Cash and Cash Equivalents	177,565		121,891		145,380		1,569
Restricted Cash	69,645		50,176		53,193		615
Time Deposits	5,814		996		8,678		51
Investment in Direct Financing Leases	1,462,354		1,465,856		1,451,574		12,919
Installment Loans	2,491,927		2,254,387		2,386,597		22,015
Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses	(103,028	)	(125,309	)	(115,250	)	(910	)
Investment in Operating Leases	591,056		536,489		619,005		5,222
Investment in Securities	618,688		591,714		589,271		5,466
Other Operating Assets	98,740		72,932		82,651		872
Investment in Affiliates	302,306		174,805		274,486		2,671
Other Receivables	142,895		142,901		160,263		1,262
Inventories	115,058		145,107		113,203		1,017
Prepaid Expenses	50,434		45,684		45,082		446
Office Facilities	95,106		66,347		65,410		840
Other Assets	214,495		180,795		189,410		1,896

Total Assets	6,333,055		5,724,771		6,068,953		55,951

Liabilities and Shareholders’ Equity

Short-Term Debt	955,048		922,427		947,871		8,438
Deposits	354,191		317,235		336,588		3,129
Trade Notes, Accounts Payable and Other Liabilities	307,618		290,130		270,737		2,718
Accrued Expenses	87,782		93,087		95,407		776
Policy Liabilities	519,849		559,815		550,880		4,593
Current and Deferred Income Taxes	204,242		160,960		179,859		1,804
Deposits from Lessees	122,416		88,733		98,415		1,081
Long-Term Debt	2,960,489		2,673,135		2,861,863		26,155

Total Liabilities	5,511,635		5,105,522		5,341,620		48,694

Common Stock	76,520		52,315		73,100		676
Additional Paid-in Capital	94,602		70,268		91,045		836
Retained Earnings:
Legal Reserve	2,220		2,220		2,220		19
Retained Earnings	650,952		521,686		570,494		5,751
Accumulated Other Comprehensive Income (Loss)	4,514		(19,396	)	(1,873	)	40
Treasury Stock, at Cost	(7,388	)	(7,844	)	(7,653	)	(65	)

Total Shareholders’ Equity	821,420		619,249		727,333		7,257

Total Liabilities and Shareholders’ Equity	6,333,055		5,724,771		6,068,953		55,951


	September 30, 2005		September 30, 2004		March 31, 2005		U.S. dollars September 30, 2005
Note : Accumulated Other Comprehensive Income (Loss)
Net unrealized gains on investment in securities	37,219		29,282		40,150		329
Minimum pension liability adjustments	(1,146	)	(7,742	)	(1,090	)	(10	)
Foreign currency translation adjustments	(31,904	)	(38,527	)	(39,610	)	(282	)
Net unrealized gains (losses) on derivative instruments	345		(2,409	)	(1,323	)	3

- 21 -

Condensed Consolidated Statements of Shareholders’ Equity

(For the Six Months Ended September 30, 2005 and 2004, and the Year Ended March 31, 2005)

(Unaudited)


	(millions of JPY, millions of US$)

	Six Months ended September 30, 2005		Six Months ended September 30, 2004		Year ended March 31, 2005		U.S. dollars September 30, 2005
Common Stock:
Beginning balance	73,100		52,068		52,068		646
Issuance during the year	3,420		247		21,032		30

Ending balance	76,520		52,315		73,100		676

Additional Paid-in Capital:
Beginning balance	91,045		70,015		70,015		805
Issuance during the year and other, net	3,557		253		21,030		31

Ending balance	94,602		70,268		91,045		836

Legal Reserve:
Beginning balance	2,220		2,220		2,220		19

Ending balance	2,220		2,220		2,220		19

Retained Earnings:
Beginning balance	570,494		481,091		481,091		5,040
Cash dividends	(3,496	)	(2,093	)	(2,093	)	(31	)
Net income	83,954		42,688		91,496		742

Ending balance	650,952		521,686		570,494		5,751

Accumulated Other Comprehensive Income (Loss):
Beginning balance	(1,873	)	(33,141	)	(33,141	)	(17	)
Net change of unrealized gains on investment in securities	(2,931	)	4,234		15,102		(26	)
Net change of minimum pension liability adjustments	(56	)	225		6,877		0
Net change of foreign currency translation adjustments	7,706		7,102		6,019		68
Net change of unrealized gains on derivative instruments	1,668		2,184		3,270		15

Ending balance	4,514		(19,396	)	(1,873	)	40

Treasury Stock:
Beginning balance	(7,653	)	(8,206	)	(8,206	)	(67	)
Increase, net	265		362		553		2

Ending balance	(7,388	)	(7,844	)	(7,653	)	(65	)

Total Shareholders’ Equity:
Beginning balance	727,333		564,047		564,047		6,426
Increase, net	94,087		55,202		163,286		831

Ending balance	821,420		619,249		727,333		7,257

Summary of Comprehensive Income :
Net income	83,954		42,688		91,496		742
Other comprehensive income	6,387		13,745		31,268		57

Comprehensive income	90,341		56,433		122,764		799

- 22 -

Condensed Consolidated Statements of Cash Flows

(For the Six Months Ended September 30, 2005 and 2004, and the Year Ended March 31, 2005)

(Unaudited)


	(millions of JPY, millions of US$)

	Six Months ended September 30, 2005		Six Months ended September 30, 2004		Year ended March 31, 2005		U.S. dollars September 30, 2005
Cash Flows from Operating Activities:
Net income	83,954		42,688		91,496		742
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	60,168		65,104		132,158		531
Provision for doubtful receivables and probable loan losses	6,877		16,687		39,650		61
Decrease in policy liabilities	(31,031	)	(32,967	)	(41,902	)	(274	)
Gains from securitization transactions	(4,035	)	(2,706	)	(12,520	)	(36	)
Equity in net income of affiliates	(15,607	)	(9,765	)	(20,043	)	(138	)
Gains on sales of subsidiaries and affiliates and liquidation loss	(1,800	)	(2,802	)	(3,347	)	(16	)
Gains on sales of available-for-sale securities	(6,402	)	(11,236	)	(14,761	)	(57	)
Gains on sales of real estate under operating leases	(9,445	)	(1,281	)	(1,554	)	(83	)
Gains on sales of operating lease assets other than real estate	(4,895	)	(2,280	)	(4,746	)	(43	)
Write-downs of long-lived assets	521		9,165		11,713		5
Write-downs of securities	2,668		2,763		4,930		24
Increase in restricted cash	(16,186	)	(14,379	)	(17,517	)	(143	)
Increase in trading securities	(7,425	)	(9,299	)	(21,430	)	(66	)
Increase in inventories	(14,803	)	(20,856	)	(21,906	)	(131	)
Increase in prepaid expenses	(3,940	)	(1,461	)	(975	)	(35	)
Increase (decrease) in accrued expenses	(8,512	)	(3,880	)	8,255		(75	)
Increase in deposits from lessees	24,123		10,211		19,567		213
Other, net	57,927		7,281		(20,601	)	512

Net cash provided by operating activities	112,157		40,987		126,467		991

Cash Flows from Investing Activities:
Purchases of lease equipment	(509,873	)	(436,304	)	(942,489	)	(4,505	)
Principal payments received under direct financing leases	314,488		322,727		633,724		2,779
Net proceeds from securitization of lease receivables, loan receivables and securities	102,287		72,711		191,976		904
Installment loans made to customers	(783,614	)	(703,820	)	(1,545,297	)	(6,923	)
Principal collected on installment loans	616,456		627,482		1,287,144		5,446
Proceeds from sales of operating lease assets	89,306		48,362		73,928		789
Investment in and dividends received from affiliates, net	(7,716	)	(836	)	(48,257	)	(68	)
Purchases of available-for-sale securities	(91,389	)	(94,411	)	(219,890	)	(807	)
Proceeds from sales of available-for-sale securities	72,752		53,843		127,452		643
Maturities of available-for-sale securities	20,202		28,648		82,373		178
Purchases of other securities	(20,321	)	(11,184	)	(24,283	)	(180	)
Proceeds from sales of other securities	15,966		2,589		11,456		141
Purchases of other operating assets	(15,774	)	(2,851	)	(9,216	)	(139	)
Acquisitions of subsidiaries, net of cash acquired	—		(6,044	)	(12,506	)	—
Sales of subsidiaries, net of cash disposed	1,500		—		—		13
Other, net	12,943		3,562		(14,119	)	114

Net cash used in investing activities	(182,787	)	(95,526	)	(408,004	)	(1,615	)

Cash Flows from Financing Activities:
Net increase (decrease) in debt with maturities of three months or less	43,425		(33,465	)	(34,227	)	384
Proceeds from debt with maturities longer than three months	919,112		793,755		1,934,048		8,120
Repayment of debt with maturities longer than three months	(878,214	)	(755,004	)	(1,665,050	)	(7,759	)
Net increase in deposits due to customers	17,603		24,690		44,043		156
Issuance of common stock	3,476		492		2,052		31
Dividends paid	(3,496	)	(2,093	)	(2,093	)	(31	)
Net decrease in call money	—		(5,000	)	(5,000	)	—
Other, net	266		372		570		2

Net cash provided by financing activities	102,172		23,747		274,343		903

Effect of Exchange Rate Changes on Cash and Cash Equivalents	643		448		339		6

Net Increase (Decrease) in Cash and Cash Equivalents	32,185		(30,344	)	(6,855	)	285
Cash and Cash Equivalents at Beginning of Period	145,380		152,235		152,235		1,284

Cash and Cash Equivalents at End of Period	177,565		121,891		145,380		1,569

- 23 -

Segment Information

(For the Six Months Ended September 30, 2005 and 2004, and the Year Ended March 31, 2005)

(Unaudited)


											(millions of JPY)

	Six months ended September 30, 2005					Six months ended September 30, 2004					Year ended March 31, 2005
	Segment Revenues		Segment Profits		Segment Assets	Segment Revenues		Segment Profits		Segment Assets	Segment Revenues		Segment Profits		Segment Assets
Operations in Japan
Corporate Financial Services	47,662		23,824		1,602,587	40,774		17,273		1,467,823	87,708		43,848		1,506,311
Automobile Operations	48,911		13,425		489,313	44,076		10,916		441,202	89,404		21,088		451,715
Rental Operations	33,638		5,292		116,982	34,981		5,044		117,741	68,447		9,384		118,427
Real Estate-Related Finance	34,865		20,318		961,049	26,694		10,216		867,605	77,389		13,856		956,047
Real Estate	98,018		20,562		520,730	84,892		12,505		398,388	195,906		23,959		500,755
Life Insurance	68,178		7,753		521,022	66,306		3,992		565,021	136,857		7,223		567,023
Other	49,919		16,259		519,727	67,450		11,800		421,744	143,754		20,970		489,758

Sub-Total	381,191		107,433		4,731,410	365,173		71,746		4,279,524	799,465		140,328		4,590,036

Overseas Operations
The Americas	26,493		14,070		398,936	24,020		4,725		446,231	53,084		15,621		403,399
Asia, Oceania and Europe	43,834		19,747		527,255	34,772		10,933		499,426	73,089		22,133		498,855

Sub-Total	70,327		33,817		926,191	58,792		15,658		945,657	126,173		37,754		902,254

Segment Total	451,518		141,250		5,657,601	423,965		87,404		5,225,181	925,638		178,082		5,492,290

Difference between Segment totals and Consolidated Amounts	(8,591	)	(8,141	)	675,454	(8,034	)	(18,544	)	499,590	(11,919	)	(24,533	)	576,663

Consolidated Amounts	442,927		133,109		6,333,055	415,931		68,860		5,724,771	913,719		153,549		6,068,953


			(millions of US$)

	U.S. dollars September 30, 2005
	Segment Revenues		Segment Profits		Segment Assets
Operations in Japan
Corporate Financial Services	421		210		14,158
Automobile Operations	432		119		4,323
Rental Operations	297		47		1,034
Real Estate-Related Finance	308		180		8,491
Real Estate	866		182		4,600
Life Insurance	602		68		4,603
Other	442		143		4,592

Sub-Total	3,368		949		41,801

Overseas Operations
The Americas	234		124		3,524
Asia, Oceania and Europe	387		175		4,659

Sub-Total	621		299		8,183

Segment Total	3,989		1,248		49,984

Difference between Segment totals and Consolidated Amounts	(76	)	(72	)	5,967

Consolidated Amounts	3,913		1,176		55,951


*Note 1:		The results of the reported segments from April 1, 2005 reflect the revised operating structure following the reorganization of the Company. Accordingly, real estate-related equity investment operations and the REIT asset management operations, which had been included in the “Real Estate-Related Finance” segment, were included in the “Real Estate” segment from the first quarter of this fiscal year. Therefore, certain related amounts that had been previously reported are reclassified.
2:		Effective January 1, 2005, the Company integrated seven group companies, which were involved in automobile leasing and rental operations, into ORIX Auto Corporation, in order to control and manage the overall automobile operations under one company. The automobile leasing operations, which had been included in the “Corporate Financial Services” segment and the automobile rental operations that had been included in the “Rental Operations” segment were included in the “Automobile Operations” segment from the previous fiscal year. The “Rental Operations” segment included only the rental operations of precision measuring and other equipment. The Company changed the management of its overseas operations, whereby the “Europe” segment and the “Asia and Oceania” segment were combined and from the previous fiscal year the new segment was shown as the “Asia, Oceania and Europe” segment.
3:		Since the Company evaluates the performance for the segments based on profits before income taxes, tax expenses are not included in the segment profits. In addition, results of discontinued operations are included in “Segment Revenues” and “Segment Profits” of each segment, if any. Such amounts are eliminated in “Difference between Segment totals and Consolidated Amounts.”

- 24 -

Basis of presentation and significant accounting policies

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

Some areas of potential significant differences between U.S. and Japanese accounting policies and practices are as follows: Accounting for direct financing leases, the use of the straight-line method of depreciation for operating lease equipment, deferral of life insurance policy acquisition costs, accounting for derivative instruments and hedging activities, accounting for goodwill and other intangible assets resulting from business combinations, accounting for pension plans, and reclassification of discontinued operations. Segment information is prepared in accordance with FASB Statement No. 131. The basis of presentation and significant accounting policies are as follows.

1. Consolidated subsidiaries

The accompanying consolidated financial statements include the accounts of the Company, 106 domestic subsidiaries and 76 overseas subsidiaries (total of 182 subsidiaries).

The consolidated financial statements also include variable interest entities to which the Company and its subsidiaries are primary beneficiaries pursuant to FASB Interpretation No. 46 (revised December 2003) (FIN46(R) (“Consolidation of Variable Interest Entities”)).

Major subsidiaries are ORIX Auto Corporation, ORIX USA Corporation and others.

2. Affiliates accounted for by the equity method

Investment in 57 domestic affiliates and 24 overseas affiliates (total of 81 affiliates) are accounted for by using the equity method. Major affiliates are The Fuji Fire and Marine Insurance Company, Limited, DAIKYO INCORPORATED, Korea Life Insurance Co., Ltd., and others.

3. The date of subsidiaries fiscal closing

Certain subsidiaries have an interim closing date that differs from that of the Company. However, these subsidiaries close their books and make necessary adjustments for consolidation purposes as of the Company’s interim closing date. For certain subsidiaries whose fiscal periods end at a date that is within three months from our consolidated interim closing date, we use the most recent fiscal period end of those subsidiaries in our consolidated financial results.

4. Accounting policies

(1) Use of estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(2) Recognition of revenues

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

Operating leases—Revenues from operating leases are recognized on a straight-line basis over the contract terms. Operating lease assets are recorded at cost and are depreciated over their estimated useful lives mainly on a straight-line basis.

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

- 25 -

(3) Investment in securities

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

(4) Inventories

Inventories consist primarily of advance and/or progress payments for development of residential condominiums for sale and completed residential condominiums.

Advances and/or progress payments for sale are carried at cost less any impairment losses and finished goods are stated at the lower of cost or market.

(5) Impairment of long-lived assets

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

(6) Allowance for doubtful receivables on direct financing leases and probable loan losses

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

(7) Prepaid benefit cost (Accrued benefit liability)

The Company and its subsidiaries adopt FASB Statement No. 87 (“Employer’s Accounting for Pensions”), and the costs of pension plans are accrued based on amounts determined using actuarial methods.

(8) Foreign currencies translation

The Company and its subsidiaries maintain their accounting records in their functional currency. Transactions in foreign currencies are recorded in the entity’s functional currency based on the prevailing exchange rates on the transaction date.

The financial statements of foreign subsidiaries and affiliates are translated into Japanese yen by applying the exchange rates in effect at the end of each fiscal year to all assets and liabilities. Income and expenses are translated at the average rates of exchange prevailing during the fiscal year.

- 26 -

(9) Hedge accounting

The Company and its subsidiaries adopt FASB Statement No. 133 (“Accounting for Derivative Instruments and Hedging Activities”), as amended by FASB Statement No. 138 (“Accounting for Certain Derivative Instruments and Certain Hedging Activities—an amendment of FASB Statement No. 133”) and FASB Statement No. 149 (“Amendment of Statement 133 on Derivative Instruments and Hedging Activities”). All derivatives are recorded on the balance sheet at fair value.

(10) Goodwill and other intangible assets resulting from business combinations

Goodwill and other intangible assets that have indefinite useful lives are not amortized. Impairment tests are required on an annual basis and between annual tests whenever events or circumstances indicate a potential impairment might exist.

(11) Income taxes

The Company, in general, determines its income tax provisions for interim periods by applying the current estimate of the effective tax rate to be applicable for the full fiscal year to the actual year-to-date pre-tax income amount. The estimated effective tax rate is determined by dividing total estimated income tax expense for the full fiscal year by total estimated pre-tax income for the full fiscal year.

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

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

- 27 -

Revenues from overseas customers

Revenues from overseas customers are as follows.


	Millions of JPY
September 30, 2005	The Americas		Asia, Oceania and Europe		Total
Overseas revenue	22,344		46,103		68,447

Consolidated revenue					442,927

The rate of the overseas revenues to consolidated revenue	5.1	%	10.4	%	15.5	%



	Millions of JPY
September 30, 2004	The Americas		Asia, Oceania and Europe		Total
Overseas revenue	20,772		36,878		57,650

Consolidated revenue					415,931

The rate of the overseas revenues to consolidated revenue	5.0	%	8.9	%	13.9	%



	Millions of JPY
March 31, 2005	The Americas		Asia, Oceania and Europe		Total
Overseas revenue	46,552		77,227		123,779

Consolidated revenue					913,719

The rate of the overseas revenues to consolidated revenue	5.1	%	8.4	%	13.5	%



	Millions of U.S. dollars
September 30, 2005	The Americas		Asia, Oceania and Europe		Total
Overseas revenue	198		407		605

Consolidated revenue					3,913

The rate of the overseas revenues to consolidated revenue	5.1	%	10.4	%	15.5	%

- 28 -

Investment in Securities

Investment in securities at September 30, 2005 and 2004, and March 31, 2005 consists of the following:


	Millions of JPY			Millions of U.S. dollars
	September 30, 2005	September 30, 2004	March 31, 2005	September 30, 2005
Trading securities	58,040	34,917	47,784	513
Available-for-sale securities	399,666	411,894	390,542	3,531
Other securities	160,982	144,903	150,945	1,422

	618,688	591,714	589,271	5,466

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

The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale securities in each major security type at September 30, 2005 and 2004, and March 31, 2005 are as follows:


	Millions of JPY
September 30, 2005	Amortized cost	Gross unrealized gains	Gross unrealized losses		Fair Value
Available-for-sale:
Japanese and foreign government bond securities	4,503	76	(233	)	4,346
Japanese prefectural and foreign municipal bond securities	21,259	6	(241	)	21,024
Corporate debt securities	239,625	1,466	(1,833	)	239,258
Mortgage-backed and other asset-backed securities	69,958	13,228	(2,687	)	80,499
Equity securities	20,103	34,786	(350	)	54,539

	355,448	49,562	(5,344	)	399,666

- 29 -


	Millions of JPY
September 30, 2004	Amortized cost	Gross unrealized gains	Gross unrealized losses		Fair Value
Available-for-sale:
Japanese and foreign government bond securities	13,861	34	(188	)	13,707
Japanese prefectural and foreign municipal bond securities	17,397	15	(79	)	17,333
Corporate debt securities	218,056	3,908	(2,264	)	219,700
Mortgage-backed and other asset-backed securities	106,684	11,261	(2,840	)	115,105
Equity securities	15,998	30,411	(360	)	46,049

	371,996	45,629	(5,731	)	411,894


	Millions of JPY
March 31, 2005	Amortized cost	Gross unrealized gains	Gross unrealized losses		Fair Value
Available-for-sale:
Japanese and foreign government bond securities	4,498	78	(215	)	4,361
Japanese prefectural and foreign municipal bond securities	16,941	68	(138	)	16,871
Corporate debt securities	238,096	2,159	(1,332	)	238,923
Mortgage-backed and other asset-backed securities	65,192	13,460	(2,314	)	76,338
Equity securities	18,912	35,862	(725	)	54,049

	343,639	51,627	(4,724	)	390,542


	Millions of U.S. dollars
September 30, 2005	Amortized cost	Gross unrealized gains	Gross unrealized losses		Fair Value
Available-for-sale:
Japanese and foreign government bond securities	40	1	(2	)	39
Japanese prefectural and foreign municipal bond securities	188	—	(2	)	186
Corporate debt securities	2,116	13	(16	)	2,113
Mortgage-backed and other asset-backed securities	618	117	(24	)	711
Equity securities	178	307	(3	)	482

	3,140	438	(47	)	3,531

- 30 -


Key Quarterly Financial Data (Unaudited)									(millions of JPY)

	Fiscal 2005								Fiscal 2006
Balance Sheet Data	Q1 (04/4-6)		Q2 (04/7-9)		Q3 (04/10-12)		Q4 (05/1-3)		Q1 (05/4-6)		Q2 (05/7-9)
1) Investment in Direct Financing Leases	1,454,461		1,465,856		1,480,526		1,451,574		1,470,338		1,462,354
Japan	1,183,421		1,187,595		1,212,340		1,183,791		1,186,866		1,164,647
Overseas	271,040		278,261		268,186		267,783		283,472		297,707

2) Installment Loans	2,221,554		2,254,387		2,328,427		2,386,597		2,440,842		2,491,927
Japan	1,997,881		2,019,718		2,100,661		2,153,949		2,211,360		2,258,906
Overseas	223,673		234,669		227,766		232,648		229,482		233,021

3) Investment in Operating Leases	529,078		536,489		576,621		619,005		574,801		591,056
Japan	385,532		380,550		425,178		466,489		425,815		439,063
Overseas	143,546		155,939		151,443		152,516		148,986		151,993

4) Investment in Securities	579,193		591,714		605,511		589,271		593,911		618,688
Japan	423,111		446,026		466,607		467,562		466,859		489,625
Overseas	156,082		145,688		138,904		121,709		127,052		129,063

5) Other Operating Assets	68,004		72,932		81,885		82,651		91,677		98,740
Japan	61,071		64,772		74,538		75,156		84,390		90,551
Overseas	6,933		8,160		7,347		7,495		7,287		8,189

Total Operating Assets	4,852,290		4,921,378		5,072,970		5,129,098		5,171,569		5,262,765

Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses	(128,726	)	(125,309	)	(120,508	)	(115,250	)	(110,689	)	(103,028	)
Allowance/Investment in Direct Financing Leases and Installment Loans	3.5	%	3.4	%	3.2	%	3.0	%	2.8	%	2.6	%

Total Assets	5,651,018		5,724,771		5,873,033		6,068,953		6,185,171		6,333,055

Short-Term Debt, Long-Term Debt and Deposits	3,876,782		3,912,797		4,060,447		4,146,322		4,236,166		4,269,728
Policy Liabilities	577,024		559,815		554,161		550,880		537,746		519,849

Total Liabilities	5,056,239		5,105,522		5,231,701		5,341,620		5,420,568		5,511,635

Shareholders’ Equity	594,779		619,249		641,332		727,333		764,603		821,420

Total Liabilities & Shareholders’ Equity	5,651,018		5,724,771		5,873,033		6,068,953		6,185,171		6,333,055


New Business Volumes	Q1 (04/4-6)		Q2 (04/7-9)		Q3 (04/10-12)		Q4 (05/1-3)		Q1 (05/4-6)		Q2 (05/7-9)

Direct Financing Leases: New receivables added	188,262		210,689		202,826		261,360		196,181		219,254
Japan	150,035		169,583		160,378		220,748		153,585		169,741
Overseas	38,227		41,106		42,448		40,612		42,596		49,513

Direct Financing Leases: New equipment acquisitions	166,937		188,911		180,174		231,650		175,106		193,855
Japan	130,715		148,909		139,736		187,930		134,333		145,029
Overseas	36,222		40,002		40,438		43,720		40,773		48,826

Installment Loans: New loans added	307,530		396,510		394,231		447,246		363,952		419,662
Japan	273,289		352,816		351,053		417,336		329,457		374,084
Overseas	34,241		43,694		43,178		29,910		34,495		45,578

Operating Leases: New equipment acquisitions	40,737		55,077		81,786		70,727		48,932		62,979
Japan	33,195		35,750		70,626		62,193		30,794		44,201
Overseas	7,542		19,327		11,160		8,534		18,138		18,778

Investment in Securities: New securities added	45,486		60,092		60,167		78,855		51,178		60,532
Japan	38,795		56,822		58,932		76,261		49,603		59,867
Overseas	6,691		3,270		1,235		2,594		1,575		665

Other Operating Transactions: New assets added	29,354		26,429		45,563		28,258		30,376		25,189
Japan	29,354		25,017		45,386		27,888		30,376		25,189
Overseas	—		1,412		177		370		—		—

- 31 -


									(millions of JPY)

	Fiscal 2005								Fiscal 2006
Income Statement Data	Q1 (04/4-6)		Q2 (04/7-9)		Q3 (04/10-12)		Q4 (05/1-3)		Q1 (05/4-6)		Q2 (05/7-9)
Revenues
1) Direct Financing Leases	27,399		28,262		27,720		30,133		28,722		32,313
Japan	21,698		22,268		21,915		24,260		22,775		25,802
Overseas	5,701		5,994		5,805		5,873		5,947		6,511

2) Operating Leases	45,195		42,923		44,045		46,814		47,810		51,968
Japan	34,948		32,455		32,664		35,455		35,045		38,548
Overseas	10,247		10,468		11,381		11,359		12,765		13,420

3) Interest on Loans and Investment Securities	29,903		35,949		33,117		37,066		36,220		40,978
Interest on loans	27,203		33,370		30,709		34,616		33,443		38,034
Japan	23,383		29,195		26,591		29,537		28,588		32,302
Overseas	3,820		4,175		4,118		5,079		4,855		5,732
Interest on investment securities	2,700		2,579		2,408		2,450		2,777		2,944
Japan	264		313		268		336		423		544
Overseas	2,436		2,266		2,140		2,114		2,354		2,400

4) Brokerage Commissions and Net Gains on Investment Securities	5,160		7,927		7,502		13,317		8,443		11,973
Brokerage commissions	1,226		1,001		997		1,292		1,255		2,068
Net gains on investment securities	3,934		6,926		6,505		12,025		7,188		9,905

5) Life Insurance Premiums and Related Investment Income	30,208		36,133		30,704		39,959		30,229		38,241
Life insurance premiums	28,007		33,676		26,966		37,157		28,393		32,915
Related investment income	2,201		2,457		3,738		2,802		1,836		5,326

6) Real Estate Sales	21,840		20,059		26,298		54,965		19,214		12,162
Japan	21,840		20,059		26,298		54,965		19,214		12,162
Overseas	—		—		—		—		—		—

7) Gains (Losses) on Sales of Real Estate under Operating Leases	1,198		83		(195	)	468		5,820		3,625
Japan	1,198		83		(195	)	468		5,820		3,625
Overseas	—		—		—		—		—		—

8) Transportation Revenues	12,775		14,152		12,788		15,624		—		—
Japan	12,775		14,152		12,788		15,624		—		—
Overseas	—		—		—		—		—		—

9) Other Operating Revenues	28,414		28,351		34,599		42,864		35,866		39,343
Japan	25,471		25,958		32,088		40,425		33,435		36,141
Overseas	2,943		2,393		2,511		2,439		2,431		3,202

Total Revenues	202,092		213,839		216,578		281,210		212,324		230,603

Expenses
1) Interest Expense	13,872		13,940		13,440		14,874		14,692		15,881
2) Costs of Operating Leases	32,785		28,476		30,452		31,354		33,483		33,332
3) Life Insurance Costs	27,965		31,954		27,139		35,838		27,239		31,000
4) Costs of Real Estate Sales	20,543		18,719		22,540		52,028		16,664		11,101
5) Costs of Transportation Revenues	11,714		11,685		10,652		12,543		—		—
6) Other Operating Expenses	15,076		16,518		21,828		29,027		21,386		23,431
7) Selling, General and Administrative Expenses	39,033		48,384		43,115		50,990		43,354		46,155
8) Provision for Doubtful Receivables and Probable Loan Losses	8,795		7,892		10,367		12,596		4,732		2,145
9) Write-downs of Long-Lived Assets	—		9,165		—		2,548		—		521
10) Write-downs of Securities	1,468		1,295		1,236		931		1,800		868
11) Foreign Currency Transaction Loss (Gain), Net	(172	)	531		470		(46	)	(643	)	84

Total Expenses	171,079		188,559		181,239		242,683		162,707		164,518

Operating Income	31,013		25,280		35,339		38,527		49,617		66,085
Equity in Net Income of Affiliates	4,754		5,011		8,038		2,240		7,263		8,344
Gains (Losses) on Sales of Subsidiaries and Affiliates and Liquidation Loss	839		1,963		745		(200	)	1,459		341
Income before Discontinued Operations and Income Taxes	36,606		32,254		44,122		40,567		58,339		74,770
Provision for Income Taxes	16,061		14,066		20,090		18,273		23,928		30,689
Income from Continuing Operations	20,545		18,188		24,032		22,294		34,411		44,081
Discontinued Operations, Net of Applicable Tax Effect	2,982		973		998		1,484		3,378		2,084

Net Income	23,527		19,161		25,030		23,778		37,789		46,165


Key Ratios, Per Share Data and Employees	Q1 (04/4-6)		Q2 (04/7-9)		Q3 (04/10-12)		Q4 (05/1-3)		Q1 (05/4-6)		Q2 (05/7-9)
Return on Equity (ROE)*	16.2	%	12.6	%	15.9	%	13.9	%	20.3	%	23.3	%
Return on Assets (ROA)*	1.67	%	1.35	%	1.73	%	1.59	%	2.47	%	2.95	%
Shareholders’ Equity Ratio	10.5	%	10.8	%	10.9	%	12.0	%	12.4	%	13.0	%
Debt-to-Equity Ratio (times)	6.5		6.3		6.3		5.7		5.5		5.2
Shareholders’ Equity Per Share (yen)	7,104.39		7,389.48		7,642.86		8,322.96		8,731.00		9,333.32
Basic EPS (yen)	281.05		228.73		298.51		280.13		432.08		525.69
Diluted EPS (yen)	258.14		211.02		270.41		255.48		409.74		498.00
Number of Employees	14,917		15,184		15,699		13,734		14,154		14,310

*	annualized

- 32 -


					(millions of JPY)

	Fiscal 2005				Fiscal 2006
Segment Information	Q1 (04/4-6)	Q2 (04/7-9)	Q3 (04/10-12)	Q4 (05/1-3)	Q1 (05/4-6)	Q2 (05/7-9)
Operations in Japan
Corporate Financial Services	19,355	21,419	20,253	26,681	22,456	25,206
Automobile Operations	21,379	22,697	22,679	22,649	24,462	24,449
Rental Operations	19,623	15,358	15,712	17,754	15,765	17,873
Real Estate-Related Finance	11,376	15,318	19,834	30,861	15,493	19,372
Real Estate	44,302	40,590	41,137	69,877	51,495	46,523
Life Insurance	30,260	36,046	30,721	39,830	30,093	38,085
Other	32,786	34,664	35,147	41,157	24,589	25,330

Sub-Total	179,081	186,092	185,483	248,809	184,353	196,838

Overseas Operations
The Americas	11,172	12,848	12,760	16,304	12,773	13,720
Asia, Oceania and Europe	17,058	17,714	19,237	19,080	20,220	23,614

Sub-Total	28,230	30,562	31,997	35,384	32,993	37,334

Total Segment Revenues	207,311	216,654	217,480	284,193	217,346	234,172

Operations in Japan
Corporate Financial Services	7,909	9,364	11,283	15,292	11,379	12,445
Automobile Operations	5,022	5,894	5,331	4,841	6,280	7,145
Rental Operations	2,411	2,633	2,270	2,070	1,634	3,658
Real Estate-Related Finance	2,584	7,632	3,448	192	6,892	13,426
Real Estate	8,837	3,668	6,118	5,336	12,781	7,781
Life Insurance	1,879	2,113	1,773	1,458	1,632	6,121
Other	6,374	5,426	4,486	4,684	8,198	8,061

Sub-Total	35,016	36,730	34,709	33,873	48,796	58,637

Overseas Operations
The Americas	1,210	3,515	7,482	3,414	7,152	6,918
Asia, Oceania and Europe	5,934	4,999	6,584	4,616	7,569	12,178

Sub-Total	7,144	8,514	14,066	8,030	14,721	19,096

Total Segment Profits	42,160	45,244	48,775	41,903	63,517	77,733

Operations in Japan
Corporate Financial Services	1,441,748	1,467,823	1,532,659	1,506,311	1,544,319	1,602,587
Automobile Operations	426,706	441,202	453,153	451,715	461,148	489,313
Rental Operations	116,020	117,741	117,599	118,427	115,660	116,982
Real Estate-Related Finance	853,426	867,605	932,754	956,047	977,407	961,049
Real Estate	391,209	398,388	450,511	500,755	478,389	520,730
Life Insurance	561,819	565,021	572,742	567,023	548,898	521,022
Other	419,110	421,744	416,146	489,758	495,998	519,727

Sub-Total	4,210,038	4,279,524	4,475,564	4,590,036	4,621,819	4,731,410

Overseas Operations
The Americas	451,032	446,231	427,689	403,399	406,247	398,936
Asia, Oceania and Europe	467,721	499,426	487,579	498,855	514,018	527,255

Sub-Total	918,753	945,657	915,268	902,254	920,265	926,191

Total Segment Assets	5,128,791	5,225,181	5,390,832	5,492,290	5,542,084	5,657,601

- 33 -

Equity in Net Income of Affiliates was a net gain of JPY 15,607 million for the six months ended September 30, 2005, a net gain of JPY 9,765 million for the six months ended September 30, 2004 and a net gain of JPY 20,043 million for the year ended March 31, 2005.

The average number of shares was 87,646,520 for the six months ended September 30, 2005, 83,743,749 for the six months ended September 30, 2004 and 84,110,243 for the year ended March 31, 2005.

Changes in Accounting Principles

No ( x ) (except for adoptions of new accounting principles)